Annual Report: Sapphire Textile Mills Limited

ANNUAL REPORT
2020
Sapphire Textile Mills Limited
CONTENTS
CORPORATE
Company Information 2
Directors’ Profile 5
Vision and Mission 9
Chairman’s Review Report 11
Directors’ Report 13
Financial Highlights 20
Statement of Compliance with Listed Companies (Code of Corporate 34
Governance) Regulations, 2019
Independent Auditors’ Review Report to the Members on the Statement of Compliance 36
Contained in Listed Companies (Code of Corporate Governance) Regulations, 2019
Notice of Annual General Meeting 38
Jama Punji Ad 44
FINANCIAL STATEMENTS OF SAPPHIRE TEXTILE MILLS LIMITED
Independent Auditors’ Report to the Members 46

Statement of Financial Position 51
Statement of Profit or Loss 52
Statement of Comprehensive Income 53
Statement of Changes in Equity 54
Statement of Cash Flows 55
Notes to the Financial Statements 56
CONSOLIDATED FINANCIAL STATEMENTS OF SAPPHIRE TEXTILE MILLS LIMITED AND

ITS SUBSIDIARIES
Directors’ Report 120

Independent Auditors’ Report to the Members 121
Consolidated Statement of Financial Position 126
Consolidated Statement of Profit or Loss 127
Consolidated Statement of Comprehensive Income 128
Consolidated Statement of Changes in Equity 129
Consolidated Statement of Cash Flows 130
Notes to the Consolidated Financial Statements 131
Pattern of Shareholding 216
Directors’ Report Consolidated in Urdu 220
Directors’ Report in Urdu 227
Chairman’s Review Report in Urdu 228
Forms of Proxy in Urdu & English 229
Annual Report 2020 1
COMPANY INFORMATION
BOARD OF DIRECTORS
Mr. Mohammad Abdullah - Chairman HUMAN RESOURCE & AUDITORS
Mr. Nadeem Abdullah - Chief Executive REMUNERATION COMMITTEE E. Y. Ford Rhodes
Mr. Shahid Abdullah Chartered Accountants
Mr. Amer Abdullah Mr. Nadeem Karamat - Chairman
Mr. Yousuf Abdullah Mr. Nadeem Abdullah - Member LEGAL ADVISOR
Mr. Nabeel Abdullah Mr. Umer Abdullah - Member A. K. Brohi & Company
Mr. Umer Abdullah Ms. Mashmooma Zehra Majeed - Member
Mr. Nadeem Karamat Mr. Shahid Shafiq - Member BANKERS
Mr. Shahid Shafiq
Ms. Mashmooma Zehra Majeed Allied Bank Limited
SHARES REGISTRAR
Hameed Majeed Associates (Pvt.) Ltd Bank Alfalah Limited
AUDIT COMMITTEE Bank Al Habib Limited
Mr. Nadeem Karamat - Chairman CHIEF FINANCIAL OFFICER
Mr. Amer Abdullah - Member Bank Islami Pakistan Limited
Mr. Abdul Sattar
Mr. Yousuf Abdullah - Member Faysal Bank Limited
Mr. Shahid Shafiq - Member COMPANY SECRETARY Habib Bank Limited
Mr. Zeeshan
Habib Metropolitan Bank Limited
TAX CONSULTANTS Meezan Bank Limited
Deloitte Yousuf Adil MCB Bank Limited
Chartered Accountants
National Bank of Pakistan
Soneri Bank Limited
Standard Chartered Bank (Pakistan) Ltd.
The Bank of Punjab
United Bank Limited
2 Sapphire Textile Mills Limited
COMPANY INFORMATION
REGISTERED OFFICE MILLS

212, Cotton Exchange Building Spinning Units
I. I. Chundrigar Road, Karachi. A-17, SITE, Kotri.
Tel: +92 21 111 000 100 A-84, SITE Area, Nooriabad.
Fax: +92 21 32416705, 32417418 63/64-KM, Multan Road, Jumber Khurd, Chunian, District Kasur.
1.5-KM, Warburton Road, Feroze Wattoan, Sheikhupura.
www.sapphire.com.pk
Weaving Unit, Yarn Dyeing Unit, Printing & Processing Unit
and Home Textile Unit
2-KM, Warburtan Road, Feroze Wattoan, Sheikhupura.
Stitching Unit
1.5-KM, Off. Defence Road, Bhubtian Chowk, Raiwind Road,
Lahore.

Directors’
Profile
4 Sapphire
Sapphire Textile Mills Limited.
Textile Mills Limited
DIRECTORS’ PROFILE
MIAN MOHAMMAD ABDULLAH

(Chairman)
Mian Mohammad Abdullah, a leading and experienced industrialist of Pakistan is the chairman
and founder of Sapphire Group of Companies. He has significant experience of working in different
business environments and possesses wide experience of business establishment. At present group
has stakes in Textile, Power, Dairy and Retail and is a prominent private sector employer.
Mian Abdullah is an active philanthropist and has served on Board of various philanthropic
organizations. He has twice been bestowed with Pakistan’s top civilian award, Sitara-e-Imtiaz in
recognition of his contribution towards business.
MR. NADEEM ABDULLAH

(Chief Executive Officer)
Mr. Nadeem Abdullah has been the Chief Executive Officer of Sapphire Textile Mills Limited for the
last 16 years and is also a director in other group companies. He graduated from McGill University
Canada. He is serving as Chief Executive Officer of company’s subsidiaries in the renewable energy
segment.
As Chief Executive Officer of the company, Mr. Nadeem contributed to Company’s growth in
terms of diversification in the value-added segment including retail and renewable energy. He has
vast experience of business establishment and management. He led the business growth of the
organization, introduced new product lines and managed the development of many value-added
products. He was involved in the development of the group’s textile operations, which provided him
an in-depth understanding of the business. Mr. Nadeem has expertise in multiple disciplines including
sales and marketing, supply chain management, product development and management etc.
MR. SHAHID ABDULLAH
Mr. Shahid Abdullah has been associated with Sapphire Group since 1980. Being a director of various
companies of Sapphire Group, he has to plan and forecast for both long and short-term positions.
He introduced new lines in the textile business like knitting, cone dyeing, fabric dyeing and finishing.
He has achieved considerable experience of spinning, weaving, knitting, dyeing, finishing and power
generation. He has experience and is competent in business dealings, especially for procurement
of plant and machinery, raw material and other assets. He is well-versed in sales promotion and has
successfully created goodwill for Sapphire products in local as well as in export markets. He holds a
bachelor’s degree in commerce from University of Karachi. He is serving as Chief Executive Officer of
Sapphire Fibres Limited and Sapphire Electric Company Limited.

MR. AMER ABDULLAH
Mr. Amer Abdullah has a Master in Business Administration degree from the U.S. He joined the group at a
young age and was appointed as director in 1990 in various group companies. He has undertaken various
textile expansion projects and has diversified the dairy business. He is experienced in business dealings
especially for procurement of plant and machinery, raw material and other assets. He has rich experience
of sales promotion and has successfully added goodwill for Sapphire products in domestic as well as in
export markets. He is serving as Chief Executive Officer of Diamond Fabrics Limited and Sapphire Dairies
(Private) Limited.
MR. YOUSUF ABDULLAH
Mr. Yousuf Abdullah has a Master in Business Administration degree from the UK. He is the Chief Executive
Officer of Sapphire Finishing Mills Limited and is also on the board of other group business. He became
Director in various companies of Sapphire Group in 1995. His vision was instrumental in introducing new
lines in the textile businesses. Having considerable experience in sales promotion, he added remarkable
goodwill of Sapphire products in local as well as international markets.
MR. NABEEL ABDULLAH
Mr. Nabeel Abdullah has done his Bachelor of Science in Economics from the London School of Economics.
He has also undertaken numerous professional courses from the Lahore University of Management
Sciences. Before joining the Sapphire Group, he also interned at Citi, in their Commercial Bank, in London
for 3 months. He with experience of textile manufacturer diversify business in to retailing which has paid off
for the group and is enjoying impressive growth. Mr Nabeel is the Chief Executive Officer of Sapphire Retail
Limited and is currently overseeing raw material procurement, sales, production, accounts and finance of
Sapphire Textile Mills Limited.
MR. UMER ABDULLAH
Mr. Umer Abdullah has done his Bachelor of Science in Economics from the University of Toronto. Before
joining Sapphire Group, he interned at RBC capital markets, UHN and Akhuwat Foundation. He joined
Sapphire in January 2018 and after rotating in various functions of the businesses he is now looking after
the Home Textiles business and has ambitious plans to grow it.

MR. NADEEM KARAMAT
Mr. Nadeem Karamat Corporate and Financial Services experience spreads over 34 years across three
continents. A specialist in Strategy, Corporate/Business Leadership, and Board Governance, his professional
experience includes managing and leading Financial Institutions in Commercial and wholesale banking,
Multilateral Development banks, Capital Markets/Advisory and Development Financial Institution.
His career spanned over 23 years with Fortune 500 companies. He started with Bank of America in Pakistan
in corporate banking, and then moved to American Express Bank Ltd, where he served for over 20 years. At
American Express Bank he leveraged the opportunity to work in the U.S., Middle East and Singapore. With
American Express Bank, he held the position as Country Head for the Levant region [Lebanon and Jordan],
Corporate Finance Head for Pakistan, Bangladesh and Srilanka, and lastly Country Head for Pakistan for
6 years. After American Express Bank’s divestment in Pakistan in December 2006, he successfully sold
the bank to a local group under Central Bank’s scheme of amalgamation. He then worked for five years in
Istanbul, Turkey and successfully established the 25th Multilateral Development Bank in the world, [ECO
Trade & Development Bank] as Founding Vice President, covering 10 countries and represented Pakistan
for its shareholding.
Upon his return to Pakistan he joined BMA Capital Management, a large corporate advisory and brokerage
house as MD in 2012. In 2014 he joined PAK Iran Investment Company [Pair Investment Company] as
CEO. He has vast experience in managing functional teams, policy formulation as well as leading large and
complex financial structures and M&A activities.
Outside his career, his engagements were:

Member of the Board of Directors for First Inter-investment Bank [now IGI Investment Bank], board member
of Soneri Bank, Faysal Asset Management company, NICL, Sapphire Textiles Company and Director
Intellectual Property Rights of Pakistan.
He remained President of American Business Council of Pakistan, Executive Committee member for
Overseas Investors Chamber of Commerce and Industry, Executive Committee member for Pakistan
Banking Association, Member Board of Governors for Lahore University and Management Sciences
[LUMS] Member Board of Trustees for MALC, Member Board of Trustees National University of Science and
Technology [NUST]. He has been awarded the quality award for leadership and performance by Chairman
American Express Company.

MR. SHAHID SHAFIQ
Mr. Shahid Shafiq has an MBA from the Institute of Business Administration (IBA), Karachi with a major in
Accounting & Finance. He was awarded 2 Gold Medals at the IBA.
He was the Chief Executive Officer of a textile mill, and has served as the Vice Chairman of APTMA (Sindh
Zone) and a Member of its Central Managing Committee for a number of terms; and as the Vice Chairman
of the Karachi Cotton Association (KCA) and as a Member of the KCA Board for multiple terms. He has
served as a Member of the Board of the Privatisation Commission of Pakistan.
Owing to his abiding interest in the field of education, he is a Member of the Board of Governors of the IBA,
the Chairman of its Audit & Finance Committee, and a Member of its Selection Board. He is a Member of the
Board of Governors of the Textile University of Pakistan (TIP). Earlier, he was appointed by the President of
Pakistan as a Member of the Syndicate of the Quaid-i-Azam University, Islamabad, and as the Chairman of
a Search Committee to appoint a Vice-Chancellor of a Federal University.
He also volunteers on the Boards of a welfare Hospital and a School in Karachi.
MS. MASHMOOMA ZEHRA MAJEED

Ms. Majeed completed her Chartered Financial Analyst (CFA) program in 2001 from the CFA Institute and the
Financial Risk Manager (FRM) Program in 2010. She has a vast experience of over 20 years in Investment
and Capital Markets. She has been associated with the asset management industry in Pakistan for over
18 years with her forte being in investment management and product development. She has previously
worked in senior positions in Atlas Asset Management Limited, ABAMCO Ltd (now JS Investments Ltd) and
Crosby Asset Management Ltd. She started her career with M/s Hameed Majeed Associates (Pvt) Ltd., as
Management & Financial Consultant.
Currently, Ms. Majeed is working as Chief Executive Officer (CEO) in Mutual Funds Association of Pakistan
(MUFAP) since 2012.
She is on the Board of Atlas Honda Limited from March 13, 2020. She has previously served on the Board
of Honda Atlas Cars (Pakistan) Limited from July 1, 2017 to March 13, 2020.

VISION AND MISSION
OUR
VISION OUR
MISSION
To be one of the premier textile Company
recognized for leadership in technology,
flexibility, responsiveness and quality.
Our customers will share in our success through

innovative manufacturing, certifiable quality, Our mission is to be recognized as premier
exceptional services and creative alliances. supplier to the markets we serve by providing
Structured to maintain in depth competence quality yarns, fabric and other textile products to
and knowledge about our business, our satisfy the needs of our customer.
customer and worldwide markets.
Our mission will be accomplished through
Our workforce will be the most efficient in excellence in customer service, sales and
industry through multiple skill learning and manufacturing supported by teamwork of all
the fostering of framework and security of the associates.
safest work environment possible recognized
as excellent citizen in the local and regional We will continue our tradition of honesty, fairness
community through our financial and human and integrity in relationship with our customers,
resources support and our senility to the associates, shareholders, community and
environment. stakeholders.

REVIEW REPORT BY THE CHAIRMAN
REVIEW REPORT BY THE

CHAIRMAN

REVIEW REPORT BY THE CHAIRMAN
The Board of Directors is performing its duties in accordance

with law and in the best interest of company and its
shareholders. As required under the Code of Corporate
Governance, an annual evaluation of the Board of Directors of
Sapphire Textile Mills Limited is carried out. The purpose of this
evaluation is to ensure that the Board’s overall performance
and effectiveness are measured and benchmarked against
expectations in the context of objectives set for the Company.
For the financial year ended June 30, 2020, the Board’s
overall performance and effectiveness has been assessed
as satisfactory. It is based on an evaluation of integral
components, including vision, mission and values;
engagement in strategic planning; formulation of policies;
monitoring the organization’s business activities; monitor
financial resource management; effective fiscal oversight;
equitable treatment of all employees and efficiency in carrying
out the Board’s business.
Sapphire Textile Mills Limited Complies with all the

requirements set out in the law with respect to the composition,
procedures and meetings of the Board of Directors and its
committees. Necessary Board agenda and related supporting
documents were duly made available to the board in sufficient
time prior to committee meetings. The Board has exercised
all its powers in accordance with relevant laws and regulation
and the non-executive and independent directors are equally
involved in important decisions of the board.
Mohammad Abdullah
Karachi Chairman
24 September 2020

Directors’
Report To The
Shareholders

DIRECTORS’ REPORT TO THE SHAREHOLDERS
The Directors of the Company have pleasure in submitting their Report together with the audited financial
statements of the Company for the year ended June 30, 2020.
FINANCIAL REVIEW
The company’s financial results have remained satisfactory in the challenging economic environment.
Below is a summary of key financial numbers:
2020 2019
Rupees in ‘000
Net turnover 34,030,186 34,252,752

Gross Profit 4,834,691 5,405,733
Profit from Operations 3,866,062 5,031,346
Other Income 721,187 1,485,021
Finance cost (2,556,977) (2,085,427)
Profit before taxation 1,309,085 2,946,008
Profit after taxation 1,179,089 2,559,440
The company’s net turnover slightly declined from Other income which comprises dividends from
Rs.34.253 billion to Rs.34.030 billion as compare to investments in Subsidiary Companies and Blue
that of the past year. The Company achieved growth Chip Companies was Rs.721 million in comparison
of 8% in turnover during nine months of current with Rs.1.485 billion in preceding year. The financial
financial year, however lock down in the world as cost during the year increased to Rs. 2.557 billion
well as in the country on account of COVID-19 has representing 7.51% of sales as compared to that
effected sales growth trend in last quarter. of Rs. 2.085 billion representing 6.09% of sales in
2019. Increase in interest rates was a challenge,
The company earned a gross profit of 16.52% however the Government of Pakistan took quick
during nine months of the current financial year. steps to support the industry. It included interest
Due to the COVID-19 situation, there had been a rate cut, release of pending refunds, deferment of
decline in sales and significant reduction of raw principal payments against long-term loans as well
material prices, which affected profitability of the as concessional finance to encourage retention of
company especially due to the adjustment on workers.
account of price rationalization of inventory held
by the company. This resulted in fall of our gross
profit to 14.21%. The steady gross profit margin
has been achieved due to Company’s continuous
emphasis on vertical integration.

APPROPRIATION OF PROFIT
Rupees in ‘000
Profit Before Taxation 1,309,085

Less: Taxation (129,996)
Profit after taxation 1,179,089
Gain on remeasurement of staff retirement benefits 51,413
Gain on disposal of investments - net of tax 51,745
Transfer of subsidiaries reserve on merger (108,800)
Add: Unappropriated profit brought forward 15,894,790
17,068,237
Appropriations
Final dividend for the year ended June 30, 2019 (260% i.e. Rs.26 per share) (522,162)
Unappropriated Profit Carried Forward 16,546,076
EQUITY INVESTMENT IN SUBSIDIARY FUTURE PROSPECTS

The Company has established wholly owned The management is optimistic about business
subsidiary Sapphire International APS a limited environment as the steps taken by the Government
liability Company incorporated in Denmark to in the form of deferment of principal loan payments,
strengthen exports. Paid up capital of the subsidiary reduction in interest rates and availability of funds
is equivalent to USD 100,000. at nominal cost for payment of workers wages and
salaries helped in business sustainability during
ISSUANCE OF RIGHT SHARES current trubulent time of COVID-19 pandemic.
During the year the company issued 8% right
shares at Rs. 400 (including a premium of Rs.390) The Company during the year invested in fabric
per share in proportion of 8 shares for every 100 dyeing plant in line with its strategy to expand in
shares held by shareholders. value added products. This recent investment will
help to strengthen export and profitability of the
EARNINGS PER SHARE Company.
The earnings per share for the year ended June 30,
2020 is Rs.55.03 as compared to Rs.121.31 for last The biggest challenge for the Industry is low
year ended June 30, 2019. production of cotton crop in the country due to
which cotton has to be imported which puts the
DIVIDEND domestic products at comparative disadvantage
The Board of Directors of the Company has not against other producing countries.
proposed dividend for the year ended June 30, 2020
(June 30, 2019: 260%) due to uncertain situtation
Post Covid and in accordance with condition of
banks against deferment of principal loan payments
as per State Bank of Pakistan Scheme.

SUBSIDIARIES OF SAPPHIRE TEXTILE MILLS three projects have successfully commenced

LIMITED commercial operation in September, 2018.
The Company owns five subsidiaries out of which
three are 100% owned by Sapphire Textile Mills 4. Sapphire International APS
Limited. The brief of each subsidiary is as follows: Sapphire International APS is a limited liability
Company incorporated in Denmark formed to
1. Sapphire Wind Power Company Limited strengthen exports.
The Company is 70% owned by Sapphire Textile
Mills Ltd and 30% by Bank Alfalah Limited. 5. Designtex SMC-Private Limited
The Company has set up a wind farm with Designtex SMC-Private Limited (the company)
capacity of 52.80 MW at Jhimpir Sindh which was incorporated during the year as SMC Private
started Commercial operations in November Company limited by shares under Companies
2015 – the project is operating following best Act, 2017. It is wholly owned subsidiary of
industry practices and is yielding satisfactory Sapphire Retail Limited which is wholly owned
results. subsidiary of Sapphire Textile Mills Limited.
The principal business of the company is
2. Sapphire Retail Limited manufacturing of textile and ancillary products.
Sapphire Retail Limited (SRL) is a wholly owned
subsidiary of Sapphire Textile Mills Limited. Merger of non-functional wholly owned
The principal business of SRL is to operate subsidiaries
“Sapphire ” brand retail outlets for the sale of On 29th October 2019, the Board of Directors
textile and other products. SRL is principally of the company passed a resolution approving
engaged in manufacturing of textile products a Scheme of Amalgamation under Section 284
by processing the textile goods in outside of the Companies Act, 2017, to amalgamate
manufacturing facilities and to operate retail its wholly owned subsidiaries, Sapphire Solar
outlets to sell the same in Pakistan and abroad (Private) Limited (SSPL), Sapphire Tech (Private)
through online stores. SRL operates 25 retail Limited (STPL) and Sapphire Renewables
outlets throughout the country. Limited (SRL) with and into the company. As on
the completion date of 31st December 2019,
3. Triconboston Consulting Corporation the entire undertakings of SSPL, STPL and SRL
(Private) Limited stand merged with and into the company. As
Triconboston Consulting Corporation (Private) a result the entire businesses of SSPL, STPL
Limited is incorporated under the laws of and SRL including properties, assets, liabilities
Pakistan and operating 3 projects having and rights and obligations are vested into the
capacity of 50 MW each in Jhimpir Sindh. All the company.

BOARD OF DIRECTORS
The Board comprises three independent directors, four non-executive directors and three executive
directors. The directors of the company were elected in the Extraordinary General Meeting of the company
held on June 15, 2020.
During the year Six (6) meetings of the Board of Directors were held. The number of meetings attended by
each Director is given hereunder:
Name Category No of Meetings

Mr. Nadeem Abdullah Executive Director 5
Mr. Nabeel Abdullah Executive Director 5
Mr. Umer Abdullah Executive Director 1
Mr. Mohammad Abdullah Non- Executive Director 6
Mr. Shahid Abdullah Non- Executive Director 4
Mr. Amer Abdullah Non- Executive Director 5
Mr. Yousuf Abdullah Non- Executive Director 4
Mr. Nadeem Karamat Independent Director 6
Mr. Shahid Shafiq Independent Director 1
Ms. Mashmooma Zehra Majeed Independent Director 1
Mr. Shayan Abdullah* Non- Executive Director 4
* Mr. Shayan Abdullah has retired from the Board of Directors.
* Mr. Umer Abdullah, Mr. Shahid Shafiq and Ms. Mashmooma Zehra Majeed were elected as new
members of the Board on June 15, 2020
Audit Committee
The Audit Committee held Four (4) meetings during the year. Attendance by each member were as
follows:
Name No of Meetings
Mr. Nadeem Karamat 4
Mr. Amer Abdullah 3
Mr. Yousuf Abdullah 3
Mr. Shayan Abdullah 3
Mr. Shahid Shafiq* 0
* Mr. Shahid Shafiq has been appointed as member of the Audit Committee in Board Meeting held on
June 25, 2020 and Mr. Shayan Abdullah has retired from Audit Committee.

Human Resource & Remuneration Committee preparation of financial statements and any
The Board of Directors of the company in departure there from has been adequately
compliance with the Code of Corporate Governance disclosed and explained.
recreated a Human Resource & Remuneration
Committee on June 25, 2020. Mr. Nadeem Karamat e) The system of internal control, which was
is the Chairman of this committee whereas other in place, is being continuously reviewed by
members include Mr. Nadeem Abdullah, Mr. Umer the internal audit and has been effectively
Abdullah, Mr. Shahid Shafiq and Ms. Mashmooma implemented. The process of review and
Zehra Majeed. The committee had one meeting monitoring continues with the object to improve
during this year. it further.
Directors Remuneration f) All liabilities in regard to the payment on account

The remuneration of the Board members is approved of taxes, duties, levies and charges have been
by the Board itself. However, in accordance with fully provided and will be paid in due course or
the Code of Corporate Governance, it is ensured where claim was not acknowledged as debt the
that no director takes part in deciding his or her same are disclosed as contingent liabilities in
own remuneration. The company does not pay the notes to the accounts.
remuneration to non-executive directors and
independent directors are paid a fee to attend g) There are no doubts about the company’s
meetings. Remuneration package of Chief Executive ability to continue as a going concern.
and other executive directors is disclosed in Note
No.44 to the financial statements. h) There has been no material departure from the
best practice of Corporate Governance.
Statement on Corporate and Financial Reporting
Frame Work i) A summary of key operating and financial data
The Board of Directors periodically reviews the of the Company are annexed.
company’s strategic direction. Business plans and
targets are set by the Chief Executive and reviewed j) The Company is operating Employees’
by the Board. The Board is committed to maintaining Provident Fund for its eligible employees. The
a high standard of corporate governance. The Board value of investment of the fund as on June 30,
has reviewed the Code of Corporate Governance 2020 is Rs.350.116 million.
and confirms that:
k) Following trade in the shares of the Company
a) The financial statements together with the notes were carried out by the Directors, Chief
thereon have been drawn up in conformity with Executive Officer, Chief Financial Officer,
the Companies Act, 2017. These present fairly Company Secretary, their spouses and minor
its state of affairs, the result of its operations, its children.
cash flows and its changes in equity.
200 Shares Shares purchased by Mrs. Shamshad Begum
b) The company has maintained proper books of 107,500 Shares Mrs. Usma Yousuf Shares Gift to her
accounts. Husband Mr. Yousuf Abdullah
800,000 Shares Mr. Yousuf Abdullah Shares Gift to his Son
Mr. Salman Abdullah
c) Appropriate accounting policies have been
350,000 Shares Mr. Amer Abdullah Shares Gift to his Son Mr.
consistently applied in preparation of financial
Ali Abdullah
statements and accounting estimates are
784,170 Shares Mr. Amer Abdullah Shares Gift to his Son Mr.
based on reasonable and prudent judgment. Tayyab Abdullah
100,000 Shares Mr. Nadeem Abdullah Shares Gift to his Son
d) International Accounting Standards, as Mr. Nabeel Abdullah
applicable in Pakistan, have been followed in 100,000 Shares Mrs. Noshaba Nadeem Shares Gift to her
Son Mr. Umer Abdullah

Code of Conduct operating successfully. In the current year, Abdullah

The Code of Conduct has been communicated and Foundation has established a scholarship fund for
acknowledged by each director and employee of TCF students pursuing higher education in top
the company. universities of Pakistan.
Related Party Transactions Through Abdullah Foundation, we began to work

All transactions with related parties were carried with the Jinnah Hospital in Lahore in 2015 taking
out on an arm’s length basis which were in line up the challenge of upgrading the Pediatrics Ward.
with transfer pricing methods and the policy for Not only was the ward completely renovated but
related parties approved by the Board. A complete equipment was also provided to ensure that the
list of all related party transactions is compiled and department functioned smoothly and catered to
submitted to the Audit Committee every quarter. the medical needs of the children. It gives us deep
The internal audit function ensures that all Related satisfaction to know that the hospital is making a
Party transactions are done on an arm’s length positive difference in the lives of children. During
basis. After review by the audit committee the the current year, we have started the reconstruction
transactions are placed before the Board for their and renovation of the Gynecology Ward.
consideration and approval.
The company is providing clean energy to the
During the year, the company carried out national grid through its wind projects at Jhimpir,
transactions with its related parties. Details Sindh. The company has installed solar power
of these transactions are disclosed in note 41 to panels for local residents of Jhimpir area and is also
unconsolidated financial statements attached providing clean water to local residents.
therein.
The company through its subsidiary, Sapphire
Corporate Social Responsibility Retail Limited, has introduced environment friendly,
The company strongly believes in its responsibility canvas bags. The canvas bags, which are made
towards community at large and has taken various from 100% leftover fabric, have replaced plastic
steps in the area of education, health and the natural bags. This initiative has created a new benchmark
environment. Through our group welfare trust, in retail sales.
Abdullah Foundation, we are a proud partner of The
Citizens Foundation (TCF), which is a professionally The company is an active participant of United
managed, non-profit organization set up in 1995 Nations Global Compact Program. We are working
by a group of citizens, who wanted to bring about in line with 2030 vision of United Nations by
positive social change through education. following global SGDs.
Over the years we have helped to establish various The Company made generous donations for health,
schools for the underprivileged and all of them are education and social welfare projects as reported
in Note no.34 to the financial statements.

Auditors Board Evaluation

The present Auditors, M/s. EY Ford Rhodes, During the year, the Board and its sub-committees
Chartered Accountants will retire in Annual General have undertaken a formal process of evaluation of
Meeting and being eligible, have offered themselves their performance. The overall performance of the
for reappointment. The Board of Directors on Board and its sub-committees measured on the
recommendation of Audit Committee, proposes the defined parameters for the year was satisfactory.
appointment of M/s. EY Ford Rhodes, Chartered
Accountants, as external auditor of the Company Acknowledgment
for the year ending June 30, 2021. The Management would like to place on record its
appreciation for the support of Board of Directors,
Pattern of Shareholding regulatory authorities, shareholders, customers,
The Pattern of shareholding of the company as financial institutions, suppliers and dedication and
at June 30, 2020 is annexed. This statement is hard work of the Staff and Workers.
prepared in accordance with section 227 (2) (f) of
the Companies Act, 2017.
On behalf of the Board
NADEEM ABDULLAH MOHAMMAD ABDULLAH

CHIEF EXECUTIVE DIRECTOR
Karachi
24 September 2020

Financial Highlights
For the year ended June 30, 2020
Particulars UOM 2020 2019 2018 2017 2016 2015
Summarized Statement of Profit or Loss
Sales Rs. in Million 34,030 34,253 28,896 25,584 23,111 23,315

Gross profit Rs. in Million 4,835 5,406 3,536 2,678 2,563 2,608
Operating profit / EBIT Rs. in Million 3,866 5,031 3,340 3,944 2,610 1,848
Profit before taxation Rs. in Million 1,309 2,946 1,949 2,975 1,737 1,178
Profit after taxation Rs. in Million 1,179 2,559 1,595 2,722 1,448 1,034
Cash dividend Rs. in Million - 522 321 281 281 201
Summarized Statement of Financial Position

Property, plant and equipment Rs. in Million 13,119 12,595 11,415 10,575 9,523 8,751
Investment & Other assets Rs. in Million 13,844 14,513 15,568 17,926 10,695 10,129
Net current assets Rs. in Million 3,583 2,041 2,376 2,224 1,907 1,406
Total assets employed Rs. in Million 30,546 29,149 29,359 30,726 22,124 20,287
Represented By:
Share capital Rs. in Million 217 201 201 201 201 201
Reserves Rs. in Million 16,260 16,181 15,821 16,794 14,703 14,169
Shareholders' equity Rs. in Million 16,477 16,382 16,022 16,995 14,904 14,370
Long term loans Rs. in Million 13,772 12,257 12,858 13,326 6,728 5,445
Deferred liabilities Rs. in Million 298 510 478 405 492 472
Total Rs. in Million 30,546 29,149 29,358 30,726 22,124 20,287
Summarized Statement of Cash Flows

Operating activities Rs. in Million 19 1,791 1,186 235 157 848
Investing activities Rs. in Million (701) (2,185) (1,155) (8,031) (2,703) (4,959)
Financing activities Rs. in Million 610 436 (47) 7,768 2,595 4,071
Cash and cash equivalents at
the end of the year Rs. in Million 34 97 55 71 99 49

Financial Highlights
Particulars UOM 2020 2019 2018 2017 2016 2015
RATIOS:
Profitability Ratios:
Gross Profit to sales Percentage 14.21 15.78 12.24 10.47 11.09 11.18
EBITDA to sales Percentage 15.06 18.07 15.36 19.44 15.10 10.98
Net Profit to sales Percentage 3.46 7.47 5.52 10.64 6.27 4.44
Return on equity Percentage 7.16 15.62 9.96 16.02 9.72 7.20
Return on capital employed Percentage 3.86 8.78 5.43 8.86 6.55 5.10
Liquidity Ratios:
Current ratio Times 1.26 1.14 1.18 1.19 1.20 1.18

Quick / acid test ratio Times 0.62 0.62 0.76 0.73 0.75 0.67
Capital Structure ratios
Financial leverage ratio Times 1.37 1.35 1.33 1.26 0.90 0.74
Weighted average cost of debt Percentage 9.34 8.56 5.84 4.11 5.81 5.21
Debt to equity ratio Times 0.88 0.87 0.87 0.82 0.59 0.38
Interest cover ratio Times 1.51 2.41 2.40 4.07 2.99 2.76
Turnover Ratios:
Inventory turnover Days 102.47 81.95 78.41 77.33 73.28 68.26
Inventory turnover ratio Times 3.38 4.20 4.37 4.42 4.62 4.97
Debtor turnover Days 19.42 24.87 31.90 24.84 23.57 19.74
Debtors turnover ratio Times 18.79 14.68 11.44 14.70 15.48 18.49
Creditors turnover Days 13.35 10.93 12.07 9.97 7.81 6.12
Creditors turnover ratio Times 27.35 33.38 30.24 36.59 46.74 59.64
Fixed assets turnover ratio Times 2.65 2.85 2.63 2.55 2.53 2.77
Total assets turnover ratio Times 0.77 0.80 0.68 0.69 0.77 0.73
Operating cycle Days 108.55 95.89 98.24 92.19 89.05 81.89
Investment / Market Ratios:
Earning per share Rs. Per share 55.03 121.31 75.60 129.01 68.64 49.02
Price earning ratio Times 14.83 11.62 15.13 15.43 9.99 11.67
Price to book ratio Times 1.07 1.82 1.51 2.47 0.97 0.84
Dividend yield Percentage - 1.84 1.40 0.70 2.04 1.75
Cash dividend per share Rs. Per share - 26.00 16.00 14.00 14.00 10.00
Dividend payout ratio Percentage - 21.43 21.16 10.85 20.40 20.40
Dividend cover ratio Times - 4.67 4.73 9.21 4.90 4.90
Breakup value per share Rs. Per share 759.64 776.49 759.44 805.53 706.43 681.13
Market value per share at
the end of the year Rs. Per share 816.18 1,409.95 1,143.80 1,990.45 685.61 572.00
Share Price - High during the year Rs. Per share 1,440.00 1,410.98 2,144.80 2,273.95 708.75 572.00
Share Price - Low during the year Rs. Per share 612.00 932.31 1,035.94 600.00 689.90 525.00
EBITDA Rs. In Million 5,125 6,191 4,439 4,974 3,490 2,561

Profitability Ratios
25
19.44
20 18.07
15.10 15.36 15.78 15.06

Percentage
15 11.18
10.98 12.24
11.09 14.21
10.47 10.64
10
7.47
6.27
5.52
4.44
5 3.46
-
2015 2016 2017 2018 2019 2020
Gross Profit Net Profit to sales EBITDA to sales
Turnover
120
102
100
82
77 78
80 68
73
Days
60
40 32
24 25 25
20 19
20 8 10 12 11
13
6
-
2015 2016 2017 2018 2019 2020
Inventory Debtors Creditors
Cash Flows
10,000
7,768
8,000
6,000
4,071
4,000
Rupees in million
2,595
1,791
1,186
2,000 848
235 436 610
157 19
-
2015 2016 2017 2018 2019 2020
(2,000)
(47)
(2,185)
(4,000) (2,703) (701)
(1,155)
(6,000) (4,959)
(8,000)
(8,031)
(10,000)
Operating activities Investing activities Financing activities

Investor Ratios
140 129.01
121.31
Rupees per share 120
100
75.60
80 68.64
55.03
60 49.02
40
15.43 15.13 14.83
11.67 9.99 11.62
20
-
2015 2016 2017 2018 2019 2020
Price earning ratio Earning per share
Liquidity Ratios
1.40 1.26
1.18 1.20 1.19 1.18
1.14
1.20
1.00
0.75 0.76
0.73
0.80
Times
0.67
0.62 0.62
0.60
0.40
0.20
-
2015 2016 2017 2018 2019 2020
Current ratio Quick / acid test ratio
Capital Structure Ratios

4.50
4.07
4.00
3.50
2.99
2.76
3.00
2.40 2.41
2.50
Times
2.00
1.51
1.26 1.33 1.35
1.50
0.90 1.37
1.00 0.74
0.50 0.82 0.87 0.87 0.88

0.59
- 0.38
2015 2016 2017 2018 2019 2020
Debt to equity ratio Interest cover ratio Financial leverage ratio

Assets 2020 Assets 2019
39% 38%
61% 62%
Total non-current assets Total current assets Total non-current assets Total current assets
Fixed Assets Growth
2020 13,119
2019 12,595
2018 11,415
2017 10,575
2016 9,523
2015 8,751
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000

Rupees in Millions
Sales Growth
2020 34,030
2019 34,253
2018 28,896
2017 25,584
2016 23,111
2015 23,315
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

Rupees in Millions

Equity
2020 16,477
2019 16,382
2018 16,022
2017 16,995
2016 14,904
2015 14,370
13,000 13,500 14,000 14,500 15,000 15,500 16,000 16,500 17,000 17,500
Rupees in Millions
Profit After Tax
2020 1,179
2019 2,559
2018 1,595
2017 2,722
2016 1,448
2015 1,034
- 500 1,000 1,500 2,000 2,500 3,000

Rupees in Millions
ROE and ROCE

18
16.02 15.62
16
14
12
Percentage
9.72 9.96
10 8.86 8.78
8 7.20 7.16
6.55
5.10 5.43
6
3.86
4
2
-
2015 2016 2017 2018 2019 2020
Return on equity Return on capital employed

Fixed Assets Turnover Ratio
2020 2.65
2019 2.85
2018 2.63
2017 2.55
2016 2.53
2015 2.77
2.30 2.40 2.50 2.60 2.70 2.80 2.90

Times
Market & Breakup Value Per Share

2,500
1,990
2,000
Rupee per share
1,410
1,500 806
1,144 776
681 706
1,000 816
760
572
686
500 759
-
2015 2016 2017 2018 2019 2020
Market value per share Breakup value per share
Local and Export Sales

35,000
29,460
30,000 28,639
Rupees in Millions
25,000 21,305
19,096
17,892
20,000 17,040
15,000
10,000 7,555 7,069

6,303 7,540
4,335 4,650
5,000
-
2015 2016 2017 2018 2019 2020
Local Export

Horizontal Analysis of Statement of Financial Position
As at 30 June 2020
2020 2019 2018 2017 2016 2015

Statement of Financial Position Rupees in ‘000
Total Equity 16,476,548 16,382,080 16,022,255 16,994,755 14,903,981 14,370,171

Total non-current liabilities 14,069,919 12,766,693 13,336,334 13,730,948 7,220,257 5,916,786
Total current liabilities 13,899,814 14,414,170 12,971,562 11,689,840 9,676,419 7,800,847
Total equity and liabilities 44,446,280 43,562,943 42,330,151 42,415,543 31,800,657 28,087,804
Total non-current assets 26,963,596 27,107,861 26,982,905 28,501,663 20,217,498 18,880,695

Total current assets 17,482,684 16,455,082 15,347,246 13,913,880 11,583,159 9,207,109
Total assets 44,446,280 43,562,943 42,330,151 42,415,543 31,800,657 28,087,804
Variance in %
Total Equity 0.58 2.25 (5.72) 14.03 3.71 7.72
Total non-current liabilities 10.21 (4.27) (2.87) 90.17 22.03 113.95
Total current liabilities (3.57) 11.12 10.96 20.81 24.04 31.23
Total equity and liabilities 2.03 2.91 (0.20) 33.38 13.22 27.38
Total non-current assets (0.53) 0.46 (5.33) 40.98 7.08 37.55

Total current assets 6.24 7.22 10.30 20.12 25.81 10.61
Total assets 2.03 2.91 (0.20) 33.38 13.22 27.38
Equity & Liabilities
2020 16,477 14,070 13,900
2019 16,382 12,767 14,414
2018 16,022 13,336 12,972

Total Equity
2017 16,995 13,731 11,690 Total non-current liabilities
Total current liabilities
2016 14,904 7,220 9,676
2015 14,370 5,917 7,801
- 10,000 20,000 30,000 40,000 50,000

Rupees in Millions
Current & Non-Current Assets

2020 26,964 17,483
2019 27,108 16,455
2018 26,983 15,347
2017 28,502 13,914 Total non-current assets

Total current assets
2016 20,217 11,583
2015 18,881 9,207
- 10,000 20,000 30,000 40,000 50,000

Rupees in Millions

Horizontal Analysis of Statement of Profit or Loss
For the year ended 30 June 2020
2020 2019 2018 2017 2016 2015

Rupees in ‘000
Statement of Profit or Loss
Net turnover 34,030,186 34,252,752 28,896,327 25,583,975 23,110,564 23,315,337

Cost of sales 29,195,495 28,847,019 25,360,087 22,906,157 20,547,990 20,707,602
Gross profit 4,834,691 5,405,733 3,536,240 2,677,818 2,562,574 2,607,735
Distribution cost 1,049,687 1,084,078 1,011,944 925,753 860,297 921,945
Administrative expenses 447,255 428,052 413,538 360,275 311,823 295,285
Other operating expenses 192,873 347,189 118,970 364,712 159,117 121,811
Other income 721,187 1,485,021 1,348,444 2,917,232 1,378,442 579,112
Profit from operations 3,866,062 5,031,435 3,340,232 3,944,310 2,609,779 1,847,806
Finance cost 2,556,977 2,085,427 1,391,491 968,946 873,059 669,411
Profit before taxation 1,309,085 2,946,008 1,948,741 2,975,364 1,736,720 1,178,395
Taxation 129,996 386,568 353,682 253,617 288,506 144,259
Profit after taxation 1,179,089 2,559,440 1,595,059 2,721,747 1,448,214 1,034,136
Variance in %
Net turnover (0.65) 18.54 12.95 10.70 (0.88) (8.25)

Cost of sales 1.21 13.75 10.71 11.48 (0.77) (8.47)
Gross profit (10.56) 52.87 32.06 4.50 (1.73) (6.47)
Distribution cost (3.17) 7.13 9.31 7.61 (6.69) (2.21)
Administrative expenses 4.49 3.51 14.78 15.54 5.60 23.28
Other operating expenses (44.45) 191.83 (67.38) 129.21 30.63 (6.61)
Other income (51.44) 10.13 (53.78) 111.63 138.03 13.41
Profit from operations (23.16) 50.63 (15.32) 51.14 41.24 (6.96)
Finance cost 22.61 49.87 43.61 10.98 30.42 (6.48)
Profit before taxation (55.56) 51.17 (34.50) 71.32 47.38 (7.23)
Taxation (66.37) 9.30 39.46 (12.09) 99.99 (49.70)
Profit after taxation (53.93) 60.46 (41.40) 87.94 40.04 5.16
Sales and Other Income

2020 34,030 721
2019 34,253 1,485
2018 28,896 1,348
Sales
2017 25,584 2,917
Other income
2016 23,111 1,378
2015 23,315 579
- 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

Rupees in Millions
Cost of Sales and Expenses

2020 29,195 1,690 2,557
2019 28,847 1,859 2,085
2018 25,360 1,544 1,391

Cost of sales
2017 22,906 1,651 969
Selling & General expenses
2016 20,548 1,331 873
Financial expenses
2015 20,708 1,339 669
- 10,000 20,000 30,000 40,000

Rupees in Millions

Vertical Analysis of Financial Statements
2020 2019 2018 2017 2016 2015

Rs. ‘000 % Rs. ‘000 % Rs. ‘000 % Rs. ‘000 % Rs. ‘000 % Rs. ‘000 %
Statement of financial position

As at 30 June 2020
Total Equity 16,476,548 37.07 16,382,080 37.61 16,022,255 37.85 16,994,755 40.07 14,903,981 46.87 14,370,171 51.16
Total non-current liabilities 14,069,919 31.66 12,766,693 29.31 13,336,334 31.51 13,730,948 32.37 7,220,257 22.70 5,916,786 21.07
Total current liabilities 13,899,814 31.27 14,414,170 33.09 12,971,562 30.64 11,689,840 27.56 9,676,419 30.43 7,800,847 27.77
Total equity and liabilities 44,446,280 100.00 43,562,943 100.00 42,330,151 100.00 42,415,543 100.00 31,800,657 100.00 28,087,804 100.00
Total non-current assets 26,963,596 60.67 27,107,861 62.23 26,982,905 63.74 28,501,663 67.20 20,217,498 63.58 18,880,695 67.22
Total current assets 17,482,684 39.33 16,455,082 37.77 15,347,246 36.26 13,913,880 32.80 11,583,159 36.42 9,207,109 32.78
Total assets 44,446,280 100.00 43,562,943 100.00 42,330,151 100.00 42,415,543 100.00 31,800,657 100.00 28,087,804 100.00
Statement of profit or loss

Net turnover 34,030,186 100.00 34,252,752 100.00 28,896,327 100.00 25,583,975 100.00 23,110,564 100.00 23,315,337 100.00
Cost of sales 29,195,495 85.79 28,847,019 84.22 25,360,087 87.76 22,906,157 89.53 20,547,990 88.91 20,707,602 88.82
Gross profit 4,834,691 14.21 5,405,733 15.78 3,536,240 12.24 2,677,818 10.47 2,562,574 11.09 2,607,735 11.18
Distribution cost 1,049,687 3.08 1,084,078 3.16 1,011,944 3.50 925,753 3.62 860,297 3.72 921,945 3.95
Administrative expenses 447,255 1.31 428,052 1.25 413,538 1.43 360,275 1.41 311,823 1.35 295,285 1.27
Other operating expenses 192,873 0.57 347,189 1.01 118,970 0.41 364,712 1.43 159,117 0.69 121,811 0.52
Other income 721,187 2.12 1,485,021 4.34 1,348,444 4.67 2,917,232 11.40 1,378,442 5.96 579,112 2.48
Profit from operations 3,866,062 11.36 5,031,435 14.69 3,340,232 11.56 3,944,310 15.42 2,609,779 11.29 1,847,806 7.93
Finance cost 2,556,977 7.51 2,085,427 6.09 1,391,491 4.82 968,946 3.79 873,059 3.78 669,411 2.87
Profit before taxation 1,309,085 3.85 2,946,008 8.60 1,948,741 6.74 2,975,364 11.63 1,736,720 7.51 1,178,395 5.05
Provision for taxation 129,996 0.38 386,568 1.13 353,682 1.22 253,617 0.99 288,506 1.25 144,259 0.62
Profit after taxation 1,179,089 3.46 2,559,440 7.47 1,595,059 5.52 2,721,747 10.64 1,448,214 6.27 1,034,136 4.44
COMMENTS ON FINANCIAL STATEMENTS
Statement of Financial Position
Non-Current Assets
Non-current assets of the Company mainly constitute property, plant and equipment and long term
investments in subsidiary companies and investment in blue chip shares. Value of long term investments
in blue chip shares has declined due to decrease in share prices whereas value of property, plant and
equipment increased as company invested in fabric dyeing range machinery to strengthen its value added
products share.

Over six years, Property plant and equipment of Sapphire Textile Mills Limited have increased to Rs.13,119
million which is 50% higher than Property plant and equipment held in year 2015. The Company has made
emphasis on vertical integration and established garment stitching, printing and dyeing facilities in these
years for growth in value added products.

Vertical Analysis of Financial Statements
Current Assets
Current assets of the Company mainly constitute stock in trade, trade debts and short term
investments in blue chip shares. Current assets of the company are in line with existing business
activities. Stocks and trade debts slightly increased due to prevailing COVID-19 pandemic. Value of
short term investments in blue chip shares has decreased due to decline in stock market rates. The
Company has also disposed off certain portion of short term investments to improve liquidity.
Equity
The Company has sound equity aggregating Rs.16,477 million as on 30 June 2020.
Long Term Financing
Long term financing of the Company is at same level in comparison with last year. During the year
the company obtained long term loans of Rs. 1,281 million as per the State Bank of Pakistan (SBP)
scheme LTFF for investment in plant and machinery. Further Rs. 398 million has been obtained
under SBP scheme for payment of salaries and wages. During the year, the company has also paid
long term loans aggregating Rs.1,428 million. Further, the company has opted for SBP scheme
for deferment of principle payment for next twelve months. Under this scheme principal payments
aggregating Rs. 2,175 million due in next twelve months has been deferred.
Short Term Borrowings
Short term loans of the company are at same level in comparison with previous year despite increase
in stock and trade debts due to ongoing pandemic.

Statement of Profit or Loss
Sales of the company has grown up by 45.96% over the last six years . However, during the current
year sales have marginally declined by 0.65% in comparison with last year due to breakout of
COVID-19 pandemic. Gross profit as a percentage of sales has increased from 11.18% to 14.21%
over the period of six years. Gross profit has improved due to more emphasis on value added
products and efficient cost levels.
Other income of the company mainly constitute dividend received from subsidiary companies,
associated companies and blue chip companies.
Finance cost has increased significantly in comparison with last year due to higher mark up rates
during the current year.


DuPont Analysis
7.16% ROE
2.65% 37.07%
Return on Ownership
Assets Ratio
Owners
3.46% Assets
Equity Total Assets
Net Profit Turnover
PKR 16,477 PKR 44,446
Margin 0.77 times
million million
Total Owners'
Net Income Sales Total Assets
Liabilities Equity
PKR 1,179 PKR 34,030 PKR 44,446
PKR 27,970 PKR 16,477
million million million
million million
Current
Non-Current Current Non-Current
Sales Total Cost Assets
Assets Liabilities Liabilities
PKR 34,030 PKR 32,851 PKR 17,483
PKR 26,964 PKR 13,900 PKR 14,070
million million million
million million
2020 2019
Tax Burden Percentage 9.93% 13.12%

Interest Burden Percentage 66.14% 41.45%
EBIT to Sales Percentage 11.36% 14.69%
Return on Equity Percentage 7.16% 15.62%
Total Assets Turnover Times 0.77 0.80
Debt to Equity Ratio Times 0.88 0.87

Our Value Addition and Its Distribution
2020 2019
Rs. in ‘000 % age Rs. in ‘000 % age
Value Addition
Net Sales including sales tax 36,686,968 98.07% 34,270,435 95.85%

Other operating income 721,187 1.93% 1,485,021 4.15%
37,408,155 100.00% 35,755,456 100.00%
Value Distribution
Cost of Sales (excluding employees’

remuneration, duties and taxes) 25,481,132 68.12% 25,332,875 70.45%
Distribution, administration (Excluding
employees' remuneration and taxes) 1,073,158 2.87% 1,248,120 3.47%
Employees Remuneration 4,210,658 11.26% 3,954,147 11.00%
Government taxes (includes income tax,
WPPF, WWF, duties, federal &
provincial taxes, sales tax etc) 2,875,552 7.69% 563,379 1.57%
Providers of capital (Finance cost) 2,556,977 6.84% 2,085,427 5.80%
Dividend - 0.00% 522,162 1.45%
Contribution to society - Donations 31,590 0.08% 12,067 0.03%
Profit retained 1,179,089 3.15% 2,238,110 6.22%
37,408,155 100.00% 35,956,288 100.00%
Distribution of Wealth 2020

0% 3%
0.08%
7%
Cost of Sales
8% Employees' remuneration
Providers of capital (Finance cost)
68%
Dividend
11%
Distribution and administration expenses
3% Government taxes
Contribution to society - Donations
Profits Retained
Distribution of Wealth 2019

1%
0.03% 6%
Cost of Sales
6%
Employees' remuneration
2%
Providers of capital (Finance cost)
11% Dividend
70%
Distribution and administration expenses

4%
Government taxes
Contribution to society - Donations
Profits retained

RESULTS REPORTED IN INTERIM FINANCIAL STATEMENTS
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total

2019 2018 Change 2019 2018 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change
Rupees in Millions in % Rupees in Millions in % Rupees in Millions in % Rupees in Millions in % Rupees in Millions in %
Particulars
Sales 9,092 8,095 12% 9,497 8,165 16% 9,041 9,268 -2% 6,400 8,725 -27% 34,030 34,253 -1%
GP 1,556 1,272 22% 1,752 1,228 43% 1,255 1,472 -15% 272 1,434 -81% 4,835 5,406 -11%
EBITDA 1,577 1,252 26% 2,024 1,761 15% 1,929 2,009 -4% (404) 1,170 -135% 5,125 6,191 -17%
PAT 564 507 11% 789 606 30% 60 500 -88% (234) 946 -125% 1,179 2,559 -54%
Rupee per share Rupee per share Rupee per share Rupee per share
EPS 26.74 24.04 11% 37.18 28.72 29% 2.76 23.72 -88% (11.08) 44.83 -125% 55.03 121.31 -55%

CODE OF CORPORATE GOVERNANCE
STATEMENT OF COMPLIANCE WITH LISTED 6. All the powers of the Board have been duly
COMPANIES (CODE OF CORPORATE exercised and decisions on relevant matters
GOVERNANCE) REGULATIONS, 2019 have been taken by board/ shareholders as
empowered by the relevant provisions of the
Name of Company: SAPPHIRE TEXTILE MILLS
LIMITED year ending June 30, 2020. Act and these Regulations.
The Company has complied with the requirements of 7. The meetings of the Board were presided over
the Regulations in the following manner:
by the Chairman and, in his absence, by a
1. The total number of directors are (10) Ten as per director elected by the board for this purpose.
the following: The board has complied with the requirements
of Act and the Regulations with respect to
a. Male (9) Nine frequency, recording and circulating minutes of
b. Female (1) One meeting of board.
2. The composition of the Board is as follows: 8. The Board of directors have a formal policy and
transparent procedures for remuneration of
Category Names directors in accordance with the Act and these
Independent Directors Mr. Nadeem Karamat
Regulations.
Mr. Shahid Shafiq
Independent Director / Female Ms. Mashmooma Zehra Majeed
9. Total ten (10) directors of the company were
Non-Executive Directors Mr. Mohammad Abdullah
elected on 15th June, 2020, out of which eight
Mr. Shahid Abdullah
Mr. Amer Abdullah
(8) Directors meet the requirements, four (4)
Mr. Yousuf Abdullah Directors have already attained certification
Executive Directors Mr. Nadeem Abdullah under directors training program while four
Mr. Nabeel Abdullah (4) directors meets the requirements of the
Mr. Umer Abdullah exemption under regulation. The remaining
two (2) are newly elected directors, who
3. The directors have confirmed that none of them may acquire the directors training program
is serving as a director on more than seven listed certification within a period of one year from
companies, including this company. the date of election.
4. The company has prepared a “Code of Conduct” 10. The Board has approved appointment of CFO,
and has ensured that appropriate steps have been Company Secretary and Head of Internal Audit,
taken to disseminate it throughout the company including their remuneration and terms and
along with its supporting policies and procedures. conditions of employment and complied with
relevant requirements of the Regulations.
5. The Board has developed a vision/mission
statement, overall corporate strategy and 11. The financial statements of the Company were
significant policies of the company. The board duly endorsed by Chief Executive Officer and
has ensured that complete record of particulars Chief Financial Officer before approval of the
of the significant policies along with the dates of Board.
approval or amended has been maintained.

CODE OF CORPORATE GOVERNANCE
12. The Board has formed committees comprising the firm involved in the audit are not a close
members given below: relative (Spouse, parents, dependents and non-
dependents children) of the chief executive
a) Audit Committee officer, chief financial officer, head of internal
audit, company secretary or directors of the
• Mr. Nadeem Karamat (Chairman) company.
• Mr. Shahid Shafiq (Member)
• Mr. Yousuf Abdullah (Member) 17.
The statutory auditors or the persons
• Mr. Amer Abdullah (Member) associated with them have not been
appointed to provide other services except in
b) HR and Remuneration Committee accordance with the Act, these Regulations
or any other regulatory requirement and
• Mr. Nadeem Karamat (Chairman) the auditors have confirmed that they have
• Mr. Nadeem Abdullah (Member) observed IFAC guidelines in this regard.
• Mr. Umer Abdullah (Member)
• Mr. Shahid Shafiq (Member) 18. We confirm that all other requirements of the
• Ms. Mashmooma Zehra Majeed (Member) Regulations 3,6,7,8,27,32,33 and 36 have been
complied with.
13. The terms of reference of the aforesaid
committees have been formed, documented Regulation 6 (1) the Listed Companies (Code
and advised to the committee for compliance. of Corporate Governance) Regulations, 2019,
requires that “each listed company shall have
14. The frequency of meetings (quarterly/ half at least two or one third members of the Board,
yearly/ yearly) of the committee were as per whichever is higher, as independent directors”.
following: At time of the recent election of Directors, the
Company assessed its compliance with this
a) Audit Committee [Quarterly] Regulation. One third of the Company’s total
b) HR and Remuneration Committee [ yearly] number of Directors results in a fractional
number (3.33). The fraction has not been
15. The Board has set up an effective Internal Audit rounded up to one and therefore, the Board
Function. of Directors currently has 3 independent
Directors. The Company considers that the
16.
The statutory auditors of the Company existing composition of the Board of Directors
have confirmed that they have been given a brings in the relevant experience and valuable
satisfactory rating under the quality control contributions to the Board.
review program of the Institute of Chartered
Accountants of Pakistan and registered with For and on behalf of the Board
Audit Oversight Board of Pakistan, that they
and all their partners are in compliance with
International Federation of Accountants (IFAC) MOHAMMAD ABDULLAH NADEEM ABDULLAH
guidelines on code of ethics as adopted by CHAIRMAN CHIEF EXECUTIVE
the Institute of Chartered Accountants of
Karachi
Pakistan and that they and the partners of 24 September 2020

INDEPENDENT AUDITORS’ REVIEW REPORT
TO THE MEMBERS OF SAPPHIRE TEXTILE MILLS LIMITED
Review Report on the Statement of Compliance contained in Listed Companies (Code of

Corporate Governance) Regulations, 2019
We have reviewed the enclosed Statement of an opinion on the effectiveness of such internal
Compliance with the Listed Companies (Code of controls, the Company’s corporate governance
Corporate Governance) Regulations, 2019 (the procedures and risks.
Regulations) prepared by the Board of Directors
of Sapphire Textile Mills Limited (‘the Company’) The Regulation requires the Company to
for the year ended 30 June 2020 in accordance place before the Audit Committee, and upon
with the requirements of regulation 36 of the recommendation of the Audit Committee, place
Regulations. before the Board of Directors for their review
and approval, its related party transactions. We
The responsibility for compliance with the are only required and have ensured compliance
Regulations is that of the Board of Directors of the of this requirement to the extent of the approval
Company. Our responsibility is to review whether of the related party transactions by the Board
the Statement of Compliance reflects the status of Directors upon recommendation of the Audit
of the Company’s compliance with the provision Committee. We have not carried out procedures to
of the Regulations and report if it does not and to assess and determine the Company’s process for
highlight any non-compliance with requirements identification of related parties and that whether
of the Regulations. A review is limited primarily to the related party transactions were undertaken at
inquiries of the Company’s personnel and review arm’s length price or not.
of various documents prepared by the Company
to comply with the Regulations. Based on our review, nothing has come to our
attention which causes us to believe that the
As a part of our audit of the financial statements Statement of Compliance does not appropriately
we are required to obtain an understanding of the reflect the Company’s compliance, in all material
accounting and internal control systems sufficient respects, with the requirements contained in the
to plan the audit and develop an effective audit Regulations as applicable to the Company for the
approach. We are not required to consider whether year ended 30 June 2020.
the Board of Directors’ statement on internal
control covers all risks and controls or to form
EY Ford Rhodes
Engagement Partner: Farooq Hameed
Lahore
24 September 2020

Notice of the
Annual General
Meeting

NOTICE OF THE ANNUAL GENERAL MEETING
NOTICE OF THE ANNUAL GENERAL MEETING B (i) “RESOLVED THAT the related Parties
Notice is hereby given that 52nd Annual General transactions conducted during the year
Meeting of Sapphire Textile Mills Limited (The in which the majority of Directors are
“Company”) will be held on Thursday, 22nd October, interested as disclosed in the note 41 of
2020 at 312, Cotton Exchange Building, I.I the unconsolidated financial statements
Chundrigar Road, Karachi at 03:30 p.m. to transact for the year ended 30th June , 2020, be
the following business: and are hereby ratified, approved and
confirmed.”
Ordinary Business:
(ii) “RESOLVED THAT the Board of Directors
1. To confirm the minutes of last General Meeting. of the Company be and is hereby
authorized to approve the transactions
2. To receive, consider and adopt the Audited to be conducted with Related Parties on
Accounts together with Chairman’s, Directors’ case to case basis during the financial year
and Auditors’ Reports for the year ended 30th ending 30th June, 2021.”
June, 2020.
“FURTHER RESOLVED THAT
3. To appoint auditors for the year ending 30 June,
th
transactions approved by Board shall
2021 and fix their remuneration. The present be deemed to have been approved by
Auditors, M/s EY Ford Rhodes, Chartered the shareholders and shall be placed
Accountants retire and being eligible offer before the shareholders in the next
themselves for reappointment. Annual General Meeting for their formal
ratification/approval.”
Special Business
Any other Business
4. To approve by way of special resolution with or
without modification the following resolutions in 5. To transact any other business with the
respect of related party transaction in terms of permission of the chair.
Section 208 of the Companies Act, 2017:
(Attached to this Notice is a Statement of
A. “RESOLVED THAT the pursuant to section Material Facts covering the above-mentioned
208 of the Companies Act 2017, the Special Business, as required under section
shareholders’ consent be and is hereby 134(3) of the Companies Act, 2017).
accorded to give on lease company’s
stitching facility situated at Unit-8, 1.5 kms
Bhobatian Chowk, Raiwind Road, Lahore By Order of the Board
to M/s. Designtex (SMC-Private) Limited
100% subsidiary of Sapphire Retail Limited
(SRL) (SRL is also 100% subsidiary of
Sapphire Textile Mills Limited) as per term
and condition mutually agreed on arm
length basis. Zeeshan
Company Secretary
“FURTHER RESOLVED that the Chief Karachi
Executive be and is hereby authorized 24 September 2020
to plan, negotiate, execute and do all
necessary step or things necessary for
execution of the lease agreement (s).

For attending the meeting through video link Road, Karachi, up to 15th October, 2020, will be
due to COVID 19 Pandemic: considered in time to entitle the transferees to
In pursuance of SECP Circular Nos. 5, 10A and 20 attend and vote at the meeting.
of 2020 dated 17th March, 2020, 01st April , 2020
and 31st August, 2020 respectively regarding 2) A member entitled to attend and vote at this
Regulatory Relief to dilute impact of Corona Virus meeting is entitled to appoint another member
(COVID 19) for Corporate Sector, the entitled as his/her proxy to attend and vote. An
shareholders interested in attending the Annual instrument of proxy applicable for the Meeting
General Meeting (AGM) through video link facility is being provided with the notice sent to the
(“Zoom” which can be downloaded from Google members. Further copies of the instrument
Play or Apple App Store) are requested to get may be obtained from the registered office of
themselves registered with the Company Secretary the Company during normal office hours. The
office at least two working days before the holding proxy form can also be downloaded from the
of the time of AGM at contact@sapphiretextiles. Company’s website: www.sapphire.com.pk/
com.pk by providing the following details:- stml
Name of CNIC Folio Cell Email 3) Duly completed instrument of proxy, and
Shareholder Number Number Number. Address
the other authority under which it is signed,
thereof, must be lodged with the secretary of
the company at the company’s registered office
• Upon receipt of the above information from 212, Cotton Exchange Building, I.I.Chundrigar
interested shareholders, the Company Road, Karachi at least 48 hours before the time
will send the login details at their email of the meeting.
addresses.
4) Any change of address of members should
• On the AGM day, the shareholders will be immediately notified to the company’s
be able to login and participate in the share registrar, Hameed Majeed Associates
AGM proceedings through their smart (Private) Limited, 4th Floor, Karachi Chambers,
phone or computer devices from their any HasratMohani Road, Karachi.
convenient location.
5) The CDC account holders will further have
• The login facility will be opened thirty (30) to follow the under-mentioned guidelines as
minutes before the meeting time to enable laid down by the Securities and Exchange
the participants to join the meeting after Commission of Pakistan:
identification process and verification
process. i) In case of individuals, the account holder
or sub-account holder and/or the person
• Shareholders will be encouraged to whose securities are in group account
participate in the AGM to consolidate and their registration details are uploaded
their attendance and participation through as per the Regulations, shall authenticate
proxies. his identity by showing his original
computerized national identity card (CNIC)
NOTE or original passport at the time of attending
the meeting.
1) Share Transfer Books will be remain closed
and no transfer of shares will be accepted for ii) In case of corporate entity, the Board of
registration from 16th October, 2020 to 22nd Directors’ resolution/power of attorney with
October, 2020 (both days inclusive). Transfers specimen signature of the nominee shall
received in order, by the M/s. Hameed Majeed be produced at the time of the meeting.
Associates (Private) Limited Company Registrar,
4th Floor, Karachi Chambers, Hasrat Mohani
a) For appointing proxies:
i) In case of individuals, the account holder or sub-account holder and/or the person whose
securities are in group account and their registration details are uploaded as per the Regulations,
shall submit the proxy form accordingly.
ii) The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers
shall be mentioned on the form.
iii) Attested copies of CNIC or the passport shall be attached.
iv) The proxy shall produce his/her original CNIC or original passport at the time of meeting.
v) In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen
signature shall be submitted along with proxy form to the company.
6) In compliance with regulatory directives issued from time to time, members who have not yet submitted
copy of their valid CNIC/NTN are requested to submit the same to the Company, with members’ folio
number mentioned thereon for updating record.
7) Members can exercise their right to demand a poll subject to meeting requirements of section 143-145
of the companies Act 2017 and applicable clause of the Companies (Post Ballot) Regulations, 2018.
8) The Company shall provide video conference facility to its members for attending the General Meeting
at places other than the town in which general meeting is taking place, provided that if members,
collectively holding 10% or more shareholding residing at a geographical location, provide their
consent to participate in the meeting through video conference at least 07 days prior to date of the
meeting, the Company shall arrange video conference facility in that city subject to availability of such
facility in that city.
In this regard, please fill the following form and submit to registered address of the Company 07 days
before holding of the General Meeting:
“I/We, ___________ of ____________ being a member of Sapphire Textile Mills Ltd, holder of ________ Ordinary
Shares as per registered folio # __________ hereby opt for video conference facility at _____________.”
__________________
Signature of Member

Status of Investment under Clause 4(2) of the Companies (Investment in Associated Undertakings)
Regulations, 2017
Amount of
Company / Date of
Amount of Investment approved Investment made Reason
Resolution
to date
Sapphire Wind Power Collateral/security as may be This amount was

Company Limited required by the issuing bank amended in AGM held on
(SWPCL ) 17th February, to issue a Stand by Letter of 26th Oct, 2015 in order to
2014 & subsequently Credit(SBLC) in PKR equivalent Nil secure the obligation of
amended on 26th Oct, upto approximately USD 10 SWPCL in relation to the
2015 Million in order to secure certain required balance of the
obligations of SWPCL Debt Service Reserve
Triconboston Consultancy Security / collateral as may be This amount was

Corporation (Private) required by the issuing banks approved in the EOGM
Limited (TBCCPL), 27th in order for the same to issue Dated 27th March,
March 2017 debt service reserve standby 2017and is in the process
letters of credit together with SBLC = USD 8.79 of implementation as and
any replacement standby letters Million when required.
of credit in order to secure the
amount up-to USD 24 Million
(United States Dollars Twenty Four
Million);
Security / collateral as may be

required by the issuing banks in
This amount was
order for the same to issue excess
Triconboston Consultancy approved in the EOGM
debt standby letters of credit
Corporation (Private) Dated 27th March,
together with any replacement Nil
Limited (TBCCPL), 27th 2017and is in the process
standby letters of credit in order
March 2017 of implementation as and
to secure the amount up-to USD
when required
15 Million (United States Dollars
Fifteen Million); and
To invest by way of loans and

advances in the PKR equivalent
upto USD 11.3 Million (United
States Dollars Eleven Million
Three Hundred Thousand) for
a period of up-to five (5) years This amount of loan was
Triconboston Consultancy from the commercial operations approved in the EOGM
Corporation (Private) date of the last of the three Dated 27th March,
Nil
Limited (TBCCPL), 27th (approximately) 150MW wind 2017and is in the process
March 2017 power project, and to arrange and of implementation as and
deliver: (i) standby letters of credit when required
together with any replacement
standby letters of credit in order to
secure the Available Contingency
Commitment Amount, in favour of
the agent/security trustee

Material Changes in Financial Statements of utilization of company’s assets / facilities and

Associated Company enhance its export activities.
Sapphire Wind Power Company Limited Value of Assets to be leased out.

The Company is 70% owned by Sapphire Textile
Mills Ltd and 30% by Bank Alfalah Limited. The A. The WDV value of proposed assets to be
Company has set up a wind farm with capacity leased is up to Rs. 560.346 million as at
of 52.80 MW at Jhimpir, Sindh which started 30 June, 2020. These assets will be leased
Commercial operations in Nov 2015 – the project out at the current market rates.
is operating following best industry practices and is
yielding satisfactory results. Reason / Benefit of Leasing
Financial Year Financial Year B. It will improve in Overall Profitability of

Ended June 30, Ended the Company by availing other ancillary
2020 June 30, 2016
and related operational and fiscal benefits
Net Sales 3,704,254,098 1,584,896,926 attached to export oriented units.
Gross Profit 2,421,950,586 1,020,332,620
Profit Before Tax 1,746,809,140 678,614,077
Profit After Tax 1,759,688,303 678,235,929 Interest of Directors:
Triconboston Consulting Corporation (Private) C. Sapphire Textile Mills Limited is planning to

Limited lease out its units to its 100% subsidiary
Triconboston Consulting Corporation (Private) of Subsidiary. Directors have no direct or
Limited was incorporated under the laws of Pakistan indirect interest except to the extent of
and operating 3 projects having capacity of 50 MW their shareholding.
each in Jhimpir Sindh. All the three projects have
successfully commenced commercial operation in Time frame or duration of the transactions or
September, 2018. The project is operating following contracts or arrangements
best industry practice and is yielding satisfactory
results. D. CEO of the company Mr. Nadeem Abdullah
is to be authorized to complete all, term
Financial Year Financial Year and condition of the agreements and other
Ended Ended regulatory requirements for completion of
June 30, 2020 June 30, 2017
transaction in the best interest of Company.
Net Sales 10,495,000,097 -
Gross Profit /(Loss) 7,254,882,207 (93,798,217)
1. Relating to Item Number 4 (B)(i) of the notice
Profit /(Loss ) 4,851,092,424 (94,039,713) – Ratification and approval of the related party
Before Tax
transactions
Profit /(Loss) After 4,848,524,478 (95,055,582)
Tax
The Company carries out transactions with its
STATEMENT OF MATERIAL FACTS UNDER associates and related parties in accordance
SECTION 134 (3) OF THE COMPANIES ACT, 2017 with its policies, applicable laws, regulations
and with approval of board of directors of the
Introduction: company. However, during the year since
majority of the Company’s Directors are
The management of Sapphire Textile Mills Limited interested in certain transactions (by virtue of
(Company) Intends to lease out its stitching facility being the shareholder or common directorship),
situated at Unit-08, 1.5 kms Bhobatian Chowk, therefore due to absent of requisite quorum for
Raiwind Road, Lahore, Punjab to improve the approval in Board of Directors meeting, these

transactions are being placed for the approval 2. Relating to Item Number 4 (B)(ii) of the notice
by shareholders in the Annual General Meeting. Authorization for the Board of Directors to
approve the related party transactions during
All transactions with related parties to be the year ending 30th June, 2021.
ratified have been disclosed in the note 41 to
the unconsolidated financial statements for the The Company shall be conducting transactions
year ended 30th June, 2020. with its related parties during the year ending
30th June, 2021 on an arm’s length basis
The company carries out transactions with as per the approved policy with respect to
its related parties on an arm’s length basis ‘transactions with related parties’ in the normal
as per the approved policy with respect to course of business. The majority of Directors
‘transactions with related parties’ in the normal are interested in these transactions due to
course of business and periodically reviewed their common directorship in the subsidiary
by the Board Audit Committee. Upon the / associated companies. In order to promote
recommendation of the Board Audit Committee, transparent business practices, the Board
such transactions are placed before the board of Directors seeks authorization from the
of directors for approval. shareholders to approve transactions with the
related parties from time-to-time on case to
Transactions entered into with the related case basis for the year ending 30th June, 2021
parties include, but are not limited to, sale and such transactions shall be deemed to be
& purchase of goods, dividends paid and approved by the Shareholders. The nature and
received, investments made (in accordance with scope of such related party transactions is
the approval of shareholders and board where explained above. These transactions shall be
applicable) and sharing of common expenses. placed before the shareholders in the next AGM
for their formal approval/ratification.
The nature of relationship with these related
parties has also been indicated in the note 41
to the unconsolidated financial statements for
the year ended 30th June, 2020.

UNCONSOLIDATED
FINANCIAL
STATEMENTS

Independent Auditors’ Report
To the Members of Sapphire Textile Mills Limited
Report on the Audit of the Separate Financial Statements
Opinion the profit, comprehensive income, the changes in
We have audited the annexed unconsolidated equity and its cash flows for the year then ended.
financial statements of Sapphire Textile Mills
Limited (the Company), which comprise the Basis for Opinion
statement of financial position as at 30 June 2020, We conducted our audit in accordance with
the statement of profit or loss, the statement of International Standards on Auditing (ISAs) as
comprehensive income, the statement of changes applicable in Pakistan. Our responsibilities under
in equity, the statement of cash flows for the year those standards are further described in the
then ended, and notes to the financial statements, Auditors’ Responsibilities for the Audit of the
including a summary of significant accounting Financial Statements section of our report. We
policies and other explanatory information are independent of the Company in accordance
(hereinafter referred to as the ‘separate financial with the International Ethics Standards Board
statements’) and we state that we have obtained all for Accountants’ Code of Ethics for Professional
the information and explanations which, to the best Accountants as adopted by the Institute of
of our knowledge and belief, were necessary for the Chartered Accountants of Pakistan (the Code) and
purposes of the audit. we have fulfilled our other ethical responsibilities
in accordance with the Code. We believe that the
In our opinion and to the best of our information audit evidence we have obtained is sufficient and
and according to the explanations given to us, the appropriate to provide a basis for our opinion.
statement of financial position, statement of profit
or loss, statement of comprehensive income, the Key Audit Matters
statement of changes in equity and the statement Key audit matters are those matters that, in our
of cash flows together with the notes forming part professional judgment, were of most significance
thereof conform with the accounting and reporting in our audit of the separate financial statements of
standards as applicable in Pakistan and give the current period. These matters were addressed
the information required by the Companies Act, in the context of our audit of the separate financial
2017 (XIX of 2017), in the manner so required and statements as a whole, and in forming our opinion
respectively give a true and fair view of the state of thereon, and we do not provide a separate opinion
the Company’s affairs as at 30 June 2020 and of on these matters.
Following are the key audit matters:

Key audit matters How our audit addressed the key audit matter
1. Stock in trade
The Company has a composite textile set-up We performed following key audit procedures,
comprising spinning, weaving, processing and among other procedures, in respect of stock in
home textile units. Therefore its stock in trade trade:
includes various inventory items including
cotton, yarn and fabric categorized into raw - We gained an understanding of the
materials, work in process and finished goods management’s process of recording and
based on the processes of respective units valuing inventories.
where these are being utilized / produced.
- We tested controls over the Company’s
These are stored at various geographically
processes of inventory purchases and
dispersed locations.
issuance.
Stock in trade as at 30 June 2020 amounted - We attended virtual inventory counts and
to Rs. 8,911 million comprising a significant reconciled the count results to inventory
percentage (20%) of the Company’s total listings at the year end.
assets. - We performed substantive procedures over
purchases recorded during the year.
The amount of stock in trade is net of provisions - We tested the valuation of inventory items
for net realizable value amounting to Rs. 482 in accordance with Company’s policy and
million due to items to be sold at less than international accounting standards (IAS 2 –
cost as disclosed in note 13.1 to the separate Inventories).
financial statements.

There is an element of judgement relating to - We evaluated appropriateness of the

this provision which is based on expected measurement basis for net realizable value
future transactions and the current economic for finished goods and raw material.
conditions particularly after the outbreak of
COVID-19. - We recalculated the NRV adjustment for
finished goods and raw material, on sample
Due to the above factors, significant auditor basis.
attention is required in auditing of inventory
balances and transactions during the year and
hence considered a Key Audit Matter.
2. COVID -19
The COVID-19 pandemic caused significant We discussed with the senior management about
and unprecedented curtailment in economic the impacts of COVID-19 related events on the
and social activities particularly during the business operations, financial condition, liquidity
period from March 2020 to May 2020 in line and operating performance of the Company.
with the directives of the Government. This
situation posed a range of business and We identified key financial statement items which
financial challenges to the businesses globally may require additional audit considerations due
and across various sectors of the economy in to the COVID· 19 related conditions that prevailed
Pakistan. during the latter part of the year. In this regard, we
considered the realizable value of inventories
The Company’s operations were disrupted due and recoverability of trade receivables, which
to the circumstances arising from COVID-19 were impacted by the lockdowns imposed by the
including the suspension of production, sales Government and distressed demand in global
and operations; although for a short period of economy.
time.
We checked the sale of the inventories subsequent
In view of the unique nature of these events and to the year end to evaluate the realizable-value of
its possible impacts on the business operations inventory held as at 30 June 2020.
and financial reporting we considered this area
as a key audit matter to identify specific risks in We assessed the adequacy of allowance for net
relation to the financial statements and devise realizable value made in respect of the inventory
our audit strategy accordingly. held as at 30 June 2020.
Please also refer to note 48 to the financial In respect of trade receivables, we checked
statements. the computations for expected credit losses as
determined by the management in accordance
with the requirements of IFRS-9 ‘Financial
Instruments’. We evaluated the assumptions used
by the management for such estimates including
their reasonableness and the supporting economic
and historical data used in this regard.
We reviewed the terms of loans obtained, renewed

and / or restructured by the Company to assess
compliance with key terms and conditions,
including any applicable debt covenants and
reviewed the correct classification, treatment and
disclosure of the same.

3. Related party transactions
The Company is the parent entity in a Group of We obtained a list of related parties and
companies. transactions entered into with them during the year
from management.
Nature of transactions with related parties
includes investments, purchases and sales, We performed substantive procedures on related
expenses charged on behalf of each other, party transactions and balances including review
dividend income and intercompany loans of contract terms, underlying invoices, analytical
along-with interest thereon (as disclosed in procedures, balance confirmations and assessment
note 41 to the accompanying separate financial of recoverability of receivable balances vis-à-vis
statements) leading to a significant amount of financial position of respective Group entities.
investments, receivable and payable balances
of Rs. 9,998 million, Rs. 1,694 million and Rs.
2,230 million as at the year end, respectively. We reviewed the approval process for related party
transactions including approval by those charged
The inter-company transactions and balances with governance.
require significant auditor attention as the
amounts are material to the separate financial We assessed whether appropriate disclosures
statements as a whole and are hence considered have been made in separate financial statements
as Key Audit Matter. regarding related party transactions and balances
in accordance with IAS 24 and requirements under
the fourth schedule to the Companies Act, 2017.
Information Other than the Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. The other information comprises the information
included in the Annual Report, but does not include the separate financial statements and our auditors’
report thereon.
Our opinion on the separate financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the separate financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
separate financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the Financial Statements

Management is responsible for the preparation and fair presentation of the separate financial statements in
accordance with the accounting and reporting standards as applicable in Pakistan and the requirements of
Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is necessary
to enable the preparation of separate financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the separate financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Company
or to cease operations, or has no realistic alternative but to do so.
Board of directors are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the separate financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these separate financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the separate financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report
to the related disclosures in the separate financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditors’ report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of the separate financial statements, including
the disclosures, and whether the separate financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
We communicate with the board of directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the board of directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of most
significance in the audit of the separate financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements
Based on our audit, we further report that in our opinion:
a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX
of 2017);
b) the statement of financial position, the statement of profit or loss, the statement of comprehensive
income, the statement of changes in equity and the statement of cash flows together with the notes
thereon have been drawn up in conformity with the Companies Act, 2017 (XIX of 2017) and are in
agreement with the books of account and returns;
c) investments made, expenditure incurred and guarantees extended during the year were for the purpose
of the Company’s business; and
d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by
the Company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.
The engagement partner on the audit resulting in this independent auditors’ report is Farooq Hameed.
EY Ford Rhodes
Lahore
24 September 2020

STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
Note 2020 2019

Rupees Rupees
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 6 13,119,291,362 12,595,223,703
Investment property 7 31,750,000 31,750,000
Intangible assets 8 208,333 627,039
Long term investments 9 13,612,999,166 14,256,507,418
Long term loans and advances 10 111,663,175 135,843,927
Long term deposits 11 87,684,092 87,909,092
26,963,596,128 27,107,861,179
CURRENT ASSETS
Stores, spares and loose tools 12 471,374,075 393,812,720
Stock in trade 13 8,910,912,161 7,481,967,254
Trade debts 14 2,782,771,494 2,197,892,804
Loans and advances 15 56,882,329 72,388,577
Trade deposits and short term prepayments 16 24,925,374 6,688,684
Other receivables 17 845,667,618 921,899,641
Short term investments 18 2,956,225,380 4,030,717,707
Tax refunds due from Government 19 1,366,384,838 1,252,955,655
Cash and bank balances 20 67,540,738 96,759,191
17,482,684,007 16,455,082,233
TOTAL ASSETS 44,446,280,135 43,562,943,412
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES

Authorized share capital
35,000,000 ordinary shares of Rs.10 each 350,000,000 350,000,000
Issued, subscribed and paid-up capital 21 216,897,910 200,831,400

Reserves 22 16,259,650,037 16,181,248,942
16,476,547,947 16,382,080,342
NON-CURRENT LIABILITIES
Long term financing 23 13,772,308,842 12,257,108,436
Deferred liabilities 24 297,609,788 509,584,337
14,069,918,630 12,766,692,773
CURRENT LIABILITIES
Trade and other payables 25 3,898,936,441 3,442,588,442
Contract liabilities 26 830,395,887 850,602,812
Accrued Interest / mark-up 27 361,222,288 320,423,966
Unclaimed dividend 1,696,118 1,795,457
Short term borrowings 28 8,070,572,958 7,797,508,535
Current portion of long term financing 23 736,989,866 2,001,251,085
13,899,813,558 14,414,170,297
CONTINGENCIES AND COMMITMENTS 29
TOTAL EQUITY AND LIABILITIES 44,446,280,135 43,562,943,412
The annexed notes from 1 to 50 form an integral part of these financial statements.
Chief Executive Chief Financial Officer Director

STATEMENT OF PROFIT OR LOSS
Note 2020 2019

Rupees Rupees
Net turnover 30 34,030,186,288 34,252,752,057
Cost of sales 31 (29,195,495,154) (28,847,019,067)
Gross profit 4,834,691,134 5,405,732,990
Distribution cost 32 (1,049,687,288) (1,084,077,934)
Administrative expenses 33 (447,254,813) (428,051,718)
Other operating expenses 34 (192,873,482) (347,188,591)
Other income 35 721,186,673 1,485,021,046

(968,628,910) (374,297,197)
Profit from operations 3,866,062,224 5,031,435,793
Finance cost 36 (2,556,976,879) (2,085,427,251)
Profit before taxation 1,309,085,345 2,946,008,542
Taxation 37 (129,996,345) (386,568,597)
Profit after taxation for the year 1,179,089,000 2,559,439,945
Restated
Earnings per share - basic and diluted 38 55.03 121.31

STATEMENT OF COMPREHENSIVE INCOME
2020 2019
Rupees Rupees
Other comprehensive income:
Items to be reclassified to profit or loss in subsequent years:
Forward foreign currency contracts
Unrealized loss on remeasurement of forward foreign currency contracts (12,941,707) -
Reclassification adjustments relating to gain realized on

settlement of forward foreign currency contracts - (17,651,047)
(12,941,707) (17,651,047)
Net loss on debt instruments at fair value through
other comprehensive income (1,000,000) (6,756,705)
Items not be reclassified to profit or loss in subsequent years:
Net loss on equity instruments at fair value through

other comprehensive income (1,133,791,389) (1,845,905,550)
Gain / (loss) on remeasurement of staff retirement benefits 51,412,524 (8,535,640)

Impact of deferred tax - 564,377
51,412,524 (7,971,263)
Other comprehensive loss for the year (1,096,320,572) (1,878,284,565)
Total comprehensive income for the year 82,768,428 681,155,380

54
Capital Reserves Revenue Reserves
Unrealized Unrealized Unrealized (Loss)/

Fixed Assets Gain/(loss) on Gain/(loss) on gain on forward Unappropriated
Share Capital Share Premium General reserves Total Equity
Replacement available for sale investments at fair foreign exchange profit
investments value through OCI contracts
Rupees
Balance as at 01 July 2018 200,831,400 156,202,200 65,000,000 587,918,606 - 17,651,047 1,330,000,000 13,664,651,949 16,022,255,202
Effect of adoption of IFRS 9 - - - (587,918,606) 587,918,606 - - - -

Balance as at 01 July 2018 (restated) 200,831,400 156,202,200 65,000,000 - 587,918,606 17,651,047 1,330,000,000 13,664,651,949 16,022,255,202
Total comprehensive income for the year ended 30 June 2019

Profit after taxation for the year - - - - - - - 2,559,439,945 2,559,439,945
Other comprehensive loss for the year - - - - (1,852,662,255) (17,651,047) - (7,971,263) (1,878,284,565)
- - - - (1,852,662,255) (17,651,047) - 2,551,468,682 681,155,380

Transaction with owners
Final dividend for the year ended 30 June 2018

@ Rs.16 per share - - - - - - - (321,330,240) (321,330,240)
Balance as at 30 June 2019 200,831,400 156,202,200 65,000,000 - (1,264,743,649) - 1,330,000,000 15,894,790,391 16,382,080,342
Balance as at 01 July 2019 200,831,400 156,202,200 65,000,000 - (1,264,743,649) - 1,330,000,000 15,894,790,391 16,382,080,342

Profit after taxation for the year - - - - - - - 1,179,089,000 1,179,089,000
Other comprehensive (loss) / income for the year - - - - (1,134,791,389) (12,941,707) - 51,412,524 (1,096,320,572)
- - - - (1,134,791,389) (12,941,707) - 1,230,501,524 82,768,428
STATEMENT OF CHANGES IN EQUITY
Transfer of gain on sale of investment at fair value

through OCI to un-appropriated profit - - - - (51,745,097) - - 51,745,097 -
Transfer of subsidiaries reserve on merger (note 9.1.2) - - - - - - - (108,799,583) (108,799,583)

Right shares 1,606,651 issued at the rate
of Rs.400 per share (Rs.10 par value
and Rs.390 premium per share) 16,066,510 626,593,890 - - - - - - 642,660,400

@ Rs.26 per share - - - - - - - (522,161,640) (522,161,640)
-
Balance as at 30 June 2020 216,897,910 782,796,090 65,000,000 - (2,451,280,135) (12,941,707) 1,330,000,000 16,546,075,789 16,476,547,947

STATEMENT OF CASH FLOWS
Note 2020 2019

Rupees Rupees
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 39 2,906,545,167 4,570,592,925
Long term loans, advances and deposits 24,405,753 (98,576,863)

Finance cost paid (2,382,774,603) (1,949,777,484)
Staff retirement benefits - gratuity paid (72,379,948) (71,451,763)
Taxes paid (456,416,650) (659,547,043)
(2,887,165,448) (2,779,353,153)
Net cash generated from operating activities 19,379,719 1,791,239,772
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (1,900,066,091) (2,575,356,110)

Investment in subsidiaries (15,760,000) (1,000,000,000)
Investments made - (50,000,000)
Short term investment in equity instruments (81,940,358) -
Loans to subsidiaries recovered - net - 482,000,000
Proceeds from disposal of property, plant and equipment 172,910,817 217,237,477
Proceeds from sale of investments 497,776,517 -
Dividend received 615,476,874 715,830,198
Interest received 10,398,801 24,079,347
Rental income received 510,000 787,500
Net cash used in investing activities (700,693,440) (2,185,421,587)
CASH FLOWS FROM FINANCING ACTIVITIES
Short term borrowings - net 239,125,963 496,232,329

Proceeds from long term financing 1,679,397,307 1,312,068,000
Repayment of long term financing (1,428,458,120) (1,051,123,632)
Share issuance 642,660,400 -
Dividend paid (522,260,979) (320,844,302)
Net cash generated from financing activities 610,464,571 436,332,396
Net (decrease) / increase in cash and cash equivalents (70,849,150) 42,150,580
Cash and cash equivalents at the beginning of the year 96,759,191 54,608,611
Transfer upon merger 7,692,237 -
Cash and cash equivalents at the end of the year 40 33,602,278 96,759,191

NOTES TO THE FINANCIAL STATEMENTS
1. LEGAL STATUS AND OPERATIONS
Sapphire Textile Mills Limited (the Company) was incorporated in Pakistan on 11 March 1969 as a
public limited company under the Companies Act, 1913 (now the Companies Act, 2017). The shares
of the Company are listed on Pakistan Stock Exchange.
The Company is principally engaged in manufacturing and sale of yarn, fabrics, home textile products,
finishing, stitching and printing of fabrics. Following are the business units of the Company along
with their respective locations:
BUSINESS UNIT LOCATION

Registered Office
Karachi 212, Cotton Exchange Building, I. I. Chundrigar Road, Karachi
Lahore office 7-A/K, Main Boulevard, Gulberg II, Lahore
Production Plants
Spinning A-17,SITE, Kotri
Spinning A-84,SITE Area, Nooriabad
Spinning 63/64-KM, Multan Road, Jumber Khurd,Chunian, District
Kasur
Spinning 1.5-KM, Warburton Road, Feroze Wattoan, Sheikhupura
Weaving and Yarn Dyeing, 2-KM, Warburtan Road, Feroze Wattoan, Sheikhupura
Printing, Processing and Home
Textile
Stitching 1.5-KM Off, Defence Road, Bhubtian Chowk, Raiwind Road,
Lahore
2. BASIS OF PREPARATION
2.1 Statement of Compliance
These financial statements have been prepared in accordance with the accounting and reporting
standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan
comprise of:
- International Financial Reporting Standards (IFRS Standards) issued by the International

Accounting Standards Board (IASB) as notified under the Companies Act, 2017
- Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS
Standards, the provisions of and directives issued under the Companies Act, 2017 have been
followed.
2.2 These are separate financial statements, where the investment in subsidiaries and associates is
shown at cost; consolidated financial statements are separately presented.
2.3 These financial statements have been prepared under the historical cost convention except for
measurement of certain financial assets and financial liabilities at fair value and recognition of
employee benefits at present value using valuation techniques.

2.4 These financial statements are presented in Pak Rupees, which is the functional currency of the
Company. Figures have been rounded off to the nearest rupee unless otherwise stated.
2.5 Disclosure of operating segments has been made in consolidated financial statements of the
Company
3. ACCOUNTING ESTIMATES, JUDGEMENTS AND FINANCIAL RISK MANAGEMENT
The preparation of financial statements in conformity with approved accounting standards requires
the use of certain critical accounting estimates. It also requires management to exercise its judgement
in the process of applying the Company’s accounting policies. Estimates and judgements are
continually evaluated and are based on historic experience and other factors, including expectation
of future events that are believed to be reasonable under the circumstances. In the process of
applying the Company’s accounting policies, the management has made the following estimates
and judgements which are significant to the financial statements:
a) Estimate of useful lives and residual values of property, plant & equipment, intangible assets
and investment property [notes 5.1, 5.2, 5.3, 6.1, 7 and 8]
b) Provision for obsolete and slow moving stores, spares and loose tools [note 5.5 and 12]
c) Net realisable values of stock-in-trade [note 5.6 and 13]
d) Provision for expected credit loss [note 5.7 and 14]
e) Provision for employees’ retirement benefits [note 5.10 and 24.2]
f) Provision for taxation [note 5.12 and 37]
4. STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED APPROVED

ACCOUNTING STANDARDS
4.1 New / Revised Standards, Interpretations and Amendments
The accounting policies adopted in the preparation of these financial statements are consistent with
those of the previous financial year except that the Company has adopted the following accounting
standards which became effective for the current period:
IAS 19 - Employee Benefits (amendments) - Plan Amendment, Curtailment or Settlement
IAS 28 - Investment in Associates and Joint Ventures - Long-term Interests in Associates

and Joint Ventures (amendments)
IFRS 9 - Financial Instruments - Prepayment Features with Negative Compensation
IFRS 14 - Regulatory Deferral Accounts
IFRS 16 - Leases
IFRS 16 - Leases; to clarify the amendment providing lessees with an exemption from
assessing whether a COVID-19-related rent concession (a rent concession that
reduces lease payments due on or before 30 June 2021) is a lease modification.
IFRIC 23 - Uncertainty over Income Tax Treatments

In addition to the above amendments, improvements to the following accounting standard (under the
annual improvements 2015 - 2017 cycle) has also been adopted:
IFRS 3 & - Business Combinations & Joint Arrangements - When an entity obtains control
IFRS 11 of a business that is a joint operation, it is required to remeasure previously held
interests in that business.
IAS 12 - Income Taxes - Income tax consequences of dividends should be recognised in
profit or loss, regardless how the tax arises.
IAS 23 - Borrowing Costs - If any specific borrowing remains outstanding after the related
asset is ready for its intended use or sale, that borrowing becomes part of the
funds that an entity borrows generally when calculating the capitalisation rate on
general borrowings.
The adoption of the above amendments and improvements to accounting standards did not have
any material effect on the financial statements. The analysis of changes introduced by IFRS 16 is
explained below:
Impact on adoption of IFRS 16
IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a

Lease,SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions
Involving the Legal Form of a Lease. The standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to account for all leases
under a single on-balance sheet model.
Lessor accounting under IFRS 16 is substantially unchanged under IAS 17. Lessors continue to
classify leases as either operating or finance leases using similar principles as in IAS 17. Therefore,
IFRS 16 did not have an impact on the Company for leases where the Company is the lessor.
The Company adopted IFRS 16 using the modified retrospective method of adoption with the date
of initial application of 1 July 2019. Under this method, the standard is applied retrospectively with
the cumulative effect of initially applying the standard recognized at the date of initial application.
The Company elected to use the transition practical expedient allowing the standard to be applied
only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of
initial application. The Company also elected to use the recognition exemptions for lease contracts
that, at the commencement date, have a lease term of 12 months or less and do not contain a
purchase option (‘short-term leases’), and lease contracts for which the underlying asset is of low
value (‘low-value assets’).
The adoption of IFRS 16 did not have material impact on the amounts recognized in the statement
of financial position, statement of profit or loss, statement of cash flows or earnings per share as
the Company does not have any operating lease contract which is not short term or of immaterial
value.
4.2 Standards, Interpretations and amendments to approved accounting standards that are not yet
effective:
The following amendments to the approved accounting and reporting standards, applicable in
Pakistan, would be effective from the dates mentioned below against the respective standards and
interpretation have not been adopted early by the Company:

Effective date (annual
Standard or Interpretation periods beginning on
or after)
IAS 1 & Presentation of Financial Statements & Accounting Policies, 01 January 2020
IAS 8 Changes in Accounting Estimates and Errors: Definition of
Material, to clarify the definition of material and its alignment
with the definition used in the Conceptual Framework
(amendments)
IAS 1 Presentation of Financial Statements to clarify how to classify 01 January 2022
debt and other liabilities as current or non-current.
IFRS 3 Business combinations to clarify the definition of business 01 January 2020
The amendment updates a reference in IFRS 3 to the
Conceptual Framework for Financial Reporting without
changing the accounting requirements for business
combinations.
IFRS 4 Insurance contracts to clarify extension of the Temporary 01 January 2023
Exemption from Applying IFRS 9 defers the fixed expiry date
of the following temporary exemptions from applying IFRS 9
to annual periods beginning on or after January 01, 2023.
IFRS 9 Financial Instruments to clarify the requirements for hedge 01 January 2020
accounting to support the provision of useful financial
information during the period of uncertainty caused by the
phasing out of interest-rate benchmarks such as interbank
offered rates (IBORs) on hedge accounting.
IFRS 10 & Consolidated Financial Statements & Investment in Associates Not yet finalized
IAS 28 and Joint Ventures - Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture – (Amendment)
IAS 16 Property, plant and equipment to clarify the prohibition on an 01 January 2022
entity from deducting from the cost of an item of property, plant
and equipment any proceeds from selling items produced while
bringing that asset to the location and condition necessary
for it to be capable of operating in the manner intended by
management. Instead, an entity recognizes the proceeds from
selling such items, and the cost of producing those items, in
profit or loss.
IAS 37 Provisions, contingent liabilities and contingent assets 01 January 2022
to specify which costs should be included in an entity’s
assessment whether a contract will be loss-making.
The above new amendments to standards and interpretations are not expected to have any material
impact on the Company’s financial statements in the period of initial application.
In addition to the above new standards and amendments to standard and interpretations, The
IASB has also issued the revised Conceptual Framework for Financial Reporting (the Conceptual
Framework) in March 2018 which is effective for annual periods beginning on or after January 01,
2020 for preparers of financial statements who develop accounting policies based on the Conceptual
Framework. The revised Conceptual Framework is not a standard, and none of the concepts override
those in any standard or any requirements in a standard. The purpose of the Conceptual Framework
is to assist IASB in developing standards, to help preparers develop consistent accounting policies
if there is no applicable standard in place and to assist all parties to understand and interpret the
standards.

In addition to the above new standards and amendments to standard and interpretations,
improvements to various accounting standards have also been issued by the IASB in May 2020.
Such improvements are generally effective for accounting periods beginning on or after 01 January
2020. The Company expects that such improvements to the standards will not have any material
impact on the Company’s financial statements in the period of initial application.
Further, the following new standards have been issued by IASB which are yet to be notified by
the Securities and Exchange Commission of Pakistan (SECP) for the purpose of applicability in
Pakistan.
IASB effective date

(annual
Standard
periods beginning on or
after)
IFRS 1 - First time adoption of International Financial 01 July 2009
Reporting Standards
IFRS 17 - Insurance Contracts 01 January 2023
The Company expects that the adoption of the above revision, amendments and interpretation of
the standards will not affect the Company’s financial statements in the period of initial application.
5 SUMMARY OF 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, except as
explained in note 4.1.
5.1 Property, plant and equipment
Owned assets
Property, plant and equipment are stated at cost less accumulated depreciation except freehold
land and leasehold land, which are stated at cost less impairment losses, if any. Cost comprises
acquisition and other directly attributable costs.
Depreciation is provided on a reducing balance method and charged to statement of profit or loss
to write off the depreciable amount of each asset over its estimated useful life at the rates specified
in note 6.1. Depreciation on addition in property, plant and equipment is charged from the month of
addition while no depreciation is charged in the month of disposal.
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will
flow to the Company and its cost can be measured reliably. The carrying amount of the replaced
part is derecognized, if any. The costs of the day-to-day servicing of property, plant and equipment
are recognized in statement of profit or loss as incurred.
Gains and losses on disposal of an item of property, plant and equipment are determined by
comparing the proceeds from disposal with the carrying amount of property, plant and equipment,
and are recognized in the statement of profit or loss.
The Company reviews the useful life and residual value of property, plant and equipment on a regular
basis. Any change in estimates in future years might affect the carrying amounts of the respective
items of property, plant and equipment with a corresponding effect on depreciation charge.

Capital work-in-progress
Capital work-in-progress is stated at cost accumulated up to the statement of financial position date
less accumulated impairment losses, if any. Capital work-in-progress is recognized as an operating
fixed asset when it is made available for intended use.
5.2 Investment property
Property held for capital appreciation and rental yield, which is not in the use of the Company
is classified as investment property. Investment property comprises of land. The Company has
adopted cost model for its investment property using the same basis as disclosed for measurement
of the Company’s owned assets.
5.3 Intangible assets
Intangible assets (including computer software) acquired by the Company are stated at cost less
accumulated amortization and impairment losses, if any.
Subsequent expenditure on capitalized intangible assets is capitalized only when it increases the
future economic benefits embodied in the specific assets to which it relates. All other expenditures
are expensed as incurred.
Amortization is charged to statement of profit or loss on straight line basis over a period of five years.
Amortization on addition is charged from the date the asset is put to use while no amortization is
charged from the date the asset is disposed off.
5.4 Investment in subsidiary and associated companies
Investments in subsidiaries and associates are recognized at cost less impairment loss, if any.
Whenever indicators of impairment occurs, the recoverable amounts are estimated to determine the
extent of impairment losses, if any, and carrying amounts of investments are adjusted accordingly.
Impairment losses are recognized as expense. Where impairment losses subsequently reverse, the
carrying amounts of the investments are increased to the revised recoverable amounts but limited to
the extent of initial cost of investments. A reversal of impairment loss is recognized in the statement
of profit or loss.
5.5 Stores, spares and loose tools
Stores, spares and loose tools are valued at lower of weighted average cost and net realizable value,
less provision for impairment, if any. Items in transit are valued at cost accumulated to reporting
date. Provision for obsolete and slow moving stores, spares and loose tools is determined based
on management estimate regarding their future usability.
5.6 Stock in trade
Stock-in-trade is stated at the lower of cost and net realizable value, except waste which is valued
at net realizable value. Cost is arrived at on a weighted average basis. Cost of work-in-process
and finished goods include cost of raw materials and appropriate portion of production overheads.
Net realizable value is the estimated selling price in the ordinary course of business less cost of
completion and selling expenses.
5.7 Trade debts and other receivables
Trade debts and other receivables are recognized and carried at original invoice amount less
expected credit losses (ECL) as explained in note 5.19.1 (d).

5.8 Cash and cash equivalents
Cash and cash equivalents are carried in the statement of financial position at cost. For the purpose
of cash flow statement, cash and cash equivalents consist of cash-in-hand and balances with
banks, net of temporary overdrawn bank balances.
5.9 Borrowings
Borrowings are initially recorded at the proceeds received. In subsequent periods, borrowings are
stated at amortized cost using the effective interest rate (EIR) method. Finance costs are accounted
for on an accrual basis and are included in current liabilities to the extent of the amount remaining
unpaid.
5.10 Employee benefits
Defined benefit plan

The Company operates an unfunded gratuity scheme for its eligible permanent employees as per
terms of employment who have completed minimum qualifying period of service as defined under
the scheme.
The cost of providing benefits is determined using the projected unit credit method, with actuarial
valuation being carried out at each reporting date. The amount arising as a result of remeasurement
are recognized in the statement of financial position immediately, with a charge or credit to other
comprehensive income in the periods in which they occur.
The liability recognized in the statement of financial position in respect of defined benefit plan is the
present value of defined benefit obligation at the end of reporting period.
Defined Contribution Plan

The Company operates an approved contributory provident fund for its eligible permanent employees
as per terms of employment for which contributions are charged to income for the year.
The Company and the employees make equal monthly contributions to the fund at the rate of 8.33%
of basic salary. The assets of the fund are held separately under the control of trustees.
5.11 Trade and other payables
Liabilities for trade and other amounts payable are measured at cost which is the fair value of the
consideration to be paid in future for goods and services received, whether or not billed to the
Company.
5.12 Taxation
Current year
The charge for current taxation is based on taxable income at the current rate of taxation after taking
into account applicable tax credits, rebates and exemptions available, if any. However, for income
covered under final tax regime, taxation is based on applicable tax rates under such regime.
Deferred tax
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 recognized for all taxable temporary differences and deferred
tax assets are recognized to the extent that it is probable that taxable profits will be available against
which the deductible temporary differences, unused tax losses and tax credits can be utilized.

The carrying amount of all deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part
of the deferred tax assets to be utilized. Deferred tax is calculated at the rates that are expected
to apply for the year when the differences reverse based on tax rates that have been enacted or
substantively enacted by the reporting date. Deferred tax is charged or credited in the statement
of profit or loss, except in the case of items credited or charged to other comprehensive income or
equity in which case it is included in other comprehensive income or equity.
The Company assesses at each reporting date whether its income is subject to tax under the Final
Tax Regime or normal provision of the Income Tax Ordinance, 2001. It considers turnover trend of
last three years as well as expected pattern of taxation of furture years in order to recognize deferred
tax.
5.13 Dividend and appropriation to reserves
Dividend and appropriation to reserves are recognized in the financial statements in the period in
which they are approved by the shareholders and therefore, they are accounted for as non-adjusting
post balance sheet event.
5.14 Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a
result of past events, it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and reliable estimate of the amount can be made. Provisions are
reviewed at each reporting date and adjusted to reflect the current best estimate.
5.15 Revenue recognition
Sale of goods
The Company’s contracts with customers for the sale of goods generally include one performance
obligation for both local and export sales i.e. provision of goods to the customers.
(a) Local Sales
The revenue from sale of goods is recognized at the point in time when control of the goods is
transferred to the customer, generally on dispatch of products from the mill.
(b) Export Sales
The revenue from sale of goods is recognized at the point in time when control of the goods
is transferred to the customer, dependent on the related inco-terms generally on date of bill
of lading or delivery of the product to the port of destination. Therefore, export sales are
recognized upon clearance of shipment at port of discharge.
Rendering of services
The Company provides garments stitching and fabric processing services to local customers. These
services are sold separately and the Company’s contract with the customer for services constitute a
single performance obligation.
Revenue from services is recognized at the point in time, generally on dispatch of the stitched/
processed fabric from the factory. There are no terms giving rise to variable consideration under the
Company’s contracts with its customers.

Other sources of revenue
Return on bank balances is accrued on a time proportion basis by reference to the principal
outstanding and the applicable rate of return.
Dividend income and entitlement of bonus shares are recognized when right to receive such dividend
and bonus shares is established.
Revenue against scrap sales is recognized when control is transferred to customer. Consideration
is always received at the time of delivery.
All other income items are recognized on accrual basis.
5.16 Borrowing cost
Borrowing costs are recognized as an expense in the period in which these are incurred except
to the extent of borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset. Such borrowing costs are capitalized as part of the cost of that
asset up to the date of its commencing.
5.17 Foreign currency transactions and translation
Foreign currency transactions are translated into Pak Rupees using the exchange rates prevailing at
the dates of the transactions. All monetary assets and liabilities in foreign currencies are translated
into Pak Rupees at the rates of exchange prevailing at the reporting date. Foreign exchange gains
and losses on translation are recognized in the statement of profit or loss. All non-monetary items
are translated into Pak Rupees at exchange rates prevailing on the date of transaction or on the date
when fair values are determined.
5.18 Impairment
The carrying amount of the Company’s assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If such indications exist, the asset’s recoverable
amount is estimated in order to determine the extent of the impairment loss, if any. Impairment loss
is recognized as expense in the statement of profit or loss.
5.19 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity
5.19.1 Financial assets
a) Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized
cost, fair value through other comprehensive income (OCI), and fair value through profit or
loss.
The classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Company’s business model for managing them.
With the exception of trade receivables that do not contain a significant financing component
or for which the Company has applied the practical expedient, the Company initially measures
a financial asset at its fair value plus, in the case of a financial asset not at fair value through
profit or loss, transaction costs. Trade receivables that do not contain a significant financing
component or for which the Company has applied the practical expedient are measured at
the transaction price determined under IFRS 15, Revenue from Contracts with Customers.

In order for a financial asset to be classified and measured at amortized cost or fair value
through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and
interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the
SPPI test and is performed at an instrument level.
The Company’s business model for managing financial assets refers to how it manages its
financial assets in order to generate cash flows. The business model determines whether
cash flows will result from collecting contractual cash flows, selling the financial assets, or
both.
Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the market place (regular way trades) are recognized
on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
b) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Financial assets at amortized cost (debt instruments)

- Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt
instruments)
- Financial assets designated at fair value through OCI with no recycling of cumulative gains
and losses upon derecognition (equity instruments)
- Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
The Company measures financial assets at amortised cost if both of the following conditions
are met:
i) The financial asset is held within a business model with the objective to hold financial assets
in order to collect contractual cash flows, and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortized cost are subsequently measured using the EIR method and are
subject to impairment. Gains and losses are recognized in profit or loss when the asset is
derecognized, modified or impaired.
The Company’s financial assets at amortized cost includes long term deposits, trade debts,
loan to employees, trade deposits and other receivables.
Financial assets at fair value through OCI (debt instruments)
The Company measures financial assets at fair value through OCI if both of the following
conditions are met:
i) The financial asset is held within a business model with the objective of both holding to collect
contractual cash flows and selling, and
solely payments of principal and interest on the principal amount outstanding

For debt instruments at fair value through OCI, interest income, foreign exchange revaluation
and impairment losses or reversals are recognized in the statement of profit or loss and
computed in the same manner as for financial assets measured at amortized cost. The
remaining fair value changes are recognized in OCI. Upon derecognition, the cumulative fair
value change recognized in OCI is recycled to profit or loss.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Company can elect to classify irrevocably its equity investments
as equity instruments designated at fair value through OCI when they meet the definition of
equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The
classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. The Company
transfers the gain / loss on investments disposed off to unappropriated profit within equity.
Dividends are recognized as other income in the statement of profit or loss when the right of
payment has been established, except when the Company benefits from such proceeds as
a recovery of part of the cost of the financial asset, in which case, such gains are recorded in
OCI. Equity instruments designated at fair value through OCI are not subject to impairment
assessment.
Based on business model of the Company, it elected to classify irrevocably its equity
investments under this category.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading,
financial assets designated upon initial recognition at fair value through profit or loss, or financial
assets mandatorily required to be measured at fair value. Financial assets are classified as
held for trading if they are acquired for the purpose of selling or repurchasing in the near
term. Derivatives, including separated embedded derivatives, are also classified as held for
trading unless they are designated as effective hedging instruments. Financial assets with
cash flows that are not solely payments of principal and interest are classified and measured
at fair value through profit or loss, irrespective of the business model. Notwithstanding the
criteria for debt instruments to be classified at amortized cost or at fair value through OCI, as
described above, debt instruments may be designated at fair value through profit or loss on
initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial
position at fair value with net changes in fair value recognized in the statement of profit or
loss.
A derivative embedded in a hybrid contract, with a financial liability or non-financial host,
is separated from the host and accounted for as a separate derivative if the economic
characteristics and risks are not closely related to the host; a separate instrument with the
same terms as the embedded derivative would meet the definition of a derivative; and the
hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are
measured at fair value with changes in fair value recognized in profit or loss. Reassessment
only occurs if there is either a change in the terms of the contract that significantly modifies
the cash flows that would otherwise be required or a reclassification of a financial asset out of
the fair value through profit or loss category.
A derivative embedded within a hybrid contract containing a financial asset host is not
accounted for separately. The financial asset host together with the embedded derivative is
required to be classified in its entirety as a financial asset at fair value through profit or loss.

c) Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized (i.e., removed from the Company’s statement of
financial position) when:
i) The rights to receive cash flows from the asset have expired, or
ii) The Company has transferred its rights to receive cash flows from the asset or has assumed
an obligation to pay the received cash flows in full without material delay to a third party under
a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all
the risks and rewards of the asset, or (b) the Company has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has
entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained
the risks and rewards of ownership. When it has neither transferred nor retained substantially
all of the risks and rewards of the asset, nor transferred control of the asset, the Company
continues to recognize the transferred asset to the extent of its continuing involvement. In
that case, the Company also recognizes an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the
Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the maximum amount
of consideration that the Company could be required to repay.
d) Impairment of financial assets
The Company recognizes an allowance for expected credit losses (ECLs) for all debt
instruments not held at fair value through profit or loss. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows
that the Company expects to receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms.
ECLs are recognized in two stages. For credit exposures for which there has not been a
significant increase in credit risk since initial recognition, ECLs are provided for credit losses
that result from default events that are possible within the next 12-months (a 12-month ECL).
For those credit exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected over the remaining
life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables, the Company applies a simplified approach in calculating ECLs.
Therefore, the Company does not track changes in credit risk, but instead recognizes a loss
allowance based on lifetime ECLs at each reporting date. The Company has established a
provision matrix that is based on its historical credit loss experience, adjusted for forward-
looking factors specific to the debtors and the economic environment.
For debt instruments at fair value through OCI, the Company applies the low credit risk
simplification. At each reporting date, the Company evaluates whether the debt instrument
is considered to have low credit risk using all reasonable and supportable information that is
available without undue cost or effort. In making that evaluation, the Company reassesses the
internal credit rating of the debt instrument. In addition, the Company considers that there has
been a significant increase in credit risk when contractual payments are more than 30 days
past due.

The Company considers a financial asset in default when contractual payments are 30 days
past due. However, in certain cases, the Company may also consider a financial asset to
be in default when internal or external information indicates that the Company is unlikely
to receive the outstanding contractual amounts in full before taking into account any credit
enhancements held by the Company. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
5.19.2 Off-setting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount is reported in the statement of financial
position when there is a legally enforceable right to offset the recognized amounts and there is an
intention to settle either on a net basis, or to realize the asset and settle the liability simultaneously.
5.19.3 Derivative financial instruments
The Company designates derivative financial instruments as either cash flow hedge or fair value
hedge.
a) Cash flow Hedges
The effective portion of the gain or loss on the hedging instrument is recognized in OCI
in the cash flow hedge reserve, while any ineffective portion is recognized immediately in
the statement of profit or loss. The cash flow hedge reserve is adjusted to the lower of the
cumulative gain or loss on the hedging instrument and the cumulative change in fair value of
the hedged item.

The Company designates only the spot element of forward contracts as a hedging instrument.
The forward element is recognized in OCI and accumulated in a separate component of equity
under cost of capital reserve.
The amounts accumulated in OCI are accounted for, depending on the nature of the underlying
hedged transaction. If the hedged transaction subsequently results in the recognition of a non-
financial item, the amount accumulated in equity is removed from the separate component of
equity and included in the initial cost or other carrying amount of the hedged asset or liability.
This is not a reclassification adjustment and will not be recognized in OCI for the period. This
also applies where the hedged forecast transaction of a non-financial asset or non-financial
liability subsequently becomes a firm commitment for which fair value hedge accounting is
applied.
For any other cash flow hedges, the amount accumulated in OCI is reclassified to profit or
loss as a reclassification adjustment in the same period or periods during which the hedged
cash flows affect profit or loss.
b) Fair value hedges
The change in the fair value of a hedging instrument is recognized in the statement of profit or
loss as other expense. The change in the fair value of the hedged item attributable to the risk
hedged is recorded as part of the carrying value of the hedged item and is also recognized in
the statement of profit or loss as other expense.
For fair value hedges relating to items carried at amortized cost, any adjustment to carrying
value is amortized through profit or loss over the remaining term of the hedge using the EIR
method. The EIR amortization may begin as soon as an adjustment exists and no later than
when the hedged item ceases to be adjusted for changes in its fair value attributable to the
risk being hedged.

If the hedged item is derecognized, the unamortized fair value is recognized immediately in
profit or loss.
When an unrecognized firm commitment is designated as a hedged item, the subsequent

cumulative change in the fair value of the firm commitment attributable to the hedged risk is
recognized as an asset or liability with a corresponding gain or loss recognized in profit or
loss.
5.19.4 Financial liabilities
Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through
profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments
in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs.
The Company’s financial liabilities include trade and other payables, unclaimed dividend, loans and
borrowings including bank overdrafts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading
and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of
repurchasing in the near term.
Gains or losses on liabilities held for trading are recognized in the statement of comprehensive
income. Financial liabilities designated upon initial recognition at fair value through profit or
loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are
satisfied. The Company has not designated any financial liability as at fair value through profit
or loss.
b) Financial liabilities at amortized cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortized cost using the Effective interest rate (EIR) method.
Gains and losses are recognized in statement of profit and loss when the liabilities are
derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortization is included as
finance costs in the statement of comprehensive income.
This category generally applies to the liabilities as disclosed in Note 46.5.

5.20 Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is,
if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
Company as lessee
Company applies a single recognition and measurement approach for all leases, except for short-
term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease
payments and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e. the
date the underlying asset is available for use). Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized,
dismantling cost, initial direct costs incurred, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognized in the statement of financial position immediately
before the date of initial application. Right-of-use assets are depreciated on a straight-line basis
over the shorter of the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost
reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life
of the asset. The right-of-use assets are also subject to impairment.
Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option reasonably
certain to be exercised by the Company and payments of penalties for terminating the lease, if the
lease term reflects the Company exercising the option to terminate. Variable lease payments that do
not depend on an index or a rate are recognized as expenses (unless they are incurred to produce
inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses implicit rates available in the
lease agreements, however, in case the interest rate implicit in the lease is not readily determinable,
the Company uses incremental borrowing rate at the lease commencement date.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term, a change in the lease payments
(e.g. changes to future payments resulting from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an option to purchase the underlying asset.

Company as lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental
to ownership of an asset are classified as operating leases. Rental income arising is accounted for
on a straight-line basis over the lease terms and is included in revenue in the statement of profit
or loss and other comprehensive income due to its operating nature. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying amount of the leased
asset and recognized over the lease term on the same basis as rental income. Contingent rents are
recognized as revenue in the period in which they are earned.
5.20.1 Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of
buildings (i.e., those leases that have a lease term of 12 months or less from the commencement
date and do not contain a purchase option). Lease payments on short-term leases and leases of
low-value assets are recognized as expense on a straight-line basis over the lease term. During the
year, the Company has recognized an amount of rent expense, in the statement of profit or loss,
representing charge for short-term leases.
5.21 Earnings per share - basic and diluted
The Company presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic
EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company
by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary shareholders of the Company and
the weighted average number of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares.
5.22 Related party transactions
All transactions with related parties are carried out by the Company at arms’ length. Nature of the
related party relationship as well as information about the transactions and outstanding balances
are disclosed in the relevant notes to the financial statements.
Note 2020 2019

Rupees Rupees
6. PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 6.1 12,286,441,128 12,209,645,502
Capital work-in-progress 6.6 832,850,234 385,578,201
13,119,291,362 12,595,223,703

72
6.1 Operating fixed assets
2020
Land Buildings on free - hold land Buildings on lease - hold land
Labour, staff Labour, staff Leased

Plant and Electric Fire fighting Electric Office Mills Furniture and
Free - hold Lease - hold Factory building colony and Office building Factory building colony and building Computer Vehicles Total
machinery installation equipment equipment equipment equipment fixtures
others others improvements
Rupees

Balance as at 1 July 2019
Cost 324,259,058 115,038,377 2,971,927,465 521,522,713 420,773,248 322,715,156 97,496,346 89,436,813 15,080,441,541 544,577,843 26,470,720 114,017,748 91,049,673 42,183,079 107,109,148 78,744,634 223,390,474 21,171,154,036
Accumulated depreciation - - (1,177,802,201) (168,324,243) (74,432,381) (216,466,512) (32,313,662) (65,007,785) (6,654,093,842) (252,855,884) (7,091,962) (36,926,212) (61,125,191) (31,326,063) (49,655,676) (31,745,600) (102,341,321) (8,961,508,534)
Net book value 324,259,058 115,038,377 1,794,125,264 353,198,470 346,340,867 106,248,644 65,182,684 24,429,028 8,426,347,699 291,721,959 19,378,758 77,091,536 29,924,482 10,857,016 57,453,472 46,999,034 121,049,153 12,209,645,502
For the year ended

30 June 2020
Additions 31,036,499 184,697,710 73,768,902 - 913,750 - - 984,214,021 33,354,989 2,629,700 47,705,629 9,730,324 - 8,909,010 40,055,353 35,778,171 1,452,794,058
Disposals:
- Cost - - - - - - - - 289,504,573 - - - 922,874 - - - 37,165,560 327,593,007
- Depreciation - - - - - - - - (194,383,740) - - - (728,437) - - - (15,460,865) (210,573,042)
- - - - - - - - 95,120,833 - - - 194,437 - - - 21,704,695 117,019,965
Depreciation for the year - - (188,929,314) (20,070,107) (17,317,043) (10,670,552) (3,259,134) (4,885,805) (920,145,843) (31,358,777) (2,104,775) (11,722,374) (10,636,873) (1,085,702) (6,469,514) (5,997,196) (24,325,457) (1,258,978,466)
355,295,557 115,038,377 1,789,893,660 406,897,265 329,023,824 96,491,842 61,923,550 19,543,223 8,395,295,044 293,718,171 19,903,683 113,074,791 28,823,496 9,771,314 59,892,968 81,057,191 110,797,172 12,286,441,128
Balance as at 30 June 2020
Cost 355,295,557 115,038,377 3,156,625,175 595,291,615 420,773,248 323,628,906 97,496,346 89,436,813 15,775,150,989 577,932,832 29,100,420 161,723,377 99,857,123 42,183,079 116,018,158 118,799,987 222,003,085 22,296,355,087
Net book value 2020 355,295,557 115,038,377 1,789,893,660 406,897,265 329,023,824 96,491,842 61,923,550 19,543,223 8,395,295,044 293,718,171 19,903,683 113,074,791 28,823,496 9,771,314 59,892,968 81,057,191 110,797,172 12,286,441,128
Depreciation rate % per

- - 10 5 5 10 5 20 10 10 10 10 30 10 10 10 20
annum
2019

Plant and Electric Fire fighting Electric Office Mills Furniture and
Free - hold Lease - hold Factory building colony and Office building Factory building colony and building Computer Vehicles Total
machinery installation equipment equipment equipment equipment fixtures
Rupees
Cost 324,259,058 115,038,377 2,190,884,787 430,900,360 403,323,748 315,446,843 88,607,683 89,436,813 14,165,368,516 509,302,988 19,902,818 68,272,927 79,970,954 40,906,781 98,169,445 68,587,385 358,761,271 19,367,140,754
Net book value 324,259,058 115,038,377 1,143,050,195 277,266,140 347,058,677 110,659,252 59,412,806 30,536,285 7,948,804,495 284,756,861 14,526,968 36,510,724 27,926,291 10,712,614 54,615,039 41,385,333 197,315,277 11,023,834,392
For the year ended

30 June 2019
Additions - - 781,042,678 90,622,353 17,449,500 7,268,313 8,888,663 - 1,514,057,567 35,849,684 6,567,902 46,244,821 12,862,294 1,276,298 8,939,703 10,157,249 40,041,670 2,581,268,695
Disposals:
- Cost - - - - - - - - 598,984,542 574,829 - 500,000 1,783,575 - - - 175,412,467 777,255,413
- Depreciation - - - - - - - - (448,912,208) (560,277) - (494,808) (1,299,706) - - - (88,769,618) (540,036,618)
- - - - - - - - 150,072,334 14,552 - 5,192 483,869 - - - 86,642,849 237,218,795
Depreciation for the year - - (129,967,609) (14,690,023) (18,167,310) (11,678,921) (3,118,785) (6,107,257) (886,442,029) (28,870,034) (1,716,112) (5,658,817) (10,380,234) (1,131,896) (6,101,270) (4,543,548) (29,664,945) (1,158,238,790)
324,259,058 115,038,377 1,794,125,264 353,198,470 346,340,867 106,248,644 65,182,684 24,429,028 8,426,347,699 291,721,959 19,378,758 77,091,536 29,924,482 10,857,016 57,453,472 46,999,034 121,049,153 12,209,645,502
Cost 324,259,058 115,038,377 2,971,927,465 521,522,713 420,773,248 322,715,156 97,496,346 89,436,813 15,080,441,541 544,577,843 26,470,720 114,017,748 91,049,673 42,183,079 107,109,148 78,744,634 223,390,474 21,171,154,036
Net book value 2019 324,259,058 115,038,377 1,794,125,264 353,198,470 346,340,867 106,248,644 65,182,684 24,429,028 8,426,347,699 291,721,959 19,378,758 77,091,536 29,924,482 10,857,016 57,453,472 46,999,034 121,049,153 12,209,645,502

- - 10 5 5 10 5 20 10 10 10 10 30 10 10 10 20
annum
6.2 Freehold lands of the Company are located at Sheikhupura, Kasur and Lahore with an area of 1,099,016 (2019: 1,077,327) square yards and leasehold lands of the Company are located
at Kotri, Nooriabad and Karachi with an area of 435,964 (2019: 435,964) square yards.
6.3 Freehold land includes Rs.80.685 million (2019: Rs. 80.685 million) representing the Company’s 30% share of jointly controlled property located at Block-D/1, Gulberg, Lahore, registered
in the name of the Company along with Sapphire Fibres Limited, Diamond Fabrics Limited, and Sapphire Finishing Mills Limited (Associated Companies).
Annual Report 2020

73
6.4 The depreciation charge for the year has been allocated as follows:
Note 2020 2019
Rupees Rupees
Cost of sales 31 1,218,364,009 1,114,315,358
Distribution cost 32 1,388,726 2,425,329
Administrative expenses 33 39,225,730 41,498,103
1,258,978,465 1,158,238,790
6.5 Particulars of disposed operating fixed assets during the year, having book value of five hundred thousand rupees
or more are as follows:
Accumulated Net Book Sale Profit / Particulars of Buyers
Cost Mode of disposal
Depreciation Value Proceeds (loss) / Relationship (if any)
Rupees
Plant and Machinery
R.A Engineering Services (Private)

Gas generator 104,490,065 59,031,569 45,458,495 16,812,000 (28,646,495) Negotiation
Limited
Auto coro open end machine 26,699,603 21,840,764 4,858,839 7,000,000 2,141,161 - - - - do - - - - A.R.Textile
Auto coro open end machine 16,770,074 14,529,210 2,240,864 4,393,046 2,152,182 - - - - do - - - - Lyallpur Textiles
Slub device 3,741,579 3,134,625 606,954 606,954 - - - - - do - - - - Lyallpur Textiles
Auto coro open end machine 11,984,352 10,050,009 1,934,343 3,500,000 1,565,657 - - - - do - - - - Combined Spinning (Private) Limited
Auto coro open end machine 25,759,462 20,256,521 5,502,941 7,000,000 1,497,059 - - - - do - - - - Multan Spinning Mills
Auto coro open end machine 8,696,729 7,455,945 1,240,784 2,500,000 1,259,216 - - - - do - - - - Noor Tex
Loptex sorter machine 14,073,537 10,773,517 3,300,020 3,350,000 49,980 - - - - do - - - - Nadeem Textile Mills Limited
Vortex MVS machines 30,999,479 18,087,672 12,911,806 14,500,000 1,588,194 - - - - do - - - - H.A.R Textile Mills Limited
Loptex sorter machine 8,975,089 6,038,679 2,936,409 2,945,455 9,046 - - - - do - - - - Abdullah Fibres (Private) Limited
Chemtronics Water Services (Private)
Water treatment machine 1,800,000 725,800 1,074,200 1,100,000 25,800 - - - - do - - - -
Limited
Chain grate, coal firing system machines 5,955,052 990,027 4,965,025 4,307,785 (657,240) - - - - do - - - - Prime Oil And Ghee Mills Limited
Steam boiler machine 12,000,000 5,882,524 6,117,476 7,300,000 1,182,524 - - - - do - - - - M.A. Oils Private Limited
271,945,020 178,796,863 93,148,157 75,315,240 (17,832,917)
Vehicles - Sold to employees
Suzuki Swift 1,463,000 663,486 799,514 799,514 - As per Company Policy Mr. Sami Ud Din
Honda Civic 2,353,000 745,640 1,607,360 1,607,360 - - - - - do - - - - Mr. Alam Zeb Burki
Suzuki Cultus 1,250,000 425,000 825,000 825,000 - - - - - do - - - - Mr. Adnan Younus
Suzuki Cultus 1,250,000 350,000 900,000 900,000 - - - - - do - - - - Mr. Zain-Ul-Abideen
Suzuki Cultus 1,099,000 555,068 543,932 543,932 - - - - - do - - - - Mr. Zahid Siddique
Honda Civic 2,353,000 857,538 1,495,462 1,495,462 - - - - - do - - - - Mr. Muhammad Sohaib Khan
Suzuki Swift 1,418,000 866,228 551,772 551,772 - - - - - do - - - - Mr. Muhammad Irfan Akhtar
Toyota Corolla 1,880,500 906,986 973,514 973,514 - - - - - do - - - - Mr. Faisal Arif
Honda Civic 2,403,000 698,472 1,704,528 1,704,528 - - - - - do - - - - Mr. Sarmad Munir
Suzuki Cultus 1,250,000 527,500 722,500 722,500 - - - - - do - - - - Mr. Faisal Nazir
16,719,500 6,595,918 10,123,582 10,123,582 -
Vehicles - Sold to third parties
Toyota Corolla 2,379,000 198,250 2,180,750 2,425,000 244,250 Negotiation Mr. Muhammad Asif Ashraf
Honda City 1,804,000 263,584 1,540,416 1,854,000 313,584 - - - - do - - - - Ms. Samreen Sajid
Toyota Fortuner 6,230,500 1,574,240 4,656,260 4,901,250 244,990 - - - - do - - - - Mr. Malik Taimur Ali Noon
Suzuki Swift 1,327,000 627,759 699,241 1,100,000 400,759 - - - - do - - - - Mr. Waqas Dilawar
Suzuki Swift 1,463,000 708,742 754,258 1,200,000 445,742 - - - - do - - - - Mr. Naveed Ahmed Khan
13,203,500 3,372,575 9,830,925 11,480,250 1,649,325
Other assets having book value

25,724,987 21,807,686 3,917,301 5,947,710 2,030,409
less than Rs.500,000
2020 327,593,007 210,573,042 117,019,965 102,866,782 (14,153,183)
2019 777,255,413 540,036,617 237,218,795 228,050,702 (9,168,093)

Note 2020 2019
Rupees Rupees
6.6 Capital work-in-progress
Civil works and buildings 167,976,421 154,608,429

Plant and machinery 6.6.1 660,175,499 184,923,436
Electric installation 543,314 44,904,336
Mills equipment 4,155,000 -
Computer - 642,000
Advance for vehicles - 500,000
832,850,234 385,578,201
6.6.1 Additions to capital work in progress include borrowing cost aggregating Rs.11,199,800 (2019:
Rs.419,125) at the borrowing rate of 2.75% to 14.65% (2019:2.50%) per annum.
6.7 Movement of capital work-in-progress during the year is as follows:
Additions Transferred to
01 July 2019 during the operating fixed 30 June 2020
year assets
Rupees
Particulars
Civil works and buildings 154,608,429 269,731,144 (256,363,152) 167,976,421

Plant and machinery 184,923,436 1,432,067,491 (956,815,428) 660,175,499
Electric installation 44,904,336 840,652 (45,201,674) 543,314
Mills equipment - 4,310,000 (155,000) 4,155,000
Computer 642,000 939,444 (1,581,444) -
Advance for vehicles 500,000 16,278,650 (16,778,650) -
385,578,201 1,724,167,381 (1,276,895,348) 832,850,234
2020 2019
Rupees Rupees
7 INVESTMENT PROPERTY
Freehold land 31,750,000 31,750,000
7.1 This represents free-hold land situated at Raiwind Road, Lahore having an area of 5,000 square
yards.
7.2 Fair value of the investment property, based on the estimation was Rs.70 million (2019: Rs. 45
million)

Note 2020 2019

Rupees Rupees
8 INTANGIBLE ASSETS
(Computer software)
Net carrying value as at 01 July 2019

Net book value as at July 01 627,039 2,035,188
Amortization during the year 8.1 (418,706) (1,408,149)
Net book value as at 30 June 2020 208,333 627,039
Gross carrying value as at 30 June 2020
Cost 24,992,360 24,992,360

Accumulated amortization (24,784,027) (24,365,321)
Net book value as at 30 June 2020 208,333 627,039
Amortization rate % per annum 20 20
8.1 Amortization expense for the year has been charged to other operating expenses.
9 LONG TERM INVESTMENTS

Related parties - at cost:
Subsidiaries - unlisted 9.1 9,522,423,070 9,630,113,070

Associates - listed 9.2 8,461,851 8,461,851
- unlisted 9.3 467,514,425 467,514,425
475,976,276 475,976,276
Other companies - Fair value through other

9.4 3,614,599,820 4,150,418,072
comprehensive income
13,612,999,166 14,256,507,418

9.1 Investments in subsidiary companies - unlisted
2020 2019 Note 2020 2019

No. of Shares Name of Company Rupees Rupees
228,228,737 228,228,737 Sapphire Wind Power 9.1.1 2,282,287,370 2,282,287,370

Company
Limited (SWPCL)
Equity Interest Held 70%

(2019: 70%)
- 10,000 Sapphire Tech (Private) Limited
9.1.2 - 100,000
(2019: 100%)
Less: Impairment charged - (100,000)
- -
- 1,000 Sapphire Solar (Private)
Limited

9.1.2 - 10,000
(2019: 100%)
Less: Impairment charged - (10,000)
- -
200,000,000 200,000,000 Sapphire Retail Limited 2,000,000,000 2,000,000,000
(2019: 100%)
475,051,500 475,051,500 Triconboston Consulting 9.1.1 5,224,375,700 5,224,375,700

Corporation (Private) Limited
(TBCL)
Equity Interest Held 57.125%

(2019: 57.125%)
- 1,234,500 Sapphire Renewables Limited

9.1.2 - 123,450,000
(2019: 100%)
673,780 - Sapphire International ApS 9.1.3 15,760,000 -

(2019: Nil)
9,522,423,070 9,630,113,070
9.1.1 The shares of SWPCL and TBCL held by the Company are under pledge as a security for debt
finance arrangement for the wind energy project of SWPCL and TBCL respectively.

9.1.2 On 29 October 2019, the Board of Directors of the Company passed a resolution approving a
Scheme of Amalgamation under Section 284 of the Companies Act, 2017, to amalgamate its wholly
owned subsidiaries, Sapphire Solar (Private) Limited (SSPL), Sapphire Tech (Private) Limited (STPL)
and Sapphire Renewables Limited (SRL) with and into the Company. As such, as of the completion
date of 31 December 2019, the entire undertaking of SSPL, STPL and SRL stands merged with and
into the Company. As a result the entire business of SSPL, STPL and SRL including its properties,
assets, liabilities and rights and obligations vested into the Company. Since SSPL, STPL, SRL were
group companies under common control, the merger has been accounted for as a common control
transaction. The acquired net assets of SSPL, STPL and SRL are included in the financial statements
of the Company at the same carrying values as recorded in SSPL’s, STPL’s and SRL’s own financial
statements as on 31 December 2019. The results and the statement of financial position of SSPL,
STPL and SRL are consolidated prospectively from the date of merger.
Under merger accounting, the carrying values of the assets and liabilities of the parties to the
combination are as follows:
Carrying value on the date of merger Total

SSPL STPL SRL
Rupees
Assets
Deposits and other receivables - - 6,827,900 6,827,900
Cash at bank 22,618 90,690 7,578,929 7,692,237
Income tax recoverable - - 442,260 442,260
22,618 90,690 14,849,089 14,962,397
Liabilities
Accrued and other liabilities 80,170 140,170 - 220,340
Short term loans 2,500,662 138,738 - 2,639,400
Withholding sales tax payable - - 91,640 91,640
2,580,832 278,908 91,640 2,951,380
Net assets acquired (2,558,214) (188,218) 14,757,449 12,011,017
Reconciliation of the net assets acquired to amount transferred to reserves is as follows:
Amount
Rupees
Net assets acquired 12,011,017

Less: Investment in subsidiaries (123,450,000)
(111,438,983)
Short term loan receivable - written off 2,639,400

Net loss transferred to reserves (108,799,583)

9.1.3 The Company has incorporated a wholly owned subsidiary for the facilitation of its exports. Its
registered address is Petersen Søgade 15, 1. th. 6000 Kolding, Denmark.
2020 2019 2020 2019

9.2 Investments in associates - listed

Reliance Cotton Spinning Mills
313,295 313,295 8,461,851 8,461,851
Limited
(2019: 3.04%)
9.3 Investments in associates - unlisted
4,234,500 4,234,500 Sapphire Power Generation Limited 113,705,500 113,705,500

(2019: 26.43%)
6,000,000 6,000,000 Sapphire Electric Company Limited 60,000,000 60,000,000

(2019: 1.42%)
10,000 10,000 Sapphire Holding Limited 100,000 100,000

(2019: 0.05%)
23,500,000 23,500,000 Sapphire Dairies (Private) Limited 235,000,000 235,000,000

(2019: 21.36%)
Foreign Company - Creadore A/S

3,675 3,675 58,708,925 58,708,925
Denmark
Beneficial ownership: Sapphire Textile
Mills Limited - 49% (2019: 49%)
and Beirholm holding A/S Nordager
20, 6000 Kolding,
Denmark- 51% (2019: 51%)
467,514,425 467,514,425

9.4 Other companies - Fair value through other comprehensive income
2020 2019 Note 2020 2019

Quoted - conventional
4,061,840 4,061,840 MCB Bank Limited 217,880,150 217,880,150
Fair value adjustment 440,422,259 490,707,838
658,302,409 708,587,988
29,623,714 29,623,714 Habib Bank Limited 5,926,153,798 5,926,153,798

Fair value adjustment (3,056,504,623) (2,570,971,950)
2,869,649,175 3,355,181,848
Unquoted
Novelty Enterprises
7,055,985 7,055,985
(Private) Limited 9.4.1 86,148,236 86,148,236
TCC Management
50,000 50,000
Services (Private) Limited 500,000 500,000
3,614,599,820 4,150,418,072
9.4.1 This represents 12.5% equity interest in Novelty Enterprises (Private) Limited, a privately held
entity. The investee company has not yet commenced its operations accordingly fair value of the
investment cannot be determined. However, based on the latest available financial statements, the
management is of the view that there are no indications of impairment and the carrying amount has
been considered equal to the fair value.
9.4.2 The Company has pledged 3.332 million (2019: 2.832 million) shares of MCB Bank Limited, 0.150
million (2019: 1 million) shares of Engro Corporation Limited, 12.906 million (2019: 18.906 million)
shares of Bank Al-Habib Limited and 27.177 million (2019: 21.177 million) shares of Habib Bank
Limited with various financial institutions for arrangement of finance facilities.
9.4.3 The Company has pledged 4.407 million (2019: 4.407 million) shares of Engro Corporation Limited,
7.200 million (2019: 9.2 million) shares of Bank Al-Habib Limited, 0.730 million (2019: 1.230 million)
shares of MCB Bank Limited and 2.447 million (2019: 2.447 million) shares of Habib Bank Limited
and Nil (2019: 30.183 million) shares of K- Electric Limited with Standard Chartered Bank as
security for issuance of standby letter of credit amounting to US $ 8.791 million in favour of a
financial institution for Debt Service Reserve support for TBCL (2019: US $ 11.300 million in favour
of a financial institutions for contingency support in TBCL in accordance with Sponsors Support
agreement).

Note 2020 2019
Rupees Rupees
10 LONG TERM LOANS AND ADVANCES
Loan to employees - unsecured

10.1 46,163,175 51,343,927
(considered good)
Advance for land 65,500,000 84,500,000
111,663,175 135,843,927
10.1 Loan to employees - unsecured (considered good)
Loans to employees 10.1.1 70,855,954 78,281,393

Current portion of loans shown under current
15 (24,692,779) (26,937,466)
assets
46,163,175 51,343,927
10.1.1 These represent interest free loans provided to executives and permanent employees for various
purposes in accordance with the terms of employment. These loans are secured against retirement
benefits payable to the executives / employees on resignation / retirement. These are recoverable in
equal monthly instalments. The fair value adjustment in accordance with the requirements of IFRS
9 ‘Financial Instruments’ arising in respect of long term loans is not considered material and hence
not recognized.
11 LONG TERM DEPOSITS
Security deposits
WAPDA 85,830,588 85,830,588
SNGPL 1,097,000 1,097,000
Others 11.1 756,504 981,504
87,684,092 87,909,092
11.1 It includes an amount of Rs.36,000 (2019: Rs.36,000) deposit with Yousuf Agencies (Private) Limited
- related party.
12 STORES, SPARES AND LOOSE TOOLS
Stores 233,006,325 198,542,639

Spares - in hand 215,245,013 188,427,624
Spares - in transit 77,157,422 71,764,713
292,402,434 260,192,337
Loose tools 593,715 547,686
526,002,473 459,282,662
Less: Provision for slow moving stores, spares
12.1 (54,628,399) (65,469,942)
and loose tools
471,374,075 393,812,720

Note 2020 2019

Rupees Rupees
12.1 Provision for slow moving stores, spares and

loose tools
Balance at the beginning of the year 65,469,942 55,806,634

(Reversal) / provision made during the year - net 34/35 (10,841,543) 9,663,308
Balance at the end of the year 54,628,399 65,469,942
13 STOCK IN TRADE
Raw material - in hand 31.1 6,208,117,180 5,132,990,550

Raw material - in transit 95,424,152 268,530,903
6,303,541,332 5,401,521,453
Work in process 31 638,708,853 589,256,549
Finished goods 1,918,914,557 1,460,392,852
Waste 49,747,419 30,796,400
31 1,968,661,976 1,491,189,252
8,910,912,161 7,481,967,254
13.1 Stock in trade include items valued at Net Realizable value (NRV). The write down to NRV amounting
Rs.481.878 million (2019: Rs. Nil) has been recognized in cost of goods sold. Detail of cost and NRV
is as follows.
Cost
Raw material 4,395,019,840 -

Finished goods 545,151,568 -
Firm commitments against stock in transit 784,043,303 -
5,724,214,710 -
Net Realizable value
Raw material 4,013,188,697 -
5,242,336,836 -

Note 2020 2019
Rupees Rupees
14 TRADE DEBTS
Considered good
Foreign debts 14.1 249,688,542 547,412,695
Considered good
Domestic debts 14.2 & 14.3 2,486,991,685 1,609,750,052
Waste 28,043,192 24,324,356
Others 18,048,075 16,405,701
2,533,082,952 1,650,480,109
Considered doubtful 36,773,217 36,505,865
Less: Provision for expected credit loss 14.4 (36,773,217) (36,505,865)
2,533,082,952 1,650,480,109
2,782,771,494 2,197,892,804
14.1 Foreign debts includes an amount of Rs. 6,651,238 (2019: Rs. Nil) from Sapphire International Aps,
a related party, against export sales.
14.2 Domestic debts includes an amount of Rs.567,469,863 (2019: Rs.402,577,494) receivable against
indirect export sales.
14.3 Due from related parties- Domestic debts
Diamond Fabrics Limited 6,013,426 1,547,426

Sapphire Fibres Limited 620,024 -
Reliance Cotton Spinning Mills Limited - 468,180
Sapphire Finishing Mills Limited 203,140,815 129,618,265
Sapphire Retail Limited 737,817,914 734,068,164
947,592,179 865,702,035
14.3.1 The aging of trade debts receivable from related parties as at reporting date is as follows:
Neither past
Total amount
due nor Past due but not impaired
receivable
impaired
0-30 days 31-60 days 61-90 days 91-180 days 181-360 days
Rupees
30 June 2020 947,592,179 361,859,683 180,549,174 134,675,618 107,678,067 162,751,798 77,840
14.3.2Maximum amount due from related parties during the year, calculated by reference to month-end
balances, was Rs.1,507,302,859 (2019: Rs.1,677,704,456).

Note 2020 2019

Rupees Rupees
14.4 Provision for expected credit loss

Charged during the year 34 267,352 -
Written off during the year - (7,836,532)
Recovered during the year - (583,412)
15 LOANS AND ADVANCES
Advances
- Unsecured-Considered good
to suppliers 27,044,201 38,903,397
to contractors - 989,134
27,044,201 39,892,531
Loans
Current portion of long term loans to employees
Short term loans to employees 10.1 24,692,779 26,937,466
5,145,349 5,558,580
Short term loans to subsidiaries
- Sapphire Solar (Private) Limited (subsidiary) - 2,500,662
Less: Impairment - (2,500,662)
- Sapphire Tech (Private) Limited (subsidiary) - 138,738
Less: Impairment - (138,738)
- -
56,882,329 72,388,577
16 TRADE DEPOSITS AND SHORT TERM PREPAYMENTS
Security deposits 22,789,000 4,065,140

Prepayments 2,136,374 2,623,544
24,925,374 6,688,684

Note 2020 2019
Rupees Rupees
17 OTHER RECEIVABLES
Claims receivable 8,143,153 -

Deposits with High Court 19,430,291 19,430,291
Export rebate receivable 67,859,558 99,244,147
Receivable against sale of fixed assets 10,797,272 80,841,307
Receivable from Triconboston Consulting

Corporation (Private) Limited (subsidiary) 17.1 739,347,345 721,482,301
Receivable from Sapphire Wind Power Company
Limited (subsidiary) against shared expenses - 406,800
Rent receivable 90,000 -
Interest receivable - 494,795
845,667,618 921,899,641
17.1 It includes an amount of Rs.709.347 million (2019: Rs. 691.482 million) receivable against technical
services and Rs. 30.000 million (2019: Rs. 30.000 million) representing receivable balance transferred
to the Company from the subsidiary’s previous sponsor at the time of its acquisition. This is interest
free and un-secured.
18 SHORT TERM INVESTMENTS
Advance for Term Finance Certificates (TFCs) - 50,000,000
Investments at fair value through other

comprehensive income (FVOCI) 18.1 2,956,225,380 3,980,717,707
2,956,225,380 4,030,717,707
18.1 Investments at fair value through other comprehensive

income (FVOCI) comprises of:
Debt instruments at fair value through other

comprehensive income (FVOCI) 18.1.1 49,000,000 53,443,295
Equity instruments at fair value through other
comprehensive income (FVOCI) 18.1.2 2,907,225,380 3,927,274,412
2,956,225,380 3,980,717,707

18.1.1 Debt instruments at fair value through other comprehensive income (FVOCI)
2020 2019 Particulars 2020 2019 2020 2019

Cost Carrying value
Number of
Certificates Rupees
HBL Term Finance

500 - Certificates (a) 50,000,000 - 49,000,000 -
Sales tax refund
- 602 bonds - 60,200,000 - 53,443,295
50,000,000 60,200,000 49,000,000 53,443,295
(a) This represents 500 TFCs of HBL having par value of Rs.100,000 and aggregated value of
Rs.50,000,000. TFCs issued are rated, listed, unsecured, subordinated, perpetual, non-cumulative,
contingent convertible, additional Tier-1, capital eligible and having green shoe option.
18.1.2 Equity instruments at fair value through other comprehensive income (FVOCI)
2020 2019 2020 2020 2019

No. of Shares Name of Company Cost Fair value
Rupees
26,985,346 28,105,846 Bank Al-Habib Limited 1,105,332,382 1,411,333,596 2,202,936,210

(Refer to note 9.4.2
and 9.4.3)
4,574,007 5,947,370 Engro Corporation 1,293,345,025 1,339,818,130 1,579,621,472
(Pakistan) Limited (Refer to
note 9.4.2 and 9.4.3)
113,000 - Engro Fertilizer Limited 6,981,529 6,811,640 -
- 72,000 Pakistan State Oil Limited - - 12,213,360
30,183,000 30,183,000 K Electric Limited 260,805,385 90,850,830 132,503,370
808,000 - Meezan Bank Limited 70,864,861 55,630,800 -
26,900 - United Bank Limited 4,093,970 2,780,384 -
2,741,423,152 2,907,225,380 3,927,274,412
972,295 972,295 Gulshan Spinning Mills 17,441,370 - -
Limited
2,758,864,522 2,907,225,380 3,927,274,412

Note 2020 2019
Rupees Rupees
19 TAX REFUNDS DUE FROM GOVERNMENT
Income tax - net 19.1 1,066,819,158 1,017,180,322

Sales tax receivable 624,534,807 524,303,681
Less: provision against doubtful sales tax
19.2 (324,969,127) (288,528,348)
refunds
299,565,680 235,775,333
1,366,384,838 1,252,955,655
19.1 Income tax - net
Advance income tax / refundable 1,489,327,475 1,666,028,099
Provision for taxation 19.1.1 (422,508,317) (648,847,777)
1,066,819,158 1,017,180,322
19.1.1 Provision for taxation
Provision for the year 422,616,472 401,846,952
1,071,464,249 878,469,086
Less: Advance tax adjusted during the year
against completed assessments (648,955,932) (229,621,309)
422,508,317 648,847,777
19.2 Provision against doubtful sales tax refunds

Provision made during the year 36,440,779 153,522,284
20 CASH AND BANK BALANCES

Cash in hand 2,071,975 1,517,000
Bank balances
Local Currency
Current 7,397,946 43,365,855
Saving 20.1 37,643,605 34,498,339
45,041,551 77,864,194
Foreign currency-current accounts
USD 20.2 20,427,212 16,657,349
EURO 20.3 - 720,648
20,427,212 17,377,997
67,540,738 96,759,191

20.1 Balances with banks carry profit at the rate ranging from 6.5% to 11.25% (2019: 8% to 12%) per
annum.
20.2 Cash at bank on USD account was US$ 121,410 (2019: US $ 101,569).
20.3 Cash at bank on EURO account was Nil (2019: EURO 3,867).
21 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
2020 2019 2020 2019

No. of Shares Rupees Rupees
Ordinary shares of Rs.10 each

allotted for consideration
7,813,391 6,206,740 paid in cash 78,133,910 62,067,400
13,876,400 13,876,400 issued as bonus shares 138,764,000 138,764,000
21,689,791 20,083,140 216,897,910 200,831,400
21.1 Numerical movement in the number of shares is as follows:
2020 2019
Numbers Numbers
Opening number of shares 6,206,740 6,206,740

Number of shares issued against right issue 1,606,651 -
Closing number of shares 7,813,391 6,206,740
21.2 The Company has only one class of shares which carry no right to fixed income.
21.3 6,716,144 (2019: 6,215,349) shares of the Company are held by associated companies as at the
reporting date.
Note 2020 2019

Rupees Rupees
22 RESERVES
Capital reserves 22.1 (1,616,425,752) (1,043,541,449)
Revenue reserves 22.2 17,876,075,789 17,224,790,391
16,259,650,037 16,181,248,942
22.1 Composition of capital reserves is as follows:
Share Premium 22.1.1 782,796,090 156,202,200

Fixed Assets Replacement Reserve 22.1.2 65,000,000 65,000,000
Unrealized loss on investments at
fair value through OCI 22.1.3 (2,451,280,135) (1,264,743,649)
Unrealized loss on forward foreign exchange contracts (12,941,707) -
(1,616,425,752) (1,043,541,449)

22.1.1 This reserve can be utilized by the Company only for the purposes specified in section 81 of the
Companies Act, 2017.
22.1.2 This reserve represents funds set aside for the purchase of fixed assets in the future.
22.1.3 This represents the unrealized loss on re-measurement of investments at fair value through OCI.
Note 2020 2019

Rupees Rupees
22.2 Composition of revenue reserves is as follows:
General reserves 22.2.1 1,330,000,000 1,330,000,000

Unappropriated profit 22.2.2 16,546,075,789 15,894,790,391
17,876,075,789 17,224,790,391
22.2.1 This represents appropriation of profit in past years to meet future contingencies.
22.2.2 This represents the level of unrestricted funds available for general use and distribution among the
shareholders.
23 LONG TERM FINANCING
Loans from banking companies - secured
Allied Bank Limited 23.1 3,295,808,372 2,832,884,395

Bank Alfalah Limited - Related Party 23.2 999,147,248 499,905,000
Bank Al Habib Limited 23.3 1,616,922,462 1,838,740,792
Faysal Bank Limited 23.4 71,285,000 95,006,000
Habib Bank Limited 23.5 7,335,590,333 7,821,197,334
MCB Bank Limited 23.6 23,716,000 -
United Bank Limited 23.7 1,166,829,293 1,170,626,000
14,509,298,708 14,258,359,521
Less: Current portion shown under current liabilities (736,989,866) (2,001,251,085)
13,772,308,842 12,257,108,436
23.1 These loans carry mark-up ranging from 2.50% to 14.20% (2019: 2.50% to 11.43%) obtained in
different tranches and are repayable in quarterly instalments ranging from 8 to 32. These loans are
secured against exclusive hypothecation charge of Rs.2,965 million (2019: Rs.2,659 million) over
specific plant and machinery and pledge of shares of various companies held by the Company as
disclosed in note 9.4.2 having market value of Rs.1,171.583 million (2019: Rs.838.077 million) as on
reporting date.
23.2 These loans carry mark-up of 2.50% to 2.75% (2019: 2.50%) obtained in different tranches and are
repayable in quarterly instalments ranging from 16 to 32. These loans are secured against exclusive
hypothecation charge of Rs.1,352.95 million (2019: Rs.588.240 million) over specific plant and
machinery.

different tranches and are repayable in 32 quarterly instalments. These loans are secured against
exclusive hypothecation charge of Rs.328 million (2019: Rs.328 million) over specific plant and
machinery and pledge of shares of various companies held by the Company as disclosed in note
9.4.2 having market value Rs.2,044.940 million (2019: Rs.1,631.120 million) as on reporting date.
exclusive hypothecation charge of Rs.228.033 million (2019: Rs.228.033 million) over specific plant
and machinery.
different tranches and are repayable in quarterly instalments ranging from 4 to 32. These loans
are secured against exclusive hypothecation charge of Rs.9,211.730 million (2019: Rs.8,544.773
million) over specific plant and machinery and pledge of shares of various companies held by the
Company as disclosed in note 9.4.2 having market value Rs.674.976 million (2019: Rs.1,037.288
million) as on reporting date.
23.6 These loans carry mark-up at the rate of 2.50% (2019: Nil) obtained in different tranches and are
repayable in 32 quarterly instalments. These loans are secured against exclusive hypothecation
charge of Rs.27.901 million (2019: Nil) over specific plant and machinery.
23.7 These loans carry mark-up at the rate of 2.50% (2019: 2.50%) obtained in different tranches and
are repayable in 32 quarterly instalments. These loans are secured against exclusive hypothecation
charge of Rs.1,463 million (2019: Rs. 1,425 million) over specific plant and machinery.
Note 2020 2019

Rupees Rupees
24 DEFERRED LIABILITIES
Deferred taxation 24.1 - 236,675,636

Staff retirement benefits - gratuity 24.2 297,609,788 272,908,701
297,609,788 509,584,337
24.1 Deferred taxation
In view of applicability of presumptive tax regime on taxable income for the current and previous
tax year and expected pattern of chargeability of Company’s income to tax in the same manner,
deferred tax liability has been reversed in the financial statements.

Note 2020 2019
Rupees Rupees
24.2 Staff retirement benefits
Movement in the net liability recognized

in the statement of financial position
Opening net liability 272,908,701 225,857,306

Expense for the year in profit and loss 24.2.1 148,493,559 109,967,518
Remeasurement recognized in other
comprehensive income (51,412,524) 8,535,640
369,989,736 344,360,464
Benefits paid during the year (72,379,948) (71,451,763)
Closing net liability 297,609,788 272,908,701
24.2.1 Expense recognized in the statement of profit or loss
Current service cost 114,761,140 92,855,690

Interest cost 33,732,419 17,111,828
148,493,559 109,967,518
Movement in the present value of defined benefit obligation
Present value of defined benefit obligation 272,908,701 225,857,306

Interest cost 33,732,419 17,111,828
Actuarial (gain) / loss (51,412,524) 8,535,640
Benefits paid (72,379,948) (71,451,763)
297,609,788 272,908,701
2020 2019 2018 2017 2016

Rupees
Historical information
Present value of defined

benefit obligation 297,609,788 272,908,701 225,857,306 200,339,674 250,766,027
Experience adjustments
on plan liabilities 51,412,524 (8,535,640) (13,604,382) 7,398,992 9,965,376

- Expected gratuity expenses charged to profit and loss for the year ending 30 June 2021 works out
to Rs.131,417,555.
- The weighted average duration of defined benefit obligation is 5 years.
General description
The scheme provides for terminal benefits for all of its permanent employees who attain the
minimum qualifying period. Annual charge is made using the actuarial technique of Projected Unit
Credit Method. Latest actuarial valuation was carried out on 30 June 2020.
2020 2019
% %
Principal actuarial assumptions
Following are a few important actuarial assumption

used in the valuation:
Discount rate 8.50 14.25

Expected rate of increase in salary 7.50 13.25
Average age of employees 32.1 years 31.6 years

Mortality rates (for death in service) SLIC (2001-05) SLIC (2001-05)
Sensitivity analysis for actuarial assumptions
The calculation of defined benefit obligation is sensitive to assumptions given above. The below
information summarizes the amount of defined benefit obligation at the end of the reporting period
if there is a change in respective assumptions by 100 basis point.
Increase in Decrease in
assumptions assumptions
Rupees in ‘000
Discount rate 282,330 315,061
Increase in future salaries 316,347 280,859

Note 2020 2019
Rupees Rupees
25 TRADE AND OTHER PAYABLES
Creditors 25.1 1,006,008,344 714,556,613

Accrued liabilities 2,167,383,421 2,059,619,157
Workers' profit participation fund 25.2 62,057,316 99,005,254
Workers' welfare fund 360,614,852 346,498,561
Infrastructure fee 25.3 276,097,189 215,818,411
Payable to provident fund 8,028,146 3,115,242
Unrealized loss on remeasurement of forward
currency contracts 17,947,173 -
Others 800,000 3,975,204
3,898,936,441 3,442,588,442
25.1 These balances include the following amounts
due to related parties:
Amer Cotton Mills (Private) Limited 201,393 17,499
Diamond Fabrics Limited 22,176 -
Reliance Cotton Spinning Mills Limited 45,118,193 -
Sapphire Fibres Limited 6,934,076 4,949,420
Sapphire Finishing Mills Limited 91,493,188 142,548
143,769,026 5,109,467
25.2 Workers’ profit participation fund
Allocation for the year 34 62,057,316 99,005,254

Interest on funds utilized in the Company's
36
business 2,402,298 719,673
64,459,614 99,724,927
163,464,868 158,754,265
Less: Payments during the year (101,407,552) (59,749,011)
Balance at the end the year 62,057,316 99,005,254
25.3 It includes Rs.275,207,157 (2019: Rs.214,406,369) representing provision recognised against

disputed infrastructure fee levied by the Government of Sindh through Sindh Finance (Amendment)
Ordinance, 2001. The Company has contested this issue in the Sindh High Court (the High Court).
The High Court in its judgment dated 15 September 2008 partly accepted the appeal by declaring
the levy and collection of infrastructure fee prior to 28 December 2006 as illegal and ultra vires and
afterward as legal. The Company filed an appeal in the Supreme Court against this judgement.
Additionally, the Government of Sindh also filed appeal for the part of judgement decided against
them.

The above appeals were disposed off in May 2011 with a joint statement of the parties that, during
the pendency of the appeals, another law come into existence which was not subject matter in the
appeal, therefore, the decision thereon be first obtained from the High Court before approaching
the Supreme Court with the right to appeal. Accordingly, the petition was filed in the High Court
in respect of the above view. During the pendency of this appeal an interim arrangement was
agreed whereby bank guarantees furnished for consignments cleared upto 27 December 2006
were returned and bank guarantees were furnished for 50% of the levy for consignment released
subsequent to 27 December 2006 while payment was made against the balance amount. Similar
arrangement continued for the consignments released during the current year.
As at 30 June 2020, the Company has provided bank guarantees aggregating Rs.274.823 million
(2019: Rs.214.823 million) in favour of Excise and Taxation Department.
26. CONTRACT LIABILITIES
26.1 It includes advances received from Creadore A/S Denmark amounting Rs.24,179,553 (2019: Rs.
45,117,361).
26.2 The contract liabilities outstanding at 30 June 2019 have been recognized as revenue during the
year.
Note 2020 2019
Rupees Rupees
27 ACCRUED INTEREST / MARK-UP
Accrued interest / mark-up on secured:

- long term financing 209,788,226 170,362,670
- short term borrowings 151,434,062 150,061,296
361,222,288 320,423,966
27.1 Accrued mark-up includes an amount of Rs.15,569,438 (2019: Rs.9,637,049) due to Bank Alfalah
Limited - related party.
28 SHORT TERM BORROWINGS
Short term loans 3,682,792,190 5,009,967,750

Running finance under mark-up arrangements 4,353,842,308 2,549,697,785
28.1 8,036,634,498 7,559,665,535
Bank overdrafts 28.2 33,938,460 -

Loan from related parties 28.3 - 237,843,000
8,070,572,958 7,797,508,535
28.1 Aggregate facilities amounting to Rs.19,495 million (2019: Rs.15,662 million) were available to the
Company from banking companies. These are secured against hypothecation charge on stock in
trade, book debts, export bills under collection and pledge of shares. These carry mark up ranging
2.25% to 14.81% (2019: 2.15% to 13.30%) on local currency loans per annum payable monthly
/ quarterly. These facilities are renewable on various expiry dates. Short term borrowing includes
amounting Rs.1,047 million (2019: Rs.814 million) due to Bank Alfalah Limited (related party).

Total unfunded facilities available to the company aggregate to Rs.18,964 million (2019: Rs.11,846
million) out of which the amount remained unutilized at the year-end was Rs.14,120 million (2019:
Rs.8,320 million). These facilities are secured against lien on shipping documents, hypothecation
charge on current assets of the Company, cash margins and pledge of shares.
28.2 This represents issuance of cheques in excess of balance at bank accounts.
28.3 It includes loans received from related parties, which are interest free, unsecured and payable by the
entity on demand. Details of the parties are as follows:
Note 2020 2019

Rupees Rupees
Loan from Directors and their spouses - 148,140,000

Loan from major shareholders - 19,443,000
Loan from associated companies - 70,260,000
- 237,843,000
29 CONTINGENCIES AND COMMITMENTS
Contingencies
29.1 Guarantees issued by banks on behalf of the Company 702,400,369 617,943,587
29.2 Post dated Cheques have been issued to Collector of Customs as an indemnity to adequately
discharge the liabilities for taxes and duties leviable on imports. As at 30 June 2020 the value of
these cheques amounted to Rs.1,391.363 million (2019: Rs.720.484 million).
29.3 A commercial bank has issued a guarantee amounting Rs.45 million in favour of excise and taxation
department of Government of Sindh on behalf of Sapphire Wind Power Company Limited (subsidiary
company) against charge of Rs.60 million on fixed assets of the Company.
29.4 Also refer to content of note 9.4.2 and 9.4.3.

29.5 Commitments
Commitments in respect of confirmed

letter of credit 29.5.1 2,306,194,325 1,055,047,702
Commitments in respect of capital expenditure 29.5.2 28,927,239 128,731,342
Commitments in respect of forward foreign
352,443,189 -
currency contracts
2,687,564,754 1,183,779,044
29.5.1 Confirmed letter of credit in respect of:
- plant and machinery 470,885,640 297,630,174

- raw material 1,752,672,334 706,206,126
- stores and spares 82,636,351 51,211,402
2,306,194,325 1,055,047,702

29.5.2 This includes commitments for payments to be made for to various construction companies for the
construction and extension on existing building at multiple plants of the Company.
30 NET TURNOVER
Export Sales Local Sales Total
Note 2020 2019 2020 2019 2020 2019
Rupees
Yarn 30.2 11,954,237,418 13,255,163,103 4,012,514,180 1,427,087,011 15,966,751,598 14,682,250,114
Fabric 30.3 10,715,373,459 10,842,110,780 999,797,207 563,725,987 11,715,170,666 11,405,836,767
Home textile products 5,769,494,876 5,183,496,486 115,644,765 117,765,718 5,885,139,641 5,301,262,204
Raw material - - 100,024,559 29,873,566 100,024,559 29,873,566
Waste 30.4 199,973,684 179,230,548 317,259,594 267,546,934 517,233,278 446,777,482
Processing income - - 1,995,067,920 2,243,606,323 1,995,067,920 2,243,606,323
28,639,079,437 29,460,000,917 7,540,308,225 4,649,605,539 36,179,387,662 34,109,606,456
Export rebate and duty drawback 507,580,498 160,828,378
Less: sales tax (2,656,781,872) (17,682,777)
34,030,186,288 34,252,752,057
30.1 Revenue is recognised at point in time as per the terms and conditions of underlying contracts with
customers.
2020 2019
Rupees Rupees
30.2 Export sales - Yarn
Direct export 4,559,377,181 4,676,488,557

In-direct export 7,394,860,237 8,578,674,546
11,954,237,418 13,255,163,103
30.3 Export sales - Fabric
Direct export 7,339,764,196 8,059,404,814

In-direct export 3,375,609,263 2,782,705,966
10,715,373,459 10,842,110,780
30.4 Export waste sales represent comber noil sales.
30.5 Exchange loss due to currency rate fluctuations relating to export sales amounting to Rs.79.253
million (2019: gain of Rs.77.652 million) has been included in export sales.

Note 2020 2019
Rupees Rupees
31 COST OF SALES
Raw material consumed 31.1 20,411,274,110 20,441,921,666

Packing material consumed 475,654,063 433,831,982
Stores and spares consumed 958,791,245 918,861,102
Salaries, wages and benefits 31.2 3,714,363,587 3,514,144,126
Fuel, power and water 2,060,837,544 2,212,273,630
Other manufacturing expenses 31.3 526,734,110 701,221,384
Repair and maintenance 76,483,143 63,008,830
Vehicle running expenses 35,742,291 40,582,373
Travelling and conveyance 31,366,964 41,318,644
Insurance expenses 31,885,732 27,719,223
Rent, rates and taxes 2,204,133 15,551,558
Fees and subscription 18,290,801 6,567,026
Communication expenses 19,108,477 15,114,005
Printing and stationery 1,210,115 955,284
Legal and professional charges 1,281,277 568,308
Depreciation 6.4 1,218,364,009 1,114,315,358
Miscellaneous expenses 2,591,979 4,691,425
29,586,183,580 29,552,645,924
Work in process
Opening stock 589,256,549 478,749,878
Closing stock 13 (638,708,853) (589,256,549)
(49,452,304) (110,506,671)
Cost of goods manufactured 29,536,731,276 29,442,139,253
Finished goods
Opening stock 1,491,189,252 850,821,494
Closing stock 13 (1,968,661,976) (1,491,189,252)
(477,472,724) (640,367,758)
Cost of goods sold - manufactured 29,059,258,552 28,801,771,495
Cost of raw material sold 31.4 136,236,602 45,247,572
29,195,495,154 28,847,019,067
31.1 Raw material consumed
Opening balance 5,132,990,550 4,045,463,922

Purchases 21,486,400,740 21,529,448,294
26,619,391,290 25,574,912,216
Closing stock 13 (6,208,117,180) (5,132,990,550)
20,411,274,110 20,441,921,666
31.2 Salaries, wages and benefits include Rs.148,493,559 (2019: Rs.109,967,518) in respect of post
employment benefits - gratuity and Rs.32,307,658 (2019: Rs.27,299,161) in respect of provident
fund contribution.

Note 2020 2019

Rupees Rupees
31.3 Other manufacturing expenses
Cotton dyeing, bleaching and bale pressing charges 156,073,108 179,369,514

Yarn dyeing and bleaching charges 21,224,897 47,647,855
Fabric dyeing, bleaching, knitting and processing charges 60,883,124 66,244,055
Weaving and yarn doubling charges 103,764,645 48,831,353
Stitching, spinning and other charges 82,960,791 90,614,042
Embroidery charges 101,827,545 268,514,565
526,734,110 701,221,384
31.4 It includes salaries, wages and benefits, insurance and finance cost amounting Rs.1,205,457 (2019:
Rs.400,421), Rs.2,410,913 (2019: Rs.800,842) and Rs.12,054,567 (2019: Rs.4,004,210) respectively.
32 DISTRIBUTION COST
On export sales
Export development surcharge 43,537,687 45,441,414
Insurance 5,855,415 7,313,037
Commission 204,057,762 254,905,801
Ocean freight and forwarding 382,453,727 380,184,579
635,904,591 687,844,831
On local sales
Inland freight and handling 53,292,081 53,179,803
Commission 47,069,859 53,010,756
100,361,940 106,190,559
Other distribution cost
Salaries and benefits 32.1 203,223,297 173,721,218
Rent and utilities 344,937 161,397
Communication 14,619,634 13,515,578
Travelling, conveyance and entertainment 70,650,939 65,859,323
Insurance expenses 194,052 323,405
Repair and maintenance 3,982,151 394,530
Samples and advertising 3,484,940 11,842,377
Exhibition expenses 11,637,033 10,822,151
Printing and stationery 391,156 398,603
Depreciation 6.4 1,388,726 2,425,329
313,420,757 290,042,544
1,049,687,288 1,084,077,934
32.1 Salaries and benefits include Rs.8,055,912 (2019: Rs.6,640,620) in respect of provident fund
contribution.
Note 2020 2019
Rupees Rupees
33 ADMINISTRATIVE EXPENSES
Directors' remuneration 50,520,000 45,600,000

Directors' meeting fee 450,000 300,000
Rent, rates and utilities 19,371,517 18,040,850
Communication 10,892,705 11,989,461
Printing and stationery 3,407,087 5,302,492
Motor vehicle expenses 15,949,864 15,627,262
Insurance expense 2,367,929 2,675,486
Legal and professional charges 9,387,804 3,413,253
Computer expenses 7,990,867 6,224,475
Advertisement 240,815 136,630
Depreciation 6.4 39,225,730 41,498,103
Others 252,000 360,218
447,254,813 428,051,718
contribution.
34 OTHER OPERATING EXPENSES

Auditors' remuneration 34.1 2,568,900 2,231,850
Donations 34.2 31,590,176 12,067,030
Amortization of intangible assets 8.1 418,706 1,408,149
Provision for stores, spares and loose tools 12.1 - 9,663,308
Provision against doubtful sales tax refundable 19.2 36,440,779 153,522,284
Realized loss on forward currency contracts 18,331,482 -
Allowance for expected credit loss 6.5 267,352 -
Loss on sale of fixed assets 14,153,183 9,168,093
Exchange loss on foreign currency accounts 329,561 -
192,873,482 347,188,591

Note 2020 2019

Rupees Rupees
34.1 Auditors’ remuneration
Audit fee 1,698,900 1,618,000

Half yearly review fee 444,150 423,000
Code of corporate governance review fee 85,850 85,850
Tax consultancy fee 200,000 -
Other certification / services 140,000 105,000
2,568,900 2,231,850
34.2 Donations to following organisation are greater than 10% of total donations i.e. Rs.3,159,018 (2019:
Rs.1,206,703) of the Company.
The Kidney Centre Post Graduate

Training Institute - 1,250,000
Network of Organisations Working for
People with Disabilities Pakistan (NOWPDP) - 1,500,000
Abdullah Foundation 34.2.1 23,185,000 2,300,000
23,185,000 5,050,000
34.2.1 The Directors of the Company who have interest in Abdullah Foundation (donee) are following.
Name of director Interest in donee Name and address of donee
Mr. Mohammad Abdullah Director

Mr. Shahid Abdullah Director
Abdullah Foundation, 312, Cotton Exchange
Mr. Nadeem Abdullah Director
Building,I.I. Chundrigar Road, Karachi.
Mr. Amer Abdullah Director
Mr. Yousuf Abdullah Director

Note 2020 2019
Rupees Rupees
35 OTHER INCOME
Income from financial assets

Dividend income
- from other companies 447,930,334 397,359,558
- from subsidiary and associated companies 167,546,540 317,870,640
615,476,874 715,230,198
Mark-up income on loans to subsidiaries - 12,822,179

Exchange gain on foreign currency accounts - 3,541,393
Exchange gain on translation of receivable 17,865,044 -
Interest income on saving account and bonds 10,398,801 2,835,359
643,740,719 734,429,129
Income from non-financial assets

Reversal of stores, spares and loose tools 12.1 10,841,543 -
Credit balance written-back - 6,883,216
Rental income 600,000 600,000
Technical services - 691,482,301
Scrap sales [Net of sales tax aggregating
Rs.14.752 million (2019: Rs.9.783 million)] 66,004,411 51,626,400
77,445,954 750,591,917
721,186,673 1,485,021,046
36 FINANCE COST
Interest / mark-up on :
- short term finances 794,232,615 838,361,165
- long term loans 1,302,855,080 1,049,341,278
- Workers' Profit Participation Fund 25.2 2,402,298 719,673
2,099,489,993 1,888,422,116
Bank charges, commission and others charges 324,082,933 197,005,135

Exchange loss on foreign currency loans 133,403,953 -
2,556,976,879 2,085,427,251

2020 2019
Rupees Rupees
37 TAXATION
Current tax
- for the year 421,583,240 402,681,080
- prior years (54,911,259) (834,128)
366,671,981 401,846,952
Deferred tax (236,675,636) (15,278,355)
129,996,345 386,568,597
There is no relationship between tax expense and accounting profit since the Company’s profits
are subject to tax under the Final Tax Regime for the current year. Accordingly, no numerical
reconciliation has been presented.
37.1 The Finance Act, 2017 had amended Section 5A of the Income Tax Ordinance, 2001 and introduced
tax on every public company at the rate of 7.5%, for the year ended 30 June 2017, of its accounting
profit before tax for the year. However, this tax shall not apply in case the Company distribute 40%
of the accounting profit through cash dividend within six months of the end of the said year. The
Company filed a Constitutional Petition (CP) before the Honourable Sindh High Court (SHC), Sindh
on 28 July 2017 challenging the vires of amended Section 5A of the Income Tax Ordinance, 2001,
and SHC accepted the CP and granted stay against the newly amended section 5A. In case the
SHC’s decision is not in favour of the Company; the Company will either be required to declare
amount of dividend or it will be liable to pay additional tax at the rate of 7.5% of its profit before tax
for the financial year ended 30 June 2017. The matter is still pending with the court as at current
reporting date.
Restated
2020 2019
38 EARNINGS PER SHARE - BASIC AND DILUTED
Profit after taxation for the year Rupees 1,179,089,000 2,559,439,945
Weighted average number of ordinary shares Number 21,427,664 21,097,578
Earnings per share - basic and diluted Rupees 55.03 121.31

Note 2020 2019
Rupees Rupees
39 CASH GENERATED FROM OPERATIONS

Adjustments for non-cash items:
Depreciation on operating fixed assets 1,258,978,465 1,158,238,790
Amortization of intangible assets 418,706 1,408,149
Interest income (10,398,801) (15,657,538)
Loss on sale of property, plant and equipment 14,153,183 9,168,093
Dividend income - others (447,930,334) (397,359,558)
Dividend income - subsidiary and associate (167,546,540) (317,870,640)
Provision for gratuity 148,493,559 109,967,518
(Reversal) / Provision for stores, spares and loose tools (10,841,543) 9,663,308
Provision against doubtful sales tax refundable 36,440,779 153,522,284
Credit balance written back - (6,883,216)
Finance cost 2,423,572,926 2,085,427,251
Rental income (600,000) (600,000)
3,244,740,400 2,789,024,441
Operating cash flow before changes in working capital 4,553,825,745 5,735,032,983
Changes in working capital

(Increase) / Decrease in current assets
Stores, spare and loose tools (66,719,811) (13,106,126)
Stock-in-trade (1,428,944,907) (2,010,266,735)
Trade debts (579,873,224) 749,290,597
Loans and advances 15,506,247 47,248,229
Trade deposits and short term prepayments (11,408,790) 1,151,212
Other receivables 6,277,987 (371,548,794)
(2,065,162,499) (1,597,231,617)
Increase / (decrease) in current liabilities
Trade and other payables 438,088,846 (417,811,253)
Contract liabilities (20,206,925) 850,602,812
2,906,545,167 4,570,592,925
40 CASH AND CASH EQUIVALENTS
Bank overdrafts (33,938,460) -

Cash and bank balances 20 67,540,738 96,759,191
33,602,278 96,759,191

41 RELATED PARTY DISCLOSURES
The related parties comprise of associated companies (due to common directorship), subsidiaries,
directors and key management personnel. The remuneration of key management personnel is
disclosed in note 44. The Company in the normal course of business carries out transactions with
various related parties. Significant transactions with related parties are as follows:
Relationship with
Nature of transactions 2020 2019
the Company
Rupees Rupees
(i) Subsidiaries Sales / processing 3,055,673,011 2,996,099,227

Purchase of vehicle - 2,350,000
Investment made 15,760,000 1,000,000,000
Expenses charged to 547,555 441,371
Mark-up charged to - 12,822,179
Loans recovered - (482,000,000)
Rental income 600,000 600,000
(ii) Associates Sales / processing 2,188,385,995 2,024,157,587

Purchases 272,867,255 348,990,618
Electricity / steam purchased - 10,886,678
Expenses charged to 50,602,713 44,785,484
Expenses charged by 10,862,700 8,683,181
Mark-up charged by 60,937,811 44,800,008
Dividend paid 146,203,902 89,971,632
Loans obtained net 662,522,688 189,215,131
Right shares issued 200,158,000 -
(ii) Others Contribution to provident fund 49,002,427 41,782,087

Loans (repaid to) / received from
directors and others - net (167,583,000) 167,583,000
Donation 23,185,000 2,300,000
Sale of vehicle to key management
personnel - 1,869,482
Dividend 320,474,622 195,459,952

41.1 The related parties with whom the Company had entered into transactions or have arrangement /
agreement in place are following:
Aggregate
Company Name Basis of relationship % of
shareholding
Sapphire Wind Power Company Limited Subsidiary 70%

Triconboston Consulting Corporation (Private)
Subsidiary 57.125%
Limited
Sapphire Retail Limited Subsidiary 100%
Sapphire International Aps Subsidiary 100%
Creadore A/S Associated Company 49%
Sapphire Power Generation Limited Associated Company 26.43%
Sapphire Dairies (Private) Limited Associated Company 18.80%
Reliance Cotton Spinning Mills Limited Common directorship 3.04%
Sapphire Electric Company Limited Common directorship 1.42%
Sapphire Holding Limited Common directorship 0.05%
Sapphire Fibres Limited Common directorship N/A
Yousuf Agencies (Private) Limited Common directorship N/A
Sapphire Finishing Mills (Private) Limited Common directorship N/A
Diamond Fabrics Limited Common directorship N/A
Amer Cotton Mills (Private) Limited Common directorship N/A
Investor in a subsidiary of the
Bank Alfalah Limited N/A
Company
Amer Tex (Private) Limited Common directorship N/A
Galaxy Agencies (Private) Limited Common directorship N/A
Nadeem Enterprises (Private) Limited Common directorship N/A
Neelum Textile Mills (Private) Limited Common directorship N/A
Sapphire Agencies (Private) Limited Common directorship N/A
Subsidiary of an associated
Green Field Enterprises (Private) Limited N/A
company
Four strength (Private) Limited Common directorship N/A
Abdullah Foundation Common directorship N/A
2020 2019
42 NUMBER OF EMPLOYEES
Number of employees at year end 9,541 9,120
Average number of employees 9,862 8,864

2020 2019
43 PLANT CAPACITY AND ACTUAL PRODUCTION
Spinning
Total number of spindles installed 141,576 139,433

Average number of spindles worked 138,431 138,424
Total number of rotors installed 1,032 3,120
Number of shifts worked per day 3 3
Total days worked 353 365
Installed capacity after conversion into 20/s lbs. 114,315,658 119,255,126
Actual production after conversion into 20/s lbs 95,065,457 98,423,297
Weaving
Total number of looms installed 362 360

Average number of looms worked 362 360
Installed capacity(at 50 picks/inch of fabric square meters) 153,231,821 152,241,843
Actual production(at 50 picks/inch of fabric square meters) 137,858,353 142,630,979
Finishing and Printing
Production capacity meters 43,200,000 43,200,000

Actual production meters 35,003,177 38,986,791
Yarn dyeing
Production capacity KGs 1,080,000 -

Actual production KGs 713,467 -
Home Textile Product
The capacity of this unit is undeterminable due to multi product involving varying processes of
manufacturing and run length of order lots.
43.1 Reason for low production
Under utilization of available capacity for spinning and finishing and printing is mainly due to normal
maintenance / temporarily shut down and changes in production pattern.

44 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
Executives Director Chief Executive

2020 2019 2020 2019 2020 2019
Rupees
Remenuration 293,694,847 252,541,929 14,520,000 12,600,000 36,000,000 33,000,000

Bonus 27,499,838 24,667,078 - - - -
Medical 4,446,502 3,245,176 - - - -
Contribution to provident fund 16,253,842 12,102,292 - - - -
Leave encashment and
other benefits 26,544,047 28,861,328 - - - -
368,439,076 321,417,803 14,520,000 12,600,000 36,000,000 33,000,000
Number of persons 83 75 2 1 1 1
44.1 In addition, some of the above persons have been provided with the company maintained cars.
44.2 Meeting fee of Rs.0.450 million (2019: Rs.0.300 million) has been paid to independent non-executive
directors. No other remuneration has been paid to non-executive directors of the Company.
44.3 The Chief Executive and Executive Directors were also provided with telephones at residence.
45 PROVIDENT FUND
Sapphire Textile Mills Limited Employees’ Provident Fund Trust holds the investments which are in
accordance with the provisions of section 218 of the Companies Act 2017 and the Rules formulated
for this purpose.
46 FINANCIAL INSTRUMENTS
The Company has exposures to the following risks from its use of financial instruments:
Credit risk
Liquidity risk
Market risk
The Company’s Board of Directors has overall responsibility for the establishment and oversight
of the Company’s risk management framework. The Board is also responsible for developing and
monitoring the Company’s risk management policies.
46.1 Credit risk
46.1.1 Exposure to credit risk

Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the trade debts, trade
deposits, other receivables, other financial assets and cash and bank balances. Out of total financial
assets of Rs.10,383 million (2019: Rs.11,423 million), financial assets which are subject to credit
risk aggregate to Rs.3,862 million (2019: Rs.3,345 million). The carrying amount of financial assets
represents the maximum credit exposure. The maximum exposure to credit risk at the reporting
date is as follows:

2020 2019
Rupees Rupees
Long term deposits 87,684,092 87,909,092

Trade debts 2,782,771,494 2,197,892,804
Loan to employees 76,001,303 83,839,973
Trade deposits 22,789,000 4,065,140
Other receivables 777,808,061 822,655,494
Short term investments 49,000,000 53,443,295
Bank balances 65,468,763 95,242,191
3,861,522,713 3,345,047,989
46.1.2 The maximum exposure to credit risk for trade debts at the reporting date by geographical region is
as follows:
Domestic 2,533,082,952 1,650,480,109

Export 249,688,542 547,412,695
2,782,771,494 2,197,892,804
The majority of export debts of the Company are situated in Asia, Europe and North America.
46.1.3 Customer credit risk is managed by each business unit subject to the Company’s established policy,
procedures and control relating to customer credit risk management. Credit quality of a customer
is assessed based on an extensive credit rating scorecard and individual credit limits are defined in
accordance with this assessment. Outstanding customer receivables are regularly monitored and all
exports are covered by letters of credit or other forms of credit insurance obtained from reputable
banks.
An impairment analysis is performed at each reporting date using a provision matrix to measure
expected credit losses. The provision rates are based on days past due for groupings of various
customer segments with similar loss patterns (i.e., by geographical region, product type and
customer type). The calculation reflects the probability-weighted outcome, the time value of money
and reasonable and supportable information that is available at the reporting date about past
events, current conditions and forecasts of future economic conditions. Generally, trade receivables
are written-off if past due for more than one year and are not subject to enforcement activity.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of
financial assets disclosed above. The Company does not hold collateral as security. The letters of
credit for export sales are considered integral part of export trade receivables and there is no past
history of default in case of export debtors, so the expected credit loss rate for the export trade
receivables is insignificant, hence gross amount equals to net carrying amount. However, for local
trade receivables the Company evaluates the concentration of risk with respect to them as low, as
its customers mostly deal in advances and their demand is order based.

Set out below is the information about the credit risk exposure on the Company’s local trade
receivables assets using a provision matrix:
361 days
Not due 1-30 days 31-60 days 61-90 days 91-180 days 181-360 days
or more
Rupees
As at 30 June 2020
Estimated total gross carrying
amount at default 1,499,077,540 570,453,928 177,880,120 132,805,029 180,024,052 294,904 9,320,596
Expected credit loss 8,424,010 7,283,233 346,903 8,892,690 2,453,312 52,474 9,320,596
As at 30 June 2019
Estimated total gross carrying
amount at default 924,835,461 331,960,447 208,541,467 162,325,440 44,395,138 3,415,038 11,512,983
Expected credit loss 6,787,847 10,401,101 3,476,282 1,612,100 154,273 2,561,278 11,512,983
46.1.4 Credit risk from balances with banks and financial institutions is managed by the Company’s
finance department in accordance with the Company’s policy. Investments of surplus funds are
made only with approved counterparties and within credit limits assigned to each counterparty.
Counterparty credit limits are reviewed by the Company’s Board of Directors on an annual basis,
and may be updated throughout the year subject to approval of the Company’s Finance Committee.
The limits are set to minimize the concentration of risks and therefore mitigate financial loss through
a counterparty’s potential failure to make payments. The Company deals with banks having credit
ratings in the top categories therefore, considers these as low risk and does not expect credit loss
to arise on the balances. Following are the credit ratings of banks with which balances are held:
Name of bank Rating Agency Rating

Short term Long term
MCB Bank Limited PACRA A1+ AAA

National Bank of Pakistan PACRA A1+ AAA
United Bank Limited JCR-VIS A-1+ AAA
Habib Bank Limited JCR-VIS A-1+ AAA
Citibank N.A. Moody's P-1 Aa3
Faysal Bank Limited PACRA A1+ AA
Habib Metropolitan Bank Limited PACRA A1+ AA+
Bank Al-Habib Limited PACRA A1+ AA+
Dubai Islamic Bank Pakistan Limited JCR-VIS A-1+ AA
Allied Bank Limited PACRA A1+ AAA
Standard Chartered Bank (Pakistan) Limited PACRA A1+ AAA
Industrial and Commercial Bank of China Moody's P-1 A1
Soneri Bank Limited PACRA A1+ AA-

46.2 Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated with
financial liabilities. Prudent liquidity risk management implies maintaining sufficient cash and the
availability of funding through an adequate amount of committed credits facilities. The Company’s
treasury department maintains flexibility in funding by maintaining availability under committed
credits lines.
Financial liabilities in accordance with their contractual maturities are presented below:
2020
Contractual Between 1 to 5 5 years and
Carrying amount Up to 1 year
cashflow years above
Rupees
Long term financing 14,509,298,708 18,866,028,411 1,871,524,010 13,464,177,509 3,530,326,892

Trade and other payables 3,200,167,084 3,200,167,084 3,200,167,084 - -
Accrued interest / mark-up 361,222,288 361,222,288 361,222,288 - -
Unclaimed dividend 1,696,118 1,696,118 1,696,118 - -
Short term borrowings 8,070,572,958 8,296,097,794 8,296,097,794 - -
26,142,957,156 30,725,211,695 13,730,707,294 13,464,177,509 3,530,326,892
2019
Rupees

25,159,353,695 29,269,649,914 14,171,344,056 12,757,064,140 2,341,241,718
46.2.1 The contractual cash flow relating to the above financial liabilities have been determined on the
basis of mark-up / interest rates effective at the respective year-end. The rates of mark-up / interest
have been disclosed in the respective notes to these financial statements.
46.3 Market risk

Market risk is the risk that changes in market price, such as foreign exchange rates, interest rates
and equity prices will affect the Company’s income or the value of its holding of financial instruments.

46.3.1 Currency risk

The Company is exposed to currency risk on import of raw materials, stores and spares and export
of goods mainly denominated in US Dollar, Euro, Japanese Yen and Swiss Frank. The Company’s
exposure to foreign currency risk for US Dollar, Euro, Japanese Yen and Swiss Frank is as follows:
2020
Rupees US $ EURO JPY CHF AED GBP
Trade debts (249,688,542) (1,358,933) (111,310) - - - -

Bank balances (20,427,212) (121,410) - - - - -
(270,115,755) (1,480,343) (111,310) - - - -
Outstanding letters of credit 2,306,194,325 12,457,892 1,058,180 - 17,790 - -

Foreign currency forward
352,443,189 1,823,850 241,026 - - - -
contracts
Net Exposures 2,388,521,759 12,801,399 1,187,896 - 17,790 - -
2019
Trade debts (547,412,695) (2,741,522) (524,779) - - - -

Bank balances (17,377,997) (101,569) (3,867) - - - -
(564,790,692) (2,843,091) (528,646) - - - -
Outstanding letters of credit 1,055,047,702 4,028,853 1,216,360 14,604,000 48,900 2,955,600 9,000
Forward exchange contracts - - - - - - -
Net Exposures 490,257,010 1,185,762 687,714 14,604,000 48,900 2,955,600 9,000
The following significant exchange rates have been applies as at reporting date:
2020 2019
Rupees Rupees
US $ to Rupees (Buying/Selling) 168.25 / 168.75 164 / 164.5

Euro to Rupees (Buying/Selling) 189.11 / 189.73 186.37 / 186.99
Sensitivity analysis
A 20 percent (2019: 20 percent) strengthening of the Rupees against US Dollar and Euro at 30 June
would have increase / (decrease) equity and profit and loss account by the amounts shown below.
This analysis assumes that all other variables, in particulars interest rates, remain constant.
Equity Profit or loss

Rupees Rupees
As at 30 June 2020
Effect in US Dollar (49,813,542) (49,813,542)
Effect in Euro (4,209,967) (4,209,967)
As at 30 June 2019
Effect in US Dollar (93,253,385) (93,253,385)
Effect in Euro (19,704,751) (19,704,751)

20 percent (2019: 20 percent) weakening of the Rupees against the above currency at 30 June
would have had the equal but opposite effect on the above currencies to the amounts shown above,
on the basis that all other variable remain constant.
46.3.2 Interest rate risk
At the reporting date, the profit, interest and mark-up rate profile of the Company’s significant
financial assets and liabilities is as follows:
Effective rate Carrying Amount

2020 2019 2020 2019
% % Rupees Rupees
Fixed rate instruments
Financial liabilities
Long term financing 2.5% to 6.5% 2.5% to 6.5% 5,457,318,288 4,535,248,994
Short term borrowings 2.25% to 3.00% 2.15% to 3% 3,486,784,000 2,100,000,000
Variable rate instruments
Long term financing 7.97% to 14.20% 6.47% - 13.43% 9,051,980,420 9,723,110,527
Short term borrowings - local currency 8.36% to 14.81% 6.46% to 13.30% 4,583,788,958 5,459,665,535
Fair value sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through
profit or loss. Therefore, a change in mark-up / interest rates at the reporting date would not affect
profit or loss account.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in mark-up / interest rates at the balance sheet date would have
increased / (decreased) profit for the year by the amounts shown below. This analysis assumes that
all other variables, in particular foreign currency rates, remain constant. The analysis is performed
on the same basis for 2020.
Profit and loss 100 bps
Increase (Decrease)
Rupees Rupees
As at 30 June 2020
Cash flow sensitivity - variable rate instruments 136,357,694 (136,357,694)
As at 30 June 2019
The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and
liabilities of the Company.

46.3.3 Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices (other than those arising from interest rate risk or currency
risk). Other price risk arises from the Company’s investment in ordinary shares of listed Companies.
To manage its price risk arising from aforesaid investments, the company diversify its portfolio and
continuously monitor developments in equity markets. In addition the Company actively monitors
the key factors that affect stock price movement.
A 10% increase / decrease in share prices of listed companies at the reporting date would have
increased / decreased the Company’s unrealized gain on investments at fair value through OCI as
follows:
2020 2019
Rupees Rupees
Effect on equity 643,517,696 799,104,425
Effect on investments 643,517,696 799,104,425
The sensitivity analysis prepared is not necessarily indicative of the effects on equity / investments
of the Company.
46.4 Fair value of financial instruments
Carrying values of the financial assets and financial liabilities approximate their fair values. Fair value
is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction.
46.5 Financial instruments by Category

FINANCIAL ASSETS
Debt instruments at amortised cost
Trade debts 2,782,771,494 2,197,892,804
Trade deposits 22,789,000 4,065,140
Other receivables 777,808,061 822,655,494
Bank balances 65,468,763 95,242,191
3,812,522,713 3,291,604,694
Debt instruments at fair value through OCI
Sales tax refund bonds - 53,443,295
HBL Term Finance Certificates 49,000,000 -
49,000,000 53,443,295
Equity instruments at fair value through OCI
Quoted equity shares 6,435,176,964 7,991,044,248
Unquoted equity shares 86,648,236 86,648,236
6,521,825,200 8,077,692,484
Total current 6,634,900,826 7,133,069,382
Total non current 3,748,447,087 4,289,671,091
2020 2019
Rupees Rupees
FINANCIAL LIABILITIES
At amortized cost
Trade and other payables 3,200,167,084 2,781,266,216
Accrued interest / mark-up 361,222,288 320,423,966
Secured bank loan 14,509,298,708 12,257,108,436
Short term finances from banks 8,070,572,958 9,560,916,620
Other current loans - 237,843,000
26,142,957,156 25,159,353,695
Total current 12,370,648,314 12,580,025,836
46.6 Fair value hierarchy
The carrying value of all financial assets and liabilities reflected in the financial statements
approximate their fair value.
The table below analyses financial instruments carried at fair value, by valuation method. The
different levels have been defined as follows:
Level 1. Quoted market price (unadjusted) in an active market for identical instrument.
Level 2. Inputs other than quoted price included within Level 1 that are observable for
the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from
prices).
Level 3. Inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The main level of inputs used by the Company for its financial assets are derived and evaluated as follows:
Level 1 Level 2 Level 3

Rupees
As at 30 June 2020
Assets carried at fair value
Debt instruments at fair value through OCI 49,000,000 - -
Equity instruments at fair value through OCI 6,435,176,964 - 86,648,236
6,484,176,964 - 86,648,236
As at 30 June 2019
Debt instruments at fair value through OCI - 53,443,295 -
7,991,044,248 53,443,295 86,648,236

46.7 Capital risk management
The Company’s prime objective when managing capital is to safeguard its ability to continue as a
going concern in order to provide adequate returns for shareholders, benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of capital.
Consistent with others in the industry, the company manages its capital risk monitoring its debts
levels and liquid assets and keeping in view future investment requirements and expectations of the
shareholders. Debt is calculated as total borrowings (long term financing and short term borrowings
as shown in the statement of financial position). Total capital comprises shareholders’ equity as
shown in the statement of financial position under ‘share capital and reserves’.
2020 2019
Rupees Rupees
Total borrowings 22,579,871,666 22,055,868,056

Less: Cash and bank balances 67,540,738 96,759,191
Net debt 22,512,330,928 21,959,108,865
Total equity 16,476,547,947 16,382,080,342
Total capital 38,988,878,875 38,341,189,207
2020 2019
Percentage Percentage
Gearing ratio 57.74 57.27

47 RECONCILIATION OF MOVEMENT OF LIABILITIES TO CASH FLOWS ARISING FROM FINANCING

ACTIVITIES
2020
Long term Short term Accrued Unclaimed
interest / dividend Total
loans borrowings mark-up
Rupees
Balance as at 01 July 2019 14,258,359,521 7,797,508,535 320,423,966 1,795,457 22,378,087,479
Cash flows
Repayment of loans (1,428,458,120) - - - (1,428,458,120)

Proceeds from loans 1,679,397,307 239,125,963 - - 1,918,523,270
Finance cost paid - - (2,382,774,603) - (2,382,774,603)
Dividends paid - - - (522,260,979) (522,260,979)
Total changes from financing

cash flows 250,939,187 239,125,963 (2,382,774,603) (522,260,979) (2,414,970,432)
Other changes including non-cash

Dividend declared - - - 522,161,640 522,161,640
Finance cost - - 2,423,572,926 - 2,423,572,926
Total liability related other changes - - 2,423,572,926 522,161,640 2,945,734,566
Closing as at 30 June 2020 14,509,298,708 8,036,634,498 361,222,289 1,696,118 22,908,851,613
2019

loans borrowings interest / dividend Total
mark-up
Rupees
Cash flows

Dividends paid - - - (320,844,302) (320,844,302)
Total changes from financing cash

flows 260,944,368 496,232,329 (1,949,777,484) (320,844,302) (1,513,445,088)

Finance cost - - 2,085,427,251 - 2,085,427,251

48 IMPACT OF COVID-19 ON THE FINANCIAL STATEMENTS
The outbreak of Novel Coronavirus (COVID-19) continues to progress and evolve. Therefore, it is
challenging now, to predict the full extent and duration of its business and economic impact. The
outbreak of COVID-19 has had a distressing impact on overall demand in the global economy with
notable downgrade in growth forecasts.
The Company’s revenue comprises of both local within Pakistan and export sales outside Pakistan.
COVID-19 is expected to bear an impact in the given situation as the Company caters the needs
of different levels of the textile supply chain both locally and internationally. It expects that the local
market will not show further decline and growth is expected in the upcoming period. The international
markets have also starting resuming business and orders are now regaining volume. However extent
and duration of such impact remains uncertain and dependent on future developments that cannot
be accurately predicted at this time, such as the transmission rate of COVID-19 and the extent and
effectiveness of containment actions taken. Given the ongoing economic uncertainty, a reliable
estimate of the impact cannot be made at the date of authorization of these financial statements.
Financial impact of COVID-19 on Company’s financial statements mainly includes decrease in

revenue of last quarter as compared to prior period and adjustment for Net Realizable Value as
disclosed in note 13.1.
49 CORRESPONDING FIGURES
Corresponding figures have been rearranged/reclassified, wherever necessary for better presentation.
However, no significant reclassification has been made during the year except for advance for land
amounting to Rs. 84.5 million which has been reclassified from capital work in progress (note 6.6) to
long term loans and advances (note 10).
50 DATE OF AUTHORIZATION FOR ISSUE
These financial statements were approved by the Board of Directors and authorized for issue on 24
September 2020.

CONSOLIDATED
FINANCIAL
STATEMENTS

Directors’ Report to the Shareholders
To the members of Sapphire Textile Mills Limited
Report on the Audit of the Consolidated Financial Statements
On behalf of Board of Directors of Holding Company of, Sapphire Wind Power Company Limited, Sapphire
Retail Limited, Triconboston Consulting Corporation (Private) Limited, Sapphire International APS and
Designtex SMC-Private Limited, it is our pleasure to present Directors’ Report with Audited Consolidated
Financial Statements for the year ended June 30, 2020.
Sapphire Wind Power Company Limited

The Company is 70% owned by Sapphire Textile Mills Ltd and 30% by Bank Alfalah Limited. The Company
has set up a wind farm with capacity of 52.80 MW at Jhimpir which started Commercial operations in
November 2015 – the project is operating following best industry practices and is yielding satisfactory
results.
Sapphire Retail Limited

Sapphire Retail Limited (SRL) is a wholly owned subsidiary of Sapphire Textile Mills Limited. The
principal business of SRL is to operate “Sapphire” brand retail outlets for the sale of textile and other
products. SRL is principally engaged in manufacturing of textile products by processing the textile goods
in outside manufacturing facilities and to operate retail outlets to sell the same in Pakistan and abroad
through online stores. SRL operates 25 retail outlets throughout the country.
Tricon Boston Consulting Corporation (Private) Limited

Tricon Boston Consulting Corporation (Private) Limited is incorporated under the laws of Pakistan and
operating 3 projects having capacity of 50 MW each in Jhimpir. All the three projects have successfully
commenced commercial operation in September, 2018.
Sapphire International APS

Sapphire International APS is a limited liability Company incorporated in Denmark formed to strengthen
exports.
Designtex SMC-Private Limited

Designtex SMC-Private Limited (the company) was incorporated during the year as SMC Private Company
limited by shares under Companies Act, 2017. It is wholly owned subsidiary of Sapphire Retail Limited
which is wholly owned subsidiary of Sapphire Textile Mills Limited. The principal business of the company
is manufacturing of textile and ancillary products.
On behalf of the Board
NADEEM ABDULLAH MOHAMMAD ABDULLAH

CHIEF EXECUTIVE DIRECTOR
Karachi
24 September 2020

Independent Auditors’ Report
To the Members of Sapphire Textile Mills Limited
Report on the Audit of the Consolidated Financial Statements
Opinion applicable in Pakistan. Our responsibilities under
We have audited the annexed consolidated financial those standards are further described in the Auditor’s
statements of Sapphire Textile Mills Limited and Responsibilities for the Audit of the Consolidated
its subsidiaries (the Group), which comprise the Financial Statements section of our report. We
consolidated statement of financial position as are independent of the Group in accordance
at 30 June 2020 and the consolidated statement with the International Ethics Standards Board
of profit or loss, the consolidated statement of for Accountants’ Code of Ethics for Professional
comprehensive income, the consolidated statement Accountants as adopted by the Institute of the
of changes in equity and the consolidated statement Chartered Accountants of Pakistan (the Code), and
of cash flows for the year then ended, and notes we have fulfilled our other ethical responsibilities
to the consolidated financial statements, including in accordance with the Code. We believe that the
a summary of significant accounting policies and audit evidence we have obtained is sufficient and
other explanatory information. appropriate to provide a basis for our opinion.
In our opinion, consolidated financial statements Key Audit Matters

give a true and fair view of the consolidated Key audit matters are those matters that, in our
financial position of the Group as at 30 June 2020 professional judgment, were of most significance in
and its consolidated financial performance and its our audit of the consolidated financial statements of
consolidated cash flows for the year then ended the current period. These matters were addressed
in accordance with the accounting and reporting in the context of our audit of the consolidated
standards as applicable in Pakistan. financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate
Basis for Opinion opinion on these matters.
We conducted our audit in accordance with
International Standards on Auditing (ISAs) as
Following are the key audit matters:

1. Preparation of consolidated financial
statements
The Group’s consolidated financial statements We reviewed the consolidation schedules in relation
comprise of transactions and balances of to transactions and balances of the subsidiaries.
the Holding Company, its subsidiaries and
associates. Consolidating these financial We reviewed the computation of share of profit of
statements involves elimination of intercompany associates.
transactions and balances and consolidation of
the amounts and disclosures of each entity’s We cross-matched the inter-company transactions
financial statements. and balances with the respective financial
statements of the entities for elimination of the
Significant auditor attention is required in same.
review of the consolidation schedules as the
Group comprises of a number of subsidiaries We reviewed the arithmetic accuracy of the
as associates and intercompany transactions consolidation schedules.
are material to the consolidated financial
statements as a whole, hence these are We reviewed the work performed by component
considered a Key Audit Matter. auditors including reviewing reporting deliverables
from the component audit teams.
We reviewed the completeness of disclosures in the

consolidated financial statements by comparing
with the relevant disclosures in each entity’s
individual financial statements.

2. Stock in trade
The Holding Company has a composite We performed following key audit procedures,
textile set-up comprising spinning, weaving, among other procedures, in respect of stock in
processing and home textile units. Therefore, its trade:
stock in trade includes various inventory items
including cotton, yarn and fabric categorized - We gained an understanding of the
into raw materials, work in process and finished management’s process of recording and
goods based on the processes of respective valuing inventories.
units where these are being utilized / produced.
- We tested controls over the Group’s
These are stored at various geographically
processes of inventory purchases and
dispersed locations.
issuance.
Stock in trade as at 30 June 2020 amounted - We attended virtual inventory counts and
to Rs. 11,492 million comprising 10% of the reconciled the count results to inventory
Group’s total assets. listings at the year end.
- We performed substantive procedures over
The amount of stock in trade is net of provisions purchases recorded during the year.
for net realizable value amounting to Rs. 482 - We tested the valuation of inventory items
million due to items to be sold at less than cost in accordance with Group’s policy and
as disclosed in note 15.3 to the consolidated international accounting standards (IAS 2 –
financial statements. Inventories).
- We evaluated appropriateness of the
There is an element of judgement relating to
measurement basis for net realizable value
this provision which is based on expected
for finished goods and raw material.
future transactions and the current economic
conditions particularly after the outbreak of - We recalculated the NRV adjustment for
COVID-19. finished goods and raw material, on sample
basis.
Due to the above factors, significant auditor
attention is required in auditing of inventory
balances and transactions during the year and
hence considered a Key Audit Matter.
3. First time adoption of IFRS 16
The Group has adopted IFRS 16 Leases with Our Audit procedures to review the application of
effect from 01 July 2019 which resulted in IFRS 16 amongst others, include the following:
changes to the accounting policies as disclosed
in Note 5.1 to the consolidated financial • We evaluated the appropriateness of the
statements. new accounting policies for recognition,
measurement, presentation and disclosure
The standard has now introduced a new of lease contracts in the consolidated
accounting model for operating lease contracts financial statements.
from the standpoint of a lessee. As per new
• We obtained the understanding of
requirement the Group has recognized right-
the process and controls in place for
of-use assets of Rs. 2,102 million and lease
identification of in-scope lease contracts
liability of Rs. 2,178 million in the consolidated
(considering recognition exemption
statement of financial position of the Group as
available under the standard i.e. short-term
disclosed in Note 7.10 and Note 27 respectively.
leases and leases of low value assets).
• We corroborated the completeness of
leases identified by the management by
reviewing and analyzing the existing lease
arrangements as of the date of initial
application and reviewing the rent expense
ledgers for the year.

The application of new standard requires • We performed independent checks of lease

management to make significant estimates accounting computations for the sample of
and judgements such as determination of lease
lease contracts through reperformance of
term and appropriate discount rate for the
measurement of lease liability. such computations and tracing the terms
with the relevant contracts.
We have considered adoption of the standard
as a Key Audit Matter due to the significance of • We evaluated the appropriateness of the
the accounting change and the involvement of assumptions used by the management in
significant judgements in respect of application measuring lease liabilities such as discount
of the new standard. rate, lease term etc.
• We assessed the adequacy and
appropriateness of disclosures in the
consolidated financial statements as
required under the standard and the
applicable financial reporting framework.
4. Covid - 19
The COVID-19 pandemic caused significant We discussed with the senior management about the
and unprecedented curtailment in economic impacts of COVID-19 related events on the business
and social activities particularly during the operations, financial condition, liquidity and operating
period from March 2020 to May 2020, in line performance of the Group.
with the directives of the Government. This
We identified key financial statement items which
situation posed a range of business and
may require additional audit considerations due to the
financial challenges to the businesses globally
COVID-19 related conditions that prevailed during the
and across various sectors of the economy in
latter part of the year. In this regard, we considered
Pakistan.
the realizable value of inventories and recoverability
of trade receivables, which were impacted by
The Group’s operations were disrupted due
the lockdowns imposed by the Government and
to the circumstances arising from COVID-19
distressed demand in global economy.
including the suspension of production, sales
and operations; although for a short period of We checked the sale of the inventories subsequent
time. to the year end to evaluate the realizable value of
inventory held as at 30 June 2020.
In view of the unique nature of these events and
We assessed the adequacy of allowance for net
its possible impacts on the business operations
realizable value made in respect of the inventory held
and financial reporting we considered this area
as at 30 June 2020.
as a key audit matter to identify specific risks in
relation to the financial statements and devise In respect of trade receivables, we checked
our audit strategy accordingly. the computations for expected credit losses as
determined by the management in accordance with
Please also refer to note 52 to the consolidated the requirements of IFRS-9 ‘Financial Instruments’. We
financial statements. evaluated the assumptions used by the management
for such estimates including their reasonableness
and the supporting economic and historical data
used in this regard.
We reviewed the terms of loans obtained, renewed
and / or restructured by the Group to assess
compliance with key terms and conditions, including
any applicable debt covenants and reviewed the
correct classification, treatment and disclosure of the
same.

Information Other than the Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. The other information comprises the information
included in the Annual Report, but does not include the financial statements and our auditors’ report
thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and the Board of Directors for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with the accounting and reporting standards as applicable in Pakistan and
Companies Act, 2017 and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Group or
to cease operations, or has no realistic alternative but to do so.
The Board of directors are responsible for overseeing the Group’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a
going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were
of most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditors’ report is Farooq Hameed.
EY Ford Rhodes
Lahore
24 September 2020

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
Note 2020 2019

Rupees Rupees
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 7 68,330,966,394 67,768,721,445
Investment property 8 31,750,000 31,750,000
Intangible assets 9 458,860,485 457,922,727
Long term investments 10 4,910,371,492 5,392,557,086
Long term loans and advances 11 111,663,175 135,843,927
Long term deposits and prepayments 12 90,434,779 255,063,553
Deferred tax asset 13 115,051,021 81,646,027
74,049,097,346 74,123,504,765
CURRENT ASSETS
Stores, spares and loose tools 14 725,190,008 639,876,314
Stock in trade 15 11,491,779,760 9,737,203,625
Trade debts 16 11,627,624,567 5,587,782,714
Loans and advances 17 132,174,057 137,705,316
Trade deposits and short term prepayments 18 86,972,105 58,776,966
Other receivables 19 985,815,910 2,946,182,241
Short term investments 20 2,956,225,380 4,030,717,707
Tax refunds due from Government 21 1,467,911,232 1,086,056,747
Cash and bank balances 22 6,264,545,239 4,414,025,673
35,738,238,258 28,638,327,303
TOTAL ASSETS 109,787,335,604 102,761,832,068
EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES
Authorized share capital
35,000,000 ordinary shares of Rs.10 each 350,000,000 350,000,000
Issued, subscribed and paid-up capital 23 216,897,910 200,831,400

Reserves 24 22,198,232,942 17,938,008,345
Equity attributable to equityholders of the parent 22,415,130,852 18,138,839,745
Non-controlling interest 8,769,248,341 6,204,799,788
Total Equity 31,184,379,193 24,343,639,533
NON-CURRENT LIABILITIES
Long term financing 25 54,006,688,838 55,768,661,310
Deferred liabilities 26 310,342,296 521,093,438
Lease liabilities 27 2,016,766,709 10,644,971
56,333,797,843 56,300,399,719
CURRENT LIABILITIES
Trade and other payables 28 6,757,019,625 5,089,972,393
Contract liabilities 29 869,746,700 850,602,812
Accrued interest / mark-up 30 499,052,861 539,247,498
Short term borrowings 31 8,510,584,713 8,858,241,142
Current portion of long term financing 25 5,470,065,259 6,774,126,398
Current portion of lease liabilities 27 160,993,292 3,807,116
22,269,158,568 22,117,792,816
CONTINGENCIES AND COMMITMENTS 32
TOTAL EQUITY AND LIABILITIES 109,787,335,604 102,761,832,068
The annexed notes from 1 to 55 form an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Note 2020 2019

Rupees Rupees
Net turnover 33 52,967,395,731 49,641,617,037
Cost of sales 34 (36,161,494,725) (35,792,532,087)
Gross profit 16,805,901,006 13,849,084,950
Distribution cost 35 (2,595,681,324) (2,857,822,555)
Administrative expenses 36 (784,446,472) (795,739,879)
Other operating expenses 37 (217,390,973) (515,724,842)
Other income 38 702,357,546 585,048,426

(2,895,161,223) (3,584,238,850)
Profit from operations 13,910,739,783 10,264,846,100
Finance cost 39 (6,054,361,338) (4,970,115,365)
Share of profit of associated companies 129,882,216 175,894,211
Taxation 40 (121,981,481) (431,316,256)
Attributable to:
Equity holders of the parent 5,257,567,820 3,760,432,789
Non-controlling interest 2,606,711,360 1,278,875,901
7,864,279,180 5,039,308,690
Restated
Earnings per share - basic and diluted 41 245.36 178.24

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2020 2019
Rupees Rupees
Other comprehensive income:
Items that may be reclassified to profit or loss in subsequent years:
Forward foreign currency contracts
Unrealized loss on remeasurement of forward foreign currency contracts (12,941,707) -
Reclassification adjustments relating to gain realized on

settlement of forward foreign currency contracts - (17,651,047)
Unrealised (loss) / gain on remeasurement of forward

foreign currency contracts of associates (51,980) 188,100
(12,993,687) (17,462,947)
Unrealized loss on equity instruments at fair value through
other comprehensive income - associates (8,752,707) (18,940,824)
Net loss on debt instruments at fair value through

other comprehensive income (1,000,000) (6,756,705)
Exchange difference on translation of foreign operations 2,406,857 65,313,797
Items not be reclassified to profit or loss in subsequent years:
Net loss on equity instruments at fair value through

other comprehensive income (1,133,791,389) (1,845,905,550)
Gain / (loss) on remeasurement of staff retirement benefits 51,412,524 (8,535,640)

(Loss) / gain on remeasurement of staff retirement gratuity - associates (181,347) 168,288
Impact of deferred tax - 564,377
51,231,177 (7,802,975)
Other comprehensive loss for the year (1,102,899,749) (1,831,555,204)
Total comprehensive income for the year 6,761,379,431 3,207,753,486
Attributable to:
Equityholders of the parent 4,154,668,071 1,928,877,585

Non- controlling interest 2,606,711,360 1,278,875,901
6,761,379,431 3,207,753,486

Capital Reserves Revenue Reserves
Unrealized Unrealized Unrealized (loss)/ Unrealized (Loss)/

Fixed Assets Gain/(loss) on Gain/(loss) on Gain on translation gain on forward Unappropriated Non-Controlling
Share Capital Share Premium General reserves Total Total Equity
Replacement available for sale investments at fair of foreign foreign exchange profit Interest
investments value through OCI operation contracts
Rupees
Balance as at 01 July 2018 200,831,400 156,202,200 65,000,000 589,844,100 - 23,454,928 17,804,164 1,330,000,000 14,149,837,356 16,532,974,148 5,045,923,889 21,578,898,037
Effect of adoption of IFRS 9 by parent company - - - (589,844,100) 589,844,100 - - - - - - -
Balance as at 01 July 2018 (restated) 200,831,400 156,202,200 65,000,000 - 589,844,100 23,454,928 17,804,164 1,330,000,000 14,149,837,356 16,532,974,148 5,045,923,889 21,578,898,037
Profit after taxation for the year - - - - - - - - 3,760,432,789 3,760,432,789 1,278,875,901 5,039,308,690
Other comprehensive (loss) / income for the year - - - - (1,871,603,079) 65,313,797 (17,462,947) - (7,802,975) (1,831,555,204) - (1,831,555,204)
- - - - (1,871,603,079) 65,313,797 (17,462,947) - 3,752,629,814 1,928,877,585 1,278,875,901 3,207,753,486

Share of decrease in reserves of associated
companies under equity method - - - - - - - - (1,681,748) (1,681,748) - (1,681,748)

@ Rs.16 per share - - - - - - - - (321,330,240) (321,330,240) - (321,330,240)
Interim dividend @ Rs.1.23 per share - SWPCL - - - - - - - - - - (120,000,002) (120,000,002)
Balance as at 30 June 2019 200,831,400 156,202,200 65,000,000 - (1,281,758,979) 88,768,725 341,217 1,330,000,000 17,579,455,182 18,138,839,745 6,204,799,788 24,343,639,533
Effect of change in accounting policy

due to adoption of IFRS-16 by SWPCL- note 5.1 (ii) - - - - - - - - 6,386,784 6,386,784 2,737,193 9,123,977
Balance as at 01 July 2019 - Adjusted 200,831,400 156,202,200 65,000,000 - (1,281,758,979) 88,768,725 341,217 1,330,000,000 17,585,841,966 18,145,226,529 6,207,536,981 24,352,763,510

Profit after taxation for the year - - - - - - - - 5,257,567,820 5,257,567,820 2,606,711,360 7,864,279,180
Other comprehensive (loss) / income for the year - - - - (1,143,544,096) 2,406,857 (12,993,687) - 51,231,177 (1,102,899,749) - (1,102,899,749)
- - - - (1,143,544,096) 2,406,857 (12,993,687) - 5,308,798,997 4,154,668,071 2,606,711,360 6,761,379,431
Transfer of gain on sale of investment at fair value
through OCI to un-appropriated profit - - - - (51,745,097) - - - 51,745,097 - - -
Share of decrease in reserves of associated
companies under equity method - - - - - - - - (5,262,508) (5,262,508) - (5,262,508)
1,606,651 right shares issued at the rate
of Rs.400 per share (Rs.10 par value
and Rs.390 premium per share) 16,066,510 626,593,890 - - - - - - - 642,660,400 - 642,660,400
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
@ Rs.26 per share - - - - - - - - (522,161,640) (522,161,640) - (522,161,640)

Interim dividend for the year ended 30 June 2020
@ Rs.0.46 per share-SWPCL - - - - - - - - - - (45,000,000) (45,000,000)
Balance as at 30 June 2020 216,897,910 782,796,090 65,000,000 - (2,477,048,172) 91,175,582 (12,652,470) 1,330,000,000 22,418,961,912 22,415,130,852 8,769,248,341 31,184,379,193
Annual Report 2020

129
CONSOLIDATED STATEMENT OF CASH FLOWS
Note 2020 2019

Rupees Rupees
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 42 13,787,248,151 5,722,624,303
Long term loans, advances and deposits 188,809,526 (105,079,440)

Finance cost paid (6,033,671,458) (4,706,307,449)
Staff retirement benefits - gratuity paid (72,379,948) (71,451,763)
Taxes paid (868,891,713) (42,461,733)
(6,786,133,593) (4,925,300,385)
Net cash generated from operating activities 7,001,114,558 797,323,918
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (1,857,038,724) (8,251,126,263)

Purchase of intangibles (3,290,960) (722,236)
Dividend received from associates 62,523,860 37,850,867
Investments made - (50,000,000)
Investments in equity investments (81,940,358) -
Investment in subsidiaries (15,860,000) -
Proceeds from disposal of property, plant and equipment 185,421,375 268,240,755
Proceeds from disposal of right to use assets 9,194,831 -
Proceeds from sale of investments 497,776,517 -
Interest received 106,814,900 125,123,289
Net cash used in investing activities (648,445,547) (7,472,654,255)
CASH FLOWS FROM FINANCING ACTIVITIES
Short term borrowings - net (381,594,890) 564,208,776

Proceeds from long term financing 2,066,476,724 10,277,538,139
Repayment of long term financing (6,262,779,676) (3,902,210,327)
Repayment of lease liabilities (41,281,722) (26,216,693)
Issuance of shares 642,660,400 -
Dividend paid (567,260,979) (440,844,304)
Net cash (used in) / generated from financing activities (4,543,780,143) 6,472,475,591
Net increase / (decrease) in cash and cash equivalents 1,808,888,868 (202,854,746)
Cash and cash equivalents at the beginning of the year 4,414,025,673 4,616,880,419
Transfer upon merger 7,692,237 -
Cash and cash equivalents at the end of the year 43 6,230,606,778 4,414,025,673

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. LEGAL STATUS AND OPERATIONS
Sapphire Textile Mills Limited (the Holding Company) was incorporated in Pakistan on 11 March
1969 as a public limited company under the Companies Act, 1913 (now the Companies Act, 2017).
The shares of the Company are listed on Pakistan Stock Exchange.
The Holding Company is principally engaged in manufacturing and sale of yarn, fabrics, home
textile products, finishing, stitching and printing of fabrics. Following are the business units of the
Holding Company along with their respective locations:
BUSINESS UNIT LOCATION

Registered Office
Karachi 212, Cotton Exchange Building, I. I. Chundrigar Road, Karachi
Lahore office 7-A/K, Main Boulevard, Gulberg II, Lahore
Production Plants
Spinning A-17,SITE, Kotri
Spinning A-84,SITE Area, Nooriabad
Spinning 63/64-KM, Multan Road, Jumber Khurd,Chunian,
District Kasur
Spinning 1.5-KM, Warburton Road, Feroze Wattoan, Sheikhupura
Weaving and Yarn Dyeing 2-KM, Warburtan Road, Feroze Wattoan, Sheikhupura
Printing Processing
and Home Textile
Stitching 1.5-KM Off, Defence Road, Bhubtian Chowk, Raiwind Road,
Lahore
1.1 The Group consists of:
- Sapphire Textile Mills Limited (the Holding Company)
Subsidiary Companies % of
shareholding
(i) Sapphire Retail Limited (SRL) 100%
(ii) Sapphire Wind Power Company Limited (SWPCL) 70%
(iii) Tricon Boston Consulting Corporation (Private) 57.125%
Limited (TBCL)
(iv) Sapphire International ApS 100%
(v) Designtex (SMC-Private) Limited (Wholly owned 100%
subsidiary of SRL)
i) Sapphire Retail Limited (SRL) was incorporated in Pakistan as an unlisted public company
limited by shares under the Companies Ordinance, 1984 (now the Companies Act, 2017) on
11 June 2014. Its registered office is situated at 7 A/K Main Boulevard, Gulberg-II, Lahore.
SRL is principally engaged in carrying out manufacturing of textile products by processing the
textile goods in outside manufacturing facilities and operating retail outlets to sell the same in
Pakistan and abroad through e-store.

ii) Sapphire Wind Power Company Limited (SWPCL) was incorporated in Pakistan as an unlisted
public company limited by shares under the Companies Ordinance, 1984 (now the Companies
Act, 2017) on 27 December 2006. Its registered office is located at 212, Cotton Exchange
Building, I.I. Chundrigar Road, Karachi and the wind power plant has been set up at Jhimpir,
District Thatta, Sindh on land that is leased to the it by Alternative Energy Development Board
(‘AEDB’), Government of Pakistan.
SWPCL’s principal objective is to carry on the business of supplying general electric power
and to setup and operate wind power generation projects to generate, accumulate, distribute
and supply electricity.
It has set up a wind power station of 52.80 MW gross capacity at the abovementioned
location and achieved Commercial Operations Date (‘COD’) on 22 November 2015. It has an
Energy Purchase Agreement (‘EPA’) with its sole customer, Central Power Purchasing Agency
Guarantee Limited (‘CPPAGL’) for twenty years which commenced from the COD.
iii) Tricon Boston Consulting Corporation (Private) Limited (TBCL) was incorporated in Pakistan
as a private limited company by shares under the Companies Ordinance, 1984 (now the
Companies Act, 2017) on 13 August 2012. Its principle objective is to carry on the business
of supplying general electric power and to setup and operate wind power generation projects
to generate, accumulate, distribute and supply electricity. Its registered office is located at
7/A- K, Main Boulevard, Gulberg II, Lahore, Punjab.
TBCL has set up three wind power station of each 49.735 MW gross capacity at Deh, Kohistan
7/1 Tapo Jhimpir, Taluka and District Thatta in the province of Sindh measuring 3,852 acres.
It has achieved Commercial Operations Date (‘COD’) on 16 August 2018,14 September 2018
and 11 September 2018 for Project A, B and C respectively (collectively defined as ‘Projects’).
It has also signed three Energy Purchase Agreement (‘EPA’) with its sole customer for its
Projects, Central Power Purchaser Agency (Guarantee) Limited (‘CPPA-G’) for twenty years
which commenced from the COD.
iv) Sapphire International APS a limited liability company incorporated in Denmark is formed to
strengthen exports of the Holding Company and is engaged in selling textiles. The Company
was incorporated on 27 August 2019. Its registered office is located at c/o Petersen Søgade
15, 1. th. 6000 Kolding, Denmark.
v) Designtex (SMC-Private) Limited was incorporated in Pakistan on 6 February 2020 as a single

member private company and is wholly owned subsidiary of Sapphire Retail Limited, which is
wholly owned subsidiary of Sapphire Textile Mills Limited. The company is principally engaged
in manufacturing of textile and ancillary products. The head office of the Company is located
at 1.5KM, Defence Road, Bhobtian Chowk, Off Raiwind Road, Lahore.
1.2 On 29 October 2019, the Board of Directors of the Holding Company passed a resolution approving
a Scheme of Amalgamation under Section 284 of the Companies Act, 2017, to amalgamate its
wholly owned subsidiaries, Sapphire Solar (Private) Limited, Sapphire Tech (Private) Limited and
Sapphire Renewables Limited with and into the Holding Company. As such, as of the completion
date of 31 December 2019, the entire undertaking of Sapphire Solar (Private) Limited , Sapphire
Tech (Private) Limited and Sapphire Renewables Limited stands merged with and into the Holding
Company. As a result the entire business of Sapphire Solar (Private) Limited , Sapphire Tech (Private)
Limited and Sapphire Renewables Limited including their properties, assets, liabilities and rights
and obligations vested into the Holding Company. Since Sapphire Solar (Private) Limited , Sapphire
Tech (Private) Limited and Sapphire Renewables Limited were group companies under common
control, the merger has been accounted for as a common control transaction. The acquired
net assets of Sapphire Solar (Private) Limited , Sapphire Tech (Private) Limited and Sapphire
Renewables Limited are included in the financial statements of the Holding Company at the same
carrying values as recorded in Sapphire Solar (Private) Limited , Sapphire Tech (Private) Limited and
Sapphire Renewables Limited’s own financial statements as on 31 December 2019. The results
and the statement of financial position of Sapphire Solar (Private) Limited , Sapphire Tech (Private)
Limited and Sapphire Renewables Limited are consolidated prospectively from the date of merger.

2. BASIS OF PREPARATION
2.1 Statement of compliance
These consolidated financial statements have been prepared in accordance with the accounting and
reporting standards as applicable in Pakistan. The accounting and reporting standards applicable in
Pakistan comprise of:
- International Financial Reporting Standards (IFRS Standards) issued by the International

Accounting Standards Board (IASB) as notified under the Companies Act, 2017
- Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS
Standards, the provisions of and directives issued under the Companies Act, 2017 have been
followed.
2.2 These consolidated financial statements have been prepared under the historical cost convention
except for measurement of certain financial assets and financial liabilities at fair value and recognition
of employee benefits at present value using valuation techniques.
2.3 These consolidated financial statements are presented in Pak Rupees, which is the functional
currency of the Group. Figures have been rounded off to the nearest rupee unless otherwise stated.
3. BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Holding Company
and its subsidiaries as at 30 June 2020. Control is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee. Specifically, the Group controls an investee if, and only
if, the Group has:
• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the investee
• The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances in assessing whether it has
power over an investee, including:
• The contractual arrangement(s) with the other vote holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control. Consolidation of a subsidiary
begins when the Group obtains control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of OCI are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the non-controlling interests having
a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries
to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets
and liabilities, equity, income, expenses and cash flows relating to transactions between members
of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill),
liabilities, non-controlling interest and other components of equity, while any resultant gain or loss
is recognised in profit or loss. Any investment retained is recognised at fair value.
4. ACCOUNTING ESTIMATES, JUDGEMENTS AND FINANCIAL RISK MANAGEMENT
The preparation of financial statements in conformity with approved accounting standards requires
the use of certain critical accounting estimates. It also requires management to exercise its judgement
in the process of applying the Group’s accounting policies. Estimates and judgements are continually
evaluated and are based on historic experience and other factors, including expectation of future
events that are believed to be reasonable under the circumstances. In the process of applying the
Group’s accounting policies, the management has made the following estimates and judgements
which are significant to the financial statements:
a) Estimate of useful lives and residual values of property, plant and equipment, intangible
assets [notes 6.3, 6.5, 7.1,and 9]
b) Provision for obsolete and slow moving stores, spares and loose tools [note 6.6 and 14]
c) Net realizable values of stock-in-trade [note 6.7 and 15]
d) Provision for expected credit loss [note 6.8 and 16]
e) Provision for employees’ retirement benefits [note 6.11 and 26.2]
f) Provision for taxation [note 6.13 and 40]
g) Judgement and estimate used for determining incremental borrowing rate [note 6.14
and 27]
5. STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED APPROVED

ACCOUNTING STANDARDS
5.1 New / Revised Standards, Interpretations and Amendments
The accounting policies adopted in the preparation of these financial statements are consistent with
those of the previous financial year except that the Group has adopted the following accounting
standards which became effective for the current period:
IAS 19 - Employee Benefits (amendments) - Plan Amendment, Curtailment or Settlement
IAS 28 - Investment in Associates and Joint Ventures - Long-term Interests in Associates

and Joint Ventures (amendments)

IFRS 9 - Financial Instruments - Prepayment Features with Negative Compensation
IFRS 14 - Regulatory Deferral Accounts
IFRS 16 - Leases
IFRS 16 - Leases; to clarify the amendment providing lessees with an exemption from
assessing whether a COVID-19-related rent concession (a rent concession that
reduces lease payments due on or before 30 June 2021) is a lease modification.
IFRIC 23 - Uncertainty over Income Tax Treatments
In addition to the above amendments, improvements to the following accounting standard (under
the annual improvements 2015 - 2017 cycle) has also been adopted:
IFRS 3 & - Business Combinations & Joint Arrangements - When an entity obtains control
IFRS 11 of a business that is a joint operation, it is required to remeasure previously held
interests in that business.
IAS 12 - Income Taxes - Income tax consequences of dividends should be recognised in
profit or loss, regardless how the tax arises.
IAS 23 - Borrowing Costs - If any specific borrowing remains outstanding after the related
asset is ready for its intended use or sale, that borrowing becomes part of the
funds that an entity borrows generally when calculating the capitalisation rate on
general borrowings.
The adoption of the above amendments and improvements to accounting standards did not
have any material effect on the consolidated financial statements except for adoption of IFRS -16
‘Leases’. The analysis of changes introduced by IFRS 16 is explained below:
Impact on adoption of IFRS 16
IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a

Lease,SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions
Involving the Legal Form of a Lease. The standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to account for all leases
under a single on-balance sheet model.
Lessor accounting under IFRS 16 is substantially unchanged under IAS 17. Lessors continue to
classify leases as either operating or finance leases using similar principles as in IAS 17. Therefore,
IFRS 16 did not have an impact on the Group for leases where the Group is the lessor.
The Group has adopted IFRS 16 retrospectively from 01 July 2019 as permitted under the specific
transitional provisions in the standard. Under this method, the standard is applied retrospectively
with cumulative effect of applying the standard recognized at the date of initial application. The
Group has recognised the impact of adoption of this standard as an adjustment to opening balance
of retained earnings on 01 July 2019 where applicable. The Group elected to use the transition
practical expedient allowing the standard to be applied only to contracts that were previously
identified as leases applying IAS 17 and IFRIC 4 at the date of initial application.
The Group also applied the available practical expedients wherein it:
- Used a single discount rate to a portfolio of leases with reasonably similar characteristics.

- Applied the short-term leases exemptions to leases with lease term that ends within 12 months
of the date of initial application.
- Used hindsight in determining the lease term where the contract contained options to extend or
terminate the lease
- has not accessed whether a COVID-19 related rent concession is a lease modification
The SECP through SRO 986(I)/2019 dated 02 September 2019 has granted exemption from the
requirements of IFRS 16 to all companies to the extent of the power purchase agreements executed
before 01 January 2019 as disclosed in note 5.2. Therefore, for the remaining leases, TBCL and
SWPL (subsidiary companies) have adopted IFRS 16 retrospectively from 01 July 2019.
Leases previously accounted for as operating leases
The Group recognized right-of-use assets and lease liabilities for those leases previously classified
as operating leases, except for short-term leases and leases of low-value assets. The right-of-use
assets were recognized based on the amount equal to the lease liabilities, adjusted for any related
prepaid and accrued lease payments previously recognized. Lease liabilities were recognized based
on the present value of the remaining lease payments, discounted using the incremental borrowing
rate at the date of initial application.
Leases previously classified as finance leases
The Group did not change the initial carrying amounts of recognized assets and liabilities at the date
of initial application for leases previously classified as finance leases (i.e. the right-of-use assets and
lease liabilities equal the lease assets and liabilities recognized under IAS 17). The requirements of
IFRS 16 were applied to these leases from 1 July 2019.
Impact of adoption of IFRS-16 against each subsidiary Company is as follows:
Name of company Note reference

Sapphire Textile Mills Limited - Holding company (i)
Sapphire Wind Power Company Limited - Subsidiary Company (ii)
Tricon Boston Consulting Corporation (Private) Limited - Subsidiary (ii)

Company
Sapphire Retail Limited - Subsidiary Company (iii)
(i) Sapphire Textile Mills Limited
The adoption of IFRS 16 did not have material impact on the amounts recognized in the
statement of financial position, statement of profit or loss, statement of cash flows or earnings
per share of the STML as the Holding Company does not have any operating lease contract
which is not short term or of immaterial value.
(ii) Sapphire Wind Power Company Limited and Tricon Boston Consulting Corporation (Private)
Limited

The following summary reconciles the operating lease commitments of SWPCL and TBCL;
power generation companies of the Group at 30 June 2019 to the lease liabilities recognised
on initial application of IFRS 16 at 01 July 2019:

SWPCL TBCL
Rupees Rupees
Operating lease as at 30 June 2019

Operating lease commitments 66,354,820 90,815,225
Accrued liability for operating lease liability 9,123,977 -
75,478,797 90,815,225
Incremental borrowing rate 15.25% 14.97%
Discounted using the lessee’s incremental
borrowing rate at the date of initial application 23,274,419 22,335,816
Lease liability recognised as at 01 July 2019
Of which are:
Current lease liabilities 2,744,000 -
Non-current lease liabilities 20,530,419 22,335,816
23,274,419 22,335,816
The right of use asset relating to the leasehold land at plant site of both the subsidiary Companies,
Jhimpir, was measured at the amount equal to the lease liability recognised in the statement of
financial position as at 01 July 2019.
Right of use asset 23,274,419 22,335,816

The adoption of IFRS 16 affected the following items in
the statement of financial position on 01 July 2019:
Property, plant and equipment - increased by 23,274,419 22,335,816

Lease liability - increased by 23,274,419 22,335,816
Trade and other payables (accrued liability
for operating lease rentals) - decreased by 9,123,977 -
Adjustment to opening retained earnings 9,123,977 -
(iii) Sapphire Retail Limited
‘Sapphire Retail Limited; textile retail company of the Group has lease contracts for rented
premises (retail outlets and warehouse) and vehicles. The effect of adoption IFRS 16 as at 1
July 2019 increase/ (decrease) is as follows:

Leases previously accounted for as operating leases
Rupees
Assets
Right-of-use assets 1,979,344,096
Long term deposits - retail outlets (99,481,724)
Prepayments (28,148,063)
1,851,714,309
Liabilities
Lease liabilities 1,851,714,309
Leases previously classified as finance leases
Assets
Right-of-use assets 16,987,661
Property and equipment - leased assets (16,987,661)
Liabilities
Lease liabilities 14,452,087
Liabilities against assets subject to finance lease (14,452,087)
Incremental borrowing rate Rented premises 14.97% to 15.92%
Vehicles 8.02% to 12.61%
Statement of profit or loss
Profit before adoption of IFRS 16 301,407,977
Lease rental expense not booked (414,050,790)

Depreciation - right-of-use assets 342,471,145
Interest on lease liabilities 299,352,169
Impact on profit before taxation 227,772,524
5.2 Exemption from applicability of certain interpretations to standards for Power Sector Companies
(a) SECP through SRO 986(I)/2019 dated 02 September 2019 has granted exemption from the
requirements of IFRS 16 ‘Leases’ to all companies that have executed their power purchase
agreements before 01 January, 2019. Under IFRS 16, the consideration required to be made
by the lessee for the right to use the asset is to be accounted for as a lease under IFRS
16, ‘Leases’. Consequently, TBCL and SWPL (Subsidiary Companies) wind power plants’
control due to purchase of total output by CPPA-G appears to fall under the scope of IFRS
16. Consequently, if the Group were to follow IFRS 16, the effect on the financial statements
would be as follows:

2020 2019
Rupees Rupees
De-recognition of property, plant and equipment (43,296,543,978) (45,660,284,996)

De-recognition of trade debts (2,589,320,201) (1,665,951,772)
Recognition of lease debtor 45,555,837,666 46,077,223,488
(330,026,513) (1,249,013,280)
Decrease in un-appropriated profit at the beginning of the year (1,249,086,819) (373,237,920)

Increase / (decrease) in profit for the year 919,060,306 (875,848,899)
Decrease in un-appropriated profit at the end of the year (330,026,513) (1,249,013,280)
(b) In respect of companies holding financial assets due from the Government of Pakistan,
SECP through SRO 985(I)/2019 dated 02 September 2019 has notified that the requirements
contained in IFRS 9 with respect to application of Expected Credit Losses method shall not
be applicable till 30 June 2021 and that such companies shall follow relevant requirements of
IAS 39 in respect of above referred financial assets during the exemption period. Accordingly,
the TBCL and SWPCL (Subsidiaries companies) have not followed the requirements of IFRS
9 with respect to application of Expected Credit Losses in respect of trade debts and other
receivables due from CPPA-G.
5.3 Standards, Interpretations and amendments to approved accounting standards that are not yet
effective:
The following amendments to the approved accounting and reporting standards, applicable in
Pakistan, would be effective from the dates mentioned below against the respective standards and
interpretation have not been adopted early by the Group:
Effective date (annual

Standard or Interpretation periods beginning on
or after)
IAS 1 & Presentation of Financial Statements & Accounting Policies, 01 January 2020
IAS 8 Changes in Accounting Estimates and Errors: Definition of
Material, to clarify the definition of material and its alignment
with the definition used in the Conceptual Framework
(amendments)
IAS 1 Presentation of Financial Statements to clarify how to classify 01 January 2022
debt and other liabilities as current or non-current.
IFRS 3 Business combinations to clarify the definition of business 01 January 2020
The amendment updates a reference in IFRS 3 to the
Conceptual Framework for Financial Reporting without
changing the accounting requirements for business
combinations.
IFRS 4 Insurance contracts to clarify extension of the Temporary 01 January 2023
Exemption from Applying IFRS 9 defers the fixed expiry date
of the following temporary exemptions from applying IFRS 9
to annual periods beginning on or after January 01, 2023.
IFRS 9 Financial Instruments to clarify the requirements for hedge 01 January 2020
accounting to support the provision of useful financial
information during the period of uncertainty caused by the
phasing out of interest-rate benchmarks such as interbank
offered rates (IBORs) on hedge accounting.
IFRS 10 & Consolidated Financial Statements & Investment in Associates Not yet finalized
IAS 28 and Joint Ventures - Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture – (Amendment)
IAS 16 Property, plant and equipment to clarify the prohibition on an 01 January 2022
entity from deducting from the cost of an item of property, plant
and equipment any proceeds from selling items produced while
bringing that asset to the location and condition necessary
for it to be capable of operating in the manner intended by
management. Instead, an entity recognizes the proceeds from
selling such items, and the cost of producing those items, in
profit or loss.
IAS 37 Provisions, contingent liabilities and contingent assets 01 January 2022
to specify which costs should be included in an entity’s
assessment whether a contract will be loss-making.
The above new amendments to standards and interpretations are not expected to have any material
impact on the Group’s financial statements in the period of initial application.
In addition to the above new standards and amendments to standard and interpretations, The
IASB has also issued the revised Conceptual Framework for Financial Reporting (the Conceptual
Framework) in March 2018 which is effective for annual periods beginning on or after January 01,
2020 for preparers of consolidated financial statements who develop accounting policies based
on the Conceptual Framework. The revised Conceptual Framework is not a standard, and none
of the concepts override those in any standard or any requirements in a standard. The purpose of
the Conceptual Framework is to assist IASB in developing standards, to help preparers develop
consistent accounting policies if there is no applicable standard in place and to assist all parties to
understand and interpret the standards.
In addition to the above new standards and amendments to standard and interpretations,
improvements to various accounting standards have also been issued by the IASB in May 2020.
Such improvements are generally effective for accounting periods beginning on or after 01 January
2020. The Group expects that such improvements to the standards will not have any material impact
on the Group’s consolidated financial statements in the period of initial application.
Further, the following new standards have been issued by IASB which are yet to be notified by
the Securities and Exchange Commission of Pakistan (SECP) for the purpose of applicability in
Pakistan.
IASB effective date

(annual
Standard
periods beginning on or
after)
IFRS 1 - First time adoption of International Financial 01 July 2009
Reporting Standards
IFRS 17 - Insurance Contracts 01 January 2023
The Group expects that the adoption of the above revision, amendments and interpretation of the
standards will not affect the Group’s financial statements in the period of initial application.

6 SUMMARY OF 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 except as explained in note 5.1.
6.1 Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration transferred, which is measured at acquisition
date fair value, and the amount of any non-controlling interests in the acquiree. For each business
combination, the Group elects to measure the non-controlling interests (NCI) in the acquiree at the
proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed
as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the
acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent
settlement is accounted for within equity. Contingent consideration classified as an asset or liability
that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at
fair value with the changes in fair value recognised in the statement of profit or loss in accordance
with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9 is measured at
fair value at each reporting date with changes in fair value recognised in profit or loss.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interests and any previous interest
held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net
assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and all of the liabilities assumed and
reviews the procedures used to measure the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value of net assets acquired over the aggregate
consideration transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit
from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned
to those units.
Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within
that unit is disposed of, the goodwill associated with the disposed operation is included in the
carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed
in these circumstances is measured based on the relative values of the disposed operation and the
portion of the cash-generating unit retained.
6.2 Investment in associates
An associate is an entity over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control
or joint control over those policies.

The considerations made in determining significant influence is similar to those necessary to

determine control over subsidiaries. The Group’s investment in its associate are accounted for using
the equity method.
Under the equity method, the investment in an associate is initially recognised at cost. The carrying
amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the
associate since the acquisition date. Goodwill relating to the associate is included in the carrying
amount of the investment and is not tested for impairment separately.
The statement of profit or loss reflects the Group’s share of the results of operations of the associate.
Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when
there has been a change recognised directly in the equity of the associate, the Group recognises its
share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and
losses resulting from transactions between the Group and the associate are eliminated to the extent
of the interest in the associate.
The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the
statement of profit or loss and represents profit or loss after tax and non-controlling interests in the
subsidiaries of the associate.
The financial statements of the associate are prepared for the same reporting period as the Group
except for Creadore A/S . When necessary, adjustments are made to bring the accounting policies
in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise
an impairment loss on its investment in its associate. At each reporting date, the Group determines
whether there is objective evidence that the investment in the associate is impaired. If there is such
evidence, the Group calculates the amount of impairment as the difference between the recoverable
amount of the associate and its carrying value, and then recognises the loss within ‘Share of profit
of an associate’ in the statement of profit or loss.
Upon loss of significant influence over the associate, the Group measures and recognises any
retained investment at its fair value. Any difference between the carrying amount of the associate
upon loss of significant influence or joint control and the fair value of the retained investment and
proceeds from disposal is recognised in profit or loss.
The financial statements of foreign associate of which the functional currency is different from
that used in preparing the Group’s consolidated financial statements are translated in functional
currency of the Group. Statement of financial position items are translated at the exchange rate
at the reporting date and the statement of profit or loss items are converted at the average rate
for the period. Any resulting translation differences are recognized under exchange difference on
translating foreign operation in consolidated reserves.
6.3 Property, plant and equipment

Owned assets
Property, plant and equipment are stated at cost less accumulated depreciation except freehold
land and leasehold land, which are stated at cost less impairment losses, if any. Cost comprises
acquisition and other directly attributable costs.
Depreciation is provided on a reducing balance method except to the effect that straight line method
is used for assets of SWPCL and TBCL and charged to the statement of profit or loss to write off
the depreciable amount of each asset over its estimated useful life at the rates specified in note 7.1.
Depreciation on addition in property, plant and equipment is charged from the month of addition
while no depreciation is charged in the month of disposal.

The cost of replacing part of an item of property, plant and equipment is recognized in the carrying
amount of the item if it is probable that the future economic benefits embodied within the part will
flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part
is derecognized, if any. The costs of the day-to-day servicing of property, plant and equipment are
recognized in profit or loss as incurred.
Gains and losses on disposal of an item of property, plant and equipment are determined by
comparing the proceeds from disposal with the carrying amount of property, plant and equipment,
and are recognized in the statement of profit or loss.
The Group reviews the useful life and residual value of property, plant and equipment on a regular
basis. Any change in estimates in future years might affect the carrying amounts of the respective
items of property, plant and equipment with a corresponding effect on depreciation charge.
Capital work-in-progress
Capital work-in-progress is stated at cost accumulated up to the reporting date less accumulated
impairment losses, if any. Capital work-in-progress is recognized as an operating fixed asset when
it is made available for intended use.
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 relevant operating assets
category as and when such items are available for use.
6.4 Investment property
Property held for capital appreciation and rental yield, which is not in the use of the Group is
classified as investment property. Investment property comprises of land. The Group has adopted
cost model for its investment property using the same basis as disclosed for measurement of the
Group’s owned assets.
6.5 Intangible assets
Intangible assets (including computer software) acquired by the Group are stated at cost less
accumulated amortization and impairment losses, if any.
Subsequent expenditure on capitalized intangible assets is capitalized only when it increases the
future economic benefits embodied in the specific assets to which it relates. All other expenditures
are expensed as incurred.
Amortization is charged to the statement of profit or loss on straight line basis over a period ranging
from three to five years. Amortization on addition is charged from the date the asset is put to use
while no amortization is charged from the date the asset is disposed off.
6.6 Stores, spares and loose tools
Stores, spares and loose tools are valued at lower of weighted average cost and net realizable value,
less provision for impairment, if any. Items in transit are valued at cost accumulated to reporting
date. Provision for obsolete and slow moving stores, spares and loose tools is determined based
on management estimate regarding their future usability.

6.7 Stock in trade
Stock-in-trade is stated at the lower of cost and net realizable value, except waste which is valued
at net realizable value. Cost is arrived at on a weighted average basis. Cost of work-in-process
and finished goods include cost of raw materials and appropriate portion of production overheads.
Net realizable value is the estimated selling price in the ordinary course of business less cost of
completion and selling expenses. Provision for obsolete stock is determined based on management
estimate regarding their future usability.
6.8 Trade debts and other receivables
Trade debts and other receivables are recognised and carried at original invoice amount less
expected credit losses (ECL) as explained in note 6.21.1 (d).
6.9 Cash and cash equivalents
Cash and cash equivalents are carried in the statement of financial position at cost. For the purpose
of statement of cash flows, cash and cash equivalents consist of cash-in-hand and balances with
banks, net of temporary overdrawn bank balances.
6.10 Borrowings
Borrowings are initially recorded at the proceeds received. In subsequent periods, borrowings are
stated at amortized cost using the effective interest rate method. Finance costs are accounted for
on an accrual basis and are included in current liabilities to the extent of the amount remaining
unpaid.
6.11 Employee benefits
Compensated absences
The Group accounts for all accumulated compensated absences in the period in which absences
accrue.
Defined benefit plan
The Holding Company operates an unfunded gratuity scheme for its eligible permanent employees
as per terms of employment who have completed minimum qualifying period of service as defined
under the scheme.
The cost of providing benefits is determined using the projected unit credit method, with actuarial
valuation being carried out at each reporting date. The amount arising as a result of remeasurement
are recognized in the statement of financial position immediately, with a charge or credit to other
comprehensive income in the periods in which they occur.
The liability recognized in the statement of financial position in respect of defined benefit plan is the
present value of defined benefit obligation at the end of reporting period.
Defined contribution plan
There is an approved contributory provident fund for its eligible employees as per terms of
employment for which contributions are charged to income for the year.

The Group and the employees make equal monthly contributions to the fund at the rate of 8.33% of
basic salary. The assets of the fund are held separately under the control of trustees.
6.12 Trade and other payables
Liabilities for trade and other amounts payable are measured at cost which is the fair value of the
consideration to be paid in future for goods and services received.
6.13 Taxation
Current year
The charge for current taxation is based on taxable income at the current rate of taxation after taking
into account applicable tax credits, rebates and exemptions available, if any. However, for income
covered under final tax regime, taxation is based on applicable tax rates under such regime.
The income of subsidiary companies - Sapphire Wind Power Company Limited (SWPCL) and Tricon
Boston Consulting Corporation (Private) Limited derived from electric power generation is exempt
from tax as per the terms of clause (132) of Part I of the Second Schedule to the Income Tax
Ordinance, 2001, subject to the conditions and limitations provided therein.
Under clause (11A) of Part IV of the Second Schedule to the Income Tax Ordinance, 2001, the
subsidiary companies (SWPCL and TBCL)) are also exempt from levy of minimum tax on ‘turnover’
under section 113 of the Income Tax Ordinance, 2001. However, full provision is made in the
statement of profit or loss on income from sources not covered under the above clauses at current
rates of taxation after taking into account, tax credits and rebates available, if any.
Deferred tax
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 recognized for all taxable temporary differences
and deferred tax assets are recognized to the extent that it is probable that taxable profits will be
available against which the deductible temporary differences, unused tax losses and tax credits can
be utilized.
Deferred tax is calculated at the rates that are expected to apply for the year when the differences
reverse based on tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited in the statement of profit or loss, except in the case of items
credited or charged to other comprehensive income or equity in which case it is included in other
comprehensive income or equity.
The Holding Company assesses at each reporting date whether its income is subject to tax under
the Final Tax Regime or normal provision of the Income Tax Ordinance, 2001. It considers turnover
trend of last three years as well as expected pattern of taxation of future years in order to recognize
deferred tax.
6.14 Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration.

Group as lessee
Group applies a single recognition and measurement approach for all leases, except for short-
term leases and leases of low-value assets. The Group recognizes lease liabilities to make lease
payments and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e. the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The
cost of right-of-use assets includes the amount of lease liabilities recognized, dismantling cost,
initial direct costs incurred, adjusted by the amount of any prepaid or accrued lease payments
relating to that lease recognized in the statement of financial position immediately before the date
of initial application. Right-of-use assets are depreciated on a straight-line basis over the shorter of
the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost
reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life
of the asset. The right-of-use assets are also subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payments of penalties for terminating the lease, if the
lease term reflects the Group exercising the option to terminate. Variable lease payments that do
not depend on an index or a rate are recognized as expenses (unless they are incurred to produce
inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses implicit rates available in the
lease agreements, however, in case the interest rate implicit in the lease is not readily determinable,
the Group uses incremental borrowing rate at the lease commencement date.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term, a change in the lease payments
(e.g. changes to future payments resulting from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an option to purchase the underlying asset.
Group as lessor

Leases in which the Group does not transfer substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases. Rental income arising is accounted for
on a straight-line basis over the lease terms and is included in revenue in the statement of profit
or loss and other comprehensive income due to its operating nature. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying amount of the leased
asset and recognized over the lease term on the same basis as rental income. Contingent rents are
recognized as revenue in the period in which they are earned.

6.14.1 Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of buildings
(i.e., those leases that have a lease term of 12 months or less from the commencement date and
do not contain a purchase option). Lease payments on short-term leases and leases of low-value
assets are recognized as expense on a straight-line basis over the lease term. During the year, the
Group has recognized an amount of rent expense, in the statement of profit or loss, representing
charge for short-term leases.
6.15 Dividend and appropriation to reserves

Dividend and appropriation to reserves are recognized in the consolidated financial statements in
the period in which they are approved by the shareholders and therefore, they are accounted for as
non-adjusting post balance sheet event.
6.16 Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result
of past events, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and reliable estimate of the amount can be made. Provisions are
reviewed at each reporting date and adjusted to reflect the current best estimate.
6.17 Revenue recognition

Sale of goods
The Group’s contracts with customers for the sale of goods generally include one performance
obligation for both local and export sales i.e. provision of goods to the customers.
(i) Local Sales

The revenue from sale of goods is recognized at the point in time when control of the goods is
transferred to the customer, generally on dispatch of products from the mill.
(ii) Export Sales

The revenue from sale of goods is recognized at the point in time when control of the goods
is transferred to the customer, dependent on the related inco-terms generally on date of bill
of lading or delivery of the product to the port of destination. Therefore, export sales are
recognized upon clearance of shipment at port of discharge.
(iii) Sale of electricity

Revenue on account of energy is recognised on electricity output delivered to CPPA-G whereas
on account of Non-Project Missed Volume is recognised when the event has occurred in terms
of the EPA and underlying data is available. Both are recognised at the rates specified under
the EPA. Delayed payment markup on amounts due under the EPA is accrued on a time
proportion basis by reference to the amount outstanding and the applicable rate of return
under the EPA. Invoices are generally raised on a monthly basis and are due after 30 days from
acknowledgement by CPPA-G.
Rendering of services
The Group provides garments stitching and fabric processing services to local customers. These
services are sold separately and the Group’s contract with the customer for services constitute a
single performance obligation.
Revenue from services is recognized at the point in time, generally on dispatch of the stitched /
processed fabric from the factory. There are no terms giving rise to variable consideration under the
Group’s contracts with its customers.
Other sources of revenue
Return on bank balances is accrued on a time proportion basis by reference to the principal
outstanding and the applicable rate of return.
Dividend income and entitlement of bonus shares are recognized when right to receive such dividend
and bonus shares is established.
Revenue against scrap sales is recognized when control is transferred to customer. Consideration
is always received at the time of delivery.
All other income items are recognized on accrual basis.
6.18 Borrowing cost
Borrowing costs are recognized as an expense in the period in which these are incurred except
to the extent of borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset. Such borrowing costs are capitalized as part of the cost of that
asset up to the date of commencement.
6.19 Foreign currency transactions and translation
Transactions in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing
on the date of transactions. Monetary assets and liabilities denominated in foreign currencies are
translated into Pak Rupee using the exchange rates at reporting date. Non-monetary assets and
liabilities are translated into Pak Rupees at exchange rates prevailing on the date of transaction or
on the date when fair value is determined. Exchange differences on foreign currency transactions
and translations are included in statement of profit or loss, except as follows:
For the Group’s companies in power sector, foreign exchange gains and losses resulting from the
settlement and translation at year-end exchange rates of monetary assets and liabilities denominated
in foreign currencies are capitalized in property, plant and equipment in accordance with SRO
986(I)/2019 dated 02 September 2019 (previously SRO 24(I)/2012) of the SECP. Accordingly, the
exchange differences of the Group’s Power Sector subsidiaries have been capitalized.
6.20 Impairment
The carrying amount of the Group’s assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If such indications exist, the asset’s recoverable
amount is estimated in order to determine the extent of the impairment loss, if any. Impairment loss
is recognized as expense in the statement of profit or loss.
6.21 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

6.21.1 Financial assets
(a) Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised

cost, fair value through other comprehensive income (OCI), and fair value through profit or
loss.
The classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing them.
With the exception of trade receivables that do not contain a significant financing component
or for which the Group has applied the practical expedient, the Group initially measures a
financial asset at its fair value plus, in the case of a financial asset not at fair value through
profit or loss, transaction costs. Trade receivables that do not contain a significant financing
component or for which the Group has applied the practical expedient are measured at the
transaction price determined under IFRS 15 as explained in Note 6.17 Revenue recognition.
In order for a financial asset to be classified and measured at amortised cost or fair value
through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and
interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the
SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model determines whether cash flows
will result from collecting contractual cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the market place (regular way trades) are recognised
on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
b) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Financial assets at amortised cost (debt instruments)
- Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt
instruments)
- Financial assets designated at fair value through OCI with no recycling of cumulative gains
and losses upon derecognition (equity instruments)
- Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
The Company measures financial assets at amortised cost if both of the following conditions
are met:
i) The financial asset is held within a business model with the objective to hold financial assets
in order to collect contractual cash flows, and
Financial assets at amortized cost are subsequently measured using the EIR method and are
subject to impairment. Gains and losses are recognized in profit or loss when the asset is
derecognized, modified or impaired.
The Group’s financial assets at amortized cost includes long term deposits, trade debts, loan
to employees, trade deposits and other receivables.

Financial assets at fair value through OCI (debt instruments)
The Group measures financial assets at fair value through OCI if both of the following
conditions are met:
i) The financial asset is held within a business model with the objective of both holding to collect
contractual cash flows and selling, and
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation
and impairment losses or reversals are recognised in the statement of profit or loss and
computed in the same manner as for financial assets measured at amortised cost. The
remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair
value change recognised in OCI is recycled to profit or loss.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments
as equity instruments designated at fair value through OCI when they meet the definition
of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The
classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. The Group
transfers the gain / loss on investments disposed off to unappropriated profit within equity.
Dividends are recognised as other income in the statement of profit or loss when the right
of payment has been established, except when the Group benefits from such proceeds as a
recovery of part of the cost of the financial asset, in which case, such gains are recorded in
OCI. Equity instruments designated at fair value through OCI are not subject to impairment
assessment.
Based on business model of the Group, it elected to classify irrevocably its equity investments
under this category.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading,
financial assets designated upon initial recognition at fair value through profit or loss, or financial
assets mandatorily required to be measured at fair value. Financial assets are classified as
held for trading if they are acquired for the purpose of selling or repurchasing in the near
term. Derivatives, including separated embedded derivatives, are also classified as held for
trading unless they are designated as effective hedging instruments. Financial assets with
cash flows that are not solely payments of principal and interest are classified and measured
at fair value through profit or loss, irrespective of the business model. Notwithstanding the
criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as
described above, debt instruments may be designated at fair value through profit or loss on
initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial
position at fair value with net changes in fair value recognized in the statement of profit or
loss.

A derivative embedded in a hybrid contract, with a financial liability or non-financial host,
is separated from the host and accounted for as a separate derivative if: the economic
characteristics and risks are not closely related to the host; a separate instrument with the
same terms as the embedded derivative would meet the definition of a derivative; and the
hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are
measured at fair value with changes in fair value recognized in profit or loss. Reassessment
only occurs if there is either a change in the terms of the contract that significantly modifies
the cash flows that would otherwise be required or a reclassification of a financial asset out of
the fair value through profit or loss category.
A derivative embedded within a hybrid contract containing a financial asset host is not
accounted for separately. The financial asset host together with the embedded derivative is
required to be classified in its entirety as a financial asset at fair value through profit or loss.
c) Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized (i.e., removed from the Group’s statement of
financial position) when:
i) The rights to receive cash flows from the asset have expired, or
ii) The Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks
and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks
and rewards of ownership. When it has neither transferred nor retained substantially all of
the risks and rewards of the asset, nor transferred control of the asset, the Group continues
to recognise the transferred asset to the extent of its continuing involvement. In that case,
the Group also recognises an associated liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights and obligations that the Group has
retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the maximum amount
of consideration that the Group could be required to repay.
d) Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments
not held at fair value through profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all the cash flows that the
Group expects to receive, discounted at an approximation of the original effective interest
rate. The expected cash flows will include cash flows from the sale of collateral held or other
credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a
significant increase in credit risk since initial recognition, ECLs are provided for credit losses
that result from default events that are possible within the next 12-months (a 12-month ECL).
For those credit exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected over the remaining
life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in
calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has
established a provision matrix that is based on its historical credit loss experience, adjusted
for forward-looking factors specific to the debtors and the economic environment.
For debt instruments at fair value through OCI, the Group applies the low credit risk
simplification. At each reporting date, the Group evaluates whether the debt instrument is
considered to have low credit risk using all reasonable and supportable information that is
available without undue cost or effort. In making that evaluation, the Group reassesses the
internal credit rating of the debt instrument. In addition, the Group considers that there has
been a significant increase in credit risk when contractual payments are more than 30 days
past due.
The Group considers a financial asset in default when contractual payments are 30 days
past due. However, in certain cases, the Group may also consider a financial asset to be in
default when internal or external information indicates that the Group is unlikely to receive the
outstanding contractual amounts in full before taking into account any credit enhancements
held by the Group A financial asset is written off when there is no reasonable expectation of
recovering the contractual cash flows.
6.21.2 Off-setting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount is reported in the statement of financial
position when there is a legally enforceable right to offset the recognized amounts and there is an
intention to settle either on a net basis, or to realize the asset and settle the liability simultaneously.
6.21.3 Derivative financial instruments

The Group designates derivative financial instruments as either cash flow hedge or fair value
hedge.
a) Cash flow Hedges

The effective portion of the gain or loss on the hedging instrument is recognized in OCI
in the cash flow hedge reserve, while any ineffective portion is recognized immediately in
the statement of profit or loss. The cash flow hedge reserve is adjusted to the lower of the
cumulative gain or loss on the hedging instrument and the cumulative change in fair value of
the hedged item.

The Group designates only the spot element of forward contracts as a hedging instrument.
The forward element is recognized in OCI and accumulated in a separate component of equity
under cost of capital reserve.
The amounts accumulated in OCI are accounted for, depending on the nature of the underlying
hedged transaction. If the hedged transaction subsequently results in the recognition of a non-
financial item, the amount accumulated in equity is removed from the separate component of
equity and included in the initial cost or other carrying amount of the hedged asset or liability.
This is not a reclassification adjustment and will not be recognized in OCI for the period. This
also applies where the hedged forecast transaction of a non-financial asset or non-financial
liability subsequently becomes a firm commitment for which fair value hedge accounting is
applied.
For any other cash flow hedges, the amount accumulated in OCI is reclassified to profit or
loss as a reclassification adjustment in the same period or periods during which the hedged
cash flows affect profit or loss.

b) Fair value hedges
The change in the fair value of a hedging instrument is recognised in the statement of profit or
loss as other expense. The change in the fair value of the hedged item attributable to the risk
hedged is recorded as part of the carrying value of the hedged item and is also recognised in
the statement of profit or loss as other expense.
For fair value hedges relating to items carried at amortised cost, any adjustment to carrying
value is amortised through profit or loss over the remaining term of the hedge using the EIR
method. The EIR amortization may begin as soon as an adjustment exists and no later than
when the hedged item ceases to be adjusted for changes in its fair value attributable to the
risk being hedged.
If the hedged item is derecognised, the unamortized fair value is recognised immediately in
profit or loss.
When an unrecognised firm commitment is designated as a hedged item, the subsequent

cumulative change in the fair value of the firm commitment attributable to the hedged risk is
recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss.
6.21.4 Financial liabilities
Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through
profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments
in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, lease liabilities, accrued interest/
mark up, unclaimed dividend, long term loans and short term borrowings including bank overdrafts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for
trading and financial liabilities designated upon initial recognition as at fair value through
profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of
repurchasing in the near term.
Gains or losses on liabilities held for trading are recognized in the statement of comprehensive
income. Financial liabilities designated upon initial recognition at fair value through profit or
loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are
satisfied. The Group has not designated any financial liability as at fair value through profit
or loss.
b) Financial liabilities at amortized cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured
at amortized cost using the Effective interest rate (EIR) method.

Gains and losses are recognized in statement of comprehensive income when the liabilities
are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortization is included as
finance costs in the statement of comprehensive income.
This category generally applies to the liabilities as disclosed in Note 50.5.
6.22 Earnings per share - basic and diluted
The Group presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic EPS
is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the
weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined
by adjusting the profit or loss attributable to ordinary shareholders of the Group and the weighted
average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
6.23 Segment reporting
Segment reporting is based on the operating (business) segment of the Group. An operating
segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relates to transactions with
any of the Group’s other component. An operating segment’s operating results are reviewed by the
Chief Executive Officer (CEO) to make decision about resources to be allocated to the segment and
assess its performance and for which discrete financial information is available.
Segment results that are reported to the CEO includes items directly attributable to a segment as well
as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate
assets, income tax assets, liabilities and related income and expenditure. Segment assets consist
primarily of property, plant and equipment, inventories, trade debts, loans and advances and cash
and bank balances. Segment liabilities comprise of operating liabilities and exclude items such as
taxation and corporate payables.
The business segments are engaged in providing products and services which are subject to
risks and rewards which differ from the risk and reward of other segment, segments reported are
Spinning, Weaving, Processing, Printing, Home textile products, Textile retail and Power generation
which also reflects the management structure of Group.
6.24 Related party transactions
All transactions with related parties are carried out by the Group at arms’ length. Nature of the
related party relationship as well as information about the transactions and outstanding balances
are disclosed in the relevant notes to these consolidated financial statements.
Note 2020 2019

Rupees Rupees
7. PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 7.1 64,883,952,143 66,878,177,418
Capital work-in-progress 7.7 1,276,023,745 821,327,771
Major spare parts and stand-by equipment 7.9 69,216,256 69,216,256
Right of use asset 7.10 2,101,774,250 -
68,330,966,394 67,768,721,445

7.1 Operating fixed assets
2020

Factory Plant and Electric Fire fighting Electric Office Mills Furniture and
Free - hold Lease - hold Factory building colony and Office building colony and building Computer Vehicles Leased vehicles Total
building machinery installation equipment equipment equipment equipment fixtures
Rupees
Cost 324,259,058 115,038,377 2,975,527,412 511,126,592 420,773,248 1,904,139,017 107,892,467 658,975,329 70,703,452,549 647,103,167 26,470,720 396,809,254 225,896,427 54,562,096 107,109,148 400,060,092 301,461,511 - 79,880,656,464
Accumulated depreciation - - (1,176,490,969) (164,449,036) (74,432,381) (311,353,266) (36,188,869) (246,241,953) (10,214,493,322) (255,311,567) (6,719,398) (98,388,443) (122,252,370) (39,182,765) (50,027,929) (84,424,494) (139,509,944) - (13,019,466,706)
Net book value 324,259,058 115,038,377 1,799,036,443 346,677,556 346,340,867 1,592,785,751 71,703,598 412,733,376 60,488,959,227 391,791,600 19,751,322 298,420,811 103,644,057 15,379,331 57,081,219 315,635,598 161,951,567 - 66,861,189,758
For the year ended

30 June 2020
Additions
Additions during the year
-Additions 31,036,499 - 184,697,709 73,768,902 - 2,561,308 - 4,000,000 995,640,755 33,354,989 2,629,700 61,422,886 24,789,954 371,080 8,909,010 64,010,652 45,740,409 - 1,532,933,853
-Net exchange loss

- - - - - 28,586,437 - - 988,630,880 - - - - - - - - - 1,017,217,317
capitalised (Note 7.4)
Disposals:
Exchange loss adjustments - - 13,802,693 - - - - - 48,077,615 - - - - - - - - - 61,880,308
- Cost - - - - - - - - 289,504,573 - - - 2,415,023 594,865 - - 54,277,208 - 346,791,669
- Depreciation - - - - - - - - (194,383,740) - - - (1,604,184) (594,865) - - (22,740,445) - (219,323,234)
- - - - - - - - 95,120,833 - - - 810,839 - - - 31,536,763 - 127,468,435
Depreciation for the year - - (188,929,314) (20,070,107) (17,317,043) (89,707,972) (3,259,134) (82,150,818) (3,740,323,431) (31,708,943) (2,104,776) (44,547,981) (37,725,121) (3,698,390) (6,469,513) (35,401,804) (34,625,695) - (4,338,040,042)
355,295,557 115,038,377 1,781,002,145 400,376,351 329,023,824 1,534,225,524 68,444,464 334,582,558 58,589,708,983 393,437,646 20,276,246 315,295,716 89,898,051 12,052,021 59,520,716 344,244,446 141,529,518 - 64,883,952,143
Cost 355,295,557 115,038,377 3,160,225,121 584,895,494 420,773,248 1,935,286,762 107,892,467 662,975,329 72,398,219,611 680,458,156 29,100,420 458,232,140 248,271,358 54,338,311 116,018,158 464,070,744 292,924,712 - 82,084,015,965
Accumulated depreciation - - (1,379,222,976) (184,519,143) (91,749,424) (401,061,238) (39,448,003) (328,392,771) (13,808,510,628) (287,020,510) (8,824,174) (142,936,424) (158,373,307) (42,286,290) (56,497,442) (119,826,298) (151,395,194) - (17,200,063,822)
355,295,557 115,038,377 1,781,002,145 400,376,351 329,023,824 1,534,225,524 68,444,464 334,582,558 58,589,708,983 393,437,646 20,276,246 315,295,716 89,898,051 12,052,021 59,520,716 344,244,446 141,529,518 - 64,883,952,143

- - 10 5 5 5 & 10 5 20 5 & 10 10 10 10 & 33.33 30 10 & 33.33 10 10 & 15 20 -
annum
Annual Report 2020

155
156
2019

Factory Plant and Electric Fire fighting Electric Office Mills Furniture and
Free - hold Lease - hold Factory building colony and Office building colony and building Computer Vehicles Leased vehicles Total
building machinery installation equipment equipment equipment equipment fixtures
Rupees

Cost 324,259,058 115,038,377 2,194,484,734 441,296,480 403,323,748 628,586,477 78,211,563 503,492,543 26,665,076,505 611,828,312 19,902,818 245,708,822 185,387,930 51,364,521 98,169,445 294,566,541 424,833,808 52,297,500 33,337,829,182
Accumulated depreciation - - (1,050,328,910) (157,509,427) (56,265,071) (240,356,384) (25,319,670) (172,748,866) (7,732,843,150) (225,938,972) (5,748,414) (63,491,225) (83,916,638) (34,739,288) (43,182,152) (53,964,386) (187,366,609) (9,554,620) (10,143,273,782)
Net book value - restated 324,259,058 115,038,377 1,144,155,824 283,787,053 347,058,677 388,230,093 52,891,893 330,743,677 18,932,233,355 385,889,340 14,154,404 182,217,597 101,471,292 16,625,233 54,987,293 240,602,155 237,467,199 42,742,880 23,194,555,400
Reclassification adjustments:
-Cost - - - (10,396,120) - - 10,396,120 - - - - - - - - - - - -
-Accumulated Depreciation - - 1,902,775 3,875,207 - (1,902,775) (3,875,207) - 9,514 (6,642) 372,564 6,642 165,379 (165,379) (372,254) - (9,824) - -
Net book value - adjusted 324,259,058 115,038,377 1,146,058,599 277,266,140 347,058,677 386,327,318 59,412,806 330,743,677 18,932,242,869 385,882,698 14,526,968 182,224,239 101,636,671 16,459,854 54,615,039 240,602,155 237,457,375 42,742,880 23,194,555,400
For the year ended

30 June 2020
Additions during the year
-Additions - - 462,077,461 80,226,232 17,449,500 1,275,552,540 19,284,784 186,006,762 33,331,492,197 35,849,684 6,567,902 164,230,339 43,941,807 3,513,271 8,939,703 106,831,761 58,116,623 10,506,900 35,810,587,466
-Net exchange loss

- - 318,965,217 - - - - - 11,305,868,390 - - - - - - - - - 11,624,833,607
capitalised
Disposals:
- Cost - - - - - - - 30,523,976 598,984,543 574,829 - 13,129,907 3,433,310 315,696 - 1,338,210 181,488,920 42,558,500 872,347,891
- Depreciation - - - - - - - (14,110,352) (448,912,208) (560,277) - (2,189,697) (2,074,745) (290,392) - (195,465) (90,169,182) (14,401,512) (572,903,830)
- - - - - - - 16,413,624 150,072,335 14,552 - 10,940,210 1,358,565 25,304 - 1,142,745 91,319,738 28,156,988 299,444,061
Depreciation for the year - - (128,064,834) (10,814,816) (18,167,310) (69,094,107) (6,993,992) (87,603,439) (2,930,571,894) (29,926,230) (1,343,548) (37,093,557) (40,575,856) (4,568,490) (6,473,523) (30,655,573) (42,302,693) (8,105,132) (3,452,354,994)
324,259,058 115,038,377 1,799,036,443 346,677,556 346,340,867 1,592,785,751 71,703,598 412,733,376 60,488,959,227 391,791,600 19,751,322 298,420,811 103,644,057 15,379,331 57,081,219 315,635,598 161,951,567 16,987,661 66,878,177,418
Cost 324,259,058 115,038,377 2,975,527,412 511,126,592 420,773,248 1,904,139,017 107,892,467 658,975,329 70,703,452,549 647,103,167 26,470,720 396,809,254 225,896,427 54,562,096 107,109,148 400,060,092 301,461,511 20,245,900 79,900,902,364
Accumulated depreciation - - (1,176,490,969) (164,449,036) (74,432,381) (311,353,266) (36,188,869) (246,241,953) (10,214,493,322) (255,311,567) (6,719,398) (98,388,443) (122,252,370) (39,182,765) (50,027,929) (84,424,494) (139,509,944) (3,258,240) (13,022,724,946)
Net book value - 2019 324,259,058 115,038,377 1,799,036,443 346,677,556 346,340,867 1,592,785,751 71,703,598 412,733,376 60,488,959,227 391,791,600 19,751,322 298,420,811 103,644,057 15,379,331 57,081,219 315,635,598 161,951,567 66,878,177,418
16,987,661*

- - 10 5 5 5 & 10 5 20 5 & 10 10 & 33.33 10 10 30 10 & 33.33 10 10 & 15 20 20
annum
*Assets subject to finance lease have been transferred to right of use assets after the adoption of IFRS 16 (refer to note 7.10).
7.2 Freehold lands of the Holding Company are located at Sheikhupura, Kasur and Lahore with an
area of 1,099,016 (2019: 1,077,327) square yards and leasehold lands of the Holding Company are
located at Kotri, Nooriabad and Karachi with an area of 435,964 (2019: 435,964) square yards.
7.3 Freehold land includes Rs.80.685 million (2019: Rs. 80.685 million) representing the Holding
Company’s 30% share of jointly controlled property located at Block-D/1, Gulberg, Lahore, registered
in the name of the Holding Company along with Sapphire Fibres Limited, Diamond Fabrics Limited,
and Sapphire Finishing Mills Limited (Associated Companies).
7.4 Net exchange loss capitalised
This represents exchange difference capitalised in accordance with SRO 24(I)/2019 dated 02
September 2019 of the SECP (as fully explained fully in note 6.19 to these consolidated financial
statements). Had the subsidiary companies followed IAS 21 “The Effects of Changes in Foreign
Exchange Rates”, the effect on the consolidated financial statements would be as follows:
Note 2020 2019

Rupees Rupees
Statement of financial position:

Decrease in the carrying amount of property,
plant and equipment and
un-appropriated profit as at 30 June (13,181,207,906) (12,837,721,668)
Statement of profit or loss:

Decrease in cost of sales 691,596,123 128,160,959
Increase in other expenses (1,017,217,317) (11,624,833,607)
Decrease in profit for the year (325,621,194) (11,496,672,648)
7.5 The depreciation charge for the year has been allocated as follows:
Cost of sales 34 4,124,720,399 3,226,085,387

Distribution cost 35 145,323,853 148,818,386
Administrative expenses 36 67,995,790 77,451,221
4,338,040,042 3,452,354,994

7.6 Particulars of disposed operating fixed assets during the year, having book value of five hundred thousand rupees
or more are as follows:
Accumulated Net Book Sale Profit / Particulars of Buyers

Cost Mode of disposal
Depreciation Value Proceeds (loss) / Relationship (if any)
Rupees
Plant and Machinery
R.A Engineering Services (Private)

Gas Generator 104,490,065 59,031,569 45,458,495 16,812,000 (28,646,495) Negotiation
Limited
Auto coro open end machine 26,699,603 21,840,764 4,858,839 7,000,000 2,141,161 - - - - do - - - - A.R.Textile
Auto coro open end machines 16,770,074 14,529,210 2,240,864 4,393,046 2,152,182 - - - - do - - - - Lyallpur Textiles
Slub Device 3,741,579 3,134,625 606,954 606,954 - - - - - do - - - - Lyallpur Textiles
Auto coro open end machine 11,984,352 10,050,009 1,934,343 3,500,000 1,565,657 - - - - do - - - - Combined Spinning (Private) Limited
Auto coro open end machines 25,759,462 20,256,521 5,502,941 7,000,000 1,497,059 - - - - do - - - - Multan Spinning Mills
Auto coro open end machine 8,696,729 7,455,945 1,240,784 2,500,000 1,259,216 - - - - do - - - - Noor Tex
Loptex Sorter machine 14,073,537 10,773,517 3,300,020 3,350,000 49,980 - - - - do - - - - Nadeem Textile Mills Limited
Vortex MVS machines 30,999,479 18,087,672 12,911,806 14,500,000 1,588,194 - - - - do - - - - H.A.R Textile Mills Limited
Loptex Sorter machine 8,975,089 6,038,679 2,936,409 2,945,455 9,046 - - - - do - - - - Abdullah Fibres (Private) Limited
Chemtronics Water Services (Private)
Water Treatment machine 1,800,000 725,800 1,074,200 1,100,000 25,800 - - - - do - - - -
Limited
Chain Grate, Coal Firing System
5,955,052 990,027 4,965,025 4,307,785 (657,240) - - - - do - - - - Prime Oil And Ghee Mills Limited
machines
Steam Boiler machine 12,000,000 5,882,524 6,117,476 7,300,000 1,182,524 - - - - do - - - - M.A. Oils (Private) Limited
271,945,020 178,796,863 93,148,157 75,315,240 (17,832,917)
Vehicles - Sold to employees
Suzuki Swift 1,463,000 663,486 799,514 799,514 - As per Company Policy Mr. Sami Ud Din
Honda Civic 2,353,000 745,640 1,607,360 1,607,360 - - - - - do - - - - Mr. Alam Zeb Burki
Suzuki Cultus 1,250,000 425,000 825,000 825,000 - - - - - do - - - - Mr. Adnan Younus
Suzuki Cultus 1,250,000 350,000 900,000 900,000 - - - - - do - - - - Mr. Zain-Ul-Abideen
Suzuki Cultus 1,099,000 555,068 543,932 543,932 - - - - - do - - - - Mr. Zahid Siddique
Honda Civic 2,353,000 857,538 1,495,462 1,495,462 - - - - - do - - - - Mr.Muhammad Sohaib Khan
Suzuki Swift 1,418,000 866,228 551,772 551,772 - - - - - do - - - - Mr. Muhammad Irfan Akhtar
Toyota Corolla 1,880,500 906,986 973,514 973,514 - - - - - do - - - - Mr. Faisal Arif
Honda Civic 2,403,000 698,472 1,704,528 1,704,528 - - - - - do - - - - Mr. Sarmad Munir
Suzuki Cultus 1,250,000 527,500 722,500 722,500 - - - - - do - - - - Mr. Faisal Nazir
Toyota Corolla 1,796,302 1,066,011 730,291 762,043 31,752 - - - - do - - - - Mr. Danish Hanif
Toyota Vezel 2,932,000 1,108,829 1,823,171 2,000,000 176,829 - - - - do - - - - Mr. Saquib Saeed
Honda Civic 2,577,500 1,104,887 1,472,613 1,457,226 (15,387) - - - - do - - - - Mr. Muhammad Asif
Toyota Corolla 2,080,000 1,153,484 926,516 1,011,000 84,484 - - - - do - - - - Mr. Waseem Mahmood
Honda Civic 2,926,257 969,567 1,956,690 1,995,056 38,366 - - - - do - - - - Mr. Saqib Younas
29,031,559 11,998,696 17,032,863 17,348,907 316,044
Vehicles - Sold to third parties
Toyota Corolla 2,379,000 198,250 2,180,750 2,425,000 244,250 Negotiation Mr. Muhammad Asif Ashraf
Honda City 1,804,000 263,584 1,540,416 1,854,000 313,584 - - - - do - - - - Ms. Samreen Sajid
Toyota Fortuner 6,230,500 1,574,240 4,656,260 4,901,250 244,990 - - - - do - - - - Mr. Malik Taimur Ali Noon
Suzuki Swift 1,327,000 627,759 699,241 1,100,000 400,759 - - - - do - - - - Mr. Waqas Dilawar
Suzuki Swift 1,463,000 708,742 754,258 1,200,000 445,742 - - - - do - - - - Mr. Naveed Ahmed Khan
Toyota Hilux Revo G 3,749,000 861,229 2,887,771 3,795,000 907,229 Loss insurance claim Adamjee Insurance Company Limited
16,952,500 4,233,804 12,718,696 15,275,250 2,556,554
Other assets having book value

less than Rs.500,000 28,862,590 24,293,871 4,568,719 7,437,942 2,869,223
2020 346,791,669 219,323,234 127,468,435 115,377,339 (12,091,096)
2019 872,347,891 572,903,830 299,444,061 268,240,755 (31,203,306)

Note 2020 2019
Rupees Rupees
7.7 Capital work-in-progress

Freehold land and building 7.7.1 443,173,511 435,749,570
Civil works and buildings 167,976,421 154,608,429
Plant and machinery 7.7.2 660,175,499 184,923,436
Electric installation 543,314 44,904,336
Mills equipment 4,155,000 -
Computer - 642,000
Advance for vehicles - 500,000
1,276,023,745 821,327,771
7.7.1 This represents land and building owned by SRL (Subsidiary Company) requiring levelling /
construction. The land measures four canals, seven marlas and fifty square feet and is situated at
Plot No. 21 Block H, Gulberg II Scheme, Lahore.
7.7.2 Additions to capital work in progress include borrowing cost amounting to Rs.11,199,800 (2019: Rs.
419,125) at the borrowing rate of 2.75% to 14.65% (2019: 2.50%) pertaining to Holding Company.
7.8 Movement of capital work-in-progress during the year is as follows:
Additions Transferred to
01 July 2019 during the operating fixed 30 June 2020
year assets
Rupees
Particulars
Freehold land and building 435,749,570 7,423,941 - 443,173,511
Civil works and buildings 154,608,429 269,731,144 (256,363,152) 167,976,421
Plant and machinery 184,923,436 1,432,067,491 (956,815,428) 660,175,499
Electric installation 44,904,336 840,652 (45,201,674) 543,314
Mills equipment - 4,310,000 (155,000) 4,155,000
Computer 642,000 939,444 (1,581,444) -
Advance for vehicles 500,000 16,278,650 (16,778,650) -
821,327,771 1,731,591,322 (1,276,895,348) 1,276,023,745
7.9 These spare parts and stand-by equipment are in the possession and control of SWPCL’s (subsidiary
company) O&M contractor, General Electric, for smooth and uninterrupted operation and maintenance
of the Company’s plant as per the terms of the O&M Agreement dated 13 October 2011 and as
amended by Novation Agreement dated 29 June 2018. Previously, these were in the possession and
control of former O&M contractor, HydroChina as per the terms of the O&M Agreement dated 12
December 2013. Upon completion of the term of the said agreement on 07 March 2018, HydroChina
handed over the major spare parts and stand-by equipment to General Electric. As per the terms of
the above mentioned O&M Agreement, General Electric will replenish and hand over these items to
the Subsidiary Company on the expiry of the respective O&M Agreement i.e. eight years from the
Taking-Over Date.

7.10 Right of use asset
Set out below are the carrying amounts of right-of-use assets recognized and the movements during
the year.
Rented
Note Vehicles Land Total
premises
Rupees
As at 1 July 2019 1,979,344,096 16,987,661 65,946,318 2,062,278,075

Additions during the year 393,201,598 3,950,000 - 397,151,598
Depreciation expense 7.10.5 (342,471,145) (2,257,670) (3,644,091) (348,372,906)
Disposals during the year-WDV - (9,282,517) - (9,282,517)
As at 30 June 2020 2,030,074,549 9,397,474 62,302,227 2,101,774,250
Note reference 7.10.1 7.10.2 7.10.3
7.10.1 SRL (subsidiary) has lease contracts for rented premises (retail outlets). Leases of rented premises
generally have lease terms between 2 and 12 years. The subsidiary company’s obligations under
its leases are secured by the lessor’s title to the leased assets. Generally, the Company is restricted
from assigning and subleasing the leased assets with a few exceptions. There are several lease
contracts that include extension and termination options and variable lease payments based on
future events. The subsidiary company has other leases for rented premises with a lease term of
12 months or less, for which the Company applies the short-term leases recognition exemption for
these leases.
7.10.2 SRL(subsidiary) has lease contracts for vehicles. Leases of vehicles have lease terms between 4
and 5 years. The subsidiary company’s obligations under its leases are secured by the lessor’s title
to the leased assets. Generally, subsidiary company is restricted from assigning and subleasing
the leased assets with a few exceptions.
7.10.3 This represents right of use asset relating to land obtained from Government of Sindh, Land
Utilization Department, through Deputy Commissioner Thatta for a lease of 1,284 acres for each of
the three projects of TBCL (subsidiary) and land acquired from AEDB, situated in Jhimpir, District
Thatta for a lease of 1,372 acres on which the wind power plant of SWPCL (subsidiary) is installed
for a period of thirty years.
7.10.4 Particulars of disposed leased vehicles during the year is as follows:

Net
Accumulated Sale Profit /
Cost Book Mode of disposal
Depreciation Proceeds (loss)
Value
Rupees
Suzuki Swift - Mr. Muhammad Wasim - Employee 1,375,000 491,649 883,351 901,389 18,038 Company Policy
Suzuki Swift - Mr. Hammad Ahmed - Employee 1,375,000 491,638 883,362 919,417 36,055 - - - - do - - - -
Honda City - Mr. Juniad Khan - Employee 1,703,000 407,962 1,295,038 1,316,987 21,949 - - - - do - - - -
Suzuki Swift - Mr. Rao Zulifqar - Ex Employee 1,571,000 377,040 1,193,960 1,090,600 (103,360) - - - - do - - - -
Honda City - Mr. Zeeshan Haider - Ex Employee 1,903,900 336,355 1,567,545 1,472,944 (94,601) - - - - do - - - -
Suzuki Swift - Mr. Ali Khan - Ex Employee 1,375,000 553,667 821,333 855,566 34,233 - - - - do - - - -
Suzuki Cultus - Mr. Shahid Manzoor - Ex Employee 1,340,000 275,445 1,064,555 1,064,555 - - - - - do - - - -
Honda Civic - Mr. Muhammad Imran - Third party 2,353,000 779,627 1,573,373 1,573,373 - Negotiation
12,995,900 3,713,383 9,282,517 9,194,831 (87,686)

7.10.5 The depreciation charge for the year has been allocated as follows:
Note 2020 2019

Rupees Rupees
Cost of sales 34 4,630,536 -

Distribution cost 35 343,011,487 -
Administrative expenses 36 730,883 -
348,372,906 -
8 INVESTMENT PROPERTY
Freehold land 31,750,000 31,750,000
8.1 This represents free-hold land of Holding Company situated at Raiwind Road, Lahore having an area
of 5,000 square yards.
8.2 Fair value of the investment property, based on estimation was Rs.70 million (2019: Rs.45 million).
9 INTANGIBLE ASSETS
Computer software 9.1 3,320,175 2,382,417
Goodwill 9.2 455,540,310 455,540,310
458,860,485 457,922,727
9.1 Computer software
Net carrying value as at 01 July 2019
Net book value as at July 01 2,382,417 17,925,194
Addition during the year 9.1.1 3,290,960 722,236
Write-off - (8,969,460)
Amortization during the year 9.1.2 (2,353,202) (7,295,553)
Net book value as at 30 June 2020 3,320,175 2,382,417
Gross carrying value as at 30 June 2020
Cost 38,660,733 35,369,773

Accumulated amortization (35,340,558) (32,987,356)
Net book value as at 30 June 2020 3,320,175 2,382,417
Amortization rate % per annum 20 & 33.33 20 & 33.33
9.1.1 This represents inventory and point of sale (POS) software and garments simulator software of SRL
(Subsidiary Company).

9.1.2 Amortization expense for the year has been charged to other operating expenses.
9.2 Goodwill represents excess of the amount paid by the Holding Company over fair value of net
assets of TBCL (Subsidiary company) for the purchase of the Subsidiary Company in 2015.
TBCL is considered a separate cash generating unit of the Group and there is no indicator of its
impairment.
Note 2020 2019

Rupees Rupees
10 LONG TERM INVESTMENTS

Related parties - under eqity method
Associates - listed 10.1 93,345,238 85,189,188

- unlisted 10.2 1,202,426,434 1,156,949,826
1,295,771,672 1,242,139,014
Other companies - Fair value through other

comprehensive income 10.3 3,614,599,820 4,150,418,072
4,910,371,492 5,392,557,086
10.1 Investments in associates - listed
2020 2019 2020 2019

Reliance Cotton Spinning Mills

313,295 313,295 93,345,238 85,189,188
Limited (RCSM)
(2019: 3.04%)
Fair value of the ordinary shares as at
30 June 2020 amounted to
Rs. 40.102 million (24 June 2019:
Rs. 45.741 million).
10.1.1 The movement in the value of equity investment is as follows:
2020 2019
Rupees Rupees
Cost 8,461,851 8,461,851

Dividend received (2,506,360) (2,036,418)
Accumulated profit 87,389,747 78,763,755
93,345,238 85,189,188
Investment in RCSM represents 313,295 fully paid ordinary shares of Rs.10 each representing 3.04%
(2019: 3.04%) of RCSM’s issued, subscribed and paid-up capital as at 30 June 2020. RCSM was
incorporated on 13 June 1990 as a public limited company and its shares are quoted on Pakistan
Stock Exchange. The principal activity of RCSM is manufacturing and sale of yarn. RCSM is an
associate of the Group on the basis of common directorship.
10.2 Investments in associates - unlisted
2020 2019 Note 2020 2019

4,234,500 4,234,500 Sapphire Power Generation 10.2.1 369,108,608 366,555,937

Limited (SPGL)
(2019: 26.43%)
6,000,000 6,000,000 Sapphire Electric Company 10.2.2 233,878,141 201,011,680
Limited (SECL)
(2019: 1.42%)
10,000 10,000 Sapphire Holding Limited 10.2.3 4,322,127 3,802,866
(SHL)
(2019: 0.05%)
23,500,000 23,500,000 Sapphire Dairies (Private) 10.2.4 273,136,997 278,957,283
Limited (SDL)
(2019: 21.36%)
3,675 3,675 Foreign Company - Creadore 10.2.5 321,980,561 306,622,060
A/S Denmark (Creadore A/S)
Beneficial ownership:
Sapphire Textile Mills
Limited - 49% (2019: 49%)
and Beirholm holding A/S
Nordager 20, 6000 Kolding,
Denmark- 51% (2019: 51%)
10.2.6 1,202,426,434 1,156,949,826
10.2.1 Investment in SPGL represents 4,234,500 fully paid ordinary shares of Rs.10 each representing
26.43% (2019: 26.43%) of SPGL’s issued, subscribed and paid-up capital as at 30 June 2020.
SPGL was incorporated in Pakistan as a public limited company and is principally engaged in the
business of electric power generation and distribution.
10.2.2 Investment in SECL represents 6,000,000 fully paid ordinary shares of Rs.10 each representing
1.42% (2019: 1.42%) of SECL’s issued, subscribed and paid-up capital as at 30 June 2020. SECL
was incorporated in Pakistan as a public limited company and the principal activity of the company
is to build, own, operate and maintain a combined cycle power station having a net capacity of 212
MW at Muridke, Sheikhupura. SECL is an associate of the Group due to common directorship.
10.2.3 Investment in SHL represents 10,000 fully paid ordinary shares of Rs.10 each representing 0.05%
(2019: 0.05%) of SHL’s issued, subscribed and paid-up capital as at 30 June 2020. SHL was
incorporated in Pakistan as a public limited company and the main business of the Company is to
invest in the shares of associated companies and other business. SHL is an associate of the Group
due to common directorship.
10.2.4 Investment in SDL represents 23,500,000 fully paid ordinary shares of Rs.10 each representing
18.80% (2019: 21.36%) of SDL’s issued, subscribed and paid-up capital as at 30 June 2020. SDL
was incorporated as a private limited company and is principally engaged in production and sale
of milk and milk products.

10.2.5 Investment in Creadore represents 3,675 fully paid ordinary shares of DKK1000 each representing
49% (2019: 49%) of Creadore’s share capital as at 30 April 2020. Creadore is principally engaged
in product development and marketing of textiles for the global hotel industry.
10.2.6 The movement in the value of equity investments is as follows:
Creadore
SPGL SECL SHL SDL
A/S
Rupees
2020
Cost 113,705,500 60,000,000 100,000 235,000,000 58,708,925
Dividend received - (18,000,000) - - (42,017,500)
Accumulated profit 255,403,108 191,878,141 4,222,127 38,136,997 305,289,136

369,108,608 233,878,141 4,322,127 273,136,997 321,980,561
2019
Cost 113,705,500 60,000,000 100,000 235,000,000 58,708,925
Dividend received - - (17,500) - (35,796,949)
Accumulated profit 252,850,437 141,011,680 3,720,366 43,957,283 283,710,084

366,555,937 201,011,680 3,802,866 278,957,283 306,622,060
The summary of financial statements / reconciliation of the associates is as follows:
30 April
30 June 2020
2020
Creadore
RCSML SPGL SECL SHL SDL
A/S
Rupees
Non-current assets 2,946,376,178 1,268,186,963 12,137,766,684 9,284,764,318 2,765,787,162 -

Current assets 4,264,333,101 351,903,858 12,134,585,333 101,927,336 448,120,800 832,884,948
7,210,709,279 1,620,090,821 24,272,352,017 9,386,691,654 3,213,907,962 832,884,948
Non-current and
current liabilities 4,144,240,968 223,306,183 7,744,130,904 702,181,242 1,761,051,593 175,781,760
Net assets 3,066,468,311 1,396,784,637 16,528,221,113 8,684,510,412 1,452,856,369 657,103,186
Reconciliation to carrying amount

Opening net assets 2,798,535,314 1,387,124,794 14,205,540,890 7,641,151,557 1,305,757,496 625,759,309
Right shares issued - - - - 150,000,000 -
Profit for the year 392,882,264 39,693,688 3,594,744,295 1,235,854,678 12,068,020 116,026,850
Other comprehensive
(loss) / income (47,577,492) (30,016,282) - (198,231,223) (1,361,943) -
Other adjustments 4,964,225 (17,563) - 5,735,400 (13,607,204) 10,027,030
Dividend paid during
the year (82,336,000) - (1,272,064,072) - - (94,710,000)
Closing net assets 3,066,468,311 1,396,784,637 16,528,221,113 8,684,510,412 1,452,856,369 657,103,186
Group's share (%) 3.04% 26.43% 1.42% 0.05% 18.80% 49.00%

Carrying amount of
investment 93,345,238 369,108,608 233,878,141 4,322,127 273,136,997 321,980,561

30 April
30 June 2020
2020
Creadore
A/S
Rupees
Revenue 5,986,720,080 540,000 10,225,387,536 5,393,106 1,428,308,718 1,338,916,000
Profit before tax 461,316,957 62,150,168 3,595,016,880 1,321,674,466 68,398,242 148,747,550
Profit after tax 392,882,264 39,693,688 3,594,744,295 1,235,854,678 12,068,020 116,026,850
30 April
30 June 2019
2019
Creadore
A/S
Rupees
Non-current assets 2,798,087,483 1,208,437,851 12,711,139,304 8,156,112,550 2,355,473,666 -

Current assets 3,264,523,208 310,117,593 12,149,706,721 108,714,997 316,673,348 793,263,364
6,062,610,691 1,518,555,444 24,860,846,025 8,264,827,547 2,672,147,014 793,263,364

Non-current and
current liabilities 3,264,075,377 131,430,651 10,655,305,135 623,675,990 1,366,389,518 167,504,058
Net assets 2,798,535,314 1,387,124,793 14,205,540,890 7,641,151,557 1,305,757,496 625,759,306
Reconciliation to carrying amount
Opening net assets 2,425,593,005 1,427,056,270 11,025,494,570 6,596,393,913 1,146,522,825 416,057,628
Profit for the year 517,324,312 25,539,768 3,180,046,320 1,501,117,021 161,136,640 149,463,215
Other comprehensive
income / (loss) (69,893,791) (60,365,252) - (434,342,868) (1,351,758) -
Other adjustments (7,590,212) (5,105,992) - 13,146,486 (550,211) 133,293,463
Dividend paid during

the year (66,898,000) - - (35,162,995) - (73,055,000)
Closing net assets 2,798,535,314 1,387,124,794 14,205,540,890 7,641,151,557 1,305,757,496 625,759,306
Group's share
(percentage) 3.04% 26.43% 1.42% 0.05% 21.36% 49.00%
Carrying amount of
investment 85,189,188 366,555,937 201,011,680 3,802,866 278,957,283 306,622,060
Revenue 5,379,009,395 93,065,004 14,872,883,864 36,868,689 1,088,576,356 1,226,221,810
Profit before tax 550,889,260 36,629,274 3,180,578,910 1,560,535,943 202,222,259 191,299,790
Profit after tax 517,324,312 25,539,768 3,180,046,320 1,501,117,021 161,136,640 149,463,215
10.2.7 The share of profit or loss after acquisition is recognized based on financial statements as at 30
June 2020 except Creadore A/S, Denmark whose financial year ended on 30 April 2020.

10.3 Other companies - Fair value through other comprehensive income
2020 2019 Note 2020 2019

Quoted - conventional
4,061,840 4,061,840 MCB Bank Limited 217,880,150 217,880,150
Fair value adjustment 440,422,259 490,707,838
658,302,409 708,587,988
29,623,714 29,623,714 Habib Bank Limited 5,926,153,798 5,926,153,798

Fair value adjustment (3,056,504,623) (2,570,971,950)
2,869,649,175 3,355,181,848
Unquoted
7,055,985 7,055,985 Novelty Enterprises (Private) 10.3.1 86,148,236 86,148,236
Limited
50,000 50,000 TCC Management Services 500,000 500,000
(Private) Limited
3,614,599,820 4,150,418,072
10.3.1 This represents 12.5% equity interest of the Holding Company in Novelty Enterprises (Private)
Limited, a privately held entity. The investee Company has not yet commenced its operations
accordingly fair value of the investment cannot be determined. However, based on the latest
available financial statements, the management is of the view that there are no indications of
impairment and the carrying amount has been considered equal to the fair value.
10.3.2 The Holding Company has pledged 3.332 million (2019: 2.832 million) shares of MCB Bank Limited,
0.150 million (2019: 1 million) shares of Engro Corporation Limited, 12.906 million (2019: 18.906
million) shares of Bank Al-Habib Limited and 27.177 million (2019: 21.177 million) shares of Habib
Bank Limited with various financial institutions for arrangement of finance facilities.
10.3.3 The Holding Company has pledged 4.407 million (2019: 4.407 million) shares of Engro Corporation
Limited, 7.200 million (2019: 9.2 million) shares of Bank Al-Habib Limited, 0.730 million (2019:
1.230 million) shares of MCB Bank Limited, 2.447 million (2019: 2.447 million) shares of Habib
Bank Limited and Nil (2019: 30.183 million) shares of K- Electric Limited with Standard Chartered
Bank as security for issuance of standby letter of credit amounting to US $ 8.791 million in favour
of a financial institution for Debt Service Reserve support for TBCL (2019: US $ 11.300 million in
favour of a financial institutions for contingency support in TBCL in accordance with Sponsors
Support agreement).

Note 2020 2019
Rupees Rupees
11 LONG TERM LOANS AND ADVANCES
Loan to employees 11.1 46,163,175 51,343,927
Advance for land 65,500,000 84,500,000

111,663,175 135,843,927
11.1 Loan to employees - unsecured
(considered good) 11.1.1 70,855,954 78,281,393
Current portion of loans shown under
current assets 17 (24,692,779) (26,937,466)
46,163,175 51,343,927
11.1.1 These represent interest free loans provided to executives and permanent employees for various
purposes in accordance with the terms of employment as per Group’s Human Resource policy.
These loans are secured against retirement benefits payable to the executives / employees on
resignation / retirement. These are recoverable in equal monthly instalments. The fair value
adjustment in accordance with the requirements of IFRS 9 ‘Financial Instruments’ arising in respect
of long term loans is not considered material and hence not recognized.
12 LONG TERM DEPOSITS AND PREPAYMENTS
Security deposits
WAPDA 85,830,588 85,830,588
SNGPL 1,097,000 1,097,000
Others 12.1 3,507,191 130,068,244
90,434,779 216,995,832
Lease deposit money 12.2 - 22,973,966

Prepayments - 15,093,755
90,434,779 255,063,553
12.1 It includes an amount of Rs.36,000 (2019: Rs.36,000) deposit with Yousuf Agencies (Private) Limited
- related party, by the Holding Company.
12.2 This represented payment made to Government of Sindh by TBCL (Subsidiary Company) for lease
of land measuring 3,852 acres situated at Deh Kohistan 7/1 Tapo Jhampir, Taluka & District Thatta
in the province of Sindh.

Note 2020 2019

Rupees Rupees
13 DEFERRED TAX ASSET

Deferred tax (liability) / asset as at year end comprises of
temporary differences relating to:
Accelerated tax depreciation - property and equipment (47,289,824) (57,713,782)
Leases 25,723,893 -
Provision for leave encashment 4,055,075 3,915,000
Minimum tax available for carry forward - 40,680,462
Business loss carry forward - depreciation 132,561,877 94,764,347
115,051,021 81,646,027
The aggregate unused tax losses and minimum tax credits available to the SRL (Subsidiary
Company) for set off against future taxable profit as at 30 June 2020 amount to Rs. 1,056.60 million
and Rs. 132.83 million respectively. Of these, deferred tax assets on unused tax losses arising from
depreciation amounting to Rs. 457.11 million have been recognized as shown above.
Expiry of tax losses (excluding depreciation) and minimum tax credits for which no deferred tax
asset has been recognized is as follows:
Tax Year Nature
2023 Business loss - 12,081,851
2024 Business loss 599,494,500 660,998,102
599,494,500 673,079,953
2020 Minimum tax credit - 3,625,664
2021 Minimum tax credit 13,211,118 13,211,118
2024 Minimum tax credit 40,680,462 -
2025 Minimum tax credit 33,169,305 -
132,833,144 62,609,041
732,327,644 735,688,994
14 STORES, SPARES AND LOOSE TOOLS
Stores 14.1 486,822,258 444,606,233

Spares - in hand 215,245,013 188,427,624
Spares - in transit 77,157,422 71,764,713
292,402,435 260,192,337
Loose tools 593,714 547,686
779,818,407 705,346,256
Less: Provision for slow moving stores, spares
14.2 (54,628,399) (65,469,942)
and loose tools
725,190,008 639,876,314

14.1 This includes stores and spares amounting of Rs.111.051 million (2019: Rs.111.051 million) of
SPWCL (subsidiary company) which are in the possession and control of the subsidiary company’s
O & M contractor, General Electric, for smooth and uninterrupted operation and maintenance of the
subsidiary company’s plant as per the terms of the O & M Agreement dated 13 October 2011 and as
amended by Novation Agreement dated 29 June 2018. Previously, these were in the possession and
control of former O & M contractor, HydroChina as per the terms of the O&M Agreement dated 12
December 2013. Upon completion of the term of the said agreement on 7 March 2018, HydroChina
handed over the stores and spares to General Electric. As per the terms of the above mentioned O &
M Agreement, General Electric will replenish and hand over these items to the subsidiary company
on the expiry of the respective O & M Agreement i.e. eight years from the Taking-Over Date.
This also includes spare parts and stand-by equipment of Rs.122.975 million (2019: 122.975
million) of TBCL (subsidiary company) which are in the possession and control of the subsidiary
company’s Wind Power Operations & Maintenance(O&M) contractor, HydroChina, for smooth and
uninterrupted operation and maintenance of the subsidiary company’s plant as per the terms of
the O&M Agreements dated 26 September 2016 amended through supplemental agreement dated
06 May 2017, for a period of two years from the taking-over date. Furthermore, the subsidiary
company has also signed LTOMA dated 26 September 2016 as amended through supplemental
agreements dated 19 April 2017 for a term of eight years starting from the end of the above
mentioned HydroChina’s O&M Agreement, and these items will be handed over to the GE on expiry
of HydroChina’s O&M Agreements. As per the terms of the O&M Agreements, HydroChina and
subsequently GE will replenish and hand over these items to the subsidiary Company on the expiry
of their respective agreements.
Note 2020 2019

Rupees Rupees
14.2 Provision for slow moving stores, spares and

loose tools

(Reversal) / provision made during the year - net 38 / 37 (10,841,543) 9,663,308
15 STOCK IN TRADE
Raw material - in hand 34.1 6,477,674,302 5,484,996,977
Raw material - in transit 95,424,152 268,530,903
6,573,098,454 5,753,527,880
Work in process 15.1 1,894,315,328 1,706,335,329

Provision for obsolete stock 15.2 (1,200,000) (1,200,000)
34 1,893,115,328 1,705,135,329
Finished goods - manufactured 34 2,852,494,380 2,199,493,745

Finished goods - purchased for resale 123,324,179 48,250,271
2,975,818,559 2,247,744,016
Waste 34 49,747,419 30,796,400
11,491,779,760 9,737,203,625

15.1 This includes work-in-process of SRL (subsidiary company) amounting to Rs.246,154,546 (2019:
Rs. 28,975,377) in the possession of various vendors.
Note 2020 2019

Rupees Rupees
15.2 Provision for obsolete stock - (work-in-process)
Opening balance 1,200,000 61,825,350

Add: Provision for the year - 1,200,000
Less: Reversal during the year - (61,825,350)
Closing balance 1,200,000 1,200,000
15.3 Stock in trade include items valued at Net Realizable value (NRV). The write down to NRV amounting
Rs.481.878 million (2019: Rs. Nil) has been recognized in cost of goods sold. Detail of cost and NRV
is as follows.
Cost
Raw material 4,395,019,840 -

5,724,214,710 -
Net Realizable value
Raw material 4,013,188,697 -
5,242,336,836 -
16 TRADE DEBTS
Considered good
Foreign debts 824,555,141 547,412,695
CPPA-G 16.1 9,013,939,918 4,123,958,073
Other domestic debts 16.2 & 16.3 1,743,038,241 875,681,889
Waste 28,043,192 24,324,356
Others 18,048,075 16,405,701
11,627,624,567 5,587,782,714
Considered doubtful 36,773,217 36,505,865

Less: Provision for expected credit loss 16.6 (36,773,217) (36,505,865)
- -
11,627,624,567 5,587,782,714

16.1 These include amount of Rs.2,643.092 million (2019: Rs.1,775.380 million) receivable from CPPA-G
by SWPCL (Subsidiary Company). These are secured by a guarantee from the Government of
Pakistan under the Implementation Agreement and are in the normal course of business and interest
free, however, a delayed payment markup at the rate of three months Karachi Inter-Bank Offered
Rate (‘KIBOR’) plus 4.5% is charged in case the amounts are not paid within due dates. The rate of
delayed payment markup charged during the year on outstanding amounts ranges from 11.43% to
18.41% (2019:12.54% to 17.40%) per annum. An amount of Rs. 551.75 million (2019: Rs. 523.76
million) related to unbilled receivables is included in this receivable.
These also include amount of Rs 6,370.847 million (2019: 2,348.580 million) receivable from CPPA-G
by TBCL (Subsidiary Company). These are secured by a guarantee from the Government of Pakistan
under the Implementation Agreement and are in the normal course of business and interest free,
however, a delayed payment markup at the rate of three months Karachi Inter-Bank Offered Rate
(‘KIBOR’) plus 2% is charged in case the amounts are not paid within due dates. The rate of delayed
markup payment markup charged during the year on outstanding amounts ranges from 10.97% to
15.90% per annum. An amount of Rs. 187.20 million related to unbilled delayed payment markup is
included in this receivable.
16.2 Domestic debts include amount of Rs.567,469,863 (2019: Rs.402,577,494) receivable against
indirect export sales.
2020 2019
Rupees Rupees
16.3 Due from related parties- Domestic debts
Diamond Fabrics Limited 6,013,426 1,547,426

Sapphire Fibres Limited 620,024 -
Reliance Cotton Spinning Mills Limited - 468,180
209,774,265 131,633,871
16.4 The aging of trade debts receivable from related parties as at reporting date is as follows:
Neither past
Total amount
due nor Past due but not impaired
receivable
impaired
0-30 days 31-60 days 61-90 days 91-180 days
Rupees
30 June 2020 209,774,265 101,303,943 103,676,417 2,459,240 138,025 2,196,640
16.5 Maximum amount due from related parties during the year, calculated by reference to month-end
balances, was Rs.324,281,641 (2019: Rs.238,317,735).

Note 2020 2019

Rupees Rupees
16.6 Provision for expected credit loss

Charged during the year 37 267,352 -
Written off during the year - (7,836,532)
Recovered during the year - (583,412)
17 LOANS AND ADVANCES

Advances - Unsecured-Considered good
to suppliers 102,049,829 103,921,447
to contractors - 989,134
102,049,829 104,910,581
Current portion of long term loans to employees 11.1 24,692,779 26,937,466
Short term loans to employees 5,431,449 5,857,269
132,174,057 137,705,316
18 TRADE DEPOSITS AND SHORT TERM PREPAYMENTS
Security deposits 49,784,895 4,134,140
Margin deposits with bank 18.1 - 5,327,900
Prepayments 37,187,210 49,314,926
86,972,105 58,776,966
18.1 This represented cash margin deposited with a bank by Sapphire Renewables Limited (subsidiary
company merged with holding company during the year) on behalf of TBCL( Subsidiary Company)
against issuance of letters of guarantee.
19 OTHER RECEIVABLES
Claims receivable 8,143,153 -

Deposits with High Court 19,430,291 19,430,291
Export rebate receivable 67,859,558 99,244,147
Receivable against sale of fixed assets 10,797,271 80,841,307
Claims recoverable from NTDC against
WPPF for pass through items 19.1 498,906,164 224,346,175
Receivables from CPPA-G 19.2 373,708,145 2,521,552,891
Interest receivable - 494,795
Other receivables - considered good 6,971,328 272,635
985,815,910 2,946,182,241

19.1 Under section 9.2(a) of the EPA, payments to Workers’ Profit Participation Fund (WPPF) by SWPCL
and TBCL (Subsidiary Companies) are recoverable from CPPA-G as a pass through items amounting
to Rs. 151.354 million (2019: Rs. 119.348 million) and Rs. 347.553 million (2019: Rs. 104.998 million)
respectively. Movement of WPPF for during the year is as follows:
Note 2020 2019

Rupees Rupees
Opening balance 224,346,175 129,174,909

Accrued for the year 28.2 329,335,299 169,570,864
Received during the year (47,565,978) (74,399,598)
Written off during the year (7,209,332) -
Closing balance 498,906,164 224,346,175
19.2 Receivables from CPPA-G by

TBCL (Subsidiary Company)
Import duty 96,789,463 290,368,399
Insurance 19.2.1 276,918,682 118,659,022
Un-billed price differential 19.2.2 - 2,112,525,470
373,708,145 2,521,552,891
19.2.1 Under section 9.2(a) of the EPA with CPPA-G, Insurance payments are recoverable from CPPA-G as
a pass through item.
19.2.2 These were accrued on the basis of difference between indexed tariff applied with NEPRA and
Reference Tariff as approved by NEPRA through its tariff determination dated 13 May 2016 numbered
NEPRA/ TRF-343/ TBCCPL-A-2015/ 6485-6487, NEPRA / TRF-344/ TBCCPL-B-2015/ 6491-6493
and NEPRA/ TRF-345/ TBCCPL-C-2015/ 6497-6499 issued by NEPRA for the Project A, B and C
respectively. In the previous year, the subsidiary company had billed the price differential invoice to
CPPA amounting to 3.01 billion after determination of tariff by NEPRA.
20 SHORT TERM INVESTMENTS
Advance for Term Finance Certificates (TFCs) - 50,000,000

Investments at fair value through other
comprehensive income (FVOCI) 20.1 2,956,225,380 3,980,717,707
2,956,225,380 4,030,717,707
20.1 Investments at fair value through other comprehensive income (FVOCI) comprises of:
Debt instruments at fair value through other

comprehensive income (FVOCI) 20.1.1 49,000,000 53,443,295
Equity instruments at fair value through other
comprehensive income (FVOCI) 20.1.2 2,907,225,380 3,927,274,412
2,956,225,380 3,980,717,707

20.1.1 Debt instruments at fair value through other comprehensive income (FVOCI)
2020 2019 Particulars 2020 2019 2020 2019

Cost Carrying value
Number of
Certificates Rupees
HBL Term Finance

500 - Certificates (a) 50,000,000 - 49,000,000 -
Sales tax refund
- 602 bonds - 60,200,000 - 53,443,295
50,000,000 60,200,000 49,000,000 53,443,295
(a) This represents 500 TFCs of HBL having par value of Rs.100,000 and aggregated value of
Rs.50,000,000. TFCs issued are rated, listed, unsecured, subordinated, perpetual, non-cumulative,
contingent convertible, additional Tier-1, capital eligible and having green shoe option.
20.1.2 Equity instruments at fair value through other comprehensive income (FVOCI)
2020 2019 2020 2020 2019

Cost Fair value
No. of Shares Name of Company
Rupees
26,985,346 28,105,846 Bank Al-Habib Limited 1,105,332,382 1,411,333,596 2,202,936,210

(Refer to note 10.3.2 and
10.3.3)
4,574,007 5,947,370 Engro Corporation 1,293,345,025 1,339,818,130 1,579,621,472
(Pakistan) Limited (Refer to
note 10.3.2 and 10.3.3)
113,000 - Engro Fertilizer Limited 6,981,529 6,811,640 -
- 72,000 Pakistan State Oil Limited - - 12,213,360
30,183,000 30,183,000 K Electric Limited 260,805,385 90,850,830 132,503,370
808,000 - Meezan Bank Limited 70,864,861 55,630,800 -
26,900 - United Bank Limited 4,093,970 2,780,384 -
2,741,423,152 2,907,225,380 3,927,274,412
Gulshan Spinning
972,295 972,295 Mills Limited 17,441,370 - -
2,758,864,522 2,907,225,380 3,927,274,412

Note 2020 2019
Rupees Rupees
21 TAX REFUNDS DUE FROM GOVERNMENT
Income tax - net 21.1 1,121,439,170 1,034,187,284

Sales tax receivable 671,441,189 340,397,811
Less: provision against doubtful
sales tax refunds 21.2 (324,969,127) (288,528,348)
346,472,062 51,869,463
1,467,911,232 1,086,056,747
21.1 Income tax - net
Advance income tax / refundable 1,553,183,264 1,710,249,230
Provision for taxation 21.1.1 (431,744,094) (676,061,946)
1,121,439,170 1,034,187,284
21.1.1 Provision for taxation
Provision for the year 465,021,555 448,688,960
1,141,083,501 929,633,666
Less: Advance tax adjusted during the year
against completed assessments (709,339,407) (253,571,720)
431,744,094 676,061,946
21.2 Provision against doubtful sales tax refunds

Provision made during the year 37 36,440,779 153,522,284
22 CASH AND BANK BALANCES

Cash in hand 99,012,801 109,063,508
Bank balances
Local Currency
Current 1,900,281,474 1,352,472,739
Saving 22.1 37,643,605 35,188,509
1,937,925,079 1,387,661,248
Foreign currency-current accounts
USD 22.2 59,504,819 16,657,349
EURO 22.3 - 720,648
59,504,819 17,377,997
Foreign currency-saving accounts (USD)
Sapphire Wind Power Company Limited (SWPCL) 22.4 1,699,725,159 1,730,825,941
Tricon Boston Consulting Corporation
(Private) Limited (TBCL) 22.5 2,468,377,381 1,169,096,979
4,168,102,540 2,899,922,920
6,264,545,239 4,414,025,673

22.1 Balances with banks carry profit at the rate ranging from 6.5% to 11.25% (2019: 8% to 12%) per
annum.
22.2 Cash at bank in USD account includes US $ 121,410 (2019: US $ 101,569) related to Holding
Company and amount of US $ 231,915 (2019: US $ Nil) pertaining to Sapphire International Aps
(Subsidiary Company).
22.3 Cash at bank in EURO account represents EURO Nil (2019: EURO 3,867) .
22.4 This includes the following balances as at 30 June 2020 held in various accounts, mentioned below,
established and maintained by the subsidiary company in pursuance to the Finance Agreement
dated 31 March 2014 entered into by the Company with IDFC (formerly OPIC) and the Accounts
Agreement dated 07 May 2014 entered into by the subsidiary company with IDFC and various
branches of CitiBank, N.A.:
USD 9.4623 million equivalent to Rs. 1,592.059 million (2019: USD 9.570 million equivalent to Rs
1,569.49 million) in Debt Service Reserve account for repayment of long term finance and payment
of interest accrued and other related costs thereon to IDFC;
USD 0.640 million equivalent to Rs. 107.680 million (2019: USD 0.984 million equivalent to Rs.161.337
million) in Dollar Maintenance Reserve account for payments against O & M Agreements.
Profit on balances on these accounts ranges from 0.051% to 2.360% (2019: 1.75% to 1.48%) per
annum.
22.5 This represents balances as at 30 June 2020 held in various accounts, established and maintained
by the Subsidiary Company pursuant to the Accounts Agreement dated 21 April 2017 entered into
by the Subsidiary Company with various branches of Citibank, N.A. USD 14.39 million equivalent to
Rs 2,421.27 million (2019: nil) in Debt Service Reserve account for repayment of long term finance
and payment of interest accrued and other related costs thereon to lenders.
Profit on balances on these accounts ranges from 0.08% to 1.91288% (2019:1.44% to 1.90%) per
annum.
23 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
2020 2019 2020 2019

No. of Shares Rupees Rupees

allotted for consideration
7,813,391 6,206,740 paid in cash 78,133,910 62,067,400
13,876,400 13,876,400 issued as bonus shares 138,764,000 138,764,000
21,689,791 20,083,140 216,897,910 200,831,400
23.1 Numerical movement in the number of shares is as follows:
2020 2019
Numbers Numbers
Opening number of shares 6,206,740 6,206,740

Number of shares issued against right issue 1,606,651 -
Closing number of shares 7,813,391 6,206,740

23.2 The Holding Company has only one class of shares which carry no right to fixed income.
23.3 6,716,144 (2019: 6,215,349) shares of the Holding Company are held by associated companies as
at the reporting date.
Note 2020 2019

Rupees Rupees
24 RESERVES
Capital reserves 24.1 (1,550,728,970) (971,446,837)
Revenue reserves 24.2 23,748,961,912 18,909,455,182
22,198,232,942 17,938,008,345
24.1 Composition of capital reserves is as follows:
Share Premium 24.1.1 782,796,090 156,202,200

Fixed Assets Replacement Reserve 24.1.2 65,000,000 65,000,000
Unrealized loss on investments at
fair value through OCI 24.1.3 (2,477,048,172) (1,281,758,979)
Unrealized gain on translation of foreign operation 91,175,582 88,768,725
Unrealized (loss) / gain on forward
foreign exchange contracts (12,652,470) 341,217
(1,550,728,970) (971,446,837)
24.1.1 This reserve can be utilized by the Holding Company only for the purposes specified in section 81
of the Companies Act, 2017.
24.1.2 This reserve represents funds set aside for the purchase of fixed assets in the future.
24.1.3 This represents the unrealized loss on re-measurement of investments at fair value through OCI.
24.2 Composition of revenue reserves is as follows:
General reserves 24.2.1 1,330,000,000 1,330,000,000

Unappropriated profit 24.2.2 22,418,961,912 17,579,455,182
23,748,961,912 18,909,455,182
24.2.1 This represents appropriation of profit in past years to meet future contingencies.
24.2.2 This represents the level of unrestricted funds available for general use and distribution among the
shareholders.

Note 2020 2019

Rupees Rupees
25 LONG TERM FINANCING
Loans from banking companies - secured 25.1 15,274,253,121 14,743,297,021

Loans from Overseas Private Investment
Corporation 25.2 9,241,209,462 10,607,855,809
Loans from International Finance Corporation,
Asian Development Bank,
Islamic Development Bank and DEG 25.3 34,961,291,514 37,191,634,878
59,476,754,097 62,542,787,708
Less: current portion of long term financing
Loans from banking companies - secured 25.1 815,875,792 2,144,001,085
Loans from Overseas Private Investment
Corporation 25.2 1,682,479,688 1,625,041,215
Loans from International Finance Corporation,
Asian Development Bank,
Islamic Development Bank and DEG 25.3 2,971,709,779 3,005,084,098
5,470,065,259 6,774,126,398
54,006,688,838 55,768,661,310
25.1 Loans from banking companies - secured
Allied Bank Limited 25.1.1 3,382,887,785 2,832,884,395

Bank Alfalah Limited - Related Party 25.1.2 999,147,248 499,905,000
Bank Al Habib Limited 25.1.3 1,716,922,462 2,013,740,792
Faysal Bank Limited 25.1.4 71,285,000 95,006,000
Habib Bank Limited 25.1.5 7,335,590,333 7,821,197,334
Diminishing musharakah from Meezan Bank 25.1.6 277,875,000 309,937,500
MCB Bank Limited 24.1.7 23,716,000 -
United Bank Limited 25.1.8 1,166,829,293 1,170,626,000
The Bank of Punjab 25.1.9 300,000,000 -
15,274,253,121 14,743,297,021
Less: Current portion shown under
current liabilities (815,875,792) (2,144,001,085)
14,458,377,329 12,599,295,936

25.1.1 For the Holding Company, these loans carry mark-up ranging from 2.50% to 14.20% (2019: 2.50%
to 11.43%) obtained in different tranches and are repayable in quarterly instalments ranging from 8
to 32. These loans are secured against exclusive hypothecation charge of Rs.2,965 million (2019:
Rs.2,659 million) over specific plant and machinery and pledge of shares of various companies as
disclosed note 10.3.2 having market value Rs.1,171.583 million (2019: Rs.838.077 million) as on
reporting date.
SRL (Subsidiary Company) has obtained long term loan from Allied Bank Limited to pay salaries
and wages of the employees for the months effected by COVID-19. The loan for 2.5 years tenure
and principal will be repaid in 8 equal installments after 31 January 2021. The markup rate is 1
month KIBOR + 1% per annum. The loan is secured against current assets of the Subsidiary
Company. The loan was converted to State Bank of Pakistan’s refinance scheme for the payment
of salaries and wages subsequent to the year end.
25.1.2 These loans carry mark-up of 2.50% to 2.75% (2019: 2.50%) obtained in different tranches and
are repayable in quarterly instalments ranging from 16 to 32. These loans are secured against
exclusive hypothecation charge of Rs.1,352.950 million (2019: Rs.588.240 million) over specific
plant and machinery.
25.1.3 For the Holding Company, these loans carry mark-up ranging from 2.50% to 13.87% (2019:
2.50% to 11.13%) obtained in different tranches and are repayable in 32 quarterly instalments.
These loans are secured against exclusive hypothecation charge of Rs.328 million (2019: Rs.328
million) over specific plant and machinery and pledge of shares of various companies held by the
Holding Company as disclosed in note 10.3.2 having market value Rs. 2,044.940 million (2019:
Rs.1,631.120 million) as on reporting date.
SRL (Subsidiary Company) has obtained long term loan from Bank AL Habib Limited to meet its
long term capital requirements .The repayment period of the loan is in arrears of quarterly equal
installment of Rs. 25 Million over 3 years. The markup rate is 3 months KIBOR + 2% per annum.
The loan is secured against exclusive charge of Rs. 400 million over electrical equipment, furniture
and fittings etc. of the Subsidiary Company.
25.1.4 These loans carry mark-up ranging from 2.50% to 6.50% (2019: 2.50% to 6.50%) obtained in
exclusive hypothecation charge of Rs. 228.033 million (2019: Rs. 228.033 million) over specific
plant and machinery.
25.1.5 These loans carry mark-up ranging from 2.50% to 14.04% (2019: 2.50% to 11.25%) obtained in
different tranches and are repayable in quarterly instalments ranging from 4 to 32. These loans
are secured against exclusive hypothecation charge of Rs.9,211.730 million (2019: Rs.8,544.773
million) over specific plant and machinery and pledge of shares of various companies held by
the Holding Company as disclosed in note 10.3.2 having market value Rs.674.976 million (2019:
Rs.1,037.288 million) as on reporting date.
25.1.6 SRL (Subsidiary Company) has obtained long term facility from Meezan Bank Limited in July 2016
for the purchase of land, building and its commercialization fee. The facility is for 10 years tenure
including 2 years grace period after which principal is repayable in quarterly installments. The
markup rate is 3 months KIBOR + 0.45% per annum. The facility is secured against first charge
over the purchased land and building of the Subsidiary Company.
25.1.7 These loans carry mark-up at the rate of 2.50% (2019: Nil) obtained in different tranches and are
repayable in 32 quarterly instalments. These loans are secured against exclusive hypothecation
charge of Rs.27.901 million (2019: Nil) over specific plant and machinery.

25.1.8 These loans carry mark-up at the rate of 2.50% (2019: 2.50%) obtained in different tranches and
are repayable in 32 quarterly instalments. These loans are secured against exclusive hypothecation
charge of Rs.1,463 million (2019: Rs.1,425 million) over specific plant and machinery.
25.1.9 SRL (Subsidiary Company) has obtained long term facility from The Bank of Punjab to meet its
long term capital requirements. The facility is for 4 years tenure including 6 months of grace period
after which principal is repayable in equal quarterly installments of Rs. 37.5 million each. The
markup rate is 3 months KIBOR + 1.25% per annum. The loan is secured against first charge of
Rs.400 million over the present and future moveable fixed assets of the Subsidiary Company.
2020 2019
Rupees Rupees
25.2 Loans from Overseas Private Investment Corporation
Opening balance 10,607,855,809 9,031,048,357

Exchange loss 208,156,257 2,963,854,327
Amortization of transaction cost 22,703,716 22,635,000
10,838,715,782 12,017,537,684
Repaid during the year (1,597,506,320) (1,409,681,875)

9,241,209,462 10,607,855,809
current liabilities (1,682,479,688) (1,625,041,215)
7,558,729,774 8,982,814,594
25.2.1 This represents long term finance facility of USD 95 million obtained by SWPCL (Subsidiary
Company) from IDFC (formerly OPIC) for the construction of the wind power project at Jhimpir in
accordance with the Finance Agreement dated 31 March 2014. The Subsidiary Company has fully
availed the loan facility during the previous year. The security for the loan includes all the current
and future assets of the Subsidiary Company. It carries markup, payable quarterly, at the rate of
three months London Inter-Bank Offered Rate (‘LIBOR’) plus 3.7% guarantee fee per annum. As
of 30 June 2020, the principal amount of USD $ 55.47 million is repayable in eleven unequal semi
annual installments ending on 10 October 2025 in accordance with the amortization schedule
provided by IDFC.
25.3 Loans from International Finance Corporation, Asian Development Bank, Islamic Development
Bank and DEG
Opening balance 37,191,634,878 20,835,460,122

Receipt during the year - 7,799,500,800
Exchange loss 860,494,536 9,827,101,440
38,091,044,250 38,500,977,198
Repaid during the period (3,129,752,736) (1,309,342,320)
34,961,291,514 37,191,634,878
current liabilities (2,971,709,779) (3,005,084,098)
31,989,581,735 34,186,550,780
25.3.1 This represents long term finance facility of USD 237.60 million obtained by TBCL (Subsidiary
Company) equivalent to Rs.28,893 million from International Finance Corporation (IFC),
Asian Development Bank (ADB), Islamic Development Bank (IDB) and Deutsche Investitions-
undEntwicklungsgesellschaft (DEG) for the construction of the projects at Jhimpir in accordance
with the Facility Agreements. The security for the loan includes all the current and future assets of
the Subsidiary Company. It carries markup, payable quarterly, at the rate of three months London
Inter-Bank Offered Rate (‘LIBOR’) plus 4.5% fee per annum. The principal amount is repayable in
nineteen unequal semi annual instalments ending on September 2028.
Note 2020 2019

Rupees Rupees
26 DEFERRED LIABILITIES
Deferred taxation 26.1 12,732,508 248,184,737
Staff retirement benefits - gratuity 26.2 297,609,788 272,908,701
310,342,296 521,093,438
26.1 Deferred taxation
Investment in associate 26.1.1 12,732,508 11,509,101
26.1.1 The temporary differences associated with investments in the Group’s associates, for which a
deferred tax liability has not been recognised in the periods presented, aggregate to Rs. 97.196
million (2019: Rs. 92.84 million). The Group has determined that the undistributed profits of its
associates will not be distributed in the foreseeable future. Furthermore, the Group has also no
intention to sell the investments in its associate in the foreseeable future. Hence, there are no
income tax consequences attached to the payment of dividends in either 2020 or 2019 by the
Group to its shareholders.
26.1.2 In view of applicability of presumptive tax regime on taxable income for the current and previous
tax year and expected pattern of chargeability of Holding Company’s income to tax in the same
manner, deferred tax liability has been reversed in the financial statements.
The income of power generation companies of the Group is exempt from taxation. Therefore, there
is no deferred tax liability in respect of these companies.
In respect of deferred taxation of the Group’s tax retail company, refer to note 13.
DesignTex (SMC-Private) Limited does not have a deferred tax liability as its income is currently
chargeable to tax under minimum taxation and there is no taxable income under Normal Tax
Regime.
There are no taxable or deductible temporary differences in case of Sapphire International ApS’s
assets or liabilities.

26.2 Staff retirement benefits
Movement in the net liability recognized in the statement of financial position
Note 2020 2019

Rupees Rupees
Opening net liability 272,908,701 225,857,306

Expense for the year in profit and loss 26.2.1 148,493,559 109,967,518
Remeasurement recognized in other
comprehensive income (51,412,524) 8,535,640
369,989,736 344,360,464
Benefits paid during the year (72,379,948) (71,451,763)
Closing net liability 297,609,788 272,908,701
26.2.1 Expense recognized in the statement of profit or loss

Interest cost 33,732,419 17,111,828
148,493,559 109,967,518
2020 2019 2018 2017 2016

Rupees
Historical information
Present value of defined

benefit obligation 297,609,788 272,908,701 225,857,306 204,111,474 250,766,027
Experience adjustments
on plan liabilities 51,412,524 (8,535,640) (13,604,382) 7,398,992 9,965,376
Principal actuarial assumptions

Following are a few important actuarial assumption used in the valuation:
2020 2019
% %
Discount rate 8.50 14.25
Expected rate of increase in salary 7.50 13.25
Average age of employees 32.1 years 31.6 years

Mortality rates (for death in service) SLIC (2001-05) SLIC (2001-05)
Sensitivity analysis for actuarial assumptions
The calculation of defined benefit obligation is sensitive to assumptions given above. The below
information summarizes the amount of defined benefit obligation at the end of the reporting period
if there is a change in respective assumptions by 100 basis point.
Increase in Decrease in
assumptions assumptions
Rupees in ‘000
Discount rate 282,330 315,061
Increase in future salaries 316,347 280,859
27 LEASE LIABILITIES
Note 2020 2019

Rupees Rupees
Land 27.1 49,584,897 -

Rented premises 27.2 2,120,540,012 -
Vehicles 27.2 7,635,092 14,452,087
2,177,760,001 14,452,087
Current portion shown under current liabilities
Land (2,744,000) -
Rented premises (155,671,132) -
Vehicles (2,578,160) (3,807,116)
(160,993,292) (3,807,116)
2,016,766,709 10,644,971
27.1 Set out below are the carrying amounts of lease liabilities recognized in respect of land and the
movements during the period:
SWPCL TBCL Total

Rupees
Initial application of IFRS 16 on 01 July 2019 23,274,419 22,335,816 45,610,235

Payments made during the year (2,744,000) - (2,744,000)
Unwinding of lease liability 3,374,990 3,343,672 6,718,662
23,905,409 25,679,488 49,584,897
Current portion shown under current liabilities (2,744,000) - (2,744,000)
Balance as at 30 June 2020 21,161,409 25,679,488 46,840,897
Note reference 27.1.1 27.1.2
27.1.1 This represents liability in respect of a 20 years lease of 1,372 acres of land, acquired from AEDB,
situated in Jhimpir, District Thatta, Sindh on which the wind power plant of SWPCL (subsidiary
company) is installed. The aforementioned land has been allocated to the subsidiary company by
AEDB out of the total land leased for a period of thirty years from Government of Pakistan (‘GoP’)
for Wind Power Generation Projects under the Master Lease Deed dated 13 February 2008. The
subsidiary company, in order to gain access to the land for conducting feasibility/other associated
studies, had signed an Agreement to Lease with AEDB dated 21 September 2008. However, the
formal site sub-lease agreement was signed on 11 March 2014. The term of site sub-lease has
commenced from this date and will end with the term of the EPA.
27.1.2 This represents liability in respect of 1,284 acres of land each for Project A, Project B and Project C,
acquired from Government of Sindh, Land Utilization department, through Deputy Commissioner
Thatta, on which the wind power plants of TBCL are installed. The aforementioned land has been
allocated to the subsidiary company by Government of Sindh for a period of thirty years for Wind
Power Generation Projects under the land lease agreement. The term of land lease agreement has
commenced from November 2011 date and will end with the term of the EPA.
Rupees
27.1.3 Maturity analysis as at 30 June 2020

Not later than 1 year 2,744,000
Later than 1 year but not later than 5 years 29,128,000
Later than 5 years 131,696,814
163,568,814
Future finance charge (113,983,917)
49,584,897
Present value of finance lease liabilities (2,744,000)
46,840,897
27.2 Set out below are the carrying amounts of lease liabilities recognized and the movements during the
period.
Rented premises Vehicles Total
Rupees Rupees Rupees
As at 1 July 2019 1,851,714,309 14,452,087 1,866,166,396
Additions during the year 368,069,122 3,950,000 372,019,122
Accretion of interest 299,352,169 1,194,261 300,546,430
Rental payments (398,595,588) (11,961,256) (410,556,844)
As at 30 June 2020 2,120,540,012 7,635,092 2,128,175,104
Current portion shown under current liabilities 155,671,132 2,578,160 158,249,292
Balance as at 30 June 2020 1,964,868,880 5,056,932 1,969,925,812
27.2.1 SRL (Subsidiary Company) has entered into finance lease arrangements with different parties
for rented premises and Bank Al Habib Limited for leased vehicles. The liabilities under these
arrangements are payable in monthly installments and above mentioned mark-up rates are used
as discounting factor to determine the present value of minimum lease payments. The effective
interest rates used as the discounting factor range from 14.97% - 15.92% for rented premises and
8.02% - 12.61% for vehicles. Residual value of the leased assets has already been paid at the
inception of the lease in the form of 15% security deposit. Detail is given in note 7.10.1 to these
consolidated financial statements.

27.2.2 The maturity analysis of lease liabilities is as follows:
SRL (Subsidiary Company)
Rented premises Vehicles Total
Rupees Rupees Rupees
Year ending 30 June
Not later than 1 year 448,595,277 3,142,821 451,738,098
Later than 1 year but not later than 5 years 1,968,683,001 5,619,113 1,974,302,114
Later than 5 years 1,049,395,936 - 1,049,395,936
3,466,674,214 8,761,934 3,475,436,148
Less: Future finance charges (1,346,134,202) (1,126,842) (1,347,261,044)
2,120,540,012 7,635,092 2,128,175,104
Less: Current maturity shown under
current liabilities (155,671,132) (2,578,160) (158,249,292)
1,964,868,880 5,056,932 1,969,925,812
Note 2020 2019

Rupees Rupees
28 TRADE AND OTHER PAYABLES
Creditors 28.1 2,835,227,463 1,654,108,744

Accrued liabilities 2,448,344,770 2,462,971,599
Infrastructure fee 28.3 322,754,833 262,476,055
Lender fees and charges payable 52,010,682 65,537,913
Tax deducted at source 237,269,057 1,070,147
Unrealized loss on measurement of
forward foreign currency contracts 17,947,173 -
Provision against accumulating
compensated absences 13,983,018 13,500,000
Payable to provident fund 11,890,730 7,288,404
Others 65,024,653 7,944,852
6,757,019,625 5,089,972,393
28.1 These balances include the following amounts due to related parties:
Amer Cotton Mills (Private) Limited 201,393 17,499

Diamond Fabrics Limited 22,176 -
Reliance Cotton Spinning Mills Limited 45,118,193 -
Sapphire Fibres Limited 6,934,076 4,949,420
143,769,026 7,482,317

28.2 Workers’ profit participation fund
Note 2020 2019

Rupees Rupees

Allocation for the year 37 62,617,095 99,005,254
Receivable from CPPA-G 19.1 329,335,299 169,570,864
Interest on funds utilized in the Group's business 39 2,402,298 719,673
394,354,692 269,295,791
662,930,810 383,100,439
Less: Payments during the year (270,978,416) (114,524,321)
Balance at the end the year 391,952,394 268,576,118
28.3 It includes Rs.275,207,157(2019: Rs.214,405,369) representing provision recognised against

disputed infrastructure fee levied by the Government of Sindh through Sindh Finance (Amendment)
Ordinance, 2001. The Holding Company has contested this issue in the Sindh High Court (the High
Court). The High Court in its judgment dated 15 September 2008 partly accepted the appeal by
declaring the levy and collection of infrastructure fee prior to 28 December 2006 as illegal and ultra
vires and afterward as legal. The Holding Company filed an appeal in the Supreme Court against
this judgement. Additionally, the Government of Sindh also filed appeal for the part of judgement
decided against them.
The above appeals were disposed off in May 2011 with a joint statement of the parties that, during
the pendency of the appeals, another law come into existence which was not subject matter in the
appeal, therefore, the decision thereon be first obtained from the High Court before approaching
the Supreme Court with the right to appeal. Accordingly, the petition was filed in the High Court
in respect of the above view. During the pendency of this appeal an interim arrangement was
agreed whereby bank guarantees furnished for consignments cleared upto 27 December 2006
were returned and bank guarantees were furnished for 50% of the levy for consignment released
subsequent to 27 December 2006 while payment was made against the balance amount. Similar
arrangement continued for the consignments released during the current year.
As at 30 June 2020, the Holding Company has provided bank guarantees aggregating Rs.274.823
million (2019: Rs.214.823 million) in favor of Excise and Taxation Department.
29 CONTRACT LIABILITIES
29.1 It includes advances received from Creadore A/S Denmark (associated company) amounting
Rs.24,179,553 (2019: Rs. 45,117,361).
29.2 The contract liabilities outstanding at 30 June 2019 have been recognized as revenue during the
year.
2020 2019
Rupees Rupees
30 ACCRUED INTEREST / MARK-UP
Accrued interest / mark-up on secured:
- long term financing 335,932,004 358,597,542
- short term borrowings 163,120,857 180,649,956
499,052,861 539,247,498
30.1 Accrued mark-up includes an amount of Rs.15,569,438 (2019: Rs.9,637,049) due to Bank Alfalah
Limited - related party.
Note 2020 2019

Rupees Rupees
31 SHORT TERM BORROWINGS
Short term loans 31.1 3,682,792,190 5,009,967,750
Running finance under mark-up arrangements 31.1 4,550,134,241 3,312,693,610
Running Musharakah facility 31.2 243,719,821 297,736,782
8,476,646,252 8,620,398,142
Bank overdrafts 31.3 33,938,461 -

Loan from related parties 31.4 - 237,843,000
8,510,584,713 8,858,241,142
31.1 Aggregate facilities amounting to Rs.20,795 million (2019: Rs.16,692 million) were available to the
Group from banking companies. These are secured against hypothecation charge on stock in trade,
book debts, export bills under collection, lien over import documents, present and future assets of
the subsidiary company and pledge of shares. These carry mark up ranging 2.25% to 15.10% (2019:
2.15% to 14.05%) on local currency loans per annum payable monthly / quarterly. These facilities
are renewable on various expiry dates. Short term borrowing includes amounting Rs.1,047.344
million (2019: Rs.813.804 million) due to Bank Alfalah Limited (related party).
Total unfunded facilities available to the Group aggregate to Rs.19,614.230 million (2019: Rs.12,396
million) out of which the amount remained unutilised at the year-end was Rs.14,542 million (2019:
Rs.8,484 million). These facilities are secured against lien on shipping documents, hypothecation
charge on current assets of the Group, cash margins and pledge of shares.
31.2 Running Musharakah facility available from commercial bank aggregates to Rs. 300 million (2019:
Rs. 300 million) at profit rate of 1 month KIBOR plus 0.30% and 0.35% (2019: 1 month KIBOR plus
0.15% and 0.25%) per annum. The amount utilized as at 30 June 2020, for Musharakah was Rs.
243.7 million (2019: Rs 297.7 million). The facilities are secured against pari passu charge on the
current assets of the Company with 10% risk margin, and lien on import documents. The mark-
up rate charged during the year on the outstanding balance ranges from 8.68% to 14.15% (2019:
7.18% to 13.05%) per annum.
31.3 This represents issuance of cheques in excess of balance at bank accounts.
31.4 This represented loans received from related parties by Holding Company, which are interest free,
unsecured and payable by the entity on demand. Details of the parties are as follows:
2020 2019
Rupees Rupees
Loan from Directors and their spouses - 148,140,000
Loan from major shareholders - 19,443,000
Loan from associated companies - 70,260,000
- 237,843,000

32 CONTINGENCIES AND COMMITMENTS
Contingencies
2020 2019
Rupees Rupees
32.1 Guarantees issued by banks on behalf of the Group 702,400,369 624,093,587
32.2 Post dated Cheques have been issued to Collector of Customs as an indemnity to adequately
discharge the liabilities for taxes and duties leviable on imports. As at 30 June 2020 the value of
these cheques amounted to Rs.1,391.363 million (2019: Rs.720.484 million).
32.3 A commercial bank has issued a guarantee amounting Rs.45 million in favour of excise and taxation
department of Government of Sindh on behalf of Sapphire Wind Power Company Limited (subsidiary
company) against charge of Rs.60 million on fixed assets of the Holding Company.
32.4 Irrevocable letter of credit of USD 0.5 million equivalent to Rs 84.375 million (2019: USD 1.17 million
equivalent to Rs 192.47 million) in favour of CitiBank, N.A. as per the terms of the Finance Agreement
dated 31 March 2014.
32.5 Also refer to content of note 10.3.2 and 10.3.3.
Note 2020 2019

Rupees Rupees
32.6 Commitments
Commitments in respect of confirmed

letter of credit 32.6.1 2,534,194,325 1,441,047,702
Commitments in respect of capital expenditure 32.6.2 28,927,239 128,731,342
Commitments in respect of forward foreign
currency contracts 352,443,189 -
2,915,564,753 1,569,779,044
32.6.1 Confirmed letter of credit in respect of:
- plant and machinery 470,885,640 297,630,174

- raw material 1,980,672,334 1,092,206,126
- stores and spares 82,636,351 51,211,402
2,534,194,325 1,441,047,702
32.6.2 This includes commitments for payments to be made for to various construction companies for the
construction and extension on existing building at multiple plants of the Holding Company.

33 NET TURNOVER
Export Sales Local Sales Total
Note 2020 2019 2020 2019 2020 2019
Rupees
Yarn 33.2 11,921,011,153 13,255,163,103 4,012,514,180 1,427,028,111 15,933,525,333 14,682,191,214
Fabric 33.3 9,797,777,893 10,842,110,781 2,002,902,661 455,019,418 11,800,680,554 11,297,130,199
Clothing items - 9,310,842 8,507,095,555 10,497,133,111 8,507,095,555 10,506,443,953
Home textile products 5,672,930,525 5,183,496,486 187,796,206 219,485,459 5,860,726,731 5,402,981,945
Raw material - - 100,024,559 29,873,566 100,024,559 29,873,566
Accessories - - 224,436,365 318,470,085 224,436,365 318,470,085
Waste 33.4 199,973,684 179,230,548 317,259,594 260,379,471 517,233,278 439,610,019
Processing income - - 476,761,360 146,025,628 476,761,360 146,025,628
Power Generation - - 15,868,339,924 10,755,034,731 15,868,339,924 10,755,034,731
27,591,693,255 29,469,311,760 31,697,130,404 24,108,449,580 59,288,823,659 53,577,761,340
Export rebate and duty drawback 507,580,498 160,828,378
Less: sales tax (5,202,112,347) (1,388,225,573)
Less: Discounts to customers (1,626,896,079) (2,708,747,108)
52,967,395,731 49,641,617,037
33.1 Revenue is recognized at point in time as per the terms and conditions of underlying contracts with
customers.
2020 2019
Rupees Rupees
33.2 Export sales - Yarn
Direct export 4,526,150,916 4,676,488,556

In-direct export 7,394,860,237 8,578,674,547
11,921,011,153 13,255,163,103
33.3 Export sales - Fabric
Direct export 6,422,168,630 8,059,404,814

In-direct export 3,375,609,263 2,782,705,967
9,797,777,893 10,842,110,781
33.4 Export waste sales represent comber noil sales.
33.5 Exchange loss due to currency rate fluctuations relating to export sales amounting to Rs.79.253
million (2019: gain of Rs.77.652 million) has been included in export sales.

Note 2020 2019

Rupees Rupees
34 COST OF SALES
Raw material consumed 34.1 19,044,556,928 20,354,059,634

Packing material consumed 520,392,782 518,321,259
Stores and spares consumed 958,791,245 918,861,102
Salaries, wages and benefits 34.2 4,152,801,733 4,062,945,352
Fuel, power and water 2,136,141,501 2,251,281,973
Other manufacturing expenses 34.3 2,619,868,646 3,647,161,320
Repair and maintenance 1,315,540,836 1,013,762,303
Vehicle running expenses 50,034,925 55,301,751
Travelling and conveyance 59,496,955 85,248,245
Site management expenses 18,947,313 28,185,492
Insurance expenses 68,899,152 61,717,142
Rent, rates and taxes 14,920,715 47,312,599
Communication expenses 28,498,879 31,986,744
Security 6,031,960 6,008,140
Depreciation on right of use asset 7.10.5 4,630,536 -
Depreciation on operating fixed assets 7.5 4,124,720,399 3,226,085,387
Miscellaneous expenses 23,148,862 37,378,133
35,194,912,111 36,358,653,514
Work in process
Opening stock 1,705,135,329 1,624,710,151
Closing stock 15 & 34.4 (1,893,115,328) (1,705,135,329)
(187,979,999) (80,425,178)
Cost of goods manufactured 35,006,932,112 36,278,228,336
Finished goods
Opening stock 2,230,290,145 1,261,823,192
Closing stock 15 & 34.5 (2,902,241,799) (2,230,290,145)
(671,951,654) (968,466,953)
Cost of goods sold - manufactured 34,334,980,458 35,309,761,383
Cost of raw material sold 34.6 136,236,602 45,247,572
Cost of sales - purchased for resale 1,690,277,665 437,523,132
36,161,494,725 35,792,532,087

Note 2020 2019
Rupees Rupees
34.1 Raw material consumed
Opening balance 5,484,996,977 4,446,479,832

Purchases 20,037,234,253 21,392,576,779
25,522,231,230 25,839,056,611
Closing stock 15 (6,477,674,302) (5,484,996,977)
19,044,556,928 20,354,059,634
34.2 Salaries, wages and benefits include Rs.148,493,559 (2019: Rs.109,967,518) in respect of post
employment benefits - gratuity and Rs. 48,467,337 (2019: Rs.46,103,168) in respect of provident
fund contribution.
2020 2019
Rupees Rupees
34.3 Other manufacturing expenses

Cotton dyeing, bleaching and bale pressing charges 156,073,108 179,369,514
Yarn dyeing and bleaching charges 21,224,897 47,647,855
Fabric dyeing, bleaching, knitting and processing charges 2,154,017,660 3,006,434,469
Weaving and yarn doubling charges 103,764,645 48,831,353
Designing Cost - 5,749,522
Stitching, spinning and other charges 82,960,791 90,614,042
Embroidery charges 101,827,545 268,514,565
2,619,868,646 3,647,161,320
34.4 This includes reversal for provision of write down of work in process amounting to Rs. Nil (2019:
Rs.60,625,350).
34.5 This includes reversal of provision for write down of own manufactured finished goods amounting
to Rs. Nil (2019: Rs.5,872,188).
34.6 It includes salaries, wages and benefits, insurance and finance cost amounting Rs.1,205,457 (2019:
Rs.400,421), Rs.2,410,913 (2019: Rs.800,842) and Rs.12,054,567 (2019: Rs.4,004,210) respectively.

Note 2020 2019

Rupees Rupees
35 DISTRIBUTION COST
On export sales
Export development surcharge 43,537,687 45,441,414
Insurance 5,855,415 7,313,037
Commission 204,057,762 254,905,801
Ocean freight and forwarding 382,453,726 380,184,579
635,904,590 687,844,831
On local sales
Inland freight and handling 177,184,037 161,465,893
Commission 47,069,859 53,010,756
224,253,896 214,476,649
Other distribution cost
Rent and utilities 54,349,307 486,795,946
Communication 21,310,080 27,049,362
Fuel, power and water 76,175,685 -
Samples and advertising 294,841,941 342,265,518
Packing material 32,046,816 54,937,953
Exhibition expenses 11,637,033 10,822,151
Retail outlet expenses 30,045,902 55,498,048
Legal and professional charges 100,000 1,096,153
Depreciation on operating fixed assets 7.5 145,323,853 148,818,386
Depreciation - right-of-use assets 7.10.5 343,011,487 -
Computer, printing and stationery 4,205,537 8,994,396
Insurance 6,865,891 393,916
Others 2,610,413 185,493
1,735,522,838 1,955,501,075
2,595,681,324 2,857,822,555
contribution.

Note 2020 2019
Rupees Rupees
36 ADMINISTRATIVE EXPENSES
Directors' remuneration 50,520,000 45,600,000

Directors' meeting fee 1,650,000 2,100,000
Rent, rates and utilities 44,359,108 49,137,021
Communication 16,705,329 18,776,983
Motor vehicle expenses 19,419,539 21,068,478
Insurance expense 9,151,206 5,816,367
Computer expenses 15,301,553 8,202,979
Advertisement 240,815 136,630
Depreciation - right-of-use assets 7.10.5 730,883 -
Depreciation - operating fixed assets 7.5 67,995,790 77,451,221
Others 14,198,770 10,864,766
784,446,472 795,739,879
contribution.

Note 2020 2019

Rupees Rupees
37 OTHER OPERATING EXPENSES
Workers' Profit Participation Fund 28.2 62,617,095 99,005,254

Workers' Welfare Fund 26,716,027 60,122,623
Auditors' remuneration 37.1 13,435,258 7,391,244
Donations 37.2 37,512,103 14,167,030
Amortization of intangible assets 9.1 2,353,202 7,295,553
Provision for stores, spares and loose tools 14.2 - 9,663,308
Balance written off during the year 7,209,332 16,545,891
Provision against doubtful sales tax refundable 21.2 36,440,779 153,522,284
Impairment of receivable - 107,838,889
Loss on sale of operating fixed assets and 7.6 &
right to use assets - net 7.10.4 12,178,782 31,203,306
Loss on write-off of intangible assets 9.1 - 8,969,460
Allowance for expected credit loss 16.6 267,353 -
Exchange loss on foreign currency accounts 329,560 -
Realized loss on forward currency contracts 18,331,482 -
217,390,973 515,724,842
37.1 Auditors’ remuneration
Audit fee 4,960,900 4,682,400

Code of corporate governance review fee 85,850 85,850
Group reporting 165,000 -
Other certification / services 2,654,300 1,560,900
Taxation services 4,520,750 300,000
Out of pocket expenses 604,308 339,094
13,435,258 7,391,244
A.F Ferguson & Company
Audit fee 1,012,000 1,152,000
Group reporting 165,000 -
Other certification 1,136,800 508,400
Taxation services 4,320,750 300,000
7,065,613 2,137,629

Note 2020 2019
Rupees Rupees
EY Ford Rhodes
Audit fee 2,598,900 2,468,000
CCG 85,850 85,850
Tax consultancy services 200,000 -
Other certifications 140,000 105,000
3,532,145 3,143,715
Shinewing Hameed Chaudhri & Company

Audit fee - 32,400
Deloitte Yousuf Adil

Audit fee 1,350,000 1,030,000
Other certifications 1,377,500 947,500
Out of pocket 110,000 100,000
2,837,500 2,077,500
37.2 Donation to following organisations are greater than 10% of total donation Rs. 3,751,210 (2019:
Rs.1,416,703) of the Group.
Network of Organisations Working for People

with Disabilities Pakistan (NOWPDP) - 1,500,000
Women's' Empowerment Group
4,000,000 -
Abdullah Foundation 37.2.1 23,185,000 2,300,000
27,185,000 3,800,000
37.2.1 Following Directors of the Company have interest in Abdullah Foundation (donee) .
Name of director Interest in donee Name and address of donee
Mr. Mohammad Abdullah Director

Mr. Shahid Abdullah Director
Abdullah Foundation, 312, Cotton Exchange
Mr. Nadeem Abdullah Director
Building,I.I. Chundrigar Road, Karachi.
Mr. Amer Abdullah Director
Mr. Yousuf Abdullah Director

Note 2020 2019

Rupees Rupees
38 OTHER INCOME
Income from financial assets

Dividend income 447,953,012 397,379,333
Exchange gain on foreign currency accounts - 3,541,393
Interest income on saving account and bonds 106,320,105 125,618,084
554,273,117 526,538,810
Income from non-financial assets
Credit balance written-back - 6,883,216
Reversal of provision of stores,
spares and loose tools 14.2 10,841,543 -
Scrap sales [Net of sales tax aggregating
Rs.14.752 million (2019: Rs.9.783 million)] 60,429,951 51,626,400
Waiver on lease payments 38.1 76,812,935 -
148,084,429 58,509,616
702,357,546 585,048,426
38.1 This represents concessions provided (rentals not charged) by landlords against rented premises
due to COVID-19 pandemic. This represents a non-cash adjustments and is credited to profit or loss
as per requirement of IFRS-16 Leases.
39 FINANCE COST
Interest / mark-up on :
- short term finances 880,145,383 938,195,032
- long term loans 4,209,707,941 3,663,698,501
- Workers' Profit Participation Fund 28.2 2,402,298 719,673
- lease liabilities 307,265,092 2,590,689
5,399,520,714 4,605,203,895
Bank charges, commission and others charges 407,396,325 267,592,498
Amortization of loan transaction cost 61,618,552 54,692,808
Lender's fees and charges 52,421,794 42,626,164
Exchange loss on foreign currency loans 133,403,953 -
6,054,361,338 4,970,115,365

2020 2019
Rupees Rupees
40 TAXATION
Current tax
- for the year 463,961,999 466,594,556
- prior years (73,123,295) (17,905,596)
390,838,704 448,688,960
Deferred tax (268,857,223) (17,372,704)
121,981,481 431,316,256
40.1 There is no relationship between tax expense and accounting profit, since the Holding Company’s
profits are subject to tax under the Final Tax Regime for the current year, SRL’s and Designtex
(SMC-Private) Limited current tax represents minimum tax under Income Tax Ordinance, 2001 and
for the power generation companies (TBCL and SWPCL), income taxes are exempt as explained in
Note 6.13. Accordingly, no numerical reconciliation has been presented.
40.2 The Finance Act, 2017 has amended Section 5A of the Income Tax Ordinance, 2001 and introduced
tax on every public company at the rate of 7.5%, for the year ended June 30, 2017, of its accounting
profit before tax for the year. However, this tax shall not apply in case the Company distribute 40%
of the accounting profit through cash dividend within six months of the end of the said year. The
Holding Company filed a Constitutional Petition (CP) before the Honorable Sindh High Court (SHC),
Sindh on July 28, 2017 challenging the vires of amended Section 5A of the Income Tax Ordinance,
2001, and SHC accepted the CP and granted stay against the newly amended section 5A. In case
the SHC’s decision is not in favour of the Holding Company; the Holding Company will either be
required to declare amount of dividend or it will be liable to pay additional tax at the rate of 7.5% of
its profit before tax for the financial year ended June 30, 2017. As at reporting date no charge has
been recorded in this respect.
Restated
2020 2019
41 EARNINGS PER SHARE - BASIC AND DILUTED
Profit after taxation for the year attributable to

equity holders of the parent Rupees 5,257,567,820 3,760,432,789
Weighted average number of ordinary shares Number 21,427,664 21,097,578
Earnings per share - basic and diluted Rupees 245.36 178.24

2020 2019
Rupees Rupees
42 CASH GENERATED FROM OPERATIONS
Profit before taxation and share of profit of associates 7,856,378,445 5,294,730,735

Adjustments for non-cash items:
Depreciation on operating fixed assets 4,338,040,042 3,452,354,994
Depreciation on right of use fixed assets 348,372,906 -
Amortization of intangible assets 2,353,202 7,295,553
Interest income (106,320,105) (125,618,084)
Loss on sale of property, plant and equipment and
right to use asset - net 12,178,782 31,203,306
Loss on write-off of Intangible assets - 8,969,460
Dividend income (447,953,012) (397,379,333)
Provision for gratuity 148,493,559 109,967,518
Provision for stocks - (73,670,332)
(Reversal of) / provision for stores, spares and loose tools (10,841,543) 9,663,308
Credit balance written back - (6,883,216)
Balance written off during the year 7,209,332 16,545,891
Allowance for expected credit loss 267,353 -
Impairment of receivable - 107,838,889
Provision against doubtful sales tax refundable 36,440,779 -
Waiver on lease payments (76,812,935) -
Finance cost 5,859,338,833 4,915,422,557
10,172,385,745 8,110,403,319
Operating cash flow before changes in working capital 18,028,764,190 13,405,134,054
Changes in working capital

(Increase) / Decrease in current assets
Stores, spare and loose tools (63,630,608) (135,675,803)
Stock-in-trade (1,754,576,135) (2,184,773,584)
Trade debts (6,034,836,386) (1,645,223,262)
Loans and advances 5,531,259 86,916,064
Trade deposits and short term prepayments (21,367,239) (4,340,585)
Other receivables 1,882,618,168 (2,017,409,435)
(5,986,260,941) (5,900,506,605)
Increase / (decrease) in current liabilities
Trade and other payables 1,725,601,014 (2,632,605,958)
Contract liabilities 19,143,888 850,602,812
13,787,248,151 5,722,624,303

Note 2020 2019
Rupees Rupees
43 CASH AND CASH EQUIVALENTS
Bank overdrafts 31 (33,938,461) -

Cash and bank balances 22 6,264,545,239 4,414,025,673
6,230,606,778 4,414,025,673
44 RELATED PARTY DISCLOSURES
The related parties comprise of associated companies (due to common directorship), directors and
key management personnel. The remuneration of key management personnel is disclosed in note
48. The Group in the normal course of business carries out transactions with various related parties.
Significant transactions with related parties are as follows:
Relationship with 2020 2019

Nature of transactions
the Company Rupees Rupees
(i) Associates Sales / processing 2,188,385,995 2,024,157,587

Purchases 291,855,139 358,482,018
Purchase of electricity / steam - 10,886,678
Expenses charged to 50,602,713 44,785,484
Expenses charged by 10,862,700 8,683,181
Markup charged by 60,937,811 44,800,008
Dividend paid 146,203,902 209,971,634
Loans obtained net 662,522,688 189,215,131
(ii) Others Contribution to provident fund 79,048,747 74,784,403

Loan from directors and related parties (167,583,000) 167,583,000
Sale of vehicles to key
management personnel 1,457,226 4,569,482
Donation 23,185,000 2,300,000
Dividend 320,474,622 195,459,952

44.1 The related parties with whom the Group had entered into transactions or have arrangement /
agreement in place are following:
Aggregate
Company Name Basis of relationship % of
shareholding
Creadore A/S Associated Company 49%

Sapphire Power Generation Limited Associated Company 26.43%
Sapphire Dairies (Private) Limited Associated Company 18.80%
Reliance Cotton Spinning Mills Limited Common Directorship 3.04%
Sapphire Electric Company Limited Common Directorship 1.42%
Sapphire Holding Limited Common Directorship 0.05%
Sapphire Fibres Limited Common Directorship N/A
Yousuf Agencies (Private) Limited Common Directorship N/A
Sapphire Finishing Mills Limited Common Directorship N/A
Diamond Fabrics Limited Common Directorship N/A
Amer Cotton Mills (Private) Limited Common Directorship N/A
Four Strength (Private) Limited Common Directorship N/A
Bank Alfalah Limited Investor in a subsidiary of the Group N/A
Amer Tex (Private) Limited Common Directorship N/A
Galaxy Agencies (Private) Limited Common Directorship N/A
Nadeem Enterprises (Private) Limited Common Directorship N/A
Neelum Textile Mills (Private) Limited Common Directorship N/A
Sapphire Agencies (Private) Limited Common Directorship N/A
Abdullah Foundation Common Directorship N/A
Green Field Enterprises (Private) Limited Subsidiary of an associated Group N/A

45 SEGMENT ANALYSIS
45.1 SEGMENT RESULTS
Processing, Elimination of
printing, Home Power
Spinning Weaving inter segment Total
Textile and Generation
Textile Retail transaction
Rupees
For the year ended 30 June

2020
Net turnover 20,080,368,493 12,592,699,351 14,674,265,226 14,199,254,197 (8,579,191,536) 52,967,395,731
Cost of sales (18,709,582,504) (10,446,553,596) 11,062,207,114) (4,522,343,047) 8,579,191,536 (36,161,494,725)
Gross Profit 1,370,785,989 2,146,145,755 3,612,058,112 9,676,911,150 - 16,805,901,006
Distribution cost (312,489,375) (403,177,843) (1,880,014,106) - - (2,595,681,324)
Administrative expenses (245,179,529) (116,133,887) (254,621,935) (168,511,121) - (784,446,472)
(557,668,904) (519,311,730) (2,134,636,041) (168,511,121) - (3,380,127,796)
Profit before taxation

and unallocated income
and expenses 813,117,086 1,626,834,025 1,477,422,070 9,508,400,029 - 13,425,773,210
Depreciation on operating
fixed assets 588,091,451 242,978,368 531,681,327 2,975,288,896 - 4,338,040,042
Depreciation on
right-to-use assets - - 344,728,815 3,644,091 - 348,372,906
For the year ended 30 June

2019
Net turnover 19,608,053,545 12,903,643,914 14,838,423,013 9,548,078,730 (7,256,582,165) 49,641,617,037
Cost of sales (17,552,744,021) (10,718,036,734) (11,364,812,697) (3,413,520,800) 7,256,582,165 (35,792,532,087)
Gross Profit 2,055,309,524 2,185,607,180 3,473,610,316 6,134,557,930 - 13,849,084,950
Distribution cost (371,752,061) (440,150,291) (2,046,517,769) 597,566 - (2,857,822,555)
Administrative expenses (248,163,598) (104,641,636) (279,187,716) (163,746,929) - (795,739,879)
(619,915,659) (544,791,927) (2,325,705,485) (163,149,363) - (3,653,562,434)
Profit before taxation

and unallocated income
and expenses 1,435,393,865 1,640,815,253 1,147,904,831 5,971,408,567 - 10,195,522,516
Depreciation on operating
fixed assets 564,441,305 258,418,689 507,440,779 2,122,054,221 - 3,452,354,994

Reconciliation of operating results with profit after tax is as follows:

2020 2019
Rupees Rupees
Total results for reportable segments 13,425,773,210 10,195,522,516

Other operating expenses (217,390,973) (515,724,842)
Other income 702,357,546 585,048,426
Finance cost (6,054,361,338) (4,970,115,365)
Share of profit of associated companies 129,882,216 175,894,211
Taxation (121,981,481) (431,316,256)
Profit for the year 7,864,279,180 5,039,308,690

45.2 SEGMENT ASSETS AND LIABILITIES
Processing,
printing, Home
Spinning Weaving Power Generation Total
Textile and Textile
Retail
Rupees
As at 30 June 2020
Segment assets 13,132,006,035 4,416,693,552 14,244,801,669 67,067,848,827 98,861,350,083
Segment Liabilities 20,868,358,319 2,531,152,118 10,030,129,373 44,406,320,730 77,835,960,540
As at 30 June 2019
Segment assets 11,820,053,480 4,594,319,755 9,416,932,220 62,309,278,158 88,140,583,613
Segment Liabilities 20,631,414,203 2,626,065,688 5,669,961,791 48,031,280,061 76,958,721,743
Reconciliation of segment assets and liabilities with total assets and liabilities in the balance
sheet is as follows:
2020 2019
Rupees Rupees
Total for reportable segments assets 98,861,350,083 88,140,583,613

Unallocated assets 10,925,985,521 14,621,248,455
Total assets as per statement of financial position 109,787,335,604 102,761,832,068
Total for reportable segments liabilities 77,835,960,540 76,958,721,743

Unallocated liabilities 766,995,871 1,459,470,792
Total liabilities as per statement of financial position 78,602,956,411 78,418,192,535

2020 2019
Numbers Numbers
46 NUMBER OF EMPLOYEES
Number of employees at year end 10,472 10,038
Average number of employees 10,790 9,762
47 PLANT CAPACITY AND ACTUAL PRODUCTION
Spinning
Total number of spindles installed 141,576 139,433
Average number of spindles worked 138,431 138,424
Total number of rotors installed 1,032 3,120
Installed capacity after conversion into 20/s lbs. 114,315,658 119,255,126
Actual production after conversion into 20/s lbs 95,065,457 98,423,297
Weaving
Total number of looms installed 362 360
Average number of looms worked 362 360
Installed capacity(at 50 picks/inch of fabric square meters) 153,231,821 152,241,843
Actual production(at 50 picks/inch of fabric square meters) 137,858,353 142,630,979
Finishing and Printing

Production capacity meters 43,200,000 43,200,000
Actual production meters 35,003,177 38,986,791
Home Textile Product

The capacity of this unit is undeterminable due to multi product involving varying processes of
manufacturing and run length of order lots.
Yarn dyeing
Production capacity KGs 1,080,000 -
Actual production KGs 713,467 -
Power Generation
Installed capacity (MWh) 600,847 520,216
Actual energy delivered (MWh) 449,760 487,460

47.1 Reason for low production
Under utilization of available capacity for spinning, finishing and printing of the Holding Company is
mainly due to normal maintenance / temporarily shut down and changes in production pattern.
Output produced by the plants of SWPCL and TBCL (power sector subsidiary companies) is
dependent on the load demanded by CCPA-G and plant availability.
48 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
Executives Director Chief Executive

2020 2019 2020 2019 2020 2019
Rupees
Remuneration 520,390,999 568,015,005 14,520,000 12,600,000 36,000,000 33,000,000

Bonus 43,849,964 112,110,761 - - - -
Medical 7,074,765 5,995,629 - - - -
Contribution to provident fund 24,100,194 23,210,263 - - - -
Leave encashment and other
benefits 34,756,739 41,785,410 - - - -
630,172,661 751,117,068 14,520,000 12,600,000 36,000,000 33,000,000
Number of persons 131 134 2 1 1 1
48.1 In addition, some of the above persons have been provided with the company maintained cars.
48.2 Meeting fee of Rs.1.650 million (2019: Rs.2.10 million) has been paid to independent non-executive
directors. No other remuneration has been paid to non-executive directors of the Group.
48.3 The Chief Executive and Executive Directors were also provided with the telephones at residence.
49 PROVIDENT FUND
The Group Employees’ Provident Fund Trust holds the investments which are in accordance with
the provisions of section 218 of the Companies Act 2017 and the Rules formulated for this purpose.
50 FINANCIAL INSTRUMENTS
The Group has exposures to the following risks from its use of financial instruments:
Credit risk
Liquidity risk
Market risk
The Group’s Board of Directors has overall responsibility for the establishment and oversight of the
Group’s risk management framework. The Board is also responsible for developing and monitoring
the Group’s risk management policies.

50.1 Credit risk
50.1.1 Exposure to credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from trade debts, loans and
advances, trade deposits, other receivables, short term investments and cash and bank balances.
Out of total financial assets of Rs. 25,597 million (2019: Rs.21,313 million), financial assets which are
subject to credit risk aggregate to Rs.18,976 million (2019: Rs.13,126 million). The carrying amount
of financial assets represents the maximum credit exposure. The maximum exposure to credit risk
at the reporting date is as follows:
2020 2019
Rupees Rupees

Trade debts 11,627,624,567 5,587,782,714
Trade deposits 49,784,895 9,462,040
Other receivables 917,956,352 2,846,938,094
Short term investments 49,000,000 53,443,295
Bank balances 6,165,532,438 4,304,962,165
18,976,620,434 13,126,696,768
50.1.2 The maximum exposure to credit risk for trade debts at the reporting date by geographical region is
as follows:
Domestic 10,803,069,426 5,040,370,019

Export 824,555,141 547,412,695
11,627,624,567 5,587,782,714
The majority of export debts of the Group are situated in Asia, Europe and North America.
Customer credit risk is managed by each business unit subject to the Groups’ established policy,
procedures and control relating to customer credit risk management. Credit quality of a customer
is assessed based on an extensive credit rating scorecard and individual credit limits are defined
in accordance with this assessment. Outstanding customer receivables and contract assets are
regularly monitored and all exports are covered by letters of credit or other forms of credit insurance
obtained from reputable banks.
An impairment analysis is performed at each reporting date using a provision matrix to measure
expected credit losses. The provision rates are based on days past due for groupings of various
customer segments with similar loss patterns (i.e., by geographical region, product type and
customer type). The calculation reflects the probability-weighted outcome, the time value of money
and reasonable and supportable information that is available at the reporting date about past
events, current conditions and forecasts of future economic conditions. Generally, trade receivables
are written-off if past due for more than one year and are not subject to enforcement activity. The
maximum exposure to credit risk at the reporting date is the carrying value of each class of financial
assets disclosed above. The Group does not hold collateral as security.

The letters of credit for export sales are considered integral part of export trade receivables and
there is no past history of default in case of export debtors, so the expected credit loss rate for
the export trade receivables is insignificant, hence gross amount equals to net carrying amount.
However, for local trade receivables the Group evaluates the concentration of risk with respect to
them as low, as its customers mostly deal in advances and their demand is order based.
Set out below is the information about the credit risk exposure on the Company’s local trade
receivables assets using a provision matrix:
361 days
Not due 1-30 days 31-60 days 61-90 days 91-180 days 181-360 days
or more
Rupees
As at 30 June 2020
Estimated total gross
5,279,065,771 1,770,208,093 1,863,704,984 133,005,029 1,578,528,090 82,827,606 132,503,070
carrying amount at default
Expected credit loss 8,424,010 7,283,233 346,903 8,892,690 2,453,312 52,474 9,320,596
As at 30 June 2019
Estimated total gross
2,827,723,084 1,168,148,380 494,303,823 374,100,313 129,014,382 30,844,936 52,740,965
carrying amount at default
Expected credit loss 6,787,847 10,401,101 3,476,282 1,612,100 154,273 2,561,278 11,512,983
50.1.4 Credit risk from balances with banks and financial institutions is managed by the Group’s finance
department in accordance with the Group’s policy. Investments of surplus funds are made only
with approved counterparties and within credit limits assigned to each counterparty. Counterparty
credit limits are reviewed by the Group’s Board of Directors on an annual basis, and may be updated
throughout the year subject to approval of the Group’s Finance Committee. The limits are set to
minimize the concentration of risks and therefore mitigate financial loss through a counterparty’s
potential failure to make payments. The Group deals with banks having credit ratings in the top
categories therefore, considers these as low risk and does not expect credit loss to arise on the
balances. Following are the credit ratings of banks with which balances are held:
Name of bank Rating Agency Rating

Short term Long term
MCB Bank Limited PACRA A1+ AAA

National Bank of Pakistan PACRA A1+ AAA
Meezan Bank Limited JCR-VIS A-1+ AA+
United Bank Limited JCR-VIS A-1+ AAA
Habib Bank Limited JCR-VIS A-1+ AAA
Citibank N.A. Moody's P-1 Aa3
Faysal Bank Limited PACRA A1+ AA
Habib Metropolitan Bank PACRA A1+ AA+
Bank Al-Habib Limited PACRA A1+ AA+
Dubai Islamic Bank Pakistan JCR-VIS A-1 AA
Allied Bank Limited PACRA A1+ AAA
Samba Bank Limited JCR-VIS A-1 AA
Standard Chartered Bank PACRA A1+ AAA
Industrial and Commercial Bank of China Moody's P-1 A1
Bank Alfalah Limited PACRA A1+ AA+
The Bank of Punjab PACRA A1+ AA
Soneri Bank Limited PACRA A1+ AA-

50.2 Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated
with financial liabilities. Prudent liquidity risk management implies maintaining sufficient cash and
the availability of funding through an adequate amount of committed credits facilities. The Group’s
treasury department maintains flexibility in funding by maintaining availability under committed
credits lines.
Financial liabilities in accordance with their contractual maturities are presented below:
2020
Rupees

Lease liabilities 2,177,760,001 3,639,004,962 454,482,098 2,003,430,114 1,181,092,750
76,110,276,279 82,273,378,821 21,740,368,518 42,836,843,285 17,696,167,018
2019
Rupees

Lease liabilities 14,452,087 18,064,308 5,532,562 12,531,746 -
76,167,875,404 80,281,783,844 21,659,393,366 27,090,467,525 31,531,922,953
50.2.1 The contractual cash flows relating to the above financial liabilities have been determined on the
basis of mark-up / interest rates effective at the respective year-end. The rates of mark-up / interest
have been disclosed in the respective notes to these financial statements.
50.3 Market risk

Market risk is the risk that changes in market price, such as foreign exchange rates, interest rates
and equity prices will affect the Group’s income or the value of its holding of financial instruments.
50.3.1 Currency risk

The Group is exposed to currency risk on import of raw materials, stores and spares parts and
export of goods mainly denominated in US Dollar, Euro, Japanese Yen and Swiss Frank. The
Group’s exposure to foreign currency risk for US Dollar, Euro, Japanese Yen, AED, GBP, Danish
Krone and Swiss Frank is as follows:

2020
Trade debts (824,555,141) (4,770,604) (111,310) - - - -

Bank balances (4,227,607,359) (24,845,625) - - - -
Long term finance - secured 44,202,500,976 261,940,747 - - - - -
39,150,338,476 232,324,517 (111,310) - - - -
Outstanding letters of credit 2,306,194,325 12,457,892 1,058,180 - 17,790 - -
Foreign currency forward contracts 352,443,189 1,823,850 241,026 - - - -
Net Exposures 41,808,975,990 246,606,259 1,187,896 - 17,790 - -
2019
Trade debts (547,412,695) (2,741,522) (524,779) - - - -

Bank balances (2,926,225,471) (17,784,209) (3,867) - - - -
Long term finance - secured 47,799,490,687 290,574,411 - - - - -
Creditors and accrued liabilities 348,559,400 2,125,362 -
44,674,411,921 272,174,043 (528,646) - - - -
Outstanding letters of credit 1,055,047,702 4,028,853 1,216,360 14,604,000 48,900 2,955,600 9,000
Net exposure 45,729,459,623 276,202,896 687,714 14,604,000 48,900 2,955,600 9,000
The following significant exchange rates have been applies as at reporting date:
2020 2019
Rupees Rupees
US $ to Rupees (Buying/Selling) 168.25 / 168.75 164 / 164.5

Euro to Rupees (Buying/Selling) 189.11 / 189.73 186.37 / 186.99
Sensitivity analysis
A 20 percent (2019: 20 percent) strengthening of the Rupees against US Dollar and Euro at June
30, would have increase / (decrease) equity and profit or loss by the amounts shown below. This
analysis assumes that all other variables, in particulars interest rates, remain constant. The analysis
is performed on the same basis for 2019.
Equity Profit or loss

Rupees Rupees
As at 30 June 2020
Effect in US Dollar 8,298,300,626 8,298,300,626
Effect in Euro 44,928,603 44,928,603
As at 30 June 2019
Effect in US Dollar 8,989,743,098 8,989,743,098
Effect in Euro 25,633,852 25,633,852

20 percent (2019: 20 percent) weakening of the Rupees against the above currency at 30 June
would have had the equal but opposite effect on the above currencies to the amounts shown above,
on the basis that all other variable remain constant.
50.3.2 Interest rate risk
At the reporting date, the profit, interest and mark-up rate profile of the Group’s significant financial
assets and liabilities is as follows:
Effective rate Carrying Amount

2020 2019 2020 2019
Percentage Rupees
Fixed rate instruments
Long term financing 2.5% to 6.5% 2.5% to 6.5% 5,457,318,288 4,535,248,994
Short term borrowings 2.25% to 3.00 % 2.15% to 3.00 % 3,486,784,000 2,100,000,000
Variable rate instruments
Long term financing
- foreign currency loan 5.15% to 6.83% 6.84% to 7.90% 44,202,500,976 47,799,490,687
- local currency loan 7.97% to 14.20% 6.47% to 13.43% 9,816,934,833 10,208,048,027
Short term borrowings -

local currency loan 8.36% to 15.10% 6.46% to 14.05% 5,023,800,713 6,520,398,142
Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through
profit or loss. Therefore, a change in mark-up / interest rates at the reporting date would not affect
statement of profit or loss.
Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in mark-up / interest rates at the reporting date would have increased
/ (decreased) profit for the year by the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remain constant. The analysis is performed on the
same basis for 2019.
Profit and loss 100 bps
Increase (Decrease)
Rupees Rupees
As at 30 June 2020
As at 30 June 2019
Cash flow sensitivity - variable rate instruments 821,934,539 821,934,539
The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and
liabilities of the Group.
50.3.3 Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices (other than those arising from interest rate risk
or currency risk). Other price risk arises from the Group’s investment in ordinary shares of listed
Companies. To manage its price risk arising from aforesaid investments, the group diversify its
portfolio and continuously monitor developments in equity markets. In addition the Group actively
monitors the key factors that affect stock price movement.
A 10% increase / decrease in share prices of listed companies at the reporting date would have
increased / decreased the Group’s unrealized gain on investments at FVOCI as follows:
2020 2019
Rupees Rupees
Effect on equity 643,517,696 799,104,425
Effect on investments 643,517,696 799,104,425
The sensitivity analysis prepared is not necessarily indicative of the effects on equity / investments
of the Group.
50.4 Fair value of financial instruments
Carrying values of the financial assets and financial liabilities approximate their fair values. Fair value
is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction.
50.5 Financial instruments by Category

FINANCIAL ASSETS
Loans and receivables
Trade debts 11,627,624,567 5,587,782,714
Trade deposits 49,784,895 9,462,040
Other receivables 917,956,352 2,846,938,094
Cash and bank balances 6,264,545,239 4,414,025,673
19,026,633,235 13,182,316,981
Debt instruments at fair value through OCI
HBL Term Finance Certificates 49,000,000 -
Sales tax refund bonds - 53,443,295
49,000,000 53,443,295
Equity instruments at fair value through OCI
Quoted equity shares 6,435,176,964 7,991,044,248
Unquoted equity shares 86,648,236 86,648,236
6,521,825,200 8,077,692,484
Total current 21,846,260,661 16,871,720,963

2020 2019
Rupees Rupees
FINANCIAL LIABILITIES
At amortized cost
Trade and other payables 5,444,428,489 4,211,351,512
Accrued Interest / mark-up 499,052,861 539,247,498
Secured bank loan 59,476,754,097 62,542,787,708
Lease liabilities 2,177,760,001 14,452,087
Other current loans - 237,843,000
Short term borrowings 8,510,584,713 8,858,241,142
76,110,276,279 76,405,718,404
Total current 20,086,820,732 20,626,412,123
50.6 Fair value hierarchy
The carrying value of all financial assets and liabilities reflected in the financial statements
approximate their fair value.
The table below analyses financial instruments carried at fair value, by valuation method. The
different levels have been defined as follows:
Level 1. Quoted market price (unadjusted) in an active market for identical instrument.
Level 2. Inputs other than quoted price included within Level 1 that are observable for
the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from
prices).
Level 3. Inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The main level of inputs used by the Group for its financial assets are derived and evaluated as follows:
Level 1 Level 2 Level 3

Rupees
As at 30 June 2020
Debt instruments at fair value through OCI 49,000,000 - -
6,484,176,964 - 86,648,236
As at 30 June 2019
Debt instruments at fair value through OCI - 53,443,295 -
7,991,044,248 53,443,295 86,648,236
50.7 Capital risk management
The Group’s prime objective when managing capital is to safeguard its ability to continue as a going
concern in order to provide adequate returns for shareholders, benefits for other stakeholders and
to maintain an optimal capital structure to reduce the cost of capital.
Consistent with others in the industry, the Group manages its capital risk monitoring its debts levels
and liquid assets and keeping in view future investment requirements and expectations of the
shareholders. Debt is calculated as total borrowings (‘long term loans’ and ‘short term borrowings’
as shown in the statement of financial position). Total capital comprises shareholders’ equity as
shown in the statement of financial position under ‘share capital and reserves’.
2020 2019
Rupees Rupees
Total borrowings 67,987,338,810 62,557,239,795

Less: Cash and bank balances 6,264,545,239 4,414,025,673
Net debt 61,722,793,571 58,143,214,122
Total equity 22,415,130,852 18,138,839,745
Total capital 84,137,924,423 76,282,053,867
2020 2019
Percentage Percentage
Gearing ratio 73.36 76.22

51 RECONCILIATION OF MOVEMENT OF LIABILITIES TO CASH FLOWS ARISING FROM FINANCING
ACTIVITIES
2020
interest / dividend Total
loans borrowings mark-up
Rupees
Cash flows
Repayment of loans (6,262,779,676) (381,594,890) - - (6,644,374,566)

Proceeds from loans 2,066,476,724 - - - 2,066,476,724
Dividends paid - - - (567,260,979) (567,260,979)
Total changes from

financing cash flows (4,196,302,952) (381,594,890) (6,033,671,458) (567,260,979) (11,178,830,279)

Amortization of transaction cost 61,618,552 - - - 61,618,552
Exchange loss 1,068,650,789 - - - 1,068,650,789
Changing in running finance - 33,938,461 - - 33,938,461
Finance cost - - 5,993,476,821 - 5,993,476,821
Total liability related other changes 1,130,269,341 33,938,461.00 5,993,476,821 567,161,640 7,724,846,263
2019

loans borrowings interest / dividend Total
mark-up
Rupees
Cash flows

Dividends paid - - - (440,844,304) (440,844,304)
18,061,864,076 563,368,741 (4,706,307,449) (440,844,304) 13,478,081,064

Finance cost - - 4,915,422,557 - 4,915,422,557

52 IMPACT OF COVID-19 ON THE FINANCIAL STATEMENTS
The outbreak of Novel Coronavirus (COVID-19) continues to progress and evolve. Therefore, it is
challenging now, to predict the full extent and duration of its business and economic impact. The
outbreak of COVID-19 has had a distressing impact on overall demand in the global economy with
notable downgrade in growth forecasts.
Analysis of impact of COVID -19 on the Group companies is as follows:
The Holding Company’s revenue is earned from both local within Pakistan and international markets.
COVID-19 is expected to bear an impact in the given situation as the Holding Company caters the
needs of different levels of the textile supply chain both locally and internationally. It expects that
the local market will not show further decline and growth is expected in the upcoming period.
The international markets have also starting resuming business and orders are now regaining
volume. However extent and duration of such impact remains uncertain and dependent on future
developments that cannot be accurately predicted at this time, such as the transmission rate of
COVID-19 and the extent and effectiveness of containment actions taken. Given the ongoing
economic uncertainty, a reliable estimate of the impact cannot be made at the date of authorization
of these financial statements.
Financial impact of COVID-19 on Holding Company’s financial statements mainly includes decrease
in revenue of last quarter as compared to prior period and adjustment for Net Realizable Value as
disclosed in note 15.3.
SRL (Subsidiary Company) has reviewed its exposure to business risks and related accounting
considerations. Consequently the Subsidiary Company believes that there is no material impact on
the recognition and measurement of assets and liabilities. Closure of outlets due to Government-
enforced lockdown led to decline in revenue and higher working capital requirements leading to
increase in creditors. To cater the working capital requirements, the Subsidiary Company obtained
long term financing from Allied Bank Limited and The Bank of Punjab as disclosed in note 25.1.1
and 25.1.9 respectively. SRL was however able to obtain relief in the payment of rental for retail
outlets, resulting in waiver income (note- 38). However, since the lockdown was relaxed subsequent
to year-end, all retail outlets have opened for resumption of normal business activities.
The operations of TBCL and SWPCL (Subsidiaries companies) were not affected as they fell
under the exemption provided by the Government of Sindh to providers of essential services.
After implementing all the necessary Standard Operating Procedures (SOPs) to ensure safety of
employees, both the companies continued to carry out their operations and have taken all necessary
steps to ensure smooth and adequate continuation of their business. Due to this, management of
both the subsidiary companies has assessed the accounting implications of these developments
and according to management’s assessment, there is no significant accounting impact of the effects
of COVID-19.
Sapphire International ApS and Designtex (SMC-Private) Limited have been incorporated during
the year and their operations are dependent on those of the Holding Company and Sapphire Retail
Limited respectively.

53 EVENTS AFTER REPORTING DATE
On August 13, 2020, a Memorandum of an Understanding (‘MoU’) was executed by and between
the Committee for Negotiation with Independent Power Producers [on behalf of Government of
Pakistan (‘GoP’)] and Pakistan Wind Energy Association [on behalf of Wind Power Projects (‘WPPs’)
under the Renewable Energy Policy 2006], through which the WPPs have voluntarily agreed to
provide certain concessions to the GoP on a prospective basis, including the efforts on their part
for negotiations with third parties regarding an extension in the debt tenure and a reduction in the
operation and maintenance cost and spread over the interest rates offered by the banks. Furthermore,
the WPPs have agreed to reduce their return on equity and the spread over the markup rates used
for charging interest on amounts due from CPPA-G. However, the terms of the MoU are subject to
approval of the Board of Directors of several WPPs, as well as National Electric Power Regulatory
Authority and the Federal Cabinet and would take affect when it is approved.
54 CORRESPONDING FIGURES
Corresponding figures have been rearranged/reclassified, wherever necessary for better presentation.
However, no significant reclassification has been made during the year except for advance for land
amounting to Rs. 84.5 million which has been reclassified from capital work in progress (note 7.7) to
long term loans and advances (note 11).
55 DATE OF AUTHORIZATION FOR ISSUE
These consolidated financial statements were approved by the Board of Directors of the Holding
Company and authorized for issue on 24 September 2020.

PATTERN OF SHAREHOLDING
As at 30 June 2020
NUMBER OF SHAREHOLDERS FROM TO TOTAL SHARES HELD
313 1 100 5,785

53 101 500 13,158
21 501 1,000 14,791
26 1,001 5,000 53,754
5 5,001 10,000 40,039
2 10,001 15,000 26,363
2 15,001 20,000 37,119
2 20,001 25,000 43,282
1 25,001 30,000 30,000
2 30,001 35,000 61,236
3 35,001 40,000 108,383
2 45,001 50,000 94,367
2 60,001 65,000 122,287
1 75,001 80,000 78,345
1 80,001 85,000 81,432
1 100,001 105,000 100,700
1 115,001 120,000 118,800
2 140,001 145,000 282,853
1 160,001 165,000 162,853
1 185,001 190,000 189,540
2 215,001 220,000 434,516
1 225,001 230,000 227,988
1 245,001 250,000 247,508
1 270,001 275,000 285,809
1 300,001 305,000 300,926
1 405,001 410,000 408,301
1 415,001 420,000 417,077
1 495,001 500,000 498,454
1 540,001 545,000 544,979
1 565,001 570,000 567,114
1 570,001 575,000 573,152
1 605,001 610,000 609,683
1 630,001 635,000 633,141
1 655,001 660,000 657,788
1 675,001 680,000 677,128
2 685,001 690,000 1,372,335
2 780,001 785,000 1,566,170
1 795,001 800,000 800,000
1 995,001 1,000,000 998,015
2 1,025,001 1,030,000 2,052,000
2 1,070,001 1,075,000 2,144,000
1 1,590,001 1,595,000 1,591,291
1 2,415,001 2,420,000 2,417,329
470 21,689,791
* Note: The slabs representing nil holding have been omitted.

CATEGORIES OF SHAREHOLDERS
As at 30 June 2020
Particulars No. of Shares Held Percentage %
Director's, CEO, Their Spouse and Minor Children 8,752,081 40.35

Associated Companies, Undertakings
and Related Parties 6,716,144 30.96
NIT & ICP 1,002,955 4.62
Banks, Development Finance Institutions, 129 0.00
Non-Banking Financial Institutions
Insurance Company 11,910 0.05
Other Companies 324,658 1.50
General Public (Local) 4,881,914 22.51
21,689,791 100.00

As at 30 June 2020
A) ASSOCIATED COMPANIES, UNDERTAKINGS AND RELATED PARTIES NO OF SHARES

Amer Tex (Pvt.) Limited 419,139
Four Strenght (Pvt.) Limited 804,789
Galaxy Agencies (Pvt.) Limited 544,979
Nadeem Enterprise (Pvt.) Limited 633,141
Neelum Textile Mills (Private) Limited 463,779
Reliance Cotton Spinning Mills Limited 100,223
Salman Ismail (SMC-Private) Limited 639,923
Sapphire Agencies (Pvt.) Limited 2,518,029
Sapphire Holding Limited 285,809
Sapphire Power Generation Limited 306,333
B) NIT & ICP
CDC - Trustee National Investement (Unit) Trust 998,015
National Investment Trust Limited 4,940
C) DIRECTORS, CHIEF EXECUTIVE OFFICER, THEIR SPOUSE

AND MINOR CHILDREN
DIRECTORS & THEIR SPOUSES

Mr. Mohammad Abdullah 498,454
Mr. Yousuf Abdullah 1,605,744
Mr. Amer Abdullah 712,228
Mr. Shahid Abdullah 427,741
Mr. Nabeel Abdullah 1,072,000
Mr. Umer Abdullah 1,072,000
Mr. Nadeem Karamat 540
Mr. Shahid Shafiq 510
Mrs. Shamshad Begum 688,784
Mrs. Ambareen Amer 875,886
Mrs. Shireen Shahid 708,594
Ms. Mashmooma Zehra Majeed 500
CHIEF EXECUTIVE OFFICER & HIS SPOUSE

Mr. Nadeem Abdullah 654,584
Mrs. Noshaba Nadeem 434,516
D) BANKS, DEVELOPMENT FINANCIAL INSTITUTIONS, NON-BANKING FINANCIAL

INSTITUTIONS AND INSURANCE COMPANIES
BANKS
National Bank of Pakistan 129

As at 30 June 2020
INSURANCE COMPANY NO OF SHARES
EFU Life Assurance Ltd 11,910
E) SHAREHOLDERS HOLDING 05% OR MORE
Mr. Yousuf Abdullah 1,605,744

Sapphire Agencies (Pvt.) Limited 2,518,029
F) TRADING IN THE SHARES OF COMPANY DURING THE YEAR BY THE DIRECTORS

CHIEF EXCEUTIVE OFFICER, CHIEF FINANCIAL OFFICER, COMPANY SECRETARY
AND THEIR SPOUSES AND MINOR CHILDERN
Shares Purchased by Mrs. Shamshad Begum 200

Mrs. Usma Yousuf Shares Gift to her Husband Mr. Yousuf Abdullah 107,500
Mr. Yousuf Abdullah Shares Gift to his Son Mr. Salman Abdullah 800,000
Mr. Amer Abdullah Shares Gift to his Son Mr. Ali Abdullah 350,000
Mr. Amer Abdullah Shares Gift to his Son Mr. Tayyab Abdullah 784,170
Mr. Nadeem Abdullah Shares Gift to his Son Mr. Nabeel Abdullah 100,000
Mrs. Noshaba Nadeem Shares Gift to her Son Mr. Umer Abdullah 100,000

AFFIX
CORRECT
POSTAGE
The Company Secretary
SAPPHIRE TEXTILE MILLS LIMITED

212, Cotton Exchange Buidling,
I.I. Chundrigar Road,
Karachi.

FORM OF PROXY SAPPHIRE TEXTILE MILLS LIMITED
I/we
Folio No. of
a member(s) of Sapphire Textile Mills Limited and a holder of Ordinary
Shares, do hereby appoint
of
or failing him/her
of
a member of Sapphire Textile Mills Limited, vide Registered Folio No. as my/our Proxy to act on my/
our behalf at 52nd Annual General meeting of the Company to be held on Thursday the 22nd October,
2020 at 03:30 p.m. at Trading Hall, 312-Cotton Exchange Building, I. I. Chundrigar Road, Karachi and /
or any adjournment thereof.
Signed this day of 2020

REVENUE
STAMP PF
Signature
RS.5/-
(Signature should agree with the specimen signature registered with the Company)
NOTICE
1. No proxy shall be valid unless it is duly stamped with a revenue stamp of Rs.5/-
2. In the case of Bank or Company, the proxy form must be executed under its common seal and signd by its
authorized person.
3. Power of Attorney or other authority (if any) under which this proxy form is signed, a certified copy of that
Power of Attorney must be deposited along with this form.
4. This proxy form duly completed must be deposited at the Registered Office of the Company at least 48 hours
before the time of holding the meeting.
5. In case pf CDC account holder:
i) The proxy form shall be witnessed by two persons whose names, addresses CNIC numbers shall be
mentioned on the form.
ii) Attested copies of CNIC or passport of the beneficial owners and the proxy shall be furnished with the
proxy form.
iii) The proxy shall produce his original CNIC or original passport at the time of meeting.
iv) In case of corporate entity, the Board of Directors’ resolution/Power of Attorney with specimen signature
of the proxy holder shall be submitted (unless it has been provided earlier) along with proxy form to the
Company.
Witness:
Name Name
Address Address
CNIC No. CNIC No.

AFFIX
CORRECT
POSTAGE
The Company Secretary
SAPPHIRE TEXTILE MILLS LIMITED

212, Cotton Exchange Buidling,
I.I. Chundrigar Road,
Karachi.

212, Cotton Exchange Building, I.I. Chundrigar Road, Karachi, Pakistan.
Phone: +92 21 111 000 100, +92 21 3241 0930 Fax: +92 21 3241 6705
E-Mail: [email protected]
7A-K, Main Boulevard, Gulberg II, Lahore, Pakistan.

Phone: +92 42 111 000 100, +92 42 35750410, Fax: +92 42 35758783
E-Mail: [email protected]

Annual Report: Sapphire Textile Mills Limited

Uploaded by

Copyright:

Available Formats

Annual Report: Sapphire Textile Mills Limited

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Annual Report: Sapphire Textile Mills Limited

Uploaded by

Copyright:

Available Formats

ANNUAL REPORT

FINANCIAL STATEMENTS OF SAPPHIRE TEXTILE MILLS LIMITED

Independent Auditors’ Report to the Members 46

CONSOLIDATED FINANCIAL STATEMENTS OF SAPPHIRE TEXTILE MILLS LIMITED AND

Directors’ Report 120

REGISTERED OFFICE MILLS

Annual Report 2020 3

MIAN MOHAMMAD ABDULLAH

MR. NADEEM ABDULLAH

MR. SHAHID ABDULLAH

Annual Report 2020 5

MR. AMER ABDULLAH

MR. YOUSUF ABDULLAH

MR. NABEEL ABDULLAH

MR. UMER ABDULLAH

6 Sapphire Textile Mills Limited

MR. NADEEM KARAMAT

Outside his career, his engagements were:

Annual Report 2020 7

MR. SHAHID SHAFIQ

He also volunteers on the Boards of a welfare Hospital and a School in Karachi.

MS. MASHMOOMA ZEHRA MAJEED

8 Sapphire Textile Mills Limited

Our customers will share in our success through

Annual Report 2020 9

REVIEW REPORT BY THE

10 Sapphire Textile Mills Limited

The Board of Directors is performing its duties in accordance

Sapphire Textile Mills Limited Complies with all the

Annual Report 2020 11

12 Sapphire Textile Mills Limited

Net turnover 34,030,186 34,252,752

Annual Report 2020 13

Profit Before Taxation 1,309,085

EQUITY INVESTMENT IN SUBSIDIARY FUTURE PROSPECTS

14 Sapphire Textile Mills Limited

SUBSIDIARIES OF SAPPHIRE TEXTILE MILLS three projects have successfully commenced

Annual Report 2020 15

Name Category No of Meetings

* Mr. Shayan Abdullah has retired from the Board of Directors.

16 Sapphire Textile Mills Limited

Directors Remuneration f) All liabilities in regard to the payment on account

Annual Report 2020 17

Code of Conduct operating successfully. In the current year, Abdullah

Related Party Transactions Through Abdullah Foundation, we began to work

18 Sapphire Textile Mills Limited

Auditors Board Evaluation

On behalf of the Board

NADEEM ABDULLAH MOHAMMAD ABDULLAH

Annual Report 2020 19

Particulars UOM 2020 2019 2018 2017 2016 2015

Summarized Statement of Profit or Loss

Sales Rs. in Million 34,030 34,253 28,896 25,584 23,111 23,315

Summarized Statement of Financial Position

Summarized Statement of Cash Flows

20 Sapphire Textile Mills Limited

Particulars UOM 2020 2019 2018 2017 2016 2015

Current ratio Times 1.26 1.14 1.18 1.19 1.20 1.18

Capital Structure ratios