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DIRECTOR'S REPORT TO THE SHAREHOLDERS

ASIM TEXTILE MILLS LTD.

DIRECTORS’ REPORT TO THE SHAREHOLDERS

 Your directors are pleased to present unaudited  accounts for the first quarter ended on December 31,   2003.

FINANCIAL RESULTS:

 Sales during the period under review increased by 19% compared with the corresponding period of last year, due to which the gross profit margin increased slightly to 4% from 2% in the corresponding quarter of last year.

 Administration and selling expenses went down by 36% during the quarter under review in comparison to corresponding quarter of the previous year.  During the period under review financial expenses went down by 18%. As a result of increase in gross profit margin and decrease in Admin, selling and financial expenses net loss before tax for the quarter stands at Rs 4.745 million in comparison to Rs. 10.791 for the corresponding period of last year.

 Earning per share (EPS) for this quarter is in negative at Rs. 0.27 as compared to negative EPS of Rs. 0.75 in the corresponding quarter of last year.

 COURT CASES.

 As mentioned in the previous   directors’ reports that the company has filed a suit in the Honourable Lahore High Court, Lahore against Faysal Bank Limited for compensation of loss suffered on acquisition of unremunerative agricultural land and disposal of the same, for not providing timely cash finance facilities despite written commitments and for charging illegal profits against the principles 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. After filing our suit,  Faysal Bank Limited has also filed a suit against the company. The cases are continuing and are at argument stage.  Due to litigation the company is not making payment on account of Morahaba Finances.

 OUTSTANDING STATUTORY PAYMENT

 Sales tax amounting to Rs 806,464 is outstanding due to disagreement. An appeal has been filed to the Collector (Appeal) Sales Tax, Faisalabad. The appeal is yet to be heard.

 FUTURE PROSPECTS:

 Performance of the company has improved from that in the corresponding period of last year.  Management of your company will try its best  to improve the performance of the company in future.

 ACKNOWLEDGMENT:

 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 the future.

 On behalf of the Board

Faisalabad.                                                                                  Zahid Anwar

30.01.2004                                                                                 Chief Executive