annual report farooque spinning 2013yousufdewan.com/dfsml/financial highlights/dfsml/annual...

Mission StatementMission Statement

Our Mission is to be recognized as a premium quality yarn

manufacturing unit.

The Unit is setup with an idea to cater to the premium market of

fine count compact yarn to satisfy the valuable customers.

To assume leadership role in the technological advancement of the

industry.

To benefit the customers, employees and

shareholders and to fulfill our commitments to the society.

Our trademark is honesty, innovation, fairness, teamwork of our people

and integrity in relationship with our customers, associates,

shareholders, community and stake holders.

Vision StatementVision StatementTo be the leader in textile industry by building the Companys' image

through quality, competitive prices, customer's satisfaction and meeting

social obligation.

ANNUAL REPORT 201302

CONTENTS

Company Information

Notice of Annual General Meeting

Directors' Report

Financial Highlights

Statement of Compliance with the Best Practices of

Code of Corporate Governance

Review Report to the Members

Auditors’ Report

Balance Sheet

Profit and Loss Account

Statement of Comprehensive Income

Cash Flow Statement

Statement of Changes in Equity

Notes to the Financial Statements

Pattern of Share Holding

Form of Proxy

4

5

7

11

12

14

15

17

18

19

20

21

22

42

ANNUAL REPORT 2013 03

COMPANY INFORMATION

04 ANNUAL REPORT 2013

BOARD OF DIRECTORSExecutive Director : Dewan Abdul Baqi Farooqui - Chief Executive Officer Non-Exective Directors : Dewan Muhammad Yousuf Farooqui - Chairman, Board of Directors

Dewan Asim Mushfiq Farooqui Dewan Abdullah Ahmed Farooqui Dewan Abdul Rehman Farooqui Mr. Haroon Iqbal

Independent Director : Mr. Aziz-ul-Haque AUDIT COMMITTEE : Mr. Aziz-ul-Haque – Chairman Dewan Abdul Rehman Farooqui - Member

Mr. Haroon Iqbal - Member

HUMAN RESOURCES &REMUNERATION COMMITTEE

: Dewan Muhammad Yousuf Farooqui - Chairman Dewan Abdul Baqi Farooqui - Member Mr. Haroon Iqbal - Member

AUDITORS : Feroze Sharif Tariq & Co.

Chartered Accountants 4/N/H Block-6, P.E.C.H.S., Karachi 75400, Pakistan

COMPANY SECRETARY : Syed Muhammad Salahuddin CHIEF FINANCIAL OFFICER : Mehmood ul Hassan Asghar LEGAL ADVISORS : Abbass & Atif Law Associates TAX ADVISOR : Sharif & Co. Advocates BANKERS : United Bank Limited

Bank Islami Pakistan Limited MCB Bank Limited Silk Bank Limited Askari Bank Limited NIB Bank Limited Allied Bank Limited Soneri Bank Limited Summit Bank Limited

REGISTERED OFFICE : Finance & Trade Centre Block-A, 7th Floor, Shahrah-e-Faisal, Karachi.

SHARES REGISTRAR & TRANSFER AGENT : BMF Consultants Pakistan (Private) Ltd.Anum Estate Building, Room No. 310 & 311,3rd Floor, 49, Darul Aman Society,Main Shahrah-e-Faisal, Adjacent Baloch ColonyBridge, Karachi-75350, Pakistan

FACTORY OFFICE : 54 Km, Multan Road, Phool Nagar By PassDistrict Kasur, Punjab , Pakistan.

WEBSITE : www.yousufdewan.com

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting of Dewan Farooque Spinning Mills Limited (“DFSML” or “the Company”) will be held on Wednesday, October 30, 2013, at 02:00 p.m. at Dewan Cement Limited Factory Site, at Deh Dhando, Dhabeji, District Malir, Karachi, Pakistan; to transact the following businesses upon recitation from Holy Qur'aan and other religious recitals:

1. To confirm the minutes of the preceding Annual General Meeting of the Company held on Wednesday, October 24, 2012;

2. To receive, consider, approve and adopt the annual audited financial statements of the Company for the year ended June 30, 2013, togetherwith the Directors' and Auditors' Reports thereon;

3. To appoint the Statutory Auditors' of the Company for the ensuing year, and to fix their remuneration;

4. To consider any other business with the permission of the Chair.

Karachi: September 27, 2013

NOTES:1. The Share Transfer Books of the Company will remain closed for the period from October 23, 2013 to October

30, 2013 (both days inclusive).

2. Members are requested to immediately notify change in their addresses, if any, at our Shares Registrar Transfer rdAgent BMF Consultants Pakistan (Private) Limited, located at Anum Estate Building, Room No. 310 & 311, 3

Floor, 49, Darul Aman Society, Main Shahrah-e-Faisal, adjacent to Baloch Colony Bridge, Karachi, Pakistan.

3. A member of the Company entitled to attend and vote at this meeting, may appoint another member as his/her proxy to attend and vote instead of him/her. Proxies, in order to be effective, must be received by the Company at the abovesaid address, not less than 48 hours before the meeting.

4. CDC Account holders will further have to observe the following guidelines, as laid down in Circular 01 dated January 20, 2000, issued by the Securities and Exchange Commission of Pakistan:

a) For Attending Meeting:

i) In case of individual, the account holder or sub-account holder, and/or the person whose securities are in group account and their registration details are uploaded as per the regulations, shall authenticate his/her identity by showing his/her original National Identity Card (CNIC), or original passport at the time of attending the meeting.

ii) In case of corporate entity, the Board of Directors' resolution/power of attorney, alongwith the specimen signature of the nominee, shall be produced (unless it has been provided earlier) at the time of meeting.

By Order of the Board

Syed Muhammad Salahuddin Company Secretary

05ANNUAL REPORT 2013

06

b) For Appointing Proxies:

i) In case of individual, the account holder or sub-account holder, and/or the person whose securities are in group account and their registration details are uploaded as per the regulations, shall submit the proxy form as per the above requirements.

ii) Two persons, whose names, addresses, and CNIC numbers shall be mentioned on the form, shall witness the proxy.

iii) Attested copies of CNIC or passport of the beneficial owners and proxy shall be furnished alongwith the proxy form.

iv) The proxy shall produce his/her original CNIC or original passport at the time of the meeting.

v) In case of corporate entity, the Board of Directors' resolution/power of attorney, alongwith the specimen signature of the nominee, shall be produced (unless it has been provided earlier) along with the proxy form to the Company.

ANNUAL REPORT 2013

DIRECTORS’ REPORT TO THE SHAREHOLDERS

IF YE GIVE THANKS, I WILL GIVE YOU MORE (HOLY QURAN)

IN THE NAME OF ALLAH; THE MOST GRACIOUS AND MERCIFUL

Dear Shareholder(s),Assalam-o-Alykum!

The Board of Directors, other members of the management of your Company are pleased to present the Annual Audited Financial Statements of the Company for the year ended June 30, 2013 together with the Auditors' Report thereon.

Operating results and performance:The operating results for the year under review are as follows:

SALES (NET)

COST OF SALES

GROSS PROFIT

OPERATING EXPENSES

OPERATING PROFIT

OTHER CHARGES

OTHER INCOME

PROFIT BEFORE TAXATION

TAXATION

PROFIT AFTER TAXATION

1,301,851,799

1,194,006,233

107,845,566

(45,719,351)

62,126,215

(53,239,651)

390,924

9,277,488

25,959,172

35,236,660

"Rupees”

During the period under review, company has achieved net sales of Rs.1.302 billion as compared to Rs. 1.363 billion of the corresponding period of last year. Company has earned gross profit of Rs. 107.845 million as compared to the gross loss of Rs. 17.509 million for the corresponding period of last year.

The management of the company has managed to improve the results as compared to those of the last year for the same period. The profitability of the company could have been further improved, had there not been power crises, increase in tariff of gas and hike in freight and transportation cost. By virtue of timely procurement of raw cotton and rational utilization of funds, the management has succeeded to optimize plant capacity utilization which resulted in higher production and lowering the cost of yarn per lb manufactured with relation to fixed costs.

During the financial year 2011-12 the company had settled with its lenders through Compromise Agreement dated December 23, 2011 against which consent decrees had been granted by the Honorable High Court of Sindh, Karachi. Company's short term and long term loans had been rescheduled in the form of long term loans, however certain banks did not accepted the restructuring proposal at that time, and we are still in negotiation with those few banks to accept the restructuring proposal.

Future OutlookThe key challenges facing the Pakistan's economy emerging from long standing structural issue which have continued to suppress economic activity and growth of the country. The macroeconomic outlook is largely dependent on government's ability to control fiscal deficit while addressing energy shortage to revitalize large scale manufacturing industry. At present energy crisis affecting the economy badly; however some initiatives which are being taken by the government hopefully will improve the situation in near future.


Dewan Farooque is one of the state of the art mills. Currently its yarn is selling in the local market at competitive rates. Since its product is used in the high end market therefore, we are fetching good prices and enjoining niche market. We have also attained wapda connection for this mill as it was in-evitable due to acute Gas shortage in the Punjab region during winters. We are also working on the third alternate energy source as in winters both Gas and wapda are not sufficiently available which result in low capacity utilization. Currently we are in a stage of feasibility study on coal and furnace oil generation.

Our weaving industry is steadily growing as new units have come into production due to increase in fabric demand and the closed units have resumed their operations as well. Since your company is largely making the weaving yarn therefore, your company is also working continuously on its BMR in order to cater the ever increasing quality demand from the weaving sector.

In a backdrop of recent floods the cotton crop assessment committee forecasted decline in cotton production at 11.95 million bales, earlier in the beginning of the season the production was estimated at 13.25 million bales. This forecast might result in higher cotton prices, which may affect our competitiveness in the international market. The company has been targeting the export of yarn and foreseeing prospective future outlook with an increased focus on export sale.

Prompt and timely decision in right direction is the core objective of every management, particularly in an industry where the input costs are more volatile and subject to frequent change. The management of the company has decided to implement ERP in near future to keep on tracking all the information on the company strength to take the better decision such as hiring right number of employees, purchasing additional machines or cut down the cost etc. The implementation of E.R.P will not only streamline the M.I.S. reporting but will also provide the base for the management to make timely decision with paperless environment and also clarity in the job description for the betterment of the company.

Human ResourceThe management of the Company is committed to excellence and has a clear vision that human resources and strong leadership practices are important enablers of high productivity and sustainable competitive advantage of our Company. Therefore, management of the Company gives much importance to the optimal use of human resources by way of proper guidance, motivation and incentive schemes for the employees.

Post Balance Sheet EventsThere has been no event subsequent to the balance sheet date that would require an appropriate disclosure or adjustment to the financial statements referred herein.

Statement of Compliance under Code of Corporate Governance Security and Exchange Commission of Pakistan framed a code of corporate governance, which was incorporated through the listing regulations of all stock exchanges of the country. The directors of your Company have ensured implementation of all provisions of code of corporate governance applicable for the period ended June 30, 2013.

Review report on statement of Compliance with code of corporate governance of Auditors is annexed with this report.

Directors of the Company are pleased to confirm that there is no material departure from the best practices as detailed in the listing regulations.

1. The financial Statements presented by the management of the Company give a fair account of the state of affairs, the results of its operations, cash flow and changes in equity.

2. Proper books of accounts have been maintained as required under the Companies Ordinance, 1984.

3. Accounting policies have been consistently applied in the preparation of financial statements and accounting estimates are based on reasonable and prudent judgment.

4. International Financial Reporting Standards as applicable in Pakistan have been followed in preparation of financial statements and any departure there from, if any, has been adequately disclosed.


5. The system of internal controls, which is in place, is sound in design and has been effectively implemented and monitored.

6. There has been no material departure from the best practices of the corporate governance.

7. The Company has constituted an Audit Committee from amongst the non-executive members of its Board.

8. The Board has prepared and circulated a Statement of Ethics and Business Practices amongst its members and the company's employees.

9. As required under the Code of Corporate Governance, the following information has been presented in this report:

i) Pattern of Shareholding;ii) Shares held by associated undertaking and related persons;

BoardThe Board of Directors comprises of individuals with diversified knowledge who endeavor to contribute towards the aim of the Company with the best of their abilities. During the year four meetings of the Board were held. The attendance of directors was as follows:

NamesNo. of Meetings

attended

Dewan Muhammad Yousuf Farooqui

Dewan Abdul Baqi Farooqui

Dewan Asim Mushfiq Farooqui

Dewan Abdullah Ahmed Farooqui

Dewan Abdul Rehman Farooqui

Mr. Haroon Iqbal

Mr. Aziz-ul-Haque

3

5

2

1

5

5

5

09

Leave of absence was granted to directors who could not attend these meetings.

Earnings per Share(Loss)/ earnings per share during the period under report worked out to Rs.0.36 (2012: Rs.1.10)

Appointment of AuditorsThe present auditors, M/s. Feroze Sharif Tariq & Co., Chartered Accountants, Karachi, retire and being eligible for reappointment under the Companies Ordinance, 1984, and the Code of Corporate Governance issued by the Securities and Exchange Commission of Pakistan, have offered themselves for the same. The Board of Directors of your company, based on the recommendations of the Audit Committee of the board, propose M/s. Feroze Sharif Tariq & Co., Chartered Accountants, for reappointment as auditors of the company for the ensuing year.

Pattern of ShareholdingThe prescribed shareholding information, both under the Companies Ordinance, 1984, and the Listing Regulations, vis-à-vis, Code of Corporate Governance, is attached at the end of this report.

Key operating and financial dataKey operating and financial data for preceding six years is annexed.

ANNUAL REPORT 2013

Vote of Thanks & ConclusionOn the behalf of the Board, I appreciate the valuable, loyal, and commendable services rendered to the Company by its executives, members of the staff and workers.

In conclusion, we bow, beg and pray to Almighty Allah, Rahman-o-Ar-Rahim, in the name of our beloved Prophet Muhammad (peace be upon him) for the continued showering of his blessings, guidance, strength, health, and prosperity to us, our company, country and nation; and also pray to Almighty Allah to bestow peace, harmony, brotherhood, and unity in true Islamic spirit to whole of the Muslim Ummah; Ameen; Summa Ameen.

Date: September 27, 2013Place: Karachi

10

Dewan Abdul Baqi FarooquiChief Executive

LO-MY LORD IS INDEED HEARER OF PRAYER (HOLY QURAN)

By and under Authority of the Board of Directors

ANNUAL REPORT 2013

FINANCIAL HIGHLIGHTS


2008 2009 2011 2012 2013

Sales - Net 1,002,684 920,419 1,736,128 1,363,080

Gross profits/ (loss) 120,968 (54,422) 34,553 (17,510)

Profit/ (Loss) before tax (38,366) (217,008) (16,942) (105,825)

Profit/ (Loss) after tax (36,540) (209,510) (73,756) (107,625)

Current assets 544,808 586,138 846,151 907,081

Shareholders equity 585,194 375,684 750,204 656,019

Current liabilities 731,068 838,390 1,151,888 446,601

Earning/ (Loss) per share (Rs.) (0.61) (3.49) (1.05) (1.10)

Breakup value per share (Rs.) 9.75 6.26 7.67 6.71

Current ratio (Times) 0.75 0.70 0.73 2.03

Gross profit/ (loss) % 12.06% (5.91%) 1.99% (1.28%)

Net profit/ (loss) % (3.64%) (22.76%) (4.25%) (7.90%)

Debt equity ratio (Times) 0.54 0.67 0.52 0.61

(Rupees in Thousands)2010

1,247,720

138,952

85,640

75,664

586,936

451,348

793,710

6.06%

0.74

0.62

7.52

11.14%

1.26

1,301,852

107,846

9,277

35,237

918,886

730,249

485,854

0.36

7.47

1.89

8.28%

2.71%

0.53

STATEMENT OF COMPLIANCE WITH THE CODE OF

CORPORATE GOVERNANCE FOR THE YEAR ENDED JUNE 30, 2013

12

The statement is being presented to comply with the Code of Corporate Governance (“CCG”) contained in Regulation No 35 of listing regulation of Karachi, Lahore and Islamabad Stock Exchanges, for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance.

The company has applied the principles contained in the CCG in the following manner:

1. The Company encourages representation of independent non executive directors and directors representing minority interests on its Board of Directors. At present the board includes One Independent Director, five Non-Executive Directors and one Executive Directors of the Company.

2. The condition of maximum number of seven directorships to be held by a director in listed companies as per clause ii of the CCG will be applicable after election of next Board of Directors of the Company.

3. All the resident directors of the company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange.

4. No casual vacancy occurred on the board during this period.

5. The company has prepared a “Code of Conduct” and has ensured that appropriate steps have been taken to disseminate it throughout the company along with its supporting policies and procedures.

6. The board has developed a vision/mission statement overall corporate strategy and significant policies of the company. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.

7. All the powers of the board have been duly exercised and decisions on material transactions including appointment and determination of remuneration and terms and conditions of employment of the CEO, other executive and non-executive directors have been taken by the board/shareholders.

8. The meetings of the board were presided over by the Chairman and, in his absence, by the director elected by the board for this purpose and the board met at least once in every quarter. Written notices of the board meetings, along with agenda and working papers were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

9. In accordance with the criteria specified on clause (xi) of CCG, some directors are exempted from the requirement of directors' training program and rest of the Directors to be trained within specified time.

10. There was no change in the position of CFO, Company Secretary and Head of Internal Audit during the year. The Directors report for this have prepared in compliance with the requirement of the CCG and fully describes the salient matters required to be disclosed.

11. The financial statements of the company were duly endorsed by CEO and CFO before approval of the board.

12. The director, CEO and executives do not hold any interest in the shares of the company other than the disclosed in the pattern of shareholding.

13. The company has complied with all the corporate and financial reporting requirements of CCG.

14. The board has formed an Audit Committee. It comprises three members of whom one is independent director who is also chairman and two members are non executive directors.

ANNUAL REPORT 2013

13

15. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the company and as required by CCG. The terms of reference of the committee have been formed and advised to the committee for compliance.

16. The board has formed an HR and Remuneration Committee. It comprises of three members of whom two are non-executive directors and the chairman of the committee is a non-executive director.

17. The board has set up an effective internal audit function. The staffs are considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the company.

18. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under the quality control review program of the ICAP, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the company and that the firm and all its partners are in compliance with International Federation Accountants (IFAC) guidelines on code of ethics are adopted by the ICAP.

19. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.

20. The closed period, prior to the announcement of interim/final results, and business decisions, which may materially effect the market price of company's securities, was determined and intimated to directors, employees and stock exchange(s).

21. Material / price sensitive information has been disseminated among all market participants at once through stock exchange(s).

23. We confirm that all the other material principles enshrined in the CCG have been complied with.

Date : September 27, 2013Place : Karachi


ANNUAL REPORT 2013

AUDITORS' REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE

CHARTERED ACCOUNTANTSAudit Engaging Partner: Mohammad TariqDated: September 27, 2013Place: Karachi

We have reviewed the 'Statement of Compliance with the Best Practices' contained in the 'Code of Corporate

Governance' prepared by the Board of Directors of Dewan Farooque Spinning Mills Limited to comply with the

respective Listing Regulations of the Karachi Stock Exchange (Guarantee) limited, where the company is listed.

The responsibility for compliance with the 'Code of Corporate Governance' is that of the board of directors of the

company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether

the 'Statement of Compliance' reflects the status of the company's compliance with the provisions of the 'Code of

Corporate Governance' and report if it does not. A review is limited primarily to inquiries of the company personnel

and review of the various documents prepared by the company to comply with the code.

As part of our audit of the financial statements we are required to obtain an understanding of the accounting and

internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out

any special review of the internal control system to enable us to express an opinion as to whether the board's

statement on internal control covers all controls, and the effectiveness of such controls.

Further, Sub-Regulation (xiii) of Listing Regulation on 35 (previously Regulation no 37) notified by The Karachi

Stock Exchange (Guarantee) Limited vide circular KSE/N-269 dated 19 January 2009 requires the Management

Company to place before the Board of Director for their consideration and approval related party transactions

distinguishing between transactions carried out on term equivalent to those that prevail in arm's length transactions

and transaction which are not executed at arm's length price recording proper justification for using such alternate

pricing mechanism. Further, all such transaction are also required to be separately placed before the audit

committee. We are only required and have ensured compliance of requirement to the extent of approval of related

party transactions by the Board of Director and placement of such transactions before the audit committee. We have

not carried out any procedures to determine whether the related party transactions were undertaken at arm's length

price or not.

Based on our review nothing has come to our attention, which causes us to believe that the 'Statement of

Compliance' does not appropriately reflect the company's compliance, in all material respects, with the best

practices contained in the Code of Corporate Governance as applicable to the company for the year June 30, 2013.


AUDITORS' REPORT TO THE MEMBERS

We have audited the annexed Balance Sheet of Dewan Farooque Spinning Mills Limited, as at June 30, 2013, and

related Profit and Loss account, Statement of Comprehensive Income, Cash Flow Statement and Statement of

Changes in Equity together with the notes forming part thereof, for the year then ended, and we state that, we have

obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the

purpose of our audit.

It is the responsibility of the company's management to establish and maintain a system of internal control, and

prepare and present the above said statements in conformity with the approved accounting standards and the

requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements

based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require

that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free

of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the above said statements. An audit also includes assessing the accounting policies and significant

estimates made by management, as well as, evaluating the overall presentation of the above said statements. We

believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:

a) in our opinion, proper books of account have been kept by the company as required by the Companies

Ordinance, 1984;

b) in our opinion:

i) the Balance Sheet and Profit & Loss Account together with the notes thereon have been drawn up in

conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and

are further in accordance with the accounting policies consistently applied, consistently applied;

ii) the expenditure incurred during the year was for the purpose of the Company's business; and

iii) the business conducted, investments made and the expenditure incurred during the year were in

accordance with the objects of the Company;


CHARTERED ACCOUNTANTS

Audit Engaging Partner: Mohammad TariqDated: September 27, 2013Place: Karachi

c) in our opinion, and to the best of our information and according to the explanations given to us, the Balance

Sheet, Profit & Loss Account, Statement of Comprehensive income, Cash Flow Statement and Statement of

Changes in Equity together with the notes forming part thereof conform with approved accounting standards as

applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the

manner so required and respectively give a true and fair view of the state of the Company's affairs as at June

30, 2013 and of the loss, its Comprehensive income, Cash flows and Changes in Equity for the year then ended;

and

d) In our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance 1980 (xviii of 1980), was

deducted by the company and deposited in the Central Zakat fund established under section 7 of that ordinance.


BALANCE SHEET As at 30th June, 2013


Note June 30,

2013

June 30,

2012 ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 5 1,724,336,167 1,856,659,674

Long term deposits 26,747,245 26,747,245

CURRENT ASSETS

Stores & Spares 6 35,262,768 22,533,904

Stock-in-trade 7 272,073,939 406,803,479

Trade Debts- Unsecured, Considered Good. 8 335,242,002 243,254,899

Loans & advances- Unsecured, Considered Good. 9 81,134,061 86,400,443

Trade deposits & other receivables- Considered Good. 10 68,555,914 49,207,009

Advance income tax 101,419,973 82,112,976

Cash and bank balances 11 25,197,103 16,768,478

918,885,760 907,081,188

TOTAL ASSETS 2,669,969,172 2,790,488,107

EQUITY AND LIABILITIES

SHAREHOLDERS' EQUITY

Share capital

Authorised capital

100,000,000 (June 30, 2012: 100,000,000) ordinary shares of Rs.10/- each 12 1,000,000,000 1,000,000,000

Issued, Subscribed and Paid-up Capital

97,750,726 (June 30, 2012: 97,750,726) ordinary shares of Rs.10/- each 13 977,507,260 977,507,260

Un appropriated loss (247,257,832) (321,488,015)

730,249,428 656,019,245

Surplus on revaluation of property, plant and equipment 14 624,667,068 663,660,591

NON-CURRENT LIABILITIES

Syndicated Long Term Loan - Secured 15 628,684,739 791,093,058

Deferred liabilities for staff benefits 16 8,106,646 8,190,746

Deferred Taxation 17 192,407,212 224,923,394

CURRENT LIABILITIES

Trade & other payables 18 130,552,046 104,872,485

Accrued mark-up 14,264,197 14,630,855

Short term borrowings- secured 19 25,482,873 111,567,365

Current portion of long term liabilities 20 245,573,785 152,106,200

Provision for taxation 21 69,981,178 63,424,168

485,854,079 446,601,073

Contingencies and Commitments 22 - -

2,669,969,172 2,790,488,107

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

Rupees


Haroon IqbalDirector

PROFIT & LOSS ACCOUNTFOR THE YEAR ENDED 30TH JUNE 2013


Note 2013 2012

SALES - NET 23 1,301,851,799 1,363,080,039

COST OF SALES 24 (1,194,006,233) (1,380,589,803)

GROSS PROFIT / (LOSS) 107,845,566 (17,509,764)

OPERATING EXPENSESAdministrative expenses 25 (27,354,360) (36,513,773)Selling and distribution expenses 26 (18,364,991) (21,881,006)

(45,719,351) (58,394,779)OPERATING PROFIT/ (LOSS) 62,126,215 (75,904,543)

OTHER INCOME 27 390,924 1,426,50262,517,139 (74,478,041)

OTHER CHARGESFinance cost 28 (52,541,345) (31,346,594)Workers' profit participation fund (498,790) -Workers' welfare fund (199,516)

(53,239,651) (31,346,594)PROFIT / (LOSS) BEFORE TAXATION 9,277,488 (105,824,635)

TAXATION Current year (6,557,010) (13,740,530) Deferred 32,516,182 11,940,031

25,959,172 (1,800,499)35,236,660 (107,625,134)

Basic earnings / (loss) per share (Rupees) 29 0.36 (1.10)


(Rupees)

PROFIT / (LOSS) AFTER TAXATION



STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30TH JUNE 2013


PROFIT / (LOSS) AFTER TAXATION 35,236,660 (107,625,134)

OTHER COMPREHENSIVE INCOME - -

- Incremental depreciation 59,990,035 20,677,686- Related deferred tax (20,996,512) (7,237,190)

38,993,523 13,440,496TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 74,230,183 (94,184,638)


(Rupees)

2013 2012

Transfer from surplus on revaluation of property plant and equipment in

respect of:



CASH FLOW STATEMENTFOR THE YEAR ENDED 30TH JUNE 2013


Note 2013 2012

CASH FLOW FROM OPERATING ACTIVITIES

Profit / (loss) before taxation 9,277,488 (105,824,635)

Adjustments for non cash and other items:

Gain on sale of property, plant and equipment - (155,875)

Depreciation 148,839,305 119,717,514

Financial charges (52,541,345) 31,346,594

Cash flow before working capital changes 105,575,448 45,083,598

Working Capital changes

(Increase)/ Decrease in assets:

Stores & spares (12,728,864) 2,427,750

Stock in trade 134,729,540 (5,203,835)

Trade debts (91,987,103) (24,865,431)

Loans & advances 5,266,382 (1,377,469)

Trade deposits & other receivables (19,348,905) 1,173,542

Increase/ (Decrease) in liabilities:

Trade creditors, other payables and borrowings 25,679,561 298,147,130

Cash generated/(used) in operations 41,610,611 270,301,687

Taxes paid (19,306,997) (21,445,861)

Gratuity paid (84,100) (335,691)

Financial charges paid 52,174,687 (18,719,679)

Net cash generated/(used) in operating activities 179,969,650 274,884,054

CASH FLOW FROM INVESTING ACTIVITIES

Capital expenditure incurred (16,515,799) (2,437,080)Sale proceeds on disposal of fixed assets - 300,000Long term deposits - (1,566,236)Net cash outflow from investing activities (16,515,799) (3,703,316)

CASH FLOW FROM FINANCING ACTIVITIES

Lease repayment (3,093,944) -Syndicated Long Term Loan (65,846,790) (24,059,582)Net cash Inflow/(out flow) from financing activities (68,940,734) (24,059,582)

Net decrease in cash and cash equivalents 94,513,117 247,121,156

Cash and Cash equivalents at the beginning of the year (94,798,887) (341,920,043)

Cash and Cash equivalents at the end of the year 30 (285,770) (94,798,887)


(Rupees)



STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30TH JUNE 2013


Balance as at July 01, 2011 977,507,260 (227,303,377) 750,203,883

Total comprehensive income/(loss) for the year - (94,184,638) (94,184,638)

Balance as at June 30, 2012 977,507,260 (321,488,015) 656,019,245

Balance as at July 01, 2012 977,507,260 (321,488,015) 656,019,245

Total comprehensive income/(loss) for the year - 74,230,183 74,230,183

Balance as at June 30, 2013 977,507,260 (247,257,832) 730,249,428


(Rupees)

Unappropriated

Profit/ (loss) Total Share Capital



NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30th JUNE 2013

22

1 THE COMPANY AND ITS OPERATIONS

Dewan Farooque Spinning Mills Limited is incorporated in Pakistan on December 22, 2003 as public limited company, under the Companies Ordinance, 1984. The shares of the company are listed on the Karachi Stock Exchange. The registered office of the company is located at Finance & Trade Centre, Block "A" 7th floor, Shara-e-Faisal, Karachi, Pakistan; while its manufacturing facilities are located at 54 km Multan Road, Phool Nagar By-pass District kasur near the city of Lahore in Pakistan. The principal activity of the company is manufacturing and sale of fine quality yarn. The company has installed capacity of 28,800 spindles.

2 STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with approved accounting standards, as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail.

2.1 STANDARDS, INTERPRETATIONS AND AMENDMENTS TO APPROVED ACCOUNTING STANDARDS ARE EFFECTIVE DURING THE YEAR

During the year, certain amendments to standards became effective. However, they did not have material effect on these financial statements.

Standards and amendments to approved accounting standards that are not yet effective

The following revised standards, amendements and interpertatios with respect to the approved accounting standards as applicable in Pakistan would be effectuve forom the dates nentioned below against the respective standard or interpretation:

Effective date (accounting periods beginning on or after)

IFRS 7 - Financial Instruments : Disclosures - (Amendments) January 01, 2013Amendments enhance disclosures about offsetting offinancial assets and financial liabilities.

IAS 19 - Employee Benefits - (Revised) January 01, 2013IAS 32 - Offsetting Financial Assets and Financial

liabilities - (Amendment) January 01, 2014

The Company expects that the adoption of the above revisions, interpretations and amendments of the standards will not affect the Company's financial statements in the period of initial application.

In addition to the above, the following new standards have been issued by IASB which are yet to be notified by the SECP for the purpose of applicability in Pakistan.

ISAB Effective date (accounting periods Beginning on or after)

IFRS 9 - Financial Instruments : Classification and Measurement January 01, 2015IFRS 10 - Consolidated Financial Statements January 01, 2013IFRS 11 - Joint Arrangements January 01, 2013IFRS 12 - Disclosure of Interests in Other Entities January 01, 2013IFRS 13 - Fair Value Measurement January 01, 2013

ANNUAL REPORT 2013

23

3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTION

The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. Estimates and judgments are continually evaluated and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

In the process of applying the Company’s accounting policies, management has made the following estimates and judgments which are significant to the financial statements:

3.1 Property, plant and equipment

Estimates with respect to residual values and depreciable lives and pattern of flow of economic benefits are based on the recommendation of technical team of the Company. Further, the Company reviews the value of the assets for possible impairment on an annual basis. Any change in the estimates in future years might affect the carrying amounts of the respective items of tangible property, plant and equipment with a corresponding affect on the depreciation charge and impairment.

3.2 Taxation

In making the estimates for income taxes payable by the Company, the management considers applicable tax laws and the decisions of appellate authorities on certain cases issued in past. Deferred tax assets are recognized for all unused tax losses and credits to the extent that it is probable that taxable profit will be available against which such losses and credits can be utilized. 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.

3.3 Stock-in-trade

The Company reviews the Net Realizable Value (NRV) of stock-in-trade to assess any diminution in the respective carrying values.

3.4 Provision for doubtful receivables

A provision for impairment of trade and other receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of receivables. These estimates and underlying assumptions are reviewed on an ongoing basis.

4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of these financial statements are consistent with those of the previous financial year except as described below:

New and amended standards and interpretations

The Company has adopted the following amendments to IFRSs which become effective during the year:IAS 1 - Presentation of financial Statements - Presentation of items of other comprehensive income

(Amendment)IAS 12 - Income Taxes - Recovery of Underlying Assets (Amendment)

The adoption of the above standards, amendments, Interpretations and Improvments did not have any material effect on the financial statements

ANNUAL REPORT 2013

24

4.1 Basis of Preparation and measurementThese financial statements are presented in Pakistani Rupees, rounded off to the nearest Rupee. The financial statements have primarily been prepared on the historical cost basis, unless an accountings policy herein states otherwise. The financial statements, except for the cash flow statement, have been prepared under the accrual basis of accounting and staff retirement which is stated at present value.

4.2 Property, plant and equipment

OwnedOperating assets except Leasehold land are stated at cost or revalued amount less accumulated depreciation . Leasehold land and capital work-in-progress are stated at cost.

Any surplus arising on revaluation of property plant and equipment is credited to the surplus on revaluation account. Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from the fair value. To the extent of incremental depreciation (net of tax) charged on the revalued assets, the related surplus on revaluation of property, plant and equipment is transferred to unappropriated profit through statement of comprehensive income.

LeasedThe company accounts for property, plant and equipment acquired under finance leases by recording the assets and the related liability. These amounts are determined as the fair values or discounted value of minimum lease payments; whichever is the lower, as at inception, less accumulated depreciation and impairment losses when chargeable. Financial charges are allocated to the accounting period in a manner so as to provide a constant periodic rate of charge on the outstanding liability.

DepreciationDepreciation is charged to income using the reducing balance method whereby the cost or revalued amount of an asset is written off over its estimated useful life and rates applied are in no case less than the rates prescribed by Federal Board of Revenue. Depreciation is charged from the month of acquisition or transfer of assets from capital work in progress on proportionate basis. The assets' residual values and useful lives are reviewed at each financial year end, and adjusted , if appropriate, at each balance sheet date. Depreciation is charged before month of disposal on proportionate basis.

Repairs, renewals and maintenanceMajor repairs and renewals are capitalized. Normal repairs and maintenance are charged as expense when incurred. Gains or losses on disposal or retirement of assets are determined as the difference between the sale proceeds and the carrying amounts of these assets and are included in the income currently.

Finance LeasesFinance leases, which transfer to the company, substantially all the risks and benefits incidental to ownership, are capitalized at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and the reduction of lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.

4.3 Stores, spares and loose toolsThese are valued at moving average cost except items in transit which are valued at cost accumulated to balance sheet date.

Provision is made for any slow moving and obsolete items.

ANNUAL REPORT 2013

25

4.4 Stock-in-tradeRaw Material At lower of weighted average cost and net realizable value.

Cost of raw material and components represents invoice value plus other charges paid thereon.

Finished goods At lower of weighted average cost and net realizable value.Cost of finished goods comprises of prime cost and an appropriate portion of production overheads.

Waste At net realizable value.Work-in-process At weighted average cost.

This comprises the direct cost of raw materials, wages, and appropriate manufacturing overheads.

Stock in transit At cost accumulated up to the balance sheet date.Packing material At lower of weighted average cost and net realizable value.

Net realizable value signifies the estimated selling price in the ordinary course of business less cost necessary to be incurred in order to make sale.

Provision for obsolete and slow moving stock is determined based on the management assessments regarding their future useability.

4.5 Long term loans / BorrowingsLong term loans/ borrowings are initially recognized at cost. After initial recognition same are measured at original recorded amount less principal repayments thereof.

4.6 Trade and other payablesLiabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in future for goods and services.

4.7 Foreign currency translationTransactions in foreign currencies are initially recorded using the rates of exchange ruling at the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Rupees at the exchange rates prevailing on the balance sheet date. In order to hedge its exposure to foreign exchange risks, the company enters into forward exchange contracts. Such transactions are translated at contracted rates. The company charges all exchange differences to Profit and Loss Account.

4.8 Borrowing costsBorrowing Costs are recognised initially in fair value net of transaction costs incurred.

Borrowing cost 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, are added to the cost of those assets until such time the assets are substantially ready for their intended use. All other borrowing costs are charged to income in the period in which they are incurred.

4.9 Financial instrumentsRecognitionAll financial assets and liabilities are recognized at the time when the company becomes a party to the contractual provisions of the instrument. Any gain or loss on derecognition of the financial assets and financial liabilities are taken to profit and loss account to which it arises.

ANNUAL REPORT 2013

26

Off SettingFinancial asset and financial liability is set off and the net amount is reported in the balance sheet if the company has a legal right to set off the transaction and also intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Corresponding income on assets and charge on liability is also offset.

DerivativesDerivatives that do not qualify for hedge accounting are recognized in the balance sheet at estimated fair value with corresponding effect to profit and loss. Derivative financial instruments are carried as assets when fair value is positive and liabilities when fair value is negative.

4.10 Cash and cash equivalents.Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of the cash flow statement, cash and cash equivalents comprise cash in hand, with banks on current and saving accounts, term deposits with maturities of three months or less and short term running finance.

4.11 Related party transactionsAll transactions with related parties are carried out by the company at arm's length price using the method prescribed under the Companies Ordinance' 1984.

4.12 Revenue recognitionRevenue from sales is recognized on dispatch of goods and on performance of service

Revenue from Export Sales of Goods recognized when significant risks and rewards of ownership are transferred to buyer, this is , when shipped which coincides with date of Shipping Bill.

Gain on Sale of Fixed Assets is recorded when the title is transferred in favor of transferor.

Interest Income is recognized on a time proportioned basis using the effective rate of return.

Income from scrap is recorded on dispatch of scrap to the customers.

Rebate on export is recognized after finalization of export documents.

4.13 Trade debts & other receivablesTrade debts originated by the company are recognized and carried at the original invoice amount less an allowance for any uncollectible amounts. An estimate for a doubtful receivable is made when collection of the whole or part of the amount is no longer probable. Bad debts are written off as incurred.

4.14 ProvisionsA provision is recognized in the balance sheet when the company has a legal or constructive obligation, and, as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and that a reliable estimate can be made for the amount of this obligation.

4.15 Impairment of assetsThe carrying amounts of the assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount, whereby the asset is written down and that impairment losses are recognized in the profit and loss account.

ANNUAL REPORT 2013

27

4.16 Loans, advances and other receivablesLoans, advances and other receivables are recognized initially at cost, and subsequently at their amortized/ residual cost.

4.17 Short term and long term loansShort Term and Long Term Loans are recognized initially at cost and subsequently measured at amortized cost.

4.18 Post Employment Benefits - Defined Contribution PlanThe company upto June 30, 2010 was operating an un-funded gratuity scheme for its employees. Provision was made accordingly in the financial statements to cover obligations under the scheme and the Company had fully provided for the liability under the gratuity scheme as of June 30,2010.

Effective from July 01, 2010, the company has, in place of gratuity scheme, established a recognised provident fund for its permanent employees. Equal contributions are being made in respect thereof by company and employees in accordance with the terms of the fund.

4.19 TaxationCurrent YearProvision in respect of current year's taxation is based on the method of taxation prescribed under the Income Tax Ordinance, 2001, whereby taxable income is determined and tax charged at the current rates of taxation after taking into account tax credits and rebates available, if any, or the minimum tax liability determined under Section 113 of the Income Tax Ordinance, 2001, whichever is higher.

DeferredDeferred tax is provided using the liability method on all temporary differences at the balance sheet date, between the tax bases of assets and liabilities and their carrying amount for financial statements reporting purposes. Deferred tax liabilities are generally recognized for all temporary taxable differences.

Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply when the asset is realized or the liability is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date.

4.20 Dividend and appropriation to reservesDividend is recognized as a liability in the period in which it is approved by the shareholders.

ANNUAL REPORT 2013

Note June 30

2013

June 30

2012

Operating fixed assets - net 5.1 1,724,336,167 1,856,659,674

1,724,336,167 1,856,659,674

5 PROPERTY, PLANT AND EQUIPMENT

5.1 Operating Fixed Assets

The following is a statement of operating fixed assets:

Leased

Plant and

Machinery

(Leased)

200,449,275 2,625,180,920- 16,515,799- -- -

200,449,275 2,641,696,719

92,425,691 768,521,24710,802,358 148,839,305

- -103,228,049 917,360,552

97,221,226 1,724,336,167

-108,023,584 1,856,659,674

10

Total Leasehold Land

Factory

Building

Non Factory

Building

Plant &

Machinery

Electric

Installation

Furniture &

Fixtures Vehicles

Computer

Equipment

Office

Equipment

Cost / Revalued Amount

Cost As at 01 July 2012 349,650,000 207,734,858 108,111,211 1,651,472,341 63,877,886 8,772,959 29,400,062 4,900,454 811,874Addition/ Transfer from CWIP - - - 16,331,864 106,035 - - 19,400 58,500Transfers/ Deletion - - - - - - - - -Surplus on Revaluation - - - - - - - - -As at 30th June 2013 349,650,000 207,734,858 108,111,211 1,667,804,205 63,983,921 8,772,959 29,400,062 4,919,854 870,374

Accumulated Depreciation

As at 01 July 2012 - 64,792,039 20,362,776 525,077,057 38,110,639 4,296,476 19,104,841 3,952,994 398,734Charge for the year 14,294,282 4,387,422 112,639,528 3,875,691 447,648 2,059,044 288,118 45,214Adjustments - - - - - - - - -As at 30th June 2013 - 79,086,321 24,750,198 637,716,585 41,986,330 4,744,124 21,163,885 4,241,112 443,948

-Net book value As at June 30, 2013 349,650,000 128,648,537 83,361,013 1,030,087,620 21,997,591 4,028,835 8,236,177 678,742 426,426

As at June 30, 2012 349,650,000 142,942,819 87,748,436 1,126,395,284 25,767,247 4,476,483 10,295,221 947,460 413,140

Depreciation rate % per annum - 10 5 10 15 10 20 30 10

Owned


Revaluation of land, building, and plant & machinery had been carried out on March 13, 2012 by independent professional valuers M/s Iqbal A. Nanjee & Co. on the basis of market value or depreciated replacement values as applicable. Revaluation surplus had been credited to surplus on revaluation of property plant and equipment account to comply with the requirement of Section 235 of the Companies Ordinance, 1984.

Had there been no revaluation the related figures of land, building and plant & machinery at June 30, 2013 would have been as follows:

85,415,080 - 85,415,080189,289,398 76,688,411 112,600,987

78,414,913 22,795,191 55,619,7221,080,767,245 561,401,781 519,365,4641,433,886,636 660,885,383 773,001,253

85,415,080 349,650,000 264,234,920124,666,603 143,112,063 18,445,460

58,442,814 88,139,112 29,696,298556,935,526 1,143,972,486 587,036,960825,460,023 1,724,873,661 899,413,638

2012

Rupees

CostAccumulated

Depreciation

2013

CostAccumulated

DepreciationWritten Down

ValueRupees

Plant & machinery

Non - factory building Plant & machinery

Non - factory building

Lease hold landFactory building on lease hold land

Factory building on lease hold landLease hold land

Written DownValue

147,501,571 118,827,607

1,337,733 889,906148,839,304 119,717,513

5.2 Allocation of Depreciation

Cost of Goods Manufactured

Administrative Expenses

Depreciation Expenses for the year has been allocated as follows :

June 30

2013

June 30

2012


9

68,101,779 67,838,8972,687,347 12,235,818

687,240 1,356,0949,657,695 4,969,634

81,134,061 86,400,443

6

Packing material 3,713,435 3,294,561Store & spares 31,549,333 19,239,343

35,262,768 22,533,904

STORES & SPARES

7

Raw material 17,963,728 108,733,960Work-in-process 16,951,008 13,925,085Stock in Transit 66,926,805 124,896,160Yarn 170,232,398 159,248,274

272,073,939 406,803,479

8

335,242,002 235,821,076- 7,433,823

335,242,002 243,254,899

0.3 100,572,601 182,441,1740.18 60,343,560 48,650,9800.52 174,325,841 12,162,745

335,242,002 243,254,899

Trade debts - local Trade debts- Export

TRADE DEBTORS - Considered Good, Unsecured

8.1Up to one month1 to 6 monthsMore than 6 months

The aging of debtors at the reporting date:

The above Stock has been pledged with the banks to the extent of restructured finance facilities obtained by

the Company Rs.29.98 million (2012; Rs.95.78)

STOCK IN TRADE

Based on past experience the management believes that no impairment allowance is necessary in respect of trade debts due to major amount of trade debts have been recovered subsequent to the balance sheet date and for the rest of the trade debts management believes that the same will be recovered in short course of time. The credit quality of the company's receivable can be measured with their past performance of no default.

10

16,268,341 14,116,90052,287,573 35,090,10968,555,914 49,207,009

Suppliers of goods & servicesAdvance against ImportAdvance to Employees Others

LOANS AND ADVANCES - Unsecured, Considered Good

Trade depositsSales tax refundable

TRADE DEPOSITS AND OTHER RECEIVABLES

Note June 30

2013

June 30

2012

11

91,119 59,82425,105,984 16,708,65425,197,103 16,768,478

12

In hand - CashAt banks - Current Accounts

CASH AND BANK BALANCES

AUTHORISED SHARE CAPITAL


13 ISSUED, SUBSCRIBED AND PAID UP-CAPITAL

The pattern of shareholding, as required under the Code of Corporate Governance issued by the Securities and Exchange Commission of Pakistan, is attached at the end of this report.

Dewan Motors (Private) Limited, an associated company, held 37,750,726 Ordinary shares of Rs.10 each.

14

Opening Balance 878,735,953 -

Surplus arising on revaluation during the year - 899,413,639

Transferred to unappropriated profit:

- Surplus relating to incremental depreciation charged duringthe year - net of deferred tax

(38,993,523) (13,440,496)

(20,996,512) (7,237,190)

(59,990,035) (20,677,686)

818,745,918 878,735,953Less: related deferred tax liability on:

- Opening Balance 215,075,362 -

- Surplus arising on revaluation during the year - 222,312,552

- Incremental depreciation charged during the year (20,996,512) (7,237,190)194,078,850 215,075,362

624,667,068 663,660,591

- Related Deferred Tax Liability

SURPLUS ON REVALUATION OF PROPERTY PLANT AND EQUIPMENT

Note June 30

2013

June 30

2012

1,000,000,000 1,000,000,000

Ordinary shares of Rs.10/- each 1,000,000,000 1,000,000,000

Ordinary shares of Rs.10/- each

977,507,260 977,507,260

Ordinary shares of Rs.10/- each 977,507,260 977,507,260

Ordinary shares of Rs.10/- each

June 30 2013

June 302012

100,000,000 100,000,000

100,000,000 100,000,000

(Number of shares)

97,750,726

97,750,726

(Number of shares)

97,750,726

97,750,726

16

Opening Balance of staff gratuity 8,190,746 8,526,437

Provided during the year - -

8,190,746 8,526,437

Paid during the year 84,100 335,691 Closing balance of staff gratuity 8,106,646 8,190,746

DEFERRED LIABILITIES FOR STAFF BENEFITS

The company has discontinued unfunded gratuity scheme with effect from June 30, 2010 and from July 01, 2010 company has started Provident fund scheme in lieu of Gratuity. Equal contributions are being made in respect thereof by company and employees in accordance with the terms of the fund.


The assets of the Company had been revalued as at March 13, 2012. The revaluation is carried out by an independent valuer, M/s. Iqbal A. Nanjee & Co. (Pvt.) Ltd on the basis of professional assessment of present market values or depreciated replacement values and resulted in surplus as follows:

349,650,000143,112,063

88,139,1121,143,972,4861,724,873,661

85,415,080124,666,603

58,442,814556,935,526825,460,023

264,234,92018,445,46029,696,298

587,036,960899,413,638

2012

Rupees

Lease hold landFactory building on lease hold land

CostAccumulated

Depreciation

WrittenDown Value

Non - factory building Plant & machinery

June 30

2013

June 30

2012

15

791,093,058 851,093,058

5,846,790 -

785,246,268 851,093,058156,561,529 60,000,000

628,684,739 791,093,058

Syndicated Long Term Loan - Secured

Less: Paid during the year

Less: Transferred to current portion

SYNDICATED LONG TERM LOANS - SECURED Rupees

The Company had settled with its lenders through Compromise Agreement dated December 23, 2011 against which consent decrees had been granted by the Honorable High Court of Sindh, Karachi. As per the terms, Company's short term and long term loans had been rescheduled in the form of long term loans of Rs.875.13 million which was to be repaid in six and half years from the date of restructuring with progressive mark up ranging from 6% to 14% over the period on outstanding principal. This loan is secured by way of mortgage charge over immovable properties and hypothecation of movable assets of the company. Moreover banks/financial institution have also approved further working capital limit to the Company amounting to Rs. 192.10 million by providing syndicated cash finance against pledge of stocks in proportion to their loan amounts as explained in note 19 to these financial statements. This has streamlined the funding requirements of the Company which has ultimately helped the management to run the operations.

17

Deferred tax liability arising due to accelerated tax depreciation 174,519,262 223,103,426

Deferred tax liability arising on liability against assets subject to finance lease 15,560,639 (19,436,282)

Deferred tax liability due to revaluation of property plant & equipment 194,078,850 215,075,362

Deferred tax assets arising on staff gratuity (2,837,326) (2,850,134)Deferred tax assets arising on carry forward losses (188,914,213) (190,968,978)

192,407,212 224,923,394

18

Creditors 115,510,606 85,194,889Accrued expenses 14,343,134 19,677,595Workers' profit participation fund 18.1 498,790 -Workers' welfare fund 18.2 199,516 -

130,552,046 104,872,484

- -498,790 -498,790 -

- -

498,790 -

18.1

Balance at beginning of the year Add: Allocation for the year

Less: Payments during the year Balance at end of the year

Workers' profit participation fund

DEFERRED TAXATION

TRADE AND OTHER PAYABLES


June 30

2013

June 30

2012

Rupees

18.2

- -199,516 -199,516 -

- -

199,516 -

19

25,482,873 111,567,365

Balance at beginning of the year Add: Allocation for the year

Less: Payments during the year Balance at end of the year

Workers' welfare fund

Short term finance

SHORT TERM BORROWING - SECURED

As part of restructuring banks / financial institutions have approved further working capital to the Company amounting to Rs. 192.10 million by providing syndicated cash finance against pledge of stocks in proportion to their loan amounts. The tenure of working capital facility is one year expiring on December 31, 2013 on rollover basis and this facility is secured by way of pledge of stocks of the company. The markup rate for this facility is one month KIBOR which is payable on quarterly basis.

Note

23

1,236,878,124 1,262,746,76978,772,538 86,644,313

6,137,554 16,112,973

3,240,518 8,548,9641,325,028,734 1,374,053,019

(10,640,822) -(12,536,113) (10,972,980)

1,301,851,799 1,363,080,039

24

159,248,274 241,509,391

24.1 1,192,581,958 1,296,028,686

12,408,399 2,300,000

1,364,238,631 1,539,838,077

170,232,398 159,248,274

1,194,006,233 1,380,589,803

Local salesWaste salesCommercial Doubling

Export sales

- Sales Tax - Sales commission

Opening stock of finished goods

Cost of goods manufactured

Finished goods purchased

Less: closing stock of finished goods

SALES - NET

COST OF SALES


21

Balance at the beginning of the year 63,424,168 49,683,638Provision made during the year 6,557,010 13,740,530

69,981,178 63,424,168Payment/ Adjusted during the year - -

69,981,178 63,424,168

PROVISION FOR TAXATION

June 30

2013

June 30

2012

Rupees

The income tax returns of the company has been filed up to tax year 2012 to income tax department and the assessments of the company have been finalized up to and including the tax year 2010. However, the commissioner of income tax may at any time during a period of five years from the date of filling of return may select the deemed assessment for audit.

22 Contingencies and Commitments

22.1 The Company is facing litigation with one of its lenders that is pending in Honorable High Court of Sindh, Karachi, and its aggregate suit amount is of Rs. 32.2 million. The company expects that the settlement / restructuring of liabilities with this lender will also be reached in the same manner as has been done with other lenders. Furthermore, the company has not provided mark up on above loan since December 2009 amounting to Rs. 29.201 million and for the year impact also disclosed in note 28.1 to the financial statements.

20

Liabilities against assets subject to finance lease 52,762,256 55,856,200Redeemable capital - PPTFCs 36,250,000 36,250,000Syndicated Long term loan 156,561,529 60,000,000

245,573,785 152,106,200

CURRENT PORTION OF LONG TERM LIABILITIES

Note

24.1.1

Opening Stock 108,733,960 72,219,930Add: Purchases inclusive of direct expenses 625,435,702 877,529,816

734,169,662 949,749,746Less: Closing Stock 17,963,728 108,733,960

716,205,934 841,015,786

24.1.2

25

Salaries and benefits 25.1 8,060,856 8,904,727Director remuneration 6,840,000 6,840,000Travelling & conveyance 54,826 389,870Printing & stationary 417,558 257,982Legal & professional 2,206,097 4,897,782Auditors remuneration 25.2 450,000 400,000Vehicle running expenses 425,365 192,224Communication 111,668 77,420Rent Expenses 2,897,012 7,335,882Donations 25.3 3,020,000 3,200,000Depreciation 5.2 1,337,733 889,906Fees & subscription 1,213,775 1,668,926Other expenses 319,470 1,459,054

27,354,360 36,513,773

Raw Material Consumed

ADMINISTRATIVE EXPENSES

Salaries and benefits include Rs.3.47 million (2012 Rs.3.76million) in respect of post employmentbenefits.

24.1

Raw material consumed 24.1.1 716,205,934 841,015,786Doubling charges - 494,000Stores and spares consumed 31,822,063 29,972,428Packing material consumed 17,046,017 18,016,645Salaries, wages & other benefits 24.1.2 95,646,378 89,616,248Insurance 4,523,298 5,223,303

Repair & maintenance 3,711,962 2,795,683Fuel & power 174,366,735 178,116,760Vehicle running & maintenance 2,239,601 2,411,806Communication 484,819 540,730Rent, rates & taxes 509,380 332,122Entertainment 136,807 182,632Printing & stationary 360,723 171,957Travelling & conveyance 602,438 712,109Other manufacturing expenses 450,155 1,274,598Depreciation 5.2 147,501,571 118,827,607

1,195,607,881 1,289,704,414Work-in-process - Opening 13,925,085 20,249,357Work-in-process - Closing 16,951,008 13,925,085

Cost of Goods Manufactured 1,192,581,958 1,296,028,686

Cost of goods manufactured


June 30

2013

June 30

2012

Rupees

Note


25.1 Salaries and benefits include Rs.0.223 million (2012: Rs.0.219) in respect of post employment benefits.

25.2 325,000 300,000

100,000 75,000

25,000 25,000 450,000 400,000

25.3

3,000,000 3,000,000

26

26.1 10,445,934 12,048,933135,744 716,768108,560 414,947

1,950,578 3,770,66644,336 269,025

4,222,903 2,652,944899,842 639,365557,094 1,368,358

18,364,991 21,881,006

26.1 Salaries and benefits include Rs.0.528 million (2012: Rs..448 million) in respect of post employmentbenefits.

27

426,309 6,992

(35,385) 1,263,635

- 155,875390,924 1,426,502

Gain on disposal of fixed assets

Profit on Saving Accounts

Exchange Gain / (Loss)

Salaries and benefitsExport expensesOcean freightTravelling & conveyanceExport development surchargeVehicle running expensesCommunicationMiscellaneous expenses

SELLING AND DISTRIBUTION EXPENSES

OTHER INCOME

Audit Fee

Dewan Farooque Trust - related party

- Dewan M. Yousuf Farooqui- Chairman Board of Trustees

- Dewan Abdul Baqi Farooqui - Trustee

- Haroon Iqbal - Trustee

- Salman Rasheed - Trustee

- Ishtiaq Ahmed - Trustee

- Aziz-ul-Haq - Trustee

- Mrs. Hina Yousuf Trustee

Half yearly review

Reimbursable expenses

Interest of the directors or their spouses in the donations made during the year is as follows:

June 30

2013

June 30

2012

Rupees

Note


28

47,463,220 26,823,339

3,356,469 979,509

- 2,807,1931,721,656 736,553

52,541,345 31,346,594

Short term syndicate Loan

Marabaha Financing

FINANCE COST

Markup on :

Bank & other charges

Syndicate Long Term Loans

June 30

2013

June 30

2012

Rupees

Note

28.1 The Company has not made the provision of markup for the year amounting to Rs.4.27 million in respect of borrowings of certain banks who have not yet accepted the restructuring proposal. The management of the Company is quite hopeful that these banks will also accept restructuring proposal in near future. Had the provision been made the loss for the year and accrued markup would have been higher by Rs.4.27 million and shareholders' equity would have been lower by Rs.29.20 million.

29

35,236,660 (107,625,134)97,750,726 97,750,726

0.36 (1.10)

30

25,197,103 16,768,478(25,482,873) (111,567,365)

(285,770) (94,798,887)

31

(Loss)/ profit after taxation (Rupees)Weighted average number of ordinary shares (Loss)/ profit per share

BASIC EARNINGS PER SHARE

Cash and Bank BalancesShort term Borrowings

CASH AND CASH EQUIVALENTS

REMUNERATION OF DIRECTORS & EXECUTIVES

No figure for diluted earning per share has been presented as the company has not yet issued any instrumentswhich would have an impact on basic earning per share when exercised.

DIRECTOR EXECUTIVES DIRECTOR EXECUTIVES

6,840,000 18,653,035 6,840,000 7,601,460- 19,685 - 193,666

6,840,000 18,672,720 6,840,000 7,795,126

1 10 1 4

2013 2012

RemunerationLeave Encashment

Number of persons

Executives are also provided with Company manitained car.

32 TRANSACTIONS WITH RELATED PARTIESRelated parties include associated group companies, directors, executives and key management personnel. The remuneration paid to executives has been mentioned in Note 31. During the year aggregate transactions undertaken by the company with the associated companies are as follows :

Purchases - Raw Material/ Yarn 34,045,972

Sales - Yarn/ Waste/ Cotton

Share based expenses

7,657,225

9,253,214

Provident Fund 4,431,740

Donation - Dewan Farooque Trust 3,000,000 All transactions were carried out on commercial terms and conditions and were valued at arm's length price.


33

Installed capacity after conversion into 20's (lbs) 11,433,598

Actual production after conversion into 20's (lbs) 10,290,238

Total number of spindles installed 28,800

Average number of spindles worked 26,040

Number of shifts worked per day 3

Total days worked

14,467,398

2,389,940

3,635,295

4,727,328

3,000,000

10,409,600

9,368,640

28,880

23,670

3

300 260

PLANT CAPACITY AND PRODUCTION

June 30

2013

June 30

2012

Rupees

Note

34 Financial Instruments

The Company has exposures to the following risks from its use of financial instruments:Credit riskLiquidity riskMarket riskThe Board of Directors has overall responsibility for the establishment and oversight of Company’s risk management framework. The Board is also responsible for developing and monitoring the Company’s risk management policies.

34.1

The maximum exposure to credit risk at the reporting date is:Trade Debts - Considered Good 335,242,002 243,254,899Loans and Advances - Unsecured - Considered good 10,344,935 6,325,728Trade deposits & other receivable - Considered Good. 68,555,914 49,207,009Cash and bank balances 25,197,103 16,768,478

439,339,954 315,556,114

Credit risk

34.2 Liquidity riskLiquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure as far as possible to always have sufficient liquidity to meet its liability when due.

The company is exposed to liquidity risk in respect of non current interest bearing liabilities, short term borrowings, trade and other payable and mark-up accrued.The following are the contractual maturities of the financial liabilities, including estimated interest payments:


Financial Instruments

Carryingamount

Contractual

cash flows Six months

or less Six totwelve

One yearonward

Financial liabilities

Syndicated long term loan 785,246,268 785,246,268 101,366,084 103,751,502 735,659,086 Trade and other payables 130,552,046 130,552,046 130,552,046 - - Short term Borrowings 25,482,873 28,923,061 28,923,061 - - Mark-up payable 14,264,197 16,546,469 16,546,469

955,545,384 961,267,843 277,387,659 103,751,502 735,659,086

Financial liabilities

Long term Finances 851,093,058 851,093,058 55,515,801 54,205,947 950,734,065 Trade and other payables 104,872,484 104,872,484 104,872,484 - - Short term Borrowings 111,567,365 126,628,959 126,628,959 - - Mark-up payable 14,630,855 14,630,855 14,630,855

1,067,532,907 1,082,594,501 287,017,244 54,205,947 950,734,065

Rupees

2013

Rupees

2012

Carryingamount

Contractual

cash flows

Six monthsor less

Six totwelve

One yearonward

The contractual cash flows relating to the above financial liabilities have been determined on the basis of markup rates effective as at June 30, 2012. The rates of markup have been disclosed in relevant notes to the financial statements.

34.3 Market riskMarket risk is the risk that the value of a financial instrument will fluctuate resulting in as a result of changes in market prices or the market prices due to change in credit rating of the issuer or the instrument, change in market sentiments, speculative activities, supply and demand of securities and liquidity in the market.

34.4 Currency riskForeign currency risk arises mainly due to conversion of foreign currency assets and liabilities into local currency. The Company is not materially exposed to foreign currency risk on foreign currency assets and liabilities.

34.5 Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of the financial instruments will fluctuate because of changes in market interest rates, majority of the interest rate exposure arises from short and long term borrowings from bank and term deposits and deposits in profit and loss sharing accounts with banks. At the balance sheet date the interest rate profile of the company's interest-bearing financial instruments are:

June 30

2013

June 30

2012

Financial assets - -Financial liabilities 905,588,187 1,054,766,623

905,588,187 1,054,766,623

Variable rate instruments Fixed rate instruments Carrying amounts




34.6 Risk management policiesRisk management is carried out by the management under policies approved by board of directors. The board provides principles for overall risk management, as well as policies covering specific areas like foreign exchange risk, interest rate risk and investing excessive liquidity.

34.7 Capital risk managementThe Company’s objective when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure the Company may adjust the amount of dividends paid to shareholders, issue new shares and take other measures commensuration to the circumstances.

Consistent with others in the industry, the company manages its capital risk by monitoring its debt levels and liquid assets and keeping in view future investment requirements and expectation of the shareholder. Debt is calculated as total borrowings ('long term loan' and short term borrowings' as shown in the balance sheet). Total capital comprises shareholders' equity as shown in the balance sheet under 'share capital and reserves'.

June 30

2013

June 30

2012

905,588,187 1,054,766,62325,197,103 16,768,478

880,391,084 1,037,998,145730,249,428 656,019,245

1,610,640,512 1,694,017,390

0.55 0.61

Total BorrowingsLess Cash and Bank BalancesNet debtTotal equityTotal Capital

Gearing ratio

34.8 Fair value of financial instruments

Fair value is an amount for which an assets could be exchanged, or a liability settled, between knowledgeable willing parties in arm's length transaction. Consequently, differences may arise between the carrying value and the fair value estimates.

As at the reporting date the fair value of all financial assets and liabilities are estimated to approximate their carrying values.

35 Date of AuthorizationThese financial statements have been authorized for issue on September 27, 2013 by the Board of Directors of the company.

36 General

36.1 Comparative figures has been rearranged and re-classified wherever necessary for the purpose of better presentation and comparison. However, there was no material reclassification to report.

36.2 Figures have been rounded off to the nearest rupees.

36.3 Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates. The financial statements are presented in Pakistani rupees, which is the Company's functional and Presentational currency.

Karachi.Dated : September 27, 2013

PATTERN OF SHAREHOLDING THE CODE OF CORPORATE GOVERNANCE AS ON 30TH JUNE 2013


Srl # Categories of ShareholdersNumber of

Shareholders

Number of Shares

held

% of

Shareholding

1. Associated Companies 1 37,750,726 38.62%

2. NIT and ICP - - 0.00%

3. Directors, CEO, their Spouses & Minor Children 11 25,485,132 26.07%

4. Executives - - 0.00%

5. Public Sector Companies & Corporations 19 1,854,623 1.90%

6. Banks, Development Finance lnstitutions, Non-Banking Finance

Companies, Insurance Companies, Modarbas & Mutual Funds

2 10,500 0.01%

7. Individuals 1,748 32,649,745 33.40%

TOTAL 1,781 97,750,726 100.00%

Srl # NamesNumber of

Shareholders

Number of Shares

held

% of

Shareholding

1. Associated Companies

Dewan Motors (Pvt.) Limited 1 37,750,726 38.62%

2. NIT and ICP

- - 0.00%3. Directors, CEO, their Spouses & Minor Children

Directors and CEO

3.1 Dewan Muhammad Yousuf Farooqui 1 9,065,451 9.27%

3.2 Dewan Abdul Baqi Farooqui 1 4,072,727 4.17%

3.3 Dewan Asim Mushfiq Farooqui 1 4,072,727 4.17%

3.4 Dewan Abdullah Ahmed Farooqui 1 4,072,727 4.17%

3.5 Dewan Abdul Rehman Farooqui 1 500 0.00%

3.6 Mr. Haroon Iqbal 1 500 0.00%

3.7 Mr. Aziz ul Haque 1 500 0.00%

7 21,285,132 21.77%

Spouses of Directors and CEO

3.8 Mrs. Hina Yousuf 1 1,050,000 1.07%

3.9 Mrs. Sharmeen Mushfiq 1 1,050,000 1.07%

3.10 Mrs. Farah Jabri 1 1,050,000 1.07%

3.11 Mrs. Nada Jabri 1 1,050,000 1.07%

4 4,200,000 4.30%

Minor Children of Directors and CEO

- - 0.00%

Srl # NamesNumber of

Shareholders

Number of Shares

held

% of

Shareholding

1 Dewan Motors (Pvt.) Limited 1 37,750,726 38.62%

2 Dewan Muhammad Yousuf Farooqui 1 9,065,451 9.27%

3 Dewan Zia-ur-Rehman Farooqui 2 8,622,727 8.82%

DETAILS OF CATAGORIES OF SHAREHOLDERS

SHAREHOLDERS HOLDING 5% OR MORE OF THE VOTING SHARES/ INTERESTS IN THE COMPANY

DETAILS OF TRADING IN THE SHARES OF THE COMPANY BY DIRECTORS, CEO, CFO, COMPANY

SECRETARY, THEIR SPOUSES AND MINOR CHILDREN

During the year under review, none of the CEO, CFO, Directors, Company Secretary, their spouses and minor children have

traded in the shares of the Company.


FORM 34

1. Incorporation Number

2. Name of the Company

3. Pattern of holding of the shares held by theShareholders as at

4. Number of

Shareholders

Total Shares

held56 1 - 100 Shares 828

785 101 - 500 Shares 391,465225 501 - 1,000 Shares 224,600322 1,001 - 5,000 Shares 1,048,374138 5,001 - 10,000 Shares 1,263,84046 10,001 - 15,000 Shares 614,57538 15,001 - 20,000 Shares 734,00037 20,001 - 25,000 Shares 884,11512 25,001 - 30,000 Shares 348,33315 30,001 - 35,000 Shares 514,5009 35,001 - 40,000 Shares 354,500

18 40,001 - 50,000 Shares 887,50011 50,001 - 60,000 Shares 616,5063 60,001 - 65,000 Shares 192,5004 65,001 - 70,000 Shares 277,0005 70,001 - 75,000 Shares 371,0004 75,001 - 80,000 Shares 315,0002 80,001 - 90,000 Shares 171,0002 90,001 - 95,000 Shares 185,5007 95,001 - 100,000 Shares 695,9125 100,001 - 150,000 Shares 564,6003 150,001 - 170,000 Shares 482,8022 170,001 - 200,000 Shares 400,0004 200,001 - 250,000 Shares 863,4894 250,001 - 300,000 Shares 1,125,5112 300,001 - 400,000 Shares 786,3654 400,001 - 500,000 Shares 1,905,0001 500,001 - 600,000 Shares 572,7271 600,001 - 700,000 Shares 630,0001 700,001 - 800,000 Shares 740,0002 800,001 - 1,000,000 Shares 1,729,8266 1,000,001 - 1,500,000 Shares 6,271,0004 1,500,001 - 5,000,000 Shares 16,722,1811 6,000,001 - 8,100,000 Shares 8,050,0001 8,100,001 - 9,070,000 Shares 9,065,4511 9,070,001 - 37,755,000 Shares 37,750,726

1781 97,750,726

THE COMPANIES ORDINANCE, 1984(Section 236(1) and 464)

PATTERN OF SHAREHOLDING

0046530

DEWAN FAROOQUE SPINNING MILLS LIMITED

Shareholdings

TOTAL

3 0 0 6 2 0 1 3


5. Percentage

5.1 26.07%

5.2 38.62%

5.3 NIT and ICP 0.00%

5.4 0.01%

5.5 Insurance Companies 0.00%

5.6 Modarabas and Mutual Funds 0.00%

5.7 Shareholders holding 5% 56.71%5.8 General Public 0.00%

a. Local 33.40%

b. Foreign 0.00%

5.9 1.90%

Categories of Shareholders Shares held

Directors, Chief Executive Officer, their spouses and

minor children25,485,132

Associated Companies, undertakings and related

parties37,750,726

-

-

Banks, Development Financial Institutions, Non-

Banking Finance Companies10,500

- -

55,438,904

32,649,745

Others (Joint Stock Companies, Brokrage Houses,

Employees Funds & Trustees)1,854,623

PROXY FORMIMPORTANT

I/We_____________________________________________________________________________ of

_____________________________________________________________________ being a member

of Dewan Farooque Spinning Mills Limited and holder of________________________________

___________________________________________Ordinary shares as per Registered Folio No./CDC

Participant’s ID and Account No ____________________________________________ hereby appoint

_________________________________________________________________________________ of

__________________________________________________________________________ who is also

member of Dewan Farooque Spinning Mills Limited vide Registered Folio No./CDC Participant’s ID

and Account No._________________ my/our proxy to vote for me/our behalf at the 9th Annual General

Meeting of the Company to be held on And any

adjournment thereof.

Signed this _____________________________________ day of ___________________________2013.

Wednesday, October 30, 2013, at 02:00 p.m.

Signature

Witness:

Name:

Address:

SignatureWitness:

Name:

Address:

Signature

Affix RevenueStamp Rs. 5/-

10th ANNUAL GENERAL MEETING

DEWAN FAROOQUE SPINNING MILLS LIMITED

This form of Proxy duly completed must be deposited at our Shares RegistrarTransfer Agent BMF Consultants Pakistan (Private) Ltd. Anum Estate Building, Room No. 310 & 311, 3rd Floor, 49, Darul Aman Society, Main Shahrah-e-Faisal,Adjacent Baloch Colony Bridge, Karachi-75350, Pakistan. Not later than 48 hours before the time of holding the meeting A Proxy should also be a member of the Company.

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