1. Status
and Nature of Business
The company was
incorporated in
The company commenced its
commercial operation, from 2001 after reactivation of plant which remained idle
for the seven year. However, the company again has suspended its production on
2. Summary
of Significant Accounting Policies
2.1 Statement
of Compliance
These Financial Statements
have been prepared in accordance with the approved Accounting Standards as
applicable in
As per SRO 684 (1) dated
August 10, 2004 issued by the Central Board of Revenue, the Company’s tax year
/ financial year is required to end on June 30, instead of September 30, and
further clarified by the Securities and Exchange Commission of Pakistan vide their circular no. 29 of 2004
dated November 05, 2004. In order to make the company’s accounting period
consistent with the aforementioned requirement the company has prepare its
financial statements covering period of nine months ended on June 30, 2005.
Since the audited comparative figures are available for the year ended
2.2 Accounting
Convention
These financial statements
have been prepared under the historic cost convention, without taking into
account, the effects of inflation and/or current values, if any.
2.3 Taxation
2.3.1 Current
Provision for current taxation
is based on the income taxable at the current rates of tax, after taking into
account tax credits and tax rebates, if any, under the applicable Income Tax
Law in
2.3.2 Deferred
The Company accounts for
deferred taxation on all material timing differences between the tax base and
accounting base of an asset or a liability. However, deferred tax is not
provided if it can be established with reasonable certainty that these
differences would not crystallize in the foreseeable future.
Contd...2..
2.4 Property,
Plant and Equipments
2.4.1a Property, Plant and Equipments are stated at
cost less accumulated depreciation, except Capital Work-in-Progress which is
stated at cost and Land Leasehold on straight Line Basis.
Depreciation is charged to
income using the reducing balance method, at the rates specified in the annexed
schedule, whereby the cost of an asset is written-off over its estimated useful
life, reflecting the approximate value of the consumption of the respective
assets economic benefits.
No Depreciation on Assets
except a Hut on Sandspit (Lease Hold) and Vehicles has been charged during the
year as their has been no production activity made
during the period under review.
2.4.1b Maintenance and normal repairs are charged to
income, as and when incurred. Major renewals and improvements are capitalized
and the assets so replaced, if any, are retired.
2.4.1c Gains and losses arising on the disposal of
fixed assets are taken to the Profit and Loss Account.
2.5 Stores and Spares and Stock-in-Trade
These are valued as follows:
Stores and Spares : At average cost
Raw Material : At average cost
Finished
Goods : At lower of cost or net realizable value.
2.5.1 Net realizable value
signifies the estimated selling price in the ordinary course of business, less,
costs necessarily to be incurred in order to make the sale.
2.6. Foreign
Currencies
Transactions in foreign
currencies, if any, are recorded using the rates of exchange prevalent at the
date of the transaction. Assets and Liabilities in foreign currencies, if any,
are translated into the reporting currency, i.e., Rupees, at the exchange rate
prevalent at the balance sheet date, except where foreign exchange contracts
are entered into; in which case, the contracted rates are used. Exchange gains
and losses, if any, are included/charged into income currently.
2.7
Deferred Costs -
Unallocated Pre-production Expenses
The company used to amortize
this deferred cost over a period of ten years from the year of commencement of
commercial production; therefore, the entire deferred cost would be amortized
by the financial year end
2.8 Revenue
Recognition
Revenue
from Sales is recognized on dispatch of goods to customers.
Other
Income is recognized on Receipt Basis.
Contd..3..
2.9. Trade
Debts
Trade debts are carried at
the original invoice amount, less an estimate made for doubtful receivables
based on a review of all outstanding amounts at the year end. Bad debts are
written off when identified. Debts considered bad, if any, by the management
are written-off, and provision is made against those considered doubtful. No
general provision is made for bad and doubtful debts.
2.10 Provisions
Provisions are recognized
when the company has a legal or constructive obligation to do so, and as a
result of past events, it is probable that an outflow of resources will be
required to settle the obligation, and a reliable estimate of the amount can be
made.
2.11 Cash
and cash equivalents
Cash and cash equivalents
includes Cash and Bank Balances. The Cash and Cash Equivalents are Subject to
insignificant Changes.
2.12 Financial
Instruments
All financial assets and liabilities
are recognized at the time when the company becomes a party to the contractual
provisions of the instrument. Any gain or loss arising on the recognition or
de-recognition of the financial assets and liabilities are included in the
Profit and Loss for the period in which it arises.
2.13 Trade
and Other payables
Liabilities for trade and
other amounts payable are carried at cost, which is fair value of the
consideration to be paid in the future for the goods or services so received
whether billed to the Company or not.
2.14. Borrowing
Costs
Borrowing Costs incurred
are charged to Profit and Loss Account.
2.15 Mark-
up Bearing Borrowings.
Mark up bearing borrowings
are recognized initially at cost less attributable transaction
costs. Subsequent to initial recognition Mark-up bearing borrowings are stated
at original cost less repayment. While the difference between the cost (reduced
for periodicals payments) and redemption value is recognized in the profit and
loss amount over the period of the borrowings on an effective mark-up basis.
2.16 Employees
Benefits
The company does not
operate any employee’s benefits scheme.
2.17 Contingent
Liability.
A contingent liability is
disclosed in the financial statements unless the possibility of an out flow of
resources embodying economic benefits is remote.
2.18 Contingent
Assets.
A contingent asset is
disclosed where in inflow of economic benefits is probable.
Conted..4..