ANNUAL REPORT 2021

Full Family Clothing

Partner of choice
Interloop is a Business with Purpose!

Pursuing our Vision 2025, our strategic focus is to maintain our leadership in the

hosiery business and build further credibility of our multi-category products, enhancing

our customer experience through provision of value-added services, offering

products across all ages, genders, and abilities. We will continue to lead the way

in responsible manufacturing, meeting the highest standards of environmental

and social performance and will achieve our strategy through a diverse,

inclusive, and engaged workforce building a high-performing

organization, digital transformation, and an agile and lean

approach across all aspects of our business.

 TABLE OF CONTENTS

1 COMPANY OVERVIEW
Mission, Core Values
Our Vision 2025
Key Performance Indicators
6
7
8
Code of Conduct 9
Our Footprint 10
Our Journey 12
Corporate Information 14
Company Profile 16
Group Structure 17
Organizational Structure 18
Business Categories 20
Recognitions 25
Customers 26

2 GOVERNANCE
Board of Directors
Board Committees
Management Committee
30
32
33
Chairman’s Review Report 34
Directors’ Report 36
Directors’ Report (Urdu) 55
Statement of Compliance 56
Independent Review Report to the
Members on Statement of Compliance 59

3 RISKS AND OPPORTUNITIES

Risk Management Policy
Risk Governance
Risks & Mitigation Strategies
62
62
63
Opportunities & Materialization Strategies 65
Inadequacy in the Capital Structure and
Plans to Address Such Inadequacy 66
Liquidity Risk Strategy 67

4 PERFORMANCE & POSITION

Key Financial Ratios
Last Six Years Statement of Financial Position
Horizontal Analysis on Statement of Financial Position
70
71
72
Vertical Analysis on Statement of Financial Position 73
Last Six Years Statement of Profit or Loss 74
Horizontal Analysis on Statement of Profit or Loss 74
Vertical Analysis on Statement of Profit or Loss 74
Last Six Years Statement of Cash Flows 75
Horizontal Analysis on Statement of Cash Flows 75
Vertical Analysis on Statement of Cash Flows 75

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5 OUTLOOK
Forward Looking Statement 78

6 SUSTAINABILITY & CORPORATE SOCIAL RESPONSIBILITY

People 82
Planet 83
Prosperity 84
Certifications 85
Memberships 85

7 FINANCIAL STATEMENTS
Independent Auditor’s Report on Financial Statements
Statement of Financial Position
Statement of Profit or Loss
89
94
95
Statement of Comprehensive Income 96
Statement of Changes in Equity 97
Statement of Cash Flows 98
Notes to the Financial Statements 100

8 SHAREHOLDERS' INFORMATION
Notice of 29th Annual General Meeting
Statement Under Section 134(3) of the Companies Act, 2017
Notice of Annual General Meeting (Urdu)
156
161
167
Pattern of Shareholding 168
Information for Shareholders 171
Interloop Limited - Form of Proxy 173
Interloop Limited - Form of Proxy (Urdu) 174

Annual Report 2021 | 3

1. Company Overview
 MISSION
To be an agent of positive change for the
stakeholders and community by pursuing an
ethical and sustainable business

CORE VALUES

INTEGRITY CARE ACCOUNTABILITY

RESPECT EXCELLENCE

VISION 2025
It is a Growth Led Strategy, which will enable Interloop to be a
Full Family Clothing Partner of Choice
Vision 2025 charts out our strategy from July 2021 We aim to be a partner of choice through exceptional
through to June 2026. It is guided by a customer first customer service delivered by our value added services
approach with our strategic focus on offering multi- and responsible business practices.
category products, manufactured responsibly meeting
the highest standards of social and environmental To successfully deliver our strategy, we will unleash the
performance. potential of our people by building a diverse, inclusive
and engaged workforce creating a high performing
Our strategic focus will be to maintain leadership in organization. This will be enabled by our digital
hosiery and build credibility of our new categories, transformation and by an agile and lean mindset
offering products across all ages, genders and abilities, across all aspects of our business.
becoming a full family clothing supplier.

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 Our Vision
2025
To Become a Full Family Clothing
Partner of Choice

WH
AT
FUL
L
W
FA
M
IL

E
VA L U
E

DO
AD

Y
D

C
LO
R E S PON
E

TH
D
S

SE

ING
IB

RVI
LE

CES
BUSIN

HOW WE’LL DO IT
ES

S
PEOPLE
A diverse, inclusive and engaged workforce
creating a high performing organization

DIGITAL TRANSFORMATION
Drive efficiencies through digitalization
and provide transparency to our customers
with real time information

AGILE MANUFACTURING
Drive an agile organization retaining our
competitive position as a responsive high
quality manufacturer

$700M 2.5x
REVENUE THROUGH
25%
LOWER CARBON FOOTPRINT
REVENUE BY FY 2026
VALUE ADDED SERVICES AND RESOURCE CONSUMPTION
Transforming into a full family clothing business will
Providing value added services creating Lead the way in responsible manufacturing meeting highest
build further credibility with our customers
strong lasting partnerships standards of environmental and social performance

Annual Report 2021 | 7

 KEY
PERFORMANCE
INDICATORS
Total Sales Exports EBITDA

54,962 319 10,176

PKR in Million USD in Million PKR in Million
FY 2020 36,303 FY 2020 209 FY 2020 5,122

Profit before Tax Profit after Tax Gross Profit Margin

6,873 6,292 25.86%

PKR in Million PKR in Million
FY 2020 2,116 FY 2020 1,796 FY 2020 21.66%

Net Profit Margin Earnings per share Total Assets

11.45% 7.21 60,695

PKR PKR in Million
FY 2020 4.95% FY 2020 2.06 FY 2020 45,367

Shareholders’ Equity Share Price Return on Equity

20,515 70.03 30.67%

PKR in Million PKR
FY 2020 17,280 FY 2020 43.92 FY 2020 10.40%

Cash Dividend per share* Bonus per share* Price Earnings Ratio

2.50 3% 9.71
PKR (3 share for every 100 share) Times
FY 2020 2.00 FY 2020 Nil FY 2020 21.32

Current Ratio Investment in Community

1.22 330
Times PKR in Million
FY 2020 1.14 FY 2020 175

*includes PKR 1 per share Final Dividend and 3% bonus shares, recommended by the Board of Directors in
board meeting held on September 15, 2021, subject to approval at Annual General Meeting to be held on
October 15, 2021

8 |
CODE OF CONDUCT

Interloop Limited conducts its business with the ensure that our suppliers, vendors, and contractors
highest ethical standards and in full compliance understand the standards we apply to ourselves and
with all applicable laws of the country. Honesty and expect them to do the same.
integrity take precedence in all relationships including
those with customers, suppliers, employees, and other ASSETS AND PROPRIETARY
stakeholders.
INFORMATION
ETHICS AND BUSINESS PRACTICES We consider our company’s physical and intellectual
assets valuable and must protect them in the interest
We conduct the company’s business in an of the company and its shareholders. Our employees
environmentally responsible and sustainable manner are expected to strictly comply with internal policies,
and provide employees with a safe and healthy preserve company’s physical and intellectual assets
workplace. We expect our employees to act with and confidential information. Our employees are
honesty and professionalism and be scrupulous accountable for applying all available tools to manage
towards company information, funds, equipment, the company’s information resources and records
facilities, using their authority fairly and equitably. properly and proficiently.
Respect and equality are key values at Interloop, where
politicizing and debating ethical and religious topics or
hurting anyone on such grounds is not acceptable. The
OUR PEOPLE
company believes in a diverse, inclusive, and engaged We believe that highly engaged employees are
workforce creating a high-performance organization. essential for professional development and business
Over the years, Interloop has developed a robust success. Therefore, we encourage our employees to
organizational culture based on the strong foundation contribute their best and to avail the opportunities
of the company’s Mission and Values i.e. Integrity, for development and growth. We have specific
Care, Accountability, Respect & Excellence. management policies and SOPs in line with best
international practices for operations and support
We seek to do business with suppliers, vendors, functions. We invest in continuous improvement
contractors, and other independent businesses of processes including organizational structure, HR
that demonstrate high standards of ethical business planning and performance management. We provide
behavior. Our company does not knowingly do employees with tools, techniques, and trainings to
business with any persons or businesses that operate master their current jobs, broaden their skills, and
in violation of applicable laws and regulations for advance their career goals and groom as good human
employment, health, safety, and environment. We beings.

Annual Report 2021 | 9

 OUR FOOTPRINT
Global Presence through
Affiliates & Associates

10 |
Annual Report 2021 | 11
 OUR JOURNEY

12 |
Annual Report 2021 | 13
 CORPORATE INFORMATION
BOARD OF DIRECTORS AUDIT COMMITTEE
Musadaq Zulqarnain Tariq Iqbal Khan
Chairman / Non-Executive Director Chairman

Navid Fazil Saeed Ahmad Jabal

Chief Executive Officer / Executive Director Member

Muhammad Maqsood Jahan Zeb Khan Banth

Executive Director / Group CFO Member

Jahan Zeb Khan Banth HUMAN RESOURCE &

Non-Executive Director REMUNERATION COMMITTEE
Saeed Ahmad Jabal
Shereen Aftab Chairman
Non-Executive Director

Navid Fazil
Saeed Ahmad Jabal Member
Independent Director

Jahan Zeb Khan Banth

Tariq Iqbal Khan Member
Independent Director

NOMINATION COMMITTEE
CHIEF FINANCIAL OFFICER
Musadaq Zulqarnain
Muhammad Maqsood Chairman

COMPANY SECRETARY Navid Fazil

Rana Ali Raza Member

HEAD OF INTERNAL AUDIT Muhammad Maqsood

Member
Jamshaid Iqbal

CHIEF INFORMATION OFFICER RISK MANAGEMENT COMMITTEE

Yaqub Ahsan Tariq Iqbal Khan
Chairman

LEGAL ADVISOR
Muhammad Maqsood
HaidermotaBNR & Co. Member

AUDITORS Yaqub Ahsan

Kreston Hyder Bhimji & Co., Member
Chartered Accountants
Syed Hamza Gillani
Member

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SHARE REGISTRAR HEAD OFFICE
CDC Share Registrar Services Limited Interloop Limited
1 Km Khurrianwala, Jaranwala Road, Khurrianwala,
Karachi Office: Faisalabad, Pakistan
Share Registrar Department Tel: (92-41) 4360400
CDC House, 99-B, Block-B, Fax: (92-41) 2428704
S.H.C.H.S, Main Shahra-e-Faisal,
Karachi -74400 PLANT SITES
Tel: (92-21) 111-111-500 Plant 1:
Fax: (92-21) 34326031 1 Km Khurrianwala-Jaranwala Road, Khurrianwala,
Faisalabad, Pakistan
Lahore Office:
Mezzanine Floor Plant 2 & 4:
South Tower, LSE Plaza, 7 Km Khurrianwala-Jaranwala Road, Khurrianwala,
19-Khayaban-e-Aiwan-e-Iqbal, Faisalabad, Pakistan
Lahore - 54000
Tel: (92-42) 36362061-66 Plant 3:
8 Km Manga Raiwind Road, Raiwind,
BANKERS Lahore, Pakistan
• Allied Bank Limited
• Askari Bank Limited Denim Plant:
• Bank Alfalah Limited 8 Km Manga Raiwind Road, Raiwind,
• Faysal Bank Limited Lahore, Pakistan
• Habib Bank Limited
• Habib Metropolitan Bank Limited Plant 5:
• MCB Bank Limited 6 Km Bypass Road, Khurrianwala,
• MCB Islamic Bank Limited Faisalabad, Pakistan
• Meezan Bank Limited
• National Bank of Pakistan
• Standard Chartered Bank Pak Limited
• Summit Bank Limited
• The Bank of Punjab
• United Bank Limited

REGISTERED OFFICE
Interloop Limited
Al-Sadiq Plaza, P-157,
Railway Road,
Faisalabad, Pakistan
Tel: (92-41) 2619724
Fax: (92-41) 2639400
Email: [email protected]
Website: www.interloop-pk.com

Annual Report 2021 | 15

 COMPANY PROFILE
Interloop Limited, headquartered in Pakistan, is the resources we use. Almost 50% of our raw materials
a vertically integrated multi-category Full Family are derived from sustainable sources and we have
Clothing company, manufacturing Hosiery, Denim, increased the use of organic cotton by around 400%
Knitwear & Seamless Apparel products, for top since 2016.
international brands and retailers, endeavoring to
become a Partner of Choice, for all. Living the digital first reality, we ensure that existing
operations are carried out as per industry best
Being the largest listed textile company on Pakistan practices and new initiatives are pursued to digitize
Stock Exchange by market capitalization & 2nd largest operations and enable our people to work faster and
exporter of Pakistan, we employ over 25,000 highly better. We have already deployed Robotic Process
motivated and engaged people from 15 different Automation across repetitive tasks, improving speed
nationalities, including more than 1,500 females. and accuracy and its expansion from shared services
We enjoy an organizational network spread across to merchandising and planning activities. We have
3 continents, with large well-equipped industrial introduced analytics dashboard across various teams
infrastructure based in Pakistan and Sri Lanka, and providing a real time view of the critical KPIs.
marketing services offices in USA, Europe & Japan.
Interloop is a Business with Purpose! Following the
Interloop Limited, is a world-class organization Triple Bottom Line approach focused on People,
dedicated to innovation and manufacturing excellence, Planet & Prosperity, our Mission & reason for existence
a pioneer in environmental consciousness and at the is to bring about a positive change in the community.
forefront of social change. Aiming for Race to Zero, Our ambition to transform lives, improve well-being,
our focus has been on circular by choice, reducing build a diverse, inclusive and engaged workforce
carbon foot print and using less water. Interloop and conserve the environment is reflected in our
Hosiery Plant 4 is South Asia’s First LEED Gold Certified business decisions & practices as well as in our social
Socks manufacturing facility and Interloop Denim is responsibility initiatives.
one of the Largest and among the only 12 Apparel
manufacturing facilities globally, to receive LEED® v4 Our focus has always been to reduce inequalities and
Platinum Certification by US Green Building Council. build gender equitable workplace which has gained us
international recognition from top organizations like
At Interloop Limited, we are passionate about the the UN Global Compact, UN Women, and Fair Trade.
products we make while being responsible stewards of

16 |
GROUP STRUCTURE
EuroSox Plus BV

Global Veneer Trading

Limited

Interloop Dairies Limited

Interloop Holdings
Interloop Limited (Private) Limited

Interloop Welfare Trust

IRC Dairy Products

(Private) Limited
(Associates)

Lyallpur Literary Council

Momentum Logistics (Private)

Limited

Octans Digital (Private)

Limited

Printkraft (Private)
Limited

Shifa Medical Center

Islamabad (Pvt) Limited

Shifa National Hospital

Faisalabad (Pvt.) Limited

Socks & Socks (Private)

Limited

Texlan Center (Private)

Limited

Annual Report 2021 | 17

 ORGANIZATIONAL
STRUCTURE

18 |
Annual Report 2021 | 19
 BUSINESS CATEGORIES
HOSIERY
700+ million pairs of socks
annual production capacity

Interloop Limited has maintained its position as one of the

largest suppliers of socks globally, over the last 29 years,
exporting to top brands and retailers, including Nike, adidas,
Puma, Target, H&M, C&A, Amazon, and Uniqlo, to name
a few. With 5 vertically integrated manufacturing facilities
spread across South Asia, including 4 in Pakistan and 1 in Sri
Lanka, Interloop Hosiery is equipped with the latest Italian
Knitting Machines, Spanish Processing Machines, and Italian
Dyeing Machines, having quick changeover capability and
highly skilled staff to produce high volumes of standard mix
and low volumes of customized products. Interloop Plant 4,
located at Interloop Industrial Park is Pakistan’s & Region’s
First LEED Gold Certified Socks Production Facility. Under
the V4 rating system, it ensures 26% Energy Savings, 51%
Reduction in Potable Water Usage & 25% Enhanced Fresh Air
Intake for Comfort.

Interloop has the capacity to produce 700 million pairs of

socks annually. This includes athletic, performance, fashion,
and casual wear regardless of gender and size and one of the
largest capacity for infant socks. The company is on responsible
manufacturing trajectory, ensuring sustainable production
from farm to factory and to customers. As Interloop aims to
become a full-service company for its customers, it has the
edge of having in-house end-to-end services for Product
Development, Quality Assurance, Research & Innovation
and Digital Sampling. It is aggressively investing in its digital
capabilities to transform its way of working across product
design and development, manufacturing, and customer
services. Interloop is in the process of expanding its capacity
to 6,500 knitting machines at its manufacturing locations
across Pakistan and Sri Lanka.

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DENIM
6 million garments
annual production capacity

As part of business diversification, Interloop started its

Denim Apparel manufacturing operations in Dec 2019.
Interloop Denim is one of the most technologically advanced
facilities in South Asia and represents how the future of the
Denim Industry will look like. The facility is LEED Platinum
certified by US Green Building Council and in line with Lean
concepts. The operations generate minimal environmental
impact and prioritize worker well-being in keeping with
Interloop’s commitment towards United Nations Sustainable
Development Goals.

With over 3,500 associates, Denim intends to achieve a

1:1 male to female ratio in its workforce in the long run.
The plant has current production capacity of 500,000 pcs
per month and aims at enhancing it to 1 million pcs per
month by 2022. The product line includes bottoms, shorts,
skirts, jackets, work wear cargos for all ages, genders, and
sizes, providing services to brands and retailers such as
Diesel, Guess, Hugo Boss, Mustang, ALDI, NYDJ, INDITEX.
Eco-friendly technologies have been used to replace
aggressive processing agents and to reduce excessive water
consumption. Laser and Ozone machines have replaced
manual processes to minimize the impact on workers and
to ensure precision and quality. The implementation of new,
more efficient, and environmental friendly technologies will
have favorable impacts, both on our people & planet.

Interloop Denim is set to become a model for Sustainability

across Denim apparel manufacturing in the region.

Annual Report 2021 | 21

 BUSINESS CATEGORIES
KNITWEAR
20 million garments
annual production capacity

Expanding further into the Apparel segment, Interloop

established its Knitwear Apparel Business in 2019 as a cut &
sew pilot project, which is now backed by a modern dye house
launched in August 2021. With a dyeing capacity of 10 tons
per day, this dye house brings the fabric dyeing and finishing
operations in-house, while the value added services are
expanded to knitting, printing, and embroidery. By Dec 2021, it
will become a fully vertically integrated Knitwear Apparel facility
equipped with in-house knitting, dyeing, cutting, embellishment,
and sewing capabilities.

Knitwear Apparel has a production capacity of 1.2 million

garments per month with a planned enhancement to 1.8
million pcs by March 2022. The product mix includes T-Shirts,
Innerwear, Polo’s, Sweatshirts, Pants, Fleece Hoodies & Jackets
being exported to eminent brands and retailers in USA, UK,
and EU including Target, Tom Tailor, Carhartt, Ben Sherman,
Katin, Russel Athletic, Penfield Original, Penguin, Elle, and Juicy
Couture.

A hi-tech and fully vertically integrated Apparel Manufacturing

Complex will start its operations at Interloop Apparel Park,
Faisalabad in Q2 2023 with 42 tons of knitting/dyeing capacity
per day, producing over 2 million garments per month.

22 |
SEAMLESS
4 million garments
annual production capacity

Interloop has set up a state-of-the-art vertically integrated

Seamless Active wear production facility at the Interloop
Industrial Park, with the latest Italian knitting machines having
average monthly production capacity of 345,000 pcs.

The latest Japanese machines provide a large variety of sewing

capabilities, as well as a variety of styling from basic to high tech.
The Seamless garments offer 360 stretch with no restricting
seams. Interloop offers special synthetic material range in
recycled as well as biodegradable materials, combining durable
performance with sustainability.

Body mapping technology builds required construction, meeting

the needs of different body zones without any additional cut
& stitch panels involved. The product range includes active
& performance wear, base layers, seamless innerwear, and
shape wears for both men & women. Currently, Interloop is
serving seamless active wear business of prestigious names
such as adidas, H&M, Kappa, Reebok, Bebe, Pepe Jeans,
Aldi & Kaufland, and continuously striving to engage more
distinguished customers in our portfolio.

A dedicated, self-sufficient Product Development Facility with

4 Santoni knitting machines, 3 dyeing machines, and 20 sewing
machines, is also in process and will be operational by Q3, 2021
to ensure quick sampling with desired quality.

Annual Report 2021 | 23

 BUSINESS CATEGORIES
YARNS
26 million kgs
annual production capacity

SPINNING
Interloop produces over 26 million kgs of top quality Yarn
annually for a range of textile customers, following strict
testing standards on automated spinning plants, equipped
with the latest European machines.

Raw Materials include:

• Pakistani and Imported Cotton
• BCI, Organic, and PSCP Cotton
• Acrylic, Viscose, Polyester, Modal & Tencel
• Re-Cycled Synthetic Fiber

Multiple varieties of yarn produced include: Plain, Slub, Multi

Count, Slub Lycra Core, Lycra Core, Polyamide Core, Siro, etc.
40% yarn is consumed in-house with remaining serving world’s
renowned weavers, knitters, denim and towel manufacturers.

YARN DYEING & AIR COVERING

A state-of-the-art Yarn Dyeing facility, equipped with modern
machines including highly automated dyeing operations,
automatic dyestuff, chemical dispensing system etc., is
providing a wide variety of colours in Spun and Filament
Yarns. With annual dyeing capacity of 4 million kgs, Interloop
is providing a wide variety of colors in yarn including Polyester,
Nylon, Acrylic, Coolmax, Modal, Tencel, Viscose, Wool,
Bamboo, Blended, Microfibers, and Recycled Yarns. Modern
Italian Air Covering Machines with annual production capacity
of 1 million kgs are being used for covering all types of in-
house dyed, dope dyed, and raw white yarns with various
brands of spandexes like Lycra and Creora at different
customized percentages.

Keeping in view the vision 2025, the company is also planning

to further add in-house dyeing capacity of 10 tons spun cotton
yarns per day to cater to Interloop Limited's all business
categories and speed to market.

24 |
RECOGNITIONS

EFP EXPORTERS RECOGNITION AWARD 2020

Interloop Limited being an Innovation-driven manufacturer, has been
recognized all over the globe for instituting sustainable practices
for its people, operations and the community. These commendable
practices have therefore earned Interloop the Export Recognition
Award 2020 for Top 100 exporters of Pakistan presented by His
Excellency Dr. Arif Alvi, President Islamic Republic of Pakistan.

UNGC LIVING THE GLOBAL COMPACT BEST

PRACTICES SUSTAINABILITY AWARD 2020
Interloop Limited participated in the UN Global Compact Living the
Global Compact Best Practices Sustainability Awards 2020 for the
first time and won the 3rd Prize in the large scale manufacturing
category. This is a testament to Interloop’s commitment towards
contributing to a healthier and sustainable future for all, in line
with the UN SDGs and 10 principles of the UN Global Compact,
embedded in the way it conducts business.

15TH EFP-OSH AWARD 2019

At the 15th EFP – OSH Awards 2019, Interloop was awarded the
1st prize in the Textile sector across the country, in recognition of
its best practices in Safety, Health & Environment. Employee Health
Monitoring, Emergency Preparedness, Quality of EHS Management,
Leadership Commitment, Staff Participation, Training Program,
Incident Reporting & Analysis, and Performance Monitoring were
the aspects and domains considered for evaluating the contesting
companies.

Annual Report 2021 | 25

 CUSTOMERS
Some of our top clients across Europe,
USA and Asia

26 |
Annual Report 2021 | 27
2. Governance
 BOARD OF DIRECTORS

MUSADAQ ZULQARNAIN
Chairman / Non-Executive Director

Musadaq Zulqarnain is the Chairman of Interloop Limited, Interloop Dairies Limited and
Chairman & CEO of Interloop Holdings (Pvt.) Limited. He also serves on the Board of
Karandaz Pakistan and is the President of Interloop Welfare Trust and Lyallpur Literary
Council. He is also associated with The Citizens Foundation (TCF), the largest not-
for-profit organization providing primary and secondary education to underprivileged
children in Pakistan.

A mechanical engineer by profession, Musadaq’s leadership experience spans over four

decades. Through his vision & commitment, he successfully led Interloop to become one of the
world’s largest hosiery manufacturers, and expand into denim, knitwear and seamless apparel manufacturing, backed by
a strong purpose of creating positive change. Musadaq also has the honour of serving on the Council of Business Leaders
advisory to the Prime Minister, as a member of the CPEC Business Council, and as Chairman of the Complaint Oversight
Committee, FBR.

Musadaq is a development enthusiast and philanthropist, actively engaged in nurturing the youth of Pakistan by facilitating
education, women empowerment and sports. He has always been at the forefront in providing free health services for poor
patients and relief activities during natural disasters including the current pandemic.

NAVID FAZIL
Chief Executive Officer / Executive Director

Navid Fazil is a Founding Director and CEO of Interloop Limited. He also serves on
the Boards of TCPL and Interloop Holdings (Pvt.) Limited. He is the Vice President of
Interloop Welfare Trust which is engaged in numerous philanthropic activities across
the country.

Navid enjoys around three decades' experience as a business leader and entrepreneur
and has played a key role in developing Interloop Limited as one of the world's largest
Hosiery suppliers for top international brands and retailers, with an annual turnover of 331
Million USD. Being a progressive leader, he has spearheaded company’s expansion into
multi-category manufacturing including Denim, Knitwear and Seamless Apparel, endeavoring to
become a Full Family Clothing, Partner of Choice, for all. Under his leadership, Interloop Limited
stands today as the second largest textile exporter of Pakistan.

Navid is an Electrical Engineer and earned his Masters in Management from the University of Oxford, UK. Having a
technically trained and intellectual mind, he puts great emphasis on continuous improvement with special focus on Lean
Manufacturing, Research & Innovation and Sustainability. A strong supporter of Diversity, Inclusion and Sustainable Growth,
Navid is actively involved in many social responsibility programs, both professionally and personally. He is passionate about
protecting the environment for future generations and keenly follows developments in regenerative agriculture around the
world.

MUHAMMAD MAQSOOD
Executive Director

Muhammad Maqsood is Executive Director Interloop Limited. He is also a Member

of the Boards of Interloop Dairies, Texlan Center (Pvt.) Limited and Interloop Welfare
Trust. With an overall experience of 26 years, Maqsood’s association with Interloop
spans 19 years. He is performing his duties as Group CFO. His current responsibility
portfolio includes Group finances, financial reporting and taxation. Maqsood is a
fellow member of Institute of Chartered Accountants of Pakistan & Institute of Financial
Accountants, UK and trained at INSEAD on Strategic Financial Management in Global
Markets.

30 |
 TARIQ IQBAL KHAN
Independent Director

Tariq Iqbal Khan is an Independent Director on the Board of Interloop Limited and
is also serving on the Boards of various eminent listed and non-listed companies.
Previously, he has served on the Boards of multiple banks, pharmaceutical, chemical
& petroleum companies and as the Chairman of SNGPL and ARL, etc.

A fellow member of Institute of Chartered Accountants, Pakistan, Tariq has been

serving the country for more than four decades by holding prominent positions in the
private and public sectors. He played a pivotal role in founding the Islamabad Stock
Exchange and subsequently served as its President. He also served as Member Tax Policy
& Co-Ordination at the Central Board of Revenue, followed by working as Commissioner,
Securities & Exchange Commission of Pakistan (SECP) and later as Chairman SECP (acting) for a brief period where he was
instrumental in restructuring SECP. Tariq served as the Chairman & MD of NIT for more than 8 years which played a key role
in establishing and stabilizing the capital markets.

SHEREEN AFTAB
Non-Executive Director

Shereen Aftab is currently a Non-Executive Director on the Board of Interloop Limited

and has served on the Board as a Director since 1999. In the past, she has also been
associated with Interloop as Director Merchandising. She holds a Ph.D. degree in
Immunology from the University of Manchester, UK and is an MBBS Medic. She has
profound interest in Arts & Crafts and is currently running her business in this field.
She has a keen interest in animal welfare. She works with the Ayesha Chundrigar
Foundation that runs a large animal rescue center, among other activities. Currently
she is serving on the ACF board as Vice President.

JAHAN ZEB KHAN BANTH

Non-Executive Director

Jahan Zeb Khan Banth is currently serving as a Non-Executive Director on the Board
of Interloop Limited. A chemical engineer by profession, Jahan Zeb was previously
working with Interloop Limited as Director Technical, strategically leading the
maintenance of Hosiery manufacturing equipment, expansion projects, BMR and
the Energy Division. Of the overall rich professional experience of 41 years, Jahan
Zeb has spent the last 23 years with Interloop.

SAEED AHMAD JABAL

Independent Director

Saeed Ahmad Jabal is an Independent Director on the Board of Interloop Limited.

A Chartered Accountant by profession, Saeed carries four and a half decades’
rich and versatile experience of working in Pakistan and overseas, at leadership
positions throughout as CFO, Director Finance, Executive Director, Corporate
Secretary and Chief Internal Auditor in Fruit Juices Industry, Textile sector industries
including Spinning, Weaving, Fabrics Processing, Apparels, Home Textiles & Hosiery
industries, etc.

An important milestone in his career; Saeed looked after enhancing the computerized
financial system on the IBM platform. He also supervised the implementation of Oracle
ERP System and conversion of data in a composite textile manufacturing and exports
company. Besides Finance & Accounts, he also developed SOPs for ISO 9000 certification and
systems, procedures & policies for business operations, management and organizational development, etc. While in overseas
employment, Saeed had been a member of a huge computerization project in the mid 80s and was responsible for system
assurance and financial data handling by the computer system. He was also responsible for cost management and control of
the contracted projects.

Annual Report 2021 | 31

 BOARD COMMITTEES

Tariq Iqbal Khan

Audit Committee Chairman

Saeed Ahmad Jabal Jahan Zeb Khan Banth

Member Member

HR & Remuneration Saeed Ahmad Jabal

Committee Chairman

Navid Fazil Jahan Zeb Khan Banth

Member Member

Nomination Musadaq Zulqarnain

Committee Chairman

Navid Fazil Muhammad Maqsood

Member Member

Risk Management Tariq Iqbal Khan

Committee Chairman

Muhammad Maqsood Yaqub Ahsan Syed Hamza Gillani

Member Member Member

32 |
MANAGEMENT COMMITTEE

NAVID FAZIL
Chief Executive Officer /
Executive Director

FARYAL SADIQ
Vice President Sales & Marketing

TARIQ RASHID MALIK

President Yarns & Sourcing

YAQUB AHSAN
Chief Information Officer

MUHAMMAD MAQSOOD
President / Group CFO

MASOOMA ZAIDI
Vice President Hosiery Sales

AZHAR SADIQ
President Hosiery

AQEEL AHMAD
Vice President People & OD

ZAIN SADIQ
Vice President Operations

TAYAB MASOOD
Vice President Apparel

FEROZE AHMED
Vice President Denim

Annual Report 2021 | 33

 CHAIRMAN'S REVIEW REPORT
Dear Shareholders, I am delighted to present Almighty, we are pretty much hopeful to get new
performance review of Interloop Limited (‘the successes as we have a number of factors in our
Company’ or ‘ILP’) and the role played by the Board favor; the strength of our balance sheet, our strong
of Directors (‘the Board’) in achieving the objectives of cash generation, our expertise and most of all, the
the Company, for the year ended June 30, 2021. dedication and will of our employees.

ECONOMIC OUTLOOK ROLE OF THE BOARD OF DIRECTORS

The economy posted a fairly strong expansion in During the pandemic, the Board remained engaged
the fiscal year 2021 (July 2020–June 2021), due to with the management which helped it to meet
rebounding domestic demand and healthier export the exceptional and unforeseen challenges. The
growth. Turning to FY 2022, conditions seem to continuous monitoring of the Board throughout the
be subdued in the first quarter as the loosening period and the deliberations to the management
of lockdown restrictions in late June resulted in an were cardinal in achieving all the targets and
increase in new COVID-19 cases. Consequently, some overcoming the pandemic impacts. The Board
key economic regions implemented partial lockdowns has performed remarkably well even through the
in July and August, which should be weighing on impacts of the pandemic have been devastating.
activity somewhat. Furthermore, export growth eased The Company successfully steered through the
notably in July, likely due to supply chain disruptions uncertain times with emphasis on health and safety
amid renewed COVID-19 restrictions across the yet, ensuring business continuity, on the back of
region. That being said, fiscal support measures guidance from the Board of Directors.
outlined in this fiscal year’s budget should be stoking
domestic demand. ILP has a seven member Board of Directors, which
comprises individuals with diverse backgrounds,
Economies all over the world including Pakistan have having core competencies, knowledge, and expertise
been facing challenges posed by new waves and relevant to the business of the Company. All Board
variants of the COVID-19 pandemic but Pakistan’s Members and the Leadership team of the Company
economy has witnessed V-shaped restoration. The are humbled by your overwhelming response and are
International Monetary Fund (IMF) has acknowledged determined to deliver as per your expectations. The
Pakistan’s stronger economic activity and kept the Board provides strategic direction to the management
global growth forecast largely unchanged at six and fulfills its fiduciary responsibilities with a sense of
percent for the current year and 4.9pc for the next commitment.
year. GDP growth in FY 2022 (July 2021–June 2022)
is set to get slow following FY 2021’s rebound. Fixed The Board has constituted the Boards’ Audit
investment and private consumption growth should Committee, Human Resource & Remuneration
taper as ongoing pandemic-related concerns and Committee, Nomination Committee, and Risk
a moderating global economic recovery weigh on Management Committee. These committees
domestic demand. Downside risks stem from new provided valuable input and assistance to the Board.
variants of the virus, rising debt, and geopolitical The Audit Committee particularly focuses on the
tensions. detailed review of financial statements and internal
controls. These sub-committees held meetings and
BUSINESS PERFORMANCE reported to the Board as per stipulations of the
Listed Companies (Code of Corporate Governance)
Despite challenging business environment, your
Regulations, 2019. Best practices of corporate
Company’s results of operations, financial position, and
governance having been embedded into the
net assets are indicative of a solid financial condition.
Company’s culture to maintain the highest level of
The current financial year was the most successful year
professionalism and business conduct.
as the Company was able to achieve its highest ever
sales figure and reported the net sales of Rs. 54.962
An annual evaluation of performance of the Board,
billion as compared to Rs. 36.303 billion during last
members of the Board, and its Committees was carried
year. Further, net profit after tax increased from Rs.
out with the help of a formal and effective mechanism.
1.796 billion to Rs. 6.292 billion, up by 250.23%.
Based on the feedback received through this mechanism
This was mainly due to the post lockdown effect and
overall role of the Board has been found to be effective.
opening of global markets. This net profit translated
The Board has fulfilled all its mandatory responsibilities
into Earnings per Share (EPS) of Rs. 7.21 as against Rs.
including ensuring compliance with all legal and regulatory
2.06 of last year.
requirements for the Company.

The Company is investing a substantial amount to

I would like to share that all the Directors, including
increase its reserve base and with the Grace of Allah

34 |
Independent Directors, fully participated and contributed
to the decision making process of the Board. The Board
performed its duties and responsibilities diligently, inter
alia, by:
• Ensuring that Mission, Vision, and Values of the
Company are being followed;
• Effectively guiding the Company in its strategic
affairs;
• Setting annual goals and targets for the
management;
• Overseeing management’s performance and
focusing on major risk areas;
• Evaluating significant investments;
• Ensuring high standards of Corporate Governance
to preserve stakeholders’ value;

Furthermore, throughout the year, all significant

issues were presented to the Board or its committees,
particularly, all related party transactions of the
Company were approved by the Board on the
recommendation of the Audit Committee. The Audit
Committee and Human Resource & Remuneration
Committee met regularly to strengthen the functions
of the Board. The Board carried out its self-evaluation
and identified potential areas for further improvement,
in line with the global best practices.

As Chairman, I always make sure that the Board stays

pro-active and works closely with the management to
oversee the implementation of the Company’s strategy
and provide counsel and insights wherever required. The
board and the management are fully conscious of the
challenges ahead and are well prepared to tackle them
with the required vision, knowledge, and experience.

On behalf of the Board, I would like to express my

appreciation for the contribution of the Board,
excellent efforts put in by our management and
employees as well as for the support received from
all stakeholders including our valued customers,
suppliers, banks, regulators, and other organizations.
I hope and pray that the Company may maintain the
momentum of growth in the future years.

Musadaq Zulqarnain
Chairman

Faisalabad,
September 15, 2021

Annual Report 2021 | 35

 DIRECTORS' REPORT

The Directors of Interloop Limited (‘the company’ or ‘ILP’) are pleased to present the
Annual Report together with the audited Financial Statements and Auditors’ Report
thereon for the year ended June 30, 2021.

ECONOMIC & INDUSTRY OVERVIEW FINANCIAL AND OPERATIONAL

Pakistan’s economy already had a volatile growth pattern PERFORMANCE
over the years, with regular boom and bust cycles, facing Current financial year has been a challenging year for
challenges in achieving long-term and inclusive growth. Pakistan’s economy. The COVID-19 pandemic has been a
The FY21 began in the midst of the most severe global source of stress and adversity, the world over. Pakistan’s
health crisis experienced in modern history. Despite myriad economy showed its resilience and braced the negative
of challenges, Pakistan’s economy, on the back of various impacts of the global pandemic far better than expected.
measures and achievements during the year, has witnessed The efficient response by the Government and SBP to
a V-shaped recovery post COVID and a growth rate of 3.9% tackle the pandemic resulted in increased business in the
as against initial estimate of 1.5% released by IMF whereas country as compared to the neighboring countries.
the current indicators show visible improvements and the
FY22 whereby it is expected that the economy will grow Despite challenging business environment, the current
by approximately 5% and will accelerate further over the financial year was the most successful year of your
medium term. company by the grace of Allah Almighty. Sales revenue
of your company increased by 51.40% to the highest ever
Moreover, the Ministry of Commerce and Ministry of sales figure of Rs. 54,962.27 million, as compared to Rs.
Industries & Production have played a pivotal role in 36,302.79 million during the corresponding period. Your
developing a permitting environment for industrial company earned profit after tax of Rs 6,291.57 million for
growth. The Textile Industry is considered one of the the year under review as compared to Rs 1,796.40 million
most vital sectors for Pakistan’s economic growth. It is a during the previous year. The net profit translated into
significant contributor to its industrial exports. Pakistan’s Earnings per Share (EPS) of Rs. 7.21 as against Rs. 2.06 of
textile exports have mostly recovered from the COVID-19 last year.
pandemic shocks and have picked up a growing pace.
According to the Pakistan Bureau of Statistics (PBS), textile The operating results of the company are summarized as
exports have increased by 22.94% during FY21. In the textile follows:
sector, the highest exports were of Knitwear segment with
a growth of 37% on a YoY basis. The Knitwear exports were
$ 3.83 billion in FY21 compared to $ 2.80 billion in FY20.
Whereas, Exports of Bed Wear and Readymade Garment’s
segments had substantial growth by 29% YoY and 19% YoY,
respectively.

36 |
 2021 2020

(Rs. in Millions)

Sales – net 54,962.27 36,302.79

Gross profit 14,212.28 7,863.72
EBITDA 10,175.59 5,121.61
Profit before Tax 6,872.86 2,115.83
Less : Tax Expense 581.29 319.428
Profit after Tax 6,291.57 1,796.40
Unappropriated profit brought forward 4,766.12 5,366.21
Effect of initial application of IFRS 16 - (0.67)
Transfer upon amalgamation (804.50) -
Profit available for Appropriations 6,219.92 1,799.12
Appropriations

- Final dividend 2019 1,526.34

- Interim dividend 2020 872.20
- Final dividend 2020 872.20
- Interim dividend 2021 1,308.30

Unappropriated profit carried forward 8,001.04 4,766.12

Earnings per share – Basic (Rs.) 7.21 2.06
Earnings per share – Diluted (Rs.) 7.21 2.06

The company is focused on maintaining its growth momentum in the long run. The management is acutely monitoring
its resources to reap the maximum benefits for its Stakeholders. This involves optimizing revenue generation using both;
key financial indicators and strategic indicators that provide a meaningful assessment of our performance against the
strategy.

VERTICAL ANALYSIS
Category 2021 2020

% %

Gross profit 25.86 21.66

Operating profit 14.59 8.96
Profit before tax 12.50 5.83
Net profit after tax 11.45 4.95
EBITDA 18.51 14.11

EBITDA

Net profit after tax

2020 %
Profit before tax
2021 %

Operating profit

Gross profit

-5 .00 10.00 15.00 20.00 25.00 30.00

Annual Report 2021 | 37

 EARNINGS PER SHARE
The Basic and Diluted earnings per share after tax is Rs. and Exchange Commission of Pakistan (SECP) and the
7.21 (2020: Rs 2.06) Rule Book of Pakistan Stock Exchange (PSX).

DIVIDEND The following comments are acknowledgement of

company’s commitment to high standards of Corporate
In view of the company’s earnings, the Board of Directors
Governance and Continuous Improvement:
has recommended a Final Cash Dividend in respect of the
1. The financial statements, prepared by the
financial year ended June 30, 2021, at the rate of Rs. 1 per
Management of the company, fairly present its
share (i.e. 10%), is subject to approval of the members at
state of affairs, the results of its operations, cash
the Annual General Meeting to be held on October 15,
flows and changes in equity.
2021, including the interim dividend of Rs.1.50 per share
2. Proper books of account of the company have
(i.e. 15%) already paid, which make a total cash distribution
been maintained.
of Rs. 2.5 (i.e. 25%) for the year ended Jun 30, 2021.
3. Appropriate accounting policies have been
These financial statements do not include the effect of the
consistently applied in preparation of the financial
proposed final dividend.
statements and accounting estimates are based on
reasonable and prudent judgment.
BUSINESS SEGMENTS
4. International Financial Reporting Standards, as
The Management of the company has determined the applicable in Pakistan, have been followed in
operating segments based on the information that is preparation of financial statements and any departure
presented to the Board of Directors of the company for from there has been adequately disclosed.
allocation of resources and assessment of performance. 5. A Mission statement, Vision and overall Corporate
Segment performance is generally evaluated based on Strategy for the company is prepared, adopted and
certain key performance indicators including business reviewed as and when deemed appropriate by the
volume and gross profit. Board.
6. The system of internal control is sound in design and
Based on internal management reporting structure and has been effectively implemented and monitored.
products produced and sold, the company is organized 7. There are no significant doubts on the company’s
into the following operating segments: ability to continue as a going concern.
a) Hosiery - This segment relates to the sale of socks & 8. There has been no material departure from the best
tights
practices of Corporate Governance, as detailed in
b) Yarns (Spinning & Yarn Dying) - This segment relates the listing regulations.
to the sale of yarns
9. A summary of key operating and financial data of
c) Apparel – This segment relates to the readymade the company is annexed.
garments
10. Outstanding taxes and levies are given in the Notes
d) Other operating segments - This represents various to the Financial Statements.
segments of the company which currently do not 11. The management of the company is committed
meet the minimum reporting threshold stated in
to good corporate governance, and appropriate
the International Financial Reporting Standards.
These mainly include Domestic Sales, Energy, Yarn steps are taken to comply with best practices.
Dyeing, Denim and Active Wear. 12. The company operates a contributory provident
fund scheme for employees and defined benefit

The details of the business segments of the company are gratuity scheme for its management/non-

annexed in the Annual Report. management employees. The value of investments

based as at Jun 30, 2021, are as follows:

CORPORATE AND FINANCIAL Provident Fund Rs. 92,369,196

REPORTING FRAMEWORK
The company Management is fully cognizant of its STATEMENT OF COMPLIANCE
responsibility as recognized by the Companies Act, WITH THE CODE OF CORPORATE
2017, the Listed Companies (Code of Corporate GOVERNANCE
Governance) Regulations, 2019 issued by the Securities The company has fully complied with the requirements of

38 |
the Listed Companies (Code of Corporate Governance) Regulations, 2019. A statement to this effect is annexed with
this annual report.

BOARD OF DIRECTORS AND ITS COMMITTEES

THE BOARD
Interloop Limited has a Seven-Member (6 Male & 1 Female) Board of Directors which comprises of individuals with
diverse backgrounds, having core competencies, knowledge and expertise relevant to the business of the company.
Moreover, none of the Executive Directors of the company are serving as a Non-Executive Director in another Listed
company. Our Board composition represents the interests of all categories of Shareholders and consists of:

• Independent Directors 2
• Other Non-Executive Directors 3
• Executive Directors 2

During the year, Eight (8) Board meetings were held. The names of Directors and the number of meetings attended by
each Director are as follows:

Meetings
Name(s) of Director(s)
Attended
Musadaq Zulqarnain Chairman/Non-Executive Director 8
Navid Fazil Chief Executive Officer/ Executive Director 8
Jahan Zeb Khan Banth Non-Executive Director 8
Muhammad Maqsood Group CFO/Executive Director 8
Shereen Aftab Non-Executive Director 1
Saeed Ahmad Jabal Independent Director 8
Tariq Iqbal Khan Independent Director 8

FEMALE DIRECTOR
Shereen Aftab is the only female Director on the Board of Directors of the company.

BOARD COMMITTEES
The Board of Directors has constituted Board’s Audit Committee (AC), Human Resource & Remuneration Committee
(HR&R), Nomination Committee (NC) and Risk Management Committee (RMC) as follows:

AUDIT COMMITTEE (AC)

The Board Audit Committee assists the Board in fulfilling its oversight responsibilities, primarily in reviewing and
reporting financial and non-financial information to Shareholders, and the audit processes. During the year 2020-21,
Nine (9) Committee meetings were held. The name of Directors and number of meetings attended by each Director are
as follows:

Meetings
Name(s) of Committee Members
Attended
Tariq Iqbal Khan ( Chairman) 9
Saeed Ahmad Jabal 9
Jahan Zeb Khan Banth 8

Annual Report 2021 | 39

 HUMAN RESOURCE & REMUNERATION COMMITTEE (HR&R)
The Committee meets to review and recommend all elements of compensation, organization and employee
development policies related to the senior executives. During the year 2020-21, Six (6) Committee meetings were
held. The name of Directors and number of meetings attended by each Director are as follows:

Meetings
Name(s) of Committee Members
Attended
Saeed Ahmad Jabal ( Chairman) 6
Navid Fazil 6
Jahan Zeb Khan Banth 6

NOMINATION COMMITTEE (NC)

A Board Nomination Committee has been constituted to assist the Board, primarily in keeping the structure, size and
composition of the Board under regular review and for making recommendations to the Board with regard to any
changes necessary therein. No meeting of the Committee was held during the year 2020-21.

Name(s) of Committee Members

Musadaq Zulqarnain (Chairman)

Navid Fazil
Muhammad Maqsood

RISK MANAGEMENT COMMITTEE (RMC)

A Risk Management Committee has been constituted this fiscal year to assist the Board, primarily for reviewing and
identifying the systems of internal control and risk management of the company, to identify any weaknesses and for
making recommendations to the Board with regards to any major necessary intervention required therein. During the
year 2020-21, One (1) Committee meeting was held. The names of Directors & Members who attended the meeting
are as follows:

Meetings
Name(s) of Committee Members
Attended
Tariq Iqbal Khan (Chairman) 1
Muhammad Maqsood 1
Yaqub Ahsan 1
Syed Hamza Gillani 1

BOARD EVALUATION
As required under the Code of Corporate Governance, The assessment of the Board is conducted against the
the Board conducts a self-evaluation of its performance defined parameters including but not limited to the
on an annual basis. The evaluation also includes the overall structure and size of the Board, integrity, credibility
assessment of the performance of the Executive Directors, and trustworthiness in decision making, clarity in setting
Independent Directors, and its Sub Committees. The the Board’s own performance targets, preparedness
Board of Directors believe that a continuous assessment for the Board meetings, agility and effectiveness of the
is critical to measure how effectively the Board has Board and quality of contribution by the members.
performed against the objectives and goals that they
have set for themselves. Based on the results, the areas The overall performance of the Board and its sub-
of improvements are identified, and corrective action committees measured on the basis of approved criteria
plans are prepared. remained satisfactory.

40 |
The overall performance of the Board and its sub- addresses any specific questions by the Board members.
committees measured on the basis of approved criteria The performance of the CEO is assessed through the
remained satisfactory. evaluation system set by the company. The principle factors
of evaluation include financial performance, business
DIRECTORS' TRAINING PROGRAM processes, compliance, business excellence and people
management.
All Directors are fully conversant with their duties and
responsibilities as Directors of corporate bodies. By
June 30, 2021, all Directors had acquired the prescribed
CHAIRMAN'S REVIEW
certification under Directors Training Program or are The Chairman’s review included in the Annual Report deals
exempt from the Directors’ Training Program by virtue inter-alia with the economic outlook, performance of the
of experience as per the requirements of the Companies company, role of the Board of Directors & future prospects
Listed (Code of Corporate Governance) Regulations, 2019 and uncertainties.
that meet the criteria specified by the Commission and
approved by it. REVIEW OF RELATED PARTIES
TRANSACTIONS
The Board is kept up-to-date on legal, regulatory
The company has executed all transactions with its related
and governance matters through regular papers and
parties at an arm’s length price except where it has been
briefings from the company Secretary and presentations
disclosed in the financial statements. In compliance with
by internal and external advisors. Directors are
the Companies Listed (Code of Corporate Governance)
responsible for upholding the Corporate Governance
Regulations, 2019 and applicable laws and regulations,
and giving the company a strategic direction. To
details of all related party transactions are placed before
optimize the effectiveness of the Board, it is pertinent
the Audit Committee and upon recommendation of the
for new members to learn about the dynamics and
Audit Committee, the same are placed before the Board
operations of the company. Your company conducts
for review and approval. For information on transaction
various training programs to make sure that the entire
with the related party in 20020-21, please refer to the
Board is aligned with the Organization’s Mission and
Notes to the Financial Statements.
Corporate Governance.

TRADING IN THE SHARES OF THE

DIRECTORS' REMUNERATION COMPANY
The Directors’ Remuneration Policy for Independent
Trading and holdings of company’s shares by Directors &
Directors has been approved by the shareholders of the
Executives or their spouses were notified in writing to the
company. The policy includes transparent procedure
company Secretary along with the price, number of shares,
for remuneration of Directors in accordance with the
form of share certificates and nature of transaction which
Companies Act, 2017 and Companies Listed (Code of
were notified by the company Secretary to the Board,
Corporate Governance) Regulations, 2019. Independent
SECP & PSX, within the stipulated time. All such holdings
Directors are only entitled to receive fixed fees in lieu of
have been disclosed in the Pattern of Shareholding.
remuneration for attending the Board and Committee
Meetings and General Meetings of the company together
EMPLOYEE STOCK OPTION SCHEME
with travelling and lodging costs borne by the company. No
Director is involved in deciding his/her own remuneration. The company had introduced “Interloop Limited
Employees Stock Option Scheme, 2016 (ESOS)” to offer
Appropriate disclosure of remuneration paid during the company Shares to its eligible Executive Employees,
year to Directors and Chief Executive Officer has been pursuant to the Public Companies (Employees Stock
provided in Note no. 46 to the Financial Statements. Option Scheme) Rules, 2001, transforming them from
Stakeholders to Shareholders. These shares qualify for
REVIEW OF CEO'S PERFORMANCE bonus shares, dividends, or similar corporate benefits
announced by the company from time to time. The scheme
The Chief Executive Officer (CEO), being part of the Board,
is flexible, voluntary, and focused on long term growth and
is present in every meeting of the Board. He provides an
prosperity of the employees.
overview of the company’s performance to the Board and

Annual Report 2021 | 41

 Certain amendments to the Scheme had been approved a very low expectation of credit risk and very strong
by the shareholders of the company in its last Annual capacity for timely payments of financial commitments.
General Meeting held on October 15, 2020 with the This capacity is not significantly vulnerable to foreseeable
context of listed Companies regulations owing to its listing events.
on Pakistan Stock Exchange (PSX) during the year 2019.
The Scheme had originally been approved by the members ADEQUATE INTERNAL CONTROLS
in the general meeting held on December 31, 2015 and AND MONITORING
by SECP through its letter no. SMD/CIW/ESOS/01/2016
The Board of Directors is aware of its responsibility with
dated September 01, 2016.
respect to internal controls environment and accordingly
has established an efficient system of internal controls for
Apart from the requisite amendments made under
ensuring effective and efficient conduct of operations,
the approval of the SECP, there had been no further
safeguarding company assets, compliance with applicable
consequential changes made to the Scheme. The legislative
laws and regulations and reliable financial reporting. Such
changes made in the constitutional law as indexed below
systems are monitored effectively by the Management
may be taken as incorporated;
while the Board Audit Committee reviews the internal
control systems based on assessment of risks and reports
i. Companies Ordinance, 1984 has been repealed to the Board of Directors.
with Companies Act, 2017;
ii. Public Companies (Employees Stock Option Scheme) ADEQUATE INTERNAL FINANCIAL
Rules, 2001 have been repealed with Companies
CONTROLS
(Further Issue of Shares) Regulations, 2020.
The Board of Directors has established a system of sound
Owing to the recent amendments in the Scheme approved internal financial controls, for achieving effectiveness and
by the shareholders of the company & SECP respectively efficiency in its operations, reliable financial reporting
as stated supra, the B class of Shares (Non-Voting Ordinary and compliance with applicable laws and regulations.
Shares) have now been eliminated from the applicable The independent Internal Audit function of the company
Scheme by approving and proposing requisite alteration regularly monitors implementation of financial controls
of/amendment to the Memorandum & Articles of whereas the Audit Committee reviews the effectiveness of
Association (MOA-AOA) of the company. Accordingly, the the internal control framework and financial statements on
Scheme is now fully operative and applicable under the a continuous basis.
prescribed amendments.
INTERNAL AUDIT AND CONTROL
CREDIT RATING The Board has set up an independent Internal Audit
The management believes in transparency and credibility Function headed by a qualified person reporting to the
of financial information. In this regard the company Audit Committee. The scope of internal auditing within the
approached VIS Credit Rating Company Limited (VIS), a company is clearly defined which broadly involves review
‘Full Service’ rating agency providing independent rating and evaluation of its internal control system.
services in Pakistan which in its Press Release of April
20, 2021 had assigned an initial entity rating of ‘A+/A-1’ PATTERN OF SHAREHOLDING
(Single A plus/Single A-One) to Interloop Limited (ILP).
Pattern of Shareholding as at June 30, 2021, which are
Outlook on the assigned ratings was ‘Stable’. Long term
required to be disclosed under the reporting framework, is
rating of ‘A+’ signified good credit quality with adequate
annexed to this report.
protection factors. Risk may vary slightly from time to
time because of economic conditions. Short Term Rating
COMMUNICATION
of ‘A-1’ indicated high certainty of timely payment, and
excellent liquidity factors supported by good fundamental The company focuses on the importance of the
protection factors. communication with all the stakeholders. The Annual,
Half-yearly and Quarterly Reports are distributed to
These ratings reflect Interloop’s sound financial position them within the time specified in the Companies Act,
resulting from a robust capital structure and denotes 2017. Company engaged the Shareholders & analyst

42 |
through various briefing sessions during the year. The to get its team members vaccinated against COVID-19.
activities of the company are updated on its website at The company Management would like to place on record
www.interloop-pk.com, on timely basis. and appreciate the support extended by the Government
of Punjab and the Provincial Health Department for a mass
CORPORATE BRIEFING SESSION (CBS) vaccination drive conducted at the company’s premises.

The company held CBS on November 19, 2020. The

objective behind the company’s engagement through this
GOVERNMENT POLICES DURING THE
briefing was to give investors (both existing and potential) YEAR
the right perspective of the company’s business affairs, to The Government took several important policy decisions
help them make informed investment decisions. Investors like monetary and fiscal measures, smart lockdowns,
from all walks of life attended the event and showed great rapid vaccination etc. IMF has acknowledged that the
interest in the affairs of the company. The Board continues government policies have been critical in supporting the
to value the importance of building strong investor economy and saving lives and livelihoods.
relations. The company believes that the relationship with
Shareholders is crucial in helping us achieve our targets. After the COVID-19 outbreak, the State Bank of Pakistan
proactively reduced the policy rates from 13.25 percent
BUSINESS CONTINUITY PLAN to 7.0 percent. The target of monetary policy was shifted

The company has implemented the security management towards supporting growth and employment during the

system, has well-established disaster recovery / business pandemic. The same policy continued during FY 2020-21,

continuity plan and data backup to cope with any which has supported the economic recovery while keeping

unwarranted event, along with the analysis of the inflation expectations under control and safeguarding

preventive measures specific for site. It has also taken into financial stability. This policy provides inexpensive source of

consideration every possible aspect of safety measures Short term/Long term financing for the company and has

during construction and erection of building and plant. significantly improved the bottom line of company in the

Further, the company has complete insurance cover in current financial year. A special mention needs to be made

case of any catastrophic incident to enable the company about the ingenuity of the SBP in taking charge of the

to restate at its position. monetary policy at the right time and restoring confidence
among the business community along with introduction
of the Temporary Economic Relief Facility (TERF) which
APPOINTMENT OF STATUTORY
mobilized human and financial capital to push forward
AUDITORS
expansion plans.
The present auditors M/S. Kreston Hyder Bhimji &
company, Chartered Accountants have completed their FBR tax collection has witnessed a significant growth owing
tenure for the year (FY 2020-21) and will be retiring at the to the revival of domestic economic activity and ongoing
conclusion of the forthcoming Annual General Meeting comprehensive tax policy and administrative reforms.
(AGM). Being eligible, they have offered themselves for Sales tax refunds are processed with the short improved
re-appointment. The Audit Committee has recommended procedures making it easy for the company. In addition to
their re-appointment as auditors of the company for the these, Duty Drawback on Local Taxes & Levies (DLTL) is also
year (FY 2021-22). an excellent scheme from the government to support the
exporters in efficient financial management.
COVID-19 EFFECTS AND MEASURES
Interloop Limited continues to operate as a going concern To revive the forest cover and wildlife resources in
despite challenges posed by the COVID-19 Pandemic. Pakistan, the government has launched the Ten Billion
We are pleased to announce that the company has been Tree Tsunami Programme. Interloop Limited has supported
able to maintain strict SOPs for combating the COVID-19 the government initiative by planting a number of trees
pandemic and to keep the team and the workplace safe through its employees. Different types of trees have been
under these challenging circumstances. The company planted at different locations sequestration helping off-set
continues to keep the health and safety of its employees GHG emissions.
as its top priority and has pursued an aggressive strategy

Annual Report 2021 | 43

 HEALTH, SAFETY & ENVIRONMENT
Your company is continuously investing substantial 2020 & November 05, 2020 approved the scheme of
resources to improve working conditions and maintaining arrangement for amalgamation of ILA, a wholly owned
subsidiary of ILP, with and into ILP with effect from January
the highest standards of health, safety and environment
31, 2021. ILA is amalgamated with and into ILP with the
(HSE) to ensure well-being of the people who work with us,
approval of the Securities and Exchange Commission
as well as of the communities where we operate. of Pakistan. The entire issued, subscribed and paid-up
capital of ILA, comprising of 104,500,000 ordinary shares
CORPORATE SOCIAL RESPONSIBILITY of Rs. 10 each stands cancelled without any payment or
other consideration with effect from January 31, 2021.
During the current financial year, Interloop’s CSR vision has
been aimed at protecting our environment, operating in a
socially responsible manner, developing the communities PRINCIPAL RISKS AND UNCERTAINTIES
in which we operate, maintaining standards of excellence Risks & Opportunities are discussed in detail on page no.60
in our work and advocating healthy lifestyles, acting with of the Annual Report..
integrity and adhering to the highest ethical standards,
promoting diversity in our work force and partnering with BUSINESS CHALLENGES AND FUTURE
diverse suppliers and ensuring a safe, healthy workplace. OUTLOOK
The detailed analysis on CSR activities is presented in the
Interloop Limited has outlined its Vision 2025 which reads
Annual and Sustainability Reports of the company.
as “TO BECOME A FULL FAMILY CLOTHING PARTNER
OF CHOICE” with the Targeted Revenue of USD 700M with
EVENTS AFTER THE STATEMENT OF
total planned investment of USD 302.27M. The company
FINANCIAL POSITION DATE
needs to achieve certain goals and may have to face some
i. Dividend challenges to reach the targets set for 2025 which include:

The Board of Directors in its meeting held on • Significant Size in the World Market
September 15, 2021 has proposed final cash • End to End Services
dividend for the year ended June 30, 2021 @ Rs.1 • Engaged Employees
per share, for approval of the members in the • Serving the Community
Annual General Meeting.
The company is planning to expand its operations to
ii. Bonus Shares
achieve the set targets by addition of Hosiery Plant and
The Board of Directors in its meeting held on Denim Fabric Mill. Further planning to increase the capacity
September 15, 2021 has proposed the issue of of manufacturing in all segments focusing from infant to
bonus shares in the proportion of 3% i.e., 3 bonus adult customer.
shares for every 100 shares held, for the year ended
June 30, 2021, for approval of the members in the Interloop Limited has elevated its commitment to the
Annual General Meeting. environment by joining the Fashion Industry’s Charter for
Climate Action to drive net-zero GHG emissions by 2050.
MATERIAL CHANGES DURING THE We will work towards a target of 25% GHG emission
CURRENT YEAR reductions by FY2026. We are also functioning on reducing
water consumption by 25%, diverting 100% of our waste
The company had the following material events during the
from landfills and ensuring Zero Discharge of Hazardous
FY 2020-21;
Chemicals.

i. Amalgamation of Wholly owned Subsidiary -

Although the challenges are huge but we are committed
IL Apparel (Private) Limited (ILA)
to perform in the best possible manner and add value
During the year, the Board of Directors of Interloop
to our stakeholders by meeting the long-term goals of
Limited (ILP) and IL Apparel (Private) Limited (ILA)
in their respective meetings held on October 28, the company. For improving quality of our products and

44 |
getting premium on selling prices, we will continue to upgrade plant and machinery with the prime objective of reducing
imbalance and inefficiencies, reducing utilities and maintenance requirements and develop our human capital.

ACKNOWLEDGMENT
The achievements of the company are a mirror image of the unrelenting commitment and contribution of its employees,
and the trust of its clients, suppliers, service carriers and Shareholders. The company recognizes and offers gratitude to
all stakeholders for the confidence reposed in it.

On Behalf of the Board of Directors

Navid Fazil Jahan Zeb Khan Banth

Chief Executive Officer / Director Director

Faisalabad
September 15, 2021

Annual Report 2021 | 45

46 |
Annual Report 2021 | 47
48 |
Annual Report 2021 | 49
50 |
Annual Report 2021 | 51
52 |
Annual Report 2021 | 53
 EBITDA

Net profit after tax

2020 %
Profit before tax
2021 %

Operating profit

Gross profit

-5 .00 10.00 15.00 20.00 25.00 30.00

54 |
Annual Report 2021 | 55
 STATEMENT OF COMPLIANCE
Listed Companies (Code of Corporate Governance)
Regulations, 2019
Name of Company : Interloop Limited

Year Ending : June 30, 2021

The company has complied with the requirements of the Regulations in the following manner:

1. The total number of directors are seven (7) as per the following:

a) Male : Six (6)

b) Female : One (1)

2. The composition of Board is as follows:

CATEGORY NAMES
Tariq Iqbal Khan
Independent Directors
Saeed Ahmad Jabal
Other Non-executive Directors Musadaq Zulqarnain
(excluding female director) Jahan Zeb Khan Banth
Navid Fazil
Executive Directors
Muhammad Maqsood
Female Directors
Shereen Aftab
(Non-Executive)

Note: For a Board comprising of seven member, one-third equates to 2.33. Two independent directors have
been appointed, however, the fraction of 0.33 in such one-third is not rounded up as one since the fraction is
below half (0.5);

3. The directors have confirmed that none of them is serving as a director on more than seven listed companies,
including this company;
4. The company has prepared a code of conduct, and has ensured that appropriate steps have been taken to
disseminate it throughout the company along with its supporting policies and procedures;
5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of
the company. The Board has ensured that complete record of particulars of the significant policies along with
their date of approval or updating is maintained by the company;
6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken by
the Board/Shareholders as empowered by the relevant provisions of the Act and these Regulations;
7. The meetings of the Board were presided over by the Chairman, and, in his absence, by a director elected
by the Board for this purpose. The Board has complied with the requirements of Act and the Regulations
with respect to frequency, recording and circulating minutes of meeting of the Board;
8. The Board has a formal policy and transparent procedures for remuneration of directors, in accordance with
the Act and these Regulations;
9. All the directors are either exempt or have acquired the prescribed certification under Directors’ Training
Program specified and approved by the Commission. Supplemental to that, one female executive also
obtained Directors’ Training Program Certification from ICAP during the fiscal year under consideration;
10. The Board has approved the appointment of the Chief Financial Officer, Company Secretary, and Head of
Internal Audit, including their remuneration and terms and conditions of employment and complied with
relevant requirements of the Regulations;

56 |
11. Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements before approval
of the Board;
12. The Board has formed committees comprising of members given below:

A) AUDIT COMMITTEE

Tariq Iqbal Khan Chairman

Saeed Ahmad Jabal Member
Jahan Zeb Khan Banth Member

B) HUMAN RESOURCE AND REMUNERATION COMMITTEE

Saeed Ahmad Jabal Chairman

Navid Fazil Member
Jahan Zeb Khan Banth Member

C) NOMINATION COMMITTEE

Musadaq Zulqarnain Chairman

Navid Fazil Member
Muhammad Maqsood Member

D) RISK MANAGEMENT COMMITTEE

Tariq Iqbal Khan Chairman

Muhammad Maqsood Member
Yaqub Ahsan Member
Syed Hamza Gillani Member

13. The terms of reference of the aforesaid committees have been formed, documented and advised to the
committee for compliance;
14. The frequency of meetings (quarterly/half yearly/yearly) of the committees was as follows:
a) Audit Committee – Quarterly
b) Human Resource and Remuneration Committee – On requirement basis
c) Nomination Committee - On requirement basis
d) Risk Management Committee – On requirement basis

15. The Board has set up an effective Internal Audit function which comprises of professionals suitably qualified
and experienced for the purpose, and are conversant with the policies and procedures of the company;

Annual Report 2021 | 57

 16. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under
the Quality Control Review program of the Institute of Chartered Accountants of Pakistan and registered with
Audit Oversight Board of Pakistan. Also, all their partners are in compliance with International Federation
of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants
of Pakistan, and that they and the partners of the firm involved in the audit are not a close relative (spouse,
parent, dependent and non-dependent children) of the Chief Executive Officer, Chief Financial Officer, Head
of Internal Audit, Company Secretary or Director of the company;
17. The statutory auditors or the persons associated with them have not been appointed to provide other services
except in accordance with the Act. These Regulations or any other regulatory requirement and the auditors have
confirmed that they have observed IFAC guidelines in this regard;
18. We confirm that all requirements of regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have been
complied with.

Navid Fazil Jahan Zeb Khan Banth

Chief Executive Officer / Director Director

Faisalabad
September 15, 2021

58 |
INDEPENDENT
REVIEW REPORT TO THE
MEMBERS ON STATEMENT
OF COMPLIANCE
Review Report on the Statement of Compliance Contained In Listed Companies
(Code of Corporate Governance) Regulations, 2019

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance)
Regulation, 2019 (the Regulations) prepared by the Board of Directors of Interloop Limited (the company) for the year
ended June 30, 2021, in accordance with the requirements of regulation 36 of the Regulations.

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

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

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

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance
does not appropriately reflect the company’s compliance, in all material respects, with the requirements contained in the
Regulations as applicable to the company for the year ended June 30, 2021.

KRESTON HYDER BHIMJI & CO.
DATED: September 15, 2021 CHARTERED ACCOUNANTS
FAISALABAD Engagement Partner: Syed Aftab Hameed

Annual Report 2021 | 59

3. Risks and Opportunities
 RISK MANAGEMENT
POLICY
The Board of Directors is responsible for developing and monitoring the Risk Management Policy to determine
the company’s level of risk tolerance. The Policy aims at management of risks by identifying them early on and
minimizing their impact on the business through mitigation strategies. The Board of Directors carried out an in-
depth analysis of the major risks faced by the company business that could threaten the business model, future
performance, solvency, or liquidity of the company. The types of risks include strategic, commercial, operational,
and financial, which have been identified along with the nature of their impact and likelihood of occurrence, and the
mitigation strategies to manage these risks.

RISK GOVERNANCE
The company’s Board of Directors is also responsible for establishing an effective risk management framework and
provides oversight through the Board Committees. The Risk Management Committee assists the Board, primarily
for monitoring and approving the risk policies and associated risk management frameworks. The Risk Management
Committee is also responsible for:

• Reviewing and approving the Corporation’s The Audit Committee monitors financial and
risk appetite statement on an annual basis and regulatory compliance risks and the internal audit
approving any material amendment to the risk function provides independent and objective analysis
appetite statement of the company’s controls and governance processes.
The Human Resource & Remuneration Committee
• Reviewing and approving the Contingency Funding
reviews succession planning for the availability of the
Plan at least annually, and approving any material
adequate competent human resource for key company
revisions to this plan before implementation
operations and assesses compensation programs to
• Reviewing significant risk exposures and the evaluate the risk of escalation of expense on salaries
steps that management has taken to identify, & wages.
measure, monitor, control, and report such
exposures, including risks such as credit, market, The responsibility for monitoring and control of
liquidity, operational (which includes fiduciary and risks has been delegated to the management of
technology risks), strategic, and model and risks the company. The Management Committee (MC),
associated with incentive compensation plans comprising the CEO and Senior Management of
• Evaluating risk exposure and tolerance the company is responsible for supervising risk
identification and management & implementation of
• Reviewing and evaluating the company’s practices
the policy & procedures, all across the organization.
concerning risk assessment and risk management
All Functions of the company identify and evaluate
• Reviewing significant issues identified by Risk and risks related to their areas, devise suitable mitigating
Compliance and the Internal Audit Department strategies, and report any modifications or additions
concerning the risk management and compliance to MC, on regular basis.
activities of the Corporation, together with
management's responses and follow-up to these
reports
• Reviewing significant examination reports and
associated matters identified by regulatory
authorities relating to risk management and
compliance issues, and management's responses

62 |
RISKS & MITIGATION STRATEGIES

TYPES OF RISK RISK SOURCE NATURE MITIGATION STRATEGIES

Interloop Limited regularly participates in and provides

valuable inputs to regulatory bodies, government
Impact: H trade and economic committees, think tanks, and
Political and
advocacy bodies. We continue to monitor the impact
Economic
Strategic

Likelihood: M of government policies on Pakistan's economy at

External
Instability
large and the textile sector in particular. We continue
to optimize country of production opportunities to
minimize the impact of political instability.

Our Corporate, Legal Affairs and EHS teams continue

Impact: M
Regulatory to closely monitor any regulatory changes advised by
Regime SECP, Excise & Taxation, FBR, Customs and Labour
Likelihood: M
Dept. and take appropriate measures accordingly.

We continue to closely monitor competitive forces

Impact: H
Changing in the market and invest in our capacity, technology,
diversification, quality, service delivery, and ethical
Commercial

Tariff Regimes/ Likelihood: M

practices to maintain our deep relationships with
External

Near Shoring
global brands and retailers.

Our global teams continue to monitor financial results

Impact: M and market news and conduct a credit risk analysis of
Customer our customer base. We regularly monitor our credit
Bankruptcy Likelihood: M period and the receivable amount and manage the
risks associated with intolerance levels.

We continue to monitor and strongly emphasize on

Impact: M quality control and have strong measures in place to
Claims produce quality at source and have regular technical
Operational

Likelihood: L and process audits to avoid passing on any critical

Internal

defects to the customer.

Interloop has a comprehensive EHS framework in

place and proactively monitors all its processes that
Environment, Impact: H
affect EHS with a robust mechanism in place, to ensure
Health and compliance with all EHS laws (local and international).
Safety (EHS) Likelihood: L
In addition, all our physical assets are insured against
unforeseen incidents such as fire, theft and so forth.

* H = High M = Medium L = Low

Annual Report 2021 | 63

 TYPES OF RISK RISK SOURCE NATURE MITIGATION STRATEGIES

Interloop continues to provide sustainable employment to

more than 25,000 people. We have stringent workplace

Internal
Impact: M standards in place complying with international labor
Attrition Rate laws, however, we aim to go beyond the minimum, break
Likelihood: L the class barriers and empower our team members,
providing an equitable, inclusive and respectable
workplace, keeping our people motivated and engaged.

Interloop depends heavily on Information Technology for

Operational

its business therefore an IT Risk Management Framework

is followed to mitigate IT Risks. IT policies and controls
are in place and IT Security is addressed using tools and
techniques to secure infrastructure, applications, and
data. IT Security and incidence response procedures are
External
Impact: L documented while the resiliency and support for business
Cyber Security
continuity are ensured through a disaster recovery site,
Risk
Likelihood: L real-time data replication, and periodic testing. Data
backup policies exist as per best practices to protect
against data loss. An IT Program Management unit exists
to mitigate IT program execution risks. A Digital Agenda
has been formulated and is being executed to protect
against technology obsolescence. Technology operations
are delivered by a team of ITIL-certified professionals.

The company is a net exporter so the devaluation of

Impact: L PKR has a positive impact overall. However, to manage it
Currency Risk effectively, the company closely monitors sentiments and
Likelihood: M market moves and from time to time uses different kinds
of derivatives to minimize the risk

The company’s interest rate risk arises from long-term

financing, short-term borrowings, loans and advances
Monetary Impact: M to subsidiary companies, and bank balances in saving
Policy accounts. The company management pro-actively
Changes Likelihood: M manages its financial planning and carefully crafted its
portfolio of barrowing through utilizing LTFF/ILTFF and
ERF to avoid any adverse impact of monetary policy
Financial

External

The company’s exposure to credit risk and impairment

losses relates to its trade debts. This risk is mitigated by
Impact: M the fact that the majority of our customers have a strong
Credit Risk/
financial standing and we have a long-standing business
Market Risk
Likelihood: L relationship with all our customers. We do not expect
non-performance by our customers; hence, the credit risk
is minimal.

The company management is diligently managing its

cash flow stream and carefully crafted its portfolio of
Impact: L investment and barrowing. The management thoroughly
Liquidity Risk reviews key financial ratios and adjusts its strategy, which
Likelihood: L keeps the company in financial discipline. Additionally, the
company maintains enough reserve along with sufficient
funded lines from the Financial Institutions.

64 |
 TYPES OF RISK RISK SOURCE NATURE MITIGATION STRATEGIES

When managing capital, it is our prime

objective to safeguard the company’s ability
Financial to continue as a going concern to provide

Internal
Impact: M returns for shareholders. Therefore, the
Capital Risk company management diligently opts for
Likelihood: L the optimal capital structure to reduce the
cost of capital. The company maintains a low
leveraged capital structure and monitors the
capital structure based on the gearing ratio.

OPPORTUNITIES & MATERIALIZATION STRATEGIES

OPPORTUNITIES SOURCE CAPITAL MATERIALIZATION STRATEGIES

Expanding our apparel products portfolio will be a key

growth opportunity for us, as global apparel supply chains
Full Family
Clothing

reorganize themselves amidst changing tariff regimes and

Financial, Social
the pandemic. Our strategy is to continue to build credibility
and Relationship,
with our customers and leverage our relationships offering a
Human Capital
broader set of products including hosiery, denim, knitwear
apparel and seamless products for all ages, sizes, genders
and abilities.
Penetration

Our market intelligence and research and innovation teams

Market

focus on evaluating new demand patterns, buying behaviors

Human and
and trends to stay ahead of the curve releasing new product
Financial Capital
concepts, identifying white spaces and capitalizing on
External

untapped opportunities.
Value Added

We aim to be a partner of choice for our customers by

Services

offering value-added services including trends and analytics,

Financial, Social
design services, collaborative planning, forecasting,
and Relationship,
warehousing, and logistics. We will build on our existing
Human Capital
long-term relationships and bring onboard new customers,
offering superior customer experience and service.
Digitization

We are investing in our digital capabilities and transforming

Human, the way we work to remain competitive and efficient.
Manufactured and We are deploying technology across product design and
Financial Capital development, manufacturing, and customer services
processes.

Annual Report 2021 | 65

 OPPORTUNITIES SOURCE CAPITAL MATERIALIZATION STRATEGIES

As demand patterns shift, the move towards more

Sustainability

sustainably manufactured products has been accelerated by

the COVID-19 outbreak. We are investing in our capabilities
External

Human, Financial
to competitively source sustainable raw materials (organic,
and Social &
BCI, recycled), invest in technology and processes that
Relationship
minimize our impact on the environment (GHG emissions
Capital
reduction, water, and energy saving), and invest in upgrading
our people as well as community well-being.

INADEQUACY IN THE CAPITAL STRUCTURE AND PLANS TO ADDRESS

SUCH INADEQUACY
The company manages its capital structure in the context of economic conditions and the risk characteristics
of the underlying assets. For further details, related to the company’s capital risk management, please refer
to note 52.4 of the financial statements. Future projections indicate the adequacy of capital structure for the
foreseeable future.

66 |
LIQUIDITY RISK STRATEGY
LIQUIDITY AND CASH FLOW
MANAGEMENT STRATEGY
The company is diligently managing its cash flow stream average cost of capital and minimal reliance over
and has thoughtfully crafted its portfolio of investment external sources.
and borrowing. The management meticulously reviews
key financial ratios and adjusts the company strategy, INVESTMENTS AND PLACEMENT OF
maintaining financial discipline. In addition to that, FUNDS
the company maintains enough reserves along with
sufficient funded lines from the Financial Institutions. The company has strategically diversified its portfolio
overtime to maintain maximum returns while taking
prudent levels of risks and exposure. The company
LIQUIDITY GENERATION
prefers premium credit-rated institutions for investment
Internal cash generation is ensured through revenues and placement of funds to minimize liquidity and credit
and income from deposits / short term investments. risk and profitable returns are ensured by investments
Receipts from customers are effectively managed in the money market / Government securities, term
through optimized control on customers’ credit. The deposits with banks / financial institutions, and any
management diligently monitors operating cash flow other investment schemes to enhance profitability and
needs through effective cash flow forecasting. It increase shareholders’ return.
periodically evaluates planned vs actual results and
takes steps to keep it in line with plans. Furthermore, Further Liquidity risk-related information is given in
before taking external financing, the company carries Financial Statement Note No. 52.3
out in-depth cash flow forecasting and considers
optimal returns. This ensures optimum weighted

Annual Report 2021 | 67

4. Performance and Position
KEY FINANCIAL RATIOS

Particulars 2021 2020 2019 2018 2017 2016

Profitability Ratios
Gross Profit Margin % 25.86 21.66 31.90 29.37 26.48 28.27
Net Profit Margin % 11.45 4.95 13.86 12.48 11.35 13.90
Return on Equity % 30.67 10.40 29.05 42.78 20.85 29.39

Liquidity Ratios
Current Ratio Times 1.22 1.14 1.27 0.86 1.26 1.53
Quick/Acid Test Ratio Times 0.77 0.59 0.84 0.56 0.85 0.97

Investment/Market Ratios
Earnings per share - basic Rs 7.21 2.06 6.67 5.10 3.95 4.81
Earnings per share - diluted Rs 7.21 2.06 6.67 5.10 3.95 4.81
Dividend Yield Ratio % 3.57 4.55 6.78 - - -
Cash dividend per share - declared Rs 2.50 2.00 3.00 5.00 5.21 3.03
Market Price - at year end Rs 70.03 43.92 44.27 - - -
Break up value per share Rs 23.52 19.81 20.50 47.78 76.04 65.70

Capital Structure
Leverage Ratio Times 1.50 1.27 0.93 2.04 0.74 0.62
Interest Cover Times 8.29 3.15 7.09 10.62 10.81 10.44
Operating Cycle Days 135.56 144.66 124.04 117.58 103.86 106.47

70 |
LAST SIX YEARS
STATEMENT OF
FINANCIAL POSITION
Particulars 2021 2020 2019 2018 2017 2016
Rupees in '000
Assets
Non Current Assets
Property, plant and equipment 26,193,029 22,744,239 18,256,474 15,451,969 13,639,799 11,710,739
Intangible Asset 209,623 171,459 66,161 42,410 47,205 34,923
Long term investments - 1,853,735 1,008,735 380,549 1,400,159 1,400,159
Long term loans 144,673 113,823 65,762 60,747 50,027 63,227
Long term deposits 60,478 38,337 28,019 25,055 29,372 48,356
Total non current assets 26,607,803 24,921,593 19,425,151 15,960,730 15,166,563 13,257,404
Current Assets
Stores and spares 1,199,116 1,062,524 887,659 779,198 696,743 583,261
Stock in trade 11,276,308 8,810,625 6,282,491 5,121,718 3,565,881 3,176,741
Trade debts 15,052,940 7,207,391 8,247,740 7,293,008 4,814,220 4,778,114
Loan and advances 1,034,836 485,930 1,063,342 617,743 1,007,837 621,987
Prepayment and other receivables 318,708 193,182 194,544 179,864 480,505 227,858
Accrued Income 2,131 2,239 10,441 - - -
Tax refunds due from government 4,328,555 2,408,014 1,925,439 2,451,806 1,971,626 952,073
Short term investments 500,000 125,044 1,207,251 147,425 716,526 -
Deferred employee share
option compensation expense - - - 5,014 968 -
Cash and bank balances 374,442 150,787 1,538,564 193,687 58,599 51,374

Total current assets 34,087,036 20,445,736 21,357,471 16,789,463 13,312,905 10,391,408

Total Assets 60,694,839 45,367,329 40,782,622 32,750,193 28,479,468 23,648,813

Equity & Liabilities

Equity
Issued, subscribed and paid up capital 8,721,975 8,721,975 8,721,975 1,901,104 1,899,385 1,896,000
Reserves 3,791,602 3,791,602 3,791,602 38,863 21,052 -
Unappropriated profit 8,001,035 4,766,115 5,366,207 7,142,570 12,522,990 10,560,457

Total equity 20,514,612 17,279,692 17,879,784 9,082,537 14,443,427 12,456,457

Non current liabilities
Long term financing 8,213,978 6,861,130 3,628,745 2,247,936 1,916,475 3,133,871
Lease liabilities 152,969 102,158 - 615 1,084 -
Deferred liabilities 3,816,001 3,140,682 2,482,623 1,925,612 1,572,461 1,262,174
Total non current liabilities 12,182,948 10,103,970 6,111,368 4,174,163 3,490,020 4,396,045
Current liabilities
Trade and other payables 5,551,641 3,031,231 3,576,861 2,730,414 1,815,056 2,159,892
Dividend payable 4,004 2,952 130,935 475,276 - -
Accrued mark up 221,674 191,136 110,483 137,856 83,140 88,958
Short term borrowings 19,636,066 14,354,861 11,726,000 15,180,937 7,636,573 3,255,000
Derivative financial instruments 33,074 - - - - -
Current portion of non current liabilities 2,550,820 403,487 1,247,191 969,010 1,011,252 1,292,461

Total current liabilities 27,997,279 17,983,667 16,791,470 19,493,493 10,546,021 6,796,310

Total equity and liabilities 60,694,839 45,367,329 40,782,622 32,750,193 28,479,468 23,648,813

Annual Report 2021 | 71

HORIZONTAL ANALYSIS ON
STATEMENT OF
FINANCIAL POSITION
Particulars 2021vs 2020 2020 vs 2019 2019 vs 2018 2018 vs 2017 2017 vs 2016 2016vs 2015
Percentage
Assets
Non Current Assets
Property, plant and equipment 15% 25% 18% 13% 16% 2%
Intangible Asset 22% 159% 56% -10% 35% 23%
Long term investments -100% 84% 165% -73% 0% 16%
Long term loans 27% 73% 8% 21% -21% 119%
Long term deposits 58% 37% 12% -15% -39% -33%
Total non current assets 7% 28% 22% 5% 14% 4%
Current Assets
Stores and spares 13% 20% 14% 12% 19% 4%
Stock in trade 28% 40% 23% 44% 12% -21%
Trade debts 109% -13% 13% 51% 1% 12%
Loan and advances 113% -54% 72% -39% 62% 113%
Prepayment and other receivables 65% -1% 8% -63% 111% 141%
Accrued Income -5% -79% 100% 0% 0% 0%
Tax refunds due from government 80% 25% -21% 24% 107% 2%
Short term investments 300% -90% 719% -79% 100% 0%
Deferred employee share option
compensation expense 0% 0% -100% 418% 100% 0%
Cash and bank balances 148% -90% 694% 231% 14% 20%

Total current assets 67% -4% 27% 26% 28% 2%

Total Assets 34% 11% 25% 15% 20% 3%

Equity & Liabilities

Equity
Issued, subscribed and paid up capital 0% 0% 359% 0% 0% 0%
Reserves 0% 0% 9656% 85% 100% 0%
Unappropriated profit 68% -11% -25% -43% 19% 40%

Total equity 19% -3% 97% -37% 16% 32%

Non current liabilities
Long term financing 20% 89% 61% 17% -39% -30%
Lease liabilities 50% 100% -100% -43% 100% -100%
Deferred liabilities 22% 27% 29% 22% 25% 28%

Total non current liabilities 21% 65% 46% 20% -21% -21%
Current liabilities
Trade and other payables 83% -15% 31% 50% -16% 32%
Dividend payable 36% -98% -72% 100% 0% 0%
Accrued mark up 16% 73% -20% 66% -7% -47%
Short term borrowings 37% 22% -23% 99% 135% -36%
Derivative financial instruments 100% 0% 0% 0% 0% 0%
Current portion of non current liabilities 532% -68% 29% -4% -22% 16%

Total current liabilities 56% 7% -14% 85% 55% -15%

Total equity and liabilities 34% 11% 25% 15% 20% 3%

72 |
VERTICAL ANALYSIS ON
STATEMENT OF
FINANCIAL POSITION
Particulars 2021 2020 2019 2018 2017 2016
Percentage
Assets
Non Current Assets
Property, plant and equipment 43% 50% 44% 47% 48% 50%
Intangible Asset 0% 0% 0% 0% 0% 0%
Long term investments 0% 4% 2% 1% 5% 6%
Long term loans 0% 0% 0% 0% 0% 0%
Long term deposits 0% 0% 0% 0% 0% 0%
Total non current assets 43% 54% 46% 48% 53% 56%
Current Assets
Stores and spares 2% 2% 2% 2% 2% 2%
Stock in trade 19% 19% 15% 16% 12% 14%
Trade debts 25% 16% 21% 23% 17% 20%
Loan and advances 2% 1% 3% 2% 4% 3%
Prepayment and other receivables 0% 1% 1% 1% 2% 1%
Accrued Income 0% 0% 0% 0% 0% 0%
Tax refunds due from government 7% 5% 5% 7% 7% 4%
Short term investments 1% 1% 3% 0% 3% 0%
Deferred employee share option
compensation expense 0% 0% 0% 0% 0% 0%
Cash and bank balances 1% 1% 4% 1% 0% 0%

Total current assets 57% 46% 54% 52% 47% 44%

Total Assets 100% 100% 100% 100% 100% 100%

Equity & Liabilities

Equity
Issued, subscribed and paid up capital 14% 19% 21% 6% 7% 8%
Reserves 6% 8% 9% 0% 0% 0%
Unappropriated profit 13% 11% 13% 22% 44% 45%

Total equity 33% 38% 43% 28% 51% 53%

Non current liabilities
Long term financing 14% 15% 9% 7% 7% 13%
Lease liabilities 0% 0% 0% 0% 0% 0%
Deferred liabilities 7% 7% 7% 6% 6% 5%
Total non current liabilities 21% 22% 16% 13% 13% 18%
Current liabilities
Trade and other payables 9% 7% 9% 8% 6% 10%
Dividend payable 0% 0% 0% 1% 0% 0%
Accrued mark up 1% 0% 0% 0% 0% 0%
Short term borrowings 32% 32% 29% 47% 26% 14%
Derivative financial instruments 0% 0% 0% 0% 0% 0%
Current portion of non current liabilities 4% 1% 3% 3% 4% 5%

Total current liabilities 46% 40% 41% 59% 36% 29%

Total equity and liabilities 100% 100% 100% 100% 100% 100%

Annual Report 2021 | 73

LAST SIX YEARS
STATEMENT OF PROFIT OR LOSS

Particulars 2021 2020 2019 2018 2017 2016

Rupees in '000

Sales - net 54,962,265 36,302,794 37,478,321 31,138,736 26,529,786 26,333,359

Gross Profit 14,212,280 7,863,718 11,954,714 9,144,499 7,026,284 7,445,009
Operating expenses (6,192,379) (4,610,725) (5,538,024) (4,655,082) (3,520,071) (3,097,516)
Profit from operations 8,019,901 3,252,993 6,416,690 4,489,417 3,506,213 4,347,493
Finance cost (1,147,038) (1,137,162) (995,707) (483,654) (391,940) (472,972)
Profit before taxation 6,872,863 2,115,831 5,420,983 4,005,763 3,114,273 3,874,521
Taxation (581,292) (319,428) (226,216) (119,954) (103,188) (214,117)
Profit for the year 6,291,571 1,796,403 5,194,767 3,885,809 3,011,085 3,660,404

HORIZONTAL ANALYSIS ON
STATEMENT OF PROFIT OR LOSS
Particulars 2021vs 2020 2020 vs 2019 2019 vs 2018 2018 vs 2017 2017 vs 2016 2016vs 2015
Percentage
Sales - net 51% -3% 20% 17% 1% 9%
Gross Profit 81% -34% 31% 30% -6% 32%
Operating expenses 34% -17% 19% 32% 14% 42%
Profit from operations 147% -49% 43% 28% -19% 26%
Finance cost 1% 14% 106% 23% -17% -47%
Profit before taxation 225% -61% 35% 29% -20% 51%
Taxation 82% 41% 89% 16% -52% 175%
Profit for the year 250% -65% 34% 29% -18% 47%

VERTICAL ANALYSIS ON
STATEMENT OF PROFIT OR LOSS
Particulars 2021 2020 2019 2018 2017 2016
Percentage
Sales - net 100% 100% 100% 100% 100% 100%
Gross Profit 25.86% 21.66% 31.90% 29.37% 26.48% 28.27%
Operating expenses -11.27% -12.70% -14.78% -14.95% -13.27% -11.76%
Profit from operations 14.59% 8.96% 17.12% 14.42% 13.22% 16.51%
Finance cost -2.09% -3.13% -2.66% -1.55% -1.48% -1.80%
Profit before taxation 12.50% 5.83% 14.46% 12.86% 11.74% 14.71%
Taxation -1.06% -0.88% -0.60% -0.39% -0.39% -0.81%
Profit for the year 11.45% 4.95% 13.86% 12.48% 11.35% 13.90%

74 |
LAST SIX YEARS
STATEMENT OF CASH FLOWS
Particulars 2021 2020 2019 2018 2017 2016
Rupees in '000

Cash Flows from Operating Activities (707,684) 2,602,454 5,856,137 (2,790,766) 1,238,798 5,310,648
Cash Flows from Investing Activities (4,618,250) (7,283,840) (5,224,627) (4,467,281) (3,152,722) (1,526,224)
Cash Flows from Financing Activities 5,413,852 2,477,398 1,654,622 7,369,132 1,945,152 (3,775,710)
Net increase/(decrease) in cash and 87,918 (2,203,988) 2,286,132 111,085 31,228 8,714
cash equivalents

HORIZONTAL ANALYSIS ON
STATEMENT OF CASH FLOWS
Particulars 2021vs 2020 2020 vs 2019 2019 vs 2018 2018 vs 2017 2017 vs 2016 2016vs 2015
Percentage

Cash Flows from Operating Activities -127% -56% 310% -325% -77% 50%
Cash Flows from Investing Activities 37% -39% -17% -42% -107% 42%
Cash Flows from Financing Activities 119% 50% -78% 279% 152% -294%
Net increase/(decrease) in cash and
104% -196% 1958% 256% 258% 116%
cash equivalents

VERTICAL ANALYSIS ON
STATEMENT OF CASH FLOWS
Particulars 2021 2020 2019 2018 2017 2016
Percentage

Cash Flows from Operating Activities -805% -118% 257% -2512% 3967% 60941%
Cash Flows from Investing Activities -5253% 330% -229% -4021% -10096% -17514%
Cash Flows from Financing Activities 6158% -112% 72% 6633% 6229% -43327%
Net (decrease) / increase in cash and
100% 100% 100% 100% 100% 100%
cash equivalents

Annual Report 2021 | 75

5. Outlook
 FORWARD
LOOKING STATEMENT
COMPANY’S PERFORMANCE AGAINST
LAST YEAR’S PROJECTIONS/STATUS
OF PROJECTS
2020 – 2021 was an unprecedented year which presented a a strategic focus on offering multi-category products,
global crisis on many fronts that we have never experienced. delivered with exceptional customer service and
The health and economic crisis were followed by severe manufactured responsibly, meeting the highest standards
supply chain disruptions; including raw material shortages, of social and environmental performance.
logistic challenges and mounting cost pressures.
With a stable political outlook, strong macroeconomic
At Interloop, our teams worked incredibly hard to overcome indicators and fully vaccinated workforce, we are confident
these challenges and continued to provide outstanding about the future, as we go all in to execute Vision 2025.
service to our partners. Despite difficult business conditions,
we made a conscious decision to ensure there were no SOURCES OF INFORMATION AND
layoffs or retrenchments. As a result we quickly mobilisied ASSUMPTIONS USED FOR FORECASTS
our workforce as we changed gears to move into growth
The projections for the upcoming financial years are based
mode. Our business bounced back better than expected,
on assumptions and analyses comprising historical trends,
recording the highest annual sales in Interloop’s history at
current state, future forecasts and expansion plans, in-line
USD 351 million. Major contribution came from the hosiery
with company’s mission. Operational and financial plans
business at USD 270 million, followed by our yarns business
are devised in line with strategic direction and approval
contributing USD 40 million. More importantly, our new
of the Board of Directors, following an extensive due
business categories including Denim, Knitted Apparel, and
diligence process including legal, financial, and technical
Seamless Active wear contributed another USD 40 million
feasibility studies.
laying a strong foundation for our future growth plans.

COMPANY’S PREPAREDNESS TO
Vision 2020 was our previous five years’ strategy, ending
RESPOND TO CRITICAL CHALLENGES
June 2021. Our ambition to drive top line growth through
value addition, process improvement and nourishing talent The company has a robust Business Continuity Plan and
proved successful as we diversified our business launching is well equipped to respond to critical challenges and
new categories. We came very close to our financial uncertainties as and when they arise. A recent example is
ambition and have laid a solid foundation for our next five managing the COVID-19 crisis during which Interloop had
years’ strategy. put together and executed the Pandemic Recovery Plan
and kept its employees safe and healthy, got more than
FORWARD LOOKING STATEMENT 94% employees vaccinated ensuring business continuity.
The Management regularly reviews the risk matrix to
Vision 2025 charts out our strategy from July 2021 to June
update mitigation strategies and stay ahead of the curve.
2026. It is guided by our CUSTOMER FIRST approach with

78 |
Annual Report 2021 | 79
6. Sustainability &
Corporate Social
Responsibility
 PEOPLE
ACHIEVEMENTS VS TARGETS 2021

GOALS TARGETS ACHIEVEMENTS

Empowered Workforce

Women across all levels of our workforce to 10% 8%

Build a Diverse &

Provide decent work and employment opportunities

25,000+
to 20,000 people

Empower our team members by adopting true Lean philosophy

8,000+
and deploying Lean tools and trainings to over 2000 people

Provide affordable, equitable and quality education to 4000 Educating 4000

children by sponsoring 25 TCF schools in under privileged children in
Transform Lives

communities 27 TCF Schools

Provide 500 young women and men access to technical and

500*
higher education

Provide equal access to education for 300 children with

500*
disabilities

Provide quality early childhood development and pre-primary

152**
education to at least 200 children at Interloop’s childcare centers

Promote local sporting talent by enabling 3000 people to

3,500
Well-being

participate in sporting events

Improve

Improve well-being of 4000 people in our community through

4,000***
promoting reading, and literature

Providing treatments for 8000 patients 11,500

*Approximate Figure **Children enrolled so far *** In FY2021, Literary Events were conducted virtually due to COVID-19 pandemic

GOAL 2025
A diverse, inclusive and engaged workforce
creating a high performing organization

PEOPLE TARGETS 2025

Boost Employee Train Workforce on Relevant &

Increase Workforce Diversity
Engagement Future Competencies

30% 70% 80%

82 |

82 |
 PLANET
ACHIEVEMENTS VS TARGETS 2021*

AREAS TARGETS ACHIEVEMENTS

Sustainable Raw Material 25% of total raw material 47.6%

Water 15% Reduction 9.0% Reduced

Energy 15% Reduction 8.7% Increased

GHG Emissions 15% Reduction 9.3% Reduced

Renewable Energy 4 MW 5.9 MW

ZDHC Foundational level

Wastewater ZDHC Foundational level
achieved
2021: Jeans Redesigned
Certified
ILP Sustainability Certifications
2021: LEED Platinum Certified
(Denim)

* Hosiery Only

GOAL 2025
Lead the way in responsible manufacturing
meeting highest standards of environmental
& social performance

ENVIRONMENTAL TARGETS 2025

Reduce
Carbon Footprint Increase use of
Reduce water
25% consumption by
sustainable raw
materials upto
reduction in GHG
Emissions 25% 70%

Invest in community well-being

ZDHC Supplier to
Divert wast from
Zero Complaint
landfills
Facilities
100% 100% 4% of profits

Annual Report 2021 | 83

 PROSPERITY

Interloop’s Economic Performance

Particulars FY 2021 FY 2020

PKR in Million PKR in Million

Direct Economic Value Generated

Revenue a 55,933 36,945

Direct Economic Value Distributed

Operating Cost b 33,762 22,980

Employee Wages/Benefits c 12,327 9,523

Payment to Providers of Capital d 3,326 2,879

Payment to Government e 2,149 1,333

Investments in community f 330 175

g=a-b-c-d-
Economic Value Retained 4,039 55
e-f

84 |
CERTIFICATIONS
ENVIRONMENTAL

COMMITMENTS & COLLABORATIONS CHEMICAL MANAGEMENT PORTALS

SOCIAL OTHERS

MEMBERSHIPS

Annual Report 2021 | 85

88
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INTERLOOP
LIMITED
Report on the Audit of Financial Statements

Opinion
We have audited the annexed financial statements of Interloop Limited (“the Company”), which comprise the statement
of financial position as at June 30, 2021, the statement of profit or loss, the statement of comprehensive income, the
statement of changes in equity, the statement of cash flows for the year then ended and notes to the financial statements
including a summary of significant accounting policies and other explanatory information, and we state that we have
obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the
purpose of the audit.

In our opinion and to the best of our information and according to the explanations given to us, the statement of financial
position, the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity and
the statement of cash flows together with the notes forming part thereof conform Accounting and Reporting Standards
as applicable in Pakistan, and, give the information required by the Companies Act, 2017 (XIX of 2017), in the manner so
required and respectively give a true and fair view of the state of the Company’s affairs as at June 30, 2021 and of the
profit, total comprehensive income, the changes in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered
Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Following are the Key Audit Matter(s):

S. No Key Audit Matter(s) How the Matter was addressed in audit

1. Borrowings: (Refer notes 24 and 29 to the financial statements)
The Company has significant amounts of borrowings Our audit procedures included:
from Banks and other financial institutions amounting
to Rs. 30.289 billion, being 75% of total liabilities, as • Review of loan agreements and facility letters
at reporting date. to ascertain the terms and conditions of
repayment, rates of markup used and disclosed
Given the significant level of borrowings, finance by management for finance costs and to ensure
costs, significant gearing, the disclosure given by the that the borrowings have been approved at
management in financial statements and compliance appropriate level.
with various loan covenants, this is considered to be a
key audit matter. • Verification of disbursement of loans and
utilization on sample basis. Review of documents
for charge registration with regulator- SECP.

• Verification of repayments made by the Company

during the year on sample basis to confirm that
repayments are being made on time and no
default has been made.

Office No.1, 2nd Floor, Legacy Tower, Kohinoor City, Faisalabad-Pakistan. Phone: + 92-41-8731632, 8731650
Email: [email protected] Website: www.krestonhb.com
Other offices: Karachi, Lahore, Islamabad.
A member of Kreston International- A Global Network of Independent Accounting Firms
89
 S. No Key Audit Matter(s) How the Matter was addressed in audit
• Assessing procedures designed by management
to comply with the debt covenants and performing
covenant tests on sample basis.

• Obtaining confirmation from Banks of the

Company to confirm balances, terms & conditions
stated in the facility offer letter and compliance
thereof.

• Performing analytical procedures, recalculations

and other related procedures for verification of
finance costs.

• Ensuring that the outstanding liabilities have

been properly classified and related securities
and other terms are adequately disclosed in the
financial statements
2. Capital expenditures (Refer notes 7 to the financial statements)
The Company is investing significant amounts in Our audit procedures in relation to capitalization
its operations and there is a number of areas where of property, plant and equipment, amongst others
management’s judgment impacts the carrying value included the following:
of property, plant and equipment and its respective
depreciation profile. These include among others the • Understanding the design and implementation
decision to capitalize costs; and review of useful life ofof management controls over capitalization and
the assets. performing tests of control over authorization of
capital expenditure and accuracy of its recording
The Company’s principal accounting policy on in the system.
operating fixed assets and capital work in progress
are disclosed in notes – 6.1 and 6.2 to the financial • Testing, on sample basis, the costs incurred
statements. on projects with supporting documents and
contracts.
We focused on this area since the amounts have a
significant impact on the financial position of the • Assessing the nature of costs incurred for capital
Company and there is significant management projects through testing, on sample basis, of
judgment required that has significant impact on the amounts recorded and considering whether the
reporting of the financial position for the Company. expenditure meets the criteria for capitalization
Therefore, considered as one of the key audit matters. as per the accounting policy and applicable
accounting standards.

• Checked the reasonableness of management’s

assessment of categories of assets and working
of reclassification in categories of assets including
impact of reclassification on both cost of assets
and accumulated depreciation in each category.

• Inspecting supporting documents for the date

of capitalization when project was ready for its
intended use to assess whether depreciation
commenced and further capitalization of costs
ceased from that date and assessing the useful
life assigned by management including the
calculation of related depreciation.

90
S. No Key Audit Matter(s) How the Matter was addressed in audit
3. Inventory existence and valuation (Refer notes 12 and 13 to the financial statements)
The company has significant levels of inventories Our audit procedures over existence and valuation of
amounting to Rs. 12.475 billion as at the reporting inventory included, but were not limited to:
date, being 21% of the total assets of the Company.
• To test the quantity of inventories at all locations,
There is a risk in estimating the eventual NRV of items we assessed the corresponding inventory
held, as well as assessing which items may be slow- observation instructions and participated in
moving or obsolete. inventory counts on sites. Based on samples,
we performed test counts and compared the
The Company’s principal accounting policy on stores quantities counted by us with the results of the
and spares and stock in trade are disclosed in notes – counts of the management;
6.6 and 6.7 to the financial statements.
• For a sample of inventory items, re-performed the
The significance of the balance coupled with the weighted average cost calculation and compared
judgments and estimates involved on their valuation the weighted average cost appearing on valuation
has resulted in the inventories being considered as a sheets;
key audit matter.
• We tested that the ageing report used by
management correctly aged inventory items by
agreeing a sample of aged inventory items to the
last recorded invoice;

• On a sample basis, we tested the net realizable

value of inventory items to recent selling prices
and reperformed the calculation of the inventory
write down, if any;

• We also made enquires of management, including

those outside of the finance function, and
considered the results of our testing above to
determine whether any specific write downs were
required.
4. Revenue recognition (Refer note 32 to the financial statements)
We identified recognition of revenue of the Company We performed a range of audit procedures in relation
as a key audit matter because revenue is one of the key to revenue including the following:
performance indicators and gives rise to an inherent
risk that revenue could be subject to misstatement to • We obtained an understanding of the process
meet expectations or targets. relating to recognition of revenue and testing
the design, implementation and operating
The Company earns revenue from multiple business effectiveness of key internal controls over
lines which operate as distinct business units with recording of revenue;
significant volume of revenue transactions.
• We compared a sample of revenue transactions
Revenue is recorded in accordance with the recorded during the year with sales orders, sales
requirements of IFRS-15 which provides a invoices, delivery documents and other relevant
comprehensive model of revenue recognition and underlying documents;
requires the Company to exercise judgement,
taking into consideration all of the relevant facts and • We performed analytical review procedures and
circumstances when applying the model to contracts other test of details over various revenue streams
with customers. including the cut-off procedures to check that
revenue has been recognized in the appropriate
For further information, refer to the summary of accounting period;
significant accounting policies, Revenue from contracts
with customers’ note 6.18 to the financial statements. • We assessed the adequacy of the disclosures
as per the guidelines set out in the applicable
financial reporting requirements.

91
Information Other than the Financial Statements and Auditor’s Report Thereon
Management is responsible for the other information. The other information comprises the information included in the
annual report, but does not include the financial statements and auditor’s report thereon.

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

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

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

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

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

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

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

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

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.

92
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide to the Board of Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements:

Based on our audit, we further report that in our opinion:

a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);

b) the statement of financial position, the statement of profit or loss, the statement of comprehensive income, the
statement of changes in equity and the statement of cash flows together with the notes thereon have been drawn
up in conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and
returns;

c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the
Company’s business; and

d) 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 auditor’s report is Syed Aftab Hameed - FCA.

Date: September 15, 2021 KRESTON HYDER BHIMJI & CO.

Place: Faisalabad CHARTERED ACCOUNTANTS

93
STATEMENT OF
FINANCIAL POSITION
As at June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

ASSETS
NON CURRENT ASSETS
Property, plant and equipment 7 26,193,029 22,744,239
Intangible assets 8 209,623 171,459
Long term investments 9 – 1,853,735
Long term loans 10 144,673 113,823
Long term deposits 11 60,478 38,337
26,607,803 24,921,593
CURRENT ASSETS
Stores and spares 12 1,199,116 1,062,524
Stock in trade 13 11,276,308 8,810,625
Trade debts 14 15,052,940 7,207,391
Loans and advances 15 1,034,836 485,930
Prepayment and other receivables 16 318,708 193,182
Accrued income 17 2,131 2,239
Tax refunds due from Government 18 4,328,555 2,408,014
Short term investments 19 500,000 125,044
Cash and bank balances 20 374,442 150,787
34,087,036 20,445,736
TOTAL ASSETS 60,694,839 45,367,329
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized share capital 21 10,000,000 10,000,000

Issued, subscribed and paid up capital 22 8,721,975 8,721,975
Reserves 23 3,791,602 3,791,602
Unappropriated profit 8,001,035 4,766,115
20,514,612 17,279,692
NON CURRENT LIABILITIES
Long term financing 24 8,213,978 6,861,130
Lease liabilities 25 152,969 102,158
Deferred liabilities 26 3,816,001 3,140,682
12,182,948 10,103,970
CURRENT LIABILITIES
Trade and other payables 27 5,551,641 3,031,231
Unclaimed dividend 4,004 2,952
Accrued mark up 28 221,674 191,136
Short term borrowings 29 19,636,066 14,354,861
Derivative financial instruments 33,074 –
Current portion of non current liabilities 30 2,550,820 403,487
27,997,279 17,983,667
CONTINGENCIES AND COMMITMENTS 31 – –
TOTAL EQUITY AND LIABILITIES 60,694,839 45,367,329

The annexed notes 1 to 55 form an integral part of these financial statements.

Chief Executive Officer Director Chief Financial Officer

94
STATEMENT OF
PROFIT OR LOSS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

Sales - net 32 54,962,265 36,302,794

Cost of sales 33 (40,749,985) (28,439,076)
Gross profit 14,212,280 7,863,718

Operating expenses
Distribution cost 34 (2,639,632) (2,007,264)
Administrative expenses 35 (2,796,180) (2,197,949)
Other operating expenses 36 (919,479) (504,513)
(6,355,291) (4,709,726)
Other income 37 162,912 99,001
Profit from operations 8,019,901 3,252,993
Finance cost 38 (1,147,038) (1,137,162)

Profit before taxation 6,872,863 2,115,831

Taxation 39 (581,292) (319,428)

Profit for the year 6,291,571 1,796,403

Earnings per share - basic and diluted (Rupees) 40 7.21 2.06

The annexed notes 1 to 55 form an integral part of these financial statements.

Chief Executive Officer Director Chief Financial Officer

95
STATEMENT OF
COMPREHENSIVE INCOME
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

Profit for the year 6,291,571 1,796,403

Other comprehensive (loss)/income:

Items that will not be reclassified subsequently to profit or loss:

Remeasurement of post retirement benefits obligations 26.1.4 (71,653) 2,715

Total comprehensive income for the year 6,219,918 1,799,118

The annexed notes 1 to 55 form an integral part of these financial statements.

Chief Executive Officer Director Chief Financial Officer

96
STATEMENT OF
CHANGES IN EQUITY
For the year ended June 30, 2021

Capital reserve Revenue reserve

Share
Unappropriated Total
capital Share premium
profit

(Rupees ‘000)

Balance as at June 30, 2019 8,721,975 3,791,602 5,366,207 17,879,784

Profit for the year – – 1,796,403 1,796,403
Other comprehensive income – – 2,715 2,715
Total comprehensive income for the year – – 1,799,118 1,799,118
Effect of initial application of IFRS-16 – – (667) (667)
Transactions with owners:
Dividend to ordinary shareholders – – (2,398,543) (2,398,543)

Balance as at June 30, 2020 8,721,975 3,791,602 4,766,115 17,279,692

Profit for the year – – 6,291,571 6,291,571
Other comprehensive loss – – (71,653) (71,653)

Total comprehensive income for the year – – 6,219,918 6,219,918

Transfer upon amalgamation (note 44) – – (804,504) (804,504)
Transactions with owners:
Dividend to ordinary shareholders – – (2,180,494) (2,180,494)

Balance as at June 30, 2021 8,721,975 3,791,602 8,001,035 20,514,612

The annexed notes 1 to 55 form an integral part of these financial statements.

Chief Executive Officer Director Chief Financial Officer

97
STATEMENT OF
CASH FLOWS
For the year ended June 30, 2021

2021 2020
(Rupees ‘000) (Rupees ‘000)

a) CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 6,872,863 2,115,831
Adjustments for:
Depreciation 2,279,613 1,980,510
Amortization 18,329 14,931
Depreciation on right of use assets 41,215 16,835
Workers’ welfare fund 140,262 43,180
Workers’ profit participation fund 369,111 112,527
Staff retirement gratuity 857,791 783,277
Loss on disposal of non current assets 19,535 17,534
Exchange (gain)/loss - net (36,056) 37,011
Inventory write-off 434 7,125
Realized loss on derivative financial instruments 27,251 106,843
Unrealized loss on derivative financial instruments 33,074 –
Remeasurement loss on investment in mutual funds – 5,293
Profit on term deposit receipts (TDRs) (3,088) (36,131)
Profit on term finance certificates (TFCs) (45,624) (55,606)
Interest on loan to Metis International (Pvt) Ltd (1,152) (1,356)
Reversal of impairment loss (70,814) –
Interest on receivables from IL Bangla Limited (5,308) (5,796)
Finance cost 1,147,038 1,137,162
Operating cash flows before working capital changes 11,644,474 6,279,170
Changes in working capital
(Increase)/decrease in current assets
Stores and spares (126,666) (174,865)
Stock in trade (2,056,846) (2,535,259)
Trade debts (7,632,722) 1,040,349
Loans and advances (469,075) 571,644
Prepayment and other receivables (114,482) 17,322
Tax refunds due from government (1,876,611) (218,701)
Short term investment in mutual funds - net – 125,603
Increase/(decrease) in current liabilities
Trade and other payables 2,071,469 (433,974)
(10,204,933) (1,607,881)
Cash generated from operations 1,439,541 4,671,289
Finance cost paid (1,097,987) (1,049,053)
Income tax paid (531,448) (448,202)
Staff retirement gratuity paid (281,467) (122,931)
Workers’ profit participation fund paid (119,000) (288,315)
Long term loans paid (88,237) (42,293)
Long term deposits paid (16,505) (10,318)
Settlement of derivative financial instruments (27,251) (106,843)
Profit on term deposit receipts (TDRs) received 3,132 36,131
Exchange gain/(loss) - net 11,538 (37,011)
Net cash (used in)/generated from operating activities (707,684) 2,602,454

98
 2021 2020
Note (Rupees ‘000) (Rupees ‘000)

b) CASH FLOWS FROM INVESTING ACTIVITIES

Additions in:
Property, plant and equipment (5,077,335) (6,422,247)
Intangible assets (81,439) (120,229)
Proceeds from disposal of non current assets 90,848 48,636
Profit on term finance certificates (TFCs) received 45,609 55,000
Changes in long term investments 404,067 (845,000)
Net cash used in investing activities (4,618,250) (7,283,840)

c) CASH FLOWS FROM FINANCING ACTIVITIES
Long term financing obtained 3,997,643 4,592,913
Repayment of long term financing (747,505) (2,204,245)
Payment of lease rentals (50,297) (13,605)
Changes in short term borrowings - net 4,393,453 2,628,861
Dividend paid (2,179,442) (2,526,526)
Net cash generated from financing activities 5,413,852 2,477,398
Net increase/(decrease) in cash and cash equivalents (a+b+c) 87,918 (2,203,988)
Add: Transfer upon amalgamation 10,693 –
Cash and cash equivalents at the beginning of the year 275,831 2,479,819
Cash and cash equivalents at the end of the year 41 374,442 275,831

The annexed notes 1 to 55 form an integral part of these financial statements.

Chief Executive Officer Director Chief Financial Officer

99
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

1. LEGAL STATUS AND OPERATIONS

Interloop Limited (the Company) was incorporated in Pakistan on 25th April, 1992 as a private limited company
under Repealed Companies Ordinance, 1984 (now Companies Act, 2017). On 18th July 2008, the Company was
converted into public limited company and subsequently, on 5th April 2019, it was publicly listed on Pakistan
Stock Exchange. The Company is engaged in the business of manufacturing and sale of socks, leggies, denim and
yarn, and to generate electricity for its own use.

The geographical locations and addresses of the Company’s business units, including production facilities are as
under:

– Registered office: Al-Sadiq Plaza, P-157, Railway Road, Faisalabad.
– Corporate office & Plant 1: 1-KM, Khurrianwala – Jaranwala Road, Khurrianwala, Faisalabad-Pakistan.
– Plant 2, Plant 4 & Spinning unit: 7-KM, Khurrianwala – Jaranwala Road, Khurrianwala, Faisalabad-Pakistan.
– Plant 5: 6-KM, Khurrianwala – Jaranwala Road, Khurrianwala, Faisalabad-Pakistan.
– Plant 3 & Denim: 8-KM, Manga- Raiwind Road, Raiwind, Dist. Kasur, Lahore-Pakistan.
– Apparel unit: 117-J.B, Millat Road Dhanola, Faisalabad-Pakistan. (Rented)

2. AMALGAMATION OF IL APPAREL (PRIVATE) LIMITED
The Board of Directors of the Company in their meeting held on October 28, 2020 approved the amalgamation
of IL Apparel (Private) Limited (“ILA”), a wholly owned subsidiary of Interloop Limited (“the Company”) with and
into the Company, in accordance with the terms of Scheme of Amalgamation prepared under the provisions of
section 284 read with all other enabling provisions of the Companies Act, 2017. In pursuance of the scheme of
amalgamation approved by the Board as above, the Securities and Exchange Commission of Pakistan approved
the scheme on January 25, 2021 and sanctioned the effective date of the amalgamation i.e. January 31, 2021.
Pursuant to the scheme, the entire undertaking and business of ILA with all the property, assets, rights, liabilities
and obligations of every description stand amalgamated into the Company while the shares of ILA held by the
Company stood cancelled.

As the above amalgamation represents a transaction between commonly controlled entities, the said transaction
is outside the scope of IFRS-3 ‘Business Combinations’ and therefore is accounted for as a common control
transaction and predecessor accounting has been applied as of the date of amalgamation. Accordingly, the
assets and liabilities of ILA have been amalgamated in the financial statements of the Company at their net
carrying amount as recorded in ILA separate financial statements as at January 31, 2021. The difference in value
of the net assets and cost of investment in ILA in the long-term investments of the Company has been included
in equity under the head unappropriated profit. All inter-company balances stand eliminated as at January
31, 2021 without any fund movement. The ILA stand dissolved without winding up. The statement of financial
position of ILA is merged prospectively from the date of amalgamation. Detail of the net assets transferred upon
amalgamation is disclosed in note. 44 to the financial statements.

3. BASIS OF PREPARATION
3.1 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 the 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.

100
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

3.2 Basis of measurement

These financial statements have been prepared under the historical cost convention except as otherwise
stated in respective policy notes.

3.3 Functional and presentation currency
These financial statements are presented in Pakistani Rupee which is also the Company’s functional
currency.

4. NEW AND REVISED STANDARDS, INTERPRETATIONS AND PRONOUNCEMENTS

4.1 Standards, interpretations and amendments to approved accounting standards which became
effective during the year
– Amendments to IFRS 9, ‘Financial Instruments’; IAS 39, ‘Financial Instruments: Recognition and
Measurement, and IFRS 7, ‘ Financial Instruments: Disclosures’ - Interest Rate Benchmark Reform
(effective for the Company’s annual period beginning on or after January 01, 2020):

The changes in Interest Rate Benchmark Reform

i. modify specific hedge accounting requirements so that entities would apply those hedge
accounting requirements assuming that the interest rate benchmark on which the hedged cash
flows and cash flows from the hedging instrument are based will not be altered as a result of
interest rate benchmark reform;

ii. are mandatory for all hedging relationships that are directly affected by the interest rate
benchmark reform;

iii. are not intended to provide relief from any other consequences arising from interest rate
benchmark reform (if a hedging relationship no longer meets the requirements for hedge
accounting for reasons other than those specified by the amendments, discontinuation of
hedge accounting is required);

iv. and require specific disclosures about the extent to which the entities’ hedging relationships
are affected by the amendments.

The amendments do not have any significant impact on these financial statements.

– Amendment to IFRS 16, ‘Leases’ - Covid-19-Related Rent Concessions (effective for annual
period beginning on or after June 01, 2020):
The changes in Covid-19-Related Rent Concessions (Amendment to IFRS 16) amend IFRS 16 to
provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a
lease modification; require lessees that apply the exemption to account for COVID-19-related rent
concessions as if they were not lease modifications; require lessees that apply the exemption to
disclose that fact; and require lessees to apply the exemption retrospectively in accordance with IAS
8, but not require them to restate prior period figures. The amendment does not have any impact
on these financial statements.

– Amendments to IAS 1, ‘Presentation of financial statements’, and IAS 8, ‘Accounting policies,
changes in accounting estimates and errors’ (effective for the Company’s annual period
beginning on or after January 01, 2020):
These amendments and consequential amendments to other IFRSs:

(i) use a consistent definition of materiality throughout IFRSs and the Conceptual Framework for
Financial Reporting;

(ii) clarify the explanation of the definition of material; and

(iii) incorporate some of the guidance in IAS 1 about immaterial information.

101
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

The amendments do not have any significant impact on these financial statements.

– Amendment to IFRS 3 ‘Business Combinations’ – Definition of a Business (effective for business
combinations for which the acquisition date is on or after the beginning of annual period
beginning on or after January 01, 2020):
The IASB has issued amendments aiming to resolve the difficulties that arise when an entity
determines whether it has acquired a business or a group of assets. The amendments clarify that
to be considered a business, an acquired set of activities and assets must include, at a minimum,
an input and a substantive process that together significantly contribute to the ability to create
outputs. The amendments include an election to use a concentration test. The amendment does
not have any significant impact on these financial statements.

During the year certain other amendments to standards or new interpretations became effective,
however, the amendments or interpretations did not have any material effect on these financial
statements of the Company.

4.2 Standards, interpretations and amendments to approved accounting standards that are issued but
not yet effective and have not been early adopted by the Company
– Amendment to IAS 16 ‘Property, Plant and Equipment’ - Proceeds before Intended Use
(effective for annual period beginning on or after January 01, 2022):
The amendment prohibit 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. The amendment is not likely to have an impact on the Company’s financial statements.

– Amendment to IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ - Onerous
Contracts - Cost of Fulfilling a Contract (effective for annual period beginning on or after
January 01, 2022):
The amendment specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly
to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling
that contract (examples would be direct labour, materials) or an allocation of other costs that relate
directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an
item of property, plant and equipment used in fulfilling the contract). The amendment is not likely
to have an impact on the Company’s financial statements.

– Amendments to IFRS 3, ‘Business Combinations’ - Reference to the Conceptual Framework
(effective for the Company’s annual period beginning on January 01, 2022):
The amendments are intended to replace a reference to the Framework for the Preparation
and Presentation of Financial Statements, issued in 1989 with a reference to the Conceptual
Framework for Financial Reporting, that was issued in March 2018, without significantly changing
its requirements. In addition, the Board added an exception to the recognition principle of IFRS 3 to
avoid the issue of potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities and
it clarified existing guidance in IFRS 3 for contingent assets. The amendment is not likely to have an
impact on the Company’s financial statements.

– Amendments to IAS 8, ‘Accounting policies, changes in accounting estimates and errors’ -
Definition of Accounting Estimates (effective for the Company’s annual period beginning on
January 01, 2023):
The amendments replace the definition of a change in accounting estimates with a definition of
accounting estimates. Under the new definition, accounting estimates are “monetary amounts in
financial statements that are subject to measurement uncertainty”. Entities develop accounting
estimates if accounting policies require items in financial statements to be measured in a way that
involves measurement uncertainty. The amendments clarify that a change in accounting estimate
that results from new information or new developments is not the correction of an error. The
Company is yet to assess the full impact of the amendment.

102
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

– Amendments to IAS 1, ‘Presentation of financial statements’ and IFRS Practice Statement 2-

Disclosure of Accounting Policies (effective for the Company’s annual period beginning on
January 01, 2023):
The amendments require that an entity discloses its material accounting policies, instead of its
significant accounting policies. Further amendments explain how an entity can identify a material
accounting policy. Examples of when an accounting policy is likely to be material are added. To support
the amendment, the Board has also developed guidance and examples to explain and demonstrate
the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2. The
amendment is not likely to have an impact on the Company’s financial statements.

– Amendments to IAS 1, ‘Presentation of financial statements’ - Classification of Liabilities as
Current or Non-current (effective for the Company’s annual period beginning on January 01,
2022):
The amendments specify that the conditions which exist at the end of the reporting period are
those which will be used to determine if a right to defer settlement of a liability exists. Management
expectations about events after the reporting date, for example on whether a covenant will be
breached, or whether early settlement will take place, are not relevant. The amendments clarify the
situations that are considered settlement of a liability.

– Annual Improvements to IFRS Standards 2018–2020 Cycle. The new cycle of improvements
addresses improvements to following approved accounting standards (effective for annual
period beginning on or after January 01, 2022):
– IFRS 1 First-time Adoption of International Financial Reporting Standards. This amendment simplifies
the application of IFRS 1 for a subsidiary that becomes a first-time adopter of IFRS Standards later
than its parent – i.e. if a subsidiary adopts IFRS Standards later than its parent and applies IFRS
1.D16(a), then a subsidiary may elect to measure cumulative translation differences for all foreign
operations at amounts included in the consolidated financial statements of the parent, based on the
parent’s date of transition to IFRS Standards.

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

– IAS 41 Agriculture. The amendment removes the requirement for entities to exclude taxation cash
flows when measuring the fair value of a biological asset using a present value technique. This will
ensure consistency with the requirements in IFRS 13 - Fair Value Measurement.

There are other amendments and interpretations to the approved accounting standards that are
not yet effective and are also not relevant to the Company and therefore, have not been presented
here.

Further, the following new standards have been issued by the International Accounting
Standards Board (IASB), which are yet to be notified by the Securities and Exchange Commission
of Pakistan (SECP), for the purposes of their applicability in Pakistan:
IFRS - 1 ‘First time adoption of International Financial Reporting Standards’.
IFRS - 17 ‘Insurance Contracts’.

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with the approved accounting standards require management
to make judgments, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgments about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates.

103
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are revised if the revision affects only that period, or in the
period of the revision and future periods. Judgments made by management in application of the approved
accounting standards that have significant effect on the financial statements and estimates with a significant
risk of material adjustments in the next year are discussed in respective policy notes. The areas where various
assumptions and estimates are significant to the Company’s financial statements or where judgment was exercised
in application of accounting policies are as follows:

Estimate of useful life of operating fixed assets - note 6.1
Estimated useful life of intangible assets - note 6.3
Impairment of non-financial assets - note 6.4
Stores and spares - note 6.6
Stock-in-trade - note 6.7
Estimation used in right of use asset and corresponding lease liability - note 6.10
Staff retirement benefits - note 6.12
Provisions - note 6.15
Contingencies - note 6.16
Taxation - note 6.20
Impairment of Financial Assets - note 6.25.1

6. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6.1 Operating fixed assets and depreciation
Operating fixed assets, except freehold land which is stated at cost, are stated at cost less accumulated
depreciation and identified accumulated impairment loss, if any. Cost comprises acquisition and other
directly attributable costs.

Depreciation is calculated at the rates stated in note - 7.1 applying reducing balance method. The
useful life and residual value of major components of operating fixed assets are reviewed annually to
determine that expectations are not significantly different from the previous estimates. Adjustment in
depreciation rate for current and future periods is made if expectations are significantly different from
the previous estimates. Depreciation is charged from the month when an asset becomes available for
use, whereas no depreciation is charged in the month of its disposal.

Expenditure, which enhances or extends the performance of operating fixed assets beyond its original
specification and its useful life, is recognized as a capital expenditure and is added to the cost of the
operating fixed assets. These are depreciated on reducing balance method at the rate mentioned in
note - 7.1.

An item of operating fixed asset and any significant part initially recognized is derecognized upon
disposal or when no future economic benefits are expected from its use or disposal. The gain or loss
arising on derecognition of an item of operating fixed asset is determined as the difference between the
sales proceeds and the carrying amounts of the asset and is recognized in the statement of profit or loss.

6.2 Capital work in progress
Capital work in progress is stated at cost less identified impairment loss, if any, and represents direct cost
of material, labour, applicable overheads and borrowing costs on qualifying assets. Transfers are made
to relevant property, plant and equipment category as and when assets are available for its intended
use.

6.3 Intangible assets - Computer software
Intangible assets are stated at cost less accumulated amortization and identified accumulated impairment
loss, if any. These are amortized using the reducing balance method at the rates given in note - 8.1.
Amortization on additions is charged from the month in which an intangible asset is acquired, while no
amortization is charged for the month in which intangible asset is disposed off.

104
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

Costs associated with maintaining computer software program are recognized as an expense as and
when incurred. Costs that are directly attributable to identifiable software and have probable economic
benefits exceeding one year, are recognized as an intangible asset at the time of initial recognition.
Direct costs include the purchase cost of software and related overhead costs.

Expenditure, which enhances or extends the performance of computer software beyond its original
specification and useful life, is recognized as a capital expenditure and added to the cost of the software.
These are amortized on reducing balance method at the rate mentioned in the relevant note.

6.3.1 Development costs
Development costs that are directly attributable to the design and testing of identifiable and unique
software products controlled by the Company are recognized as development cost in intangible assets.
Directly attributable costs that are capitalized as part of the software includes advance payments for the
software. Capitalized development costs are recorded as intangible assets and amortized from the point
at which the asset is ready for use.

6.4 Impairment of non-financial assets
The carrying amounts of the Company’s non-financial assets, other than stock in trade and stores and
spares, are reviewed at each reporting date to determine whether there is any indication of impairment.
If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible
assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at
each reporting date.

An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds
its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates
cash flows that largely are independent from other assets and groups.

Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of cash-
generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units
and then to reduce the carrying amount of the other assets of the unit on a pro-rata basis. Impairment
losses on goodwill shall not be reversed.

An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized. Prior impairments of non-financial assets are
reviewed for possible reversal at each reporting date.

6.5 Investment in subsidiary and associates
Investments in subsidiary and associates are recognized at cost less impairment loss, if any. At each
reporting date, 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.

The profits and losses of subsidiary and associated entities are carried forward in their financial
statements and not dealt within these financial statements except to the extent of dividend declared
by the subsidiary and associates. Gains and losses on disposal of investments are included in other
income.

6.6 Stores and spares
Stores and spares are carried at moving average cost. Provision is made for slow moving and obsolete
store items when so identified. Stores and spares held for capital expenditure are included in capital
work in progress.

105
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

6.7 Stock-in-trade
These are stated at the lower of cost and net realizable value (NRV). The methods used for the calculation
of cost are as follows:

Raw material - At factory Moving average cost
- In transit Invoice value plus direct charges in respect thereof.
Work in process and finished goods Prime cost including a proportion of production overheads.

Wastes are valued at net realizable value.

Stock-in-trade is regularly reviewed by the management and any obsolete items are brought down to
their net realizable value. Net realizable value signifies the selling price in the ordinary course of business
less costs necessary to be incurred to affect such sale.

6.8 Trade debts and other receivables
Trade debts are recognized and carried at the original invoice amounts, being the fair value, less loss
allowance, if any. For measurement of loss allowance for trade debts, the Company applies IFRS 9
simplified approach to measure the expected credit losses.


Other receivables are recognized at amortized cost, less any allowance for expected credit losses.

6.9 Cash and cash equivalents

Cash and cash equivalents comprise of cash in hand, cheques in hand/cheques overdrawn, balances
with banks and include short term highly liquid investments with original maturities of three months or
less. The cash and cash equivalents are readily convertible to known amount of cash and are subject to
insignificant risk of change in value.

6.10 Leases
Right of use assets

At inception, the Company assesses whether a contract is or contains a lease. This assessment involves
the exercise of judgement about whether the Company obtains substantially all the economic benefits
from the use of the asset and whether the Company has a right to direct the use of the asset. The
Company recognizes right of use assets (RoU) 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
RoU includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease incentives received.

Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease
term, the recognized right of use assets are depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term. Depreciation of RoU is charged to statement of profit or loss.
Residual value and the useful life of an RoU are reviewed at least at each financial year-end. Depreciation
on additions to RoU is charged from the month in which an asset is acquired, while no depreciation is
charged for the month in which the asset is disposed off.

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.

106
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

The related payment obligations, net of finance costs are classified as current and long term liability
depending upon the timing of the payment.

In calculating the present value of lease payments, the Company uses the incremental borrowing rate
at the lease commencement date if the interest rate implicit in the lease is not readily determinable.
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 in-substance fixed
lease payments or a change in the assessment to purchase the underlying asset.

Each lease payment is allocated between the liability and finance cost so as to achieve a constant rate
on the balance outstanding. The interest element of the rental is charged to statement of profit or loss
over the lease term.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-
line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or
less and leases of low value items.

6.11 Share capital
Ordinary shares are classified as equity and recognized at their face value.

6.12 Staff retirement benefits
(a) Defined Benefit Plan
The Company operates an unfunded gratuity scheme for all employees according to the terms of
employment, subject to a minimum qualifying period of service. Annual provision is made on the basis of
actuarial valuation to cover obligations under the scheme for all employees eligible to gratuity benefits.

The cost of providing benefits is determined using the projected unit credit method, with actuarial
valuation being carried out at each reporting date. Remeasurement of net defined benefit liability, which
comprise of actuarial gains and losses i.e. experience adjustments and the effects of changes in actuarial
assumptions, are recognized immediately in other comprehensive income. The Company determines
net interest expense/(income) on the defined benefit obligation for the period by applying the discount
rate used to measure the defined benefit obligation at the beginning of the annual period to then-net
defined benefit, taking into account any change in the net defined benefit obligation during the period
as a result of contributions and benefit payments. Net interest expense and other expenses e.g. current
service cost, related to defined benefit plans are recognized in statement of profit or loss.

(b) Defined Contribution Plan
There is a contributory provident fund for executive staff of the Company for which contributions are
charged to profit or loss as and when incurred.

The Company makes monthly contribution to the fund at the rate of 7.5% whereas employees of the
Company have the option to contribute more than 7.5% but not exceeding 12.5% of his/her monthly
basic pay with the written approval of the Board. The assets of the fund are held separately under the
control of trustees.

6.13 Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance
that the grant will be received and the Company will comply with all attached conditions. Government
grants received by the Company in the form of economic benefits are deferred and accounted for under
income approach in profit or loss. Relevant amortization income is recognized in profit or loss, net off
with relevant expense, on systematic basis over the period in which the expenses for the grants are
intended to compensate.

107
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

6.14 Trade and other payables

Liabilities for trade and other payables are carried at their amortized cost, which approximate fair value
of the consideration to be paid in future for goods and services received, whether or not billed to the
Company. Exchange gains and losses arising on translation in respect of liabilities in foreign currency are
added to the carrying amount of the respective liabilities.

6.15 Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of
past events and it is probable that an outflow of resources will be required to settle the obligation and
a reliable estimate of the amount can be made.

Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate. If
it is no longer probable that an outflow of resources embodying economic benefits will be required to
settle the obligation, the provisions are reversed.

6.16 Contingencies
The assessment of the contingencies inherently involves the exercise of significant judgment as the
outcome of the future events cannot be predicted with certainty. The Company, based on the availability
of the latest information, estimates the value of contingent assets and liabilities which may differ on the
occurrence/ non-occurrence of the uncertain future events.

6.17 Foreign currency translation
Transactions in foreign currency during the period are initially recorded in the functional currency at
the rate prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign
currencies are translated at functional currency at the rate of exchange prevailing at the reporting date.
All non-monetary assets and liabilities are translated into rupees at exchange rates prevailing on the
date of transaction or on date when fair values are determined. Exchange differences are charged to
statement of profit or loss.

6.18 Revenue recognition
Revenue is recognized at an amount that reflects the consideration to which the Company is expected
to be entitled in exchange for transferring goods or services to a customer. For each contract with a
customer, the Company: identifies the contract with a customer; identifies the performance obligations
in the contract; determines the transaction price which takes into account estimates of variable
consideration and the time value of money; allocates the transaction price to the separate performance
obligations on the basis of the relative stand-alone selling price of each distinct good or service to be
delivered; and recognizes revenue when or as each performance obligation is satisfied in a manner that
depicts the transfer to the customer of the goods or services promised.

Variable consideration within the transaction price, if any, reflects concessions provided to the customer
such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any
other contingent events. Such estimates are determined using either the ‘expected value’ or ‘most
likely amount’ method. The measurement of variable consideration is subject to a constraining principle
whereby revenue will only be recognized to the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognized will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are initially recognized as deferred revenue in the
form of a separate refund liability.

a) Sale of goods
Revenue from the sale of goods is recognized at the point in time when the customer obtains
control of the goods, which is generally at the time of delivery. Otherwise, control is transferred
over time and revenue is recognized over time by reference to the progress towards complete
satisfaction of the relevant performance obligation if one of the following criteria is met:

108
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

– the customer simultaneously receives and consumes the benefits provided by the Company’s
performance as the Company performs;

– the Company’s performance creates and enhances an asset that the customer controls as the
Company performs; or

– the Company’s performance does not create an asset with an alternative use to the Company and
the Company has an enforceable right to payment for performance completed to date.

b) Rendering of services
Revenue from a contract to provide services is recognized over time as the services are rendered.

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

d) Other revenue
Other revenue is recognized when it is received or when the right to receive payment is established.

6.19 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or
sale, are added to the cost of those assets, until such time when the assets are substantially ready for
their intended use or sale. All other borrowing costs are charged to statement of profit or loss in the
period of as and when incurred.

6.20 Taxation
Current
The charge for current taxation is based on taxable income at current rates of taxation after taking into
account tax credits, rebates and exemptions available, if any. However, for income covered under Final
Taxation Regime (FTR), taxation is based on the applicable tax rates under such Regime. The charge
for current tax also includes adjustments, where considered necessary, and provision for tax made in
previous years arising from assessments framed during the year for such years.

Deferred
Deferred tax is accounted for using the statement of financial position method in respect of temporary
differences arising from differences between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax basis used in the computation of taxable income. Deferred tax
is calculated by using the tax rates enacted at the reporting date. In this regard, the effect on deferred
taxation of the portion of income subjected to Final Tax Regime is adjusted in accordance with the
requirements of Accounting Technical Release – 27 of the Institute of Chartered Accountants of Pakistan,
if considered material.

Deferred tax liability is recognized for all taxable temporary differences and deferred tax asset is
recognized for all deductible temporary differences and carry forward of unused tax losses and unused
tax credits, if any, to the extent that it is probable that future taxable profit will be available against which
these can be utilized.

Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit
will be realized. Significant management judgment is required to determine the amount of deferred tax
assets that can be recognized, based upon the likely timing and level of future taxable profits together
with future tax planning strategies.

109
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

6.21 Earnings per share

The Company presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic EPS is
calculated by dividing the profit by weighted average number of shares outstanding during the period.
Diluted EPS is calculated by adjusting for the effects of all dilutive potential ordinary shares.

6.22 Dividend
Dividend distribution to the Company’s shareholders is recognized as a liability in the Company’s
financial statements in the period in which dividends are approved.

6.23 Segment reporting
Segment reporting is based on the operating (business) segments of the Company. An operating
segment is a component of the Company that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to the transactions with any
of the Company’s other components. An operating segment’s operating results are reviewed regularly
by the chief operating decision maker (‘CODM’) to make decisions about resources to be allocated
to the segment and assess its performance, and for which discrete financial information is available.
The CODM, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors of the Company that makes the strategic
decisions.

Segment results that are reported to the CODM include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis. Those incomes, expenses, assets, liabilities and
other balances which cannot be allocated to a particular segment on a reasonable basis are reported as
unallocated.

Transactions among the business segments are recorded at cost. Inter segment sales and purchases are
eliminated from the total.

6.24 Related party transactions
All transactions with related parties are carried out at arm’s length prices. Each transaction is evaluated
to be characterized as an “”arm’s length transaction”” and approximated to the arm’s length criteria
using one of the following methodologies:

• Market-based pricing
• Negotiated pricing
• Cost-based pricing

6.25 Financial Instruments:
6.25.1 Financial assets
A financial asset is measured at amortized cost if it is held in order to collect contractual cash flows which
arise on specified dates and that are ‘solely payment of principal and interest (SPPI)’ on the principal
amount outstanding. A debt investment is measured at fair value through other comprehensive income
if it is held in order to collect contractual cash flows which arise on specified dates that are solely
principal and interest and as well as selling the asset on the basis of its fair value. All other financial assets
are classified and measured at fair value through profit or loss unless the Company makes an irrevocable
election on initial recognition to present gains and losses on equity instruments in other comprehensive
income. Despite these requirements, a financial asset may be irrevocably designated as measured at fair
value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch.

A. Classification and measurement of financial assets
Investments and other financial assets
Classification:
The Company classifies its financial assets in the following measurement categories:

– those to be measured subsequently at fair value (either through other comprehensive income, or
through profit or loss), and
110
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

– those to be measured at amortized cost

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

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

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

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

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

Amortized cost
Financial assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortized cost. Interest income from
these financial assets is included in other income using the effective interest rate method. Any gain
or loss arising on derecognition is recognized directly in statement of profit or loss and presented
in other income / (other operating expenses) together with foreign exchange gains and losses.
Impairment losses are presented as separate line item in the statement of profit or loss.

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

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

111
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

if they are acquired for the purpose of selling or repurchasing in the near term. 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.

B. 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 when:

The rights to receive cash flows from the asset have expired, or

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.

C. Impairment
The Company record an allowance for a forward-looking expected credit loss (ECL) approach for all
loans and other debt financial assets not held at FVPL.

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. The shortfall is then discounted
at an approximation to the asset’s original effective interest rate.

For trade and other receivables, the Company has applied the standard’s simplified approach
and has calculated ECLs based on lifetime expected credit losses. The Company has established
a provision matrix that is based on the Company’s historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment. 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.

D. Derivative financial instruments
Derivatives are initially recognized at fair value. Any directly attributable transaction costs are
recognized in the statement of profit or loss as incurred. They are subsequently remeasured at fair
value, with all gains or losses, realized and unrealized, recognized in the statement of profit or loss.

112
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

6.25.2 Financial liabilities

A. Classification 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.

i) 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. Gains
or losses on liabilities held for trading are recognized in the statement of profit or loss. 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.

ii) Loans and borrowings

This is the category most relevant to the Company. After initial recognition, interest-bearing loans
and borrowings are subsequently measured at amortized cost using the EIR method. Gains and
losses are recognized in the statement of profit or 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 profit or loss.

This category generally applies to interest-bearing loans and borrowings.

B. Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled
or expires. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying amounts is recognized in the statement
of profit or loss.

6.25.3 Offsetting of financial assets and liabilities

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

113
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

7. PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 7.1 23,467,161 21,897,796
Capital work-in-progress 7.2 2,543,689 733,655
Right of use assets 7.3 182,179 112,788
26,193,029 22,744,239

7.1 Operating fixed assets

2021

Cost Depreciation W.D.V

Rate
Description As On As on As on As on As on
Transfer upon For the Transfer upon %
July 1, Additions Deletions June 30, July 1, Adjustments June 30, June 30,
amalgamation year amalgamation
2020 2021 2020 2021 2021

(Rupees ‘000)

Owned

Freehold land 1,723,264 188,598 220,527 – 2,132,389 – – – – – 2,132,389 –

Buildings on freehold land 7,323,607 610,953 60,294 – 7,994,854 2,530,865 521,017 9,608 – 3,061,490 4,933,364 10
Plant and machinery 20,367,053 1,593,773 241,678 (89,737) 22,112,767 8,148,454 1,314,441 37,090 (73,690) 9,426,295 12,686,472 10
Tools and equipment 1,282,851 96,820 76,842 – 1,456,513 464,024 83,665 12,265 – 559,954 896,559 10
Office equipment 497,145 195,230 39,139 (13,082) 718,432 254,422 64,156 11,334 (9,488) 320,424 398,008 20
Electric installations 1,984,922 290,621 62,840 (4,785) 2,333,598 641,190 142,514 10,620 (2,845) 791,479 1,542,119 10
Furniture and fixtures 480,528 93,405 16,849 – 590,782 176,184 41,694 2,694 – 220,572 370,210 10
Vehicles 689,573 198,784 40,938 (128,643) 800,652 236,008 112,126 12,560 (68,082) 292,612 508,040 20

Total 34,348,943 3,268,184 759,107 (236,247) 38,139,987 12,451,147 2,279,613 96,171 (154,105) 14,672,826 23,467,161

2020

Cost Depreciation W.D.V

Rate
Description As On As On As On Trial As on As on
%
July 1, Additions Deletions June 30, July 1, For the year Production Adjustments June 30, June 30,
2019 2020 2019 Capitalization 2020 2020

(Rupees ‘000)

Owned

Freehold land 1,580,632 142,632 – 1,723,264 – – – – – 1,723,264 –

Buildings on freehold land 5,242,322 2,081,285 – 7,323,607 2,091,888 438,313 664 – 2,530,865 4,792,742 10
Plant and machinery 17,015,857 3,422,219 (71,023) 20,367,053 7,025,777 1,167,278 8,388 (52,989) 8,148,454 12,218,599 10
Tools and equipment 975,631 308,597 (1,377) 1,282,851 388,974 75,375 398 (723) 464,024 818,827 10
Office equipment 408,316 101,856 (13,027) 497,145 215,163 49,748 – (10,489) 254,422 242,723 20
Electric installations 1,414,876 570,548 (502) 1,984,922 521,102 119,953 204 (69) 641,190 1,343,732 10
Furniture and fixtures 396,077 84,502 (51) 480,528 146,669 29,529 13 (27) 176,184 304,344 10
Vehicles 582,590 204,064 (97,081) 689,573 188,288 100,314 – (52,594) 236,008 453,565 20

Total 27,616,301 6,915,703 (183,061) 34,348,943 10,577,861 1,980,510 9,667 (116,891) 12,451,147 21,897,796

114
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

7.1.1 The detail of operating fixed assets disposed / written off during the year are as follows:

Accumulated Book Sale Gain /

Description Cost Mode of Disposal Particulars of Buyers
Depreciation Value Proceeds (Loss)

(Rupees ‘000)

Assets having book value exceeding Rs. 500,000 each

Plant and Machinery

Air compressor - Atlas Copco - 1,500 943 557 100 (457) Negotiation Mr. Muhammad Safdar - House # 782, Street # 09,
SCD - 750 SBH Zulfiqar Colony, Faisalabad, Pakistan
Gas absorption chiller - Dalian 4,985 3,968 1,017 842 (175) Negotiation Mr. Abdul Aziz - House # 117, Street # 02, Sarfraz
Sanyo - D-G-22 GML Colony, Faisalabad, Pakistan
Automatic boarding 2,125 1,328 797 513 (284) Negotiation Socks & Socks (Pvt.) Limited - Associated
machine - Techopea Company
Automatic boarding 2,125 1,328 797 513 (284) Negotiation Socks & Socks (Pvt.) Limited - Associated
machine - Techopea Company
Automatic boarding 2,125 1,328 797 513 (284) Negotiation Socks & Socks (Pvt.) Limited - Associated
machine - Techopea Company

Sub Total 12,860 8,895 3,965 2,481 (1,484)
Vehicles
Toyota Corolla GLI Prosmetic 1,881 1,107 774 664 (110) Company Policy Mr. Muhammad Shoaib - Company Employee
Honda City M/T ASP 1.3 1,716 865 851 973 122 Company Policy Mr. Ali Imran Raja - Company Employee
Honda City M/T ASP 1.5 1,838 757 1,081 1,309 228 Company Policy Mr. Muhammad Shahzad Afzal - Company
Employee
Suzuki Cultus VXL 1,893 338 1,555 1,556 1 Company Policy Mr. Hassan Javed - Company Employee
Suzuki Cultus VXR 1,277 553 724 724 - Company Policy Mr. Mehboob Khaliq Ansari - Company Employee
Suzuki Cultus VXL 1,419 728 691 691 - Transferred IL Apparel (Pvt) Limited - Subsidiary Company
Toyota Corolla GLI A/T 1,931 1,132 799 664 (135) Company Policy Mr. Muhammad Awais Asghar - Company
Employee
Toyota Corolla GLI M/T 2,865 366 2,499 2,500 1 Negotiation Mr. Muhammad Zaman Khan - House # 96, Canal
Garden 203 R.B, Faisalabad, Pakistan
Toyota Corolla GLI M/T 2,837 1,663 1,174 1,004 (170) Company Policy Ms. Faryal Sadiq - Company Employee
Honda Accord 2.4 10,650 7,670 2,980 3,854 874 Company Policy Mr. Tariq Rasheed - Company Employee
Toyota Corolla GLI A/T 1,861 1,115 746 722 (24) Company Policy Mr. Jamshaid Iqbal - Company
Employee
Suzuki Ciaz GL A/T 2,116 973 1,143 1,142 (1) Company Policy Mr. Naveed Ahmad Khan - Company Employee
Toyota Corolla ALTIS 2,376 1,759 617 860 243 Company Policy Mr Shafqat Hasan Khawaja - Company Employee
Suzuki Cultus VXR 1,277 676 601 601 - Company Policy Mr. Shahid Habib - Company Employee
Toyota Fortuner 5,352 3,800 1,552 1,555 3 Negotiation Mr. Sheraz, Saeed Autos, 22C-Model Town, Jail
Road, Faisalabad, Pakistan.
Honda City M/T 1,575 1,045 530 305 (225) Company Policy Mr. Waqas Ahmed Gill - Company Employee
Suzuki Swift DLX 1,360 765 595 450 (145) Company Policy Mr. Ghulam Murtaza - Company Employee
Toyota Corolla GLI A/T 2,463 779 1,684 1,684 - Company Policy Mr. Shakeel Ahmad Anjum - Company Employee
Toyota Corolla ALTIS 2,296 1,105 1,191 1,225 34 Negotiation Mr. Sheraz, Saeed Autos, 22C-Model Town, Jail
Road, Faisalabad, Pakistan.
Suzuki Cultus VXR 1,297 625 672 191 (481) Company Policy Mr. Inam Ul Haq - Company Employee
Toyota Fortuner 4X4 4,014 1,556 2,458 1,004 (1,454) Company Policy Mr. Feroze Ahmed - Company Employee
Toyota Hilux Revo 4X4 5,851 1,794 4,057 5,550 1,493 Insurance Claim EFU General Insurance Limited
Toyota Corolla GLI 1,924 1,099 825 531 (294) Company Policy Mr. Rizwan Zahid - Company Employee
Honda City M/T 1,569 1,051 518 324 (194) Company Policy Mr. Muhammad Shahid Mehmood - Company
Employee
Honda City M/T 1,583 917 666 531 (135) Company Policy Mr. Amjad Farooq - Company Employee
Toyota Corolla GLI A/T 1,201 398 803 701 (102) Company Policy Mr. Shakeel Akhtar - Company Employee
Honda City M/T 1,577 913 664 531 (133) Company Policy Mr. Abid Ali Gill - Company Employee
Toyota Corolla GLI A/T 1,924 1,115 809 664 (145) Company Policy Mr. Saeed Hassan Bhatti - Company Employee
Toyota Corolla ALTIS 2,083 1,209 874 723 (151) Company Policy Mr. Ghulam Qasim Shaheen - Company Employee
Honda Civic Oriel 2,673 1,549 1,124 723 (401) Company Policy Mr. Akmal Nasim - Company Employee

115
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

Accumulated Book Sale Gain /

Description Cost Mode of Disposal Particulars of Buyers
Depreciation Value Proceeds (Loss)

(Rupees ‘000)

Honda City M/T 1,587 920 667 531 (136) Company Policy Mr. Safdar Ali - Company Employee
Suzuki Swift DLX 1,359 788 571 531 (40) Company Policy Mr. Muhammad Waqas Ahsan - Company
Employee
Honda City M/T 1,582 918 664 450 (214) Company Policy Mr. Altaf Rasool - Company Employee
Toyota Corolla GLI A/T 1,902 1,296 606 275 (331) Company Policy Mr. Ali Javaid - Company Employee
KIA Picanto 2,039 510 1,529 1,560 31 Negotiation Mr. Sheraz, Saeed Autos, 22C-Model Town, Jail
Road, Faisalabad, Pakistan.
Suzuki Cultus VXL 691 92 599 701 102 Company Policy Ms. Arshia Zia - Company Employee
Honda City M/T 1,587 909 678 450 (228) Company Policy Ms. Ghazala Kanwal - Company Employee
Suzuki Cultus VXL 1,419 845 574 500 (74) Company Policy Mr. Maqbool Alam Baig - Company Employee
Honda City M/T 1,577 939 638 450 (188) Company Policy Mr. Muhammad Amjad - Company Employee
Honda City M/T 1,587 909 678 450 (228) Company Policy Mr. Muhammad Toufique - Company Employee
Toyota Corolla XLI 1,771 1,178 593 415 (178) Company Policy Mr. Muhammad Tariq - Company Employee
Honda Civic Turbo 2,735 1,609 1,126 450 (676) Company Policy Mrs. Rahat Naseem - Company Employee
Honda City M/T 1,582 931 651 450 (201) Company Policy Mr. Noman Rasheed - Company Employee
Toyota Corolla ALTIS 3,554 1,307 2,247 2,250 3 Negotiation Mr. Sheraz, Saeed Autos, 22C-Model Town, Jail
Road, Faisalabad, Pakistan.
Suzuki Cultus VXL 1,566 611 955 1,500 545 Insurance Claim EFU General Insurance Limited
Toyota Yaris CVT 2,869 - 2,869 2,810 (59) Negotiation Mr. Sheraz, Saeed Autos, 22C-Model Town, Jail
Road, Faisalabad, Pakistan.
Toyota Corolla ALTIS 2,657 1,358 1,299 1,298 (1) Transferred Interloop Holdings (Pvt) Limited - Associated
Company
Sub Total 106,743 54,542 52,201 49,027 (3,174)

Other assets having book

value below Rs. 500,000 each 116,644 90,668 25,976 39,340 13,364

Total - 2021 236,247 154,105 82,142 90,848 8,706

Total - 2020 183,061 116,891 66,170 48,636 (17,534)

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

7.1.2 Depreciation expense for the year has

been allocated as under;
Cost of sales 33 2,054,495 1,800,919
Administrative expenses 35 225,118 179,591
2,279,613 1,980,510

7.1.3 Borrowing cost capitalized during the year was Nil (2020: Rs. 107.501 million calculated @ 2.75% to
14.07%).

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

7.2 Capital work-in-progress

Civil works 1,216,376 209,268
Plant and machinery 547,137 308,734
Capital stores 7.2.1 129,762 131,616
Advances to suppliers 650,414 84,037
2,543,689 733,655

116
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

7.2.1 Capital stores include factory tools and equipment, office equipment, electric installations and furniture
and fixtures that are held in store for future use and capitalization.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

7.3 Right of use assets

Buildings
Transition effect on initial application of IFRS-16 – 35,511
Opening balance 112,788 –
Transfer upon amalgamation 65,017 –
Additions during the year 46,500 94,112
Termination during the year (911) –
223,394 129,623
For the year depreciation 7.3.1 (41,215) (16,835)
Net book value 182,179 112,788

7.3.1 Depreciation expense relating to right of use assets - buildings of Rs. 40.844 million (2020: Rs. 12.471
million) has been charged in ‘Cost of sales’ and Rs. 0.371 million (2020: Rs. 4.364 million) in ‘Administrative
expenses’.

7.4 Details of immovable property in the name of the Company:
Usage Location Area

Chak # 76 RB. 1 - KM, Jaranwala Road,

Khurrianwala, Faisalabad. 19 Acres 7 Kanals 12 Marlas
Plant 1 Chak # 194 RB. 1 - KM, Jaranwala Road,
Khurrianwala, Faisalabad. 3 Acres 13 Marlas
Chak # 108 RB. 1 - KM, Jaranwala Road,
Khurrianwala, Faisalabad. 9 Marlas

Interloop Industrial Chak # 103 RB, 7 - KM, Jaranwala Road, 138 Acres 11 Kanals 4 Marlas 5
Park - (Plant 2, Plant Khurrianwala, Faisalabad. Sarsai
4 & Spinning unit)
Chak # 106 RB, 6 - KM, By Pass Road,
Khurrianwala, Faisalabad. 14 Acres 3 Kanals 12 Marlas

Plant 3 8 - KM, Manga Raiwind Road, Distt. Kasur, Lahore. 41 Acres 3 Kanals 8 Marlas

Denim Division 8 - KM, Manga Raiwind Road, Distt. Kasur, Lahore. 26 Acres 7 Kanals 14 Marlas

Plant 5 & Apparel unit Chak # 106 RB, 6 - KM, By Pass Road, 175 Acres 3 Kanals 14 Marlas 8
Khurrianwala, Faisalabad. Sarsai

Land Chak # 200 RB, Near Toll Plaza Gatwala,
Lathianwala, Faisalabad. 2 Acres 13 Marlas 5 Sarsai

117
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

8. INTANGIBLE ASSETS
Computer software 8.1 209,623 67,168
Development cost - in progress – 104,291
209,623 171,459
8.1 Computer Software
Cost:
Opening balance 146,932 130,994
Addition during the year 185,730 15,938
Transfer upon amalgamation 4,883 –
Write-off during the year (36,486) –
301,059 146,932
Amortization:
Opening balance 79,764 64,833
Transfer upon amalgamation 1,480 –
For the year amortization 8.2 18,329 14,931
Adjustment (8,137) –
91,436 79,764
Net book value 209,623 67,168

Amortization rate 20% 20%

8.2 Amortization expense relating to intangible assets of Rs. 2.118 million (2020: Rs. 5.577 million) has been
charged in ‘Cost of sales’ and Rs. 16.211 million (2020: Rs. 9.354 million) in ‘Administrative expenses’.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

9. LONG TERM INVESTMENTS

Unquoted equity - at cost
Subsidiary company
IL Apparel (Pvt) Limited 2 – 1,045,000
Associated company
IL Bangla Limited 9.1 – 308,735
Others - at amortized cost
Term finance certificates (TFCs) 9.2 – 500,000
– 1,853,735
9.1 IL Bangla Limited
Cost of investment 9.1.1 308,735 308,735
Reversal of impairment loss 70,814 –
379,549 308,735
Disposed off during the year (379,549) –
– 308,735

9.1.1 This represent Company’s investment in 31.825 million ordinary share of BD Takas 10/- each, equity held
31.61%. However, the Company in its Extra Ordinary General Meeting held on December 10, 2020, after
giving due consideration, had approved the sale of its investment “IL Bangla Limited”. The decision was
taken keeping in mind the best interest of the shareholders.

118
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
(Rupees ‘000) (Rupees ‘000)

9.2 Term finance certificates - TFCs

Habib Bank Limited 500,000 500,000
Transferred to short term investments (500,000) –
– 500,000

9.2.1 This represent investment as fully paid-up, rated, privately placed, perpetual, unsecured, subordinated,
noncumulative, contingent convertible, additional Tire 1, capital eligible 5,000 term finance certificates
(TFCs) of Habib Bank Limited having face value of Rs.100,000/- each aggregating to Rs. 500 million
(2020: Rs. 500 million). TFCs carry markup at the rate of 3 months KIBOR+ 1.60% per annum payable
quarterly in arrears.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

10. LONG TERM LOANS

Considered good - Secured
Loans to employees 10.1 131,788 96,233
Loan to director 10.2 12,885 17,590
144,673 113,823

10.1 Loans to employees
Opening balance 142,721 96,795
Add: transfer upon amalgamation 7,155 –
Add: disbursement made during the year 232,683 120,021
382,559 216,816
Less: amount received during the year (139,830) (74,095)
242,729 142,721
Less: receivable within twelve months 15 (110,941) (46,488)
131,788 96,233

10.1.1 These loans are given to employees as per approved policy of the Company and are secured against
employees retirement benefits.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

10.2 Loan to director

Opening balance 22,117 25,750
Less: amount received during the year (4,616) (3,633)
17,501 22,117
Less: receivable within twelve months 15 (4,616) (4,527)
12,885 17,590

10.2.1 This represents loan paid to executive director of the Company as per house building finance policy of
the Company. Under the first policy, home ownership grant of Rs. 2.5 million and mortgage assistance
of Rs. 23.25 million. Tenure of the home ownership grant and mortgage assistance is for a period of six
years. Mortgage assistance is repayable in 60 equal monthly installments along with markup thereon.

119
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

11. LONG TERM DEPOSITS

Considered good:
Security deposits - unsecured 60,478 38,337

12. STORES AND SPARES

Stores 336,118 311,225
Spares 862,998 751,299
1,199,116 1,062,524

13. STOCK IN TRADE
Raw materials 6,667,859 5,131,795
Work in process 1,368,804 589,622
Finished goods 3,239,645 3,089,208
11,276,308 8,810,625

14. TRADE DEBTS
Considered good:
Foreign
- Secured 14.1 6,234,955 4,375,676
- Unsecured 7,869,261 2,232,046
14,104,216 6,607,722
Local
- Unsecured 14.1 948,724 599,669
15,052,940 7,207,391

14.1 It includes receivables from following related parties;
Foreign
Texlan Center (Pvt) Limited 307,824 136,419
Eurosox Plus BV 75,155 120,799

Local
PrintKraft (Pvt) Limited – 485
Socks & Socks (Pvt) Limited 144,208 –
527,187 257,703

14.2 The maximum aggregate amount of receivable due from related parties at the end of any month during
the year was Rs. 623.720 million (2020: Rs. 757.49 million).

14.3 At June 30, 2021, trade debts due from related parties aggregating to Rs. 200.96 million (2020: Rs.
138.30 million) were past due but not impaired. The ageing analysis of these trade debts is as follows:

2021 2020
(Rupees ‘000) (Rupees ‘000)

Not yet due 326,230 119,407

Upto 1 month 83,776 75,746
More than 1 month 117,181 62,550
527,187 257,703

120
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

15. LOANS AND ADVANCES

Considered good:
Loans
Current portion of loans to employees 10.1 110,941 46,488
Current portion of loan to director 10.2 4,616 4,527
Metis International (Pvt) Limited 15.1 6,398 6,777

Advances
Advances to suppliers 15.2 911,211 424,874
Advances to employees 15.3 1,670 3,264
1,034,836 485,930

15.1 This loan was given in foreign currency amounting to US $ 275,000 at the rate of 15% per annum ( amount
in US $ to be converted in PKR in accordance with conversion rate given at www.oanda.com). Upon lapse
of payment date, additional mark up at the rate of 2.5% will be charged on monthly mark up installment
due for each day of delay up to a maximum of 20%. The loan is secured through an irrevocable lien/
charge on total assets of the Metis International (Pvt) Limited and is repayable on demand.

15.2 It includes advance payment of Nil (2020: Rs. 0.189 million) to Texlan Center (Pvt) Limited - a related
party. The maximum aggregate amount of receivable due from related party at the end of any month
during the year was Nil (2020: Rs. 0.189 million).

15.3 Advances to employees are given to meet business expenses and are settled as and when expenses are
incurred.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

16. PREPAYMENT AND OTHER RECEIVABLES

Prepayment
Insurance premium 19,451 12,039
Prepaid expenses 10,071 –

Other receivables - considered good

Subsidy on gas 16.1 288,511 92,581
Receivables from related parties 16.2 675 88,562
318,708 193,182

16.1 This represents the subsidy receivable against sui gas consumption from Government of Pakistan (GoP)
amounting to Rs. 235.92 million (2020: Rs. 90.4 million) and Sui Northern Gas Pipelines Limited (SNGPL)
amounting to Rs. 52.59 million (2020: Rs. 2.18 million). The GoP has fixed weighted average gas tariff of
US $6.5 per million British Thermal Unit (MMBtu) to zero-rated industry and announced subsidy to the
units bearing higher rate than fixed one, whereas SNGPL allowed 50% system gas adjustment capped
at initial contractual load.

121
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

16.2 Receivables from related parties:

IL Bangla Limited - Unquoted associate 16.5 – 88,562
Interloop Limited ESOS Management Trust 675 –
675 88,562

16.3 The maximum aggregate amount of other receivable due from related parties at the end of any month
during the year was Rs. 94.54 million (2020: Rs. 88.56 million ).

16.4 At June 30, 2021, other receivables aggregating to Rs. 0.68 million (2020: Rs. 88.56 million) were past
due but not impaired. The ageing analysis of these receivables is as follows:

2021 2020
(Rupees ‘000) (Rupees ‘000)

Up to 3 months – 5,796
More than 3 months 675 –
More than 1 year – 82,766
675 88,562

16.5 This represented balance receivable against payments made on behalf of IL Bangla Limited. Interest
charged at effective rate of 7.53% per annum.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

17. ACCURED INCOME

Interest on loan to Metis International (Pvt) Limited 1,510 1,633
Profit on term finance certificates (TFCs) 621 606
2,131 2,239

18. TAX REFUNDS DUE FROM GOVERNMENT
DDT 2,398,409 447,587
Sales tax refundable 966,547 954,308
Income tax refundable 963,599 1,006,119
4,328,555 2,408,014

19. SHORT TERM INVESTMENTS

At amortized cost
Term Deposit Receipts (TDRs)
Allied Bank Limited 19.1 – 125,044

Term Finance Certificates (TFCs)
Habib Bank Limited 9.2 500,000 –
500,000 125,044

19.1 Short term investment in TDRs earned interest at effective rate of 6.40% per annum (2020: 6.40% to
12.60% per annum). Accrued profit was Nil (2020: Rs. 0.044 million) included in the carrying value.

122
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
(Rupees ‘000) (Rupees ‘000)

20. CASH AND BANK BALANCES

Cash in hand 18,287 14,169
Cash at banks
In current accounts 338,095 76,510
In foreign currency accounts 18,060 60,108
356,155 136,618
374,442 150,787

21. AUTHORIZED SHARE CAPITAL

2020 2021 2020 2021 2020
(Number of shares in ‘000) (Rupees ‘000) (Rupees ‘000)

1,000,000 965,000 Ordinary shares of Rs. 10 each 10,000,000 9,650,000

– 35,000 Non-voting ordinary shares
of Rs. 10 each – 350,000
1,000,000 1,000,000 10,000,000 10,000,000

21.1 Pursuant to conversion of non voting ordinary shares into voting ordinary shares (as detailed in Note
22.1), clause V of the memorandum of association of the Company was accordingly amended in light of
proposed conversion/change in class of share capital which was approved by SECP on March 03, 2021.


22. ISSUED, SUBSCRIBED AND PAID UP CAPITAL
2020 2021 2020 2021 2020
(Number of shares in ‘000) Note (Rupees ‘000) (Rupees ‘000)

132,166 130,900 Ordinary shares of Rs. 10 each

fully paid in cash 1,321,662 1,309,000
740,031 738,500 Ordinary shares of Rs. 10 each
issued as fully paid bonus
shares 7,400,313 7,385,000
– 1,266 Non-voting ordinary shares of
Rs. 10 each fully paid in
cash 22.1 – 12,662
– 1,531 Non-voting ordinary shares
of Rs. 10 each issued as
fully paid bonus shares – 15,313
872,197 872,197 8,721,975 8,721,975

22.1 Employees Share Option Scheme (ESOS)
Interloop Limited (“the Company”) had introduced its Employee Stock Option Scheme, 2016 (“the
Scheme”), whereby certain amendments have been approved by the shareholders of the Company in its
Annual General Meeting held on October 15, 2020 in the Scheme with the context of listed Companies
regulations owing to its listing on Pakistan Stock Exchange (PSX) during year 2019. The Scheme had
originally been approved by the members in the general meeting held on December 31, 2015 and by
SECP through its letter no. SMD/CIW/ESOS/01/2016 dated September 01, 2016.

Apart from the requisite amendments made under the approval of the SECP, there had been no further
consequential changes made to the Scheme. The legislative changes made in the constitutional law as
indexed below may be taken as incorporated;

123
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

i. Companies Ordinance, 1984 has been repealed with Companies Act, 2017;
ii. Public Companies (Employees Stock Option Scheme) Rules, 2001 have been repealed with
Companies (Further Issue of Shares) Regulations, 2020.

Owing to the recent amendments in the Scheme approved by the shareholders of the Company &
SECP respectively as stated supra, the B class of Shares (Non-Voting Ordinary Shares) had now been
eliminated from the applicable Scheme by approving and proposing requisite alteration of/amendment
to the Memorandum & Articles of Association (MoA & AoA) of the Company. Since the first approval of
the Scheme, the Company had made three allotments under the Scheme whereby it had issued total
2,797,450 (two million, seven hundred ninety seven thousand, four hundred fifty) fully paid & non-listed,
Non-Voting Ordinary Shares which had been granted, vested, exercised and/or issued before the listing
of the Company to the Eligible Employees in terms of Approved Scheme.

Further, letter dated March 10, 2021 of the Company to PSX confirming conversion of Interloop
Employee Non-Voting, Non-Listed Ordinary Shares into Ordinary Shares amidst requisite approval of
SECP, followed by a CDC letter dated March 18, 2021 confirming that total 2,797,450 (two million
seven hundred ninety seven thousand four hundred fifty) Ordinary Shares of the Company, ranking
pari passu to existing Ordinary Listed Shares, had been credited into respective accounts as per the
conversion ratio 1:1 in the Central Depository System at the end of day of March 17, 2021 along with an
intimation confirmation regarding revocation of CDS eligibility security of Non-Voting Ordinary Shares
of the Company with effect from start of day on Thursday, March 18, 2021. Accordingly, the Scheme is
now fully operative and applicable under the prescribed amendments.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

23. RESERVES
Capital reserve
Share premium 23.1 3,791,602 3,791,602

23.1 This represents premium received over and above face value of the shares issued to institutional investors,
high net worth individuals and general public through initial public offering (IPO) and employees of the
Company through employees stock option scheme (ESOS). This reserve can be utilized by the Company
only for the purposes specified in section 81 of the Companies Act, 2017.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

24. LONG TERM FINANCING

From financial institutions - secured
Diminishing musharika 24.1 3,319,775 3,504,615
Syndicated finance facility 24.2 271,429 271,429
Syndicated finance facility (BMR) 24.3 53,449 53,449
Islamic long term finance facility - ILTFF 24.4 2,565,731 2,431,785
Refinance for salaries 24.5 1,610,975 624,576
Long term financing facility - LTFF 24.6 712,791 335,179
Demand finance loan 24.7 107,326 1,480
Temporary economic refinance facility - TERF 24.8 1,542,462 –
Islamic temporary economic refinance facility - ITERF 24.9 47,690 –
Islamic finance renewable energy - IFRE 24.10 230,444 –
Diminishing musharika vehicles 24.11 190,508 –
10,652,580 7,222,513
Less: Current portion of long term financing (2,438,602) (361,383)
8,213,978 6,861,130

124
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

24.1 These loans have been obtained under diminishing musharika arrangements from various banks on
different dates. The repayment of the loans is to be made in quarterly installments within a maximum
period of 06 years including maximum grace period of one year from the date when financing was
availed. These are secured against 1st joint pari passu charge - JPP of Rs. 10,269 million (2020: Rs. 6,468
million), ranking charge of Rs. 50 million (2020: Rs. 5,052 million) over fixed assets and specific charge of
Rs. 150 million (2020: Rs. 992 million) on plant and machinery of the Company. These loans carry mark-
up ranging from 03 months KIBOR plus 0.10% to 0.25% per annum (2020: 03 months KIBOR plus 0.10%
to 0.50% per annum). During last financial year, the Company has availed the loan deferment for period
of one year.

24.2 The Company was entered into a syndicated long term finance facility arrangement of Rs. 1,900 million
with a consortium of local banks, lead by ABL, for acquisition of certain assets from Kohinoor Mills
Limited, disbursed on April 09, 2011. The repayment of this loan was to be made in quarterly installments
in 10 years including 03 years of grace period and the loan is secured against the 1st specific charge of
Rs. 433.33 million (2020: Rs. 2,933.34 million) over the acquired assets of KML Hosiery Division (ILP- HD-
III). The mark up was charged at the fixed rate of 5% per annum (2020: 5% per annum).

24.3 The Company has entered into syndicated long term finance facility arrangement for Rs. 300 million
with a consortium of local banks, lead by ABL, for Balancing, Modernization and Replacement (BMR) of
assets purchased from Kohinoor Mills Limited, disbursed on October 29, 2011. The repayment of loan
is to be made in quarterly installments in 10 years including 03 years of grace period and the securities
are same as mentioned in 24.2 above. The markup is charged at the rate of 03 months KIBOR plus 1.3%
per annum (2020: 03 months KIBOR plus 1.3% per annum). During last financial year the Company has
availed the loan deferment for period of one year.

24.4 The Company has obtained Islamic Long Term Finance Facility - ILTFF for purchase of plant and
machinery, in different tranches. Repayment of loan is to be made in quarterly installments in 10 years
including a grace period of 02 years when financing was availed and is secured against 1st JPP charge of
Rs. 5,734 million (2020 : Rs. 3,734 million) and ranking charge of Rs. 1200 million (2020: Rs. 2,000 million)
over land, building and plant and machinery of the Company. These charges are same on both ILTFF and
diminishing musharika facilities from HBL and is included in aggregate charge mentioned in note 24.1
above. Markup is charged at SBP ILTFF rate plus 0.75% per annum (2020: SBP ILTFF rate plus 0.75% per
annum).

24.5 Due to the effects of Covid-19 pandemic, State Bank of Pakistan took various steps to support the
economy. SBP introduced a refinance scheme for payment of salaries and wages at subsidized rate of
borrowing. The Company has obtained Rs. 2,188.36 million (2020 : Rs. 666.67 million) which includes
transfer of Rs. 188.36 million from IL Apparel (Pvt) Limited of the said borrowing from Bank Alfalah
Limited, first tranche disbursed on May 21, 2020. It is secured against a ranking charge of Rs. 2,667
million (2020: Rs. 1,334 million) over the fixed assets of the Company. It is repayable in 8 quarterly
installments in 2.5 years including a grace period of 06 months starting from July 2020. Markup is
charged at subsidized rate ranging from SBP rate i.e. zero percent plus 0.9 % to 1% per annum (2020 :
SBP rate i.e. zero percent plus 0.90 % per annum).

The Company has availed this facility at concessional rate of markup with the undertaking not to lay off
its workers/employees at least during three months from the date of first disbursement. The Company
has recognised its liability under SBP refinance scheme at its fair value and Rs. 113.010 million (2020 :
Rs. 42.09 million) is recorded as deferred income - government grant vide note 26.2.

24.6 The Company has obtained Long Term Finance Facility - LTFF for the establishment of Hosiery Division -
V, Fabric Dye House unit and expansion of Active Wear, Energy Unit, and Spinning Unit on different dates
from various banks. Repayment of loans is to be made in quarterly installments in 10 years including 02
years grace period and is secured against exclusive charge of Rs. 4,000 million (2020: Rs. 4,000 million)
over land, building, plant and machinery of Hosiery Division-V, ranking charge of Nil (2020: Rs. 2,400
million) and exclusive charge of Rs. 2,400 million (2020: Nil) over financed assets of Active Wear, Fabric
Dye House, Energy Unit - Hosiery Division-III and Spinning Unit of the Company. Markup is charged at
SBP LTFF rate plus 0.75 % per annum (2020: SBP LTFF rate plus 0.75 % per annum).

125
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

24.7 The Company has obtained demand finance loan for the establishment of Hosiery Division - V & Fabric
Dye House and expansion of Active Wear unit, Energy unit and Spinning Unit, on different dates from
various banks. Repayment of loans is to be made in quarterly installments in 10 years including 02 years
grace period and is secured against exclusive charge of Rs. 4,000 million (2020: Rs. 4,000 million) on
land, building, plant and machinery of Hosiery Division - V and exclusive charge of Rs. 2,400 million
(2020: Nil) on financed assets of Active Wear, Fabric Dye House, Energy Unit - Hosiery Division - III and
Spinning Unit of the Company and the same are included in charges as mentioned in note 24.6 above.
Markup is to be charged at SBP TERF rate plus 0.75% to 1.25 % per annum (2020: 6 months KIBOR plus
0.25% per annum).

24.8 The Company has obtained SBP Temporary Economic Refinance Facility - TERF for the establishment
of Hosiery Division - V & Fabric Dye House and expansion of Active Wear Unit, Energy Unit & Spinning
Unit from two banks BOP and NBP in different tranches. The repayment is to be made in 32 equal
consecutive quarterly installments in 10 years with grace period of 02 years. The loan is secured against
exclusive charge of Rs. 4,000 million on land, building, plant and machinery of Hosiery Division - V
and exclusive charge of Rs. 2,400 million on financed assets of Active Wear, Fabric Dye House, Energy
Unit - Hosiery Division - III and Spinning Unit of the Company and the same are included in charges as
mentioned in note 24.6 and 24.7 above. Maximum markup is charged at SBP rate plus 1.25%.

24.9 The Company has obtained Islamic Temporary Economic Refinance Facility - ITERF to meet CAPEX
requirements from MCB Islamic Bank Limited, first tranche disbursed on Mar 30, 2021. It is secured
against ranking charge of Rs. 800 million on plant & machinery with 25% margin. Repayment of loans is
to be made in quarterly installments in 10 years including 02 years grace period. Markup is charged at
rate SBP plus 0.95% per annum.

24.10 The Company has obtained SBP Islamic Finance Renewable Energy - IFRE for Solar Energy Project from
HBL, disbursed on Nov 25, 2020. The loan is secured against 1st JPP charge of Rs. 494 million over fixed
assets of the Company. The repayment of this loan is to be made in quarterly installments in 06 years
inclusive of 01 year grace period. Markup is charged at fixed rate of 3.75 %.

24.11 The Company has obtained under dimishing musharika vehicles arrangement from Faysal Bank Limited
(FBL) for the purchase of locally manufactured non-commercial vehicles for use of company employees,
disbursed on November 01, 2020. The repayment of the loan is to be made in monthly installments
within a period of 05 years with zero grace period from the date of FOL. These are secured against
charge over vehicle upto Rs. 266.67 million, Hire Purchase Agreement (HPA) will be marked in favor of
FBL in excise and taxation. Original excise files and duplicate key will be in possession of FBL until all
dues are settled/adjusted. This loan carry mark-up of 03 months KIBOR plus 0.5% per annum.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

25. LEASE LIABILITIES

Impact of initial application of IFRS 16 – 36,179
Opening balance 119,694 –
Transfer upon amalgamation 87,098 –
Addition in lease liability 46,500 89,471
Accretion of interest 18,068 7,649
Payments during the year (50,297) (13,605)
Termination during the year (1,019) –
220,044 119,694
Less: Current portion shown under current liabilities 30 (67,075) (17,536)
152,969 102,158

25.1 These represents lease contracts for Company manufacturing facility, warehouses, and employees
hostel and have estimated lease terms between 3 to 5 years. These are discounted using incremental
borrowing rate of the Company.

126
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

25.2 The future minimum lease payments to which the Company is committed under the agreements will be
due as follows:

Not later Later than one More than Total
than one year and but three years
year later than
three years
(Rupees ‘000)

At June 30, 2021

Future minimum lease payments 87,048 145,271 25,498 257,817
Less: Un-amortized finance charges (19,973) (16,818) (982) (37,773)
Present value of future minimum
lease payments 67,075 128,453 24,516 220,044

At June 30, 2020
Future minimum lease payments 30,814 104,899 21,120 156,833
Less: Un-amortized finance charges (13,278) (23,118) (744) (37,139)
Present value of future minimum
lease payments 17,536 81,781 20,376 119,694

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

26. DEFERRED LIABILITIES

Staff retirement gratuity 26.1 3,810,946 3,126,168
Deferred income - Government grant 26.2 5,055 14,514
3,816,001 3,140,682

26.1 General description

This represents an unfunded gratuity scheme which provides termination benefits for all employees of
the Company who attain the minimum qualifying period. The latest actuarial valuation of the defined
benefit plan was carried out as at June 30, 2021 using the Projected Unit Credit (PUC) Actuarial Cost
Method. Details of the defined benefit plan are as follows:

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

26.1.1 Movement in the present value of

defined benefit obligation
Opening balance 3,126,168 2,482,623
Expenses recognized in the statement
of profit or loss 26.1.2 857,791 783,277
Remeasurement of plan obligation
chargeable to other comprehensive income 26.1.4 71,653 (2,715)
Balance transferred to Interloop Holdings
(Pvt) Limited (6,699) (17,086)
Transfer upon amalgamation 43,500 –
Balance capitalized to denim division – 3,000
Paid during the year (281,467) (122,931)
Closing balance 3,810,946 3,126,168

127
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

26.1.2 Expenses recognized in the statement

of profit or loss
Current service cost 581,638 425,883
Past service cost – 6,326
Interest cost 276,153 351,068
857,791 783,277

26.1.3 Amounts charged in the statement of

profit or loss are as follows:
Cost of sales 33 731,837 670,052
Distribution cost 34 23,531 22,569
Administrative expenses 35 102,423 90,656
857,791 783,277

26.1.4 Total remeasurement chargeable to other
comprehensive income
Remeasurement of plan obligation:
Actuarial (income)/ losses from changes in
financial assumptions 89,583 (222,019)
Experience adjustments (17,930) 219,304
71,653 (2,715)

2021 2020
26.1.5 Principal actuarial assumptions used
Discount rate used for profit and loss charge 9.25% 14.50%
Discount rate for year end obligation 10.25% 9.25%

Salary increase used for year end obligation
Salary increase for FY 2021 N/A 0.00%
Salary increase for FY 2022 10.00% 9.00%
Salary increase for FY 2023 10.00% 9.00%
Salary increase for FY 2024 10.00% 9.00%
Salary increase for FY 2025 10.00% 9.00%
Salary increase for FY 2026 10.00% 9.00%
Salary increase for FY 2027 onward 10.00% 9.00%
Demographic assumption
Mortality rates (for deaths in service) SLIC SLIC
2001-2005 2001-2005
Setback 1 year Setback 1 year
Retirement assumption 60 years 60 years

26.1.6 The expected contribution to defined benefit obligation for the year ending June 30, 2022 will be Rs.
1,097.450 million.

26.1.7 Sensitivity analysis

The calculation of the defined benefit obligation is sensitive to assumptions set out above. The following
table summarizes how the impact on the defined benefit obligation at the end of the reporting period
would have increased / (decreased) as a result of a change in respective assumptions by 100 bps.

128
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
(Rupees ‘000) (Rupees ‘000)

Discount rate + 100 bps (3,409,319) (2,792,109)

Discount rate - 100 bps 4,293,648 3,529,169
Salary change + 100 bps 4,299,249 3,535,318
Salary change - 100 bps (3,396,937) (2,780,665)

The sensitivity analysis of the defined benefit obligation to the significant actuarial assumptions has been
performed using the same calculation techniques as applied for calculation of defined benefit obligation
reported in the statement of financial position.

26.1.8 The average duration of defined benefit obligation for the year ended 2021 is 12 years (2020: 12 years).

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

26.2 Movement in deferred income is as follows;

Opening balance 39,083 –
Government grant recognized 70,919 42,091
Transfer upon amalgamation 10,778 –
For the year amortization (70,582) (3,008)
50,198 39,083
Current portion of deferred income 30 (45,143) (24,568)
Closing balance 5,055 14,515

26.2.1 There are no unfulfilled conditions or other contingencies attaching to these grants.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

27. TRADE AND OTHER PAYABLES

Creditors 27.1 1,909,705 850,123
Accrued liabilities 27.2 2,727,736 1,722,530
Advances from customers 49,229 19,007
Other payables 249,117 224,288
Employees provident fund trust 27.3 3,898 3,013
Withholding tax payable 62,808 55,513
Workers’ profit participation fund 27.4 365,241 113,577
Workers’ welfare fund 183,907 43,180
5,551,641 3,031,231

27.1 It includes payable to following related parties;
Interloop Holdings (Pvt) Limited 30,100 –
Octans Digital (Pvt) Limited 2,299 –
PrintKraft (Pvt) Limited 16,532 –
Socks & Socks (Pvt) Limited 65 –
Momentum Logistics (Pvt) Limited 27,443 –
76,439 –

27.2 It includes an amount of Rs. 326.259 million (2020: Rs. 262.691 million) relating to infrastructure cess
payable and Rs. 26.37 million (2020: Rs. 23.43 million) relating to associate company- Global Veneer
Trading Limited.

129
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

27.2.1 Honourable Sindh High Court in its decision dated September 17, 2008 declared the imposition of
infrastructure cess before December 28, 2006 as void and invalid. However, the Excise and Taxation
Department filed an appeal before the Honourable Supreme Court of Pakistan. The Honourable
Supreme court of Pakistan had disposed off the appeal with a joint statement of the parties that
during the pendency of the appeal, another law i.e. fifth version came into existence which was not
the subject matter of the appeal hence the case was referred back to High Court of Sindh with right to
appeal to Supreme Court. The Company filed constitutional petition bearing No. 1809 of 2011 before
Honourable High Court Sindh. On May 31, 2011, the High Court of Sindh had granted an interim relief
on an application of petitioners on certain terms including discharge and return of bank guarantees /
security furnished on consignment released up to December 27, 2006 and any bank guarantee / security
furnished on consignment released after December 27, 2006 shall be encashed to the extent of 50% of
the guaranteed or secured amount only with balance kept intact till the disposal of petition. In case the
High Court upholds the applicability fifth version of law and its retrospective application, the authorities
are entitled to claim the amounts due under the said law with the right to appeal available to petitioner.
In the light of interim relief the Company has paid 50% of the amount of Infrastructure cess. Imports
of the Company are being released against 50% payment of Infrastructure cess to Excise and Taxation
Department and furnishing of bank guarantee of balance amount. On 4th June 2021, Honorable Sindh
High Court passed an order whereby it upheld the contention of Sindh Government and suspend its
own order for 90 days. The Company along with other entities has decided to file appeal against the said
order in Supreme Court of Pakistan.

The Government of Punjab imposed Punjab Infrastructure Development Levy in terms of the Punjab
Infrastructure Development Cess Act, 2015 (the Act) read with PRA Notification No.PRA/IDC/2015
dated May 16, 2016 and PRA order No.PRA/Orders.08/2015 dated May 23, 2016. The Company
being aggrieved filed writ petition vide WP No.24536 of 2016 before Honorable Lahore High Court
challenging the constitutionality of the Act . The Lahore High Court on July 28, 2016 granted interim
relief for clearance of goods subject to payment of 50% of the disputed amount and upon furnishing of a
bank guarantee for the balance of 50% of the amount. The case is pending litigation before Honorable
Lahore High Court, Lahore, the same has been adjourned without any next date.

The full amount of Infrastructure cess forms component of cost of imported items and provision recorded
in books. Bank guarantees furnished ragarding imposition of infrastructure cess have been disclosed in
note - 31.1 to these financial statements.

27.3 The investments out of provident fund have been made in accordance with the provisions of section 218
of the Companies Act, 2017 and conditions specified thereunder.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

27.4 Workers’ profit participation fund

Opening balance 113,577 285,500
Interest on funds utilized in the Company’s business 38 1,553 2,815
Expense allocation for the year 36 369,111 112,527
Capitalized in denim division – 1,050
484,241 401,892
Paid during the year (119,000) (288,315)
Closing balance 365,241 113,577

28. ACCRUED MARK UP
Mark up on:
Long term financing 57,426 85,523
Short term borrowings 164,248 105,613
221,674 191,136

130
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

29. SHORT TERM BORROWINGS

From banking companies - Secured
Under mark up arrangements
ERF - II 15,857,000 13,870,000
FAPC - own source 2,052,000 –
FE-25 Export 29.1 – 484,861
Running finance/musharaka 1,727,066 –
19,636,066 14,354,861

29.1 These are secured against first Joint Pari Passu (JPP) charge of Rs. 44,395 million (2020: Rs. 37,066
million) and ranking charge of Nil (2020: Rs. 1,334 million) over all present and future current assets,
further secured by 2nd JPP ranking charge of Rs. 6,000 million (2020: Rs. 6,000 million) over all present
and future plant and machinery of the Company in favor of all the lending banks. The total limits available
to the Company for short term borrowings from all the banks are amounting to Rs. 33,296 million (2020:
Rs. 28,796 million).

Mark up is charged as;
ERF - II SBP Rate + 0.25 to 0.30 % per annum (2020: SBP Rate + 0.25 to
1.00 % per annum)

FAPC - own source 3 months Kibor + 0.15 to 0.25% per annum

Running finance/musharaka 1 to 3 months Kibor + 0.10 to 0.25% per annum

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

30. CURRENT PORTION OF NON CURRENT LIABILITIES

Long term financing 24 2,438,602 361,383
Lease liabilities 25 67,075 17,536
Deferred income - Government grant 26.2 45,143 24,568
2,550,820 403,487

31. CONTINGENCIES AND COMMITMENTS
31.1 Contingencies
31.1.1 The Punjab Revenue Authority has created a demand of an amount of Rs. 29.931 million in respect
of an alleged default on withholding of provincial sales tax on account of various transport services
received by the Company during the period from March 01, 2015 to May 31, 2016 along with default
surcharge and penalty under Punjab Sales Tax on Services Act, 2012, rejecting the exemption claim of
the taxpayer company. The Company being aggrieved, filed an appeal before Commissioner (Appeals)
Punjab Revenue Authority (PRA) which is pending adjudication at the terminal date.

The Company has not made any provision against the above demand as the management is confident
that the ultimate outcome of the appeal would be in favor of the Company, inter alia on the basis of the
advice of the tax consultant and relevant law and facts.

131
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

31.1.2 Bank guarantees issued by various banks on

behalf of the company in favour of:

Sui Northern Gas Pipelines limited (SNGPL)
against supply of gas 635,853 560,933

The Director, Excise and Taxation, Karachi against
imposition of infrastructure cess 300,853 240,853

Faisalabad Electric Supply Company (FESCO)
against supply of electricity 134,245 70,414

Punjab Revenue Authority against imposition of
infrastructure cess 11,533 11,533

State Bank of Pakistan 110,112 127,551

Total Parco Pakistan Ltd 3,000 3,000
1,195,596 1,014,284

31.1.3 Post dated cheques issued in favour of custom

authorities for release of imported goods. 5,546,980 4,284,124

31.1.4 Corporate guarantees given to banks on behalf of
IL Apparel (Pvt) Ltd - subsidiary company. – 1,750,000

31.2 Commitments
Under letters of credit for:
Capital expenditure 2,993,664 153,815
Raw materials 2,998,175 354,040
Stores and spares 38,595 16,855
6,030,434 524,710

32. SALES - NET

Export sales 32.1 50,368,323 33,326,780
Local sales 5,515,410 3,765,833
55,883,733 37,092,613
Less:
Sales discount (113,523) (246,720)
Sales tax (807,945) (543,099)
(921,468) (789,819)
54,962,265 36,302,794

32.1 It includes exchange (loss) / gain amounting to Rs. (681.474) million (2020: Rs. 204.841 million).

32.2 Revenue is disaggregated based on geographical locations of our customers. The same is disclosed in
note - 49.

132
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

33. COST OF SALES

Raw material consumed 33.1 25,962,379 17,004,146
Stores and spares consumed 33.2 1,562,094 1,101,147
Knitting, processing and packing charges 1,062,841 124,469
Salaries, wages and benefits 33.3 8,987,551 7,122,873
Staff retirement gratuity 26.1.3 731,837 670,052
Fuel and power 2,585,320 1,987,473
Repairs and maintenance 300,856 192,329
Insurance 61,031 49,197
Depreciation 7.1.2 2,054,495 1,800,919
Depreciation on right of use assets 7.3.1 40,844 12,471
Amortization 8.2 2,118 5,577
Rent, rate and taxes 1,993 526
Other manufacturing costs 124,702 154,313
43,478,061 30,225,492
Work in process
Opening balance 589,622 597,562
Transfer upon amalgamation 202,984 –
Closing balance (1,368,804) (589,622)
(576,198) 7,940
Cost of goods manufactured 42,901,863 30,233,432
Finished goods
Opening balance 3,089,208 1,954,089
Transfer upon amalgamation 52,281 –
Closing balance (3,239,645) (3,089,208)
(98,156) (1,135,119)
42,803,707 29,098,313
DDT (2,053,722) (659,237)
40,749,985 28,439,076

33.1 Raw material consumed

Opening balance 5,131,795 3,730,840
Transfer upon amalgamation 154,006 –
Purchases 27,344,437 18,405,101
32,630,238 22,135,941
Closing balance (6,667,859) (5,131,795)
25,962,379 17,004,146

33.2 Stores and spares consumed

Opening balance 1,062,524 887,659
Transfer upon amalgamation 9,926 –
Purchases 1,688,760 1,276,012
2,761,210 2,163,671
Closing balance (1,199,116) (1,062,524)
1,562,094 1,101,147

33.3 Salaries, wages and benefits include Rs. 8.158 million (2020: Rs. 7.989 million) in respect of the provident
fund contribution.

133
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

34. DISTRIBUTION COST

Staff salaries and benefits 34.1 343,793 223,008
Staff retirement gratuity 26.1.3 23,531 22,569
Sea and air freight 280,445 109,914
Shipping expenses 665,018 522,238
Selling commission 1,074,270 920,996
Export development surcharge 126,094 85,451
Marketing and advertisement 126,481 122,609
Others – 479
2,639,632 2,007,264

34.1 Staff salaries and benefits include Rs. 1.135 million (2020: Rs. 1.173 million) in respect of the provident
fund contribution.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

35. ADMINISTRATIVE EXPENSES

Staff salaries and benefits 35.1 1,619,330 1,221,687
Directors’ remuneration 76,099 58,703
Staff retirement gratuity 26.1.3 102,423 90,656
Postage and communication 83,622 43,596
Electricity, gas and water 24,584 25,532
Rent, rates and taxes 158,665 113,983
Printing and stationery 94,620 67,380
Travelling and conveyance 43,871 88,456
Vehicles running and maintenance 26,231 22,785
Legal and professional charges 115,686 122,213
Repairs and maintenance 20,605 37,379
Auditors’ remuneration 35.2 4,383 3,975
Insurance 21,378 18,780
Entertainment 92,245 61,326
Advertisement 10,656 11,839
Newspapers and periodicals 401 559
Depreciation 7.1.2 225,118 179,591
Depreciation on right of use assets 7.3.1 371 4,364
Amortization 8.2 16,211 9,354
Others 59,681 15,791
2,796,180 2,197,949

35.1 Staff salaries and benefits include Rs. 6.738 million (2020: Rs. 5.903 million) in respect of the provident
fund contribution.

2021 2020
(Rupees ‘000) (Rupees ‘000)

35.2 Auditors’ remuneration

Annual audit fee 3,500 3,225
Other certification 53 –
Half yearly review 630 600
Out of pocket expenses 200 150
4,383 3,975

134
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

36. OTHER OPERATING EXPENSES

Exchange loss - net – 37,011
Loss on disposal of non current assets 19,535 17,534
Inventory write-off 434 7,125
Realized loss on derivative financial instruments 27,251 106,843
Unrealized loss on derivative financial instruments 33,074 –
Charity and donations 36.1 329,812 175,000
Workers’ profit participation fund 27.4 369,111 112,527
Workers’ welfare fund 140,262 43,180
Realized/ remeasurement loss on mutual funds 36.2 – 5,293
919,479 504,513

36.1 Charity and donations
Names of donees’ in which a director or his spouse has an interest:

Name of Donee Interest Name of 2021 2020
in Donee Director / Spouse (Rupees ‘000) (Rupees ‘000)

Mr. Navid Fazil 76,700 169,369

Mr. Musadaq Zulqarnain
Interloop Welfare Trust Trustees Mrs. Shereen Aftab
Mr. Jahanzeb Khan Banth
Mr. Muhammad Maqsood
Lyallpur Literary Council Trustees Mr. Musadaq Zulqarnain 800 –
Mrs. Nazia Navid
77,500 169,369

2021 2020
(Rupees ‘000) (Rupees ‘000)

36.2 Realized / remeasurement loss on mutual funds;

Realized loss on investment in mutual funds -
fair value through profit or loss – 6,496

Dividend income on investment in mutual funds -
fair value through profit or loss – (1,203)
– 5,293

37. OTHER INCOME
Income from financial assets
Interest on loan to Metis International (Pvt) Ltd 1,152 1,356
Exchange gain - net 36,056 –
Profit on term deposit receipts (TDRs) 3,088 36,175
Profit on term finance certificates (TFCs) 45,624 55,606
Interest on receivables from IL Bangla Limited 5,308 5,796
Reversal of impairment loss 70,814 –
Other income- mutual funds 683 –
Income from non-financial assets
Scrap sales 187 68
162,912 99,001

135
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

38. FINANCE COST

Mark up on:
Short term borrowings 537,334 601,984
Long term financing - net 406,617 381,056
Interest on workers’ profit participation fund 27.4 1,553 2,815
Interest on lease liabilities 18,068 7,649
Bank charges and commission 183,466 143,658
1,147,038 1,137,162

39. TAXATION
Current year 39.1 493,524 322,056
Prior year 87,768 (2,628)
581,292 319,428

39.1 Provision for deferred tax is not required as the Company is chargeable to tax under section 154 and
169 of the Income Tax Ordinance, 2001 and no temporary differences are expected to arise in the
foreseeable future. Reconciliation of tax expense and product of accounting profit multiplied by the
applicable tax rate is not required in view of presumptive taxation.

2021 2020
40. EARNINGS PER SHARE - BASIC AND DILUTED
40.1 Earnings per share - Basic
Profit for the year (Rupees in ‘000) 6,291,571 1,796,403
Weighted average number of ordinary shares
outstanding during the year (Numbers in’000) 872,197 872,197
Earnings per share - basic (Rupees) 7.21 2.06


40.2 Earnings per share - Diluted
No figures for diluted earnings per share have been presented as the Company has not issued any
instruments carrying options which would have an impact on earnings per share when exercised.

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

41. CASH AND CASH EQUIVALENTS

Cash and bank balances 20 374,442 150,787
Short term investments - Term Deposit Receipts (TDRs) 19 – 125,044
374,442 275,831

42. RECONCILIATION OF MOVEMENT OF LIABILITIES TO CASH FLOWS ARISING FROM FINANCING ACTIVITIES
Balance Non cash Cash Balance
as on July changes Flows as on June
01, 2020 30, 2021
(Rupees ‘000)

Long term financing 7,222,513 179,929 3,250,138 10,652,580

Lease liabilities 119,694 150,647 (50,297) 220,044
Short term borrowings 14,354,861 887,752 4,393,453 19,636,066
Unclaimed dividend 2,952 2,180,494 (2,179,442) 4,004
21,700,020 3,398,822 5,413,852 30,512,694

136
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021 2020

43. NUMBER OF EMPLOYEES

Average number of employees during the year 22,789 20,004
Number of employees at end of the year 25,378 21,104

44. NET ASSETS ACQUIRED UPON AMALGAMATION

As disclosed in note 2, the detail of net assets of ILA transferred to the Company are given below:

January 31, 2021

(Rupees ‘000)
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 727,950
Intangible assets 3,403
Long term deposits 5,636
Long term loans 5,642
742,631
CURRENT ASSETS
Stock in trade 409,271
Stores and spares 9,926
Trade debts 212,827
Loans and advances 16,802
Deposit, prepayment and other receivables 4,461
Tax refunds due from government 93,773
Cash and bank balances 10,693
757,753
1,500,384
LIABILITIES
NON CURRENT LIABILITIES
Long term financing 78,234
Lease liabilities 57,314
Deferred liabilities 45,852
181,400
CURRENT LIABILITIES
Trade and other payables 49,386
Accrued mark up 4,116
Short term borrowings 887,752
Current portion of non current liabilities 137,234
1,078,488
1,259,888

Net assets of Investment Segment 240,496

137
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

January 31, 2021

(Rupees ‘000)
44.1 Reconciliation of the net assets acquired to
amount transferred to reserves is as follows
Net assets acquired 240,496
Less: Investment in subsidiary (1,045,000)
Net loss transferred to reserves (804,504)

2021 2020
Note (Rupees ‘000) (Rupees ‘000)

45. SHARIAH SCREENING DISCLOSURE

Loans/advances as per Islamic mode
Loans 24 & 29 9,987,775 8,021,400

Shariah compliant bank deposits/bank balances

Bank balances 115,316 24,864

Revenue earned from a shariah compliant business 54,962,265 36,302,794

Loss/Gain or dividend from shariah compliant investments
Net realized gain/(loss) on disposal of mutual funds 683 (4,200)
Dividend Income on mutual funds for the year – 692

Mark up on Islamic mode of financing (448,839) (412,241)
Profits or interest on any conventional loan or advance
Interest on loan to Metis International (Pvt) Ltd 1,152 1,356
Profit on term deposit receipts (TDRs) 3,088 36,175
Profit on term finance certificates (TFCs) 45,624 55,606
Interest on receivables from IL Bangla Limited 5,308 5,796
Interest on workers’ profit participation fund (1,553) (2,815)
Interest on lease liabilities (18,068) (7,649)
Interest on other conventional loans (495,112) (570,797)

Relationship with shariah compliant banks

Name of institutions Relationship with institutions
MCB Islamic Bank Bank Balance, long term financing and short term
borrowing
Allied Bank Limited (Islamic Banking) Bank balance and long term financing
Meezan Bank Limited Bank Balance, long term financing and short term
borrowing
Bank Alfalah Limited (Islamic) Bank balance
Bank of Punjab (Taqwa Islamic Banking) Bank balance and long term financing
Habib Bank Limited (Islamic Banking) Bank balance and long term financing
Faysal Bank Limited Bank Balance, long term financing and short term
borrowing

138
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

46. REMUNERATION TO CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

2021
Chief Directors Executives
Executive
(Rupees ‘000)

Managerial remuneration 30,000 30,600 540,048

Medical allowance – – 13,650
Directorship fee – 13,200 –
Reimbursable expenses – – 61,168
Staff retirement gratuity – – 24,630
Contribution to provident fund – – 7,248
Other allowances 49 2,250 98,269
30,049 46,050 745,013
Number of persons 1 6 146

2020
Chief Directors Executives
Executive
(Rupees ‘000)

Managerial remuneration 22,500 27,795 490,397

Medical allowance – – 11,855
Directorship fee – 6,600 –
Reimbursable expenses – – 48,719
Staff retirement gratuity – – 23,133
Contribution to provident fund – – 7,025
Other allowances 308 1,500 39,006
22,808 35,895 620,135
Number of persons 1 6 130

The chief executive officer, executive director and some executives are provided with company maintained cars.

139
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

47. TRANSACTIONS WITH RELATED PARTIES

Related parties include subsidiary company, associated companies and undertakings, entities under common
directorship, directors, major shareholders, key management personnel, employees benefit trust and post
employment benefit plans. The Company in the normal course of business carries out transactions with various
related parties. Amounts due from and to related parties are shown under the relevant notes to the financial
statements. Remuneration to directors and key management personnel is disclosed in note 46. Detail of
transactions with related parties, other than those which have been specifically disclosed elsewhere in these
financial statements are as follows:
2021 2020
Name Nature of transaction (Rupees ‘000) (Rupees ‘000)

IL Bangla Limited Sale of yarn – 486

Interest on receivables 5,308 5,796
IL Apparel (Pvt) Limited Processing services 1,721 865
Sale of yarn 21,882 5,559
Sale of assets 723 6,300
Purchase of waste 16 –
Investment in share capital – 345,000
Toll manufacturing charges 358,230 25,917
Purchase of packing material 68 –
Interloop Holdings Services received 176,195 84,825
(Pvt) Limited Sale of assets – 7,904
Purchase of assets - net 670 –
Loan repaid during the year – 1,400,000
Mark up expense on loan – 10,109
Texlan Center (Pvt) Limited Sale of yarn 1,223,199 826,606
Sale of packing material and
spare parts 54,124 49,808
Interloop Limited ESOS Dividend 217 45
Management Trust
Momentum Logistics Transportation services received 99,205 2,001
(Pvt) Limited
PrintKraft (Pvt) Limited Sales of asset – 485
Purchase of packing material 80,160 –
Global Veneer Trading Selling commission 364,937 573,728
Limited
Eurosox Plus BV Sale of socks 334,674 660,364
Octans Digital (Pvt) Services received 7,848 –
Limited Sales of assets 81 –
Socks & Socks (Pvt) Rent expenses 4,012 –
Limited Services received 4,325 –
Sales of waste 54,658 –
Sale of goods - net 56,371 –
Sales of assets 36,080 –
Interloop Provident Fund Contribution to the fund 45,582 42,542
Trust
Key management personnel Sale of assets 5,908 –
and other related parties Mark up on house building
finance loan 399 471
Rent expenses 1,262 1,169
Dividend paid 1,897,580 2,064,819

140
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

47.1 Following are the related parties with whom the Company had entered into transactions or have
arrangements / agreements in place.

Common Directorship Address

Basis of / Percentage of and Country
Company Name Relationship shareholding of Incorporation

Interloop Holdings (Pvt) Limited Associate Common Directors Al-Sadiq Plaza, P-157, Railway
Road, Faisalabad, Pakistan.

Interloop Dairies Limited Associate Common Directors Al-Sadiq Plaza, P-157, Railway
Road, Faisalabad, Pakistan.

Texlan Center (Pvt) Limited Associate Common Directors Dagonna Road, Minuwangoda,
Sri Lanka.

Momentum Logistics (Pvt) Limited Associate Subsidiary of Associate Al-Sadiq Plaza, P-157, Railway
Road, Faisalabad, Pakistan.

PrintKraft (Pvt) Limited Associate Subsidiary of Associate Al-Sadiq Plaza, P-157, Railway
Road, Faisalabad, Pakistan.

Shifa Medical Center Associate Common Directors Shifa, International Hospitals,

Islamabad (Pvt) Limited Sector H-8/4 Islamabad,
Pakistan.

IRC Dairy products (Pvt) Limited Associate Subsidiary of Associate Al-Sadiq Plaza, P-157, Railway
Road, Faisalabad, Pakistan.

Global Veneer Trading Limited Associate N/A Bahnhofasteasse22, 6300 Zug,

Switzerland.

Eurosox Plus BV Associate N/A Constructieweg 1, 7451 PS

Holten, Netherlands.

Interloop Welfare Trust Trustee N/A Al-Sadiq Plaza, P-157, Railway

Road, Faisalabad, Pakistan.

Interloop Limited ESOS Trustee N/A Al-Sadiq Plaza, P-157, Railway

Management Trust Road, Faisalabad, Pakistan.

Interloop Provident Fund Trust Trustee N/A Al-Sadiq Plaza, P-157, Railway
Road, Faisalabad, Pakistan.

Octans Digital (Pvt) Limited Associate Common Directors Al-Sadiq Plaza, P-157, Railway
Road, Faisalabad, Pakistan.

Shifa National Hospital Associate Common Directors Shifa, International Hospitals,

Faisalabad (Pvt) Limited Sector H-8/4 Islamabad,
Pakistan.

Lyallpur Literary Council Associate Common Directors Al-Sadiq Plaza, P-157, Railway
Road, Faisalabad, Pakistan.

Socks & Socks (Pvt) Limited Associate Common Directors 7- KM Khurrianwala - Jaranwala
Road, Khurrianwala-
Faisalabad, Pakistan.

141
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

48. UTILIZATION OF PROCEEDS FROM INITIAL PUBLIC OFFERING

The Company has carried out IPO for setting up two new projects.
- A socks knitting unit in Khurrianwala, Faisalabad, “Hosiery Division - V”.
- A denim stitching unit in Lahore, “Denim Division”.

2021 2020
(Rupees ‘000) (Rupees ‘000)

Estimated cost of these two projects is as under;

Hosiery Division - V 5,909,000 4,504,000
Denim Division 8,325,000 8,325,000
14,234,000 12,829,000

These projects were planned to finance through issuance of share capital to general public and financing from
banks. For this purpose, the Company carried out a successful IPO last year and had secured islamic long term
finance facilities from banks. During the year, estimated cost of hosiery division - V has been revised due to
devaluation of PKR and trial run losses. The increase is being financed through internal cash generation. Detail of
the proceeds from IPO and financing required is classified as under;

2021 2020
(Rupees ‘000) (Rupees ‘000)

Proceeds from IPO 5,024,900 5,024,900

Financing from banks 6,229,523 6,229,523
Internally generated funds 2,979,577 1,574,577
14,234,000 12,829,000

The implementation report of the projects as on June 30, 2021 is as under;


Denim Division Hosiery Division–V
Amount POs issued Amount POs issued
utilized / LCs utilized / LCs
established established
(Rupees ‘000)

Land and building 2,444,354 107,063 1,167,999 383,223

Plant and machinery 2,680,059 163,873 2,649,370 1,443,095
Power and utilities 949,249 50,653 993,025 711,563
Computer and IT equipment 213,383 19,395 36,959 35,644
Miscellaneous expenses 144,879 11,140 – –
Trial run losses 449,927 – 2,988 –
6,881,851 352,124 4,850,341 2,573,525

142
 49. OPERATING SEGMENTS
Management has determined the operating segments based on the information that is presented to the Board of Directors of the Company for
allocation of resources and assessment of performance. Operating segments are reported in a manner consistent with internal reporting provided to
the Chief Operating Decision Maker (‘CODM’). Segment performance is generally evaluated based on certain key performance indicators including
business volume and gross profit.

Based on internal management reporting structure and products produced and sold, the Company is organized into the following operating segments :

a) Hosiery
This segment relates to the sale of socks.
b) Spinning
This segment relates to the sale of yarn and its in-house use.
c) Denim
This segment relates to the sale of denim products and garments.
d) Energy
This segment generates electricity for in-house consumption.
e) Apparel
NOTES TO THE
For the year ended June 30, 2021

This segment relates to the sale of fashion apparels.

f) Other operating segments
These represent various segments of the Company which currently do not meet the minimum reporting threshold mentioned in International
financial reporting standards ‘Operating Segments’ (IFRS 8). These mainly include domestic sales, yarn dyeing and active wear.

49.1 Segment information
Hosiery Spinning Denim Energy Apparel Other Segments Elimination of Intersegment Total
Transactions Company
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
(Rupees ‘000) Rupees in ‘000 (Rupees ‘000) (Rupees ‘000) (Rupees ‘000) (Rupees ‘000) (Rupees ‘000) (Rupees ‘000)

Sales

External sales 43,513,005 30,012,909 5,143,772 4,443,897 3,572,053 990,820 - - 1,157,477 - 1,575,958 855,168 - - 54,962,265 36,302,794
FINANCIAL STATEMENTS

Intersegment sales 230,812 166,966 4,877,787 3,119,214 18,648 4,454 2,638,434 2,276,445 3,261 - 1,130,052 916,326 (8,898,994) (6,483,405) - -

43,743,817 30,179,875 10,021,558 7,563,111 3,590,701 995,274 2,638,434 2,276,445 1,160,738 - 2,706,010 1,771,494 (8,898,994) (6,483,405) 54,962,265 36,302,794
Cost of sales (30,609,489) (22,476,541) (8,314,069) (7,220,789) (4,939,462) (1,688,682) (2,344,902) (1,878,886) (997,231) - (2,443,826) (1,657,583) 8,898,994 6,483,405 (40,749,985) (28,439,076)

Gross profit/(loss) 13,134,328 7,703,334 1,707,489 342,322 (1,348,761) (693,408) 293,532 397,559 163,507 - 262,184 113,911 - - 14,212,280 7,863,718

Distribution cost (2,068,818) (1,807,996) (58,161) (55,584) (329,801) (97,748) - (295) (84,374) - (98,478) (45,641) - - (2,639,632) (2,007,264)
Administrative expenses (2,258,899) (1,900,984) (67,187) (70,222) (358,278) (188,596) (12,570) (8,182) (86,341) - (12,905) (29,965) - - (2,796,180) (2,197,949)

(4,327,717) (3,708,980) (125,348) (125,806) (688,079) (286,344) (12,570) (8,477) (170,715) - (111,383) (75,606) - - (5,435,812) (4,205,213)
Profit/(loss) before taxation and
unallocated income and expenses 8,806,611 3,994,354 1,582,141 216,516 (2,036,840) (979,752) 280,962 389,082 (7,208) - 150,801 38,305 - - 8,776,468 3,658,505

Other operating expenses (919,479) (505,542)
Other income 162,912 99,001
Finance cost (1,147,038) (1,137,162)
Taxation (581,292) (319,428)

Profit after taxation 6,291,571 1,795,374

143
Depreciation and amortization 1,217,065 1,215,325 211,933 226,188 588,473 304,268 169,940 180,328 40,172 - 111,574 86,167 - - 2,339,157 2,012,276
 49.2 Reconciliation of reportable segment assets and liabilities

Hosiery Spinning Denim Energy Apparel Other Segments Unallocated Total Company

144
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
(Rupees ‘000) Rupees in ‘000 (Rupees ‘000) (Rupees ‘000) (Rupees ‘000) (Rupees ‘000) (Rupees ‘000) (Rupees ‘000)

Assets 33,274,677 24,700,620 5,700,781 6,017,860 8,370,046 6,796,488 2,124,915 2,041,263 3,788,161 - 2,170,652 1,234,575 5,265,606 4,576,523 60,694,839 45,367,329

Liabilities 17,718,814 8,860,292 395,611 215,471 935,741 4,215,600 197,274 102,380 648,791 - 389,178 149,643 19,894,817 14,544,251 40,180,227 28,087,637

Segment Capital
Expenditures 2,881,847 1,520,235 75,411 119,098 596,979 4,658,091 41,121 152,580 891,593 - 671,823 92,472 - - 5,158,774 6,542,476

49.3 Geographical information

49.3.1 The Company’s revenue from external customers by geographical locations is detailed below:

Australia 1,083 -
Asia 4,502,014 4,321,213
Europe 18,399,574 16,770,360
North America 27,355,776 11,925,857
South America 2,815 72,082
Pakistan 4,701,003 3,213,282

54,962,265 36,302,794
NOTES TO THE
For the year ended June 30, 2021

49.3.2 All non-current assets of the Company as at reporting dates are located and operating in Pakistan.

49.4 The Company earns its revenue from a large mix of customers.

50. PLANT CAPACITY AND ACTUAL PRODUCTION

[ UOM ] 2021 2020
(Figures ‘000)

Hosiery
Installed capacity - knitting [DZN] 60,733 59,480
Actual production - knitting [DZN] 54,163 41,694

Spinning
FINANCIAL STATEMENTS

Installed capacity after conversion into 20/s [LBS] 29,949 29,949

Actual production after conversion into 20/s [LBS] 25,178 23,204

Yarn Dyeing
Installed capacity [KGs] 4,873 4,928
Actual production [KGs] 4,052 3,438

Denim
Installed capacity [Pieces] 6,000 4,322
Actual production [Pieces] 3,377 2,448

Active Wear and Apparel
The plant capacity of these divisions is indeterminable due to multi product plans involving varying processes of manufacturing and run length of order lots.

50.1 Reason for increase

The increase in actual production during the year when compared with capacity is mainly on account of:
- The actual production is planned to meet the internal demand and orders in hand.
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

51. FAIR VALUE OF FINANCIAL INSTRUMENTS

The 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.

Fair value hierarchy
Fair value is defined as the price that would be received to sell an asset or paid to settle a liability in an orderly
transaction between market participants at the measurement date.

Underlying the definition of fair value is the presumption that the Company is a going concern and there is no
intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse
terms.


A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available
from an exchange dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent
actual and regularly occurring market transactions on an arm’s length basis.


IFRS 13 ‘Fair Value Measurement’ requires the Company to classify fair value measurements and fair value
hierarchy that reflects the significance of the inputs used in making the measurements of fair value hierarchy has
the following levels:

Level 1 : Fair value measurements using quoted (unadjusted) in active markets for identical asset or liability.

Level 2 : Fair value measurements using inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 : Fair value measurements using inputs for the asset or liability that are not based on observable market
data (i.e. unobservable inputs).

Transfer between levels of the fair value hierarchy are recognized at the end of the reporting period during which
the changes have occurred.

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including
their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial
liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

145
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2021

Carrying Amount Fair Value

Fair value
Other
through Amortized
financial Total Level 1 Level 2 Level 3 Total
profit or cost
liabilities
loss

(Rupees ‘000)

On balance sheet financial instruments

Financial assets measured at fair value - - - - - - - -
Financial assets not measured at fair value
Long term loans - 144,673 - 144,673 - - - -
Long term deposits - 60,478 - 60,478 - - - -
Trade debts - 15,052,940 - 15,052,940 - - - -
Loans and advances - 121,955 - 121,955 - - - -
Other receivables - 289,186 - 289,186 - - - -
Accrued income - 2,131 - 2,131 - - - -
Short term investments - 500,000 - 500,000 - - - -
Cash and bank balances - 374,442 - 374,442 - - - -
- 16,545,805 - 16,545,805 - - - -

Financial liabilities measured at fair value
Derivative financial instruments 33,074 - - 33,074 - 33,074 - 33,074
Financial liabilities not measured at fair value
Long term financing - - 10,652,580 10,652,580 - - - -
Lease liabilities - - 220,044 220,044 - - - -
Trade and other payables - - 4,890,456 4,890,456 - - - -
Unclaimed dividend - - 4,004 4,004 - - - -
Accrued mark up - - 221,674 221,674 - - - -
Short term borrowings - - 19,636,066 19,636,066 - - - -
33,074 - 35,624,824 35,657,898 - 33,074 - 33,074

2020

Carrying Amount Fair Value

Fair value
Other
through Amortized
financial Total Level 1 Level 2 Level 3 Total
profit or cost
liabilities
loss

(Rupees ‘000)

On balance sheet financial instruments

Financial assets measured at fair value - - - - - - - -
Financial assets not measured at fair value
Long term loans - 113,823 - 113,823 - - - -
Long term investments - 500,000 - 500,000 - - - -
Long term deposits - 38,337 - 38,337 - - - -
Trade debts - 7,207,391 - 7,207,391 - - - -
Loans and advances - 57,792 - 57,792 - - - -
Other receivables - 181,143 - 181,143 - - - -
Accrued income - 2,239 - 2,239 - - - -
Short term investments - 125,044 - 125,044 - - - -
Cash and bank balances - 150,787 - 150,787 - - - -
- 8,376,556 - 8,376,556 - - - -

Financial liabilities measured at fair value - - - - - - - -
Financial liabilities not measured at fair value
Long term financing - - 7,222,513 7,222,513 - - - -
Lease liabilities - - 119,694 119,694 - - - -
Trade and other payables - - 2,799,954 2,799,954 - - - -
Unclaimed dividend - - 2,952 2,952 - - - -
Accrued mark up - - 191,136 191,136 - - - -
Short term borrowings - - 14,354,861 14,354,861 - - - -
- - 24,691,110 24,691,110 - - - -

146
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

52. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company finances its operations through equity, borrowings and management of working capital with a view
to maintain an appropriate mix between various sources of finance to minimize risk. The Company follows an
effective cash management and planning policy and maintains flexibility in funding by keeping committed credit
lines available. Market risks are managed by the Company through the adoption of appropriate policies to cover
currency risks and interest rate risks.

The Company has exposures to the following risks from its use of financial instruments:

- Market risk
- Credit risk
- Liquidity risk

52.1 Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices. Market risk comprises interest rate risk, currency risk and other
price risk such as equity risk. The sensitivity analysis in the following sections relate to the position as at
June 30, 2021 and 2020.

52.1.1 Interest rate risk:
Interest rate risk represents the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market interest rates. Majority of the interest rate exposure arises
from investments in term deposit receipts, long term and short term loans, lease liabilities, short term
borrowings and long term financing.

At the reporting date, the interest rate profile of the Company’s interest bearing financial instruments is
as follows:

2021 2020
Fixed rate instruments
Short term investments (Rupees in ‘000) 500,000 125,044
Loan to Metis International (Pvt) Limited - Secured (Rupees in ‘000) 6,398 6,777
Receivables from IL Bangla Limited (Rupees in ‘000) – 88,562
Long term financing - Secured (Rupees in ‘000) 7,088,848 3,662,969
Lease liabilities (Rupees in ‘000) 220,044 119,694
Short term borrowings - Secured (Rupees in ‘000) – 484,861

Variable rate instruments
Loan to director - Secured (Rupees in ‘000) 15,001 19,617
Effective interest rate in percentage 2.25 2.40
Long term financing from financial institutions -
Secured (Rupees in ‘000) 3,563,732 3,559,544
Effective interest rate in percentage 6.98 10.29
Short term borrowings from financial institutions -
Secured (Rupees in ‘000) 19,636,066 13,870,000
Effective interest rate in percentage 2.30 2.45

Fair value sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through
profit or loss. Therefore, a change in interest rate at the balance sheet date would not affect statement
of profit or loss of the Company.

147
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

Cash flow sensitivity analysis for variable rate instruments

If interest rates on loan, receivables, long term financing and short term borrowings from banks, at
the year end date, fluctuate by 100 bps higher / lower with all other variables, in particularly foreign
exchange rates held constant, profit before taxation for the year 2021 and 2020 would have been
affected as follows:

2021 2020
(Amount ‘000) (Amount ‘000)

Effect on profit and loss of an increase in interest rate for loan to director 207 182
Effect on profit and loss of an increase in interest rate for long term financing (41,668) (32,538)
Effect on profit and loss of an increase in interest rate for short term borrowings (37,387) (103,317)
(78,848) (135,673)

Decrease in interest rates at June 30 would have had the equal but opposite effect of these amounts.
Sensitivity analysis has been prepared on symmetric basis.

52.1.2 Currency risk / Foreign Exchange risk:
Currency risk is the risk that the fair value or future cash flows of a financial instrument, will fluctuate
because of changes in foreign exchange rates. Foreign currency risk arises mainly where receivables and
payables exist due to foreign currency transactions.

Exposure to Currency Risk
The Company’s exposure to currency risk is restricted to the amounts receivable from/payable to the
foreign entities and bank balances which are denominated in currency other than the functional currency
of the Company. The Company’s exposure to currency risk is as follows:

2021 2020
Particulars Currency F.Currency Rupees F.Currency Rupees
(Amount ‘000 )

Foreign currency bank accounts US $ 114.39 18,051 329.39 55,419

EUR € 0.05 9 24.80 4,689
18,060 60,108

Trade debts US $ 89,380.33 14,104,216 39,273.23 6,607,722
Loans and advances US $ 40.52 6,398 40.52 6,777
14,128,674 6,674,607

Less: Payables - Creditors US $ (567.50) (89,835) (267.52) (45,145)
EUR € (122.48) (23,114) (118.09) (22,405)
GBP £ (0.04) (8) (14.15) (2,939)
CNY - - (0.06) (1)
JPY ¥ - - (17.70) (28)
(112,957) (70,517)
FE-25 Export US $ - - (2,873.25) (484,861)
On Balance sheet Exposure 14,015,717 6,119,228
Under letter of credit US $ 22,080 3,495,202 2,019.75 340,833
EUR € 10,497 1,980,826 517.29 98,146
GBP £ 63 13,757 - -
JPY ¥ 237,972 340,872 - -
Off Balance Sheet Exposure 5,830,657 438,978

148
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

The following significant exchange rates have been applied as at reporting date:

2021 2020
Foreign Currency Selling Buying Selling Buying
(Rupees) (Rupees)

US $ 158.30 157.80 168.75 168.25

EUR € 188.71 188.12 189.73 189.11
GBP £ 219.28 218.58 207.68 207.05
CNY 24.76 24.69 24.00 23.92
JPY ¥ 1.43 1.4279 1.57 1.56

Currency rate sensitivity analysis
If the functional currency, at reporting date, had weakened by 10% against the foreign currencies with
all other variables held constant, the profit before taxation would have increased for the year 2021 and
2020 by the following amounts:

2021 2020
(Rupees ‘000) (Rupees ‘000)

Foreign Currency
US $ 1,632,418 571,626
EUR € 182,264 (1,649)
GBP £ 1,280 (274)
JPY ¥ 31,735 (3)
1,847,697 569,700

A 10% strengthening of the functional currency against foreign currencies at June 30 would have had
the equal but opposite effect of these amounts.

Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis. The
analysis assumes that all other variables remained constant.

52.1.3 Other price risk:
Price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices (other than those arising from interest rate risk or currency risk),
whether those changes are caused by factors specific to the individual financial instrument or its issuer,
or factors affecting all similar financial instruments traded in the market. The Company is not exposed to
any significant other price risk.

149
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

52.2 Credit risk:

Credit risk is the risk representing accounting loss that would be recognized at the reporting date if
one party to a financial instrument will fail to discharge an obligation or its failure to perform duties
under the contract as contracted. Concentration of credit risk arises when a number of counterparties
are engaged in similar business activities or have similar economic features that would cause their
ability to meet contractual obligations that is susceptible to changes in economic, political or other
conditions. Concentration of credit risk indicates the relative sensitivity of the Company’s performance
to developments affecting a particular industry. The maximum exposure to credit risk at the reporting
date is as follows :

2021 2020
(Rupees ‘000) (Rupees ‘000)

Long term loans 144,673 113,823

Long term investments – 500,000
Long term deposits 60,478 38,337
Trade debts 15,052,940 7,207,391
Loans and advances 121,955 57,792
Other receivables 289,186 181,143
Accrued income 2,131 2,239
Short term investments 500,000 125,044
Bank balances 356,155 136,618
16,527,518 8,362,387

Loans and advances consist of loans to employees & director and Metis International (Pvt) Ltd. Loans
to employees and director are secured against their retirement benefits and loan to Metis International
along with its accrued interest is also secured through an irrevocable lien/charge on total assets of the
Metis International (Pvt) Limited. Therefore, the Company is not exposed to any significant credit risk on
these loans.

Long term deposits have been mainly placed with suppliers of electricity, gas and telecommunication
services. Considering the financial position and credit quality of the institutions, the Company’s exposure
to credit risk is not significant.

Trade debts amounting to Rs. 6,235 million (2020: Rs. 4,376 million) out of total debts are secured
against letters of credit and insured contract. Furthermore, credit quality of customers is assessed taking
into consideration their financial position and previous dealings and on that basis, individual credit
limits are set. Moreover, the management regularly monitors and reviews customers’ credit exposure.
Accordingly, the Company is not exposed to any significant credit risk.

Other receivables constitute mainly receivables from the related parties and subsidy on gas. Considering
the financial position of related parties and credit quality of the institution, the Company’s exposure to
credit risk is not significant.

The Company has no material expected credit loss or impairment allowance at the year end regarding
trade debts and other receivables.

Short term investments are investments in TFCs. The credit risk on these investments and their accrued
profit is limited because counter party is bank with reasonably high credit ratings.

The credit quality of the Company’s bank balances can be assessed by reference to external credit
ratings or to historical information about counterparty default rate:

150
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

Name of Bank Date Long term Short term Outlook Agency

Allied Bank Limited 23-Jun-21 AAA A1+ Stable PACRA

Askari Bank Limited 25-Jun-21 AA+ A1+ Stable PACRA
Bank Alfalah Limited 26-Jun-21 AA+ A1+ Stable PACRA
Dubai Islamic Bank Pakistan Limited 30-Jun-21 AA A1+ Stable JCR-VIS
Faysal Bank Limited 30-Jun-21 AA A-1+ Stable JCR-VIS
Habib Bank Limited 30-Jun-21 AAA A-1+ Stable JCR-VIS
Habib Metropolitan Bank Limited 25-Jun-21 AA+ A1+ Stable PACRA
MCB Bank Limited 23-Jun-21 AAA A1+ Stable PACRA
MCB Islamic Bank Limited 23-Jun-21 A A1 Stable PACRA
Meezan Bank Limited 30-Jun-21 AAA A-1+ Stable JCR-VIS
National Bank of Pakistan 28-Jun-21 AAA A-1+ Stable JCR-VIS
Standard Chartered Bank
Pakistan Limited 25-Jun-21 AAA A1+ Stable PACRA
The Bank of Punjab 18-Jun-21 AA+ A1+ Stable PACRA
United Bank Limited 30-Jun-21 AAA A-1+ Stable JCR-VIS

Due to the Company’s long standing relationships with these counterparties and after giving due
consideration to their strong financial standing, management does not expect non-performance by
these counter parties on their obligations to the Company. Accordingly, the risk is minimal.

52.3 Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with
financial liabilities.

The Company’s approach to manage liquidity risk is to maintain sufficient level of liquidity by holding
highly liquid assets and the availability of funding through an adequate amount of committed credit
facilities. At June 30, 2021 the Company has Rs. 14,296 million (2020: Rs 12,870 million) unutilized
borrowing limits available from financial institutions and Rs. 374.442 million (2020: Rs. 150.787 million)
cash and bank balances. The management believes that the Company is not exposed to any liquidity
risk.

The following are the contractual maturity analysis of financial liabilities as at June 30, 2021 and 2020:

2021
Carrying Contractual Within 6 More than 6 More than 1
amount cash flows months months and year and
up to 1 year up to 5 year
(Rupees ‘000)

Financial Liabilities :
Long term financing 10,652,580 9,298,656 1,452,804 1,435,217 6,410,635
Lease liabilities 220,044 257,817 42,667 44,381 170,769
Trade and other payables 4,890,456 4,890,456 4,890,456 – –
Unclaimed dividend 4,004 4,004 4,004 – –
Accrued mark up 221,674 221,674 221,674 – –
Short term borrowings 19,636,066 19,636,066 19,636,066 – –
35,624,824 34,308,673 26,247,671 1,479,598 6,581,404

151
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

2020
Carrying Contractual Within 6 More than 6 More than 1
amount cash flows months months and year and
up to 1 year up to 5 year
(Rupees ‘000)

Fnancial Liabilities :
Long term financing 7,222,513 6,621,454 245,875 515,413 5,860,166
Lease liabilities 119,694 156,833 15,613 15,201 126,019
Trade and other payables 2,799,954 2,799,954 2,799,954 – –
Unclaimed dividend 2,952 2,952 2,952 – –
Accrued mark up 191,136 191,136 191,136 – –
Short term borrowings 14,354,861 14,448,227 14,448,227 – –
24,691,110 24,220,556 17,703,757 530,614 5,986,185

The contractual cash flows relating to the above financial liabilities have been determined on the basis of
interest rates / mark-up rates effective as at 30 June. The rates of interest / mark up have been disclosed
in note 24, 25 and 29 to these financial statements.


52.4 Capital risk management

The primary objective of the Company’s capital management is to safeguard the Company’s ability to
continue as a going concern, maintain healthy capital ratios, strong credit rating and optimal capital
structures in order to ensure ample availability of finance for its existing and potential investment
projects, so that it can continue to provide returns for shareholders thereby maximizing their wealth,
benefits for other stakeholders and reduce the cost of capital.

The Company manages the capital structure in the context of economic conditions and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company
may, for example, adjust the amount of dividends paid to shareholders, issue new shares, or sell assets
to reduce debt.

The Company monitors capital on the basis of debt to equity ratio, calculated on the basis of total debt
to equity.

2021 2020
(Rupees ‘000) (Rupees ‘000)

Long term financing 10,652,580 7,222,513

Short term borrowings 19,636,066 14,354,861
Debts 30,288,646 21,577,374
Equity 20,514,612 17,279,692
Total capital (equity + debt) 50,803,258 38,857,066

Gearing ratio (percentage) 59.62 55.53

152
NOTES TO THE
FINANCIAL STATEMENTS
For the year ended June 30, 2021

53. EVENT AFTER THE BALANCE SHEET DATE

The Board of Directors in their meeting held on September 15, 2021 have proposed a final cash dividend of Re. 1
per shares (2020: Re. 1 per share), amounting to Rs. 872.20 million (2020: Rs. 872.20 million) and bonus shares at
3% (i.e. 3 shares for every 100 shares held on the entitlement date) for the year ended 30 June 2021, for approval
of the members at the Annual General Meeting of the Company.

54. DATE OF AUTHORIZATION FOR ISSUE
The financial statements were authorized for issue on September 15, 2021 by the Board of Directors of the
Company.

55. GENERAL
55.1 Corresponding figures
Corresponding figures have been rearranged and reclassified wherever necessary for the purpose
of better presentation. However, during the year no material reclassification has been made in the
corresponding figures.

55.2 Following nomenclature has been changed during the year

Previous year nomenclature Current year nomenclature
Duty drawback DDT
Loss on disposal of property, plant and equipment Loss on disposal of non current assets

55.3 Rounding
Figures have been rounded off to the nearest thousand.

Chief Executive Officer Director Chief Financial Officer

153
 NOTICE OF 29TH
ANNUAL GENERAL MEETING
Notice is hereby given that the 29th Annual General Meeting (“AGM”) of Interloop Limited (the “company”) will be
held on Friday, October 15, 2021 at 11:30 a.m. at the Interloop Executive Club, Interloop Industrial Park located at
7-KM Khurrianwala- Jaranwala Road, Khurrianwala, Faisalabad, to transact the following businesses:

ORDINARY BUSINESS:

1. To confirm the minutes of the last Extra Ordinary General Meeting (EGM) of the company held on December
10, 2020.

2. To receive, consider and adopt the Annual Audited Financial Statements of the company for the year ended
June 30, 2021, together with the Auditors’ and Directors’ Reports thereon and Chairman’s Review Report.

3. To approve Final Cash Dividend @ 10 % [i.e. Rs. 1 /Share], for the year ended June 30, 2021 as recommended
by the Board of Directors.

4. To appoint Auditors and fix their remuneration for the financial year 2021-22. The members are hereby
given notice that Audit Committee and the Board of Directors have recommended the name of retiring
auditors, M/s Kreston Hyder Bhimji & Company, Chartered Accountants for re-appointment as Auditors of
the company.

SPECIAL BUSINESS:

5. To consider and approve as recommended by the Board of Directors of the company, the issue of bonus
shares in the proportion of 3 % i.e., 3 bonus shares for every 100 shares held, for the year ended June 30,
2021 and in order to give effect to the aforesaid, if thought fit, pass with or without modification the following
resolutions as Special Resolution:

RESOLVED THAT a sum of Rs. 261,659,240 be utilized out of the share premium account of the company and
applied towards issue of 26,165,924 ordinary shares of Rs. 10 each to be allotted as fully paid bonus shares
in the proportion of three (3) ordinary shares for every hundred (100) shares i.e. 3%, held by a shareholder of
the company.

FURTHER RESOLVED THAT the above bonus shares shall rank pari passu in all respects with the existing
ordinary shares of the company, as regards future dividend and in all other respects.

FURTHER RESOLVED THAT fractional entitlements of the members shall be consolidated into whole shares
and sold in the stock market and the sale proceeds shall be donated to a charitable institution as permissible
under the law.

FURTHER RESOLVED THAT the Chief Executive Officer and Secretary of the company, be and are hereby
jointly and / or severally authorized to give effect to above resolutions and to do and cause to be done all
acts, deeds and things that may be necessary, incidental or required for issue, allotment and distribution of
the said bonus shares and payment of sale proceeds of the fractional shares.

6. To consider and if thought fit to approve an increase in the Authorized Share Capital of the company and
for this purpose pass the following special resolution, with or without any amendments and to the requisite
approvals the consequent amendments in the Memorandum of Association of the company, subject to
requisite approvals, if any:

RESOLVED THAT the Authorized Share Capital of the company be and is hereby increased from Rs.
10,000,000,000 (Rupees Ten Billion only) divided into 1,000,000,000 (One Billion) ordinary shares of Rs. 10
(Rupees Ten) each to Rs. 15,000,000,000 (Rupees Fifteen Billion only) divided into 1,500,000,000 (One Billion
Five Hundred Million) ordinary shares of Rs. 10 (Rupees Ten) each ranking pari passu in every respect with the
existing ordinary shares of the company.

FURTHER RESOLVED THAT in consequence of the said increase in the Authorized Share Capital of the
company, the existing Clause V of the Memorandum of Association (MOA) of the company , be and is hereby
replaced accordingly, to read as follows;

156
 Clause V of the Memorandum of Association:

“The Authorized Capital of the company is Rs. 15,000,000,000/- (Rupees Fifteen Billion only) divided into
1,500,000,000 (One Billion Five Hundred Million) Ordinary Shares of Rs.10/- (Rupees Ten) each, with attached
thereto respectively such preferential, deferred, qualified or special rights, privileges and conditions as
provided in the Articles of Association of the company, or in accordance with the Companies Act, 2017, and
to vary, modify or abrogate such rights, privileges and conditions, in such manner as may be permitted by
the Companies Act, 2017 and to increase and/or reduce the capital and to divide shares in the capital into
several kinds and classes and to consolidate or subdivide the shares and to issue shares for higher or lower
denominations.”

7. To ratify and approve transactions conducted with the Related Parties for the years ended June 30, 2019 to
June 30, 2021 by passing the following special resolution with or without modification:

RESOLVED THAT the transactions conducted with the Related Parties as disclosed in the note 43/47 of the
Annual Audited Financial Statements for the years ended June 30, 2019 to June 30, 2021 respectively, be and
are hereby ratified, approved and confirmed.

8. To approve potential transactions with Related Parties intended to be carried out in the financial year ending
on June 30, 2022 and to authorize the Board of Directors of the company, to carry out such Related Party
transactions at its discretion from time to time, irrespective of the composition of the Board of Directors.

The resolutions to be passed as special resolutions are as under:

RESOLVED THAT the Board of Directors of the company be and is hereby authorized to approve the
transactions to be conducted with the Related Parties on case to case basis for the financial year ending on
June 30, 2022.

FURTHER RESOLVED THAT the Board of Directors of the company may, at its discretion, approve specific
related party transactions from time to time, irrespective of the composition of the Board, and in compliance
with the company’s policy pertaining to Related Party transactions and notwithstanding any interest of the
Directors of the company in any Related Party transaction which has been noted by the shareholders.

The Statement under Section 134(3) of the Companies Act, 2017, pertaining to the special business referred
to above is being circulated to the members along with the Notice of the Meeting.

OTHER BUSINESS:

9. To transact any other business with the permission of the Chair.

By Order of the Board

Place: Faisalabad (Rana Ali Raza)

Dated: September 23, 2021 Company Secretary

Notes:

1. Closure of Share Transfer Books:

The Share Transfer Books of the company will remain closed from October 08, 2021 to October 15, 2021
(both days included). Transfer requests on prescribed format, received at the office of the Share Registrar
of the company, M/s. CDC Share Registrar Services Limited, CDC House, 99 –B, Block B, S.M.C.H.S., Main
Shahrah-e- Faisal, Karachi-74400 on or before the close of business on October 07, 2021 will be treated ‘in
time’ for the purpose of above entitlement to the transferees, and / or to attend the AGM.

157
 2. Participation in the Annual General Meeting:
All members entitled to attend and vote at this meeting may appoint another person as his / her proxy to
attend and vote for him / her. Proxies in order to be effective must be received at the Registered Office of the
company, not less than 48 hours before the time of holding the meeting. CDC Account Holders will further
have to follow the guidelines as laid down in Circular 1 dated January 26, 2000 issued by the Securities &
Exchange Commission of Pakistan. Proxy form is available at the company’s website i.e. www.interloop-pk.
com (in English and Urdu Language).

3. Consent for Video Conference Facility:

Pursuant to Section 132(2) & section 134(b) of the Companies Act, 2017, if company receives consent
form from Shareholders holding aggregate 10% or more shareholding residing at geographical location
to participate in the meeting through video conference at least 7 days prior to the date of meeting, the
company will arrange video conference facility in that city subject to availability of such facility in that city. To
avail this facility please provide following information and submit to registered office of the company:

I / We, __________________________________ of _________________, being a member of Interloop Limited,

holder of __________________________ ordinary share(s) as per Registered Folio / CDC Account No.
______________________ hereby opt for video conference facility at ______________________.

___________________
Signature of Member

4. Attendance of the Members:

a. For Attending the Meeting

(i) In the case of individuals, the account holder or sub-account holder whose registration details are uploaded
as per the Central Depository Company of Pakistan Limited Regulations, shall authenticate his/her identity by
showing his/ her valid original Computerized National Identity Card (CNIC) or original passport at the time of
attending the Annual General Meeting.

(ii) In case of a corporate entity, the Board of Directors’ resolution/power of attorney, with specimen signature
of the nominee, shall be produced at the time of the Annual General Meeting, unless it has been provided
earlier.

b. For Appointing Proxies

(i) In case of individuals, the account holder or sub-account holder whose registration details are uploaded as
per the Central Depository Company of Pakistan Limited Regulations, shall submit the proxy form as per the
mentioned requirements.

(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 the valid CNICs or the passports of the beneficial owner(s) and the proxy shall be furnished
with the proxy form.

(iv) The proxy shall produce his/her valid original CNIC or original passport at the time of the Annual General
Meeting.

(v) In case of a corporate entity, the Board of Directors’ resolution/power of attorney, with specimen signature
of the nominee, shall be submitted to the company along with the proxy form unless the same has been
provided earlier.

158
5. Mandatory Submission of CNIC Copies:
With reference to the notification of Securities and Exchange Commission of Pakistan (SECP), SRO 779(1)2011
dated August 18, 2011, the Members/ Shareholders who have not yet submitted photo copy of their valid
CNIC to the company are required to send the same at the earliest directly to the company’s Share Registrar
M/s. CDC Share Registrar Services Limited, CDC House, 99 –B, Block B, S.M.C.H.S., Main Shahrah-e- Faisal,
Karachi-74400. In case of non-receipt of the copy of valid CNIC and noncompliance of the above mentioned
SRO of SECP, the company may be constrained to withhold transfer of dividend in the future, if any.

6. Dividend Bank Mandate:

Pursuant to Section 242 of the Companies Act, 2017, members are requested to provide their CNIC’s and
bank account details including name of the bank, address of bank branch and International Bank Account
Number (IBAN) to receive their cash dividend directly into their bank account. Therefore, all members who
have not yet provided their CNIC and Bank Account details are once again reminded to immediately submit a
copy of their CNIC and duly filled ‘Dividend Bank Mandate Form’ to the company’s Share Registrar or to the
company directly. In the absence of valid bank account details and CNIC, dividend amount will be withheld in
compliance with the provisions of Act and Regulations made thereunder by the Commission. The ‘Dividend
Bank Mandate Form’ is available at the company’s website i.e. www.interloop-pk.com

Members who hold shares in CDC accounts are required to provide their bank mandates to their respective
participants.

7. Deduction of Income Tax from Dividend under Section 150 of the Income Tax Ordinance, 2001 (“Income
tax Ordinance”):

The rates of deduction of withholding tax for Filers and Non-Filers as prescribed under Section 150 of the
Income Tax Ordinance 2001, are as under:

For Filers of income tax returns 15.00%

For Non-Filers of income tax returns 30.00%

Withholding tax on Dividend in case of Joint Account Holders

Members who have joint shareholdings held by Filers and Non-Filers shall be dealt with separately and in
such particular situation, each account holder is to be treated as either a Filer or a Non-Filers and tax will be
deducted according to his/her shareholding.

If the share is not ascertainable then each account holder will be assumed to hold equal proportion of shares
and the deduction will be made accordingly. Therefore, in order to avoid deduction of tax at a higher side, the
joint account holders are requested to provide the below details of their shareholding to the Share Registrar
of the company latest by the Annual General Meeting date.

Name of Principal Name of Joint

Folio No/ Total No of Share Share
Shareholder and Shareholder and
CDC Account No Shares Holding Holding
CNIC # CNIC #

Valid Tax Exemption Certificate for Exemption from Withholding Tax

A valid tax exemption certificate is necessary for exemption from the deduction of withholding tax under
Section 150 of the Income Tax Ordinance, 2001. Members who qualify under Clause 47B of Part IV of the
Second Schedule to the Income Tax Ordinance, 2001, and wish to seek an exemption must provide a copy
of their valid tax exemption certificate to the Shares Registrar prior to the date of commencement of Book
closure, otherwise tax will be deducted according to the applicable law.

Unclaimed Dividend

Shareholders, who by any reason, could not claim their dividend, if any, are advised to contact our Share

159
 Registrar M/s. CDC Share Registrar Services Limited, CDC House, 99 –B, Block B, S.M.C.H.S., Main Shahrah-e-
Faisal, Karachi-74400 and collect / enquire about their unclaimed dividend, if any.

8. Deposit of Physical Shares into CDC Accounts:

Securities and Exchange Commission of Pakistan has issued directions vide letter no. CSD/ED/Misc./2016/639-
640 dated March 26, 2021 in the light of Section 72 of the Companies Act, 2017 whereby every existing
listed company shall be required to replace its physical shares with book-entry form in a manner as may
be specified and from the date notified by the Commission, within a period not exceeding four years from
the commencement of the Companies Act, 2017 i.e. May 31, 2017. In order to ensure compliance with the
aforesaid provision and to be benefited of the holding of shares in Book-Entry Form, all shareholders who
still having physical shareholding may open CDC sub-account with any of the brokers or investor’s account
directly with the CDC to place their physical shares into scrip-less form. This will facilitate them in many ways
including safe custody/online trading of shares, easy transfer of ownership, no risk of damage/lost/duplicate
shares, instant credit of entitlements (bonus/right issue) as the trading of physical shares is not permitted as
per existing Regulations of the Pakistan Stock Exchange Limited.

9. Transmission of Audited Financial Statements / Notices Through Email:

Members are hereby informed that pursuant to SECP SRO 787(1)/2014 dated September 8, 2014, and under
section 223(6) of the Companies Act 2017, circulation of Audited Financial Statements and Notice of Annual
General Meeting has been allowed in electronic format through email.

In compliance with the above requirements, members who wish to receive the Annual Report 2021 in
electronic form may file an application as per the form provided on the company’s website in compliance with
the subject SRO. The members who have provided consent to receive Annual Report 2021 can subsequently
request any other media including hard copy which shall be provided free of cost within seven days.

10. Transmission of Annual Financial Statements Through CD/DVD/USB:

SECP through its SRO 470 (I)/2016 dated May 31, 2016 have allowed companies to circulate their Annual
Balance Sheet, Profit and Loss Account, Auditor’s Report and Directors’ Report to its members through CD/
DVD/USB at their registered addresses. In view of the above, the company has sent its Annual Report to the
Shareholders in the form of CD/DVD. Any Member can send request for printed copy of the Annual Report to
the company on standard request form placed under the Investor Information section on its website https://
www.interloop-pk.com.

11. Placement of Financial Statements on Website:

The Financial Statements of the company for the year ended June 30, 2021 along with reports have been
placed on the website of the company: https://www.interloop-pk.com.

12. Intimation of Changes of Address and declaration for non-deduction of Zakat:

Shareholders are requested to promptly notify any changes in their registered addresses and provide their
declarations for non-deduction of zakat, if applicable, to the Share Registrar of the company. Members who
hold shares in CDC / participant accounts are required to update their addresses and submit their declarations
for non-deduction of zakat, if applicable, to the CDC or their respective participants.

160
STATEMENT OF MATERIAL
FACTS CONCERNING
SPECIAL SPECIAL BUSINESS
PURSUANT TO SECTION
134(3) OF THE COMPANIES
ACT, 2017
This statement sets out the material facts concerning the Special Business given in agenda items No.5, 6, 7 & 8
of the Notice of AGM, which will be considered to be passed by the members. The purpose of this Statement
is to set forth the material facts concerning such Special Business.

Agenda Item No. 5 of the Notice –

To consider and approve issue of fully paid bonus shares.

With a view to capitalize the Share Premium balance, the Board of Directors of the company in its meeting held
on September 15, 2021 have proposed to issue bonus shares at the ratio of 3:100; i.e., 3 (Three) fully paid-up
ordinary shares for every 100 (One Hundred) ordinary shares held, thereby capitalize a sum of Rs. 261,659,240.
These Bonus Shares shall rank pari passu with the existing ordinary shares of the company, as regards future
dividend and in all other respects. However, they will not qualify for the final cash dividend declared for the year
ended June 30, 2021.

The Directors are not interested in this business except as shareholders of the company.

Agenda Item No. 6 of the Notice –

Increase in Authorized Capital to be passed as a Special Resolution.

The Board of Directors of the company in their meeting held on September 15, 2021 approved the increase
in the Authorized Share Capital of the company from Rs. 10,000,000,000 (Rupees Ten Billion only) divided
into 1,000,000,000 (One Billion) of the nominal value of Rs.10 (Rupees Ten) each Ordinary Shares to Rs.
15,000,000,000 (Rupees Fifteen Billion only) divided into 1,500,000,000 (One Billion Five Hundred Million) of the
nominal value of Rs.10 (Rupees Ten each) Ordinary Shares. This increase in Authorized Capital is indispensable
to accommodate the current bonus issue of 3% bonus shares as mentioned in Item No. 5 of the Agenda. Further
the current increase in Authorized Capital is proposed to anticipate any increase in issue of shares as the total
Authorized Capital of the company is 87% issued, paid-up and subscribed.

The Directors are not interested in this business except as shareholders of the company.

Agenda Item No. 7 of the Notice –

To ratify and approve transactions conducted with the Related Parties for the years ended June 30, 2019
to June 30, 2021.

Transactions conducted with the Related Parties have to be approved by the Board of Directors duly recommended
by the Audit Committee on quarterly basis pursuant to clause 15 of the Listed Companies (Code of Corporate
Governance) Regulations, 2019. However, since majority of the company’s Directors were interested due to their
common directorships and therefore these transactions are being placed for the
approval by shareholders in the 29th Annual General Meeting of the company.

All the transactions with the Related Parties to be ratified have been disclosed in the note 43/47 of the Annual
Audited Financial Statements for the years ended June 30, 2019 to June 30, 2021 respectively. The company
carries out transactions in the normal course of business. All transactions entered into with related parties require
the approval of the Audit Committee of the company. Upon the recommendation of the Audit Committee, such

161
 transactions were placed before the Board of Directors for approval. The nature of relationship with these related
parties has also been indicated in the referred Financial Statements for the subject fiscal years.

Agenda Item No. 8 of the Notice –

To authorize Board of Directors of the company to approve potential transactions with the Related Parties
intended to be carried out in the financial year ending on June 30, 2022.

The company shall be conducting transactions with its Related Parties during the year ending on June 30, 2022
in the normal course of business. The majority of Directors are interested due to their common directorship in
the associated undertakings. In order to promote transparent business practices, the shareholders are required to
authorize the Board of Directors to approve transactions with the related parties from time-to-time and on case
to case basis for the year ending on June 30, 2022, which transactions shall be deemed to be approved by the
Shareholders, irrespective of the composition of the Board, and in compliance with the company’s policy pertaining
to Related Party transactions and notwithstanding any interest of the Directors of the company in any Related Party
transaction which has been noted by the shareholders.

The Directors are interested in the resolutions to the extent of their common directorships and shareholding in the
associated companies and the privileges attached thereto only.

162
163
164
165
166
167
 PATTERN OF SHAREHOLDING
AS ON JUNE 30, 2021
SHAREHOLDING
Number of Shareholders From To Total Shares Held
137 1 100 3,798
1,321 101 500 641,322
835 501 1,000 824,805
1,008 1,001 5,000 2,544,208
292 5,001 10,000 2,178,304
105 10,001 15,000 1,332,653
53 15,001 20,000 953,733
51 20,001 25,000 1,190,067
31 25,001 30,000 866,297
27 30,001 35,000 882,436
14 35,001 40,000 533,298
7 40,001 45,000 305,973
21 45,001 50,000 1,039,350
9 50,001 55,000 467,987
15 55,001 60,000 878,317
6 60,001 65,000 375,718
5 65,001 70,000 345,279
6 70,001 75,000 442,000
3 75,001 80,000 229,516
7 80,001 85,000 580,748
6 85,001 90,000 529,994
4 90,001 95,000 372,250
10 95,001 100,000 1,000,000
3 100,001 105,000 305,417
1 105,001 110,000 106,750
1 110,001 115,000 114,500
2 115,001 120,000 232,002
7 120,001 125,000 864,576
4 125,001 130,000 513,629
2 130,001 135,000 269,500
2 135,001 140,000 274,418
3 140,001 145,000 427,375
6 145,001 150,000 895,811
2 150,001 155,000 305,500
1 160,001 165,000 161,000
2 165,001 170,000 340,000
3 170,001 175,000 520,500
2 190,001 195,000 383,677
6 195,001 200,000 1,192,644
3 200,001 205,000 610,142
1 205,001 210,000 208,500
2 210,001 215,000 425,500
1 215,001 220,000 216,250
3 220,001 225,000 667,500
2 240,001 245,000 489,250
2 245,001 250,000 495,500
1 255,001 260,000 256,000
2 260,001 265,000 524,319
1 265,001 270,000 268,000

168
 SHAREHOLDING
Number of Shareholders From To Total Shares Held
2 270,001 275,000 544,415
1 310,001 315,000 310,882
1 315,001 320,000 319,148
1 320,001 325,000 320,500
1 325,001 330,000 330,000
1 360,001 365,000 365,000
1 365,001 370,000 365,235
1 370,001 375,000 371,938
1 375,001 380,000 379,500
1 385,001 390,000 388,000
2 395,001 400,000 797,712
3 400,001 405,000 1,210,319
1 410,001 415,000 411,000
1 415,001 420,000 418,500
1 450,001 455,000 450,020
1 455,001 460,000 456,378
1 480,001 485,000 485,000
1 495,001 500,000 500,000
1 505,001 510,000 505,250
1 540,001 545,000 541,470
1 560,001 565,000 563,916
1 580,001 585,000 582,500
1 620,001 625,000 623,000
1 665,001 670,000 669,500
1 700,001 705,000 704,000
1 900,001 905,000 900,172
1 910,001 915,000 914,222
1 945,001 950,000 948,877
1 955,001 960,000 955,500
1 1,035,001 1,040,000 1,039,500
1 1,115,001 1,120,000 1,117,500
2 1,195,001 1,200,000 2,400,000
1 1,335,001 1,340,000 1,339,672
1 1,455,001 1,460,000 1,456,162
1 1,585,001 1,590,000 1,588,000
1 1,620,001 1,625,000 1,623,500
1 1,815,001 1,820,000 1,816,500
1 1,820,001 1,965,000 1,825,218
1 1,965,001 1,970,000 1,966,750
1 1,990,001 1,995,000 1,993,500
1 1,995,001 2,000,000 1,997,000
1 2,450,001 2,455,000 2,453,500
1 2,580,001 2,585,000 2,581,218
1 2,805,001 2,810,000 2,808,110
1 3,510,001 3,515,000 3,514,201
1 3,635,001 3,640,000 3,640,000
1 3,730,001 3,735,000 3,735,000
2 3,995,001 4,000,000 8,000,000
2 4,340,001 4,345,000 8,681,396

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 SHAREHOLDING
Number of Shareholders From To Total Shares Held
1 5,090,001 5,095,000 5,094,500
2 7,195,001 7,200,000 14,400,000
1 8,850,001 8,855,000 8,853,000
1 10,465,001 10,470,000 10,469,669
1 13,250,001 13,255,000 13,250,500
1 13,865,001 13,870,000 13,867,560
1 17,075,001 17,080,000 17,076,396
1 37,330,001 37,335,000 37,334,869
1 69,000,001 71,185,000 69,358,284
1 282,495,001 282,500,000 282,498,838
1 298,495,001 298,500,000 298,498,840
4,106 872,197,450

Categories of Shareholders Shareholders Shares Held Percentage

Directors and their spouse(s) and minor children 10 707,025,833 81.06

Associated Companies, undertakings and related parties - - -

Executives 6 21,831,136 2.50

Banks Development Financial Institutions, Non-Banking
6 12,981,500 1.49
Financial Institutions
Insurance Companies 10 13,772,419 1.58

Modarabas and Mutual Funds 68 44,394,368 5.09

General Public

a. Local 3,832 53,035,314 6.08

b. Foreign 54 379,095 0.04

Foreign Companies 2 9,056,000 1.04

Others 118 9,721,785 1.11

Total 4,106 872,197,450 100.00

Share holders holding 10% or more 2 580,997,678 66.61

170
INFORMATION FOR
SHAREHOLDERS
COMPANY REGISTERED OFFICE ANNUAL LISTING FEE
Interloop Limited The Annual listing fee for the Financial year 2021-2022 has
Al – Sadiq Plaza, P – 157, been paid within the prescribed time limit.
Railway Road, Faisalabad, Pakistan
Phone: +92 – 41 – 2619724 FINANCIAL CALENDAR
Fax: +92 – 41 – 2639400 September 2021 Audited annual results for the
year ended June 30, 2021
SHARE REGISTRAR September 2021 Mailing of annual reports
CDC Share Registrar Services Limited October 2021 Annual General Meeting
Karachi Office:
October 2021 Unaudited first quarter
Share Registrar Department, financial results
CDC House, 99-B, Block B,
February 2021 Unaudited half year financial
S.H.C.H.S, Main Shahra-e-Faisal, results
Karachi – 74400
April 2022 Unaudited third quarter
Tel: (92-21) 111-111-500 financial results
Fax: (92-21) 34326031
Lahore Office: FINANCIAL INFORMATION
Mezzanine Floor, South Tower, LSE Plaza, The company has posted its Annual and Quarterly Accounts
19-Khayaban-e-Aiwan-e-Iqbal, Lahore. on the company’s website in addition to transmitting them
Tel: (042) – 36362061-66 through the Exchange.

COMPANY WEBSITE STATUTORY COMPLIANCE

Updated information regarding the company can be During the year, the company has complied with all
accessed at www.interloop-pk.com. The website contains applicable provisions, filed all returns/forms and furnished
the latest financial results of the company together with all the relevant particulars as required under the Companies
company’s profile and product range. Act, 2017 and allied rules, the Securities and Exchange
Commission of Pakistan (SECP) Regulations and the Listing
EXCHANGE LISTING regulations of PSX.
Interloop Limited became listed on Pakistan Stock
Exchange (PSX) on April 5, 2019. ANNUAL GENERAL MEETINGS
Pursuant to Section 132 of the Companies Act, 2017, the
STOCK SYMBOL company holds a General Meeting of shareholders at least
The stock symbol for dealing in equity shares of Interloop once a year. Every shareholder has a right to attend the
Limited is “ILP” General Meeting. The notice of such meeting is sent to
all the shareholders at least 21 days before the meeting
LOGO and also advertised in at least one English and one
Interloop Limited is transforming from a Hosiery Urdu newspaper having circulation in Karachi, Lahore &
manufacturer to a Multi-Category “Full Family Clothing Islamabad.
company and has refreshed the Interloop brand identity
(Logo) AGM 2021 will be held as on:
Date: October 15, 2021
Time: 11:30 A.M.
Venue: Interloop Executive Club, Interloop Industrial Park,
7-KM Khurrianwala-Jaranwala Road, Faisalabad

Before After

171
 SHARE TRANSFER SYSTEM
Share transfers received by the company’s Share Registrar a statement that a shareholder entitled to attend and
are registered within the prescribed period. vote, is entitled to appoint a proxy who sought to be a
member of the company. The instrument appointing a
DATES OF BOOK CLOSURE proxy (duly signed by the shareholder appointing that
The register of the members and shares transfer books of proxy) should be deposited at the registered office of the
the company will remain closed from October 08, 2021 to company, not less than forty-eight hours before the said
October 15, 2021 (both days inclusive). general meeting.

DATE OF DIVIDEND PAYMENT DIVIDEND MANDATE (MANDATORY)

The payment of dividend upon declaration by As per provision of Section 242 of Companies Act,
shareholders at the forthcoming Annual General Meeting 2017, any dividend payable in cash shall only be paid
will be made on or after October 15, 2021. through electronic mode directly into the bank account
designated by the entitled shareholders and SECP vide
Last year, the company has transferred the final cash S.R.O.1145(I)/2017 (as amended) directed all shareholders
dividend on October 28, 2020 after approval from to provide their valid International Bank Account Numbers
shareholders at the 28th Annual General Meeting. (IBAN) to receive cash dividend electronically. Company
shall be constrained to withhold the payment of Dividend
CIRCULATION OF ANNUAL REPORTS THROUGH CD to the shareholders, in case of non-availability of IBAN of
/ DVD / USB the shareholder or authorized person.
As notified by the Securities and Exchange Commission
of Pakistan (SECP) vide SRO 470(1)/2016, dated May WITHHOLDING TAX/ZAKAT ON DIVIDENDS:
31, 2016, and in continuation with the SRO 787(1)/2014 As per the provisions of Section 150 of the Income Tax
dated September 8, 2014, further supported by Section Ordinance, 2001, withholding tax is deductible at source
223(6) of the Companies Act 2017, and approved by the on the amount of dividend paid by the company at the
Shareholders, the company shall circulate Annual Report rate of 15% for filers and at the rate of 30% for non-filers.
2021 to its shareholders in the form of CD. Any member
requiring printed copy of Annual Report 2021 may send In the light of clarification from Federal Board of Revenue,
a request using a Standard Request Form placed on all the shareholders who intend to seek exemption from
company website. withholding of taxes on payment of dividend under clause
47B of Part – IV of the Second Schedule of the Income
PROXIES Tax Ordinance, 2001, are requested to provide valid
Pursuant to Section 137 of the Companies Act, 2017 Exemption Certificate under section 159(1) of the Income
and according to the Memorandum and Articles of Tax Ordinance, 2001, duly issued by the concerned
Association of the company, every shareholder of the Commissioner of Inland Revenue in order to claim the
company who is entitled to attend and vote at a general said exemption. Zakat is also deductible at source from
meeting of the company can appoint another person as the dividend at the rate of 2.5% of the face value of the
his/her proxy to attend and vote on his/her behalf. Every share, other than corporate holders or individuals who
notice calling a general meeting of the company contains have provided an undertaking for non-deduction of zakat.

172
INTERLOOP LIMITED
FORM OF PROXY
ANNUAL GENERAL MEETING
I/We__________________________________________________________________________ of_______________________

CDC A/C NO./ FOLIO NO. ______________________________ being a shareholder of Interloop Limited (“The Company”)

hold ______________________________ Ordinary Shares do hereby appoint_____________________________________

Mr./Ms./Miss ______________________________________________________of___________________________________

CDC A/C NO./ FOLIO NO. ____________________________ and or falling him/her_____________________________

of ___________________________ who is/are also a shareholder of the said Company, as my /our proxy in my /our absence

to attend and vote for me /us at the 29th Annual General Meeting of the Company to be held on October 15, 2021 (Friday)

at 11:30 A.M. at Interloop Executive Club, Interloop Industrial Park, 7-KM Khurrianwala-Jaranwala Road, Faisalabad and/or

any adjournment thereof in the same manner as I/we myself /ourselves would vote if personally present at that meeting.

At witness my/our hand this ____________________ day of __________________ 2021.

Witness 1:
Affix
1. Signed: Revenue Stamp of
Rs. 5/-
Name:

Address:

C.N.I.C/Passport NO.
Signature of Member(s) ________________
(The signature should match with the
Witness 2:
specimen registered with the Company)

1. Signed:

Name:

Address:

C.N.I.C/Passport NO.

Important:
a. This Proxy Form, duly completed and signed, must be received at the Registered Office of the Company, Interloop
Limited, Al-Sadiq Plaza P-157, Railway Road, Faisalabad, not less than 48 hours before the time of holding the
meeting.

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

c. The proxy form shall be witnessed by two persons whose names, addresses and CNIC/SNIC (Computer National
Identity Card/Smart National Identity Card) numbers shall be mentioned on the form.

d. Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with proxy
form.

e. In case of corporate entity, the Board of Directors resolution/power of attorney with specimen shall be submitted
(unless it has been provided earlier) along with proxy form to the Company.

173
174
CORPORATE OFFICE
1-KM, Khurrianwala-Jaranwala Road
Khurrianwala, Faisalabad, Pakistan
T +92 41 4360400
F +92 41 2428704

REGISTERED OFFICE
Al–Sadiq Plaza, P–157,
Railway Road, Faisalabad, Pakistan
Tel: +92–41–2619724
Fax: +92–41–2639400
Email: [email protected]

Interloop Limited InterloopLtd interlooplimited interlooplimited

www.interloop-pk.com