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Nishat Mills Limited
2014’s Annual Report
of Nishat Mills Limited
By Hijab aheed
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condition. )reehold land and capital #ork5in5progress are stated at cost less any
recogni(ed impairment loss. *ubse3uent costs are included in the asset$s carrying
amount or recogni(ed as a separate asset% as appropriate% only #hen it is probable
that uture economic beneits associated #ith the item #ill lo# to the Company and
the cost o the item can be measured reliably. +ll other repair and maintenance costs
are charged to proit and loss account during the period in #hich they are incurred.
Property% plant and e3uipment include operating ixed assets and
capital #ork in progress. &perating ixed assets are urther categori(ed into o#ned
and leased. )reehold land% buildings on reehold land% Plant and machinery% stand by
e3uipment% electric installations% actory e3uipment% computer e3uipment% vehicles
and urniture% ixtures : oice e3uipment are o#ned ixed assets% #hile some plant
and machinery are leased.
• 0epreciation
0epreciation on property% plant and e3uipment is charged to proit and
loss account applying the reducing balance method so as to #rite o the cost 4depreciable amount o the assets over their estimated useul lives. The Company
charges the depreciation on additions rom the date #hen the asset is available or
use and on deletions up to the date #hen the asset is de5recogni(ed. The residual
values and useul lives are revie#ed by the management% at each inancial year5end
and ad,usted i impact on depreciation is signiicant.
/uildings% plant and machinery% stand by e3uipment% electric
installations% actory e3uipment% urniture% ixtures : e3uipment have 18;
depreciation rate. Computer e3uipment has
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Intangible assets include ranchise and computer sot#are. These are
amorti(ed at the rate o '8;.
orkers$ proit participation und and
>orkers$ #elare und. )rom these Income tax is an estimated liability.
• *hort term borro#ings
It includes *hort term running inances% *tate /ank o Pakistan 6*/P7 reinance%
Temporary bank overdrats and other short term borro#ings. *hort term running
inances rates o mark5up range rom !.9"; to 1'.'"; per annum on the balance&utstanding. *tate bank o Pakistan reinances rates o markup range rom ?.@8; to
?.!8; per annum on the balance outstanding. These inances are obtained rom
banking companies under markup arrangements and are secured against ,oint pari
passu hypothecation charge on all present and uture current assets% other
instruments and ranking hypothecation charge on plant and machinery and pledge o
cotton o the Company.
• Contingencies
The Company is contingently liable on account o central excise duty not
ackno#ledged as debt as the case is pending beore Court.
Postdated che3ues are issued to customs authorities in respect o duties on imported
items availed on the basis o consumption and export plans. I documents o exports
are not provided on due dates% che3ues issued as security shall be encashable.
-uarantees are given by the banks o the Company to *ui Northern -as Pipelines
Limited against gas connections% *hell Pakistan Limited and Pakistan *tate &il
Limited against purchase o urnace oil% 0irector 2xcise and Taxation% Aarachi
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against inrastructure% Pakistan +rmy against ulilment o sales order and Pun,ab
Po#er 0evelopment /oard or issuance o Letter o Interest to set up an electricity
generation acility.
Nishat Linen 6Private7 Limited 5 *ubsidiary Company is contesting sales tax
demands o upees ".'
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paid ordinary shares o upees 18 each% e3uity held 1shares. nited /ank Limited5upees 18 each in Lalpir Po#er Limited #hereby. &rdinary shares o Lalpir Po#er
Limited are no# listed on the Aarachi *tock 2xchange Limited and Lahore *tock2xchange Limited. Investments in Lalpir Po#er Limited and Pakgen Po#er
Limited include ""8 and "88 shares respectively% held in the name o nominee
director o the olding Company. 0.-. Ahan Cement Company Limited
1
e3uity held '?.?8;Pakgen Po#er Limited518'%"'9%@'? ully paid ordinary shares
o upees 18 each% e3uity held '@."";. Nishat Paper Products Company Limited5
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Pak Au#ait Investment Company 6Private7 Limited. +ccording to the lease
agreement% leasing company has contributed upees 1"8.89@ million rom its o#n
sources and the remaining amount o upees 19!.!"< million has been inanced
under Long Term )inance )acility 6LT))7 scheme o *tate /ank o Pakistan.
Minimum lease payments have been discounted using implicit interest rate rangingrom !.@8; to 1'.1"; per annum. /alance rentals are payable in 3uarterly
instalments. Taxes% repairs and insurance costs are borne by the olding Company.
These are secured against the leased assets and demand promissory notes.
@. Cash lo# statementsThe operating activities in cash lo# statement had proit beore taxation and
urther ad,ustments #ere done in them. Those urther ad,ustments included adding
deprecation as it is a non5cash expense% deducting o Provision or slo# moving
stores% spare parts and loose tools% deducting Net exchange gain on or#ardcontracts% deducting -ain on sale o property% plant and e3uipment% deducting -ain
on sale o investment% deducting 0ividend Income% deducting Proit on deposits #ith
banks% deducting *hare o proit rom associated companies% and adding inance
costs. +ter things #orking capital ad,ustments #ere made. There #as an increase in
current assetsD stores% spares parts% and loose tools% stock in trade% trade debts% short
term deposits and prepayments% and other receivables. There #as deduction by the
amount these assets #ere increased. Loans and advances 6Current assest7 #ere
decreased so they #ere being added to the amount. +s ar as current liabilities are
concerned% trade and other payables #ere increased so they #ere being added. There
#as a cash outlo# in the operating activities o Nishat Mills Limited.
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