sunrays final

7/27/2019 Sunrays Final

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INTRODUCTION

Sun Rays Textile Mills is working under INDUS GROUP OF COMPANIS! It was

in"or#orated on August $%& '()% wit* an aut*ori+ed "a#ital o, Rs! '-- Million di.ided

into '- Million Ordinary s*ared o, Rs '-/0 ea"*! T*e Paid u# Ca#ital o, t*e "o1#any is

Rs! 2- Million di.ided into 2 Million Ordinary s*ared o, Rs! '-/0ea"* ,ully #aid in "as*!

T*e 3ran"* o,,i"e o, t*e "o1#any is in Multan 3ut its *ead o,,i"e is lo"ated in 4ara"*i

and t*e "o1#any is listed in 4ara"*i Sto"k x"*ange! T*e #rin"i#al 3usiness o, t*e

"o1#any& as 3y t*e o35e"t "lause& is to 1anu,a"ture and sale o, yarn! T*e 1ills is lo"ated

in Mu+a,,argar*& Dera Ga+i 4*an Di.ision w*i"* is in t*e #ro.in"e o, Pun5a3!

BANKER'S OF THE COMPANY

T*e 6ankers o, t*e Co1#any are7

8 9a3i3 6ank :i1ited

8 Musli1 Co11er"ial 6ank

8 National De.elo#1ent Finan"e Cor#oration



AUDITOR'S OF THE COMPANY

T*e auditors o, t*e Co1#any are M/s M! ;ousa,Adil! Salee1 < Co1#any! Sun rays

Textile Mills *as 9ead O,,i"e in 4ara"*i 3ut a 6ran"* O,,i"e is in Multan! Co1#any *as

a "*air1an& a "*ie, exe"uti.e! And ,i.e dire"tors! T*e dire"tors are res#onsi3le ,or7

• Planning

• Finan"e

• Co11er"ial

• Personnel

• x#ort

T*e "o1#any *as "entrali+ed 1anage1ent syste1! x"e#t #rodu"tion& all 1a5or a"ti.ities

are #er,or1ed in 6ran"* O,,i"e! T*e "o1#any is 1anaged 3y #ro,essional 1anage1ent!

T*e relations*i# 3etween workers an 1anage1ent is "ordial! T*e e1#loyees are =uite

satis,ied wit* t*eir 1anage1ent! T*e workers are drawing *andso1e salaries! T*e

1anage1ent is also satis,ied wit* t*e #er,or1an"e o, e1#loyees!

FINANCIAL YEAR

T*e Finan"ial ;ear o, t*e "o1#any 3egins ,ro1 'st O"to3er and ends at >-t* Se#te13er!

AN OVERVIEW OF COMPANY'S PERFORMANCE

Sun Rays Textile Mills started its "o11er"ial #rodu"tion ,ro1 ?uly '& '(('! Co1#any

earned a #ro,it o,Rs! '&)-'&$'@ in ,irst t*ree 1ont*s! In '(($ su,,ered a loss o, Rs!



&('%&-$! T*is loss was t*e result o, de"line in sale #ri"es o, "otton yarn 3ot* in

international and lo"al 1arket!

In t*e year '((> "o1#any earned a #ro,it o,Rs! '&')2& '%$! T*is was due to t*e redu"ing

"ost& ex#ort 1arketing ad in"reased e,,i"ien"y! T*is year t*e s#inning "a#a"ity o, t*e

"o1#any in"reased ,ro1 '$@)- s#indles to '($-- s#indles! x#ort in"reased ,or1 2!%

1illion to )>!>'' 1illion!

In t*e year '((@ "o1#any su,,ered a loss o,Rs! '>&>>&2@! T*is was due to t*e in"reased

"ost o, in#uts i!e!& #ower& 1ard0u#& and wages ets! T*us all t*ese in"reased t*e "ost o,

#rodu"tion!

In t*e year '(( "o1#any su,,ered a loss o, Rs! $(&%'%&2>>! T*e sale o, yarn in"reased as

"o1#ared to t*e last year!

6ut t*e loss was due to t*e ,ailure o, "otton "ro# w*i"* in"reased t*e "otton #ri"es!

Furt*er1ore& t*e #ri"es o, "otton yarn were not in"reased in #ro#ortion to t*e in"reased

"otton #ri"es!

In t*e year '((2 textile industry re1ained under "rises as in t*e #re.ious year! So& t*e

a""u1ulated loss #osition in"reased to Rs! >& 2$2&>! In t*e year '((% "o1#any earned

a,ter tax #ro,it o, Rs! & ')(& 2(! T*is year t*e "o1#any was also in "rises as in t*e

#re.ious year 3ut t*e 1anage1ent worked *ard to en*an"e ex#orts! As a result o, w*i"*

ex#orts o, t*e "o1#any in"reased $> B!



COMPANY PROFILE

BOARD OF DIRECTORSMian RiazAhmedMr. Kashif RiazMian Muhammed AhmedMr. Shahzad AhmedMr. Naveed AhmedMr. ImranAhmadMr. ShafqatMasoodMrs.Rehana Attaullah KhanMr. Mutiullah Khan(Chairman)

(Chief Exeutive)(!iretor)(!iretor)(!iretor )(!iretor)(!iretor)(!iretor)(!iretor)

(Nominee N.!.".C)C#IE" FINANCIAL OFFICERC$M%AN& SECRETARYAUDIT C$MMI''EEMr. Shair Kausar Mr. Ahmad "ahim NiaziMr. Shahzad AhmadMr. Naveed AhmadMr. ShafqatMasoodMr. Ahmad "ahim Niazi

(Chairman)(Memer)(Memer)(Seretar)

REGISTERED OFFICEFACTORY



BANKERSAUDITORSS*"Ioor+ $ffie ,+ -/+ 0eaumont %laza+0eaumont Road+ Civil 1ines 2uarters.Karahi.Khan3ur Shomali 0a44a Sher M+ M. RoadMuzaffar5arh.Muslim Commerial 0an6 1imited.Soneri 0an6 1imited"asal 0an6 1imitedM7s M+ &ousufAdil+ Saleem 8 Com3an.Chartered Aountants



9ISI$N'o e a most suessful om3an in terms of qualit 3roduts+servies 8 "inanials.

MISSI$N'o 3rovide qualit 3roduts 8 Servies to our ustomers and handsome return to theshareholders.



NAME OF DIRECTORMian Mohammad AhmedMianRiazAhmedShahzad AhmedNaveed AhmedIm ran AhmedKashifRiazShafqat MasoodRehana Attaullah KhanMutiullahKhan

PRODUCTION

'he %rodution for the ear under

revie: :as satisfator.

1A0$;R7MANA5EM EN''he 1aour 7 Mana4ement relations remained ordial throu4hout theear. &our Com3an is 3rovidin4 various failities and amenities tothe :or6ers.

PATTERN OF SHAREHOLDING'he %attern ofShareholdin4 is annexed+



COMMERCIAL DEPARTMENT

Main 9ussain A*1ad Fa+al w*o is a di re"tor o, t*e "o1#any *eads t*e

"o11er"ial de#ar t1ent! Co11er"ial de#ar t1ent #lay a key role in t*e

3usiness! T*e "o11er"ial de#art1ent o, t*e 9ussain textile is di.ided into

two 1ain se"tions!

1 Purchase department

2. Sales department

Purchase Department

T*e #ur"*ase de#art1ent is di.ided also into two se"tions7

'! Cotton Pur"*ase De#ar t1ent

$! Store Pur"*ase De#ar t1ent

COTTON PURCHASE DEPARTMENT

Cotton is #ri1ary raw 1aterial in texti le industry! As "otton is seasonal

"ro# so t*i s r e=uires *uge in.est1ent and e,, i" ient de" is ion 1aking

a3il i t ies ! Daily sto"k #osit ions are re"ei.ed ,ro1 t*e 1ills ! T*e dire"tor

*i1sel, is res#onsi3le ,or t*e #ur"*ase o, raw 1aterial!



T*e set u# o, t*is de#art1ent is under7

Dire"tor

i"e President

Field Manager

Cotton Sele"tor

Purchase Process

T*e ,ollowing ste#s are in.ol.ed in t*e #ur"*ase o, raw 1aterial!

Selectrs !"s"t

Sample select"n

Sample test"n#

Dec"s"n

A#reement

$"s"t % Cttn Selectr

T*e "otton sele"tors o, 9ussain Textile! So1eti1es "otton sele"tors .isit

on t*eir 3e*al, and so1e ti1es t*e "otton ,a"tories "all t*e1!



Select"n % Sample

*en t*e "otton sele"tor ,inds any suita3le "otton t*ey take t*e sa1#le o,

t*at "otton wit* t*e #ri"e o,,ered 3y t*e sellers!

Test"n# % Sample

T*e "otton sele"tor sends t*ese sa1#les to t*e la3oratory ,or testing!

Dec"s"n %r purchase

As t*ee is "entrali+ed 1anage1ent syste1 so t*e dire"tor "onsidering tests

results& *e takes t*e de"ision ,or t*e #ur"*ase o, "otton *i1sel,!

A#reement

On t*e "o1#lexion o, t*e a3o.e #ro"ess writ ten agree1ent is 1ade wit*

t*e Store #ur"*ase de#art1ent

Dire"tor

Pur"*ase o,,i"er

Assistant Pur"*ase o,,i"er

Pur"*ase "lerk

T*e s to re #ur "*as e de#ar t1en t i s r es #ons i3 le , or t *e #ur "*as e o ,

,ollowing ite1s7

Spare parts



General Stores i!e! stationary #a"king 1aterial oil lu3ri"ants

&u"ld"n# Mater"al

T*e store #ur"*ase de#art1ent #re#ares t*e ,ollowing do"u1ents!

Demand Re'u"s"t"n

Order %rm

(ds rece"!ed nte.

Procedure

T*e ,ollowing is t*e #ro"edure o, lo"al #ur"*ase de#art1ent&

T*e #ur"*ase de#art1ent re"ei.es indent ,ro1 t*e store in "*arge at 1ills!

T*e indent *as ,ull detail a3out t*e =uantity and =uality o, re=uired ite1s!

T*e #ur"*ase de#ar t1ent on t*e 3as is o, indent doesnE t in=uiry ,or rate

, ro1 at leas t two su##l iers & a, ter in=uiry 1anager #ur"*ase dis"uss t*e

rate and ot*er ne"essary in,or1ation wit* dire"tor!

A,t er t *e Pur "*as e de#ar t1en t #ur "*as es i te1s , ro1 t *e a##ro.ed

su##liers and sent t*e1 dire"tly to t*e 1ills wit* t*ree "o#ies o, deli.ery

orders!

In "ase o, no re 5e" t ion o, s t e1s s tore in "*arge send one "o#y o, t*e

deli.ery order 3a"k to #ur"*ase de#art1ent along wit* one "o#y o, inward

gate #ass!



Store in "*arge also kee#s a "o#y o, deli.ery order ,or *is own re"ord!

IN "ase r e 5e" tion o, items s tore in "*arge sends al l "o#ies o, del i.ery

orders wit* ite1s 3a"k to t*e #ur"*ase de#art1ent o,,i"e!



SA:S DPARTMNT

Sates de#art1ent is one o, t*e i1#ortant in any industry! I, a unit #rodu"e

3est =uality goods 3ut *a.e not "o1#etiti.e sta,, t*an it would 3e di,,i"ult to

sell t*e #rodu"ts! T*e stru"ture o, Sales De#art1ent is as under7

Dire"tor Manager :o"al Sales Manager x#ort Sales

Co11er"ial Assistant x#ort Assistant

Sun Rays Textile Mills is selling its #rodu"t to lo"al as well as in

international 1arket! T*us t*e sales de#art1ent o, t*e Sun Rays TextileMills is di.ided into two se"tions7

8 :o"al Sales De#art1ent

8 x#ort De#art1ent

LOCAL SALES DEPARTMENT

In t*e 3eginning Sun Rays Textile Mills :i1ited sold its 1a5or #ortion o,

#rodu"t to t*e lo"al 1arket and t*en it gradually entered in t*e international1arket! In '((' t*e ration o, lo"al sales to total sales was (%!%@B 3ut t*is

ration de"reased to @@!('B to total sales o, t*e year '((%!

PROCEDURE

T*e ,ollowing a"ti.ities are #er,or1ed in t*e lo"al sales de#ar t1ent!

8 T*e dire"tors re"ei.es orders 1ainly 3y #*one

8 Dire"tor e.aluates t*e "a#a3ility to ,ul, ill t*e order 3y "onsulting daily

sto"k re#ot ,ro1 1ills!8 Dire"tors gi.es t*e instru"tion to lo"al sales 1anager t*at trans,er t*e

in,or1ation on lo"al sale "ontra"t sli#!

8 6e,ore issuing/sending "ontra"t sli#& sales 1anager "*e"ks t*e selling

li1its o, t*e #arti"ular #arty/3ro"ker& and dis"uss t*e 1atte wit* t*e

Dire"tor i, it is ex"eeding t*e selling li1it!



8 Sale De#art1ent 1ake t*ree "o#ies o, Deli.ery Order signed 3y t*e

Dire"tor!

8 Original "o#y is dis#at"*ed to t*e #arty and kee#s one "o#y ,or re"ord and

one "o#y to a""ount se"tion!

Export Department

9ussain t exti le 1il ls s ta rt ed sales , ro1 lo"al 1arket and now 1a5or

#ortion o, #rodu"ts is ex#orted outside Pakistan! Mr! 9a,i+ *eads t*e

ex#ort de#art1ent!

T*e stru"ture o, t*is de#art1ent is as under!

Dire"tor

Manager x#ort

x#ort Assistant

Ty#ist

Export Process

T*e ex#ort #ro"ess starts ,ro1 3argaining! A 3uyer "ontra"ts t*e "o1#any

, or t* e # ur "* as e o , y ar n! T *e " on tr a" t 1 ay 3 e d ir e" t o r t *r ou g*

1iddle1an! *en t*e #ri "e i s sent and "ontort s ,or1 i s , il led ! T*e

dire"tor o, t*e "o1#any settles t*e ter1s and "onditions!



COMMERC)A* )N$O)CE

6I:: OF :ADING

FORM

> 6I:: OF C9ANG

CFRTTFTCATF OF ORIGIONS

6NFICIAR; S CRTIFICAT'

CRTIFICAT OF S9IPPING COMPAN;

PAC4ING :IST

Cmmerc"al "n!"ce

)t "s a srt % l"st sh+s +hat are the, e-prt"n# sh+"n# the Cntract

*.C

ORM E

Sh"nn"n# Cmpan, name

T*is "o11er"ial in.oi"e is sent to t*e 3uyer s Central *ank! One "o#y o,

t*is in.oi"e is kept in Hussain Mills Ltd

Bill of Lading

I t is a l is t o, goods issued 3y t*e s*i##ing l ine stat ing t*at t*e goods *a.e

3een loaded on 3oard ,reig*t #re#aid and ot*er s#e"i,i"ations!



E form

For1 i s t*e 3asi" do"u1ent o, ex#ort Go.ern1ent "ont ro l ,oreign

ex"*ange t *r oug* t *i s , or 10 T*us i t 3 one o , t *e 1os t i 1#or tant

do"u1ents x#ort , i l ls and signs i t ! 6ank also "ountersigns t*is ,or1! I t

*as ,our "o#ies!

T*e or iginal and du#l i"ate "o#y is sent to t*e Custo1 De#ar t1ent ,or

"learan"e! A,ter .eri, i"at ion t*e "usto1 de#art1ent sends "o#y and one

"o#y t*e "o#y is ke#t wit* t*e "usto1! T*e tr i#l i"ate "o#y o, t*is ,or1 issent to t*e negotiating 3ank! T*e =uadru#li"ate "o#y is o,,i"e "o#y!

Bill of Exchange

A 3il l o, ex"*ange *as 3een de,ined as an un"ondit ional order in writ ing

addressed 3y one #erson to anot*er& s igned 3y t*e #erson g i. ing i t!

Re=uir ing t*e #erson to w*o1 i t i s addressed to #ay on de1and or at a

, ixed or deter1ina3le ,uture t i1e& a "er tain su1 o, 1oney to or to t*e

order o, a s#e"i,ied #erson!

Certificate of Origin

T*e "*a13er o , "o11er"e and i ndus tr y i ss ue t *i s "er ti ,i "a te ! T*i s

"erti,i"ate only "erti,ies t*e origin!

T*e 3uyer issues 3ene,i"iary "ert i, i"ate re=uires t*e sel ler ! Usually t*e

wording o, t*is "erti,i"ate is as7



HCer t i , i"ate t*at goods *a.e 3een s*i##ed #er .essel s*i##ing "o1#any

na1e and t*e s*i##ing do"u1ents *a.e 3een dis#at"*ed to t*e a##li"ant

under :" No!

Cert"%"cate %rm sh"pp"n# cmpan,

Sh"pp"n# cmpan, )ssues t"lls cert"%"cate n the re'uest % /u,er.

Packing list

Pa"king l i s t "ontain t*e detai l o, al l t*e i te1s 3eing ex#or ted! T*is l i s t

s*ows t*e "arton nu13er& "ontainer nu13er goods des"ri#t ion gross and

net weig*t o, total "artons and ea"* "arton!



IMPORT DEPRTME!T

9ussain texti le *as also an i1#ort de#art1ent! T*e i1#ort de#art1ent o,

9TM is res#onsi3le to i1#or t t*ose i te1s t*at are not a.ai la3le in t*e

Pakistan! T*e stru"ture o, t*is de#art1ent is as under7

Ch"e% E-ecut"!e

D"rectr

Sen"r Mana#"n# )mprt

Ass"stant

PROCEDURE

Senior Manager is res#onsi3le ,or i1#ort o, 1a"*inery e=ui#1ent s#are

#arts raw 1aterial et"!

An indent ,or i1#ort o, i te1s a,ter t*e a##ro.al o, C*ie, xe"uti.e is not

i1#ort de#art1ent!

T*e Sen io r Manager I 1#or t s el e" ts a s u3"ont ra"t or , ro1 a##ro.ed

su##liers list!



In re#lay a =uotation ,ro1 t*e su3"ontra"tor re"ei.ed! A "o#y o, =uotation

is to "on"erned ,or e.aluation and "*e"king o, s#e"i,i"ation!

A, ter r e"ei. ing t*e "on, ir1ation l et te r o, " redit i s est a3li s*ed and

su3"ontra"tor is in,or1ed eit*er 3y #*one or ,ax or telex!

T*e re"ei.ed ite1s are sending to t*e 1ills w*ere t*ese are o#ened!

T*e ite1s are "*e"ked against =uotations!

In "ase o, any da1age t*e i1#ort de#art1ent is in,or1ation de#art1ent do

t*e ne"essary arrange1ents ,or sur.ey o, goods ,ro1 insuran"e agen"ies

and "lai1s!

A ,ile is 1aintained wit* detailed in,or1ation o, i1#ort de#art1ent and



FINANC DPARTMNT

Finan"e de#art1ent is t*e 3a"k 3one o, e.ery organi+ation! Finan"e

de#art1ent is

"o1#osed o, two de#art1ents su"* as7

8 A""ounts de#art1ent

8 Internal Audit de#art1ent!

A CCOUNTS DEPAR TMENT

T*e a""ount de#art1ent is res#onsi3le ,or t*e entire a""ounting #ro"ess o,

t*e organi+ation regarding t*e re"ording o, transa"tion& designing t*e

a""ounting syste1& #re#aration o, ,inan"ial state1ents and "o1#uter

a##li"ation to t*e a""ounting #ro"ess!

FUNCTIONS OF THE ACCOUNTING DEPARTMENT

'! T*e 1ain ,un"tion o, t*e a""ounting de#art1ent are to re"ord t*e

3usiness transa"tions!

$! T*is de#art1ent also design t*e a""ounting #oli"ies!

>! T*e de#art1ent is res#onsi3le to 1aintain t*e 3ooks o, a""ounts!

@! T*is de#art1ents also #re#ares t*e , inan"ial state1ents and o,,er t*ese

to t*e s*are*olders!

T*us 3y studying t*e a3o.e ,un"tions it is "lear t*at t*e ,inan"e de#art1ent

is restri"ted u#to t*e re"ording and 1aintain t*e a""ounting data! All t*e

, inan"ial 1attes are "ontrolled 3y t*e dire"tors! T*is de#art1ent is *eaded

3y C*ie, A""ountant Mr! S*a33ir 4ausar!

7T*e set u# o, t*is de#art1ent is as under7

C*ie, A""ountant

A""ountant

Cas*ier

Ty#ist

Data ntry O#erator

T*e a""ounting de#art1ent is 1ainly di.ided into ,ollowing t*ree se"tionsJ

Stores Se"tion

Salaries and ages Se"tion

General A""ounting Se"tion



1. STORE SECT)ON

$!

Store se"tion is 1ainly "on"erned wit* store a""ounting! T*is se"tion is

*eaded 3y t*e C*ie, A""ountant! T*e 1a5or res#onsi3ilities o, t*is se"tion

are

8 To re"ord all t*e store #ur"*ases

8 To re"ord all t*e store issues

8 To #re#are .arious re#orts relating to store i!e! 1aterial "onsu1#tion

re#ort& #arty wise #ur"*ase re#ort!

8 To kee# a "*e"k on all stores 3y sur#risingly "*e"king t*eir re"ord and

#*ysi"al existen"e o, ite1s

stored!

6e"ause o, t*e a3o.e 1entioned duties& t*is se"tion *as a key #osition in t*e

"o1#any! NO #ay1ent is 1ade to any3ody unless it is "*e"ked and .eri,ied 3y t*is se"tion!

2. SA*AR)ES AND 0AES SECT)ON

T*is se"tion is res#onsi3le o, 1aking #ay1ents to t*e e1#loyees! T*is

se"tion #lays an i1#ortant role in sa,eguarding t*e interest o, t*e "o1#any

as well as e1#loyees! T*is se"tion also ensures all t*e la3our laws! Certain

laws relating to t*e "o1#any are as under7

a. *EA$E PROCEDUREAs ,ar as lea.es are "on"erned t*ere are t*ree ty#es o, lea.es7

S)C *EA$ES

Si"k lea.es are eig*t in a year!

CASUA* *EA$ES

Casual lea.es are ten in ea"* year!

ANNUA* OR EARNED *EA$ES

T*ere are twel.e earned lea.es! Co1#anies rules do not allow any e1#loyeeto do ,our days lea.e wit*out a##li"ation! In "ase i, an e1#loyee does so

t*en *e "annot a.ail annual lea.es!

/. ATTENDANCE A**O0ANCE

I, an e1#loyee works ,or ,ull one 1ont* t*en *e gets attendan"e allowan"e

o, Rs! '--/K



c. SA*AR)ES AND 0A(ES

Mini1u1 Salary is not less t*en '(-/S T*e 3reak0u# o, salary is as under7

6asi" Salary

6adii Allowan"e -

Attendan"e Allowan"e '--

Cost o, :i.ing Allowan"e ')B o, 6asi" Salary

Pun5a3 1#loyees S#e"ial Allowan"e

Mini1u1 ages Ad5a"ent Allowan"e

9ouse Rent Allowan"e '-B o, 6asi" Salary

Utility Allowan"e '-B o, 6asi" Salary

S#e"ial Allowan"e >--

d. )NCOME TA3

In"o1e Tax is dedu"ted ,ro1 alt t*ose e1#loyees w*ose annual salary is

greater t*an Rs! @-&---/K

e. AD$ANCES AND :OANS

Ad.an"es and loans are gi.en to t*e e1#loyees w*i"* are ad5usted against

salaries! It is t*e sole dis"retion o, t*e 1anage1ent w*et*er t*ey a##ro.e

ad.an"es and loans or not!

%. (RATU)T4

Gratuity is gi.en to t*e e1#loyees!

5. (ENERA* ACCOUNT)N( SCTION

General a""ounting se"tion is 1ainly "on"erned wit* utilities like gas&

ele"tri"ity& ,uel& tele#*one et"! T*e 1a5or res#onsi3ility o, t*is se"tion to

kee# t*e re"ord o, 3ills regarding utilities!



)NTERNA* AUD)T

Sun Rays Textile Mills *as also a s#e"ial de#art1ent ,or #er,or1ing t*e

internal audit! T*is de#art1ent is *eaded 3y t*e internal auditor! T*e audit

de#art1ent de.elo#s audit #rogra1s 3e,ore "ondu"ting and audit! T*is

de#art1ent work on "ontinual 3asis! T*e internal auditor o, t*e "o1#any

.isits t*e 1ills on weekly 3asis and "ondu"t t*e audit a""ording to t*e

"*e"k list ,ra1ed 3y t*e internal audit de#art1ent! T*e de#art1ent is

res#onsi3le to kee# its eyes on t*e i1#le1entation o, 1anage1ent #oli"ies!

T*is de#art1ent is also res#onsi3le to in,or1 t*e to# 1anage1ent regarding

t*e a""ura"y o, all a""ording in,or1ation and t*eir analysis!

MAIN FUNCTIONS OF THE INTERNAL AUDIT

DEPARTMENT Following are t*e 1ain ,un"tions o, t*e internal audit de#art1ent!

1. Re!"s"n % the S,stem

T*e internal audit de#art1ent re.ises t*e syste1 i, t*ere arises any

dis"re#an"y!

2. Chec6 n the s,stem

T*e internal audit de#art1ent "*e"k w*et*er t*e re.ised syste1 is 3eing

,ollowed or not! I, t*ere arises any de.iation t*at is re#orted to t*e1anage1ent!

5. Chec6 n Mana#ement pl"c"es

@! T*is de#art1ent also exa1ines w*et*er 1anage1ent #oli"ies are 3eing

,ollowed or not!

7. Prper ma"ntenance % /6s % accunts

T*e internal audit de#art1ent also exa1ines w*et*er #ro#er 3ooks o,

a""ounts are 3eing ke#t as re=uired 3y t*e Co1#anies Ordinan"e '()@!

8. Assets Sa%e#uard"n#

T*is de#art1ent also sa,eguard t*e "o1#any assets!

T*e ,ollowing are t*e 1ain ,un"tions #er,or1ed 3y t*e internal audit

de#art1ent at 3ran"* o,, i"e Multan w*ile "ondu"ting an audit!

i! C*e"king o, #ostings ,ro1 "lo"k "ards to wages s*eets&

ii! Re"o.ery o, ad.an"es



iii! Pri"e "*e"king

i.! C*e"king o, Credit Notes issued 3y t*e Sales De#art1ent!

.! C*e"king o, De3it Notes issued 3y t*e Sales De#art1ent!

.i! C*e"king o, re3ates& dis"ounts

.ii! Continuous "*e"king o, assets o, t*e "o1#any!

.iii! C*e"king o, 3ank .ou"*ers!

ix! C*e"king o, #ay1ents .ou"*ers

x! C*e"king o, "redit .ou"*ers

-"! C*e"king o, general .ou"*ers



NOTES TO THE ACCOUNTSFOR THE YEAR ENDEDSEPTEMBER 30. 2003

<. S'A';S AM! AC'I9I'IES

'he om3an is limited shares inor3orated in %a6istan on Au4ust =>+<?/> under the Com3anies $rdinane+ <?/@ and listedat Karahi Sto6 Exhan4e. 'he 3rini3al usiness of the Com3an! manufature and sale of arn. 'he Mills is loated at !istrit Muzaffar4arh+ !era5nazI Khan !ivision+ in the 3rovine of %una.

2. SIGNIFICANT ACCOUNTING POLICIES

2." Accou#$#% Co#&e#$o#'hese Bmanlal statements have een 3re3ared under#istorial ost onvention exe3t thater tain fixed assets have een inluded at revaluation andertain exhan4e differenes stated innote =.- have een inor3orated In the ost of relevan t assets.

2.2 S$'$e(e#$ o) co(*+'#ce'hese finanial statements have een 3re3ared in aordane:ith a33roved Aountin4 Standards as a33liale in %a6istanand requirements of Com3anies $rdinane+ <?/@+ A33rovedaountin4 standards om3rise of suh International

Aountin4 Standards as notified under the 3rovisions of the Com3anies $rdinane+ <?/@ Dherever+ the requirementsof Com3anies $rdinane <?/@ or diretives issued the



Seurities and Exhan4e Commission of %a6istan differ :iththe requirements of these standards+ the requirements ofCom3anies $rdinane <?/@ or requirements of the saiddiretives ta6e 3reedene.

2.3 S$')) Re$re(e#$ Be#e)$!'he Com3an o3erates an unfunded 4ratuit sheme overin4all its em3loees. 'he ost of 3rovidin4 enef it is determinedusin4 the 3roeted unit redit method+ :ith atuarial valuation.'he atuarial valuation is arried out as at Se3temer +=. Atuarial 4ains and losses :hih exeed < 3er ent ofthe 3resent value of the om3anFs 4ratuit oli4ations areamor tized over the ex3eted avera4e remainin4 :or ld lives ofthe em3loees. %ast servie ost is reo4nized immediatel to

the extent that the enefits are alread vested+ and other:iseis amortized on a strai4ht line asis over the avera4e 3erioduntil the amended enefits eome vested.

2., T'-'$o#Curre#$

%rovision for urrent taxation is ased on taxale inome atthe urrent tax rates after ta6in4 into aount tax reates andtax redits availale+ if an. 'he har4e for urrent tax isalulated usin4 3revailin4 tax rates ex3eted to a33l to the3rofit for the ear. 'he har4e for urrent tax also in ludesadustments :here onsidered neessar to 3rovision for taxmade in 3revious ears ar isin4 from assessments frameddurin4 the ear for suh ears.

De) erred!eferred tax is aounted for usin4 the alane sheet liailitmethod in res3et of all tem3orar differenes arisin4 fromdifferene et:een the arrin4 amount of assets and

liailities In the finanial statements and the orres3ondin4tax ases used in the om3utation of the taxale 3rofit.!eferred tax liailities are 4enerall reo4nized for all taxaletem3orar differenes and deferred tax assets are reo4nizedto the extent that It Is 3roale that taxale 3rofits :ill eavailale a4ainst :hih the dedutile tem3orar differenes+unused tax losses and redits an



!eterred tax is alulated at rates that are ex3eted to a33l to the 3eriod :hen the differenes

reverse ased on tax rates that have een enated orsustantivel enated the alanes

sheet date. !eferred tax is har4ed or redited in the inome statement+ exe3t in the ase of

items redited or har4ed to equit in :hih ase it is inluded in the equit.2. O*er'$#% A!!e$!

$3eratin4 assets exe3t freehold land are stated al ost or valuation less aumulated

de3reiation and an identified im3airment loss. "reehold land is stated at ost7valuation.!e3reiation is har4ed to inome a33lin4 the reduin4 alane method at the rates s3eified in

the o3eratin4 assets note. Exhan4e differenes in res3et of loans otained for aquisition of

fixed assets are inor3orated in the ost of relevant assets+

!e3reiation on additions durin4 the ear is har4ed on the asis of :hole ear. #o:ever+

de3reiation for 3ro3ortionate 3eriod of use is har4ed on maor 3roet ost a3italized durin4

the ear. No de3reiation is har4ed on deletions durin4 the ear.

Im3airment loss or its reversal+ if an+Fis har4ed to inome. Dhere an im3airment loss is

reo4nized+ the de3reiation har4e is adusted in the future 3eriods to alloate the assets

revised arrin4 amount over its estimated useful life.

Maintenane and normal re3airs are har4ed to inome as and :hen inurred+ Maor rene:als

and im3rovements are a3italized. 5ains and losses on dis3osal of assets are inluded in

urrentearFs inome. =G C'*$'+ Dor6 In Pro%re!!

All osts7ex3enditure onneted :ith s3eifi assets are olleted under this head. 'hese aretransferred to s3eifi assets as and :hen assets are availale for use.$!% Stores and S#ares

Stores and s3ares are stated at lo:er of ost (determined the movin4 avera4e method) and

net realizale value+ exe3t those in transit :hih are valued at atual ost.2./ S$oc # Tr'de

'hese are valued at lo:er of ost and net realizale value. Cost is determined a33lin4

follo:in4 asisH

Ra: material Dei4hted avera4e ost Dor6 in 3roess Avera4e manufaturin4

ost "inished 4oods Avera4e ost of 4oods manufatured Daste Net

realizale value 2.1 Tr'de De$or!

Kno:n ad dets are :ritten off and 3rovision is made for dets onsidered doutful. 2."0

Fore%# Curre#c Tr'#!+'$o# Assets and liailities in forei4n urrenies are translated into %a6 ru3ees at the rates of exhan4e

rulin4 on the alane sheet date+ exe3t those overed under for:ard exhan4e ontrat and

exhan4e ris6 over sheme :hih are translated at the over rate. 'ransations In forei4n

urren are translated into %a6 ru3ees at the rate of exhan4e rulin4 at the date of transation

exe3t for those overed under for:ard exhan4e ontrat :hih are translated at the over rate.

Exhan4e differenes other than those mentioned in note =.- are inluded in urrent earFs

inome.2."" F#'#c'+ #!$ru(e#$!

"inanial instrument is reo4nized usin4 trade date aountin4 asis+ :hen the om3an

eomes the 3art to the ontratual 3rovisions of the instrument.

Financial '!!e$!

All finanial assets are initiall reo4nized at nominal value of onsideration 4iven for it.

Susequent to initial reo4nition+ finanial assets are reo4nized at fairvalue exe3t finanial

assets :hose fair value annot e measured relial. An 4ain or loss is inluded in urrent ear

inome.

Financial liabilities

All finanial liailities are initiall reo4nized at nominal value of onsideration reeived.

Susequent to initial reo4nition+ finanial liailities are reo4nized at fair value+ amortized ost or

ost as the ase ma e. An 4ain or loss is inluded in urrent ear inome.2."2 Pro&!o#



A 3rovision is reo4nized in the alane sheet :hen the om3an has a le4al or onstrutive

oli4ation as a result of a 3ast event+ it is 3roale that an outflo: of resoures emodin4

eonomi enefits :ill e required to settle the oli4ation+ and a reliale estimate an e made to

the amount of oli4ation+2."3 I(*'r(e#$

An assessment is made at eah alane sheet da'-e to determine :hetherthere is an evidene

that a finanial asset or 4rou3 of finanial assets ma e im3aired. If suh evidene exists+ theestimated reoverale amount of that asset is determined and an im3airment loss reo4nized for

the differene et:een the reoverale amount and the arrin4 amount.2.", Tr'de '#d o$4er *''+e!

1iailities for trade and other amounts 3aale are arried at ost :hih is the fairvalue of the

onsideration to e 3aid in the future for 4oods and servies reeived+ :hether or not illed to the

om3an.2." A!!e$! !u5ec$ $o )#'#ce +e'!e

'hese are stated at the lo:er of 3resent value of minimum lease 3aments under the lease

a4reements and the fair value of the assets. 'he related oli4ations of lease are aounted for as

liailities. "inanial har4es are alloated to aountin4 3eriods in a manner so as to 3rovide a

onstant 3eriodi rate of finanial ost on the remainin4 alane of 3rini3al liailit for eah

3eriod. !e3reiation is har4ed at the rates stated in note < a33lin4 reduin4 alane method

to :rite off a ost of the assets over its estimated useful life in vie: of ertaint of o:nershi3 ofassets at the end of the lease 3eriod.

2."6 Re&e#ue Reco%#$o# Sales are reorded on dis3ath of 4oods to ustomers.



DIRECTOR7S REPORT

&our !iretors are 3leased to 3resent the <=th Annual Re3ort on the affairs of our om3analon4 :ith 'he Audited Aounts for the "inanial ear ended th Se3temer+=.

'he Com3an earned 3retax 3rofit of Rs.-G.==-(M). 0riefs of finanial results for the ear under

revie: are as under%rofit for the ear efore taxation %ro vision for taxation %rofit afterJtaxation;na33ro3riated 3rofit rou4ht for:ard %rofit availale for a33ro3riation 'ransfer to 5eneralReserve %ro3osed Cash !ividend'ransfer from sur3lus on revaluation of fixed assets ;na33ro3riated 3rofit arried for:ardRs.$$$ -@+< (>+@<) @G+-// =<+?@< G/+-=? (+) (G+?) G<+>/< ?+@<

'he earnin4 3er share is Rs.G.>- (%ar value Rs.<73er share

PRESEMT YEAR ASSESSMENT

0 the 4rae of almi4ht Allah the om3an earned reasonale 3rofits. &our !iretors are

3leased to 3ro3ose <L Cash !ividend for the ear under revie:.'he total sale amounted to Rs./=+<+@<= as om3ared to Rs.>?=+<??+?-- Last ear. 'hou4hthere :as Inrease in the total sale .?L+the 4ross 3rofit ho:ever redue fromRs.<G@+//+@? to Rs. <=>+>@=+>>@ i.e. from =./< L of sales last earfo <-+-= L this ear. 'hederease in 4ross 3rofit is mainl attriuted to the inrease in ost of ra: material and eletriitover last ear.

An amount of a33roximatel Rs. </ (M) has een invested on 0MR of the mahiner+ land+ andonstrution of ne: uildin4 et. 'his 0MR:ill hel3 to 3rodue the etterqualltofarn and :illalso hel3 to redue the ost of 3rodution. ':o ne: rin4 frames alon4 :ith a6 3roessmahines :ere added durin4 this ear.

All liailities in re4ard to the the 3ament on aount of taxes+ duties+ levies and har4es have

een full 3rovided.

FUTURE PROSPECTS

De ho3e our om3an :ill earn handsome 3rofit in the next finanial ear inreasin4 ex3ortat etter 3ries+ etter 3rodution+ laour ost savin4s et.'hree 4as 4enerator of . MD :ereinstalled at our mill and the are runnin4 suessfull sine Novemer=. De ho3e that the lo:ost of ener4 :ill hel3 the om3an to mainatain its 3rofitailit.

De further stale thatHi) 'he "inanial Statements 3re3ared the Mana4ement+ 3resent fairl its state of affairs+ the

result of its o3erations+ Cash "lo:s and han4es in equitH) %ro3er oo6s of Aounts have een maintainedH) A33ro3riate aountin4 3oliies have een onsistentl a33lied in 3re3aration of "inanial

Statements and aountin4 estimates are ased on reasonale and 3rudent ud4ment.d) International Aountin4 Standards+ as a33liale in %a6istan have een follo:ed in3re3aration of

"inanial Statements. e) 'here are no si4nifiant douts u3on the om3anFs ailit to

ontinue as a 4oin4 onern.

f) Internal auditor is ontinuousl revie:in4 the existin4 sstem of internal ontrol and other

3roedures. 'he 3roess of revie: :ill ontinue and an :ea6ness in ontrols :ill have

immediate attention of the Mana4ement.



AUDITORS7 REPORT TO THE MEMBERS

De have audited the annexed alane sheet of S;NRA&S 'E'I1E MI11S 1IMI'E!+ as at

Se3temer + = and the related 3rofit and loss aount+ statement of han4es in equit and

ash flo: statement to4ether :ith the notes formin4 3art thereof+ for the ear then ended and :e

state that :e have otained all the information and ex3lanations :hih to the est of our

6no:led4e and elief+ :ere neessar for the 3ur3oses of our audit.

It is the res3onsiilit of the om3anFs mana4ement to estalish and maintain a sstem of

internal ontrol+ and 3re3are and 3resent the aove statements in onformit :ith the a33roved

aountin4 standards and the requirements of Com3anies $rdinane+ <?/@. $ur res3onsiilit is

to ex3ress an o3inion on these statements ased on our audit.

De onduted our audit In aordane :ith the auditin4 standards as a33liale in %a6istan.

'hese standards require that :e 3lan and 3erform the audit to otain reasonale assurane

aout :hether the aove said statements are free of an material misstatement. An audit

inludes examinin4+ on a test asis+ evidene su33ortin4 the amounts and dislosures in the

aoFve said statements. An audit also inludes assessin4 the aountin4 3oliies and si4nifiant

estimates made mana4ement+ as :ell as+ evaluatin4 the overall 3resentation of the aove said

statements. De elieve that our audit 3rovides a reasonale asis for our o3inion and+ after due

verifiation+ :e re3ort that

a) in our o3inion+ 3ro3er oo6s of aount have een 6e3t the Com3an as required theCom3anies

$rdinane+ <?/@H ) in our o3inion H

(i) the alane sheet and 3rofit and loss aount to4ether :ith the notes thereon have een

dra:n u3 In onformit :ith the Com3anies $rdinane+ <?/@+ and are in a4reement :ith

the oo6s of aount and are further in aordane :ith the aountin4 3oliies

onsistentl a33lied exe3t for the han4e as stated in note =.- :ith :hih :e onurH

(ii) the ex3enditure inurred durin4 the ear :as for the 3ur3ose of the Com3anFs usinessH and

(lii) the usiness onduted+ investments made and the ex3enditure inurred durin4 the ear :ere

in aordane :ith the oets of the Com3an H

) in our o3inion and to the est of our information and aordin4 to the ex3lanations 4iven to

us+ the alane sheet+ 3rofit and loss aount+ statement of han4es in equit and ash

flo: statement to4ether :ith the notes formin4 3art thereof on form :ith a33roved

aountin4 standards as a33liale in %a6istan+ and 4ive the information required theCom3anies $rdinane+ <?/@+ in the manner so required and res3etivel 4ive a true and

fair vie: of the state of the om3anFs affairs as at Se3temer + = and of the 3rofit+

han4es in equit and its ash flo:s for the ear then ended H and

d) in our o3inion+ a6at dedutile at soure under the a6at and ;shr $rdinane+ <?/

(9III of <?/)+ :as deduted the om3an and de3osited in the Central a6at "und

estalished under setion > of that $rdinane.

!ated !eemer =?+ = M. &$;S;"A!I1 SA1EEM 8 C$. %lae Multan

Chartered Aountants



'his statement is ein4 3resented to om3l :ith the ode of or3orate 5overnane ontained in

Re4ulation No.> of listin4 re4ulations of Karahi Sto6 Exhan4e (5uarantee 1td.) for the

3ur3ose of estalishin4 a frame:or6 of 4ood 4overnane+ :here a listed om3an is mana4ed

in om3liane :ith the est 3ratie of or3orate 4overnane.

'he om3an has a33lied the 3rini3les ontained in the ode in the follo:in4 manner.

<. 'he Com3an enoura4e re3resentation of inde3endent nonJexeutive diretors anddiretors re3resentin4 the minorit interests on its 0oard of !iretors. At 3resent the 0oard

inludes at least t:o inde3endent nonJexeutive diretors and none re3resentin4 minorit

shareholders.=. 'he diretors have onfirmed that none of them is servin4 as a diretor in more than ten

listed om3anies+ inludin4 the Com3an.

. All the resident diretors of the Com3an are re4istered as tax3aers and none of them has

defaulted in 3ament of an loan to a an6in4 om3an+ a !"I or an N0"I or+ ein4 a

memer of a sto6 exhan4e+ has een delared as a defaulter that sto6 exhan4e.@. 'here :as no asual vaan ourred durin4 the ear.-. 'he Com3an has 3re3ared a FStatement of Ethis and 0usiness %ratiesO+ :hih has een

si4ned all the diretors and em3loees of the Com3an.

G. 'he 0oard has develo3ed a vision7mission statement+ overall or3orate strate4 and

si4nifiant 3oliies of the Com3an. A om3lete reord of 3artiulars of si4nifiant 3oliiesalon4 :ith the dates on :hih the :ere a33roved or amended has een maintained.

>. All the 3o:ers of the 0oard have een dul exerised and the 0oard has ta6en deisions on

material transations+ inludin4 a33ointment and determination of remuneration and terms

and ondition of em3loment of the CE$ and other exeutive diretors.

/. 'he meetin4s of the 0oard :ere 3resided over the Chairman and+ in his asene+ a

diretor eleted the 0oard for this 3ur3ose and the 0oard met at least one in ever

quarter. Dritten noties of the 0oard meetin4s+ alon4 :ith a4enda and :or6in4 3a3ers+

:ere irulated at least seven das efore the meetin4s. 'he minutes of the meetin4 :ere

a33ro3riatel reorded and irulated.

?. 'he 0oard arran4ed an $rientation Course for the diretors durin4 the finanial ear to

a33rise them of their duties and res3onsiilities. 'he ourse :as onduted

Mr.ShafqatMasood "CA and its duration :as four hours.

<. 'he 0oard has a33roved a33ointment of C"$+ Com3an Seretar and #ead of Internal Audit+ inludin4 their remuneration and terms and onditions of em3loment+ as determined

the CE$.<<. 'he diretorsF re3ort for this ear has een 3re3ared in om3liane :ith the requirements of

the Code and full desries the salient matters required to e dislosed.<=. 'he finanial statements of the Com3an :ere dul endorsed CE$ and C"$ eforea33roval of the 0oard.

<. 'he diretors+ CE$ and exeutives do not hold an interest in the share of the Com3an

other than that dislosed in the 3attern of shareholdin4.<@. 'he Com3an has om3lied :ith all the or3orate and finanial re3ortin4 requirements of the

Code.

<-. 'he 0oard has formed an audit ommittee. It om3rises three memers+ of :hom t:o are

nonJexeutive diretors.

<G. 'he meetin4 of the audit ommittee :ere held at least one ever quarter 3rior to a33rovalof interim and final results of the Com3an and as required the Code. 'he terms of

referene of the ommittee have een formed and advised to the ommittee for

om3liane.<>. 'he 0oard has setJu3 an internal audit funtion.

</. 'he statutor auditors of the Com3an have onfirmed that the have een 4iven a

satisfator ratin4 under the qualit ontrol revie: 3ro4ram of the Institute of Chartered

Aountants of %a6istan+ that the or an of the 3artners of the firm+ theirs3ouses and

minor hildren do not hold shares of the Com3an and that the firm and all its 3artners are



in om3liane :ith International "ederation of Aountants (I"AC) 4uidelines on ode

either as ado3ted institute of Chartered Aountants $f %a6istan.

<?. 'he statutor auditors or the 3ersons assoiated :ith them have not een a33ointed to

3rovide other servies exe3t in aordane :ith the listin4 re4ulations and the auditors

have onfirmed that the have oserved I"AC 4uidelines in this re4ard.

De onfirm that all other material 3rini3les ontained in the Code have een om3lied :ith.

ON BEHALF OF THE BOARD OF DIRECTORS Sd89KASHIFRIA: CHIEF E;ECUTI<E

sunrays final

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