DG Cement Annual Report 2016 PDF

STRUCTURING LIFE
Annual
Report 2016
D.G.
D.G. KHAN CEMENT COMPANY LIMITED
Vision & Mission 01
The Year’s Highlights 02
Contents
Company Information 03
Contact Us 04
Governance Structure
Governance 07
Company Organogram 12
List of Group Companies 13
Terms of Reference of Audit Committee 14
Terms of Reference of Human Resource and Remuneration Committee 14
Stakeholders’ Engagement 19
Pattern of Share Holding 20
Categories of Shareholders 24
Information Under Listing Regulation No. 5.19.11 ( x ) 26
Attendance of Directors 32
Status of Director Training Programme 32
Corporate Calander FY16 34
Report of the Board Audit Committee 37
Statement of Compliance with CCG 38
Auditor’s Review Report to the Members on Statement of Compliance with CCG 40
Business Structure
SWOT Analysis 43
Risks 44
Business Objectives 47
Exports & International Market 49
Geographical & Market Presence 50
Domestic Cement Industry 51
Economic Environment 53
Plant Specification 56
Brief History 57
Hub Project Update 58
Management & Reviews

Management Profile 63
Chairperson’s Message 65
Chief Executive’s Review 66
Directors’ Report to the Shareholders 69
Analysis
Six Years at a Glance and Ratios 77
Vertical Analysis 79
Horizontal Analysis 81
Graphical Analysis 83
Commentary on Trends and Ratios 86
Progress through Quarters 87
Value added Statement 89
Per Share Income Statement 90
DuPont Analysis 94
Equity Investments Analysis 95
Share Price Sensitivity Analysis 97
Financial Statements
Auditors’ Report to the Members 102
Financial Statements 103
Consolidated Financial Statements

Directors’ Report 165
Auditors’ Reports to the Members 168
Consolidated Financial Statements 169
Glossary of Terms 243
Notice of Annual General Meeting 244

Jama Ponji Ad 252
Form of Proxy 254
Vision Statement
To transform the Company into a modern and dynamic cement manufacturing company
with qualified professionals and fully equipped to play a meaningful role on sustainable
basis in the economy of Pakistan.
Mission Statement
To provide quality products to customers and explore new markets to promote/ expand
sales of the Company through good governance and foster a sound and dynamic team, so
as to achieve optimum prices of products of the Company for sustainable and equitable
growth and prosperity of the Company.
01 Annual Report 2016

The Year’s Highlights
Cement Production:
4.4 million tons
Utilisation: Sales Mix:

104.78% 84% local 16% export
Local Sales YOY Growth: Total Sales YOY Growth:

16% 14.6%
Equity: Balance Sheet:

PKR 66 b PKR 83 b
Gross Sales: PAT:

PKR 37 b PKR 8.8 b
Operating Cash Flows: EBITDA:

PKR 11 b PKR 14 b
GP Margin: PBT Margin:

42.65% 42.02%
PAT Margin: EBITDA Margin:

29.59% 48.76%
EPS: ROE:
PKR 20.06 13.36%
Breakup Value: Debt/Equity:

PKR 150.15/share 10.63%
Current Ratio: Equity/Total Assets:

3.07 78.86%
Annual Report 2016 02

Company Information
Board of Directors Mrs. Naz Mansha Chairperson

Mr. Raza Mansha Chief Executive
Mr. Khalid Niaz Khawaja
Mr. Khalid Qadeer Qureshi
Mr. Farid Noor Ali Fazal
Mr. Shahzad Ahmad Malik
Ms. Nabiha Shahnawaz Cheema
Audit Committee Mr. Khalid Niaz Khawaja Member/Chairman

Mr. Khalid Qadeer Qureshi Member
Ms. Nabiha Shahnawaz Cheema Member
Human Resource & Mr. Khalid Qadeer Qureshi Member/Chairman

Remuneration Committee Mr. Raza Mansha Member
Ms. Nabiha Shahnawaz Cheema Member
Company Secretary Mr. Khalid Mahmood Chohan
Management Mr. Raza Mansha Chief Executive Officer

Mr. Aftab Ahmad Khan Director Finance
Dr. Arif Bashir Director Technical & Operations
Mr. Farid Noor Ali Fazal Director Marketing
Mr. Inayat Ullah Niazi Chief Financial Officer
Local Bankers Allied Bank Limited MCB Islamic Bank Limited

Bank Alfalah Limited Meezan Bank Limited
Bank Al-Habib Limited National Bank of Pakistan
Bank Islami Pakistan Limited NIB Bank Limited
Citibank N.A. Samba Bank Limited
Dubai Islamic Bank Soneri Bank Limited
Faysal Bank Limited Standard Chartered Bank
Habib Bank Limited Limited (Pakistan) Limited
Habib Metropolitan Bank The Bank of Punjab
MCB Bank Limited United Bank Limited
External Auditors A.F. Ferguson & Co., Chartered Accountants
Cost Auditors Hasnain Ali & Company, Chartered Accountants
Legal Advisors Mr. Shahid Hamid, Bar-at-Law
CUIN 0006469
NTN 1213275-6
Symbol DGKC

Contact Us
Registered Office Nishat House, 53-A, Lawrence Road,

Lahore-Pakistan
UAN: 92 42 111 11 33 33
Fax: 92 42 36367414
Email: [email protected]
web site: www.dgcement.com
Factory Khofli Sattai, Distt., Dera Ghazi Khan-Pakistan

Phone: 92-641-460025-7
Fax: 92-641-462392
Email: [email protected]
12, K.M. Choa Saidan Shah Road,

Khairpur, Tehsil Kallar Kahar,
Distt. Chakwal-Pakistan
Phone: 92-543-650215-8
Fax: 92-543-650231
Share Registrar THK Associates (Pvt) Ltd

Head Office, Karachi
2nd Floor, State Life Building No. 3,
Dr. Zia Uddin Ahmed Road, Karachi
Tel: (021) 111 000 322
Fax: (021) 35655595
Branch Office, Lahore

2nd Floor, DYL Motorcycles Ltd. Office Building,
Plot No. 346 Block No. G-III,
KhokarChowk,Main Boulevard, Johar Town, Lahore
Tel: (042) 35290577, Fax (042) 35290667
For Investors’ Information, Mr. Inayat Ullah Niazi

Comments, Inquiries, Chief Financial Officer
Complaints: E-mail: [email protected]
Phone: 0092 42 111 11 33 33
Mr. Khalid Mehmood Chohan

Company Secretary
E-mail: [email protected]
Phone: 0092 42 111 11 33 33

Governance
Core Principles
The Company has set core principles for its governance which are:
Integrity Transparency Ethics Professionalism Compliance
These principles are at foundation of governance model of the Company. All the policies, procedures and agreements are
made and implemented with these core principles in mind.
Integrity at the root is the main guiding principle. The Company has ‘no compromise policy’ for integrity.
With integrity comes transparency. This is the main off-shoot of integrity and dignity. Transparency in every dealing and
disclosure is core to the Company.
With integrity at the root, brings ways to deal in the best possible way called the Ethics. Professionalism, is to conduct
every part and phase of the business with best possible resources and in best possible ways. This brings subtlety to
business decisions and ensures integration of all levels.
Being a Compliant organization to all applicable laws, regulations and standards is central to the Company’s values.
Internal Controls
The Company’s internal controls are designed and implemented with a view to the Company’s Core Principles.
Internal controls are made to ensure that every thing is conducted with integrity as basic principle. Internal control
blueprint is to make sure that:
• Duties are assigned to right persons

• Duties are segregated
• Chain of checking & reporting exists
• Availability of alternatives
• Routine maintenance/replacement is properly conducted
• Least possible hazardous impact on environment
• Departments are integrated
• Each step is adequately reported
• Any malfunctioning/undesired activity is timely and adequately reported and acted upon
Departments & Consolidation

For sake of proper functioning the Company is divided into some departments. All departments are under board of
directors. The departments are:
• Finance Primary Department

• Production & Technical Primary Department
• Purchasing Primary Department
• Marketing Primary Department
• Corporate & Secretariat Primary Department
• IT & ERP Service Department
• Human Resource Service Department
• Administration Service Department
Each area is headed by a departmental head. Each departmental head is assisted with various sub sector heads. Depart-
ments are linked vertically and horizontally to make the functioning of the Company in best possible way.
This two-way-simultaneous linking pave the way for consolidating overall objective of the Company decided by the Board
of Directors and disseminated to each level through departmental heads.

Functions performed by each department are described in abridged form as under:
Finance
• Maintaining PKR impact of each transaction
• Reporting the transactions in standardized way
• Issuing financial information to public
• Liaison with analysts
• Maintain relationship with local and international lenders
• Monitoring the financial impact of each transaction
• Assessing and advising on cost-benefit relations
• Maintaining the necessary records
• Managing the taxation affairs including income tax, sales tax, excise duties, customs, levies etc.
• Acting as primary focal point for internal & external independent auditors
• Acting as the terminating point of marketing and purchasing departments in the shape of receivables and payables
sub sections.
• Managing the budgets and planning
• Managing the foreign currency and interest based exposures
Production & Technical

• Surveying for best equipment & supplier
• Analysing equipments of various suppliers and picking up the right one
• Keep all the equipment in running condition
• Keeping and implementing the most appropriate maintenance program
• Ensuring the quality of the product
• Ensuring the health, safety and environment standards implementation
• Bringing innovation to the production processes
• Maintaining the stores, spares and workshops
Purchasing
• Maintaining wide network of suppliers of goods and services in and out of country
• Obtaining best quotes from best suppliers
• Choosing the quote in terms of quality and economy
• Ensure timely supply of required goods or services
Marketing
• Developing the product market within Pakistan
• Developing the product market outside Pakistan
• Develop strategies for market penetration
• Conducting market surveys
• Arranging promotional and advertisement activities
• Maintaining logistics arrangement
• Developing brand name
• Maintaining balance in factory production and despatches
• Ensure timely supply of product to dealers and customers
IT & ERP
• Maintaining state of the art IT systems in the Company
• Keeping the IT systems updated
• Provision of necessary equipment to staff for performing duties
• Troubleshooting
• Ensuring security of the equipment and stored data
• Maintaining ERP system and keep it updated
• Arrange for training of the users and smooth transition between systems
• Maintaining necessary stocks for any abrupt demands
• Maintaining backups and disaster recovery plan
• Ensure successful testing of the backups and DRP

Human Resource
• Assessing the Company requirements for various talents
• Discussing the requirements of departments
• Maintaining resume banks and links with outsourced talent hunters
• Advertising the jobs
• Designing and updating job descriptions
• Conducting annual appraisals and earmarking the benefits increments and promotions
• Addressing the human capital grievances and resolving the issues
• Act as arbitrator for human resources issues
• Work and arrange on continuous development of human resource
• Arrange for trainings and workshops
Corporate & Secretariat

• Maintaining the shares and shareholders record
• Addressing the shareholders grievances
• Liaison with corporate authorities of the country
• Preparing, keeping and submitting the mandatory records with corporate governing authorities and bourses
• Issuing notices of corporate nature/action.
• Conducting board and shareholders meetings and maintaining record thereof
• Responsible for any correspondence with authorities and bourses
• Responsible for statutary filing/subminsions with SECP and Stock Exchange under applicable law
Administration
• Maintain the workplace
• Responsible for security and safety of people working in the workplace and equipment and record of the Company
• Provision of all necessary items and environment for staff for performing duties
• Maintaining the company vehicles fleet
• Keeping the discipline in the workplace
• Trainings of workplace safety, discipline, health and environmental issues
• Maintaining first aid and all necessary measures to combat any untoward event
• Assisting the general society on issues pertaining to health, environment, sports, handicapped persons etc.
• Work as host of the Company guests
How departments work in collaboration and functions performed by each department, and its linking with each other is
sketched hereunder:
BOD
CEO
Finance Production Purchasing Marketing Secretariat Human IT & Administ-
Resource ERP ration
Head of
Deaprtment
Sub Heads
Assisting
Staff

Risks Mitigation through Best Governance
Production Risk
The Company has installed strict rules to ensure its production facilities secure and safe. Effective controls have been
established for smooth running of production. The spares and tools policy is to maintain at all time necessary spares. We
are always online and in touch with our crucial suppliers in order to manage lead times, logistics and quality issues. We
always keep our selves abreast of the new developments and research being carried out with our international suppliers.
All the production process is carried out with internationally and nationally accepted rules. Our all assets are fully insured.
The produced stuff is ensured to be of standard and stored in well equipped places to maintain the quality.
Unforeseen Event
Our all assets, premises, stores, spares and stocks are insured.
Market/Supply & Credit Risk

Dispatch mechanism is quick, responsive and round the clock. Uninterrupted logistics are ensured to reach our product
throughout country and in foreign markets. Effective marketing is given due importance. Searching new markets, deriving
new strategies and maintaining healthy competition are among our marketing principles. We have a strong network of
nationwide dealers which ensure reach of our product to ultimate customers without any hindrance and loss. It is also
ensured that our product is reached to consumer in fresh condition. We also put emphasis on institutional sales. Credit
is given to only institutional consumers or consumers and dealers with satisfactory track record and financial health. Most
of our local sales are on advance. Thus we manage credit risk very effectively. Exports sales are also mostly on advance
basis while rest are on sight letter of credit issued by reputable banks around the world. We select our foreign customers
with due care. We have had a successful track of branding our product and company in few foreign markets.
Margins
On the costs side we try to make a best possible relationship with its related benefit. Over years we have invested heavily
in cost reduction measures. The Company has tried to achieve margin gains through economies of scale as well.
Financial Management & Treasury

Leverage is managed to gain ultimate benefits from it. Your company has easy access to financial market at discounted
prices. For any short or long term need company can easily raise considerable amounts from lenders. Company always
keeps a reasonable size of finance facilities in tact to meet any abrupt demand. The company is a reputed and renowned
organization not only in Pakistan but abroad as well. We have and maintained a clean history of repayments of obligations
and best relationships with local and international lenders. The management of your company keeps a constant eye on
all foreign currency and interest rates movements. The borrowing of the company is maintained as a mixture of local
and foreign currency borrowings in order to reap maximum benefits yet managing the currency and interest rate risks.
Departmental collusion Risk

Separate departments are established for imports, purchasing, sales and receivables, payables, treasury and finance,
accounts and taxation and MIS. The company has instituted a beautiful merger of centeralisation and de-centeralisation
for management of its affairs. Powers are delegated at appropriate levels in all departments. While all departments are
independent yet they are working for common goal with interdepartmental cooperation and harmony. CEO office and
Board of Directors work as point of conjunction for all departments and as highest decision making authority.
Control Risks
Internal controls have been established at each level to ensure segregation, efficiency, effectiveness and transparency at
every level of transaction. These controls not only give a strong and professional working environment but also avoid
fraud and embezzlement. Approval limits have been defined and adhered to. Company has whistleblower policy to
discourage activities those are deemed illegal, dishonest, or not correct within an organization that is either private or
public.
Certification
The company is ISO 9001 and 14001 certified.

Human Resource
The company values its employees as most important assets. We always try to develop and nourish the skills of our
employees. Company tries to compensate its human workforce in every best possible way. Professionalism and integrity
are core values we instill in our employees.
Health & Safety

The company takes it on priority about Health and Safety of employees. Rules are developed and adherence to those is
monitored for ensuring safety while working and minimizing health & safety hazards.
Reporting
A proper system of reporting and action on it is in place. Top management regularly reviews all trends and reports. BOD
quarterly reviews the performance and state of affairs of the company. To ensure transparency and truthfulness of
reporting, internal audit system is in place. To further strengthen it, independent external auditors of satisfactory rating
are appointed. Reporting within departments and inter departmental reporting are designed to ensure transparency and
effectiveness. The reporting system is developed at each level within each department which ultimately reaches in a
consolidated form to BOD. The Company reports its financial statements in compliance with all applicable local laws and
international standards as described in the financial statements.
Records
Company has established comprehensive measures to ensure safe keeping of it records and data. An effective disaster
management plan is in place for all ERP data. Company complies with legal requirements of maintenance of data.
Internal Audit
Internal audit system is in place which is independent of the management of the company and reports to BOD. Internal
Audit department is governed by the Board’s instructions and terms. It carries out its activities quarterly, annually and as
and when desired. Sites and Head Office are visited and checked by the internal audit team at various intervals. They have
complete access to the company records and can call any explanation.
Stakeholders
Reporting
BOD
Laws & Regulations
Reporting
BAC HR & R
Values
Internal & External Audit
CEO
Production Reporting
IT & ERP
Objectives
HR Admin
Finance
Secretariat
Purchase
Marketing Maintenance

Company Organogram
BOD
Audit Committee CEO HR&R Committee

Internal Audit
Director Director Director Company

Finance Marketing Technical & CIO Secretary
Operations
Head of GM
CFO Exports Works DGK
Head of Accounts Head of DGM

& Taxation Local Sales Works
Head of Finance Head of GM

& Treasury Admin & Works KHP
HR HO
Head of Costing DGM
& Budgeting Works
Head of Sales GM
& Receivable Admin DGK
Head of Payables GM
Admin KHP
Head of
Department Purchase
Head Imports
GM
Department Works HUB
Head Domestic
Payables GM
Admin HUB
Accounts
Controller-DGK
Accounts
Controller-KHP BOD: Board of Directors
CEO: Chief Executive Officer
CFO: Chief Financial Officer
Accounts CIO: Chief Information Officer
Controller-HUB DGM: Deputy General Manager

List of Group Companies
Associated
Nishat Mills Limited

Nishat Power Limited
Lalpir Power Limited
Pakgen Power Limited
Nishat Papers Products Company Limited
Nishat Hotels And Properties Limited
Nishat (Aziz Avenue) Hotels And Properties Limited
Nishat (Raiwind) Hotels And Properties Limited
Nishat (Gulberg) Hotels And Properties Limited
Nishat Hospitality (Pvt) Limited
Nishat Automobiles (Pvt) Limited
Nishat Agriculture Farming (Pvt) Limited
Nishat Developers (Pvt) Limited
Nishat Dairy (Pvt) Limited
Nishat Farm Supplies Limited
Adamje Life Assurance Company Limited
Mnet Services (Pvt) Limited
Euronet Pakistan (Pvt) Limited
MCB Islamic Bank Limited
Other Than Associated
MCB Bank Limited

Adamjee Insurance Company Limited
Security General Insurance Company Limited
Nishat Energy Limited
Nishat Linen (Pvt) Limited
Pakistan Aviators & Aviation (Pvt) Ltd.
Nishat Real Estates Development (Pvt) Limited
MCB Financial Services Limited
Lalpir Solar Power (Pvt) Limited
Nishat Commodities (Pvt) Limited

Terms of Reference of Audit Committee
The Audit Committee shall, inter alia, recommend to the Board of Directors the appointment of external auditors, their
removal, audit fees, the provision by the external auditors of any service to the company in addition to audit of its
financial statements. The Board of Directors shall give due consideration to the recommendations of the Audit Committee
in all these matters and where it acts otherwise, it shall record the reasons thereof.
The terms of reference of the Audit Committee shall also include the following:
(a) determination of appropriate measures to safeguard the company’s assets;

(b) review of quarterly, half-yearly and annual financial statements of the listed company, prior to their approval by
the Board of Directors, focusing on:
• major judgmental areas;
• significant adjustments resulting from the audit;
• the going concern assumption;
• any changes in accounting policies and practices;
• compliance with applicable accounting standards;
• compliance with listing regulations and other statutory and regulatory requirements; and
• significant related party transactions.
(c) review of preliminary announcements of results prior to publication;

(d) facilitating the external audit and discussion with external auditors of major observations arising from interim and
final audits and any matter that the auditors may wish to highlight (in the absence of management, where
necessary);
(e) review of management letter issued by external auditors and management’s response thereto;
(f) ensuring coordination between the internal and external auditors of the company;
(g) review of the scope and extent of internal audit and ensuring that the internal audit function has adequate
resources and is appropriately placed within the company;
(h) consideration of major findings of internal investigations of activities characterized by fraud, corruption and abuse
of power and management's response thereto;
(i) ascertaining that the internal control systems including financial and operational controls, accounting systems for
timely and appropriate recording of purchases and sales, receipts and payments, assets and liabilities and the
reporting structure are adequate and effective;
(j) review of the company’s statement on internal control systems prior to endorsement by the Board of Directors and
internal audit reports;
(k) instituting special projects, value for money studies or other investigations on any matter specified by the Board
of Directors, in consultation with the CEO and to consider remittance of any matter to the external auditors or to
any other external body;
(l) determination of compliance with relevant statutory requirements;
(m) monitoring compliance with the best practices of corporate governance and identification of significant violations
thereof; and
(n) consideration of any other issue or matter as may be assigned by the Board of Directors.
Terms of Reference of Human Resource and Remuneration Committee

(i) Recommending Human Resource Management Policies to the Board.
(ii) Recommending to the Board the Selection, evaluation, compensation (including retirement benefits) and
succession planning of the Chief Executive Officer.
(iii) Recommending to the Board the Selection, evaluation, compensation (including retirement benefits) and
succession planning of the Chief Operating Officer, Chief Financial Officer, Company Secretary and Head of Internal
Audit.
(iv) Consideration and approval on recommendations of CEO on such matters for Key management positions who
directly report to Chief executive officer or COO.
(v) Consideration of any other issue or matter as may be assigned by the Board of Directors.

Human Resource Management
The overall requirements of the job, relevant qualification and experience of the individual will be the determining factors
in the selection of employees. The policy of the company is to develop its own employees and fill in the vacancies from
within the organization whenever possible. In case of non availability of qualified personnel from within, the company
will recruit qualified and appropriately experienced personnel in the respective discipline from outside.
New Officers will be inducted only on the basis of an employment requisition against a specific function within the
approved manpower budget.
Statement on Environment
The company is committed in green and pure environment and minimum possible adverse impact on environment. For
achieving its goal it:
• Uses state of the art technology compliant with environmental rules and thereby reducing the impact on
environment to its minimum level;
• Uses alternate fuels to permissible extent, which otherwise be a waste and pollution-causing material;
• Uses the plant running and heat as a source of energy;
• Preserve and restore the environment;
• Train its employees to do work in environment friendly manner;
• Raise awareness about environment in employees and nearby communities;
MIS and IT Governance

The Company achieved management and operation excellence through plant and office automation. Easy management,
smart monitoring, reduction of operational cost, significant resource saving and enhanced production are the main
benefit of automation. It also helped to optimize office activities and procedure in smart way. The Key technology
components are FLS Plant Automation system, Plant Guide, ERP System, Helpdesk, IP Telephony and state-of-art
infrastructure.
Enterprise Resource Planning (ERP) system

The Company has implemented state-of-the-art Enterprise Resource Planning (ERP) system “Oracle e-Business Suite” in
2008. ERP system enabled company to manage its Finance, manufacturing, maintenance, Human Resource, Order
management, Sales and dispatch, inventory and purchasing in one application suite. All application are tightly integrated
and helping company to eliminate the duplication of work. This application is implemented on world best practices and
excellent security mechanism. Each user is restricted through security profile, and all database and application logs are
enabled. Following are the few benefits of ERP.
Finance
• Excellent Financial management, monitoring and controls.
• Instant Financial results
• Automated Withholding Tax management.
• Reduced asset bases and costs, enhanced decision support, more accurate and timely information, reduced
financial cycles, and increased procurement leverage
• A large number of processes have been automated, which has increased the efficiency and reduced overhead costs
• Business Intelligence provides fully interactive dashboards and reports with a rich variety of visualizations.
• Also Business Intelligence allows the creation of highly formatted templates, reports, and documents such as flash
reports, checks
Manufacturing
• Automated production batches linked with Plant.
• Manufacturing information integrated with Plant
• Automated Daily Production report from Plant Guide
• Instant Truck loading information from pack house
Maintenance
• Efficient and cost effective maintenance with preventive and predicted maintenance.
• Online work orders, automated job scheduling, and online material and resource requests

Human Resource
• Effective HRMS management.
• Bio Metric Time management
• Secure and error free payroll and benefit system.
Order Management/Sales and Dispatch

• Online Customer management
• Online ordering system, with live order status.
• Increased customer satisfaction through integration and consistency
• Secure shipping and dispatch controls
• Automated dispatch and truck loading planning
• SMS system for customer, send SMS for each truck including truck, drive and dispatch information.
• Automated invoice email to customer
Inventory
• Efficient store management
• Centralize inventory management for all plants
• Online stocks, by item, category and locations.
• Inter-org transfer control.
• Secure receiving and issuance system
Purchasing
• Efficient Supplier management
• Online purchase requests, Purchase Orders, RFQ, and Quotations.
• Online Hierarchical Approval system.
• Automated Min-Max Planning.
Effective ERP Reporting System

ERP Reports have been generated containing classified information covering almost each area of the company e.g.
financial statements, daily production report alongwith historical data, consumption norms, daily dispatch and booking
information, detailed analytical report on inventory and consumption etc. ERP Reporting is available to all executives,
they can monitor their respective data in office and as well as during out of office.
ICT & Networking Infrastructure

DKC is using branded Servers, Storage Personal computers and Laptops to keep better corporate hardware support.
Internet connectivity to end users is served with firewall, Antivirus and Intrusion Detection & Prevention System (IPS)
from head office to all plant sites and sales offices, Daily review logs and controls of network, security, threats,
applications, and database done by internal team, which is audited by external auditors quarterly.
Disaster Recover Site

DR Site is located far away from head office data center. Backup of software and configuration is stored on DR site and
Plant Sites. Disaster Drill are done quarterly and reported accordingly.
Quality Management
DGKC is compliant with international and national quality standards. Strict monitoring is in place to ensure quality of
products. From raw materials to packed products, each and every step and procedure is tested, checked, reviewed and
approved under standard operating procedures.
Corporate Social Responsibility

The company is well cognizant of its responsibilities towards society. The Company:
• Provides free ambulance service to local communities.
• Provides free fire brigade services to local and nearby areas.
• Provides free bus transportation facilities to and from nearby villages/dispensary.
• Provides heavy equipment, manpower and technical services in case of any mishaps/accidents to adjoining areas.
• Contributes to flood, earthquake and other disasters victims rehabilitation
• Supports deserving sports persons.

Stakeholders’ Engagement
The guiding principles for engagement with stakeholders are:
• Timeliness
• Fairness
• Effectiveness
• Transparency
The ways of interaction and engagement are divided into scheduled and as and when required basis. The means of interaction could
be formal & informal and direct & indirect.
Stake Holders Methods Adopted
General Meetings
Circulation of Minutes
Shareholders/Investors Circulation of Company Reports
Through Company Secretariat
Letters/Emails/Telephone
Meetings
Visits
Lenders/Analysts
Conferences
Office Meetings
Suppliers Visits
Office Meetings
Visits
Customers
Informal Gatherings
Supervisor Interaction
Employees Informal Meetings & Gatherings
Appraisals, HR Department
Regular Reporting
On Demand Reporting
Regulatory Authorities Office Meetings
Information Notices
Meetings
Communities

Pattern of Share Holding as at June 30, 2016
2016 30
HAVING SHARES
NO. OF
SHAREHOLDERS From To SHARES HELD PERCENTAGE
1243 1 100 54191 0.0124

1271 101 500 416825 0.0951
752 501 1000 636796 0.1453
1018 1001 5000 2594649 0.5922
269 5001 10000 2136064 0.4876
85 10001 15000 1072791 0.2449
75 15001 20000 1378647 0.3147
45 20001 25000 1083501 0.2473
42 25001 30000 1190645 0.2718
32 30001 35000 1051290 0.2400
27 35001 40000 1046596 0.2389
19 40001 45000 828400 0.1891
16 45001 50000 783200 0.1788
18 50001 55000 933331 0.2130
12 55001 60000 702116 0.1603
16 60001 65000 1012200 0.2310
15 65001 70000 1031292 0.2354
20 70001 75000 1465236 0.3344
5 75001 80000 392900 0.0897
8 80001 85000 656399 0.1498
5 85001 90000 441500 0.1008
6 90001 95000 558949 0.1276
19 95001 100000 1891900 0.4318
3 100001 105000 307700 0.0702
5 105001 110000 540700 0.1234
8 110001 115000 893750 0.2040
3 115001 120000 357700 0.0816
1 120001 125000 120500 0.0275
4 125001 130000 505900 0.1155
4 130001 135000 530600 0.1211
4 135001 140000 552375 0.1261
4 140001 145000 566800 0.1294
12 145001 150000 1793187 0.4093
4 150001 155000 613379 0.1400
2 155001 160000 315800 0.0721
4 170001 175000 689600 0.1574
2 175001 180000 358493 0.0818
3 180001 185000 551200 0.1258
2 190001 195000 388600 0.0887
1 195001 200000 199200 0.0455
3 200001 205000 606630 0.1385
2 215001 220000 435300 0.0994
Continued

HAVING SHARES
NO. OF
2 220001 225000 444001 0.1013

3 225001 230000 684900 0.1563
1 235001 240000 237800 0.0543
2 240001 245000 489600 0.1118
5 245001 250000 1247400 0.2847
3 250001 255000 761000 0.1737
2 255001 260000 515300 0.1176
1 260001 265000 264529 0.0604
2 265001 270000 531800 0.1214
1 270001 275000 270032 0.0616
2 275001 280000 551900 0.1260
1 280001 285000 280500 0.0640
3 295001 300000 893589 0.2040
1 300001 305000 304244 0.0694
2 310001 315000 629100 0.1436
1 320001 325000 320500 0.0732
2 325001 330000 652500 0.1489
1 330001 335000 330100 0.0753
1 335001 340000 337500 0.0770
2 340001 345000 686600 0.1567
1 345001 350000 350000 0.0799
1 350001 355000 350200 0.0799
2 355001 360000 713300 0.1628
2 360001 365000 723290 0.1651
1 370001 375000 375000 0.0856
4 375001 380000 1510700 0.3448
1 380001 385000 385000 0.0879
2 395001 400000 795500 0.1816
1 400001 405000 403486 0.0921
1 405001 410000 410000 0.0936
1 410001 415000 414500 0.0946
1 415001 420000 420000 0.0959
1 425001 430000 426000 0.0972
1 435001 440000 435200 0.0993
1 445001 450000 450000 0.1027
1 460001 465000 461000 0.1052
1 480001 485000 485000 0.1107
4 495001 500000 1990600 0.4544
1 525001 530000 528320 0.1206
1 535001 540000 535500 0.1222
2 545001 550000 1098500 0.2507
1 550001 555000 553500 0.1263
1 560001 565000 564880 0.1289
1 565001 570000 569700 0.1300
1 575001 580000 578200 0.1320
1 595001 600000 600000 0.1369
1 600001 605000 600200 0.1370
1 610001 615000 613100 0.1399
Continued

HAVING SHARES
NO. OF
1 640001 645000 644848 0.1472

2 645001 650000 1299500 0.2966
1 665001 670000 667500 0.1524
1 675001 680000 678232 0.1548
3 685001 690000 2064005 0.4711
1 695001 700000 700000 0.1598
2 710001 715000 1422900 0.3248
1 740001 745000 743100 0.1696
1 750001 755000 752000 0.1716
2 795001 800000 1600000 0.3652
1 800001 805000 802080 0.1831
3 810001 815000 2436914 0.5562
1 845001 850000 846000 0.1931
1 860001 865000 862000 0.1968
1 885001 890000 887900 0.2027
2 935001 940000 1877550 0.4285
1 940001 945000 944500 0.2156
1 970001 975000 975000 0.2225
1 980001 985000 981849 0.2241
1 990001 995000 994500 0.2270
1 995001 1000000 995907 0.2273
1 1035001 1040000 1038100 0.2369
1 1065001 1070000 1067500 0.2437
1 1070001 1075000 1073402 0.2450
1 1075001 1080000 1075200 0.2454
1 1090001 1095000 1093800 0.2497
1 1125001 1130000 1129000 0.2577
1 1165001 1170000 1167600 0.2665
1 1175001 1180000 1178900 0.2691
1 1195001 1200000 1200000 0.2739
1 1205001 1210000 1209600 0.2761
1 1300001 1305000 1300032 0.2967
1 1340001 1345000 1344600 0.3069
1 1345001 1350000 1350000 0.3081
1 1365001 1370000 1369300 0.3125
1 1390001 1395000 1390500 0.3174
1 1470001 1475000 1473181 0.3363
1 1480001 1485000 1484111 0.3387
3 1495001 1500000 4500000 1.0271
1 1540001 1545000 1543546 0.3523
1 1585001 1590000 1589100 0.3627
1 1595001 1600000 1600000 0.3652
1 1605001 1610000 1609100 0.3673
1 1660001 1665000 1661300 0.3792
1 1690001 1695000 1690800 0.3859
1 1750001 1755000 1752000 0.3999
1 1820001 1825000 1825000 0.4166
1 1890001 1895000 1892500 0.4320
Continued

HAVING SHARES
NO. OF
1 1905001 1910000 1908000 0.4355

1 1910001 1915000 1913900 0.4368
1 1955001 1960000 1956760 0.4466
1 1960001 1965000 1961113 0.4476
1 1975001 1980000 1978300 0.4515
1 1995001 2000000 2000000 0.4565
1 2090001 2095000 2092300 0.4776
1 2120001 2125000 2125000 0.4850
1 2270001 2275000 2272693 0.5187
1 2430001 2435000 2434600 0.5557
1 2590001 2595000 2591000 0.5914
1 2605001 2610000 2606700 0.5950
1 2795001 2800000 2800000 0.6391
1 2980001 2985000 2981200 0.6805
1 3065001 3070000 3069500 0.7006
1 3190001 3195000 3190911 0.7283
1 3255001 3260000 3259032 0.7439
1 3260001 3265000 3262240 0.7446
1 3440001 3445000 3444244 0.7861
1 3455001 3460000 3458700 0.7894
1 3535001 3540000 3536700 0.8072
1 3735001 3740000 3737907 0.8532
1 3875001 3880000 3878870 0.8853
1 3940001 3945000 3943000 0.9000
1 4565001 4570000 4567800 1.0426
1 4600001 4605000 4604222 1.0509
1 4635001 4640000 4635974 1.0582
1 4905001 4910000 4909249 1.1205
1 5750001 5755000 5752689 1.3130
1 6005001 6010000 6006253 1.3709
1 6035001 6040000 6035417 1.3776
1 7720001 7725000 7720600 1.7622
1 8060001 8065000 8060906 1.8399
1 8435001 8440000 8435300 1.9253
1 11145001 11150000 11149920 2.5450
1 15725001 15730000 15729997 3.5903
1 21285001 21290000 21289060 4.8592
1 22925001 22930000 22929033 5.2335
1 114645001 114650000 114645168 26.1676
5262 Company Total 438119118 100.0000

Categories of Shareholders As on June 30, 2016
SHARES HELD %
1. Directors, Chief Executive Officer, 18,705,416 4.27

and their spouse and minor children
2. Associated Companies, undertakings 141,246,945 32.24

and related parties.
3. NIT and ICP 1,474,681 0.34
4. Banks Development Financial 8,716,258 1.99

Institutions Non Banking Financial Institutions.
5. Insurance Companies 7,959,181 1.82
6. Modarabas and Mutual Funds 30,300,764 6.92
7. Shareholders holding 10% & more 137,574,201 31.40
8. General Public:
a. Local 52,178,287 11.91

b. Foreign 1,397,480 0.32
9. Others
Joint Stock Companies 12,147,425 2.77
Investment Companies 14,572 0.00
Pension Funds, Provident Funds etc. 6,498,862 1.48
Foreign Companies 103,304,017 23.58

4.27 18,705,416 1
32.24 141,246,945 2
0.34 1,474,681 3
1.99 8,716,258 4
1.82 7,959,181 5
6.92 30,300,764 6
31.40 137,574,201 7
11.91 52,178,287
0.32 1,397,480
2.77 12,147,425
0.00 14,572
1.48 6,498,862
23.58 103,304,017

Information Under Listing Regulation No. 5.19.11 ( x ) of
PSX Rule Book as on June 30, 2016
No. of Shares %
I. Associated Companies, undertakings and related parties
Nishat Mills Limited - Associated Company 137,574,201 31.40

Adamjee Insurance Company Limited - Related Party 3,444,244 0.79
Security General Insurance Company Limited - Related 228,500 0.05
II. Mutual Funds:
CONFIDENCE MUTUAL FUND 573 0.00

PRUDENTIAL STOCKS FUND LTD (03360) 64,800 0.01
PAK QATAR INDIVIDUAL FAMILY PARTICIPANT INVESTMENT FUND 10,000 0.00
PRUDENTIAL STOCK FUND LTD. 413 0.00
CDC - TRUSTEE MCB PAKISTAN STOCK MARKET FUND 40,200 0.01
CDC - TRUSTEE JS LARGE CAP. FUND 264,529 0.06
CDC - TRUSTEE ATLAS STOCK MARKET FUND 1,200,000 0.27
CDC - TRUSTEE MEEZAN BALANCED FUND 295,009 0.07
CDC - TRUSTEE JS ISLAMIC FUND 150,000 0.03
CDC - TRUSTEE ALFALAH GHP VALUE FUND 72,000 0.02
CDC - TRUSTEE UNIT TRUST OF PAKISTAN 100 0.00
CDC - TRUSTEE AKD INDEX TRACKER FUND 52,387 0.01
CDC - TRUSTEE AL MEEZAN MUTUAL FUND 689,905 0.16
CDC - TRUSTEE MEEZAN ISLAMIC FUND 4,604,222 1.05
CDC - TRUSTEE UBL STOCK ADVANTAGE FUND 862,000 0.20
PAK QATAR INDIVIDUAL FAMILY PARTICIPANT INVEST FUND 100,000 0.02
CDC - TRUSTEE ATLAS ISLAMIC STOCK FUND 400,000 0.09
CDC - TRUSTEE AL-AMEEN SHARIAH STOCK FUND 995,907 0.23
CDC - TRUSTEE NAFA STOCK FUND 1,609,100 0.37
CDC - TRUSTEE NAFA MULTI ASSET FUND 140,500 0.03
CDC - TRUSTEE FIRST HABIB INCOME FUND 15,000 0.00
CDC - TRUSTEE ASKARI ASSET ALLOCATION FUND 20,000 0.00
CDC - TRUSTEE MEEZAN TAHAFFUZ PENSION FUND - EQUITY SUB FUND 887,900 0.20
CDC - TRUSTEE APF-EQUITY SUB FUND 85,000 0.02
CDC - TRUSTEE JS PENSION SAVINGS FUND - EQUITY ACCOUNT 27,300 0.01
CDC - TRUSTEE ALFALAH GHP ISLAMIC STOCK FUND 184,500 0.04
CDC - TRUSTEE HBL - STOCK FUND 1,178,900 0.27
CDC - TRUSTEE NAFA ISLAMIC ASSET ALLOCATION FUND 497,500 0.11
CDC - TRUSTEE APIF - EQUITY SUB FUND 87,500 0.02
CDC - TRUSTEE HBL MULTI - ASSET FUND 152,900 0.03
CDC - TRUSTEE MCB PAKISTAN ASSET ALLOCATION FUND 315,000 0.07
CDC - TRUSTEE JS ISLAMIC PENSION SAVINGS FUND-EQUITY ACCOUNT 33,000 0.01
CDC - TRUSTEE ALFALAH GHP STOCK FUND 63,800 0.01
CDC - TRUSTEE ALFALAH GHP ALPHA FUND 52,100 0.01
CDC - TRUSTEE NIT-EQUITY MARKET OPPORTUNITY FUND 3,259,032 0.74
CDC - TRUSTEE ABL STOCK FUND 944,500 0.22
M C F S L-TRUSTEE ASKARI ISLAMIC ASSET ALLOCATION FUND 10,000 0.00

CDC - TRUSTEE FIRST HABIB STOCK FUND 44,700 0.01
CDC - TRUSTEE LAKSON EQUITY FUND 938,050 0.21
CDC-TRUSTEE NAFA ASSET ALLOCATION FUND 139,700 0.03
CDC-TRUSTEE NAFA SAVINGS PLUS FUND - MT 47,900 0.01
CDC - TRUSTEE AKD AGGRESSIVE INCOME FUND - MT 26,000 0.01
CDC - TRUSTEE PICIC INCOME FUND - MT 800 0.00
CDC-TRUSTEE HBL ISLAMIC STOCK FUND 265,200 0.06
CDC - TRUSTEE HBL IPF EQUITY SUB FUND 44,000 0.01
CDC - TRUSTEE HBL PF EQUITY SUB FUND 40,000 0.01
CDC - TRUSTEE ASKARI EQUITY FUND 40,000 0.01
CDC - TRUSTEE ALFALAH GHP INCOME FUND - MT 57,000 0.01
CDC - TRUSTEE KSE MEEZAN INDEX FUND 256,100 0.06
MCBFSL - TRUSTEE PAK OMAN ADVANTAGE ASSET ALLOCATION FUND 75,900 0.02
MCBFSL - TRUSTEE PAK OMAN ISLAMIC ASSET ALLOCATION FUND 90,000 0.02
CDC-TRUSTEE FIRST HABIB ISLAMIC BALANCED FUND 31,500 0.01
CDC - TRUSTEE ATLAS INCOME FUND - MT 711,300 0.16
MCBFSL - TRUSTEE ABL ISLAMIC STOCK FUND 814,100 0.19
CDC - TRUSTEE NAFA PENSION FUND EQUITY SUB-FUND ACCOUNT 64,900 0.01
CDC - TRUSTEE NAFA ISLAMIC PENSION FUND EQUITY ACCOUNT 61,500 0.01
CDC - TRUSTEE UBL ASSET ALLOCATION FUND 228,400 0.05
CDC - TRUSTEE PIML STRATEGIC MULTI ASSET FUND 103,000 0.02
CDC - TRUSTEE FIRST CAPITAL MUTUAL FUND 24,200 0.01
CDC - TRUSTEE AL-AMEEN ISLAMIC ASSET ALLOCATION FUND 155,000 0.04
CDC - TRUSTEE NIT INCOME FUND - MT 133,600 0.03
CDC - TRUSTEE NAFA ISLAMIC PRINCIPAL PROTECTED FUND - I 47,300 0.01
CDC - TRUSTEE PIML ISLAMIC EQUITY FUND 75,000 0.02
CDC - TRUSTEE FAYSAL SAVINGS GROWTH FUND - MT 140,300 0.03
CDC-TRUSTEE AL-AMEEN ISLAMIC RET. SAV. FUND-EQUITY SUB FUND 314,100 0.07
CDC - TRUSTEE UBL RETIREMENT SAVINGS FUND - EQUITY SUB FUND 435,200 0.10
CDC - TRUSTEE NAFA ISLAMIC PRINCIPAL PROTECTED FUND - II 102,700 0.02
CDC - TRUSTEE ASKARI HIGH YIELD SCHEME - MT 376,900 0.09
CDC - TRUSTEE ABL ISLAMIC PENSION FUND - EQUITY SUB FUND 27,700 0.01
CDC - TRUSTEE ABL PENSION FUND - EQUITY SUB FUND 12,400 0.00
CDC - TRUSTEE NAFA ISLAMIC STOCK FUND 244,600 0.06
CDC - TRUSTEE PAKISTAN SARMAYA MEHFOOZ FUND 32,000 0.01
CDC - TRUSTEE NAFA INCOME OPPORTUNITY FUND - MT 125,300 0.03
CDC - TRUSTEE PIML VALUE EQUITY FUND 49,700 0.01
CDC - TRUSTEE NIT ISLAMIC EQUITY FUND 1,825,000 0.42
CDC-TRUSTEE NITIPF EQUITY SUB-FUND 20,000 0.00
CDC-TRUSTEE NITPF EQUITY SUB-FUND 27,000 0.01
MCBFSL - TRUSTEE NAFA INCOME FUND - MT 1,000 0.00
CDC - TRUSTEE AL AMEEN ISLAMIC DEDICATED EQUITY FUND 2,272,693 0.52
CDC - TRUSTEE NAFA ISLAMIC ACTIVE ALLOCATION EQUITY FUND 203,100 0.05
CDC - TRUSTEE HBL ISLAMIC ASSET ALLOCATION FUND 46,300 0.01
CDC - TRUSTEE FAYSAL MTS FUND - MT 19,700 0.00
CDC - TRUSTEE MEEZAN ASSET ALLOCATION FUND 25,000 0.01
CDC - TRUSTEE LAKSON TACTICAL FUND 110,700 0.03

III. Directors and their spouse(s) and minor children:
Mrs. Naz Mansha Director/Chairperson 113,098 0.03

Mian Raza Mansha Director/CEO 12,696,880 2.90
Mr. Khalid Niaz Khawaja Diretcor 2,000 0.00
Mr. Khalid Qadeer Qureshi Director 720 0.00
Mr. Farid Noor Ali Fazal Director 1,200 0.00
Mr. Shahzad Ahmad Malik Director 100 0.00
Ms. Nabiha Shahnawaz Cheema Director 320 0.00
Mrs. Ammil Raza Mansha Spouse of CEO 5,891,098 1.34
IV. Executives:
Mr. I.U. Niazi Chief Financial Officer 2,775 0.00
V. Public Sector Companies and Corporations:
Joint Stock Companies 12,147,425 2.77
VI. Banks, Development Finance Institutions, Non-banking Finance

Companies, Insurance Companies, Takaful, Modaraba and
Pension Funds:
Investment Companies 14,572 0.00

Insurance Companies 7,959,181 1.82
Financial Institutions 8,716,258 1.99
Modaraba Companies 8,644 0.00
Mutual Funds 30,292,120 6.91
Pension Funds/Providend Funds Etc. 6,498,862 1.48
VII. Shareholders holding Five percent or more voting interest

in the Listed Company
Mian Umer Mansha 27,295,313 6.23

Mian Hassan Mansha 26,879,917 6.14
Nishat Mills Limited 137,574,201 31.40
Information Under Listing Regulation No. 5.19.11 ( xii ) of PSX Rule Book as on June 30, 2016
There is no trading in the shares of the Company, carried out by its Directors, Chief Excutive Officer, Chief Operating
Officer, Chief Financial Officer, Head of Internal Audit, Company Secretary, their Spouses and minor children during
the period July 01, 2015 to June 30, 2016.

0.01 32,000
0.03 125,300
0.01 49,700
0.42 1,825,000
0.00 20,000
0.01 27,000
0.00 1,000
0.52 2,272,693
0.05 203,100
0.01 46,300
0.00 19,700
0.01 25,000
0.03 110,700
0.03 113,098
2.90 12,696,880
0.00 2,000
0.00 720
0.00 1,200
0.00 100
0.00 320
1.34 5,891,098
0.00 2,775
2.77 12,147,425
0.00 14,572
1.82 7,959,181
1.99 8,716,258
0.00 8,644
6.91 30,292,120
1.48 6,498,862
6.23 27,295,313
6.14 26,879,917
31.40 137,574,201

0.01 33,000
0.01 63,800
0.01 52,100
0.74 3,259,032
0.22 944,500
0.00 10,000
0.01 44,700
0.21 938,050
0.03 139,700
0.01 47,900
0.01 26,000
0.00 800
0.06 265,200
0.01 44,000
0.01 40,000
0.01 40,000
0.01 57,000
0.06 256,100
0.02 75,900
0.02 90,000
0.01 31,500
0.16 711,300
0.19 814,100
0.01 64,900
0.01 61,500
0.05 228,400
0.02 103,000
0.01 24,200
0.04 155,000
0.03 133,600
0.01 47,300
0.02 75,000
0.03 140,300
0.07 314,100
0.10 435,200
0.02 102,700
0.09 376,900
0.01 27,700
0.00 12,400
0.06 244,600

PSX 2016 30
5.19.11 (X)
31.40 137,574,201
0.79 3,444,244
0.05 228,500
0.00 573
0.01 64,800
0.00 10,000
0.00 413
0.01 40,200
0.06 264,529
0.27 1,200,000
0.07 295,009
0.03 150,000
0.02 72,000
0.00 100
0.01 52,387
0.16 689,905
1.05 4,604,222
0.20 862,000
0.02 100,000
0.09 400,000
0.23 995,907
0.37 1,609,100
0.03 140,500
0.00 15,000
0.00 20,000
0.20 887,900
0.02 85,000
0.01 27,300
0.04 184,500
0.27 1,178,900
0.11 497,500
0.02 87,500
0.03 152,900
0.07 315,000

Attendance of Directors
In Meetings During the Year From July 01, 2015 To June 30, 2016
Audit Committee
During the year under review, Four Audit Committee Meetings were held, attendance position was as under:--
Sr. No. Name of Member No. of meetings attended
1. Mr. Khalid Niaz Khawaja (Member/Chairman) 4

2. Mr. Khalid Qadeer Qureshi (Member) 3
3. Ms. Nabiha Shahnawaz Cheema (Member) 3
HR&R Committee
During the year under review, one Human Resource & Remuneration (HR&R) Committee meeting was held, attendance
position was as under:-
Sr No. Name of Member No. of meetings attended
1. Mr. Khalid Qadeer Qureshi (Member/Chairman) 1

2. Mr. Raza Mansha (Member) 0
3. Ms. Nabiha Shahnawaz Cheema (Member) 1
Board Of Directors
During the year under review, five Board of Directors Meetings was held, attendance position was as under:-
Sr. No. Name of Dirctor No. of meetings attended
1. Mrs. Naz Mansha (Chairperson) 3

2. Mr. Raza Mansha (Chief Executive Officer) 2
3. Mr. Khalid Niaz Khawaja 5
4. Mr. Khalid Qadeer Qureshi 4
5. Mr. Farid Noor Ali Fazal 4
6. Mr. Shehzad Ahmad Malik 5
7. Ms. Nabiha Shahnawaz Cheema 4
Status of Director Training Programme

Sr. No. Name of Director Status of Director
Training Programme
1. Mrs. Naz Mansha Exempt

2. Mian Raza Mansha-CEO Exempt
3. Mr. Khalid Niaz Khawaja Completed
4. Mr. Khalid Qadeer Qureshi Exempt
5. Mr. Farid Noor Ali Fazal Completed
6. Mr. Shahzad Ahmad Malik Completed
7. Ms. Nabiha Shahnawaz Cheema Completed

2016 30 2015

Corporate Calander from July 01, 2015 to June 30, 2016
Date Event
July 13, 2015 Material Information sent to Stock Exchange that the Company has signed a
Contract with FLSMIDTH, DENMARK for supply of engineering and equipment
of pyro process for green field clinker production project at Mouza Chihai,
Tehsil Gaddani, District Lasbella, Balochistan.
July 23, 2015 Notice for meeting of Board of Directors sent to Directors.
July 30, 2015 Meeting of the Board of Directors conducted for appointment of Cost Auditors
for the year ended 2014-15, Approval Annual Bonus and Revision in monthly
salaray of CFO, Company Secretary, Head of Internal Audit and whole time
working directors, Appoval of Revenue and Fixed Capital Budget for the year
2015-16 etc.etc.
September 07, 2015 Material Information sent to Stock Exchange that the Company has signed a
Contract with Loesche GmbH, Germany, to supply complete Raw, Cement and
Coal Grinding mills compatible with green field cement plant at Mouza Chihai,
Tehsil Gaddani, District Lasbella, Balochistan.
September 14, 2015 Notice of Meeting of Audit Committee sent to Members of Audit Committee.
September 14, 2015 Notice for Meeting of Board Directors for consideration of Annual Audited
Accounts for the year ended June 30, 2015 sent to Directors and Stock
Exchange.
September 21, 2015 Meeting of the Members of Audit Committee conducted for recommendation
of Annual Audited Accounts for the year ended June 30, 2015, related party
transactions, appointment of External Auditors etc.etc. to the Board of
Directors for their approval.
September 21, 2015 Meeting of the Board of Directors conducted for consideration and approval of
Annual Audited Accounts for the year ended June 30, 2015, Dividend,
Director's Report, Related Party Transactions, Appointment of External
Auditors, Agenda and Venue of AGM, monthly Salary of CEO etc.etc.
September 21, 2015 Financial Results for the year ended June 30, 2015 along with Notice of AGM,
Notice U/S 218 of the Companies Ordinance, 1984 and other Coprorate
Actions Sent to Stock Exchange immediately after conclusion of Board
Meeting.
October 01, 2015 Notice of Annual General Meeting published in Newspapers.
October 07, 2015 Material Information sent to Stock Exchange that Letter of Credit for supply of
engineering and equipment of Pyro Process from FLSMIDTH, DENMARK was
established through National Bank of Pakistan.
October 21, 2015 Notice of Meeting of Audit Committee sent to Members of Audit Committee.

Date Event
October 21, 2015 Notice for Meeting of Board Directors for consideration of Un-Audited
Accounts for the 1st Quarter ended September 30, 2015 Sent to Directors and
Stock Exchange.
October 28, 2015 Meeting of the Members of Audit Committee conducted for recommendation
of Un Audited Accounts for the 1st Quarter ended September 30, 2015,
Related Party Transactions etc. etc. to the Board of Directors for their
approval.
October 28, 2015 Meeting of the Board of Directors conducted for consideration and approval of
Un-Audited Accounts for the 1st Quarter ended September 30, 2015, Directors
Report, Related Party Transactions etc. etc.
October 28, 2015 Financial Results for the 1st Quarter ended September 30, 2015 along with
other Coprorate Actions, if any, Sent to Stock Exchange immediately after
conclusion of Board Meeting.
November 25, 2015 Minutes of Annual General Meeting held on October 29, Sent to Stock
Exchange.
November 27, 2015 Intimation regarding dispatch of 50% Final Dividend for the year 2015 sent to
Stock Exchange
December 09, 2015 Material Information sent to Stock Exchange that Letter of Credit for supply of
three Grinding Mills (Raw Mill, Coal Mill and Cement Mill) with complete
associated equipment from Loesche GmbH, Germany has been established
through Allied Bank Limited.
February 09, 2016 Notice of Meeting of Audit Committee sent to Members of Audit Committee.
February 09, 2016 Notice for Meeting of Board Directors for consideration of Un-Audited
Accounts for the Half Year ended December 31, 2015 Sent to Directors and
Stock Exchange.
February 16, 2016 Meeting of the Members of Audit Committee conducted for recommendation
of Un Audited Accounts for the Half Year ended December 31, 2015, Related
Party Transactions etc. etc. to the Board of Directors for their approval.
February 16, 2016 Meeting of the Board of Directors conducted for consideration and approval of
Un-Audited Accounts for the Half Year ended December 31, 2015, Directors
Report, Related Party Transactions, Further Equity Investment in Adamjee
Insurance Co. Ltd. etc. etc.
February 16, 2016 Financial Results for the Half Year ended December 31, 2015 along with other
Coprorate Actions, if any, Sent to Stock Exchange immediately after conclusion
of Board Meeting.
February 25, 2016 Material Information Sent to Stock Exchange that the Board of Directors has
approved to submit Pre-Qualification Document (PQD) as a consortium
member, for approval to Punjab Power Development Board, Government of
the Pubjab (PPDB) for development of Raw Site Coal based Small Thermal
Power Project of 220 MW and authorized Chief Executive Officer to take the
future decisions in this respect.

Date Event
April 05, 2016 Material Information sent to Stock Exchange that the Board of Directors has
approved to submit Pre-Qualification Document (PQD) as a main sponsor with
other consortium members, for approval to Private Power Infrastructure
Board, Government of Pakistan (PPIB) for development of 200-225 MW RLNG
based Power Project and authorized Chief Executive Officer to take the future
decisions in this respect.
April 14, 2016 Notice of Meeting of Audit Committee sent to Members of Audit Committee.
April 15, 2016 Notice for Meeting of Board Directors for consideration of Un-Audited
Accounts for the 3rd Quarter ended March 31, 2016 Sent to Board of Directors
and Stock Exchange along with Closed Period.
April 21, 2016 Meeting of the Members of Audit Committee conducted for recommendation
of Un Audited Accounts for the 3rd Quarter ended March 31, 2016, Related
Party Transactions etc. etc. to the Board of Directors for their approval.
April 22, 2016 Meeting of the Board of Directors conducted for consideration of Un-Audited
Accounts for the 3rd Quarter ended March 31, 2016, Directors Report, Related
Party Transactions etc. etc.
April 22, 2016 Financial Results for the 3rd Quarter ended March 31, 2016 along with other
Coprorate Actions, if any, Sent to Stock Exchange immediately after conclusion
of Board Meeting.
June 06, 2016 Material Information sent to Stock Exchange that the Pre-Qualification
Document (PQD) submitted by the Company as a main sponsor with other
consortium members, for approval to Private Power Infrastructure Board,
Government of Pakistan (PPIB) for development of 200-225 MW RLNG based
Power Project at existing site of GTPS and SPS Faisalabad has been declared
Technically Non-Qualified by PPIB vide its letter No.
1(102)PPIB/2053-01/16/PRJ/0-46940 dated June 01, 2016.

Report of the Board Audit Committee
The Board Audit Committee (BAC) is governed by the mandate given to it vide Code of Corporate Governance and Board
of the Company. It is vital platform to ensure transparency of company reporting and checking effectiveness in
achievement of company objectives.
BAC assists Board in scrutinizing the financial and non-financial information and maintaining an independent check on
activities of management. It also provides a helping hand to Board in risk management, internal controls, compliance and
governance matters.
BAC comprises of three members:
Mr. Khalid Niaz Khawaja Independent Director Member/Chairman

Mr. Khalid Qadeer Qureshi Non-Executive Director Member
Ms. Nabiha Shahnawaz Cheema Non-Executive Director Member
All the members have extensive knowledge and experience in the field of finance, accounting, controls, system
management, reporting and compliance areas.
BAC takes into account information from various sources like reports from management, internal auditors, external
auditors and any other source. BAC invites, questions and calls any person from management as and when required.
During FY16 BAC met four times. CFO and internal auditors are regular participants of the meeting. BAC also meets
external and internal auditors independently once a year.
The terms of BAC are precisely defined by the Board. The Committee monitors including other things:
• Internal controls
• Risk management
• Integrity of financial information
• Internal and external audit reports
• Audit observations
• Compliance with applicable laws
• Management’s decisions conformity with the Company objectives
• Related Party transactions
• Assessing accounting & financial estimates, going concern assumption, changes in accounting policies and
compliance with standards.
• Recommendation of external auditors appointment based on independence, integrity and satisfactory rating with
ICAP
The Board Audit Committee has reviewed the performance and operations of the Company for the year ended June 30,
2016 and reports that:
• Internal controls of the company are sound and are working properly;
• Departments of the company are working in line with company objectives;
• Records are maintained in accordance with applicable laws and regulations;
• Financial statements are in conformity with applicable laws, regulations and applicable standards;
• Listing Regulations and other statutory and regulatory requirements are in compliance.
• Preliminary announcements were reviewed prior to publication.
• Reviewed and discussed Internal Audit observations and decisions are taken.
• Code of Corporate Governance is followed;
• Being at arm’s length, related party transactions are recommended to the Board for approval;
• Recommended the present auditors, M/S A.F. Ferguson & Co. Chartered Accountants, for reappointment for year
ending June 30, 2017, with rotation of engagement partner.
Khalid Niaz Khawaja

Chairman
Board Audit Committee
Lahore
August 31, 2016

Statement of Compliance with the Code of Corporate
Governance (CCG) [See clause (5.19.23)]
Name of company: D. G. Khan Cement Company Limited
Year ended: June 30, 2016
This statement is being presented to comply with the Code of Corporate Governance (CCG) contained in listing
Regulation No. 5.19.23 of listing regulations of Pakistan Stock Exchange 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 company encourages representation of independent non-executive directors and directors representing
minority interests on its board of directors. At present the board includes:
Category Names
Independent Director Mr. Khalid Niaz Khawaja
Executive Directors Mr. Raza Mansha

Mr. Farid Noor Ali Fazal
Non-Executive Directors Mrs. Naz Mansha

Mr. Khalid Qadeer Qureshi
Mr. Shahzad Ahmad Malik
Ms. Nabiha Shahnawaz Cheema
The independent director meets the criteria of independence under clause 5.19.1(b) of the CCG.
2. The directors have confirmed that none of them is serving as a director on more than seven listed companies,
including this company (excluding the listed subsidiaries of listed holding companies where applicable).
3. All the directors are registered taxpayers and none of them has defaulted in payment of any loan to a banking
company, a DFI or an NBFI and not a member of a stock exchange and none of them has been declared as a
defaulter by that stock exchange.
4. No casual vacancy occurred on the Board during the year.
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 Chairperson and, in her 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.
9. The board arranged followings for its directors during the year.
Orientation Course: -
All the directors on the Board are fully conversant with their duties and responsibilities as directors of
corporate bodies. The directors were apprised of their duties and responsibilities through orientation courses.

Directors’ Training Program: -
(i) Three ( 3 ) Directors of the Company are exempt due to 14 years of education and 15 years of experience
on the board of a listed company.
(ii) Four directors Mr. Khalid Niaz Khawaja, Mr. Farid Noor Ali Fazal, Mr. Shahzad Ahmad Malik and Ms.
Nabiha Shahnawaz Cheema have completed the directors training program.
10. No new appointments of CFO, Company Secretary and Head of Internal Audit, has been approved by the Board.
The remuneration of CFO and Head of Internal Audit was revised during the year after due approval of the
Board.
11. The directors’ report for this year has been prepared in compliance with the requirements of the 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 3 members, of whom 2 are non-executive directors
and one is independent director.
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 3 members, of whom 2 are
non-executive directors and the chairman of the committee is a Non-Executive director.
18. The board has set up an effective internal audit function and the members of internal audit function are
considered suitably qualified and experienced for the purpose and are conversant with the policies and
procedures of the company.
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 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 the market price of company’s securities, was determined and intimated to directors,
employees and stock exchange.
22. Material/price sensitive information has been disseminated among all market participants at once through
stock exchange.
23. We confirm that all other material principles enshrined in the CCG have been complied with.
RAZA MANSHA
Chief Executive Officer
Lahore: August 31, 2016

Review Report to the Members on Statement of Compliance
with Best Practices of Code of Corporate Governance
We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate
Governance (the ‘Code’) prepared by the Board of Directors of D.G. Khan Cement Company Limited (the ‘Company’) for
the year ended June 30, 2016 to comply with the requirements of clause No. 5.19 of the Regulations of the Pakistan Stock
Exchange Limited where the Company is listed.
The responsibility for compliance with the Code 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 and report if it does not and to highlight any
non-compliance with the requirements of the Code. 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 a part of our audit of the financial statements we are required to obtain an understanding of the accounting and
internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to
consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion
on the effectiveness of such internal controls, the Company's corporate governance procedures and risks.
The Code requires the Company to place before the Audit Committee, and upon recommendation of the Audit
Committee, place before the Board of Directors for their review and approval its related party transactions distinguishing
between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions
which are not executed at arm's length price and recording proper justification for using such alternate pricing
mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the
related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried
out 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 as applicable to the Company for the year ended June 30, 2016.
A. F. Ferguson & Co.

Chartered Accountants
Lahore,
Date: August 31, 2016
Name of engagement partner: Muhammad Masood

SWOT Analysis
Strengths Opportunities
• Taping foreign
markets through
• Excellent credibility & exports.
• Establishing
creditworthiness.
manufacturing facilities
• Strong brand name. in attractive foreign
• Economies of scale. markets, specially in
• Extensive dealer network. African continent.
• Easy access to financial • Market in Southern
markets. Pakistan.
• Presently low population
density and per capita
cement consumption in
Pakistan.
• No physical presence near • Inconsistent governmental

port and in southern areas of policies.
Pakistan. • Unhealthy industry
competition.
Weaknesses Threats

Risks
Risk Head Type of Risk Probable Impact How it is

handled/mitigated
Imported Coal Availability Imported coal is the main • Maintaining stock levels.
burning stuff of kilns and • Relationship with
its non-availability could international coal
hamper production suppliers.
• Replacing some portion
of coal with alternate
fuels.
Price Coal price could heavily • Price is monitored

impact cost of sales and vigilantly.
therefore income statement. • Shipments are booked at
Considering huge size of best available prices
coal consumption its considering the stock
monetary effect would levels.
be large.
FX As price is in USD therefore, • FX movements are

any movement in PKR/USD monitored vigilantly and
parity could affect income steps are taken to hedge
statement. against probable heavy
FX losses.
Energy Availability Energy (either Electricity • Captive power houses

or Gas) availability from are built.
governmental sources is in • Captive power units are
serious situation and not designed on dual fuel
guaranteed. Energy is the basis i.e., Gas & Furnace
lifeline of plant and its oil.
non-availability could stop • Reliance on single fuel is
plant operations. avoided.
• Waste Heat Recovery
plants are installed.
• Coal based captive
power plant at DGK
installed to avoid
reliance on national grid
and gas.
Price Prices of electricity, gas, • Mix of various energy

furnace oil and coal could sources is always made
mark a reasonable impact in a way so as to achieve
on cost of sales. best in cost terms.
• New plants and
innovations are being
installed to minimize the
cost of energy.
• Waste Heat Recovery
plants are a source of
energy at negligible
price.

handled/mitigated
Raw materials Availability If supply of raw is disrupted • Enough land areas and
Limestone, it could hamper the mines are obtained to
Gypsum etc. operations. secure supply of raw
materials.
• Factory sites are adjacent
to main raw material
quarries.
Freight & Price • Freight cost effect is • Freight costs are

Logistics reasonable on income negotiated to get
statement under the maximum advantage
heads of cost of sales under the prevailing
and marketing & sales. situation.
Freight is necessary • In case of ocean freights,
component of deals are carefully
transporting the finished handled at right time
goods to desired and monitored at levels.
destinations including
ports.
• It is also an important
factor for inward
shipments.
FX In case of international Freight deals are done in

shipments FX movement a way to incorporate the
has a multiplying effect on probable FX movement
freight price. effect.
Local Currency Price • During times of heavy • Loans are negotiated at

Loans loans (Long & Short best possible spread.
terms) markup expense • Movement of KIBOR and
holds an important place discount rate is
in income statement. monitored.
• Movement in KIBOR, • Strong credibility and
discount rates, spreads financial strength gives
could affect the financial advantage.
cost of company.
Foreign Currency Price LIBOR rate movement and • Loans are negotiated at
Loans spread are important factor best possible and
in FCY loans. competitive price.
• Strong credibility and
financial strength gives
advantage
FX FX movement could cast • FX movements are

an impact of reasonable monitored vigilantly.
size on income statement • Hedging the probable
and cash flows. unfavourable
movements.
Sales Demand • Local demand can affect • Market dynamics are

the sale of cement minutely considered all
considerably. the time to devise the
• Demand in exports areas strategy.
can also change the • New exports markets are
top line. hunted.

handled/mitigated
Price • Cement price is volatile • Market dynamics are

locally and so could bring minutely considered all
remarkable changes in the time to devise the
income statement. strategy.
• Exports markets are also • Reducing costs to be
very competitive. competitive.
• Search for new markets
for exports.
Equity Price Fluctuations Shares price fluctuations As far as strategic

Investments could hit the equity under investments are concerned
fair value reserves or these are fix on balance
income statement in sheet.
either way. Market movements are
minutely monitored for
Investments for gain.
Dividend Dividend increase/decrease Most of the dividends are

can shape the bottom line. from strategic investments.
Factory Obsolescence If a technology becomes Our plants are state of the

Operations obsolete, it can affect art. Cement plants
operational capability and technology is not a rapid
competitiveness. changing technology.
However, our plants, allied
machineries and processes
are on a continuous
improvement path.
Accident/Theft Accident or theft can • Adequate security and

hamper production or cast safety arrangements are
a monetary loss. made at all assets sites
to ensure smooth
running of operations.
• Proper Insurance
coverage is obtained
from reputable
insurance companies.
Laws • Any legal change could Company is compliant with

bring with it its necessary all prevailing laws and
changes. regulations and capable of
• Non compliance can adapting changing
materially affect business. situations.
Human resources Persons to run the Qualified and Experienced

company affairs and human resources are hired.
operations are a must. Company considers its
employees as an asset and
compensate them for their
value-able services.
Company manages
employee retention and
retirement policies.
Policies are in place to
ensure integrity of
employees.

Business Objectives
Penetrate Local & Exports Market
To be Leader in Use of Cutting Edge Technology
Branding
Cost Saving through Innovative Means
Committed Employees
Broad Base of Satisfied Suppliers
Better Returns for Shareholders
Environment Friendly Operations
Strong Supply Chain

Ordinary Portland Cement
Products
Sulphate Resistant Cement
Limestone
Clay
Raw Materials Iron Ore
Silica Sand
Gypsum
Coal
Fuel
Aternative Fuels
OPC
Quality Standards
PS 232:2008(R) Grade 43
PS 232:2008(R) Grade 53
Assured compliance with:
ASTM C-150 Type I
BS 12:1996
EN 197-1/2000 CEM I 42.5 N/R
IS No. 12269:1987 Grade 53
SRC
PS 612-1989 (R)
Assured compliance with:
BSS 4027 1996
ASTM C-150 Type V
ISO-9001-2000
ISO Certifications
ISO-14001

Exports & International Market
World Cement Production 2015: Pakistan is neighbour to world’s Per Capita Cement Consumption:
4.1 b t p.a. No. 1st, 2nd & 4th cement Global: 400-500 Kg
with China contributing 57% & producers. India: 200 Kg
India 6%, ranking at Sri Lanka: 300-400 Kg
1st & 2nd place. Pakistan cement industry
exported about 15% of its total
despatch in FY16.
DGKC exports to Afghanistan:

28% of Exports
Iranian cement being cheap is a

potential tough competitor in
Afghanistan, Gulf & Africa,
besides domestic market.
DGKC exports to Sri-Lanka:

DGKC exports to African 3% of exports
Continent: 18% of exports
Indian cement industry:

capacity> 370 m t p.a.
expected to touch 550 m t p.a.
by 2020.
Capacity utilisation: 75%
DGKC exports to India: 51% of exports

By Road: 78%, By Sea: 22%

Geographical & Market Presence
Local Sales FY16: SRC 3%, OPC 97%
Export Sales FY16: OPC 100%
20
DGKC Market Share
18
DGKC is the third largest cement 16

manufacturer in Pakistan. 14
12
With production capacity of
4.2 m t p.a. the Company 10
constitutes about 9.3% of domestic
8
industry
6
4
2
0
FY6 FY7 FY8 FY9 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Local Exports
Sales Office Rawalpindi
Over 2200 Dealers Nation-wide
Khairpur: Factory
Dera Ghazi Khan: Factory

Lahore: Head Office
2.2 million tons p.a.

expansion process
initiated
Sales Office Lahore
Sales Office Multan
Sales Office Dera Ghazi Khan
Hub: Factory (underconstruction)

Sales Office Karachi

Domestic Cement Industry
Average utilization (%) for industry since Pakistan Per Capita Cement
FY06 is as under:
Consumption: 169kg
Local Exports Total
North 62.02 14.96 76.98 Pakistan population
South 55.16 29.29 84.45
Overall 60.47 17.71 78.19 density: 222 / km2
Total installed capacity of Pakistan Cement Industry is 43,446,428 t p.a. of clinker
and 45,618,750 t p.a. of cement as of now.
17 players of cement in Local Sales Utilisation (%)

120
Pakistan with 24 units. DGKC
100
Industry
North Cement Capacity: 80
60
37,026,000 t p.a. 40
South Cement Capacity: 20

0
8,592,750 t p.a. FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08 FY07 FY06
35 Exports Utilisation (%) Announced & expected

30
expansion of
25
20 DGKC
20.36 m t p.a.
15 Industry
10 Of this DGKC announced
5
0
FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08 FY07 FY06
5.14 m t p.a. expansion
• Projected local growth: Overall Sales Utilisation (%)

approx. 10% p.a. 120
• Major demand from 100

household sector. 80
DGKC
• CPEC is expected to Industry
60
bolster the cement
demand. 40
20
Major risk is unhealthy 0
price competition. FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08 FY07 FY06
Source: APCMA website

Industry Expansion Analysis
2023 65.98 103.41 75.75 66.62 54.70

-57% -15% -1% 17%
2022 65.98 89.92 68.87 61.69 52.09

-36% -4% 7% 21%
2021 65.98 78.19 62.61 57.12 49.61

-19% 5% 13% 25%
2020 59.28 67.99 56.92 52.89 47.25

-15% 4% 11% 20%
2019 54.67 59.12 51.74 48.97 45.00

-8% 5% 10% 18%
2018 46.98 51.41 47.04 45.34 42.86

-9% 0% 3% 9%
2017 45.62 44.71 42.76 41.98 40.82

2% 6% 8% 11%
Supply Demand Demand Demand Demand

@ 15% @ 10% @ 8% @ 5%
CAGR CAGR CAGR CAGR
Figures are in million tons. Announced & Local Demand to

Over/(Under) Supply Expected expansion rise while exports
from industry is of to face tough time
• This is a pure forecast and may vary with actual. 20.36 million tons p.a.
• Capacities are added to stream in next to announced year.

Economic Environment
60 CRUDE OIL FY16 AVG USD 42.03

MAX USD 56.96
MIN USD 26.21
50
40
30
20
10
0
2016
1.18 EUR-USD FY16

AVG 1.1102
MAX 1.1620
1.15
MIN 1.0564
1.12
1.09
1.06
1.03
1.00
2016
World Growth 2.9~3.1 Pakistan Construction Local Construction

Pakistan Growth 4~4.71 Sector: 3% of GDP Sector: 13.10% YOY Growth

USD-PKR FY16 AVG 104.3229
MAX 105.5550
MIN 101.7500
106
105
104
103
102
101
100
99
2016
1.0 USD 6M LIBOR FY15 & FY16
0.8
0.6
0.4
0.2
0.0
2016
6M KIBOR July September December March June

FY16 7.05 6.62 6.51 6.36 6.06
FY15 10.17 10.19 9.63 7.98 7.07
Local Inflation Reduced Labour Force Participation Rate: 32% Unemployment Rate: 6%
Pakistan’s Domesic debt: PKR 13,000 b T Bills Average Rate: 5.9%

Pakistan External debt: PKR 5,000 b

Share Capital Growth
Year No. of Shares Year No. of Shares
FY1993 61,900,000 FY2005 184,393,569
FY1994 61,900,000 FY2006 230,491,961
FY1995 98,829,932 FY2007 253,541,157
FY1996 108,712,925 FY2008 253,541,157
FY1997 132,391,380 FY2009 304,249,388
FY1998 132,391,380 FY2010 365,099,265
FY1999 132,391,380 FY2011 438,119,118
FY2000 152,391,380 FY2012 438,119,118
FY2001 152,391,380 FY2013 438,119,118
FY2002 152,391,380 FY2014 438,119,118
FY2003 167,630,518 FY2015 438,119,118
FY2004 184,393,569 FY2016 438,119,118
Plant Capacity Growth

Year Clinker Production TPD
Incorporated in Lahore under
management control of State FY 1986 2,000
Cement Corporation of Pakistan FY 1994 2200

Limited in 1978 with factory at Dera FY 1998 5,500
Ghazi Khan and started commercial
FY 2005 6700
production in April 1986.
FY 2007 13,400
Acquired by NIshat Group in May 1992 and got listed on stock exchanges.

Name Mrs. Naz Mansha Raza Mansha Khalid Niaz Khalid Qadeer Farid Noor Ali
Khawaja Qureshi Fazal
Designation Chairperson Chief Executive Independent Director Non-Executive Director Marketing

Officer Director & Director in BOD
Education Graduate from Graduate from B.Sc, Fellow of Fellow member of the Bachelor of
Kinnaird College University of Institute of Bankers, Institute of Chartered Commerce, Laws and
Lahore Pennsylvania Pakistan Accountants of Management
Pakistan (FCA)
Experience Years 28 Years 21 Years 43 Years 46 Years 41 Years
Experience Field Business Strategy & Chief Executive Banking Finance, Accounting, Marketing
Development etc. Officer, Business Treasury &
Strategy & Information Systems
Development etc. Development &
Implementation
Directorship in Nishat Paper Chief Nil • Nishat Mills • Nishat Paper

other companies Products Co. Ltd. Executive/Director Limited Products Co. Ltd
• Nishat Paper • Nishat Power Ltd • Nishat
Products Co. Ltd. • Lalpir Power Ltd Automobiles (Pvt)
• Nishat Developers • Nishat Paper Ltd
(Pvt) Ltd. Products Co. Ltd
• Nishat (Gulberg) • Nishat
Hotels and Commodities
Properties Ltd. (Pvt) Ltd
Director
• MCB Islamic Bank
Ltd .
• Adamjee Life
Assurance Co Ltd.
• Sui Northern Gas
Pipe Lines Ltd.
• Nishat Hotels and
Properties Ltd.
• Nishat Dairy (Pvt)
Ltd.
• Nishat Agriculture
Farming (Pvt) Ltd.
• MNET Services
(Pvt) Ltd.
• Euronet Pakistan
(Pvt) Ltd.
• Nishat Farm
Supplies (Pvt) Ltd.
• Nishat (Raiwind)
Hotels and
Properties Ltd.
• Nishat (Aziz
Avenue) Hotels and
Properties Ltd.
Other Served in IT
Committee &
Business Strategy &
Development
Committee and HR&R
Committee in MCB.

Shahzad Ahmad Ms. Nabiha Aftab Ahmad Dr. Arif Bashir Inayat Ullah Niazi Khalid Mehmood
Malik Shahnawaz Khan Chohan
Cheema
Non-Executive Non-Executive Director Finance Director Technical Cheif Financial Officer Company Secretary
Director Director & Operations
Civil Engineer & MBA Chartered Fellow member of the PhD in Chemical Commerce Graduate Commerce Graduate
from LUMS. Accountant Institute of Chartered Engineering & CA Inter
Accountants of
Pakistan (FCA)
25 Years 13 Years Over 50 Years 32 Years 33 Years 34 Years
Financial Financial & Business Accounts, Tax, Audit, Project Planning and Accounts, Tax, Audit, Income Tax,
Management Management Finance & Execution, Operation Finance & Corporate Matters &
Management and Maintenance of Management Secretarial Practices.
Plants
• Nishat Power Ltd • Nishat Mills Chief Executive • Pakgen Power • Security General
Limited Officer Limited Insurance
• Nishat Hospitality • Lalpir Solar Power • Nishat Paper Company Limited
(Pvt) Ltd (Private) Limited Products Company • Nishat Paper
Limited Products Co. Ltd.
Director/CEO • Pakistan Aviators
• Nishat Energy Ltd and Aviation (Pvt)
Ltd.
Director • Nishat Hotels and
• MCB Bank Limited Properties Ltd.
• Nishat (Chunian) • Nishat (Aziz
Limited Avenue) Hotels and
• Nishat Chunian Properties Ltd.
Power Limited • Nishat (Gulberg)
• Nishat Hotels and Hotels and
Properties Ltd Properties Ltd.
• Nishat (Aziz • Nishat (Raiwind)
Avenue) Hotels and Hotels and.
Properties Ltd Properties Ltd.
• Nishat (Gulberg) • Nishat Energy Ltd.
Hotels and • Lalpir Solar Power
Properties Ltd (Pvt) Ltd.
• Nishat (Raiwind) • National Clearing
Hotels and Company of
Properties Ltd Pakistan Limited
• Nishat Paper • LSE Financial
Products Comany Services Limited
Limited.
• MCB Financial
Services Limited
Served as Deputy Served as CEO of Served in Public Sector, Served as Director in Serving as Company
Director in the Security General Ghee, Sugar & Rice Lahore Secretary in various
Pakistan Audit and Insurance Company Sector, Served in Stock Exchange. Nishat Group
Account Service, GOP. Limited. various committees in companies.
MCB. Served in as
Chairman LSE.

Chairperson’s Message
It gives me immense delight on completion of yet
another successful year of the Company. Despite bleak
prevailing environment on international and national
economic front the cement sector of Pakistan came up
with resilience. Construction sector has an intense
relationship with other economic activities.
Governments and people undertake development and
construction work respectively when they got something
besides daily necessities and bread and butter. In this
relationship, after a certain level this indicates growth.
Economic indicators of the homeland are though yet
struggling but I see these in another way and that is
“there is yet to be done more and there is more room
for rapid growth”. The growth in cement sector in such
circumstances showed that had other sectors performed
well it could be far better. In this regard volumetric
growth is very important, without undermining the
importance of the value. The reason being the volumetric
growth means demand for the product and that’s the
baseline.
The Company, your Company, has outshined in capacity

utilization. It holds third largest market share overall, in
local and exports. Brand loyalty is established and
increasing. Company’s returns, this year, are satisfactory
and registered a bright trend.
The Company takes all its decisions with its core values
in place. We believe in Ethics, Professionalism,
Transparency and Compliance. Integrity is integral to us.
We believe in employing best practices. There is zero
tolerance on quality issues. Maximization of
shareholders worth is one of the main objectives.
I am very hopeful that the Company can flourish more

and innovate. I look ahead a buoyant progress and
continuous development.
Mrs. Naz Mansha

Chairperson
Lahore
August 31, 2016

Chief Executive’s Review
World Economy
Global growth in 2015 remained about 2.9~3.1 (range

quoted by various studies). The completed year was
restrained and submissive. From China to Australia, USA
to Europe, Middle East to South East Asia all remain in
fragile demand and passing through a phase of low
interest rates. Syria, Yemen and Iraq crisis and growing
tensions in Middle East are yet unresolved. Last year
many undesired events occurred in this region. Its
conflicts have involved many countries including world
powers.
Europe has gone through a tough year in terms of

politics, economics and terrorism. Brexit, refugee crisis,
terror attacks in Paris and Brussels and ailing economies
all are highlights for last completed fiscal year which
have definite upshots.
Oil prices have really shocked the world from lower side
like they did some years back from the upper side. Crude
Oil touched lowest of about USD 26 but during the fiscal
year achieved an average of about USD 42. Now it is
trending upward. Low oil prices have definitely put the
oil export dependent countries in a trembling state
whilst cocooning the oil importers.
Domestic Economic Developments
Though still struggling, but positive signs ricocheted US
Fed rate. LIBOR was at 30 years low level. Last two fiscal Islamabad claimed that economy had grown at 4.71% in
years trend clearly shows its bottom and rebounding. FY16 but this figure remained in much debate and
Brexit is expected to bring in a tough fight between EU doubts. As per Economic Survey of Pakistan (ESP) 2016,
and UK for trade agreements with rest of the world and agriculture growth was negative 0.2%. This is a unique
between themselves. The expected stretched exit phenomenon at least in last thirteen years record.
process may affect sentiments of stakeholders. Agriculture sector accommodates about 44% of total
labour force.Total cropped area also remained stagnant
Emerging Asia and specifically India are expected to since FY14. Manufacturing and services sectors reported
record good growth and same is expected for South Asia. 5 and 5.7 percent growth respectively.
Sector Approximate Approximate South Asia Growth in FY16

Share in GDP (%) Growth (%) Country %
Agriculture 20 -0.19 India 7.5

Industrial 21 6.80 Sri Lanka 5.0
Manufacturing 14 5.00 Bangladesh 6.6
LSM 11 4.61
Construction 3 13.10 Per capita income increased from USD 1516 to USD 1560.
Services 59 5.71 Tax revenues growth rate was 8.4% as compared to 11%
of last year. Exports decreased by 9.1%. Imports reduced
by 5.2%. Workers’ remittances grew by 5.7%. Inflation

reduced from 4.5% to about 2.8%. As per last reported [assessed as "Moderate"]; Institutional Strength ["Very
figures debt and liabilities of government reached about Low "]; Fiscal Strength ["Very Low (-)"]; and Susceptibility
73% of GDP crossing PKR 21,000 billion. to Event Risk ["High"].”
This year government published an annexure to ESP Recently JP Morgan announced inclusion of Sukuk in its
explaining the impacts of war in Afghanistan on Pakistan emerging market indices in which it will include a
which states that Pakistan has suffered about PKR 9,869 Pakistan’s sukuk of USD 1 billion.
billion over a period of 14 years from 2001 due to war in
Afghanistan and terrorist attacks. Despite issues of running Economic growth during the last completed fiscal year is
war against terrorism Pakistan economy stood fast. not though impressive but better. Most benefits which
this government reaped are procured through
CPEC is the one thing Pakistan seems to completely international oil & commodity prices decline and
relying on for its future for politico-economics matters. increased workers’ remittances. This international low
About 2400 km long CPEC road is expected to link price phase could have been better reaped however.
Gawadar and Kashghar and Karachi Lahore motorway. It
is expected to boast infrastructure including of roads, Domestic Cement Industry
railways, oil and gas pipelines. It includes heavy
expenditure on energy sector as well. It is $45bn of In the economic survey of Pakistan for 2016 government
investment of which $33bn is in energy projects. Risks to marked cement sector as one of those contributed to
it are mostly of domestic origin. Yet a well-thought growth in LSM. Construction sector reported growth of
strategic configuration and consolidation with its fiscal 13.10%.
designs & impacts not made public by the government.
Cement consumption is a reflection of the demand for
Electricity situation improved. But still energy crisis is housing, infrastructure and is related to a country's level
there and power plants are underutilized. of urbanization. Pakistan is sixth most populace country
in the world. Its average density is about 222/km2.
During the year voluntary tax scheme met with failure for Pakistan per capita cement consumption is about 169 kg
registering the traders and resolution of withholding tax which is far less than world average of 400 kg.
issues on bank withdrawals. Tax laws are being made
more and more complex. All corporates have been During the year local sales surge by 17% (FY15: 8%) while
burdened with acting as a withholding agent on behalf of exports declined by about 18% (FY15: 12%). This puts the
government without any compensation. total growth of cement industry at about 10% (FY15: 3%).
About more than 65% surge is reported in housing loans Industry total overall utilization recorded at about 85%
on YOY basis. However, the number of borrowers fell by (FY15:78%). Of this 72% (FY15:62%) is utilized in local
more than 6%. These and other facts show that more market and 13% (FY15:16%) in exports.
financing is routed to high end customers or areas.
There is an expected industry expansions of 20 million
Overall advances to private sector increased by about tons per annum. Some have announced while few more
11% as compared to last year. Whereas decrease in are expected. These expansions are expected to come on
benchmark lending rates is about 14% within FY16 and line between FY17 and FY20. This additional capacity will
for two years (FY15 & FY16) the cumulative decline is take the industry rated capacity of cement production
about 40%. Therefore, low interest rates even, could not from 45 million tons p.a. to 65 million tons p.a.
attract the desired credit off-take which shows low
economic activity. The Company’s Performance
Pakistan showed its intentions of now going alone This is actually a marvelous year for the Company. Prices
without any further assistance from IMF. Privatisation of though reduced but production and dispatch
some entities is on cards. Low inflation rates lead to outnumbered some previous years. We produced 13%
cutting discount rates. more clinker than last year, operated at 104% for cement
production and sold 5% more than our capacity. This
During FY16 Moody's Investors Service says Pakistan's B3 shows that the Company is far better in utilization than
issuer rating balances strengthening growth and Industry.
progress on structural reforms against a relatively high
government debt burden and political risks. It looks at The Company earned PKR 20.06 (FY15: 17.40) per share,
the country's credit profile in terms of Economic Strength double than the face value of each share. This 15%

increase is mainly contributed by PKR 68/share from sales We are in an interweaved world. Impacts of others affect
netted off by PKR 48/share COGS and tax. All other costs us and vice versa. Euro area, UK, USA are very much
are covered by other income. linked to Pakistan export sector and agriculture sector
employs the most of Pakistan’s population. Improvement
The Company GP margin for completed year is 42.65% in these regions and sectors would bring more activity to
(FY15: 36.22%) while EBITDA to Sales is 48.76% (FY15: construction area.
44.86%). The Company gives a return of about 19% on
pre-tax basis with 79% equity financed assets. Proposed expansions by cement players may not disturb
largely, the industry as if industry utilization is projected
Prospects & Perspective to increase by 10%p.a. on YOY basis then it is expected
that it will easily absorb market demand.
For upcoming year global economy is expected to be
slightly better with gradual pace. Oil price rise is Coal prices are expected to remain in a range bound
expected but it would not go beyond USD70. Rising oil position. Benchmark lending rates in the country may
prices will help USD in gaining strength against other not change considerably. Banks liquidity position may
currencies. Further, due to Brexit and prolonged exit spill. These may cause the lending rates subdued. The
process and the uncertainty it brings, USD may get lift. Company’s lending level, of long term loans, could grow
These inclusive factors may lead to postponement of Fed in FY17 along with the Hub project progress. The
rate hike but sentiments show that rate would go upward Company has already negotiated fine deals with lenders
sooner or later. for this project.
Recently government of Pakistan introduced withholding As far as EUR is concerned, it may remain in pressure.
tax on real estate transactions. Law for prohibiting While USD may get appreciation of about 5% against PKR
holding properties in others names, is also on tables. for the year. But the markets may move in most
These laws are not expected to cast any material impact unpredictable and unusually way. Exchange rate
on construction sector and specifically cement. movements are crucial for upcoming year as most of the
project shipments, denominated in Euro, are expected to
If government simplifies the tax laws and tightens its realize in the forthcoming year.
grip, that would be more advantageous for revenue
increase and expansion of base. Inflation level in the country is expected to not act
ruthlessly but will increase in modest way in response to
Given the facts I discussed in the economy and industry oil prices upward trend. Therefore, it could be expected
sections, I am of the view that Pakistan’s economy can that margins may dwindle due to oil, coal and inflation
perform far better and it has an immense capability rise but increase in sales in quantitative terms would
provided it is organized with sincerity, consistent mitigate that effect.
policies and precision.
The Hub project would be a huge addition to our fleet
Agriculture sector has a remarkable impact on Pakistan. with copious benefits to all stakeholders.
Provided this year had it performed well it would have
given more positivity to construction and cement. I am profoundly thankful to my team and all stakeholders
Urbanisation is at high pace in Pakistan. Though it should for their endeavors and trust.
be properly managed and planned. A huge cushion is
available in per capita cement consumption. Huge
infrastructure is expected to be built in coming years
owing to CPEC. All these factors lead to one point that
cement demand is going to increase further. Exports
prices are expected to remain in tight grip.
Raza Mansha
Government has announced some measures for uplift of Chief Executive Officer
agriculture sector which if successful will give boost to
this sector and resultantly also bring in the demand for Lahore
cement. Housing mortgage loans market is still not fully August 31, 2016
developed. If lending institutions open and widen the
windows for secure housing loans it would be a plus Note: Global economic growth rates may vary from those with the reader as
factor for cement demand. various global organizations of the world estimated it differently.

Directors’ Report to the Shareholders
The directors of your company are pleased to present Kiln operational days (for three kilns) were around 875
you the performance numbers of your company for the (FY15: 750). Clinker production achieved level of 98%
year ended on June 30, 2016: (FY15: 87%) while cement production touched the level of
105% (FY15: 91%).
PKR in thousands
Sales
FY16 FY15
Sales 29,703,758 26,104,611 Sales revenue increased by about 14% with a

Cost of sales (17,035,566) (16,649,411) corresponding increase of just about 2% in COGS, thereby
Gross profit 12,668,192 9,455,200 giving a surge of about 34% in gross margin.
Administrative expenses (572,780) (472,326)
Local sales surge by 16% in volumes and by 15% in value
Selling and distribution expenses (949,628) (746,723) as compared to last financial year. This indicates
Other operating expenses (913,642) (727,805) reduction in price but the impact of which is downplayed
Other income 2,379,053 2,320,335 by quantity sold. Reduction in price is due to a passed on
Profit from operations 12,611,195 9,828,681 effect of cost saving to customers.
Finance cost (130,451) (281,504)
Cost of Sales
Profit before taxation 12,480,744 9,547,177
Taxation (3,691,072) (1,922,497) Cost of sales increased by 2% from last year. The main
Profit after taxation 8,789,672 7,624,680 reason is 105% cement production and comparatively
high number of plant operation days which undoubtedly
shined the economies of scale impact. Among cost
Earning Per Share of your company for FY16 is PKR 20.06 reductions is sunken coal prices and nether inflation
as compared to PKR 17.40 for FY15. which clutched the COGS and contained it. It also
includes less dependency on WAPDA due to cheap
Operational numbers of your company for the year are as furnace oil generated own power.
under:
Figures in MT Others
FY16 FY15 Dividend income increased by 10% from PKR1,703 million
Production: to PKR 1,869 million. There is a substantial increase in
Clinker 3,964,998 3,507,230 income from bank deposits due to better cash flows.
Finance cost decrease is mainly due to less utilization of
Cement 4,426,631 3,849,672
banking facilities and reduced lending rates in the
Sales:
market. Exchange losses also showed insignificant
Total 4,422,691 3,858,070 change due to controlled FX parity. In the selling
Local 3,710,393 3,196,103 expenses, freight increase is due to more quantity sold in
Exports 712,298 661,967 exports as compared to last year.
Taxation
The Company’s clinker production increased by 13%
(FY15:2%). In volumes total sales increased by 14.6% Taxation expense rocketed by 92%, bringing down the
(FY15:-3%) with local sales increase of about 16% PBT by about PKR 3.7 billion. Current tax provision is
(FY15:8%) and exports increase of about 7.6% (FY15:-35%). calculated under normal tax regime. It includes super tax
and taxes falling under final tax regime. Tax losses of
The Company utilization for FY16 remained at about subsidiaries which are taken by the Company have also
105% (FY15:91%) against industrial utilization of 85% been accounted for in calculating the tax for the year.
(FY15:78%). Local sales utilization of the Company for The Company does not have any further tax losses to be
FY16 was recorded at 88% (FY15: 75%) and for exports it accounted for.
was 17% (FY15: 15.68%).

PBT is reported as 42% of the sales as compared to 37% of for setting up of a brown field project with a capacity of
FY15. Due to taxation impact this PBT bring down PAT at upto 2,200,000 tons per annum clinker at Dera Ghazi
29.59% to net sales which is almost same as FY15 of Khan site.
29.21% to respective sales.
Appropriation
Long Term Loans
The Board keeping in view the profitability and capacity
The new loans are for captive coal power project. The expansion requirements, decided to recommend
loans are at competitive price. dividend of PKR 6 per share for FY16.
Bank Balance Auditors
The rise in bank balance is due to better cash flows which The present auditors, M/S A.F. Ferguson & Co. Chartered
are saved by the Company for Hub project. These are Accountants retire and offer themselves for
placed at attractive rates with various banks. reappointment. The Board has recommended the
appointment of M/S A.F. Ferguson & Co. Chartered
Investments Accountants as auditors with rotation of engagement
partner for the ensuing year as suggested by the Audit
During the year fair value gain declined due to stock Committee subject to approval of the members in the
market change. The Company purchased shares of forthcoming Annual General Meeting.
Adamjee Insurance Co. Ltd. during the year. During this
year the Company increased its stake in Nishat Hotels & Information U/s 218 of the Companies
Properties Ltd. to PKR 1 billion. Ordinance, 1984
Future Prospects In pursuance of Section 218 of the Companies Ordinance,

1984, the members of D. G. Khan Cement Company
We foresee increase in local demand for cement. Exports Limited (“the Company”) are hereby informed that the
market may decline but overall sales expected to remain Board of Directors of the Company in their meeting held
upward. on August 31, 2016 has approved to increase the
monthly remuneration of Mr. Raza Mansha, Chief
Oil prices would move upward. Coal prices will also move Executive Officer of the Company to Rs. 2,500,000 with
towards hike but are expected not to give surprises. effect from July 01, 2016 and bonus as per service rules
KIBOR position will not change immensely. PKR is of the Company. There is no change in other terms and
expected to see depreciation against USD. Company’s conditions of his appointment.
balance sheet will put on new debts for Hub plant.
Compliance with Code of Corporate
Captive Coal Power plant of 30 MW started operations in Governance
June 2016.
The requirements of the Code of Corporate Governance
For FY17 the applicable tax rate for the Company is 31%. set out by Pakistan Stock Exchange in its Listing
For FY17 government made few important changes in Regulations, relevant for the year ended June 30, 2016
taxation which affect the Company as well. First is the have been adopted by the company and have been fully
change in Federal Excise Duty which is changed from 5% complied with. A Statement to this effect is annexed to
of sales value to PKR1000/ton. The other one is the Report.
restriction on surrendering of subsidiary losses upto the
shareholding extent of the holding enterprise. Corporate and Financial Reporting Framework
We expect that in forthcoming year the trend of The Directors of your company states that:
profitability will remain almost same.
(a) The financial statements, prepared by the
Hub cement plant, of 9000tpd, will be a state of the art management of the company, present its state of
project. All LCs established. Civil work is in full swing at affairs fairly, the result of its operations, cash flows
site. Shipments started to arrive. The project is in line and changes in equity;
with time schedule.
(b) Proper books of account of the company have been
Board of Directors has decided to initiate the process maintained;

(c) Appropriate accounting policies have been (q) Cost of investments of the Provident Fund is PKR
consistently applied in preparation of financial 958.338 million (2015: 878.139 million) and of
statements and accounting estimates are based on Gratuity is PKR 312.5 million (2015: 267 million).
reasonable and prudent judgment;
We are cordially thankful to our all customers, dealers,
(d) The financial statements are prepared in conformity suppliers, lenders and other stakeholders. We appreciate
with the Companies Ordinance 1984 and all our employees and admire their untiring efforts for
International Financial Reporting Standards, as betterment of company.
applicable in Pakistan, have been followed in
preparation of financial statements and any For and on behalf of the Board
departures therefrom has been adequately disclosed
and explained;
(e) The system of internal control is sound in design and

has been effectively implemented and monitored;
(f) There are no significant doubts upon the company’s Raza Mansha
ability to continue as a going concern; Chief Executive Officer
(g) There has been no material departure from the best Lahore
practices of the Corporate Governance as detailed in August 31, 2016
the Listing regulations.
(h) Significant deviations from last year in operating

results of the company are highlighted and reasoned
in other parts of Directors report.
(i) Key operating and financial data of last six years is

annexed in this annual report;
(j) Where any statutory payment on account of taxes,

duties, levies and charges is outstanding, the amount
together with a brief description and reasons for the
same is disclosed in the financial statements;
(k) Significant plans and decisions, such as corporate

restructuring, business expansion and
discontinuance of operations, has been outlined
along with future prospects, risks and uncertainties
surrounding the company;
(l) The number of board and committees’ meetings held

during the year and attendance by each director is
annexed in this annual report;
m) Status of directors’ training program is annexed in

this annual report;
(n) The pattern of shareholding is annexed in this annual

report.
(o) The company is current in its all financial obligations.
(p) All trades in the shares of the company, carried out

by its directors, executives and their spouses and
minor children is annexed in this annual report.

26,104,611 29,703,758
(16,649,411) (17,035,566)
9,455,200 12,668,192
(472,326) (572,780)
(746,723) (949,628)
(727,805) (913,642)
2,320,335 2,379,053
9,828,681 12,611,195
(281,504) (130,451)
9,547,177 12,480,744
(1,922,497) (3,691,072)
7,624,680 8,789,672
3,507,230 3,964,998
3,849,672 4,426,631
3,858,070 4,422,691
3,196,103 3,710,393
661,967 712,298

Six Years at a Glance
FY16 FY15 FY14 FY13 FY12 FY11

MT
Production
Clinker 3,964,998 3,507,230 3,585,103 3,924,090 3,773,948 3,738,404

Cement 4,426,631 3,849,672 3,988,512 4,031,801 4,004,458 4,176,733
Cement sales: 4,422,691 3,858,070 3,976,272 4,008,276 4,018,956 4,165,635

Local 3,710,393 3,196,103 2,954,943 2,887,812 2,765,534 2,860,795
Export 712,298 661,967 1,021,329 1,120,464 1,253,422 1,304,840
Clinker Sale:
Local - - - - - -
Export - - - 6,000 5,945 98,521
PKR in Thousands
Equity 65,783,429 62,296,071 61,516,535 47,956,798 32,899,525 30,217,283

Balance Sheet Footing 83,418,265 74,391,443 73,282,069 63,526,719 50,685,198 49,703,229
Fair Value Reserves 24,256,385 27,405,272 32,722,894 23,802,704 13,580,112 14,974,881
Fixed Assets 39,576,830 29,958,970 29,832,625 28,740,974 27,185,726 25,985,385
Capitalisation 5,730,155 925,479 3,465,403 3,750,420 2,039,499 764,442
Long Term Loans 3,538,251 1,348,522 2,111,513 4,327,841 6,785,851 6,875,127
Short Term Loans 3,451,352 1,826,072 2,551,676 5,420,290 6,733,467 8,691,982
Current Assets 30,835,521 31,426,342 32,068,626 25,789,989 18,265,583 18,325,209
Current Liabilities 10,056,634 6,583,476 5,940,563 9,307,593 11,205,943 12,687,375
Gross Sales 37,045,715 32,468,621 32,344,996 29,599,883 27,404,611 23,473,534
Net Sales 29,703,758 26,104,611 26,542,509 24,915,924 22,949,853 18,577,198
Cost of Sales 17,035,566 16,649,411 17,284,941 15,589,917 15,443,098 14,192,229
GP 12,668,192 9,455,200 9,257,568 9,326,007 7,506,755 4,384,969
Administrative Expenses 572,780 472,326 480,468 405,579 267,705 211,362
Selling Expenses 949,628 746,723 1,445,225 1,751,174 2,202,901 2,470,599
Other Expenses 913,642 727,805 518,745 544,806 500,835 37,964
Financial Expenses 130,451 281,504 608,859 994,879 1,670,784 2,079,146
Other Income 2,379,053 2,320,335 1,647,126 1,466,289 1,187,936 1,134,130
Taxation 3,691,072 1,922,497 1,885,899 1,593,689 -55,652 430,231
PAT 8,789,672 7,624,680 5,965,498 5,502,169 4,108,118 170,961
Profit from Operations 12,611,195 9,828,681 6,813,130 6,624,448 4,535,314 1,665,044
Dividend Income 1,869,917 1,703,466 1,434,179 1,295,633 1,058,707 951,354
Depreciation 1,871,866 1,880,603 1,790,002 1,577,755 1,447,712 1,430,410

Profitability Indicators
EBITDA (PKR in thousands) 14,483,061 11,709,284 10,250,258 9,668,492 7,170,962 4,110,748

EBITDA Less Other Income (PKR in thousands) 12,104,008 9,388,949 8,603,132 8,202,203 5,983,026 2,976,618
GP to Sales (%) 42.65 36.22 34.88 37.43 32.71 23.60
PBT to Sales (%) 42.02 36.57 29.58 28.48 17.66 3.24
PAT to Sales (%) 29.59 29.21 22.48 22.08 17.90 0.92
EBITDA to Sales (%) 48.76 44.86 38.62 38.80 31.25 22.13
ROE (wrt average equity) (%) 13.73 12.32 10.90 13.61 13.02 0.60
ROA (wrt to average total assets) (%) 11.14 10.33 8.72 9.64 8.18 0.35
ROE (without fair value reserves) (%) 23.00 23.95 22.53 25.31 23.77 1.19
ROE (PAT/Equity) (%) 13.36 12.24 9.70 11.47 12.49 0.57
ROE (PBT/Equity) (%) 18.97 15.33 12.76 14.80 12.32 1.99
Liquidity Indicators
Operating Cashflows (PKR in thousands) 11,119,972 9,954,056 8,724,257 6,685,968 4,011,634 370,314
Working Capital (PKR in thousands) 20,778,887 24,842,866 26,128,063 16,482,396 7,059,640 5,637,834
Current Ratio (times) 3.07 4.77 5.40 2.77 1.63 1.44
Activity Indicators
Fixed Assets Turnover 85.43 87.32 90.63 89.10 86.32 72.44
Investment/Market Indicators
Ordinary Shares (No.) 438,119,118 438,119,118 438,119,118 438,119,118 438,119,118 438,119,118

Dividend/Share (PKR) 6.00 5.00 3.50 3.00 1.50 -
Stock Price/Share on year end (PKR) 190.49 142.77 87.96 83.69 39.38 22.99
EPS 20.06 17.40 13.62 12.56 9.38 0.45
PE Ratio 9.49 8.21 6.46 6.66 4.20 51.09
Divident Payout Ratio (%) 29.91 28.74 25.70 23.89 15.99 -
Dividend Yield Ratio (wrt year end price) (%) 3.15 3.50 3.98 3.58 3.81 -
Break Up Value/Share (PKR) 150.15 142.19 140.41 109.46 75.09 68.97
Capital Structure Indicators
Debt to Equity (%) 10.63 5.10 7.58 20.33 41.09 51.52

Equity to Total Assets (%) 78.86 83.74 83.94 75.49 64.91 60.80
Interest Coverage (wrt EBITDA) (%) 111.02 41.60 16.84 9.72 4.29 1.98
DSCR with other income 18.94 10.92 5.03 3.07 1.96 0.98
DSCR without other income 15.83 8.76 4.22 2.60 1.63 0.71
Operational (Volumetric) Indicators
Clinker Production (% change wrt last year) 13.05 -2.17 -8.64 3.98 0.95 -20.19
Cement Production (% change wrt last year) 14.99 -3.48 -1.07 0.68 -4.12 -14.91
Total Sales (% change wrt last year) 14.63 -2.97 -0.80 -0.27 -3.52 -15.14
Local Sales (% change wrt last year) 16.09 8.16 2.32 4.42 -3.33 -30.29
Exports Sales (% change wrt last year) 7.60 -35.19 -8.85 -10.61 -3.94 62.07
Cement Production Utilisation (%) 104.87 91.20 94.49 95.52 94.87 98.95
Total Sales Utilisation (%) 104.78 91.40 94.20 94.96 95.21 98.69
Local Sales Utilisation (%) 87.90 75.72 70.01 68.42 65.52 67.78
Exports Sales Utilisation (%) 16.88 15.68 24.20 26.54 29.69 30.91
Sales Mix: Local to Total Sales (%) 83.89 82.84 74.31 72.05 68.81 68.68
Sales Mix: Exports to Total Sales (%) 16.11 17.16 25.69 27.95 31.19 31.32

Vertical Analysis of Balance Sheet (%)
(Re-stated) (Re-stated)
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Issued, subscribed and paid up capital 5.25 5.89 5.98 6.90 8.64 8.82
Reserves 41.04 50.26 58.28 53.18 46.49 50.24
Accumulated profit 32.56 27.59 19.69 15.41 9.78 1.77
Total Equity 78.86 83.74 83.94 75.49 64.91 60.83
NON-CURRENT LIABILITIES
Long term finances - secured 2.88 0.96 1.80 4.56 9.13 9.83
Long term deposits 0.09 0.10 0.09 0.10 0.13 0.14
Retirement and other benefits 0.13 0.18 0.27 0.24 0.46 0.28
Deferred taxation 5.98 6.17 5.78 4.95 3.25 3.44
Total Non-Current Liabilities 9.08 7.41 7.95 9.86 12.98 13.69
CURRENT LIABILITIES
Trade and other payables 6.43 5.44 3.38 3.60 4.16 3.31
Accrued finance cost 0.06 0.04 0.08 0.20 0.32 0.57
Short term borrowings - secured 4.14 2.45 3.48 8.53 13.28 17.50
Current portion of non-current liabilities 1.38 0.87 1.10 2.27 4.27 4.03
Derivative financial instrument - - 0.02 - - -
Provision for taxation 0.04 0.05 0.05 0.06 0.07 0.07
Total Current Liabilities 12.06 8.85 8.11 14.65 22.11 25.48
Total Equity & Liabilities 100.00 100.00 100.00 100.00 100.00 100.00
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 47.44 40.27 40.71 45.55 53.98 52.31
Intangible assets - 0.02 0.05 0.09 0.15 -
Investments 15.52 17.37 15.36 13.62 9.60 10.59
Long term loans and deposits 0.07 0.09 0.12 0.15 0.24 0.27
Total Non-Current Assets 63.04 57.76 56.24 59.40 63.96 63.17
CURRENT ASSETS
Stores, spare parts and loose tools 4.80 4.89 5.03 6.16 7.82 7.13
Stock-in-trade 0.92 1.60 1.84 2.62 1.88 1.74
Trade debts 0.24 0.21 0.23 0.43 0.63 0.92
Investments 21.36 33.41 33.30 28.12 21.95 24.41
Advances, deposits, prepayments & other receivables 0.70 0.87 1.04 0.96 1.23 2.29
Income tax receivable 0.52 0.91 0.52 1.57 1.69 -
Derivative financial instrument 0.02 0.01 - 0.00 - -
Cash and bank balances 8.40 0.35 1.79 0.74 0.85 0.34
Total Current Assets 36.96 42.24 43.76 40.60 36.04 36.83
Total Assets 100.00 100.00 100.00 100.00 100.00 100.00

Vertical Analysis of Profit and Loss Account (%)
Sales 100.00 100.00 100.00 100.00 100.00 100.00
Cost of sales 57.35 63.78 65.12 62.57 67.29 76.40
Gross profit 42.65 36.22 34.88 37.43 32.71 23.60
Administrative expenses 1.93 1.81 1.81 1.63 1.17 1.14

Selling and distribution expenses 3.20 2.86 5.44 7.03 9.60 13.30
Other operating expenses 3.08 2.79 1.95 2.19 2.18 0.20
Other income 8.01 8.89 6.21 5.88 5.18 5.96
Impairment on investments - - - - - 0.64
Profit from operations 42.46 37.65 31.87 32.47 24.94 14.28
Finance cost 0.44 1.08 2.29 3.99 7.28 11.04
Profit before taxation 42.02 36.57 29.58 28.48 17.66 3.24
Taxation 12.43 7.36 7.11 6.40 0.24 2.32
Profit after taxation 29.59 29.21 22.48 22.08 17.90 0.92

Horizontal Analysis of Balance Sheet (YoY) (%)
(Re-stated) (Re-stated)
Issued, subscribed and paid up capital - - - - - 20.00

Reserves -8.42 -12.45 26.40 43.38 -5.59 12.62
Accumulated profit 32.33 42.25 47.39 97.56 463.98 24.16
Total equity 5.60 1.27 28.27 45.77 8.88 13.94
Long term finances - secured 236.01 -45.93 -54.44 -37.37 -5.15 -4.11
Long term deposits 8.07 4.40 5.49 -4.35 -3.58 -12.63
Retirement and other benefits -19.08 -31.27 30.82 -34.32 67.35 33.82
Deferred taxation 8.74 8.34 34.66 90.67 -3.43 16.50
Total Non-Current Liabilities 37.49 -5.37 -6.98 -4.82 -3.22 0.86
CURRENT LIABILITIES
Trade and other payables 32.57 63.47 8.31 8.41 28.27 -2.13
Accrued finance cost 93.86 -54.05 -52.78 -22.77 -42.73 -17.87
Short term borrowings - secured 89.00 -28.44 -52.92 -19.50 -22.53 -9.32
Current portion of non-current liabilities 77.90 -19.45 -44.23 -33.50 8.19 -6.44
Derivative financial instrument - - 100.00 - - -
Provision for taxation - - - - - -
Total Current Liabilities 52.76 10.82 -36.18 -16.94 -11.47 -8.19
Total Equity & Liabilities 12.13 1.51 15.36 25.34 2.04 5.58
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 32.10 0.42 3.10 5.75 5.29 0.82
Intangible assets -100.00 -50.00 -33.33 -25.00 100.00 -
Investments 0.23 14.74 30.14 77.82 -7.50 11.98
Long term loans and deposits -16.63 -18.76 -10.46 -20.61 -9.67 -16.04
Total Non-Current Assets 22.38 4.25 9.21 16.40 3.32 2.45
CURRENT ASSETS
Stores, spare parts and loose tools 10.19 -1.44 -5.73 -1.25 11.84 17.41
Stock-in-trade -35.49 -11.89 -18.83 74.07 10.73 -16.85
Trade debts 28.47 -7.03 -38.30 -13.97 -30.77 51.11
Investments -28.31 1.85 36.63 60.55 -8.25 12.90
Advances, deposits, prepayments
and other receivables -9.81 -15.20 24.90 -1.49 -45.36 4.54
Income tax receivable -35.72 75.47 -61.47 16.55 100.00 -
Derivative financial instrument 100.00 100.00 -100.00 100.00 - -
Cash and bank balances 2,619.91 -80.31 179.18 9.44 155.57 -27.36
Total Current Assets -1.88 -2.00 24.35 41.19 -0.16 11.44
Total Assets 12.13 1.51 15.36 25.34 2.04 5.58

Horizontal Analysis of Profit & Loss Account (YoY) (%)
Sales 13.79 -1.65 6.53 8.57 23.54 14.14
Cost of sales 2.32 -3.68 10.87 0.95 8.81 4.59
Gross profit 33.98 2.13 -0.73 24.23 71.19 62.08
Administrative expenses 21.27 -1.69 18.46 51.50 26.66 22.57
Selling and distribution expenses 27.17 -48.33 -17.47 -20.51 -10.84 148.45
Other operating expenses 25.53 40.30 -4.78 8.78 1,219.24 -79.91
Other income 2.53 40.87 12.33 23.43 4.74 24.40
Profit from operations 28.31 16.17 4.57 41.37 113.53 18.54
Finance cost -53.66 -53.77 -38.80 -40.45 -19.64 9.27
Profit before taxation 30.73 21.60 10.65 75.10 574.07 67.74
Taxation 91.99 1.94 18.34 2,963.67 -112.94 243.14
Profit after taxation 15.28 27.81 8.42 33.93 2,302.96 -26.63

Graphical Analysis
Bifurcation of Sales (in %)
FY11
FY12
FY13
FY14
FY15
FY16
- 20.00 40.00 60.00 80.00 100.00 120.00
Cost of sales Administrative expenses
Selling and distribution expenses Other operating expenses
Finance cost Taxation

Profit after taxation
* Calculated wrt to Net Sales without other income
Other income % to Sales Other Income to PAT (%)
30.43
8.89
8.01
28.92
6.21 5.88
5.18 27.61
27.07 26.65
FY16 FY15 FY14 FY13 FY12


40,000,000
Clinker Production
35,000,000
4,000,000
30,000,000
3,900,000
3,800,000 25,000,000
3,700,000 Gross Sales
20,000,000
3,600,000 Net Sales
3,500,000 15,000,000
Other Income
3,400,000 10,000,000 EBITDA
3,300,000
5,000,000
3,200,000
FY16 FY15 FY14 FY13 FY12 FY11 0
In MT FY16 FY15 FY14 FY13 FY12 FY11 PKR in ‘000
Cement Sales 60.00
4,500,000 50.00
4,400,000
4,300,000 40.00
4,200,000 GP to Sales (%)
4,100,000 30.00 PBT to Sales (%)
4,000,000
PAT to Sales (%)
3,900,000
20.00
3,800,000 EBITDA to Sales (%)
3,700,000
10.00
3,600,000
3,500,000
-
In MT
90,000,000
Sales Mix (% wrt volumes)
80,000,000
100%
90% 70,000,000
80%
60,000,000
70%
60% Export 50,000,000
50% 40,000,000
Local Equity
40%
30,000,000 Balance Sheet Footing
30%
20% 20,000,000
10%
10,000,000
0%
FY16 FY15 FY14 FY13 FY12 FY11 0
FY16 FY15 FY14 FY13 FY12 FY11 PKR in ‘000
10,000 Equity to Total Assets (%)

9,000
8,000 90.00
7,000 80.00
6,000 70.00
Average Exports 60.00
5,000
Price/t (Gross)
4,000 50.00
3,000 40.00
Average Local
2,000 Price/t (Gross) 30.00
1,000 20.00
- 10.00
-

Break Up Value/Share (PKR) Debt to Equity (%)
160.00 60.00
140.00
50.00
120.00
100.00 40.00
80.00 30.00
60.00
20.00
40.00
20.00 10.00
- -
FY16 FY15 FY14 FY13 FY12 FY11 FY16 FY15 FY14 FY13 FY12 FY11
20.00 Current Ratio (times)

18.00
6.00
16.00
14.00 5.00
12.00
4.00
10.00
8.00 3.00
6.00
4.00 2.00
2.00
1.00
-
-
ROE (PAT/Equity) (%) ROE (PBT/Equity) (%)
COGS
Others 7%
Raw and packing
materials 14%
Depreciation 10%
Salaries, wages and

Stores and spares
other benefits 10%
consumed 9%
Electricity and gas 12%
Furnace oil and coal 38%

Commentary on Trends and Ratios
Increase in Production 13% with 105% of cement production. Sales to rated capacity commonly referred to as
utilization was also 105%. 84% quantity sold in Pakistan while rest is exported. Sales mix has changed
considerably over a period of 6 years with exports dropping to 16% from 30%.
GP margins also changed from 23% to 42% within these 6 years. Strong prices within domestic market and
compressed prices in exports market lead to sales mix change and GP improvement. During these years
company invested heavily in cost reduction capitalizations including RDF and waste heat recovery plants.
In FY16 inflation diminished and commodity prices depressed which resultantly amplified the GP. PAT was 18%
in FY12 which remained at 22% for next couple of years and in FY15 & FY16 it was at about 29%. Among other
factors it increased due to reduction in finance cost due to lowered lending and dropped lending rates. For
FY15 & FY16 reason for almost same PAT despite increase in GP ratio is the taxation expense which increased
by 92% as compared to FY15.
Company’s EBITDA is now at 4 times of what it was 6 years back. Return on Equity is 13%. In ROE the Company
is almost consistent in last six years.
Share price increased from PKR23/share to PKR190/share; about a gain of PKR167/share which is a jump of
about 8 times. Per share earnings increased PKR0.45 to PKR20.06. At the close of FY16 market is giving a
multiple of about 9.5 to DGKC.
Total debt is just 10% of total equity which is about 51% six years back. The Company’s total assets are backed
by 79% of equity which includes share capital, capital reserves, fair value reserves, and accumulated profit.

Progress through Quarters
FY15 Q1 Q2 Q3 Q4 FY16
PKR in Thousands
Sales-Net 26,104,611 6,244,161 7,391,181 7,682,801 8,385,615 29,703,758
Cost of Sales 16,649,411 3,865,068 4,283,196 4,274,902 4,612,400 17,035,566
Gross Profit 9,455,200 2,379,093 3,107,985 3,407,899 3,773,215 12,668,192
Administrative Expenses 472,326 108,861 133,390 117,340 213,189 572,780
Selling & Distrubtion Expenses 746,723 207,190 178,807 236,613 327,018 949,628
Other Operating Expenses 727,805 240,249 214,358 235,802 223,233 913,642
Other Income 2,320,335 480,423 756,791 567,280 574,559 2,379,053
Operational Profit 9,828,681 2,303,216 3,338,221 3,385,424 3,584,334 12,611,195
Finance Cost 281,504 29,625 32,116 36,915 31,795 130,451
Profit Before Tax 9,547,177 2,273,591 3,306,105 3,348,509 3,552,539 12,480,744
Taxation 1,922,497 551,748 947,950 1,050,000 1,141,374 3,691,072
Profit After Tax 7,624,680 1,721,843 2,358,155 2,298,509 2,411,165 8,789,672
Cash Flows from Operating Activities 9,954,056 1,602,254 4,944,390 7,732,229 -2,927,646 11,351,227
Cash Flows from Investing Activities -7,837,863 3,290,922 1,337,088 419,358 -11,185,986 -6,138,618
Cash Flows from Financing Activities -2,385,043 1,760,000 857,508 304,187 -2,957,571 -35,876
Balance Sheet Footing 74,391,443 75,993,958 77,668,832 78,024,707 83,418,265 83,418,265
Equity 62,296,071 61,621,125 60,414,585 61,574,774 65,783,429 65,783,429
Non Current Liabilities 5,511,896 7,362,372 7,971,879 7,870,381 7,578,202 7,578,202
Current Liabilities 6,583,476 7,010,461 9,282,368 8,579,552 10,056,634 10,056,634
Non Current Assets 42,965,101 43,563,032 45,254,507 46,126,337 52,582,744 52,582,744
Current Assets 31,426,342 32,430,926 32,414,325 31,898,370 30,835,521 30,835,521
MT
Clinker Production 3,507,230 848,954 974,253 1,022,460 1,119,331 3,964,998
Cement Production 3,849,672 917,523 1,094,181 1,140,742 1,274,185 4,426,631
Total Sales 3,858,070 919,694 1,088,435 1,146,880 1,267,682 4,422,691
Local Sales 3,196,103 758,927 939,217 966,430 1,045,819 3,710,393
Exports Sales 661,967 160,767 149,218 180,450 221,863 712,298
EPS (PKR) 17.40 3.93 5.38 5.25 5.50 20.06

9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
-
et fit m e fit a x ax
le s-N Pro Inco l Pro r eT e rT
Sa s s r a fo ft
Gro the ion Be it A
O rat fit Pro
f
Op
e Pro
Q1 Q2 Q3 Q4
PKR in ‘000
1,400,000 90,000,000
1,200,000 80,000,000
EPS (PKR)
70,000,000
1,000,000
60,000,000 5.38 5.50
5.25
800,000
50,000,000
600,000 3.93
40,000,000
400,000 30,000,000
20,000,000
200,000
10,000,000
-
Q1 Q2 Q3 Q4 -
Q1 Q2 Q3 Q4
Total Sales Cement Production Q1 Q2 Q3 Q4
Equity Balance Sheet Footing
In MT PKR in ‘000

Value added Statement - Accrual Basis
FY16 FY15
(Rupees in thousand) (Rupees in thousand)
Wealth Created
Revenues:
- Local sales 33,190,695 28,756,679
- Exports 3,855,019 37,045,714 94% 3,711,941 32,468,620 93%
Income from other sources

- Investment income 1,869,918 1,703,466
- Other income 509,137 2,379,055 6% 616,868 2,320,334 7%
39,424,769 100% 34,788,954 100%
Wealth Distributed
Suppliers:
- Against raw and packing materials 2,414,220 2,231,919
- Against services 841,859 664,707
- Against stores spares 1,700,847 1,804,299
- Against fuels and other energy sources 8,504,677 13,461,603 34% 8,819,867 13,520,792 39%
Employees 2,105,583 5% 1,712,741 5%

Government:
- Direct taxes 3,524,932 1,830,901
- Indirect taxes 6,994,383 6,031,146
- Other levies and duties 166,139 10,685,454 27% 91,596 7,953,643 23%
Providers of Capital:
- Banks 130,451 281,504
- Ordinary share holders - 130,451 0% - 281,504 1%
Reinvested in business
- Depreciation 1,890,319 1,899,051
- Profit/ (loss) for the period 8,789,668 10,679,987 27% 7,624,680 9,523,731 27%
Other operating costs - Net 2,361,691 6% 1,796,543 5%
39,424,769 100% 34,788,954 100%
Other operating costs - Net
6%
34% Suppliers
Reinvested in business 27%
6%
Employees
27%
Government

Per Share Income Statement
FY16 FY15
PKR/Share PKR/Share
Sales 67.80 59.58

Cost of sales 38.88 38.00
Gross profit 28.91 21.58
Administrative expenses 1.31 1.08

Selling and distribution expenses 2.17 1.70
Other operating expenses 2.09 1.66
Other income 5.43 5.30
Profit from operations 28.78 22.43

Finance cost 0.30 0.64
Profit before taxation 28.49 21.79
Taxation 8.42 4.39
Profit after taxation 20.06 17.40
FY16 FY15
Sales 67.80 59.58
Total Revenue 73.23 64.88
Total Cost 53.17 47.48
Profit after taxation 20.06 17.40
FY15 FY15
80 80
FY16 FY16
70 70
60 60
50 50
40 40
30 30
20
20
10
10
0
Sales Other income Profit after taxation 0
Per Share Revenue Per Share Cost Per Share PAT

DuPont Analysis
ROE
13.36%
PROFIT MARGIN ASSETS TURNOVER EQUITY MULTIPLIER

29.59% 35.6% 1.27 times
PAT: PKR 8,789,672
COGS: FIXED ASSETS: NON CURRENT

PKR 17,035,566 PKR 39,576,830 LIABILITIES:
57.35% 47.44% PKR 7,578,202
9.08%
ADMIN Expense: LONG TERM CURRENT

PKR 572,780 INVESTMENTS: LIABILITIES:
1.93% PKR 12,947,976 PKR 10,056,634
15.52% 12.06%
SELLING Expense: CURRENT ASSETS: This includes fair value

PKR 949,628 PKR 30,835,521 reserve on investment
3.20% 36.96%
OTHER Expense: OTHERS:

PKR 913,642 PKR 57,938
3.08% 0.08%
FINANCE Expense:
This includes investments
PKR 130, 451
0.44%
TAX:
PKR 3,691,072
12.43% ROE is calculated on year end total equity.
This is calculated wrt Net Sales.

OTHER INCOME:
PKR 2,379,053 This is calculated wrt Total Assets.
8.01%
All PKR Figures are in ‘000.

Equity Investments Analysis
Number Cost Fair Value % Stake in % to Total Cost % to Total MV Dividend

of Shares (PKR in ‘000) (PKR in ‘000) Company of portfolio of portfolio FY16 (PKR in ‘000)
MCB Bank Limited 102,277,232 604,068 22,503,041 9.18 9.28 73.14 1,636,436
Nishat Mills Limited 30,289,501 1,326,559 3,268,237 8.61 20.38 10.62 136,303
Adamjee Insurance Co. Ltd. 20,988,735 798,535 1,052,794 6.00 12.27 3.42 54,928
Nishat (Chunian) Limited 7,274,602 76,397 257,666 3.03 1.17 0.84 10,912
First Capital Mutual Fund Ltd. 104,457 212 1,232 0.35 0.00 0.00 83
United Bank Limited 214,354 33,646 37,924 0.02 0.52 0.12 2,786
Pakistan Petroleum Limited 595,382 117,405 92,313 0.03 1.80 0.30 2,874
Nishat Paper Products Co. Ltd. 25,595,398 221,874 221,874 55.00 3.41 0.72 25,595
Nishat Dairy (Pvt) Limited 270,000,000 2,331,900 2,331,900 55.10 35.82 7.58 -
Nishat Hotels and Properties Limited 100,000,000 1,000,000 1,000,000 10.42 15.36 3.25 -
Total 557,339,661 6,510,596 30,766,981 100.00 100.00 1,869,917
Sector Wise Investment

Cost Fair Value % wrt Cost % wrt FV
(PKR in ‘000) (PKR in ‘000)
Banks 637,714 22,540,965 9.80 73.26

Insurance 798,535 1,052,794 12.27 3.42
Textiles 1,402,956 3,525,903 21.55 11.46
Oil 117,405 92,313 1.80 0.30
Dairy 2,331,900 2,331,900 35.82 7.58
Paper 221,874 221,874 3.41 0.72
Hospitality 1,000,000 1,000,000 15.36 3.25
Mutual Fund 212 1,232 0.00 0.00
Investments in Related and Non- Related Parties

Cost Fair Value % wrt Cost % wrt FV
(PKR in ‘000) (PKR in ‘000)
Subsidiary 2,553,774 2,553,774 39.22 8.30

Related other than subsidiary 2,930,627 26,771,278 45.01 87.01
Non-Related 1,026,195 1,441,929 15.76 4.69
Dividend Income
(PKR in ‘000) % to Total
Dividend
from related parties:

Nishat Mills Limited 136,303 7.29
MCB Bank Limited 1,636,436 87.51
Adamjee Insurance Company Limited 54,928 2.94
Nishat Chunian Limited 10,912 0.58
Nishat Paper Products Company Limited 25,595 1.37
1,864,174 99.69
from other parties:

United Bank 2,786 0.15
First Capital Mutual Fund 83 0.00
Pakistan Petroleum 2,874 0.15
5,743 0.31
1,869,917 100.00

Sector Wise Investments
(% to Total Cost of Investments portfolio)
Hospitality Banks 10%

15%
Paper
Insurance
3%
12%
Association Wise Investment

(% to Total Cost of Investments portfolio)
Dairy Textiles Non-Related
36% 22% 16% Subsidiary
39%
Oil
2%
% to Total MV of Investments
Portfolio
Nishat Dairy (Pvt) Limited Nishat Hotels and Related other than
8% Properties Limited subsidiary
Adamjee Insurance 3% 45%
Co. Ltd.
3%

11%
% to Total Cost of Investments

Portfolio
MCB Bank Limited
73% Nishat Hotels and MCB Bank Limited,
Properties Limited, 9.28
15.36
Nishat Mills
Limited,
20.38
Nishat Dairy (Pvt)
Limited,
35.82 Adamjee
Insurance
Nishat (Chunian)
Co. Ltd.
Limited,
12.27
1.17
Nishat Paper Pakistan Petroleum

Products Co. Ltd., Limited,
3.41 1.80

Share Price Sensitivity Analysis
FY16 FY15
DGKC STOCK PRICE AVERAGE 156.40 107.64

DGKC STOCK PRICE MAX 190.69 143.37
DGKC STOCK PRICE MIN 125.76 71.71
DGKC STOCK PRICE 30 JUNE CLOSE 190.49 142.77
DGKC STOCK TURNOVER AVERAGE 2,778,800 4,858,227
DGKC STOCK TURNOVER MAX 10,566,700 22,670,500
DGKC STOCK TURNOVER MIN 281,300 337,000
DGKC STOCK MC AVERAGE 68,522,595,257 47,160,244,126
DGKC STOCK MC MAX 83,544,931,179 62,813,135,367
DGKC STOCK MC MIN 55,097,858,016 31,417,520,661
200
DGKC Stock Closing Price
150
100
50
0
30-06-2016 01-07-2014
25,000,000
DGKC Stock Turnover
20,000,000
15,000,000
10,000,000
5,000,000
0
30-06-2016 01-07-2014

FY16 FY15
PSX-100 INDEX AVERAGE 34,021.71 31,798.97

PSX-100 INDEX MAX 38,776.94 34,826.51
PSX-100 INDEX MIN 30,564.50 27,774.43
PSX-100 INDEX 30 JUNE CLOSE 37,783.54 34,398.86
PSX-100 TURNOVER AVERAGE 113,661,914 139,301,650
PSX-100 TURNOVER MAX 273,930,650 364,949,260
PSX-100 TURNOVER MIN 19,471,400 27,030,710
PSX-100 MC AVERAGE 1,865,026,005,892 1,706,577,092,631
PSX-100 MC MAX 3,438,071,000,000 1,942,680,390,000
PSX-100 MC MIN 196,095,859,000 1,481,676,590,000
45,000
PSX-100 INDEX
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
30-06-2016 01-07-2014
Dividend Payout Ratio (%)

35.00 Dividend Yield Ratio (wrt year end price) (%)
30.00
5.00
25.00
4.00
20.00
3.00
15.00
2.00
10.00
1.00
5.00
-
-
25.00
Share Price Sensitivity Factors

20.00
Sales Volumes
EPS
15.00 Sales Price
PE Ratio
10.00 Foreign Currency Movements
Interest Rates
5.00
Energy Tariffs
-
Any relevant change in regulations

Auditors’ Report to the Members
We have audited the annexed balance sheet of D.G. Khan Cement Company Limited (‘the Company’) as at June 30, 2016
and the related profit and loss account, statement of 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 except for the changes resulted on initial
application of standards, amendments or interpretations to existing standards, as stated in note 2.2.1 to the
annexed financial statements with which we concur;
(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 comprehensive income, cash flow statement and statement of changes in
equity together with the notes forming part thereof conform with approved accounting standards as applicable in
Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and
respectively give a true and fair view of the state of the Company’s affairs as at June 30, 2016 and of the profit, total
comprehensive income, its cash flows and changes in equity and for the year then ended; and
(d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted
by the Company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.
Lahore,
Dated: August 31, 2016

Balance Sheet
2016 2015
Note (Rupees in thousand)
Authorised capital
- 950,000,000 (2015: 950,000,000)
ordinary shares of Rs 10 each 9,500,000 9,500,000
- 50,000,000 (2015: 50,000,000)
preference shares of Rs 10 each 500,000 500,000
10,000,000 10,000,000
Issued, subscribed and paid up capital

438,119,118 (2015: 438,119,118)
ordinary shares of Rs 10 each 5 4,381,191 4,381,191
Reserves 6 34,238,885 37,387,772
Accumulated profit 27,163,353 20,527,108
65,783,429 62,296,071
Long term finances - secured 7 2,400,000 714,261

Long term deposits 8 77,813 72,003
Retirement and other benefits 9 111,334 137,585
Deferred taxation 10 4,989,055 4,588,047
7,578,202 5,511,896
CURRENT LIABILITIES
Trade and other payables 11 5,366,340 4,048,079

Accrued finance cost 12 52,931 27,304
Short term borrowings - secured 13 3,451,352 1,826,072
Current portion of non-current liabilities 14 1,150,921 646,931
Provision for taxation 35,090 35,090
10,056,634 6,583,476
CONTINGENCIES AND COMMITMENTS 15 - -

83,418,265 74,391,443
The annexed notes 1 to 46 form an integral part of these financial statements.
Chief Executive

As At June 30, 2016
2016 2015
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 16 39,576,830 29,958,970

Intangible assets 17 - 18,452
Investments 18 12,947,976 12,918,182
Long term loans and deposits 19 57,938 69,497
52,582,744 42,965,101
CURRENT ASSETS
Stores, spare parts and loose tools 20 4,006,181 3,635,858

Stock-in-trade 21 766,633 1,188,376
Trade debts 22 201,574 156,899
Investments 23 17,819,005 24,855,796
Advances, deposits, prepayments and other receivables 24 584,447 648,010
Income tax receivable 433,136 673,807
Derivative financial instrument 25 14,701 9,873
Cash and bank balances 26 7,009,844 257,723
30,835,521 31,426,342
83,418,265 74,391,443
Director

Profit & Loss Account
for the Year Ended June 30, 2016
2016 2015
Sales 27 29,703,758 26,104,611
Cost of sales 28 (17,035,566) (16,649,411)
Gross profit 12,668,192 9,455,200
Administrative expenses 29 (572,780) (472,326)
Selling and distribution expenses 30 (949,628) (746,723)
Other operating expenses 31 (913,642) (727,805)
Other income 32 2,379,053 2,320,335
Profit from operations 12,611,195 9,828,681
Finance cost 33 (130,451) (281,504)
Taxation 34 (3,691,072) (1,922,497)
Profit after taxation 8,789,672 7,624,680
Earnings per share - basic and diluted 35 20.06 17.40
Chief Executive Director

Statement of Comprehensive Income
2016 2015
(Rupees in thousand)
Other comprehensive income for the year - net of tax
Items that may be reclassified subsequently to profit or loss:
Change in fair value of available for sale investments (3,148,887) (5,287,376)

Gain during the year transferred to profit and loss account
on derecognition of available for sale investment - (30,246)
(3,148,887) (5,317,622)
Items that will not be subsequently reclassified to profit or loss:
Remeasurement of retirement benefits 53,099 14,247

Tax effect (15,930) (8,352)
37,169 5,895
Other comprehensive loss for the year (3,111,718) (5,311,727)

Total comprehensive income for the year 5,677,954 2,312,953

Cash Flow Statement
2016 2015
Cash flows from operating activities
Cash generated from operations 36 13,896,567 11,673,448

Finance cost paid (104,998) (313,619)
Retirement and other benefits paid (49,339) (130,393)
Taxes paid (2,628,068) (1,278,413)
Long term deposits - net 5,810 3,033
Net cash generated from operating activities 11,119,972 9,954,056
Cash flows from investing activities
Fixed capital expenditure (11,516,561) (2,017,180)

Proceeds from disposal of property, plant and equipment 45,751 19,571
Long term loans, advances and deposits - net 11,559 16,047
Investment in equity instruments (822,264) (3,025,879)
Investment in financial assets at fair value through
profit or loss (3,002,039) (19,910,642)
Sale proceeds from disposal of investments 7,711,635 15,926,428
Interest received 639 39,326
Dividend received 1,869,917 1,703,466
Cash surrendered in respect of Tax losses purchased from subsidiaries (206,000) (589,000)
Net cash used in investing activities (5,907,363) (7,837,863)
Cash flows from financing activities
Proceeds from long term finances 3,300,000 -

Settlement of derivative financial instrument (4,907) (46,643)
Repayment of long term finances (1,140,373) (804,984)
Dividend paid (2,190,596) (1,533,416)
Net cash used in financing activities (35,876) (2,385,043)
Net increase in cash and cash equivalents 5,176,733 (268,850)

Cash and cash equivalents at the beginning of the year (1,568,349) (1,242,650)
Exchange losses on cash and cash equivalents (49,892) (56,849)
Cash and cash equivalents at the end of the year 37 3,558,492 (1,568,349)

Capital Reserve Revenue Reserve
Capital
Fair Redemption
Share Share Value Reserve General Accumulated
Capital Premium Reserve Fund Reserve Profit Total
R u p e e s i n t h o u s a n d
Balance as on June 30, 2014 4,381,191 4,557,163 32,722,894 353,510 5,071,827 14,429,950 61,516,535
Transactions with owners recognised directly in equity
Final dividend for the year ended June 30, 2014
Rs 3.50 per share - - - - - (1,533,417) (1,533,417)
- Profit for the year - - - - - 7,624,680 7,624,680

- Other comprehensive loss for the year
- Changes in fair value of available for sale investments - - (5,317,622) - - - (5,317,622)
- Remeasurements of retirement benefits - net of tax - - - - - 5,895 5,895
Total comprehensive (loss) / income for the year - - (5,317,622) - - 7,630,575 2,312,953
Transactions with owners recognised directly in equity
Rs 5.00 per share - - - - - (2,190,596) (2,190,596)
- Profit for the year - - - - - 8,789,672 8,789,672

- Other comprehensive loss for the year
- Changes in fair value of available for sale investments - - (3,148,887) - - - (3,148,887)
- Remeasurements of retirement benefits - net of tax - - - - - 37,169 37,169
Total comprehensive (loss) / income for the year - - (3,148,887) - - 8,826,841 5,677,954
Annual Report 2016

108
Statement of Changes in Equity
Notes to and Forming Part of the Financial Statements
1. Legal status and nature of business
D. G. Khan Cement Company Limited ("the Company") is a public limited company incorporated in Pakistan and is
listed on Pakistan Stock Exchange. It is principally engaged in production and sale of Clinker, Ordinary Portland and
Sulphate Resistant Cement. The registered office of the Company is situated at 53-A Lawrence Road, Lahore.
2. Basis of preparation
2.1 These financial statements have been prepared in accordance with the requirements of the Companies
Ordinance, 1984 (the 'Ordinance') and 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 and Islamic Financial Accounting Standards (IFAS) issued by
Institute of Chartered Accountants of Pakistan as are notified under the Ordinance, provisions of and directives
issued under the Ordinance. Wherever the requirements of the Ordinance or directives issued by Securities and
Exchange Commission of Pakistan differ from the requirements of IFRS or IFAS, the requirements of the
Ordinance or the requirements of the said directives prevail.
2.2 Initial application of standards, amendments or an interpretation to existing standards
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 the
current year and are relevant to the Company
Certain standards, amendments and interpretations to approved accounting standards are effective for
accounting periods beginning on or after July 1, 2015 but are considered not to be relevant or to have
any significant effect on the Company's operations and are, therefore, not detailed in these financial
statements except for the amendments as explained below:
- IFRS 11, 'Joint Arrangements', is applicable on annual periods beginning on or after January 01,
2013, however, SECP has adopted this IFRS for periods beginning on or after January 1, 2015. IFRS
11 is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the
arrangement rather than its legal form. There are two types of joint arrangement: joint operations and
joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations
relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and
expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement
and hence equity accounts for its interest. Proportional consolidation of joint ventures is no longer
allowed. The application of this standard does not have a material impact on the Company's financial
statements.
- IFRS 12 - ‘Disclosures of interests in other entities’. This is applicable on accounting periods

beginning on or after January 01, 2013, however, SECP has adopted this standard for periods
beginning on or after January 1, 2015. This standard includes the disclosure requirements for all forms
of interests in other entities, including joint arrangements, associates, special purpose vehicles and
other off balance sheet vehicles. The Company shall apply this standard from July 01, 2015 and is yet
to assess the impact of these changes on its financial statements. The application of this standard
does not have a material impact on the Company's financial statements.

- IFRS 13 - ‘Fair value measurement’. This is applicable on accounting periods beginning on or after
January 01, 2013, however, SECP has adopted this standard for periods beginning on or after January
1, 2015. This standard aims to improve consistency and reduce complexity by providing a precise
definition of fair value and a single source of fair value measurement and disclosure requirements for
use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not
extend the use of fair value accounting but provide guidance on how it should be applied where its use
is already required or permitted by other standards within IFRSs or US GAAP. The application of this
standard does not have a material impact on the Company's financial statements.
2.2.2 Standards, amendments and interpretations to existing standards that are not yet effective and
have not been early adopted by the Company
The following amendments and interpretations to existing standards have been published and are
mandatory for the Company's accounting periods beginning on or after July 01, 2016 or later periods,
and the Company has not early adopted them:
- 'Amendment to IAS 16 ‘Property, plant and equipment’ and IAS 38,'Intangible assets', on
depreciation and amortisation is applicable on accounting periods beginning on or after January 01,
2016. IASB has clarified that the use of revenue based methods to calculate the depreciation of an
asset is not appropriate because revenue generated by an activity that includes the use of an asset
generally reflects factors other than the consumption of the economic benefits embodied in the asset.
The IASB has also clarified that revenue is generally presumed to be an inappropriate basis for
measuring the consumption of the economic benefits embodied in an intangible asset. The Company
is yet to assess the impact of this amendment on its financial statements.
Effective date
(accounting periods
beginning on or after)
Other standards or interpretations
Amendments to IAS 7, ‘Statement of cash flows’ on disclosure initiative January 01, 2017
Amendments to IAS 12, ‘Income taxes’ on Recognition of January 01, 2017

deferred tax assets for unrealised losses
Amendments to IFRS 2, ‘Share based payments ’, on clarifying how to January 01, 2018
account for certain types of share-based payment transactions
IFRS 9, 'Financial instruments' January 01, 2018
IFRS 14, 'Regulatory deferral accounts' January 01, 2017
IFRS 15, 'Revenue from contracts with customers' January 01, 2018
Amendments to IFRS 15, ‘Revenue from contracts January 01, 2018

with customers' on gross versus net revenue presentation
IFRS 16 ‘Leases' January 01, 2019
3. Basis of measurement
3.1 These financial statements have been prepared under the historical cost convention except for revaluation of
certain financial instruments at fair value and recognition of certain employee retirement benefits at present
value.

3.2 The Company's significant accounting policies are stated in note 4. Not all of these significant policies require
the management to make difficult, subjective or complex judgments or estimates. The following is intended to
provide an understanding of the policies the management considers critical because of the complexity,
judgment and estimation involved in their application and their impact on these financial statements.
Judgments and estimates are continually evaluated and are based on historical experience, including
expectations of future events that are believed to be reasonable under the circumstances. These judgments
involve assumptions or estimates in respect of future events and the actual results may differ from these
assumptions or estimates. The areas involving a higher degree of judgments or complexity or areas where
assumptions and estimates are significant to the financial statements are as follows:
a) Provision for taxation - note 4.2 and 34
b) Retirement and other benefits - note 4.3 and 9
c) Useful lives and residual values of property, plant and equipment- note 4.5 and 16.1
a) Provision for taxation
The Company takes into account the current income tax law and the decisions taken by appellate
authorities. Instances where the Company's view differs from the view taken by income tax department
at the assessment stage and where the Company considers that its views on items of material nature
is in accordance with the law, the amounts are shown as contingent liabilities.
b) Retirement and other benefits
The Company uses the valuation performed by an independent actuary as the present value of its
retirement benefit obligations. The valuation is based on the assumptions as mentioned in note 4.3.
c) Useful lives and residual values of property plant and equipment
The Company reviews the useful lives and residual values of property, plant and equipment on a regular
basis. Any change in estimates in future years might affect the carrying amounts of respective items of
property, plant and equipment with a corresponding effect on the depreciation charge and impairment.
4. Significant accounting policies
The significant accounting policies adopted in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
4.1 Borrowings
Borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, these are stated at amortised cost with any difference between proceeds (net of transaction costs)
and redemption value being recognised in the profit and loss over the period of the borrowings on an effective
interest rate basis.
Preference shares, which are mandatorily redeemable on a specific date at the option of the Company, are
classified as liabilities. The dividend on these preference shares is recognised in the profit and loss account as
finance cost.
Finance costs are accounted for on an accrual basis and are shown as accrued finance cost to the extent of the
amount remaining unpaid.
Borrowings are classified as a current liability unless the Company has an unconditional right to defer
settlement of the liability for at least twelve months after the balance sheet date.

4.2 Taxation
Income tax expense comprises current and deferred tax. Income tax is recognised in profit and loss account
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current
Provision of current tax is based on the taxable income for the year determined in accordance with the
prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax
rates expected to apply to profit for the year if enacted after taking into account tax credits, rebates and
exemptions, if any. The charge for current tax also includes adjustments, where considered necessary, to
provision for tax made in previous years arising from assessments framed during the year for such years.
Deferred
Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences
arising from differences between the carrying amount of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which the deductible temporary differences, unused tax
losses and tax credits can be utilised.
Deferred tax assets and liabilities are calculated at the rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on the tax rates (and tax laws) that have been enacted or
substantively enacted by the balance sheet date. Deferred tax is charged or credited to the profit and loss
account, except in the case of items charged or credited to equity in which case it is included in the statement
of changes in equity.
4.3 Retirement and other benefits
The main features of the schemes operated by the Company for its employees are as follows:
4.3.1 Defined benefit plans
The Company operates an approved funded defined benefit gratuity plan for all employees having a
service period of more than five years for management staff and one year for workers. Provisions are
made in the financial statements to cover obligations on the basis of actuarial valuations carried out
annually. The most recent valuation was carried out as at June 30, 2016 using the "Projected Unit
Credit Method".
The actual return on plan assets represents the difference between the fair value of plan assets at the
beginning of the year and as at the end of the year after adjustments for contributions made by the
Company as reduced by benefits paid during the year.
The amount recognized in balance sheet represents the present value of the defined benefit obligation
as reduced by the fair value of the plan assets.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions
are charged or credited to equity in other comprehensive income in the year in which they arise. Past
service costs are recognized immediately in the profit and loss account.
The future contribution rate of the plan includes allowances for deficit and surplus. Projected Unit
Credit Method, using the following significant assumptions, is used for valuation of this scheme:

Discount rate 7.25% p.a.
Expected increase in eligible salary level 6.25% p.a.
Duration of the plan (years) 9
The expected mortality rates assumed are based on the SLIC (2001-2005) mortality table set back one
year.
The Company is expected to contribute Rs 45.234 million to the gratuity fund in the next year.
4.3.2 Defined contribution plan
The Company operates a recognised provident fund for all its regular employees. Equal monthly
contributions are made to the fund both by the Company and the employees at the rate of 10% of the
basic salary for officers and 10% of basic salary plus cost of living allowance for workers. The
Company has no further payment obligations once the contributions have been paid. Obligation for
contributions to defined contribution plan is recognised as an expense in the profit and loss account as
and when incurred.
4.3.3 Accumulating compensated absences
The Company provides for accumulating compensated absences, when the employees render
services that increase their entitlement to future compensated absences. Under the service rules,
employees are entitled to 2.5 days leave per month. Unutilised leaves can be accumulated up to 90
days in case of officers. Any balance in excess of 90 days can be encashed up to 17 days a year only.
Any further unutilised leaves lapse. In case of workers, unutilised leaves may be accumulated without
any limit, however, accumulated leave balance above 50 days is encashable upon demand of the
worker. Unutilised leaves can be used at any time by all employees, subject to the approval of the
Company's management.
Provisions are made annually to cover the obligation for accumulating compensated absences based
on actuarial valuation and are charged to profit and loss account. The most recent valuation was
carried out as at June 30, 2016 using the "Projected Unit Credit Method".
The amount recognised in the balance sheet represents the present value of the defined benefit
obligations. Actuarial gains and losses are charged to the profit and loss account immediately in the
period when these occur.
Projected unit credit method, using the following significant assumptions, has been used for valuation
of accumulating compensated absences:

Expected rate of increase in salary level per annum; and 6.25% p.a.
Expected mortality rate SLIC (2001-2005) mortality table (setback 1 year)
4.4 Trade and other payables
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within
one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current liabilities.
Trade and other payables are initially recognised at fair value plus directly attributable cost, if any, and
subsequently at amortised cost using effective interest rate method.

4.5 Property, plant and equipment
4.5.1 Operating assets
Property, plant and equipment, except freehold land, are stated at cost less accumulated depreciation
and any identified impairment loss. Freehold land is stated at cost less any identified impairment loss.
Cost in relation to certain property, plant and equipment signifies historical cost, gains and losses
transferred from equity on qualifying cash flow hedges and borrowing costs as referred to in note 4.17.
Depreciation on all property, plant and equipment is charged to the profit and loss account on the
reducing balance method, except for plant and machinery which is being depreciated using the straight
line method, so as to write off the historical cost of such asset over its estimated useful life at annual
rates mentioned in note 16.1 after taking into account their residual values.
The assets' residual values and useful lives are continually reviewed by the Company and adjusted if
impact on depreciation is significant. The Company's estimate of the residual value of its property,
plant and equipment as at June 30, 2015 has not required any adjustment.
Depreciation on additions to property, plant and equipment is charged from the month in which an
asset is acquired or capitalised while no depreciation is charged for the month in which the asset is
disposed off.
The Company assesses at each balance sheet date whether there is any indication that property, plant
and equipment 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
amounts exceed the respective recoverable amount, assets are written down to their recoverable
amounts and the resulting impairment loss is recognised 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 an impairment
loss is recognised, the depreciation charge is adjusted in the future periods to allocate the asset's
revised carrying amount over its estimated useful life.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item shall flow
to the Company and the cost of the item can be measured reliably. All other repair and maintenance
costs are charged to profit and loss account during the period in which they are incurred.
The profit 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.
4.5.2 Major spare parts and stand-by equipment
Major spare parts and stand-by equipment qualify as property, plant and equipment when an entity
expects to use them during more than one year. Transfers are made to operating assets category as
and when such items are available for use.
4.5.3 Capital work-in-progress
Capital work-in progress is stated at cost less any identified impairment loss and represents
expenditure incurred on property, plant and equipment during the construction and installation. All
expenditure connected with specific assets incurred during installation and construction period are
carried under capital work-in-progress. Cost also includes applicable borrowing costs. Transfers are
made to relevant property, plant and equipment category as and when assets are available for use.
4.6 Intangible assets
Expenditure incurred to acquire Oracle Enterprise Resource Planning (ERP) system has been capitalised as an

intangible asset and stated at cost less accumulated amortisation and any identified impairment loss. Intangible
assets are amortised using the straight line method over a period of five years.
Amortisation on additions to intangible assets is charged from the month in which an asset is acquired or
capitalised while no amortisation is charged for the month in which the asset is disposed off.
The Company assesses at each balance sheet date whether there is any indication that intangible assets may
be impaired. If such an indication exists, the carrying amounts of such assets are reviewed to assess whether
they are recorded in excess of their recoverable amount. Where carrying amounts exceed the respective
recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss is
recognised 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 an impairment loss is recognised, the amortisation charge is adjusted in the
future periods to allocate the asset's revised carrying amount over its estimated useful life.
4.7 Leases
The Company is the lessee:
4.7.1 Finance leases
Leases where the Company has substantially all the risks and rewards of ownership are classified as
finance leases. At inception, finance leases are capitalised at the lower of present value of minimum
lease payments under the lease agreements and the fair value of the assets, less accumulated
depreciation and impairment loss, if any.
The related rental obligations, net of finance costs, are included in liabilities against assets subject to finance
lease. The liabilities are classified as current and non-current depending upon the timing of the payment.
Minimum lease payments made under finance leases are apportioned between the finance cost and
the reduction of the outstanding liability. The finance cost is allocated to each period during the lease
term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent lease payments, if any, are accounted for by revising the minimum lease payments over the
remaining term of the lease when the lease adjustment is confirmed. The interest element of the rental
is charged to income over the lease term.
Assets acquired under a finance lease are depreciated over the estimated useful life of the assets on
reducing balance method except plant and machinery which is depreciated on straight line method.
Depreciation of leased assets is charged to the profit and loss account.
Depreciation methods, residual values and the useful lives of the assets are reviewed at least at each
financial year-end and adjusted if impact of depreciation is significant.
Depreciation on additions to leased assets is charged from the month in which an asset is acquired
while no depreciation is charged for the month in which the asset is disposed off.
4.7.2 Operating leases
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received
from the lessor) are charged to profit on a straight-line basis over the lease term.
4.8 Investments
Investments in equity instruments of subsidiary company
Investment in subsidiary company is measured at cost as per the requirements of IAS-27 "Consolidated and

Separate Financial Statements". However, at subsequent reporting dates, the Company reviews the carrying
amount of the investment and its recoverability to determine whether there is an indication that such investment
has suffered an impairment loss. If any such indication exists, the carrying amount of the investment is adjusted
to the extent of impairment loss. Impairment losses are recognised as an expense in the profit and loss account.
Investments in equity instruments of associated company
Investments in associates where the Company has significant influence are measured at cost in the Company's
separate financial statements.
The Company is required to issue consolidated financial statements along with its separate financial
statements, in accordance with the requirements of IAS 27 'Consolidated and Separate Financial Statements'.
Investments in associates, in the consolidated financial statements, are being accounted for using the equity
method.
At each balance sheet date, the Company reviews the carrying amounts of the investments in associates to
assess whether there is any indication that such investments have suffered an impairment loss. If any such
indication exists, the recoverable amount is estimated in order to determine the extent of the impairment loss,
if any. In making an estimate of recoverable amount of these investments, the management considers future
stream of cash flows and an estimate of the terminal value of these investments. Impairment losses are
recognised as expense in the profit and loss account.
Available for sale
Investments which are intended to be held for an indefinite period of time but may be sold in response to the
need for liquidity are classified as available for sale. Available for sale investments are recognised initially at fair
value plus any directly attributable transaction costs. After initial recognition, these are stated at fair values
unless fair values can not be measured reliably, with any resulting gains and losses being taken directly to equity
until the investment is disposed off or impaired. At each reporting date, these investments are remeasured at
fair value, unless fair value cannot be reliably measured. At the time of disposal, the respective surplus or deficit
is transferred to profit and loss. Fair value of quoted investments is their bid price on Pakistan Stock Exchange
at the balance sheet date. Unquoted investments, where active market does not exist, are carried at cost as it
is not possible to apply any other valuation methodology. Unrealised gains and losses arising from the changes
in the fair value are included in fair value reserves in the period in which they arise.
Investments intended to be held for less than twelve months from the balance sheet date or to be sold to raise
operating capital, are included in current assets, all other investments are classified as non-current.
Management determines the appropriate classification of its investments at the time of the purchase and
re-evaluates such designation on a regular basis.
All purchases and sales of investments are recognised on the trade date which is the date that the Company
commits to purchase or sell the investment.
At each balance sheet date, the Company reviews the carrying amounts of the investments to assess whether
there is any indication that such investments have suffered an impairment loss. If any such indication exists, the
recoverable amount is estimated in order to determine the extent of the impairment loss, if any. Impairment
losses are recognised as expense in the profit and loss account. Impairment losses recognised in the profit and
loss account on equity instruments are not reversed through the profit and loss account.
4.9 Stores and spares
Usable stores and spares are valued principally at moving weighted average cost, while items considered
obsolete are carried at nil value. Items in transit are valued at cost comprising invoice value plus other charges
paid thereon.

Provision is made in the financial statements for obsolete and slow moving stores and spares based on
management estimate.
4.10 Stock-in-trade
Stock of raw materials (except for those in transit), work in process and finished goods are valued principally at
the lower of weighted average cost and net realisable value. Stock of packing material is valued principally at
moving average cost. Cost of work in process and finished goods comprises cost of direct materials, labour and
related production overheads (based on normal operating capacity). It excludes borrowing cost.
Materials in transit are stated at cost comprising invoice value plus other charges paid thereon.
Net realisable value is determined on the basis of estimated selling price of the product in the ordinary course
of business less estimated costs of completion and the estimated costs necessary to be incurred in sale.
If the expected net realisable value is lower than the carrying amount, a write-down is recognised for the
amount by which the carrying amount exceeds its net realisable value. Provision is made in the financial
statements for obsolete and slow moving stock in trade based on management estimate.
4.11 Financial instruments
4.11.1 Financial assets
The Company classifies its financial assets in the following categories: at fair value through profit or
loss, loans and receivables, available for sale and held to maturity. The classification depends on the
purpose for which the financial assets were acquired. Management determines the classification of its
financial assets at the time of initial recognition.
a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading and financial
assets designated upon initial recognition as at fair value through profit or loss. A financial asset
is classified as held for trading if acquired principally for the purpose of selling in the short term.
Assets in this category are classified as current assets, if expected to be settled within twelve
months, otherwise they are classified as non-current assets.
b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are included in current assets, except for maturities
greater than twelve months after the balance sheet date, which are classified as non-current
assets. Loans and receivables comprise advances, deposits and other receivables and cash and
cash equivalents in the balance sheet.
c) Available for sale financial assets
Available for sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets unless management
intends to dispose of the investments within twelve months from the balance sheet date.
d) Held to maturity
Financial assets with fixed or determinable payments and fixed maturity, where management has
the intention and ability to hold till maturity are classified as held to maturity and are stated at
amortized cost.

4.11.2 Recognition and measurement
All financial assets are recognized at the time when the Company becomes a party to the contractual
provisions of the instrument. Regular purchases and sales of investments are recognized on
trade-date; the date on which the Company commits to purchase or sell the asset. Financial assets are
initially recognized at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized
at fair value and transaction costs are expensed in the profit and loss account. Financial assets are
derecognized when the rights to receive cash flows from the assets have expired or have been
transferred and the Company has transferred substantially all the risks and rewards of ownership.
Available for sale financial assets and financial assets at fair value through profit or loss are
subsequently carried at fair value. Loans and receivables and held to maturity investments are carried
at amortized cost using the effective interest rate method.
Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit
or loss' category are presented in the profit and loss account in the period in which they arise. Dividend
income from financial assets at fair value through profit or loss is recognized in the profit and loss
account as part of other income when the Company's right to receive payments is established.
Changes in the fair value of securities classified as available for sale are recognized in other
comprehensive income. When securities classified as available for sale are sold or impaired, the
accumulated fair value adjustments recognized in equity are included in the profit and loss account as
gains and losses from investment securities. Interest on held-to-maturity investments calculated using
the effective interest method is recognized in the profit and loss account. Dividends on available for
sale equity instruments are recognized in the profit and loss account when the Company’s right to
receive payments is established.
The fair values of quoted investments are based on current prices. If the market for a financial asset is
not active (and for unlisted securities), the Company measures the investments at cost less impairment
in value, if any.
The Company assesses at each balance sheet date whether there is an objective evidence that a
financial asset or a group of financial assets is impaired. If any such evidence exists for available for
sale financial assets, the cumulative loss is removed from equity and recognized in the profit and loss
account. Impairment losses recognized in the profit and loss account on equity instruments are not
reversed through the profit and loss account. Impairment testing of trade debts and other receivables
is described in note 4.12.
4.11.3 Financial liabilities
All financial liabilities are recognized at the time when the Company becomes a party to the contractual
provisions of the instrument.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or
expired. Where an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the original liability and the recognition of a
new liability, and the difference in respective carrying amounts is recognized in the profit and loss
account.
4.11.4 Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount is reported in the financial statements only
when there is a legally enforceable right to set off the recognised amount and the Company intends
either to settle on a net basis or to realise the assets and to settle the liabilities simultaneously.

4.12 Trade debts and other receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary
course of business. If collection is expected in one year or less, they are classified as current assets. If not, they
are presented as non-current assets.
Trade debts are recognised initially at original invoice amount, which approximates fair value, and subsequently
measured at amortized cost using the effective interest method, less provision for doubtful debts.
A provision for doubtful debts is established when there is objective evidence that the Company will not be able
to collect all amounts due according to the original terms of the receivable. Significant financial difficulties of the
debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency
in payments are considered indicators that the trade receivable is doubtful. The provision is recognized in the
profit and loss account. Debts, considered irrecoverable, are written off as and when identified. Subsequent
recoveries of amounts previously written off are credited to the profit and loss account.
4.13 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 comprise cash in hand, demand deposits, other short term highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change
in value and short term borrowings. In the balance sheet, short term borrowings are included in current liabili-
ties.
4.14 Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subse-
quently re-measured at their fair values. The method of recognizing the resulting gain or loss depends on wheth-
er the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The
Company has not designated any derivatives as hedging instruments and accordingly, the changes in fair value
re-measurement are recognised in the profit and loss account. Trading derivatives are classified as a current
asset or liability.
4.15 Foreign currency transactions and translation
a) Transactions and balances
All monetary assets and liabilities in foreign currencies are translated into rupees at exchange rates
prevailing at the balance sheet date. Transactions in foreign currencies are translated into rupees at
exchange rates prevailing at the date of transaction. Non-monetary assets and liabilities that are
measured in terms of historical cost in a foreign currency are translated into rupees at exchange rates
prevailing at the date of transaction. Non-monetary assets and liabilities denominated in foreign
currency that are stated at fair value are translated into rupees at exchange rates prevailing at the date
when fair values are determined. Exchange gains and losses are included in income.
b) Functional and presentation currency
The financial statements are presented in Pak Rupees, which is the Company’s functional and
presentation currency. Figures are rounded to the nearest thousand.
4.16 Provisions
Provisions are recognised when; the Company has a present legal or constructive obligation as a result of past
events; it is probable that an outflow of resources shall be required to settle the obligation; and the amount has
been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow shall be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood
of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision due to passage of time is recognised as interest
expense.
4.17 Borrowing costs
General and specific 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 capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
4.18 Revenue recognition
Revenue represents the fair value of the consideration received or receivable for goods sold, net of discounts
and sales tax. Revenue is recognised when it is probable that the economic benefits associated with the
transaction will flow to the Company and the amount of revenue, and the associated cost incurred, or to be
incurred, can be measured reliably.
Revenue from sale of goods is recognised when the significant risk and rewards of ownership of the goods are
transferred to the buyer i.e. on the dispatch of goods to the customers.
Dividend income and entitlement of bonus shares are recognised when right to receive such dividend and
bonus shares is established.
Return on deposits is accrued on a time proportion basis by reference to the principal outstanding and the
applicable rate of return.
4.19 Dividend
Dividend distribution to the Company's shareholders is recognised as a liability in the Company's financial
statements in the period in which the dividends are approved by the Company's shareholders.
4.20 Contingent liabilities
Contingent liability is disclosed when:
- there is a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non occurrence of one or more uncertain future events not wholly within the control of the
Company; or
- there is present obligation that arises from past events but it is not probable that an outflow of resources
embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be
measured with sufficient reliability

5. Issued, subscribed and paid up capital
2016 2015 2016 2015

(Number of shares) (Rupees in thousand)
343,512,029 343,512,029 Ordinary shares of Rs 10 each fully

paid in cash 3,435,120 3,435,120
Ordinary shares of Rs 10 each issued for
20,000,000 20,000,000 consideration other than cash 200,000 200,000
Ordinary shares of Rs 10 each issued as fully
74,607,089 74,607,089 paid bonus shares 746,071 746,071
438,119,118 438,119,118 4,381,191 4,381,191
137,574,201 (2015: 137,574,201) and 203,500 (2015: 203,500) ordinary shares of the Company are held by Nishat Mills
Limited (associated company) and Security General Insurance Company Limited (associated company) respectively as
at June 30, 2016. In addition, 6,275,944 (2015: 6,275,944) ordinary shares are held by Adamjee Insurance Company
Limited, a related party as at June 30, 2016.
2016 2015
6. Reserves
Movement in and composition of reserves is as follows:
Capital reserves
- Share premium
At the beginning of the year 4,557,163 4,557,163
Additions during the year - -
At the end of the year - note 6.1 4,557,163 4,557,163
- Fair value reserve

Fair value (loss) / gain during the year (3,148,887) (5,317,622)
- Capital redemption reserve fund - note 6.3 353,510 353,510

29,167,058 32,315,945
Revenue reserves
- General reserve
Transferred (to) / from accumulated profit - -
At the end of the year 5,071,827 5,071,827
34,238,885 37,387,772
6.1 This reserve can be utilised by the Company only for the purposes specified in section 83(2) of the Companies
Ordinance, 1984.
6.2 As referred to in note 4.8, this represents the unrealised gain on remeasurement of investments at fair value and
is not available for distribution. This amount shall be transferred to profit and loss account on realisation.
6.3 The Capital redemption reserve fund represents fund created for redemption of preference shares and in
accordance with the terms of issue of preference shares, to ensure timely payments, the Company was required
to maintain a redemption fund with respect to preference shares. The Company had created a redemption fund
and appropriated Rs 7.4 million each month from the profit and loss account in order to ensure that fund
balance at redemption date was equal to the principal amount of the preference shares. The preference shares
were redeemed during the year ended June 30, 2007.

2016 2015
7. Long term finances - secured
These are composed of:

- Long-term loans - note 7.1 - 7.2 3,538,251 1,348,522
- Loan under Musharika arrangement - note 7.1 - 7.2 - -
3,538,251 1,348,522
Less : Current portion shown under current liabilities - note 14 1,138,251 634,261
2,400,000 714,261
7.1 Long term loans - secured

2016 2015 Rete of mark-up Mark-up
Lender (Rupees in thousand) Number of instalments outstanding
per annum Payable
Local currency
Loan 1
Dubai Islamic Bank 900,000 - ** Base rate + 0.35% 10 equal semi annual instalments ending in September 2020 Half yearly
Loan 2
Bank Islami 800,000 - * Base rate + 0.2% 16 quarterly equal instalments ending in September 2020. Quarterly
Loan 3
Habib Bank Limited 1,350,000 - * Base rate + 0.35% 20 quarterly equal instalments ending in December 2020 Quarterly
Loan 4
Bank Of Punjab - 400,000 * Base rate + 0.5% The loan has been fully repaid during the year Quarterly
Foreign Currency
Loan 5
Eco Trade and Development 488,251 948,522 *** Base rate + 1.65% 4 equal semi-annual instalments ending in May, 2017 Semi - Annually
Bank US$ 4.663 million
(2015: US$ 9.327 million )"
3,538,251 1,348,522
* Base rate: Average ask rate of three-month Karachi Inter Bank Offer Rate ("KIBOR") to be reset for each mark-up period
** Base rate: Average ask rate of six-month Karachi Inter Bank Offer Rate ("KIBOR") to be reset for each mark-up period
*** Base rate: Average ask rate of six-month London Inter Bank Offer Rate ("LIBOR") reset for each mark-up period
7.2 Security
Loan 1
The loan is secured by ranking charge of Rs. 1,334 million on all present and future fixed assets including land and building of the plant site located at DG Khan site inclusive of 25% margin.
Loan 2
The loan is secured by ranking charge over fixed assets of the company amounting to Rs. 1,000 million to be upgraded to joint pari passu charge with in 180 days from the date of disbursment.
Annual Report 2016

Loan 3
The loan is secured by First pari passu charge over existing and future fixed assets of the company amounting to Rs. 4,991 million.
Loan 4
The loan is secured by an initial ranking charge over present and future land, building and plant and machinery of the Company to the tune of Rs 1,066.667 million. The total facility amount available is
Rs 800 million.
122
Loan 5
The loan is secured by first pari passu charge over all present and future fixed assets of the Company amounting to USD 27.980 million. The total facility amount available is USD 20.985 million.
2016 2015
8. Long term deposits
Customers 41,382 39,102

Others 36,431 32,901
77,813 72,003
These represent interest free security deposits from stockists and suppliers and are repayable on cancellation /
withdrawal of the dealership or on cessation of business with the Company.
2016 2015
9. Retirement and other benefits
Staff gratuity - note 9.1 1,962 33,345

Accumulating compensated absences - note 9.2 109,372 104,240
111,334 137,585
9.1 Staff gratuity
The amounts recognised in the balance sheet are as follows:

Present value of defined benefit obligation 404,923 352,380
Fair value of plan assets (402,961) (319,035)
Liability as at June 30 1,962 33,345
9.1.1 Movement in net liability for staff gratuity
Net liability as at July 1 33,345 112,513

Current service cost 43,706 38,935
Net interest on defined benefit obligation 33,211 35,487
Return on plan assets during the year (31,133) (27,958)
45,784 46,464
Total remeasurements for the year charged to other
comprehensive income (53,099) (14,247)
Contributions made by the Company during the year (24,068) (111,385)
Net liability as at June 30 1,962 33,345
9.1.2 Movement in present value of defined benefit obligation
Present value of defined benefit obligation as at July 1 352,380 273,597

Interest cost 33,211 35,487
Benefits paid during the year (23,512) (11,549)
Remeasurements:
- Actuarial (gains) / losses from changes in
demographic assumptions - -
- Actuarial (gains) / losses from changes in financial assumptions (6,847) -
- Experience adjustments 5,985 15,910
(862) 15,910
Present value of defined benefit obligation as at June 30 404,923 352,380

2016 2015
9.1.3 Movement in fair value of plan assets
Fair value of plan assets as at July 1 319,035 161,084

Interest income on plan assets 31,133 27,958
Contributions during the year 24,068 111,385
Remeasurements in fair value of plan assets 52,237 30,157
Fair value of plan assets as at June 30 402,961 319,035
9.1.4 Plan assets
Plan assets are comprised as follows:
2016 2015
(Rs in '000') Percentage (Rs in '000') Percentage
Plan assets
Cash and Bank 1,010 0.25% 902 0.28%
Debt instruments 348,735 86.54% 318,133 99.72%
Deposits 53,216 13.21% - 0.00%
402,961 100.00% 319,035 100.00%
Plan liabilities
Account payables - 0.00% - 0.00%
402,961 100.00% 319,035 100.00%
2016 2015
9.1.5 Charge for the year (including capitalised during the year)

Interest income on plan assets (31,133) (27,958)
Total expense for the year 45,784 46,464
Less: Expense capitalized during the year (1,767) (1,314)
Expense charged to profit and loss account 44,017 45,150
9.1.6 Total remeasurements charged to other comprehensive

income
Actuarial (gains) / losses from changes in demographic

assumptions - -
Actuarial (gains) / losses from changes in financial assumptions (6,847) -
Experience adjustments 5,985 15,910
(862) 15,910
Remeasurements in plan assets, excluding interest income (52,237) (30,157)
Total remeasurements charged to other comprehensive income (53,099) (14,247)

9.1.7 Amounts for current period and previous four annual periods of the fair value of plan assets and present
value of defined benefit obligation are as follows:
2016 2015 2014 2013 2012

As at June 30
Present value of defined
benefit obligation 404,923 352,380 273,597 225,816 167,467
Fair value of plan assets (402,961) (319,035) (161,084) (149,756) (82)

Deficit 1,962 33,345 112,513 76,060 167,385
Experience adjustment
arising on plan obligation (862) 15,910 16,362 17,256 10,222
arising on plan assets 52,237 30,157 (1,473) 1,396 33
9.1.8 Assumptions used for valuation of the defined benefit scheme for management and non-management
staff are as under:
2016 2015
Discount rate Per annum 7.25% 9.75%

Expected rate of increase in salary Per annum 6.25% 8.75%
Rate of interest income on plan assets Per annum 13.25% 13.25%
Duration of the plan Number of years 9 8
9.1.9 Year end sensitivity analysis (±100 bps) on defined benefit obligation is as follows:
Discount rate Discount rate Salary Salary

increase rate increase rate
+ 100 bps - 100 bps + 100 bps - 100 bps

benefit obligation 322,950 383,172 383,540 322,136
9.1.10 The Company expects to pay Rs 45.234 million in contributions to defined benefit plan during the year
ending June 30, 2017.
2016 2015
9.2 Accumulating compensated absences
Opening balance 116,910 100,344

Expenses recognised 30,403 35,574
Benefits paid (25,271) (19,008)
122,042 116,910
Payable within one year - note 14 (12,670) (12,670)
Closing balance 109,372 104,240

2016 2015
9.2.1 Movement in liability for accumulating

compensated absences
Present value of accumulating compensated

absences as at July 1 116,910 100,344
Remeasurements:
- Actuarial (gains)/losses from changes in demographic
assumptions - -
- Actuarial (gains)/losses from changes in financial assumptions - -
- Experience adjustments (2,180) 302
(2,180) 302
Present value of accumulating compensated absences
as at June 30 122,042 116,910

Remeasurement during the year (2,180) 302
Expense charged to the profit and loss account 28,668 34,357
9.2.3 Amounts for current period and previous four annual periods of the present value of accumulating
compensated absences are as follows:
2016 2015 2014 2013 2012

As at June 30
Present value of accumulated

compensated absences 122,043 116,910 100,344 88,338 74,381
arising on obligation (2,180) 302 6,704 17,205 14,739
9.2.4 Assumptions used for valuation of the accumulating compensated absences are as under:
2016 2015

Expected withdrawal and early retirement rate SLIC 2001-2005 SLIC 2001-2005
mortality table mortality table

9.2.5 Year end sensitivity analysis (± 100 bps) on obligation:
Salary Salary
Discount rate Discount rate increase rate increase rate
+ 100 bps - 100 bps + 100 bps - 100 bps
Present value of obligation 109,861 127,982 128,115 109,599
Officers Workers
2016 2015 2016 2015
(days) (days) (days) (days)
Average number of leaves

- Utilised per annum 11.00 11.00 16.00 18.00
- Encashed per annum 9.00 9.00 11.00 9.00
- Encashed per annum in excess
of accrued leave of 30 days 0.00 0.25 4.00 2.00
2016 2015
10. Deferred taxation
The liability for deferred taxation comprises temporary differences relating to:
Deferred tax liability
Accelerated tax depreciation 5,021,419 4,628,724
Deferred tax assets
Provision for retirement and other benefits (32,364) (40,677)
4,989,055 4,588,047
11. Trade and other payables
Trade creditors - note 11.1 1,820,917 770,183

Infrastructure cess 89,164 89,164
Advances from customers 595,869 380,547
Accrued liabilities 1,768,446 1,235,957
Workers' profit participation fund - note 11.2 668,129 1,305,760
Workers' welfare fund - note 11.3 157,757 91,596
Federal excise duty payable 56,568 40,967
Withholding tax payable 20,338 14,138
Retention money payable 71,344 21,056
Unclaimed dividends 22,197 18,089
Advances against sale of scrap 5,578 6,949
Advance against sale of fixed assets 1,522 -
Unclaimed dividend on redeemable preference shares 127 125
Export commission payable 50,314 44,750
Others 38,070 28,798
5,366,340 4,048,079

11.1 Trade creditors include amounts due to related parties amounting to Rs 514.031 million (2015: Rs 115.447
million)
2016 2015
Nishat Paper Product Company Limited (Subsidiary company) 257,558 111,560

Security General Insurance Company Limited (Associated company) 1,685 1,362
Adamjee Insurance Company Limited (Related party) 45 2,525
Nishat Dairy (Private) Limited (Subsidiary company) 224,999 -
484,287 115,447
11.2 Workers' profit participation fund
Opening balance 1,305,760 880,273

Provision for the year 665,625 507,304
Interest for the year 2,529 360
1,973,914 1,387,937
Less: Payments made during the year (1,305,785) (82,177)

Closing balance 668,129 1,305,760
11.3 Workers' welfare fund
Opening balance 91,596 -

Provision for the year - note 31 166,139 91,596
257,735 91,596
Less: Payments made during the year (99,978) -

12. Accrued finance cost
Accrued mark-up on:
- Long term loans - secured 41,582 12,080

- Short term borrowings - secured 11,265 15,140
Preference dividend on redeemable preference shares 84 84
52,931 27,304
13. Short term borrowings - secured
Short term running finances - note 13.1 1,270,103 1,094,647

Import finances - secured - note 13.2 351,249 731,425
Export finances -secured - note 13.3 1,830,000 -
3,451,352 1,826,072
13.1 Short term running finances - secured
Short term running finances available from various commercial banks under mark up arrangements amount to Rs
6,200 million (2015: Rs 5,425 million). The rates of mark up are based on Karachi Inter Bank Offer Rate ("KIBOR")
plus spread and range from 5.49% to 7.01% (2015: 6.81% to 10.43% ) or part thereof on the balance outstanding.
These are secured by first registered charge on all present and future current assets of the Company wherever
situated including stores and spares, stock in trade, book debts, investments and receivables.

13.2 Import finances - secured
The company has obtained import finance facilities aggregating to Rs 5,300 million (2015: 5,525 million) from
commercial banks. The rates of mark up based on Karachi Inter Bank Offer Rate ("KIBOR") plus spread range
from Nil (2015: Nil ) and those based on London Inter Bank Offer Rate ("LIBOR") plus spread range from 1.05%
to 2.50% (2015: 1.90% to 2.73%). The aggregate import finances are secured by a registered charge on all
present and future current assets of the Company wherever situated including stores and spares, stock in trade,
book debts, investments and receivables.
Of the aggregate facility of Rs 36,744 million (2015: Rs 10,578 million) for opening letters of credit and Rs 1,900
million (2015: Rs 2,020 million) for guarantees, the amount utilised as at June 30, 2016 was Rs 13,358 million
(2015: Rs 3,271 million) and Rs 913 million (2015: Rs 942 million) respectively. The aggregate facilities for
guarantees are secured by a registered charge on current assets of the Company. Of the facility for guarantees,
Rs 14.48 million (2015: Rs 14.48 million) is secured by a lien over bank deposits as referred to in note 26.2.
13.3 Export finances - secured
This represents export finance loans obtained from various commercial banks, which carry mark up based on
rates notified by State Bank of Pakistan ranging from 3.75% to 4.00% (2015: 5.50% to 7.00%), export finances
which carry markup based on Karachi Inter Bank Offer Rate ("KIBOR") ranging from Nil per annum (2015: Nil )
and London Inter Bank Offer Rate ("LIBOR") at Nil (2015: Nil ). These loans are obtained for a period of 180 days
and are secured against pari passu hypothecation charge over current assets of the Company.
2016 2015
14. Current portion of non-current liabilities
Long term finances - note 7 1,138,251 634,261

1,150,921 646,931
15. Contingencies and commitments
15.1 Contingencies
15.1.1 The Income Tax Officer, while framing the assessments for the assessment years 1984-85 to 1990-91,
has taxed the income of the Company on account of the interest on the deposits and sale of scrap etc.
The Appellate Tribunal on appeal filed by the Company issued an order in favour of the Company for
the assessment years 1984-85 to 1990-91. The Income Tax Department filed reference before the
Lahore High Court. Pending final outcome of such reference, no adjustment has been made in these
financial statements for the relief granted by the Appellate Tribunal aggregating Rs. 35.090 million.
15.1.2 During the period 1994 to 1996, the Company imported plant and machinery relating to expansion unit,
for which exemption was claimed under various SROs from the levy of custom duty and other duties
including sales tax. As per the provisions of SRO 484 (I)/92, 978 (I)/95 and 569 (I)/95, the exemption from
the statutory duty would be available only if the said plant and machinery was not manufactured locally.
However, the Custom Authorities rejected the claim of the Company by arguing that the said machinery
was on the list of locally manufactured machinery, published by the Federal Board of Revenue.
Consequently, the Company appealed before the Lahore High Court, Multan Bench, which allowed the
Company to release the machinery on furnishing indemnity bonds with the Custom Authorities.
Collector of Customs and Central Excise, Multan has passed an order dated November 26, 1999,
against the Company on the grounds that the said machinery was being manufactured locally during
the time when it was imported.

After various appeals at different forums, the Honorable Supreme Court remanded the case back to the
Customs Authorities to reassess the liability of the company. The custom authorities re-determined the
liability of the Company upon which the Company preferred an appeal to the Customs Appellate
Tribunal. The Tribunal decided the case in favour of the Company, upon which the Company
discharged all liabilities. However, the custom authorities preferred a reference to the Lahore High
Court, Multan Bench. In case of any adverse decision, the management assesses liability to the tune
of Rs 233.390 million. No provision for this amount has been made in the financial statements as
according to the management of the Company, there are meritorious grounds that the ultimate decision
would be in its favour.
15.1.3 The Competition Commission of Pakistan (the CCP) took suo moto action under Competition
Ordinance, 2007 and issued Show Cause Notice on October 28, 2008 for increase in prices of cement
across the country. The similar notices were also issued to All Pakistan Cement Manufacturers
Association (APCMA) and its member cement manufacturers. The Company has filed a Writ Petition in
the Lahore High Court. The Lahore High Court, vide its order dated August 24, 2009 allowed the CCP
to issue its final order. The CCP accordingly passed an order on August 28, 2009 and imposed a
penalty of Rs. 933 million on the Company. The Lahore High Court vide its order dated August 31, 2009
restrained the CCP from enforcing its order against the Company for the time being.
The vires of the Competition Commission of Pakistan, 2007 have been challenged by a large number
of Petitioners and all have been advised by their legal counsels that prima facie the Competition
Commission Ordinance, 2007 is ultra vires of the Constitution. A large number of grounds have been
raised by these Petitioners and the matter is currently being adjudicated by the Lahore High Court, the
Sindh High Court and the Supreme Court of Pakistan. In all these cases stay orders have been granted
by the Courts. Based on the legal opinion, the management is confident that the Company has a good
case and there are reasonable chances of success in the pending Petition in the Supreme Court of
Pakistan.
15.1.4 The matter relating to interpretation of provisions of section 4(2) of the repealed Central Excise Act,
1944 (1944 Act) has now attained finality after having been adjudicated by the honorable Supreme
Court of Pakistan through its judgment dated 27 January 2009 (upholding its previous judgment dated
15 February 2007). The longstanding controversy between the revenue department and the tax payers
related primarily to finer interpretation of the provisions of section 4(2) of the 1944 Act wherein the
department had a view that excise duty shall be included as a component for determination of the
value (retail price) for levying excise duty. The departmental view, being against the spirit of law, was
challenged by the taxpayers in appeals before the honorable High Courts of the country which, duly
appreciating the contentions of the taxpayers, overturned the departmental view and succeeded the
appeals.
Now since the controversy has attained finality up to the highest appellate level, the Company has
initiated the process of claiming refund of excess excise duty paid by it during the periods from 1994
to 1999 which aggregates to Rs. 1,115.145 million. The amount of refund, however, shall be
incorporated in the books of accounts once it is realized by the Company.
15.1.5 The Company, consequent to the order passed by the Supreme Court of Pakistan against the decision
of the Sindh High Court in the matter of infrastructure cess, filed a petition before the Sindh High Court,
challenging the levy of fifth version of the law enforcing infrastructure cess. Earlier, the Sindh High
Court, in August 2008, ruled out that only levies computed against consignments made on or after
December 28, 2006 shall be payable by the petitioners. Although the parties have reached an interim
arrangement, through an order of Sindh High Court dated May 31, 2011, for release of 50% of the
guarantees, the final order from Sindh High Court is still pending. According to the legal counsel of the
Company, chances of favorable outcome of the appeal are fair, therefore 50% of the amount of
infrastructure cess payable has not been incorporated in these financial statements amounting to Rs.
89.164 million.

15.1.6 The Company, consequent to the order-in-appeal passed by the learned Customs, Federal Excise and
Sales Tax Appellate Tribunal, Lahore, filed a petition before the Lahore High Court, challenging the levy
of sales tax on the in-house consumption of Shale, Gypsum and Limestone for the period of June 13,
1997 to August 11, 1998. According to the legal counsel of the Company, chances of favorable
outcome of the petition are fair, therefore the payable amount has not been incorporated in these
financial statements amounting to Rs 212.239 million.
15.1.7 The Company has issued the following guarantees in favour of:
- Collector of Customs, Excise and Sales Tax against levy of Sales Tax, custom duty and excise
amounting to Rs 33.627 million (2015: Rs 54.377 million).
- Director, Excise Collection Office, Sindh Development and Maintenance against recovery of
infrastructure fee amounting to Rs 425.9 million (2015: Rs 425.9 million).
- Director General, Mines and Minerals, Punjab against installation of cement factory near Khairpur,
District Chakwal amounting to Rs 3 million (2015: Rs 3 million).
- The President of the Islamic Republic of Pakistan against the performance of a contract to Frontier
Works Organization amounting to Rs 0.5 million (2015: Rs 0.5 million).
- Sui Northern Gas Pipelines Limited against supply of 6 MMCFD and 14 MMCFD gas for captive use
for Khairpur Project and for D.G Khan Project respectively amounting to Rs 427.606 million (2015: Rs
382.235 million).
- Professional Tax imposed by Administration Zila Council (The District Coordination Officer, DG Khan)
- Sindh High Court against levy of Sales Tax, custom duty and excise amounting to Rs 15.423 million
(2015: 15.423 million).
- The Managing Director, Lahore Waste Management Company (LWMC) against the performance of a
contract amounting to Rs 5 million (2015: Rs 15 million).
- Guarantees against export orders amounting to Rs 2.094 million (2015: Rs 46.096 million).
15.2 Commitments in respect of:
(i) Contracts for capital expenditure Rs. 274.83 million ( 2015: Rs. 427.335 million).
(ii) Letters of credit for capital expenditure Rs. 11,142.576 million (2015: Rs. 2,274.836 million)
(iii) Letters of credit other than capital expenditure Rs. 1,152.906 million ( 2015: Rs 996.607 million)
(iv) The amount of future payments under operating leases and the period in which these payments will
become due are as follows:
2016 2015
Not later than one year 331 331

Later than one year and not later than five years 1,325 1,325
Later than five years 4,976 5,309
6,632 6,965
16. Property, plant and equipment
Operating assets - note 16.1 31,806,997 27,979,032

Capital work-in-progress - note 16.2 7,674,465 1,874,469
Major spare parts and stand-by equipment - note 16.3 95,368 105,469
39,576,830 29,958,970

16.1 Operating assets 2016 (Rupees in thousand)
Annual Accumulated Depreciation Accumulated
Cost Book value
rate of Cost as at Additions/ depreciation charge/ depreciation
as at 30 June as at June
depreciation July 01, 2015 (Deletions) as at July 01, (deletions) as at June
2016 30, 2016
% 2015 for the year 30, 2016
Freehold land - 721,369 829,502 1,550,871 - - - 1,550,871
Leasehold land 3.33 63,000 - 63,000 15,750 2,100 17,850 45,150
Buildings on freehold land
- Factory building 10 6,700,177 1,133,793 7,833,970 3,366,430 342,823 3,709,253 4,124,717
- Office building and housing colony 5 837,822 426,872 1,264,694 330,921 27,124 358,045 906,649
Roads 10 578,342 - 578,342 316,847 26,149 342,996 235,346
Plant and machinery 2.38-9.02 33,011,721 2,911,098 35,922,819 11,388,264 1,230,964 12,619,228 23,303,591
Quarry equipment 20 1,890,109 163,922 2,054,031 1,237,203 107,300 1,344,503 709,528
Furniture and fittings 10 138,328 46,138 184,466 56,847 9,473 66,320 118,146
Office equipment 10 263,074 36,923 299,997 108,194 17,682 125,876 174,121
Vehicles 20 420,108 134,756 503,349 166,679 48,548 194,048 309,301
(51,515) (21,179)
Aircraft 30 328,752 - 328,752 203,907 37,453 241,360 87,392
Power and water supply lines 10 498,528 47,163 545,691 281,256 22,250 303,506 242,185
45,451,330 5,730,167 51,129,982 17,472,298 1,871,866 19,322,985 31,806,997
(51,515) (21,179)
Annual Report 2016

132
2015 (Rupees in thousand)
133
Cost Book value
2015 30, 2015
% 2014 for the year 30, 2015
Freehold land - 601,362 120,007 721,369 - - - 721,369

Leasehold land 3.33 63,000 - 63,000 13,650 2,100 15,750 47,250

- Factory building 10 6,575,135 125,042 6,700,177 2,998,692 367,738 3,366,430 3,333,747
- Office building and housing colony 5 826,806 11,016 837,822 304,409 26,512 330,921 506,901
Annual Report 2016

Roads 10 572,480 5,862 578,342 287,792 29,055 316,847 261,495
Plant and machinery 4-11.08 32,610,992 414,771 33,011,721 10,182,131 1,210,040 11,388,264 21,623,457
(14,042) (3,907)
Quarry equipment 20 1,762,387 127,722 1,890,109 1,136,885 100,318 1,237,203 652,906
Furniture and fittings 10 119,663 18,665 138,328 48,790 8,057 56,847 81,481
Office equipment 10 229,054 34,020 263,074 93,098 15,096 108,194 154,880
Vehicles 20 378,440 63,309 420,108 136,464 44,181 166,679 253,429
(21,641) (13,966)
Aircraft 30 328,752 - 328,752 150,403 53,504 203,907 124,845
Power and water supply lines 10 493,463 5,065 498,528 257,254 24,002 281,256 217,272
44,561,534 925,479 45,451,330 15,609,568 1,880,603 17,472,298 27,979,032
(35,683) (17,873)
16.1.1 Freehold land and building include book values of Rs 12 million (2015: Rs 12 million) and Rs 5.784 million (2015: Rs 6.089 million) respectively which are held
in the name of Chief Executive of the Company. This property is located in the locality of Defence Housing Authority where the by-laws restrict transfer of title
of the residential property in the name of the Company.
2016 2015
16.1.2. The depreciation charge for the year has been allocated as follows:
Cost of sales - note 28 1,793,840 1,789,684

Administrative expenses - note 29 73,580 86,591
Selling and Distribution expenses - note 30 4,446 4,328
1,871,866 1,880,603
16.1.3 Disposal of property, plant and equipment
Detail of property, plant and equipment disposed off during the year is as follows:
Particulars of Accumulated Sales Gain / (Loss) Mode of
Sold to Cost Book value
assets depreciation proceeds on disposal disposal
Vehicles Employees
Muhammad Naveed Akhtar 2,008 1,187 821 1,330 509 Auction
Ghulam Ahmad Alvi 1,586 757 829 841 12 -do-
Outside parties
Nadeem 822 521 301 617 316 Auction
Ghulam Nabi 662 534 128 618 490 -do-
Nadeem 822 521 301 638 337 -do-
Mr. Asim 837 535 302 671 369 -do-
Yasir Hussain 822 521 301 713 412 -do-
Khurram Imtiaz 1,394 772 622 1,213 591 -do-
Khurram Imtiaz 1,973 1,073 900 1,459 559 -do-
Khurram Mahmood 2,150 1,107 1,043 1,590 547 -do-
Khurram Imtiaz 1,587 557 1,030 1,393 363 -do-
Khurram Imtiaz 398 295 103 363 260 -do-
Kamran Ghulam Mustufa 500 314 186 375 189 -do-
Zeeshan Haider Raza 555 423 132 536 404 -do-
Asim 842 534 308 667 359 -do-
Fareed Khan 842 534 308 716 408 -do-
Muhammad Perwaiz 1,325 797 528 1,123 595 -do-
Khurram Imtiaz 2,097 1,093 1,004 1,621 617 -do-
Stolen- SGI Claim 28,939 8,290 20,649 28,044 7,395 Insurance Claim
Annual Report 2016

Other assets with book
value less than Rs 50,000 - - - - -
51,515 21,179 30,336 45,751 15,415
134
135
Plant & Machinery

Asset written off 7,042 1,955 5,087 - (5,087) Assets written off
Asset Retired for Overhauling 7,000 1,953 5,047 - - Retired from use
Vehicles
Employees
Munir Shah 662 452 210 218 8 Company policy
Akhund Saeed Khaliq 1,325 653 672 706 34 -do-
Annual Report 2016

Outside parties
Nasir Zahoor 275 191 84 549 465 Auction
Adnan Anwar 662 460 202 627 425 -do-
Rizwan Khan 1,269 804 465 1,060 595 -do-
Muhammad Bilal 1,269 804 465 1,140 675 -do-
Rashid Saleemi 1,337 724 613 1,210 597 -do-
Khurram Imtiaz 2,449 1,718 731 3,235 2,504 -do-
Habib Asad Khan 969 732 237 964 727 -do-
Mirza Abdul Hafeez 1,306 1,118 188 627 439 -do-
Muhammad Asim 2,679 1,589 1,090 2,398 1,308 -do-
Nadeem Gull 822 456 366 732 366 -do-
Irfan Ahmad 1,354 837 517 1,066 549 -do-
Syed Mazhar Jamil 1,756 1,265 491 1,650 1,159 -do-
Muhammad Awais 427 309 118 432 314 -do-
Faisal Mahmood 969 757 212 831 619 -do-
Asim Mumtaz 555 437 118 653 535 -do-
Muhammad Naeem 500 277 223 473 250 -do-
Security General Insurance Company 1,056 382 674 1,000 326 Insurance Claim

35,683 17,873 17,810 19,571 6,808
16.2 Capital work-in-progress
Capital Capital Transfers

Balance Borrowing cost expenditure Transfers to Balance
as at June expenditure capitalized within capital operating fixed as at June
incurred charged off work in
30, 2015 during the year during the assets 30, 2016
during the year progress
year
Civil works 724,241 1,097,453 - (6,597) 19,822 (1,526,177) 308,742

Plant and machinery 656,348 5,566,930 141,457 (1,543) 16,711 (2,910,144) 3,469,759
Advances 86,389 1,339,936 - - - (290,779) 1,135,546
Others 42,519 8,386 - - (36,533) (13,003) 1,369
Expansion Project :
- Civil works 76,848 1,908,278 - - - - 1,985,126
- Plant and Machinery - 45,184 - - - - 45,184
- Others 288,124 440,615 - - - - 728,739
1,874,469 10,406,782 141,457 (8,140) - (4,740,103) 7,674,465

Balance Borrowing cost expenditure Transfers to Balance
as at June expenditure capitalized within capital operating fixed as at June
30, 2014 during the year during the assets 30, 2015
year
Civil works 288,234 553,375 - - - (117,368) 724,241

Plant and machinery 101,548 767,345 - (306) - (212,239) 656,348
Advances 60,903 140,833 - - - (115,347) 86,389
Others 16,813 32,193 - - - (6,487) 42,519
Annual Report 2016

Expansion Project :
- Civil works 24,701 52,147 - - - - 76,848
- Others 142,119 146,005 - - - - 288,124
634,318 1,691,898 - (306) - (451,441) 1,874,469
136
2016 2015
16.3 Major spare parts and stand-by equipment
Balance at the beginning of the year 105,469 246,341

Additions during the year 126,515 167,272
Transfers made during the year (136,616) (308,144)
Balance at the end of the year 95,368 105,469
17. Intangible assets
This represents Oracle ERP system.
Cost
As at July 1 92,260 92,260
Additions - -
As at June 30 92,260 92,260
Less: Accumulated amortisation

As at July 1 73,808 55,356
Amortisation for the year - note 17.1 18,452 18,452
As at June 30 92,260 73,808
- 18,452
17.1 Oracle ERP system is being amortised over a useful life of five years.
17.2 The amortisation charge for the year has been allocated as follows:
Cost of sales - note 28 12,916 12,916

Selling and distribution expenses - note 30 2,768 2,768
18,452 18,452
18. Investments
These represent the long term investments in:

- Related parties - note 18.1 5,880,267 5,076,176
- Others - available for sale - note 18.2 151,263 133,089
6,031,530 5,209,265
Cumulative fair value gain - note 18.3 6,916,446 7,708,917

12,947,976 12,918,182

2016 2015
18.1 Related Parties
Nishat Chunian Limited - quoted - available for sale

7,173,982 (2015: 5,961,549) fully paid ordinary shares of Rs 10 each
Equity held: 2.99% (2015: 2.98%)
Market value - Rs 254.102 million (2015: Rs 218.968 million) 75,565 45,254
75,565 45,254
MCB Bank Limited

Equity held: 1.91% (2015: 1.91%)
Market value Rs 4,687.595 million (2015: Rs 5,307.580 million) 125,834 125,834
125,834 125,834

Equity held: 6% (2015: 4.59%)
Market value - Rs 1,052.794 million (2015: Rs 764.479 million) 917,238 643,459
Less: Cumulative impairment Loss (118,703) (118,703)
798,535 524,756
Subsidiary - unquoted - at cost
Nishat Paper Products Company Limited

Equity held: 55% (2015: 55%) 221,874 221,873
221,874 221,873
Nishat Dairy (Private) Limited

Equity held: 55.10% (2015: 55.10%) 2,331,900 2,331,900
2,331,900 2,331,900
Associates - quoted - available for sale

Equity held: 8.61% (2015: 8.61%)
Market value - Rs 3,268.237 million (2015: Rs 3,460 million) 1,577,174 1,577,174
1,326,559 1,326,559
Associates - unquoted
Nishat Hotels and Properties Limited

Equity held: 10.42% (2015: 6.25%) 1,000,000 500,000
1,000,000 500,000
5,880,267 5,076,176

Nishat Mills Limited and Nishat Hotels and Properties Limited are associated companies as per the Companies
Ordinance, 1984, however, for the purpose of measurement, these have been classified as available for sale and
measured at fair value as the Company does not have significant influence over these companies.
The Company's investment in ordinary shares of Nishat Hotels and Properties Limited has been valued at Rs 10
per share which corresponds to the fair value at the reporting date.
2016 2015
18.2 Others - available for sale
First Capital Mutual Fund

104,457 (2015: 104,457) certificates of Rs 10 each
Equity held 0.35% (2015: 0.35%)
Market value - Rs 1.232 million (2015: Rs 1.250 million) 890 890
Less: Cumulative impairment Loss (678) (678)
212 212
Pakistan Petroleum Limited

595,382 (2015: 459,782) fully paid ordinary shares of Rs 10 each
Equity held: 0.03% (2015: 0.02%)
Market value - Rs 92.313 million (2015:Rs 72.525) 117,405 99,231
117,405 99,231
United Bank Limited

Equity held: 0.02% (2015: 0.02%)
Market value - Rs 37.924 million (2015: 36.637 million) 33,646 33,646
33,646 33,646
151,263 133,089
18.3 Cumulative fair value gain
As at July 01 7,708,917 8,796,806

Fair value (loss)/gain recognized in other comprehensive income (792,471) (1,087,889)
6,916,446 7,708,917
on derecognition of investment in shares - -
As at June 30 6,916,446 7,708,917
18.4 Investments with a face value of Nil (2015: Nil) are pledged as security against bank facilities. 3,860,267 (2015:
3,860,267 ) shares of MCB Bank Limited are blocked in Central Depository Company ('CDC') account.
2016 2015
19. Long term loans and deposits
Considered Good
- Loans to related parties - note 19.1 - 17,205
- Other loans and advances - note 19.2 57,938 52,292
57,938 69,497

2016 2015
19.1 Loans to related parties
Loan to related party - note 19.1.1 17,206 34,411

Less: Receivable within one year (17,206) (17,206)
- 17,205
19.1.1 This represents an unsecured loan of Rs 12.250 million and Rs 4.956 million (2015: Rs 24.500 million
and Rs 9.911 million) given to Sui Northern Gas Pipelines Limited (SNGPL) for the development of
infrastructure for the supply of natural gas to the plants at D.G. Khan and Khairpur respectively. Mark
up is charged at rates ranging from 1.5% to 2% per annum (2015: 1.5% to 2% per annum) respectively
and is received annually. The principal amount is receivable in 4 equal annual instalments ending
December, 2016 and March, 2017, respectively. The maximum aggregate amount outstanding during
the year was Rs 17.206 million (2015: Rs 34.411 million).
2016 2015
19.2 Other loans and advances
Loans to employees
- Executives - note 19.2.1 105 137
- Others 1,973 2,848
2,078 2,985
Less: Receivable within one year
- Executives 26 32
- Others 671 875
697 907
1,381 2,078
Security deposits 56,557 50,214
57,938 52,292
19.2.1 Executives
Opening balance 137 40

Transfer from others to executives - 145
Interest accrued - 10
137 195
Less: Repayment during the year 32 58
105 137
These represent secured loans given to executives and other employees for house building and
purchase of motor vehicles and are recoverable in equal monthly instalments over a period of 24 to 96
months. The loans given to executives and other employees carry interest at the rate of 10% per
annum (2015: 10% per annum) except for loans given to workers which are interest free.
The loans of Rs 2.078 million (2015: Rs 2.985 million) are secured against the employees' respective
retirement benefits.
The maximum aggregate amount due from executives at any time during the year was Rs 0.137 million
(2015: Rs 0.185 million).

2016 2015
20. Stores, spare parts and loose tools
Stores [including in transit: Rs 58.623 million 1,564,087 1,140,537

(2015: Rs 284.723 million)]
Spare parts [including in transit Rs 7.94 million 2,437,661 2,492,767
(2015: Rs 3.139 million)]
Loose tools 4,433 2,554
4,006,181 3,635,858
20.1 Stores and spare parts include items which may result in fixed capital expenditure but are not distinguishable.
2016 2015
21. Stock-in-trade
Raw materials 208,713 167,603

Packing material [including in transit amounting to Rs. 0.142 million
(2015: Nil)] 205,638 206,455
Work-in-process 166,940 508,578
Finished goods 185,342 305,740
766,633 1,188,376
22. Trade debts - considered good
Secured 148,052 61,038

Unsecured
- Related parties - note 22.1 14,021 12,402
- Others 39,501 83,459
201,574 156,899
22.1 Related parties - unsecured
Nishat Hospitality (Private) Limited 537 537

Nishat Linen (Private) Limited 221 -
Nishat Hotels and Properties Limited 12,822 10,114
MCB Bank Limited - -
Nishat Spinning (Pvt) Ltd - 711
Nishat Dairy (Private) Limited 434 600
Nishat Chunian Limited - 440
Nishat Agriculture Farming (Pvt) Ltd 7 -
14,021 12,402

Age analysis of the amounts due from related parties is as follows:
1 to 3 More than 3 As at June 30, As at June 30,

months months 2016 2015
Nishat Hospitality (Private) Limited - 537 537 537

Nishat Linen (Private) Limited - 221 221 -
Nishat Hotels and Properties Limited 4,530 8,292 12,822 10,114
MCB Bank Limited - - - -
Nishat Spinning (Pvt) Ltd - - - 711
Nishat Dairy (Private) Limited 434 - 434 600
Nishat Chunian Limited - - - 440
Nishat Agriculture Farming (Pvt) Ltd 7 - 7 -
4,971 9,050 14,021 12,402
2016 2015
23. Investments
Available for sale - quoted

Related parties - note 23.1 479,066 479,066
479,066 479,066
At fair value through profit or loss

Others - note 23.3 - 3,173,170
Related parties - note 23.4 - 1,507,206
- 4,680,376
17,819,005 24,855,796
Nishat Chunian Limited - quoted

Equity held: 0.042% (2015: 0.05%)
832 832
MCB Bank Limited - quoted

Equity held: 7.27% (2015: 7.27%)
478,234 478,234
479,066 479,066

2016 2015
As at July 01 19,696,354 23,926,087

Fair value (loss) / gain recognized in other comprehensive income (2,356,415) (4,199,487)
17,339,939 19,726,600
on derecognition of investment in shares - (30,246)
As at June 30 17,339,939 19,696,354
23.3 Others - At fair value through profit or loss
ABL Government Securities fund

Nil (2015: 316,292,242) units
Cost Nil (2015: 3,171.589 million) - 3,173,170
- 3,173,170
23.4 Related parties - At fair value through profit or loss
MCB Pakistan Sovereign Fund (MCB-PSF)

Nil (2015: 15,057,137) units
Cost Nil (2015: 1,505.964) - 1,507,206
- 1,507,206
24. Advances, deposits, prepayments and other receivables
Current portion of loans to employees - considered good 697 907

Current portion of long term receivable from related party 17,206 17,206
Advances - considered good
- To employees - note 24.1 17,047 2,015
- To suppliers 197,897 241,082
214,944 243,097
Due from related parties - note 24.2 5,240 6,625

Prepayments 12,560 3,623
Mark-up receivable from related party - note 24.3 140 280
Profit receivable on bank deposits 36,325 1,956
Advance against investment in shares - 30,311
Balances with statutory authorities
- Sales tax - note 24.4 263,177 260,678
- Excise duty 17,243 17,243
- Export rebate 15,469 63,696
295,889 341,617
Other receivables 1,446 2,388
584,447 648,010
24.1 Included in advances to employees are amounts due from executives of Rs 4.424 million (2015: Rs 1.105
million).

2016 2015
24.2 Due from related parties - unsecured
Nishat Mills Limited 4,751 6,136

Nishat Developers (Private) Limited 489 489
5,240 6,625
24.3 This represents mark-up receivable from Sui Northern Gas Pipelines Limited against the loan as referred to in
note 19.1.1.
24.4 Sales tax recoverable includes amounts which have been recovered by the sales tax department against
miscellaneous demands raised by it. The Company has filed appeals against the demands at different forums
as referred to in note 15.
2016 2015
25. Derivative financial instrument
Classified under current liabilities

Cross currency interest rate swap - note 25.1 - -
Classified under current assets

Cross currency interest rate swap - note 25.1 14,701 9,873
25.1 This represents derivative cross currency interest rate swap arrangement with a commercial bank. Under the
terms of the arrangement, the Company pays Karachi Inter-Bank Offered Rate ('KIBOR') minus bank spread to
the arranging bank on the notional Pak Rupee (PKR) amount for the purposes of the cross currency swap, and
receives London Inter-Bank Offered Rate ('LIBOR') on the notional US Dollar (USD) amount from the arranging
bank. There have been no transfers of liabilities under the arrangements, only the nature of the interest payment
has changed. The derivative cross currency swap outstanding as at June 30, 2016 has been marked to market
and the resulting loss has been included in the profit and loss account.
2016 2015
26. Cash and bank balances
At banks:
Savings accounts
Local currency - note 26.1 - 26.2 198,164 124,920
Foreign Currency: US$ 1,423,638 (2015: US$ 765,885) 149,055 77,737
Term deposit receipts 6,275,120 -
Current accounts 386,086 53,636
7,008,425 256,293
In hand 1,419 1,430
7,009,844 257,723
26.1 The balances in saving accounts bear mark-up at 4% per annum (2015: 4.5% to 7.1% per annum).
26.2 Included in balances at banks on saving accounts are Rs 14.480 million (2015: Rs 14.480 million) which are
under lien to secure bank guarantees referred to in note 13.2.

2016 2015
27. Sales
Local sales 33,190,696 28,756,679

Export sales - note 27.1 3,855,019 3,711,942
37,045,715 32,468,621
Less:
Sales tax 5,368,344 4,658,118
Excise duty and special excise duty 1,626,039 1,373,029
Commission to stockists and export agents 347,574 332,863
7,341,957 6,364,010
29,703,758 26,104,611
27.1 Export sales include rebate on exports amounting to Rs 21.609 million (2015: Rs 20.527 million).
2016 2015
28. Cost of sales
Raw and packing materials consumed 2,414,220 2,231,919

Salaries, wages and other benefits - note 28.1 1,691,573 1,378,058
Electricity and gas 2,026,778 2,729,317
Furnace oil and coal 6,466,481 6,078,717
Stores and spares consumed 1,489,298 1,597,051
Repairs and maintenance 211,549 207,249
Insurance 65,932 68,049
Depreciation on property, plant and equipment - note 16.1.2 1,793,840 1,789,684
Amortisation of intangible assets - note 17.2 12,916 12,916
Royalty 310,038 274,437
Excise duty 29,504 26,248
Vehicle running 27,563 31,215
Postage, telephone and telegram 3,752 5,203
Printing and stationery 4,126 5,209
Legal and professional charges 1,277 2,094
Travelling and conveyance 12,469 11,309
Estate development 26,740 23,672
Rent, rates and taxes 52,327 42,492
Freight charges 25,448 38,576
Other expenses 24,870 25,793
16,690,701 16,579,208
Opening work-in-process - note 22 508,578 560,634

Closing work-in-process - note 22 (166,940) (508,578)
341,638 52,056
Cost of goods manufactured 17,032,339 16,631,264
Opening stock of finished goods - note 22 305,740 348,437

Closing stock of finished goods - note 22 (185,342) (305,740)
120,398 42,697
Less: Own consumption (117,171) (24,550)
17,035,566 16,649,411

28.1 Salaries, wages and other benefits include Rs 39.441 million (2015: Rs 35.445 million), Rs 32.926 million (2015:
Rs 32.539 million) and Rs 20.881 million (2015: Rs 24.726 million) respectively, in respect of provident fund
contribution by the Company, provision for gratuity and staff compensated absences.
2016 2015
28.1.1 Salaries, wages and other benefits
Salaries, wages and other benefits include the

following in respect of retirement benefits:
Gratuity
Interest cost for the year 23,884 24,851
32,927 32,539
Accumulating compensated absences

Remeasurements (1,498) 209
20,881 24,726
29. Administrative expenses
Salaries, wages and other benefits - note 29.1 277,286 223,642

Electricity, gas and water 9,534 9,876
Insurance 2,949 2,648
Depreciation on property, plant and equipment - note 16.1.2 73,580 86,591
Legal and professional services - note 29.2 19,192 21,803
Rent, rates and taxes 258 743
Entertainment 3,583 2,864
School expenses 25,020 23,576
Fee and subscription 24,610 15,719
Advances written off 50,684 -
572,780 472,326
29.1 Salaries, wages and other benefits include Rs 7.906 million (2015: Rs 7.679 million), Rs 7.394 million (2015: Rs
8.526 million) and Rs 5.186 million (2015: Rs 6.482 million) respectively, in respect of provident fund contribution
by the Company, provision for gratuity and staff compensated absences.

2016 2015

Gratuity
7,393 8,526

Remeasurements (372) 55
5,186 6,482
29.2 Legal and professional charges
Legal and professional charges include the following

in respect of auditors' remuneration for:
Statutory audit 2,310 2,000
Half-yearly review 666 605
Tax services 9,355 4,375
Other certification charges 110 100
Out of pocket expenses 120 117
12,561 7,197
30. Selling and distribution expenses

Insurance 647 650
Legal and professional services 972 3,999
Entertainment 864 886
Advertisement and sales promotion 15,666 10,348
Freight and handling charges 772,330 593,360
Debtors written off - -
Other expenses 752 2,164
949,628 746,723

4.085 million) and Rs 2.602 million (2015: Rs 3.149 million) respectively, in respect of provident fund contribu-
tion by the Company, provision for gratuity and staff compensated absences.
2016 2015
Salaries, wages and other benefits include the following in

respect of retirement benefits:
Gratuity
3,697 4,085

Interest cost for the year 870 1,066
2,601 3,149
31. Other operating expenses
Workers' profit participation fund 665,625 507,304

Donations - note 31.1 650 4,245
Realized loss on derivative financial instrument 4,907 46,642
Un-realized loss on derivative financial instrument - -
Exchange loss 76,071 78,018
Workers' Welfare Fund 166,139 91,596
Others 250 -
913,642 727,805
31.1 None of the directors and their spouses had any interest in any of the donees.
2016 2015
32. Other income
Income from financial assets

Income on bank deposits 418,266 8,369
Interest on loans to employees - -
Mark-up on loan / advances to related parties 499 9,823
Unrealized gain on derivative financial instruments 4,828 24,775
Gain on disposal of available for sale investments 29,222 30,246
Gain on investments at fair value through profit or loss - 387,738
Dividend Income from:
- Others - note 32.2 5,743 7,639
1,869,917 1,703,466
C/F 2,322,732 2,164,417

2016 2015
B/F 2,322,732 2,164,417

Income from non-financial assets
Rental income 834 813
Gain on disposal of property, plant and equipment - note 16.1.4 15,415 6,808
Scrap sales 23,860 140,391
Provisions and unclaimed balances written back 16,207 7,901
Others 5 5
56,321 155,918
2,379,053 2,320,335
32.1 Dividend income from related parties

MCB Bank Limited 1,636,436 1,534,159
Adamjee Insurance Company Limited 54,928 34,448
Nishat Chunian Limited 10,912 6,062
Nishat Paper Products Company Limited 25,595 -
1,864,174 1,695,827
32.2 Dividend income from other parties
United Bank 2,786 2,347

First Capital Mutual Fund 83 74
Pakistan Petroleum 2,874 5,217
5,743 7,638
33. Finance cost
Interest and mark-up on:

- Workers' profit participation fund 2,529 360
Guarantee commission 2,130 2,550
Bank charges 24,336 23,279
130,451 281,504
34. Taxation
Current
- For the year 2,734,000 951,000
- Prior 134,740 37,608
2,868,740 988,608
Deferred 822,332 933,889

3,691,072 1,922,497
34.1 The provision for current taxation represents tax under normal tax regime of the Income Tax Ordinance, 2001
('the Ordinance') at the rate of 32% and super tax at the rate of 3% under section 4B of the Ordinance as
reduced by tax credit under section 65B. In addition to this, it includes tax on exports and dividend income
which is full and final discharge of Company's tax liability in respect of income arising from such source and tax
on capital gains under section 37A of the Ordinance.

For purposes of current taxation, the tax losses available for carry forward as at June 30, 2016 are estimated
approximately at Nil (2015: Nil).
34.2 In terms of the provisions of Section 59B of the Income Tax Ordinance, 2001 ('the Ordinance'), a subsidiary
company may surrender its tax losses in favour of its holding company for set off against the income of its
holding Company subject to certain conditions as prescribed under the Ordinance.
Accordingly, the Company has adjusted its tax liability for the tax year 2016 by acquiring the losses of its
subsidiary company, Nishat Dairy (Private) Limited and consequently an aggregate sum of Rs 437.255 million
equivalent to the tax value of the losses acquired has been recognized as payable to the subsidiary company.
2016 2015
% %
34.3 Tax charge reconciliation
Numerical reconciliation between the average effective

tax rate and the applicable tax rate
Applicable tax rate 32.00 33.00
Tax effect of amounts that are:

- Not deductible for tax purposes (0.19) 0.05
Effect of change in prior years' tax 1.10 (1.69)
Effect of change in tax rate - (8.04)
Effect of tax credits (2.46) (0.43)
Effect of apportionment of expenses 1.34 3.06
Effect of presumptive tax regime (2.23) (5.79)
Rounding and others 0.01 (0.02)
(2.43) (12.86)
Average effective tax rate charged to profit and loss account 29.57 20.14
2016 2015
35. Earnings per share
35.1 Earnings per share - Basic
Profit for the year Rupees 8,789,672,000 7,624,676,570

Weighted average number of ordinary shares
Number 438,119,118 438,119,118
Earnings per share - basic Rupees 20.06 17.40
35.2 Earnings per share - Diluted
There is no dilution effect on the basic earnings per share as the Company has no such commitments.

2016 2015
36. Cash generated from operations
Profit before tax 12,480,744 9,547,177

Adjustments for:
- Depreciation on property, plant and equipment 1,871,866 1,880,603
- Amortisation on intangible assets 18,452 18,452
- Gain on disposal of investments (29,222) (30,246)
- Gain on investments at fair value through profit or loss - (387,738)
- Gain on disposal of property, plant and equipment (15,415) (6,808)
- Realized loss on derivative financial instruments 4,907 46,642
- Unrealized gain on derivative financial instruments (4,828) (24,775)
- Dividend income (1,869,917) (1,703,466)
- Mark-up income (499) (9,823)
- Provision for retirement benefits 72,685 79,507
- Exchange loss 76,071 78,018
- Liabilities written back (16,231) -
- Advances written off 51,030 -
- Finance cost 130,451 281,504
Profit before working capital changes 289,350 221,870
Effect on cash flows due to working capital changes

- (Increase) / decrease in stores, spares and loose tools (370,323) 52,937
- Decrease in stock-in-trade 421,743 160,366
- (Increase) / decrease in trade debts (29,884) 24,756
- Decrease in advances, deposits, prepayments
and other receivables 12,393 86,627
- Increase in trade and other payables 1,092,544 1,579,715
1,126,473 1,904,401
13,896,567 11,673,448
37. Cash and cash equivalents
Cash and bank balances - note 26 7,009,844 257,723

Short term borrowings - secured - note 13 (3,451,352) (1,826,072)
3,558,492 (1,568,349)

38. Remuneration of Chief Executive, Directors and Executives
38.1 The aggregate amount charged in the financial statement for the year for remuneration, including certain benefits, to the Chief Executive, full time working directors
and executives of the Company are as follows:
Chief Executive Directors Executives
2016 2015 2016 2015 2016 2015
Managerial remuneration 17,336 15,760 12,732 11,575 431,982 371,947

Contributions to Provident and
Gratuity Fund - - 2,334 2,122 69,121 36,462
Housing 270 270 335 335 160,226 134,926
Utilities - - - - 31,988 28,794
Leave passage - - 1,273 1,157 13,580 10,852
Bonus 1,313 1,183 965 869 103,580 85,778
Medical expenses 304 389 299 268 22,110 17,119
Others 11,287 10,237 637 549 73,068 61,711
30,510 27,839 18,575 16,875 905,655 747,589
Number of persons 1 1 1 1 365 332
38.2 The Company also provides the chief executive and some of the directors and executives with Company maintained cars, travelling and utilities.
38.3 During the year the Company paid meeting fee amounting to Rs 180 thousand (2015: Rs 220 thousand) to its non-executive directors.
Annual Report 2016

152
39. Transactions with related parties
The related parties comprise subsidiary company, associated companies, other related companies, directors, 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, dividend income is disclosed in note 32.1, expense charged in respect of staff retirement benefit plans is
disclosed in note 9, amounts due from directors and key management personnel are shown under receivables and
remuneration of directors and key management personnel is disclosed in note 38. Other significant transactions with
related parties are as follows:
2016 2015
Relationship with the Company Nature of transactions
i. Subsidiary company Purchase of goods 1,297,934 1,124,699

Sale of goods services 16,998 20,493
Rental income 834 813
Interest income - 9,005
Dividend income 25,595 -
ii. Other related parties Sale of goods 121,299 321,747

Sale of equipment - -
Purchase of asset - -
Insurance premium 91,133 104,235
Purchase of services 1,397,836 1,268,675
Insurance claims received 31,649 6,284
Mark-up income on balances
with related parties 19,434 4,625
Dividend income 1,838,579 1,695,827
Dividend paid 720,418 499,582
iii. Post employment benefit plans Expense charged in respect of

retirement benefit plans
(including capitalized) 76,187 82,038
Expense charged in respect of
contributory provided fund 52,533 47,910
Funds paid to contributory provident fund 159,282 157,735
40. Plant capacity and actual production
Capacity Actual production

2016 2015 2016 2015
Clinker (Metric Tonnes)
Unit I 810,000 810,000 696,461 463,886
Unit II -note 40.1 1,200,000 1,200,000 1,227,600 1,243,109
Unit III 2,010,000 2,010,000 2,040,937 1,800,235
40.1 Normal capacity is based on 300 working days, this can be exceeded if the plant is operational for more than
300 days during the year.

2016 2015
41. Number of employees
Total number of employees as at June 30 1,156 1,132
Average number of employees during the year 1,152 1,123
2016 2015
42. Provident Fund Related Disclosures
The company operates a provident fund for its employees.
(i) Size of the fund - total assets 1,547,895 1,401,591

(ii) Cost of investments made 958,338 878,139
(iv) Fair value of investments - note 42.1 1,380,898 1,249,972
(iii) Percentage of investments made 89.21% 89.18%
42.1 The breakup of fair value of investments is:
2016 2015
Fair value Percentage of Fair value Percentage of
of size of of size of
investment fund investment fund
(Rs in '000') --%-- (Rs in '000') --%--
Category wise break-up of investments

Special accounts in a scheduled bank 142,774 9.22% 88,476 7.08%
Government securities 401,625 25.95% 423,260 33.86%
Listed securities
- Mutual funds 119,468 7.72% 116,085 9.29%
- Other listed securities 670,446 43.31% 547,724 43.82%
Un-listed securities 46,585 3.01% 74,427 5.95%
1,380,898 89.21% 1,249,972 89.18%
The figures for 2016 are based on un-audited financial statements of the Provident Fund. The investments of
the provident fund have been made in accordance with the provisions of Section 227 of the Companies
Ordinance, 1984 and the rules formulated for this purpose except for:
- investments in unlisted securities (NIT units)

- investments in listed securites in excess of 30% of the provident fund
The management is taking steps to dispose off such investments.
43. Financial risk management
43.1 Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value
interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall
risk management programme focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Company’s financial performance. The Company uses derivative financial
instruments to hedge certain risk exposures.

Risk management is carried out by the Company's Board of Directors (the Board). The Company's finance
department evaluates and hedges financial risks. The Board provides written principles for overall risk
management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate
risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment
of excess liquidity.
The Company's overall risk management procedures to minimise the potential adverse effects of financial
market on the Company's performance are as follows:
(a) Market risk
(i) Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. Currency risk arises mainly from future commercial transactions or
receivables and payables that exist due to transactions in foreign currencies.
The Company is exposed to currency risk arising from various currency exposures, primarily with respect to the
United States Dollar (USD). Currently, the Company’s foreign exchange risk exposure is restricted to bank
balances and amounts receivable from / payable to the foreign entities.
2016 2015
Cash and bank balances - USD 1,424 766

Receivable against sales to foreign parties - USD 1,417 601
Long term loan - USD (4,663) (9,327)
Net liability exposure - USD (1,822) (7,960)
At June 30, 2016, if the Rupee had weakened / strengthened by 10% against the US dollar with all other
variables held constant, post-tax profit for the year would have been Rs 13.442 million (2015: Rs 80.947 million)
lower / higher, mainly as a result of foreign exchange losses / gains on translation of US dollar-denominated
financial assets and liabilities.
(ii) Price risk
The Company is exposed to equity securities price risk because of investments held by the Company and
classified as available for sale. Material investments within the portfolio are managed on an individual basis and
all buy and sell decisions are approved by the Board. The primary goal of the Company's investment strategy
is to maximise investment returns.
The Company’s investments in equity of other entities that are publicly traded are included in the Pakistan Stock
Exchange.
The table below summarises the impact of increases / decreases of the KSE-100 index on the Company’s
post-tax profit for the year and on equity. The analysis is based on the assumption that the KSE had increased
/ decreased by 10% with all other variables held constant and all the Company’s equity instruments moved
according to the historical correlation with the index:

Impact on post-tax profit Impact on other components
of equity
2016 2015 2016 2015
Karachi Stock Exchange - 468,025 2,721,321 3,003,983
Post-tax profit for the year would increase / decrease as a result of gains / losses on equity securities classified
as at fair value through profit or loss. Other components of equity would increase / decrease as a result of gains
/ losses on equity securities classified as available for sale. As at June 30, 2016, the Company had no invest-
ments classified as fair value through profit or loss.
(iii) Cash flow and fair value interest rate risk
Interest rate risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.
As the Company has no significant floating interest rate assets, the Company’s income is substantially indepen-
dent of changes in market interest rates.
The Company’s interest rate risk arises from short term and long-term borrowings. These borrowings issued at
variable rates expose the Company to cash flow interest rate risk.
The Company analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking
into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these
scenarios, the Company calculates the impact on profit and loss of a defined interest rate shift. The scenarios
are run only for liabilities that represent the major interest-bearing positions.
At June 30, 2016, if interest rates on floating rate borrowings had been 1% higher / lower with all other variables
held constant, post-tax profit for the year would have been Rs 35.905 million (2015: Rs 27.503 million) higher /
lower, mainly as a result of higher / lower interest expense on floating rate borrowings.
(b) Credit risk
Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other
party by failing to discharge an obligation.
Credit risk of the Company arises from cash and cash equivalents, derivative financial instruments and deposits
with banks and financial institutions, as well as credit exposures to distributors and wholesale and retail
customers, including outstanding receivables and committed transactions. The management assesses the
credit quality of the customers, taking into account their financial position, past experience and other factors.
Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The
utilisation of credit limits is regularly monitored and major sales to retail customers are settled in cash. For banks
and financial institutions, only independently rated parties with a strong credit rating are accepted.
(i) Exposure to credit risk
The Company monitors the credit quality of its financial assets with reference to historical performance of such
assets and available external credit ratings. The carrying values of financial assets exposed to credit risk and
which are neither past due nor impaired are as under:

2016 2015
Long term loans and deposits 57,938 69,497

Trade debts - unsecured 53,522 95,861
Advances, deposits, prepayments and other receivables 61,054 29,362
Balances with banks 7,008,425 256,293
7,180,939 451,013
The aging analysis of trade receivables - unsecured is as follows:
Up to 90 days 43,888 78,870

91 to 180 days 5,352 9,776
181 to 365 days 2,141 3,653
Above 365 days 2,141 3,562
53,522 95,861
The management estimates the recoverability of trade receivables on the basis of financial position and past
history of its customers based on the objective evidence that it shall not receive the amount due from the
particular customer. The provision is written off by the Company when it expects that it cannot recover the
balance due. Any subsequent repayments in relation to amount written off are credited directly to profit and loss
account.
(ii) Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to
external credit ratings (if available) or to historical information about counterparty default rate:
Rating Rating
Short term Long term Agency 2016 2015
Allied Bank Limited A1+ AA+ PACRA - -

Askari Bank Limited A-1+ AA JCR-VIS 6 442
Bank Alfalah Limited A1+ AA PACRA 268,170 77,737
Bank Islami Pakistan Limited A1 A+ PACRA 58 14
Bank of Punjab A1+ AA- PACRA 109 300
Citibank N.A. P-1 A1 Moody's 2 74
Dubai Islamic Bank
Pakistan Limited A-1 A+ JCR-VIS 348 872
Faysal Bank Limited A1+ AA PACRA 4 4
Habib Bank Limited A-1+ AAA JCR-VIS 500,000 6,943
HSBC Bank Middle
East Limited P-1 A2 Moody's - -
MCB Bank Limited A1+ AAA PACRA 777,538 133,019
Meezan Bank Limited A-1+ AA JCR-VIS 12 23
National Bank of Pakistan A1+ AAA JCR-VIS 1,922 4,082
NIB Bank Limited A1+ AA- PACRA 1,017,347 15,933
Silk Bank Limited A-2 A- JCR-VIS 5 5
Standard Chartered Bank
(Pakistan) Limited A1+ AAA PACRA 554 2,300
United Bank Limited A-1+ AA+ JCR-VIS 154,517 13,775
Soneri Bank Limited A1+ AA- PACRA 715 769
Deutsche Bank AG P-2 Baa2 Moody's 1 -
Habib Metropolitan Bank Limited A1+ AA+ PACRA 2,258,502 1
JS Bank A1+ A+ 2,025,119 -
Bank Al-Habib A1+ AA+ 3,496 -
Samba Bank Limited A-1 AA JCR-VIS - -
7,008,425 256,293

(c) Liquidity risk
Liquidity risk represents the risk that the Company shall encounter difficulties in meeting obligations associated
with financial liabilities.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability
of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the
Company's businesses, the Company's finance department maintains flexibility in funding by maintaining
availability under committed credit lines.
Management monitors the forecasts of the Company’s cash and cash equivalents (note 37) on the basis of
expected cash flow. This is generally carried out in accordance with practice and limits set by the Company.
These limits vary by location to take into account the liquidity of the market in which the entity operates. In
addition, the Company's liquidity management policy involves projecting cash flows in each quarter and
considering the level of liquid assets necessary to meet its liabilities, monitoring balance sheet liquidity ratios
against internal and external regulatory requirements and maintaining debt financing plans.
The table below analyses the Company’s financial liabilities and net-settled derivative financial liabilities into
relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date.
The amounts disclosed in the table are the contractual undiscounted cash flows as the impact of discounting
is not significant.
At June 30, 2016 Carrying value Less than Between 1 and 3 to 5 years
1 years 2 years
Long term finances 3,538,251 1,388,251 800,000 1,350,000

Trade and other payables 4,763,371 4,763,371 - -
Accrued finance cost 52,931 52,931 - -
Short term borrowings - secured 3,451,352 3,451,352 - -
11,805,905 9,655,905 800,000 1,350,000
1 years 2 years
Long term finances 1,348,522 634,261 634,261 80,000

6,862,481 6,148,220 634,261 80,000
43.2 Capital risk management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain
an optimal capital structure to reduce the cost of capital.
The Company manages its capital structure 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
dividends paid to shareholders or issue new shares.
Consistent with others in the industry and the requirements of the lenders, the company monitors the capital
structure on the basis of gearing ratio. This ratio is calculated as total debt divided by total capital employed.
Total debt represents long term and short-term finances obtained by the Company. Total capital employed
includes equity as shown in the balance sheet plus total debt. The Company’s strategy, which was unchanged
from last year, was to maintain a gearing ratio of 60% debt and 40% equity. The gearing ratio as at June 30,
2016 and June 30, 2015 is as follows:

2016 2015
Total interest bearing borrowings 6,989,603 3,174,594

Total equity 65,783,429 62,296,071
Total capital employed 72,773,032 65,470,665
Gearing ratio 10% 5%
43.3 Fair value estimation
The table below analyses the financial instruments carried at fair value, by valuation method. The different levels
have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(Level 3).
The following table presents the Company's assets and liabilities that are measured at fair value:
As at June 30, 2016 Level 1 Level 2 Level 3 Total

Assets
Investments - Available for sale 27,213,207 1,000,000 - 28,213,207
Investments at fair value through
profit and loss - - - -
Derivative financial instruments - 14,701 - 14,701
Total assets 27,213,207 1,014,701 - 28,227,908
Liabilities - - - -
Total liabilities - - - -
As at June 30, 2015

Assets
Investments - Available for sale 30,039,829 500,000 - 30,539,829
Investments at fair value through
profit and loss 4,680,376 - - 4,680,376
34,720,205 509,873 - 35,230,078
Liabilities
Derivative financial instruments - - - -

43.4 Financial instruments by categories
At fair value
through Available Loans and
profit or loss for sale receivables Total
As at June 30, 2016
Assets as per balance sheet

Derivative financial instrument 14,701 - - 14,701
Long term loans and advances - - 57,938 57,938
Trade debts - - 201,574 201,574
Loans, advances and other receivables - - 61,054 61,054
Investments - 28,213,207 - 28,213,207
Cash and bank balances - - 7,009,844 7,009,844
14,701 28,213,207 7,330,410 35,558,318
At fair value
As at June 30, 2015

Loans, advances and other receivables - - 29,362 29,362
Trade debts - - 156,899 156,899
Investments 4,680,376 30,539,829 - 35,220,205
Cash and bank balances - - 257,723 257,723
4,690,249 30,539,829 513,481 35,743,559
Financial liabilities at fair Financial liabilities at

value through profit or loss amortized cost
2016 2015 2016 2015
Liabilities as per balance sheet
Long term finance - secured - - 3,538,251 1,348,522

Accrued mark up - - 52,931 27,304
Trade and other payables - - 4,763,371 3,660,583
Short term borrowings - secured - - 3,451,352 1,826,072
- - 11,805,905 6,862,481
43.5 Offsetting financial assets and financial liabilities
There are no significant financial assets and financial liabilities that are subject to offsetting, enforcable master
netting arrangements and similar agreements.

44. Shariah compliant arrangements
Nature of As at June 30, 2016 As at June 30, 2015

shariah Carried under Carried under
Compliant Shariah Shariah
arrangement compliant compliant
Description if any arrangements Others arrangements Others
Assets
Bank balances (note 26)
- Current accounts Various 745 186,078 897 124,908
- Savings accounts Various 12,086 6,809,516 12 130,477
12,831 6,995,594 909 255,385
Liabilities
Long term finances - secured Diminishing

(note 7) musharika 1,700,000 1,838,251 - 1,348,522
Short term borrowings - secured
(note 13) Istisna 1,266,077 2,185,276 448,785 1,377,288
2,966,077 4,023,527 448,785 2,725,810
For the year ended For the year ended

June 30, 2016 June 30, 2015
Carried under
Shariah Shariah
compliant compliant
Description arrangements Others arrangements Others
Income
Income on bank deposits 358 417,908 - 8,369
358 417,908 - 8,369
Expenses
Finance cost
- On long term borrowings 90,552 87,717 9,346 75,165
- On short term borrowings 3,444 61,200 16,769 154,036
93,996 148,917 26,115 229,201
Breakup of dividend income has been disclosed in note 32.1 and 32.2

Relationship
Non-Islamic With Islamic
window windows
operations operations
44.1 Relationship with banks
Allied Bank Limited Yes NA

Bank Alfalah Limited Yes NA
Bank Al-Habib Limited Yes NA
Bank Islami Pakistan Limited NA Yes
Citi Bank N.A. Yes NA
Dubai Islamic Bank NA Yes
Faysal Bank Limited Yes NA
Habib Bank Limited Yes Yes
Habib Metropolitan Bank Yes NA
MCB Bank Limited Yes Yes
Meezan Bank Limited NA Yes
National Bank of Pakistan Yes NA
NIB Bank Limited Yes NA
Samba Bank Limited Yes NA
Soneri Bank Limited Yes NA
Standard Chartered Bank (Pakistan) Limited Yes Yes
The Bank of Punjab Yes NA
United Bank Limited Yes NA
45. Date of authorisation for issue
These financial statements were authorised for issue on August 31, 2016 by the Board of Directors of the Company.
46. Events after the balance sheet date
46.1 The Board of Directors have proposed a final dividend for the year ended June 30, 2016 of Rs 6 per share (2015:
Rs 5 per share), amounting to Rs 2,628.715 million (2015: Rs 2,190.596 million) at their meeting held on August
31, 2016 for approval of the members at the Annual General Meeting to be held on October 31, 2016. These
financial statements do not reflect this appropriation.
46.2 Finance Act, 2015 introduced income tax at the rate of 10% on undistributed reserves where such reserves of
the company are in excess of its paid up capital and the company derives profits for a tax year but does not
distribute requisite cash dividend within six months of the end of the said tax year. Liability in respect of such
income tax, if any, is recognised when the prescribed time period for distribution of dividend expires.

Consolidated Financial Statements
Directors’ Report on Consolidated FS
The consolidated accounts represent accounts of DG Khan Cement Company Limited (DGKC) the holding company and
Nishat Paper Products Company Limited (NPPCL) and Nishat Dairy (Private) Limited (NDL).
The directors of your company are pleased to present you the consolidated performance numbers of for the year ended
on June 30, 2016:
FY16 FY15
Sales 31,946,614 28,221,467

Cost of sales 19,514,551 18,545,841
Gross profit 12,432,063 9,675,626
Administrative expenses 632,779 516,780
Selling and distribution expenses 965,870 764,832
Other operating expenses 1,233,687 855,148
Other income 2,362,110 2,365,321
Finance cost 171,845 356,858
Taxation 3,408,616 1,692,172
Consolidated EPS increased by about 10% from FY15. GP increased by 28% with 13% increase in net sales. Separate report
is issued on affairs of the holding company. Among the subsidiary companies NPPL’s PAT increased by 25% and GP by 30%
with its profitability’s main impact coming from cost management. NDL is still facing gross loss.
We are cordially thankful to our all customers, dealers, suppliers, lenders and other stakeholders. We appreciate all our
employees and admire their untiring efforts for betterment of company.
For and on behalf of the Board
Raza Mansha
Chief Executive Officer
Lahore
August 31, 2016

28,221,467 31,946,614
18,545,841 19,514,551
9,675,626 12,432,063
516,780 632,779
764,832 965,870
855,148 1,233,687
2,365,321 2,362,110
9,904,187 11,961,837
356,858 171,845
9,547,329 11,789,992
1,692,172 3,408,616
7,855,157 8,381,376

Auditors’ Report to the Members
We have audited the annexed consolidated financial statements comprising consolidated balance sheet of D.G. Khan
Cement Company Limited (the holding company) and its subsidiary companies (hereinafter referred to as ‘the Group’) as
at June 30, 2016 and the related consolidated profit and loss account, consolidated statement of comprehensive income,
consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming part
thereof, for the year then ended. We have also expressed separate opinions on the financial statements of D.G. Khan
Cement Company Limited and its subsidiary companies, except for Nishat Paper Products Company Limited and Nishat
Farm Supplies (Private) Limited which were audited by other firms of auditors, whose reports have been furnished to us
and our opinion in so far as it relates to the amounts included for such companies, is based solely on the reports of such
other auditors. These financial statements are the responsibility of the holding company’s management. Our
responsibility is to express an opinion on these financial statements based on our audit.
Our audit was conducted in accordance with the International Standards on Auditing and accordingly included such tests
of accounting records and such other auditing procedures as we considered necessary in the circumstances.
As stated in note 2.2.1 to the annexed consolidated financial statements, the Group has changed its accounting policies
on initial application of standards, amendments or an interpretation to existing standards.
In our opinion, the consolidated financial statements present fairly the financial position of D.G. Khan Cement Company
Limited and its subsidiary companies (the Group) as at June 30, 2016 and the results of their operations for the year then
ended.

Lahore,
Date: August 31, 2016

Consolidated Balance Sheet
2016 2015
Authorised capital
950,000,000 (2015: 950,000,000)
ordinary shares of Rs 10 each 9,500,000 9,500,000
50,000,000 (2015: 50,000,000)
preference shares of Rs 10 each 500,000 500,000
10,000,000 10,000,000
Issued, subscribed and paid up capital

438,119,118 (2015: 438,119,118)
ordinary shares of Rs 10 each 5 4,381,191 4,381,191
Reserves 6 34,205,232 37,352,272
Accumulated profit 27,108,337 20,708,896
65,694,760 62,442,359
Non-controlling interest 2,041,337 2,232,260
67,736,097 64,674,619
Long term finances - secured 7 2,513,750 945,511

Long term deposits 8 77,813 72,003
Retirement and other benefits 9 111,335 137,585
Deferred taxation 10 5,379,939 4,866,434
8,082,837 6,021,533
CURRENT LIABILITIES
Trade and other payables 11 5,296,293 4,353,727

Accrued finance cost 12 60,421 41,130
Short term borrowings - secured 13 3,750,006 2,348,534
Current portion of non-current liabilities 14 1,284,046 780,056
Provision for taxation 35,090 35,090
10,425,856 7,558,537
CONTINGENCIES AND COMMITMENTS 15 - -
86,244,790 78,254,689
The annexed notes 1 to 50 form an integral part of these consolidated financial statements.
Chief Executive

As At June 30, 2016
2016 2015
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 16 43,067,616 33,693,078

Biological assets 17 660,491 1,149,799
Intangible assets 18 - 18,452
Investments 19 10,441,240 10,364,409
Long term loans, advances and deposits 20 58,842 70,402
54,228,189 45,296,140
CURRENT ASSETS
Stores, spares and loose tools 21 4,124,476 3,765,849

Stock-in-trade 22 1,338,211 1,913,314
Trade debts 23 524,974 431,072
Investments 24 17,819,047 24,855,842
Advances, deposits, prepayments and other receivables 25 604,398 980,024
Income tax recoverable 568,700 736,598
Derivative financial instrument 26 14,701 9,873
Cash and bank balances 27 7,022,094 265,977
32,016,601 32,958,549
86,244,790 78,254,689
Director

Consolidated Profit & Loss Account
2016 2015
Sales 28 31,946,614 28,221,467
Cost of sales 29 (19,514,551) (18,545,841)
Gross profit 12,432,063 9,675,626
Administrative expenses 30 (632,779) (516,780)
Selling and distribution expenses 31 (965,870) (764,832)
Other operating expenses 32 (1,226,798) (788,921)
Other income 33 2,362,110 2,365,321
Changes in fair value of biological assets 17 (6,889) (66,227)
Finance cost 34 (171,845) (356,858)
Taxation 35 (3,408,616) (1,692,172)
Attributable to:
Equity holders of the parent 8,552,868 7,765,530
Non-controlling interest (171,492) 89,627
8,381,376 7,855,157
Earnings per share - basic and diluted 36 19.52 17.72

Consolidated Statement of Comprehensive Income
2016 2015
Other comprehensive income for the year - net of tax
Items that may be reclassified subsequently to profit or loss:
Changes in fair value of available for sale investments (3,145,529) (5,287,376)
Gain during the year transferred to consolidated profit and

loss account on derecognition of investment in shares - (30,246)
Loss on re-measuring to fair value the existing interest in Nishat

Dairy (Private) Limited on acquisition of control (note 46) - (74,524)
(3,145,529) (5,392,146)
Items that will not be subsequently reclassified to profit or loss:
Remeasurement of retirement benefits 53,099 14,247

Tax effect (15,930) (8,352)
37,169 5,895
Total comprehensive income for the year 5,273,016 2,468,906
Attributable to:
Equity holders of the parent 5,442,997 2,379,279
Non-controlling interest (169,981) 89,627
5,273,016 2,468,906

Consolidated Cash Flow Statement
2016 2015
Cash flows from operating activities

Cash generated from operations 37 13,746,484 11,825,953
Finance cost paid (294,185) (388,483)
Retirement and other benefits paid (49,337) (130,393)
Taxes paid (2,743,143) (1,308,737)
Long term deposits - net 11,560 (17,467)
Net cash generated from operating activities 10,671,379 9,980,873
Cash flows from investing activities

Payment for acquisition of subsidiary - net of cash aquired 47.2 - (1,777,840)
Fixed capital expenditure (11,430,940) (2,252,673)
Proceeds from sale of property, plant and equipment 47,157 27,797
Purchase of/cost incurred on biological assets (61,129) (403,836)
Proceeds from sale of biological assets 289,043 123,004
Long term loans, advances and deposits - net 5,810 16,046
Investment in 'available for sale' investments (865,990) (1,175,735)
Investment in 'finacial assets at fair value through profit or loss' (3,001,994) (19,910,642)
Proceeds from disposal of investments - 'at fair value
through profit or loss' 7,711,637 15,926,447
Interest income received 384,572 957
Dividends received 1,845,684 1,703,469
Net cash used in investing activities (5,076,150) (7,723,006)
Cash flows from financing activities

Proceeds from long term finances 3,300,000 -
Repayment of long term finances (1,257,873) (879,359)
Settlement of derivative financial instrument (4,907) (46,642)
Transaction with non-controlling interests 46.3 - (18,244)
Dividends paid to:
- Non-controlling interests (20,942) -
- Owners of the Parent company (2,186,488) (1,533,417)
Net cash used in financing activities (170,210) (2,477,662)
Net increase / (decrease) in cash and cash equivalents 5,425,019 (219,795)
Cash and cash equivalents at the beginning of the year (2,082,557) (1,805,913)
Exchange loss on cash and cash equivalents (70,374) (56,849)
Cash and cash equivalents at the end of the year 38 3,272,088 (2,082,557)

Capital Reserve Revenue Reserve
Capital Total equity
Fair Redemption attributable to Non-
Share Share Value Reserve General Accumulated shareholders of Controlling
Capital Premium Reserve Fund Reserve Profit parent company Interest Total equity
R u p e e s i n t h o u s a n d
Balance as on June 30, 2014 4,381,191 4,557,163 32,722,894 353,510 5,110,851 14,454,708 61,580,317 304,960 61,885,277
Transactions with owners in their capacity as owners:
Rs 3.50 per share - - - - - (1,533,417) (1,533,417) - (1,533,417)
Non-controlling interests on acquisition of
subsidiary (note 47.1.2) - - - - - - - 1,872,097 1,872,097
Transactions with non-controlling interests (note 46.3) - - - - - 16,180 16,180 (34,424) (18,244)
- - - - - (1,517,237) (1,517,237) 1,837,673 320,436
Total comprehensive income for the year
- Profit for the year - - - - - 7,765,530 7,765,530 89,627 7,855,157
- Other comprehensive income for the year
- Changes in fair value of available for sale investments - - (5,317,622) - - - (5,317,622) - (5,317,622)
- Loss on re-measuring to fair value the existing
interest in Nishat Dairy (Private) Limited on
acquisition of control (note 47.1.1) - - (74,524) - - - (74,524) - (74,524)
- Remeasurements of retirement benefits - net of tax - - - - - 5,895 5,895 - 5,895
- - (5,392,146) - - 7,771,425 2,379,279 89,627 2,468,906
Balance as on June 30, 2015 4,381,191 4,557,163 27,330,748 353,510 5,110,851 20,708,896 62,442,359 2,232,260 64,674,619
Transactions with owners in their capacity as owners:
Rs 5.00 per share - - - - - (2,190,596) (2,190,596) (20,942) (2,211,538)
Transactions with non-controlling interests (note 46.3) - - - - - - - - -
- - - - - (2,190,596) (2,190,596) (20,942) (2,211,538)
Total comprehensive income for the year
- Profit / (loss) for the year - - - - - 8,552,868 8,552,868 (171,492) 8,381,376
- Other comprehensive income for the year
- Changes in fair value of available for sale investments - - (3,147,040) - - - (3,147,040) 1,511 (3,145,529)
- Remeasurements of retirement benefits - net of tax - - - - - 37,169 37,169 - 37,169
- - (3,147,040) - - 8,590,037 5,442,997 (169,981) 5,273,016
Balance as on June 30, 2016 4,381,191 4,557,163 24,183,708 353,510 5,110,851 27,108,337 65,694,760 2,041,337 67,736,097
Annual Report 2016

174
Consolidated Statement of Changes in Equity
Notes to and Forming Part of the Financial Consolidated Statements

1. Legal status and nature of business
The group comprises of:
- D. G. Khan Cement Company Limited ("the Parent Company");

- Nishat Paper Products Company Limited ("NPPCL")
- Nishat Dairy (Private) Limited ("NDL")
- Nishat Farm Supplies (Private) Limited ("NFS")
D. G. Khan Cement Company Limited is a public limited company incorporated in Pakistan and is listed on Pakistan
Stock Exchange. It is principally engaged in production and sale of Clinker, Ordinary Portland and Sulphate Resistant
Cement.
Nishat Paper Products Company Limited is a public limited company incorporated in Pakistan under the Companies
Ordinance, 1984 on July 23, 2004. It is principally engaged in the manufacture and sale of paper products and
packaging material. During the previous year, the Parent Company aquired a further shareholding of 5% in NPPCL
thereby increasing its cumulative shareholding in NPPCL to 55% as referred to in note 46.3.
Nishat Dairy (Private) Limited is a private limited company incorporated in Pakistan. It is principally engaged in the
business of production and sale of raw milk. During the year ended June 30, 2015, the Parent company, on November
26, 2014, aquired a further shareholding of approximately 44.68% in NDL, thereby increasing its cumulative
shareholding in NDL to approximately 55.10% as referred to in note 47.
Nishat Farm Supplies (Private) Limited is a private limited company incorporated in Pakistan on March 4, 2015 under
the Companies Ordinance, 1984. It is a wholly owned subsidiary of Nishat Dairy (Private) Limited. The principal activity
of the company is to carry on the business of sale, marketing and distribution of imported chemicals, medicines,
vaccines, cows, other chemicals of all kinds and types. During the year ended June 30, 2015, NDL subscribed to 100%
of the share capital of NFS on the date of its incorporation. The acquistion was inadvertently not recorded in the
consolidated financial statements for the year ended June 30, 2015, and as the impact of this error is immaterial, the
subsidary has been consolidated in these financial statements.
The registered offices of the Parent Company, NPPCL, NDL and NFS are situated at 53-A, Lawrence Road, Lahore.
Effective
percetage of holding
- Nishat Paper Products Company Limited 55.00%

- Nishat Dairy (Private) Limited 55.10% (approx)
- Nishat Farm Supplies (Private) Limited 55.10% (approx)
2. Basis of preparation
2.1 These consolidated financial statements have been prepared in accordance with the requirements of the
Companies Ordinance, 1984 (the Ordinance) and 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 and Islamic Financial Accounting Standards (IFAS) issued by the
Institute of Chartered Accountants of Pakistan as are notified under the Ordinance, provisions of and directives
issued under the Ordinance. Wherever the requirements of the Ordinance or directives issued by Securities and
Exchange Commission of Pakistan differ with the requirements of IFRS or IFAS, the requirements of the
Ordinance or the requirements of the said directives prevail.

2.2 Initial application of standards, amendments or an interpretation to existing standards
The following amendments to existing standards have been published that are applicable to the Group's
consolidated 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 the
current year and are relevant to the Group
Certain standards, amendments and interpretations to approved accounting standards are effective for
accounting periods beginning on or after July 1, 2015 but are considered not to be relevant or to have
any significant effect on the Group's operations and are, therefore, not detailed in these financial
statements except for the amendments as explained below:
- IFRS 11, 'Joint Arrangements', is applicable on annual periods beginning on or after January 01,
2013, however, SECP has adopted this IFRS for periods beginning on or after January 1, 2015. IFRS
11 is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the
arrangement rather than its legal form. There are two types of joint arrangement: joint operations and
joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations
relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and
expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement
and hence equity accounts for its interest. Proportional consolidation of joint ventures is no longer
allowed. The application of this standard does not have a material impact on the Group's consolidated
financial statements.
- IFRS 12 - ‘Disclosures of interests in other entities’. This is applicable on accounting periods

beginning on or after January 01, 2013, however, SECP has adopted this standard for periods
beginning on or after January 1, 2015. This standard includes the disclosure requirements for all forms
of interests in other entities, including joint arrangements, associates, special purpose vehicles and
other off balance sheet vehicles. The Group has applied this standard from July 1, 2015 and has
disclosed interests in other entites in note 46.
- IFRS 13 - ‘Fair value measurement’. This is applicable on accounting periods beginning on or after
January 01, 2013, however, SECP has adopted this standard for periods beginning on or after January
1, 2015. This standard aims to improve consistency and reduce complexity by providing a precise
definition of fair value and a single source of fair value measurement and disclosure requirements for
use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not
extend the use of fair value accounting but provide guidance on how it should be applied where its use
is already required or permitted by other standards within IFRSs or US GAAP. The application of this
standard does not have a material impact on the Group's consolidated financial statements.
2.2.2 Standards, amendments and interpretations to existing standards that are not yet effective and
have not been early adopted by the Group
The following amendments and interpretations to existing standards have been published and are
mandatory for the Group's accounting periods beginning on or after July 01, 2016 or later periods, and
the Group has not early adopted them:
Amendment to IAS 16 ‘Property, plant and equipment’ and IAS 38,'Intangible assets', on depreciation
and amortisation is applicable on accounting periods beginning on or after January 01, 2016. IASB has
clarified that the use of revenue based methods to calculate the depreciation of an asset is not
appropriate because revenue generated by an activity that includes the use of an asset generally
reflects factors other than the consumption of the economic benefits embodied in the asset. The IASB
has also clarified that revenue is generally presumed to be an inappropriate basis for measuring the
consumption of the economic benefits embodied in an intangible asset. The Group is yet to assess the
impact of this amendment on its consolidated financial statements.

Effective date
(accounting periods
beginning on or after)
Other standards or interpretations
Amendments to IAS 7, ‘Statement of cash flows’

on disclosure initiative January 01, 2017
Amendments to IAS 12, ‘Income taxes’ on Recognition of

deferred tax assets for unrealised losses January 01, 2017
Amendments to IFRS 2, ‘Share based payments ’, on clarifying how to

account for certain types of share-based payment transactions January 01, 2018
IFRS 9, 'Financial instruments' January 01, 2018
IFRS 14, 'Regulatory deferral accounts' January 01, 2017
IFRS 15, 'Revenue from contracts with customers' January 01, 2018
Amendments to IFRS 15, ‘Revenue from contracts

with customers' on gross versus net revenue presentation January 01, 2018
IFRS 16 ‘Leases' January 01, 2019
3. Basis of measurement
3.1 These consolidated financial statements have been prepared under the historical cost convention except for
revaluation of biological assets, certain financial instruments and plan assets of employee retirement benefits at
fair value, and recognition of certain plan obligations of employee retirement benefits at present value.
3.2 The Group's significant accounting policies are stated in note 4. Not all of these significant policies require the
management to make difficult, subjective or complex judgments or estimates. The following is intended to
provide an understanding of the policies the management considers critical because of the complexity,
judgment and estimation involved in their application and their impact on these consolidated financial
statements. Judgments and estimates are continually evaluated and are based on historical experience,
including expectations of future events that are believed to be reasonable under the circumstances. These
judgments involve assumptions or estimates in respect of future events and the actual results may differ from
these estimates. The areas involving a higher degree of judgments or complexity or areas where assumptions
and estimates are significant to the consolidated financial statements are as follows:
a) Provision for taxation - note 4.3 and 35
b) Provision for employees' retirement benefits - note 4.4 and 9
c) Residual values and useful lives of depreciable assets - note 4.6 and 16.1
d) Fair valuation of biological assets - note 4.7 and 17
a) Provision for taxation
The Group takes into account the current income tax law and the decisions taken by appellate authorities.
Instances where the Group's view differs from the view taken by income tax department at the assessment
stage and where the Group considers that its views on items of material nature is in accordance with law, the
amounts are shown as contingent liabilities.

b) Employee retirement benefits and other obligations
The Group uses the valuation performed by an independent actuary as the present value of its
retirement benefit obligations. The valuation is based on the assumptions as mentioned in note 4.4.
c) Useful lives and residual values of property plant and equipment
The Group reviews the useful lives and residual values of property, plant and equipment on a regular
basis. Any change in estimates in future years might affect the carrying amounts of respective items of
property, plant and equipment with a corresponding effect on the depreciation charge and impairment.
d) Fair valuation of biological assets
The Group values it biological assets at fair value less estimated point of sale costs. Any change in
estimate might affect the carrying amount of the biological asset with a corresponding charge to the
profit and loss account.
4. Significant accounting policies
The significant accounting policies adopted in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
4.1 Principles of consolidation
a) Subsidiaries
The consolidated financial statements include the financial statements of D. G. Khan Cement Company Limited
and its subsidiaries Nishat Paper Products Company Limited with 55% (2015: 55%) holding, Nishat Dairy
(Private) Limited with an approximate 55.10% (2015: 55.10%) holding and Nishat Farm Supplies (Private)
Limited with an approximate 55.10% (2015: Nil) holding (hereinafter referred to as "the Group Companies").
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date
that control ceases.
The assets and liabilities of subsidiary companies have been consolidated on a line by line basis and carrying
value of investments held by the Parent Company is eliminated against the subsidiaries' shareholders' equity in
the consolidated financial statements. Material intra-group balances and transactions have been eliminated.
Non-controlling interests are that part of the net reserves of the operation and of net assets of subsidiaries
attributable to interests which are not owned by the Group. Non-controlling interest is presented as a separate
line item in the consolidated financial statements.
The group applies the acquisition method to account for business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary is the
fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity
interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date. The group recognises any
non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.

The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity and
acquisition date fair value of any previous equity interest in the acquired entity over the fair value of the net
identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain
purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental
borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financer
under comparable terms and conditions.
Contingent consideration is classified either as equity or as a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously
held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss or
through other comprehensive income as appropriate.
b) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity
transactions – that is, as transactions with the owners in their capacity as owners. A change in ownership
interests results in an adjustment between the carrying amounts of the controlling and non-controlling interests
to reflect their relative interests in the subsidiary. The difference between fair value of any consideration paid and
the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or
losses on disposals to non-controlling interests are also recorded in equity.
4.2 Borrowings
Borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, these are stated at amortised cost with any difference between proceeds (net of transaction costs)
and redemption value being recognised in the profit and loss over the period of the borrowings on an effective
interest rate basis.
Preference shares, which are mandatorily redeemable on a specific date at the option of the Group, are
classified as liabilities. The dividend on these preference shares is recognised in the profit and loss account as
finance cost.
Finance costs are accounted for on an accrual basis and are shown as accrued finance cost to the extent of the
amount remaining unpaid.
Borrowings are classified as a current liability unless the Group has an unconditional right to defer settlement of
the liability for at least twelve months after the balance sheet date.
4.3 Taxation
Income tax expense comprises current and deferred tax. Income tax is recognised in consolidated profit and
loss account except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current
Provision of current tax is based on the taxable income for the year determined in accordance with the
prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax
rates expected to apply to profit for the year if enacted after taking into account tax credits, rebates and
exemptions, if any. The charge for current tax also includes adjustments, where considered necessary, to
provision for tax made in previous years arising from assessments framed during the year for such years.

Deferred
Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences
arising from differences between the carrying amount of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation of the taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be available against which the deductible temporary
differences, unused tax losses and tax credits can be utilised.
Deferred tax assets and liabilities are calculated at the rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on the tax rates (and tax laws) that have been enacted or
substantively enacted by the balance sheet date. Deferred tax is charged or credited to the consolidated profit
and loss account, except in the case of items charged or credited to equity in which case it is included in the
consolidated statement of changes in equity.
4.4 Employees' retirement benefits and other obligations
The main features of the schemes operated by the Group for its employees are as follows:
Parent Company
Defined benefit plans
The Parent Company operates an approved funded defined benefit gratuity plan for all employees having a
service period of more than five years for management staff and one year for workers. Provisions are made in
the consolidated financial statements to cover obligations on the basis of actuarial valuations carried out
annually. The most recent valuation was carried out as at June 30, 2016 using the "Projected Unit Credit
Method".
The actual return on plan assets represents the difference between the fair value of plan assets at the beginning
of the year and as at the end of the year after adjustments for contributions made by the Parent Company as
reduced by benefits paid during the year.
The amount recognized in the consolidated balance sheet represents the present value of the defined benefit
obligation as reduced by the fair value of the plan assets.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are
charged or credited to equity in consolidated other comprehensive income in the year in which they arise. Past
service costs are recognized immediately in the consolidated profit and loss account.
The future contribution rate of the plan includes allowances for deficit and surplus. Projected Unit Credit
Method, using the following significant assumptions, is used for valuation of this scheme:

Expected increase in eligible pay 6.25% p.a.
Expected rate of return on plan assets 9
The expected mortality rates assumed are based on the SLIC (2001-2005) mortality table set back one year.
The Parent Company is expected to contribute Rs 45.234 million to the gratuity fund in the next year.
Defined contribution plan
The Parent Company operates a recognised provident fund for all its regular employees. Equal monthly
contributions are made to the fund both by the Parent Company and the employees at the rate of 10% of the
basic salary for officers and 10% of basic salary plus cost of living allowance for workers. Obligation for
contributions to defined contribution plan is recognised as an expense in the consolidated profit and loss
account as and when incurred.

The Parent Company provides for accumulating compensated absences, when the employees render service
that increases their entitlement to future compensated absences. Under the service rules, employees are
entitled to 2.5 days leave per month. Unutilised leaves can be accumulated up to 90 days in case of officers.
Any balance in excess of 90 days can be encashed up to 17 days a year only. Any further unutilised leaves
lapse. In case of workers, unutilised leaves may be accumulated without any limit, however accumulated leave
balance above 50 days is encashable upon demand of the worker. Unutilised leaves can be used at any time by
all employees, subject to the approval of the Parent Company's management.
Provisions are made annually to cover the obligation for accumulating compensated absences based on
actuarial valuation and are charged to consolidated profit and loss account. The most recent valuation was
carried out as at June 30, 2016 using the "Projected Unit Credit Method".
The amount recognised in the consolidated balance sheet represents the present value of the defined benefit
obligations. Actuarial gains and losses are charged to the consolidated profit and loss account immediately in
the period when these occur.
Projected unit credit method, using the following significant assumptions, has been used for valuation of
accumulating compensated absences:

Expected rate of increase in salary level per annum; and 6.25% p.a.
Expected mortality rate SLIC (2001-2005) mortality table
(setback 1 year)
NDL and NPPCL ('Subsidiary Companies')
Defined contribution plan
NDL and NPPCL ('Subsidiairy Companies') operate a recognised provident fund for all its regular employees.
Equal monthly contributions are made to the fund both by the Subsidiary Companies and the employees at the
rate of 10% of the basic salary for officers and 10% of basic salary plus cost of living allowance for workers.
Obligation for contributions to defined contribution plan is recognised as an expense in the consolidated profit
and loss account as and when incurred.
4.5 Trade and other payables
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within
one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current liabilities.
Trade and other payables are initially recognised at fair value plus directly attributable cost, if any, and
subsequently at amortised cost using effective interest rate method.
4.6 Property, plant and equipment
4.6.1 Operating assets
Property, plant and equipment except freehold land, capital work-in-progress and major spare parts
and stand-by equipment are stated at cost less accumulated depreciation and any identified
impairment loss. Freehold land is stated at cost less any identified impairment loss. Cost in relation to
certain property, plant and equipment signifies historical cost, gains and losses transferred from equity
on qualifying cash flow hedges and borrowing costs as referred to in note 4.19.

Depreciation on all property, plant and equipment of the Parent Company and NPPCL is charged to the
consolidated profit and loss account on the reducing balance method, except for plant and machinery
which is being depreciated using the straight line method, as for NDL, all property, plant and equipment
is depreciated using the reducing balance method so as to write off the historical cost of such asset
over its estimated useful life at annual rates mentioned in note 16.1 after taking into account their
residual values.
The assets' residual values and useful lives are continually reviewed by the Group and adjusted if
impact on depreciation is significant. The Group's estimate of the residual value of its property, plant
and equipment as at June 30, 2016 has not required any adjustment.
Depreciation on additions to property, plant and equipment is charged from the month in which an
asset is acquired or capitalised while no depreciation is charged for the month in which the asset is
disposed off.
The Group assesses at each balance sheet date whether there is any indication that property, plant and
equipment 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 amounts. Where carrying
amounts exceed the respective recoverable amounts, assets are written down to their recoverable
amounts and the resulting impairment loss is recognised in the consolidated 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
an impairment loss is recognised, the depreciation charge is adjusted in the future periods to allocate
the asset's revised carrying amount over its estimated useful life.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item shall flow
to the Group and the cost of the item can be measured reliably. All other repair and maintenance costs
are charged to consolidated profit and loss account during the period in which they are incurred.
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 recognised as an income or expense.
4.6.2 Major spare parts and stand-by equipment
Major spare parts and stand-by equipment qualify as property, plant and equipment when an entity
expects to use them during more than one year. Transfers are made to operating assets category as
and when such items are available for use.
4.6.3 Capital work-in-progress
Capital work-in-progress is stated at cost less any identified impairment loss and represents
expenditure incurred on property, plant and equipment during the construction and installation. All
expenditure connected with specific assets incurred during installation and construction period are
carried under capital work-in-progress. Cost also includes applicable borrowing costs. Transfers are
made to relevant property, plant and equipment category as and when assets are available for use.
4.7 Biological assets
4.7.1 Livestock
Livestock are measured at their fair value less estimated point-of-sale costs. Fair value of livestock is
determined by an independent valuer on the basis of best available estimates for livestock of similar
attributes. Milk is measured at its fair value less estimated point-of-sale costs at the time of milking.
Gains or losses arising from changes in fair value less estimated point-of-sale costs of livestock is
recognized in the consolidated profit and loss account.

Livestock are categorized as mature or immature. Mature livestock are those that have attained
harvestable specifications. Immature livestock have not yet reached that stage.
4.7.2 Crops
Crops are measured at fair value less estimated point of sale costs, with changes in the fair value during
the period recognised in the profit and loss account.
Costs incurred in plantation and management of crops are capitalized as part of the asset. All other
costs are charged to the consolidated profit and loss account.
The fair value is determined using the present value of expected net cash-flows from the asset based
on significant assumptions. Fair value is deemed to approximate the cost when little biological
transformation has taken place or the impact of the transformation on price is not expected to be
material.
Crops are categorized as mature or immature. Mature crops are those that have attained harvestable
specifications. Immature agricultural assets have not yet reached that stage. Crops that are expected
to mature after more than a period of 12 months are classified in long term assets and those expected
to mature before 12 months are included in current assets.
4.8 Intangible assets
Expenditure incurred by the Parent Company to acquire Oracle enterprise resource planning (ERP) system has
been capitalised as intangible assets and stated at cost less accumulated amortisation and any identified
impairment loss. Intangible assets are amortised using the straight line method over a period of five years.
Amortisation on additions to intangible assets is charged from the month in which an asset is acquired or
capitalised while no amortisation is charged for the month in which the asset is disposed off.
The Parent Company assesses at each balance sheet date whether there is any indication that intangible assets
may be impaired. If such an indication exists, the carrying amounts of such assets are reviewed to assess
whether they are recorded in excess of their recoverable amount. Where carrying amounts exceed the
respective recoverable amount, assets are written down to their recoverable amounts and the resulting
impairment loss is recognised in the consolidated 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 an impairment loss is recognised, the
amortisation charge is adjusted in the future periods to allocate the asset's revised carrying amount over its
estimated useful life.
4.9 Leases
4.9.1 Finance leases
Leases where the Group has substantially all the risks and rewards of ownership are classified as
finance leases. At inception, finance leases are capitalised at the lower of present value of minimum
lease payments under the lease agreements and the fair value of the assets, less accumulated
depreciation and impairment loss, if any.
The related rental obligations, net of finance costs, are included in liabilities against assets subject to
finance lease. The liabilities are classified as current and non-current depending upon the timing of the
payment.
Minimum lease payments made under finance leases are apportioned between the finance cost and
the reduction of the outstanding liability. The finance cost is allocated to each period during the lease
term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent lease payments, if any, are accounted for by revising the minimum lease payments over the
remaining term of the lease when the lease adjustment is confirmed. The interest element of the rental
is charged to income over the lease term.

Assets acquired under a finance lease are depreciated over the estimated useful life of the assets on
reducing balance method except plant and machinery which is depreciated on straight line method at
the rates mentioned in note 16.1. Depreciation of leased assets is charged to the consolidated profit
and loss account.
Depreciation methods, residual values and the useful lives of the assets are reviewed at least at each
financial year-end and adjusted if impact of depreciation is significant.
Depreciation on additions to leased assets is charged from the month in which an asset is acquired
while no depreciation is charged for the month in which the asset is disposed off.
4.9.2 Operating leases
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received
from the lessor) are charged to profit on a straight-line basis over the lease term.
4.10 Investments
Investments in equity instruments of associated company
Associates are all entities over which the Group has significant influence but not control. Investments in
associates are accounted for using the equity method of accounting and are initially recognised at cost. The
Group's investment in associates includes goodwill (net of any accumulated impairment loss) identified on
acquisition. The Group's share of its associates' post acquisition profits or losses is recognised in the
consolidated profit and loss account, and its share of post-acquisition movements in reserves is recognised in
reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the
investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group
and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Available for sale
Investments which are intended to be held for an indefinite period of time but may be sold in response to the
need for liquidity are classified as available for sale. Available for sale investments are recognised initially at fair
value plus any directly attributable transaction costs. After initial recognition, these are stated at fair values
unless fair values cannot be measured reliably, with any resulting gains and losses being taken directly to equity
until the investment is disposed off or impaired. At each reporting date, these investments are remeasured at fair
value, unless fair value cannot be reliably measured. At the time of disposal, the respective surplus or deficit is
transferred to consolidated profit and loss account. Fair value of quoted investments is their bid price on
Pakistan Stock Exchange at the balance sheet date. Unquoted investments, where active market does not exist,
are carried at cost as it is not possible to apply any other valuation methodology. Unrealised gains and losses
arising from the changes in the fair value are included in fair value reserves in the period in which they arise.
Investments intended to be held for less than twelve months from the balance sheet date or to be sold to raise
operating capital, are included in current assets, all other investments are classified as non-current.
Management determines the appropriate classification of its investments at the time of the purchase and
re-evaluates such designation on a regular basis.
All purchases and sales of investments are recognised on the trade date which is the date that the Group
At each balance sheet date, the Group reviews the carrying amounts of the investments to assess whether there
is any indication that such investments have suffered an impairment loss. If any such indication exists, the
recoverable amount is estimated in order to determine the extent of the impairment loss, if any. Impairment
losses are recognised as expense in the consolidated profit and loss account. Impairment losses recognised in

the consolidated profit and loss account on equity instruments are not reversed through the consolidated profit
and loss account.
Investments at fair value through profit or loss
Investments that are acquired principally for the purpose of generating a profit from short-term fluctuations in
price are classified as 'at fair value through profit or loss' and are included in current assets. They are initially
measured at cost and at subsequent reporting dates, these investments are remeasured at fair value (quoted
market price), unless fair value cannot be reliably measured. The investments for which a quoted market price
is not available, are measured at cost as it is not possible to apply any other valuation methodology. Realised
and unrealised gains and losses arising from changes in fair value are included in consolidated profit or loss for
the period in which they arise.
All purchases and sales of investments are recognised on the trade date which is the date that the Group
4.11 Stores and spares
Usable stores and spares are valued principally at moving weighted average cost, while items considered
obsolete are carried at nil value. Items in transit are valued at cost comprising invoice value plus other charges
paid thereon.
Provision is made in the financial statements for obsolete and slow moving stores and spares based on
management estimate.
4.12 Stock-in-trade
Stock of raw materials (except for those in transit), work in process and finished goods are valued principally at
the lower of weighted average cost and net realisable value. Stock of packing material is valued principally at
moving average cost. Cost of work in process and finished goods comprises cost of direct materials, labour and
appropriate manufacturing overheads.
Materials in transit are stated at cost comprising invoice value plus other charges paid thereon.
Net realisable value signifies the estimated selling price in the ordinary course of business less costs necessary
to be incurred in order to make a sale.
If the expected net realisable value is lower than the carrying amount, a write-down is recognised for the
amount by which the carrying amount exceeds its net realisable value. Provision is made in the financial
statements for obsolete and slow moving stock in trade based on management estimate.
4.13 Financial instruments
4.13.1 Financial assets
The Group classifies its financial assets in the following categories: at fair value through profit or loss,
loans and receivables, available for sale and held to maturity. The classification depends on the
purpose for which the financial assets were acquired. Management determines the classification of its
financial assets at the time of initial recognition.
a) Financial assets at fair value through profit and loss
Financial assets at fair value through profit or loss are financial assets held for trading and financial
assets designated upon initial recognition as at fair value through profit or loss. A financial asset is
classified as held for trading if acquired principally for the purpose of selling in the short term. Assets
in this category are classified as current assets, if expected to be settled within twelve months,
otherwise they are classified as non-current assets.

b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They are included in current assets, except for maturities greater than
twelve months after the balance sheet date, which are classified as non-current assets. Loans and
receivables comprise advances, deposits and other receivables and cash and cash equivalents in the
consolidated balance sheet.
c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets unless management
intends to dispose of the investments within twelve months from the consolidated balance sheet date.
d) Held to maturity
Financial assets with fixed or determinable payments and fixed maturity, where management has the
intention and ability to hold till maturity are classified as held to maturity and are stated at amortized cost.
4.13.2 Recognition and measurement
All financial assets are recognized at the time when the Group becomes a party to the contractual
provisions of the instrument. Regular purchases and sales of investments are recognized on
trade-date; the date on which the Group commits to purchase or sell the asset. Financial assets are
initially recognized at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized
at fair value and transaction costs are expensed in the consolidated profit and loss account. Financial
assets are derecognized when the rights to receive cash flows from the assets have expired or have
been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit or loss are
subsequently carried at fair value. Loans and receivables and held to maturity investments are carried
at amortized cost using the effective interest rate method.
Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit
or loss' category are presented in the consolidated profit and loss account in the period in which they
arise. Dividend income from financial assets at fair value through profit or loss is recognized in the
consolidated profit and loss account as part of other income when the Group's right to receive
payments is established.
Changes in the fair value of securities classified as available-for-sale are recognized in consolidated
other comprehensive income. When securities classified as available-for-sale are sold or impaired, the
accumulated fair value adjustments recognized in equity are included in the profit and loss account as
gains and losses from investment securities. Interest on held-to-maturity investments calculated using
the effective interest method is recognized in the consolidated profit and loss account. Dividends on
available-for-sale equity instruments are recognized in the consolidated profit and loss account when
the Group’s right to receive payments is established.
The fair values of quoted investments are based on current prices. If the market for a financial asset is
not active (for unlisted securities) , the Group measures the investments at cost less impairment in
value, if any.
The Group assesses at each balance sheet date whether there is an objective evidence that a financial
asset or a group of financial assets is impaired. If any such evidence exists for available-for-sale
financial assets, the cumulative loss is removed from equity and recognized in the consolidated profit
and loss account. Impairment losses recognized in the consolidated profit and loss account on equity
instruments are not reversed through the consolidated profit and loss account. Impairment testing of
trade debts and other receivables is described in note 4.14.

4.13.3 Financial liabilities
All financial liabilities are recognized at the time when the Group becomes a party to the contractual
provisions of the instrument.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or
expired. Where an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the original liability and the recognition of a
new liability, and the difference in respective carrying amounts is recognized in the consolidated profit
and loss account.
4.13.4 Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount is reported in the Group financial
statements only when there is a legally enforceable right to set off the recognised amount and the
Group intends either to settle on a net basis or to realise the assets and to settle the liabilities
simultaneously.
4.14 Trade debts
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary
course of business. If collection is expected in one year or less, they are classified as current assets. If not, they
are presented as non-current assets.
Trade debts are recognised initially at original invoice amount, which approximates fair value, and subsequently
measured at amortized cost using the effective interest method, less provision for doubtful debts.
A provision for doubtful debts is established when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of the receivable. Significant financial difficulties of the
debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency
in payments are considered indicators that the trade receivable is doubtful. Debts, considered irrecoverable, are
written off as and when identified. Subsequent recoveries of amounts previously written off are credited to the
consolidated profit and loss account.
4.15 Cash and cash equivalents
Cash and cash equivalents are carried in the consolidated balance sheet at cost. For the purpose of
consolidated cash flow statement, cash and cash equivalents comprise cash in hand, demand deposits, other
short term highly liquid investments that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of change in value and short term borrowings. In the consolidated balance sheet,
short term borrowings are included in current liabilities.
4.16 Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently re-measured at their fair values. The method of recognizing the resulting gain or loss depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group has not designated any derivatives as hedging instruments and accordingly, the changes in fair value
re-measurement are recognised in the consolidated profit and loss account. Trading derivatives are classified
as a current asset or liability.
4.17 Foreign currency transactions and translation
a) Transactions and balances
All monetary assets and liabilities in foreign currencies are translated into rupees at exchange rates prevailing
at the balance sheet date. Transactions in foreign currencies are translated into rupees at exchange rates

prevailing at the date of transaction. Non-monetary assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated into rupees at exchange rates prevailing at the date of transaction.
Non-monetary assets and liabilities denominated in foreign currency that are stated at fair value are translated
into rupees at exchange rates prevailing at the date when fair values are determined. Exchange gains and
losses are included in consolidated profit and loss account.
b) Functional and presentation currency
The consolidated financial statements are presented in Pak Rupees, which is the Group's functional and
presentation currency. Figures are rounded to the nearest thousand.
4.18 Provisions
Provisions are recognised when; the Group has a present legal or constructive obligation as a result of past
events; it is probable that an outflow of resources shall be required to settle the obligation; and the amount has
been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow shall be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood
of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision due to passage of time is recognised as interest
expense.
4.19 Borrowing costs
General and specific 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 capitalisation.
All other borrowing costs are recognised in consolidated profit or loss in the period in which they are incurred.
4.20 Revenue recognition
Revenue represents the fair value of the consideration received or receivable for goods sold, net of discounts
and sales tax. Revenue is recognised when it is probable that the economic benefits associated with the
transaction will flow to the Group and the amount of revenue, and the associated cost incurred, or to be
incurred, can be measured reliably.
Revenue from sale of goods is recognised when the significant risk and rewards of ownership of the goods are
transferred to the buyer i.e. on the dispatch of goods to the customers.
Dividend income and entitlement of bonus shares are recognised when right to receive such dividend and
bonus shares is established.
Return on deposits is accrued on a time proportion basis by reference to the principal outstanding and the
applicable rate of return.
4.21 Dividend
Dividend distribution to the shareholders is recognised as a liability in the period in which the dividends are
approved.

4.22 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Group executive committee.
4.23 Contingent liabilities
Contingent liability is disclosed when:
- there is a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Group; or
- there is present obligation that arises from past events but it is not probable that an outflow of resources
embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be
measured with sufficient reliability.
5. Issued, subscribed and paid up capital
2016 2015 2016 2015

(Number of shares) (Rupees in thousand)
343,512,029 343,512,029 Ordinary shares of Rs 10 each fully

paid in cash 3,435,120 3,435,120
20,000,000 20,000,000 Ordinary shares of Rs 10 each issued for
consideration other than cash 200,000 200,000
74,607,089 74,607,089 Ordinary shares of Rs 10 each issued as fully
paid bonus shares 746,071 746,071
438,119,118 438,119,118 4,381,191 4,381,191
137,574,201 (2015: 137,574,201) and 203,500 (2015: 203,500) ordinary shares of the Company are held by Nishat Mills
Limited (associated company) and Security General Insurance Company Limited (associated company) respectively as
at June 30, 2016. In addition, 6,275,944 (2015: 6,275,944) ordinary shares are held by Adamjee Insurance Company
Limited, a related party as at June 30, 2016.

2016 2015
6. Reserves
Movement in and composition of reserves is as follows:
Capital reserves
- Share premium
Additions during the year - -
- Fair value reserve

Fair value (loss) / gain during the year - net (3,147,040) (5,392,146)
- Capital redemption reserve fund - note 6.3 353,510 353,510

29,094,381 32,241,421
Revenue reserves
- General reserve
Transferred (to) / from consolidated profit and loss account - -
At the end of the year 5,110,851 5,110,851
34,205,232 37,352,272
6.1 This reserve can be utilised by the Group only for the purposes specified in section 83(2) of the Companies
Ordinance, 1984.
6.2 As referred to in note 4.10 this represents the unrealised gain on remeasurement of investments at fair value and
is not available for distribution. This amount shall be transferred to consolidated profit and loss account on
realisation.
6.3 The Capital redemption reserve fund represents fund created for redemption of preference shares and in
accordance with the terms of issue of preference shares, to ensure timely payments, the Group was required to
maintain a redemption fund with respect to preference shares. The Group had created a redemption fund and
appropriated Rs 7.4 million each month from the consolidated profit and loss account in order to ensure that
fund balance at redemption date was equal to the principal amount of the preference shares. The preference
shares have been redeemed during the year ended June 30, 2007.
2016 2015
7. Long term finances - secured
These are composed of:

- Long-term loans - note 7.1 - 7.2 3,785,126 1,712,897
3,785,126 1,712,897
Less : Current portion shown under current liabilities - note 14 1,271,376 767,386
2,513,750 945,511

7.1 Long term loans - secured
191
2016 2015 Rate of mark-up Mark-up
Loan Lender (Rupees in thousand) Number of instalments outstanding
per annum Payable
Local Currency
1 The Bank of Punjab - 400,000 * Base rate + 0.5% The loan has been fully repaid during the year Quarterly
2 The Bank of Punjab 109,375 171,875 * Base rate +0.75% 11 equal quarterly installments ending in December, 2017 Quarterly
3 United Bank Limited 137,500 192,500 ** Base rate + 0.75% 7 equal semi-annual installments ending in March 2018 Semi-annually
4 Dubai Islamic Bank 900,000 - ** Base rate + 0.35% 10 equal semi annual instalments ending in September 2020 Half yearly
5 Bank Islami 800,000 - * Base rate + 0.2% 16 quarterly equal instalments ending in September 2020 Quarterly
6 Habib Bank Limited 1,350,000 - * Base rate + 0.35% 20 quarterly equal instalments ending in December 2020 Quarterly
Foreign Currency
Annual Report 2016

7 Eco Trade and Development Bank
US$ 4.663 million
(2015: US$ 9.327 million) 488,251 948,522 *** Base rate + 1.65% 4 equal semi-annual instalments ending in May, 2017 Semi-annually
3,785,126 1,712,897
* Base rate: Average ask rate of three-month Karachi Inter Bank Offer Rate ("KIBOR") to be reset for each mark-up period
** Base rate: Average ask rate of six-month Karachi Inter Bank Offer Rate ("KIBOR") to be reset for each mark-up period
*** Base rate: Average ask rate of six-month London Inter Bank Offer Rate ("LIBOR") reset for each mark-up period
7.2 Security
Loan 1
The loan is secured by an initial ranking charge over present and future land, building and plant and machinery of the Company to the tune of Rs 1,066.667 million. The total facility amount
available is Rs 800 million.
Loan 2
The loan is secured by first pari passu charge over the present and future fixed assets of the Subsidiary Company - NPPCL amounting to Rs 334 Million.
Loan 3
The loan is secured by first pari passu charge on equipment and machinery of the Subsidiary Company - NPPCL amounting Rs. 293.33 million.
Loan 4
The loan is secured by ranking charge of Rs. 1,334 million on all present and future fixed assets of Parent Company including land and building of the plant site located at DG Khan site inclusive
of 25% margin.
Loan 5
The loan is secured by ranking charge over fixed assets of the Parent company amounting to Rs. 1,000 million to be upgraded to joint pari passu charge with in 180 days from the date of
disbursment.
Loan 6
The loan is secured by First pari passu charge over existing and future fixed assets of the Parent company amounting to Rs. 4,991 million.
Loan 7
The loan is secured by first pari passu charge over all present and future fixed assets of the Parent ompany amounting to USD 27.980 million. The total facility amount available is USD 20.985
million.
2016 2015
8. Long term deposits
Customers 41,382 39,102

Others 36,431 32,901
77,813 72,003
These represent interest free security deposits from stockists and suppliers and are repayable on cancellation /
withdrawal of the dealership or on cessation of business with the Group respectively.
2016 2015
9. Retirement benefits
Staff Gratuity - note 9.1 1,962 33,345

111,335 137,585
9.1 Staff gratuity
The amounts recognised in the consolidated

balance sheet are as follows:
Present value of defined benefit obligation 404,923 352,380

Fair value of plan assets (402,961) (319,035)
9.1.1 Movement in net liability for staff gratuity
Net liability as at July 1 33,345 112,513

Net interest on defined benefit obligation 33,211 35,487
Return on plan assets during the year (31,133) (27,958)
45,784 46,464
Total remeasurements for the year charged to
other comprehensive income (53,099) (14,247)
Contributions made by the Parent Company during the year (24,068) (111,385)
9.1.2 Movement in present value of defined benefit obligation
Present value of defined benefit obligation as at July 1 352,380 273,597

Remeasurements:
- Actuarial (gains) / losses from changes in demographic assumptions - -
- Actuarial (gains) / losses from changes in financial assumptions (6,847) -
- Experience adjustments 5,985 15,910
(862) 15,910
Present value of defined benefit obligation as at June 30 404,923 352,380

2016 2015
9.1.3 Movement in fair value of plan assets
Fair value of plan assets as at July 1 319,035 161,084

Interest income on plan assets 31,133 27,958
Contributions during the year 24,068 111,385
Remeasurements in fair value of plan assets 52,237 30,157
Fair value of plan assets as at June 30 402,961 319,035
9.1.4 Plan assets
Plan assets are comprised as follows:
2016 2015
(Rs in '000') Percentage (Rs in '000') Percentage
Plan assets
Cash and other deposits 1,010 0.25% 902 0.28%
Debt instruments 348,735 86.54% 318,133 99.72%
Deposits 53,216 13.21% - 0.00%
402,961 100.00% 319,035 100.00%
2016 2015

9.1.6 Total remeasurements charged to other comprehensive

income
Actuarial (gains) / losses from changes in demographic

assumptions - -
Actuarial (gains) / losses from changes in financial assumptions (6,847) -
Experience adjustments 5,985 15,910
(862) 15,910
Remeasurements in plan assets, excluding interest income (52,237) (30,157)
Total remeasurements charged to other comprehensive income (53,099) (14,247)

9.1.7 Amounts for current period and previous four annual periods of the fair value of plan assets and present
value of defined benefit obligation are as follows:
2016 2015 2014 2013 2012

As at June 30
benefit obligation 404,923 352,380 273,597 225,816 167,467
Fair value of plan assets (402,961) (319,035) (161,084) (149,756) (82)

Deficit 1,962 33,345 112,513 76,060 167,385
arising on plan obligation (862) 15,910 16,362 17,256 10,222
on plan assets 52,237 30,157 (1,473) 1,396 33
9.1.8 Assumptions used for valuation of the defined benefit scheme for management and non-management
staff are as under:
2016 2015

Rate of interest income on plan assets Per annum 13.25% 13.25%
9.1.9 Year end sensitivity analysis (±100 bps) on defined benefit obligation is as follows:
Discount rate Discount rate Salary Salary

increase rate increase rate
+ 100 bps - 100 bps + 100 bps - 100 bps

benefit obligation 322,950 383,172 383,540 322,136
9.1.10 The Company expects to pay Rs 45.234 million in contributions to defined benefit plan during the year
ending June 30, 2017.
2016 2015
9.2 Accumulating compensated absences
Opening balance 116,910 100,344

Expenses recognised 30,403 35,574
Benefits paid (25,270) (19,008)
122,043 116,910
Payable within one year - note 14 (12,670) (12,670)

2016 2015
9.2.1 Movement in liability for accumulating

compensated absences
Present value of accumulating compensated

absences as at July 1 116,910 100,344
Remeasurements:
- Actuarial (gains)/losses from changes in demographic
assumptions - -
- Actuarial (gains)/losses from changes in financial assumptions - -
- Experience adjustments (2,180) 302
(2,180) 302
Present value of accumulating compensated absences
as at June 30 122,043 116,910

Remeasurement during the year (2,180) 302
Amounts for current period and previous four annual periods of the present value of accumulating
compensated absences are as follows:
2016 2015 2014 2013 2012

As at June 30
Present value of accumulating

compensated absences 122,043 116,910 100,344 88,338 74,381
arising on obligation (2,180) 302 6,704 17,205 14,739
9.2.3 Assumptions used for valuation of the accumulating compensated absences are as under:
2016 2015

Expected withdrawal and early retirement rate SLIC 2001-2005 SLIC 2001-2005
mortality table mortality table

9.2.4 Year end sensitivity analysis (± 100 bps) on obligation:
Salary Salary
Discount rate Discount rate increase rate increase rate
+ 100 bps - 100 bps + 100 bps - 100 bps
Present value of obligation 109,861 127,982 128,115 109,599
Officers Workers
2016 2015 2016 2015
(days) (days) (days) (days)
Average number of leaves

- Utilised per annum 11.00 11.00 16.00 18.00
- Encashed per annum 9.00 9.00 11.00 9.00
- Encashed per annum in excess
of accrued leave of 30 days 0.00 0.25 4.00 2.00
2016 2015
10. Deferred income tax liabilities
The liability for deferred taxation comprises temporary differences relating to:
Deferred tax liability
Accelerated tax depreciation 5,412,303 5,030,036
Deferred tax assets

Provision for retirement and other benefits (32,364) (40,677)
Unabsorbed tax losses and tax credits - (122,925)
5,379,939 4,866,434
Deferred tax asset on tax losses available for carry forward, minimum tax paid available for carry forward u/s 113 of the
Income Tax Ordinance, 2001 and Alternate Corporate Tax ('ACT') paid available for carry forward u/s 113C of the
Income Tax Ordinance, 2001 are recognized to the extent that the realisation of related tax benefits through future
taxable profits is probable.
The Group has not recognised deferred tax assets of Rs 183.268 million (2015: Rs 183.206 million) in respect of tax
losses, as sufficient taxable profits would not be available to set these off in the foreseeable future as referred to in note
35.3 and 35.4.
During the year, NDL has surrendered its available tax losses amounting to Rs 1,073.375 million with a collective tax
value of Rs 430.998 million in favour of the Parent company through Group relief under section 59B of the Income Tax
Ordinance, 2001."

2016 2015
11. Trade and other payables
Trade creditors - note 11.1 1,604,173 933,036

Infrastructure cess 148,383 140,641
Advances from customers 595,869 380,547
Accrued liabilities 1,799,629 1,252,021
Workers' profit participation fund - note 11.2 694,111 1,342,564
Federal excise duty payable 56,568 40,967
Custom duty payable - 2,278
Withholding tax payable 20,338 14,138
Retention money payable 75,619 25,331
Unclaimed dividends 22,197 18,089
Advances against sale of scrap 5,578 6,949
Advance against sale of fixed asset 1,522 -
Unclaimed dividend on redeemable preference shares 127 125
Export commission payable 50,314 44,750
Others - note 11.4 54,173 60,695
5,296,293 4,353,727
11.1 Trade creditors include amount due to related parties amounting to Rs 5.180 million (2015: Rs 6.798 million).
2016 2015
Nishat Agriculture Farming (Private) Limited 1,543 2,725

Nishat Developers (Private) Limited 1,906 -
Adamjee Insurance Company Limited 45 2,590
Security General Insurance Company Limited 1,686 1,483
5,180 6,798
11.2 Workers' profit participation fund
Opening balance 1,342,564 900,718

Interest for the year - note 34 2,529 2,380
2,036,885 1,427,717
Less: payments made during the year 1,342,774 85,153
Closing balance 694,111 1,342,564
11.3 Workers' welfare fund
Opening balance 91,596 -

267,670 91,596
Less: Payments made during the year (99,978) -
11.4 Includes an amount of Rs 0.62 million (2015: Rs 0.266 million) and Nil (2015: Rs 0.199 million) payable to
Employees Provident Fund of the NDL and NPPCL respectively.

2016 2015
12. Accrued finance cost
Accrued mark-up on:

Preference dividend on redeemable preference shares 84 84
60,421 41,130
13. Short term borrowings - secured
Short term running finances - secured - note 13.1 1,426,095 1,106,861

Import finances - secured - note 13.2 493,911 1,241,673
Export finances - secured - note 13.3 1,830,000 -
3,750,006 2,348,534
13.1 Short term running finances - secured
Short term running finances available from various commercial banks under mark up arrangements amount to
Rs 7,100 million (2015: Rs 6,125 million). The rates of mark up are based on Karachi Inter-Bank Offer Rate
("KIBOR") plus spread and range from 5.49% to 8.47% (2015: 6.81% to 11.74%) per annum or part thereof on
the balance outstanding. These are secured by first registered charge on all present and future current assets
of the Parent Company and NPPCL wherever situated including stores and spares, stock in trade, book debts,
investments, receivables.
13.2 Import finances - secured
The Group has obtained import finance facilities aggregating to Rs 7,200 million (2015: Rs 7,975 million) from
commercial banks. The rates of mark up based on Karachi Inter-Bank Offer Rate ("KIBOR") plus spread range
from 6.74% to 6.75% (2015: 10.44% to 10.56%) per annum and those based on London Inter-Bank Offer Rate
("LIBOR") plus spread range from 1.1% to 3.5% (2015: 1.90% to 4.8%) per annum. The aggregate import
finances are secured by a registered charge on all present and future current assets of the Parent Company and
NPPCL, wherever situated, including stores and spares, stock in trade, book debts, investments and receivables.
Of the aggregate facility of Rs 36,744 million (2015: Rs 10,578 million) for opening letters of credit and Rs 1,900
million (2015: Rs 2,020 million) for guarantees, the amount utilised as at June 30, 2016 was Rs 13,358 million (2015:
Rs 3,271 million) and Rs 913 million (2015: Rs 942 million) respectively. The aggregate facilities for guarantees are
secured by a registered charge on current assets of the Parent company. Of the facility for guarantees, Rs 14.48
million (2015: Rs 14.48 million) is secured by a lien over bank deposits as referred to in note 27.2.
With respect to subsidiary company NDL, the facilities for opening letters of credits and guarantees as at June
30, 2016 amount to Rs 1,370 million (2015: Rs 700 million) of which the un-utilized amount as of this date was
Rs 1,000 million (2015: Rs 474 million). The above aggregate non-funded facilities include Rs 700 million (amount
utilized as at June 30, 2015: Rs. 50 million) under permissible shariah arrangements with Islamic banks.
13.3 Export finances - secured
This represents export finance loans obtained from various commercial banks, which carry mark up based on
rates notified by State Bank of Pakistan ranging from 3.75% to 4.00% (2015: 5.50% to 7.00%), export finances
which carry markup based on Karachi Inter Bank Offer Rate ("KIBOR") ranging from Nil per annum (2015: Nil )
and London Inter Bank Offer Rate ("LIBOR") at Nil (2015: Nil ). These loans are obtained for a period of 180 days
and are secured against pari passu hypothecation charge over current assets of the Parent company.

2016 2015
14. Current portion of non-current liabilities
Long term finances - note 7 1,271,376 767,386

Retirement and other benefits - note 9.2 12,670 12,670
1,284,046 780,056
15. Contingencies and commitments
15.1 Contingencies
15.1.1 The Income Tax Officer, while framing the assessments for the assessment years 1984-85 to 1990-91,
has taxed the income of the Parent company on account of the interest on the deposits and sale of
scrap etc. The Appellate Tribunal on appeal filed by the Parent company issued an order in favour of
the Parent company for the assessment years 1984-85 to 1990-91. The Income Tax Department filed
reference before the Lahore High Court. Pending final outcome of such reference, no adjustment has
been made in these financial statements for the relief granted by the Appellate Tribunal aggregating Rs.
35.090 million.
15.1.2 During the period 1994 to 1996, the Parent company imported plant and machinery relating to
expansion unit, for which exemption was claimed under various SROs from the levy of custom duty
and other duties including sales tax. As per the provisions of SRO 484 (I)/92, 978 (I)/95 and 569 (I)/95,
the exemption from the statutory duty would be available only if the said plant and machinery was not
manufactured locally. However, the Custom Authorities rejected the claim of the Parent company by
arguing that the said machinery was on the list of locally manufactured machinery, published by the
Federal Board of Revenue. Consequently, the Parent company appealed before the Lahore High Court,
Multan Bench, which allowed the Parent company to release the machinery on furnishing indemnity
bonds with the Custom Authorities.
Collector of Customs and Central Excise, Multan has passed an order dated November 26, 1999,
against the Parent company on the grounds that the said machinery was being manufactured locally
during the time when it was imported.
After various appeals at different forums, the Honorable Supreme Court remanded the case back to the
Customs Authorities to reassess the liability of the Parent company. The custom authorities
re-determined the liability of the Parent company upon which the Parent company preferred an appeal
to the Customs Appellate Tribunal. The Tribunal decided the case in favour of the Parent company,
upon which the Parent company discharged all liabilities. However, the custom authorities preferred a
reference to the Lahore High Court, Multan Bench. In case of any adverse decision, the management
assesses liability to the tune of Rs 233.390 million. No provision for this amount has been made in the
financial statements as according to the management of the Parent company, there are meritorious
grounds that the ultimate decision would be in its favour.
15.1.3 The Competition Commission of Pakistan (the CCP) took suo moto action under Competition
Ordinance, 2007 and issued Show Cause Notice on October 28, 2008 for increase in prices of cement
across the country. The similar notices were also issued to All Pakistan Cement Manufacturers
Association (APCMA) and its member cement manufacturers. The Parent company has filed a Writ
Petition in the Lahore High Court. The Lahore High Court, vide its order dated August 24, 2009 allowed
the CCP to issue its final order. The CCP accordingly passed an order on August 28, 2009 and imposed
a penalty of Rs. 933 million on the Parent company. The Lahore High Court vide its order dated August
31, 2009 restrained the CCP from enforcing its order against the Company for the time being.
The vires of the Competition Commission of Pakistan, 2007 have been challenged by a large number
of Petitioners and all have been advised by their legal counsels that prima facie the Competition

Commission Ordinance, 2007 is ultra vires of the Constitution. A large number of grounds have been raised
by these Petitioners and the matter is currently being adjudicated by the Lahore High Court, the Sindh High
Court and the Supreme Court of Pakistan. In all these cases stay orders have been granted by the Courts.
Based on the legal opinion, the management is confident that the Parent company has a good case and
there are reasonable chances of success in the pending Petition in the Supreme Court of Pakistan.
15.1.4 The matter relating to interpretation of provisions of section 4(2) of the repealed Central Excise Act, 1944
(1944 Act) has now attained finality after having been adjudicated by the honorable Supreme Court of
Pakistan through its judgment dated 27 January 2009 (upholding its previous judgment dated 15
February 2007). The longstanding controversy between the revenue department and the tax payers
related primarily to finer interpretation of the provisions of section 4(2) of the 1944 Act wherein the
department had a view that excise duty shall be included as a component for determination of the value
(retail price) for levying excise duty. The departmental view, being against the spirit of law, was challenged
by the taxpayers in appeals before the honorable High Courts of the country which, duly appreciating the
contentions of the taxpayers, overturned the departmental view and succeeded the appeals.
Now since the controversy has attained finality up to the highest appellate level, the Parent company
has initiated the process of claiming refund of excess excise duty paid by it during the periods from
1994 to 1999 which aggregates to Rs. 1,115.145 million. The amount of refund, however, shall be
incorporated in the books of accounts once it is realized by the Parent company.
15.1.5 The Parent company, consequent to the order passed by the Supreme Court of Pakistan against the
decision of the Sindh High Court in the matter of infrastructure cess, filed a petition before the Sindh
High Court, challenging the levy of fifth version of the law enforcing infrastructure cess. Earlier, the
Sindh High Court, in August 2008, ruled out that only levies computed against consignments made on
or after December 28, 2006 shall be payable by the petitioners. Although the parties have reached an
interim arrangement, through an order of Sindh High Court dated May 31, 2011, for release of 50% of
the guarantees, the final order from Sindh High Court is still pending. According to the legal counsel of
the Parent company, chances of favorable outcome of the appeal are fair, therefore 50% of the amount
of infrastructure cess payable has not been incorporated in these financial statements amounting to
Rs. 89.164 million.
15.1.6 The Parent company, consequent to the order-in-appeal passed by the learned Customs, Federal
Excise and Sales Tax Appellate Tribunal, Lahore, filed a petition before the Lahore High Court,
challenging the levy of sales tax on the in-house consumption of Shale, Gypsum and Limestone for the
period of June 13, 1997 to August 11, 1998. According to the legal counsel of the Parent company,
chances of favorable outcome of the petition are fair, therefore the payable amount has not been
incorporated in these financial statements amounting to Rs 212.239 million.
15.1.7 NPPCL filed an appeal before the Commissioner Inland Revenue (CIR) (Appeals), against the amended
assessment order dated June 29, 2014 passed by the Additional Commissioner Inland Revenue u/s
122(9)/122(5A) of the Income Tax Ordinance, 2001 for the tax year 2008. Through this order an income
tax demand of Rs. 184.61 million was created against NPPCL. Objection was raised on various issues
like difference in raw material purchases in income tax and sales tax records,
unexplained/unsubstantiated tax deductions claimed, difference in federal excise duty and sales tax
liability as per income tax and sales tax returns, brought forward losses not allowed, etc. The
assessment order was decided in favor of NPPCL by the CIR (appeals) against which the department
has filed appeal before the Appellate Tribunal Inland Revenue which is pending adjudication. The
management, based on the advice of its legal counsel, is confident that the matter will be decided in
its favor and no financial obligation is expected to accrue. Consequently, no provision has been made
in these financial statements.
15.1.8 In the year 2014, NPPCL filed a petition before the honorable Islamabad High Court, against the
valuation ruling no 601/2013 which was subsequently superseded by ruling no 721/2015 issued by the
Directorate General of Customs Valuation, Custom House, Karachi ('Custom authorities'). As per the
valuation ruling, sack Kraft paper shall be assessed to duty/taxes on fixed rate per kilogram, rather than

the transaction value based assessment. The honorable Islamabad High Court on January 23, 2015,
while allowing the goods to be released on furnishing of bank guarantee for the different amount,
dismissed the aforementioned writ petition due to non-jurisdiction of the Court. NPPCL then filed writ
petitions no 806/2015 and 846/2015 before the honorable Sindh High Court for declaration and
permanent injunction to the effect that value of the goods imported by NPPCL to be assessed u/s 25(2)
of the Customs Act, 1969 (existing transaction value based assessment), that ruling 721/2015 is
arbitrary and for restraining the custom authorities from encashment of bank guarantees. During the
current year, the honorable Sindh High Court, while disposing off both the writ petitions, directed the
concerned custom authorities to pass a proper speaking assessment order in terms of Section 80 of
the customs Act, 1969 after affording an opportunity of proper hearing to the plaintiff. The Court also
restrained encashment of bank guarantees in case of any adverse order unless the plaintiff appeal has
been heard at an appellate forum.
Meanwhile NPPCL also filed review petition to Director General of Customs Valuation for revision of
ruling 721 and requested to delete Sack Kraft Paper from the valuation ruling. Consequently, upon
order of honorable Sindh High Court and presentations made by NPPCL, NPPCL again appealed
custom authorities to revise valuation ruling as it is not representing international rates of Kraft paper
and make final assessment of goods imported on declared (transaction based) value, the Custom
authorities on April 19, 2016 issued fresh valuation ruling no 833/2016 superseding earlier ruling no
721/2015 and further deleting Sack Kraft Paper from the ruling. However, the custom authorities
decision on account of final assessment of provisionally released Kraft paper earlier imported against
bank guarantees is pending. Pursuant to revision of ruling and Court order, NPPCL is hopeful of a
favorable decision. However, being prudent NPPCL has made a provision of Rs. 20.63 million (2015:
Rs. 12.61 million) of custom duties that might be payable representing duty determined as per ruling
and actual declared value in these financial statements.
15.1.9 NPPCL filed an appeal before the Commissioner Inland Revenue (CIR) (Appeals), against the amended
assessment order dated December 31, 2014 passed by the Deputy Commissioner Inland Revenue
(DCIR) u/s 122(9)/122(5A) of the Income Tax Ordinance, 2001 for the tax year 2011. The DCIR through
the order made additions u/s 21 mainly on account of non-deduction of tax on interest and freight
payments thereby reducing the declared loss of tax year 2011 by Rs. 56.19 million. Further the amount
of refund was reduced by Rs. 2.05 million through levy of Workers Welfare Fund. The case was heard
by CIR appeals and order is awaited. The management, based on the advice of its legal counsel, is
confident that the matter will be decided in its favor and no financial obligation is expected to accrue.
Consequently, no provision been made in these financial statements.
15.1.10 In the year 2012, NPPCL had written back the provisions created on account of Workers' Welfare Fund
(WWF) relating to years 2010 and 2011 based on the judgment issued by the Honorable Lahore High
Court through order dated August 19, 2011. The Honorable Lahore High Court, through such order, has
held the amendments introduced to the Workers Welfare Fund Ordinance, 1971 through Finance Act,
2006 and Finance Act, 2008 as ultra vires the constitution and, since NPPCL did not have any taxable
income for said years, NPPCL had reversed the provision made for WWF in respect of above
mentioned years amounting to Rs. 2.10 million. Furthermore, pursuant to the order of the Honorable
Lahore High Court, no provision for WWF has been made by NPPCL for the year 2012 to 2015 based
on the rationale that NPPCL does not have taxable income in those years. In the absence of the Lahore
High Court order, the provision for WWF based on accounting profit for the year 2012 to 2015 amounts
to Rs. 8.48 million. However, NPPCL remains contingently liable for the WWF amounts as
aforementioned till such time that finality is achieved at the highest appellate forum.
15.1.11 The Parent Company has issued the following guarantees in favour of:
- Collector of Customs, Excise and Sales Tax against levy of Sales Tax, custom duty and excise
- Director, Excise Collection Office, Sindh Development and Maintenance against recovery of

infrastructure fee amounting to Rs 425.9 million (2015: Rs 425.9 million).
- Director General, Mines and Minerals, Punjab against installation of cement factory near Khairpur,
District Chakwal amounting to Rs 3 million (2015: Rs 3 million).
- The President of the Islamic Republic of Pakistan against the performance of a contract to Frontier
Works Organization amounting to Rs 0.5 million (2015: Rs 0.5 million).
- Sui Northern Gas Pipelines Limited against supply of 6 MMCFD and 14 MMCFD gas for captive use
for Khairpur Project and for D.G Khan Project respectively amounting to Rs 427.606 million (2015: Rs
382.235 million).
- Professional Tax imposed by Administration Zila Council (The District Coordination Officer, DG Khan)
- Sindh High Court against levy of Sales Tax, custom duty and excise amounting to Rs 15.423 million
(2015: 15.423 million).
- The Managing Director, Lahore Waste Management Company (LWMC) against the performance of a
contract amounting to Rs 5 million (2015: Rs 15 million).
- Guarantees against export orders amounting to Rs 2.094 million (2015: Rs 46.096 million).
15.1.12 With respect to the NPPCL, Habib Bank Limited has issued a bank guarantee for Rs 50.39 million
(2015: Rs 29.09 million) in favour of Directorate General of Customs Valuation, Custom House, Karachi
as a security against the pending case. The guarantee will expire after the final decision on this case is
announced.
United Bank Limited and Bank Al-Habib has issued a bank guarantee for Rs. 46.92 million (2015: 45.92
million) in favour of The Director Excise and Taxation, Karachi as a security against the pending case.
The guarantee will expire after the final decision on this case is announced.
15.1.13 With respect to the NDL, letter of guarantee of Rs 14 million (2015: Rs 14 million) in favour of Director,
Excise and Taxation, Karachi under direction of Sindh High Court in respect of suit filed for levy of
infrastructure cess.
15.2 Commitments in respect of:
(i) Contracts for capital expenditure Rs 274.830 million (2015: Rs 427.335 million)
(ii) Letters of credits for capital expenditure Rs 11,195.826 million (2015: Rs 2,274.836 million)
(iii) Letter of credit other than capital expenditure Rs 1,425.616 million (2015: Rs 1,183.407 million).
(iv) The amount of future payments under operating leases and the period in which these payments will
become due are as follows:
2016 2015
Not later than one year 331 331

Later than one year and not later than five years 1,325 1,325
Later than five years 4,976 5,309
6,632 6,965
16. Property, plant and equipment
Operating assets - note 16.1 35,288,238 31,693,136

Capital work-in-progress - note 16.2 7,684,010 1,894,473
Major spare parts and stand-by equipment - note 16.3 95,368 105,469
43,067,616 33,693,078

16.1 Operating assets 2016 (Rupees in thousand)
Cost Book value
203
2016 30, 2016
% 2015 for the year 30, 2016
Freehold land - 1,054,329 829,502 1,883,831 - - - 1,883,831
Leasehold land 3.33 63,000 - 63,000 15,750 2,100 17,850 45,150
- Factory building 5 - 10 8,556,091 1,148,910 9,705,001 3,558,776 498,476 4,057,252 5,647,749
- Office building and housing colony 5 838,426 426,872 1,265,298 331,042 27,148 358,190 907,108
Annual Report 2016

Roads 10 588,599 - 588,599 322,793 26,580 349,373 239,226
Plant and machinery 3.33 - 10 34,764,279 2,927,404 37,687,903 11,676,597 1,336,134 13,012,731 24,675,172
(3,780)
Factory and quarry equipment 10 - 20 1,937,566 172,100 2,109,666 1,240,033 112,310 1,351,515 758,151
(828)
Furniture, fixture and office equipment 10 - 30 430,659 89,289 519,948 172,298 31,294 203,592 316,356
Vehicles 20 477,527 154,170 580,182 171,178 61,389 211,388 368,794
(51,515) (21,179)
Aircraft 30 328,752 - 328,752 203,856 37,453 241,309 87,443
Power and water supply lines
and installations 10 643,581 48,215 691,796 297,350 35,188 332,538 359,258
2016 49,682,809 5,796,462 55,423,976 17,989,673 2,168,072 20,135,738 35,288,238
(55,295) (22,007)
Acquisition of Cost Book value
subsidiary as at 30 June as at June
(note 46.1.2) 2015 30, 2015
% 2014 for the year 30, 2015
Freehold land 0 601,362 332,960 120,007 1,054,329 - - - 1,054,329

Leasehold land 3.33 63,000 - - 63,000 13,650 2,100 15,750 47,250
- Factory building 5 - 10 6,862,482 1,488,101 205,508 8,556,091 3,089,726 469,050 3,558,776 4,997,315
- Office building and housing
colony 5 827,410 - 11,016 838,426 304,505 26,537 331,042 507,384
Roads 10 582,737 - 5,862 588,599 293,259 29,534 322,793 265,806
Plant and machinery 3.33 - 10 33,600,494 591,049 604,587 34,764,279 10,398,517 1,284,848 11,676,597 23,087,682
(31,851) (6,768)
Factory and quarry equipment 10 - 20 1,762,387 46,319 128,860 1,937,566 1,136,885 103,148 1,240,033 697,533
Furniture, fixture and
office equipment 10 - 30 356,034 16,374 58,251 430,659 146,892 25,406 172,298 258,361
Vehicles 20 382,014 37,362 86,179 477,527 138,659 49,140 171,178 306,349
(28,028) (16,621)
Aircraft 30 328,752 - - 328,752 150,352 53,504 203,856 124,896
-
Power and water supply lines
and installations 10 507,111 113,223 23,247 643,581 264,978 32,372 297,350 346,231
2015 45,873,783 2,625,388 1,243,517 49,682,809 15,937,423 2,075,639 17,989,673 31,693,136

(59,879) (23,389)
16.1.1 Freehold land and building include book values of Rs 12 million (2015: Rs 12 million) and Rs 5.784 million (2015: Rs 6.089 million) respectively which are held in
the name of Chief Executive of the Parent Company. This property is located in the locality of Defence Housing Authority where the by-laws restrict transfer of
title of the residential property in the name of the Parent Company.
2016 2015
16.1.2. The depreciation charge for the year has been allocated as follows:
Cost of sales - note 29 2,084,981 1,982,504

Annual Report 2016

Selling and Distribution expenses - note 31 4,446 4,328
2,168,072 2,075,639
204
16.1.3 Disposal of property, plant and equipment
Detail of property, plant and equipment disposed off during the year is as follows:
205
Plant & Machinery Outsiders

M/s Shareef Dairy Farm 2,282 503 1,779 816 (963) Negotiation
Mr. Muhammad Nadeem 1,427 310 1,117 560 (557) Negotiation
Mr. Ali Imran 71 16 55 30 (25) Negotiation
Vehicles Employees
Muhammad Naveed Akhtar 2,008 1,187 821 1,330 509 Auction
Annual Report 2016

Ghulam Ahmad Alvi 1,586 757 829 841 12 -do-
Outside parties
Nadeem 822 521 301 617 316 Auction
Ghulam Nabi 662 534 128 618 490 -do-
Nadeem 822 521 301 638 337 -do-
Mr. Asim 837 535 302 671 369 -do-
Yasir Hussain 822 521 301 713 412 -do-
Khurram Imtiaz 1,394 772 622 1,213 591 -do-
Khurram Imtiaz 1,973 1,073 900 1,459 559 -do-
Khurram Mahmood 2,150 1,107 1,043 1,590 547 -do-
Khurram Imtiaz 1,587 557 1,030 1,393 363 -do-
Khurram Imtiaz 398 295 103 363 260 -do-
Kamran Ghulam Mustufa 500 314 186 375 189 -do-
Zeeshan Haider Raza 555 423 132 536 404 -do-
Asim 842 534 308 667 359 -do-
Fareed Khan 842 534 308 716 408 -do-
Khurram Imtiaz 2,097 1,093 1,004 1,621 617 -do-
Security General Insurance Company Limited 28,939 8,289 20,650 28,044 7,394 Insurance Claim

55,295 22,007 33,288 47,157 13,869
Plant & Machinery

Asset written off 7,042 1,955 5,087 - (5,087) Assets written off
Asset retired for overhauling 7,000 1,953 5,047 - - Retired from use
Outsider
M/s Umer Farms (Private) Limited 5,706 1,098 4,608 2,372 (2,236) Negotiation
Mr. Rafaqat Ali 1,141 229 912 405 (507) Negotiation
M/s Cemcon (Private) Limited 6,103 605 5,498 1,538 (3,960) Negotiation
Mr. Ijaz Hussain 285 48 237 284 47 Negotiation
M/s Zulfiqar Dairy Farm 285 57 228 86 (142) Negotiation
M/s Monaco Dairy Farm 143 28 115 49 (66) Negotiation
M/s Akeel Enterprises 71 14 57 26 (31) Negotiation
M/s Eastern Dairy (Private) Limited 650 86 564 838 274 Negotiation
Mr. Syed Hassan Ali 571 121 450 202 (248) Negotiation
Vehicles Employees
Munir Shah 662 452 210 218 8 Company policy
Akhund Saeed Khaliq 1,325 653 672 706 34 Company policy
Irfan Ahmad 1,301 804 497 1,088 591 Company policy
Outside parties
Nasir Zahoor 275 191 84 549 465 Auction
Adnan Anwar 662 460 202 627 425 -do-
Rizwan Khan 1,269 804 465 1,060 595 -do-
Muhammad Bilal 1,269 804 465 1,140 675 -do-
Rashid Saleemi 1,337 724 613 1,210 597 -do-
Khurram Imtiaz 2,449 1,718 731 3,235 2,504 -do-
Habib Asad Khan 969 732 237 964 727 -do-
Mirza Abdul Hafeez 1,306 1,118 188 627 439 -do-
Muhammad Asim 2,679 1,589 1,090 2,398 1,308 -do-
Nadeem Gull 822 456 366 732 366 -do-
Irfan Ahmad 1,354 837 517 1,066 549 -do-
Syed Mazhar Jamil 1,756 1,265 491 1,650 1,159 -do-
Muhammad Awais 427 309 118 432 314 -do-
Faisal Mahmood 969 757 212 831 619 -do-
Asim Mumtaz 555 437 118 653 535 -do-
Muhammad Naeem 500 277 223 473 250 -do-
Annual Report 2016

Security General Insurance Company Limited 1,056 382 674 1,000 326 Insurance Claim
M/s Burden Bros. 5,086 1,852 3,234 318 (2,916) Negotiation

59,879 23,389 36,490 27,797 (3,646)
206
16.2 Capital work-in-progress
207
Balance Acquisition of Borrowing cost expenditure Transfers to Balance
as at June subsidiary expenditure capitalized within capital operating fixed as at June
30, 2015 (note 46.1.2) during the year during the assets 30, 2016
year
Civil works 728,778 - 1,112,271 - (6,597) 19,822 (1,538,974) 315,300

Plant and machinery 656,348 - 5,566,930 141,457 (1,543) 16,711 (2,910,144) 3,469,759
Advances 101,856 - 1,341,749 - (54) - (306,604) 1,136,947
Others 42,519 - 10,667 - - (36,533) (13,698) 2,955
Annual Report 2016

Expansion Projects:
- Civil works 76,848 - 1,908,278 - - - - 1,985,126
- Plant and Machinery - - 45,184 - - - - 45,184
- Others 288,124 - 440,615 - - - - 728,739
1,894,473 - 10,425,694 141,457 (8,194) - (4,769,420) 7,684,010

Balance Acquisition of Borrowing cost expenditure Transfers to Balance
as at June subsidiary expenditure capitalized within capital operating fixed as at June
30, 2014 (note 46.1.2) during the year during the assets 30, 2015
year
Civil works 288,234 58,785 563,529 - (275) - (181,495) 728,778

Plant and machinery 101,548 43,764 890,234 - (306) - (378,892) 656,348
Advances 60,903 - 156,300 - - - (115,347) 101,856
Others 16,813 - 35,253 - - - (9,547) 42,519
Expansion Projects:
- Civil works 24,701 - 52,147 - - - - 76,848
- Others 142,119 - 146,005 - - - - 288,124
634,318 102,549 1,843,468 - (581) - (685,281) 1,894,473
2016 2015
16.3 Major spare parts and stand-by equipment
Balance at the beginning of the year 105,469 246,341

Additions during the year 126,515 167,272
Transfers made during the year (136,616) (308,144)
Balance at the end of the year 95,368 105,469
17. Biological assets
Dairy livestock
- Mature 540,051 1,032,166
- Immature 120,440 117,633
- note 17.1 660,491 1,149,799
17.1 Reconciliation of carrying amounts of livestock
Opening balance 1,149,799 -

Acquisition of subsidiary - 60,457
Increase due to purchases during the year 1,128 403,836
1,210,927 1,364,293
Fair value gain due to new births 36,243 36,494

Changes in fair value (due to price change and biological
transformation) (43,132) (102,721)
(6,889) (66,227)
Decrease due to deaths/ livestock losses (32,383) (40,058)

Decrease due to sale of livestock (511,164) (108,209)
(543,547) (148,267)
Carrying amount at the end of the year which approximates
the fair value 660,491 1,149,799
17.2 As at June 30, 2016 the Group held 3,135 (2015: 4,390) mature assets able to produce milk and 2,084 (2015:
2,115) immature assets that are being raised to produce milk in the future. During the post-acquistion period,
2,449 (2015 : 527) cows were sold and the Group produced approximately 20,905,116 (2015: 25,937,656)
gross liters of milk from these biological assets. As at June 30, 2016, the Group also held 127 (2015: Nil)
immature male calves.
17.3 The valuation of dairy livestock as at June 30, 2016 has been carried out by an independent valuer. In this
regard, the valuer examined the physical condition of the livestock, assessed the key assumptions and
estimates and relied on the representations made by the Group as at June 30, 2016. Further, in the absence of
an active market of the Group's dairy livestock in Pakistan, market and replacement values of similar live stock
from active markets in Netherlands and Australia, have been used as basis of valuation model by the
independent valuer. The cost of transportation to Pakistan is also considered.

2016 2015
18. Intangible assets
This represents Oracle ERP system.

Cost
As at July 1 92,260 92,260
Additions - -
As at June 30 92,260 92,260
Less: Accumulated amortisation
As at July 1 73,808 55,356
Amortisation for the year - note 18.1 18,452 18,452
As at June 30 92,260 73,808
- 18,452
18.1 Oracle ERP system is being amortised over a useful life of five years.
18.1.1 The amortisation charge for the year has been allocated as follows:
2016 2015
Cost of sales - note 29 12,916 12,916

Selling and distribution expenses - note 31 2,768 2,768
18,452 18,452
19. Investments
These represent the long term investments in:

- Others - available for sale - note 19.2 151,263 133,089
3,521,385 2,655,492
10,441,240 10,364,409

2016 2015
Nishat Chunian Limited - quoted - available for sale

7,173,982 (2015: 5,961,549) fully paid ordinary
shares of Rs 10 each
Equity held: 2.99% (2015: 2.98%)
Market value - Rs 254.102 million (2015: Rs 218.968 million) 75,565 45,254
75,565 45,254
MCB Bank Limited

21,519,115 (2015: 21,305,315) fully paid ordinary shares of
Rs 10 each
Equity held: 1.94% (2015: 1.91%)
169,463 125,834

20,988,735 (2015: 16,053,735) fully paid ordinary shares
of Rs 10 each
Equity held: 6% (2015: 4.59%)
Market value - Rs 1,052.794 million (2015: Rs 764.479 million) 917,238 643,459
798,535 524,756
Associates - quoted - available for sale

Rs 10 each
Equity held: 8.61% (2015: 8.61%)
Market value - Rs 3,268,237 million (2015: Rs 3,460 million) 1,577,174 1,577,174
1,326,559 1,326,559
Associates - unquoted
Nishat Hotels and Properties Limited

Rs 10 each
Equity held: 10.42% (2015: 6.25%) - note 19.1.2 1,000,000 500,000
1,000,000 500,000
3,370,122 2,522,403
19.1.1 Nishat Mills Limited and Nishat Hotels and Properties Limited are associated companies as per the
Companies Ordinance, 1984, however, for the purpose of measurement, these have been classified as
available for sale and measured at fair value as the Group does not have significant influence over
these companies.
19.1.2 The Company's investment in ordinary shares of Nishat Hotels and Properties Limited has been valued
at Rs 10 per share which corresponds to the fair value at the reporting date.

2016 2015
19.2 Others - available for sale
First Capital Mutual Fund

104,457 (2015: 104,457) certificates of Rs 10 each
Equity held 0.35% (2015: 0.35%)
Less: Cumulative impairment Loss (678) (678)
212 212
Pakistan Petroleum Limited
Equity held: 0.03% (2015: 0.02%)
Market value - Rs 92.313 million (2015:Rs 72.525) 117,405 99,231
117,405 99,231
United Bank Limited

Equity held: 0.02% (2015: 0.02%)
Market value - Rs 37.924 million (2015: 36.637 million) 33,646 33,646
33,646 33,646
151,263 133,089
As at July 01 7,708,917 8,796,807

Fair value (loss) / gain recognized in other comprehensive income (789,062) (1,087,890)
6,919,855 7,708,917
on derecognition of investment in shares - -
As at June 30 6,919,855 7,708,917
19.4 Investments with a face value of Nil (2015: Nil) are pledged as security against bank facilities. 3,860,267 (2015:
3,860,267) shares of MCB Bank Limited are blocked in Central Depository Company ('CDC') account.
2016 2015
20. Long term loans, advances and deposits
Considered Good
- Loans to related parties - note 20.1 - 17,205
- Other loans and advances - note 20.2 58,842 53,197
58,842 70,402
20.1 Loans and advances to related parties
Loan to related party - note 20.1.1 17,206 34,411

Less: receivable within one year 17,206 17,206
- 17,205

20.1.1 This represents an unsecured loan of Rs 12.250 million and Rs 4.956 million (2015: Rs 24.500 million
and Rs 9.911 million) given to Sui Northern Gas Pipelines Limited (SNGPL) for the development of
infrastructure for the supply of natural gas to the plants at D.G. Khan and Khairpur respectively. Mark
up is charged at rates ranging from 1.5% to 2% per annum (2015: 1.5% to 2% per annum) respectively
and is received annually. The principal amount is receivable in 4 equal annual instalments ending
December, 2016 and March, 2017, respectively. The maximum aggregate amount outstanding during
the year was Rs 17.206 million (2015: Rs 34.411 million).
2016 2015
20.2 Other loans and advances
Loans to employees
- Executives - note 20.2.1 105 137
- Others 1,973 2,848
2,078 2,985
Less: receivable within one year

- Executives 26 32
- Others 671 875
697 907
1,381 2,078
Security deposits 57,461 51,119
58,842 53,197
20.2.1 Executives
Opening balance 137 40

Transfer from others to executives - 145
Interest accrued - 10
137 195
Less: repayment during the year 32 58
105 137
These represent secured loans given to executives and other employees for house building and
purchase of motor vehicles and are recoverable in equal monthly instalments over a period of 24 to 96
months. The loans given to executives and other employees carry interest at the rate of 10% per
annum (2015: 10% per annum) except for loans given to workers which are interest free.
The loans of Rs 2.078 million (2015: Rs 2.985 million) are secured against the employees' respective
retirement benefits.
The maximum aggregate amount due from executives at any time during the year was Rs 0.137 million
(2015: Rs 0.185 million).
2016 2015
21. Stores and spares
Stores [including in transit: Rs 58.623 million

(2015: Rs 284.723 million)] 1,613,215 1,213,055
Spare parts [including in transit Rs 9.570 million
(2015: Rs 12.262 million)] 2,505,475 2,548,784
Loose tools 5,786 4,010
4,124,476 3,765,849

21.1 Stores and spares include items which may result in fixed capital expenditure but are not distinguishable.
2016 2015
22. Stock-in-trade
Raw materials [including in transit Rs 199.4 million

(2015: Rs 222.1 million)] 464,509 656,271
Packing material [including in transit Rs 17.004 million
(2015: Rs 8.794 million)] 200,312 190,884
Animal Forage 214,356 179,039
Work-in-process 166,940 508,578
Finished goods 292,094 378,542
1,338,211 1,913,314
23. Trade debts - considered good
Secured 148,052 61,038

Unsecured
- Related parties - note 23.1 13,587 11,802
- Others 363,335 358,232
524,974 431,072
23.1 Related parties - unsecured
Nishat Hospitality (Private) Limited 537 537

Nishat Linen (Private) Limited 221 -
Nishat Hotels and Properties Limited 12,822 10,114
Nishat Spinning (Pvt) Ltd - 711
Nishat Agriculture Farming (Pvt) Ltd 7 -
Nishat Chunian Limited - 440
13,587 11,802
Ageing analysis of the amounts due from related parties is as follows:
1 to 3 More than 3 As at June 30, As at June 30,

months months 2016 2015
Nishat Hospitality (Private) Limited - 537 537 537

Nishat Linen (Private) Limited - 221 221 -
Nishat Hotels and Properties Limited 4,530 8,292 12,822 10,114
MCB Bank Limited - - - -
Nishat Spinning (Pvt) Ltd - - - 711
Nishat Chunian Limited - - - 440
Nishat Agriculture Farming (Pvt) Ltd 7 - 7 -
4,537 9,050 13,587 11,802

2016 2015
24. Investments
Available for sale - quoted

Related parties - note 24.1 479,118 479,066
479,118 479,066
17,819,006 20,175,421
At fair value through profit or loss

Others - note 24.3 41 3,173,215
Related Parties - note 24.4 - 1,507,206
41 4,680,421
17,819,047 24,855,842
24.1 Related Parties - quoted
MCB Bank Limited

Equity held: 7.27% (2015: 7.27%)
478,286 478,234
Nishat Chunian Limited

Equity held: 0.042% (2015: 0.05%)
832 832
479,118 479,066
2016 2015
As at July 01 19,696,355 23,926,087

Fair value (loss) / gain recognized in other comprehensive income (2,356,467) (4,199,486)
17,339,888 19,726,601
Gain during the year transferred to consolidated profit and loss account
on derecognition of investment in shares - (30,246)
As at June 30 17,339,888 19,696,355

2016 2015
24.3 Others - At fair value through profit or loss
Habib Bank Limited - Quoted

210 (2015: 210) fully paid ordinary shares of Rs 10 each
Equity held: 0.00% (2015: 0.00%)
Cost - Rs 0.024 million (2015: Rs 0.024 million) 41 45
41 45
ABL Government Securities fund
Nil (2015: 316,292,242) units
Cost Nil (2015: 3,171.589 million) - 3,173,170
- 3,173,170
41 3,173,215
24.4 Related parties - At fair value through profit or loss
MCB Pakistan Sovereign Fund (MCB-PSF)

Nil (2015: 15,057,137) units
Cost Nil (2015: Rs 1,505.964 million) - 1,507,206
- 1,507,206
25. Advances, deposits, prepayments and other receivables
Current portion of loans to employees - considered good 697 907

Current portion of long term receivable from related party 17,206 17,206
Advances - considered good
- To employees - note 25.1 18,996 2,421
- To suppliers 206,690 260,621
225,686 263,042
Due from related parties - note 25.2 5,776 6,625

Prepayments 14,023 5,025
Mark-up receivable from related party - note 25.3 140 280
Profit receivable on bank deposits 36,325 1,956
Advance against investment in shares - 30,311
Letters of credit - margins, deposits, opening charges, etc - 9,537
Claims recoverable from government
- Sales tax - note 25.4 263,177 507,274
- Excise duty 17,243 17,825
- Export rebate 15,469 63,696
295,889 588,795
Other receivables 8,656 56,340
604,398 980,024
25.1 Included in advances to employees are amounts due from executives of Rs 6.019 million (2015: Rs 1.411
million).

2016 2015
25.2 Due from related parties - unsecured

Nishat Developers (Private) Limited 489 489
5,776 6,625
25.3 This represents mark-up receivable from Sui Northern Gas Pipelines Limited against the loan as referred to in
note 20.1.
25.4 Sales tax recoverable includes amounts which have been recovered by the sales tax department against
miscellaneous demands raised by it. The Group has filed appeals against the demands at different forums as
referred to in note 15.
2016 2015
26. Derivative financial instrument
Classified under current liabilities
Cross currency interest rate swap - note 26.1 - -
Classified under current assets
Cross currency interest rate swap - note 26.1 14,701 9,873
26.1 This represents derivative cross currency interest rate swap arrangement with a commercial bank. Under the
terms of the arrangement, the Parent Company pays Karachi Inter-Bank Offered Rate ('KIBOR') minus bank
spread to the arranging bank on the notional Pak Rupee (PKR) amount for the purposes of the cross currency
swap, and receives London Inter-Bank Offered Rate ('LIBOR') on the notional US Dollar (USD) amount from the
arranging bank. There have been no transfers of liabilities under the arrangements, only the nature of the
interest payment has changed. The derivative cross currency swap outstanding as at June 30, 2016 has been
marked to market and the resulting loss has been included in the consolidated profit and loss account.
2016 2015
27. Cash and bank balances
At banks:
Saving accounts
Local currency - note 27.1 & 27.2 199,005 126,175
Foreign Currency: US$ 1,423,638 (2015: US$ 765,885) 149,055 77,737
Term deposit receipts 6,275,120 -
Current accounts 393,766 60,499
7,016,946 264,411
Cash in hand 5,148 1,566
7,022,094 265,977
27.1 The balances in saving accounts bear mark-up at 6% to 8% per annum (2015: 4.5% to 8% per annum).
27.2 Included in balances at banks on saving accounts are Rs 14.480 million (2015: Rs 14.480 million) which are
under lien to secure bank guarantees referred to in note 13.2.

2016 2015
28. Sales
Local sales 35,835,780 31,268,137

Export sales - note 28.1 3,855,019 3,711,942
39,690,799 34,980,079
Less:
Sales tax 5,770,572 5,052,720
Excise duty and special excise duty 1,626,039 1,373,029
Commission to stockists and export agents 347,574 332,863
7,744,185 6,758,612
31,946,614 28,221,467
28.1 Export sales include rebate on exports amounting to Rs 21.609 million (2015: Rs 20.527 million).
2016 2015
29. Cost of sales
Raw and packing materials consumed 2,781,955 2,818,388

Forage 1,010,226 663,728
Medicines and related items 142,799 128,112
Salaries, wages and other benefits - note 29.1 1,810,571 1,451,996
Electricity and gas 2,137,819 2,769,468
Furnace oil and coal 6,482,072 6,098,129
Stores and spares consumed 1,519,405 1,617,130
Insurance 113,968 127,167
Depreciation on property, plant and equipment - note 16.1.2 2,084,981 1,982,504
Amortisation of intangible assets - note 18.1.1 12,916 12,916
Royalty 310,038 274,437
Excise duty 29,504 26,248
Legal and professional charges 1,377 2,226
Estate development 26,740 23,672
Technical consultancy charges 12,890 5,472
Freight charges 42,250 55,242
Sales tax written off 230,666 -
19,205,049 18,458,965
Opening work-in-process - note 22 508,578 560,634

Closing work-in-process - note 22 (166,940) (508,578)
341,638 52,056
Cost of goods manufactured 19,546,687 18,511,021
Opening stock of finished goods - note 22 378,542 437,912

Closing stock of finished goods - note 22 (292,094) (378,542)
86,448 59,370
Less: Own consumption 118,584 24,550
19,514,551 18,545,841

Rs 32.539 million) and Rs 20.881 million (2015: Rs 24.726 million) respectively, in respect of provident fund
contribution by the Group, provision for gratuity and staff compensated absences.
2016 2015

Gratuity
32,927 32,539

Remeasurements (1,498) 209
20,881 24,726
30. Administrative expenses

Legal and professional services - note 30.2 23,305 42,072
Rent, rates and taxes 258 743
Entertainment 3,583 2,911
School expenses 25,020 23,576
Fee and subscription 25,506 16,968
Advances / debts written off 63,949 898
Incorporation expenses 130 -
632,779 516,780
by the Group, provision for gratuity and staff compensated absences.

2016 2015

Gratuity
7,393 8,526

5,186 6,482
30.2 Legal and professional charges
Legal and professional charges include the following

in respect of auditors' services for:

Statutory audit:
- Parent Company 2,310 2,000
- NDL 841 600
3,151 2,600
Half-yearly review - Parent Company 666 605

Tax services:
- Parent Company 9,355 4,375
- NDL 1,253 3,546
10,608 7,921
Other certification charges - Parent Company 110 100

Out of pocket expenses 120 117
KPMG Taseer Hadi & Co.

Statutory audit - NPPCL 587 534
Out of pocket expenses - NPPCL 30 28
15,272 11,905

2016 2015
31. Selling and distribution expenses

Legal and professional charges 972 3,999
Entertainment 864 886
Advertisement and sales promotion 16,047 10,348
Freight and handling charges 785,914 607,218
Debtors written off - -
Other expenses 797 2,854
965,870 764,832
by the Company, provision for gratuity and staff compensated absences.
2016 2015

Gratuity
3,697 4,085

Interest cost for the year 870 1,066
2,601 3,149

2016 2015
32. Other operating expenses
Workers' profit participation fund - note 11.2 691,792 524,619

Donations - note 32.1 650 4,245
Realized loss on derivative financial instrument 4,907 46,642
Exchange loss 94,605 87,673
Loss on disposal of property, plant and equipment - note 16.1.3 - 3,646
Loss on disposal of biological assets 254,505 25,263
Loss on sale of store items 4,011 1,528
Fair value deficit on investments at fair value through profit and loss 4 -
Contractual penalties - 3,709
Others 250 -
1,226,798 788,921
32.1 None of the directors and their spouses had any interest in any of the donees.
2016 2015
33. Other income
Income from financial assets

Income on bank deposits 418,302 8,404
Gain on investments at fair value through profit or loss - 387,766
Provisions and unclaimed balances written back 16,483 8,605
Mark-up on loan / advances to related parties 499 818
Unrealized gain on derivative financial instruments 4,828 24,775
Gain on disposal of available for sale investments 29,222 30,246
Dividend income from:
- Others 5,743 7,642
1,845,684 1,703,469
2,315,018 2,164,083
Income from non-financial assets

Gain on disposal of property, plant and equipment - note 16.1.3 13,869 -
Scrap sales 29,231 144,458
Sale of bull calves 3,988 3,669
Gain on bargain purchase arising on acquisition of
control of subsidiary (NDL) - note 46.1.2 - 52,697
Others 4 414
47,092 201,238
2,362,110 2,365,321

2016 2015
33.1 Dividend income from related parties

MCB Bank Limited 1,637,795 1,534,159
Adamjee Insurance Company Limited 54,928 34,448
Habib Bank Limited 3 -
Nishat Chunian Limited 10,912 6,062
1,839,941 1,695,827
34. Finance costs
Interest and mark-up on:

- Workers' profit participation fund - note 11.2 2,529 2,380
Guarantee commission 2,221 2,670
Bank charges 25,495 24,794
171,845 356,858
35. Taxation
Current
- For the year 2,770,231 1,006,927
- Prior 134,739 37,608
2,904,970 1,044,535
Deferred 503,646 647,637

3,408,616 1,692,172
35.1 Taxation - Parent company
The provision for current taxation represents tax under normal tax regime of the Income Tax Ordinance, 2001
('the Ordinance') at the rate of 32% and super tax at the rate of 3% under section 4B of the Ordinance as
reduced by tax credit under section 65B. In addition to this, it includes tax on exports and dividend income
which is full and final discharge of Company's tax liability in respect of income arising from such source and tax
on capital gains under section 37A of the Ordinance.
approximately at Nil (2015: Nil).
In terms of the provisions of Section 59B of the Income Tax Ordinance, 2001 ('the Ordinance'), a subsidiary
company may surrender its tax losses in favour of its holding company for set off against the income of its
holding Company subject to certain conditions as prescribed under the Ordinance.
Accordingly, the Company has adjusted its tax liability for the tax year 2016 by acquiring the losses of its
subsidiary company, Nishat Dairy (Private) Limited and consequently an aggregate sum of Rs 430.998 million
equivalent to the tax value of the losses acquired has been recognized as payable to the subsidiary company.
The related intra-group transaction has been eliminated

35.2 Taxation - NPPCL
In view of available losses, the provision for current taxation of NPPCL represents tax under normal tax regime
of the Income Tax Ordinance, 2001 at the rate of 32% of taxable income for the year (Alternate Corporate Tax
(ACT) under section 113C of the Income Tax Ordinance, 2001 at the rate of 17% of accounting income (2015:
Alternative Corporate Tax @ 17% of accounting income).
For the purposes of current taxation, the tax losses available for carry forward as at year end are Nil (2015: Nil
million).
35.3 Taxation - NDL
approximately at Rs 610.679 million (2015: Rs 641.423 million). During the year, the NDL has surrendered its
available tax losses amounting to Rs 1,073.375 million (2015: Rs 1,598.618 million) with a tax benefit of Rs
430.998 million (2015: 520 million) in favour of the Parent Company through Group Relief under section 59B of
the Income Tax Ordinance, 2001.
Unused tax losses available to the NDL contains unused business losses amounting to Rs 3.977 million, Rs
195.920 million and Rs 410.782 million which expire in 2018, 2019 and 2020 respectively. The management of
the subsidiary company is of the view that given the NDL's stage of development and tax credit available for
five years, deductible temporary differences will not reverse for some considerable period. Consequently, based
on prudence principle, NDL has not recognized deferred tax asset of Rs 183.203 million (2015: Rs 183.206
million) in respect of tax losses available for carry forward u/s 57 of the Income Tax Ordinance, 2001, as
sufficient tax profits would not be available to set these off in the foreseeable future.
35.4 Taxation - NFS
approximately at Rs 0.215 million (2015: Nil). The management of NFS is of the view that given NFS's stage of
development , deductible temporary differences will not reverse for some considerable period. Consequently,
based on prudence principle, the subsidary company has not recognized deferred tax asset of Rs 0.065 million
(2015: Nil ) in respect of tax losses available for carry forward u/s 57 of the Income Tax Ordinance, 2001, as
sufficient tax profits would not be available to set these off in the foreseeable future.
2016 2015
% %
35.5 Tax charge reconciliation
Numerical reconciliation between the average effective

tax rate and the applicable tax rate of: 32.00 33.00
Tax effect of amounts that are:
- Not deductible for tax purposes (0.19) 0.05
Effect of change in prior years' tax 1.10 (1.69)
Effect of change in tax rate 0.02 (8.04)
Effect of tax credits (2.46) (0.43)
Effect of apportionment of expenses 1.34 3.06
Effect of presumptive tax regime (2.91) (5.79)
Rounding and others 0.01 (2.44)
(3.09) (15.28)
Average effective tax rate charged to consolidated profit
and loss account 28.91 17.72

2016 2015
36. Earnings per share
36.1 Earnings per share - Basic
Profit for the year - attributable to equity holders

of the Parent Company Rupees 8,552,868,000 7,765,530,000
Weighted average number of ordinary shares Number 438,119,118 438,119,118
Earnings per share - basic Rupees 19.52 17.72
36.2 Earnings per share - Diluted
There is no dilution effect on the basic earnings per share as the Group has no such commitments.
2016 2015
37. Cash generated from operations
Profit before tax 11,789,992 9,547,329

Adjustments for:
- Gain on bargain purchase arising on acquisition of
control of subsidiary (NDL) - (52,697)
- Depreciation on property, plant and equipment 2,168,072 2,075,639
- Amortisation on intangible assets 18,452 18,452
- Change in fair value of investments at fair value through profit or loss 4 -
- Gain on disposal of investments - available for sale - (30,246)
- Gain on disposal of investments - at fair value through profit or loss (29,222) (387,766)
- (Gain) / loss on disposal of property, plant and equipment (13,869) 3,646
- Loss on disposal of biological assets 254,505 25,263
- Changes in fair value of biological assets 6,889 66,227
- Realized loss on derivative financial instruments 4,907 46,642
- Unrealized gain on derivative financial instruments (4,828) (24,775)
- Dividend income (1,845,684) (1,703,469)
- Mark-up income (418,801) (818)
- Provision for retirement benefits 72,685 79,507
- Exchange loss 94,605 87,673
- Provisions and unclaimed liabilities written back (16,483) -
- Finance costs 171,845 356,858
Profit before working capital changes 463,077 560,136
Effect on cash flow due to working capital changes
- (Increase) / decrease in stores, spares and loose tools (358,627) 36,906
- Decrease in stock-in-trade 575,103 227,637
- (Increase) / decrease in trade debts (77,021) 30,458
- Decrease / (increase) in advances, deposits, prepayments
and other receivables 409,855 (118,555)
- Increase in trade and other payables 944,105 1,542,042
1,493,415 1,718,488
13,746,484 11,825,953
38. Cash and cash equivalents
Cash and bank balances - note 27 7,022,094 265,977

Short term borrowings - secured - note 13 (3,750,006) (2,348,534)
3,272,088 (2,082,557)

39. Remuneration of Chief Executive, Directors and Executives
225
39.1 The aggregate amount charged in the consolidated financial statements for the year for remuneration, including certain benefits, to the Chief Executive, full time
working Directors and Executives of the Group are as follows:
Chief Executive Directors Executives
2016 2015 2016 2015 2016 2015
Managerial remuneration 17,336 15,760 13,643 12,403 446,516 381,869
Annual Report 2016

Contributions to Provident and
Gratuity Fund - - 2,334 2,122 70,449 37,104
Housing 270 270 745 708 165,582 136,238
Utilities - - - - 32,731 29,144
Bonus 1,313 1,183 965 869 104,650 86,243
Leave passage - - 1,470 1,157 15,112 10,852
Medical expenses 304 389 299 268 22,853 17,469
Others 11,287 10,237 637 728 73,087 63,464
30,510 27,839 20,093 18,255 930,980 762,383
Number of persons 2 2 5 5 382 350
The Group also provides the chief executive and some of the directors and executives with Group maintained cars, travelling and utilities.
39.2 During the year the Group paid meeting fee amounting to Rs 180 thousand (2015: Rs 220 thousand) to its non-executive directors.
40. Transactions with related parties
The related parties comprise associated companies, other related companies, directors, key management personnel
and post employment benefit plans. The Group 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, dividend income
is disclosed in note 33.1, expense charged in respect of staff retirement benefit plans is disclosed in note 9, amounts
due from directors and key management personnel are shown under receivables and remuneration of directors and key
management personnel is disclosed in note 39. Other significant transactions with related parties are as follows:
2016 2015
Relationship with the group Nature of transactions
i. Related Parties Sale of goods and services 121,761 322,575

Insurance premium 141,538 169,973
Purchase of goods and services 1,435,965 1,272,819
Insurance claims received 31,649 6,284
Mark-up income on balances
with related parties 19,434 4,625
Dividend income 1,839,941 1,695,827
Dividend paid 720,418 499,582
ii. Post employment benefit Expense charged in respect of

plans retirement benefit plans 76,187 76,187
Expense charged in respect of
contributory provided fund 56,506 49,123
Funds paid to contributory provident fund 162,984 159,639
41. Plant capacity and actual production
Capacity Actual production

2016 2015 2016 2015
Clinker (Metric Tonnes)
Unit I -note 41.1 810,000 810,000 696,461 463,886
Unit II -note 41.1 1,200,000 1,200,000 1,227,600 1,243,109
Unit III -note 41.1 2,010,000 2,010,000 2,040,937 1,800,235
Cement bags (number of bags
in thousand) 120,000 120,000 110,404 100,908
Actual cement bags produced by NPPCL's plant is dependent on the quantity demanded by the customers.
41.1 Normal capacity is based on 300 working days, this can be exceeded if the plant is operational for more than
300 days during the year.

2016 2015
42. Number of employees
Parent Company
Total number of employees as at June 30 1,156 1132
Average number of employees during the year 1,152 1123
Subsidiary company - NPPCL
Total number of employees as at June 30 64 56
Average number of employees during the year 60 52
Subsidiary company - NDL
Total number of employees as at June 30 191 145
Average number of employees during the year 163 131
43. Provident Fund Related Disclosures
43.1 Parent Company
The Parent Company operates a provident fund for its employees.

2016 2015
(Un-audited)
(i) Size of the fund - total assets 1,547,895 1,401,591

(iii) Fair value of investments - note 43.1.1 1,380,898 1,249,972
(iv) Percentage of investments made 89.21% 89.18%
43.1.1 The breakup of fair value of investments is:
2016 2015
(Rs in '000') --%-- (Rs in '000') --%--

Government securities 401,625 25.95% 423,260 27.36%
Listed securities
- Mutual funds 119,468 7.72% 116,085 7.50%
- Other listed securities 670,446 43.31% 547,724 35.23%
Un-listed securities 46,585 3.01% 74,427 4.81%
1,380,898 89.21% 1,249,972 89.18%

The figures for 2016 are based on un-audited financial statements of the Provident Fund. The investments of
the provident fund have been made in accordance with the provisions of Section 227 of the Companies
Ordinance, 1984 and the rules formulated for this purpose except for:
- investments in unlisted securities (NIT units)

- investments in listed securites in excess of 30% of the provident fund
The management is taking steps to dispose off such investments.
43.2 Subsidiary company - NPPCL
The Subsidiary Company, NPPCL operates a provident fund for its employees.
2016 2015
(i) Size of the fund - total assets 11,474 8,520

(iii) Fair value of investments - note 43.2.1 10,182 7,620
2016 2015
(Rs in '000') --%-- (Rs in '000') --%--
Break up of investments - at fair value

The figures are based on audited financial statements of the fund. Investments out of the Provident Fund have
been made in accordance with the provisions of section 227 of the Ordinance and the rules formulated for this
purpose.
43.3 Subsidiary Company - NDL
The Subsidiary Company, NDL operates a provident fund for its employees.
2016 2015
(Un-audited)
(i) Size of the fund - total assets 11,209 5,581

(iii) Fair value of investments - note 43.3.1 8,464 4,873
2016 2015
(Rs in '000') --%-- (Rs in '000') --%--


The figures for 2016 are based on the un-audited financial statements of the Provident fund. For 2016,
investments out of the Provident fund have been made in accordance with the provisions of section 227 of the
Companies Ordinance, 1984 and the rules formulated for this purpose.
44. Financial risk management
44.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value
interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge
certain risk exposures.
Risk management is carried out by the Group's Board of Directors (the Board). The Group's finance department
evaluates and hedges financial risks. The board provides written principles for overall risk management, as well
as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of
derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
The Group's overall risk management procedures to minimise the potential adverse effects of financial market
on the Group's performance are as follows:
(a) Market risk
(i) Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. Currency risk arises mainly from future commercial transactions or
receivables and payables that exist due to transactions in foreign currencies.
The Group is exposed to currency risk arising from various currency exposures, primarily with respect to the
United States Dollar (USD) and Euro. Currently, the Group’s foreign exchange risk exposure is restricted to bank
balances and amounts receivable from / payable to the foreign entities.
2016 2015
(In thousand)
Cash and bank balances - USD 1,424 766

Receivable against sales to foreign parties - USD 1,417 601
Long term loan - USD (4,663) (9,327)
Advance received against sale - USD - -
Finances under mark-up arrangements - USD - 3,590
Mark-up payable - USD - 26
Trade and other payables - USD - 501
Net exposure - USD (1,822) (3,843)
Finances under mark-up arrangements - Euro 948 1,275

Mark-up payable - Euro 3 12
Trade and other payables - Euro 822 426
Net exposure - Euro 1,773 1,713
At June 30, 2016, if the Rupee had weakened / strengthened by 10% against the US dollar with all other
variables held constant, post-tax profit for the year would have been Rs 13.568 million (2015: Rs 39.076 million)
lower / higher, mainly as a result of foreign exchange losses / gains on translation of US dollar-denominated
financial assets and liabilities.

At June 30, 2016, if the Rupee had weakened / strengthened by 10% against the Euro with all other variables
held constant, post-tax profit for the year would have been Rs 14.662 million (2015: Rs 19.458 million) lower /
higher, mainly as a result of foreign exchange losses / gains on translation of Euro-denominated financial assets
and liabilities.
(ii) Price risk
The Group is exposed to equity securities price risk because of investments held by the Group and classified
as available for sale and fair value through profit or loss. Material investments within the portfolio are managed
on an individual basis and all buy and sell decisions are approved by the Board. The primary goal of the Group's
investment strategy is to maximise investment returns.
The Group’s investments in equity of other entities that are publicly traded are included in all of the following
three stock exchanges; Pakistan Stock Exchange.
The table below summarises the impact of increases / decreases of the KSE-100 index on the Group’s post-tax
profit for the year and on equity. The analysis is based on the assumption that the KSE had increased /
decreased by 10% with all other variables held constant and all the Group’s equity instruments moved
according to the historical correlation with the index.
Impact on post-tax profit Impact on other components

of equity
2016 2015 2016 2015
Pakistan Stock Exchange - 468,029 2,726,025 3,003,983
Post-tax profit for the year would increase / decrease as a result of gains / losses on equity securities classified
as at fair value through profit or loss, this impact is considered to be immaterial. Other components of equity
would increase / decrease as a result of gains / losses on equity securities classified as available for sale.
(iii) Interest rate risk
As the Group has no significant floating interest rate assets, the Group’s income is substantially independent of
changes in market interest rates.
The Group's interest rate risk arises from short term and long-term borrowings. These borrowings issued at
variable rates expose the Group to cash flow interest rate risk.
The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into
consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these
scenarios, the Group calculates the impact on consolidated profit and loss of a defined interest rate shift. The
scenarios are run only for liabilities that represent the major interest-bearing positions.
At June 30, 2016, if interest rates on floating rate borrowings had been 1% higher / lower with all other variables
held constant, post-tax profit for the year would have been Rs 41.067 million (2015: Rs 33.773 million) higher /
lower, mainly as a result of higher / lower interest expense on floating rate borrowings.
(b) Credit risk
Credit risk represents the risk of financial loss being caused if counter party fails to discharge an obligation.

Credit risk of the Group arises from cash and cash equivalents, derivative financial instruments and deposits
with banks and financial institutions, as well as credit exposures to distributors and wholesale and retail
customers, including outstanding receivables and committed transactions. The management assesses the
credit quality of the customers, taking into account their financial position, past experience and other factors.
Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The
utilisation of credit limits is regularly monitored and major sales to retail customers are settled in cash. For banks
and financial institutions, only independently rated parties with a strong credit rating are accepted.
(i) Exposure to credit risk
The Group monitors the credit quality of its financial assets with reference to historical performance of such
assets and available external credit ratings. The carrying values of financial assets exposed to credit risk and
which are neither past due nor impaired are as under:
2016 2015
Long term loans, advances and deposits 58,842 70,402

Trade debts - unsecured 376,922 370,034
Advances, deposits, prepayments 68,800 83,314
Balances with banks 7,016,946 264,411
7,521,510 788,161
The aging analysis of trade receivables - unsecured is as follows:
Up to 90 days 261,387 328,008

90 to 180 days 75,580 32,926
181 to 365 days 36,060 5,538
Above 365 days 3,895 3,562
376,922 370,034
The management estimates the recoverability of trade receivables on the basis of financial position and past
history of its customers based on the objective evidence that it shall not receive the amount due from the
particular customer. The provision is written off by the Group when it expects that it cannot recover the balance
due. Any subsequent repayments in relation to amount written off, are credited directly to consolidated profit
and loss account.
(ii) Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to
external credit ratings (if available) or to historical information about counterparty default rate:

Rating Rating
Short term Long term Agency 2016 2015
Allied Bank Limited A1+ AA+ PACRA - -

Askari Bank Limited A-1+ AA JCR-VIS 22 477
Bank Alfalah Limited A1+ AA PACRA 268,320 77,829
Bank Islami Pakistan Limited A1 A+ PACRA 58 14
Bank of Punjab A1+ AA- PACRA 109 587
Citibank N.A. P-1 A1 Moody's 2 74
Dubai Islamic Bank Pakistan Limited A-1 A+ JCR-VIS 348 872
Faysal Bank Limited A1+ AA PACRA 256 115
Habib Bank Limited A-1+ AAA JCR-VIS 500,000 6,943
MCB Bank Limited A1+ AAA PACRA 783,449 139,418
MCB Islamic Bank Limited A1 A PACRA 1,002
Meezan Bank Limited A-1+ AA JCR-VIS 12 37
National Bank of Pakistan A1+ AAA JCR-VIS 2,749 5,010
NIB Bank Limited A1+ AA- PACRA 1,017,347 15,933
Silk Bank Limited A-2 A- JCR-VIS 5 5
Standard Chartered Bank (Pakistan) Limited A1+ AAA PACRA 554 2,367
United Bank Limited A-1+ AA+ JCR-VIS 154,713 13,955
Soneri Bank Limited A1+ AA- PACRA 715 769
Deutsche Bank AG P-2 Baa2 Moody's 1 -
Habib Metropolitan Bank Limited A1+ AA+ PACRA 2,258,502 1
JS Bank A1+ A+ PACRA 2,025,119 -
Bank Al-Habib A1+ AA+ PACRA 3,659 -
Samba Bank Limited A-1 AA JCR-VIS 4 5
7,016,946 264,411
(c) Liquidity risk
Liquidity risk represents the risk that the Group shall encounter difficulties in meeting obligations associated
with financial liabilities.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability
of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the Group's
businesses, the Group's finance department maintains flexibility in funding by maintaining availability under
committed credit lines.
Management monitors the forecasts of the Group’s cash and cash equivalents (note 38) on the basis of expect-
ed cash flows. This is generally carried out in accordance with practice and limits set by the Group. These limits
vary by location to take into account the liquidity of the market in which the entity operates. In addition, the
Group's liquidity management policy involves projecting cash flows in each quarter and considering the level of
liquid assets necessary to meet its liabilities, monitoring balance sheet liquidity ratios against internal and exter-
nal regulatory requirements and maintaining debt financing plans.
The table below analyses the Group’s financial liabilities and net-settled derivative financial liabilities into
relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date.
The amounts disclosed in the table are the contractual undiscounted cash flows as the impact of discounting
is not significant.

1 year 2 years
Long term finances 3,785,126 1,521,376 913,750 1,350,000

12,288,877 10,025,127 913,750 1,350,000
1 year 2 years
Long term finances 1,712,897 767,386 751,761 193,750

8,068,792 7,123,281 751,761 193,750
44.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
The Group manages its capital structure and makes adjustments to it in the light of changes in economic condi-
tions. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders or issue new shares.
Consistent with others in the industry and the requirements of the lenders, the Group monitors the capital struc-
ture on the basis of gearing ratio. This ratio is calculated as total debt divided by total capital employed. Total
debt represent long term and short-term finances obtained by the Group. Total capital employed includes equity
as shown in the consolidated balance sheet plus total debt. The Group’s strategy, which was unchanged from
last year, was to maintain a gearing ratio of 60% debt and 40% equity. The gearing ratio as at June 30, 2016
and June 30, 2015 is as follows:
2016 2015
Total debt 7,535,132 4,061,431
Total equity - attributable to shareholders of the Parent Company 65,694,760 62,442,359
Total capital employed 73,229,892 66,503,790
Gearing ratio 10% 6%
44.3 Fair value estimation
The table below analyses the financial instruments carried at fair value, by valuation method. The different levels
have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(Level 3).
The following table presents the Company's assets and liabilities that are measured at fair value:

Assets
Investment - At fair value through
profit or loss 41 - - 41
Investments - Available for sale 27,260,246 1,000,000 - 28,260,246
Biological assets - - 660,491 660,491
Total assets 27,260,287 1,014,701 660,491 28,935,479
Liabilities - - - -

Assets
Investment - At fair value through
profit or loss 4,680,421 - - 4,680,421
Investments - Available for sale 30,039,830 500,000 - 30,539,830
Biological assets - - 1,149,799 1,149,799
34,720,251 509,873 1,149,799 36,379,923
Liabilities - - - -
There were no transfers between Levels 1 and 2 & Levels 2 and 3 during the period and there were no changes
in valuation techniques during the periods.
Valuation techniques used to measure level 3 assets
The fair value of these assets is determined by an independent professionally qualified valuer. Latest valuation
of these assets was carried out on June 30, 2016. Level 3 fair value of Biological assets has been determined
using a replacement cost approach, whereby, current cost of similar dairy cattle in the internatiuonal market
has been adjusted for transportation costs to arrive at fair value.
Valuation inputs and relationship to fair value
The international market prices of similar dairy cattle, when these increase the fair value increases. The fair value
is also dependent on the age of the cattle. The fair value increases as the cows mature. This value decreases
as cows age and go through lactations.
Fair value sensitivity analysis for biological assets
If the fair value of biological assets , at the year end date fluctuates by 1% higher/lower with all other variables
held constant, pre tax loss for the year would have been Rs 6.605 million (2015: Rs 11.498 million) lower/higher
mainly as a result of lower/higher fair value loss on biological assets.

The carrying values of all financial assets and liabilities reflected in the financial statements approximate their
fair values. Fair value is determined on the basis of objective evidence at each reporting date.
44.4 Financial instruments by categories
At fair value
As at June 30, 2016

Trade debts - - 524,974 524,974
Advances, deposits, prepayments and
other receivables - - 68,800 68,800
Investments 41 28,260,246 - 28,260,287
Cash and bank balances - - 7,022,094 7,022,094
14,742 28,260,246 7,674,710 35,949,698
As at June 30, 2015

Trade debts - - 431,072 431,072
other receivables - - 83,314 83,314
Investments 4,680,421 30,539,830 - 35,220,251
Cash and bank balances - - 265,977 265,977
4,690,294 30,539,830 850,765 36,080,889
Financial liabilities at fair Financial liabilities at

value through profit or loss amortized cost
2016 2015 2016 2015
Liabilities as per balance sheet
Long term finance - secured - - 3,785,126 1,712,897

Accrued mark up - - 60,421 41,130
Trade and other payables - - 4,693,324 3,966,231
Short term borrowings - secured - - 3,750,006 2,348,534
- - 12,288,877 8,068,792
44.5 Offsetting financial assets and financial liabilities
There are no significant financial assets and financial liabilities that are subject to offsetting, enforcable master
netting arrangements and similar agreements.

45. Operating Segments
Segment information is presented in respect of the Group's business. The primary format, business segment, is based on the Group's management reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one year.
The Group's operations comprise of the following main business segment types:
Type of segments Nature of business

Cement Production and sale of clinker, ordinary portland and sulphate resistant cements
Paper Manufacture and supply of paper products and packing material
Dairy Production and sale of raw milk
The identification of operating segments was based on the internal organisational and reporting structure, built on the different products and services within the Group. Allocation of the individual organisa-
tional entities to the operating segments was exclusively based on economic criteria, irrespective of the participation structure under Companies Ordinance, 1984.
45.1 Segment analysis and reconciliation
The information by operating segment is based on internal reporting to the Group executive committee, identified as the 'Chief Operating Decision Maker' as defined by IFRS 8. This information is
prepared under the IFRSs applicable to the consolidated financial statements. All Group financial data are assigned to the operating segments.
Cement Paper Dairy/Farm Supplies Elimination - net Total
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
Revenue from
- External customers 29,702,346 26,104,611 1,068,112 1,196,487 1,176,156 920,369 - - 31,946,614 28,221,467
- Inter group 1,412 - 1,297,934 1,124,700 - - (1,299,346) (1,124,700) - -
29,703,758 26,104,611 2,366,046 2,321,187 1,176,156 920,369 (1,299,346) (1,124,700) 31,946,614 28,221,467
Segment gross profit 12,668,191 9,455,201 601,911 462,572 (804,178) (222,634) (33,861) (19,513) 12,432,063 9,675,626
Segment expenses (2,436,050) (1,946,855) (78,602) (43,749) (312,529) (64,243) 1,734 (15,686) (2,825,447) (2,070,533)
Other income 2,379,053 2,320,334 4,939 4,162 6,286 4,739 (28,168) 36,086 2,362,110 2,365,321
Changes in fair value of
biological assets - - - - (6,889) (66,227) - - (6,889) (66,227)
Financial charges (130,451) (281,503) (41,004) (93,995) (391) (344) 1 18,984 (171,845) (356,858)
Taxation (3,691,071) (1,922,497) (155,061) (64,055) 437,516 294,380 - - (3,408,616) (1,692,172)
Profit after taxation 8,789,672 7,624,680 332,183 264,935 (680,185) - (60,294) 19,871 8,381,376 7,855,157
Segment assets 83,418,260 74,391,442 1,874,543 1,794,915 3,477,550 4,188,640 (2,525,563) (2,120,308) 86,244,790 78,254,689
Segment liabilities 17,634,838 12,095,374 958,131 1,167,507 397,846 428,750 (482,122) (111,561) 18,508,693 13,580,070
Depreciation and amortisation 1,890,318 1,899,055 32,921 32,711 226,411 135,648 36,874 26,677 2,186,524 2,094,091
Net cash generated from / (used in)

operating activities 11,119,972 9,954,056 439,200 125,173 (230,481) 409,785 (657,312) (508,141) 10,671,379 9,980,873
Annual Report 2016

Capital expenditure (11,516,561) (2,017,180) (7,170) (7,676) (51,680) (307,091) 144,471 79,274 (11,430,940) (2,252,673)
Net cash used in investing activities (5,907,363) (7,837,863) (50,818) (6,537) 233,941 (506,811) 648,090 628,205 (5,076,150) (7,723,006)
45.2 Geographical segments
236
All segments of the Group are managed on nation-wide basis and operate manufacturing facilities and sales offices in Pakistan only.
46. Interests in other entities
46.1 Material subsidiaries
The Group's principal subsidiaries as at June 30, 2016 are set out below. Unless otherwise stated, they have share capital
consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals
the voting rights held by the Group. The country of incorporation or registration is also their principal place of business.
Ownership interest held by Ownership interest held by

the Group non-controlling interests
Name of entity 2016 2015 2016 2015 Principal

activities
Nishat Paper Products Lahore, 55% 55% 45% 45% Paper products
Company Limited Pakistan and packaging
material
Nishat Dairy Lahore, 55.10% approx 55.10% approx 44.90% approx 44.90% approx Production and
(Private) Limited Pakistan sale of raw milk
Nishat Farm Supplies Lahore, 55.10% approx 55.10% approx 44.90% approx 44.90% approx Sale/distribution
(Private) Limited Pakistan of imported
chemicals,
medicines,
vaccines etc.
46.2 Non-controlling interests ('NCI')
Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to
the group. The amounts disclosed for each subsidiary are before inter-company eliminations:
Nishat Paper Products Nishat Dairy (Private) Nishat Farm

Limited Limited Supplies
(Private)
Limited
2016 2015 2016 2015 2016

(Rupees in thousand) (Rupees in thousand) (Rupees in
thousand)
Summarised balance sheet
Current assets 1,134,105 1,075,765 551,281 592,370 5
Current liabilities 672,785 883,490 178,472 203,130 85
Current net assets/(liabilities) 461,320 192,275 372,809 389,240 (80)
Non-current assets 740,438 719,149 2,926,400 3,596,270 -
Non-current liabilities 285,346 284,017 219,288 225,620 -
Non-current net assets 455,092 435,132 2,707,112 3,370,650 -
Net assets 916,412 627,407 3,079,921 3,759,890 (80)
Accumulated non-controlling
interest 518,506 392,008 1,522,867 1,840,251 (36)

Nishat Paper Products Nishat Dairy (Private) Nishat Farm
Limited Limited Supplies
(Private)
Limited
2016 2015 2016 2015 2016

(Rupees in thousand) (Rupees in thousand) (Rupees in
thousand)
Summarised statement of
comprehensive income
Revenue 2,366,046 2,321,187 1,176,156 1,496,624 -
Profit / (loss) for the year 332,183 264,937 (679,969) (308,865) (216)
Other comprehensive income 3,358 - - - -
Total comprehensive income 335,541 264,937 (679,969) (308,865) (216)
Profit / (loss ) allocated to NCI 145,929 121,472 (317,324) (31,846) (97)
Other comprehensive income

allocated to NCI 1,511 - - - -
Dividends paid to NCI 20,942 - - - -
Summarised cash flows
Cash flow from operating activities 439,200 125,173 (230,351) 409,785 (131)
Cash flow from investing activities (50,818) (6,537) 233,806 (506,811) -
Cash flow from financing activities (164,037) (74,375) - 100,130 135
Net increase in cash and cash

equivalents 224,345 44,261 3,455 3,104 4
46.3 Transactions with non-controlling interests - acquisition of further interest in subsidiary -NPPCL
During the year ended June 30, 2015, on December 8, 2014, the Parent company acquired a further 5% of the
issued share capital of NPPCL for a consideration of Rs 18.244 million. As at June 30, 2016, the Group holds
55% of the issued share capital of NPPCL. The carrying amount of the 50% non-controlling interest in NPPCL
immediately prior to further acquisition of shareholding was Rs 344.236 million. The Group derecognised
non-controlling interest of Rs 34.424 million and recorded an increase in equity attributable to shareholders of
the Parent Company amonting to Rs 16.180 million during the year ended June 30, 2015 as follows:
2016 2015
Carrying amount of non-controlling interest acquired - 34,424
Consideration paid to non-controlling interest - (18,244)
Excess of the carrying amount of non-controlling interest

aquired over consideration paid recognised in equity attribtable
to owners of the Parent Company - 16,180
There were no transactions with non-controlling interest during the year ended June 30, 2016.

47. Business Combination
47.1 Summary of acquisition
Prior to November 26, 2014, the Parent Company held 10.42% of the share capital of Nishat Dairy (Private)
Limited ('NDL'). During the year ended June 30, 2015, on November 26, 2014, the Parent Company acquired a
further 44.68% (approximate) shareholding and obtained control of NDL, a company principally engaged in the
production and sale of raw milk. The acquisition was accounted for as a business combination during the year
ended June 30, 2015 as follows:
Details of the purchase consideration, the net assets aquired and goodwill are as follows:
2016 2015
47.1.1 Purchase consideration:
Cash -note 47.2 - 1,819,400

Fair value of equity interest held in
Nishat Dairy (Private) Limited held before
the business combination - 425,476
Total purchase consideration - 2,244,876
Acquisition-related costs of Rs 12.5 million were charged to administrative expenses in the

consolidated profit or loss account for the year ended June 30, 2015.
The group recognised a loss of Rs 74.524 million as a result of measuring at fair value its 10.42%
equity interest in NDL held immediately before the business combination. The loss was recognised in
other comprehensive income in the consolidated statement of comprehensive income for the year
ended June 30, 2015.
47.1.2 The assets and liabilities recognised as a result of the acquisition are as follows:
2016 2015
Fair value Fair value
Property, Plant and Equipment:

- Land and buildings - note 16.1 - 1,821,061
- Plant and equipment - note 16.1 - 804,327
- Capital work in progress - note 16.1 - 102,549
Biological assets - note 17.1 - 960,457
Stores, spares and loose tools - 47,023
Stock-in-trade - 186,975
Trade debts - 29,013
other receivables - 354,633
Cash and bank balances - note 47.2 - 41,560
Long term deposits - (20,500)
Trade and other payables - (157,428)
Net identifiable assets aquired - 4,169,670
Less: Non-controlling interest - (1,872,097)
Less: Gain on gargain purchase - (52,697)
Net assets aquired - 2,244,876

Gain on bargain purchase was recognised in other income in the consolidated profit or loss account for
the year ended June 30, 2015.
On the date of acquisition, the carrying value of assets and liabilities aquired, except freehold land and
buildings included in property, plant and equipment, approximated their fair values. Fair value of
freehold land and buildings as at that date was based on the market value of such land at the aquisition
date which was determined by an independent valuer.
2016 2015
47.2 Purchase consideration - cash outflow
Outflow of cash to aquire subsidiary, net of cash aquired:
Cash consideration -note 47.1 - 1,819,400
Less: Cash and cash equivalents aquired

- Cash and balances -note 47.1.2 - (41,560)
Net outflow of cash - investing activities - 1,777,840
47.3 Accounting policy choice for non-controlling interest
The group recognises any non-controlling interest in an acquired entity either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity's net identifiable assets. This decision is
made on an acquisition by acquisition basis (note 4.1). For the non-controlling interest in NDL, the group elected
to recognise the non-controlling interest at its proportionate share of the aquired net identifiable assets.
48. Shariah compliant disclosures
Nature of shariah As at June 30, 2016 As at June 30, 2015

compliant Carried under Carried under
Description arrangement, if any Shariah Other Shariah Other
Assets
Bank balances (note 27)

- Current accounts Various 1,867 391,899 897 59,602
- Savings accounts Various 12,086 335,974 12 203,900

13,953 727,873 909 263,502
Liabilities
Long term finances - secured Diminishing
(note 7) musharika 1,700,000 2,085,126 - 1,712,897
Short term borrowings - secured

(note 13) Istisna 1,266,077 2,483,929 448,785 1,899,749
2,966,077 4,569,055 448,785 3,612,646

For the year ended For the year ended
June 30, 2016 June 30, 2015
Carried under Carried under
Shariah Shariah
compliant compliant
Description arrangements Others arrangements others
Income
Income on bank deposits 358 417,944 - 8,404

358 417,944 - 8,404
Expenses
Finance cost
- On long term borrowings 90,552 110,474 9,346 117,384
- On short term borrrowings 3,444 78,587 16,769 183,515
93,996 189,061 26,115 300,899
Breakup of dividend income has been disclosed in note 33.1.
Relationship
Non-Islamic with Islamic
window windows
operations
48.1 Relationship with banks
Allied Bank Limited Yes NA

Bank Alfalah Limited Yes NA
Bank Al-Habib Limited Yes NA
Bank Islami Pakistan Limited NA Yes
Citi Bank N.A. Yes NA
Dubai Islamic Bank NA Yes
Faysal Bank Limited Yes NA
Habib Bank Limited Yes Yes
Habib Metropolitan Bank Yes NA
MCB Bank Limited Yes Yes
Meezan Bank Limited NA Yes
National Bank of Pakistan Yes NA
NIB Bank Limited Yes NA
Samba Bank Limited Yes NA
Soneri Bank Limited Yes NA
Standard Chartered Bank (Pakistan) Limited Yes Yes
The Bank of Punjab Yes NA
United Bank Limited Yes NA
49. Date of authorisation for issue
These consolidated financial statements were authorised for issue on August 31, 2016 by the Board of Directors of the
Parent Company.

50. Events after the balance sheet date
50.1 The Board of Directors of the Parent Company have proposed a final dividend for the year ended June 30, 2016
of Rs 6 per share (2015: Rs 5 per share), amounting to Rs 2,628.715 million (2015: Rs 2,190.596 million) at their
meeting held on August 31, 2016 for approval of the members at the Annual General Meeting to be held on
October 31, 2016. These financial statements do not reflect this appropriation.
50.2 Finance Act, 2015 introduced income tax at the rate of 10% on undistributed reserves where such reserves of
the company are in excess of its paid up capital and the company derives profits for a tax year but does not
distribute requisite cash dividend within six months of the end of the said tax year. Liability in respect of such
income tax, if any, is recognised in the financial statements of the respective taxable entity when the prescribed
time period for distribution of dividend expires.

Glossary
Term Meaning
BAC Board Audit Committee
Breakup Value Shareholders' Equity/Number of Shares
Current Ratio Current Assets divided by Current Liabilities
Debt to Equity Total Debt/Equity
DGK Dera Ghazi Khan
DGKC D.G. Khan Cement Company Limited
Dividend Yield Dividend Per Share/Stock Price
Divident Payout Dividend per Share/ EPS
EBITDA Earnings Before Interest, Tax, Depreciation & Amortisation
EPS Earnings Per Share
FX Foreign Exchange (Currency)
FY Financial Year
GDP Gross Domestic Product
GP Gross Profit
HR & R Human Resource & Remuneration Committee
Interest Coverage EBITDA/Interest
IT Information Technology
KHP Khairpur
KIBOR Karachi Interbank Offer Rate
LIBOR London Interbank Offer Rate
MIS Management Information System
MT Metric Ton
MW Mega Watt
OPC Ordinary Portand Cement
PAT Profit After Tax
PE Price Earning Ratio= Stock Price/EPS
PKR Pakistani Rupee
ROA Return Assets
ROE Return on Equity
SRC Sulphate Resistant Cement
TPD Tons Per Day
USD United States Dollar
Working Capital Current Assets less Current Liabilities
WPPF Workers Profit Participation Fund
WWF Workers Welfare Fund

Notice of Annual General Meeting
Notice is hereby given that Annual General Meeting of the Shareholders of D. G. Khan Cement Company Limited (the “Company") will
be held on October 31, 2016 (Monday) at 11:00 A.M. at Nishat Hotel, 9-A, Gulberg III, Mian Mahmood Ali Kasuri Road, Lahore to
transact the following business:
1. To receive, consider and adopt the Audited Financial Statements of the Company for the year ended June 30, 2016 together
with the Directors' and Auditors' reports thereon.
2. To approve Final Cash Dividend @ 60% [i.e. Rs. 6/- (Rupees Six Only) Per Ordinary Share] as recommended by the Board of
Directors.
3. To elect seven Directors of the Company for a period of three years in accordance with the provisions of Section 178 of the
Companies Ordinance, 1984 in place of the following retiring Directors :-
1. Mrs. Naz Mansha 2. Mian Raza Mansha

3. Mr. Khalid Niaz Khawaja 4. Mr. Khalid Qadeer Qureshi
5. Mr. Farid Noor Ali Fazal 6. Mr. Shahzad Ahmad Malik
7. Ms. Nabiha Shahnawaz Cheema
4. To appoint statutory Auditors for the year ending June 30, 2017 and fix their remuneration.
5. Special Business:-
1. To consider and if deemed fit, to pass the following resolutions as special resolutions under Section 208 of the
Companies Ordinance, 1984, with or without modification, addition(s) or deletion(s), for investment in Nishat Hotels
and Properties Limited, as recommended by the Board of Directors.
RESOLVED that approval of the members of D. G. Khan Cement Company Limited (the “Company”) be and is hereby
accorded in terms of Section 208 of the Companies Ordinance, 1984 for investment up to PKR 1,000,000,000/- (PKR One
Billion Only) in Nishat Hotels and Properties Limited ("NHPL"), an associated company, in the form of working capital loan
for a period of one year starting from the date of approval by the members, provided that the return on any outstanding
amount of loan shall be 3 Month KIBOR plus 0.50% (which shall not be less than the average borrowing cost of the
Company) and as per other terms and conditions of the agreement to be executed in writing and as disclosed to the
members.
FURTHER RESOLVED, that the Chief Executive Officer and/or Chief Financial Officer and/or Company Secretary of the
Company be and are hereby singly empowered and authorized to do all acts, matters, deeds and things and take any or
all necessary steps and actions to complete all legal formalities and file all necessary documents as may be necessary or
incidental for the purpose of implementing the aforesaid resolutions.
2. To consider and if deemed fit, to pass the following resolutions as special resolutions for alteration in the Articles of
Association of the Company, with or without modification, addition(s) or deletion(s), as recommended by the Board of
Directors:
“RESOLVED that pursuant to Section 28 and other applicable provisions, if any, of the Companies Ordinance, 1984 and
any other law(s), Articles of Association of the Company be and are hereby amended by inserting a new Articles 75A and
75B immediately after the existing Article 75 to read as under
75-A. A member may opt for E-voting in a general meeting of the Company under the provisions of the Companies
(E-Voting) Regulations, 2016, as amended from time to time. In the case of E-voting, both members and
non-members can be appointed as proxy. The instruction to appoint execution officer and option to e-vote
through intermediary shall be required to be deposited with the Company, at least ten (10) days before holding
of the general meeting, at the Company’s registered office address or through email. The Company will arrange

E-voting if the Company receives demand for poll from at least five (5) members or by any member or members
having not less than one tenth (1/10) of the voting power.
75-B. An instrument of proxy in relation to E-voting shall be in the following form:
I/We, ____________________of ___________________being a member of the ________________, holder of

_____________share(s) as per register Folio No./CDC Account No.___________hereby opt for E-voting through
Intermediary and hereby consent the appointment of Execution Officer_______________as proxy and will
exercise E-voting as per The Companies (E-voting) Regulations, 2016 and hereby demand for poll for resolutions.
My secured email address is___________________, please send login details, password and electronic signature
through email.
______________________
Signature of Member
CNIC No._______________
Signed in the presence of;

______________________ ______________________
Signature of Witness Signature of Witness
CNIC No._______________ CNIC No._______________
Further Resolved that the Chief Executive Officer or Company Secretary be and is hereby authorized to do all acts, deed
and things, take all steps and action necessary, ancillary and incidental for altering the Articles of Association of the
Company including filing of all requisite documents/statutory forms as may be required to be filed with the Registrar of
Companies and complying with all other regulatory requirements so as to effectuate the alterations in the Articles of
Association and implementing the aforesaid resolution.
By order of the Board
Lahore (Khalid Mahmood Chohan)

August 31, 2016 Company Secretary
Notes:
Book Closure Notice:-
The Ordinary Shares Transfer Books of the Company will remain closed from 18-10-2016 to 31-10-2016 (both days inclusive) for
entitlement of 60% Final Cash Dividend [i.e. Rs.6/- (Rupees Six Only) Per Ordinary Share] and attending and voting at Annual General
Meeting. Physical transfers/ CDS Transactions IDs received in order in all respect up to 1:00 p.m. on 17-10-2016 at Share Registrar, THK
Associates (Pvt) Ltd, Karachi Office, 2nd Floor, State Life Building No. 3, Dr. Zia Ud din Ahmed Road, Karachi, Lahore Office, 2nd Floor,
DYL Motorcycles Ltd, Plot No. 346, Block No. G-III, Khokhar Chowk, Main Boulevard, Johar Town, Lahore, will be considered in time for
entitlement of 60% Final Cash Dividend and attending of meeting.
A member eligible to attend and vote at this meeting may appoint another member his / her proxy to attend and vote instead of
him/her. Proxies in order to be effective must reach the Company's registered office not less than 48 hours before the time for holding
the meeting. Proxies of the Members through CDC shall be accompanied with attested copies of their CNIC. In case of corporate entity,
the Board’s Resolution/power of attorney with specimen signature shall be furnished along with proxy form to the Company. The
shareholders through CDC are requested to bring original CNIC, Account Number and Participant Account Number to produce at the
time of attending the meeting.

Shareholders are requested to immediately notify the change in address, if any.
Deduction of Withholding Tax
All shareholders are advised to check their status on Active Taxpayers List (ATL) available on FBR Website and may, if required take
necessary actions for inclusion of their name in ATL to avail the lower rate of tax deduction.
In case of joint account, please intimate proportion of shareholding as each accountholder is to be treated individually as either filer
or non-filer and tax will be deducted on the basis of shareholding, in case of no notification, each joint holder shall be assumed to have
an equal number of shares.
Withholding tax exemption from dividend income, shall only be allowed if copy of valid tax exemption certificates is made available to
THK Associates (Pvt) Limited, Karachi Office, 2nd Floor, State Life Building No. 3, Dr. Zia Ud din Ahmed Road, Karachi, Lahore Office,
THK Associates (Pvt) Ltd. 2nd Floor, DYL Motorcycles Ltd. Office Building, Plot No. 346 Block No. G-III, Khokar Chowk, Main Boulevard,
Johar Town, Lahore, by the first day of Book Closure.
Submission of copy of CNIC (Mandatory):
Individuals including all joint holders holding physical share certificates are requested to submit a copy of their valid CNIC to the
Company or its Share Registrar, if not already provided. For shareholders other than individuals, the checking will be done by matching
the NTN Number, therefore the Corporate shareholders having CDC accounts are requested in their own interest to provide a copy of
NTN Certificate to check their names in ATL, before the book closure date to their respective participants/CDC, whereas corporate
shareholders holding physical share certificates should send a copy of their NTN certificate to the Company or its Share Registrar. The
Shareholders while sending CNIC or NTN certificates, as the case may be must quote their respective folio numbers.
In case of non-receipt of the copy of a valid CNIC, the Company would be unable to comply with SRO 831(1)/2012 dated July 05, 2012
of SECP and would be constrained under SECP’s Order dated June 08, 2016 under Section 251(2) of the Companies Ordinance, 1984 to
withhold the dispatch of dividend warrants to such shareholders.
Zakat Declration (CZ-50)
Zakat will be deducted from the dividends at source under the Zakat & Usher Laws and will be deposited within the prescribed period
with the relevant authority. Please submit your Zakat declarations under Zakat and Usher Ordinance, 1980 & Rule 4 of Zakat (Deduction
& Refund) Rules, 1981 CZ-50 Form, in case you want to claim exemption, with your brokers or the Central Depository Company of
Pakistan Limited (in case the shares are held in CDC-Sub Account or CDC Investor Account) or to our Share Registrar, M/s. THK
Associates (Pvt) Limited, Karachi Office, 2nd Floor, State Life Building No. 3, Dr. Zia Ud din Ahmed Road, Karachi, Lahore Office, THK
Associates (Pvt) Ltd. 2nd Floor, DYL Motorcycles Ltd. Office Building, Plot No. 346 Block No. G-III, Khokar Chowk, Main Boulevard, Johar
Town, Lahore. The Shareholders while sending the Zakat Declarations, as the case may be must quote company name and their
respective folio numbers.
Shareholders are therefore requested to promptly send a valid copy their CNICs, NTN and Zakat declarations as per above
requirements. Shareholders should also notify our Share Registrar, Ms/ THK Associates (Pvt) Limited regarding any change in their
addresses. This will ensure that the Dividend Warrants are dispatched to shareholders at their correct addresses.
Dividend Mandate (Optional):
Under Section 250 of the Companies Ordinance, 1984 a shareholder may, if so desires, direct the Company to pay dividend through
his/ her/its bank account. In pursuance of the directions given by the Securities and Exchange Commission of Pakistan (SECP) vide
Circular Number 18 of 2012 dated June 05, 2012, kindly authorize the company for direct credit of your cash dividend in your bank
account (please note that giving bank mandate for dividend payments is optional, in case you do not wish to avail this facility please
ignore this notice, dividend will be paid to you through dividend warrant at your registered address). If you want to avail the facility of
direct credit of dividend amount in your bank account, please provide following information to Company’s Share Registrar, M/s THK
Associates (Pvt) Limited.

Bank Account Details of Shareholder
Title of Bank Account
Bank Account Number
Bank’s name
Branch name and address
Cell number of shareholder
Landline number of shareholder, if any
It is stated that the above-mentioned information is correct and in case of any change therein, I / we will immediately
intimate to the company and the concerned share registrar.
Name, signature, folio # and CNIC number of shareholder

Notes:
(1) Those shareholders, who hold shares in book entry form in their CDS accounts, will provide the above dividend
mandate information directly to their respective Participant / CDC Investor Account Services Department.
(2) If dividend mandate information has already been provided by you, ignore this request.
Transmission of Annual Financial Statements Through Email:
In pursuance of the directions given by the Securities and Exchange Commission of Pakistan (SECP) vide SRO 787 (I)/2014 dated
September 8, 2014, those shareholders who desire to receive Annual Financial Statements in future through email instead of receiving
the same by Post are advised to give their formal consent along with their valid email address on a standard request form which is
available at the Company’s website i.e. www.dgcement.com and send the said form duly signed by the shareholder along with copy of
his/her CNIC to the Company’s Share Registrar M/s THK Associates (Pvt) Limited. Please note that giving email address for receiving of
Annual Financial Statements instead of receiving the same by post is optional, in case you do not wish to avail this facility please ignore
this notice, Financial Statements will be sent to the registered address of the shareholders.
STATEMENT UNDER SECTION 160 (1) (B) OF THE COMPANIES ORDINANCE, 1984.
This statement sets out the material facts pertaining to the special business to be transacted at the Annual General Meeting of the
Company to be held on October 31, 2016.
1. INVESTMENT IN NISHAT HOTELS AND PROPERTIES LIMITED
Nishat Hotels and Properties Limited (NHPL) was incorporated on 04 October 2007 as a public company limited by shares. Its
authorized share capital is Rs. 10,000,000,000/- (Rupees Ten Billion Only) divided into 1,000,000,000 (One Billion) ordinary shares of
PKR 10 each. Its main object is to carry on hotels and hospitality business in Pakistan. For the intended purpose, NHPL has acquired
Hotel site of 119 Kanals, 6 Marlas and 73 SFT of Commercial Land situated at Trade and Finance Block, Johar Town, Lahore, from Lahore
Development Authority (LDA) – Urban Development Wing and constructed Emporium Mall which is operational effective 30 June
2016.NHPL has already handed over the premises to Hyperstar which is now fully operational. Around 90% of the leases have been
finalized and the premises had been handed over to the lessees. The finishing work of the Hotel Building is at advanced stage of
completion which has been targeted for commencement from 30 Nov 2016.
The Building has a covered area of 2.742 Million Square Feet comprising the following building components (3 basements, ground floor
and 11 floors):
• 3-4 star upto 205 rooms hotel

• Banquet halls
• Hyper Star
• Shopping Mall with following features:

o Retail
o Food courts
o Cineplex
o Fun Factory
o Health and Leisure Zones
o Two basements with 2,815 parking bays for cars and motorcycles.
Since NHPL has recently achieved commercial operation of Emporium Mall. Short term finance is needed for working capital
requirements. Considering the average borrowing cost of the Company and the return offered by Banks on term deposits, the Directors
of the Company have recommended to invest surplus funds of the Company by extending a working capital loan up to Rs. 1 billion to
NHPL required by NHPL at the interest rate of 3 Month KIBOR plus 0.50% which shall not be less than the average borrowing cost of the
Company. Repayment of the principle amount of loan shall be made within one year form the date of approval by the members while
payment of interest due shall be made on monthly basis. The management expects the transaction to be beneficial for the Company as
this will enhance the return on surplus funds available with the Company.
The directors have carried out necessary due diligence for the proposed investment. The duly signed recommendation of the due
diligence report shall be made available to the members for inspection in the annual general meeting. The latest annual audited
financial statements shall be available for inspection in the annual general meeting.
Information under Clause (a) of sub-regulation (1) of regulation 3 of (Investment in Associated Companies or Associated
Undertakings) Companies Regulations, 2012.
Ref. No. Requirement Information
i Name of associated company Nishat Hotels and Properties Limited
Criteria of associated relationship Common Directorship
ii Amount of loans and advances Rs. 1,000,000,000/- (Rupees One Billion Only)
iii Purpose Working capital needs of the associated company.
Benefits The Company will earn higher income from the investment.
iv Details of existing loans NIL
v Financial position, including main items of Equity And Rupees Assets Rupees
balance sheet and profit and loss account Liabilities
of the associated company or associated
undertaking on the basis of its latest Equity 9,474,753,427 Non-Current 19,820,359,981
financial statements Assets
Non-Current 12,209,171,856 Current Assets 2,560,327,283
Liabilities
Current 696,761,981
Liabilities
22,380,687,264 22,380,687,264
vi Average borrowing cost of the investing 5.20% for the year ended June 30, 2016
company
vii Rate of interest, mark up, profit, fees or 3 Months KIBOR + 0.50%. 3 Month KIBOR as on August 23, 2016 is
commission etc. to be charged 6.02%. The return shall not be less than average borrowing cost of
the Company.

viii Sources of funds from where loans or Surplus funds of the company
advances will be given
ix Where loans or advances are being N/A

granted using borrowed funds; justification
for granting loan or advance out of
borrowed funds; detail of
guarantees/assets pledged for obtaining
such funds, if any; and repayment
schedules of borrowing of the investing
company.
X Particulars of collateral security to be Corporate guarantee of the associated company.

obtained against loan to the borrowing
company or undertaking, if any.
xi If the loans or advances carry conversion No

feature:
xii Repayment schedule and terms of loans or Repayment of principal will be made within one year of the approval
advances to be given to the investee by the members while payment of interest due will be made on
company. monthly basis.
xiii Salient feature of all agreements entered Agreement will be signed after approval by the members. Other
or to be entered with its associated significant terms and conditions are as under:
company or associated undertaking with
regards to proposed investment 1. Interest due on outstanding amount of loan shall be paid by the
associated company on monthly basis on 20th of every month
starting from the next month of the disbursement of loan.
2. In case of delay in re-payment principal and interest, an

additional sum equivalent to 7.50% per annum on the unpaid
amount for the period for which the payment is delayed, shall be
paid by Nishat Hotels and Properties Limited to D.G Khan Cement
Company Limited in addition to the agreed interest amount.
3. All payments under the loan agreement shall be made through

crossed cheques.
4. The associated company shall provide corporate guarantee to

secure the extension of loan.
xiv Direct or indirect interest of directors, One director of D. G. Khan Cement Company Limited, Mian Raza
sponsors, majority shareholders and their Mansha currently holds 21.50% shares in Nishat Hotels and Properties
relatives, if any, in the associates company Limited. The brothers of Mian Raza Mansha, namely Mian Umer
or associated undertaking or the transaction Mansha and Mian Hassan Mansha also holds 21.72% shares each in
under consideration: Nishat Hotels and Properties Limited.
The directors of the associated company are interested in the

investing company to the extent of their shareholding as under:-

Name % of Shareholding
Mian Raza Mansha 2.90

Mian Umer Mansha 6.23
Mian Hassan Mansha 6.14
Mr. I.U. Niazi 0.00
The associated companies holding shares of Nishat Hotels and

Properties Limited are interested in D. G. Khan Cement Company
Limited to the extent of their shareholding in Nishat Hotels and
Properties Limited as follows:-
%
Nishat Mills Limited 7.40
The associated companies holding shares of D. G. Khan Cement

Company Limited are interested in Nishat Hotels and Properties
Limited to the extent of their shareholding in D. G. Khan Cement
Company Limited as follows:-
%
Nishat Mills Limited 31.40
xv Any other important details necessary for None

the members to understand the transaction:
xvi In case of investment in a project of an Not Applicable

associated company or associated
undertaking that has not commenced
operations:
Starting date of work Not Applicable
Completion of work Not Applicable
Commercial operations date Not Applicable
Expected time by which the project Not Applicable

shall start paying return on investment
2. Alteration in the Articles of Association
Securities and Exchange Commission of Pakistan has issued Companies (E-Voting) Regulation 2016 on January 22, 2016 vide S.R.O
43(1)/2016. The directors have recommended alteration in the Articles of Association by inserting a new Article 75A and 75B therein
which will give the members option to be part of the decision making in the general meeting of the Company through electronic
means. A member may opt for E-voting in a general meeting of the Company under the provisions of the Companies (E-Voting)
Regulations, 2016, as amended from time to time. In the case of E-voting, both members and non-members can be appointed as proxy.
The instruction to appoint execution officer and option to e-vote through intermediary shall be required to be deposited with the
Company, at least ten (10) days before holding of the general meeting, at the Company’s registered office address or through email.
The Company will arrange E-voting if the Company receives demand for poll from at least five (5) members or by any member or
members having not less than one tenth (1/10) of the voting power.

Accordingly, it has been proposed to pass the resolution as a Special Resolution as provided in the notice of meeting for alteration in
the Articles of Association of the Company.
The directors are not interested, directly or indirectly, in the above business except to the extent of their investment as has been
detailed in the pattern of shareholding annexed to the Directors Report.
Statement Under Rule 4(2) of the Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2012
Name of Investee Company Nishat Dairy (Private) Limited
Total Investment Approved Equity investment of Rs. 2,017,880,000 (Rupees Two Billion Seventeen Million
Eight Hundred Eighty Thousand Only) for 244,000,000 shares of Rs. 10/- each at
purchase price of Rs. 8.27 per share was approved by members in AGM held on
October 29, 2014 for the period of (3) years.
Amount of Investment Made to date Investment of Rs. 1,819,400,000 has been made for 220,000,000 shares against
this approval to date.
Reason for not having made complete No further offer was received for investment from the associated company.
Investment so far where resolution
Required to be implemented in
Specified time.
Material change in financial statements At the time of approval, as per then available latest financial statement for the
of associated company or associated year ended 30 June 2014, the basic Loss per Share Re.1.58 and Break-up Value
undertaking since date of the resolution per Share was Rs.8.27. As per Latest available financial statements for the year
passed for approval of investment in ended 30 June 2016, the basic loss per share is Re. 1.39 and Break-up Value
such company. per Share is Rs.7.10.

FORM OF PROXY
IMPORTANT
Proxies, in order to be effective, must be received at the
Company’s registered Office not less than forty eight hours
before the time for holding the meeting and must be stamped,
signed and witnessed. Proxies of the members through CDC
shall be accompanied with attested copies of thier CNIC. The
shareholders through CDC are requested to bring their
original CNIC, Sub Account Number and Participant I.D.
Number. to produce at the time of attending the meeting.
Please quote Registered Folio Number/CDC Account Number
Folio No. CDC Participant I.D. No.
CDC Participant’s Name A/C, Sub A/C No.
Shares Held
I/We
of
being a member of D.G. KHAN CEMENT COMPANY LIMITED hereby appoint
or failing him/her
of
who is also a member of the Company, vide Registered Folio No./CDC A/C Sub A/C No.___________________as
my/our proxy to vote for me / us and on my / our behalf at the Annual General Meeting of the Company to be held
on 31st October 2016 at 11:00 a.m. at Nishat Hotel, 9-A, Gulberg III, Mian Mahmood Ali Kasuri Road, Lahore and at
any adjournment thereof.
As witness my/our hand this day of 2016
Signed by the said in the presence
of
(Member’s Signature)
Affix Rs. 5/-
Member’s CNIC No.
Revenue Stamp which must be
cancelled either by signature
Place
(Witness’s Signature) over it or by some other means
Date
Witness’s CNIC No.
AFFIX
D.G. KHAN CEMENT
CORRECT
COMPANY LIMITED
POSTAGE
Nishat House, 53-A, Lawrence Road,

Lahore-Pakistan.
UAN:+92-42-111-11-33-33
VERSATILE Ph: +92 42 3712 1920

Nishat House, 53-A, Lawrence Road, Lahore-Pakistan.
UAN:+92-42-111-11-33-33

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STRUCTURING LIFE

Management & Reviews

Consolidated Financial Statements

Glossary of Terms 243

Notice of Annual General Meeting 244

01 Annual Report 2016

Utilisation: Sales Mix:

Local Sales YOY Growth: Total Sales YOY Growth:

Equity: Balance Sheet:

Gross Sales: PAT:

Operating Cash Flows: EBITDA:

GP Margin: PBT Margin:

PAT Margin: EBITDA Margin:

Breakup Value: Debt/Equity:

Current Ratio: Equity/Total Assets:

Annual Report 2016 02

Board of Directors Mrs. Naz Mansha Chairperson

Audit Committee Mr. Khalid Niaz Khawaja Member/Chairman

Human Resource & Mr. Khalid Qadeer Qureshi Member/Chairman

Company Secretary Mr. Khalid Mahmood Chohan

Management Mr. Raza Mansha Chief Executive Officer

Local Bankers Allied Bank Limited MCB Islamic Bank Limited

External Auditors A.F. Ferguson & Co., Chartered Accountants

Cost Auditors Hasnain Ali & Company, Chartered Accountants

Legal Advisors Mr. Shahid Hamid, Bar-at-Law

03 Annual Report 2016

Registered Office Nishat House, 53-A, Lawrence Road,

Factory Khofli Sattai, Distt., Dera Ghazi Khan-Pakistan

12, K.M. Choa Saidan Shah Road,

Share Registrar THK Associates (Pvt) Ltd

Branch Office, Lahore

For Investors’ Information, Mr. Inayat Ullah Niazi

Mr. Khalid Mehmood Chohan

Annual Report 2016 04

Integrity Transparency Ethics Professionalism Compliance

• Duties are assigned to right persons

Departments & Consolidation

• Finance Primary Department

07 Annual Report 2016

Production & Technical

Annual Report 2016 08

Corporate & Secretariat

09 Annual Report 2016

Market/Supply & Credit Risk

Financial Management & Treasury

Departmental collusion Risk

Annual Report 2016 10

Health & Safety

Internal & External Audit

11 Annual Report 2016

Audit Committee CEO HR&R Committee

Director Director Director Company

Head of Accounts Head of DGM

Head of Finance Head of GM

Annual Report 2016 12

Nishat Mills Limited

Other Than Associated

MCB Bank Limited

13 Annual Report 2016