GHANDHARA INDUSTRIES LIMITED

Annual
Report 2020

C ntents
Vision, Mission & Core Values 05
Company Information 06
Company Review 09
Founder Chairman 10
Board of Directors 11
Human Resource 14
Organization Structure 15
Corporate Social Responsibility 16
Revisiting Year 2019 - 2020 20
Chairman Review 26
Directors’ Report 28
Notice of Meeting 42
Key Operating & Financial Data 52
Pattern of Shareholding 57
Statement of Compliance with the Code of Corporate Governance 59
Review Report on Statement of Compliance 61
Auditors’ Report to the Members 62
Statement of Financial Position 67
Statement of Profit or Loss Account and other Comprehensive Income 69
Statement of Changes in Equity 70
Statement of Cash Flows 71
Notes to the Financial Statements 72
Consolidated Directors’ Report 104
Auditors’ Report to the Members 106
Consolidated Statement of Financial Position 111
Consolidated Statement of Profit or Loss Account and other Comprehensive Income 113
Consolidated Statement of Changes in Equity 114
Consolidated Statement of Cash Flows 115
Notes to the Consolidated Financial Statements 116
Electronic Dividend Mandate Form 148
Proxy Form 149
GHANDHARA INDUSTRIES LIMITED

Soaring
to new heights of
progress
 Annual
Report 2020

Vision
“To acquire market leadership and contribute to the society by providing
high quality and environment friendly ISUZU Vehicles in Pakistan’s Market.”

Mission
● To assist the society in the fight against pollution hazards by introducing
environment friendly vehicles.
● To maximize share of ISUZU in Pakistan.
● To be a market & customer-oriented organization.
● To provide effective and efficient after sales services to the customers.
● To enhance performance in all operating areas, ensuring growth of the
company and optimum return to the stakeholders.
● To create conducive operational environment for optimum productivity,
job satisfaction, career development and well-being of Employees.

Core Values
To conduct our Business with Honesty, Integrity, and a Customer Focus.
Be Professional, Reliable, Passionate and Responsive.
GHANDHARA INDUSTRIES LIMITED

Company Profile
Board of Directors Human Resource &
Lt. Gen. (R) Ali Kuli Khan Khattak Chairman Remuneration Committee
Mr. Ahmad Kuli Khan Khattak Chief Executive Mr. Shahid Kamal Khan Chairman
Mrs. Shahnaz Sajjad Ahmad Director Mr. Ahmad Kuli Khan Khattak Member
Maj. (R) Muhammad Zia Director Maj. (R) Muhammad Zia Member
Mr. Muhammad Kuli Khan Khattak Director Mr. Sohail Hameed Khan Member
Mr. Shahid Kamal Khan Ind. Director Mr. Shahrukh Asghar Secretary
Mr. Sohail Hameed Khan Ind. Director
Chief Financial Officer
Audit Committee Mr. Muhammad Aamir, FCA
Mr. Sohail Hameed Khan Chairman
Maj. (R) Muhammad Zia Member
Mr. Shahid Kamal Khan Member
Mr. Shahnawaz Damji, ACA Secretary
 Annual
Report 2020

Speeding
towards
advancement

Company Secretary Bankers

Mr. Talha Ahmed Zaidi, ACA National Bank of Pakistan
Al-Baraka Bank (Pakistan) Ltd.
Auditors JS Bank Ltd.
M/s. ShineWing Hameed Chaudhri & Co. Faysal Bank Ltd.
Chartered Accountants The Bank of Punjab
5th Floor, Karachi Chambers MCB Islamic
Hasrat Mohani Road, Karachi Bank Alfalah Ltd.
Meezan Bank Ltd.
Legal Advisors Bank Al Habib Ltd.
S. Abid Sherazi & Co. Samba Bank Limited
Ahmed and Qazi Habib Metropolitan Bank Limited
Hassan & Hassan (Advocates)

Share Registrar Registered Office

Hameed Majeed Associates (Pvt.) Ltd. F-3, Hub Chowki Road, S.I.T.E.
4th Floor, Karachi Chamber, Post Box No. 2706, Karachi - 75730
Hasrat Mohani Road, Karachi.
Website: www.gil.com.pk
Email: info@gil.com.pk
GHANDHARA INDUSTRIES LIMITED

Broadening
Success
the avenues of

Today, the Group is an industrial empire with an extensive

portfolio of businesses comprising three cotton spinning
mills, a woolen mill, two automobile assembling plants with
extensive marketing setups, a general insurance company,
Pakistan’s largest tyre manufacturing company, a
construction company and two Trusts for supporting
education and wildlife protection.

Company Review
Ghandhara Industries Limited (GIL), is the exclusive distributor of
ISUZU products in Pakistan, and is part of the Bibojee Group of
Companies. At GIL, we are very proud of our performance in one of
the world’s most competitive truck markets in terms of loading
capacity & fuel efficiency using leading edge engineering and
manufacturing technologies, GIL has developed a reputation for
reliability, conformability and cost efficient Trucks, Buses and
Pickups.

With more than 55 years of history in Pakistan, GIL has been one of
the top leading automobile companies. Our products range from
pickups to heavy duty trucks and buses.

Our ISUZU truck consistently leads the way with superior

specification & reliability. Our customers have come to depend upon
the outstanding reliability and superb fuel economy of our trucks,
which are often required to operate under very demanding conditions.
GIL & ISUZU are concerned for the environment and their superior
engineering capability which ensures compliance with the most
stringent emissions regulations. Together with our dealership
network, we are committed to provide the highest level of customer
service availability.
Annual
Report 2020
 GHANDHARA INDUSTRIES LIMITED

Founder
Chairman

Late General Habibullah Khan Khattak

Lt. General (R) M. Habibullah Khan Khattak was the Founder Chairman of the Bibojee
Group of Companies. Today, the Group is an industrial empire with an extensive
portfolio of businesses comprising of three cotton spinning mills, a woolen mill, two
automobile plants, a general insurance company, Pakistan’s largest tyre
manufacturing company, a construction company and two Trusts for supporting
education and wildlife protection.

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 Annual
Report 2020

Chairman Chief Executive

Officer

Lt. Gen. (R) Mr. Ahmad Kuli Khan Khattak

Ali Kuli Khan Khattak

Mr. Ali Kuli Khan Khattak graduated from Mr. Ahmad Kuli Khan Khattak graduated
the Royal Military Academy Sandhurst in from the Pakistan Air Force (PAF)
1964 and holds a Masters Degree from Academy Risalpur in 1969 and served PAF
the Quaid-e-Azam University, Islamabad. for nearly 21 years. He won different
He retired from the Pakistan Army as its medals and honors including the coveted,
Chief of General Staff in 1998, prior to ‘Sword of Honour’ and Sitara-e-Basalat.
this, apart from holding various offices, After a distinguished career as a Fighter
he also directed the Directorate General Pilot, (which included a major role in the
of Military Intelligence (DGMI). During his induction of F-16 Fighter Planes in the
career he was awarded “Hilal-e-Imtiaz”. PAF) he joined the Family Business,
After retirement he joined the Bibojee ‘Bibojee’ Group of Companies. He has also
Group of Companies and served as served as chairman of All Pakistan Textile
Chairman for a number of its companies. Manufacturers Association (APTMA) and
Pakistan Automobile Association (PAMA)
which are leading associations in Pakistan.

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 GHANDHARA INDUSTRIES LIMITED

Directors’ Profiles

Mr. Muhammad Mr. Shahid Kamal Khan

Kuli Khan Khattak Independent Director
DCEO / Executive Director

Mr. Muhammad Kuli Khan Khattak is an Air Commodore (R) Shahid Kamal Khan was
automotive management professional with commissioned as a fighter pilot in the PAF in
a vast experience and proven 1966. For his meritorious services, Air Cdre.
management, sales, advertising,
Shahid was awarded both the
marketing and new business development
Tamgha-e-Basalat and the Sitara-e-Basalat by
skills. He is the Deputy Chief Executive
Officer in Ghandhara Industries Limited. the Government of Pakistan. He is a graduate
Mr. Khan was educated at Aitchison of the Royal Air Force Academy, Cranwell and
College Lahore and completed his has also completed Systems Safety course
Bachelors and Masters from Bahria conducted at the University of Southern
University. He has also completed a California. He is the CEO of EXCLAIM FZC, a
business development course from
UAE based Limited Liability Company (LLC)
London School of Economics. Mr.
Muhammad Kuli Khan Khattak is a and MTEC Enterprise, a Pakistan registered
certified Director from The Institute of proprietorship.
Chartered Accountants of Pakistan
(ICAP). He also serves on the following
board of directors: - Universal insurance
Company Ltd. - Gammon Pakistan Ltd. -
The General Tyre & Rubber Company of
Pakistan Ltd. Recently Mr. Khan has been
selected as the Vice Chairman of the
Pakistan Automobile Association (PAMA).

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 Annual
Report 2020

Directors’ Profiles

Mr. Sohail Hameed Khan Mrs. Shahnaz Sajjad Ahmad

Independent Director Non-Executive Director

Mr. Sohail Hameed is a Fellow Chartered Mrs. Shahnaz Sajjad Ahmed got Bsc degree
Accountant of Institute of Chartered from University of Peshawar and joined her
Accountants of Pakistan, with diversified father’s family Business serving the Bibojee
experience of over 40 years (26 years in Group Companies since 20 years. She is
the Middle East) in various industries presently the CEO of Bannu Woollen Mills
including oil & gas, technology, Limited, a Bibojee group Company.
automobile, textile, FMCG and
construction.

Mr. Muhammad Zia is retired Major of

Pakistan Army. He has a vast experience
of Automobile Industry and currently also
serving on the Board of Ghandhara
Nissan Limited.

Maj. (R) Muhammad Zia

Non-Executive Director
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 GHANDHARA INDUSTRIES LIMITED

Human Resource at
Ghandhara Industries Limited:

To win the marketplace,

you must first win the workplace.
˜Doug Conant

Ghandhara Industries is Aiming to“Be the Best, Be the Market Leader”

Effective recruitment, development, and the utilization of globally competitive human resources are the most
important at the Ghandhara Industries Limited. This is the key to survive the current ever-changing business
environment and achieve sustainable growth. Our concern is how we can ensure that each of our
employees—our most important assets—will exercise their full potential in line with the business strategy.

Leadership is about giving people a

platform for spreading ideas that work.
˜Seth Godin

For this reason, we are making continuous efforts toward training and fostering new employees and developing
human resources. We use a combination of on the-job training and off-the-job training to promote effective
development of human resources, with the former based on job rotations and the later reflecting the
characteristics of each business. Our policies are designed to bring the best out of the people in the most
difficult circumstances. We proved this during COVID 19 when we continued to work remotely in spite of difficult
working conditions.

If you want creative workers,

give them enough time to play.
˜John Cleese

14 00
 Annual
Report 2020
Organization Structure

BOARD OF
DIRECTORS

Audit
Committee

Human
Resource
Committee

CEO

DCE

Finance, IT
Internal Audit & Commercial

Production
Human Resource Sales Engineering Planning
Customer
Health & Safety & Administration & Marketing & Development Parts & Services Quality Assurance & Management
Service

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 GHANDHARA INDUSTRIES LIMITED

RESPONSIBILITY (CSR)
L
CORPORATE SOCIA

Corporate Social responsibility (CSR)

is at the core of the activities of
Ghandhara Industries Limited
and the focus of the work is on
community development.

Corporate Social responsibility (CSR) is at the core of the activities of Ghandhara Industries Limited and the focus
of the work is on community development. With its team of CSR champions, it works towards ensuring that it works
towards improving the society and its community. Community work starts at home and the best way to contribute
towards peace and harmony can best be achieved through providing rations to the people of Thar affected from
COVID-19 by organizing a ration pack campaign on 30 April, 2020. “spread smiles amongst the deserving families”.

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 Annual
Report 2020
Covid 19 were trying times for the whole office however we did not leave anyone but stayed with our people to make
a difference and the distribution of rations amongst the community members remains a regular feature.

Employee Development
Ghandhara Industries Limited has arranged a number of sports events such as cricket matches to work towards the
betterment of its colleagues and has helped build a platform of team work. In the month of January, 2020 the cricket
match was held between Ghandhara Industries Limited and others teams the objective was to create a sports
person spirt amongst its team.

In house Training has been arranged by HR Department on October 15, 2019 on collaboration with ACCA which
helps participants to understand the Future needs of Finance and the topic based on the “Embracing Robotic
Automation in Finance”

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 GHANDHARA INDUSTRIES LIMITED

Serving the People

GIL took initiative to help the children of SOS village in pursuing their education by making a small effort. As
a part of this society we understands that it’s our social responsibility to contribute towards the betterment of
the society by helping and serving our children.

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 Annual
Report 2020
Fire Fighting Training Glimpse:

GIL is ambitious to provide safety to the employees working in organization, therefore, our HSE Department
used to arrange safety awareness programme which help employees to take appropriate action as and when
required.

Therefore, two programme were organized within GIL in the month of December, 2019 and in March, 2020.

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 GHANDHARA INDUSTRIES LIMITED

Revisiting
Year 2019 - 2020 15th – 17th Nov’ 19

1
D-Max Display @ COLOSSEUM XIX,
Beacon House College, Gulberg, Lahore
Isuzu D-Max was a proud Gold Sponsor of COLOSSEUM XIX, held at Beacon House College.
Our product D-Max was showcased in the event and was a center of attention throughout the
event.

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 Annual
Report 2020
16th Nov’ 19

2
D-Max Display @ Corporate Briefing Session
Keeping in line with the recommendation of PSX, GIL held its corporate briefing session on 16th
Nov 2019.

CEO Ghandhara Industries Limited, Mr. Ahmad Kuli Khan Khattak, briefed relevant stakeholders
and investors about company’s future outlook and past performance.

30th Nov’ 19

3
D-Max Display @
Jhal Magsi Rally –
Pre Event Launch
Ghandhara Industries Limited was one of
the premier sponsor of Jhal Magsi Rally.
Various celebrities and high profile
Personalities visited our stall and were
quite impressed by our product.

We received an overwhelming response

from various visitors. 21
 GHANDHARA INDUSTRIES LIMITED

14th Dec’ 19

4
D-Max Display @ Karachi Club
During the year we got an opportunity to showcase our products at one of the most prestigious
clubs in Karachi that is Karachi Club. The event turned out to be a great success and received a
great amount of appraisal from the members of the club.

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 Annual
Report 2020
21st Dec’ 19

5 D-Max Display @ Dreamworld Resort–

World Wrestling Championship
We at Ghandhara Industries Limited, believe in promoting sporting activities and thus
sponsored various sporting events throughout the year. One of them was WWC held at
dreamworld

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 GHANDHARA INDUSTRIES LIMITED

17th – 19th Jan’20

6
D-Max Display @ Centaurus Mall – Islamabad
Isuzu Federal Motors organized an exciting showcase for the astonishing D-Max at Centaurus
Mall Islamabad on 17th & 19th of Jan 2020.

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 Annual
Report 2020
Momento by ISUZU Japan:

ISUZU Japan President Mr Katayama is presenting Momento to Mr Muhammad Kuli Khan Khattak Deputy
CEO- Ghandhara Industries Limited for being No 1 in truck and bus sales for year 18 - 19 in the Pakistani
market.

Mr. Ahmed Kuli Khan Khattak, CEO-Ghandhara Industries Limited can also be seen representing Ghandhara
Industries Limited.

Ghandhara Industries Limited has shown great honesty in their day to day dealings, which has earned them
the recognition and trust of consumers nationwide.

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 GHANDHARA INDUSTRIES LIMITED

Chairman’s Review
Dear Shareholders

“I welcome you to this 57th Annual General Meeting of your Company for the year ended June 30, 2020.”
During the year under consideration, government implemented various measures to improve economic
indicators which showed some improvements during first half of the year, however the later period of FY2020
was quite challenging due to emergence of Covid-19 which was declared as pandemic by WHO and
accordingly lockdowns were imposed all over the world to save and protect humanity and economies.

Due to lockdown, our economy encountered significant set-backs and overall growth went into negative
territory, however during these tough times commendable efforts were made by the government to mitigate
negative effects of the pandemic and accordingly various packages were introduced to stimulate businesses.
The State Bank also offered refinance schemes along with easing policy rate to support the business
community which was reduced by 625 basis points during the pandemic.

Keeping in view the truck and bus market, during the year overall market depleted by 46% mainly due to
adverse foreign exchange parities, slow movement of CPEC projects, reduced purchasing power on account of
increased inflation and higher interest rates during earlier part of the year.

Company’s Performance

The Company sold 1,700 units of trucks and buses and 649 units of D-MAX pick-up as compared to 3,018 units
of trucks and buses and 391 units of D-Max pick-up last year. Overall market conditions remained competitive
and full of economic challenges, despite that the Company, with customer confidence and support, has
sustained its market share. The Company will strive to provide state-of-the-art products and better quality
services to all of its valuable customers for the years to come.

Future Outlook

By the grace of Almighty, the cases of Covid-19 have reduced in Pakistan, lockdown has also been lifted and
the economic activity has been restored based on SOPs implemented by government to curb the spread of the
disease. However, the pandemic is not yet over and the masses must ensure that SOPs are being followed in
every walk of life.

Keeping in view the Government efforts in restoring the business confidence along with various policy
adjustments by the State Bank, gradual economic recovery is expected in periods to come.

Acknowledgement

On behalf of the Board of Directors, I would like to express my gratitude to all the employees and the shareholders
for their continued trust and confidence in the Company. The Board and I would also like to express thanks to Isuzu
Motors Limited, Isuzu Motors Company (Thailand) Limited and Isuzu Motors International Operations (Thailand)
Company Limited, Marubeni Corporation, Dealers, Customers and Vendors for their co-operation and the trust
shown in our products. I would also like to record our gratitude to our bankers for their contribution and understanding
shown to us and we look forward to mutual beneficial business relationships.

Lt. Gen (R) Ali Kuli Khan Khattak

Chairman

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 GHANDHARA INDUSTRIES LIMITED

Directors’ Report to Shareholders

The directors of your company take pleasure in presenting the 57th annual report & the Company’s audited
financial statements for the year ended June 30, 2020.

ECONOMY AND MARKET REVIEW

Pakistan’s economy in FY2020 witnessed various challenges in terms of fiscal deficit, current account balance
and long term loan repayments and accordingly various policy and structural reforms were undertaken to
manage the economic imbalances which showed slight improvement in trade and current account balances
during the year however outbreak of COVID-19 pandemic created uncertainty which is expected to have lasting
effects on the overall economy.

The pandemic paved crisis situation and the resultant lockdown measures implemented by the Government
completely halted the economic activities of almost all sectors, resultantly overall economic growth was pushed
in negative region. The pandemic has created risks of reduction in consumer demand vis-à-vis purchasing
power which may pose effects in periods to come.

In these uncertain situations, your Company pro-actively followed the measures implemented by government
to protect our people from negative outcomes and accordingly implemented various measures which include
work from home, maintaining social distancing, sanitization, daily body temperature screening of all employees
and workers, dis infection of working facilities, compulsory use of masks, etc.

Moving to the automobile industry highlights in the pandemic situation, the truck and bus industry as a whole
posted a downward trajectory by 46% which stood at 3,647 units in FY 2020 as compared to 6,763 units sold
during last year as reported by PAMA. This has been mainly due to adverse foreign exchange parities along
with slow pace of China-Pakistan Economic Corridor (CPEC). Despite the comparative decrease by 44% in
units sold, your Company outperformed and sustained its market leadership in truck segment with the market
share of 47% in truck and bus category.

Principal Activities of the Company

Ghandhara Industries Limited (the Company) is incorporated in Pakistan as a Public Limited Company and is
listed on the Pakistan Stock Exchange (PSX). The Company's principal activity is the assembly, progressive
manufacture and marketing of ISUZU buses, trucks and pick-up trucks.

Principal Risks and Uncertainties

The Company’s key risks include risks pertaining to market competition, exchange rate, interest rates, currency
depreciation and overall economic conditions especially post Covid-19 effects on overall economy which may
have an impact on financial position of the Company.

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 Annual
Report 2020
FINANCIAL PERFORMANCE

The financial results are summarized below: 2020 2019

(Rupees in thousand)
(Loss)/Profit from operations (41,491) 889,989
Finance cost (970,785) (751,019)
(Loss)/Profit before tax (1,012,276) 138,970
Taxation (270,607) (79,022)
(Loss)/Profit after tax (1,282,883) 59,948

(Loss)/Profit After Tax

(Loss)/Earnings per Share Rs in 000
200,000
The Basic and Diluted (loss)/earnings per share after tax
-
is Rs. (30.11) [2019: Rs. 1.41]. 2020 59,948
(200,000) 2019

Reasons for Loss (400,000)

(600,000)
The Company posted loss after tax of Rs. (1,282) million
(800,000)
in current year, as compared to profit of Rs 59 Million in
(1,000,000)
the year 2018-2019. Major reasons for loss are
reduction in sales by 15%, significant currency (1,200,000)
devaluation, increase in material prices and significant (1,400,000) (1,282,883)
hike in Company’s borrowing and finance cost on
account of rising interest rates pre Covid-19 which were gradually reduced during last quarter of FY2020.

Sales Sales (Rs in 000)

As highlighted above due to unfavorable market 14,500,000

14,000,000 13,909,913
conditions and decreasing sales trend in overall truck
13,500,000
and bus market, the Company’s sales revenue
13,000,000
decreased to Rs. 11.79 Billion as compared to Rs. 13.91 11,788,254
12,500,000
Billion last year. However, your Company has increased 12,000,000
its market share in this segment to 47% as compared to 11,500,000
45% during last year. The Company is confident about 10,500,000
sustainable recovery on account of its unmatched after 2020 2019

sales service and customer oriented and reliable

products, however it urges government to take appropriate measures amid Covid-19 to improve confidence of
customers of auto industry which would ultimately help
Gross Profit (Rs in 000)
the Company to generate more revenues.

2,000,000
OPERATING RESULTS 1,601,592
1,500,000

Gross profit 1,000,000

692,764
The Company showed a decrease in gross profits by 500,000
57% mainly due to sharp increase in material prices
-
along with currency depreciation. 2020 2019

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 GHANDHARA INDUSTRIES LIMITED

Distribution and administrative Expenses

Expense to Sales
Distribution and Administration expenses have
observed slight decrease due to efficient management,
7.00%
however the Company is aware of the impacts of
6.50%
upcoming economic challenges and is ready to combat 6.50%
them by better planning and negotiations. 6.00% 5.77%

5.50%
Finance costs
Company witnessed a significant surge in finance cost 5.00%
mainly due to increase in borrowings coupled with hike 2020 2019
in State Bank’s base rate till March 2020. During
COVID 19, the rates were gradually reduced however
Finance Cost to Sales
the same had insignificant impact on Company’s
finance cost due to nature of financing with banks. The
10.00%
management understands that the increased 8.24%
borrowings have created pressure on finance cost 8.00%
however, management is confident that it will decline 6.00%
5.40%

during FY 2021 keeping in view stable or further 4.00%

reduction in interest rates.
2.00%

Holding Company 0.00%

Bibojee services (Private) Limited, incorporated in 2020 2019

Pakistan, is our holding company by way of direct

ownership of 39.16% shares and certain other indirect shareholding.

Chairman Review
Chairman Review on market and economy have been made part of these financial statements.

Dividend
Considering the financial position of the Company, the directors of the Company have decided not to pay any
divided, cash or otherwise.

Board of Directors and its Committees

The Board of Directors of the Company as at June 30, 2020 consists of:

Total Number of Directors:

Male 06
Female 01

Composition
Independent Directors 02
Non-Executive Directors 03
Executive Directors 02

The names of the directors as at June 30, 2020 are as follows

- Lt. Gen. (R) Ali Kuli Khan Khattak

- Mr. Ahmad Kuli Khan Khattak
- Mrs. Shahnaz Sajjad Ahmad
- Maj. (R) Muhammad Zia
- Mr. Muhammad Kuli Khan Khattak
- Mr. Shahid Kamal Khan
- Mr. Sohail Hameed Khan

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There was no casual vacancy on the Board during the year.

Human Resource & Remuneration Committee (HR&R) committee

The committee consists of four members; consisting of non-executive directors including an independent
director. The terms of reference of this Committee have been determined in accordance with guidelines
provided in the Code of Corporate Governance, 2019, “the Code”. The Committee meets to review and
recommend all elements of the compensation, organization and employee development policies relating to the
senior executives’ remuneration and to approve all matters relating to the remunerations of the executive
directors and members of the management committee. The committee held one meeting during 2019-2020.

Audit Committee
The committee consists of three members including non-executive directors and head of internal audit as
secretary to the committee, chairman of the committee is an independent director. The Board Audit Committee
assists the Board in fulfilling its oversight responsibilities, primarily in reviewing and reporting financial and
non-financial information to share-holders, systems of internal control and risk management and the audit
process. It has the autonomy to call for information from management and to consult directly with the external
auditors or advisors as considered appropriate. The Chief Financial Officer regularly attends the Board Audit
Committee meetings by invitation to present the accounts. After each meeting, the Chairman of the Committee
reports to the Board. The terms of reference of this committee have been determined in accordance with
guidelines provided in the Code.

Board and its Committees’ meetings

During the year under review four meetings of Board of Directors (BoD), four meetings of Board Audit
Committee (BAC) and one meeting of the Human Resource and Remuneration (HR&R) Committee were held.
All the meetings were held in Pakistan. Attendance at the Board meetings is as follows:

Attendance
Name of Director Status BOD BAC HR&R
Lt. Gen. (R) Ali Kuli Khan Khattak Re-Elected on April 10, 2018 4/4 - -
Mr. Ahmad Kuli Khan Khattak Re-Elected on April 10, 2018 4/4 - 1/1
Mr. Muhammad Kuli Khan Khattak Appointed on February 21,
2019 to fill in casual vacancy 4/4 - -
Maj. (R) Muhammad Zia Re-Elected on April 10, 2018 3/4 4/4 0/1
Mr. Shahid Kamal Khan Re-Elected on April 10, 2018 1/4 1/4 0/1
Mrs. Shahnaz Sajjad Ahmad Elected on April 10, 2018 4/4 - -
Mr. Sohail Hameed Khan Elected on April 10, 2018 4/4 4/4 1/1

Leave of absence was granted to the Directors who could not attend the meetings.

Performance Evaluation of Board of Directors and Committees of the Board

The evaluation of Board’s role of oversight and its effectiveness is appraised by the Board itself. The main areas
of focus are:
• Achieving corporate goals and objectives as defined in the Company’s vision and mission statements.
• Strategy formulation and dissemination of directions to the management for sustainable planning and
operation; and
• Evaluation of Board’s Committees performance in relation to discharging their responsibilities as per defined
terms of reference.

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 GHANDHARA INDUSTRIES LIMITED

Remuneration of Directors
The remuneration of the Board members is approved by the Board itself. However, in accordance with the Code
of Corporate Governance, it is ensured that no Director takes part in deciding his/her own remuneration. The
following are significant features of remuneration policy:

• The remuneration including incentives and other benefits of the Chief Executive Officer during the
year amounts to Rs. 65million (2019: Rs.65 million).
• The remuneration of Executive director during the year amounts to Rs. 34.1 Million (2019: Rs. 15 Million).
• The Company does not pay remuneration to non-executive directors including independent directors
except fee for attending the meetings.

For further details on remuneration of Directors and CEO in FY 2019-20, please refer note 39 to the Financial
Statements.

Internal Audit Function

Ghandhara Industries Limited has an independent Internal Audit function which has designed internal controls
to safeguard financial and operational reporting of the Company. The Board Audit Committee quarterly reviews
the appropriateness of resources and authority of this function. The Head of Internal Audit functionally reports
to the Audit Committee. The Board Audit Committee approves the audit plan, based on an annual and quarterly
assessment of the operating areas.

The Internal Audit function carries out reviews on the financial, operational and compliance controls, and reports
its findings functionally to the Board Audit Committee and administratively to the Chief Executive.
The Board understands its responsibility towards smooth functioning of internal financial controls and
continuously strives to achieve the best practices through its regular governance.

Auditors
Present auditors, Messrs.’ShineWing Hameed Chaudhri & Co, Chartered Accountants have retired. Being
eligible, Messers. ShineWing Hameed Chaurdhri have offered themselves for re-appointment. The Board of
Directors endorses recommendation of the Audit Committee for their re-appointment as auditors of the
Company for the financial year ending June 30, 2021 to the shareholders for approval.

Pattern of shareholding
The pattern of shareholding as on 30th June 2020 & additional information thereabout required under Code of
Corporate Governance are annexed.

Communication with Stakeholders

The Company focuses on the importance of the communication with the shareholders. The annual, half yearly
and quarterly reports are distributed to them within the time specified in the Companies Act, 2017. The activities
of the Company are updated on its web site at www.gil.com.pk , on timely basis.

Related Party Transactions

The Company in the normal course of business carries out transactions with various related parties. Amounts
due from and to related parties, amounts due from executives and remuneration of directors and executives are
disclosed in the relevant notes to the Financial Statements. Other material transactions with related parties are
disclosed in note 40 to the Financial Statements.

Responsibility towards environment and society

Ghandhara Industries Limited is well aware of its responsibility towards the environment and the society and
makes its utmost possible efforts towards the betterment of the society in general and for its employees
specifically. Various seminars were undertaken during the year regarding health, safety and education of its
employees to develop a safe and environment friendly working practices.

32
 Annual
Report 2020
Subsequent Events
No material changes or commitments affecting the financial position of the Company have taken place between
the end of the financial year and the date of report.

Code of Corporate Governance

The Board is pleased to state that the management of the Company is compliant with the best practices of
corporate governance. A statement of compliance is annexed on pages 59 and 60. The Board acknowledges
its responsibility in respect of the corporate and financial reporting framework and thus states that:

The financial statement prepared by the management of the Company, present fairly its state of affairs, the
result of its operations, cash flows and changes in equity.

Proper books of account of the Company have been maintained.

Appropriate accounting policies have been consistently applied in preparation of financial statements and
accounting estimates are based on reasonable and prudent judgment.

International Financial and Reporting Standards, as applicable in Pakistan, and Companies Act, 2017
have been followed in preparation of financial statement.

The system of internal control is sound in design and has been effectively implemented and monitored.

There are no significant doubts upon the Company’s ability to continue as a going concern.

Statement of pattern of Shareholding has been included as a part of this Annual Report.

There has been no material departure from the best practices of the Code of Corporate Governance, as
detailed in the listing regulations (Rule book of Pakistan Stock Exchange).

The highlights of operating and financial data for the last six years are annexed.

Information about taxes and levies is given in notes to the accounts.

During the year, no trading in shares of the Company was carried out by Directors, CFO, Company
Secretary, their spouses and minor children.

The Company operates a defined benefit gratuity fund for its employees. The value of investments as at
June 30, 2020 was Rs. 90,390,575.

Future outlook
Covid-19 pandemic has affected overall world economy and accordingly businesses and public need to adapt
various changes in way of doing business by strictly following standard operating procedures (SOPs) to combat
direct effects of the pandemic.

Due to lockdown situation, various businesses suffered huge losses and cash flow problems, however there
was recovery in few sectors of the economy in late May 2020. Due to low purchasing power and increased cost
of doing business, overall revival is expected to take some time. However, various measures taken by
government in collaboration with State Bank of Pakistan to support businesses will have positive impacts on
purchasing power vis-à-vis the demand.

Keeping in view the economic trends, the Company is also making all necessary efforts to improve its position
based on enhanced product line and improved competitiveness, however during these tough times,
government need to continue its support by devising favorable policies for consumers and business community.

33
 GHANDHARA INDUSTRIES LIMITED

Acknowledgement

The board acknowledges the trust and confidence on the Company and its products by the shareholders,
valued suppliers, customers, dealers and bankers and thank them for their co-operation and support during
these unusual circumstances. The Board is pleased to record its appreciation for the continued diligence and
devotion of the employees. The Board takes the opportunity to thank the Company’s principals Isuzu Motors
Limited, Isuzu Motors Company (Thailand) Limited and Isuzu Motors International Operations (Thailand)
Company Limited and the trading house Marubeni Corporation for their continued support and assistance.

On behalf of the Board of Directors On behalf of the Board of Directors

Lt. Gen. (R) Ali Kuli Khan Khattak Ahmad Kuli Khan Khattak
Chairman Chief Executive

Karachi
Dated: September 30, 2020

34
 GHANDHARA INDUSTRIES LIMITED

Ghandhara Industries Limited

Notice of 57th Annual General Meeting
Notice is hereby given that the 57th Annual General Meeting of the shareholders of GHANDHARA
INDUSTRIES LIMITED will be held at 04:45 P.M. on Wednesday October 28th, 2020 at F-3, Hub Chauki Road,
S.I.T.E., Karachi to transact the following business:

Ordinary Business

1) To confirm the minutes of the Annual General Meeting of the Company held on October 25th, 2019.

2) To receive, consider and adopt the Annual Audited Accounts of the Company for the year ended June 30,
2020, together with Directors’ and Auditors’ report thereon.

3) To appoint Auditors for the year ending June 30, 2021 and to fix their remuneration. The retiring auditors,
Messers ShineWing Hameed Chaudhri & Co. Chartered Accountants, being eligible, have offered
themselves for re-appointment for the year ending June 30, 2021.

4) Any other business with the permission of the Chair.

Special Business

1) To consider to pass the following ordinary resolutions:

a) “RESOLVED that the transactions carried out in normal course of business with related parties
during the year ended June 30, 2020 be and are hereby ratified and approved.”

b) “RESOLVED that the Chief Executive of the Company be and is hereby authorized to approve all
the transactions carried out and to be carried out in normal course of business with associated
companies/related parties during the ensuing year ending June 30, 2021 and in this connection the
Chief Executive be and is hereby also authorized to take any and all necessary actions and
sign/execute any and all such documents/indentures as may be required in this regard on behalf of
the Company.”

By Order of the Board

Karachi (Talha Ahmed Zaidi)

October 7, 2020 Company Secretary

A statement of material facts under section 134(3) of the Companies Act, 2017 pertaining to the Special
Business is annexed to this notice of the meeting.

42
 Annual
Report 2020
NOTES:

1. Coronavirus Contingency Planning for Annual General Meeting of Shareholders

Considering the situation on the spread of the COVID-19, the Company has decided to facilitate its
shareholders by also allowing the Shareholders to attend the meeting through video link for the safety and in
the best interest of the shareholders. Therefore, shareholders who are interested in attending the AGM
proceedings through video link are required to update their valid e-mail ID with the Share Registrar, latest by
October 18, 2020. A detailed procedure shall be communicated through e-mail directly to the shareholders who
have provided their valid e-mail IDs and same shall be placed at the Company’s website https://www.gil.com.pk
in the investor relations section.

The shareholders who have already updated their valid e-mail IDs with the Company or its Share Registrar and
are interested to attend AGM online may send below information along with valid copy of both sides of CNIC
with the subject “Registration for Ghandhara Industries Limited AGM” at shareholders@gil.com.pk for their
appointed proxy’s verification. Such information should be sent from their duly registered valid e-mail ID for the
registration purposes latest by October 18, 2020.

Shareholders can also provide their comments and questions for the agenda items of the AGM at the email
address shareholders@gil.com.pk.

Members are therefore, encouraged to attend the AGM through video link or by consolidating their attendance
through proxies.

2. Closure of Share Transfer Books

The Share Transfer Books of the Company will remain closed for the period from October 22, 2020 to October
28, 2020 (both days inclusive) for the purpose of Annual General Meeting. Transfers received in order at our
Share Registrar M/s. Hameed Majeed Associates (Private) Limited, Karachi Chambers, Hasrat Mohani Road,
Karachi at the close of business on October 21, 2020 shall be treated in time for the purpose of Annual General
Meeting. No transfer will be accepted for registration during this period.

3. Participation in General Meeting

A member of the Company entitled to attend and vote at this meeting, may appoint another person as his/her
proxy to attend and vote instead of him/her. Proxies, in order to be effective, must be received at the Registered
Office of the Company not less than 48 hours before the time for holding the meeting.

CDC shareholders entitled to attend and vote at the meeting must bring his/her Participant ID and
Account/Sub-Account number along with original CNIC or original passport to authenticate his/her identity. In
case of corporate entity, resolution of Board of Directors/Power of Attorney with specimen signature of the
nominee along with his/her recent photograph shall be produced (unless it has been provided earlier) at the
time of the meeting.

4. For appointing the proxy

CDC shareholders shall submit the proxy form as per above requirements together with attested copy of CNIC
or Passport of the beneficial owner and proxy. In case of corporate entity, the Board of Directors'
43
 GHANDHARA INDUSTRIES LIMITED

resolution/power of attorney, along with the specimen signature of the nominee, shall be submitted along with
the proxy form to the Company.

The proxy form shall be witnessed by two witnesses with their names, addresses, and CNIC numbers. The
proxy shall produce his/her original CNIC or original Passport at the time of meeting.

5. Change in Address and CNIC

Members are requested to notify/submit the following Information / documents, in case of book entry securities
in CDS to their respective participants and in case of physical shares to the registrar of the Company by quoting
their folio numbers and name of the Company at the above mentioned address, if not earlier notified/submitted:

• Change in their address, if any

• Members, who have not yet submitted attested photocopy of their valid CNIC are requested to
submit the same along with folio numbers at earliest, directly to the Company's Share Registrar
M/s. Hameed Majeed Associates (Private) Limited, Karachi Chambers, Hasrat Mohani Road,
Karachi

6. Request for Video Conferencing Facility

If the Company receives consent from the members holding at least 10% shareholding residing in a city, to
participate in the meeting through video-link at least seven (07) days prior to date of the meeting, the Company
will arrange facility of video-link in that city subject to availability of such facility in that city.

To avail this facility please provide the following information to our Share Registrar M/s Hameed Majeed
Associates (Pvt.) Limited.

“I/We, ______________________________ of ______________________, being a member of Ghandhara

Industries Limited, holder of __________ ordinary share(s) as per Registered Folio No. __________ hereby opt
for video conference facility at _______________________.”

Signature of member

7. Availability of Audited Financial Statement on Company’s Website:

The audited financial statements of the Company for the year ended 30 June 2020 have been made available
on the Company’s website www.gil.com.pk, at least 21 days before the date of Annual General Meeting.

8. Annual Report through CD/DVD

This is to inform that SECP in accordance with SRO 470(I)/2016 dated 31 May 2016, through which SECP has
allowed companies to circulate the annual audited accounts to its members through CD/DVD/ USB instead of
transmitting the hard copies at their registered addresses, subject to consent of shareholders and compliance
with certain other conditions, the Company has obtained shareholders’ approval in its Annual General Meeting
held on October 31, 2016. Accordingly, Annual Report of the Company for the year ended June 30, 2020 is
dispatched to the shareholders through CD. However, if a shareholder requests for a hard copy of Annual
Accounts, the same shall be provided free of cost within seven days of receipt of such request.
44
 Annual
Report 2020
Further, SECP through its Notification No. SRO. 787(1)/2014, dated September 08, 2014 has allowed
companies to circulate Annual Audited Financial Statements along with Notice of Annual General Meeting
through email instead of sending the same through post, to those members who desire to avail this facility. The
members who desire to opt to receive aforesaid statements and notice of Annual General Meeting through
e-mail are requested to provide their written consent on the Standard Request Form available on the
Company’s website: www.gil.com.pk

9. Payment of Cash Dividend Electronically (Mandatory Requirement)

In accordance with the provisions of section 242 of the Companies Act, 2017 and Companies (Distribution of
Dividend) Regulations, 2017, it is mandatory for a listed company to pay cash dividend to its shareholder only
through electronic mode directly into the bank account designated by the entitled shareholder. Shareholders
who have not yet submitted their banking details for dividends already declared by the Company are requested
to fill in “Electronic Credit Mandate Form” as reproduced below and also available on Company’s website and
send it duly signed along with a copy of valid CNIC/NTN to their respective CDC participant / CDC Investor
account services (in case of shareholding in Book Entry Form) or to the Company’s Share Registrar M/s.
Hameed Majeed Associates (Pvt) Ltd (in case of shareholding in Physical Form) .

a) Shareholder’s Details
Name of the Shareholder (s)
Folio # /CDSAccount No.(s)
CNIC NO. (Copy attached)
Mobile/Landline no.
b) Shareholder’s Bank Details
Title of Bank Account
International Bank Account Number (IBAN)
Bank’s Name
Branch’s name and address

It is stated that the above mentioned information is correct and in case of any change herein I/we will
immediately intimate the Share Registrar accordingly.

10. Unclaimed/Unpaid Dividend

As per provisions of Section 244 of the Companies Act, 2017, any dividend which has been declared by a
company but has not been paid or claimed within time stipulated in Section 242 and Dividend Regulations, the
Company shall within 15 days of the expiry of the said period transfer the total amount of dividend which
remains unpaid or unclaimed to a separate profit bearing account to be called the unpaid dividend account. In
this regard, the Company is in the process of opening separate bank account to be termed as “UNPAID
DIVIDEND ACCOUNT”.

11. E-voting
Pursuant to the Companies (E-voting) Regulations, 2016, shareholders will be able to exercise their right to vote
through e-voting by giving their consent in writing, at least 10 days before the date of the meeting to the
Company on the appointment of Execution Officer by the intermediary as Proxy.

45
 GHANDHARA INDUSTRIES LIMITED

12. Details of Beneficial Ownership

Attention of corporate entities / legal persons is also invited towards SECP Circular No. 16 and 20 of 2018.
Respective shareholders (corporate entities / legal persons) are advised to provide the information pertaining
to ultimate beneficial owners and / or other information as prescribed in the subject SECP Circulars to the Share
Registrar of the Company.

13. Deposit of Physical Shares in to CDC Account:

As per Section 72 of the Companies Act, 2017 every existing listed company shall be required to replace its
physical shares with book-entry form in a manner as may be specified and from the date notified by the
Commission, within a period not exceeding four years from the commencement of this Act, i.e., May 30, 2017.

The Shareholders having physical shareholding are encouraged to open CDC sub - account with any of the
brokers or Investor Account directly with CDC to place their physical shares into scrip less form, this will
facilitate them in many ways, including safe custody and sale of shares, any time they want, as the trading of
physical shares is not permitted as per existing regulations of the Pakistan Stock Exchange.

STATEMENT UNDER SECTION 134(3) OF THE COMPANIES ACT, 2017

The following statement sets out the material facts pertaining to the special Business to be transacted at the
Annual General Meeting of the Company to be held on October 28th, 2020.

Agenda Item # 1(a) of the Special Business – Transactions carried out with associated companies
during the year ended June 30, 2020 to be passed as an Ordinary Resolution

The transactions carried out in normal course of business with associated companies (Related parties) were
being approved by the Board as recommended by the Audit Committee on quarterly basis pursuant to clause
15 of the Listed Companies Corporate Governance Regulations, 2019.

During the Board meeting it was pointed out by the Directors that as the majority of Company Directors were
interested in this/these transaction(s) due to their common directorship and holding of shares in the associated
companies, the quorum of directors could not be formed for approval of this/these transaction(s) which
has/have to be approved by the shareholders in the General Meeting.

In view of the above, the transactions conducted during the financial year ended June 30, 2020 with associated
companies as shown in note no. 40 to the Audited Financial Statements for year ended June 30, 2020 are being
placed before the shareholders for their consideration and approval/ratification.

The Directors are interested in the resolution to the extent of their common directorships and their shareholding
in the associated companies.

Agenda Item No. 1(b) of the Special Business - Authorization to the Chief Executive for the transactions
carried out and to be carried out with associated companies during the ensuing year ending June 30,
2021 to be passed as an Ordinary Resolution

The Company shall be conducting transactions with its related parties during the year ending June 30, 2021 on
an arm’s length basis as per the approved policy with respect to ‘transactions with related parties’ in the normal
course of business. The majority of Directors are interested in these transactions due to their common
directorship in the associated companies.

In order to comply with the provisions of clause 15 of Listed Companies (Code of Corporate Governance)
Regulations, 2019, the shareholders may authorize the Chief Executive to approve transactions carried out and
to be carried out in normal course of business with associated companies/related parties during the ensuing
year ending June 30, 2021.

The Directors are interested in the resolution to the extent of their common directorships and their shareholding
46 in the associated companies.
 GHANDHARA INDUSTRIES LIMITED

6 Years at a Glance
2020 2019 2018 2017 2016 2015
Financial Performance-Profitability
Gross profit margin % 5.88 11.51 18.55 20.51 26.55 20.95
EBITDA margin to sales % 1.08 7.42 13.33 14.04 21.63 15.74
Pre tax (loss)/ margin % (8.59) 1.00 11.71 11.61 18.85 15.74
Net (loss)/profit margin % (10.88) 0.43 8.12 7.41 12.80 6.79
Return on equity-before tax % (19.95) 2.99 41.58 33.78 35.33 14.54
Return on equity-after tax % (25.28) 1.29 28.84 21.57 23.99 9.95

Operating Performance / Liquidity

Total assets turnover Times 0.62 0.87 1.39 1.25 1.13 0.98
Fixed assets turnover Times 2.65 5.02 6.81 5.31 3.00 1.97
Debtors turnover Times 32.43 151.49 57.77 28.83 38.54 25.00
Debtors turnover Days 11.25 2.41 6.32 12.66 9.47 15
Inventory turnover Times 1.24 1.43 2.56 3.16 3.83 3.12
Inventory turnover Days 294.53 255.74 142.51 115.49 95.38 117
Creditors turnover Times 22.88 24.15 32.11 29.45 25.46 14.11
Creditors turnover Days 15.95 15.11 11.37 12.39 14.34 26
Operating cycle Days 289.83 243.04 137.46 115.76 90.52 106
Current ratio 1.04 1.16 1.32 1.33 1.62 1.56
Quick / acid test ratio 0.49 0.23 0.36 0.55 0.78 0.95

Capital Structure Analyses

Breakup value / share Rs 119.10 109.10 110.87 86.61 72.96 52.79
(Loss)/Earning per share (pre tax) Rs (23.76) 3.26 46.10 29.26 25.77 7.67

(Loss)/Earning per share (after tax) Rs (30.11) 1.41 31.98 18.68 17.51 5.25

Summary of Balance Sheet Rupees ‘000

Share capital 426,088 426,088 213,044 213,044 213,044 213,044

Reserves 897,105 2,172,735 2,651,071 1,612,010 1,022,517 365,002
Shareholder's fund / equity 5,074,659 4,648,384 4,724,129 3,690,168 3,108,553 2,249,388

Deferred liabilities 21,425 19,759 80,181 45,615 37,802 30,545

Property, plant & equipment 4,453,947 2,770,727 2,463,605 2,021,453 1,941,250 1,674,230
Long term assets 27,095 26,987 17,242 16,824 15,783 5,831
Net current assets / Working capital 606,303 1,759,388 2,278,947 1,612,645 1,194,481 568,524

52
 Annual
Report 2020
Summary of Financial Position
2020 2019 2018 2017 2016 2015
Rupees ‘000
Summary of Profit & Loss

Net sales 11,788,254 13,909,913 16,772,383 10,740,631 5,825,579 3,293,329

Gross profit 692,764 1,601,592 3,111,004 2,202,963 1,546,638 689,924

Operating (loss)/profit (41,491) 889,989 2,186,464 1,471,262 1,211,178 494,131

(Loss)/Profit before tax (1,012,276) 138,970 1,964,070 1,246,625 1,098,105 327,016

(Loss)/Profit after tax (1,282,883) 59,948 1,362,420 796,013 745,861 223,788

EBITDA 127,472 1,031,647 2,235,433 1,471,268 1,238,493 518,222

Rupees ‘000

Summary of Cash Flows

Net cash flow from operating activities (302,435) (2,138,425) (2,372,485) (68,215) 588,679 1,002,281

Net cash flow from investing activities (94,677) (211,639) (471,631) (111,916) (73,468) (12,428)

Net cash flow from financing activities 15,795 (311,519) (303,223) (198,826) (58,075) (9,835)

Changes in cash & cash equivalents (381,317) (2,661,583) (3,147,339) (378,957) 457,136 980,018

Cash & cash equivalents (6,177,490) (5,796,173) (3,134,590) 12,749 391,706 (65,430)

53
 GHANDHARA INDUSTRIES LIMITED

Dupont Analysis

(25.28%)
Return on
Equity

27% (6.78%)
Ownership Return on
Ratio Assets

÷ x

18,929,454 5,074,659 0.62 (10.88%)

Total Owners' Assets Net Profit
Assets Equity Turnover Margin

+ _ ÷ ÷

5,074,659 13,854,795 18,929,454

11,788,254 (1,282,883)
Owners' Total Total
Sales Net Loss
Equity Liabilities Assets

+ + _

103,464 13,751,331 4,571,820 14,357,634 13,071,137 11,788,254

Non Current Current Non Current Current Total Cost Sales
Liabilities Liabilities Assets Assets

00
* Amount are in Rupees ‘000
54
 Vertical Analysis
Balance Sheet 2020 20 Vs 19 2019 19 Vs 18 2018 18 Vs17 2017 17 Vs 16 2016 16 Vs 15 2015 15 Vs 14
Rs. in 000' % Rs. in 000' % Rs. in 000' % Rs. in 000' % Rs. in 000' % Rs. in 000' %
Assets
Non-Current Assets
Property, plant & equipment 4,453,947 23.53 2,770,727 17.40 2,463,605 20.47 2,021,453 23.52 1,941,250 37.62 1,674,230 50.02
Intangible assets 136 0.00 260 0.00 384 0.00 462 0.01 - - 45 0.00
Investment properties 88,169 0.47 88,413 0.56 88,657 0.74 88,901 1.03 89,145 1.73 89,395 2.67
Long term Investment 1,400 0.01 1,400 0.01 1,400 0.01 1,400 0.02 1,400 0.03 1,400 0.04
Long term loans 1,957 0.01 3,639 0.02 4,305 0.04 2,736 0.03 2,298 0.04 1,109 0.03
Long term deposits 23,738 0.13 21,948 0.14 11,537 0.10 12,688 0.15 12,085 0.23 3,322 0.10
Deferred taxation 2,473 0.01 87,158 0.55 845 0.01 21,134 0.25 - - - -
4,571,820 24 2,973,545 19 2,570,733 21 2,148,774 25 2,046,178 40 1,769,501 52.86

Current Assets
Stores and spares parts 22,469 0.12 8,328 0.05 10,281 0.09 2,560 0.03 1980 0.04 2,009 0.06
Stock-in-trade 7,547,063 39.87 10,359,425 65.06 6,888,220 57.24 3,779,300 43.97 1,623,753 31.47 612,623 18.30
Trade debts 638,588 3.37 88,406 0.56 95,230 0.79 485,472 5.65 259,680 5.03 42,653 1.27
Loans and advances 150,547 0.80 133,759 0.84 168,661 1.40 143,340 1.67 142,349 2.76 255,449 7.63
Trade deposits and prepayments 4,260,928 22.51 542,834 3.41 721,213 5.99 707,242 8.23 339,626 6.58 301,657 9.01
Other receivables 9,263 0.05 6,981 0.04 741 0.01 2,683 0.03 18,518 0.36 16,292 0.49
Sales tax refundable/adjustable and
taxation - payment less provision 1,387,870 7.33 1,308,983 8.22 1,081,869 8.99 520,298 6.05 142,380 2.76 211,533 6.32
Cash and bank balances 340,906 1.80 500,441 3.14 497,261 4.13 805,135 9.37 585,735 11.35 135,710 4.05
14,357,634 76 12,949,157 81 9,463,476 79 6,446,030 75 3,114,021 60 1,577,926 47.14
18,929,454 100.00 15,922,702 100.00 12,034,209 100.00 8,594,804 100.00 5,160,199 100.00 3,347,427 100.00

Equity And Liabilities

Share Capital And Reserves
Share capital 426,088 2.25 426,088 2.68 213,044 1.77 213,044 2.48 213,044 4.13 213,044 6.36
Unappropriated profit / (accumulated loss) 897,105 4.74 2,172,735 13.65 2,651,071 22.03 1,612,010 18.76 1,022,517 19.82 365,002 10.90
Surplus on revaluation of fixed assets 3,751,466 19.82 2,049,561 12.87 1,860,014 15.46 1,865,114 21.70 1,872,992 36.30 1,671,341 49.93
5,074,659 27 4,648,384 29 4,724,129 39 3,690,168 43 3,108,553 60 2,249,387 67.20
Non-Current Liabilities
Lease Liabilities 66,237 0.35 51,745 0.32 34,526 0.29 19,563 0.23 36,000 0.70 10,584 0.32
Compensated absences 15,802 0.08 13,045 0.08 10,844 0.09 6,073 0.07 6,409 0.12 - -
Deferred liabilities 21,425 0.11 19,759 0.12 80,181 0.67 45,615 0.53 37,802 0.73 30,545 0.91
Deferred taxation - - - - - - - - 51,895 1.01 47,509 1.42
103,464 1 84,549 1 125,551 1 71,251 1 132,106 3 88,638 2.65
Current Liabilities
Trade and other payables 6,872,811 36.31 4,582,157 28.78 3,427,060 28.48 3,960,103 46.08 1,674,229 32.45 783,464 23.40
Report
Annual

Unpaid dividends 78,959 0.42 78,959 0.50 44,271 0.37 24,604 0.29 11,493 0.22 - -
Unclaimed dividends 21,973 0.12 22,151 0.14 24,814 0.21 14,092 0.16 5,379 0.10 - -
Current maturity of lease liabilities 29,410 0.16 13,435 0.08 8,224 0.07 17,916 0.21 8,597 0.17 3,837 0.11
Accrued mark up 229,782 1.21 196,453 1.23 48,309 0.40 24,284 0.28 25,813 0.50 20,961 0.63
Short term borrowings 6,518,396 34.44 6,296,614 39.54 3,631,851 30.18 792,386 9.22 194,029 3.76 201,140 6.01
13,751,331 73 11,189,769 70 7,184,529 60 4,833,385 56 1,919,540 37 1,009,402 30.15
2020

18,929,454 100.00 15,922,702 100.00 12,034,209 100.00 8,594,804 100.00 5,160,199 100.00 3,347,427 100.00

55
56
Horizontal Analysis
Balance Sheet 2020 20 Vs 19 2019 19 Vs 18 2018 18 Vs17 2017 17 Vs 16 2016 16 Vs 15 2015 15 Vs 14
Rs. in 000' % Rs. in 000' % Rs. in 000' % Rs. in 000' % Rs. in 000' % Rs. in 000' %
Assets
Non-Current Assets
Property, plant & equipment 4,453,947 60.75 2,770,727 12.47 2,463,605 21.87 2,021,453 4.13 1,941,250 15.95 1,674,230 (0.26)
Intangible assets 136 (47.69) 260 (32.29) 384 (16.88) 462 100.00 - (100.00) 45 (87.13)
Investment properties 88,169 (0.28) 88,413 (0.28) 88,657 (0.27) 88,901 (0.27) 89,145 (0.28) 89,395 (0.28)
Long term Investment 1,400 - 1,400 - 1,400 - 1,400 - 1,400 - 1,400 -
Long term loans 1,957 (46.22) 3,639 (15.47) 4,305 57.35 2,736 19.06 2,298 107.20 1,109 74.38
Long term deposits 23,738 8.16 21,948 90.24 11,537 (9.07) 12,688 4.99 12,085 263.79 3,322 20.93
Deferred taxation 2,473 (97.16) 87,158 10,214.56 845 (96.00) 21,134 100.00 - - - (100.00)
4,571,820 53.75 2,973,545 15.67 2,570,733 19.64 2,148,774 5.01 2,046,178 15.64 1,769,501 (1.24)

Current Assets
GHANDHARA INDUSTRIES LIMITED

Stores and spares parts 22,469 169.80 8,328 (19.00) 10,281 301.60 2,560 29.29 1,980 (1.42) 2,009 8.04
Stock-in-trade 7,547,063 (27.15) 10,359,425 50.39 6,888,220 82.26 3,779,300 132.75 1,623,753 165.05 612,623 (41.98)
Trade debts 638,588 622.34 88,406 (7.17) 95,230 (80.38) 485,472 86.95 259,680 508.82 42,653 (80.68)
Loans and advances 150,547 12.55 133,759 (20.69) 168,661 17.66 143,340 0.70 142,349 (44.28) 255,449 21.91
Trade deposits and prepayments 4,260,928 684.94 542,834 (24.73) 721,213 1.98 707,242 108.24 339,626 12.59 301,657 61.22
Other receivables 9,263 32.69 6,981 842.11 741 (72.38) 2,683 (85.51) 18,518 13.66 16,292 59.84
Sales tax refundable/adjustable and
taxation - payment less provision 1,387,870 6.03 1,308,983 20.99 1,081,869 107.93 520,298 265.43 142,380 (32.69) 211,533 0.68
Cash and bank balances 340,906 (31.88) 500,441 0.64 497,261 (38.24) 805,135 37.46 585,735 331.61 135,710 292.26
14,357,634 10.88 12,949,157 36.83 9,463,476 46.81 6,446,030 107.00 3,114,021 97.35 1,577,926 (18.24)
18,929,454 18.88 15,922,702 32.31 12,034,209 40.02 8,594,804 66.56 5,160,199 54.15 3,347,427 (10.06)

Equity And Liabilities

Share Capital And Reserves
Share capital 426,088 - 426,088 100.00 213,044 - 213,044 - 213,044 - 213,044 0.00
Unappropriated profit / (accumulated loss) 897,105 (58.71) 2,172,735 (18.04) 2,651,071 64.46 1,612,010 57.65 1,022,517 180.14 365,002 172.41
Surplus on revaluation of fixed assets 3,751,466 83.04 2,049,561 10.19 1,860,014 (0.27) 1,865,114 (0.42) 1,872,992 12.07 1,671,341 (0.11)
5,074,659 9.17 4,648,384 (1.60) 4,724,129 28.02 3,690,168 18.71 3,108,553 38.20 2,249,387 11.34
Non-Current Liabilities
Lease Liabilities 66,237 28.01 51,745 49.87 34,526 76.49 19,563 (45.66) 36,000 240.14 10,584 33.32
Compensated absences 15,802 21.13 13,045 20.30 10,844 78.56 6,073 (5.24) 6,409 - - -
Deferred liabilities 21,425 8.43 19,759 (75.36) 80,181 75.78 45,615 20.67 37,802 23.76 30,545 22.84
Deferred taxation - - - - - - - (100.00) 51,895 9.23 47,509 100.00
103,464 22.37 84,549 (32.66) 125,551 76.21 71,251 (46.07) 132,106 49.04 88,638 170.20
Current Liabilities
Trade and other payables 6,872,811 49.99 4,582,157 33.71 3,427,060 (13.46) 3,960,103 136.53 1,674,229 113.70 783,464 42.32
Unpaid dividends 78,959 - 78,959 78.35 44,271 79.93 24,604 114.08 11,493 - - -
Unclaimed dividends 21,973 (0.80) 22,151 (10.73) 24,814 76.09 14,092 161.98 5,379 - - -
Current maturity of lease liabilities 29,410 118.91 13,435 63.36 8,224 (54.10) 17,916 108.40 8,597 124.06 3,837 (49.86)
Accrued mark up 229,782 16.97 196,453 306.66 48,309 98.93 24,284 (5.92) 25,813 23.15 20,961 (31.31)
Short term borrowings 6,518,396 3.52 6,296,614 73.37 3,631,851 358.34 792,386 308.39 194,029 (3.54) 201,140 (81.38)
13,751,331 22.89 11,189,769 55.75 7,184,529 48.64 4,833,385 151.80 1,919,540 90.17 1,009,402 (39.51)
18,929,454 18.88 15,922,702 32.31 12,034,209 40.02 8,594,804 66.56 5,160,199 54.15 3,347,427 (10.06)
 Annual
Report 2020
Pattern of Shareholding
As at June 30, 2020

Number of Shareholding Number of Percentage

Shareholders From To Shares Held
3,542 1 100 105,473 0.25
1,744 101 500 509,655 1.20
865 501 1,000 741,811 1.74
948 1,001 5,000 2,296,129 5.39
172 5,001 10,000 1,248,662 2.93
65 10,001 15,000 799,667 1.88
37 15,001 20,000 661,388 1.55
18 20,001 25,000 411,062 0.96
9 25,001 30,000 249,300 0.59
7 30,001 35,000 226,246 0.53
6 35,001 40,000 229,100 0.54
8 40,001 45,000 341,156 0.80
7 45,001 50,000 342,454 0.80
2 50,001 55,000 108,000 0.25
4 55,001 60,000 237,100 0.56
4 60,001 65,000 251,648 0.59
2 70,001 75,000 143,000 0.34
2 85,001 90,000 177,500 0.42
1 90,001 95,000 94,200 0.22
1 105,001 110,000 105,732 0.25
1 120,001 125,000 125,000 0.29
1 140,001 145,000 140,200 0.33
1 150,001 155,000 154,300 0.36
2 190,001 195,000 384,600 0.90
1 200,001 205,000 201,400 0.47
1 230,001 235,000 234,554 0.55
1 760,001 765,000 760,900 1.79
1 865,001 870,000 866,100 2.03
1 2,365,001 2,370,000 2,368,296 5.56
1 3,275,001 3,280,000 3,277,852 7.69
1 4,515,001 4,520,000 4,516,484 10.60
1 8,125,001 8,130,000 8,129,565 19.08
1 12,170,001 12,175,000 12,170,310 28.56
7,458 42,608,844 100.00
* Note: The slabs representing nil holding have been omitted.

57
 GHANDHARA INDUSTRIES LIMITED

Categories of Shareholders
As at June 30, 2020
Shareholder's Category Number of Shareholder's Number of Shares Held Percentage of Holding

Director's, CEO, Their Spouse and Minor Children 8 73,417 0.17

Associated Companies, Undertakings and Related Parties 7 27,431,642 64.38
NIT & ICP 2 241,982 0.57
Banks, NBFCs, DFIs, Takaful, Pension and Stock Funds 37 3,684,200 8.65
Investment and Modaraba Companies 3 5,056 0.01
Insurance Companies 5 93,700 0.22
Joint Stock Companies 39 766,410 1.80
Other Companies, Corporate Bodies, Trust etc 33 444,806 1.04
General Public (Local) 7,324 9,867,631 23.16
7,458 42,608,844 100.00

Categories of Shareholders
As at June 30, 2020
SR # Categories of Category wise No. Category wise
Shareholders of Folios/CDC A/Cs shares held

1 Director's, CEO, Their Spouse and Minor Children

Mr. Ahmad Kuli Khan Khattak (Chief Executive) 24,000 0.056
Mr. Ali Kuli Khan Khattak (Director) 18 0.000
Mr. Muhammad Kuli Khan Khattak (Director) 7 0.000
Mr. Shahid Kamal (Independent Director) 16 0.000
Mr. Muhammad Zia (Director) 200 0.000
Mr. Sohail Hameed Khan (Independent Director) 2 0.000
Mrs. Shahnaz Sajjad Ahmed (Director) 49,174 0.115

2 Associated Companies, Undertaking and Related Parties

Bibojee Services (Pvt) Limited 16,686,794 39.163
Bibojee Investments (Pvt) Limited 42,816 0.100
The General Tyre and Rubber Company of Pakistan Limited 201,400 0.473
Ghandhara Nissan Limited 8,132,336 19.086
The Universal Insurance Company Limited 2,368,296 5.558

3 NIT & ICP

Investment Corporation of Pakistan 7,428 0.017

CDC- Trustee National Investment (Unit) Trust 234,554 0.550

4 Banks, NBFCs, DFIs, Takaful, Pension and Stock Funds 3,684,200 8.647

5 Investment and Modaraba Companies 5,056 0.012

6 Insurance Companies 93,700 0.220

7 Joint Stock Companies 766,410 1.799

8 Other Companies, Corporate Bodies, Trust etc 444,806 1.044

9 General Public (Local) 9,867,631 23.159

42,608,844 100.00

10 Shareholders Holding 05.00% Or More

Bibojee Services (Pvt) Limited 16,686,794 39.163

Universal Insurance Co. Limited 2,368,296 5.558
Ghandhara Nissan Limited 8,132,336 19.086
Essar Asset Management 3,277,852 7.693

11 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. Nil

58
 Annual
Report 2020
Statement of Compliance with Listed Companies
(Code of Corporate Governance) Regulations, 2019
For the Year Ended June 30, 2020

This statement is being presented to comply with the Listed Companies (Code of Corporate Governance)
Regulations, 2019. The Company has applied the principles contained in the Listed Companies (Code of
Corporate Governance) Regulations, 2019 in the following manner:

1. The total number of directors are seven as per the following:

Male: 6 Female: 1

2. The composition of Board is as follows:

Independent Directors Mr. Shahid Kamal Khan

Mr. Sohail Hameed Khan

Other Non-executive Director Lt. Gen. (R) Ali Kuli Khan Khattak
Mrs. Shahnaz Sajjad Ahmad
Maj. (R) Muhammad Zia

Executive Director Mr. Ahmad Kuli Khan Khattak

Mr. Muhammad Kuli Khan Khattak

Fraction (0.33) related to the requirement for number of independent directors is less than 0.5 and therefore,
has not rounded up as one.

3. The directors have confirmed that none of them is serving as a director on more than seven listed
companies, including this company.

4. The company has prepared a Code of Conduct and has ensured that appropriate steps have been taken
to disseminate it throughout the company along with its supporting policies and procedures.

5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of
the company. The Board has ensured that complete record of particulars of significant policies along with
their date of approval or updating is maintained by the Company;

6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken
by Board/ shareholders as empowered by the relevant provisions of the Act and these Regulations.

7. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected
by the Board for this purpose. The Board has complied with the requirements of Act and the Regulations
with respect to frequency, recording and circulating minutes of meeting of Board.

8. The Board have a formal policy and transparent procedures for remuneration of directors in accordance
with the Act and these Regulations.

9. The Board of Directors have either obtained certificate of Directors’ Training Program or are exempted
from the requirements of Directors’ Training Program as per Listed Companies Code of Corporate
Governance Regulations 2019.

10. The Board has approved appointment of Chief Financial Officer, Company Secretary and Head of Internal

59
 GHANDHARA INDUSTRIES LIMITED

Audit, including their remuneration and terms and conditions of employment and complied with relevant
requirements of the Regulations.

11. CFO and CEO duly endorsed the financial statements before approval of the Board.

12. The Board has formed committees comprising of members given below:

Audit Committee Mr. Sohail Hameed Khan – Chairman

Maj. (R) Muhammad Zia - Member
Mr. Shahid Kamal Khan - Member
Mr. Shahnawaz Damji - Secretary

HR and Remuneration Committee Mr. Shahid Kamal Khan – Chairman

Mr. Ahmad Kuli Khan Khattak - Member
Maj. (R) Muhammad Zia - Member
Mr. Sohail Hameed Khan - Member
Mr. Shahrukh Asghar - Secretary

13. The terms of reference of the aforesaid committees have been formed, documented and advised to the
committee for compliance.

14. The frequency of meetings (quarterly/half yearly/ yearly) of the committee were as per following:

Audit Committee Four quarterly meetings during FY ended 2020

HR and Remuneration Committee One yearly meeting during FY ended 2020

15. The Board has set up an effective internal audit function which comprises of professionals who are
considered suitably qualified and experienced for the purpose and are conversant with the policies and
procedures of the Company.

16. The statutory auditors of the company have confirmed that they have been given a satisfactory rating
under the quality control review program of the ICAP and registered with Audit Oversight Board of
Pakistan, that they and all their partners are in compliance with International Federation of Accountants
(IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan and
that they and the partners of the firm involved in the audit are not a close relative (spouse, parent,
dependent and non-dependent children) of the chief executive officer, chief financial officer, head of
internal audit, company secretary or director of the company;

17. The statutory auditors or the persons associated with them have not been appointed to provide other
services except in accordance with the Act, these regulations or any other regulatory requirement and the
auditors have confirmed that they have observed IFAC guidelines in this regard.

18. We confirm that all requirements of regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have been
complied with.

Lt. Gen (R) Ali Kuli Khan Khattak

Chairman

September 30, 2020

60
 Annual
Report 2020
Review Report on the Statement of Compliance
Contained in Listed Companies
(Code of Corporate Governance)
Regulations, 2019
We have reviewed the enclosed Statement of Compliance with Listed Companies (Code of Corporate
Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of Ghandhara Industries
Limited (the Company) for the year ended June 30, 2020, in accordance with the requirements of regulation 36
of the Regulations.

The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our
responsibility is to review whether the Statement of Compliance reflects the status of the Company's
compliance with the provisions of the Regulations and report if it does not and to highlight any non-compliance
with the requirements of the Regulations. A review is limited primarily to inquiries of the Company's personnel
and review of various documents prepared by the Company to comply with the Regulations.

As a part of our audit of the financial statements we are required to obtain an understanding of the accounting
and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not
required to consider whether the Board of Directors' statement on internal control covers all risks and controls
or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance
procedures and risks.

The Regulations requires the Company to place before the Audit Committee, and upon recommendation of the
Audit Committee, place before the Board of Directors for their review and approval, its related party
transactions. We are only required and have ensured compliance of this requirement to the extent of the
approval of the related party transactions by the Board of Directors upon recommendation of the Audit
Committee.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of
Compliance does not appropriately reflect the Company's compliance, in all material respects, with the
requirements contained in the Regulations as applicable to the Company for the year ended June 30, 2020.

SHINEWING HAMEED CHAUDHRI & CO.

CHARTERED ACCOUNTANTS
KARACHI;

September 30, 2020

61
 GHANDHARA INDUSTRIES LIMITED

Report on the Audit of the Financial Statements

Opinion

We have audited the annexed financial statements of Ghandhara Industries Limited (the Company), which
comprise the statement of financial position as at June 30, 2020, and the statement of profit or loss and other
comprehensive income, the statement of changes in equity, the statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies and other
explanatory information, and we state that we have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purposes of the audit.

In our opinion and to the best of our information and according to the explanations given to us, the statement of
financial position, the statement of profit or loss and other comprehensive income, the statement of changes in
equity and the statement of cash flows together with the notes forming part thereof conform with the accounting
and reporting standards as applicable in Pakistan and give the information required by the Companies Act,
2017 (XIX of 2017), 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, 2020 and of the loss and other comprehensive income, the changes in equity
and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in
Pakistan. Our responsibilities under those standards are further described in the Auditors' Responsibilities for
the Audit of the Financial Statements section of our report. We are independent of the Company in accordance
with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as
adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical
responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.

62
 Annual
Report 2020
Following are the Key Audit Matters:

S.No. Key Audit Matter How the matter was addressed in our audit

1. Capitalization / revaluation of
property, plant and equipment

As disclosed in notes 5 and 19 to the Our audit procedures in respect of this area
financial statements, the Company, during included:
the year revalued its leasehold land and
building on leasehold land that resulted in Obtained an understanding of the management
net surplus / gain of Rs.1,751,086 controls over capitalization and on a sample basis, test
thousand. Also the Company incurred relevant controls over authorization and recording in
capital expenditure with additions of the system;
Rs.114,630 thousand made to its
operating fixed assets. On a sample basis, tested the costs incurred with
We identified the above matters as a key underlying supporting documentations i.e. purchase
audit matter as these represents orders, delivery challans, supplier invoices, payment
significant transactions and involves and other relevant documents;
certain estimates and judgements.
Evaluated the nature of costs on a sample basis to
ensure capitalization criteria of relevant accounting
and reporting standards;

Reviewed revaluation report of independent valuer for

revaluation of leasehold land and building on
leasehold land. Also, recalculated the computation for
revaluation surplus / gain; and

Considered the adequacy of the disclosures made in

the financial statements in relation to the above.

2. Stock-in-trade

Refer note 4.7 and 12 to the financial Our audit procedures in respect of this area
statements, the Company has included:
stock-in-trade aggregating Rs.7,547,063
thousand (2019: Rs.10,359,425 Observed physical inventory count procedures and
thousand) comprising raw materials, compared on a sample basis, physical count with
finished goods including trading goods valuations sheets;
and work in process. We identified this
area as a key audit matter because Compared on a sample basis specific purchases
stock-in-trade constitutes 39.87% of the and directly attributable cost with underlying
total assets of the Company as at June supporting documents;
30, 2020 and determining an appropriate
write down as a result of net realizable Compared the NRV, on a sample basis, to the cost
value (NRV) involves management of finished goods to assess whether any
judgement and estimation. adjustments are required to value stocks in
accordance with applicable accounting and
reporting standards; and

Considered the adequacy of the disclosures made

in the financial statements in relation to the above.

63
 GHANDHARA INDUSTRIES LIMITED

Information Other than the Financial Statements and Auditors' Report Thereon

Management is responsible for the other information. The other information comprises the information included
in the Annual Report, but does not include the financial statements and our auditors' report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.

Responsibilities of Management and Board of Directors for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance
with the accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act,
2017 (XIX of 2017) and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.

Board of directors are responsible for overseeing the Company’s financial reporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:

. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.

. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

. Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern.

64
 Annual
Report 2020
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report.
However, future events or conditions may cause the Company to cease to continue as a going concern.

. Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.

We communicate with the board of directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.

We also provide the board of directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the board of directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

Based on our audit, we further report that in our opinion:

a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX
of 2017);

b) the statement of financial position, the statement of profit or loss and other comprehensive income, the
statement of changes in equity and the statement of cash flows together with the notes thereon have been
drawn up in conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books
of account and returns;

c) investments made, expenditure incurred and guarantees extended during the year were for the purpose
of the Company’s business; and

d) no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

The engagement partner on the audit resulting in this independent auditors' report is Osman Hameed Chaudhri.

SHINEWING HAMEED CHAUDHRI & CO.

CHARTERED ACCOUNTANTS
KARACHI;

September 30, 2020

65
 Financial Statements
For the year ended June 30, 2020
 GHANDHARA INDUSTRIES LIMITED

Statement of Financial Position

AS AT JUNE 30, 2020

Note 2020 2019

(Rupees in thousand)
ASSETS

Non-Current Assets
Property, plant and equipment 5 4,453,947 2,770,727
Intangible assets 6 136 260
Investment property 7 88,169 88,413
Long term investment 8 1,400 1,400
Long term loans 9 1,957 3,639
Long term deposits 10 23,738 21,948
Deferred taxation 11 2,473 87,158
4,571,820 2,973,545
Current assets

Stores 22,469 8,328
Stock-in-trade 12 7,547,063 10,359,425
Trade debts 13 638,588 88,406
Loans and advances 14 150,547 133,759
Trade deposits and prepayments 15 4,260,928 542,834
Other receivables 16 9,263 6,981
Sales tax refundable / adjustable 162,303 390,789
Taxation - payments less provision 1,225,567 918,194
Cash and bank balances 17 340,906 500,441
14,357,634 12,949,157

Total assets 18,929,454 15,922,702

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

67
 Annual
Report 2020
Statement of Financial Position
AS AT JUNE 30, 2020

Note 2020 2019

(Rupees in thousand)
EQUITY AND LIABILITIES

Share capital and reserves
Share capital 18 426,088 426,088

Revenue reserves
Unappropriated profit 897,105 2,172,735

Capital reserve
Surplus on revaluation of fixed assets 19 3,751,466 2,049,561
Total equity 5,074,659 4,648,384

Non current liabilities

Lease liabilities 20 66,237 51,745
Compensated absences 21 15,802 13,045
Deferred liabilities 22 21,425 19,759
103,464 84,549
Current liabilities
Trade and other payables 23 6,872,811 4,582,157
Unpaid dividends 24 78,959 78,959
Unclaimed dividends 21,973 22,151
Accrued mark-up / interest 25 229,782 196,453
Short term borrowings 26 6,518,396 6,296,614
Current maturity of lease liabilities 20 29,410 13,435
13,751,331 11,189,769
Total liabilities 13,854,795 11,274,318

Contingencies and commitments 27

Total equity and liabilities 18,929,454 15,922,702

The annexed notes from 1 to 49 form an integral part of these financial statements.

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

68
 GHANDHARA INDUSTRIES LIMITED

Statement of Profit or Loss and

Other Comprehensive Income
FOR THE YEAR ENDED JUNE 30, 2020
Note 2020 2019
(Rupees in thousand)

Sales 28 11,788,254 13,909,913

Cost of sales 29 (11,095,490) (12,308,321)
Gross profit 692,764 1,601,592
Distribution cost 30 (493,750) (534,954)
Administrative expenses 31 (272,309) (267,664)
Other expenses 32 (22,852) (26,368)
Other income 33 54,656 117,383
(Loss) / profit from operations (41,491) 889,989
Finance cost 34 (970,785) (751,019)
(Loss) / profit before taxation (1,012,276) 138,970
Taxation 35 (270,607) (79,022)
(Loss) / profit after taxation (1,282,883) 59,948
Other comprehensive income
Items that will not be reclassified to profit or loss
Re-measurement of staff retirement
benefit obligation (1,040) (1,242)
Impact of deferred tax 302 360
(738) (882)
Surplus on revaluation of fixed assets 1,751,086 200,903
Impact of deferred tax (41,190) (3,365)
1,709,896 197,538
Other comprehensive income for the year - net of tax 1,709,158 196,656
Total comprehensive income for the year 426,275 256,604
(Rupees)
Basic and diluted (loss) / earnings per share 36 (30.11) 1.41

The annexed notes from 1 to 49 form an integral part of these financial statements.

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

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Report 2020
Statement of Changes in Equity
FOR THE YEAR ENDED JUNE 30, 2020

Revenue Capital
Reserve - Reserve -
Share
Unappro- Surplus on Total
capital
priated revaluation of
profit fixed assets
(Rupees in thousand)

Balance as at July 1, 2018 213,044 2,651,071 1,860,014 4,724,129

Transaction with owners,
recognised directly in equity

Final dividend for the year ended June 30, 2018
at the rate of Rs.15.6 per share - (332,349) - (332,349)
Bonus shares issued 213,044 (213,044) - -

Total comprehensive income for the year

ended June 30, 2019
Profit for the year - 59,948 - 59,948
Other comprehensive (loss) / income - (882) 197,538 196,656
- 59,066 197,538 256,604
Transfer from surplus on revaluation of
fixed assets on account of incremental
depreciation - net of deferred taxation - 7,991 (7,991) -
Balance as at June 30, 2019 426,088 2,172,735 2,049,561 4,648,384

Transaction with owners,
recognised directly in equity

Total comprehensive income for the year
ended June 30, 2020

Loss for the year - (1,282,883) - (1,282,883)
Other comprehensive (loss) / income - (738) 1,709,896 1,709,158
- (1,283,621) 1,709,896 426,275

Transfer from surplus on revaluation of
fixed assets on account of incremental
depreciation - net of deferred taxation - 7,991 (7,991) -
Balance as at June 30, 2020 426,088 897,105 3,751,466 5,074,659

The annexed notes from 1 to 49 form an integral part of these financial statements.

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

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 GHANDHARA INDUSTRIES LIMITED

Statement of Cash Flows

FOR THE YEAR ENDED JUNE 30, 2020

Note 2020 2019

(Rupees in thousand)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from / (used in) operations 37 1,174,186 (833,004)
Gratuity paid (18,866) (84,447)
Compensated absences paid (502) (457)
Finance cost paid (922,962) (599,548)
Income tax paid (534,183) (611,224)
Long term loans - net 1,682 666
Long term deposits - net (1,790) (10,411)
Net cash used in operating activities (302,435) (2,138,425)

CASH FLOWS FROM INVESTING ACTIVITIES

Fixed capital expenditure (106,315) (232,011)
Sale proceeds from disposal of operating fixed assets 8,223 17,032
Interest received 3,415 3,340
Net cash used in investing activities (94,677) (211,639)

CASH FLOWS FROM FINANCING ACTIVITIES

Lease liabilities - net 15,973 (11,195)
Dividend paid (178) (300,324)
Net cash generated from / (used in) financing activities 15,795 (311,519)
Net decrease in cash and cash equivalents (381,317) (2,661,583)
Cash and cash equivalents at beginning of the year (5,796,173) (3,134,590)
Cash and cash equivalents at end of the year 38 (6,177,490) (5,796,173)

The annexed notes from 1 to 49 form an integral part of these financial statements.

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

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Report 2020
Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2020

1. CORPORATE INFORMATION

Ghandhara Industries Limited (the Company) was incorporated on February 23, 1963. The Company’s
shares are quoted on Pakistan Stock Exchange Limited. The principal activity is the assembly,
progressive manufacturing and sale of Isuzu trucks, buses and pick ups. The registered office of the
Company is at F-3, Hub Chowki Road, S.I.T.E, Karachi. The manufacturing facilities of the Company
are located at S.I.T.E., Karachi with regional offices at Lahore, Multan, Rawalpindi and Peshawar.

2. BASIS OF PREPARATION

2.1 Statement of compliance

These financial statements have been prepared in accordance with the accounting and reporting
standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan
comprise:

- International Financial Reporting Standards (IFRS) issued by the International Accounting

Standards Board (IASB) as notified under the Companies Act, 2017; and

- Provision of and directives issued under the Companies Act, 2017.

Where provision of and directives issued under the Companies Act, 2017 differ from the IFRS, the
provision of and directives issued under the Companies Act, 2017 have been followed.

2.2 Functional and presentation currency

These financial statements are presented in Pakistan Rupees which is the functional currency of the
Company and figures are rounded off to the nearest thousand of Rupees unless otherwise specified.

2.3 New and amended standards and interpretations

2.3.1 Standards and amendments to approved accounting standards effective in current year

New and amended standards mandatory for the first time for the financial year beginning July 1, 2019:

(a) The Company has adopted IFRS 16 ‘Leases’ from July 1, 2019. IFRS 16 ‘Leases’ primarily affects
the accounting by lessees and results in the recognition of almost all leases on statement of
financial position. The standard removes distinction between operating and finance leases and
requires recognition of an asset (the right of use the leased item) and a financial liability to pay
rentals for virtually all lease contracts. An optional exemption exists for short-term and low-value
leases. The accounting by lessors does not significantly changed. Some differences may arise as
a result of the new guidance on the definition of a lease. Under IFRS 16, a contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration.

The Company has applied IFRS 16 using the modified retrospective approach. Under this
approach, the cumulative effect of initial application to be recognized in retained earnings at July
1, 2019. Accordingly, the comparative information presented for 2019 has not been restated - i.e.
it is presented as previously reported under IAS 17 and related interpretations. The details of the
changes in accounting policies are disclosed below:

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As a lessee, the Company previously classified leases as operating or finance leases based on its
assessment of whether the lease transferred substantially all of the risks and rewards of ownership
Under IFRS 16 the Company recognizes right of use assets and lease liabilities for leases - i.e.
these leases are on the statement of financial position. On initial application, the Company has also
elected to use the recognition exemptions for lease contracts that, at the commencement date,
have a lease term of 12 months or less and do not contain a purchase option (‘short-term leases’),
and lease contracts for which the underlying asset is of low value (‘low-value assets’). Some lease
contracts of the Company are extendable through mutual agreement between the Company and
the lessor or cancellable by both parties immediately or on short notice. In assessing the lease
term for the adoption of IFRS 16, the Company concluded that such contracts are short-term in
nature. The Company recognizes the lease payments associated with these leases as an expense
in statement of profit or loss.

The accounting polices relating to Company’s right of use asset and related lease liabilities are
disclosed in note 4.2, details pertaining to right of use assets are disclosed in note 5.10 and related
leases are disclosed in note 20.

(b) Amendment to IAS 12, ‘Income taxes’ as part of annual improvement 2015-2017 cycle is applicable
on accounting periods beginning on or after January 1, 2019. The amendment clarifies that all
income tax consequences of dividends (including payments on financial instruments classified as
equity) are recognised consistently with the transactions that generated the distributable profits –
i.e. in profit or loss, other comprehensive income or equity.

(c) Amendments to IAS 23, ‘Borrowing Costs’ as part of annual improvement 2015-2017 cycle is
applicable on accounting periods beginning on or after January 1, 2019. The amendments
clarify that the general borrowings pool used to calculate eligible borrowing costs excludes
only borrowings that specifically finance qualifying assets that are still under development or
construction. Borrowings that were intended to specifically finance qualifying assets that are now
ready for their intended use or sale – or any non qualifying assets – are included in that general
pool. This amendment will be applied prospectively to borrowing costs incurred on or after the date
an entity adopts the amendments.

The other new standards, amendments to approved accounting standards that are mandatory for the
financial year beginning on July 1, 2019 are considered not to be relevant or to have any significant
effect on the Company’s financial reporting and operations.

2.3.2 Standards, amendments to approved accounting standards and interpretations that are not yet
effective and have not been early adopted by the Company

The following new standards and amendments to approved accounting standards are not effective for
the financial year beginning on July 1, 2019 and have not been early adopted by the Company:

(a) Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors is applicable on accounting periods beginning on
or after January 1, 2020. The amendments are intended to make the definition of material in IAS
1 easier to understand and are not intended to alter the underlying concept of materiality in IFRS
Standards. In addition, the IASB has also issued guidance on how to make materiality judgements
when preparing their general purpose financial statements in accordance with IFRS Standards.
Refined definition of materiality - Information is material if omitting, misstating or obscuring it could
reasonably be expected to influence decisions that the primary users of general purpose financial
statements make on the basis of those financial statements, which provide financial information
about a specific reporting entity.

(b) Amendments to IFRS 16 ‘Leases’ is applicable on accounting periods beginning on or after June 1,
2020. Under IFRS 16, rent concessions often met the definition of a lease modification, unless they
were envisaged in the original lease agreement. The amendment exempts lessees from having
to consider individual lease contracts to determine whether rent concessions occurring as a direct
consequence of the covid-19 pandemic are lease modifications and allows lessees to account for
such rent concessions as if they were not lease modifications. It applies to covid-19-related rent
concessions that reduce lease payments due on or before June 30, 2021. This optional exemption
gives timely relief to lessees and enables them to continue providing information about their leases
that is useful to investors. The amendment does not affect lessors. The amendments does not
expect to have a material impact on the Company’s financial statements.
(c) Amendments to IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ is applicable for
accounting periods beginning on or after January 1, 2022. Under IAS 37, a contract is ‘onerous’

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when the unavoidable costs of meeting the contractual obligations – i.e. the lower of the costs
of fulfilling the contract and the costs of terminating it – outweigh the economic benefits. The
amendments clarify that the ‘costs of fulfilling a contract’ comprise both the incremental costs –
e.g. direct labour and materials; and an allocation of other direct costs – e.g. an allocation of the
depreciation charge for an item of property, plant and equipment used in fulfilling the contract.

(d) Amendment to IAS 16 ‘Property, plant and Equipment’ is applicable on accounting periods
beginning on or after January 1, 2022. The amendments prohibit a company from deducting from
the cost of property, plant and equipment amounts received from selling items produced while
the company is preparing the asset for its intended use. Instead, a company will recognise such
sales proceeds and related cost in profit or loss. The amendments apply retrospectively, but only
to items of PPE made available for use on or after the beginning of the earliest period presented
in the financial statements in which the company first applies the amendments.

(e) Amendments to IAS 1 ‘Presentation of Financial Statements’ is applicable on accounting periods

beginning on or after January 1, 2023. Under existing IAS 1 requirements, companies classify a
liability as current when they do not have an unconditional right to defer settlement of the liability
for at least twelve months after the end of the reporting period. As part of this amendments,
the requirement for a right to be unconditional has been removed and instead, the amendments
requires that a right to defer settlement must have substance and exist at the end of the reporting
period.

There are number of other standards, amendments and interpretations to the published standards that
are not yet effective and are also not relevant to the Company and, therefore, have not been presented
here.

3. BASIS OF MEASUREMENT

3.1 These financial statements have been prepared under the historical cost convention, except for certain
classes of property, plant and equipment which have been included at revalued amounts and staff
retirement benefit which has been recognised at present value as determined by the Actuary.

3.2 The preparation of financial statements in conformity with approved accounting standards requires
management to make judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods affected.

The areas where various assumptions and estimates are significant to the Company’s financial
statements or where judgement was exercised in application of accounting policies are as follows:

(i) Estimate of residual values and useful lives of depreciable and intangible assets (note 4.1, 4.2 and 4.3)

(ii) Lease term and discount rate for calculation of lease liabilities (note 4.2)

(iii) Provision for taxation (note 4.10)

(iv) Provision for staff benefits (note 4.12)

(v) Provisions (note 4.19)

4. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out
below. These polices have been consistently applied to all the years presented, unless otherwise
stated.

4.1 Property, plant and equipment

Leasehold land is stated at revalued amount and buildings on leasehold land are stated at revalued
amount less accumulated depreciation and impairment loss (if any). Other classes of operating fixed
assets are stated at cost less accumulated depreciation and impairment loss (if any). Capital work-in-
progress is stated at cost less impairment loss (if any). All expenditure connected to the specific assets

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incurred during the installation and construction period are carried under capital work-in-progress.
These are transferred to specific assets as and when the assets are available for use.

Plant and machinery were revalued in the year 1995 by independent valuers, and were presented at
their revalued amount. The Company subsequently adopted the cost model for plant and machinery,
and the revalued amounts were treated as deemed costs. The surplus on revaluation of these assets,
however, were recognised in accordance with section 235 of the repealed Companies Ordinance,
1984 applicable at that time.

Subsequent costs are included in the asset’s carrying amounts or recognised as a separate asset,
as appropriate, only when it is probable that future benefits associated with the item will flow to the
Company and the cost of the item can be measured reliably. All repairs and maintenances are charged
to the profit or loss as and when incurred.

Depreciation on all operating fixed assets is charged using the straight line method in accordance
with the rates specified in note 5.1 to these financial statements and after taking into account their
residual values. The depreciation method, residual values and useful lives of items of property, plant
and equipment are reviewed periodically and altered if circumstances or expectations have changed
significantly. Any change is accounted for as a change in accounting estimate by changing depreciation
charge for the current and future periods.

Depreciation on additions is charged from the month in which the assets become available for use,
while on disposals depreciation is charged upto the month of disposal.

Gains or losses on disposal or retirement of fixed assets are determined as the difference between the
sale proceeds and the carrying amounts of the assets and are included in the profit or loss.

Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does
not differ materially from their fair value. Any surplus on revaluation of fixed assets is recognised
in other comprehensive income and presented as a separate component of equity as “Surplus on
revaluation of fixed assets”, except to the extent that it reverses a revaluation decrease for the same
asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the
extent of the decrease previously charged. Any decrease in carrying amount arising on the revaluation
of fixed assets is charged to profit or loss to the extent that it exceeds the balance, if any, held in the
revaluation surplus on fixed assets relating to a previous revaluation of that asset. Each year, the
incremental depreciation charged on the revalued assets (net of deferred taxation) is reclassified from
surplus on revaluation of fixed assets to unappropriated profit. The revaluation reserve is not available
for distribution to the Company’s shareholders.

The Company assesses at each reporting date whether there is any indication that property, plant and
equipment 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 taken to profit or loss except for impairment loss on revalued assets,
which is adjusted against related revaluation surplus to the extent that the impairment loss does not
exceed the surplus on revaluation of that asset.

4.2 Right of use assets and related liabilities

The Company generally leases regional offices, ware houses and related properties. At the inception
of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. Lease terms are negotiated on an individual basis and contain a wide range of different
terms and conditions. The extension and termination options are incorporated in determination of lease
term only when the Company is reasonably certain to exercise these options.

Leases are recognised as right-of-use assets and corresponding liabilities at the date at which the
leased assets are available for use by the Company.

The lease liabilities are initially measured at the present value of the remaining lease payments at
the commencement date, discounted using the interest rate implicit in the lease, or if that rate cannot
be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its
incremental borrowing rate as the discount rate. At initial recognition, liabilities were discounted using the
Company’s incremental borrowing rate. Lease payment includes fixed payments with annual increments.
The lease liabilities are subsequently measured at amortised cost using the effective interest rate.

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Right-of-use assets are initially measured based on the initial amount of the lease liabilities adjusted for
any lease payments made at or before the commencement date, plus any initial direct costs incurred
and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying
asset or the site on which it is located, less any lease incentive received. The right-of-use assets are
depreciated on a straight line method over the lease term as this method most closely reflects the
expected pattern of consumption of future economic benefits. The carrying amount of the right-of-
use asset is reduced by impairment losses, if any. At transition, the Company recognised right of use
assets equal to the present value of lease payments.

Payments associated with short-term leases and leases of low-value assets are recognised on a
straight-line basis as an expense in statement of profit or loss. Short-term leases are leases with a
lease term of 12 months or less.

4.3 Intangible assets - computer software

Computer software licenses acquired by the Company are stated at cost less accumulated amortization.
Cost represents the cost incurred to acquire the software licenses and bringing them to use. The cost of
computer software is amortized over the estimated useful life i.e. 5 years using straight-line method.

Costs associated with maintaining computer software are charged to profit or loss as and when incurred.

4.4 Investments

4.4.1 Investment property

Property held for capital appreciation and rental yield, which is not in use of the Company is classified
as investment property. Investment property comprise of leasehold land and buildings.

Investment property are carried at cost or valuation (i.e. deemed cost) less accumulated amortization
/ depreciation and impairment, if any.

Investment property were revalued in 1996 by independent valuers and showed at revalued amounts.
The Company subsequently adopted cost model for investments property and the revalued amounts
were treated as deemed costs. The surplus on revaluation of these assets, however was recognised
in accordance with section 235 of the repealed Companies Ordinance, 1984.

Leasehold land and buildings are amortized / depreciated on straight line method at the rates stated in
note 7.

Maintenance and normal repairs are charged to profit or loss as and when incurred. Major renewals
and repairs are capitalised.

4.4.2 Long term investment

Investment in Subsidiary Company is carried at cost less impairment, if any.

4.5 Long term deposits

These are stated at cost which represents the fair value of the consideration given.

4.6 Stores

These are valued at cost determined on a first-in-first-out basis. Items in transit are stated at invoice
value plus other charges thereon accumulated upto the reporting date.

Provision for obsolete and slow moving stores is determined based on management’s estimate
regarding their future usability.

4.7 Stock-in-trade

Stock-in-trade is valued at the lower of cost and net realizable value except for goods in transit which
are stated at invoice values plus other charges thereon accumulated upto the reporting date. Cost in
relation to raw materials, components and trading stock (except for parts and accessories included
in trading stock which are valued on average basis) is arrived at principally on first in first out basis.
Cost of work in process and finished stocks including components include direct wages and applicable
manufacturing overheads.

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 GHANDHARA INDUSTRIES LIMITED

Net realizable value represents the estimated selling price in the ordinary course of business less cost
necessarily to be incurred in order to make the sale.

4.8 Trade debts and other receivables

Trade debts and other receivables are classified as financial assets at amortised cost according to
IFRS 9. Under IAS 39, trade and other receivables were previously classified as loans and receivables.

Trade and other debts are carried at original invoice amount being the fair value. Provision is made
against debts considered doubtful of recovery whereas debts considered irrecoverable are written
off. The Company uses simplified approach for measuring the expected credit losses for all trade and
other receivables including contract assets based on lifetime expected credit losses.

4.9 Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at amortised cost. For
the purposes of cash flow statement, cash and cash equivalents comprise of cash in hand, cash with
banks and short term borrowings under mark-up arrangements.

4.10 Taxation

Current

Provision for current year’s taxation is based on taxable income for the year at the current rates of
taxation after taking into account tax credits and tax rebates available, if any, and taxes paid under the
presumptive tax regime.

Deferred

The Company accounts for deferred taxation using the balance sheet liability method on temporary
differences arising between the tax base of assets and liabilities and their carrying amounts in the
financial statements. Deferred tax liability is recognised for taxable temporary differences and deferred
tax asset is recognised to the extent that it is probable that taxable profits will be available against
which the deductible temporary differences, unused tax losses and tax credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on the tax rates that have been enacted or
substantively enacted by the reporting date. Deferred tax is charged or credited in the profit or loss,
except in the case of items credited or charged to other comprehensive income / equity in which case
it is included in other comprehensive income / equity.

4.11 Finance lease / Assets subject to finance lease

Leases that transfer substantially all the risk and rewards incidental to ownership of an asset are
classified as finance leases. Assets on finance lease are capitalised at the commencement of the lease
term at the lower of the fair value of leased assets and the present value of minimum lease payments,
each determined at the inception of the lease. Each lease payment is allocated between the liability
and finance cost so as to achieve a constant rate on the finance balance outstanding. The finance cost
is charged to statement of profit or loss and is included under finance cost.

4.12 Retirement benefit obligations

4.12.1 Defined benefit plan

The Company operates a funded gratuity scheme. The scheme defines the amounts of benefits that an
employee will receive on or after retirement subject to a minimum qualifying period of service under the
scheme. The amount of retirement benefit is usually dependent on one or more factors such as age,
years of service and salary.

The liability recognised in the statement of financial position in respect of defined benefit plan is the
present value of the defined benefit obligation at the end of the reporting period less fair value of plan
assets. Contributions under the schemes are made on the basis of actuarial valuation. The valuation
of scheme is carried out annually by an independent expert, using the “Projected Unit Credit Method”
with the latest valuation being carried out as on June 30, 2020.

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The amounts arising as a result of re-measurements are recognised in the statement of financial
position immediately, with a charge or credit to other comprehensive income in the periods in which
they occur. Past-service cost, if any, are recognised immediately in income.

4.12.2 Defined contribution plan

The Company operates defined contribution plan (i.e. recognised provident fund scheme) for all its
permanent employees. The Company and the employees make equal monthly contributions to the
fund at the rate of 8.33% of the basic salary. The assets of the fund are held separately under the
control of trustees. The Company during the year have decided to close the Fund with effect from
January 1, 2020.

4.12.3 Compensated absences

Employees’ entitlements to annual leaves are recognised when they accrue to employees. A provision
is made for the estimated liability for annual leave as a result of services rendered by employees upto
the reporting date.

4.13 Trade and other payables

Trade and other payables are measured at cost which is the fair value of consideration to be paid in
future for goods and services received, whether or not billed to the Company.

4.14 Revenue recognition

The Company recognises revenue to depict the transfer of promised goods and services to customers
in an amount that reflects the consideration to which the Company expects to be entitled in exchange
for those good and services. The Company recognises revenue in accordance with that core principle
by applying the following steps:

– Identify the contract with a customer

– Identify the performance obligations in the contract
– Determine the transaction price
– Allocate the transaction price to the performance obligations in the contract
– Recognise revenue when the entity satisfies a performance obligation

Revenue from sale of goods is recognized when the Company satisfies a performance obligation (at
a point of time) by transferring promised goods to customer when the goods are being invoiced and
delivered to customers. Revenue is measured at the fair value of consideration received or receivable,
and represents amount receivable for goods supplied and sales tax.

Interest income is accrued on a time basis, by reference to the principal outstanding and the interest
rate applicable.

4.15 Borrowings and their cost

Borrowings are recorded at the proceeds received. Borrowing costs are recognised as an expense
in the period in which these are incurred except to the extent of borrowing cost that are directly
attributable to the acquisition, construction or production of a qualifying asset. Such borrowing costs,
if any, are capitalised as part of the cost of that asset.

4.16 Foreign currency translation

Transactions in foreign currencies are translated into Pak Rupee using the exchange rates prevailing
at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are
translated into Pak Rupee at the exchange rates prevailing at the reporting date. Exchange gains and
losses are taken to profit or loss.

4.17 Financial assets and liabilities

Financial assets and financial liabilities are recognised at the time when the Company becomes a
party to the contractual provisions of the instrument and derecognised when the Company loses
control of contractual rights that comprise the financial assets and in the case of financial liabilities

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when the obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on
derecognition of financial assets and financial liabilities is included in the profit or loss for the year. All
financial assets and liabilities are initially measured at cost, which is the fair value of the consideration
given and received respectively. These financial assets and liabilities are subsequently measured at
fair value, amortised cost or cost as the case may be. The particular measurement methods adopted
are disclosed in individual policy statement associated with each item.

4.18 Off-setting of financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported in the statement of financial
position when there is a legally enforceable right to offset the recognised amounts and there is an
intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal
course of business and in the event of default, insolvency or bankruptcy of the Company or the counter
party.

4.19 Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result
of past events, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation.

4.20 Dividend and appropriation to reserves

Dividend and other appropriations to reserves are recognised in the period in which they are approved.

4.21 Impairment loss

The carrying amounts of the Company’s assets are reviewed at each reporting date to identify
circumstances indicating occurrence of impairment loss or reversal of provisions for impairment losses.
If any indications exist, the recoverable amounts of such assets are estimated and impairment losses
or reversals of impairment losses are recognised in the profit or loss. Reversal of impairment loss is
restricted to the original cost of the asset.

4.22 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 profit or loss after taxation attributable to ordinary shareholders of the
Company by weighted average numbers of ordinary shares outstanding during the year.

4.23 Segment reporting

Segment information is presented on the same basis as that used for internal reporting purposes
by the Chief Operating Decision Maker, who is responsible for allocating resources and assessing
performance of the operating segments. On the basis of its internal reporting structure, the Company
considers itself to be a single reportable segment.

5. PROPERTY, PLANT AND EQUIPMENT Note 2020 2019

(Rupees in thousand)

Operating fixed assets 5.1 4,319,229 2,681,578

Capital work in progress 5.8 56,178 89,149
Right of use assets 5.10 78,540 -
4,453,947 2,770,727

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 5.1 Operating fixed assets

OWNED
Leasehold Buildings on Office Jigs and Leased
land Plant and Permanent Furniture Motor Trucks / lift Total
leasehold machines & Computers special Cars
machinery tools and fixture vehicles trucks
land equipment tools

At July 1, 2018
Revaluation / cost 1,609,050 247,685 164,877 10,345 11,605 95,981 30,815 21,397 21,160 56,822 60,267 2,330,004
Accumulated depreciation - 28,850 69,081 5,378 3,907 60,157 26,320 15,046 10,208 42,636 22,992 284,575

Net book value 1,609,050 218,835 95,796 4,967 7,698 35,824 4,495 6,351 10,952 14,186 37,275 2,045,429
Year ended June 30, 2019
Opening net book value 1,609,050 218,835 95,796 4,967 7,698 35,824 4,495 6,351 10,952 14,186 37,275 2,045,429
Additions - 131,436 71,094 16,262 1,388 32,133 20,923 10,400 2,769 274,633 30,298 591,336
Revaluation adjustments
- revaluation 189,300 11,603 - - - - - - - - - 200,903
- accumulated depreciation - - - - - - - - - - - -
189,300 11,603 - - - - - - - - - 200,903
Write offs
- cost - - 45,543 3,024 934 - - 3,320 813 - - 53,634
- accumulated depreciation - - (45,543) (3,024) (934) - - (3,320) (813) - - (53,634)
- - - - - - - - - - - -
Disposals
- cost - - - - - 11,406 11,232 538 - - - 23,176
- accumulated depreciation - - - - - (7,268) (936) (538) - - - (8,742)
- - - - - 4,138 10,296 - - - - 14,434
Transfer from leased to owned
- cost - - - - - - 7,807 - - - (7,807) -
- accumulated depreciation - - - - - - (5,575) - - - 5,575 -
- - - - - - 2,232 - - - (2,232) -
Depreciation charge - 13,075 16,006 2,275 713 14,762 3,584 2,060 2,967 74,757 11,457 141,656
Closing net book value 1,798,350 348,799 150,884 18,954 8,373 49,057 13,770 14,691 10,754 214,062 53,884 2,681,578
At June 30, 2019
Revaluation / cost 1,798,350 390,724 190,428 23,583 12,059 116,708 48,313 27,939 23,116 331,455 82,758 3,045,433
Accumulated depreciation - 41,925 39,544 4,629 3,686 67,651 34,543 13,248 12,362 117,393 28,874 363,855

Net book value 1,798,350 348,799 150,884 18,954 8,373 49,057 13,770 14,691 10,754 214,062 53,884 2,681,578
Year ended June 30, 2020
Opening net book value 1,798,350 348,799 150,884 18,954 8,373 49,057 13,770 14,691 10,754 214,062 53,884 2,681,578
Additions - 44,375 3,997 2,696 831 34,528 1,755 2,447 2,253 21,748 - 114,630
Revaluation adjustments
- revaluation 1,609,050 142,036 - - - - - - - - - 1,751,086
- accumulated depreciation - - - - - - - - - - - -
1,609,050 142,036 - - - - - - - - - 1,751,086
Disposals
- cost - - - - - 8,198 - - - - - 8,198
- accumulated depreciation - - - - - (2,980) - - - - - (2,980)
- - - - - 5,218 - - - - - 5,218
Transfer to right of use asset
- cost - - - - - - - - - - (82,758) (82,758)
- accumulated depreciation - - - - - - - - - - 28,874 28,874
- - - - - - - - - - (53,884) (53,884)
Depreciation charge - 20,620 18,894 2,748 794 17,019 3,461 2,489 3,389 99,549 - 168,963
Report

Closing net book value 3,407,400 514,590 135,987 18,902 8,410 61,348 12,064 14,649 9,618 136,261 - 4,319,229
Annual

At June 30, 2020

Revaluation / cost 3,407,400 577,135 194,425 26,279 12,890 143,038 50,068 30,386 25,369 353,203 - 4,820,193
Accumulated depreciation - 62,545 58,438 7,377 4,480 81,690 38,004 15,737 15,751 216,942 - 500,964

Net book value 3,407,400 514,590 135,987 18,902 8,410 61,348 12,064 14,649 9,618 136,261 - 4,319,229
Annual rates of depreciation - 5% 10% 12.50% 6.25% 20% 20% 12.50% 20% 33% 20%
2020

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 GHANDHARA INDUSTRIES LIMITED

Note 2020 2019

5.2 Depreciation charge has been allocated as follows: (Rupees in thousand)

Cost of goods manufactured 29.1 145,613 110,548
Distribution cost 30 6,958 5,426
Administrative expenses 31 16,392 25,682
168,963 141,656
5.3 Leasehold land and buildings on leasehold land of the Company had previously been revalued in
June 2010, June 2013, June 2016 and June 2019. Those revaluation exercises resulted in net sur-
plus of Rs.437.28 million, Rs.259.448 million, Rs.218.20 million and Rs.200.904 million respectively.
Leasehold land and buildings on leasehold land of the Company were again revalued in June 2020 by
Harvester Services (Private) Limited (Approved valuers of Pakistan Banks’ Association) on the basis
of present market value and depreciated market value (level 2 of fair value hierarchy). Different levels
of fair value have been defined in IFRS 13 and are mentioned in note 42.4.

The latest revaluation exercise resulted in a net surplus of Rs.1,751.09 million. At the time of lat-
est revaluation, forced sale value of this land was Rs.3,137.59 million. Out of the revaluation sur-
plus resulting from all the revaluations carried-out to date, an amount of Rs.3,918.584 million (2019:
Rs.2,143.483 million) remains un-depreciated as at June 30, 2020.

5.4 Leasehold land of the Company is located at S.I.T.E. Karachi with an area of 18.93 acres.

5.5 Had the operating fixed assets been recognised under the cost model, the carrying amount of building
on leasehold land would have been Rs.185.62 million (2019: Rs.150.61 million).

5.6 Operating fixed assets includes certain plant and machinery, permanent tools and jigs & special tools
with cost aggregating Rs.460.835 million (2019: Rs.384.354 million) and net book value of Rs.227.677
million (2019: Rs.259.333 million) which is held by Ghandhara Nissan Limited - a related party as
these fixed assets are used for assembling of the Company’s products.

5.7 The details of operating fixed assets disposed off during the year are as follows:

Accu- Net
Net Sale De- Mode of
Particulars Cost muated (Loss) / (loss) / Particulars
book pro- ferred disposal
of assets depreci- gain gain on of buyers
value ceeds Gain
ation disposal
Item having book value
more than Rs. 500,000 each


Motor Vehicle 4,503 901 3,602 4,400 798 (798) - Sale and lease back Orix Modaraba
Mobile work shop 3,000 1,500 1,500 3,500 2,000 - 2,000 Negotiation Logistica
7,503 2,401 5,102 7,900 2,798 (798) 2,000

Item having book value
less than Rs. 500,000 each 695 579 116 323 207 - 207 Company policy Hadi Anwar ul
Haq - Employee

June 30, 2020 8,198 2,980 5,218 8,223 3,005 (798) 2,207

June 30, 2019 23,176 8,742 14,434 17,032 2,598 (673) 1,925

5.8
Capital work in progress 2020 2019
(Rupees in thousand)
Advances made for:
- Buildings on leasehold land 8,163 47,312
- Plant and machinery 44,214 36,388
- Vehicles - 1,653
- Computer software 3,801 3,796
56,178 89,149

5.9 Capital work in progress include items with aggregating Rs.Nil (2019: Rs.5.26 million) which are locat-
ed at the plant of Ghandhara Nissan Limited - a related party. Once capitalized, the assets will be used
for assembling of the Company’s products.

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5.10 Right of use assets Note 2020 2019
(Rupees in thousand)
Transfer from operating fixed assets costing
Rs.82.758 million 53,884 -
Transition effect on initial application of IFRS 16 32,380 -
Addition / transfer from owned 19,609 -
Depreciation charged during the year 5.11 (27,333) -
Net book value at end of the year 78,540 -

5.11 Depreciation expense relating to right of use asset - properties of Rs.2.064 million has been charged in
‘Cost of sales’, Rs.11.313 million in ‘Distribution cost’ and Rs.13.956 million in ‘Administrative expenses’.

6. INTANGIBLE ASSETS Note 2020 2019

(Rupees in thousand)
These represent computer software licenses.
Cost
At June 30, 2,130 2,130
Accumulated amortization
At beginning of the year 1,870 1,746
Add: charge for the year 6.1 124 124
At end of the year 1,994 1,870
Net book value 136 260
Annual rate of amortization 20% 20%

6.1 Amortization charge for the year has been grouped under administrative expenses (note 31).

7. INVESTMENT PROPERTY Buildings on

Leasehold
leasehold Total
land
land
(Rupees in thousand)
At July 1, 2018
Cost 97,392 416 97,808
Accumulated amortization / depreciation 8,745 406 9,151
Net book value 88,647 10 88,657

Year ended June 30, 2019

Opening net book value 88,647 10 88,657
Amortization / depreciation charge 243 1 244
Closing net book value 88,404 9 88,413

At June 30, 2019

Cost 97,392 416 97,808
Accumulated amortization / depreciation 8,988 407 9,395
Net book value 88,404 9 88,413

Year ended June 30, 2020

Opening net book value 88,404 9 88,413
Amortization / depreciation charge 243 1 244
Closing net book value 88,161 8 88,169

At June 30, 2020

Cost 97,392 416 97,808
Accumulated amortization / depreciation 9,231 408 9,639
Net book value 88,161 8 88,169
Amortization / depreciation rate - per annum 0.25% 2.5%

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7.1 Amortization / depreciation charge for the year has been grouped under administrative expenses (note
31).

7.2 In the opinion of the directors, the market value of investment property at the reporting date has not
changed materially from last year.

8. LONG TERM INVESTMENT - at cost Note 2020 2019

(Rupees in thousand)
Subsidiary Company - Unquoted
Marghzar Industries (Private) Limited
140,000 (2019: 140,000) fully paid
ordinary shares of Rs.10 each. 1,400 1,400
Equity held: 70% (2019: 70%)

9. LONG TERM LOANS - Secured, considered good

Loans due from:
Related parties - Key Management Personnel 110 340
Other employees 3,656 6,156
9.1 3,766 6,496
Less: amounts recoverable within one year and
grouped under current assets
Related parties - Key Management Personnel 110 240
Other employees 1,699 2,617
14 1,809 2,857
1,957 3,639

9.1 Interest free loans have been provided to employees under their terms of employment. These are
repayable in monthly instalments over a period of one to five years. These are secured against their
respective vested retirement benefit.

9.2 Maximum aggregate amount of loans due from key management personnel at the end of any month
during the year was Rs.0.44 million (2019: Rs.0.38 million).

10. LONG TERM DEPOSITS - Considered good 2020 2019

(Rupees in thousand)
Deposit held with / for:
- Leasing companies 13,599 11,809
- Utilities and rental agreements 8,587 8,594
- Others 1,552 1,545
23,738 21,948
11. DEFERRED TAXATION - Net

This is composed of following:
- accelerated tax depreciation allowance (16,564) (35,826)
- surplus on revaluation of fixed assets (90,817) (52,891)
- liabilities against assets subject to finance lease 4,961 3,276
- gain on sale and lease back of fixed assets 358 259
- provision for gratuity 5,856 5,471
- provision for workers profit participation fund - 2,150
- provision for doubtful balances 11,861 6,986
- unabsorbed tax depreciation / unsed tax losses 85,131 156,046
- others 1,687 1,687
2,473 87,158

11.1 As at June 30, 2020, the Company has unused tax losses aggregating Rs.1,397.012 million. Deferred
tax asset on un-used losses has not been recognised on prudent basis.

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12. STOCK-IN-TRADE 2020 2019
(Rupees in thousand)
Raw materials and components
- In hand 4,170,587 6,969,265
- In transit 396,519 330,902
4,567,106 7,300,167
Work-in-process 116,438 153,698
Finished goods including components 2,100,456 2,295,343
Trading stocks 763,063 610,217
7,547,063 10,359,425

12.1 Stock-in-trade includes stock of Rs.3,641.64 million (2019: Rs.8,559.17 million) held with third parties
out of which stock of Rs.3,210.75 million (2019: Rs.7,880.86 million) is held with Ghandhara Nissan
Limited (an Associated Company) for assembly.

13. TRADE DEBTS - Unsecured Note 2020 2019

(Rupees in thousand)
Considered good
Government and semi-government agencies 1,287 2,072
Others 637,301 86,334
638,588 88,406
Consider doubtful - others 7,950 3,242
646,538 91,648
Less: provision for expected credit losses 13.3 7,950 3,242
638,588 88,406

13.1 The ageing of trade debts at reporting date is as follows:

2020 2019 2020 2019

Associated Company Others
(Rupees in thousand)

Upto 30 days - - 164,457 27,584
31 - 180 days - - 147,578 15,646
Over 180 days - - 334,503 48,418
- - 646,538 91,648

13.2 The maximum aggregate amount of trade receivable from related parties at the end of any month
during the year was Rs.Nil (2019: Rs.0.013 million).

13.3 Provision for expected credit loss

2020 2019

(Rupees in thousand)

Balance at beginning of the year 3,242 2,267

Provision for the year 4,708 975
Balance at end of the year 7,950 3,242

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14. LOANS AND ADVANCES - Unsecured Note 2020 2019

(Rupees in thousand)
Considered good
Current portion of long term loans to employees 9 1,809 2,857

Advances due from:

- employees 14.1 5,537 2,290
- suppliers, contractors and dealers 143,201 128,612
148,738 130,902
Considered doubtful
Advance to suppliers 5,274 5,359
Less: provision for doubtful advances 5,274 5,359
- -
150,547 133,759

14.1 Advances are given to employees to meet business expenses and are settled when expenses are
incurred.

15. TRADE DEPOSITS AND PREPAYMENTS 2020 2019

(Rupees in thousand)

Tender deposits 192,659 170,160

Less: provision for expected credit losses 25,112 12,925
167,547 157,235
Margins against bank guarantees 4,092,366 371,121
Less: provision for doubtful margin deposit 330 330
4,092,036 370,791
Margin against letters of credit - 12,734
Prepayments 1,345 2,074
4,260,928 542,834

16. OTHER RECEIVABLES - Unsecured

This amount is receivable from Isuzu Motors Limited, Japan on account of commission / claims.

17. CASH AND BANK BALANCES Note 2020 2019
(Rupees in thousand)
.
Cash in hand 2,652 2,264
Cash with banks on:
- current accounts 292,571 466,927
- saving accounts 17.1 47,874 33,441
- foreign currency accounts 17.2 42 42
340,487 500,410
Less: provision for a doubtful bank account 17.3 2,233 2,233
340,906 500,441

17.1 Saving accounts carry mark-up ranging from 2.46% to 2.61% (2019: 2.61% to 5.50%) per annum.

17.2 Foreign currency accounts include Japanese Yen (JPY) 31,559 equivalent to Rs.0.029 million and US
Dollars 126 equivalent to Rs.0.013 million (2019: JPY 31,559 equivalent to Rs.0.029 million and US
Dollars 126 equivalent to Rs.0.013 million).

17.3 This represents provision made against balances held with Indus Bank Limited under liquidation.

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18. SHARE CAPITAL 2020 2019
(Rupees in thousand)
18.1 Authorized capital

100,000,000 (2019: 50,000,000) ordinary
shares of Rs.10 each 1,000,000 500,000

18.2 Issued, subscribed and paid-up capital

2020 2019
(No. of shares)

17,650,862 17,650,862 Ordinary shares of Rs.10 each

fully paid in cash 176,509 176,509

358,206 358,206 Ordinary shares of Rs.10 each
issued for consideration other
than cash 3,582 3,582

24,599,776 24,599,776 Ordinary shares of Rs.10 each
issued as fully paid bonus shares 245,997 245,997

42,608,844 42,608,844 426,088 426,088

18.3 Movement in issued, subscribed and paid-up capital

2020 2019
(No. of shares)

42,608,844 21,304,422 Balance at beginning of the year 426,088 213,044

- 21,304,422 Ordinary shares of Rs.10 each
issued as fully paid bonus shares - 213,044

42,608,844 42,608,844 426,088 426,088

18.4 At June 30, 2020 and June 30, 2019 Bibojee Services (Private) Limited, the ultimate Holding Compa-
ny, held 16,686,794 (2019: 16,686,794) ordinary shares of Rs.10 each.

18.5 Ordinary shares held by related parties other than the u

ltimate Holding Company as at June 30,
2020 2019

(Rupees in thousand)

Ghandhara Nissan Limited 8,132,336 8,132,336

Universal Insurance Company Limited 2,368,296 2,368,296
The General Tyre and Rubber Company of Pakistan Limited 201,400 201,400
Bibojee Investments (Private) Limited 42,816 42,816
10,744,848 10,744,848

18.6 The holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at general meetings of the Company. All shares rank equally with regard
to Company’s residual assets.

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 GHANDHARA INDUSTRIES LIMITED

19. SURPLUS ON REVALUATION OF FIXED ASSETS Note 2020 2019

(Rupees in thousand)

Balance at the beginning of the year 2,102,452 1,912,804

Add: surplus arisen on revaluation carried-out

during the year 5.3 1,751,086 200,903

Less: transferred to unappropriated profit on account
of incremental depreciation for the year 11,255 11,255
3,842,283 2,102,452
Less: related deferred tax of:
- opening balance 52,891 52,790
- revaluation exercise for the year 41,190 3,365
- incremental depreciation for the year (3,264) (3,264)
- closing balance 90,817 52,891
Balance at end of the year 3,751,466 2,049,561

20. LEASE LIABILITIES

Balance at beginning of the year 65,180 42,750
Impact of initial application of IFRS 16 20.1 32,380 -
Additions during the year 17,896 30,298
Interest accrued 14,494 3,327
Repaid / adjusted during the year (34,303) (11,195)
95,647 65,180
Current portion grouped under current liabilities (29,410) (13,435)
Balance at end of the year 66,237 51,745

20.1 These represent lease contract for show room having estimated lease term of 4 years. These are dis-
counted using incremental borrowing rate (16.32%) of the Company.

The amount of future minimum lease payments together with the present value of the minimum lease
payments and the periods during which they fall due are as follows:
2020 2019
Finance Present Finance Present
Minimum cost value of Minimum cost value of
lease allocated minimum lease allocated minimum
payments to future lease payments to future lease
period payments period payments
(Rupees in thousand)

Not later than one year 35,570 6,160 29,410 20,019 6,584 13,435
Later than one year but
not later than five years 73,044 6,807 66,237 61,258 9,513 51,745

Total minimum
lease payments 108,614 12,967 95,647 81,277 16,097 65,180

20.2 The Company has acquired motor vehicles under finance lease arrangements from leasing companies
and a modaraba. The arrangements are secured by title of leased assets in the name of the lessor.
Rentals are payable in monthly instalments. Repair and insurance cost are borne by the Company.
The rates of financial charges applied, during the year, ranged from 8.85% to 17.59% (2019: 8.85% to
16.51%) per annum. At the end of the lease term, the ownership of the assets shall be transferred to
the Company against the security deposits paid.

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21. COMPENSATED ABSENCES Note 2020 2019
(Rupees in thousand)

Balance at beginning of the year 13,045 10,844
Provision for the year 3,259 2,658
16,304 13,502
Encashed during the year (502) (457)
Balance at end of the year 21.1 15,802 13,045

21.1 Includes liability in respect of key management personnel aggregating to Rs.5.74 million
(2019: Rs.3.60 million).

22. DEFERRED LIABILITIES Note 2020 2019

(Rupees in thousand)

Gain on sale and lease back of fixed assets 22.1 1,233 893
Staff retirement benefit - gratuity 22.2 20,192 18,866
21,425 19,759
22.1 Gain on sale and lease back of fixed assets
Balance at beginning of the year 893 555
Add: vehicle sale and lease back during the year 798 673
Less: amortization for the year 458 335
Balance at end of the year 1,233 893

The Company entered into sale and leaseback transaction during the preceding years which resulted
in finance leases. The excess of sale proceeds over the net book value of motor vehicle under sale
and leaseback arrangement has been recognised as deferred income and amortized over the period
of the lease term.

22.2 Staff retirement benefit - gratuity

22.2.1 As stated in note 4.12.1, the Company operates an approved funded gratuity scheme for its staff.

22.2.2 Plan assets held in trust are governed by local regulations which mainly includes Trust Act, 1882, the
Companies Act, 2017, Income Tax Rules, 2002 and Rules under the Trust deed of the Plan. Responsi-
bility for governance of the Plan, including investment decisions and contributions schedules lies with
the Board of Trustees. The Company appoints the trustees.

22.2.3 The latest actuarial valuations of the Scheme as at June 30, 2020 was carried out by an independent expert,
using the ‘Projected Unit Credit Method’. Details of the Scheme as per the actuarial valuation are as follows:

22.2.4 Statement of financial position - reconciliation 2020 2019

(Rupees in thousand)

Present value of defined benefit obligation 127,076 98,571
Fair value of plan assets (106,884) (79,705)
20,192 18,866
22.2.5 Movement in the present value of defined benefit obligation

Balance at beginning of the year 98,571 79,626
Current service cost 16,959 16,309
Interest cost 13,898 6,950
Re-measurement (273) 506
Benefits paid (2,079) (4,820)
Balance at end of the year 127,076 98,571

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 GHANDHARA INDUSTRIES LIMITED

22.2.6 Movement in the fair value of plan assets 2020 2019

(Rupees in thousand)

Balance at beginning of the year 79,705 -
Contributions 18,866 84,447
Benefits paid (2,079) (4,820)
Interest income 11,705 814
Re-measurements (1,313) (736)
Balance at end of the year 106,884 79,705

22.2.7 Expense recognised in statement of profit or loss

Current service cost 16,959 16,309
Interest cost - net 2,193 6,136
19,152 22,445
22.2.8 Re-measurement recognised in other comprehensive income

Remeasurement loss on plan asset 1,313 736
Experience adjustments (273) 506
1,040 1,242
22.2.9 Plan assets comprise of:

Term deposit receipts 90,391 79,078
Cash and cash equivalent 16,493 627
106,884 79,705
22.2.10 Actuarial assumptions used
(% per annum)
Discount rate 8.50 14.25
Expected rate of increase in future salaries 7.50 13.25
Mortality rates (for death in service) SLIC SLIC
2001-2005 2001-2005

22.2.11 Sensitivity analysis for actuarial assumptions

The sensitivity of the defined benefit obligation to changes in principal assumptions is:

Impact on define benefit obligation

Increase in Decrease in
Change in assumption assumption
assumption
(Rupees in thousand)

Discount rate 1.00% 115,610 140,492

Increase in future salaries 1.00% 140,492 115,411

The sensitivity analysis is based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and change in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the
same method (present value of defined benefit obligation calculated with the project unit credit method
at the end of reporting period) has been applied as when calculating the gratuity liability recognised
within the statement of financial position.

The methods and types of assumptions used in preparing the sensitivity analysis did not change
compared to the previous period.

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22.2.12 Based on actuary’s advice, the expected charge for the year ending June 30, 2021 amounts to Rs.20.75
million.

22.2.13 The weighted average duration of the scheme is 11 years.

22.2.14 Historical information 2020 2019 2018 2017 2016

(Rupees in thousand)
Present value of defined
benefit obligation 127,076 98,571 79,626 44,592 36,169

Experience adjustment (273) 506 16,676 1,934 521

22.2.15 Expected maturity analysis of undiscounted retirement benefit plan:

Less than Between Between Over 5

Total
a year 1-2 years 2-5 years years
(Rupees in thousand)
At June 30, 2020 4,015 6,783 37,994 293,629 342,421

23. TRADE AND OTHER PAYABLES Note 2020 2019

(Rupees in thousand)

Creditors 452,497 517,496
Accrued liabilities 185,168 250,474
Contract liabilities - advances from customers 23.1 5,454,130 3,163,734
Advance against sale of investment in
immovable property 5,000 5,000
Payable to trustees’ provident fund - 200
Royalty payable 44,190 36,445
Retention money 20 20
Withholding tax 30,938 26,627
Custom duty payable 537,594 445,011
Due to related parties 23.2 145,672 117,751
Due to the Subsidiary Company 2,526 2,454
Workers’ Profit Participation Fund 23.3 - 7,413
Workers’ welfare fund 23.4 - -
Others 15,076 9,532
6,872,811 4,582,157

23.1 These represent advances from customers against sale of vehicle and carry no mark-up.

23.2 Due to related parties 2020 2019

(Rupees in thousand)

Ghandhara Nissan Limited 93,745 94,650
The General Tyre & Rubber
Company of Pakistan Limited 39,959 13,637
Rahman Cotton Mills Limited 5,400 3,600
Gammon Pakistan Limited - 26
Waqf-e-Kuli Khan 5,818 5,818
Ghandhara DF (Private) Limited 750 20
145,672 117,751

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 GHANDHARA INDUSTRIES LIMITED

23.3 Workers’ profit participation fund 2020 2019

(Rupees in thousand)

Balance at beginning of the year 7,413 105,162
Add: allocation for the year - 7,314
Add: interest on funds utilised in the
Company’s business 2,443 9,829
9,856 122,305
Less: payments made during the year 9,856 114,892
Balance at end of the year - 7,413

23.4 Workers’ welfare fund

Balance at beginning of the year - 34,007
Less: paid during the year - 34,007
Balance at end of the year - -

24. Cash dividend and issuance of bonus shares to M/s. Essar Asset Management (Pvt.) Limited has been
withheld in view of the restraining order dated November 16, 2018 passed by the Hon’ble High Court
of Sindh in Suit No. 2149 of 2018.

25. ACCRUED MARK-UP / INTEREST Note 2020 2019

(Rupees in thousand)
Mark-up / interest accrued on:
- short term borrowings - secured 225,268 191,939
- long term loans - unsecured 4,514 4,514
229,782 196,453
26. SHORT TERM BORROWINGS - Secured

Finance against imported merchandise 26.1 2,691,056 2,941,765
Istisna 26.2 2,396,073 1,440,727
Murabaha 26.2 10,313 160,888
Running finance / Musharakah 26.4 1,420,954 1,753,234
6,518,396 6,296,614

26.1 The Company has arranged facilities aggregating Rs.9,807 million (2019: Rs.11,750 million) for opening
of letters of credit from banks. These facilities are secured against cash margin and consignment
of import documents in bank’s favour. Finance against import merchandise (FIM) / musawamah
aggregating Rs.4,650 million (2019: Rs.7,050 million) are also available as sub-limit of abovementioned
facilities. FIM is secured against pledge of goods. Mark-up on FIM is payable on quarterly basis at rate
ranging from Matching KIBOR plus 0.5% to 1.70% per annum (2019: at rate ranging from Matching
KIBOR plus 0.7% to 1.70 % per annum). Profit on import Murabaha is payable on 180 days basis at
the rate ranging from 3 months KIBOR plus 0.70% to 1.2% per annum (2019: at rate ranging from
matching matching KIBOR plus 0.6% to 1.75% per annum). These facilities are maturing on various
dates latest by February 28, 2021.

26.2 The Istisna facility of Rs.2,582 million (2019: Rs.2,450 million) with a tenor of 180 days (2019: 180
days) and Murabaha facility of Rs.2,232 million (2019: Rs.4,500 million) are available from Banks.
Profit on both facilities ranges from KIBOR (matching) plus 0.7% to 2.25% (2019: KIBOR (matching)
plus 0.6% to 1.75%) and is payable along with the repayment of principal. These facilities are secured
against first pari passu hypothecation charge on current assets of Rs.4,667 million (2019: Rs.6,468
million). The facilities are available upto February 28, 2021.

26.3 The Company has foreign / inland bills discounting facility of Rs.150 million (2019: Rs.150 million). The
facility is secured against lien over accepted bills under LCs. The facility has a maximum tenor of 180
days on roll over basis. The facility has one year validity on roll over basis and is due for renewal on
December 31, 2020.

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26.4 The Company has facilities for short-term running finance amounting Rs.1,440 million (2019: Rs.1,650
million) from banks. Mark-up is based on rates ranging from 1 month KIBOR plus 1.25% to 3 months
KIBOR plus 0.75% to 1.10% per annum (2019: rates ranging from 1 month KIBOR plus 0.6% to 3
months KIBOR plus 1.10% per annum) payable on quarterly basis. The facilities are primarily secured
against first pari passu charge by way of hypothecation over stocks and book debts aggregating
Rs.1,468 million (2019: Rs.2,200 million). These facilities are collateralized against equitable mortgage
over land and buildings for an amount of Rs.300 million (2019: Rs.300 million). These facilities have
one year validity on roll over basis and is due for renewal on December 31, 2020.

26.5 The facility for bank guarantees of Rs.9,841 million including sublimit of Rs.1,600 million of running
finance (2019: Rs.6,209 million including sublimit of Rs.1,250 million of running finance) is also available
from banks. These facilities are secured against cash margin and equitable mortgage over immovable
assets of the Company to an extent of Rs.3,972 million (2019: Rs.6,697 million). The facilities shall be
available latest by December 31, 2020.

27. CONTINGENCIES AND COMMITMENTS

27.1 Contingencies

(i) Suit against the Company by the supplier for the recovery of Rs.25.87 million as compensation for
breach of agreement. The suit is being defended by the Company on a number of legal grounds.
The suit is at present in evidence stage and the Company has plausible defence.

(ii) Various demands have been raised by the Central Excise and Sales Tax Departments aggregating
Rs.4.90 million. The Company filed Sales Tax Reference in High Court of Sindh against the order
of Customs, Excise and Sales Tax Appellate Tribunal (the Tribunal). The Sales Tax Reference had
been decided vide order dated January 21, 2009 wherein the High Court of Sindh has set aside
the order of the Tribunal and remanded back the case to the Tribunal to pass order in accordance
with law. The Tribunal through order dated October 9, 2015, disposed off the matter by remanding
the case to Assessing officer. No provision has been made in these financial statements as the
management believes that it will have a favourable decision.

27.2 Commitments 2020 2019

(Rupees in thousand)

Bank guarantees 7,547,916 3,943,290
Letters of credit 663,298 1,453,626

28. SALES - Net

Manufactured goods
Gross sales
- local 13,029,371 15,431,767
- export 43,501 30,015
13,072,872 15,461,782

Less: sales tax 1,893,059 2,244,585
11,179,813 13,217,197
Trading goods
Gross sales - local 729,153 814,608
Less: sales tax 120,712 121,892
608,441 692,716
11,788,254 13,909,913

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29. COST OF SALES Note 2020 2019

(Rupees in thousand)
Manufactured goods
Stocks at beginning of year 2,295,343 1,594,755
Cost of goods manufactured 29.1 10,506,469 12,669,032
12,801,812 14,263,787
Stocks at end of year (2,100,456) (2,295,343)
10,701,356 11,968,444
Trading goods
Stocks at beginning of year 610,217 368,506
Purchases 546,980 581,588
1,157,197 950,094
Stocks at end of year (763,063) (610,217)
394,134 339,877
11,095,490 12,308,321
29.1 Cost of goods manufactured

Raw materials and components consumed 29.2 9,539,407 11,618,880
Stores consumed 78,291 96,168
Salaries, wages and other benefits 29.3 201,607 227,395
Fuel and power 25,134 18,717
Rent, rates and taxes 6,357 5,776
Insurance 20,434 16,380
Research and development 1,893 5,223
Repair and maintenance 11,262 37,996
Travelling and entertainment 7,656 9,650
Vehicle running and maintenance 683 1,816
Printing, stationery and office supplies 703 643
Communication 460 410
Royalty expense 29.4 29,821 47,449
Outside assembly charges 375,600 494,135
Depreciation on operating fixed asset 5.2 145,613 110,548
Depreciation on right of use assets 5.11 2,064 -
Freight and handling 21,813 19,619
Other expenses 411 2,716
10,469,209 12,713,521
Work-in-process adjustment 37,260 (44,489)
10,506,469 12,669,032

29.2 Raw materials and components consumed

Stocks at beginning of year 7,300,167 4,815,750
Add : purchases including duties, taxes and other charges 6,806,346 14,103,297
14,106,513 18,919,047
Stocks at end of year (4,567,106) (7,300,167)
9,539,407 11,618,880

29.3 Salaries, wages and other benefits include Rs.9.89 million (2019: Rs.13.22 million) in respect of staff
retirement benefits.

29.4 Royalty charged in these financial statement pertains to Isuzu Motors Limited, Japan having
registered office at 6-26-1 Minami-Oi, Shinagawa-ku, Tokyo 140-8722 Japan and Isuzu Motor Co.
(Thailand) Limited having registered office at 38 Kor., Moo 9, Poochaosamingprai Rd., Samrong-Tai,
Phrapradaeng, Samutprakan 10130.

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30. DISTRIBUTION COST Note 2020 2019
(Rupees in thousand)

Salaries and benefits 30.1 86,429 111,168

Commission 208,614 257,782
Rent, rates and taxes 23,622 11,641
Insurance 1,091 2,184
Repair and maintenance 1,636 9,274
Utilities 1,861 520
Travelling and entertainment 11,566 18,515
Vehicle running and maintenance 2,374 1,892
Printing, stationery and office supplies 6,121 5,376
Communication 1,873 1,024
After sale services 31,695 13,283
Advertisement 33,801 46,143
Legal and professional charges 325 758
Late delivery charges 34,026 2,562
Depreciation on operating fixed asset 5.2 6,958 5,426
Depreciation on right of use assets 5.11 11,313 -
Freight forwarding and handling 21,466 43,141
Other expenses 8,979 4,265
493,750 534,954

30.1 Salaries and benefits include Rs.10.14 million (2019: Rs.12.01 million) in respect of staff retirement
benefits.

31. ADMINISTRATIVE EXPENSES Note 2020 2019
(Rupees in thousand)

Salaries and benefits 31.1 149,582 147,179
Staff training and ancillary cost 3,527 2,684
Rent, rates and taxes 9,502 6,417
Insurance 10,905 9,035
Repair and maintenance 9,649 13,180
Utilities 477 384
Travelling and entertainment 18,326 24,439
Vehicle running and maintenance 5,377 5,302
Printing, stationery and office supplies 10,045 6,901
Communication 1,862 2,490
Legal and professional charges 5,761 9,277
Fee and subscriptions 5,398 3,132
Depreciation on operating fixed asset 5.2 16,392 25,682
Depreciation on right of use assets 5.11 13,956 -
Amortization of intangible assets 6.1 124 124
Amortization / depreciation of investment property 7.1 244 244
Security expenses 11,182 10,599
Other expenses - 595
272,309 267,664

31.1 Salaries and benefits include Rs.11.28 million (2019: Rs.16.41 million) in respect of staff retirement
benefits.

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32. OTHER EXPENSES Note 2020 2019

(Rupees in thousand)
Auditors’ remuneration
- audit fee 1,000 1,000
- certification charges 72 185
- out of pocket expenses 35 25
1,107 1,210
Workers’ profits participation fund 23.3 - 7,314
Donation and charities 32.1 4,935 1,860
Provision for doubtful debts, deposits and advance 13.3, 14 & 15 16,810 15,984
22,852 26,368

32.1 Include donation amounting Rs.2.62 million made to Indus Hospital and Rs.2.23 million to Higher
Education Commission Department, Azad Jammu & Kashmir (2019: Rs.1.59 million made to Indus
Hospital). None of the directors or their spouses had any interest in the donees.

33. OTHER INCOME Note 2020 2019

(Rupees in thousand)
Income from financial assets
Profit on saving accounts and term deposit receipts 3,415 3,340
Exchange gain (loss) / gain - net (47) 1,650

Income from other than financial assets

Gain on sale of operating fixed assets 5.7 2,207 1,925
Commission 10,986 74,767
Scrap sales - net of sales tax 31,194 32,484
Amortization of gain on sale and lease back
of fixed assets 22.1 458 335
Rental income 6,443 2,882
54,656 117,383
34. FINANCE COST

Mark-up / interest on:
- lease finances 14,494 3,327
- finance against imported merchandise 374,604 535,698
- istisna / running finances / murabaha 542,451 181,445
- loan from Subsidiary Company 369 357
- workers’ profit participation fund 23.3 2,443 9,829
Bank charges and others 36,424 20,363
970,785 751,019
35. TAXATION

Current tax
- for the year 35.1 226,810 169,900
- for prior year - (1,560)
226,810 168,340
Deferred tax - origination and reversal
of temporary differences 43,797 (89,318)
270,607 79,022

35.1 No numeric tax rate reconciliation for the period is given in the financial statements, as provision made
during the current year primarily represents minimum tax due under section 113 of the Income Tax
Ordinance, 2001 (the Ordinance) and tax deducted under section 148 and 233 of the Ordinance.

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36. BASIC AND DILUTED (LOSS) / EARNINGS PER SHARE 2020 2019
(Rupees in thousand)

Net (loss) / profit for the year (1,282,883) 59,948

Weighted average ordinary shares (Number of shares)
outstanding during the year 42,608,844 42,608,844

(Rupees)
(Loss) / earnings per share (30.11) 1.41

36.1 A diluted earnings per share has not been presented as the Company has not issued any instruments
carrying options which would have an impact on earnings per share when exercised.

37. CASH GENERATED FROM / (USED IN) OPERATIONS Note 2020 2019
(Rupees in thousand)

(Loss) / profit before taxation (1,012,276) 138,970

Adjustment for non cash charges and other items:

Depreciation / amortization on:
- property, plant and equipment 168,963 141,656
- intangible assets 124 124
- investment property 244 244
Provision for compensated absences 3,259 2,658
Gain on sale of operating fixed assets (2,207) (1,925)
Amortization of gain on sale and
lease back of fixed asset (458) (335)
Exchange loss / (gain) - net 47 (1,650)
Finance cost 970,785 751,019
Profit on saving accounts and term deposit receipts (3,415) (3,340)
Provision for doubtful debts, deposits and advance 16,810 15,984
Provision for gratuity 19,152 22,445
161,028 1,065,850
Working capital changes - net 37.1 1,013,158 (1,898,854)
1,174,186 (833,004)

37.1 Working capital changes

Decrease / (increase) in current assets:

Stores (14,141) 1,953
Stock-in-trade 2,812,362 (3,471,205)
Trade debts (566,992) (9,160)
Loans and advances (16,788) 34,902
Trade deposits and prepayments (3,718,094) 178,379
Other receivables (2,329) (4,590)
Sales tax refundable / adjustable 228,486 215,770
(1,277,496) (3,053,951)
Increase in trade and other payables 2,290,654 1,155,097
1,013,158 (1,898,854)
38. CASH AND CASH EQUIVALENTS

Cash and bank balances 17 340,906 500,441
Short term borrowings 26 (6,518,396) (6,296,614)
(6,177,490) (5,796,173)

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39. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

Chief executive Director Executives
2020 2019 2020 2019 2020 2019
(Rupees in thousand)
Managerial remuneration
and allowances 60,000 60,000 31,500 12,500 78,318 97,508
Retirement benefit 5,000 5,000 2,688 2,500 7,387 5,256
Others - - - - 4,976 4,831
65,000 65,000 34,188 15,000 90,681 107,595

Number of persons 1 1 1 1 30 30

39.1 Certain employees are provided with free use of car maintained by the Company in accordance with
their terms of employment.

39.2 Aggregate amount charged in the financial statements for meeting fee to Directors was Rs.3.50 million
(2019: Rs.3.30 million).

40. TRANSACTIONS WITH RELATED PARTIES

Related parties of the Company comprise of the Ultimate Holding Company, the Subsidiary Company,
Associated Companies / undertaking, technological suppliers, directors and executives. The Company
in the normal course of business carries out transactions with various related parties at agreed terms and
conditions. Amounts due from and to related parties, amounts due from executives and remuneration
of directors and executives are disclosed in the relevant notes. Other material transactions with related
parties are given below:

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Name of related party and Nature of 2020 2019
nature of relationship transactions (Rupees in thousand)

(i) Ultimate Holding Company

Bibojee Services (Private) Limited Dividend paid - 130,157

(ii) Subsidiary Company

Marghzar Industries (Private) Limited Financial charges 369 357
Reimbursement of expenses 297 265

(iii) Associated Companies / Undertaking
The General Tyre and Rubber
Company of Pakistan Limited Purchase of tyres 125,815 210,008
(Common Directorship) Sale of parts 335 452
Dividend paid - 1,571
Ghandhara Nissan Limited Assembly charges 439,452 578,138
(Common Directorship) Sales of parts 183 32
Rental income 3,221 2,882
Re-imbursement of expenses 444 24
Dividend paid - 63,432

Universal Insurance Company Limited Dividend paid - 18,473
(Common Directorship)

Rehman Cotton Mills Limited Rent paid - 3,600
(Common Directorship) Re-imbursement of expenses 1,800 -

Gammon Pakistan Limited Rent paid 3,000 3,000
(Common Directorship) Re-imbursement of expenses 34 275

Ghandhara DF (Private) Limited Sales of parts - 8
(Common Directorship) Purchase of parts 6 22
Rental income 3,221

Bibojee Investments (Private) Limited Dividend paid - 334
(Common Directorship)

Janana De Malucho Textile Mills Re-imbursement of expenses 2,058 1,806
Limited (Common Directorship) Sale of pickup truck 6,135 -

(iv) Other related parties
Gratuity fund Contribution paid 18,866 84,447

Provident fund Contribution paid 8,896 16,460

Key management personnel Remuneration, bonus and
other benefits 138,560 148,729

Sale of pick up truck 12,887 -

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41. PRODUCTION CAPACITY

The production capacity of the plant cannot be determined as this depends upon the mix of assembly
of trucks, buses and fabrication of commercial bodies.

The Company has outsourced the assembly of trucks, buses and pick ups to Ghandhara Nissan
Limited (an Associated Company) therefore figures for the actual production for the current year has
not been given.

42. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

42.1 Financial assets and liabilities by category and their respective maturities

Interest / mark-up bearing Non interest / mark-up bearing

Maturity Maturity Maturity Maturity Total
up to one after one Sub-total up to one after one Sub-total
year year year year
(Rupees in thousand)
Financial assets as per
balance sheet

Investments - at cost
Long term investment - - - - 1,400 1,400 1,400

Amortised cost
Loans and advances - - - 1,809 1,957 3,766 3,766

Deposits - - - 4,259,583 23,738 4,283,321 4,283,321
Trade debts - - - 638,588 - 638,588 638,588
Other receivables - - - 9,263 - 9,263 9,263
Cash and bank balances 47,874 - 47,874 293,032 - 293,032 340,906

June 30, 2020 47,874 - 47,874 5,202,275 27,095 5,229,370 5,277,244

June 30, 2019 33,441 - 33,441 1,106,004 26,987 1,132,991 1,166,432

Financial liabilities as per
balance sheet

At amortised cost
Trade and other payables - - - 1,382,743 - 1,382,743 1,382,743
Accrued mark-up / interest - - - 229,782 - 229,782 229,782
Short term borrowings 6,518,396 - 6,518,396 - - - 6,518,396
Liabilities against assets subject
to finance lease 29,410 66,237 95,647 - - - 95,647
June 30, 2020 6,547,806 66,237 6,614,043 1,612,525 - 1,612,525 8,226,568
June 30, 2019 6,310,049 51,745 6,361,794 1,583,249 - 1,583,249 7,945,043

On Balance Sheet Gap
June 30, 2020 (6,499,932) (66,237) (6,566,169) 3,589,750 27,095 3,616,845 (2,949,324)
June 30, 2019 (6,276,608) (51,745) (6,328,353) (477,245) 26,987 (450,258) (6,778,611)

Off Balance Sheet

Letters of credit 663,298
Letters of guarantee 7,547,916

June 30, 2020 8,211,214

June 30, 2019 5,396,916

The effective interest / mark-up rates for the monetary financial assets and liabilities are mentioned in
respective notes to the financial statements.

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42.2 Financial risk factors

The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk
(including foreign exchange risk and interest / mark-up rate risk). The Company’s overall risk manage-
ment program focuses on having cost effective funding as well as manage financial risk to minimize
earnings volatility and provide maximum return to shareholders.

(a) Credit risk

Credit risk represents the accounting loss that would be recognised if counterparties failed to
perform as contracted. Credit risk mainly arises from loans & advances, deposits, trade debts,
other receivables and bank balances. The financial assets exposed to credit risk aggregate to
Rs.5,273.19 million (2019: Rs.1,174.94 million).

The Company believe that it is not materially exposed to credit risk as; (i) trade debts mainly
represent receivables from government, semi-government agencies and dealers, (ii) deposits
mainly include margin against letters of credit and bank guarantees held with banks having good
credit ratings and (iii) balances placed with banks having good credit ratings assigned by credit
rating agencies.

The Company attempts to control credit risk by monitoring credit exposure, limiting transactions
with specific counterparties and continually assessing the creditworthiness of counterparties.


(b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligation as they fall
due. Prudent liquidity risk management implies maintaining sufficient cash and bank balances and
availability of funding through an adequate amount of committed credit facilities. The Company
aims to maintain flexibility in funding by keeping committed credit lines open.

The maturity profile of the Company’s liabilities based on maturities is disclosed in note 42.1 of
these financial statements.

(c) Market risk

Foreign exchange risk

Foreign exchange risk arises mainly when receivables and payables exist due to transactions
based on currencies other than Pak Rupee. At June 30, 2020, payables and receivables exposed
to foreign exchange risk are Rs.44.19 million (2019: Rs.41.02 million) and Rs.0.23 million (2019:
Rs.3.291 million) respectively. The liability and receivable are denominated in Japanese Yen / US
Dollars.

At June 30, 2020 if Pak Rupee had weakened / strengthened by 13% against Japanese Yen and
US Dollars with all other variables held constant, profit before tax for the year would have been
lower / higher by Rs.5.48 million and Rs.0.024 million (2019: Rs.2.64 million), mainly as a result
of foreign exchange loss / gain on translation of Japanese Yen and dollars denominated financial
assets and liabilities.

The sensitivity of foreign exchange rate looks at the outstanding foreign exchange balances of the
Company as at the reporting date. The volatility percentage for movement in foreign exchange
rates has been used due to the fact that historically (5 years) rate has moved on average basis by
the mentioned percentage per annum.

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Interest / mark-up rate risk

Interest / mark-up rate risk is the risk that the value of a financial instrument will fluctuate due
to changes in the market interest / mark-up rates. At June 30, 2020, the Company’s interest
bearing financial liabilities of Rs.6,614.04 million (2019: Rs.6,361.79 million) represent the short
term borrowings at floating rate to manage the working capital requirements of the Company and
obligation under assets subject to finance lease. These liabilities are re-priced at a maximum
period of six months. The effective mark-up rates for financial assets and liabilities are mentioned
in respective notes to the financial statements.

Had the interest rates varied by 100 basis points with all other variables held constant, (loss) / profit
before tax for the year would have been approximately higher / lower by Rs.64.14 million (2019:
Rs.63.62 million).

The sensitivity of 100 basis points movement in the interest rates has been used as historically
(five years) floating interest rates have moved by an average of 100 basis per annum.

42.3 Price risk

The Company is not exposed to any price risk as it does not hold any investments exposed to price risk.

42.4 Fair values of financial assets and liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Underlying the definition of fair
value is the presumption that the Company is going concern and there is no intention or requirement
to curtail materially the scale of its operation or to undertake a transaction on adverse terms.

The estimated fair value of all financial assets and liabilities is considered not significantly different
from book values as the items are either short - term in nature or periodically repriced.

International Financial Reporting Standard 13, ‘Financial Instruments : Disclosure’ requires the Com-
pany to classify fair value measurements using a fair value hierarchy that reflects the significance of
the inputs used in making the measurements. The fair value hierarchy has the following levels:

- Quoted prices (unadjusted) in active markets for identical assets or liabilities [Level 1].

- Inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices) [Level 2].

- Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) [Level 3].

Currently there are no financial assets or financial liabilities which are measured at their fair value in
the statement of financial position.

43. CAPITAL RISK MANAGEMENT

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other stakeholders and
to maintain an optimal capital structure to reduce the cost of capital.

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The Company manages its capital structure by monitoring return on net assets and makes adjust-
ments to it in the light of changes in economic conditions. In order to maintain or adjust the capital
structure, the Company may adjust the amount of dividends paid to shareholders and / or issue new
shares. There was no change to the Company’s approach to capital management during the year. The
Company monitors capital on the basis of gearing ratio calculated as follows:
2020 2019
(Rupees in thousand)

Total borrowings 6,518,396 6,296,614

Cash and bank balances (340,906) (500,441)
Net debt 6,177,490 5,796,173
Total Equity 5,074,659 4,648,384
Total Capital 11,252,149 10,444,557

Gearing ratio 55% 55%

44. OPERATING SEGMENTS

These financial statements have been prepared on the basis of a single reportable segment.

(a) All non-current assets of the Company at June 30, 2020 are located in Pakistan.

(b) Export sales are made to Republic of Mauritius and Australia. Result of the Company’s revenue
from external customers in Pakistan is Rs.11,744.75 million (2019: Rs.13,789.90 million) and total
revenue from external customers from other countries is Rs.43.50 million (2019: Rs.30.02 million).

(c) The Company’s customer base is diverse with no single customer accounting for more than 10%
of net revenue as at June 30, 2020.

45. IMPACT OF COVID-19 (CORONAVIRUS) ON FINANCIAL STATEMENTS

The spread of Covid-19 as a pandemic and consequently imposition of lock down by Federal and
Provincial Governments of Pakistan (Authorities) has effected the production and sale volumes of the
Company due to closure of plant during the lock down period. The management has assessed the
accounting implications of these developments on the financial statements, however, according to
management’s assessment, there is no significant accounting impact of the effects of COVID-19 on
the asset and liabilities in these financial statements. Further, as per relaxation given by Authorities, the
Company have resumed its operations with effect from June 2, 2020 with all precautionary measures
aimed at preventing pandemic spread.

46. NUMBER OF EMPLOYEES

The number of employees (including contractual employee) at June 30, 2020 were 621
(2019: 611) and average number of employees during the year were 616 (2019: 706).

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47. SHAHRIAH SCREENING DISCLOSURE

2020 2019
Convent Shariah Convent Shariah
-ional Compliant -ional Compliant
(Rupees in thousand)

Bank balances 168,925 171,562 172,208 328,202

Accrued mark-up 119,888 109,894 131,663 64,790
Short term borrowings 3,448,751 3,069,645 4,049,615 2,246,999
Revenue - 11,788,254 - 13,909,913

Other income
a) Profit on saving accounts and
term deposit receipts 2,042 1,373 685 2,655

d) Others including exchange gain on
actual currency - 51,241 - 114,043

Mark-up / interest expense 488,277 446,084 487,717 242,939

48. CORRESPONDING FIGURES

The corresponding figures have been rearranged and reclassified, wherever considered necessary for
the purposes of comparison and better presentation the effect of which is not material.

49. DATE OF AUTHORISATION FOR ISSUE

These financial statements were authorised for issue on September 30, 2020 by the Board of Directors
of the Company.

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

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Directors’ Report on
Consolidated Financial Statements
The Directors are pleased to present their report together with consolidated financial statements of Ghandhara
Industries Limited and its subsidiary Marghzar Industries (Pvt.) Limited for the year ended June 30, 2020.

The Company has annexed consolidated financial statements along with its standalone financial statements in
accordance with the requirements of the International Financial Reporting Standard – 10 (Consolidated
Financial Statements).

There is no running business in Marghazar Industries Limited apart from interest income drawn from
Ghandhara Industries Limited (the Holding Company).

For detailed report on the financial statements, the Director Report on the audited financial statements of
Ghandhara Industries Limited can be referred.

On behalf of the Board of Directors On behalf of the Board of Directors

Lt. Gen. (R) Ali Kuli Khan Khattak Ahmad Kuli Khan Khattak
Chairman Chief Executive

Karachi
Dated: September 30, 2020

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Financial Statements
For the year ended June 30, 2020

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Report on Audit of the Consolidated
Financial Statements
To the members of Ghandhara Industries Limited

Opinion

We have audited the annexed consolidated financial statements of Ghandhara Industries Limited and its
subsidiary (the Group), which comprise the consolidated statement of financial position as at June 30, 2020,
and the consolidated statement of profit or loss and comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies and other explanatory
information.

In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position
of the Group as at June 30, 2020, and of its consolidated financial performance and its consolidated cash flows
for the year then ended in accordance with the accounting and reporting standards as applicable in Pakistan.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Paki-
stan. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled
our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.

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Following are the Key Audit Matters:

S.No. Key Audit Matter How the matter was addressed in our audit

1. Capitalization / revaluation of
property, plant and equipment

As disclosed in notes 5 and 18 to the Reviewed revaluation report of independent valuer

consolidated financial statements, the for revaluation of leasehold land and building on
Group, during the year revalued its leasehold land. Also, recalculated the computation
leasehold land and building on leasehold for revaluation surplus / gain; and
land that resulted in net surplus / gain of
Rs.1,751,086 thousand. Also the Considered the adequacy of the disclosures made
Company incurred capital capital in the financial statements in relation to the above.
expenditure with additions of Rs.114,630
thousand made to its operating fixed
assets.

We identified the above matters as a key

audit matter as these represents
significant transactions and involves
certain estimates and judgements.

2. Stock-in-trade

Refer note 4.7 and 11 to the consolidated Our audit procedures in respect of this area
financial statements, the Group has included:
stock-in-trade aggregating Rs.7,547,063 Observation of physical inventory count procedures
thousand (2019: Rs.10,359,425 and compared on a sample basis, physical count
thousand) comprising raw materials, with valuations sheets;
finished goods including trading goods Compared on a sample basis specific purchases
and work in process. We identified this and directly attributable cost with underlying
area as a key audit matter because supporting documents;
stock-in-trade constitutes 39.87% of the Compared the NRV, on a sample basis, to the cost
total assets of the Company as at June of finished goods to assess whether any
30, 2020 and determining an appropriate adjustments are required to value stocks in
write down as a result of net realizable accordance with applicable accounting and
value (NRV) involves management reporting standards; and
judgement and estimation.
Considered the adequacy of the disclosures made
in the consolidated financial statements in relation
to the above.

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Information Other than the Consolidated Financial Statements and Auditors' Report Thereon

Management is responsible for the other information. The other information comprises the information included
in the Annual Report, but does not include the consolidated financial statements and our auditors' report
thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and the Board of Directors for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with the accounting and reporting standards as applicable in Pakistan and Companies Act, 2017
and for such internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.

The Board of Directors is responsible for overseeing the Group’s financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
of these consolidated financial statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:

. Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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 GHANDHARA INDUSTRIES LIMITED

. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.

. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

. Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditors' report. However, future events or conditions may cause the Group to cease to continue as a
going concern.
. Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.

. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements. We
are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.

We also provide the Board of Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditors' report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors' report is Osman Hameed Chaudhri.

SHINEWING HAMEED CHAUDHRI & CO.

CHARTERED ACCOUNTANTS
KARACHI;

September 30, 2020

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Consolidated Financial Statements
For the year ended June 30, 2020
 GHANDHARA INDUSTRIES LIMITED

Consolidated Statement of Financial Position

AS AT JUNE 30, 2020

Note 2020 2019

(Rupees in thousand)
ASSETS

Non-Current Assets
Property, plant and equipment 5 4,453,947 2,770,727
Intangible assets 6 136 260
Investment property 7 88,169 88,413
Long term loans 8 1,957 3,639
Long term deposits 9 23,738 21,948
Deferred taxation 10 2,473 87,158
4,570,420 2,972,145
Current assets

Stores 22,469 8,328
Stock-in-trade 11 7,547,063 10,359,425
Trade debts 12 638,588 88,406
Loans and advances 13 150,547 133,759
Trade deposits and prepayments 14 4,260,928 542,834
Other receivables 15 9,263 6,981
Sales tax refundable / adjustable 162,303 390,789
Taxation - payments less provision 1,225,549 918,170
Cash and bank balances 16 340,906 500,441
14,357,616 12,949,133

Total assets 18,928,036 15,921,278

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

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Consolidated Statement of Financial Position
AS AT JUNE 30, 2020

Note 2020 2019

(Rupees in thousand)
EQUITY AND LIABILITIES

Share capital and reserves
Share capital 17 426,088 426,088

Revenue reserves
Unappropriated profit 898,109 2,173,691

Capital reserve
Surplus on revaluation of fixed assets 18 3,751,466 2,049,561
Equity Attributable to shareholders of the holding company 5,075,663 4,649,340

Non - controlling interest 5 5
Total equity 5,075,668 4,649,345

Non current liabilities
Lease liabilities 19 66,237 51,745
Compensated absences 20 15,802 13,045
Deferred liabilities 21 21,425 19,759
103,464 84,549
Current liabilities
Trade and other payables 22 6,870,384 4,579,772
Unpaid dividends 23 78,959 78,959
Unclaimed dividends 21,973 22,151
Accrued mark-up / interest 24 229,782 196,453
Short term borrowings 25 6,518,396 6,296,614
Current maturity of lease liabilities 19 29,410 13,435
13,748,904 11,187,384
Total liabilities 13,852,368 11,271,933

Contingencies and commitments 26

Total equity and liabilities 18,928,036 15,921,278

The annexed notes from 1 to 48 form an integral part of these consolidated financial statements.

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

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 GHANDHARA INDUSTRIES LIMITED

Consolidated Statement of Profit or Loss

and Other Comprehensive Income
FOR THE YEAR ENDED JUNE 30, 2020
Note 2020 2019
(Rupees in thousand)

Sales 27 11,788,254 13,909,913

Cost of sales 28 (11,095,490) (12,308,321)
Gross profit 692,764 1,601,592
Distribution cost 29 (493,750) (534,954)
Administrative expenses 30 (272,581) (267,907)
Other expenses 31 (22,882) (26,398)
Other income 32 54,656 117,383
(Loss) / profit from operations (41,793) 889,716
Finance cost 33 (970,416) (750,662)
(Loss) / profit before taxation (1,012,209) 139,054
Taxation 34 (270,626) (78,961)
(Loss) / profit after taxation (1,282,835) 60,093
Other comprehensive income
Items that will not be reclassified to profit or loss
Re-measurement of staff retirement benefit obligation (1,040) (1,242)
Impact of deferred tax 302 360
(738) (882)
Surplus on revaluation of fixed assets 1,751,086 200,903
Impact of deferred tax (41,190) (3,365)
1,709,896 197,538
Other comprehensive income for the year - net of tax 1,709,158 196,656
Total comprehensive income for the year 426,323 256,749
Rupees

Basic and diluted (loss) / earnings per share 35 (30.11) 1.41

The annexed notes from 1 to 48 form an integral part of these consolidated financial statements.

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

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Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED JUNE 30, 2020

Revenue Capital
Reserve - Reserve - Non - con-
Share Surplus on
Unappro- revaluation Total trolling
capital
priated of fixed interest
profit assets
(Rupees in thousand)

Balance as at July 1, 2018 213,044 2,651,882 1,860,014 4,724,940 5

Transaction with owners,
recognised directly in equity

Final dividend for the year ended June 30, 2018
at the rate of Rs.15.6 per share - (332,349) - (332,349) -
Bonus shares issued 213,044 (213,044) - - -

Total comprehensive income for the year
ended June 30, 2019
Profit for the year - 60,093 - 60,093 -
Other comprehensive (loss) / income - (882) 197,538 196,656 -
- 59,211 197,538 256,749 -
Transfer from surplus on revaluation of
fixed assets on account of incremental
depreciation - net of deferred taxation - 7,991 (7,991) - -
Balance as at June 30, 2019 426,088 2,173,691 2,049,561 4,649,340 5

Transaction with owners,
recognised directly in equity

Total comprehensive income for the year
ended June 30, 2020

Loss for the year - (1,282,835) - (1,282,835) -
Other comprehensive (loss) / income - (738) 1,709,896 1,709,158 -
- (1,283,573) 1,709,896 426,323 -

Transfer from surplus on revaluation of
fixed assets on account of incremental
depreciation - net of deferred taxation - 7,991 (7,991) - -
Balance as at June 30, 2020 426,088 898,109 3,751,466 5,075,663 5

The annexed notes from 1 to 48 form an integral part of these consolidated financial statements.

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

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Consolidated Statement of Cash Flows

FOR THE YEAR ENDED JUNE 30, 2020

Note 2020 2019

(Rupees in thousand)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from / (used in) operations 36 1,173,842 (833,339)
Gratuity paid (18,866) (84,447)
Compensated absences paid (502) (457)
Finance cost paid (922,593) (599,191)
Income tax paid (534,208) (611,246)
Long term loans - net 1,682 666
Long term deposits - net (1,790) (10,411)
Net cash used in operating activities (302,435) (2,138,425)

CASH FLOWS FROM INVESTING ACTIVITIES
Fixed capital expenditure (106,315) (232,011)
Sale proceeds from disposal of operating fixed assets 8,223 17,032
Interest received 3,415 3,340
Net cash used in investing activities (94,677) (211,639)

CASH FLOWS FROM FINANCING ACTIVITIES
Lease liabilities - net 15,973 (11,195)
Dividend paid (178) (300,324)
Net cash generated from / (used in) financing activities 15,795 (311,519)
Net decrease in cash and cash equivalents (381,317) (2,661,583)
Cash and cash equivalents at beginning of the year (5,796,173) (3,134,590)
Cash and cash equivalents at end of the year 37 (6,177,490) (5,796,173)

The annexed notes from 1 to 48 form an integral part of these consolidated financial statements.

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

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Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2020

1. THE GROUP AND ITS OPERATIONS

1.1 The Group consists of Ghandhara Industries Limited (the Holding Company) Marghazar Industries
(Private) Limited (the Subsidiary Company).

1.2 Ghandhara Industries Limited

Ghandhara Industries Limited (the Holding Company) was incorporated on February 23, 1963. The
Company’s shares are quoted on Pakistan Stock Exchange Limited. The principal activity is the
assembly, progressive manufacturing and sale of Isuzu trucks, buses and pick ups. The registered
office of the Company is at F-3, Hub Chowki Road, S.I.T.E, Karachi. The manufacturing facilities of the
Company are located at S.I.T.E., Karachi with branches at Lahore, Multan, Rawalpindi and Peshawar.

1.3 Marghazar Industries (Private) Limited

Marghazar Industries (Private) Limited (the Subsidiary Company) was incorporated as a private limited
company on March 7, 1969. The registered office of the Company is located at Gardee Trust Building,
Napier Road, Lahore. The Company is subsidiary of Ghandhara Industries Limited; which holds
140,000 ordinary shares representing 99.79% of the total capital of the Company.

2. BASIS OF PREPARATION

2.1 Statement of compliance

These financial statements have been prepared in accordance with the accounting and reporting
standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan
comprise:

- International Financial Reporting Standards (IFRS) issued by the International Accounting

Standards Board (IASB) as notified under the Companies Act, 2017; and

- Provision of and directives issued under the Companies Act, 2017.

Where provision of and directives issued under the Companies Act, 2017 differ from the IFRS, the
provision of and directives issued under the Companies Act, 2017 have been followed.

2.2 Functional and presentation currency

These financial statements are presented in Pakistan Rupees which is the functional currency of the
Group and figures are rounded off to the nearest thousand of Rupees unless otherwise specified.

2.3 New and amended standards and interpretations

2.3.1 Standards and amendments to approved accounting standards effective in current year

New and amended standards mandatory for the first time for the financial year beginning July 1, 2019:

(a) The Group has adopted IFRS 16 ‘Leases’ from July 1, 2019. IFRS 16 ‘Leases’ primarily affects the
accounting by lessees and results in the recognition of almost all leases on statement of financial
position. The standard removes distinction between operating and finance leases and requires
recognition of an asset (the right of use the leased item) and a financial liability to pay rentals for

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 GHANDHARA INDUSTRIES LIMITED

virtually all lease contracts. An optional exemption exists for short-term and low-value leases. The
accounting by lessors does not significantly changed. Some differences may arise as a result of
the new guidance on the definition of a lease. Under IFRS 16, a contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.

The Group has applied IFRS 16 using the modified retrospective approach. Under this approach,
the cumulative effect of initial application to be recognized in retained earnings at July 1, 2019.
Accordingly, the comparative information presented for 2019 has not been restated - i.e. it is
presented as previously reported under IAS 17 and related interpretations. The details of the
changes in accounting policies are disclosed below:

As a lessee, the Group previously classified leases as operating or finance leases based on its
assessment of whether the lease transferred substantially all of the risks and rewards of ownership.
Under IFRS 16 the Group recognizes right of use assets and lease liabilities for leases - i.e. these
leases are on the statement of financial position. On initial application, the Group has also elected
to use the recognition exemptions for lease contracts that, at the commencement date, have a
lease term of 12 months or less and do not contain a purchase option (‘short-term leases’), and
lease contracts for which the underlying asset is of low value (‘low-value assets’). Some lease
contracts of the Group are extendable through mutual agreement between the Group and the
lessor or cancellable by both parties immediately or on short notice. In assessing the lease term
for the adoption of IFRS 16, the Group concluded that such contracts are short-term in nature. The
Group recognizes the lease payments associated with these leases as an expense in statement of
profit or loss.

The accounting policies relating to Group’s right of use asset and related lease liabilities are
disclosed in note 4.2, details pertaining to right of use assets are disclosed in note 5.10 and related
leases are disclosed in note 19.

(b) Amendment to IAS 12, ‘Income taxes’ as part of annual improvement 2015-2017 cycle is applicable
on accounting periods beginning on or after January 1, 2019. The amendment clarifies that all
income tax consequences of dividends (including payments on financial instruments classified as
equity) are recognised consistently with the transactions that generated the distributable profits –
i.e. in profit or loss, other comprehensive income or equity.

(c) Amendments to IAS 23, ‘Borrowing Costs’ as part of annual improvement 2015-2017 cycle is
applicable on accounting periods beginning on or after January 1, 2019. The amendments
clarify that the general borrowings pool used to calculate eligible borrowing costs excludes
only borrowings that specifically finance qualifying assets that are still under development or
construction. Borrowings that were intended to specifically finance qualifying assets that are now
ready for their intended use or sale – or any non qualifying assets – are included in that general
pool. This amendment will be applied prospectively to borrowing costs incurred on or after the date
an entity adopts the amendments.

The other new standards, amendments to approved accounting standards that are mandatory
for the financial year beginning on July 1, 2019 are considered not to be relevant or to have any
significant effect on the Group’s financial reporting and operations.

2.3.2 Standards, amendments to approved accounting standards and interpretations that are not yet
effective and have not been early adopted by the Group

The following new standards and amendments to approved accounting standards are not effective for
the financial year beginning on July 1, 2019 and have not been early adopted by the Group:

(a) Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors is applicable on accounting periods beginning on
or after January 1, 2020. The amendments are intended to make the definition of material in IAS
1 easier to understand and are not intended to alter the underlying concept of materiality in IFRS
Standards. In addition, the IASB has also issued guidance on how to make materiality judgements
when preparing their general purpose financial statements in accordance with IFRS Standards.
Refined definition of materiality - Information is material if omitting, misstating or obscuring it could
reasonably be expected to influence decisions that the primary users of general purpose financial
statements make on the basis of those financial statements, which provide financial information
about a specific reporting entity.

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(b) Amendments to IFRS 16 ‘Leases’ is applicable on accounting periods beginning on or after June
1, 2020. Under IFRS 16, rent concessions often met the definition of a lease modification, unless
they were envisaged in the original lease agreement. The amendment exempts lessees from
having to consider individual lease contracts to determine whether rent concessions occurring
as a direct consequence of the covid-19 pandemic are lease modifications and allows lessees to
account for such rent concessions as if they were not lease modifications. It applies to covid-19-
related rent concessions that reduce lease payments due on or before June 30, 2021. This optional
exemption gives timely relief to lessees and enables them to continue providing information about
their leases that is useful to investors. The amendment does not affect lessors. The amendments
does not expect to have a material impact on the Group’s financial statements.

(c) Amendments to IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ is applicable for
accounting periods beginning on or after January 1, 2022. Under IAS 37, a contract is ‘onerous’
when the unavoidable costs of meeting the contractual obligations – i.e. the lower of the costs
of fulfilling the contract and the costs of terminating it – outweigh the economic benefits. The
amendments clarify that the ‘costs of fulfilling a contract’ comprise both the incremental costs –
e.g. direct labour and materials; and an allocation of other direct costs – e.g. an allocation of the
depreciation charge for an item of property, plant and equipment used in fulfilling the contract.

(d) Amendment to IAS 16 ‘Property, plant and Equipment’ is applicable on accounting periods
beginning on or after January 1, 2022. The amendments prohibit a Group from deducting from
the cost of property, plant and equipment amounts received from selling items produced while
the Group is preparing the asset for its intended use. Instead, a Group will recognise such sales
proceeds and related cost in profit or loss. The amendments apply retrospectively, but only to
items of PPE made available for use on or after the beginning of the earliest period presented in
the financial statements in which the Group first applies the amendments.

(e) Amendments to IAS 1 ‘Presentation of Financial Statements’ is applicable on accounting periods

beginning on or after January 1, 2023. Under existing IAS 1 requirements, companies classify a
liability as current when they do not have an unconditional right to defer settlement of the liability
for at least twelve months after the end of the reporting period. As part of this amendments,
the requirement for a right to be unconditional has been removed and instead, the amendments
requires that a right to defer settlement must have substance and exist at the end of the reporting
period.

There are number of other standards, amendments and interpretations to the published standards
that are not yet effective and are also not relevant to the Group and, therefore, have not been
presented here.

3. BASIS OF MEASUREMENT

3.1 These financial statements have been prepared under the historical cost convention, except for certain
classes of property, plant and equipment which have been included at revalued amounts and staff
retirement benefit which has been recognised at present value as determined by the Actuary.

3.2 The preparation of financial statements in conformity with approved accounting standards requires
management to make judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods
affected.

The areas where various assumptions and estimates are significant to the Group’s financial statements
or where judgement was exercised in application of accounting policies are as follows:

(i) Estimate of residual values and useful lives of depreciable and intangible assets (note 4.1, 4.2 and 4.3)
(ii) Lease term and discount rate for calculation of lease liabilities (note 4.2)
(iii) Provision for taxation (note 4.10)
(iv) Provision for staff benefits (note 4.12)
(v) Provisions (note 4.19)

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4. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out
below. These polices have been consistently applied to all the years presented, unless otherwise
stated.

4.1 Property, plant and equipment

Leasehold land is stated at revalued amount and buildings on leasehold land are stated at revalued
amount less accumulated depreciation and impairment loss (if any). Other classes of operating fixed
assets are stated at cost less accumulated depreciation and impairment loss (if any). Capital work-in-
progress is stated at cost less impairment loss (if any). All expenditure connected to the specific assets
incurred during the installation and construction period are carried under capital work-in-progress.
These are transferred to specific assets as and when the assets are available for use.

Plant and machinery were revalued in the year 1995 by independent valuers, and were presented
at their revalued amount. The Holding Company subsequently adopted the cost model for plant and
machinery, and the revalued amounts were treated as deemed costs. The surplus on revaluation of
these assets, however, were recognised in accordance with section 235 of the repealed Companies
Ordinance, 1984 applicable at that time.

Subsequent costs are included in the asset’s carrying amounts or recognised as a separate asset, as
appropriate, only when it is probable that future benefits associated with the item will flow to the Group
and the cost of the item can be measured reliably. All repairs and maintenances are charged to the
profit or loss as and when incurred.

Depreciation on all operating fixed assets is charged using the straight line method in accordance
with the rates specified in note 5.1 to these financial statements and after taking into account their
residual values. The depreciation method, residual values and useful lives of items of property, plant
and equipment are reviewed periodically and altered if circumstances or expectations have changed
significantly. Any change is accounted for as a change in accounting estimate by changing depreciation
charge for the current and future periods.

Depreciation on additions is charged from the month in which the assets become available for use,
while on disposals depreciation is charged upto the month of disposal.

Gains or losses on disposal or retirement of fixed assets are determined as the difference between the
sale proceeds and the carrying amounts of the assets and are included in the profit or loss.

Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does
not differ materially from their fair value. Any surplus on revaluation of fixed assets is recognised
in other comprehensive income and presented as a separate component of equity as “Surplus on
revaluation of fixed assets”, except to the extent that it reverses a revaluation decrease for the same
asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the
extent of the decrease previously charged. Any decrease in carrying amount arising on the revaluation
of fixed assets is charged to profit or loss to the extent that it exceeds the balance, if any, held in the
revaluation surplus on fixed assets relating to a previous revaluation of that asset. Each year, the
incremental depreciation charged on the revalued assets (net of deferred taxation) is reclassified from
surplus on revaluation of fixed assets to unappropriated profit. The revaluation reserve is not available
for distribution to the Group’s shareholders.

The Group assesses at each reporting date whether there is any indication that property, plant and
equipment 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 taken to profit or loss except for impairment loss on revalued assets,
which is adjusted against related revaluation surplus to the extent that the impairment loss does not
exceed the surplus on revaluation of that asset.

4.2 Right of use assets and related liabilities

The Group generally leases regional offices, ware houses and related properties. At the inception
of a contract, the Group assesses whether a contract is, or contains, a lease based on whether the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. Lease terms are negotiated on an individual basis and contain a wide range of different

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terms and conditions. The extension and termination options are incorporated in determination of
lease term only when the Group is reasonably certain to exercise these options.

Leases are recognised as right-of-use assets and corresponding liabilities at the date at which the
leased assets are available for use by the Group.

The lease liabilities are initially measured at the present value of the remaining lease payments at the
commencement date, discounted using the interest rate implicit in the lease, or if that rate cannot be
readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental
borrowing rate as the discount rate. At initial recognition, liabilities were discounted using the Group’s
incremental borrowing rate. Lease payment includes fixed payments with annual increments. The
lease liabilities are subsequently measured at amortised cost using the effective interest rate.

Right-of-use assets are initially measured based on the initial amount of the lease liabilities adjusted for
any lease payments made at or before the commencement date, plus any initial direct costs incurred
and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying
asset or the site on which it is located, less any lease incentive received. The right-of-use assets are
depreciated on a straight line method over the lease term as this method most closely reflects the
expected pattern of consumption of future economic benefits. The carrying amount of the right-of-use
asset is reduced by impairment losses, if any. At transition, the Group recognised right of use assets
equal to the present value of lease payments.

Payments associated with short-term leases and leases of low-value assets are recognised on a
straight-line basis as an expense in statement of profit or loss. Short-term leases are leases with a
lease term of 12 months or less.

4.3 Intangible assets - computer software

Computer software licenses acquired by the Group are stated at cost less accumulated amortization.
Cost represents the cost incurred to acquire the software licenses and bringing them to use. The cost
of computer software is amortized over the estimated useful life i.e. 5 years using straight-line method.

Costs associated with maintaining computer software are charged to profit or loss as and when
incurred.

4.4 Investments

4.4.1 Investment property

Property held for capital appreciation and rental yield, which is not in use of the Group is classified as
investment property. Investment property comprise of leasehold land and buildings.

Investment property are carried at cost or valuation (i.e. deemed cost) less accumulated amortization
/ depreciation and impairment, if any.

Investment property were revalued in 1996 by independent valuers and showed at revalued amounts.
The Holding Company subsequently adopted cost model for investments property and the revalued
amounts were treated as deemed costs. The surplus on revaluation of these assets, however was
recognised in accordance with section 235 of the repealed Companies Ordinance, 1984.

Leasehold land and buildings are amortized / depreciated on straight line method at the rates stated
in note 7.

Maintenance and normal repairs are charged to profit or loss as and when incurred. Major renewals
and repairs are capitalised.

4.5 Long term deposits

These are stated at cost which represents the fair value of the consideration given.

4.6 Stores

These are valued at cost determined on a first-in-first-out basis. Items in transit are stated at invoice
value plus other charges thereon accumulated upto the reporting date.

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Provision for obsolete and slow moving stores is determined based on management’s estimate
regarding their future usability.

4.7 Stock-in-trade

Stock-in-trade is valued at the lower of cost and net realizable value except for goods in transit which
are stated at invoice values plus other charges thereon accumulated upto the reporting date. Cost in
relation to raw materials, components and trading stock (except for parts and accessories included
in trading stock which are valued on average basis) is arrived at principally on first in first out basis.
Cost of work in process and finished stocks including components include direct wages and applicable
manufacturing overheads.

Net realizable value represents the estimated selling price in the ordinary course of business less cost
necessarily to be incurred in order to make the sale.

4.8 Trade debts and other receivables

Trade debts and other receivables are classified as financial assets at amortised cost according to
IFRS 9. Under IAS 39, trade and other receivables were previously classified as loans and receivables.
Trade and other debts are carried at original invoice amount being the fair value. Provision is made
against debts considered doubtful of recovery whereas debts considered irrecoverable are written off.
The Group uses simplified approach for measuring the expected credit losses for all trade and other
receivables including contract assets based on lifetime expected credit losses.

4.9 Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at amortised cost. For
the purposes of cash flow statement, cash and cash equivalents comprise of cash in hand, cash with
banks and short term borrowings under mark-up arrangements.

4.10 Taxation

Current

Provision for current year’s taxation is based on taxable income for the year at the current rates of
taxation after taking into account tax credits and tax rebates available, if any, and taxes paid under the
presumptive tax regime.

Deferred

The Group accounts for deferred taxation using the balance sheet liability method on temporary
differences arising between the tax base of assets and liabilities and their carrying amounts in the
financial statements. Deferred tax liability is recognised for taxable temporary differences and deferred
tax asset is recognised to the extent that it is probable that taxable profits will be available against
which the deductible temporary differences, unused tax losses and tax credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on the tax rates that have been enacted or
substantively enacted by the reporting date. Deferred tax is charged or credited in the profit or loss,
except in the case of items credited or charged to other comprehensive income / equity in which case
it is included in other comprehensive income / equity.
4.11 Finance lease / Assets subject to finance lease

Leases that transfer substantially all the risk and rewards incidental to ownership of an asset are
classified as finance leases. Assets on finance lease are capitalised at the commencement of the lease
term at the lower of the fair value of leased assets and the present value of minimum lease payments,
each determined at the inception of the lease. Each lease payment is allocated between the liability
and finance cost so as to achieve a constant rate on the finance balance outstanding. The finance cost
is charged to statement of profit or loss and is included under finance cost.

4.12 Retirement benefit obligations

4.12.1 Defined benefit plan

The Holding Company operates a funded gratuity scheme. The scheme defines the amounts of benefits

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that an employee will receive on or after retirement subject to a minimum qualifying period of service
under the scheme. The amount of retirement benefit is usually dependent on one or more factors such
as age, years of service and salary.

The liability recognised in the statement of financial position in respect of defined benefit plan is the
present value of the defined benefit obligation at the end of the reporting period less fair value of plan
assets. Contributions under the schemes are made on the basis of actuarial valuation. The valuation
of scheme is carried out annually by an independent expert, using the “Projected Unit Credit Method”
with the latest valuation being carried out as on June 30, 2020.
The amounts arising as a result of re-measurements are recognised in the statement of financial
position immediately, with a charge or credit to other comprehensive income in the periods in which
they occur. Past-service cost, if any, are recognised immediately in income.

4.12.2 Defined contribution plan

The Holding Company operates defined contribution plan (i.e. recognised provident fund scheme)
for all its permanent employees. The Holding Company and their employees make equal monthly
contributions to the fund at the rate of 8.33% of the basic salary. The assets of the fund are held
separately under the control of trustees. The Holding Company during the year have decided to close
the Fund with effect from January 1, 2020.

4.12.3 Compensated absences

Employees’ entitlements to annual leaves are recognised when they accrue to employees. A provision
is made for the estimated liability for annual leave as a result of services rendered by employees upto
the reporting date.

4.13 Trade and other payables

Trade and other payables are measured at cost which is the fair value of consideration to be paid in
future for goods and services received, whether or not billed to the Group.

4.14 Revenue recognition

The Group recognises revenue to depict the transfer of promised goods and services to customers
in an amount that reflects the consideration to which the Group expects to be entitled in exchange
for those good and services. The Group recognises revenue in accordance with that core principle by
applying the following steps:

– Identify the contract with a customer

– Identify the performance obligations in the contract
– Determine the transaction price
– Allocate the transaction price to the performance obligations in the contract
– Recognise revenue when the entity satisfies a performance obligation

Revenue from sale of goods is recognized when the Group satisfies a performance obligation (at a
point of time) by transferring promised goods to customer being when the goods are invoiced and
delivered to customers. Revenue is measured at the fair value of consideration received or receivable,
and represents amount receivable for goods supplied and sales tax.

Interest income is accrued on a time basis, by reference to the principal outstanding and the interest
rate applicable.

4.15 Borrowings and their cost

Borrowings are recorded at the proceeds received. Borrowing costs are recognised as an expense
in the period in which these are incurred except to the extent of borrowing cost that are directly
attributable to the acquisition, construction or production of a qualifying asset. Such borrowing costs,
if any, are capitalised as part of the cost of that asset.

4.16 Foreign currency translation

Transactions in foreign currencies are translated into Pak Rupee using the exchange rates prevailing
at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are
translated into Pak Rupee at the exchange rates prevailing at the reporting date. Exchange gains and

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losses are taken to profit or loss.

4.17 Financial assets and liabilities

Financial assets and financial liabilities are recognised at the time when the Group becomes a party
to the contractual provisions of the instrument and derecognised when the Group loses control of
contractual rights that comprise the financial assets and in the case of financial liabilities when the
obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on derecognition
of financial assets and financial liabilities is included in the profit or loss for the year. All financial
assets and liabilities are initially measured at cost, which is the fair value of the consideration given
and received respectively. These financial assets and liabilities are subsequently measured at fair
value, amortised cost or cost as the case may be. The particular measurement methods adopted are
disclosed in individual policy statement associated with each item.

4.18 Off-setting of financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported in the statement of financial
position when there is a legally enforceable right to offset the recognised amounts and there is an
intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal course
of business and in the event of default, insolvency or bankruptcy of the Group or the counter party.

4.19 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation.

4.20 Dividend and appropriation to reserves

Dividend and other appropriations to reserves are recognised in the period in which they are approved.

4.21 Impairment loss

The carrying amounts of the Group’s assets are reviewed at each reporting date to identify
circumstances indicating occurrence of impairment loss or reversal of provisions for impairment losses.
If any indications exist, the recoverable amounts of such assets are estimated and impairment losses
or reversals of impairment losses are recognised in the profit or loss. Reversal of impairment loss is
restricted to the original cost of the asset.

4.22 Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic
EPS is calculated by dividing the profit or loss after taxation attributable to ordinary shareholders of the
Group by weighted average numbers of ordinary shares outstanding during the year.

4.23 Segment reporting

Segment information is presented on the same basis as that used for internal reporting purposes
by the Chief Operating Decision Maker, who is responsible for allocating resources and assessing
performance of the operating segments. On the basis of its internal reporting structure, the Group
considers itself to be a single reportable segment.

5. PROPERTY, PLANT AND EQUIPMENT Note 2020 2019

(Rupees in thousand)

Operating fixed assets 5.1 4,319,229 2,681,578

Capital work in progress 5.8 56,178 89,149
Right of use assets 5.10 78,540 -
4,453,947 2,770,727

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OWNED
Leasehold Buildings on Office Jigs and Leased
land Plant and Permanent Furniture Motor Trucks / lift Total
leasehold machines & Computers special Cars
machinery tools and fixture vehicles trucks
land equipment tools

At July 1, 2018
Revaluation / cost 1,609,050 247,685 164,877 10,345 11,605 95,981 30,815 21,397 21,160 56,822 60,267 2,330,004
Accumulated depreciation - 28,850 69,081 5,378 3,907 60,157 26,320 15,046 10,208 42,636 22,992 284,575

Net book value 1,609,050 218,835 95,796 4,967 7,698 35,824 4,495 6,351 10,952 14,186 37,275 2,045,429
Year ended June 30, 2019
Opening net book value 1,609,050 218,835 95,796 4,967 7,698 35,824 4,495 6,351 10,952 14,186 37,275 2,045,429
Additions - 131,436 71,094 16,262 1,388 32,133 20,923 10,400 2,769 274,633 30,298 591,336
Revaluation adjustments
- revaluation 189,300 11,603 - - - - - - - - - 200,903
- accumulated depreciation - - - - - - - - - - - -
189,300 11,603 - - - - - - - - - 200,903
Write offs
- cost - - 45,543 3,024 934 - - 3,320 813 - - 53,634
- accumulated depreciation - - (45,543) (3,024) (934) - - (3,320) (813) - - (53,634)
- - - - - - - - - - - -
Disposals
- cost - - - - - 11,406 11,232 538 - - - 23,176
- accumulated depreciation - - - - - (7,268) (936) (538) - - - (8,742)
- - - - - 4,138 10,296 - - - - 14,434
Transfer from leased to owned
- cost - - - - - - 7,807 - - - (7,807) -
- accumulated depreciation - - - - - - (5,575) - - - 5,575 -
- - - - - - 2,232 - - - (2,232) -
Depreciation charge - 13,075 16,006 2,275 713 14,762 3,584 2,060 2,967 74,757 11,457 141,656
Closing net book value 1,798,350 348,799 150,884 18,954 8,373 49,057 13,770 14,691 10,754 214,062 53,884 2,681,578
At June 30, 2019
Revaluation / cost 1,798,350 390,724 190,428 23,583 12,059 116,708 48,313 27,939 23,116 331,455 82,758 3,045,433
Accumulated depreciation - 41,925 39,544 4,629 3,686 67,651 34,543 13,248 12,362 117,393 28,874 363,855

Net book value 1,798,350 348,799 150,884 18,954 8,373 49,057 13,770 14,691 10,754 214,062 53,884 2,681,578
Year ended June 30, 2020
Opening net book value 1,798,350 348,799 150,884 18,954 8,373 49,057 13,770 14,691 10,754 214,062 53,884 2,681,578
Additions - 44,375 3,997 2,696 831 34,528 1,755 2,447 2,253 21,748 - 114,630
Revaluation adjustments
- revaluation 1,609,050 142,036 - - - - - - - - - 1,751,086
- accumulated depreciation - - - - - - - - - - - -
1,609,050 142,036 - - - - - - - - - 1,751,086
Disposals
- cost - - - - - 8,198 - - - - - 8,198
- accumulated depreciation - - - - - (2,980) - - - - - (2,980)
- - - - - 5,218 - - - - - 5,218
Transfer to right of use asset
- cost - - - - - - - - - - (82,758) (82,758)
- accumulated depreciation - - - - - - - - - - 28,874 28,874
- - - - - - - - - - (53,884) (53,884)
Depreciation charge - 20,620 18,894 2,748 794 17,019 3,461 2,489 3,389 99,549 - 168,963
Report

Closing net book value 3,407,400 514,590 135,987 18,902 8,410 61,348 12,064 14,649 9,618 136,261 - 4,319,229
Annual

At June 30, 2020

Revaluation / cost 3,407,400 577,135 194,425 26,279 12,890 143,038 50,068 30,386 25,369 353,203 - 4,820,193
Accumulated depreciation - 62,545 58,438 7,377 4,480 81,690 38,004 15,737 15,751 216,942 - 500,964

Net book value 3,407,400 514,590 135,987 18,902 8,410 61,348 12,064 14,649 9,618 136,261 - 4,319,229
Annual rates of depreciation - 5% 10% 12.50% 6.25% 20% 20% 12.50% 20% 33% 20%
2020

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Note 2020 2019

5.2 Depreciation charge has been allocated as follows: (Rupees in thousand)

Cost of goods manufactured 28.1 145,613 110,548
Distribution cost 29 6,958 5,426
Administrative expenses 30 16,392 25,682
168,963 141,656
5.3 Leasehold land and buildings on leasehold land of the Holding Company had previously been
revalued in June 2010, June 2013, June 2016 and June 2019. Those revaluation exercises resulted
in net surplus of Rs.437.28 million, Rs.259.448 million, Rs.218.20 million and Rs.200.904 million
respectively. Leasehold land and buildings on leasehold land of the Holding Company were again
revalued in June 2020 by Harvester Services (Private) Limited (Approved valuers of Pakistan Banks’
Association) on the basis of present market value and depreciated market value (level 2 of fair value
hierarchy). Different levels of fair value have been defined in IFRS 13 and are mentioned in note 41.4.

The latest revaluation exercise resulted in a net surplus of Rs.1,751.09 million. At the time of latest
revaluation, forced sale value of this land was Rs.3,137.59 million. Out of the revaluation surplus
resulting from all the revaluations carried-out to date, an amount of Rs.3,918.584 million (2019:
Rs.2,143.483 million) remains un-depreciated as at June 30, 2020.

5.4 Leasehold land of the Holding Company is located at S.I.T.E. Karachi with an area of 18.93 acres.

5.5 Had the operating fixed assets been recognised under the cost model, the carrying amount of building
on leasehold land would have been Rs.185.62 million (2019: Rs.150.61 million).

5.6 Operating fixed assets includes certain plant and machinery, permanent tools and jigs & special tools
with cost aggregating Rs.460.835 million (2019: Rs.384.354 million) and net book value of Rs.227.677
million (2019: Rs.259.333 million) which is held by Ghandhara Nissan Limited - a related party as
these fixed assets are used for assembling of the Group’s products.

5.7 The details of operating fixed assets disposed off during the year are as follows:

Accu- Net
Net Sale De- Mode of
Particulars Cost muated (Loss) / (loss) / Particulars
book pro- ferred disposal
of assets depreci- gain gain on of buyers
value ceeds Gain
ation disposal
Item having book value
more than Rs. 500,000 each

Motor Vehicle 4,503 901 3,602 4,400 798 (798) - Sale and lease back Orix Modaraba
Mobile work shop 3,000 1,500 1,500 3,500 2,000 - 2,000 Negotiation Logistica
7,503 2,401 5,102 7,900 2,798 (798) 2,000
Item having book value
less than Rs. 500,000 each 695 579 116 323 207 - 207 Company policy Hadi Anwar ul
Haq - Employee
June 30, 2020 8,198 2,980 5,218 8,223 3,005 (798) 2,207

June 30, 2019 23,176 8,742 14,434 17,032 2,598 (673) 1,925

5.8
Capital work in progress 2020 2019
(Rupees in thousand)
Advances made for:
- Buildings on leasehold land 8,163 47,312
- Plant and machinery 44,214 36,388
- Vehicles - 1,653
- Computer software 3,801 3,796
56,178 89,149

5.9 Capital work in progress include items with aggregating Rs.Nil (2019: Rs.5.26 million) which are
located at the plant of Ghandhara Nissan Limited - a related party. Once capitalized, the assets will be
used for assembling of the Group’s products.

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5.10 Right of use assets Note 2020 2019
(Rupees in thousand)
Transfer from operating fixed assets costing
Rs.82.758 million 53,884 -
Transition effect on initial application of IFRS 16 32,380 -
Addition / transfer from owned 19,609 -
Depreciation charged during the year 5.11 (27,333) -
Net book value at end of the year 78,540 -

5.11 Depreciation expense relating to right of use asset - properties of Rs.2.064 million has been charged in
‘Cost of sales’, Rs.11.313 million in ‘Distribution cost’ and Rs.13.956 million in ‘Administrative expenses’.

6. INTANGIBLE ASSETS Note 2020 2019

(Rupees in thousand)
These represent computer software licenses.
Cost
At June 30, 2,130 2,130

Accumulated amortization
At beginning of the year 1,870 1,746
Add: charge for the year 6.1 124 124

At end of the year 1,994 1,870

Net book value 136 260
Annual rate of amortization 20% 20%

6.1 Amortization charge for the year has been grouped under administrative expenses (note 30).

7. INVESTMENT PROPERTY Buildings on
Leasehold
leasehold Total
land
land
(Rupees in thousand)
At July 1, 2018
Cost 97,392 416 97,808
Accumulated amortization / depreciation 8,745 406 9,151
Net book value 88,647 10 88,657

Year ended June 30, 2019

Opening net book value 88,647 10 88,657
Amortization / depreciation charge 243 1 244
Closing net book value 88,404 9 88,413

At June 30, 2019

Cost 97,392 416 97,808
Accumulated amortization / depreciation 8,988 407 9,395
Net book value 88,404 9 88,413

Year ended June 30, 2020

Opening net book value 88,404 9 88,413
Amortization / depreciation charge 243 1 244
Closing net book value 88,161 8 88,169

At June 30, 2020

Cost 97,392 416 97,808
Accumulated amortization / depreciation 9,231 408 9,639
Net book value 88,161 8 88,169
Amortization / depreciation rate - per annum 0.25% 2.5%

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7.1 Amortization / depreciation charge for the year has been grouped under administrative expenses (note 30).

7.2 In the opinion of the directors, the market value of investment property at the reporting date has not
changed materially from last year.

8. LONG TERM LOANS - Secured, Note 2020 2019

considered good (Rupees in thousand)

Loans due from:
Related parties - Key Management Personnel 110 340
Other employees 3,656 6,156
8.1 3,766 6,496

Less: amounts recoverable within one year and
grouped under current assets

Related parties - Key Management Personnel 110 240
Other employees 1,699 2,617
13 1,809 2,857
1,957 3,639

8.1 Interest free loans have been provided to employees under their terms of employment. These are
repayable in monthly instalments over a period of one to five years. These are secured against their
respective vested retirement benefit.

8.2 Maximum aggregate amount of loans due from key management personnel at the end of any month
during the year was Rs.0.44 million (2019: Rs.0.38 million).

9. LONG TERM DEPOSITS - Considered good 2020 2019

(Rupees in thousand)
Deposit held with / for:
- Leasing companies 13,599 11,809
- Utilities and rental agreements 8,587 8,594
- Others 1,552 1,545
23,738 21,948
10. DEFERRED TAXATION - Net

This is composed of following:
- accelerated tax depreciation allowance (16,564) (35,826)
- surplus on revaluation of fixed assets (90,817) (52,891)
- liabilities against assets subject to finance lease 4,961 3,276
- gain on sale and lease back of fixed assets 358 259
- provision for gratuity 5,856 5,471
- provision for workers profit participation fund - 2,150
- provision for doubtful balances 11,861 6,986
- unabsorbed tax depreciation / unused tax losses 85,131 156,046
- others 1,687 1,687
2,473 87,158

10.1 As at June 30, 2020, the Holding Company has unused tax losses aggregating Rs.1,397.012 million.
Deferred tax asset on un-used losses has not been recognised on prudent basis.

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11. STOCK-IN-TRADE 2020 2019
(Rupees in thousand)
Raw materials and components
- In hand 4,170,587 6,969,265
- In transit 396,519 330,902
4,567,106 7,300,167

Work-in-process 116,438 153,698
Finished goods including components 2,100,456 2,295,343
Trading stocks 763,063 610,217
7,547,063 10,359,425

11.1 Stock-in-trade includes stock of Rs.3,641.64 million (2019: Rs.8,559.17 million) held with third parties
out of which stock of Rs.3,210.75 million (2019: Rs.7,880.86 million) is held with Ghandhara Nissan
Limited (an Associated Company) for assembly.

12. TRADE DEBTS - Unsecured Note 2020 2019

(Rupees in thousand)
Considered good
Government and semi-government agencies 1,287 2,072
Others 637,301 86,334
638,588 88,406
Consider doubtful - others 7,950 3,242
646,538 91,648
Less: provision for expected credit losses 12.3 7,950 3,242
638,588 88,406
12.1 The ageing of trade debts at reporting date is as follows:

2020 2019 2020 2019

Associated Company Others
(Rupees in thousand)

Upto 30 days - - 164,457 27,584
31 - 180 days - - 147,578 15,646
Over 180 days - - 334,503 48,418
- - 646,538 91,648

12.2 The maximum aggregate amount of trade receivable from related parties at the end of any month
during the year was Rs.Nil (2019: Rs.0.013 million).

12.3 Provision for expected credit loss

2020 2019
(Rupees in thousand)

Balance at beginning of the year 3,242 2,267

Provision for the year 4,708 975
Balance at end of the year 7,950 3,242

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13. LOANS AND ADVANCES - Unsecured Note 2020 2019

(Rupees in thousand)
Considered good
Current portion of long term loans to employees 8 1,809 2,857

Advances due from:

- employees 13.1 5,537 2,290
- suppliers, contractors and dealers 143,201 128,612
148,738 130,902
Considered doubtful
Advance to suppliers 5,274 5,359
Less: provision for doubtful advances 5,274 5,359
- -
150,547 133,759

13.1 Advances are given to employees to meet business expenses and are settled when expenses are
incurred.

14. TRADE DEPOSITS AND PREPAYMENTS 2020 2019

(Rupees in thousand)

Tender deposits 192,659 170,160

Less: provision for expected credit losses 25,112 12,925
167,547 157,235
Margins against bank guarantees 4,092,366 371,121
Less: provision for doubtful margin deposit 330 330
4,092,036 370,791
Margin against letters of credit - 12,734
Prepayments 1,345 2,074
4,260,928 542,834

15. OTHER RECEIVABLES - Unsecured

This amount is receivable from Isuzu Motors Limited, Japan on account of commission / claims.

16. CASH AND BANK BALANCES Note 2020 2019
(Rupees in thousand)

Cash in hand 2,652 2,264
Cash with banks on:
- current accounts 292,571 466,927
- saving accounts 16.1 47,874 33,441
- foreign currency accounts 16.2 42 42
340,487 500,410
Less: provision for a doubtful bank account 16.3 2,233 2,233
340,906 500,441

16.1 Saving accounts carry mark-up ranging from 2.46% to 2.61% (2019: 2.61% to 5.50%) per annum.

16.2 Foreign currency accounts include Japanese Yen (JPY) 31,559 equivalent to Rs.0.029 million and US
Dollars 126 equivalent to Rs.0.013 million (2019: JPY 31,559 equivalent to Rs.0.029 million and US
Dollars 126 equivalent to Rs.0.013 million).

16.3 This represents provision made against balances held with Indus Bank Limited under liquidation.

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17. SHARE CAPITAL 2020 2019
(Rupees in thousand)
17.1 Authorized capital

100,000,000 (2019: 50,000,000) ordinary
shares of Rs.10 each 1,000,000 500,000

17.2 Issued, subscribed and paid-up capital

2020 2019
(No. of shares)

17,650,862 17,650,862 Ordinary shares of Rs.10 each

fully paid in cash 176,509 176,509

358,206 358,206 Ordinary shares of Rs.10 each
issued for consideration other
than cash 3,582 3,582

24,599,776 24,599,776 Ordinary shares of Rs.10 each
issued as fully paid bonus shares 245,997 245,997

42,608,844 42,608,844 426,088 426,088

17.3 Movement in issued, subscribed and paid-up capital

2020 2019
(No. of shares)

42,608,844 21,304,422 Balance at beginning of the year 426,088 213,044

- 21,304,422 Ordinary shares of Rs.10 each
issued as fully paid bonus shares - 213,044

42,608,844 42,608,844 426,088 426,088

17.4 At June 30, 2020 and June 30, 2019 Bibojee Services (Private) Limited, the ultimate Holding Compa-
ny, held 16,686,794 (2019: 16,686,794) ordinary shares of Rs.10 each.

17.5 Ordinary shares held by related parties other than the u

ltimate Holding Company as at June 30,
Note 2020 2019

Number of Shares

Ghandhara Nissan Limited 8,132,336 8,132,336

Universal Insurance Company Limited 2,368,296 2,368,296
The General Tyre and Rubber Company of Pakistan Limited 201,400 201,400
Bibojee Investments (Private) Limited 42,816 42,816
10,744,848 10,744,848

17.6 The holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at general meetings of the Holding Company. All shares rank equally with
regard to Group’s residual assets.

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18. SURPLUS ON REVALUATION OF FIXED ASSETS Note 2020 2019

(Rupees in thousand)

Balance at the beginning of the year 2,102,452 1,912,804

Add: surplus arisen on revaluation carried-out

during the year 5.3 1,751,086 200,903

Less: transferred to unappropriated profit on account
of incremental depreciation for the year 11,255 11,255
3,842,283 2,102,452
Less: related deferred tax of:
- opening balance 52,891 52,790
- revaluation exercise for the year 41,190 3,365
- incremental depreciation for the year (3,264) (3,264)
- closing balance 90,817 52,891
Balance at end of the year 3,751,466 2,049,561

19. LEASE LIABILITIES

Balance at beginning of the year 65,180 42,750
Impact of initial application of IFRS 16 19.1 32,380 -
Additions during the year 17,896 30,298
Interest accrued 14,494 3,327
Repaid / adjusted during the year (34,303) (11,195)
95,647 65,180
Current portion grouped under current liabilities (29,410) (13,435)
Balance at end of the year 66,237 51,745

19.1 These represent lease contract for show room having estimated lease term of 4 years. These are dis-
counted using incremental borrowing rate (16.32%) of the Company.

The amount of future minimum lease payments together with the present value of the minimum lease
payments and the periods during which they fall due are as follows:
2020 2019
Finance Present Finance Present
Minimum cost value of Minimum cost value of
lease allocated minimum lease allocated minimum
payments to future lease payments to future lease
period payments period payments
(Rupees in thousand)

Not later than one year 35,570 6,160 29,410 20,019 6,584 13,435
Later than one year but
not later than five years 73,044 6,807 66,237 61,258 9,513 51,745

Total minimum
lease payments 108,614 12,967 95,647 81,277 16,097 65,180

19.2 The Holding Company has acquired motor vehicles under finance lease arrangements from leasing
companies and a modaraba. The arrangements are secured by title of leased assets in the name
of the lessor. Rentals are payable in monthly instalments. Repair and insurance cost are borne by
the Holding Company. The rates of financial charges applied, during the year, ranged from 8.85% to
17.59% (2019: 8.85% to 16.51%) per annum. At the end of the lease term, the ownership of the assets
shall be transferred to the Holding Company against the security deposits paid.

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20. COMPENSATED ABSENCES Note 2020 2019
(Rupees in thousand)

Balance at beginning of the year 13,045 10,844
Provision for the year 3,259 2,658
16,304 13,502
Encashed during the year (502) (457)
Balance at end of the year 20.1 15,802 13,045

20.1 Includes liability in respect of key management personnel aggregating to Rs.5.74 million (2019:
Rs.3.60 million).

21. DEFERRED LIABILITIES Note 2020 2019

(Rupees in thousand)
Gain on sale and lease back of fixed assets 21.1 1,233 893
Staff retirement benefit - gratuity 21.2 20,192 18,866
21,425 19,759
21.1 Gain on sale and lease back of fixed assets

Balance at beginning of the year 893 555

Add: vehicle sale and lease back during the year 798 673
Less: amortization for the year 458 335
Balance at end of the year 1,233 893

The Holding Company entered into sale and leaseback transaction during the preceding years which
resulted in finance leases. The excess of sale proceeds over the net book value of motor vehicle under
sale and leaseback arrangement has been recognised as deferred income and amortized over the
period of the lease term.

21.2 Staff retirement benefit - gratuity

21.2.1 As stated in note 4.12.1, the Holding Company operates an approved funded gratuity scheme for its staff.

21.2.2 Plan assets held in trust are governed by local regulations which mainly includes Trust Act, 1882, the
Companies Act, 2017, Income Tax Rules, 2002 and Rules under the Trust deed of the Plan. Responsi-
bility for governance of the Plan, including investment decisions and contributions schedules lies with
the Board of Trustees. The Holding Company appoints the trustees.

21.2.3 The latest actuarial valuations of the Scheme as at June 30, 2020 was carried out by an independent expert,
using the ‘Projected Unit Credit Method’. Details of the Scheme as per the actuarial valuation are as follows:

21.2.4 Statement of financial position - reconciliation 2020 2019

(Rupees in thousand)

Present value of defined benefit obligation 127,076 98,571
Fair value of plan assets (106,884) (79,705)
20,192 18,866
21.2.5 Movement in the present value of defined benefit obligation

Balance at beginning of the year 98,571 79,626
Current service cost 16,959 16,309
Interest cost 13,898 6,950
Re-measurement (273) 506
Benefits paid (2,079) (4,820)
Balance at end of the year 127,076 98,571

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21.2.6 Movement in the fair value of plan assets 2020 2019

(Rupees in thousand)

Balance at beginning of the year 79,705 -
Contributions 18,866 84,447
Benefits paid (2,079) (4,820)
Interest income 11,705 814
Re-measurements (1,313) (736)
Balance at end of the year 106,884 79,705

21.2.7 Expense recognised in statement of profit or loss

Current service cost 16,959 16,309
Interest cost - net 2,193 6,136
19,152 22,445
21.2.8 Re-measurement recognised in other comprehensive income

Remeasurement loss on plan asset 1,313 736
Experience adjustments (273) 506
1,040 1,242
21.2.9 Plan assets comprise of:

Term deposit receipts 90,391 79,078
Cash and cash equivalent 16,493 627
106,884 79,705
21.2.10 Actuarial assumptions used
(% per annum)
Discount rate 8.50 14.25
Expected rate of increase in future salaries 7.50 13.25
Mortality rates (for death in service) SLIC SLIC
2001-2005 2001-2005

21.2.11 Sensitivity analysis for actuarial assumptions

The sensitivity of the defined benefit obligation to changes in principal assumptions is :

Impact on define benefit obligation

Increase in Decrease in
Change in assumption assumption
assumption
(Rupees in thousand)

Discount rate 1.00% 115,610 140,492

Increase in future salaries 1.00% 140,492 115,411

The sensitivity analysis is based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and change in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the
same method (present value of defined benefit obligation calculated with the project unit credit method
at the end of reporting period) has been applied as when calculating the gratuity liability recognised
within the statement of financial position.

The methods and types of assumptions used in preparing the sensitivity analysis did not change
compared to the previous period.

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21.2.12 Based on actuary’s advice, the expected charge for the year ending June 30, 2021 amounts to Rs.20.75
million.

21.2.13 The weighted average duration of the scheme is 11 years.

21.2.14 Historical information 2020 2019 2018 2017 2016

(Rupees in thousand)
Present value of defined
benefit obligation 127,076 98,571 79,626 44,592 36,169

Experience adjustment (273) 506 16,676 1,934 521

21.2.15 Expected maturity analysis of undiscounted retirement benefit plan:

Less than Between Between Over 5

Total
a year 1-2 years 2-5 years years
(Rupees in thousand)
At June 30, 2020 4,015 6,783 37,994 293,629 342,421

22. TRADE AND OTHER PAYABLES Note 2020 2019

(Rupees in thousand)

Creditors 452,497 517,496
Accrued liabilities 185,207 250,474
Contract liabilities - advances from customers 22.1 5,454,130 3,163,734
Advance against sale of investment in
immovable property 5,000 5,000
Payable to trustees’ provident fund - 200
Royalty payable 44,190 36,445
Retention money 20 20
Withholding tax 30,938 26,627
Custom duty payable 537,594 445,011
Due to related parties 22.2 145,672 117,751
Workers’ Profit Participation Fund 22.3 - 7,413
Workers’ welfare fund 22.4 - -
Others 15,076 9,532
6,870,384 4,579,772

22.1 These represent advances from customers against sale of vehicle and carry no mark-up.

22.2 Due to related parties 2020 2019

(Rupees in thousand)

Ghandhara Nissan Limited 93,745 94,650
The General Tyre & Rubber
Company of Pakistan Limited 39,959 13,637
Rahman Cotton Mills Limited 5,400 3,600
Gammon Pakistan Limited - 26
Waqf-e-Kuli Khan 5,818 5,818
Ghandhara DF (Private) Limited 750 20
145,672 117,751

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22.3 Workers’ profit participation fund 2020 2019

(Rupees in thousand)

Balance at beginning of the year 7,413 105,162
Add: allocation for the year - 7,314
Add: interest on funds utilised in the
Holding Company’s business 2,443 9,829
9,856 122,305
Less: payments made during the year 9,856 114,892
Balance at end of the year - 7,413

22.4 Workers’ welfare fund

Balance at beginning of the year - 34,007
Less: paid during the year - 34,007
Balance at end of the year - -

23. Cash dividend and issuance of bonus shares to M/s. Essar Asset Management (Pvt.) Limited has been
withheld in view of the restraining order dated November 16, 2018 passed by the Hon’ble High Court
of Sindh in Suit No. 2149 of 2018.

24. ACCRUED MARK-UP / INTEREST Note 2020 2019

(Rupees in thousand)
Mark-up / interest accrued on:
- short term borrowings - secured 225,268 191,939
- long term loans - unsecured 4,514 4,514
229,782 196,453
25. SHORT TERM BORROWINGS - Secured

Finance against imported merchandise 25.1 2,691,056 2,941,765
Istisna 25.2 2,396,073 1,440,727
Murabaha 25.2 10,313 160,888
Running finance / Musharakah 25.4 1,420,954 1,753,234
6,518,396 6,296,614

25.1 The Holding Company has arranged facilities aggregating Rs.9,807 million (2019: Rs.11,750 million)
for opening of letters of credit from banks. These facilities are secured against cash margin and
consignment of import documents in bank’s favour. Finance against import merchandise (FIM) /
musawamah aggregating Rs.4,650 million (2019: Rs.7,050 million) are also available as sub-limit of
abovementioned facilities. FIM is secured against pledge of goods. Mark-up on FIM is payable on
quarterly basis at rate ranging from Matching KIBOR plus 0.5% to 1.70% per annum (2019: rate
ranging from Matching KIBOR plus 0.7% to 1.70 % per annum). Profit on import Murabaha is payable
on 180 days basis at the rate ranging from 3 months KIBOR plus 0.70% to 1.2% per annum (2019:
rate ranging from matching KIBOR plus 0.6% to 1.75% per annum). These facilities are maturing on
various dates latest by February 28, 2021.

25.2 The Istisna facility of Rs.2,582 million (2019: Rs.2,450 million) with a tenor of 180 days (2019: 180
days) and Murabaha facility of Rs.2,232 million (2019: Rs.4,500 million) are available from Banks.
Profit on both facilities ranges from KIBOR (matching) plus 0.7% to 2.25% (2019: KIBOR (matching)
plus 0.6% to 1.75%) and is payable along with the repayment of principal. These facilities are secured
against first pari passu hypothecation charge on current assets of Rs.4,667 million (2019: Rs.6,468
million). The facilities are available upto February 28, 2021.

25.3 The Holding Company has foreign / inland bills discounting facility of Rs.150 million (2019: Rs.150
million). The facility is secured against lien over accepted bills under LCs. The facility has a maximum
tenor of 180 days on roll over basis. The facility has one year validity on roll over basis and is due for
renewal on December 31, 2020.

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25.4 The Holding Company has facilities for short-term running finance amounting Rs.1,440 million
(2019: Rs.1,650 million) from banks. Mark-up is based on rates ranging from 1 month KIBOR plus
1.25% to 3 months KIBOR plus 0.75% to 1.10% per annum (2019: rates ranging from 1 month KIBOR
plus 0.6% to 3 months KIBOR plus 1.10% per annum) payable on quarterly basis. The facilities are
primarily secured against first pari passu charge by way of hypothecation over stocks and book debts
aggregating Rs.1,468 million (2019: Rs.2,200 million). These facilities are collateralized against
equitable mortgage over land and buildings for an amount of Rs.300 million (2019: Rs.300 million).
These facilities have one year validity on roll over basis and is due for renewal on December 31, 2020.

25.5 The facility for bank guarantees of Rs.9,841 million including sublimit of Rs.1,600 million of running
finance (2019: Rs.6,209 million including sublimit of Rs.1,250 million of running finance) is also
available from banks. These facilities are secured against cash margin and equitable mortgage over
immovable assets of the Holding Company to an extent of Rs.3,972 million (2019: Rs.6,697 million).
The facilities shall be available latest by December 31, 2020.

26. CONTINGENCIES AND COMMITMENTS

26.1 Contingencies

(i) Suit against the Holding Company by the supplier for the recovery of Rs.25.87 million as
compensation for breach of agreement. The suit is being defended by the Holding Company on a
number of legal grounds. The suit is at present in evidence stage and the Holding Company has
plausible defence.

(ii) Various demands have been raised by the Central Excise and Sales Tax Departments aggregating
Rs.4.90 million. The Holding Company filed Sales Tax Reference in High Court of Sindh against
the order of Customs, Excise and Sales Tax Appellate Tribunal (the Tribunal). The Sales Tax
Reference had been decided vide order dated January 21, 2009 wherein the High Court of Sindh
has set aside the order of the Tribunal and remanded back the case to the Tribunal to pass
order in accordance with law. The Tribunal through order dated October 9, 2015, disposed off the
matter by remanding the case to Assessing officer. No provision has been made in these financial
statements as the management believes that it will have a favourable decision.

26.2 Commitments 2020 2019

(Rupees in thousand)

Bank guarantees 7,547,916 3,943,290
Letters of credit 663,298 1,453,626

27. SALES - Net

Manufactured goods
Gross sales
- local 13,029,371 15,431,767
- export 43,501 30,015
13,072,872 15,461,782

Less: sales tax 1,893,059 2,244,585
11,179,813 13,217,197
Trading goods
Gross sales - local 729,153 814,608
Less: sales tax 120,712 121,892
608,441 692,716
11,788,254 13,909,913

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28. COST OF SALES Note 2020 2019

(Rupees in thousand)
Manufactured goods
Stocks at beginning of year 2,295,343 1,594,755
Cost of goods manufactured 28.1 10,506,469 12,669,032
12,801,812 14,263,787
Stocks at end of year (2,100,456) (2,295,343)
10,701,356 11,968,444
Trading goods
Stocks at beginning of year 610,217 368,506
Purchases 546,980 581,588
1,157,197 950,094
Stocks at end of year (763,063) (610,217)
394,134 339,877
11,095,490 12,308,321
28.1 Cost of goods manufactured

Raw materials and components consumed 28.2 9,539,407 11,618,880
Stores consumed 78,291 96,168
Salaries, wages and other benefits 28.3 201,607 227,395
Fuel and power 25,134 18,717
Rent, rates and taxes 6,357 5,776
Insurance 20,434 16,380
Research and development 1,893 5,223
Repair and maintenance 11,262 37,996
Travelling and entertainment 7,656 9,650
Vehicle running and maintenance 683 1,816
Printing, stationery and office supplies 703 643
Communication 460 410
Royalty expense 28.4 29,821 47,449
Outside assembly charges 375,600 494,135
Depreciation on operating fixed asset 5.2 145,613 110,548
Depreciation on right of use assets 5.11 2,064 -
Freight and handling 21,813 19,619
Other expenses 411 2,716
10,469,209 12,713,521
Work-in-process adjustment 37,260 (44,489)
10,506,469 12,669,032

28.2 Raw materials and components consumed

Stocks at beginning of year 7,300,167 4,815,750
Add : purchases including duties, taxes and other charges 6,806,346 14,103,297
14,106,513 18,919,047
Stocks at end of year (4,567,106) (7,300,167)
9,539,407 11,618,880

28.3 Salaries, wages and other benefits include Rs.9.89 million (2019: Rs.13.22 million) in respect of staff
retirement benefits.

28.4 Royalty charged in these financial statement pertains to Isuzu Motors Limited, Japan having
registered office at 6-26-1 Minami-Oi, Shinagawa-ku, Tokyo 140-8722 Japan and Isuzu Motor Co.
(Thailand) Limited having registered office at 38 Kor., Moo 9, Poochaosamingprai Rd., Samrong-Tai,
Phrapradaeng, Samutprakan 10130.

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29. DISTRIBUTION COST Note 2020 2019
(Rupees in thousand)

Salaries and benefits 29.1 86,429 111,168

Commission 208,614 257,782
Rent, rates and taxes 23,622 11,641
Insurance 1,091 2,184
Repair and maintenance 1,636 9,274
Utilities 1,861 520
Travelling and entertainment 11,566 18,515
Vehicle running and maintenance 2,374 1,892
Printing, stationery and office supplies 6,121 5,376
Communication 1,873 1,024
After sale services 31,695 13,283
Advertisement 33,801 46,143
Legal and professional charges 325 758
Late delivery charges 34,026 2,562
Depreciation on operating fixed asset 5.2 6,958 5,426
Depreciation on right of use assets 5.11 11,313 -
Freight forwarding and handling 21,466 43,141
Other expenses 8,979 4,265
493,750 534,954

29.1 Salaries and benefits include Rs.10.14 million (2019: Rs.12.01 million) in respect of staff retirement
benefits.

30. ADMINISTRATIVE EXPENSES Note 2020 2019
(Rupees in thousand)

Salaries and benefits 30.1 149,822 147,419
Staff training and ancillary cost 3,527 2,684
Rent, rates and taxes 9,502 6,417
Insurance 10,905 9,035
Repair and maintenance 9,649 13,180
Utilities 477 384
Travelling and entertainment 18,326 24,439
Vehicle running and maintenance 5,377 5,302
Printing, stationery and office supplies 10,045 6,901
Communication 1,862 2,490
Legal and professional charges 5,793 9,280
Fee and subscriptions 5,398 3,132
Depreciation on operating fixed asset 5.2 16,392 25,682
Depreciation on right of use assets 5.11 13,956 -
Amortization of intangible assets 6.1 124 124
Amortization / depreciation of investment property 7.1 244 244
Security expenses 11,182 10,599
Other expenses - 595
272,581 267,907

30.1 Salaries and benefits include Rs.11.28 million (2019: Rs.16.41 million) in respect of staff retirement
benefits.

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31. OTHER EXPENSES Note 2020 2019

(Rupees in thousand)
Auditors’ remuneration
- audit fee 1,030 1,030
- certification charges 72 185
- out of pocket expenses 35 25
1,137 1,240
Workers’ profits participation fund 22.3 - 7,314
Donation and charities 31.1 4,935 1,860
Provision for doubtful debts, deposits and advance 12.3, 13 & 14 16,810 15,984
22,882 26,398

31.1 Include donation amounting Rs.2.62 million made to Indus Hospital and Rs.2.23 million to Higher
Education Commission Department, Azad Jammu & Kashmir (2019: Rs.1.59 million made to Indus
Hospital). None of the directors or their spouses had any interest in the donees.

32. OTHER INCOME Note 2020 2019

(Rupees in thousand)
Income from financial assets
Profit on saving accounts and term deposit receipts 3,415 3,340
Exchange gain (loss) / gain - net (47) 1,650

Income from other than financial assets

Gain on sale of operating fixed assets 5.7 2,207 1,925
Commission 10,986 74,767
Scrap sales - net of sales tax 31,194 32,484
Amortization of gain on sale and lease back
of fixed assets 21.1 458 335
Rental income 6,443 2,882
54,656 117,383
33. FINANCE COST

Mark-up / interest on:
- lease finances 14,494 3,327
- finance against imported merchandise 374,604 535,698
- istisna / running finances / murabaha 542,451 181,445
- workers’ profit participation fund 22.3 2,443 9,829
Bank charges and others 36,424 20,363
970,416 750,662
34. TAXATION

Current tax
- for the year 34.1 226,829 169,924
- for prior year - (1,645)
226,829 168,279
Deferred tax - origination and reversal
of temporary differences 43,797 (89,318)
270,626 78,961

34.1 No numeric tax rate reconciliation for the period is given in the financial statements, as provision made
during the current year primarily represents minimum tax due under section 113 of the Income Tax
Ordinance, 2001 (the Ordinance) and tax deducted under section 148 and 233 of the Ordinance.

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35. BASIC AND DILUTED (LOSS) / EARNINGS PER SHARE 2020 2019
(Rupees in thousand)

Net (loss) / profit for the year (1,282,835) 60,093

Weighted average ordinary shares (Number of shares)
outstanding during the year 42,608,844 42,608,844

(Rupees)
(Loss) / earnings per share (30.11) 1.41

35.1 A diluted earnings per share has not been presented as the Group has not issued any instruments
carrying options which would have an impact on earnings per share when exercised.

36. CASH GENERATED FROM / (USED IN) OPERATIONS Note 2020 2019
(Rupees in thousand)

(Loss) / profit before taxation (1,012,209) 139,054

Adjustment for non cash charges and other items:

Depreciation / amortization on:
- property, plant and equipment 168,963 141,656
- intangible assets 124 124
- investment property 244 244
Provision for compensated absences 3,259 2,658
Gain on sale of operating fixed assets (2,207) (1,925)
Amortization of gain on sale and
lease back of fixed asset (458) (335)
Exchange loss / (gain) - net 47 (1,650)
Finance cost 970,416 750,662
Profit on saving accounts and term deposit receipts (3,415) (3,340)
Provision for doubtful debts, deposits and advance 16,810 15,984
Provision for gratuity 19,152 22,445
160,726 1,065,577
Working capital changes - net 36.1 1,013,116 (1,898,854)
1,173,842 (833,277)

36.1 Working capital changes

Decrease / (increase) in current assets:

Stores (14,141) 1,953
Stock-in-trade 2,812,362 (3,471,205)
Trade debts (566,992) (9,160)
Loans and advances (16,788) 34,902
Trade deposits and prepayments (3,718,094) 178,379
Other receivables (2,329) (4,590)
Sales tax refundable / adjustable 228,486 215,770
(1,277,496) (3,053,951)
Increase in trade and other payables 2,290,612 1,155,097
1,013,116 (1,898,854)
37. CASH AND CASH EQUIVALENTS

Cash and bank balances 16 340,906 500,441
Short term borrowings 25 (6,518,396) (6,296,614)
(6,177,490) (5,796,173)

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38. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

Chief executive Director Executives
2020 2019 2020 2019 2020 2019
(Rupees in thousand)
Managerial remuneration
and allowances 60,000 60,000 31,500 12,500 78,318 97,508
Retirement benefit 5,000 5,000 2,688 2,500 7,387 5,256
Others - - - - 4,976 4,831
65,000 65,000 34,188 15,000 90,681 107,595

Number of persons 1 1 1 1 30 30

38.1 Certain employees are provided with free use of car maintained by the Holding Company in accordance
with their terms of employment.

38.2 Aggregate amount charged in the financial statements for meeting fee to Directors was Rs.3.50 million
(2019: Rs.3.30 million).

39. TRANSACTIONS WITH RELATED PARTIES

Related parties of the Group comprise of the Ultimate Holding Company, Associated Companies /
undertaking, technological suppliers, directors and executives. The Group in the normal course of
business carries out transactions with various related parties at agreed terms and conditions. Amounts
due from and to related parties, amounts due from executives and remuneration of directors and
executives are disclosed in the relevant notes. Other material transactions with related parties are
given below:

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Name of related party and Nature of 2020 2019
nature of relationship transactions (Rupees in thousand)

(i) Ultimate Holding Company

Bibojee Services (Private) Limited Dividend paid - 130,157

(ii) Associated Companies / Undertaking
The General Tyre and Rubber
Company of Pakistan Limited Purchase of tyres 125,815 210,008
(Common Directorship) Sale of parts 335 452
Dividend paid - 1,571

Ghandhara Nissan Limited Assembly charges 439,452 578,138
(Common Directorship) Sales of parts 183 32
Rental income 3,221 2,882
Re-imbursement of expenses 444 24
Dividend paid - 63,432

Universal Insurance Company Limited Dividend paid - 18,473
(Common Directorship)

Rehman Cotton Mills Limited Rent paid - 3,600
(Common Directorship) Re-imbursement of expenses 1,800 -

Gammon Pakistan Limited Rent paid 3,000 3,000
(Common Directorship) Re-imbursement of expenses 34 275

Ghandhara DF (Private) Limited Sales of parts - 8
(Common Directorship) Purchase of parts 6 22
Rental income 3,221

Bibojee Investments (Private) Limited Dividend paid - 334
(Common Directorship)

Janana De Malucho Textile Mills Re-imbursement of expenses 2,058 1,806
Limited (Common Directorship) Sale of pickup truck 6,135 -

(iii)
Other related parties
Gratuity fund Contribution paid 18,866 84,447
Provident fund Contribution paid 8,896 16,460
Key management personnel Remuneration, bonus and
other benefits 138,560 148,729
Sale of pick up truck 12,887 -

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40. PRODUCTION CAPACITY

The production capacity of the plant cannot be determined as this depends upon the mix of assembly
of trucks, buses and fabrication of commercial bodies.

The Holding Company has outsourced the assembly of trucks, buses and pick ups to Ghandhara
Nissan Limited (an Associated Company) therefore figures for the actual production for the current
year has not been given.

41. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

41.1 Financial assets and liabilities by category and their respective maturities
Interest / mark-up bearing Non interest / mark-up bearing
Maturity Maturity Maturity Maturity Total
up to one after one Sub-total up to one after one Sub-total
year year year year
(Rupees in thousand)
Financial assets as per
balance sheet

Investments - at cost
Long term investment - - - - 1,400 1,400 1,400

Amortised cost
Loans and advances - - - 1,809 1,957 3,766 3,766

Deposits - - - 4,259,583 23,738 4,283,321 4,283,321
Trade debts - - - 638,588 - 638,588 638,588
Other receivables - - - 9,263 - 9,263 9,263
Cash and bank balances 47,874 - 47,874 293,032 - 293,032 340,906

June 30, 2020 47,874 - 47,874 5,202,275 27,095 5,229,370 5,277,244

June 30, 2019 33,441 - 33,441 1,106,004 26,987 1,132,991 1,166,432

Financial liabilities as per
balance sheet

At amortised cost
Trade and other payables - - - 1,380,316 - 1,380,316 1,380,316
Accrued mark-up / interest - - - 229,782 - 229,782 229,782
Short term borrowings 6,518,396 - 6,518,396 - - - 6,518,396
Liabilities against assets subject
to finance lease 29,410 66,237 95,647 - - - 95,647

June 30, 2020 6,547,806 66,237 6,614,043 1,610,098 - 1,610,098 8,224,141

June 30, 2019 6,310,049 51,745 6,361,794 1,583,249 - 1,583,249 7,945,043

On Balance Sheet Gap
June 30, 2020 (6,499,932) (66,237) (6,566,169) 3,592,177 27,095 3,619,272 (2,946,897)

June 30, 2019 (6,276,608) (51,745) (6,328,353) (477,245) 26,987 (450,258) (6,778,611)
Off Balance Sheet
Letters of credit 663,298
Letters of guarantee 7,547,916

June 30, 2020 8,211,214

June 30, 2019 5,396,916

The effective interest / mark-up rates for the monetary financial assets and liabilities are mentioned in
respective notes to the financial statements.

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41.2 Financial risk factors

The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including
foreign exchange risk and interest / mark-up rate risk). The Group’s overall risk management program
focuses on having cost effective funding as well as manage financial risk to minimize earnings volatility and
provide maximum return to shareholders.

(a) Credit risk

Credit risk represents the accounting loss that would be recognised if counterparties failed to
perform as contracted. Credit risk mainly arises from loans & advances, deposits, trade debts,
other receivables and bank balances. The financial assets exposed to credit risk aggregate to
Rs.5,273.19 million (2019: Rs.1,174.94 million).

The Group believe that it is not materially exposed to credit risk as; (i) trade debts mainly represent
receivables from government, semi-government agencies and dealers, (ii) deposits mainly include
margin against letters of credit and bank guarantees held with banks having good credit ratings
and (iii) balances placed with banks having good credit ratings assigned by credit rating agencies.

The Group attempts to control credit risk by monitoring credit exposure, limiting transactions with
specific counterparties and continually assessing the creditworthiness of counterparties.

(b) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligation as they fall
due. Prudent liquidity risk management implies maintaining sufficient cash and bank balances and
availability of funding through an adequate amount of committed credit facilities. The Group aims
to maintain flexibility in funding by keeping committed credit lines open.

The maturity profile of the Group’s liabilities based on maturities is disclosed in note 41.1 of these
financial statements.

(c) Market risk

Foreign exchange risk

Foreign exchange risk arises mainly when receivables and payables exist due to transactions
based on currencies other than Pak Rupee. At June 30, 2020, payables and receivables exposed
to foreign exchange risk are Rs.44.19 million (2019: Rs.41.02 million) and Rs.0.23 million (2019:
Rs.3.291 million) respectively. The liability and receivable are denominated in Japanese Yen / US
Dollars.

At June 30, 2020 if Pak Rupee had weakened / strengthened by 13% against Japanese Yen and
US Dollars with all other variables held constant, profit before tax for the year would have been
lower / higher by Rs.5.48 million and Rs.0.024 million (2019: Rs.2.64 million), mainly as a result
of foreign exchange loss / gain on translation of Japanese Yen and dollars denominated financial
assets and liabilities.

The sensitivity of foreign exchange rate looks at the outstanding foreign exchange balances of the
Group as at the reporting date. The volatility percentage for movement in foreign exchange rates
has been used due to the fact that historically (5 years) rate has moved on average basis by the
mentioned percentage per annum.

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Interest / mark-up rate risk

Interest / mark-up rate risk is the risk that the value of a financial instrument will fluctuate due to
changes in the market interest / mark-up rates. At June 30, 2020, the Group’s interest bearing
financial liabilities of Rs.6,614.04 million (2019: Rs.6,361.79 million) represent the short term
borrowings at floating rate to manage the working capital requirements of the Group and obligation
under assets subject to finance lease. These liabilities are re-priced at a maximum period of six
months. The effective mark-up rates for financial assets and liabilities are mentioned in respective
notes to the financial statements.

Had the interest rates varied by 100 basis points with all other variables held constant, (loss) / profit
before tax for the year would have been approximately higher / lower by Rs.64.14 million (2019: Rs.63.62
million).

The sensitivity of 100 basis points movement in the interest rates has been used as historically (five
years) floating interest rates have moved by an average of 100 basis per annum.

41.3 Price risk

The Group is not exposed to any price risk as it does not hold any investments exposed to price risk.


41.4 Fair values of financial assets and liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Underlying the definition of fair value is
the presumption that the Group is going concern and there is no intention or requirement to curtail materially
the scale of its operation or to undertake a transaction on adverse terms.

The estimated fair value of all financial assets and liabilities is considered not significantly different from book
values as the items are either short - term in nature or periodically repriced.

International Financial Reporting Standard 13, ‘Financial Instruments : Disclosure’ requires the Group to
classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used
in making the measurements. The fair value hierarchy has the following levels:

- Quoted prices (unadjusted) in active markets for identical assets or liabilities [Level 1].

- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) [Level 2].

- Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) [Level 3].

Currently there are no financial assets or financial liabilities which are measured at their fair value in the
statement of financial position.

42. CAPITAL RISK MANAGEMENT

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.

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The Group manages its capital structure by monitoring return on net assets and makes adjustments to it in
the light of changes in economic conditions. In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders and / or issue new shares. There was no change
to the Group’s approach to capital management during the year. The Group monitors capital on the basis of
gearing ratio calculated as follows:
2020 2019
(Rupees in thousand)

Total borrowings 6,518,396 6,296,614

Cash and bank balances (340,906) (500,441)
Net debt 6,177,490 5,796,173
Total Equity 5,075,668 4,649,345
Total Capital 11,253,158 10,445,518
Gearing ratio 55% 55%

43. OPERATING SEGMENTS

These financial statements have been prepared on the basis of a single reportable segment.

(a) All non-current assets of the Group at June 30, 2020 are located in Pakistan.

(b) Export sales are made to Republic of Mauritius and Australia. Result of the Holding Company’s revenue
from external customers in Pakistan is Rs.11,744.75 million (2019: Rs.13,789.90 million) and total
revenue from external customers from other countries is Rs.43.50 million (2019: Rs.30.02 million).

(c) The Group’s customer base is diverse with no single customer accounting for more than 10% of net
revenue as at June 30, 2020.

44. IMPACT OF COVID-19 (CORONAVIRUS) ON FINANCIAL STATEMENTS

The spread of Covid-19 as a pandemic and consequently imposition of lock down by Federal and Provincial
Governments of Pakistan (Authorities) has effected the production and sale volumes of the Group due to
closure of plant during the lock down period. The management has assessed the accounting implications of
these developments on the financial statements, however, according to management’s assessment, there
is no significant accounting impact of the effects of COVID-19 on the asset and liabilities in these financial
statements. Further, as per relaxation given by Authorities, the Group have resumed its operations with effect
from June 2, 2020 with all precautionary measures aimed at preventing pandemic spread.

45. NUMBER OF EMPLOYEES

The number of employees (including contractual employee) at June 30, 2020 were 621 (2019: 611) and
average number of employees during the year were 616 (2019: 706).

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46. SHAHRIAH SCREENING DISCLOSURE

2020 2019
Convent Shariah Convent Shariah
-ional Compliant -ional Compliant
(Rupees in thousand)

Bank balances 168,925 171,562 172,208 328,202

Accrued mark-up 119,888 109,894 131,663 64,790
Short term borrowings 3,448,751 3,069,645 4,049,615 2,246,999
Revenue - 11,788,254 - 13,909,913

Other income
a) Profit on saving accounts and
term deposit receipts 2,042 1,373 685 2,655

d) Others including exchange gain on
actual currency - 51,241 - 114,043

Mark-up / interest expense 488,277 446,084 487,717 242,939

47. CORRESPONDING FIGURES

The corresponding figures have been rearranged and reclassified, wherever considered necessary for
the purposes of comparison and better presentation the effect of which is not material.

48. DATE OF AUTHORISATION FOR ISSUE

These financial statements were authorised for issue on September 30, 2020 by the Board of Directors
of the Holding Company.

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Muhammad Aamir
Chief Executive Director Chief Financial Officer

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Electronic Dividend Mandate Form

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Proxy Form

Company to be held on Wednesday, 28th October, 2020 at 4:45 P.M. and any adjournment thereof.

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28 57
4:45 P.M. 2020

F-3 48

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 Address: F-3, Hub Chowki Road, S.I.T.E., Karachi-75730
UAN : 111-445-111, 32560083-6, 32588708 Fax: 021-32569989, 32564458 Toll Free: 0800-11190
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