The document is the notice for the Annual General Meeting of Dewan Farooque Motors Limited. It provides details of the meeting such as date, time, location, and agenda items. The agenda includes confirmation of minutes, adoption of annual audited financial statements, appointment of auditors, and approval of short term loans to an associated company. Notes provide information on share transfer books closure, change of address notification, proxy forms submission, and requirements for attending the meeting.
The document is the notice for the Annual General Meeting of Dewan Farooque Motors Limited. It provides details of the meeting such as date, time, location, and agenda items. The agenda includes confirmation of minutes, adoption of annual audited financial statements, appointment of auditors, and approval of short term loans to an associated company. Notes provide information on share transfer books closure, change of address notification, proxy forms submission, and requirements for attending the meeting.
The document is the notice for the Annual General Meeting of Dewan Farooque Motors Limited. It provides details of the meeting such as date, time, location, and agenda items. The agenda includes confirmation of minutes, adoption of annual audited financial statements, appointment of auditors, and approval of short term loans to an associated company. Notes provide information on share transfer books closure, change of address notification, proxy forms submission, and requirements for attending the meeting.
Statement Under Section 134(3) of the Companies Act. 2017 7
Chairmans Review 9
Directors' Report 10
Key Operating and Financial Data 15
Statement of Compliance with listed companies Code of Corporate Governance 16
Independent Auditors Review Rreport to the members 18
Independent Auditors Report to the members 20
Statement of Financial Position 25
Statement of Profit & Loss Account 26
Statement of Comprehensive Income 27
Statement of Cash Flow 28
Statement of Changes in Equity 29
Notes to the Financial Statements 30
Pattern of Shareholding 64
Form of Proxy 67
Form of Proxy (Urdu) 68
Directors' Report (Urdu) 73
Notice of Annual General Meeting (Urdu) 78
Jama Punji
ANNUAL REPORT 2022
Comp any Informa tion Non-Executive Directors Mr. Ghazanfar Baber Siddiqi Chairman Board of Directors Mr. Abdul Basit Mr.Mohammad Saleem Baig Mr.Imran Ahmed Javed Mrs. Nida Jamil Female Director
Executive Director Mr. Waseem-ul- Haque Ansari
Independent Director Mr. Aziz-ul-Haque
CHIEF EXECUTIVE OFFICER
Mr. Waseem-ul- Haque Ansari
COMPANY SECRETARY Mr. Muhammad Hanif German
CHIEF FINANCIAL OFFICER
Mr. Muhsin Ali
AUDIT COMMITTEE MEMBERS
Mr. Aziz-ul-Haque Chairman Mr. Ghazanfar Baber Siddiqi Member Mr. Abdul Basit Member
HUMAN RESOURCE & REMUNERATION COMMITTEE MEMBERS
Mr. Aziz-ul-Haque Chairman Mr. Waseem-ul- Haque Ansari Member Mr. Abdul Basit Member
AUDITORS REGISTERED OFFICE
Feroze Sharif Tariq & Co. Dewan Centre, 3-A, BANKERS Chartered Accountants Lalazar, Beach Luxury Hotel Road, 4/N/4, Block 6, P.E.C.H.S., Karachi, Pakistan Allied Bank of Pakistan Limited Karachi. Askari Bank Limited Faysal Bank Limited LEGAL ADVISORS Habib Bank Limited A.K. Brohi & Co. Meezan Bank Limited National Bank of Pakistan Silk Bank Limited TAX ADVISOR Saudi Pak Industrial and Agricultural Sharif & Co. (Advocates) Investment Co. (Pvt.) Limited 3rd Floor, Uni Plaza, Standard Chartered Bank I.I. Chundrigar Road, Karachi. Summit Bank Limited SHARES REGISTRAR / FACTORY The Bank of Khyber TRANSFER AGENT Jilaniabad, Budhu Talpur, The Bank of Punjab BMF Consultants District Sajawal, United Bank Limited Pakistan (Pvt.) Limited Sindh. Anum Estate Building, Room No. 310 & 311, 3rd Floor, 49, Darul Aman Society, Main Shahrah-e-Faisal, Adjacent to Baloch Colony Bridge, Karachi, Pakistan.
02 ANNUAL REPORT 2022
Mission Statement
To be the No. 1 automobile company in Pakistan
To assume leadership role in the technological advancement of the industry and to
achieve the highest level of quantitative indigenization.
To offer high value, economical and qualitative solutions to address the commuting needs of a diverse range of customers.
To seek long-term and good relations with our suppliers and dealers with fair, honest and mutually profitable dealings.
To be a totally customer oriented company and to achieve Total Customer Satisfaction.
To create a work environment, which motivates recognizes and rewards achievements
at all levels of the organization.
To produce environment friendly vehicles.
To be a contributing corporate citizen for the betterment of society, and to exhibit a
socially responsible behavior.
ANNUAL REPORT 2022 03
Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the Twenty Forth Annual General Meeting of Dewan Farooque Motors Limited ("DFML" or "the Company") will be held on Thursday, October 27, 2022 at 2:00 p.m. at Dewan Cement Limited Factory Site, at Deh Dhando, Dhabeji, District Malir, Karachi, Pakistan; to transact the following businesses upon recitation from Holy Qur'aan and other religious recitals:
ORDINARY BUSINESS:
1. To confirm the minutes of the preceding General Meeting of the Company held on Wednesday, October 27, 2021;
2. To receive, consider, approve and adopt the annual audited financial statements of the Company for the year ended June 30, 2022, together with the Directors' and Auditors' Reports thereon;
3. To confirm the appointment of the Statutory Auditors of the Company for the year ended June 30, 2023, and to fix their remuneration;
4. To consider any other business with the permission of the Chair.
Special Business:
1. To consider and approve short term loans/ advances to an associated company in compliance with the provisions of Section 199 of the Companies Act, 2017.
By order of the Board
Muhammad Hanif German
Company Secretary Karachi: September 28, 2022
"Statement under Section 134(3) of the Companies Act. 2017, concerning the Special Business, is attached along with the Notice circulated to the members of the Company, and is deemed an integral part hereof"
NOTES:
1. The Share Transfer Books of the Company will remain closed for the period from October 20, 2022 to October 27, 2022 (both days inclusive).
2. Members are requested to immediately notify change in their addresses, if any, at our Shares Registrar Transfer Agent BMF Consultants Pakistan (Private) Limited, located at Anum Estate Building, Room No. 310 & 311, 3rd Floor, 49, Darul Aman Society, Main Shahrah-e-Faisal, adjacent to Baloch Colony Bridge, Karachi, Pakistan.
04 ANNUAL REPORT 2022
3. A member of the Company entitled to attend and vote at this meeting, may appoint another member as his/her proxy to attend and vote instead of him/her. Proxies, in order to be effective, must be received by the Company at the abovesaid address, not less than 48 hours before the meeting.
4. CDC Account holders will further have to observe the following guidelines, as laid down in Circular 01 dated January 20, 2000, issued by the Securities and Exchange Commission of Pakistan:
a) For Attending Meeting:
i) In case of individual, the account holder or sub-account holder, and/or the person whose securities are in group account and their registration details are uploaded as per the regulations, shall authenticate his/her identity by showing his/her original National Identity Card (CNIC), or original passport at the time of attending the meeting.
ii) In case of corporate entity, the Board of Directors' resolution/power of attorney, along with the specimen signature of the nominee, shall be produced (unless it has been provided earlier) at the time of meeting.
b) For Appointing Proxies:
i) In case of individual, the account holder or sub-account holder, and/or the person whose securities are in group account and their registration details are uploaded as per the regulations, shall submit the proxy form as per the above requirements.
ii) Two persons, whose names, addresses, and CNIC numbers shall be mentioned on the form, shall witness the proxy.
iii) Attested copies of CNIC or passport of the beneficial owners and proxy shall be furnished along with the proxy form.
iv) The proxy shall produce his/her original CNIC or original passport at the time of the meeting.
v) In case of corporate entity, the Board of Directors' resolution/power of attorney, along
with the specimen signature of the nominee, shall be produced (unless it has been provided earlier) along with the proxy form to the Company.
5. Notice to Shareholders who have not provided CNIC:
CNIC of the shareholders is mandatory in terms of directive of the Securities and Exchange Commission of Pakistan contained in S.R.O. 831(1)/2012 dated July 05, 2012 for the issuance of future dividend warrants etc. and in the absence of such information, payment of dividend may be withheld in term of SECP's above mentioned directive. Therefore, the shareholders who have not yet provided their CNICs are once again advised to provide the attested copies of their CNICs directly to our Shares Registrar without any further delay.
ANNUAL REPORT 2022 05
6. Mandate for E-DIVIDENDS for shareholders:
In order to make process of payment of cash dividend more efficient, e-dividend mechanism has been envisaged where shareholders can get amount of dividend credited into their respective bank accounts electronically without any delay. In this way, dividends may be instantly credited to respective bank accounts and there are no changes of dividend warrants getting lost in the post, undelivered or delivered to the wrong address, etc. The Securities and Exchange Commission of Pakistan (SECP) through Notice No. 8(4) SM/CDC 2008 dated April 5, 2013 had advised all Listed Companies to adopt e-dividend mechanism due to the benefits it entails for shareholders. In view of the above, you are hereby encouraged to provide a dividend mandate in favor of e-dividend by providing dividend mandate form duly filled in and signed.
7. Electronic Transmission of Financial Statements Etc.:
SECP through its notification No. SRO 787(1)/2014 dated September 8, 2014 has allowed companies to circulate Annual Audited Financial Statements along with Notice of Annual General Meeting through email instead of sending the same through post, to those members who desires to avail this facility? The members who desire to opt to receive aforesaid statements and notice of AGM through e-mail are requested to provide their written consent on the Standard Request Form available on the Company's website: http://www.yousufdewan.com/DFML/index.html
06 ANNUAL REPORT 2022
STATEMENT UNDER SECTION 134(3) OF THE COMPANIES ACT. 2017 This statement is annexed as an integral part of the Notice of the Twenty Forth Annual General Meeting of Dewan Farooque Motors Limited ("the Company" or "DFML") to be held on Thursday, October 27, 2022 at Dewan Cement Factory Site, at Deh Dhando, Dhabeji, District Malir, Karachi, Pakistan; and sets out the material facts concerning the Special Business to be transacted at the meeting.
SPECIAL BUSINESS
1. To consider and approve renewal of the sanctioned limits of short-term loan to an associated company in compliance with the provisions of Section 199 of the Companies Act. 2017.
SR # DESCRIPTION REFERENCE
a) Name of the Associated Company Criteria Dewan Automotive Engineering Limited
of associated relationship Common Directorship
b) Amount of loans and advances Rs. 154.879 million
c) In Case any loan has already been granted Rs. 154.879 million to the said associated company or associated undertaking, the complete details thereof.
d) Earnings/(Loss) per share for the last three 2021 2020 2019 years. -2.08 -2.78 -3.93
e) Financial position, including main items of Earnings / (loss) per share -2.08 balance sheet and profit and loss Shareholders' equity -1,320,807 Total Assets 240,923 Break-up value -61.72
f) Average borrowing cost of the investing As the Company has approached its lenders for company or in case of absence of borrowing restructuring and no mark-up is payable as per the the Karachi Interbank offered rate at the proposal. Therefore, as per regulation 5(4) of the relevant period Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2017, three months KIBOR rate is applicable.
g) Rate of interest, mark-up, profit, fees or Rate of interest to be charged will be 1% above three commission etc., to be charged months KIBOR rate. Three months KIBOR as of September 27, 2022 is 15.91% per annum.
h) Particulars of collateral security to be obtained Borrowing is unsecured.
against loan to the borrowing company or undertaking, if any:
i) Repayment schedules and terms of loans or Renewal for one year.
advances to be given to the investee company.
06 ANNUAL REPORT 2022 07
SR # DESCRIPTION REFERENCE
J) Salient feature of all the agreements entered The tenure of loan may be extended by the lender, or to be entered with its associated company subject to the approval of shareholders. or associated undertaking with regards to proposed investment. As per the terms of the agreement with the borrower the Company may recover the amount of loan by way of swap with assets/investments owned by the borrower.
k) Direct or indirect interest of directors, The following are interested directors to the extent of sponsors, majority shareholders and their their respective shareholding in the investee company relatives, if any, in the associated company which are as follows: or associated undertaking or the transaction under consideration. a) Mr. Abdul Basit 500 (0.0023%) b) Mr. Waseem-ul-Haque Ansari 1,000 (0.0047%) c) Mr. Aziz-ul-Haque 500 (0.0023%) d) Mr. Imran Ahmed Javed (Nominee Director)
Any other important details necessary for the None.
members to understand the transaction.
In this regard, the following resolution is proposed to be passed, with or without modification, as a "SPECIAL RESOLUTION":
"RESOLVED THAT, the company, in accordance with the provisions of Section 199 of the Companies Act. 2017, Clause 111 (X) of the Memorandum of Association and the terms and conditions hereby approved in the Twenty Second Annual General Meeting of the Company, be and is hereby authorized and empowered to renew the sanctioned limit for short term loan sought for approval in the previous general meeting in respect of following associated company:
LOAN
Borrowing Company: (Rupees in Million)
Dewan Automotive Engineering Limited 154.879
The renewal of the limit shall be for a period of one year and shall be renewable in the next general meeting for further period of one year."
08 ANNUAL REPORT 2022 07
Chairman's Review I am pleased to present a report on the overall performance of the Board of Directors and effectiveness of the role played by the board in achieving the company's objectives. The board of directors is responsible for the management of the company, which formulates all significant policies and strategies. The board is governed by relevant laws & regulations and its obligation, rights, responsibilities and duties are as specified and prescribed therein.
The Board of Directors comprises of individuals with diversified knowledge who endeavour to contribute towards the aim of the Company with the best of their abilities.
An annual self-evaluation of the Board of Directors of the Company is carried out. The purpose of this evaluation is to ensure that the Board's overall performance and effectiveness is measured and benchmarked against expectations in the context of objectives set for the Company.
During financial year ended June 30, 2022, four board meetings were held. The Board of Directors of the Company received agendas and supporting material in sufficient time prior to the board and its committee meetings. All the directors are equally involved in important decisions. the Board's overall performance and effectiveness for the year under review was satisfactory.
Ghazanfar Baber Siddiqi
CHAIRMAN
September 27, 2022
ANNUAL REPORT 2022 09
Directors Report The Board of Directors of Dewan Farooque Motors Limited is pleased to present its annual report along with the Company's audited financial statements for the year ended June 30, 2022 and welcomes you to the 24th Annual General Meeting.
Industry Overview
Sales of automobile sector in the category of passenger cars, SUV and LCV segments have shown an increase of 54% with total units sold 279,267 as compared to 181,397 last year. But, in the second half of the year, political instability in the country, hike of exchange rate, higher inflation, raised interest rates, increase in minimum wages, exorbitantly inflated Fuel & Electricity prices have impacted the industry negatively. Furthermore, due to ban on imports of certain items for some time in the country along with the burden of duties by Customs department and exchange control measures by the State Bank of Pakistan have further pushed the automobile sector in difficult scenario that have caused some of the plants to suspend their production facilities temporarily.
Company's performance
The summary of financial performance for the year, along with the comparative figures of financial year 2022 is as follows:
Year ended Year ended
June 30, 2022 June 30, 2021 ------(Rupees in thousand)------ Gross Sales 169 1,846 Gross loss (83,129) (80,897) Operating loss (98,134) (95,031) Net loss after tax (176,830) (189,252)
The production of the company during the year under review remained suspended due to working Capital constraints. The management is putting its best endeavors to overcome the current financial situation of the Company by adopting various countermeasures for its revival and resumption of production facilities. Management is looking for consideration of multiple possible options for their finalization and implementation in order to enable the company to resume its production that will create considerable value in the standard of living, employment and income of the inhabitants in the vicinity of plant on one side and contributing in the economic development and revenues of the province and of the country as a whole on the other. Moreover, the Company has once again taken up the issue of re-profiling / rescheduling of its debts with financial institutions with no markup condition. This time along with the Company, the financial institutions are also eager to resolve the matter and agree on the debt restructuring proposal on sustainable terms to enable the plant to be operational for the benefits of all stakeholders. The Company is confident and hopeful that its operations will be resumed in the near future.
Observation in the Auditors' Report:
The Auditors have qualified the report due to significance of the matters as referred in Para (a) and (b) of the Auditors' Report.
Going concern assumption:
These financial statements have been prepared on going concern assumption because the conditions being faced by the company are temporary and would reverse. The management is confident that the outcome will be positive as the company is negotiating reprofiling of its debt with the lenders and the same is expected to be finalized soon. 10 ANNUAL REPORT 2022 Provision of markup:
The Company has not made provision of markup amounting to Rs. 589.709 million on its loans.
The management has approached its lenders for restructuring of its long-term debts and is confident that the Company's restructuring proposals without markup will be accepted by the financial institutions / bankers. Therefore, accordingly, the Company has not made any provision of markup as the markup will not be payable.
The Board Comprises of one independent director, one executive and five non-executive Directors. The following are the names of Directors:
. Mr. Abdul Basit
. Mr. Waseem-ul-Haque Ansari . Mr. Mohammad Saleem Baig . Mr. Imran Ahmed Javed . Mr. Ghazanfar Baber Siddiqi . Mr. Aziz-ul-Haque . Mrs. Nida Jamil
During the year the following casual vacancy occurred on June 30, 2022 on the board which was filled up by the Board of Directors of the Company on July 18, 2022:
Principal Activities of the Company
Dewan Farooque Motors Limited was incorporated in Pakistan as a public limited Company and is listed on the Pakistan Stock Exchange. The Company's principal activity is the assembly/contract assembly, progressive manufacturing and sale of vehicles.
Principal Risks and Uncertainties
The Company considers the following as key risks:
. Significant competition in LCV, SUV and Passenger Car category; . Depreciation of Pak Rupee against US Dollar; . Non-availability of banking lines.
The Company is endeavoring internally as well as externally to cater with and mitigate the impact of aforesaid risks and uncertainties.
Corporate Social Responsibility
The Company conducts its business in a responsible manner looking after its stakeholders and the environment. The Company mainly focuses providing on job training to fresh hired work force enabling them to develop adequate skills. While employing work force, the Company encourages under-privileged people residing close to the plant, thereby increasing their standard of living. Moreover, health and safety of employees is another area of focus. The Company complies with all applicable rules and regulations in the manufacturing process to ensure environmental protection. Standard Operating Procedures have been laid down to ensure protecting the health and safety of employees. The Company is also involved in providing medical facilities to people residing in the surrounding area.
ANNUAL REPORT 2022 11
Subsequent Events
Except as stated above, no material changes or commitments affecting the financial position of the Company have occurred between the end of the financial year of the Company and the date of this report.
Statement of Corporate and financial reporting framework:
- The financial statements for the year ended June 30, 2022, prepared by the management of the company, present fairly its state of affairs, the results of its operations, cash flow and changes in equity;
- Proper books of account of the company have been maintained;
- Appropriate accounting policies have been consistently applied in preparation of financial
statements for the year ended June 30, 2022 and accounting estimates are based on reasonable and prudent judgment.
- International Financial Reporting Standards (IFRS) as applicable in Pakistan, have been
followed in preparation of financial statements and departure there from, if any, has been adequately been disclosed in the financial statements;
- The system of internal control is sound in design and has been effectively implemented and monitored;
- The Management has explained their views in detail regarding the going concern ability of the company in note 1.1 and non-provisioning of mark up in note 24 to the annexed audited financial statements.
- There has been no material departure from the best practices of the corporate governance, as detailed in the listing regulations of the stock exchange of Pakistan;
- Summarized key operating and financial data of last six years is enclosed with the report;
- All taxes have been paid and nothing is outstanding, except as disclosed in note 17 to the annexed audited financial statement;
- The fair value of the Provident Fund's Investment as at June 30,2022 is Rs.32.931 (2021: Rs.31.938) million.
- The Board of Directors comprise of individuals with diversified knowledge who endeavor to contribute towards the aim of the Company with the best of their abilities. During the year four meetings of the Board were held. The attendance of directors was as follows;
Name of Director No. of meetings attended
Mr. Haroon Iqbal 4
Mr. Aziz-ul-Haque 4 Mr. Waseem-ul-Haq Ansari 4 Mr. Imran Ahmed Javed 4 Mr. Mohammad Saleem Baig - Mr. Ghazandar Baber Siddiqi 4 Mrs. Nida Jamil 4 Mr. Abdul Basit -
Leave of absence was granted to directors who could not attend Board meetings.
12 ANNUAL REPORT 2022
The audit committee comprises of three directors, one of them is an independent director and two are non-executive directors. During the year, four meeting were held, members' attendance in these meetings is as under:
Name of Director No. of meetings attended
Mr. Aziz-ul-Haque 4 Mr. Haroon Iqbal 4 Mr. Ghazanfar Baber Siddiqi 4
During the year one meeting of the human resource & remuneration committee was held, members' attendance meeting is as under:
Name of Director No. of meetings attended
Mr. Aziz-ul-Haque 1 Mr. Haroon Iqbal 1 Mr. Waseem-ul-Haque Ansari 1
Auditors:
The present Auditors M/s. Feroze Sharif Tariq & Co. (Chartered Accountants) have retired and offers themselves for re-appointment.
The Board of Director on recommendation of the Audit committee has recommended the re- appointment of M/s. Feroze Sharif Tariq & Co. (Chartered Accountants).
Loss per share
The Loss per Share is Rs. 1.33 (2021 Rs. 1.42)
Dividend
Due to accumulated losses and the circumstances explained above, the directors have not recommended dividend for the year.
Pattern of Shareholding:
The Pattern of Shareholding of the Company as at June 30, 2022 is annexed.
Trading in Company Shares
None of the Directors, Executives, and their spouses and minor children have traded in the shares of the Company during the year.
Vote of Thanks:
On behalf of the Board, I thank you, the valued shareholders, Federal and Provincial Governments and their functionaries, banks, development financial institutions, leasing companies, dealers, vendors and customers for their continued support and patronage.
ANNUAL REPORT 2022 13
The Board would also like to appreciate the valuable services, loyalty and efforts rendered by the executives, staff members and workers of the Company, during the year under review.
Conclusion:
In conclusion, we bow, beg and pray to Almighty Allah, Al-Rahman, Al-Rahim, in the name of his beloved Prophet, Muhammad, peace be upon him, for continued showering of His blessings, guidance, strength, health and prosperity to us, our Company, country and nation and also pray to Almighty Allah to bestow peace, harmony, brotherhood and unity in true Islamic spirit to whole of Muslim Ummah, Ameen, Summa Ameen.
(loss) / Earnings per share before tax (Rs/share) (1.27) (1.36) (2.11) (1.76) (0.09) (0.40) (loss) / Earnings per share after tax (Rs/share) (1.27) (1.36) (2.11) (1.76) (0.10) (0.40)
Activity Ratios
Sales to Total Assets-Times 0.000 0.001 0.000 0.00 0.03 0.01
Sales to Fixed Assets-Times 0.000 0.002 0.000 0.00 0.08 0.02
Liquidity Ratios
Current ratio (excluding current maturity of LTL) 0.25 0.25 0.26 0.26 0.29 0.30 Current ratio (including current maturity of LTL) 0.21 0.21 0.21 0.21 0.23 0.23 Book value per share (Rs) (22.57) (21.24) (19.83) (17.63) (15.28) (18.63)
ANNUAL REPORT 2022 15
Statement of Compliance with Listed Companies (Code of Corporate Governance) Regulations, 2019 For the Year Ended June 30, 2022
The company has complied with the requirements of the Regulations in the following manner:
1. The total number of directors are seven as per the following:
a) Male : 6 b) Female : 1
2. The composition of board is as follows:
a) Independent Director : Mr. Aziz-ul-Haque
b) Other Non-executive Directors : Mr. Ghazanfar Baber Siddiqi Mr. Abdul Basit Mr. Mohammad Saleem Baig Mr. Imran Ahmed Javed Mrs. Nida Jamil
c) Executive Director : Mr. Waseem-ul-Haque Ansari
3. Six Directors have confirmed that they are not serving as Director in more than seven listed Companies including this Company, however, one Director is serving as Director in more than seven listed Yousuf Dewan Companies.
4. The company has prepared a Code of Conduct and has ensured that appropriate steps have been taken to disseminate it throughout the company along with its supporting policies and procedures.
5. The board has developed a vision/mission statement, overall corporate strategy and significant policies of the company. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.
6. All the powers of the board have been duly exercised and decision on relevant matters have been taken by board/ shareholders as empowered by the relevant provisions of the Act and these Regulations.
7. The meetings of the board were presided over by the Chairman and, in his absence, by a director elected by the board for this purpose. The board has compiled with requirements of Act and the regulations with respect to frequency, recording and circulating minutes of meeting of board.
8. The board of directors have a formal policy and transparent procedures for remuneration of directors in accordance with the Act and these Regulations.
9. Three Directors are qualified under the directors training program. During the year the board did not arrange training program. However, we will arrange the same in the next coming session.
16 ANNUAL REPORT 2022
10. The board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment and complied with relevant requirements of the Regulations.
11. CFO and CEO duly endorsed the financial statements before approval of the board.
12. The board has formed committees comprising of members given below:
a) Audit Committee : Mr. Aziz-ul-Haque Chairman
Mr. Ghazanfar Baber Siddiqi Member Mr. Abul Basit Member
b) HR and Remuneration : Mr. Aziz-ul-Haque Chairman
Committee Mr. Waseem-ul-Haque Ansari Member Mr. Abdul Basit Member
13. The terms of reference of the aforesaid committees have been formed, documented and advised to the committee for compliance.
14. The frequency of meetings (quarterly/half yearly/ yearly) of the committee were as per following:
a) Audit Committee : 4 meetings during the financial year ended June 30, 2022
b) HR and Remuneration : 1 annual meeting held during the financial year ended Committee June 30, 2022
15. The board has set up an effective internal audit function. The staffs are considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the company.
16. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under the quality control review program of the ICAP and registered with Audit Oversight Board of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.
17. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the Act, these regulations or any other regulatory requirement and the auditors have confirmed that they have observed IFAC guidelines in this regard.
18. We confirm that all other requirements of the Regulations have been complied with.
Waseem-ul-Haque Ansari Syed Maqbool Ali
Chief Executive Director
Karachi: September 27, 2022
ANNUAL REPORT 2022 17
INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF DEWAN FAROOQUE MOTORS LIMITED
Review Report on the Statement of Compliance contained in Listed Companies (Code
of Corporate Governance) Regulations, 2019
We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of Dewan Farooque Motors Limited (the Company) for the year ended June 30, 2022 in accordance with the requirements of regulation 36 of the Regulations.
The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our responsibility is to review whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Regulations and report if it does not and to highlight any non-compliance with the requirements of the Regulations. A review is limited primarily to inquiries of the Company's personnel and review of various documents prepared by the Company to comply with the Regulations.
As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks.
The Regulations require the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval, its related party transactions We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee.
Following instances of Non-compliances with the requirements of the Code were observed which are not stated in the Statement of Compliance.
a) The composition of board includes one independent director Mr. Aziz ul Haque, whereas in our opinion he does not meet the criteria of independence due to his cross director ship in other group companies. Further, Code requires independent directors shall not be less than two or one third of the total members of the board, whichever is higher, whereas board include one independent director.
b) The chairman of Audit committee and Human Resource and Remuneration Committee shall be an independent director, whereas in our view Mr. Aziz ul Haque does not meet the criteria of independence due to the reason reflect in para (a) above.
18 ANNUAL REPORT 2022
Based on our review, except for the above instances of non-compliance, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the requirements contained in the Regulations as applicable to the Company for the year ended June 30, 2022.
Furthermore, we highlight that one director of the company are serving as directors in more than seven listed Companies and three of the directors are qualified under the Directors' Training Program as reflected in the note 3 and 9 of the Statement of Compliance respectively.
Chartered Accountants Place:Karachi UDIN: CR202210161tQ72LPOEZ Dated: September 28, 2022
ANNUAL REPORT 2022 19
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DEWAN FAROOQUE MOTORS LIMITED Report on the Audit of the Financial Statements Adverse Opinion We have audited the annexed financial statements of Dewan Farooque Motors Limited (the Company), which comprise the statement of financial position as at June 30, 2022, and the statement of profit or loss, statement of Comprehensive income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of the audit.
In our opinion and to the best of our information and according to the explanations given to us, because of the significance of the matters described in Basis for Adverse opinion Section, the statement of financial position, the statement of profit or loss, the statement comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes forming part thereof do not conform with the accounting and reporting standards as applicable in Pakistan and do not give the information required by the Companies Act, 2017, in the manner so required and respectively do not give a true and fair view of the state of the Company's affairs as at June 30, 2022 and of the loss, the changes in equity and its cash flows for the year then ended.
Basis for Adverse Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the company in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse opinion.
a) The financial statements of the company for the year ended June 30, 2022 as disclosed in note 1.1 to the financial Statements reflect loss after taxation of Rs. 176.830 (2021: Rs. 189.252) million and as of that date it has accumulated losses of Rs. 4.399 (2021: Rs. 4.222) billion which resulted in net capital deficiency of Rs. 3.011 (2021: Rs. 2.834) billion and its current liabilities exceeded its current assets by Rs. 4.671 (2021: Rs. 4.641) billion and total assets by Rs. 2.995 ( 2021: Rs. 2.817) billion without providing the markup as refer in below para (b). The operations of the company were closed from November 2010 to November 2013 and reclose since February 2014 due to working capital constraints. Furthermore, the company has been unable to ensure timely repayments of debts owing to financial institutions due to liquidity problems as disclosed in note 13 to the Financial statements and short term finance facilities have expired and not been renewed by banks as disclosed in note 19 to the Financial statements. Following course, certain lenders have gone into litigation for repayment of liabilities through attachment and sale of company's hypothecated / mortgaged properties as disclosed in note 20.4 to the financial Statements. These conditions lead us to believe that the going concern assumption used in preparation of these financial Statements is inappropriate; consequently the assets and liabilities should have been stated at their realizable and settlement amounts respectively.
20 ANNUAL REPORT 2022
b) The company has not made provision of markup for the year amounting to Rs. 589.709 (2021: Rs. Rs. 383.967) million (refer note 24) on account of restructuring proposal offered to the lenders as described in note 1.1 to the financial statements. Non-provisioning of markup is based on management's hope that the restructuring proposal will be accepted by lenders in the proposed manner. In our opinion, since the proposal has not been accepted by the lenders so far and the lenders, instead of accepting the restructuring proposal, have preferred filing suits against the company, therefore the provision of markup should be made in these financial statements. Had the provision of markup been made in the financial statements, the loss after taxation for the year would have been higher by Rs. 589.709 (2021: Rs. 383.967) million and markup payable would have been higher and shareholders' equity would have been lower by Rs. 7.185 (2021: Rs. 6.595) billion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Following are the Key Audit Matters:
S. No. Key Audit Matters How the matter was addressed
in our audit 1. Contingencies The Company is subject to material In response to this matter, our audit litigations involving in various courts procedures included but were not limited pertaining to Custom duty, Sales tax and to: Recovery of Loans by Financial Institutions, which requires management to make Discussing legal cases with the legal assessment and judgments with respect to department to understand the likelihood and impact of such litigations. management's view point and obtaining and reviewing the litigation documents in Management have engaged independent order to assess the facts and circumstances. legal counsel on these matters. The accounting for, and disclosure of, Obtaining independent opinion of legal contingencies is complex and is a matter advisors dealing with such cases in the of most significance in our audit because form confirmations. of the judgments required to determine We also evaluated the legal cases in line the level of certainty on these matters. with the requirements of IAS 37: Provisions, The details of contingencies along with contingent liabilities and contingent assets. management's assessment and the related The disclosures of legal exposures and provisions are disclosed in note 19 to the provisions were assessed for completeness financial statements. and accuracy
There is an inherent risk that legal In view of the significant judgments
exposures are not identified and considered required, we evaluated the Company's for financial reporting purposes on a timely assessment of the nature and status of basis, therefore, considered to be a key litigation, claims and provision assessments, audit matter. Importantly, the decision to if any, and discussed with management to recognize a provision and the basis of understand the legal position and the basis measurement are judgmental. of material risk positions. We received legal letters from the Company's external counsel setting out their views in major cases.
ANNUAL REPORT 2022 21
S. No. Key Audit Matters How the matter was addressed in our audit 1. Contingencies Specifically, we challenged the timing of recognition for cases where there was potential exposure but it was not clear that a provision should be raised e.g. where obtaining reliable estimates are not considered possible. As set out in the financial statements, the outcome of litigation and regulatory claims are dependent on the future outcome of continuing legal and regulatory processes and consequently the calculations of the provisions are subject to inherent uncertainty.
Information Other than the Financial Statements and Auditor's Report Thereon
Management is responsible for the other information. The other information comprises the information in the Annual Report, but does not include the financial statements and our auditor's reports thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. As described in the basis for adverse opinion section of our report, we have concluded that the other information is materially misstated for the same reason.
Responsibilities of Management and Board of Directors for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with Accounting and Reporting Standards as applicable in Pakistan and requirements of companies Act 2017 (XIX of 2017), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the company's financial reporting process.
22 ANNUAL REPORT 2022
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
. Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
. Conclude on the appropriateness of management's use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, Future events or conditions may cause the company to cease to continue as a going concern.
. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
ANNUAL REPORT 2022 23
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Based on our audit, except for the possible effects of matters discussed in basis for adverse opinion section of our reports, we further report that in our opinion:
(a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);
(b) because of the significance of matters described in Basis for Adverse Opinion section, the statement of financial position, the statement of profit or loss. Statement of comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes thereon have not been drawn up in conformity with the Companies Act, 2017 (XIX of 2017) however, the same are in agreement with the books of account and returns;
(c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company's business; and
(d) No zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).
The engagement partner on the audit resulting in this independent auditor's report is Mohammad Ghalib.
Chartered Accountants Karachi
UDIN: AR202210161H8ETGwFP
Dated: September 28, 2022
24 ANNUAL REPORT 2022
Statement of Financial Position As At June 30, 2022 Note June 30, June 30, 2022 2021 ----------(Rs. in '000)---------- ASSETS
NON-CURRENT ASSETS
Property, Plant and Equipment 3 765,959 819,033
Investment 4 909,483 1,004,392
CURRENT ASSETS
Stores and spares 5 46,557 52,293
Stock-in-trade 6 14,856 17,193 Trade debts - considered good 7 672 672 Short term loans to associated undertakings - considered good 8 154,879 154,879 Advances, deposits, prepayments and other receivables- considered Good 9 846,659 827,475 Taxation - net 10 23,720 23,627 Cash and bank balances 11 128,715 125,143 1,216,058 1,201,282 TOTAL ASSETS 2,891,500 3,024,707
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share Capital
Authorized
150,000,000 (2021: 150,000,000)
Ordinary shares of Rs.10 each 1,500,000 1,500,000
Issued, subscribed and paid-up 12 1,387,353 1,387,353
Revenue Reserve Accumulated loss (4,398,588) (4,221,758) (3,011,235) (2,834,405)
NON-CURRENT LIABILITIES Long term loans - secured 13 - - Long term security deposits 14 11,700 12,700 Deferred Liabilities 15 4,231 4,231
CURRENT LIABILITIES Short term loan from related party 16 293,063 273,405 Trade and other payables 17 399,097 374,130 Unclaimed Dividend 18 1,802 1,802 Short term finances-secured 19 4,095,913 4,095,913 Current maturity of long term loans 13 1,096,929 1,096,930 5,886,804 5,842,181 CONTINGENCIES AND COMMITMENTS 20
TOTAL EQUITY AND LIABILITIES 2,891,500 3,024,707
The annexed notes from 1 to 37 form an integral part of these financial statements.
Muhsin Ali Waseem-ul-Haque Ansari Syed Maqbool Ali
Chief Financial Officer Chief Executive Director
ANNUAL REPORT 2022 25
Statement Of Profit or Loss For the year ended June 30, 2022
Administration and general expenses 22 15,005 14,044
OPERATING LOSS (98,134) (95,031)
OTHER INCOME/(LOSS) 23 (70,735) (76,961)
(168,869) (171,992)
Finance cost 24 - 11 Provision for obsolescence / slow moving stocks 2,218 17,226 Provision for obsolescence / slow moving stores and spares 5,736 - 7,954 17,237
LOSS BEFORE TAXATION (176,823) (189,229)
TAXATION 25 7 23
LOSS AFTER TAXATION (176,830) (189,252)
Basic / Diluted (loss) per share (Rupees) 26 (1.33) (1.42)
The annexed notes from 1 to 37 form an integral part of these financial statements.
Muhsin Ali Waseem-ul-Haque Ansari Syed Maqbool Ali
Chief Financial Officer Chief Executive Director
26 ANNUAL REPORT 2022
Statement of Comprehensive Income For The Year Ended June 30, 2022
June 30, June 30,
2022 2021 ----------(Rs. in '000)----------
Loss for the year (176,830) (189,252)
Items that will not be subsequently reclassified to profit or loss:
Other comprehensive income / (loss) - -
Total comprehensive loss for the year (176,830) (189,252)
The annexed notes from 1 to 37 form an integral part of these financial statements.
Muhsin Ali Waseem-ul-Haque Ansari Syed Maqbool Ali
Chief Financial Officer Chief Executive Director
ANNUAL REPORT 2022 27
Statement Of Cash Flow For the year ended June 30, 2022 Note June 30, June 30, 2022 2021 ----------(Rs. in '000)---------- CASH FLOW FROM OPERATING ACTIVITIES
(Loss) before taxation (176,823) (189,229)
Add / (Less) : Depreciation 53,042 58,094
Gain on disposal of fixed assets (668) (430) Loss due to Change in valuation of investment in associates 94,909 89,969 Financial charges - 11 147,283 147,644 (29,540) (41,585) Decrease in stores & spares 5,736 - Decrease in stock in trade 2,337 18,127 Decrease in trade debts - 4,948 (Increase) in advances, deposits, pre-payments & other receivables (19,184) (12,129) Increase in trade, other payables and borrowings 24,966 18,482 (Decrease) in long term security deposits (1,000) - Tax (paid) (100) (76) Dividend (paid) - (12) Financial charges (paid) - (11) 12,755 29,329
Net cash flow from operating activities (16,785) (12,256)
CASH FLOW FROM INVESTING ACTIVITIES
Sale Proceeds of fixed assets 700 450
Net cash flow from investing activities 700 450
CASH FLOW FROM FINANCING ACTIVITIES
Short term loan from related party - net 19,658 11,342
Net cash flow from financing activities 19,658 11,342
NET INCREASE / (DECREASE) IN CASH & CASH EQUIVALENTS 3,573 (464)
CASH & CASH EQUIVALENTS AT BEGINNING OF THE PERIOD (1,852,882) (1,852,418)
CASH & CASH EQUIVALENTS AT END OF THE PERIOD 27 (1,849,309) (1,852,882)
The annexed notes from 1 to 37 form an integral part of these financial statements.
Muhsin Ali Waseem-ul-Haque Ansari Syed Maqbool Ali
Chief Financial Officer Chief Executive Director
28 ANNUAL REPORT 2022
Statement Of Changes In Equity For The Year Ended June 30, 2022
Share Capital Revenue Reserves
Issued, Accumulated Total subscribed Total loss Reserves and paid-up
----------------------(Rs. in '000)----------------------
Balance as at July 01, 2020 1,387,353 (4,032,506) (4,032,506) (2,645,153)
Total Comprehensive (loss)
for the year - (189,252) (189,252) (189,252)
Balance as at June 30, 2021 1,387,353 (4,221,758) (4,221,758) (2,834,405)
Balance as at July 01, 2021 1,387,353 (4,221,758) (4,221,758) (2,834,405)
Total Comprehensive (loss)
for the year - (176,830) (176,830) (176,830)
Balance as at June 30, 2022 1,387,353 (4,398,588) (4,398,588) (3,011,235)
The annexed notes from 1 to 37 form an integral part of these financial statements.
Muhsin Ali Waseem-ul-Haque Ansari Syed Maqbool Ali
Chief Financial Officer Chief Executive Director
ANNUAL REPORT 2022 29
Notes to the Financial Statements For The Year Ended June 30, 2022
1 THE COMPANY AND ITS OPERATIONS
Dewan Farooque Motors Limited was incorporated in Pakistan on December 28, 1998 as a public limited company. The shares of the company are quoted on all the Pakistan stock exchanges in Pakistan. The principal activity of the Company is the assembly, progressive manufacturing and sale of vehicles in Pakistan.
The Company commenced commercial production through the interim facility from January 01, 2000. The main facility came into commercial operation from January 01, 2001.
On 01 August 2016, the company entered into an agreement with Daehan-Dewan Motor Company (Pvt.) Limited (a related party) for assembly of vehicles on contract basis. The Company manufactured vehicles under this arrangement from March 2018 to June 2018 after that Plant reclose till to date.
The geographical Location and address of the company's business units, including mill/plant are as under:
The registered office of the Company is situated at Dewan Centre, 3-A Lalazar, Beach Luxury Hotel Road, Karachi, while its manufacturing facilities is situated at Jilianabad, Budhu Talpur, District Sajawal, Sindh.
1.1 SUMMARY OF SIGNIFICANT EVENTS AND TRANSACTIONS IN THE CURRENT
REPORTING PERIOD:
All other significant transactions and events that have affected the Company's statement of financial position and performance during the year have been adequately disclosed either in the notes to these financial statements or in the Director report's
1.2 GOING CONCERN ASSUMPTION
The company has incurred a loss after taxation of Rs.176.830 million (2021: Rs.189,252 million) during the year ended June 30, 2022. As of that date it has accumulated losses of Rs.4.399 billion (2021: Rs.4.222 billion) and its current liabilities exceeded its current asset by Rs. 4.671 billion (2021: Rs.4.641 billion). Furthermore, cumulatively the company has not provided markup from banks and financial institutions amounting to Rs.7.185 billion (2021: Rs.6.595 billion). The working capital constraints resulted in closure of production activities leading to gross loss situation. The Company could not continue its production from November 2010 till August 2013 and again had to close the production since March 2014.The Company manufactured vehicles on contratct basis under an agreement with related party from March 2018 to June 2018 after that Plant got reclosed till date. Further, the company has been unable to ensure timely repayments of debts owing to financial institutions due to liquidity problems and the short term facilities have not been renewed by banks/financial institutions.Following course most of the lenders have gone into litigation for repayment of liabilities through attachment and sale of Company's hypothecated / mortgaged properties and certain lenders have also filed winding up petitions. These conditions indicate the existence of material uncertainty, which may cast significant doubt about Company's ability to continue as going concern.
30 ANNUAL REPORT 2022
Notes to the Financial Statements For The Year Ended June 30, 2022
These financial statements have been prepared on going concern assumption because the above conditions are temporary and would reverse. The management is confident that the outcome will be positive as the company is negotiating reprofiling of the debt with all the lenders and is expected to be finalized in due course.
2 Statement of compliance
These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan with the exception of departure of IFRS as mentioned in note 23 to the financial statements, for which the management concludes that provisioning of mark-up would conflict with the objectives of the financial statements. The accounting and reporting standards applicable in Pakistan comprise of:
a) International Financial Reporting Standard issued by the International Accounting Standards
Board (IASB) as notified under the Companies Act, 2017; and
b) Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS, the provisions of and directives issued under the Companies Act, 2017 have been followed.
2.1 BASIS OF MEASUREMENT
These financial statements have primarily been prepared under the historical cost convertion without any adjustmens for the effect of inflation or current values, except for the financial assets and liabilities which are carried at their fair values and revalued amounts(if any) and stock in trade which are valued at net realizable value (if any), if it is less than the cost and for cash flow information.
2.2 STANDARDS, AMENDMENTS, INTERPRETATION AND IMPROVEMENTS
APPLICABLE TO THE FINANCIAL STATEMENTS
Amendments to approved accounting standards and the framework for financial reporting that became effective during the current year
The Company has adopted the following amendments to International Financial Reporting Standards (IFRSs) which became effective for the current year:
Amendment or Framework
IFRS 3 - Business Combinations - Definition of a Business (Amendments)
IFRS 9 / IAS 39 / IFRS 7 - Interest Rate Benchmark Reform (Amendments) IAS 1 / IAS 8 - Definition of Material (Amendments) Conceptual Framework for Financial Reporting
ANNUAL REPORT 2022 31
Notes to the Financial Statements For The Year Ended June 30, 2022
The adoption of above amendments to the approved accounting standards and the framework for financial reporting did not have any material impact on the Company's financial statements.
Standards, amendments and improvements to the approved accounting standards that
are not yet effective
The following amendments and improvements to the approved accounting standards as
applicable in Pakistan would be effective from the dates mentioned below against the respective amendment or improvements:
IFRS 16 Covid-19-Related Rent Concessions 01 April 2022
beyond 30 June 2022 (Amendments)
IFRS 3 Reference to the Conceptual 01 January 2022
Framework (Amendments)
IAS 16 Property, Plant and Equipment: Proceeds 01 January 2022
before Intended Use (Amendments)
IAS 37 Onerous Contracts Costs of Fulfilling 01 January 2022
a Contract (Amendments)
IAS 1 Classification of Liabilities as Current 01 January 2023
or Non-current (Amendments)
IAS 1 Disclosure of Accounting Policies 01 January 2023
(Amendments)
IAS 8 Definition of Accounting Estimates 01 January 2023
(Amendments)
IAS 12 Deferred tax related to Assets and 01 January 2023
Liabilities arising from a single transaction (Amendments)
IFRS 10 / IAS 28 Sale or Contribution of Assets between Not yet finalised
an Investor and its Associate or Joint Venture (Amendment)
32 ANNUAL REPORT 2022
Notes to the Financial Statements For The Year Ended June 30, 2022
Improvements to
IFRS 9 Financial Instruments Fees in the '10 01 January 2022
percent' test for derecognition of financial liabilities
IAS 41 Agriculture Taxation in fair value 01 January 2022
measurements
IFRS 16 Leases: Lease incentives 01 January 2022
The above amendments and improvements are not expected to have any material impact on the Company's financial statements in the period of initial application.
Further, the following new standards have been issued by IASB which are yet to be notified by the SECP for the purpose of applicability in Pakistan and are not expected to have any material impact on the Company's financial statements in the period of initial application.
IASB effective date
Standard (annual periods beginning on or after)
IFRS 1 First-time Adoption of International
Financial Reporting Standards
IFRS 17 Insurance Contracts 01 January 2023
2.3 Significant Accounting estimates adjustments and Assumptions
The preparation of financial statements in conformity with approved accounting standards
require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses. It also requires management to exercise judgement in application of the company's accounting policies. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.
Significant accounting estimates and areas where judgements were exercised by
management in the application of accounting policies in the financial statements are as follows:
i. Useful lives of Property, Plant and equipment (notes 2.4 and 3.1)
ANNUAL REPORT 2022 33
Notes to the Financial Statements For The Year Ended June 30, 2022
ii. Provision for doubtful trade debts (note 2.8)
iii. Income taxes (note 2.11) iv. Classification and valuation of investments (note 2.5) v. Provision for Slow moving stores and spares (note 2.6) vi. Provision for Slow moving stock in trade (note 2.7)
2.4 Tangible fixed assets
2.4.1 Property Plant and Equipment Owned
These are stated at cost less accumulated depreciation except for land and capital work in progress which are stated at cost. Cost of certain fixed assets and capital work in progress comprises of historical cost and the cost of borrowings during construction / erection period in respect of specific loans / borrowings.
Depreciation is charged to income using the reducing balance method whereby the cost of an asset is written off over its estimated useful life. The rates of depreciation are stated in note 3.1 to the accounts. Depreciation is charged in proportion to the use of assets in the respective year.
The assets' residual values and useful lives are reviewed at each financial year end, and adjusted , if appropriate, at each statement of financial position date.
Maintenance and normal repairs are charged to income as and when incurred whereas major renewals and improvements are capitalized and the assets so replaced, if any, are retired.
Gain or loss on disposal of fixed assets are included in income currently.
2.4.2 Judgement and estimates
The useful lives, residual values and depreciation method are reviewed on a regular basis. The effect of any changes in estimate is accounted for on a prospective basis.
2.4.3 Capital work-in-progress
All expenditures connected to the specific assets incurred during installation and construction period are carried under capital work-in-progress. These are transferred to specific assets as and when assets are available for use.
2.4.4 Impairment of non-financial assets other than inventories
The assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that the assets are impaired. If there is an indication of possible impairment, the recoverable amount of the asset is estimated and compared with its carrying amount.
34 ANNUAL REPORT 2022
Notes to the Financial Statements For The Year Ended June 30, 2022
An impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount. The impairment loss is recognised in the statement of profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
An impairment loss is reversed only to the extent that the asset carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The Company recognises the reversal immediately in the statement of profit or loss, unless the asset is carried at a revalued amount in accordance with the revaluation model. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.
2.4.5 Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received as applicable. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, The right-of-use asset is depreciated using the straight line method over the shorter of the lease term and the asset's useful life . The estimated useful lives of assets are determined on the same basis as that for owned assets. In addition, the right-of-use asset is periodically reduced by impairment losses, if any.
2.4.6 Lease Liability
The Company assesses at contract inception whether a contract is, or contains, a lease, i.e. if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
34 ANNUAL REPORT 2022 35
Notes to the Financial Statements For The Year Ended June 30, 2022
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the commencement date of the lease if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
2.5 Investment
2.5.1 The management determines the appropriate classification of the investments, in accordance with the IFRSs, at the time of purchase depending on the purpose for which the investments are acquired and re-evaluate this classification on a regular basis. The existing investment of the company has been categorized as available for sale.
Available for sale investments are initially recognized at cost being the fair value of the consideration given including acquisition charges associated therewith.
After initial recognition, investment which are classified as available for sale are remeasured at fair value. Unrealized gains and losses on available for sale investments are recognized in equity till the investment is sold or otherwise disposed off, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in income.
2.5.2 Investment in Associates
Associates are entities over which the Company exercises significant influence. Investment in associates is accounted for using equity basis of accounting, under which the investment in associate is initially recognised at cost and the carrying amount is increased or decreased to recognise the Companys share of profit or loss of the associate after the date of acquisition. The Companys share of profit or loss of the associate is recognised in the Companys profit and loss account. Distributions received from associate reduce the carrying amount of the investment. Adjustments to the carrying amount are also made for changes in the Companys proportionate interest in the associate arising from changes in the associates other comprehensive income that have not been recognised in the associates profit or loss. The Companys share of those changes is recognised in other comprehensive income of the Company. The carrying amount of the investment is tested for impairment, by comparing its recoverable amount (higher of value in use and the fair value less costs to sell) with its carrying amount and loss, if any, is recognised in profit or loss. If the Company's share of losses of an associate equals or exceeds its interest in the associate, the Company discontinues recognising its share of further losses. If the associate subsequently reports profits, the investor or joint venturer resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
36 ANNUAL REPORT 2022
Notes to the Financial Statements For The Year Ended June 30, 2022
2.6 Stores and spares
These are valued at cost determined on weighted average basis. Items in transit are valued at cost comprising of invoice values plus other charges incurred thereon accumulated to the statement of financial position date.
Stores, Spares and Loose tools are regularly reviewed by the managemnet and any obsolete items are brought down to their NRV.
2.7 Stock-in-trade
Raw materials and Components are valued at cost. Those in transit are stated at invoice price plus other charges paid thereon upto the statement of financial position date. Cost is determined on a moving average basis.
Work-in-process is valued at material cost consisting of CKD kits, local vendor parts and consumables.
CBU (finished goods) in hand are valued at the lower of cost and net realizable value. Cost is determined on moving average basis.
Goods-in-transit are valued at purchase price, freight value and other charges incurred thereon upto the statement of financial position date.
Stock-in-trade is regularly reviewed by the management and any obsolete items are brought down to their NRV.
Net realizable value signifies the estimated selling price in the ordinary course of business less cost necessary to make sale.
2.8 Trade debts and other receivables
Trade debts and other receivables are stated initially at fair value and subsequently measured at amortised cost using the effective interest rate method less an allowance for expected credit losses , if any. Allowance for expected credit losses is based on lifetime ECLs that result from all possible default events over the expected life of the trade debts and other receivables. Bad debts, if any, are written off when considered irrecoverable.
2.9 Staff retirement benefits
Effective from January 1, 2004, the company has, in place of gratuity scheme, established a recognized provident fund scheme (defined Contribution Plan) for its permanent employees. Equal contributions are being made in respect thereof by company and employees in accordance with the terms of scheme.
36 ANNUAL REPORT 2022 37
Notes to the Financial Statements For The Year Ended June 30, 2022
2.10 Long term loans / Borrowings
Long term loans/ Borrowings are initially recognized at cost. After initial recognition same are measured at original recorded amount less principal repayments thereof.
2.11 Taxation
Current
The charge for current taxation is based on taxable income at current rates of taxation after taking into account tax rebates and credits available, if any, or one percent of turnover or Alternate Corporate Tax whichever is higher. Alternate Corporate Tax is calculated in accordance with the provisions of Section 113C of Income Tax Ordinance.
Deferred
Deferred tax is provided, using the liability method, on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the assets is realized or the liability is settled, based on tax rates that have been enacted or substantially enacted by the statement of financial position date.
2.12 Trade and other payables
Liability for trade and other amounts payable, are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received.
2.13 Warranty obligations
These are accounted for on the basis of claims lodged on the company.
2.14 Foreign currency translation
Foreign currency transactions are translated into Pak Rupees at exchange rates prevailing on the date of transaction. All monetary assets and liabilities in foreign currencies are translated at the rate of exchange prevailing at the statement of position date except for liabilities covered under forward exchange contracts, if any, which are translated at the contracted rates. Exchange differences on foreign currency translations are included in income along with any related hedge effects.
38 ANNUAL REPORT 2022 37
Notes to the Financial Statements For The Year Ended June 30, 2022
2.15 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an
asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
2.16 Financial instruments
Financial assets
The financial assets of the Company mainly include trade debts, loans, deposits, short- term investments, other receivables and cash and bank balances.
Under IFRS 9, on initial recognition, a financial asset is classified as measured at: amortised cost; Fair Value through Other Comprehensive Income (FVOCI) debt investment; FVOCI equity investment; or Fair Value through Profit or Loss (FVTPL). The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Based on the business model of the Company, the financial assets of the Company are measured and classified under IFRS 9 as follows;
Trade debts and other financial assets previously classified as 'loans and receivables' are now classified as 'amortised cost'. These assets are measured at amortised cost using the effective interest rate method less an allowance for expected credit losses, if any.
Short-term investments are designated at FVTPL at initial recognitiion. These are carried in the unconsolidated statement of financial position at fair value with net changesinfairvalue recognised in the unconsolidated statement of profit or loss.
Financial liabilities
There are no changes in classification and measurement for the Company's financial liabilities on the adoption of IFRS 9.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Gains or losses on liabilities held for trading are recognised in the unconsolidated statement of profit or loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Company has not designated any financial liability as at fair value through profit or loss.
38 ANNUAL REPORT 2022 39
Notes to the Financial Statements For The Year Ended June 30, 2022
Impairment of financial assets
IFRS 9 replaces the incurred loss model in IAS 39 with an expected credit loss (ECL)model.The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive. The shortfall is then discounted at an approximation to the assets original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Afinancial assets written off when there is no reasonable expectation of recovering the contractual cashflows. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the out standing contractual amounts in full before taking into accountany credit enhancements held by the Company.
At each date of statement of financial position, the Company assesses whether financial assets are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Loss allowances for financial assets measure datamortised cost are deducted from the gross carrying amount of the respective asset.
The Company uses the standards simplified approach and calculates ECL based on lifetime ECL on itsfinancial assets. The Company has established a provision matrix that is based on the Companys historical credit loss experience, adjusted for forward-looking factors specific to the financial assets and the economic environment.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the unconsolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Impairment of non-financial assets
The carrying amounts of non-financial assets other than inventories and deferred tax assets are assessed at date of statement of financial position to ascertain whether there is any indication of impairment. If such an indication exists, the asset's recoverable amount is estimated to determine the extent of impairment loss, if any. An impairment loss is recognised, as an expense in the unconsolidated statement of profit or loss. The recoverable amount is the higher of an asset's fair value less cost to disposal and value in use. Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects current market assessments of the time value of money and the risk specific to the assets.
40 ANNUAL REPORT 2022 39
Notes to the Financial Statements For The Year Ended June 30, 2022
2.17 Revenue recognition
Sales are recognized as revenue when goods are invoiced to customers. Revenue is recognised when the control of the goods/vehicle is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods according to the terms. Performance obligation is satisfied at the point of time when control of goods has been transferred to the customers.
Return on bank deposits are on an accrual basis.
Markup on loan to associated undertaking is recognized on an accrual basis.
Agency commission is recognized when shipments are made by the principal.
Unrealized gains / loss arising on re-measurement of investments classified as "financial
assets at fair value though "profit or loss" are included in the profit and loss account in the period in which these arise.
Realised capital gains / loss on sale of investments are recognized in the profit and loss account at the time of sale.
Dividend income is recognised when the right to receive the dividend is established.
Revenue from contracts with customers is recognized when the control of the goods is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods according to the negotiated contractual terms. The Company has generally concluded that it acts as a principal in its revenue arrangements because it typically controls the goods or services before transferring them to the customer.
Performance obligations held by the Company are not separable, and are not partially satisfied, since they are satisfied at a point in time, when the customer accepts the products. Moreover, the payment terms identified in most sources of revenue are short- term usually 30 to 60 days upon delivery, without any variable considerations, financing components and guarantees.
The Company recognizes an account receivable when the performance obligations have been met, recognizing the corresponding revenue. Moreover, the considerations received before satisfying the performance obligations are recognized as advances from customer.
2.18 Cash and cash equivalents
Cash and cash equivalents are carried in the statement of financial position at cost. For the purpose of the cash flow statement, cash and cash equivalents comprise cash in hand and at banks and short term finances. The cash and cash equivalents are subject to insignificant risk of changes in value.
40 ANNUAL REPORT 2022 41
Notes to the Financial Statements For The Year Ended June 30, 2022
2.19 Related Party transactions and transfer pricing
The Company enters into transactions with related parties on an arm's length basis.Ecxcept interest free Loan Obtained to meet the Working capital requiremnets of the Company From Sponsors of the Company.
2.20 Provisions
Provisions are recognized when the company has present obligation, legal or constructive, as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each statement of financial position date and adjusted to reflect the current best estimate.
2.21 Off setting of financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount is reported in the financial statements only when the company has a legally enforceable right to offset the recognized amounts and the company intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
2.22 Dividends distribution and transfer between reserves
Dividends declared are transfers between reserves made subsequent to the statement of financial position date are considered as non-adjusting events and are recognized in the financial statements in the year in which such dividends are approved / transfers are made.
2.23 Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates. The financial statements are presented in Pakistani Rupees, which is the Company's functional and presentation currency.
2.24 Segment Reporting
The Company uses management approach for segment reporting, under which segment information is required to be presented on the same basis as that used for internal reporting purposes. Operating segments have been determined and presented in a manner consistent with the internal reporting provided to the chief operating decision-maker. The company has determined operating segments on the basis of business activities i.e. manufacturing and trading activities. Segment assets have not been disclosed in these financial statements as these are not reported to the chief operating decision-maker on a regular basis.
42 ANNUAL REPORT 2022 41
Notes to the Financial Statements For The Year Ended June 30, 2022
2.25 Contingent Liability
A contingent liability is disclosed when the Company has a possible obligation as a result of past events, whose existence will be confirmed only by the occurrence or non-occurrence, of one or more uncertain future events not wholly within the control of the Company; or the Company has a present legal or constructive obligation that arises from past events, but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability.
Note June 30, June 30,
2022 2021 ------(Rs. in '000)------ 3 PROPERTY, PLANT AND EQUIPMENT
Operating fixed assets 3.1 765,959 819,033
765,959 819,033
42 ANNUAL REPORT 2022 43
Notes to the Financial Statements For The Year Ended June 30, 2022
3.1 The statement of the operating fixed assets is as follows:
Tangible - owned
Free hold Plant and Furniture Office
land Buildings machinery and Vehicles Equipment Total fixtures
----------------------------------------------(Rupees in 000)---------------------------------------------- As at July 01 ,2021
Net book value 78,033 456,326 221,809 28,871 17,453 16,541 819,033
Depreciation rate % per annum 5% 10% 10% 20% 10%
3.1.1 The above assets are mortgaged with the Financial Institutions /Banks as disclosed in note no 13, 19 and 20.4 and the note 1.1 to the financial Statements.
44 ANNUAL REPORT 2022 43
Notes to the Financial Statements For The Year Ended June 30, 2022 3.1.2 Freehold land represents 73.47 Acres situated at Jilaniabad, Budhu Talpur, District Sujawal. The value of Freehold land is Rs. 69.721 Million (2021: Rs. 69.721 Million) and leasedhold land is Rs. 8.311 Million (2021: Rs. 8.311 Million)
3.2 Depreciation charge for the period has been allocated as follows:
Note June 30, June 30,
2022 2021 ------(Rs. in '000)------
Cost of goods manufactured 20.1 51,282 56,167
Administration and general expenses 21 1,760 1,927
53,042 58,094
4. INVESTMENT
Investment in Ordinary shares of Dewan Cement Limited (DCL) - Related party
65,375,455 ordinary shares of Rs. 10 each
(2021: 65,375,455 ordinary shares of Rs. 10 each ) 4.1 804,131 804,131
Share of Profit 105,352 200,261
909,483 1,004,392
Fair value as per Market price Quoted in
Pakisatn Stock Exchange 353,027 736,128
Market value (Rupees per share) 5.40 11.26
Percentage of equity held 13.50% 13.50%
4.1 The summarized financial information of the associates over which the company exercises significant influence based on audited financial statements for the year ended June 30, 2022 are as follows:
June 30, June 30,
2022 2021 ------(Rs. in '000)------
Total Assets 37,900,907 36,931,786
Total Liabilities 18,282,996 15,996,409
Revenues 16,518,299 6,259,915
(Loss) after tax (703,032) (666,438)
Accumulated Profit up to June 30 3,581,982 3,972,237
ANNUAL REPORT 2022 45
Notes to the Financial Statements For The Year Ended June 30, 2022
Note June 30, June 30,
2022 2021 ------(Rs. in '000)------ 5. STORES AND SPARES
Stores 16,430 16,430
Spares 40,927 40,927 57,357 57,357 Less : Provision for obsolescence / slow moving stocks (10,800) (5,064) 46,557 52,293
5.1 Movement in provision for obsolescence
and slow moving items
Opening balance 5,064 5,064
Provision during the year 5,736 - Closing balance 10,800 5,064
6. STOCK-IN-TRADE
Manufacturing stock Raw materials and components 144,225 144,225 Finished goods 2,218 2,218 146,443 146,443 Trading stock Trading stock 25,705 25,824
Less : Provision for obsolescence / slow moving stocks (157,292) (155,074)
14,856 17,193
6.1 Movement in provision for obsolescence
and slow moving items
Opening balance 155,074 137,847
Provision during the year 2,218 17,227 Closing balance 157,292 155,074
7. TRADE DEBTS - Considered good 672 672
46 ANNUAL REPORT 2022 45
Notes to the Financial Statements For The Year Ended June 30, 2022
Note June 30, June 30,
2022 2021 ------(Rs. in '000)------ 8 SHORT TERM LOAN TO AN ASSOCIATED UNDERTAKING - Considered good
Dewan Automotive Engineering Limited 8.1 154,879 154,879
154,879 154,879
8.1 The company has charged markup on loans to associated undertakings carrying markup @1% above the borrowing of the company. At the end of the period these loans carries markup at the rate of 16.16% ( 2021: 8.45%) per annum.
8.2 The maximum aggregate amount of loan at the end of any month during the year was Rs. 154.879 Million (2021: Rs. 154.879 Million).
June 30, June 30,
2022 2021 9 ADVANCES, DEPOSITS, PREPAYMENTS AND ------(Rs. in '000)------ OTHER RECEIVABLES
Advances - Considered good
Suppliers and contractors
Considered good - - Considered doubtful 181,467 181,467 181,467 181,467 Less: Provision for doubtful advances (181,467) (181,467) - - Employee 3,068 3,068 Sales tax 16 5 3,084 3,073
Deposits Margin against letters of guarantees 2,050 2,050 Others 11,511 11,511 13,561 13,561
Other receivables Markup on loan to associated undertaking (note 8 & 9.1) 830,013 810,840 Others 1 1 830,014 810,841 846,659 827,475
9.1 The maximum aggregate amount receivable at the end of any month during the year was Rs. 830,014 Million (2021: Rs. 810,841 Million).
9.2 The age analysis of receivable from related party as follows.
ANNUAL REPORT 2022 47
Notes to the Financial Statements For The Year Ended June 30, 2022
June 30, June 30,
2022 2021 ------(Rs. in '000)------
Not yet due - -
Past due - up to 3 months - - - 3 to 6 months 11,240 6,580 - 6 to 12 months 7,933 6,457 - More than one year 810,840 797,803 830,013 810,840
10. TAXATION
10.1 Income tax assessments of the company have been finalized upto and including the tax year 2021 relating to income year ended June 30, 2021 and certain appeals for the Tax year 2008,2009 and 2010 are pending before the income tax appellate authorities. However, the Commissioner of Income Tax may at any time during a period of five years from the date of filing of return may select the deemed assessment for audit. The company is in loss, therefore provision has been made in the accounts for minimum tax as per provisions of the Income Tax Ordinance, 2001.
10.2 The numerical reconciliation between the average tax rate and the applicable tax rate has not been presented in these financial statements as the company is not in operational activities as described in note 1 of these financial statements.
10.3 Management had a practice of recording tax expense based on the generally accepted interpretation of tax laws and accordingly sufficient provision in respect of taxation for last three years has been provided in these financial statements.
Note June 30, June 30,
2022 2021 ------(Rs. in '000)------ 11. CASH AND BANK BALANCES
Cash in hand 82 597
Cash at banks in current accounts 11.1 128,633 125,009 128,715 125,606
48 ANNUAL REPORT 2022
Notes to the Financial Statements For The Year Ended June 30, 2022
11.1 One of the Company's current account has been blocked by the bank. The Company has gone into litigation against this action of the bank demanding release of the blocked amount. The matter is pending in the High Court of Sindh. Further, confirmation from most of the banks are not received as the company is in litigation with banks.
11.2 Represents deposits placed with conventional banks.
12. ISSUED, SUBSCRIBED AND PAID-UP-CAPITAL
June 30, June 30, 2022 2021 2022 2021 (No of Shares in 000) ------(Rs. in '000)------
135,065 135,065 Ordinary shares of Rs.10/- each fully paid in cash 1,350,651 1,350,651
3,670 3,670 Ordinary shares of Rs.10/- each, issued as fully
12.1 13,650,000 (2021: 13,650,000) shares are held by Related party (Dewan Sugar Mills Limited).
12.2 All ordinary shares rank equally with regard to the Companys residual assets. Holders of the shares are entitled to dividends from time to time and are entitled to one vote per share at the general meetings of the Company.
12.3 As of the reporting date 13,650,000 (2021: 13,650,000) and 3,500 (2021: 3,500) ordinary shares of Rs. 10 each were held by associated companies and directors of the Company respectively.
June 30, June 30,
Note 2022 2021 13. LONG TERM LOANS - secured ------(Rs. in '000)------
From banking companies and other financial institutions
Term Finance I 13.1 71,429 71,429
Term Finance II 13.2 90,000 90,000 Term Finance III 13.3 62,500 62,500 Term Finance IV 13.4 110,000 110,000 Term Finance V 13.5 63,000 63,000 Term Finance VI 13.6 700,000 700,000 1,096,929 1,096,929
1,096,929 1,096,929 Less:- Current portion shown under current liabilities 13.7 (1,096,929) (1,096,929) - -
ANNUAL REPORT 2022 49
Notes to the Financial Statements For The Year Ended June 30, 2022
13.1 The loan carries mark up at the base rate plus 2.5% per annum. Base rate has been defined as average rate of ASK SIDE of the six months KIBOR. Base rate will be set at the last business day before the installment date for the immediately preceding installment. Presently markup on the finance works out to 14.51% ( 2021 : 14.51 %) per annum.
The loan was rescheduled during the year and is to be paid in seven equal monthly installments commencing from June 29, 2008 and ending on December 31, 2008.
This loan is secured by way of parri passu charge over all present and future fixed assets including land, building, plant and machinery of the Company.
13.2 The loan carries mark up at the base rate plus 3.00% per annum. Base rate has been defined as average ASK rate of the six months KIBOR. Base rate will be set on the last day of preceding quarter. Presently markup on the finance works out to 15.01% (2021: 15.01%) per annum.
The loan is repayable in ten equal semi annual installments, with quarterly markup payments, commencing from January 26, 2006 and ending on October 26, 2010
The loan is secured by First Pari Passu hypothecation charge and equitable mortgage over fixed assets of the company.
13.3 The finance carries mark up at the base rate plus 2.50% per annum. Base rate has been defined as average rate of ASK SIDE of the six months KIBOR. Base rate will be set on the last day of preceding quarter. Presently markup on the finance works out to 14.51% (2021: 14.51%) per annum.
The loan was repayable in eight equal quarterly installments commencing from January 13, 2006 and ending on October 13, 2007
The loan was secured by First Pari Passu charge over plant and machinery and equitable mortgage over land and building of the company.
13.4 The finance carries mark up at the base rate plus 4.00 % per annum. Base rate has been defined as ASK rate of six months KIBOR prevailing on the last business day at the beginning of each quarterly period. Presently markup on the finance works out to 16.01% (2021 16.01 %) per annum.
The finance is repayable in twenty equal quarterly installments commencing from March 30, 2006 and ending on December 30, 2010
The loan is secured by First Pari Passu charge over all the present and future fixed assets of the company.
13.5 The loan carries mark up at the base rate plus 3% per annum. Base rate has been defined as average ASK rate of the six months KIBOR. Base rate will be set first time on date of disbursement and subsequently on January 1st and July 1st. Presently markup on the finance works out to 15.01 % (2021: 15.01%) per annum.
The loan is repayable in ten equal half yearly installments, with quarterly markup payments, commencing from August 14,2007 and ending on February 14, 2012.
50 ANNUAL REPORT 2022 49
Notes to the Financial Statements For The Year Ended June 30, 2022
The loan is secured by First Pari Passu charge over fixed assets of the company.
13.6 The loan carries mark up at the base rate plus 3% per annum. Base rate has been defined as average ASK rate of the six months KIBOR. Base rate will be reset on bi-annual basis i.e. on January 1st and July 1st every year. Presently markup on the finance works out to 15.01 % (2021 15.01%) per annum.
The loan is repayable through monthly installments within five years including one year grace period, markup shall continuously be paid on calendar quarter basis during grace period.
The loan is secured by First Pari Passu charge over fixed assets of the company.
13.7 This includes overdue installments amounting to Rs. 1,096,929 million. Banks/financial institutions has filed suit in the High Court of Sindh U/s 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 for recovery through sale of company's assets. The company is defending these cases. The outcome is awaited and it is expected that it will be in favour of company as fully disclosed in note no. 20.4 to the financial Statements.
13.8 Since the Company is in litigation with banks comfirmation have not been received .
14. LONG TERM SECURITY DEPOSITS
These deposits have been received from dealers and are interest free. These deposits have been utilized for the purpose of business in accordance with the term of written agreement with the dealers under section 217 of Companies Act, 2017.
Note June 30, June 30,
2022 2021 15. DEFERRED LIABILITIES ------(Rs. in '000)------
Deferred taxation 15.1 - -
Staff gratuity 15.2 4,231 4,231 4,231 4,231
15.1 Deferred Taxation
Credit balance arising due to:
Accelerated tax depreciation allowances 122,233 132,305 Share of profit in associated company 55,541 58,076 177,774 190,381 Less: Debit balance arising due to: Gratuity (1,227) (1,227) Provision for obsolete/slow moving Stores and Spares (3,132) (1,469) Provision for obsolete/slow moving Stock-in-Trade (45,615) (44,971) Provision for doubtful advance (52,625) (52,626) Carry forward tax losses and others (848,146) (434,489) (950,745) (534,782) Deferred tax assets (772,971) (344,401) Deferred tax asset not recognized 772,971 344,401 - -
ANNUAL REPORT 2022 51
Notes to the Financial Statements For The Year Ended June 30, 2022 Note June 30, June 30, 2022 2021 ------(Rs. in '000)------ 15.2 Staff gratuity
Balance at the beginning of the period 4,231 4,231
Less: Payments made during the period - - 4,231 4,231
16. SHORT TERM LOAN FROM RELATED PARTY
Sponsor Loan Balance at the beginning of the period 16.1 262,063 262,063 Add: Received during the year 31,000 - 293,063 262,063 Related Party Dewan Motors (Private) Limited 16.2 - 11,342 293,063 273,405
16.1 This represents unsecured interest free loan obtained from Sponsor of the Company for the purpose of working capital requirements and is payable on demand.
16.2 This represents unsecured interest free loan obtained from Related Party Dewan Motors (Private) Limited for the purpose of working capital requirements and is payable on demand.
17.1 Investments of provident fund have been made in accordance with the provisions of section 218 of the Companies Act 2017 and the rules formulated for this purpose.
18 Unclaimed dividend
As per the provision of Section -242 of the Companies Act, 2017 and directives of the Securities and Exchange Commission of Pakistan vide circular no. 18 dated 01 August, 2017, cash dividend will only paid through electronic mode directly in the bank accounts of shareholders, accordingly this unpaid dividend pertains to those shareholders who did not provided their valid bank accounts details
19 SHORT TERM FINANCES - SECURED
From banks & financial institutions
- Short term loan (Under mark-up / profit arrangements) 19.1 & 19.4 1,978,024 1,978,024 - Overdue letter of credits 19.4 2,117,889 2,117,889 4,095,913 4,095,913
52 ANNUAL REPORT 2022 51
Notes to the Financial Statements For The Year Ended June 30, 2022
19.1 The facilities for short term finances under markup / profit arrangements available from various banks amounted to Rs. 2,255 million (2021: Rs.2,255) million.
19.2 The rate of markup / profit ranges from 8.74% to 20% (2021: 8.74% to 20.00%) per annum.
19.3 The facilities are secured by way of pari passu charge against hypothecation of the companys stock in trade and book debts and are generally for a period of one year, renewable at the end of the period.
19.4 Since the company is in litigation with banks confirmations from most of them have not been received.
20. CONTINGENCIES AND COMMITMENTS
Contingencies
20.1 The company, in the past, received demand notices from the Customs Authorities claiming short recovery of Rs. 269.9 million in aggregate on account of custom duties, sales tax and income tax on royalty paid to Hyundai Motor Company (HMC) and Kia Motor Corporation (KMC), taking the view that the royalty pertains to the imported CKD kits as opposed to company view that the same is independent of the import of CKD kits and relates to the local manufacturing of the motor vehicles.
The Customs Appellate Tribunal has decided the matter in company's favor resulting in reversal of demand to the extent of Rs.182.8 million. Against the decision of Customs Appellate Tribunal, the Custom Authorities have filed an appeal before the High Court of Sindh which is pending for hearing. It is expected that the decision will be in favour of the Company. The company also expect a similar decision against the cases for the balance amount of Rs.87.1 million, as the facts of the cases and questions of law involved are identical.
20.2 Sales tax Appeal against order in orignal no. 31/2004 dated 28-2-2004 in respect of demand of Rs 3.2 million filed before commissioner Inland Revenue (Appeal I) Karachi has been decided in favor of the company as per order passed as per STA/35/LTU/2013 dated 17-6-2013 by CIR (Appeals-I) Karachi. The Commissioner Inland Revenue, Zone I, LTU, Karachi has filed appeal before the Appellate Tribunal Inland Revenue, Karachi against the order No. STA-35/LTU/2013 dated 17-6-2013 which is pending for adjudication.
20.3 Letter of guarantees issued by the banks amounting to Rs. 250.336 (2021: Rs. 250.336) million.
20.4 In respect of liabilities towards banks / financial institutions disclosed in note 13 and 19 to the financial statements, the banks /financial institutions have filed suits in Honorable High Court of Sindh at Karachi for recovery of their liabilities through attachment and sale of Companys hypothecated / mortgaged properties. The aggregate suits amount is Rs. 6.884 billion.
52 ANNUAL REPORT 2022 53
Notes to the Financial Statements For The Year Ended June 30, 2022
The management has disputed the claims and is strongly contesting the cases. The management filed counter claims that the banks claims are highly exaggerated as they have charged markup on markup and other levies higher than the rate of markup agreed and other charges in violation of State Bank of Pakistan rules and all other applicable laws of Pakistan. The management is hopeful that the decision will be in favor of the company and the base less suits shall be rejected by the concerned courts. Since all the cases are pending before Honorable Courts therefore the ultimate outcome cannot be established at this stage.
Commitments
20.5 Capital expenditure commitments outstanding amounts to Rs. Nil (2021: Nil ).
20.6 Commitments in respect of letters of credit amounts to Rs. Nil (2021: Nil).
21 OPERATING RESULTS
Manufacturing Trading Total
Note June 30, June 30, June 30, June 30, June 30, June 30, 2022 2021 2022 2021 2022 2021 ------------------------------------------------( Rs. in '000 )---------------------------------------------------
21.2 It includes herein a sum of Rs. Nil (2021: Rs. Nil) million relating to recognized Provident fund.
Note June 30, June 30,
2022 2021 ------(Rs. in '000)------ 22. ADMINISTRATION AND GENERAL EXPENSES
Salaries, allowances and other benefits 22.1 9,069 8,241
Depreciation 3.2 1,760 1,927 Traveling & entertainment 12 30 Vehicle running 657 1,150 Communication 51 51 Printing, stationery and office supplies 12 135 Legal and professional 375 - Advertising & publicity 25 29 Fee and subscription 2,490 1,533 Repairs and maintenance 3 57 Auditors' remuneration 22.2 551 551 Miscellaneous - 340 15,005 14,044
22.1 It includes herein a sum of Rs.0.323 (2021: Rs. 0.244) million relating to recognized Provident fund.
ANNUAL REPORT 2022 55
Notes to the Financial Statements For The Year Ended June 30, 2022 June 30, June 30, 2022 2021 ------(Rs. in '000)------ 22.2 Auditors' remuneration
Audit fee 330 330
Interim review and other certifications 121 121 Out of pocket expenses 100 100 551 551
22.3 The administration and general expenses have been allocated between manufacturing and trading activities (note 21) on the basis of net sales.
23. OTHER INCOME/(LOSS)
Gain on disposal of fixed assets 668 430
Profit on Short Term Loan to Associated undertaking 8.1 19,173 13,037 Others 4,333 (459) Share of (loss) of equity investment in associate 4. (94,909) (89,969) (70,735) (76,961)
24 FINANCE COST
During the year ended June 30, 2022 the company has not provided the markup on Long term and short term borrowings from banks and financial institutions to the extent of Rs. 589.709 million (2021: Rs. 383.967 million), accumulated Rs. 7.185 billion (2021: Rs. 6.595 billion). The management is hopeful that the restructuring proposal will be accepted by the lenders & decision of the court will be in favor of the company. However had the company provided this amount in the financial statements during the year the loss of the company would have been increased by Rs. 589.709 million (2021: Rs. 383.967 million) and consequently the Share holders equity would have been lower and accrued markup would have been higher by Rs. 7.185 billion (2021: Rs. 6.595 billion). The said non provisioning is the contravention with the requirements of IAS 23 "Borrowing Costs". June 30, June 30, 2022 2021
25 TAXATION ------(Rs. in '000)------
25.1 The Company is in loss, therefore provision has been made for minimum tax as per the provisions of Income Tax Ordinance.
Current - for the year 2 4
- for prior year 5 - 7 4
56 ANNUAL REPORT 2022
Notes to the Financial Statements For The Year Ended June 30, 2022
25.2 Relationship between tax expense and accounting loss
Provision for taxation is based on minimum tax liability at the rate of 1.5% of the turnover, therefore the relationship between accounting loss and tax expense for the year cannot be given. June 30, June 30, 2022 2021 ------(Rs. in '000)------ 26. (LOSS) PER SHARE
26.1 Basic/Diluted (loss) per share
Net (loss) for the period Rs. In thousand (176,830) (189,252)
Weighted average number of number in ordinary shares thousand 133,421 133,421 Basic/Diluted (loss) per share Rupee (1.33) (1.42)
27. CASH AND CASH EQUIVALENTS
Cash and bank balances 128,715 125,143
Short term finances (1,978,024) (1,978,024) (1,849,309) (1,852,881)
28. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
The aggregate amount charged in the accounts for the remuneration to the Chief Executive, Executive Directors and Executives are as follows:
House rent, utilities and other benefits 1,437 5,071 1,497 5,357 Retirement benefits 217 460 226 641 Medical 217 470 217 470 Leave passage / assistance 261 564 261 564 4,739 15,754 4,916 16,738
No. of persons 1 5 1 4
28.1 The chief executive, executive directors and certain executives of the company are provided free use of company maintained cars.
58 ANNUAL REPORT 2022 57
Notes to the Financial Statements For The Year Ended June 30, 2022
29. TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS / RELATED PARTIES
The related parties and associate undertakings comprise associated companies, staff retirement funds, directors and key management personnel. Transactions with related parties and associated undertakings, other than remuneration and benefits to key management personnel disclosed in the respective notes, are as follows: June 30, June 30, 2022 2021 Name of Related Party ------(Rs. in '000)------
Short term loan from related party (interest free) - 11,342
Short term Loan from Sponsors (Interest Free) 31,000 - Markup charged for the period on short term loans to associated undertakings 19,173 13,037 Provident Fund 323 244 Share of (loss) on equity investment in (94,909) (89,969) Dewan Cement Limited
29.1 The outstanding balance with related parties as at the year-end have been disclosed in the respective notes to the financial statements.
29.2 Details to compensation to the key management personnel have been disclosed in the note 28 to the financial statements.
29.3 Following are the related parties with whom the company had entered into transactions or have arrangements/agreements in place.
Name of the Company Basis of % of
relationship shareholding
Daehan-Dewan Motor Company (Private) Limited Common Directorship Nil
Dewan Automative Engineering Limited Common Directorship Nil
Dewan Cement Limited Common Directorship 13.50%
Dewan Motors (Pvt.) Limited Common Directorship Nil
30. PLANT CAPACITY AND PRODUCTION
Capacity of the plant on single shift basis is 10,000 (2021:10,000). Production (including Contract Assembly) during the year is Nil (2021: Nil) due to non-availability of banking lines.
58 ANNUAL REPORT 2022
Notes to the Financial Statements For The Year Ended June 30, 2022
31 FINANCIAL INSTRUMENTS BY CATEGORY
As at June 30, 2022
Derivatives Loans and used for Total receivables hedging ----------------------- Rs. in '000' ----------------------- Assets Trade debts 672 - 672 Other receivables 830,014 - 830,014 Cash and bank balance 128,715 - 128,715 959,401 - 959,401
As at June 30, 2022
Liabilities at fair Financial value through liabilities at Total profit or loss amortized cost ----------------------- Rs. in '000' ----------------------- Liabilities Trade and other payables - 399,097 399,097 - 399,097 399,097
As at June 30, 2021
Derivatives Loans and used for Total receivables hedging
----------------------- Rs. in '000' -----------------------
Assets Trade debts 672 - 672 Other receivables 810,841 - 810,841 Cash and bank balance 125,143 - 125,143 936,656 - 936,656
As at June 30, 2021
Liabilities at fair Financial value through liabilities at Total profit or loss amortized cost ----------------------- Rs. in '000' ----------------------- Liabilities Trade and other payables - 374,129 374,129 - 374,129 374,129
ANNUAL REPORT 2022 59
Notes to the Financial Statements For The Year Ended June 30, 2022
32 FINANCIAL RISK MANAGEMENT
32.1 Credit risk
Credit risk is the risk that one party to the financial instruments will fail to discharge its obligation and cause the other party to incur a financial loss. The company attempts to control credit risk by monitoring credit exposures, limiting transactions with specific counterparties and continually assessing the creditworthiness of counterparites.
The Company has maintained bank balances with various banks having rating ranging between AA+ to AA-
Concentration of credit risk arise when a number of counterparties are engaged in similar business activities or have similar economic features that would cause their ability to need contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentration of credit risk indicate the relative sensitivity of the company's performance to developments affecting a particular industry.
Credit risk arises from derivative financial instruments and balances with bank and financial institutions, as well as credit exposures to customers, including trade receivables and committed transaction. Out of the total financial assets of Rs. 1,935.391 (2021: Rs 1,912.295) million, the financial assets which are subject to credit risk amounted to Rs.1002.194 (2021: Rs. 983.021) million. Table marked as 32.1.1 provides analysis of the credit quality of financial assets on the basis of external credit rating or the historical information about counter party default rates disclosed in relvent note of receeivables.
The company manages credit risk in trade receivables by limiting significant exposure to any individual customer, by obtaining advance against sales, by monitoring credit exposure and continuing assessment of credit worthiness of such customers as well as by close monitoring of operations of the associated undertakings.
32.2 Liquidity Risk
Liquidity risk reflects the company's inability of raising funds to meet commitments. Management closely monitors the company's liquidity and cash flow position. This includes maintenance of statement of financial position liquidity ratios, debtors and creditors concentration both in terms of the overall funding mix and avoidance of undue reliance on large individual customers. Further, company treasury maintains flexibility in funding by keeping committed credit lines available.
32.3 Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of currency risk and interest rate risk.
60 ANNUAL REPORT 2022
Notes to the Financial Statements For The Year Ended June 30, 2022
32.3.1 Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The company manages its currency risk by close monitoring of currency markets. As per central bank regulations, As on June 30, 2022 the company does not have any financial assets or financial Liabilities which are denominated in foregn currencies.
32.3.2 Interest rate risk
Interest / markup rate risk is the risk that the fair value or future cash flows of the financial instruments will fluctuate because of changes in market interest / markup rates. Sensitivity to interest / markup rate risk arises from mismatches of financial assets and financial liabilities that mature or reprice in a given period. The company manages this mismatches through risk management strategies where significants changes in gap position can be adjusted. The company exposed to interest / markup rate risk is respect of the following.
Interest / Markup bearing Non-Interest / Markup bearing Total
32.1.1 Interest/ Maturity upto Maturity after Maturity upto Maturity after June 30, mark-up rate one year one year Sub-total one year one year Sub-total 2022 % -------------------------------------------------------(Rupees in 000)-------------------------------------------------------
ON-STATEMENT OF FINANCIAL POSITION FINANCIAL INSTRUMENTS
FINANCIAL LIABILITIES Long term loans 14.51-16.01 1,096,929 - 1,096,929 - - - 1,096,929 Long term deposits - - - - 11,700 11,700 11,700 Trade and other payables - - - 399,097 - 399,097 399,097 Short term finances 8.74-20.00 4,095,913 - 4,095,913 - - - 4,095,913 5,192,842 - 5,192,842 399,097 11,700 410,797 5,603,639
OFF-STATEMENT OF FINANCIAL POSITION FINANCIAL INSTRUMENTS
Commitment in respect of letters of credit - - - - - - - Outstanding bank guarantee - - - 250,336 - 250,336 250,336 - - - 250,336 - 250,336 250,336
ANNUAL REPORT 2022 61
Notes to the Financial Statements For The Year Ended June 30, 2022
Interest / Markup bearing Non-Interest / Markup bearing Total
Interest/ Maturity upto Maturity after Maturity upto Maturity after June 30, mark-up rate one year one year Sub-total one year one year Sub-total 2021 % -------------------------------------------------------(Rupees in 000)------------------------------------------------------- ON-STATEMENT OF FINANCIAL POSITION FINANCIAL INSTRUMENTS
FINANCIAL LIABILITIES Long term loans 14.51-16.01 1,096,929 - 1,096,929 - - - 1,096,929 Long term deposits - - - - 12,700 12,700 12,700 Trade and other payables - - - 374,129 - 374,129 374,129 Short term finances 8.74-20.00 4,095,913 - 4,095,913 - - - 4,095,913 5,192,842 - 5,192,842 374,129 12,700 386,829 5,579,671
OFF-STATEMENT OF FINANCIAL POSITION FINANCIAL INSTRUMENTS
Commitment in respect of letters of credit - - - - - - - Outstanding bank guarantee - - - 250,336 - 250,336 250,336 - - - 250,336 - 250,336 250,336
32.3.3 Fair value of financial instruments
Fair value is an amount for which an assets could be exchanged, or a liability settled, between knowledgeable willing parties in arm's length transaction. Consequently, differences may arise between the carrying value and the fair value estimates.
As at the reporting date the fair value of all financial assets and liabilities are estimated to approximate their carrying values.
33. Capital risk management
The Companys objective when managing capital are to safeguard the Companys ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure the Company may adjust the amount of dividends paid to shareholders, issue new shares and take other measures commensuration to the circumstances.
62 ANNUAL REPORT 2022 63
Notes to the Financial Statements For The Year Ended June 30, 2022
Consistent with others in the industry, the company manages its capital risk by monitoring its debt levels and liquid assets and keeping in view future investment requirements and expectation of the shareholder. Debt is calculated as total borrowings ('long term loan' and short term borrowings' as shown in the statement of financial position). total capital comprises shareholders' equity as shown in the statement of financial position under 'share capital and reserves'.
34. NUMBER OF EMPLOYEES
June 30, June 30, 2022 2021
Total number of employees
(including contractual labour) as at June 30 21 28
Average number of employees
(including contractual labour) as at June 30 26 30
35. OPERATING SEGMENT
These financial statements have been prepared on the basis of single reportable segment.
All non current assets of the Company as at June 30, 2022 are located in Pakistan.
36. DATE OF AUTHORIZATION FOR ISSUE
These financial statements have been authorized for issue on September 27, 2022 by the Board of Directors of the company.
37 GENERAL
i) Comparative figures have been rearranged and reclassified wherever necessary for the purpose of better presentation and comparision. However, there were no significant reclassifications and restatements,
ii) These financial statements are presented in Pak Rupees which is the Companys functional and presentation currency therfore the Figures have been rounded off to nearest thousand rupee.
Muhsin Ali Waseem-ul-Haque Ansari Syed Maqbool Ali
Chief Financial Officer Chief Executive Director
64 ANNUAL REPORT 2022 63
Pattern of Shareholding under Regulation 37(xx)(i) of the Code of Corporate Governance as at June 30, 2022
Number of Number of Shares % of
Sr # Categories of Shareholders Shareholders held Shareholding
1. Associated Companies 1 13,650,000 9.84%
2. NIT and ICP - - 0.00% 3. Directors, CEO, their Spouses & Minor Children 7 3,500 0.00% 4. Executives - - 0.00% 5. Public Sector Companies & Corporations 44 3,636,577 2.62% 6. Banks, Development Finance lnstitutions, Non-Banking Finance Companies, Insurance Companies, Modarbas & Mutual Funds 6 106,675 0.08% 7. Individuals 5,092 121,338,490 87.46% TOTAL 5,150 138,735,242 100.00%
Directors and CEO 3.10 Mr. Haroon Iqbal 1 500 0.00% 3.20 Mr. Aziz ul Haq 1 500 0.00% 3.30 Mr. Waseem-ul-Haque Ansari 1 500 0.00% 3.40 Mr. Ghazanfar Baber Siddiqi 1 500 0.00% 3.50 Mr. Muhammad Saleem Baig 1 500 0.00% 3.60 Mr. Imran Ahmed Javed 1 500 0.00% 3.70 Mrs. Nida Jamil 1 500 0.00% 7 3,500 0.00% Spouses of Directors and CEO 3.80 0.00% - - 0.00% Minor Children of Directors and CEO - - -
SHAREHOLDERS HOLDING 5% OR MORE OF THE VOTING SHARES/ INTERESTS IN THE COMPANY
Number of Number of Shares % of
Sr # Names Shareholders held Shareholding
1 Dewan Muhammad Yousuf Farooqui 2 63,414,268 45.71%
2 Dewan Sugar Mills Limited 1 13,650,000 9.84%
DETAILS OF TRADING IN THE SHARES OF THE COMPANY BY DIRECTORS, CEO, CFO, COMPANY SECRETARY, THEIR SPOUSES AND MINOR CHILDREN
During the year under review, none of the CEO, CFO, Directors, Company Secretary, their spouses and minor children have traded in the shares of the Company.
64 ANNUAL REPORT 2022
Form 34 THE COMPANIES ORDINANCE, 1984 (Section 236(1) and 464) PATTERN OF SHAREHOLDING 1. Incorporation Number 0039756
2. Name of the Company DEWAN FAROOQUE MOTORS LIMITED
3. Pattern of holding of the shares
held by the Shareholders as at 30.06.2022 4. Number of Total Shares Percebtage Shareholdings Shareholders held
Form 34 THE COMPANIES ORDINANCE, 1984 (Section 236(1) and 464) PATTERN OF SHAREHOLDING
5. Categories of Shareholders Number of Number of Percentage of
Shareholders Shares held Shareholding
Directors, CEO, their Spouses & Minor Children
Mr. Abdul Basit 1 500 0.00% Mr. Aziz ul Haq 1 500 0.00% Mr. Waseem-ul-Haque Ansari 1 500 0.00% Mr. Ghazanfar Baber Siddiqi 1 500 0.00% Mr. Muhammad Saleem Baig 1 500 0.00% Mr. Imran Ahmed Javed 1 500 0.00% Mrs. Nida Jamil 1 500 0.00%
Associated Companies Dewan Sugar Mills Limited 1 13,650,000 9.84%
NIT and ICP - - 0.00%
Executives - - 0.00%
Banks, Development Financial Institutions,
Non-Banking Finance Companies 4 96,550 0.07%
Insurance Companies - - 0.00%
Modarabas and Mutual Funds 1 125 0.00%
General Public a. Local 5,393 121,698,673 87.72% b. Foreign 5 1,010,500 0.73%
Others (Joint Stock Companies, Brokrage Houses,
Employees Funds & Trustees) 40 2,275,894 1.64%
TOTAL 5,451 138,735,242 100.00%
SHAREHOLDERS HOLDING FIVE PERCENT OT MORE VOTING RIGHTS
Categories of Shareholders Number of Number of Percentage of
Shareholders Shares held Shareholding
Dewan Muhammad Yousuf Farooqui 2 63,414,268 45.71%
Dewan Sugar Mills Limited 1 13,650,000 9.84%
DETAILS OF TRADING IN THE SHARES OF THE COMPANY BY DIRECTORS, CEO, CFO, COMPANY SECRETARY, THEIR SPOUSES AND MINOR CHILDREN
During the year under review, none of the CEO, CFO, Directors, Company Secretary, their spouses and minor children have traded in the shares of the Company.
of ____________________________________________________________________________ being ____ a member(s) of DEWAN FAROOQUE MOTORS LIMITED and holder of _________________________ Ordinary Shares as per Registered Folio No. / CDC Participant's ID and Account No. ______________ ______________________________ hereby appoint ____________________________________________ of _________________________________________________________________________________ _____ or falling him ________________________________________________________________________ ___ of ________________________________________________________________________________ _____ who is also member of DEWAN FAROOQUE MOTORS LIMITED vide Registered Folio No. / CDC Participant's ID and Account No. _______________________________ as my/our proxy to vote for me/us and ________________________________________________________________________________________ on my/our behalf at the 24th Annual General Meeting of the Company to be held on Thursday, October 27, 2022 at 02:00 p.m. and my adjournment thereof.
AFFIX Signed this ___________________ day of _______________2022. REVENUE STAMP RS. 5/-
1. A proxy should also be a member of the company.
2. A member of the Company entitled to attend and vote all meeting, may appoint another member as his/her proxy to attend and vote instead of him/her. 3. Proxies, In order to be effective, must be received by the Company, duly completed, at our Shares Regisrar Transfer Agent BMF Consultants Pakistan (Private) Limited, located at Anum Estate Building, Room # 301 & 311, 3rd Floor, 49, Darul Anum Society, Main Shahrah-e-Faisal, Adjacent to Baloch Colony Bridge, Karachi, Pakistan, not later than 48 hours before the meeting.
4. Further Instructions for CDC Account holders:
i) In case of individual, the account holder or sub-account holder, and/or the person whose securities are in group account and their registration details are uploaded as per the regulations, shall the proxy form as per the above requirements. ii) Two perons, whose names, addresses, and CNIC numbers shall be mentioned on the form, shall witness the proxy. iii) Attested copies of CNIC or passport of the beneficial owners and proxy shall be furnished alongwith the proxy form. iv) The proxy shall produce his/her original CNIC or original at the time of meeting. v) In case of corporate entity, the Board of Directors' resolution/power of attorney, alongwith the specimen signature of the nominee, shall be produced (unless it has been provided earlier) alongwith the proxy form to the Company.
