DIRECTORS’ REPORT TO THE SHAREHOLDERS

Your directors are pleased to present 2^nd quarter and half yearly accounts for the period ended December 31, 2005.

By the grace of Almighty Allah, there is improvement in results. The company has incurred net loss of Rs. 3.157 million as compared to net loss of Rs. 31.655 million of corresponding period of last year. It is due to better utilization of production facilities and measures taken by management for producing quality yarn.  In order to improve the production and quality of yarn, during the last period ended 30.06.2005, new spindle bosters for 11 frames were imported and replaced with old ones. Now in the current year new air compressors have been imported and replaced with old ones. The management is trying its best to improve the performance of the company.

Earning per share (EPS) for the 2^nd quarter is negative at Rs. 0.31 and Rs. 0.21 for half year as compared to negative (EPS) of Rs. 0.91 for 2^nd quarter and Rs. 2.09 for half year in the corresponding period of last year.

There has been no change in the position of on going court cases with the bank, as reported in the director’s report of the financial statements for the period ended 30.06.2005.

Last year ended 30.06.2005 the auditors qualified their opinion as to the unconfirmed status of long term finances of Faysal Bank Limited. The matter arised due to pending litigation with the bank.

Transactions with related parties are carried out at arms length. The prices are determined in accordance with comparable un-controlled price method. The power is purchased from related party at WAPDA power tariff. After period end gas connection has also been obtained and gas generators have been hired on rent. Now power is being produced by running these generators.

The management would like to place on record its appreciation for the continuous support of its shareholders, customers and employees and expect to receive same cooperation in future.

                                                                              for and on behalf of the Board 

Faisalabad.                                                                                                           Zahid Anwar

27.02.2006                                                                                                          Chief Executive