DIRECTOR'S REPORT TO THE SHAREHOLDERS

Your directors are pleased to present un audited accounts for the first quarter ended on December 31, 2002.

FINANCIAL RESULTS:

Sales during the period under review increased by 2.25 % in comparison with the corresponding quarter of last year. Prices of raw material during this quarter remained in level with the corresponding quarter of last year, however the prices of fuel and power went up due to which the gross profit margin decreased slightly by 1.75 % to 2.163 % in the current period.

Administrative, selling and general expenses during the current quarter doubled in comparison with the corresponding quarter of the last year. Main reason being increase in rent, rates and taxes due to a payment made for Corporate Asset Tax of Rs. 500,000 which was imposed on the company in the assessment year 1992-93. The appeal was long pending since then was now decided against us. Another reason for increase in admin, selling and general expenses is increase in depreciation and vehicle running expenses because of addition made in the vehicles in use.

Financial charges in this quarter have reduced by 15.5 % in comparison with the corresponding quarter of last year. The company registered a net after tax loss of Rs. 11.314 M in the current quarter as compared with that of Rs. 10.519 M in the previous year's corresponding quarter. Reasons of this slight increase have already been discussed above.

Earning per share (EPS) for this quarter is in negative at Rs. 0.74 as compared to negative EPS of Rs. 0.69 in the corresponding quarter of last year.

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.

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

30.01.2003                                                                                 Chief Executive