Director's Report To The Shareholders

DIRECTOR'S REPORT TO THE SHAREHOLDERS

Your directors feel pleasure in presenting the 13th annual report with audited accounts of the company for the year ended 30th,

September 2002.

FINANCIAL RESULTS

(RUPEES IN THOUSAND)

2002 2001

Operating profit 686 6,829

Other Income 219 167

905 6,996

Other Charges

Financial 45,404 56,316

Loss before Taxation (44,499) (49,320)

Taxation 2,056 2,078

Net loss after taxation (46,555) (51,398)

Accumulated loss brought forward (485,744) (434,346)

Accumulated loss carried forward (532,299) (485,744)

Rupees Rupees

Earning per Share (3.07) (3.39)

REVIEW OF FINANCIAL RESULTS

Their is no marked changed in sale in the current year as compared to the last year. During the current year cost of sales went up by 1.08% in comparison with last year, this was due to increase in fuel and power expenses. As a result gross profit margin decreased from 3.47% in the last year to 2.02% in the current year. Reason for low profit margin could be attributed to depressed selling prices of yarn, high cost material and fuel and power.

Administrator expenses during the year under review have gone up by 26% in comparison with last year. This is due to increase

in vehicle running and maintenance expenses and depreciation as some more vehicles were purchased. Another factor causing increase in admin expenses is increase in salaries due to normal increments and regrouping of personnel from manufacturing to administration.

During the year under review the management shifted selling efforts to local markets due to better availability of rates, as a result selling expenses were reduced by 56.5% in comparison with last year.

Financial charges for the current year have reduced by 19.37% in comparison with last year.

As per reasons given above the company made a net loss after tax for the year under review of Rs. 46.56M in comparison with Rs.51.398M of last year a decrease of 9.4%. It may be noted that company is making net loss due to high financial charges which are being fully booked, based on prudent accounting policies, despite the fact that the company has gone into litigation with the bank. The status of litigation is explained below.

COURT CASES:

As mentioned in last year's director's report that the company has filed a suit in the Honorable Lahore high Court, Lahore against Faysal Bank Limited for compensation of loss suffered on acquisition of unremunerative agriculture land and disposal of the same, for not providing timely cash finance facilities despite written commitment and for charging illegal profits against the principals of Islamic banking in contravention of the objective clause of its Article and Memorandum of Association. The amount claimed for the first two counts is Rs. 141.831 M (including claims of Central Excise Duty) and for the last count has been left for the court to determine. In the opinion of directors and company's lawyers the case is based on strong legal grounds and is likely to be decided in company's favour, if so happened the amount of long term loan and related financial charges would decrease by an amount decided by the court. The cases are continuing and are at argument stage.

FUTURE PROSPECTS:

Although there is inflationary trend in the prices of raw material and fuel & power and pressure on the selling prices of yarn, the management of your company will try its best to improve the performance of the company.

AUDITORS:

The present auditors M/s. Zahid Jamil & Co. Chartered Accountants retire and being eligible offer themselves for reappointment for the next year.

PATTERN OF SHAREHOLDING:

Pattern of shareholding as on September 30,2002 as per new format is annexed.

NUMBER OF BOARD MEETING HELD:

Ten board meetings were held during the year ended on 30.9.2002.Attendance by each director is given below:-

Name of Director No of Meeting Attended

Mr. Zahid Anwar 10 Mrs.Rukhsana Begum 7* Miss Q.A.Zahid 10 Mr.Zeeshan Zahid 8* Mr. Zia Ullah Khan 10 Mr Muhammad Ilyas 5* Mr.Muhammad Hussain Zafar 5*

*Director who did not attend the above meetings were granted leave of absence by the Board of Directors.

AUDIT COMMITTEE:

The Board in compliance with the Code of Corporate Governance has established an audit committee comprising of the following members.

Mr. Zahid Anwar Chairman Mr.Zeeshan Zahid Member Mr. Zia Ullah Khan Member

CORPORATE AND FINANCIAL REPORTING FRAME WORK:

In compliance to new listing regulations of Stock Exchanges and as required under the Companies Ordinance,1984, your directors are pleased to report as under:

The Financial Statements prepared by the management of your company present fairly state of its affairs, the result of its operations, cash flow and charges in equity.
Proper books of accounts of the company have been maintained.
Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates which are based on reasonable and prudent judgment.
International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure there form has been adequately disclosed.
The system of internal control is sound in design and has been effectively implemented and monitored.
There is no doubt upon the company's ability to continue as a going concern.
There has been no material departure from the best practices of corporate governance, as detailed in the listing regulations.
Keys operating and financial data of last six years in summarized form is annexed.

DIRECTORS REMUNERATION:

As in previous years, the directors did not draw any remuneration during the current year.

DIVIDENDS: Due to losses incurred by the company directors do not recommend payment of dividend.

ACKNOWLEDGEMENT:

The management would like to place on record its deep appreciation for the continuous support of its shareholders, customers and employers and expects to get the same cooperation in the future. .

On behalf of the Board

(Signed)

Faisalabad. Zahid Anwar 30.01.2003 Chief Executive

Asim Textile Mills Ltd.

16 C, Peoples Colony

Faisalabad 38090, PAKISTAN

Tel: 92-41-721953-6

Fax: 92-41-712399

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