RCML-ANNUAL-2014
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yaseenzari5242Reliance Cotton Spinning
Mills Limited
Company Profile 03
Vision / Mission 04
Notice of Annual General Meeting 05
Directors’ Report 06
Six Years’ Key Operating and Financial Data 09
Review Report to the members 10
Statement of Compliance 11
Auditors’ Report to the members 13
Balance Sheet 14
Profit And Loss Account 16
Statement Of Comprehensive Income 17
Cash Flow Statement 18
Statement Of Changes in Equity 19
Notes to the Financial Statements 20
Pattern of Shareholding 54
Proxy Form 59
Annual Report 2014
BOARD OF DIRECTORS
Chairman : Mr. Mohammad Abdullah
Chief Executive : Mr. Shayan Abdullah
Director : Mr. Amer Abdullah
Mr. Yousuf Abdullah
Mr. Nabeel Abdullah
Mr. Mohammad Yamin
Independent Director Mr. Asif Elahi
Audit Committee :
Chairman Mr. Amer Abdullah
Member Mr. Asif Elahi
Member Mr. Nabeel Abdullah
Humon Resource
& Remuneration Committee :
Chairman Mr. Mohammad Yamin
Member Mr. Shayan Abdullah
Member Mr. Asif Elahi
Chief Financial Officer : Mr. Naveed-ul-Islam
Secretary : Mr. Umer Rahi
Auditors : M. Yousuf Adil Saleem & Company
Chartered Accountants
Management Consultant : M. Yousuf Adil Saleem & Company
Chartered Accountants
Tax Consultants : M. Yousuf Adil Saleem & Company
Chartered Accountants
Legal Advisor : Hassan & Hassan Advocates
Bankers : Habib Bank Limited
MCB Bank Limited
Habib Metropolitan Bank Limited
Share Registrar : Hameed Majeed Associates (Private) Ltd
Registered Office : 312, Cotton Exchange Building,
I.I. Chundrigar Road, Karachi.
Mills : Feroze Wattoan,
Tehsil and District Sheikhupura
Reliance Cotton Spinning Mills Limited 3
Annual Report 2014
To be one of the premier textile company recognized for leadership in
technology, exibility, responsiveness and quality.
Our customers will share in our success through innovative
manufacturing, certifiable quality, exceptional services and creative
alliances. Structured to maintain in depth competence and knowledge
about our business , our customers and worldwide markets.
Our workforce will be the most efficient in industry through multiple skill
learning, the fostering of learning and the fostering of teamwork and the
security of the safest work environment possible recognised as excellent
citizen in the local and regional community through our financial and
human resources support and our sensitivity to the environment.
Our mission is to be recognised as premier supplier to the markets we serve
by providing quality yarns, fabrics and other textile products to satisfy the
needs of our customers .
Our miss ion will be accomplished through excellence in customer
service, sales and manufacturing supported by teamwork of all associates .
We will continue our tradition of honesty, fairness and integrity in
relationship with our customers, associates, shareholders, community and
stakeholders .
Reliance Cotton Spinning Mills Limited 4
Annual Report 2014
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT 25th Annual General Meeting of RELIANCE COTTON SPINNING MILLS LIMITED
will be held at Trading Hall, Cotton Exchange Building, I.I.Chundrigar Road, Karachi on Friday the 24th day of October,
2014 at 04:30 p.m. to transact the following business:
ORDINARY BUSINESS:
1. Consideration of the accounts, balance sheets and the reports of the directors and auditors.
2. Declaration of a dividend.
3. Appointment and xation of remuneration of auditors.
4. To transact any other business with the permission of the Chair.
By Order of the Board
Karachi. (MOHAMMAD UMER RAHI)
Dated : 01st October, 2014 Secretary
NOTES
1. Closure of share transfer books:
Share Transfer Books will remain closed and no transfer of shares will be accepted for registration from 18th October, 2014 to 24th
October, 2014 (both days inclusive). Transfers received in order, by Hameed Majeed Associates (Private) Limited, 5th Floor,
Karachi Chambers, Hasrat Mohani Road, Karachi up to 17nd October, 2014 will be considered in time for the payment of dividend.
2. Participation in the annual general meeting:
A member entitled to attend and vote at this meeting is entitled to appoint another member/any other person as his/her proxy to
attend and vote.
3. Duly completed instrument of proxy, and the other authority under which it is signed, thereof, must be lodged with the secretary of
the company at the company's registered ofce 312, Cotton Exchange Building, I.I.Chundrigar Road, Karachi at least 48 hours
before the time of the meeting.
4. Change in address: Any change of address of members should be immediately notied to the company's share registrars, Hameed
Majeed Associates (Private) Limited, 5th Floor, Karachi Chambers, Hasrat Mohani Road, Karachi.
5. The CDC account holders will further have to follow the under-mentioned guidelines as laid down by the Securities and Exchange
Commission of Pakistan:
A. For attending the meeting:
i) In case of individuals, 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 identity by showing his original
computerized 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 with specimen signature of the nominee shall
be produced at the time of the meeting.
B. For appointing proxies:
i) In case of individuals, 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 accordingly.
ii) The proxy form shall be witnessed by two persons whose names, addresses and CNIC number shall be mentioned on the
form.
iii) Attested copies of CNIC or the passport.
iv) The proxy shall produce his/her original CNIC or original passport at the time of meeting.
v) In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signature shall be submitted
along with proxy form to the company.
6. In accordance with the notication of the Securities and Exchange Commission of Pakistan, SRO 831(1)2013 dated July 05, 2012
dividend warrants should bear CNIC number of the registered member or the authorized person, except in case of minor(s) and
corporate members. Accordingly, members who have not yet submitted copy of their valid CNIC/NTN (in case of corporate entities)
are requested to submit the same to the Company, with members' folio number mentioned thereon for updating record.
7. As per the directions to all Listed Companies by SECP vide Letter No.SM/CDC 2008 dated April 05, 2013, all shareholders and the
Company are encouraged to put in place an effective arrangement for Payment of Cash Dividend Electronically (e-Dividend)
through mutual co-operation. For this purpose, the members are requested to provide Dividend Mandate including Name, Bank
Account Number, Bank and Respective Branch Address to the Company in order to adhere the envisaged guidelines.
Reliance Cotton Spinning Mills Limited 5
Annual Report 2014
DIRECTORS' REPORT
The Directors of the company have pleasure in presenting their report along with audited nancial statements
of the company for the year ended June 30, 2014.
FINANCIAL PERFORMANCE
The company's net prot for the year has decreased as compared to the last year mainly because of higher
raw material cost and hike in fuel and power cost . Yarn sales prices remained better in rst half of the year but
due to globally depressed market demand, resulted in decline of sale rates in second half of the year.
FINANCIAL HIGHLIGHTS
2014 2013
Rs. (000) Rs. (000)
Sales – net 4,243,955 3,853,608
Gross Prot 417,286 637,167
Prot from Operations 253,623 437,222
Finance Cost 168,719 160,493
Pre Tax Prot 143,610 350,982
After Tax Prot 125,558 308,875
APPROPRIATION OF PROFITS
The Board of Directors of the Company has recommended Cash Dividend 15% (2013: 20%)
EARNING PER SHARE
The earning per share for the year ended June 30, 2014 is Rs.12.20 as compared to Rs.30.01 for the Year
ended June 30, 2013.
FUTURE OUTLOOK
Textile industry has been going through one of the toughest periods in the decade. It has been facing multiple
challenges like comparative lower cost of doing business in neighboring countries, absence of export
incentives from the Government and higher energy cost. However, the management of your company is
vigilant with the prevailing circumstances and will continue to put all its efforts to mitigate the negative impacts
by planning full utilization of production capacity, diversication of product range, adopting aggressive
marketing strategy and developing strong customer relations.
STATEMENT ON CORPORATE AND FINANCIAL REPORTING FRAME WORK
The Board of Directors periodically reviews the Company's strategic direction. Business plans and targets are
set by the Chief Executive and reviewed by the Board. The Board is committed to maintain a high standard of
corporate governance. The Board has reviewed the Code of Corporate Governance and conrms that:
1. The nancial statements, prepared by the management of the Company, present fairly its state of
affairs, the result of its operations, cash ows and changes in equity.
2. The company has maintained proper books of account.
3. Appropriate accounting policies have been consistently applied in preparation of nancial
statements and accounting estimates are based on reasonable and prudent judgment.
Reliance Cotton Spinning Mills Limited 6
Annual Report 2014
DIRECTORS' REPORT
4. International Financial Reporting Standards, as applicable in Pakistan, have been followed in
preparation of nancial statements.
5. The system of internal control, which was in place, is being continuously reviewed by the internal
audit and other such procedures. The process of review and monitoring will continue with the object to
improve it further.
6. All liabilities with regard to the payment on account of taxes, duties, levies and charges have been
fully provided and will be paid in due course or where claim was not acknowledged as debt the same
is disclosed as contingent liabilities in the notes to the nancial statements.
7. There is no doubt about the Company's ability to continue as a going concern.
8. There has been no material departure from the best practices of corporate governance, as detailed in
listing regulations.
9. The Company operates unfunded gratuity scheme for permanent employees and provision has been
made in the nancial statements accordingly.
10. The board of directors in compliance with the Code of Corporate Governance has established Audit
and Human Resource & Remuneration committees, the names of their members are given in the
Company's prole.
11. Operating and nancial data and key ratios of six years are annexed.
12. Except purchase of shares, as stated hereunder, no trades in the shares of the Company were
carried out by the Directors, Chief Executive Ofcer, and Chief Financial Ofcer, Company Secretary,
their spouses and minor children:
Mrs. Shamshad Begum 12,500 shares
13. During the year, nineteen (19) meetings of the Board of Directors were held. Attendance by each
Director is as follows:
Mr. Muhammad Abdullah =12=
Mr. Shayan Abdullah =12=
Mr. Amer Abdullah =11=
Mr. Yousuf Abdullah =10=
Mr. Nabeel Abdullah =11=
Mr. Muhammad Yamin =09=
Mr. Muhammad Younas =06=
Mr. Asif Elahi =05=
14. During the year ve (5) meetings of the Audit Committee were held. Attendance by each member is
as follows:
Mr. Amer Abdullah =5=
Mr. Nabeel Abdullah =3=
Mr. Yousuf Abdullah =1=
Mr. Asif Elahi =1=
15. During the year one meeting of the Human Resource and Remuneration Committee was held and
attended by all the members.
Reliance Cotton Spinning Mills Limited 7
Annual Report 2014
DIRECTORS' REPORT
16. 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.
CHANGES IN THE BOARD OF DIRECTORS
During the year, the election of the Board of Directors was held on February 26, 2014 and Mr. Asif Elahi was
elected as Independent Director in place of Mr. Muhammad Yamin. Subsequently Mr. Muhammad Younus
resigned from the Board on 20th March 2014 and Mr. Muhammad Yamin was appointed as Director in his
place.
PATTERN OF SHARE HOLDING
The pattern of shareholding of the company as at June 30, 2014 is annexed. The statement is prepared in
accordance with the Code of Corporate Governance and the Companies Ordinance, 1984.
AUDITORS
The present Auditors M.Yousuf Adil Saleem and Company, Chartered Accountants retire and being eligible
offer themselves for re-appointment for the year 2014-2015. Audit committee and Board of Directors have
also recommended their appointment as Auditor for the year ending June 30, 2015.
ACKNOWLEDGEMENTS
The Management would like to place on record its appreciation for the support of the Shareholders, Bankers,
Suppliers and the dedication and hard work of the Staff and Workers.
For and on behalf of the Board of Directors
Karachi Amer Abdullah Yousuf Abdullah
Dated: October 01, 2014 Director Director
Reliance Cotton Spinning Mills Limited 8
Annual Report 2014
SIX YEARS’ KEY OPERATING AND FINANCIAL DATA
Rupees YEARS
in
million 2014 2013 2012 2011 2010 2009
Sales 4,243.955 3,853.608 2,557.935 2,613.864 1,753.876 1,544.923
Gross Prot 417.286 637.167 367.916 737.760 394.982 312.516
Prot Before Tax 143.610 350.982 104.472 503.164 162.560 164.967
Prot After Tax 125.558 308.875 71.803 476.540 137.703 143.869
Share Capital 102.920 102.920 102.920 102.920 102.920 102.920
Shareholder's Equity 1,806.886 1,629.332 1,298.985 1,214.390 786.809 635.409
Fixed Assets 1,436.170 1,201.244 966.777 751.621 589.377 470.702
Total Assets 4,203.199 3,281.305 2,601.956 2,400.897 1,741.224 1,495.111
DIVIDEND
Cash % 15.00 20.00 12.50 25.00 20.00 15.00
RATIOS:
Protability %
Gross Prot 9.83 16.53 14.38 28.22 22.52 20.23
Prot Before Tax 3.38 9.11 4.08 19.25 9.27 10.68
Prot After Tax 2.96 8.02 2.81 18.23 7.85 9.31
Return To Shareholders
R.O.E-Before Tax 7.95 21.54 8.05 41.43 20.66 25.96
R.O.E-After Tax 6.95 18.96 5.53 39.24 17.50 22.64
EPS Rupees 12.20 30.01 6.98 46.3 13.38 13.98
Activity Times
Sales To Total Assets 1.01 1.17 0.98 1.09 1.01 1.04
Sales To Fixed Assets 2.96 3.21 2.65 3.48 2.98 3.28
Liquidity / Leverage
Current Ratio 0.96 1.08 1.04 1.23 1.14 1.09
Debt Equity Ratio 1.08 0.79 0.79 0.78 0.88 1.12
Total Liabilities To Equity 1.33 1.01 1.00 0.98 1.21 1.33
Break up Value of Shares Rupees 175.56 158.31 126.21 117.99 76.45 61.74
Reliance Cotton Spinning Mills Limited 9
Annual Report 2014
REVIEW REPORT TO THE MEMBERS
ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES
OF CODE OF CORPORATE GOVERNANCE
We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of
Corporate Governance (the Code) prepared by the Board of Directors of Reliance Cotton Spinning Mills
Limited, for the year ended June 30, 2014, to comply with the requirement of Listing Regulations of the
Karachi Stock Exchange Limited and Lahore Stock Exchange Limited where the Company is listed.
The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our
responsibility is to review, to the extent where such compliance can be objectively veried, whether the
Statement of Compliance reects the status of the Company's compliance with the provisions of the Code
and report if it does not and to highlight any non-compliance with the requirement of the code. 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 Code.
As part of our audit of nancial statements we are required to obtain an understanding of the accounting and
internal control systems sufcient to plan the audit and develop an effective audit approach. We are not
required to consider whether the Board of Directors statement on internal controls 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 Code requires the Company to place before the Audit Committee, and upon recommendation of Audit
Committee, place before the Board of Directors for their review and approval its related party transactions
distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length
transactions and transactions which are not executed at arm's length price and recording proper justication
for using such alternate pricing mechanism. We are only required and have ensured compliance of this
requirement to the extent of approval of related party transactions by the Board of Directors upon
recommendation of Audit Committee. We have not carried out any procedures to determine whether the
related party transactions were undertaken at arm's length price or not.
Based on our review, nothing has come to our attention which causes us to believe that the Statement of
Compliance does not appropriately reect the Company's compliance, in all material respects, with the best
practices contained in the Code as applicable to the Company for the year ended June 30, 2014.
M. Yousuf Adil Saleem & Co.
Chartered Accountants
Engagement Partner:
Talat Javed
Multan
Dated: October 1, 2014
Reliance Cotton Spinning Mills Limited 10
Annual Report 2014
STATEMENT OF COMPLIANCE
WITH THE CODE OF CORPORATE GOVERNANCE
Name of Company : Reliance Cotton Spinning Mills Limited year ending June 30, 2014.
This statement is being presented to comply with the Code of Corporate Governance contained in Regulation
No.35 of listing regulations of the Karachi and Lahore Stock Exchanges for the purpose of establishing a
framework of good governance, whereby a listed company is managed in compliance with the best practices
of corporate governance.
The company has applied the principles contained in the CCG in the following manner:
1. The Company encourages representation of independent non-executive directors and directors
representing minority interests on its board of directors. At present the board includes:
Category Names
Independent Directors Mr. Asif Elahi
Executive Directors Mr. Shayan Abdullah
Non-Executive Directors Mr. Mohammad Abdullah
Mr. Amer Abdullah
Mr. Yousuf Abdullah
Mr. Nabeel Abdullah
Mr. Mohammad Yamin
2. The directors have conrmed that none of them is serving as a director on more than seven listed
companies, including this company (excluding the listed subsidiaries of listed holding companies
where applicable).
3. All the resident directors of the company are registered as taxpayers and none of them has defaulted
in payment of any loan to a banking company, a DFI or a NBFI. None of the Directors is a member of a
stock exchange.
4. During the year election of directors was held. Mr. Mohammad Yamin retired from the ofce of
director of the Company and Mr. Asif Elahi was elected as an independent director of the Company.
Further Mr. Mohammad Younus resigned from the ofce of the director of the Company and Mr.
Mohammad Yamin appointed to ll the casual vacancy during the year.
5. 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.
6. The board has developed a vision/mission statement, overall corporate strategy and signicant
policies of the company. A complete record of particulars of signicant polices along with the dates on
which they were approved or amended has been maintained.
7. All the power of the board have been duly exercised and decisions on material transactions, including
appointment and determination of remuneration and terms and conditions of employment of the
CEO, other executive and non-executive directors, have been taken by the board/shareholders.
8. 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 and board met at least once in every quarter. Written notice of
the board meetings, along with agenda and working papers, were circulated at least seven days
before the meetings. The minutes of the meetings were appropriately recorded and circulated.
Reliance Cotton Spinning Mills Limited 11
Annual Report 2014
STATEMENT OF COMPLIANCE
WITH THE CODE OF CORPORATE GOVERNANCE
9. In accordance with the criteria specied on clause (xi) of CCG, majority of Directors of the Company
are exempted from the requirement of directors’ training program and rest has done certicate
program from Institute of Cost and Management Accountants of Pakistan.
10. The board has approved appointment of CFO, Company Secretary and Head of Internal Audit,
including their remuneration and terms and conditions of employment.
11. The directors’ report for this year has been prepared in compliance with the requirements of the CCG
and fully describes the salient matters required to be disclosed.
12. The nancial statements of the company were duly endorsed by CEO and CFO before approval of
the board.
13. The directors, CEO and executives do not hold any interest in the shares of the company other than
that disclosed in the pattern of shareholding.
14. The company has complied with all the corporate and nancial reporting requirements of the CCG.
15. The board has formed an Audit Committee. It comprises of three members, of whom all are non-
executive directors.
16. The meetings of the audit committee were held at least once every quarter prior to approval of interim
and nal results of the company and as required by the CCG. The terms of reference of the
committee have been formed and advised to the committee for compliance.
17. The Board has formed an HR and Remuneration Committee. It comprises three members, of whom
two are non-executive directors and the chairman of the committee is a non-executive director.
18. The board has set up an effective internal audit function.
19. The statutory auditors of the company have conrmed that they have been given a satisfactory rating
under the quality control review program of the ICAP, that they or any of the partners of the rm, their
spouses and minor children do not hold shares of the company and that the rm and all its partners
are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as
adopted by ICAP.
20. The statutory auditors or the persons associated with them have not been appointed to provide other
services except in accordance with the listing regulations and the auditors have conrmed that they
have observed IFAC guidelines in this regard.
21. The ‘closed period’ prior to the announcement of interim/nal results, and business decisions, which
may materially affect the market price of company’s securities, was determined and intimated to
directors, employees and stock exchange(s).
22. Material/price sensitive information has been disseminated among all market participants at once
through stock exchange(s).
23. We conrm that all other material principles enshrined in the CCG have been complied with.
For and on behalf of the Board
Reliance Cotton Spinning Mills Limited 12
Annual Report 2014
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of Reliance Cotton Spinning Mills Limited (the Company)
as at June 30, 2014 and the related prot and loss account, statement of other comprehensive income,
cash ow statement and statement of changes in equity together with the notes forming part thereof, for
the year then ended 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 our audit.
It is the responsibility of the Company's management to establish and maintain a system of internal control,
and prepare and present the above said statements in conformity with the approved accounting standards
and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these
statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
above said statements are free of any material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the above said statements. An audit also includes
assessing the accounting policies and signicant estimates made by management, as well as, evaluating the
overall presentation of the above said statements. We believe that our audit provides a reasonable basis for
our opinion and, after due verication, we report that:
(a) in our opinion, proper books of account have been kept by the Company as required by the
Companies Ordinance, 1984;
(b) in our opinion:
(i) the balance sheet and prot and loss account together with the notes thereon have been
drawn up in conformity with the Companies Ordinance, 1984 and are in agreement with
the books of account and are further in accordance with accounting policies consistently
applied except for the change as mentioned in note 4 to the nancial statements with
which we concur;
(ii) the expenditure incurred during the year was for the purpose of Company's business;
and
(iii) the business conducted, investments made and the expenditure incurred during the
year were in accordance with the objects of the Company;
(c) in our opinion, and to the best of our information and according to the explanations given to us,
the balance sheet, prot and loss account, cash ow statement and statement of changes in
equity together with the notes forming parts thereof conform with the approved accounting
standards as applicable in Pakistan, and give the information required by the Companies
Ordinance, 1984, in the manner so required and, respectively give a true and fair view of the
state of the Company's affairs as at June 30, 2014 and of the prot, comprehensive income, its
cash ows and changes in equity for the year then ended; and
(d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of
1980) was deducted by the Company and deposited in Central Zakat Fund established under
section 7 of that Ordinance.
M. Yousuf Adil Saleem & Co.
Chartered Accountants
Engagement Partner:
Talat Javed
Multan
October 01, 2014
Reliance Cotton Spinning Mills Limited 13
Annual Report 2014
BALANCE SHEET
As at June 30, 2014
2014 2013 2012
Restated Restated
Note
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 5 1,436,170,103 1,201,243,703 966,777,021
Long term investments 6 582,886,019 438,944,127 332,052,454
Long term loans 7 57,000 136,000 418,000
Long term deposits 8,858,230 8,858,230 8,858,230
2,027,971,352 1,649,182,060 1,308,105,705
CURRENT ASSETS
Stores, spare parts and loose tools 8 29,108,575 30,848,492 27,518,693
Stock-in-trade 9 1,462,768,437 1,080,605,587 924,963,661
Trade debts 10 457,109,986 377,973,930 251,950,928
Loans and advances 11 11,088,006 3,887,792 1,923,764
Deposit and short term prepayments 12 630,870 986,140 371,218
Other receivables 13 11,168,271 7,485,384 5,127,146
Other nancial assets 14 3,024,125 - -
Advance income tax 61,824,031 49,217,138 37,744,543
Tax refunds due from the Government 15 118,568,199 69,758,320 39,218,641
Cash and bank balances 16 19,937,567 11,360,581 5,031,306
2,175,228,067 1,632,123,364 1,293,849,900
4,203,199,419 3,281,305,424 2,601,955,605
The annexed notes from 1 to 44 form an integral part of these nancial statements.
Reliance Cotton Spinning Mills Limited 14
Annual Report 2014
BALANCE SHEET
As at June 30, 2014
2014 2013 2012
Restated Restated
Note
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized capital
12,000,000 (2013: 12,000,000) ordinary 120,000,000 120,000,000 120,000,000
shares of Rs. 10 each
Issued, subscribed and paid up capital 17 102,920,000 102,920,000 102,920,000
General reserve 130,000,000 130,000,000 130,000,000
Capital reserve 153,821,273 77,562,392 34,964,040
Un-appropriated prot 1,420,145,118 1,318,849,539 1,031,100,903
1,806,886,391 1,629,331,931 1,298,984,943
NON-CURRENT LIABILITIES
Long term nancing 18 33,333,335 66,666,667 -
Deferred liabilities
- employee benets - unfunded 19 56,063,679 44,491,122 36,056,420
- deferred tax liability 20 39,959,077 32,299,419 19,229,902
129,356,091 143,457,208 55,286,322
CURRENT LIABILITIES
Trade and other payables 21 297,341,886 241,395,567 177,327,949
Mark-up accrued 22 32,146,591 13,899,589 16,474,191
Short term borrowings 23 1,871,422,800 1,190,849,919 1,027,326,011
Current portion of long term nancing 18 41,666,665 33,333,333 -
Provision for taxation 24,378,995 29,037,877 26,556,189
2,266,956,937 1,508,516,285 1,247,684,340
CONTINGENCIES AND COMMITMENTS 24
4,203,199,419 3,281,305,424 2,601,955,605
Statement under section 241(2) of the Companies Ordinance, 1984
The Chief Executive Ofcer of the Company is presently out of the country, therefore these nancial statements have
been signed by two directors of the Company duly authorized by the Board of Directors.
Reliance Cotton Spinning Mills Limited 15
Annual Report 2014
PROFIT AND LOSS ACCOUNT
For the year ended June 30, 2014
2014 2013
Note ……………….. Rupees ………………..
Sales 25 4,243,954,943 3,853,607,717
Cost of sales 26 3,826,669,180 3,216,440,612
Gross prot 417,285,763 637,167,105
Distribution cost 27 111,970,359 132,388,767
Administrative expenses 28 42,299,169 39,075,484
Other operating expenses 29 9,393,136 28,481,397
Finance cost 30 168,719,386 160,492,602
332,382,050 360,438,250
84,903,713 276,728,855
Other income 31 5,698,351 2,753,602
Share of prot of associates 53,008,273 71,499,476
Prot before taxation 143,610,337 350,981,933
Provision for taxation 32 18,051,867 42,107,394
Prot for the year 125,558,470 308,874,539
Earnings per share - basic and diluted 33 12.20 30.01
The annexed notes from 1 to 44 form an integral part of these nancial statements.
Statement under section 241(2) of the Companies Ordinance, 1984
The Chief Executive Ofcer of the Company is presently out of the country, therefore these nancial statements have
been signed by two directors of the Company duly authorized by the Board of Directors.
Reliance Cotton Spinning Mills Limited 16
Annual Report 2014
STATEMENT OF COMPREHENSIVE INCOME
For the year ended June 30, 2014
2014 2013
Note ……………….. Rupees ………………..
Prot for the year 125,558,470 308,874,539
Other comprehensive income:
Items that may be reclassied subsequently to prot and loss
Share in associates' unrealized gain on available for sale
investments - net 41,487,422 40,491,467
Share in associate's unrealized gain on hedging instruments 99,481 135,831
Share in associate's remeasurement of post retirement benets obligation (741,688) -
40,845,215 40,627,298
Items that will not be reclassied subsequently to prot and loss
Remeasurement of post retirement benets obligation 4 (3,678,891) (8,260,903)
37,166,324 32,366,395
Total comprehensive income for the year 162,724,794 341,240,934
The annexed notes from 1 to 44 form an integral part of these nancial statements.
Statement under section 241(2) of the Companies Ordinance, 1984
The Chief Executive Ofcer of the Company is presently out of the country, therefore these nancial statements have
been signed by two directors of the Company duly authorized by the Board of Directors.
Reliance Cotton Spinning Mills Limited 17
Annual Report 2014
CASH FLOW STATEMENT
For the year ended June 30, 2014
2014 2013
Note ……Rupees……
CASH FLOWS FROM OPERATING ACTIVITIES
Prot before taxation 143,610,337 350,981,933
Adjustments for:
Depreciation on property, plant and equipment 114,090,914 102,684,111
Provision for employee benets 18,419,947 12,507,894
Provision for doubtful debts - 2,872,147
Gain on disposal of property, plant and equipment (1,913,354) (176,360)
Finance cost 168,719,386 160,492,602
Share of prot of associates (53,008,273) (71,499,476)
389,918,957 557,862,851
Working capital changes
(Increase)/decrease in current assets
Stores, spare parts and loose tools 1,739,917 (3,329,799)
Stock-in-trade (382,162,850) (155,641,926)
Trade debts (79,136,056) (128,895,149)
Loans and advances (7,200,214) (1,964,028)
Short term investment (3,024,125) -
Deposit and short term prepayments 355,270 (614,922)
Other receivables (3,682,887) (2,358,238)
Increase in trade and other payables 55,925,351 64,048,167
(417,185,594) (228,755,895)
Cash (used in)/generated from operations (27,266,637) 329,106,956
Dividends paid (20,563,032) (12,845,549)
Employee benets paid (10,526,281) (12,334,095)
Finance cost paid (150,472,384) (163,067,204)
Sales tax paid (14,528,654) (20,349,986)
Income taxes paid (61,939,209) (48,218,477)
(258,029,560) (256,815,311)
Net cash (used in)/from operating activities (285,296,197) 72,291,645
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure on property, plant and equipment (358,633,960) (337,284,433)
Proceeds from disposal of property, plant and equipment 11,530,000 310,000
Long term investments (19,425,000) -
Proceeds from long term loans 79,000 282,000
Dividend received 4,750,262 7,206,155
Net cash used in investing activities (361,699,698) (329,486,278)
CASH FLOWS FROM FINANCING ACTIVITIES
Long term nancing obtained - 100,000,000
Long term nancing repaid (25,000,000) -
Short term borrowings - net 680,572,881 163,523,908
Net cash from nancing activities 655,572,881 263,523,908
Net increase in cash and cash equivalents 8,576,986 6,329,275
Cash and cash equivalents at beginning of the year 11,360,581 5,031,306
Cash and cash equivalents at the end of the year 16 19,937,567 11,360,581
The annexed notes from 1 to 44 form an integral part of these nancial statements.
Statement under section 241(2) of the Companies Ordinance, 1984
The Chief Executive Ofcer of the Company is presently out of the country, therefore these nancial statements have
been signed by two directors of the Company duly authorized by the Board of Directors.
Reliance Cotton Spinning Mills Limited 18
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2014
Revenue reserves Capital reserve
Share in
Share in Share in
associate's
associates' associate's
remeasurement of Items directly Total
Share capital General reserve Un-appropriated unrealized gain on unrealized gain / Sub-total
post retirement recognized in
prot available for sale (loss) on hedging benets equity
investments - net instruments
obligation
………...……………………………… Rupees ………...………………………………
Balance as at July 01, 2012 - previously reported 102,920,000 130,000,000 1,064,816,311 - - - - - 1,297,736,311
Reclassication Adjustment (refer note 42) (34,964,040) 17,796,045 (90,139) - 17,258,134 34,964,040 -
Effect of retrospective application of change in
- - 1,248,632 - - - - - 1,248,632
accounting policy (refer note 4)
Balance as at July 01, 2012 - restated 102,920,000 130,000,000 1,031,100,903 17,796,045 (90,139) - 17,258,134 34,964,040 1,298,984,943
Comprehensive income:
Reliance Cotton Spinning Mills Limited
Prot for the year ended June 30, 2013 - - 308,874,539 - - - - - 308,874,539
Other comprehensive income - restated - - (8,260,903) 40,491,467 135,831 - - 40,627,298 32,366,395
For the year ended June 30, 2014
Total comprehensive income - - 300,613,636 40,491,467 135,831 - - 40,627,298 341,240,934
Effects of items directly recognized in equity by
associates - - - - - - 1,971,054 1,971,054 1,971,054
Transactions with owners:
Final dividend for the year ended June 30, 2012 @ Rs.
1.25 per share - - (12,865,000) - - - - - (12,865,000)
Balance as at June 30, 2013 102,920,000 130,000,000 1,318,849,539 58,287,512 45,692 - 19,229,188 77,562,392 1,629,331,931
Comprehensive income:
Prot for the year ended June 30, 2014 - - 125,558,470 - - - - - 125,558,470
Other comprehensive income - - (3,678,891) 41,487,422 99,481 (741,688) - 40,845,215 37,166,324
Total comprehensive income - - 121,879,579 41,487,422 99,481 (741,688) - 40,845,215 162,724,794
STATEMENT OF CHANGES IN EQUITY
Effects of items directly recognized in equity by
associates - - - - - - 35,413,666 35,413,666 35,413,666
Transactions with owners:
Final dividend for the year ended June 30, 2013 @ Rs. 2 -
per share - - (20,584,000) - - - - - (20,584,000)
Balance as at June 30, 2014 102,920,000 130,000,000 1,420,145,118 99,774,934 145,173 (741,688) 54,642,854 153,821,273 1,806,886,391
The annexed notes from 1 to 44 form an integral part of these nancial statements.
Statement under section 241(2) of the Companies Ordinance, 1984
The Chief Executive Ofcer of the Company is presently out of the country, therefore these nancial statements have
been signed by two directors of the Company duly authorized by the Board of Directors.
19
Annual Report 2014
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
1 LEGAL STATUS AND OPERATIONS
1.1 Reliance Cotton Spinning Mills Limited ("the Company") was incorporated in Pakistan on June 13, 1990
as a public limited company under the Companies Ordinance, 1984. The Company is currently listed on
Karachi Stock Exchange Limited and Lahore Stock Exchange Limited. The principal activity of the
Company is manufacturing and sale of yarn. The registered ofce of the Company is situated at 312,
Cotton Exchange Building, Karachi. The mill is located at District Sheikhupura in the Province of Punjab.
1.2 These nancial statements are presented in Pak Rupees, which is the Company's functional and
presentation currency.
2 STATEMENT OF COMPLIANCE AND SIGNIFICANT ESTIMATES
2.1 Statement of compliance
These nancial statements have been prepared in accordance with the approved accounting standards
as applicable in Pakistan. Approved accounting standards comprise of such International Financial
Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as notied
under the provisions of the Companies Ordinance, 1984, the requirements of the Companies
Ordinance, 1984 and the directives issued by the Securities and Exchange Commission of Pakistan
(SECP). Wherever the requirements of the Companies Ordinance, 1984 or the directives issued by the
SECP differ with the requirements of the IFRS, the requirements of the Companies Ordinance, 1984,
and the said directives shall take precedence.
2.2 STANDARDS, INTERPRETATION AND AMENDMENT ADOPTED DURING THE YEAR
The following amendments to existing standards have been published that are applicable to the
Company's nancial statements covering annual periods, beginning on or after the following dates:
2.2.1 New accounting standards / amendments and IFRS interpretations that are effective for the year ended
June 30, 2014
2.2.1.1 The following standards, amendments and interpretations are effective for the year ended June 30,
2014. These standards, interpretations and the amendments are either not relevant to the Company's
operations or are not expected to have signicant impact on the Company's nancial statements other
than certain additional disclosures
Amendments to IAS 1 - Presentation of Effective from accounting period beginning
Financial Statements – Clarication of on or after January 01, 2013
Requirements for Comparative information
This improvement claries the difference between voluntary additional comparative information and the
minimum required comparative information. Generally, the minimum required comparative information
is the previous period.
Amendments to IAS 16 - Property, Plant Effective from accounting period beginning
and Equipment – Classication of servicing on or after January 01, 2013
equipment
This improvement claries that major spare parts and servicing equipment that meet the denition of
property, plant and equipment are not inventory.
Reliance Cotton Spinning Mills Limited 20
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
Amendments to IAS 32 Financial Effective from accounting period beginning
Instruments: Presentation - Tax effects of on or after January 01, 2013
distributions to holders of an equity instrument,
and transaction costs of an equity transaction
This improvement claries that income taxes arising from distributions to equity holders are accounted
for in accordance with IAS 12 Income Taxes.
Amendments to IAS 34 - Interim Financial Effective from accounting period beginning
Reporting - Interim reporting of segment on or after January 01, 2013
information for total assets and total liabilities”
The amendment aligns the disclosure requirements for total segment assets with total segment
liabilities in interim nancial statements. This clarication also ensures that interim disclosures are
aligned with annual disclosures.
Amendments to IFRS 7 Financial Instruments: Effective from accounting period beginning
Disclosures - Offsetting nancial assets and on or after January 01, 2013
nancial liabilities
These amendments require an entity to disclose information about rights to set-off and related
arrangements (e.g., collateral agreements). The disclosures would provide users with information that
is useful in evaluating the effect of netting arrangements on an entity’s nancial position. The new
disclosures are required for all recognised nancial instruments that are set off in accordance with IAS
32 Financial Instruments: Presentation. The disclosures also apply to recognised nancial instruments
that are subject to an enforceable master netting arrangement or similar agreement, irrespective of
whether they are set off in accordance with IAS 32.
IFRIC 20 - Stripping Costs in the Production Effective from accounting period beginning
Phase of a Surface Mine on or after January 01, 2013
This interpretation applies to waste removal (stripping) costs incurred in surface mining activity, during
the production phase of the mine. The interpretation addresses the accounting for the benet from the
stripping activity.
2.2.2 New accounting standards, amendments to published standards and interpretations that are
not yet effective.
The following standards, amendments and interpretations are only effective for accounting periods,
beginning on or after the date mentioned against each of them. These standards, interpretations and the
amendments are either not relevant to the Company's operations or are not expected to have signicant
impact on the Company's nancial statements other than certain additional disclosures.
Amendments to IAS 19 Employee Benets: Effective from accounting period beginning
Employee contributions on or after July 01, 2014
This amendment claries the application of IAS 19, ‘Employee benets’ (2011) – referred to as ‘IAS 19R’,
to plans that require employees or third parties to contribute towards the cost of benets. The
amendment does not affect the accounting for voluntary contributions. The 2011 revisions to IAS 19
distinguished between employee contributions related to service and those not linked to service. The
current amendment further distinguishes between contributions that are linked to service only in the
period in which they arise and those linked to service in more than one period. The amendment allows
contributions that are linked to service, and do not vary with the length of employee service, to be
deducted from the cost of benets earned in the period that the service is provided.
Reliance Cotton Spinning Mills Limited 21
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
IAS 27 (Revised 2011) – Separate Effective from accounting period
Financial Statements beginning on or after January 01 2015.
IAS 27 (Revised 2011) will concurrently
apply with IFRS 10
The revised Standard sets out the requirements regarding separate nancial statements only. Most of
the requirements in the revised Standard are carried forward unchanged from the previous Standard.
The IASB has issued recently the amendment to IAS 27 wherein it has allowed to follow the equity
method in the separate nancial statements also. These amendments will be effective from January 01,
2016 with earlier application allowed.
IAS 28 (Revised 2011) – Investments in Effective from accounting period beginning
Associates and Joint Ventures on or after January 01, 2015
Similar to the previous Standard, the new Standard deals with how to apply the equity method of
accounting. However, the scope of the revised Standard has been changed so that it covers
investments in joint ventures as well because IFRS 11 requires investments in joint ventures to be
accounted for using the equity method of accounting.
Amendments to IAS 32 Financial Instruments Effective from accounting period beginning
Presentation - Offsetting nancial assets on or after January 01, 2014
and nancial liabilities
These amendments clarify the meaning of “currently has a legally enforceable right to set-off”. It will be
necessary to assess the impact to the entity by reviewing settlement procedures and legal
documentation to ensure that offsetting is still possible in cases where it has been achieved in the past.
In certain cases, offsetting may no longer be achieved. In other cases, contracts may have to be
renegotiated. The requirement that the right of set-off be available for all counterparties to the netting
agreement may prove to be a challenge for contracts where only one party has the right to offset in the
event of default.
IAS 36 Impairment of Assets - Recoverable Amount Effective from accounting period beginning
Disclosures for Non-Financial Assets on or after January 01, 2014
"The amendments:
- remove the requirement to disclose the recoverable amount of a cash-generating unit (or group of
cash-generating units) to which a signicant amount of goodwill or intangible assets with indenite
useful lives has been allocated in periods when no impairment or reversal has been recognized (this
requirement having been inadvertently introduced as part of consequential amendments on the
introduction of IFRS 13; and
- introduce additional disclosure requirements in respect of assets for which an impairment has been
recognized or reversed and for which the recoverable amount is determined using fair value less costs
of disposal."
IAS 39 Financial Instruments: Recognition Effective from accounting period beginning
and Measurement - Novation of Derivatives and on or after January 01, 2014
Continuation of Hedge Accounting
The amendment allows the continuation of hedge accounting (under IAS 30 and IFRS 9 chapter on
hedge accounting) when a derivative is novated to a clearing counterparty and certain conditions are
met.
Reliance Cotton Spinning Mills Limited 22
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
IFRS 10 – Consolidated Financial Statements Effective from accounting period beginning
on or after January 01, 2015.
Earlier adoption is encouraged.
IFRS 10 replaces the part of IAS 27 Consolidated and Separate Financial Statements that deals with
consolidated nancial statements and SIC 12 Consolidation - Special Purpose Entities. Under IFRS 10,
there is only one basis for consolidation for all entities, and that basis is control. This change is to remove
the perceived inconsistency between the previous version of IAS 27 and SIC 12; the former used a
control concept while the latter placed greater emphasis on risks and rewards. IFRS 10 includes a more
robust denition of control in order to address unintentional weaknesses of the denition of control set
out in the previous version of IAS 27. Specic transitional provisions are given for entities that apply
IFRS 10 for the rst time. Specically, entities are required to make the ‘control’ assessment in
accordance with IFRS 10 at the date of initial application, which is the beginning of the annual reporting
period for which IFRS 10 is applied for the rst time. No adjustments are required when the ‘control’
conclusion made at the date of initial application of IFRS 10 is the same before and after the application
of IFRS 10. However, adjustments are required when the ‘control’ conclusion made at the date of initial
application of IFRS 10 is different from that before the application of IFRS 10.
IFRS 11 – Joint Arrangements Effective from accounting period
beginning on or after January 01, 2015
IFRS 11 replaces IAS 31 Interest in Joint Ventures and SIC 13 Jointly Controlled Entities – Non monetary
Contributions by Venturers. IFRS 11 deals with how a joint arrangement should be classied where two
or more parties have joint control. There are two types of joint arrangements under IFRS 11: joint
operations and joint ventures. These two types of joint arrangements are distinguished by parties’ rights
and obligations under the arrangements. Under IFRS 11, the existence of a separate vehicle is no longer
a sufcient condition for a joint arrangement to be classied as a joint venture whereas, under IAS 31,
the establishment of a separate legal vehicle was the key factor in determining whether a joint
arrangement should be classied as a jointly controlled entity.
IFRS 12 – Disclosure of Interests in Other Entities Effective from accounting period beginning
on or after January 01, 2015
IFRS 12 is a new disclosure Standard that sets out what entities need to disclose in their annual
consolidated nancial statements when they have interests in subsidiaries, joint arrangements,
associates or unconsolidated structured entities (broadly the same as special purpose entities under
SIC 12). IFRS 12 aims to provide users of nancial statements with information that helps evaluate the
nature of and risks associated with the reporting entity’s interest in other entities and the effects of those
interests on its nancial statements.
IFRS 13 – Fair Value Measurement Effective from accounting period beginning
on or after January 01, 2015
IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair
value measurements. IFRS 13 does not change the requirements regarding which items should be
measured or disclosed at fair value. The scope of IFRS 13 is broad; it applies to both nancial instrument
items and non-nancial instrument items for which other IFRSs require or permit fair value
measurements and disclosures about fair value measurements, except in specied circumstances.
IFRS 13 gives a new denition of fair value for nancial reporting purposes. Fair value under IFRS 13 is
dened as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction in the principal (or most advantageous) market at the measurement date under current
market condition (i.e. an exit price) regardless of whether that price is directly observable or estimated
using another valuation technique. IFRS 13 should be applied prospectively as of the beginning of the
annual period in which it is initially applied.
Reliance Cotton Spinning Mills Limited 23
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
IFRIC 21 - Levies Effective from accounting period beginning
on or after January 01, 2014
IFRIC 21 denes a levy as a payment to a government for which an entity receives no specic goods or
services. A liability is recognised when the obligating event occurs. The obligating event is the activity
that triggers payment of the levy. This is typically specied in the legislation that imposes the levy.
2.2.3 Other than the aforesaid standards, interpretations and amendments, the International
Accounting Standards Board (IASB) has also issued the following standards which have not
been adopted locally by the Securities and Exchange Commission of Pakistan:
- IFRS 1 First Time Adoption of International Financial Reporting Standards
- IFRS 9 Financial Instruments
- IFRS 14 Regulatory Deferral Accounts
- IFRS 15 Revenue from Contracts with Customers
2.3 Signicant Estimates
The preparation of nancial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of policies and reported amounts of
assets, liabilities, income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under circumstances,
and the results of which form the basis for making judgment about carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which estimates are 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.
Judgments made by management in the application of IFRSs that have signicant effect on the nancial
statements and estimates with a signicant risk of material adjustment in the next year are discussed in
the ensuing paragraphs.
Changes in accounting estimate
During the current year, the depreciation rate of computer have been revised from 10% to 30%. Since
the related effect on the depreciation expense of current and future periods is immaterial hence it has not
been disclosed.
Employee benets
The Company operates an unfunded gratuity scheme (dened benet plan) for all its permanent
employees who have completed minimum qualifying period of service as dened under the respective
scheme. Provisions are made annually to cover the obligation under the scheme on the basis of
actuarial valuation and are charged to income. The calculation require assumptions to be made of future
outcomes, the principal ones being in respect of increases in remuneration and discount rate used to
derive present value of dened benet obligation. The assumptions are determined by independent
actuaries on annual basis.
Reliance Cotton Spinning Mills Limited 24
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
Property, plant and equipment
The Company reviews the useful lives of property, plant and equipment on regular basis. Any change in
the estimates in future years might affect the carrying amounts of the respective items of property, plant
and equipment with a corresponding effect on the depreciation charge and impairment, if any.
Taxation
The Company takes into account the current income tax law and decisions taken by appellate
authorities. Instances where the Company's view differs from the view taken by the income tax
department at the assessment stage and the Company considers that its view on items of material
nature is in accordance with law, the amounts are shown as contingent liabilities.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Convention
These nancial statements have been prepared under the historical cost convention modied by:
- nancial instruments at fair value
- recognition of certain employee benets at present value
- investments in associates at equity method
PRINCIPAL ACCOUNTING POLICIES ADOPTED ARE AS FOLLOWS
3.1 Property, plant and equipment
Property, plant and equipment except freehold land and capital work-in-progress are stated at cost less
accumulated depreciation and accumulated impairment loss, if any. Freehold land, capital work-in-
progress and stores held for capital expenditure are stated at cost less accumulated impairment loss, if
any. Cost also includes borrowing cost; wherever applicable.
Assets' residual values, if signicant, and useful lives are reviewed and adjusted, if appropriate, at each
balance sheet date.
When parts of an item of property, plant and equipment have different useful lives, they are recognized
as separate items of property, plant and equipment.
Subsequent costs are recognized as separate asset only when it is probable that future economic
benets associated with the item will ow to the Company and the cost of the item can be measured
reliably. All other repair and maintenance costs are charged to income during the period in which they
are incurred.
Depreciation is charged to prot and loss account applying the reducing balance method over estimated
useful life at the rates specied in Note 5 to these nancial statements. In respect of additions and
disposals during the year, depreciation is charged from the month of acquisition and upto the month
preceding the disposal respectively.
Gains or losses on disposal of assets, if any, are included in the prot and loss account.
Capital work-in-progress is stated at cost accumulated upto the balance sheet date. All expenditure
connected with specic assets incurred during installation and construction period are carried under
capital work-in-progress. These are transferred to specic assets as and when these assets are
available for use.
Reliance Cotton Spinning Mills Limited 25
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
3.2 Investments in associates
Associates are entities over which the Company has signicant inuence, but not control. Investment in
associate is accounted for using equity method of accounting. Under the equity method, the investment
in associate is initially recognized at cost and the carrying amount is increased or decreased to
recognize the Company's share of prot or loss of the associate after the date of acquisition. The
Company's share of the prot or loss of the associate is recognized in the Company's prot or loss
account. The carrying amount of the investment in associate is reduced by the amount of distributions
received from the associate. The carrying amount is also adjusted by the amount of changes in the
Company's proportionate interest in the associate arising from changes in associate's equity that is
recognized directly in equity of the Company account.
The carrying amount of investment is tested for impairment by comparing its recoverable amount
(higher of value in use and fair value less costs to sell) with its carrying amount and loss, if any, is
recognized in prot or loss. When impairment losses subsequently reverse, the carrying amounts of the
investment is increased to the revised recoverable amounts but limited to the extent of initial cost of
investments. A reversal of impairment loss is recognized in the prot and loss account.
3.3 Stores, spare parts and loose tools
These are valued at lower of cost and net realizable value, except for items in transit. Cost is determined
on a moving average less allowances for obsolete and slow moving items. Items in transit are valued at
invoice values plus other charges incurred thereon up to the balance sheet date.
3.4 Stock-in-trade
These are valued at the lower of cost and net realizable value, except for items in transit and waste stock.
Cost is computed applying the following bases:
Raw material - weighted average cost.
Work-in-process - average manufacturing cost.
Finished goods - average manufacturing cost.
Stock in transit are valued at invoice value plus other charges incurred thereon upto the balance sheet
date.
Waste stock are valued at net realizable value.
Average manufacturing cost in relation to work-in-process and nished goods includes cost of direct
material, direct labor and a proportion of manufacturing overheads based on normal capacity.
Net realizable value signies the estimated selling price in the ordinary course of business less
estimated costs of completion and estimated costs necessary to make the sale.
3.5 Impairment
The Company assesses at each balance sheet date whether there is any indication that assets may be
impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether
they are recorded in excess of their recoverable amount. Where carrying values exceed the respective
recoverable amount, assets are written down to their recoverable amounts and the resulting impairment
loss is recognized in prot and loss account.
The recoverable amount is the higher of an asset's fair value less costs to sell and value in use.
Where impairment loss subsequently reverses, the carrying amount of the asset is increased to the
Reliance Cotton Spinning Mills Limited 26
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
revised recoverable amount but limited to the extent of carrying amount that would have been
determined had no impairment loss been recognized for that asset. Reversal of impairment loss is
recognized as income.
3.6 Financial instruments
Financial assets and nancial liabilities are recognized when the Company becomes a party to the
contractual provisions of the instrument and de-recognized when the Company loses control of the
contractual rights that comprise the nancial asset and in case of nancial liability when the obligation
specied in the contract is discharged, cancelled or expired.
Financial instruments are initially recorded at fair value on the date a derivative contract is entered into
and are re-measured to fair value at subsequent reporting dates.
The gain or loss relating to nancial instruments is recognized immediately in the prot and loss account.
Particular recognition methods adopted by the Company are disclosed in the individual policy
statements associated with each item of nancial instruments.
3.7 Off setting of nancial assets and nancial liabilities
A nancial asset and a nancial liability is offset and the net amount reported in the balance sheet, if the
Company has a legal enforceable right to set off the transaction and also intends either to settle on a net
basis or to realize the asset and settle the liability simultaneously.
3.8 Trade debts and other receivables
Trade debts and other receivables are carried at original invoice amount less an estimate made for
doubtful receivables based on review of outstanding amounts at the period end. Balances considered
bad and irrecoverable are written off when identied.
3.9 Cash and cash equivalents
For the purpose of cash ow statement, cash and cash equivalents consist of cash in hand, balances
with banks.
3.10 Trade and other payables
Liability for trade and other payables are measured at the fair value of the consideration to be paid in the
future for goods and services received.
3.11 Financial instruments - hedge arrangements
In certain cases, the Company uses forward foreign exchange contracts (cash ow hedge
arrangements) to hedge its risk associated primarily with foreign currency uctuations.
These contracts (except those having immaterial nancial impact) are included in the balance sheet at
fair value and any resultant unrealized gain or loss is recognized in the statement of changes in equity,
on realization of same is transferred to prot and loss account. The fair value of forward foreign
exchange contracts are included in "Other receivables" in case of favorable contracts and "Trade and
other payables" in case of unfavorable contracts. The fair values of forward foreign exchange contracts
are calculated by reference to current forward foreign exchange rates with similar maturity proles.
3.12 Impairment of Financial Assets
A nancial asset is assessed at each reporting date to determine whether there is any objective
Reliance Cotton Spinning Mills Limited 27
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
evidence that it is impaired. A nancial asset is considered to be impaired if objective evidence indicates
that one or more events have had a negative effect on the estimated future cash ows of that asset.
Individually signicant nancial assets are tested for impairment on an individual basis. The remaining
nancial assets are assessed collectively in groups that share similar credit risk characteristics.
3.13 Employee benets
Dened benet plan
The Company operates an unfunded gratuity scheme (dened benet plan) for all its permanent
employees who have completed minimum qualifying period of service as dened under the respective
scheme. Provisions are made annually to cover the obligation under the schemes on the basis of
actuarial valuation and are charged to prot and loss account for the year. The assumptions are
determined by independent actuary.
The amount recognized in the balance sheet represents the present value of dened benet obligations
using the projected unit credit actuarial valuation method. Actuarial gains/ losses arising from the
actuarial valuation are recognized immediately and are presented in other comprehensive income. The
latest actuarial valuation was carried on June 30, 2014.
The Company has adopted IAS 19 (as revised in 2011) during the year and all the changes have been
fully explained in note 4.
Details of the scheme are given in relevant note to the nancial statements.
Compensated absences
The Company provides for compensated absences of its employees on unavailed balance of leaves in
the period in which the leaves are earned.
3.14 Provisions
Provisions are recognized in the balance sheet when the Company has a present, legal or constructive
obligation as a result of past events, it is probable that an outow of resources embodying economic
benets will be required to settle the obligation, and a reliable estimate of the amount of obligation can be
made. Provisions are reviewed at each balance sheet date and adjusted to reect the current best
estimate.
3.15 Earnings per share
The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic
EPS is calculated by dividing the prot after tax attributable to ordinary shareholders of the Company by
the weighted average number of ordinary shares outstanding during the year. Diluted EPS is
determined by adjusting the prot after tax attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary
shares.
3.16 Borrowings
Loans and borrowings are recorded at the proceeds received. In subsequent periods, borrowings are
stated at amortized cost using the effective yield method. Finance cost is accounted for on an accrual
basis and is included in current liabilities to the extent of amount remaining unpaid, if any.
3.17 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents
amounts receivable for goods and services provided in the normal course of business.
Reliance Cotton Spinning Mills Limited 28
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
Revenue from local sales is recognized when goods are dispatched to customers, export sales are
recognized on shipment of goods.
Export rebate is recognized on accrual basis at the time of making the export sales.
Dividend income from investment is recognized when the Company's right to receive dividend is
established.
3.18 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or
sale, are added to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale. Investment income earned on the temporary investment of specic borrowings
pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalization.
All other borrowing costs are recognized in prot or loss account of the period in which they are incurred.
3.19 Taxation
Current
The charge for current taxation is based on taxable income at the current rate of taxation after taking into
account applicable tax credits, rebates and exemptions available, if any. However, for income covered
under nal tax regime, taxation is based on applicable tax rates under such regime.
Deferred
Deferred tax is provided using the balance sheet liability method for all temporary differences at the
balance sheet date between tax bases of assets and liabilities and their carrying amount for nancial
reporting purposes. In this regard, the effects on deferred taxation of the portion of income subject to
nal tax regime is also considered in accordance with the requirement of "Technical Release - 27" of the
Institute of Chartered Accountants of Pakistan.
Deferred tax liability is recognized for all taxable temporary differences while deferred tax asset is
recognized for all deductible temporary differences and carry forward of unused tax losses, if any, to the
extent that it is probable that taxable prots will be available against which such temporary differences
and tax losses can be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on the tax rates that have been enacted or
substantively enacted at the balance sheet date.
3.20 Foreign currencies
Transactions in currencies other than Pakistani rupee are recorded at the rates of exchange prevailing
on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are translated at the rates prevailing on the balance sheet date
except where forward exchange contracts have been entered into for repayment of liabilities in that
case, the rates contracted for are used.
Gains and losses arising on retranslation are included in prot or loss for the year.
Reliance Cotton Spinning Mills Limited 29
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
3.21 Dividend distribution
Dividend distribution to the Company’s shareholders is recognized as a liability in the nancial
statements in the period in which the dividends are approved by the Company’s shareholders.
3.22 Related party transactions
Transactions with related parties are carried out on commercial terms and conditions.
4 CHANGES IN ACCOUNTING POLICY
4.1 Adoption of amendments in IAS 19, (Revised) 'Employee Benets' as revised in 2011
"In the current year, the Company has applied IAS 19 Employee Benets (as revised in 2011) and the
related consequential amendments for the rst time."
Previously as per Company's policy cumulative net unrecognized actuarial gains and losses at the end
of previous period which exceeded 10% of the present value of the Company's gratuity were amortized
over the average expected remaining working lives of the employees.
As per IAS 19 (revised) actuarial gains and losses are recognised in other comprehensive income in the
periods in which they occur. Amounts recorded in the prot and loss account are limited to current and
past service costs, gains or losses on settlements, and net interest income (expense). All other changes
in the net dened benet obligation are recognised directly in other comprehensive income with no
subsequent recycling through the prot and loss account.
The change in accounting policy has been accounted for retrospectively in accordance with the
requirements of IAS 8, 'Accounting policies, Changes in Accounting Estimates and Errors' and
corresponding gures have been restated. The effects of the change in accounting policy on the current
and prior periods' nancial statements have been summarized as follow:
Effect on balance sheet:
---------------------------------------------June 30, 2012 -----------------------------------------------
Balance as reported Effect of change in accounting Restated
earlier policy balance
Employee benets - unfunded 37,305,052 -1,248,632 36,056,420
Un-appropriated prots 1,064,816,311 1,248,632 1,066,064,943
---------------------------------------------June 30, 2013 -----------------------------------------------
Balance as reported Effect of change in accounting Restated
earlier policy balance
Employee benets - unfunded 37,478,851 7,012,271 44,491,122
Un-appropriated prots 1,403,424,202 -7,012,271 1,396,411,931
Effect on statement of comprehensive income:
---------------------------------------------June 30, 2013 -----------------------------------------------
Balance as reported Effect of change in accounting Restated
earlier policy balance
Remeasurement of post retirement
- -8,260,903 -8,260,903
benets obligation
The change in accounting policy has no impact on prot and loss, earning per share and cashow statements.
Reliance Cotton Spinning Mills Limited 30
5 PROPERTY, PLANT AND EQUIPMENT
5.1 At June 30, 2014
…..……....………………………………… Cost ……....…………………………………….. …...………..…...…… Depreciation …...………..…...…… Book value Annual
As at July 01, As at June 30, As at July 01, Charge for the As at June 30, As at June 30, depreciation
Particulars Additions Transfers Disposals Disposals
2013 2014 2013 year 2014 2014 rate %
…..……….………………………………………………………………………………………… Rupees ……….……………………………………………………………………………………………..
Operating xed assets
Freehold land 13,251,424 6,153,000 - - 19,404,424 - - - - 19,404,424 -
Buildings on freehold land:
Residential 121,379,248 - - - 121,379,248 28,307,976 4,653,564 - 32,961,540 88,417,708 5
Factory 466,278,588 - 135,555,262 - 601,833,850 134,843,469 35,415,946 - 170,259,415 431,574,435 10
Plant and machinery 1,173,732,009 79,000 197,529,396 13,380,401 1,357,960,004 608,161,819 66,737,149 5,311,518 669,587,450 688,372,554 10
Furniture and ttings 1,345,627 - - - 1,345,627 925,241 42,039 - 967,280 378,347 10
Vehicles 23,530,187 3,470,790 - 228,200 26,772,777 11,830,906 2,786,635 53,627 14,563,914 12,208,863 20
Reliance Cotton Spinning Mills Limited
Ofce equipment 962,499 635,000 - - 1,597,499 574,766 62,298 - 637,064 960,435 10
For the year ended June 30, 2014
Electric installation 61,289,832 - 13,018,897 2,000,350 72,308,379 22,030,905 4,005,555 627,160 25,409,300 46,899,079 10
Electric equipment 195,500 - - - 195,500 173,340 2,216 - 175,556 19,944 10
Computers 2,691,728 223,171 - - 2,914,899 1,532,565 385,512 - 1,918,077 996,822 30
1,864,656,642 10,560,961 346,103,555 15,608,951 2,205,712,207 808,380,987 114,090,914 5,992,305 916,479,596 1,289,232,611
Capital work-in-progress
Building - civil work 97,880,784 132,647,842 (135,555,262) - 94,973,364 94,973,364
Plant and machinery 35,087,264 177,647,060 (197,529,396) - 15,204,928 15,204,928
Electric installation 12,000,000 36,496,097 (13,018,897) - 35,477,200 35,477,200
Vehicles - 1,282,000 - - 1,282,000 1,282,000
NOTES TO THE FINANCIAL STATEMENTS
144,968,048 348,072,999 (346,103,555) - 146,937,492 146,937,492
Total 2,009,624,690 358,633,960 - 15,608,951 2,352,649,699 808,380,987 114,090,914 5,992,305 916,479,596 1,436,170,103
5.1.1 Depreciation charge for the year has been charged to cost of sales.
31
Annual Report 2014
5.1.2 Disposal of property, plant and equipment
Accumulated Mode of Par culars of
Particulars Cost Book value Sales proceeds Gain/(loss)
deprecia on disposal buyer
……………………………………………… Rupees ……………………………………………
Plant and machinery
Autoconer machine 1,000,000 114,938 885,062 1,250,000 364,938 Negotiation M/s International Textile Machinery Equipment
Generator 6,713,717 2,027,323 4,686,394 6,200,000 1,513,606 Negotiation M/s Sapphire Fibres Limited
Synchronizing control panel 2,000,350 627,160 1,373,190 1,800,000 426,810 Negotiation M/s Sapphire Fibres Limited
Autoconer machine 5,666,684 3,169,257 2,497,427 1,980,000 (517,427) Negotiation M/s Sapphire Fibres Limited
Vehicle
Daihatsu Cuore 228,200 53,627 174,573 300,000 125,427 Negotiation Mr. Irfan Ramzan s/o Muhammad Ramzan
2014 15,608,951 5,992,305 9,616,646 11,530,000 1,913,354
2013 489,403 355,763 133,640 310,000 176,360
5.2 At June 30, 2013
…..……....………………………………… Cost ……....…………………………………….. …...………..…...…… Depreciation …...………..…...…… Book value Annual
As at July 01, As at June 30, As at July 01, Charge for the As at June 30, As at June 30, depreciation
Reliance Cotton Spinning Mills Limited
Particulars Additions Transfers Disposals Disposals
2012 2013 2012 year 2012 2013 rate %
For the year ended June 30, 2014
…..……….………………………………………………………………………………………… Rupees ……….……………………………………………………………………………………………..
Operating xed assets
Freehold land 13,251,424 - - - 13,251,424 - - - - 13,251,424 -
Buildings on freehold land:
Residential 94,346,479 - 27,032,769 - 121,379,248 24,653,775 3,654,201 - 28,307,976 93,071,272 5
Factory 415,613,113 - 50,665,475 - 466,278,588 101,275,401 33,568,068 - 134,843,469 331,435,119 10
Plant and machinery 1,069,844,730 - 103,887,279 - 1,173,732,009 549,596,070 58,565,749 - 608,161,819 565,570,190 10
Furniture and ttings 1,345,627 - - - 1,345,627 878,531 46,710 - 925,241 420,386 10
Vehicles 21,223,730 2,795,860 - 489,403 23,530,187 9,574,206 2,612,463 355,763 11,830,906 11,699,281 20
Ofce equipment 962,499 - - - 962,499 531,685 43,081 - 574,766 387,733 10
Electric installation 53,775,534 - 7,514,298 - 61,289,832 18,155,839 3,875,066 - 22,030,905 39,258,927 10
NOTES TO THE FINANCIAL STATEMENTS
Electric equipment 195,500 - - - 195,500 170,878 2,462 - 173,340 22,160 10
Computers 2,138,133 553,595 - - 2,691,728 1,216,254 316,311 - 1,532,565 1,159,163 30
1,672,696,769 3,349,455 189,099,821 489,403 1,864,656,642 706,052,639 102,684,111 355,763 808,380,987 1,056,275,655
Capital work-in-progress
Building - civil work - 175,579,028 (77,698,244) - 97,880,784 97,880,784
Plant and machinery 132,891 138,841,652 (103,887,279) - 35,087,264 35,087,264
Vehicles - 19,514,298 (7,514,298) - 12,000,000 12,000,000
132,891 333,934,978 (189,099,821) - 144,968,048 144,968,048
Total 1,672,829,660 337,284,433 - 489,403 2,009,624,690 706,052,639 102,684,111 355,763 808,380,987 1,201,243,703
32
Annual Report 2014
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
6 LONG TERM INVESTMENTS Note ------------- Rupees -------------
Investments in associates - at equity method:
Quoted:
Sapphire Fibres Limited 6.2 329,539,544 271,198,039
Sapphire Textile Mills Limited 6.3 68,070,007 57,934,410
SFL Limited 6.4 54,491,757 46,372,275
Un quoted:
Sapphire Finishing Mills Limited 6.5 50,910,735 40,390,735
Sapphire Holding Limited 6.6 28,074,191 23,048,668
Sapphire Power Generation Limited 6.7 51,799,785 -
582,886,019 438,944,127
6.1 The existence of signicant inuence by the Company is evidenced by the representation on the board of directors of
associated companies.
6.2 Investment in Sapphire Fibres Limited
393,697 (2013: 393,697) ordinary shares of Rs. 10 each - cost 41,956,482 41,956,482
Share of post acquisition prot items directly recognized in equity 289,551,547 233,965,921
(1,968,485) (4,724,364)
Dividend received 329,539,544 271,198,039
The nancial year of Sapphire Fibres Limited ends on June 30. The latest un-audited consolidated nancial results of
Sapphire Fibres Limited as of June 30, 2014 have been used for the purpose of application of equity method. Summarized
nancial information of Sapphire Fibres Limited is set out below:
Total assets 39,725,465,161 36,481,215,764
Total liabilities 21,126,021,052 20,136,508,807
Net assets 18,599,444,109 16,344,706,957
Sales 31,117,254,263 30,759,727,973
Prot for the year 1,493,901,379 2,680,651,542
Market value per share 290 169.08
Percentage of ownership 1.99% 1.99%
6.3 Investment in Sapphire Textile Mills Limited
100,223 (2013: 100,223) ordinary shares of Rs. 10 each - cost 8,114,578 8,114,578
Share of post acquisition prot and items directly recognized in
equity 60,857,436 51,523,623
Dividend received (902,007) (1,703,791)
68,070,007 57,934,410
The nancial year of Sapphire Textile Mills Limited ends on June 30. The latest un-audited consolidated nancial results of
Sapphire Textile Mills Limited as of June 30, 2014 have been used for the purpose of application of equity method.
Summarized consolidated nancial information of Sapphire Textile Mills Limited is set out below:
Total assets 22,723,479,673 19,047,160,748
Total liabilities 8,837,775,668 7,451,535,674
Net assets 13,885,704,005 11,595,625,074
Sales 25,411,301,753 25,296,639,461
Prot for the year 966,037,022 2,128,772,892
Market value per share 280 285
Percentage of ownership 0.50% 0.50%
Reliance Cotton Spinning Mills Limited 33
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
------------- Rupees -------------
6.4 Investment in SFL Limited
401,570 (2013: 401,570) ordinary shares of Rs. 10 each - cost 2,439,475 2,439,475
Share of post acquisition prot 52,453,852 43,932,800
Dividend received (401,570) -
54,491,757 46,372,275
The nancial year of SFLLimited ends on June 30. The latest unaudited consolidated nancial results of SFLLimited as of
June 30, 2014 have been used for the purpose of application of equity method. Summarized nancial information of SFL
Limited is set out below:
2014 2013
Total assets 2,726,773,089 2,320,988,133
Total liabilities 427,948 878,967
Net assets 2,726,345,141 2,320,109,166
Revenue 3,320,838 1,232,405
Prot for the year 387,114,417 401,788,398
Market value per share 65 41.62
Percentage of ownership 1.99% 1.99%
6.5 Investment in Sapphire Finishing Mills Limited
1,556,000 (2013: 1,556,000) ordinary shares of Rs. 10 each - cost 16,509,160 16,509,160
Share of post acquisition prot and items
directly recognized in equity 35,879,775 24,659,575
Dividend received (1,478,200) (778,000)
50,910,735 40,390,735
The nancial year of Sapphire Finishing Mills Limited ends on June 30. Financial results of Sapphire Finishing Mills Limited
as of June 30, 2014 are used for the purpose of application of equity method, which are based on the un-audited
management accounts. Summarized nancial information of Sapphire Finishing Mills Limited is set out below:
Total assets 8,532,013,748 7,338,659,300
Total liabilities 5,521,867,474 4,948,190,775
Net assets 3,010,146,274 2,390,468,525
Sales 14,458,904,445 14,181,868,848
Prot for the year 709,907,719 446,096,443
Breakup value per share 32.61 25.96
Percentage of ownership 1.70% 1.70%
6.6 Investment in Sapphire Holding Limited
100,223 (2013: 100,223) ordinary shares of Rs. 10 each - cost 524,950 524,950
Share of post acquisition prot 27,549,241 22,523,718
28,074,191 23,048,668
The nancial year of Sapphire Holding Limited ends on June 30. The latest unaudited consolidated nancial results of
Sapphire Holding Limited as of June 30, 2014 have been used for the purpose of application of equity method. Summarized
nancial information of Sapphire Holding Limited is set out below:
Total assets 5,925,815,334 4,866,085,504
Total liabilities 192,690,219 245,189,002
Net assets 5,733,125,115 4,620,896,502
Income 4,985,974 2,237,633
(Loss) / prot for the year 761,199,192 754,522,567
Breakup value per share 285.33 176.15
Percentage of ownership 0.50% 0.50%
Reliance Cotton Spinning Mills Limited 34
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
Note ------------- Rupees -------------
6.7 Investment in Sapphire Power Generation Limited
555,000 (2013: Nil) ordinary shares of Rs. 10 each - cost 19,425,000 -
Share of post acquisition prot 32,374,785 -
51,799,785 -
The nancial year of Sapphire Power Generation Limited ends on June 30. The latest unaudited consolidated nancial
results of Sapphire Holding Limited as of June 30, 2014 have been used for the purpose of application of equity method.
Summarized nancial information of Sapphire Power Generation Limited is set out below:
Total assets 1,445,652,298 -
Total liabilities 328,262,092 -
Net assets 1,117,390,206 -
Sales 737,583,933 -
Prot for the year 24,768,933 -
Breakup value per share 69.73 0.00
Percentage of ownership 3.46% 0.00%
7 LONG TERM LOANS
Considered good:
Executive s- secured 7.1 256,000 418,000
Other employees - secured 21,000 -
277,000 418,000
Less: Current portion
Executives 208,000 282,000
Other employees 12,000 -
11 220,000 282,000
57,000 136,000
7.1 Reconciliation of carrying amount of loan to executives
At the beginning of year 418,000 700,000
Add: Disbursement 150,000 -
Less: Repayments made by executives 312,000 282,000
At the end of year 256,000 418,000
7.1.1 These represent interest free loans to executive employees for construction of house and is secured against post
employment benets. Loan is payable in monthly installments and would be adjusted against salary. The maximum
balance outstanding at the end of any month during the year was Rs. 0.403 million (2013: Rs. 0.677 million).
8 STORES, SPARE PARTS AND LOOSE TOOLS
Stores 8.1 8,397,088 8,323,257
Spare parts 8.2 20,679,456 22,500,115
Loose tools 8.3 32,031 25,120
29,108,575 30,848,492
8.1 These include stores in transit amounting to Rs. 0.218 million (2013: Nil).
8.2 These include spare parts in transit amounting to Rs. 8.284 million (2013: Rs. 8.031 million).
8.3 These include loose tools in transit amounting to Rs. 0.171 million (2013: Nil).
Reliance Cotton Spinning Mills Limited 35
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
Note ------------- Rupees -------------
9 STOCK-IN-TRADE
Raw material 9.1 1,148,362,014 816,390,572
Work-in-process 9.2 134,041,989 78,014,316
Finished goods
Manufactured yarn 175,345,545 169,364,407
Purchased yarn - 3,560,555
9.3 175,345,545 172,924,962
Waste 5,018,889 13,275,737
1,462,768,437 1,080,605,587
9.1 Raw material include stock in transit of Rs. 157.448 million (2013: Rs. 22.347 million). It also includes stock of Rs. 598.796
million (2013: Nil) being carried out at net realizable value. The amount charged to cost of sales in respect of written
down of inventories is Rs.127.815 million (2013: Rs. Nil).
9.2 It also includes stock of Rs. 76.153 million (2013: Nil) being carried out at net realizable value. The amount charged to cost
of sales in respect of written down of inventories is Rs. 11.024 million (2013: Nil).
9.3 Finished goods include stock in transit of Rs. 28.415 million (2013: Rs. 94.953 million).
10 TRADE DEBTS
Considered good:
Foreign
Secured 10.1 60,918,945 80,527,071
Unsecured 59,311,011 11,545,002
120,229,956 92,072,073
Local
Secured 10.1 5,800,655 12,995,365
Unsecured - considered good 10.3 331,079,375 272,906,492
Unsecured - considered doubtful 18,572,147 18,572,147
10.2 355,452,177 304,474,004
475,682,133 396,546,077
Less: Provision for doubtful debts 10.4 (18,572,147) (18,572,147)
457,109,986 377,973,930
10.1 These are secured against letters of credit.
10.2 Local trade debts includes Rs. 234.657 million (2013: Rs. 208.428 million) receivable against indirect export sales.
10.3 These includes amount due from following associated companies:
Up to 1 1 to 6 months Over 6
month months
-----------------------Rupees------------------------
Sapphire Textile Mills Limited 2,600,176 - - 2,600,176 28,811,095
Sapphire Fibres Limited 22,488,567 15,894,323 - 38,382,890 39,087,526
Diamond Fabrics Limited 20,815,789 - - 20,815,789 13,356,354
45,904,532 15,894,323 - 61,798,855 81,254,975
10.4 Movement in provision for doubtful debts
Balance at 1 July 18,572,147 15,700,000
Charge for the year - 2,872,147
Balance at 30 June 18,572,147 18,572,147
11 LOANS AND ADVANCES
Considered good:
Current portion of long term loans 7 220,000 282,000
Loans to employees 11.1 448,000 448,000
Advances to suppliers 10,420,006 2,970,957
Advances against letters of credit - 186,835
11,088,006 3,887,792
11.1 These are interest free loans and are secured against post employment benets.
Reliance Cotton Spinning Mills Limited 36
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
Note ------------- Rupees -------------
12 DEPOSIT AND SHORT TERM PREPAYMENTS
Bank guarantee margin 23,809 23,809
Prepayments 607,061 962,331
630,870 986,140
13 OTHER RECEIVABLES
Export rebate receivable 11,025,677 6,766,376
Sundry receivables 142,594 719,008
11,168,271 7,485,384
14 OTHER FINANCIAL ASSETS
This represents 60,482 (2013: nil) units of Pakistan Cash Management Fund.
15 TAX REFUNDS DUE FROM THE GOVERNMENT
Sales tax refundable 62,552,997 48,024,343
Income tax refundable 56,015,202 21,733,977
118,568,199 69,758,320
16 CASH AND BANK BALANCES
Cash-in-hand 84,756 3,358,354
Cash at banks on current accounts 19,852,811 8,002,227
19,937,567 11,360,581
17 ISSUED, SUBSCRIBED AND PAID UP CAPITAL
10,292,000 (2013:10,292,000) ordinary shares of Rs. 10 each fully
paid in cash. 102,920,000 102,920,000
17.1 Ordinary shares of the Company held by associated companies as at the balance sheet date:
2014 2013
…………...Number of shares…………...
Sapphire Agencies (Private) Limited 2,318,899 2,318,899
Diamond Fabrics Limited 1,662,000 1,662,000
Amer Cotton Mills (Private) Limited 1,584,800 1,584,800
Reliance Textiles Limited 1,098,118 1,098,118
Neelum Textile Mills (Private) Limited 365,515 365,515
Sapphire Textile Mills Limited 316,692 317,682
Sapphire Fibres Limited 156,420 158,691
Galaxy Agencies (Private) Limited 108,217 108,217
Nadeem Enterprises (Private) Limited 87,104 87,104
Crystal Enterprises (Private) Limited 27,696 27,696
Sapphire Power Generation Limited 20,539 20,539
Amer Textile (Pvt) Limited 6,500 -
Yousuf Agencies (Private) Limited 3,223 3,223
Salman Ismail (SMC Private) Limited 1,500 1,500
7,757,223 7,753,984
17.2 Shareholders are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
meetings of the Company. All shares rank equally with regard to the Company's residual assets.
Reliance Cotton Spinning Mills Limited 37
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
18 LONG TERM FINANCING Note ------------- Rupees -------------
From banking companies - secured
Long term loan 18.1 100,000,000 100,000,000
Less: Payment made during the year 25,000,000 -
75,000,000 100,000,000
Less: Current portion 41,666,665 33,333,333
33,333,335 66,666,667
18.1 This facility was obtained from United Bank Limited during the period and carries mark up at the rate of 3 months
KIBOR+0.5% payable on quarterly basis. The loan is secured against hypothecation charge of Rs. 134 million on all present
and future xed assets excluding land and building of the Company. It is repayable in twelve equal quarterly installments
commencing from September 2013.
19 EMPLOYEE BENEFITS - UNFUNDED
19.1 The amount recognised in the balance sheet
Present value of dened benet obligations 55,725,429 44,491,122
Add: Payables 338,250 -
Liability recognized in the balance sheet at 30th June 56,063,679 44,491,122
19.2 Movement in net liability recognized in the balance sheet
At beginning of the year 44,491,122 36,056,420
Expense recognised in prot and loss account 19.4 18,419,947 12,507,894
Remeasurement component charged in other comprehensive income 3,678,891 8,260,903
Liability transferred from other group company - 634,500
Payments during the year (10,526,281) (12,968,595)
At end of the year 56,063,679 44,491,122
19.3 Movement in the present value of dened benet obligation
Present value of obligation at beginning of the year 44,491,122 36,056,420
Current service cost 9,492,142 7,820,559
Past service cost 4,826,625 -
Interest cost 4,101,180 4,687,335
Liability transferred from other group company - 634,500
Benets due but not paid (338,250) -
Benet paid during the year (10,526,281) (12,968,595)
Actuarial loss on obligation 3,678,891 8,260,903
Present value of obligation at end of the year 55,725,429 44,491,122
19.4 Expense recognised in prot and loss account
Current service cost 9,492,142 7,820,559
Past service cost 4,826,625 -
Interest cost 4,101,180 4,687,335
18,419,947 12,507,894
Reliance Cotton Spinning Mills Limited 38
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
------------- Rupees -------------
19.5 Charge for the year has been allocated as follows
Cost of sales 13,779,963 9,000,646
Distribution cost 3,037,449 2,106,615
Administrative expenses 1,602,535 1,400,633
18,419,947 12,507,894
19.6 Total Remeasurement chargeable to other comprehensive income
Remeasurement of plan obligation:
Experience adjustment 3,678,891 8,260,903
3,678,891 8,260,903
19.7 Principal actuarial assumptions: 2014 2013
Principal actuarial assumptions used are as follows: -
Discount rate - per annum 13.25% 10.5%
Expected rate of growth per annum in future salaries 12.25% 9.5%
Average expected remaining working life time of employees 7 years 6 years
19.8 Risk associated with with dened bent plans
Investment risks
The risk arises when the actual performance of the investments is lower than expectation and thus creating a shorthfall in the
funding objectives.
Longevity risks
The risk arises when the actual lifetime of retirees is longer than expectation. This risk is measured at the plan level over the
entire retiree population.
The sensitivity of dened benet obligation to changes in weighted principal assumptions is:
Impact on dened benet obligation
Changes in Increase in Decrease in
assumptions assumption assumption
Rupees Rupees
Discount rate 1% 52,114,081 59,855,332
Salary growth rate 1% 60,009,767 51,910,158
The aforementioned sensitivity analysis is based on a change in an assumption while holding all other assumptions constant.
In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the
sensitivity of the dened benet obligation to signicant actuarial assumptions the same method (present value of the dened
benet obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when
calculating the gratuity liability recognised within the balance sheet.
19.9 Estimated contribution for the year ending June 30, 2015 is Rs. 19.618 million.
20 DEFERRED TAX LIABILITY
Deferred tax provision has been recognized only in respect of share of prot of associates considering that other temporary
differences will not have any tax impact in foreseeable future, as the income of the Company is being assessed under the
nal tax regime and the management is condent that the Company will continue to be taxed under nal tax regime in
foreseeable future.
Reliance Cotton Spinning Mills Limited 39
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
Note 2014 2013
21 ------------- Rupees -------------
TRADE AND OTHER PAYABLES
Creditors 21.1 128,875,506 65,069,095
Accrued liabilities 21.2 100,820,233 88,191,157
Fuel price adjustment - 21,005,959
Workers' welfare fund 19,924,019 16,576,551
Infrastructure fee 28,763,287 23,028,839
Advances from customers 6,991,256 7,643,301
Workers' prot participation fund 21.3 4,944,712 15,009,799
Electricity duty 4,844,134 3,615,434
Equalisation surcharge 1,937,136 1,034,797
Unclaimed dividend 241,603 220,635
297,341,886 241,395,567
21.1 Creditors include Rs. 51.012 million (2013: Rs. 15.428 million) due to associated companies. Creditors also include Rs.
49.631 (2013: Rs. 16.482 million) payable against foreign currency bills payable.
21.2 Accrued liabilities includes Rs. 8.176 million (2013: Rs. 7.069 million) due to associated company.
21.3 Workers' prot participation fund
At the beginning of the year 15,009,799 2,715,630
Interest on funds utilized in the Company's business 21.4 755,219 154,071
Provision for the year 4,944,712 15,009,799
20,709,730 17,879,500
Payments made during the year (15,765,018) (2,869,701)
At the end of the year 4,944,712 15,009,799
21.4 Interest on workers' prot participation fund has been provided at the rates ranging from 11.5% to 15% (2013: 12.50% to
14.50%) per annum.
22 MARK-UP ACCRUED
Mark-up accrued on:
Long term nancing 2,016,520 2,528,110
Short term borrowings 30,130,071 11,371,479
32,146,591 13,899,589
23 SHORT TERM BORROWINGS
From banking companies-secured
Running nance 527,631,896 233,628,626
Foreign currency import nance 518,790,904 -
Other short term nance 825,000,000 957,017,000
Temporary bank overdraft - 204,293
1,871,422,800 1,190,849,919
23.1 The short term borrowing facilities amounting to Rs. 1,215 million (2013: Rs. 1,658 million) remained unutilized at the year
end.
23.2 These facilities have been obtained from various banks under mark-up arrangements against aggregate sanctioned limit of
Rs. 3,250 million (2013: Rs. 2,849 million). These facilities carry mark-up at the rates ranging from 2 % to 14.16 % (2013:
1.73 % to 13.47 % ) per annum payable quarterly. The aggregate short term borrowing facilities are secured against
hypothecation charge on current assets of the Company and promissory notes.
23.3 Facilities available for opening letters of credit and guarantees aggregate to Rs. 1,955 million (2013: Rs. 2,016 million) of
which facilities amounting to Rs. 1,905 million (2013: Rs. 1,999 million) were remained unutilized at the year end. These
facilities are secured against lien on shipping documents and current assets.
Reliance Cotton Spinning Mills Limited 40
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
Note 2014 2013
------------- Rupees -------------
24 CONTINGENCIES AND COMMITMENTS
24.1 CONTINGENCIES
Guarantees have been issued by banks on behalf of the Company in the normal
21,694,394 22,428,843
course of business.
Post dated cheques in favor of Commissioner Inland Revenue and Collector of
92,774,615 105,803,446
Customs.
114,469,009 128,232,289
24.2 Claim not acknowledged as debt
During the period it was discovered that there were unauthorized withdrawals of funds from one of the Company's bank accounts using forged signatures on cheques
from cheque books fraudulently issued by the Bank's staff without the Company's authority. On becoming aware of the matter, FIR has been lodged in addition to
taking up the matter with the bank. Based on the advice of its legal counsel, the management believes that the company does not have any liability whatsoever in
respect of such net unauthorized withdrawals of funds accumulating to Rs.20,605,789/- (including markup).
Furthermore the Company has led a suit on 21 March, 2014 in the honorable Sindh High Court, which has granted a stay order on 8 April, 2014 in favor of the
Company whereby the bank has been restrained from placing the Company's name in the State Bank Credit Information Bureau (CIB) list of defaulter and prevented
from taking coercive action against the Company.
24.3 Refer to Note 32.3 to the nancial statements for contingencies relating to income tax matters.
2014 2013
24.4 COMMITMENTS ------------- Rupees -------------
Letters of credit for import of:
- stores and spare parts 3,670,045 4,879,795
- raw material 58,480,401 33,038,720
- plant and machinery - 80,526,906
Contracts for capital expenditure 4,426,332 72,666,632
66,576,778 191,112,053
25 SALES
2014 2013
Export Local Total Export Local Total
………………………………………………………..….. Rupees …………………………………………………………...
Yarn 1,677,205,627 781,783,783 2,458,989,410 1,865,627,352 539,094,376 2,404,721,728
Yarn (under SPO) 1,660,076,909 - 1,660,076,909 1,318,756,438 - 1,318,756,438
3,337,282,536 781,783,783 4,119,066,319 3,184,383,790 539,094,376 3,723,478,166
Waste 52,373,793 45,233,283 97,607,076 10,310,254 114,946,441 125,256,695
Waste (under SPO) 21,158,810 - 21,158,810 - - -
73,532,603 45,233,283 118,765,886 10,310,254 114,946,441 125,256,695
3,410,815,139 827,017,066 4,237,832,205 3,194,694,044 654,040,817 3,848,734,861
Processing fee - 1,256,831 1,256,831 - 1,570,375 1,570,375
Export rebate 4,865,907 - 4,865,907 3,302,481 - 3,302,481
3,415,681,046 828,273,897 4,243,954,943 3,197,996,525 655,611,192 3,853,607,717
25.1 Export sales includes foreign currency exchange gain amounting to Rs. 8.942 million (2013: Rs. 7.032million) realized on export proceeds.
25.2 Local yarn inclusive of sales tax amounts to Rs. 797.025 million (2013: Rs. 544.850 million), local waste inclusive of sales tax amounts to Rs. 47.332 million (2013: Rs.
115.805 million) and processing fee inclusive of sales tax amounts to Rs. 1.281 million (2013: Rs. 1.597 million). SPO sales inclusive of sales tax is Rs.1,686.466
million (2013: Rs.1,328.484 million), waste under SPO inclusive of sales tax is Rs.21.582 million (2013: Nil)
Reliance Cotton Spinning Mills Limited 41
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
Note ------------- Rupees -------------
26 COST OF SALES
Raw material consumed 26.1 2,831,416,357 2,445,674,500
Packing material consumed 60,377,873 56,683,958
Store and spare parts consumed 80,280,634 82,183,326
Salaries, wages and other benets 26.2 276,397,551 239,066,948
Fuel and power 345,425,551 290,600,902
Insurance 15,280,963 10,747,413
Repair and maintenance 20,800,889 22,687,586
Travelling and conveyance 7,007,938 5,600,473
Processing charges 79,321,428 20,446,803
Other manufacturing overheads 2,196,383 1,889,321
Depreciation 5.1.1 114,090,913 102,684,110
3,832,596,480 3,278,265,340
Work-in-process
At beginning of year 78,014,316 90,743,089
At end of year (134,041,989) (78,014,316)
(56,027,673) 12,728,773
Cost of goods manufactured 3,776,568,807 3,290,994,113
Finished goods
At beginning of year 186,200,699 91,679,107
Yarn purchased 44,264,108 19,968,091
At end of year (180,364,434) (186,200,699)
50,100,373 (74,553,501)
Cost of goods sold 3,826,669,180 3,216,440,612
26.1 Raw material consumed
At beginning of the year 794,043,606 688,937,660
Add: Purchases - net 26.1.1 3,028,286,011 2,550,780,446
3,822,329,617 3,239,718,106
Less: At end of the year (990,913,260) (794,043,606)
2,831,416,357 2,445,674,500
26.1.1 Purchases are adjusted by Rs. 11.394 million, inclusive of sales tax Rs. 11.622 million (2013: Rs. 208.897 million inclusive of
sales tax Rs. 209.846 million) on account of raw material sold.
26.2 Salaries, wages and other benets include Rs. 13.779 million (2013: Rs. 9.001 million) in respect of employee benets -
gratuity.
27 DISTRIBUTION COST
Salaries and other benets 27.1 15,190,691 11,811,229
Postage and telephone 473,918 408,299
Traveling and conveyance 5,574,597 3,993,513
Printing, stationery and others 262,317 198,639
Entertainment 2,156,136 1,592,313
Commission
- Local 1,628,564 2,337,237
- Export 30,795,292 47,437,042
Freight and forwarding
- Local 6,221,020 4,074,564
- Export 43,129,680 55,621,708
Export development surcharge 4,681,874 2,988,130
Insurance charges - export 1,856,270 1,926,093
111,970,359 132,388,767
27.1 Salaries and other benets include Rs. 3.037 million (2013: Rs. 2.107 million) in respect of employee benets - unfunded
gratuity.
Reliance Cotton Spinning Mills Limited 42
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
Note ------------- Rupees -------------
28 ADMINISTRATIVE EXPENSES
Salaries and other benets 28.1 23,442,003 21,401,216
Postage and telephone 2,406,566 1,476,993
Fees and subscription 1,185,928 517,380
Printing and stationery 471,986 438,657
Traveling and conveyance 1,762,239 2,020,939
Repair and maintenance 2,526,689 3,580,481
Legal and professional charges 5,427,739 1,932,843
Advertisement 175,500 84,375
Entertainment 1,163,174 894,630
Donation 28.2 1,001,313 4,564,559
Utility charges 1,313,965 716,925
Others 1,422,067 1,446,486
42,299,169 39,075,484
28.1 Salaries and other benets include Rs. 1.602 million (2013: Rs. 1.401 million) in respect of employee benets - unfunded
gratuity.
28.2 Donations of Rs. 1 million (2013: 4 million) is paid to Abdullah Foundation, 212 Cotton Exchange Building, I.I. Chundrigar
Road, Karachi, a Trust. Mr. Muhammad Abdullah, Mr. Amer Abdullah, Mr. Yousuf Abdullah, Mr. Shayan Abdullah and Mr.
Mohammad Yamin, directors of the Company, are trustees of this trust.
29 OTHER OPERATING EXPENSES
Auditors' remuneration 29.1 823,500 826,209
Workers' prot participation fund 4,944,712 15,009,799
Workers' welfare fund 3,347,468 5,703,724
Provision for bad debts - 2,872,147
Foreign exchange loss 277,456 2,011,597
Sales Tax under amnesty scheme - 2,057,921
9,393,136 28,481,397
29.1 Auditors' remuneration
Annual audit 550,000 550,000
Half-yearly review 125,000 125,000
Compliance report on Code of Corporate Governance 50,000 50,000
Other certication 25,000 25,000
Out-of-pocket expenses 73,500 76,209
823,500 826,209
30 FINANCE COST
Mark-up on:
Long term nancing 8,874,081 4,947,014
Short term borrowings 158,239,177 139,317,456
Interest on workers' prot participation fund 755,219 154,071
Bank charges and commission 9,221,665 16,074,061
Foreign Exchange Gain on foreign currency loans (8,370,756) -
168,719,386 160,492,602
31 OTHER INCOME
Income from assets other than nancial assets
Gain on disposal of property, plant and equipment 1,913,354 176,360
Scrap sales 31.1 3,760,872 2,577,242
Income from nancial assets
Unrealised gain on remeasurement of nancial assets 24,125 -
5,698,351 2,753,602
31.1 Scrap sales inclusive of sales tax amounts to Rs. 4.3 million (2013: Rs. 3 million).
Reliance Cotton Spinning Mills Limited 43
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
Note ------------- Rupees -------------
32 PROVISION FOR TAXATION
Current
-for the year 32.2 24,378,995 29,037,877
-for prior year (13,986,786) -
10,392,209 29,037,877
Deferred - for the year 7,659,658 13,069,517
18,051,867 42,107,394
32.1 Relationship between tax expense and accounting prot
Accounting prot before tax 143,610,337 350,981,933
Tax rate % 34% 35%
Tax on accounting rate 48,827,515 122,843,677
Income chargeable to tax at lower rate (6,425,707) (68,780,983)
Effect of tax on share of prots from associates (10,363,155) (11,955,300)
Effect of prior year tax (13,986,786) -
Current tax provision 18,051,867 42,107,394
32.2 The Company falls under the ambit of nal tax regime under the Income Tax Ordinance, 2001, provision for income tax is
made accordingly. Assessments for the tax year 2013 is deemed to have been nalized under section 120 of the Income Tax
Ordinance, 2001.
32.3 There is a dispute between the Company and tax department on applicability of tax rate on export sales in the tax years 2003,
2004 and 2005. The Company contends that the rate applicable is 1% on export proceeds whereas the tax department takes
it at 1.25% in the tax year 2003 and 2004 whereas for tax year 2005 it was taken at 1.5%. For these years there are two set of
appeals on two different angles.
First one is on refusal of the tax department to pass refund order under section 170(4) as claimed by the Company as a result
of application of aforementioned difference in tax rates. Appeals on this matter at Commissioner Inland Revenue (Appeals)
were decided against tax department. Inland Revenue Appellate Tribunal also maintained the decision of Commissioner
Inland Revenue (Appeals) against the appeals led by tax department.
The second one is against the Order passed under section 122(5A) of the Ordinance for the same years whereby the tax
department has framed amendment of assessment disallowing the eligibility of tax rate adopted by the Company in the tax
returns led. Appeals on this matter at Commissioner Inland Revenue (Appeals) were decided against the Company. The
Company led appeals against combined appeals order of Commissioner Inland Revenue (Appeals), before Inland Revenue
Appellate Tribunal which are decided in favor of the Company.
33 EARNINGS PER SHARE - BASIC AND DILUTED 2014 2013
There is no dilutive effect on the basic earning per share which is based on:
Prot attributable to ordinary shareholders (Rupees) 125,558,470 308,874,539
Weighted average number of ordinary shares outstanding during
the year (Numbers) 10,292,000 10,292,000
Earnings per share - (Rupees) 12.20 30.01
Reliance Cotton Spinning Mills Limited 44
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
34 REMUNERATION TO CHIEF EXECUTIVE OFFICER AND EXECUTIVES
Chief Executive Ofcer Executives
2014 2013 2014 2013
------------- Rupees ------------- ------------- Rupees -------------
Managerial remuneration 3,216,000 3,216,000 17,658,508 15,656,674
House rent 1,447,200 1,447,200 7,177,436 7,861,503
Utilities 136,800 136,800 657,763 647,993
Conveyance - - 20,700 18,000
Medical expenses - - 421,796 382,088
Bonus/Leave encashment - - 5,393,907 4,532,153
4,800,000 4,800,000 31,330,110 29,098,411
Number of persons 1 1 14 11
34.1 The executives are also provided with cars maintained by the Company.
34.2 The Company has paid Rs.10,000 (2013: Nil) as meeting fee to director.
34.3 No remuneration was paid to the directors of the Company.
35 FINANCIAL RISK MANAGEMENT
The Company has exposure to the following risks from its use of nancial instruments:
Credit risk
Liquidity risk
Market risk
This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives,
policies and processesfor measuring and managing risk, and the Company’s management of capital. Further, quantitative
disclosures are included throughout these nancial statements.
The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management
framework. The Board is responsible for developing and monitoring the Company’s risk management policies.
The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reect changes in market conditions and the Company'sactivities. The Company, through its
training and management standards and procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations. All derivative activities for risk management purposesare
carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy
that no trading in derivatives for speculative purposes shall be undertaken. The Board of Directors reviews and agrees
policies for managing each of these risks.
The Company'sAudit Committee oversees how management monitors compliance with the Company’s risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the
Company. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular
and adhoc reviews of risk management controls and procedures, the results of which are reported to the Audit
Committee.
35.1 Credit risk and concentration of credit risk
Credit risk is the risk of nancial loss to the Company if a customer or counterparty to a nancial instrument fails to meet its
contractual obligations. To manage credit risk the Company maintains procedures covering the application for credit
approvals, granting and renewal of counterparty limits and monitoring of exposures against these limits. As part of these
processes the nancial viability of all counterparties is regularly monitored and assessed.
Reliance Cotton Spinning Mills Limited 45
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
The Company is exposed to credit risk from its operating activities primarily for local trade debts, sundry receivables and
other nancial assets.
The Company does not hold collateral as security.
The Company’s credit risk exposures are categorized under the following headings:
Counterparties
The Company conducts the following major types of transactions with counterparties:
Trade debts
Trade debts are essentially due from local and foreign customers against supply of yarn. The majority of sales to the
Company’s customers are made on specic terms. Customer credit risk is managed by each business unit subject to the
Company’s established policy, procedures and controls relating to customer credit risk management. Credit limits are
established for all customers based on internal rating criteria. Credit quality of the customer is assessed based on an
extensive credit rating. Outstanding customer receivables are regularly monitored and any shipments to major customers
are generally covered by letters of credit or other form of credit insurance.
Bank and investments
The Company limits its exposure to credit risk by only investing in highly liquid securities and only with counterparties that
have a credit rating of at least A1 and A. Given these high credit ratings, management does not expect any counterparty to
fail to meet its obligations.
35.1.1 Exposure to credit risk
The carrying amount of nancial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was:
2014 2013
----------- Rupees -----------
Long term loans 277,000 418,000
Long term deposits 8,858,230 8,858,230
Trade debts 475,682,133 396,546,077
Loans and advances 448,000 448,000
Deposits 23,809 23,809
Other receivables 142,594 719,008
Bank balances 19,852,811 8,002,227
505,284,577 415,015,351
Geographically there is no concentration of credit risk.
The aging of trade receivables at the reporting date is:
Gross Impairment Gross Impairment
2014 2014 2013 2013
------------------------------------- Rupees --------------------------------------
Past due
Upto 1 month 165,846,414 - 136,202,124 -
1 month to 6 months 121,520,157 - 87,377,981 -
Over 6 months 2,881,541 - 4,788,442 -
Over 6 months - impaired 18,572,147 18,572,147 18,572,147 18,572,147
308,820,259 18,572,147 246,940,694 18,572,147
The movement in the allowance for impairment in respect of trade receivables during the year is as follows:
Reliance Cotton Spinning Mills Limited 46
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
2014 2013
...…...Rupees...……
Balance at beginning of the year 18,572,147 15,700,000
Charge for the period - 2,872,147
Balance at end of the year 18,572,147 18,572,147
Basedon age analysis, relationship with customers and past experience the management does not expect any
party to fail to meet their obligations. The management believes that trade debts are considered good and
hence no impairment allowance is required in this regard.
35.2 Liquidity risk management
Liquidity risk reects the Company’s inability in raising funds to meet commitments. Management closely
monitors the Company’s liquidity and cash ow position. This includes maintenance of balance sheet liquidity
ratios, debtors and creditors concentration both in terms of the overall funding mix and avoidance of undue
reliance on large individual customer.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an
appropriate liquidity risk management framework for the management of the Company’s short, medium and
long-term funding and liquidity management requirements. The Company manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring
forecast and actual cash ows and matching the maturity proles of nancial assets and liabilities. Included
in note 21.1 to these nancial statements is a listing of additional undrawn facilities that the Company has at
its disposal to further reduce liquidity risk.
35.3 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Company’s income or the value of its holdings of nancial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters, while
optimizing the return on risk.
35.3.1 Foreign currency risk management
Pak Rupee (PKR) is the functional currency of the Company and as a result currency exposure arise from
transactions and balances in currencies other than PKR. The Company's potential currency exposure comprise;
- Transactional exposure in respect of non functional currency monetary items.
- Transactional exposure in respect of non functional currency expenditure and revenues.
The potential currency exposures are discussed below;
Transactional exposure in respect of non functional currency monetary items
Monetary items, including nancial assets and liabilities, denominated in currencies other than the functional
currency of the Company are periodically restated to PKRequivalent, and the associated gain or loss is taken
to the prot and loss account. The foreign currency risk related to monetary items is managed as part of the
risk management strategy.
Transactional exposure in respect of non functional currency expenditure and revenues
Certain operating and capital expenditure is incurred by the Company in currencies other than the functional
currency. Certain sales revenue is earned in currencies other than the functional currency of the Company.
These currency risks are managed as a part of overall risk management strategy.
Reliance Cotton Spinning Mills Limited 47
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
Exposure to currency risk
The Company’s exposure to foreign currency risk was as follows based on notional amounts:
2014 2013
USD EURO USD EURO
Trade debts 1,218,753 - 931,904 -
Trade creditors (5,095) - (112,254) (41,760)
Short term borrowings (5,258,904) - - -
(4,045,246) - 819,650 (41,760)
Commitments outstanding at year end amounted to Rs. 62.150 million (2013: Rs. 118.445 million) relating to
letter of credits for import of stores, spare parts, raw material and plant & machinery.
The following signicant exchange rates applied during the year:
Average rate Reporting date mid spot rate
2014 2013 2014 2013
------------- Rupees ------------- ------------- Rupees -------------
USD 1 102.65 95.2 98.75 98.80
EURO 1 139.39 125.51 134.73 129.11
Sensitivity analysis
A 5 percent strengthening of the Pak Rupee against the USD& EURO at June 30, 2014 would have decreased
prot or loss by the amounts shown below. This analysis assumesthat all other variables, in particular interest
rates, remain constant. The analysis is performed on the same basis for June 30, 2013.
2014 2013
------------- Rupees -------------
Increase / (Decrease) Increase in prot and loss account 19,973,402 (4,318,653)
A 5 percent weakening of the Pak Rupee against the USD& EUROat June 30, 2014 would have equal but
opposite effect on prot or loss by the amount shown above on the basis that all other variables remain
constant.
35.4 Interest rate risk
The interest rate risk is the risk that the value of the nancial instrument will uctuate due to changesin the
market interest rates. Sensitivity to interest rate risk arises from mismatches of nancial assets and liabilities
that mature in a given period.
Prole
At the reporting date the interest rate prole of the Company's interest bearing nancial instruments was:
2014 2013 2014 2013
……………….. % ………………... ------------- Rupees -------------
Financial liabilities
Long term nancing 9.5 to 10.68 9.81 to 10.03 75,000,000 100,000,000
Short term borrowings 2 to 14.6 1.73 to 13.47 1,871,422,800 1,190,849,919
1,946,422,800 1,290,849,919
Reliance Cotton Spinning Mills Limited 48
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
Fair value sensitivity analysis for oating rate instruments
The following table demonstrates the sensitivity to a reasonably possible change in oating interest rates,
with all other variables held constant, on the Company’s prot before tax. There is only an immaterial impact
on the Company’s equity .
Increase / Effect on prot
(Decrease) in basis before tax
2014 % Rupees
Long term nancing 750,000
1.00%
Short term borrowings 18,714,228
19,464,228
2013
Long term nancing 1,000,000
1.00%
Short term borrowings 11,908,499
12,908,499
35.5 Equity Price Risk Management
The Company’s listed and unlisted equity securities are susceptible to market price risk arising from
uncertainties about future values of the investment securities. The Company manages the equity price risk
through diversication and placing limits on individual and total equity instruments. The Company’s Board of
Directors reviews and approves all equity investment decisions.
The Company is exposed to equity price risks arising from equity investments. Equity investments are held for
strategic rather than trading purposes. The Company does not actively trade these investments.
35.6 Fair value hierarchy
Financial instruments at fair value are measured at three level fair value hierarchy that reects the
signicance of the inputs used in measuring fair values of nancial instruments
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable
inputs)
As all the long term investments of the Company are in associates and recorded on equity method, so these
investments do not fall under the levels given above. Other nancial assets are measured using level 1.
Reliance Cotton Spinning Mills Limited 49
35.2.1 Liquidity and interest risk table
The following table detail the Company’s remaining contractual maturity for its non-derivative nancial liabilities. The table has been drawn up based on the undiscounted cash
ows of nancial liabilities under long term nancing and short term borrowing agreements based on the earliest date on which the Company can be required to pay.
Carrying amount and contractual cash ows of trade and other nancial liabilities are approximately same.
2014
Carrying Contractual Six months Six to twelve One to Two years or
Amount Cash Flows or less months two years above
…………………………………….……. Rupees …………………………………………….
Non-derivative Financial liabilities
Long term nancing 75,000,000 83,133,771 28,427,280 19,131,972 35,574,519 -
Reliance Cotton Spinning Mills Limited
Employee benets - unfunded 56,063,679 56,063,679 - - - 56,063,679
For the year ended June 30, 2014
Trade and other payable 231,874,478 231,874,478 231,874,478 - - -
Mark up accrued 32,146,591 32,146,591 32,146,591 - - -
Short term borrowings 1,871,422,800 2,070,167,901 1,068,208,134 1,001,959,767 - -
2,266,507,548 2,473,386,420 1,360,656,483 1,021,091,739 35,574,519 56,063,679
2013
Carrying Contractual Six months Six to twelve One to Two years or
Amount Cash Flows or less months two years above
…………………………………….……. Rupees …………………………………………….
NOTES TO THE FINANCIAL STATEMENTS
Non-derivative Financial liabilities
Long term nancing 100,000,000 102,450,832 17,531,666 17,099,166 34,198,332 33,621,668
Employee benets - unfunded 44,491,122 44,491,122 - - - 44,491,122
Trade and other payable 175,521,643 175,521,643 175,521,643 - - -
Mark up accrued 13,899,589 13,899,589 13,899,589 - - -
Short term borrowings 1,190,849,919 1,311,155,662 675,628,831 635,526,831 - -
1,524,762,273 1,647,518,848 882,581,729 652,625,997 34,198,332 78,112,790
50
Annual Report 2014
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
36 FINANCIAL INSTRUMENTS BY CATEGORY 2014 2013
Financial Assets ------------- Rupees -------------
Loans and receivables at amortised cost
Long term loans 277,000 418,000
Long term deposits 8,858,230 8,858,230
Trade debts 475,682,133 396,546,077
Loans and advances 448,000 448,000
Deposits 607,061 962,331
Other receivables 142,594 719,008
486,015,018 407,951,646
Financial Assets - At equity method
Long term investments 582,886,019 438,944,127
Financial Assets - At fair value
Other nancial assets 3,024,125 -
Cash and bank balances 19,937,567 11,360,581
1,091,862,729 858,256,354
Financial Liabilities - At amortised cost
Long term nancing 75,000,000 100,000,000
Employee benets - unfunded 56,063,679 44,491,122
Trade and other payable 243,709,868 186,780,378
Mark up accrued 32,146,591 13,899,589
Short term borrowings 1,871,422,800 1,190,849,919
2,278,342,938 1,536,021,008
37 CAPITAL DISCLOSURE
The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern so that
it can continue to provide returns for shareholders and benets for other stakeholder 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 dividend paid to shareholders,
appropriation of amounts to reserve or/and issue new shares.
Consistent with others in industry, the Company monitors the capital structure on the basis of gearing ratio. This ratio is
calculated as borrowing divided by total capital employed. Borrowing comprises of long term nances and short term
borrowings obtained by Company. Total capital employed includes share capital and reserves (total equity) plus borrowings:-
Total borrowings including mark-up accrued 1,978,569,391 1,304,749,508
Total equity 1,806,886,391 1,629,331,931
Total capital employed 3,785,455,782 2,934,081,439
Gearing ratio 52.27% 44.47%
Reliance Cotton Spinning Mills Limited 51
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
38 TRANSACTIONS WITH RELATED PARTIES
The related parties comprise associated companies, directors, key management personnel and post employment benet
plans. The Company in the normal course of business carries out transactions with various related parties. Detail of
transactions with related parties, other then those which have been specically disclosed elsewhere in these nancial
statements are as follows 2014 2013
------------- Rupees -------------
Relationship Nature of transaction
Associated companies
Sales:
Yarn / raw material / stores, spare parts 595,067,788 701,856,126
Purchase:
Yarn /raw material /stores, spare parts 105,454,270 22,011,027
Property plant and equipment 7,350,000 1,690,000
Electricity 82,768,469 105,551,864
Services:
Rendered 1,256,831 1,323,375
Obtained 5,200,220 2,410,252
Dividend:
Paid 15,504,640 9,687,230
Received 4,750,267 7,206,155
Shared expenses paid 6,277,752 4,272,377
Investment in Associate:
Sapphire Power Generation Limited 19,425,000 -
38.1 All transactions with related parties have been carried out on agreed terms.
2014 2013
39 NUMBER OF EMPLOYEES ---------------Numbers---------------
Average number of employees during the year 1,370 1,484
Number of employees as at June 30 1,311 1,591
40 PLANT CAPACITY AND ACTUAL PRODUCTION
Production capacity
Total number of spindles installed 34,848 34,848
Number of MVS units installed (in equivalent number of spindles) 920 920
Installed capacity after conversion into 20's count (Lbs.) 25,149,564 25,149,564
Actual production
Number of spindles / MVS worked 32,420 32,420
Number of shifts per day 3 3
Total days worked 364 364
Actual production of yarn after conversion into 20's count (Lbs.) 20,167,596 20,303,617
It is difcult to describe precisely the production capacity in textile industry since it uctuates widely depending on various
factors such as count of yarn spun, spindles speed, twist per inch and raw materials used, etc. It also varies according to the
pattern of production adopted. Difference of actual production with installed capacity is in normal course of business.
41 EVENT AFTER BALANCE SHEET DATE
The Board of Directors in its meeting held on October 01, 2014 has proposed to pay cash dividend for the year ended June
30, 2014 of Rs. 15.438 million @ Rs. 1.50 per ordinary share of Rs. 10 each (2013: Rs. 20.584 million @ Rs. 2.00 per
ordinary share of Rs. 10 each). This dividend is subject to approval by the shareholders at the forthcoming Annual General
Meeting and has not been recognized in these nancial statements.
Reliance Cotton Spinning Mills Limited 52
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2014
42 DATE OF AUTHORIZATION FOR ISSUE
These nancial statements were authorized for issue on October 01, 2014 by the Board of Directors of the Company.
43 RE-CLASSIFICATION AND RE-ARRANGEMENTS
Corresponding gures have been re-arranged and re-classied wherever necessary to reect more appropriate presentation
of events and transactions for the purpose of comparison. Signicant re-classication made in the balance sheet and
statement of changes in equity are as follows:
2013 2012
From To ------------- Rupees -------------
Un-appropriated prot Capital reserve
Share in associates' unrealized gain on
available for sale investments - net 58,287,512 17,796,045
Share in associate's unrealized gain /
(loss) on hedging instruments 45,692 (90,139)
Share of items directly recognized
in equity by associates 19,229,188 17,258,134
77,562,392 34,964,040
44 GENERAL
Figures have been rounded off to the nearest Rupee.
Statement under section 241(2) of the Companies Ordinance, 1984
The Chief Executive Ofcer of the Company is presently out of the country, therefore these nancial statements have
been signed by two directors of the Company duly authorized by the Board of Directors.
Reliance Cotton Spinning Mills Limited 53
Annual Report 2014
PATTERN OF SHAREHOLDING
As at June 30, 2014
NUMBER OF
FROM TO TOTAL SHARES HELD
SHAREHOLDERS
445 1 100 7,961
79 101 500 31,511
38 501 1,000 34,203
29 1,001 5,000 80,290
8 5,001 10,000 58,609
1 10,001 15,000 11,897
2 15,001 20,000 33,340
1 20,001 25,000 20,539
2 25,001 30,000 53,099
5 35,001 40,000 191,061
1 40,001 45,000 43,188
1 45,001 50,000 45,927
2 60,001 65,000 128,298
1 65,001 70,000 68,988
1 70,001 75,000 72,350
1 85,001 90,000 87,104
1 105,001 110,000 108,217
1 130,001 135,000 134,890
1 155,001 160,000 156,420
1 220,001 225,000 224,428
1 275,001 280,000 275,699
1 300,001 305,000 302,630
1 310,001 315,000 310,697
1 315,001 320,000 316,692
1 365,001 370,000 365,515
1 465,001 470,000 465,638
1 565,001 570,000 566,700
1 825,001 830,000 829,200
1 830,001 835,000 832,800
1 930,001 935,000 934,026
1 1,015,001 1,020,000 1,018,100
1 1,095,001 1,100,000 1,097,110
1 1,380,001 1,385,000 1,384,873
634 10,292,000
*
Note: There is no shareholding in the slab not men oned
Reliance Cotton Spinning Mills Limited 54
Annual Report 2014
PATTERN OF SHAREHOLDING
As at June 30, 2014
CATEGORIES OF SHAREHOLDERS
No. of Shares
Particulars Percentage
Held
Directors, CEO, Spouses and Minor Children 924,347 8.9812
Associated Companies, Undertakings and Related
Parties 7,757,223 75.3714
NIT & ICP 465,638 4.5243
Banks, Development Finance Institutions, Non-
Banking Financial Institutions 325 0.0032
Insurance Companies 16,940 0.1646
Modarabas Companies & Mutual Funds 1,130 0.0110
General Public (Local) 1,088,019 10.5715
Joint Stock Companies 168 0.0016
Others Companies 38,210 0.3713
10,292,000 100.0000
Reliance Cotton Spinning Mills Limited 55
Annual Report 2014
PATTERN OF SHAREHOLDING
As at June 30, 2014
A) ASSOCIATED COMPANIES, UNDERTAKINGS AND RELATED PARTIES NO. OF SHARES
Amer Cotton Mills (Private) Limited 1,584,800
Amer Tex (Pvt.) Limited 6,500
Crystal Enterprises (Private) Limited 27,696
Diamond Fabrics Limited 1,662,000
Galaxy Agencies (Private) Limited 108,217
Nadeem Enterprise (Private) Limited 87,104
Neelum Textile Mills (Pvt.) Limited 365,515
Reliance Textile (Private) Limited 1,098,118
Salman Ismail (SMC-PRIVATE) Limited 1,500
Sapphire Agencies (Pvt.) Limited 2,318,899
Sapphire Fibres Limited 156,420
Sapphire Power Generation Limited 20,539
Sapphire Textile Mills Limited 316,692
Yousuf Agencies (Private) Limited 3,223
B) NIT & ICP
CDC - Trustee National Investement (Unit) Trust 465,638
C) DIRECTORS, CHIEF EXECUTIVE OFFICER, THEIR SPOUSES
AND MINOR CHILDREN
DIRECTORS & THEIR SPOUSES
Mr. Mohammad Abdullah 45,927
Mr. Yousuf Abdullah 353,885
Mr. Amer Abdullah 314,449
Mr. Nabeel Abdullah 500
Mr. Mohammad Yamin 610
Mr. Asif Elahi 500
Mrs. Ambareen Amer 80,350
Mrs. Shamshad Begum 102,223
Mrs. Usma Yousuf 25,403
CHIEF EXECUTIVE OFFICER & HIS SPOUSE
Mr. Shayan Abdullah 500
Reliance Cotton Spinning Mills Limited 56
Annual Report 2014
PATTERN OF SHAREHOLDING
As at June 30, 2014
D) BANKS, DEVELOPMENT FINANCIAL INSTITUTIONS, NON
BANKING FINANCIAL INSTITUTIONS, INSURANCE COMPANIES,
MODARABAS & MUTUAL FUNDS
BANKS
National Bank of Pakistan 225
DEVELOPMENT FINANCIAL INSTITUTIONS
National Development Finance Corporation 100
INSURANCE COMPANIES
State Life Insurance Company of Pakistan 16,940
MODARABAS
First Punjab Modaraba 500
B.R.R. Guardian Modaraba 630
E) SHAREHOLDERS HOLDING 05% OR MORE
Diamond Fabrics Limited 1,662,000
Reliance Textile (Private) Limited 1,098,118
Amer Cotton Mills (Private) Limited 1,584,800
Sapphire Agencies (Pvt.) Limited 2,318,899
F) TRADING IN THE SHARES OF COMPANY DURING THE YEAR BY THE
DIRECTORS, CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER,
COMPANY SECRETARY AND THEIR SPOUSES AND MINOR CHILDREN
Shares purchased by Mrs. Shamshad Begum 12,500
Reliance Cotton Spinning Mills Limited 57
58
Annual Report 2014
FORM OF PROXY
I / we_________________________________________________________________________________________
of __________________________________________________________________________________________
a member(s) of Reliance Cotton Spinning Mills Limited and a holder of_______________________Ordinary Shares,
do hereby appoint ______________________________________________________________________________
of __________________________________________________________________________________________
or failing him/her _______________________________________________________________________________
of ___________________________________________________________________________________________
a member of Reliance Cotton Spinning Mills Limited, vide Registered Folio No.________________ as my/our Proxy
to act on my/our behalf at 25th Annual General Meeting of the Company to be held on Friday the 24th October, 2014 at
4:30 p.m. at Trading Hall, Cotton Exchange Building, I. I. Chundrigar Road, Karachi and / or any adjournment thereof.
Signed this________ day of ________________ 2014 REVENUE
STAMP OF
Signature __________________________________ RS.5/-
(Signature should agree with the specimen signature registered with the Company)
NOTICE
1. No proxy shall be valid unless it is duly stamped with a revenue stamp of Rs.5/-
2. In the case of Bank or Company, the proxy form must be executed under its Common seal and signed by its
authorized person.
3. Power of attorney or other authority (if any) under which this proxy form is signed then a certied copy of that
power of attorney must be deposited along with this proxy form.
4. This form of proxy duly completed must be deposited at the Registered Ofce of the Company atleast 48 hours
before the time of holding the meeting.
5. In case of CDC account holder :
i) The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall
be mentioned on the form.
ii) Attested copies of CNIC or passport of the benecial owners and the proxy shall be furnished with the
proxy form.
iii) The proxy shall produce his original CNIC or original passport at the time of meeting.
iv) In case of corporate entity, the board of directors’ resolution/power of attorney with specimen signature
of the proxy holder shall be submitted (unless it has been provided earlier) along with proxy form to the
company.
Witness :
Name_________________________________________ Name_________________________________________
Address_______________________________________ Address_______________________________________
NIC No._______________________________________ NIC No._______________________________________
Reliance Cotton Spinning Mills Limited 59
60
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