DIRECTORS' REPORT TO THE SHAREHOLDERS

Your directors are pleased to present unaudited  accounts for the 3^rd quarter  ended June 30, 2003.

FINANCIAL RESULTS:

During the period under review company made a gross loss of Rs 5.574 million (Rs 17.868 million gross profit for 9 months period ended 30.6.2002) and incurred a net loss after taxation of Rs 38.874 million (after tax loss of Rs 23.373 million for 9 month period ended 30.6.2002).

Reason for this increase in loss is  attributed to increase in cost of sales, on average prices of polyester fibre increased by 12.28% and that of cotton by 44% during the current period in comparison with prices of the previous year’s corresponding period. Cost of electricity also went up during this period.

Administrative expenses during the period under review increased by 26% in comparison with that of corresponding period of last year, mainly due to increase in rent, rates and taxes, vehicle running expenses and vehicle depreciation. Due to addition of vehicles, vehicles running expenses and vehicle depreciation went up. Corporate asset tax was paid during this period which was outstanding since long due to a dispute, causing increase in the expenses of rent, rates and taxes.

During the period the management shifted selling efforts to local markets due to better availability of rates, as a result selling expenses were reduced by 16.43%.

Financial charges during the period under review have reduced by 13.63% in comparison to the corresponding period of last year, due to decrease in markup of short term running finance.

In accordance with the requirements of SRO 45(1)2003 dated 13.1.2003 of the SECP, incremental depreciation due to revaluation of Fixed Assets, for the period under review and previous years, including deferred tax, has been transferred from surplus on Revaluation of Fixed Assets to Accumulated Losses, as per details given in statement of changes in Equity.

EPS for the current period is in negative at Rs (2.56) in comparison to negative EPS of the corresponding period of last year of Rs (1.54).

COURT CASES:

Court cases with Faysal Bank Limited, for reasons explained in the previous directors reports, are still in progress and are at argument stage.

FUTURE PROSPECTS:

The management of your company will try its best to improve the performance of the company in the 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 get the same support in the future.

                                                                                                    On behalf of the Board

Faisalabad.                                                                                Zahid Anwar

29.07.2003                                                                                  Chief Executive