ZIL Annual Report 2019 PDF
ZIL Annual Report 2019 PDF
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07 Corporate Information
Company Information 08
Vision 10
Mission 11
Core Values 12
Code of Conduct 14
Corporate Social Responsibility 16
19 Corporate Governance
Board of Directors 20
Directors’ Profile 22
Board and Management Committees 27
Statement of Compliance with Listed Companies
(Code of Corporate Governance) Regulations, 2019 64
Independent Auditor’s Review Report
To the Members on the Statement of Compliance contained in Listed Companies
(Code of Corporate Governance) Regulations, 2019 66
29 Brand Portfolio
ZIL Brands 30
36 Directors’ Report
Directors‘ Report 37
Meetings of the Board of Directors 41
Vertical Analysis 52
Horizontal Analysis 54
Ratios of Last Six Years 56
Graphical Presentation 58
Statement of Value Addition 60
Pattern of Shareholding 61
Categories of shareholders 62
Key Shareholding 63
67 Financial Statements
Independent Auditor’s Report to the Members 68
Financials Statements 73
125 Annexures
Form of Proxy
Electronic Credit Mandate Form
Request for Video Conferencing Facility Form
Investor Awareness
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Board of Directors
Mrs. Feriel Ali Mehdi* Chairman, Non-Executive Director
Mr. Mubashir Hasan Ansari* Executive Director & Chief Executive Officer
Mr. Saad Amanullah Khan* Independent, Non-Executive Director
Mr. Kemal Shoaib* Non-Executive Director
Mr. Syed Hasnain Ali* Non-Executive Director
Mr. Mir Muhammad Ali* Independent, Non-Executive Director
Mr. Muhammad Salman H.Chawala** Independent, Non-Executive Director
(Representing NIT)
Retired Director
Mr. M. Qaysar Alam**
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Statutory Auditors
KPMG Taseer Hadi & Co. Chief Financial officer
Chartered Accountants Mr. Ata-ur-Rehman Shaikh
Factory
Link Hali Road, Hyderabad - 71000
Bankers
BankIslami Pakistan Limited
Habib Bank Limited
MCB Bank Limited
National Bank of Pakistan Limited
Standard Chartered Bank
Soneri Bank Limited
Shares Registrars
THK Associated (Pvt) Limited
1st Floor, 40-C, Block-6
P.E.C.H.S., Karachi
www.thk.com.pk
Phone: +92 (21) 111-000-322
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It is the fundamental policy of ZIL Limited to conduct its business • Employees must avoid any investment, arrangement or other
with honesty, integrity and in accordance with the highest ethical and association, whether their own, an immediate family or household
legal standards. The company has adopted comprehensive Code of member, which could give the appearance of, or actually interfere
Conduct (herein after called ‘Code’) to provide guidance to foster a with, the independent exercise of sound business judgment in the
culture of uprightness, accountability & high standards of personal best interests of the Company, or otherwise represents a real or
and professional veracity and to promote integrity for the board, apparent conflict of interest between the interests of the employee
senior management and other employees. and those of the Company.
• Relationships amongst employees, at all levels, must be truthful, Fair Competition and Antitrust Laws
trustworthy and honest. The Company must comply with all fair competition and antitrust
laws to ensure that businesses compete fairly and honestly and
• Compliance with the law, regulations, statutory provisions and prohibit conduct seeking to reduce or restrain competition.
company’s policies & procedures is a constant commitment
and duty of all ZIL employees. Conflicts of Interest
Employees must not engage in activities or transactions which may
• The Company’s business and activities have to be carried out in
a transparent, honest and fair manner. Any discrimination because give rise, or which may be seen to have given rise, to conflict
of race, color, religion, gender, age, nationality, marital status between their personal interests and the interest of the Company.
or physical disability is rejected. There is a likely conflict of interest if employees:
• Employees must be committed to customer satisfaction and strive
to provide quality in all business dealings.
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• cause the Company to engage in business transactions with
relatives or friends; • Signing any documents believed to be inaccurate
or untruthful.
• use nonpublic information of the Company, customer or supplier
for personal gain by employees, relatives or friends (including Protection and Proper Use of the Company Property
securities transactions based on such information); Employees must safeguard the Company property from loss or theft,
and should not take such property for unauthorized personal use.
• have more than a modest financial interest in the Company’s The Company property includes confidential information, software,
suppliers, customers or competitors; computers, office equipment, and supplies.
• receive a loan, or guarantee of obligations, from the Company Confidentiality of Information
(other than as specifically allowed) or a third party as a result of Employees are expected to safeguard confidential information and
position within the Company; must not, without authority, disclose such information about the
Company’s activities to the press, to any outside source or to
• compete, or prepare to compete, with the Company while still employees who are not entitled to such information.
employed by the Company; or
Record Retention
• perform work (with or without compensation) for a competitor, The company’s business records shall be maintained for a period
governmental or regulatory entity, customer or supplier of the specified in the law and in accordance with specific policies.
Company, or do any work for a third party that may adversely
affect performance or judgment on the job or diminish ability to Securities Trading
devote the necessary time and attention to the duties Trading in the securities of the Company by the employee, or any of
his relatives or friends, while possessing “inside” information related
Gifts, Bribes and Kickbacks to that company is strictly prohibited.
Bribes, kickbacks or other payments, (other than received in the
normal course of business including travel or entertainment) which Political Affiliations
are intended to influence a business decision or compromise ZIL Limited is an independent organization free from any political
independent judgment are strictly prohibited. Accepting cash or cash affiliation. No funds or assets of the Company may be contributed to
equivalents, including cheques, money orders, vouchers, gift any political party or organization or any individual who either holds
certificates, loans, stock or stock options that might place an public office or is a candidate for public office except where such a
employee under obligation is forbidden. Employees must politely but contribution is permitted by law.
firmly decline any such offer. Employee found guilty of paying or
receiving bribes, gifts or kickbacks should be promptly reported to Reporting Ethical
the appropriate authorities. Violations All matters of ethical / legal violations, accounting or
auditing matters, fraud, misconduct or other instances of
Financial Integrity unauthorized behavior should be promptly reported to the competent
All financial books, records and accounts must accurately reflect authorities in the manner prescribed / laid down by such authorities.
transactions and events and conform to generally accepted Confidentiality would be strictly maintained in all such reported
accounting principles and to the Company’s system of internal cases. Protection will also be provided from any kind of retaliation /
controls. Information must not be falsified or concealed under any consequence for all reports made in good faith.
circumstances. Examples of unethical financial or accounting
practices include: Workplace Safety
Every employee at work must take reasonable care for the health
• Making false entries that intentionally hide or disguise the true and safety of himself / herself and others who may be affected by his
nature of any transaction; / her acts or omissions at work; and co-operate with the Company in
its efforts to protect the health and safety of its employees and
• Improperly accelerating or deferring the recording of expenses or visitors.
revenues to achieve financial results or goals;
It is the policy of the Company to promote a productive work
• Maintaining any undisclosed or unrecorded funds or “off the book” environment and not to tolerate verbal or physical conduct by any
assets; employee that harasses, disrupts, or interferes with another’s work
performance or that creates an intimidating, humiliating, offensive or
• Establishing or maintaining improper, misleading, incomplete or hostile environment.
fraudulent account documentation or financial reporting;
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Responsibility
Consumer Protection Measures We also endeavor to ensure that our community
and its members are not placed at risk by any
At the heart of what we do at ZIL are our valued of our operational activities.
customers. We have in place several
measures to ensure our customers benefit A comprehensive and well maintained
from the highest standards of quality and that safety system under the supervision of
we engage in continuous dialogue with them. General Manager Supply Chain is established.
• Our products are manufactured using natural Safety committee and shift wise rescue teams
ingredients, which are disclosed on the are also established.
packing of each item.
The program will ensure that:
• At ZIL we follow ISO-9001 quality standard
in order to enhance defective free products. 1. Dedicated people are resourced for safety
We are also PSQCA certified. program & organization.
• The company maintains an email address 3. People are trained on key safety components,
for any queries or complaints. These are permit to work system and PPE.
evaluated and responded to with the proper
care and attention. 4. People are involved up to floor level.
• Consumers also contact the company directly 5. Safety program results are properly tracked,
or via sales agents. reviewed and shared across the organization.
• Regular surveys and home visits are also 6. Reward and recognition program is applicable
conducted to gain the general response of on safety achievements.
the consumers at large.
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Business Ethics & Anti-Corruption Measures • Employees are encouraged to minimize the
use of air conditioning, switch of room or
ZIL has a number of preventive measures and cubicle lights, printers, monitors and other
frequent activities to ensure that the employees electronics when not required.
uphold the Code of Conduct of the company.
These measures and activities are frequently • Fuel limits are regularly evaluated and
re-evaluated and amended to modernize the amended in concurrence to contemporary
existing ethical system. The Code of Conduct needs.
is scrupulously followed throughout the
organization. • Additionally a number of initiatives have been
taken in factories, depots and haulage to
Our Human Resources conserve energy.
Our success is dependent on attracting and • Power factor is improved and monitored for
retaining high-performance teams. We believe heavy machines.
our people provide the core enduring advantage
to us to constantly improve, innovate and grow. • Inverters are being installed at high torque
Through the year, we worked on various electric motors to reduce consumption.
HR initiatives and processes to ensure that our
induction schemes, training and development Environment Protection Measures
methodologies, compensation strategies and
performance management systems remained • Sewerage and drain is ensured free of any
robust and in line with best industry practices. acid or alkali and other chemicals used in
Our key area of focus for the year 2019 soap making process as per EPA standard.
remained performance improvement diversity
a n d i n c l u s i o n c a pa b i l i t y d e v e l o p m e n t , Water is reproduced and used in Plantation
competency realignment, health and wellness
amongst other key areas. • Recycling of contaminated water is ensured
to remove any contamination and the
Energy Conservation recycled water is then used for the plantation
Here at ZIL, we have incorporated internal purpose within the factory.
strategies to reduce energy consumption.
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Mrs. Feriel Ali Mehdi took over the reins of the company as the CEO Mr. Mubashir H. Ansari joined ZIL Limited in April 2011 as
in November 1998. She remained at the position till December 2012. GM-Marketing and Sales. He was promoted to the position of CEO in
She is the acting Chairman of the company since July 2007. She has January 2013. Since his appointment as CEO, he has successfully
lead the turnaround of ZIL Limited by turning a constantly loss managed to lead the change and increase sales, which made the
making business into a profitable entity and wiped out all bottom line positive.
accumulated losses within 3 years of becoming the CEO.
Mr. Ansari is an MBA from the University College of Wales,
Mrs. Mehdi holds a bachelor’s degree in Economics from Karachi Aberystwyth, UK. He started his professional journey with Unilever in
University. She started her career at Wazir Ali Industries as a 1991. He stayed with Unilever for 10 years and during this tenure he
Marketing Trainee and rapidly climbed up the corporate ladder to demonstrated his leadership capabilities in marketing as well as
become Brand Manager. She has had exposure on all the levels in sales function.
Marketing and chiefly looked after the Cooking Oil category of the
business. His international and local appointments covered leading
multinational and national organizations including ICI, Savola,
In 1996, Mrs. Mehdi resigned from Wazir Ali to join ZIL Limited. She English Biscuits Manufactures and Shan Foods where he has held
took over as the Marketing Manager looking after the entire range of leadership roles in Middle East region, and Pakistan.
the products and later excelled to the position of Director Marketing.
She took over as Managing Director in 1998 and streamlined costs, Mr. Ansari has vast experience in growing existing business and
processes and benchmarked various aspects of the business to introducing new products in FMCG industry. Most of his
make it more state-of- the-art. This resulted in lowering the losses achievements have emerged from developing people, seeking
and eventually with her team she turnaround the company by opportunities for collaboration and managing leadership transition in
mid-2003. They grew the business from a Rs. 390mn net turnover in changing environment.
1999 to a Rs. 1.6 bn by 2011. She has recently put into place a new
team to invigorate, innovate and eventually grow the business into a He has built and delivered strategic and operational capabilities in
more diverse and strong FMCG company. diversified categories including personal care, household cleaning
products, hot beverages, edible oils and fats, culinary, spreads,
She attended IMD Orchestrating Winning Performance Program sauces, drinks, desserts, and biscuits.
(OWP) in 2006 and gained intensive exposure to current thinking on
today’s key management issues. Mrs. Mehdi is certified member of He attended IMD's Orchestrating Winning Performance Program
Pakistan Institute of Corporate Governance (PICG). (OWP) in 2015 and gained exposure to thinking on current
leadership challenges and key management issues. Mr. Ansari is
also a certified director from Pakistan Institute of Corporate
Governance (PICG).
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Mr.Saad has nearly three decades of experience of working for Mr. Kemal Shoaib holds an M.S. degree in Chemical Engineering
Gillette Pakistan as CEO, and Procter & Gamble in senior executive from M.I.T., Cambridge, Masschusetts. He is currently a Consultant
positions. He is a graduate of the University of Michigan MBA (Class on the Capital Market and serves on the board of several companies
of 1987) and holds two engineering degrees. including International Steels Ltd, Century Paper & Board Mills Ltd.
and International Advertising (Pvt.) Ltd. He has been associated with
Elected twice as President of American Business Council (ABC), the prestigious organizations such as Wyeth Laboratories (Pakistan)
largest single-country business chamber in Pakistan, Mr.Saad was Ltd., Bank of Credit and Commerce Intl., S.A. London, Independence
also elected twice to the Executive Committee of Overseas Investors Bank, California, Commerce Bank Ltd., Al-Aman Holding (Pvt.) Ltd.,
Chamber of Commerce and Industry (OICCI), the largest foreign Safeway Fund Ltd., and Indus Bank Limited.
business chamber. Mr.Saad is an active social worker involved in I
am Karachi Consortium, Pakistan Innovation Foundation (PIF),
National Entrepreneurship Working Group (NEW-G), South East
Asia Leadership Academy (SEALA), Helper of HOPE and Agha
Khan Hospital’s Patient Welfare Committee.
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Syed Hasnain Ali is the CEO of HY Enterprises Pvt. Ltd, running a Mr. Salman has over 15 years of experience for working in
diversified group of companies that are involved in several industries various sectors including pharmaceutical, agriculture, chemical,
including commercial printing, educational services, retail, etc. At engineering, and finance. He played an instrumental role at
ZIL, his experience and business insight will be valuable in charting senior management level in business development, corporate
a course towards greater expansion, profitability and strategic governance, corporate affairs, and general management.
growth for the company. Currently, he is associated with NIT and is also representing the
organization as a board member. Salman holds a master’s
Mr. Hasnain received his bachelor’s degree in Communication and degree in Business Administration from IBA – Karachi and is also
Business Studies from the University of Buckingham, and he went on an Associate Member of Institute of Corporate Secretaries of
to complete a post-graduate diploma in Service Management. He Pakistan.
began his professional career at Nestle Pakistan Ltd. as a training
coordinator in the HR department, and launched the HY Group of
Companies in 2007.
Mr. Hasnain has also served on the board of Wazir Ali Industries and
is a member of the Lahore Chamber of Commerce and Industry.
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MANAGEMENT COMMITTEE
The management committee provides direction and leadership to the organization by:
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2019 proved to be a memorable year for Capri as it was this year when Capri hit its 50 years mark.
Capri was introduced in 1969 as a soap especially created for the Pakistani woman. Its unique formula contained
the finest ingredients sourced internationally, including essential cleansers, gentle skin moisturizers and a
pleasing fragrance. Its rich, creamy lather appealed to women across a very wide spectrum, as it was specially
created with skincare in mind.
From the first day until the present time, not only that Capri kept listening to its consumers to give them the
best skincare they deserved but also stayed true to its promise of delivering the benefit of moisturizing , soft
and beautiful Êskin to its consumers. It is because of this commitment that even today Capri is one of the
favorite beauty brands of the women of Pakistan.
In 2019, on completion of these 50 years of caring, Consumers were offered special Promotional bundles.
Capri 4+1 Capri bath bundle offer, Capri Save Rs.25/-large bundle offer and Capri save Rs.50/-family bundle
offer were some of the lucrative 50 years consumer promotions.
Television and Digital campaigns along with impactful point of sales materials and below the line activities, eye
catching in-store product displays were also part of the celebratory campaigns to spread the message of 50
years celebrations and to create awareness of these promotions so that maximum consumers can benefit from
them. In addition to these, specially designed out of the category product display units were placed in selective
modern trade stores in twenty towns to improve in-shop visibility of Capri brand.
Special gift boxes were developed to share the 50 years celebrations with distributors, trade and corporate
partners such as banks and suppliers etc. Celebratory events were also organized for the Sales, Head Office
and Factory teams in PC Bhurban and Dream World holiday resort showcasing the Capri brand documentary.
These activities further enhanced the 50 years Celebrations as the teams got to a highly motivating and
energizing start for the year.
The year 2019, which started with Capri 50 years celebrations ended with the achievement of highest ever
Capri sales volume. Capri witnessed further new trials, conversion and increased consumption from existing
consumers in a highly competitive environment dominated by multinational brands.
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Capri has been in the market for over 50 years now earning a high level of trust and confidence of
its consumers. Capri consumers not only appreciate the quality & consistency of Capri bar soaps
range but also keep looking for new product offerings from Capri. In order to meet such consumer
needs and expectations Capri introduced its Handwash range in 2011. However, in 2019 assessing
the changing market needs and consumer preferences Capri Handwash range was revived and new
Handwash Range was introduced in September.
New product and packaging mix of Capri handwash was developed with three new variants in White,
Pink and Green. Capri new handwash range, positioned in the beauty handwash segment, offered
consumers a choice of natural Antibac variant. The variants were carefully developed with familiar
natural ingredients, well known for their skin benefits. Natural ingredients were chosen like Aloe Vera,
Honey and Strawberry softeners for beauty variants whereas Tea Tree for the natural antibacterial
variant.
The new mix of Capri Hand wash offered new optimized formulation to further enhance the product
quality and performance. New bottle shape was designed and developed offering consumers improved
stability and convenience in usage.
The new label designs were developed to look livelier, stylish, contemporary and more attractive on
the shelves to suit the preferences of modern women. These label designs, despite being modern,
portrayed design elements & color combinations that were soft and dynamic to deliver the brand
proposition of moisturizing, soft and beautiful hands
This new range of Capri handwash received encouraging response from the market along with
demand for more variety
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It gives me pleasure to present this Review Report under the requirement of section 192 of the
Companies Act, 2017, to the shareholders of the Company pertaining to the overall performance of the
Board of Directors and their effectiveness in guiding the Company towards accomplishing its aims and
objectives.
The Financial Year 2019 has been another year of growth for the Company, as the revenue of Rs.2.4Bn
was achieved, recording robust growth of 28% over last year. Despite challenges posed by inflation
and cost pressures, ZIL Limited under the leadership of the CEO and the management team, has
shown remarkable performance in the year 2019 by achieving high sales volume and achieving
unprecedented profitability in the history of the company.
The board of directors of ZIL Limited consists of diversity of experience, skills, knowledge and business
acumen which enables the board to execute its fiduciary duties effectively to ensure that the prosperity
of the company while meeting the appropriate interests of the shareholders and stakeholders. The
Board of Directors of ZIL Limited has two committees namely Human Resources & Remuneration
Committee and Audit Committee which have implemented a strong governance framework that supports
an effective and prudent management of business matters.
During the year, elections of the new Board of Directors were held for a term of three years commencing
July 1, 2019, consequently new committees were also formed. I would like to put on record my gratitude
to the retiring director Mr. M. Qaysar Alam for his contribution while serving on the board.
The Human Resources & Remuneration Committee is entrusted to continuously strive towards improving
organizational skill set of its people which is embed in the company’s vision and mission. The Audit
Committee is delegated with the objective to maintain a system that ensures compliance with statutory
and regulatory requirements while inculcating a culture of integrity that ensures strengthening of financial
and operational controls.
The board has formal and transparent remuneration policy which is adhered to for the board members’
remuneration
An annual self-assessment is carried out to evaluate the efficiency and performance of the Board of
Directors. As a result of this evaluation it can be well established that the Board is engaged in strategic
matters, has put in place the required controls and gets all the necessary information in a timely manner.
The board further establishes that the independent directors are equally involved in all strategic matters.
I would like to thank all my fellow board members who had carried out their responsibilities diligently
during the year, and contributed towards creating better and sustainable value for all the stakeholders
of the company. In the end I would like to thank our stakeholders who have stayed alongside us through
our journey.
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Directors’ Report
The directors of the company are pleased to present Gross profit registered improvement due to cost control
the Annual Report along with audited financial results measures, high volumes, and price increases. This led
of the company for the year ended December 31, 2019. to an increase of 114bps in gross profit ratio. Advertising
and promotion expense was in line with the business
Economic Landscape plans, other selling and distribution expenses have
reduced from 13.2% of NSV to 11.5%. A considerable
During the year there has been uncertainty on the increase in administrative expenses is observed, mainly
account of fiscal and monetary policy changes and due to the celebrations of Capri’s 50th Anniversary.
consumer demand has been impacted due to shrinking
purchasing power. Overall, cost of doing business has Future Outlook
increased as Consumer Price Index has indicated
increasing inflationary trend, along with increasing fuel Although PKR has shown minimal recovery against the
and packing material prices. Raw material prices also USD in the last quarter of 2019, the risk of further
remained under pressure as, the PKR witnessed devaluation cannot be ignored. In order to document
devaluation of 12% since December 2018 against the the economy, government has introduced the
USD, while average devaluation of 23% was witnessed requirement of sharing the identity of traders to
during the year. Despite these economic challenges, distributors, initially this requirement was not welcomed
the Company has progressed significantly well in the by the business community in general, however some
competitive landscape due to better consumer flexibility on either side has resulted in continuation of
understanding, market dynamics, and widespread market the business activity; this may remain a point of
presence to deliver sustainable growth. contention between traders and government.
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i. Statements regarding the following are performance, reliability & legitimacy of financial statistics,
annexed or disclosed separately in the report: proficiency of company’s operations and compliance to
i. Key operating & financial data for last six applicable local as well as international standards, laws
years and regulations. Management has provided an
assurance to the shareholders and Board of Directors
ii. Pattern of shareholding that the company is operating under effective and efficient
internal control systems devised in a structured way.
iii. Meetings of the board of directors, board These internal financial controls ensure the Company’s
audit committee and HR&R committee adherence to policies & SOPs, while supporting overall
and respective attendance by each organization objectives.
director
Directors’ responsibility In Respect of Adequacy of
Trading of Shares Internal Financial Controls
The Code of Corporate Governance required all trades The responsibility to govern the adequacy of internal
in the shares of the Company carried out by its directors, financial controls is on the Board of Directors for which
executives and their spouses and minor children shall the Board is pleased to ensure that the company has
be disclosed. During the year MS. Feriel Ali Mehdi sound system of internal controls in place which in turn
(Director and Chairman) as per order of the court and is commendably implemented and sustained at all levels
succession certificate granted to her by the honorable of the company.
court (regarding the transmission of inherited shares of
the company from her deceased mother), transferred Board Audit Committee
731,181 shares of ZIL Limited in her brother’s name.
No other executives, CEO, CFO, Company Secretary, The board established with an Audit committee comprises
Head of Internal Audit and any other executives and three members including the chairman. Members of the
their spouses and minor children traded in the shares committee are non-executive directors, including its
of the Company chairman, who is also an independent director. The
audit committee held four meetings during the period
The BOD has approved the threshold for defining as per the requirement of applicable laws and Corporate
executives in terms of clause 5.6.1(d) of PSX listing Governance Regulations. The Chief Financial Officer,
regulations, consequent to which all defined executives Internal Auditors as well as External Auditors were
who directly reports to CEO are subject to additional invited to the meetings. Head of internal audit acted as
regulatory requirements for trading and disclosing their a secretary of the committee.
transactions in company shares.
Due to election of the Board, two Board Audit Committees
Election of Directors (BAC) operated during the year. Tenure of the first
BAC ended June 30, 2019, members of which were
During the year, elections of the Board of Directors of Mr. Saad Amanullah Khan (Chairman), Mrs. Feriel Ali
the Company were held in an Extra Ordinary General Mehdi and Mr. Muhammad Salman Husain Chawala.
Meeting held on June 27, 2019. In accordance with the Tenure of the second BAC started from July 1, 2019.
provisions of Section 159 of Companies Act 2017, Members of this committee are Mr. Muhammad Salman
persons who offered themselves for the election of Husain Chawala (Chairman), Mrs. Feriel Ali Mehdi and
directors were not more than the number of directors Mr. Kemal Shoaib.
fixed by the Board (seven), therefore all such persons
were declared elected unanimously by the house for a Human Resource & Remuneration Committee
term of three years commencing from July 1, 2019. The
names of elected directors are Mrs. Feriel Ali Mehdi, The company’s HR&R committee is fully functioning
Mr. Kemal Shoaib, Mr. Mubashir Hasan Ansari (CEO), with its chairman and majority of members being non-
Syed Hasnain Ali, Mr. Mir Muhammad Ali (Independent), executive directors. All issues of remuneration are fully
Mr. Saad Amanullah Khan (Independent), Mr. disclosed, deliberated, and decided at the meetings of
Muhammad Salman Husain Chawala (Independent) HR&R committee.
representing NIT.
Due to election of the Board, two HR&R Committees
Risk Framework and Adequacy of Internal Financial operated during the year. Tenure of the first committee
Controls ended on June 30, 2019, members of which were Mr.
Kemal Shoaib (Chairman), Mrs. Feriel Ali Mehdi, Syed
ZIL Limited, is a risk averse company, it has an overall Hasnain Ali and Mr. Mubashir Hasan Ansari. Tenure of
low risk appetite i.e. it is unwilling to take unwanted and the second committee started from July 1, 2019.
unnecessary big risk while achieving its strategic Members of this committee are Mr. Saad Amanullah
objectives. The controls are designed to provide an Khan (Chairman), Mrs. Feriel Ali Mehdi, Syed Hasnain
assurance about the organization’s financial Ali and Mr. Mubashir Hasan Ansari (CEO).
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Remuneration Policy for Non-Executive Directors • No shares of ZIL Limited are held by the audit firm
or any of its partners and their spouses and minor
The Non-Executive Directors (including Independent children.
directors) are paid Rs. 30,000 as fee for attending each
meeting. In addition, travelling & boarding expense are • Audit firm achieved satisfactory rating under The
also reimbursed on actual basis. Monthly emoluments Quality Control Review Program of The Institute of
are paid to Chairman along with company maintained Chartered Accountants of Pakistan (ICAP) and is
car and other benefits incidental or relating to the office registered with the Audit Oversight Board of Pakistan.
in accordance with approved policy. Meeting fee and
emoluments paid during the year are disclosed in Note • Audit firm and its partners are compliant with the
31 to the Financial Statements. guideline on the code of ethics of the International
Federation of Accountants as adopted by ICAP.
Board has approved formal policy and transparent
procedure for fixing the remuneration packages of • Audit firm has not provided other services except
individual directors for attending meetings of the board in accordance with PSX listing regulations.
and its committees and performing of extra services,
including the holding of the office of chairman and all Gratuity and Provident Fund
payments to directors are made according to that
approved policy. The Company is operating a Provident Fund and an
approved Gratuity Scheme. The provident fund has
Internal Audit been appropriately invested in the allowed securities
and is audited annually by independent auditors. The
The Corporate Governance encompasses with the value of investments of Provident Fund as at December
compelling need of an adequately resourced internal 31, 2019 is 117.197 million
audit function. In term of this, the Company has
outsourced its internal audit function to a renowned Composition of the Board
Chartered Accountants firm of namely Deloitte Yousuf
Adil, Chartered Accountants, a member firm of Deloitte Statement regarding total number as well as composition
Touche Tohmatsu Limited. The outsourcing has provided of directors and names of members of board committees
the company an independent review on its internal are annexed separately in the annual report.
controls that helps the company & further its aim to
remain competent. Head of Internal Audit acts as Corporate Social Responsibility
coordinator between Deloitte and the Board Audit
Committee as required by the Code of Corporate Activities undertaken by the company with regard to
Governance. corporate social responsibility are annexed separately
in the annual report.
External Auditors
Acknowledgment
KPMG Taseer Hadi & Co., Chartered Accountants have
completed the annual audit for the year ended December The Board would like to convey its gratitude to all the
31, 2019, and have issued an unqualified audit report. people involved with ZIL Limited. Over the years they
The auditors will retire on the conclusion of the upcoming have enabled the company to flourish and achieve its
Annual General Meeting of the Company. business goals. Our people and all other stakeholders
have remained committed and agile for the betterment
On the completion of five-years tenure of engagement of the company as we have been able to overcome the
partner of present audtitors, based on the suggestion challenges in this highly competitive market, which in
of Board Audit Committee for the rotation of audit firm, turn is reflected in company’s financial performance.
the Board has recommended appointment of EY Ford We treasure their dedicated efforts and feel obliged.
Rhode, Chartered Accountants as external Auditors of
the Company for the upcoming financial year, at a fee
of Rs. 1.5 million for the year 2020. EY Ford Rhode,
Chartered Accountants have confirmed that:
40
Board Meetings Annual Report 2019
Five meetings of the Board of Directors of the Company were held on March 27, April 29, August 29,
October 29 and December 16, 2019. Following was the attendance of the directors:
No. of Leave of
Director meetings absence
attended granted
Mrs. Feriel Ali Mehdi 5 - Retired on June 30 and re-elected from July 1, 2019
Mr. Mubashir Hasan Ansari 5 - Retired on June 30 and re-elected from July 1, 2019
Syed Hasnain Ali 4 1 Retired on June 30 and re-elected from July 1, 2019
Mr. Saad Amanullah Khan 5 - Retired on June 30 and re-elected from July 1, 2019
Mr. Kemal Shoaib 5 - Retired on June 30 and re-elected from July 1, 2019
Mr. Mir Muhammad Ali 3 - Elected on Board July 1, 2019
Mr. M. Salman H. Chawala (Nominee NIT) 5 - Retired on June 30 and re-elected from July 1, 2019
Mr. Qaysar Alam 2 - Retired from the board June 30, 2019
Leave of absence was granted to the directors who could not attend the Board meetings.
The Board of Directors of the Company oversees the operations and affairs of the Company in an effiecient and
effective manner. For the sake of smooth functioning, the Board has constituted two committees.
Theses committees are entrusted with the task of ensuring speedy management decisions relatng to their
respective domains.
The Board of Directors of the Company, in compliance with the Code of Corporate Governance, has established
an Audit Committee which currently comprises of the following directors
Director Designation
Four meetings of the Board Audit Committee of the Company were held on March 27, April 29, August 29,
October 29, 2019 Following was the attendance of the members:
No. of Leave of
Director meetings absence
attended granted
Mr. M. Salman H. Chawala (Representing NIT) 4 - Retired and elected on Board w.e.f. July 2019
Mrs. Feriel Ali Mehdi 4 - Retired and re-elected on Board w.e.f. July 2019
Mr. Kemal Shoaib 2 - Retired and re-elected on Board w.e.f. July 2019
Mr. Saad Amanullah Khan 2 - Retired and re-elected on Board w.e.f. July 2019
Mr. M. Salman H. Chawala appointed as Chairman and Mr. Kemal Shoaib as member of Audit Committee
w.e.f July 2019.
41
Annual Report 2019
HR AND REMUNERATION COMMITTEE COMPOSITION
HR and Remuneration committee of the Board currently comprises of the following directors.
Director Designation
Mr. Saad Amanullah Khan Chairman Retired on June 30 and re-elected from July 1, 2019
Mrs. Feriel Ali Mehdi Member Retired on June 30 and re-elected from July 1, 2019
Syed Hasnain Ali Member Retired on June 30 and re-elected from July 1, 2019
Mr. Mubashir Hasan Ansari Member Retired on June 30 and re-elected from July 1, 2019
The major role of the Committee is to review HR related matters of the Company and present its recommendations
to the consideration and approval.
One meeting of the Board HR&R Committee of the Company were held on March 26, 2019 .
Following was the attendance of the directors:
No. of Leave of
Director meetings absence
attended granted
Mr. Saad Amanullah Khan - - Retired on June 30 and re-elected from July 1, 2019
Mrs. Feriel Ali Mehdi 1 - Retired on June 30 and re-elected from July 1, 2019
Syed Hasnain Ali 1 - Retired on June 30 and re-elected from July 1, 2019
Mr. Mubashir Hasan Ansari 1 - Retired on June 30 and re-elected from July 1, 2019
Mr. Kemal Shoaib 1 - Retired on June 30 and re-elected from July 1, 2019
Mr. Saad Amanullah Khan appointed as Chairman of HR&R Committee w.e.f July 2019.
42
Annual Report 2019
43
Annual Report 2019
44
Annual Report 2019
117.197 2019
45
Annual Report 2019
ICAP
46
Annual Report 2019
47
Annual Report 2019
48
Annual Report 2019
49
Annual Report 2019
27 2,569 3,255
28 1,895 2,419
114 28.3 29.5
2.4 27.9 65.7
2.4 4.56 10.74
50
Annual Report 2019
51
Annual Report 2019
Vertical Analysis
of Financial Statements
Dec-19 Dec-18
Rs. In '000' % Rs. In '000' %
52
Annual Report 2019
53
Annual Report 2019
Horizontal Analysis
of Financial statements
Net cash flows from operating activities 283,084 80,302 59,006 99,678
Net cash flows from investing activities (47,783) (40,719) (41,456) (39,998)
Net cash flows from financing activities (215,260) (28,531) (23,004) (20,053)
Net change in cash and cash equivalents 20,041 11,052 (5,454) 39,627
54
Annual Report 2019
Dec-15 Dec-14
Rs. In '000' Rs. In '000' Dec-19 Dec-18 Dec-17 Dec-16 Dec-15 Dec-14
Dec-15 Dec-14
Rs. In '000' Rs. In '000' Dec-19 Dec-18 Dec-17 Dec-16 Dec-15 Dec-14
55
Annual Report 2019
RATIO OF LAST SIX YEARS
Financial Ratios
Unit Dec-19 Dec-18
Rate of return
Return on assets % 5.40 2.52
Return on equity % 10.76 4.92
Return on capital employed % 18.80 11.51
Interest cover Times 6.49 4.08
Profitability
Gross profit margin % 29.47 28.33
Net profit to sales % 2.72 1.47
EBITDA Rs. 218,055 119,323
EBITDA Margin to sales % 9.01 6.30
Liquidity
Current ratio 1.10 0.89
Quick ratio 0.64 0.46
Financial gearing
Debt-Equity ratio Times 0.99 0.95
Debt to Assets % 49.76% 48.81%
Capital Efficiency
Debtor turnover/ No. of days in receivables Days 9 9
Inventory turnover/ No. of days in inventory Days 50 50
Creditor turnover/ No. of days in payables Days 16 16
Operating cycle Days 43 43
Fixed assets turnover ratio Times 3.39 2.65
Total asset turnover ratio Times 1.99 1.71
56
Annual Report 2019
8 6 12 8
55 63 70 102
16 21 23 26
47 48 59 84
3.30 3.03 3.65 3.30
1.84 1.75 1.71 1.57
57
Annual Report 2019
3,000,000
2,500,000
2,000,000
Net sales
1,500,000
Cost of sales
1,000,000 Gross Profit
500,000
-
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
-5.00% Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19
-10.00%
-15.00%
Gross profit margin Net profit margin EBITDA margin to sales
30.00%
20.00%
10.00%
0.00%
-10.00%
-20.00%
-30.00%
-40.00%
-50.00%
-60.00%
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19
Return on assets Return on equity Return on capital employed
1.20
1.00
Rupees ('000)
0.80
0.60
0.40
0.20
0.00
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19
Current ratio Quick ratio
58
Annual Report 2019
59
Annual Report 2019
Statement of Value Addition
Dec-19 Dec-18
Rs. In '000 % Rs. In '000 %
Wealth Generated
Distribution of Wealth
60.00 1
2
50.00
3
40.00
4
30.00 5
6
20.00
7
10.00
8
-
1 2 3 4 5 6 7 8
60.00
50.00
40.00
30.00
20.00
10.00
-
Cost of sales and Selling, distribution Employees Finance cost Government tax Dividend to Retained for Charity and donation
services (excluding and administrative remuneration and levies shareholders future growth
employees expenses (includes income tax,
remuneration (excluding employees WPPF and WWF)
and other duties) remuneration and
other duties)
60
Annual Report 2019
Pattern of Shareholding
Central Depository Company and Physical as at December 31, 2019
61
Annual Report 2019
Pattern of Shareholding
Categories of Shareholders as at December 31, 2019
5. GENERAL PUBLIC
a. Local 3,698,356 60.4050
b. Foreign 63,281 1.0336
6,122,600 100.0000
62
Annual Report 2019
Key Shareholding
As at December 31, 2019
Sr. No. of Shares
Categories of Shareholders Percentage
No Shareholders Held
IV Mutual Funds
CDC - Trustee National Investment (Unit)Trust 1 356,987 5.8306
VIII Others
Joint Stock Companies 17 296,343 4.8401
Foreign Companies - - -
TOTAL 1268 6,122,600 100.0000
63
Annual Report 2019
Statement of Compliance
with Listed Companies (Code of Corporate Governance) Regulations, 2019
For the year ended December 31, 2019
The company has complied with the requirements of the 7. The meetings of the Board were presided over by the
Regulations in the following manner:- Chairman. The Board has complied with the requirements
1. The total number of directors are seven as per the following: of Act and the Regulations with respect to frequency,
recording and circulating minutes of meeting of the Board;
a. Male 6
b. Female 1 8. The Board has a formal policy and transparent procedures
for remuneration of directors in accordance with the Act
2. The composition of the Board is as follows: and these Regulations;
i. Independent directors 9. Six directors of the company are certified under Directors
Mr. Saad Amanullah Khan Training Programme as prescribed by the Regulations
Mr. Muhammad Salman Husain Chawala while remaining one director (Mr. Kemal Shoaib) is
Mr. Mir Muhammad Ali exempted from the requirement of this program;
ii. Non-executive directors 10. The Board has approved appointment, remuneration,
Mr. Kemal Shoaib terms and condition of employment of new Company
Mr. Syed Hasnain Ali Secretary. There was no new appointment of Chief
Financial Officer and Head of Internal Audit during the
iii. Executive director year. The changes in remuneration including terms and
Mr. Mubashir Hasan Ansari conditions of employment of the Chief Financial Officer
and Head of Internal Audit were approved by the board
iv. Female director (non-executive) and complied with relevant requirements of the Regulations;
Mrs. Feriel Ali Mehdi
11. Chief Financial Officer and Chief Executive Officer duly
3. The directors have confirmed that none of them is serving endorsed the financial statements before approval of the
as a director on more than seven Listed companies, Board;
including this company;
12. The Board has formed committees comprising of members
4. The company has prepared a code of conduct and has given below:
ensured that appropriate steps have been taken to
disseminate it throughout the company along with its a) Audit Committee (Name of members and Chairman)
supporting policies and procedures;
Mr. M. Salman Husain Chawala Chairman
5. The Board has developed a vision/mission statement, Mrs. Feriel Ali Mehdi Member
overall corporate strategy and significant policies of the Mr. Kemal Shoaib Member
company. The Board has ensured that complete record
of particulars of the significant policies along with their b) HR and Remuneration Committee (Name of members
date of approval or updation is maintained by the company; and Chairman)
6. All the powers of the Board have been duly exercised Mr. Saad Amanullah Khan Chairman
and decisions on relevant matters have been taken by Mrs. Feriel Ali Mehdi Member
the Board/ shareholders as empowered by the relevant Mr. Syed Hasnain Ali Member
provisions of the Act and these Regulations; Mr. Mubashir Hasan Ansari Member
64
Annual Report 2019
13. The terms of reference of the aforesaid committees have 17. The statutory auditors or the persons associated with
been formed, documented and advised to the committee them have not been appointed to provide other services
for compliance; except in accordance with the Act, these Regulations or
any other regulatory requirement and the auditors have
14. The frequency of meetings (quarterly/half yearly/ yearly) confirmed that they have observed IFAC guidelines in
of the committee were as per following: this regard;
65
Annual Report 2019
Independent Auditor’s Review Report
To the members of ZIL Limited
We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of
Corporate Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of
ZIL Limited (‘the Company’) for the year ended 31 December 2019 in accordance with the requirements
of the 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 part of our audit of the financial statements we are required to obtain an understanding of the
accounting and internal control systems sufficient to plan the audit and develop an effective audit
approach. We are not required to consider whether the Board of Directors’ statement on internal
control covers all risks and controls, or to form an opinion on the effectiveness of such internal
controls, the Company's corporate governance procedures and risks.
The Regulations require the Company to place before the Audit Committee, and upon recommendation
of the Audit Committee, place before the Board of Directors for their review and approval, its related
party transactions. We are only required and have ensured compliance of this requirement to the
extent of the approval of the related party transactions by the Board of Directors upon recommendation
of the Audit Committee.
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
31 December 2019.
66
Annual Report 2019
67
Annual Report 2019
In our opinion and to the best of our information and according to the explanations given to us, the statement
of financial position, 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 31 December 2019 and of the profit and other comprehensive income, the changes
in equity and its cash flows for the year then ended.
S.No. Key audit matters How the matter was addressed in our audit
1. Revenue Recognition
Refer note 23 to the financial statements and the Our audit procedures to assess the timing of
accounting policy in note 3.10 to the financial revenue recognized from the sale of products
statements regarding the sale of goods. included the following:
The Company generates revenue from sale of • obtained an understanding of the processes
goods to domestic customers. relating to the recognition of revenue and
accessing the design, implementation and
We identified recognition of revenue (against the operating effectiveness of key internal controls
sale of goods) as a key audit matter because over the recording of revenue;
68
Annual Report 2019
S.No. Key audit matters How the matter was addressed in our audit
revenue is one of the key performance indicators • comparing a sample of revenue transactions
of the company which gives rise to an inherent recognized during the year with the sales
risk of the existence and the accuracy of the invoices, delivery orders and other relevant
revenue. underlying documentations including also to
assess if the related revenue was recorded in
the appropriate accounting period.
2. Valuation of Stock-in-Trade
Refer to note 11 to the financial statements and Our audit procedures to assess the valuation of
the accounting policy in note 3.7 to the financial stock-in-trade included the following:
statements.
• obtaining an understanding of the
As at 31 December 2019, the Company’s stock management’s basis for the determination of
in-trade amounted to Rs. 179.267 million. NRV and the key estimates adopted, including
future selling prices and costs necessary to
We identified the valuation of stock-in-trade as a make the sales and the basis of the calculation
key audit matter because determining an and justification for the amount of the write
appropriate write-down as a result of net realizable downs and provisions;
value (NRV) being lower than their cost involved
significant management judgement and estimation. • assessing the NRV of stock-in-trade by
comparing, on a sample basis, management’s
estimation of future selling prices for the
products with the selling prices achieved
subsequent to the end of the reporting period;
and
69
Annual Report 2019
Information Other than the Financial Statements and Auditor’s 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.
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.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
70
Annual Report 2019
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
We communicate with the board of directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
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 year and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated
in our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
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;
71
Annual Report 2019
c) investments made, expenditure incurred and guarantees extended during the year were for the purpose
of the Company’s business; and
d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by
the company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.
The engagement partner on the audit resulting in this independent auditor’s report is Amyn Pirani.
72
ZIL Limited Annual Report 2019
Statement of Financial Position
As at 31 December 2019
2019 2018
Note (Rupees in '000)
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 5 764,360 713,945
Intangible assets 6 101 228
Long term deposits 7 1,593 1,593
Long term loans to employees 8 630 784
Total non-current assets 766,684 716,550
CURRENT ASSETS
Stores and spares 10 6,725 12,683
Stock-in-trade 11 179,267 186,932
Trade debts 12 45,560 46,188
Advances, prepayments and other receivables 13 154,493 102,585
Cash and bank balances 14 63,640 43,599
Total current assets 449,685 391,987
EQUITY
Authorised capital
40,000,000 (2018: 40,000,000) ordinary shares of Rs. 10 each 15 400,000 400,000
NON-CURRENT LIABILITIES
Deferred tax liability - net 9 27,724 980
Deferred staff liabilities 17 107,155 98,580
Liabilities against leased assets 18 60,155 4,515
CURRENT LIABILITIES
Current maturity of liabilities against leased assets 18.3 11,182 941
Trade and other payables 19 260,163 188,335
Contract liabilities 19.2 84,148 43,147
Short term borrowings 20 - 190,000
Taxation 21 53,570 13,538
Unclaimed dividend 1,178 1,034
Total current liabilities 410,241 436,995
The annexed notes from 1 to 38 form an integral part of these financial statements.
73
ZIL Limited Annual Report 2019
Statement of Profit and Loss Account
For the year ended 31 December 2019
2019 2018
Note (Rupees in '000)
(Rupees)
The annexed notes from 1 to 38 form an integral part of these financial statements.
74
ZIL Limited Annual Report 2019
Statement of Comprehensive Income
For the year ended 31 December 2019
2019 2018
Note (Rupees in '000)
The annexed notes from 1 to 38 form an integral part of these financial statements.
75
ZIL Limited Annual Report 2019
Statement of Cash Flow
For the year ended 31 December 2019 2019 2018
(Rupees in '000)
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments for:
Depreciation and amortization 65,803 42,041
Provision against doubtful trade debts 858 -
Provision against staff gratuity 14,962 12,566
Provision against other staff retirement benefits 3,647 2,740
Provision against slow moving and obsolete stock 14,265 40
Provision for slow moving stores and spares (906) -
Finance costs 25,918 18,125
Impairment against operating fixed assets 6,886 -
Return on bank deposits (92) (43)
Gain on disposal of operating fixed assets (330) (6,843)
131,011 68,626
256,622 127,783
Net increase in cash and cash equivalents during the year 20,041 11,052
Cash and cash equivalents at beginning of the year 43,599 32,547
Cash and cash equivalents at end of the year 63,640 43,599
76
ZIL Limited Annual Report 2019
Statement of Changes in Equity
As at 31 December 2019 Capital
Reserve Revenue Reserves
Issued, Surplus on General Unappropriated Total
subscribed Revaluation reserve profit
and paid up of assets -
capital Net of tax
Note ---------------------------------- (Rupees in '000) ----------------------------------
Balance as at 01 January 2018 61,226 192,954 6,000 91,737 351,917
Cash dividend for the year ended 31 December 2017 (Rs. 1.25 per
share) - approved in the annual general meeting held on 26 April 2018 - - - (7,654) (7,654)
Cash dividend for the year ended 31 December 2018 (Rs. 1.5 per
share) - approved in the annual general meeting held on 29 April 2019 - - - (9,184) (9,184)
The annexed notes from 1 to 38 form an integral part of these financial statements.
77
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
1.1 ZIL Limited (“the Company”) was incorporated as a private limited company in February 1960 under the Companies
Act, 1913 (now the Companies Act, 2017) and was subsequently converted into a public limited company in
November 1986. Its shares are listed on the Pakistan Stock Exchange. The principal activity of the Company is
manufacture and sale of home and personal care products. The registered office of the company is situated at
Ground Floor, Bahria Complex III, M.T. Khan Road, Karachi.
1.2 The impact of the COVID-19 coronavirus outbreak is expected to have a significant impact on the economic
conditions and an increase in economic uncertainty around the globe. Since the company is manufacturing products
such as personal wash, hygiene and skin care and therefore possesses minimal risk of decrease in demand of
the company’s product. With prudent risk management practice, the company will be able to meet its financial
liabilities when due and would be able to pursue its normal business activities.
The company is confident that the ability of the company to continue as a going concern has not been materially
impacted by the effects of Pandemic-COVID-19.
2. BASIS OF PREPARATION
These financial statements have been prepared in accordance with the accounting and reporting standards as
applicable in Pakistan. The accounting and reporting standards as applicable in Pakistan comprise of:
- International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standard
Board (IASB) as notified under the Companies Act, 2017; and
Where the provisions of and directives issued under the Companies Act, 2017 differ with the requirements of IFRS
Standards, the provisions of and directives issued under the Companies Act. 2017 have been followed.
These financial statements have been prepared under the historical cost convention, except that certain class of
property, plant and equipment (i.e. land, buildings and plant and machineries) have been included at revalued
amounts.
These financial statements are presented in Pakistani rupee which is also the Company's functional and presentation
currency and have been rounded off to the nearest thousand.
The preparation of financial statements in conformity with accounting and reporting standards, as applicable in
Pakistan, requires management to make judgements, estimates and assumptions that affect the application of
the accounting policies and the reported amounts of assets, liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under the circumstances, the results of which form the basis of making the judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates.
The estimates underlying the assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if the revision affects both current and future periods.
Information about the judgments made by the management in the application of the accounting policies, that
have the most significant effect on the amount recognized in these financial statements, assumptions and
estimation uncertainties with significant risk of material adjustment to the carrying amount of asset and
liabilities in the next year are described as follows:
78
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
In making the estimates for income taxes currently payable by the Company, the management considers the
current income tax law and the decisions of appellate authorities on certain issues in the past.
Certain actuarial assumptions have been adopted (as disclosed in note 17.3 to these financial statements) for the
actuarial valuation of staff gratuity and other staff retirement benefits. Changes in these assumptions in future years
may affect the liability under these schemes in those years.
The Company reviews the net realizable value (NRV) and impairment of stores and spare parts to assess any
diminution in the respective carrying values and wherever required provision for NRV / impairment is made. The
calculation of provision involves the use of estimates with regards to future estimated use and past consumption
along with stores and spares holding period.
The Company's management reviews its trade debts on a continuous basis to identify receivables where
collection of amount is no longer probable. These estimates are based on historical experience and are subject
to change in the conditions at the time of actual recovery.
The Company reviews the rate of depreciation, useful lives and value of assets for possible impairment
on an annual basis. Any change in the estimates in future years might affect the carrying amount of the respective
items of property, plant and equipment with a corresponding effect on the depreciation charge and impairment.
The Company reviews the rate of amortization and value of intangible assets for possible impairment on an annual
basis. Any change in the estimates in future years might affect the carrying amount of intangible assets with the
corresponding effect on the amortization charge and impairment.
2.5 Change In Accounting Standards, Interpretations And Amendments To Published Approved Accounting
Standards
a) Standards, interpretations and amendments to published approved accounting standards that are effective but
not relevant
There are certain new standards, amendments to the approved accounting standards and new interpretations
that are mandatory for accounting periods beginning on or after 1 January 2019. However, these did not have
any significant impact on the Company's financial reporting and therefore have not been detailed in these
financial statements, except for the changes mentioned in note 4 to these financial statements.
b) Standards, interpretations and amendments to published approved accounting standards that are not yet
effective
The following are the new standards, amendments to existing approved accounting standards and new
interpretations that will be effective for the periods beginning on or after 1 January 2020, that may have an
impact on the financial statements of the Company:
- IFRIC 23 ‘Uncertainty over Income Tax Treatments’ (effective for annual periods beginning on or after
1 January 2019) clarifies the accounting for income tax when there is uncertainty over income tax
treatments under IAS 12. The interpretation requires the uncertainty over tax treatment be reflected in
the measurement of current and deferred tax. The application of interpretation is not likely to have an
impact on Company’s financial statements.
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Notes to the Financial Statements
For the year ended 31 December 2019
when an entity determines whether it has acquired a business or a group of assets. The amendments
clarify that to be considered a business, an acquired set of activities and assets must include, at a
minimum, an input and a substantive process that together significantly contribute to the ability to create
outputs. The amendments include an election to use a concentration test. The application of interpretation
is not likely to have an impact on Company’s financial statements.
- Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors (effective for annual periods beginning on or after 1 January 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. In addition, the IASB has also
issued guidance on how to make materiality judgments when preparing their general purpose financial
statements in accordance with IFRS.
- On 29 March 2018, the International Accounting Standards Board (the IASB) has issued a revised
Conceptual Framework for Financial Reporting which is applicable immediately contains changes that
will set a new direction for IFRS in the future. The Conceptual Framework primarily serves as a tool for
the IASB to develop standards and to assist the IFRS Interpretations Committee in interpreting them. It
does not override the requirements of individual IFRSs and any inconsistencies with the revised Framework
will be subject to the usual due process – this means that the overall impact on standard setting may take
some time to crystallise. The companies may use the Framework as a reference for selecting their
accounting policies in the absence of specific IFRS requirements. In these cases, companies should
review those policies and apply the new guidance retrospectively as of 1 January 2020, unless the new
guidance contains specific scope outs.
The following International Financial Reporting Standards (IFRS Standards) as notified under the Companies
Act, 2017 and the amendments and interpretations thereto will be effective for accounting periods beginning
on or after 01 January 2020:
- IFRS 3 Business Combinations and IFRS 11 Joint Arrangement - the amendment aims to clarify the
accounting treatment when a company increases its interest in a joint operation that meets the definition
of a business. A company remeasures its previously held interest in a joint operation when it obtains
control of the business. A company does not remeasure its previously held interest in a joint operation
when it obtains joint control of the business.
- IAS 12 Income Taxes - the amendment clarifies that all income tax consequences of dividends (including
payments on financial instruments classified as equity) are recognized consistently with the transaction
that generates the distributable profits.
- IAS 23 Borrowing Costs - the amendment clarifies that a company treats as part of general borrowings
any borrowing originally made to develop an asset when the asset is ready for its intended use or sale.
Above amendments are effective from annual period beginning on or after 1 January 2019 and are not likely
to have an impact on Company’s financial statements.
Significant accounting policies applied in the preparation of these financial statements are set forth below
and have been applied consistently to all years presented except for the changes mentioned in note 4 to these
financial statements.
Initial recognition
The cost of an item of property, plant and equipment is recognized as an asset if it is probable that future economic
benefits associated with the item will flow to the entity and the cost of such item can be measured reliably.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
Recognition of the cost in the carrying amount of an item of property, plant and equipment ceases when the item
is in the location and condition necessary for it to be capable of operating in the manner intended by the management.
Measurement
Except for the leasehold and freehold lands, buildings on leasehold and freehold lands and plant and machinery,
all others items of property, plant and equipment (refer note 5.1) are stated at cost less accumulated depreciation
and accumulated impairment losses, if any.
Freehold land is measured at revalued amount. Leasehold land and buildings on leasehold land and free hold land
and plant and machinery are measured at revalued amounts, which is the fair value at the date of revaluation less
accumulated amortisation / depreciation / accumulated impairment losses, if any, recognised subsequent to the
date of revaluation. In case of revalued assets, any accumulated depreciation at the date of revaluation is eliminated
against the gross carrying amount of the asset and the net amount restated at the revalued amount of the asset.
The surplus arising on revaluation is disclosed as surplus on revaluation of property, plant and equipment (as part
of equity - refer note 4 also). The revaluation is carried out under the market value basis at regular intervals so
as to ensure that the revalued amounts are not significantly different from the carrying amounts. For the purpose
of revaluation, the Company also takes into consideration the highest and best use considering the alternate use
if legally permissible, less costs to be incurred for the alternate use in which case the value is then allocated to
land and building in proportion to the values determined on "as is" basis.
Cost in relation to items of property, plant and equipment stated at cost represents the historical costs.
Capital stores and spares which form part of the machinery are also capitalized.
Expenditure incurred to replace a component of an item of operating assets is capitalised and the asset so replaced
is retired. Other subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the asset will flow to the
Company and the cost of the asset can be measured reliably. The carrying amount of the replaced part is
derecognised.
Capital work-in-progress is stated at cost less impairment losses, if any, and consists of expenditure incurred and
advances made in respect of their construction and installation. The assets are transferred to relevant category
of operating fixed assets when they are available for intended use.
Depreciation is charged to profit and loss account applying the reducing balance method whereby costs of
assets, less their residual values, is written off over their estimated useful lives at rates disclosed in note 5.1.
Cost of the leasehold land is amortised over the period of the lease. Depreciation of the above assets /
amortization of the cost of land on additions is charged from the month in which the asset is available for use
up to the month preceding the disposal.
Useful lives are determined by the management based on expected usage of asset, expected physical wear and
tear, technical and commercial obsolescence, legal and similar limits on the use of assets and other similar factors.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included
in the profit and loss account in the year the asset is derecognized.
When revalued assets are sold, the relevant remaining surplus is transferred directly by the Company to its retained
earnings.
Normal repairs and maintenance are charged to the profit and loss account during the financial year in which these
are incurred.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified
as finance leases. Upon initial recognition, an asset acquired by way of finance lease is stated at an amount equal
to the lower of its fair value and the present value of minimum lease payments, determined at the inception of the
lease. Subsequent to initial recognition, the asset is stated at the amount determined at initial recognition less
accumulated depreciation and impairment losses, if any.
A contract is, or contains a lease if the contract conveys a right to control the use of an identified asset for a period
of time in exchange for consideration. The Company mainly leases properties for its operations. The Company
recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially
measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted
for certain remeaurements of the lease liability. The right-of-use asset is depreciated using the straight line method
from the commencement date to the earlier of end of the useful life of right-of-use asset or end of the lease term.
The estimated useful lives of assets are determined on the same basis as that for owned assets. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any.
Intangible assets acquired separately are measured on initial recognition at cost. Costs that are directly
associated with identifiable software products controlled by the Company and have probable economic benefit
beyond one year are recognized as intangible assets. Following initial recognition, intangible assets are carried
at cost less accumulated amortisation and accumulated impairment losses, if any.
Cost associated with maintaining computer software products are recognised as an expense when incurred.
Intangible assets with finite useful lives are amortised over the useful economic life as specified in note 6 and
assessed for impairment whenever there is an indication that the intangible asset may be impaired. In respect of
additions and deletions of intangible assets during the year, amortization is charged from the month of
acquisition and up to the month preceding the deletion, respectively.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset
is derecognised.
The Company operates an unfunded gratuity scheme for its eligible employees. Permanent employees
who have completed four years of service with the company are eligible employees for this scheme and
payment is made on the basis of employee's last drawn basic salary. Provision is made in the financial
statements based on actuarial valuation (conducted at the balance sheet date - 31 December 2019) using
the projected unit credit method. Remeasurement of the defined benefit liability, which comprises actuarial
gain and losses are recognised immediately in other comprehensive income. Net interest expense and other
expenses relating to defined benefit plan are recognised in the profit and loss account. Amount recognised
in the balance sheet represents the present value of defined benefit obligation.
In addition, the Company also operates an un-funded retirement benefit scheme for its eligible employees.
The employees who were on Company’s permanent payroll on or before 30 June 1999 and have completed
ten years of services with the Company are eligible for benefits under this scheme and payment is made on
the basis of employee's last drawn basic salary. Provision is made in these financial statements based on
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
the actuarial valuation (conducted at the balance sheet date - 31 December 2019) using the Projected Unit
Credit Method.
Remeasurement of the defined benefit liability, which comprises actuarial gain and losses are recognised
immediately in other comprehensive income. Net interest expense and other expense relating to defined
benefit plan are recognised in the profit and loss account. Amount recognised in the balance sheet
represents the present value of defined benefit obligation.
Provident fund is a defined contribution plan for regular staff. Monthly contributions are made both by the
Company and the employees to the fund at the rate of 10% of the basic salary.
The Company recognises the liability for compensated absences in respect of employees in the period in which
they are earned up to the balance sheet date on the basis of un-availed earned leaves balance at the end of the
year.
3.5 Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit and
loss account except to the extent that it relates to items recognized directly in Equity.
Current
Provision for current taxation is based on taxable income at the enacted or substantively enacted rates of
taxation after taking into account available tax credits and rebates, if any, and the minimum tax payable, in
accordance with the provisions of Income Tax Ordinance, 2001. The charge for current tax includes
adjustments to charge for prior years, if any.
Deferred
Deferred tax is recognised using balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. The amount of deferred tax recognised is based on the expected manner of realisation or settlement
of the carrying amount of assets and liabilities, using the enacted or substantively enacted rates of taxation.
A deferred tax asset is recognised to the extent that it is probable that the future taxable profits will be available
against which temporary difference can be utilised. Deferred tax assets are reviewed at reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax
arising on surplus on revaluation of property, plant and equipment is recorded directly in the surplus account.
These are stated at moving average cost less impairment loss, if any. The Company reviews the carrying
amount of the stores and spares on a regular basis for slow moving items. Adequate provision is made for any
excess carrying value over the estimated net realizable value and is recognized in the profit and loss account.
3.7 Stock-in-trade
These are valued at lower of cost and net realisable value (NRV). Cost of raw materials, packing materials, work
in process and finished goods is determined on weighted average cost basis, except that in case of stock in transit,
it is determined at invoice value and other charges incurred thereon, net of NRV adjustment.
Cost of finished goods consists of materials, labour and applicable production overheads. However, the
work-in-process is valued at material cost only as conversion costs are immaterial.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
Net realisable value signifies the estimated selling price in the ordinary course of business less estimated cost of
completion and selling expenses.
Trade debts and other receivables are stated initially at fair value and subsequently measured at amortized cost.
Credit loss is based on the expected credit loss model and also considers the specific exposure where their is no
expectation of recovery. Trade debts and other receivables are written off when considered irrecoverable.
Cash and cash equivalents comprise cash in hand and balances with banks.
- Sales are stated net of sales tax, trade discount and sales return and are recognised when persuasive evidence
of a sale exists. The key area of judgment in recognising revenue is the timing of recognition, which reflects
the point or period when the Company has transferred the control of the product, being when the products are
delivered to the customers. Delivery occurs when the product has been delivered to the customer
destination / specific location, the risk of loss has been transferred to the customer and the customers has
accepted the product either as per the sales contract or the Company has objective evidence that all criteria
for acceptance has been satisfied. Revenue from sale of goods is measured at fair value of the consideration
received or receivable.
- Scrap sales are stated net of sales tax and are recognised in the year in which scrap sales are made.
Trade and other payables are recognized initially at fair value plus directly attributable cost, if any, and subsequently
measured at amortized cost which approximates to its fair value.
3.12 Liability against assets subject to finance lease and right to use
Lease payments made under finance leases are apportioned between the finance expense and the reduction of
the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce
a constant periodic rate of interest on the remaining balance of the liability.
The lease liability against right of use assets is initially measured at the present value of the lease payments that
are not paid 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. The lease liability is subsequently increased
by the interest cost on the lease liability and decreased by lease payments made. It is re-measured when there
is a change in future lease payments arising from a change in an index or rate, a change in assessment of whether
extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be
exercised.
3.13 Provisions
Provisions are recognised in the balance sheet when the Company has a legal or constructive obligation as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each
balance sheet date and are adjusted to reflect the current best estimates.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
Foreign currency transactions during the year are recorded at the exchange rates approximating those ruling on
the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of
exchange which approximate those prevailing on the balance sheet date. Gains and losses on translation are taken
to the profit and loss account currently.
The Company recognises financial asset or a financial liability when it becomes a party to the contractual provision
of the instrument. Financial assets and liabilities are recognised initially at cost, which respectively is the fair value
of the consideration given or received. These are subsequently measured at amortised cost.
Financial assets are derecognised when the contractual right to cash flows from the asset expire, or when
substantially all the risks and reward of ownership of the financial asset are transferred. Financial liability is
derecognised when the Company's contractual obligations are discharged, cancelled or expired. Gain or loss on
derecognisation is recognised in the profit and loss account.
A financial asset is assessed at each reporting date to determine if there is an objective evidence that it is impaired.
A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition
of the asset, and that the loss event has a negative effect on the estimated future cash flows of the asset.
A financial asset and a financial liability is offset and the net amount reported in the balance sheet, if the Company
has the enforceable legal right to set off the transaction and also intends either to settle on a net basis or to realize
the asset and settle the liability simultaneously.
3.17 Impairment
Financial assets
The Company recognises loss allowances for Expected Credit Loss (ECLs) in respect of financial assets measured
at amortised cost.
The Company measures loss allowances at an amount equal to lifetime ECLs, except for the bank balance for
which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased
significantly since initial recognition (although in this case the measurement is at 12 month ECLs) or in cases where
the likelihood of losses are remote.
Loss allowances for trade receivables are measured at an mount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and quanlitative information and analysis,
based on the Company's historical experience and informed credit assessment and including forward-looking
information.
The Company assumes that the credit risk on a financial asset has increased significantly if it is more than past
due for a reasonable period of time. Lifetime ECLs are the ECLs that result from all possible default events over
the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events
that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum
contractual period over which the Company is exposed to credit risk.
Loss allowances for financial assets measured at amortised cost are deducted from the Gross carrying amount
of the assets.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
Non-financial assets
The carrying amounts of non-financial assets are assessed at each reporting date to ascertain whether there is
any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated. An
impairment loss is recognised, as an expense in the profit and loss account, at the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an
asset’s fair value less costs to sell and value in use. Value in use is assessed through discounting of the estimated
future cash flows using a discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset. For the purpose of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash-generating units). An impairment loss is reversed only
to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been recognised.
An impact on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that
the financial asset is impaired includes default or delinquency by a debtor, restructuring of an amount due to the
Company on the terms that the Company would not consider otherwise, indications that a debtor or issuer will
enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate
with defaults or the disappearance of an active market for a security.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of estimated cash flows discounted at the original effective
interest rate. When an event occurring after the impairment was recognised causes the amount of impairment loss
to decrease, the decrease in impairment loss is reversed through profit or loss.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial
assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are
recognised in profit and loss account.
3.18 Borrowings
All interest bearing borrowings are initially recognized at the fair value of the consideration received less directly
attributable transaction costs. After initial recognition, interest bearing borrowings are subsequently measured at
amortized cost using the effective interest rate method.
Borrowing costs are recognised as an expense in the period in which these are incurred, except that those which
are directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised as part of
the cost of that asset.
Dividends and appropriations to reserves are recognised in the period in which these are declared / approved.
The Company presents basic and diluted earnings per shares (EPS) data. Basic EPS is calculated by dividing the
profit or loss attributable to share holders of the Company by the weighted average number of ordinary shares
outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to shareholders
and the weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential
ordinary shares.
The Company has adopted IFRS 15 ‘Revenue from Contracts with Customers’, IFRS 9 ‘Financial Instruments’ and
IFRS 16 'Leases' from 01 January 2019, being the dates from which these were applicable to the Company.
The details of the nature and effect of the changes are set out below:
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
IFRS 15 became applicable to the Company with effect from 1 January 2019 and replaced IAS 18 Revenue, IAS
11 Construction Contracts and related interpretations. Under IFRS 15, revenue is recognised when a customer
obtains control of the goods and services. The Company has applied the modified retrospective method upon
adoption of IFRS 15 as allowed under the Standard. This method requires the recognition of the cumulative effect
(without practical expedients) of initially applying IFRS 15 to retained earnings.
The Company produces and contracts with customers for the sale of home and personal care products which
generally include single performance obligation. Management has concluded that revenue from sale of goods be
recognised at the point in time when control of the product has transferred, being when the products are delivered
to the customer. Invoices are generated and revenue is recognised on delivery of products. Delivery occurs when
the products have been delivered to the customer’s destination / specific location, the risks of loss have been
transferred to the customer and the customer has accepted the product either as per the sales contract or on the
lapse of acceptance provision or the Company has objective evidence that all criteria for acceptance have been
satisfied. Revenue is measured based on the consideration specified in a contract with a customer.
The Company receives short term advances from its customers. Prior to the adoption of IFRS 15, an advance
consideration received from customers was included in ‘Trade and other payables’ which now has been reclassified
in 'Contract liabilities' presented separately on the statement of financial position. In addition, reclassification has
been made from 'Trade and other payables' to 'Contract liabilities' for outstanding balance of advance from customers
for prior year to provide comparison. A receivable is recognised when the goods are delivered as this is the point
in time that the consideration is unconditional because only the passage of time is required before the payment
is due.
The above is generally consistent with the timing and amounts of revenue the Company recognised in accordance
with the previous standard, IAS 18. Therefore, the adoption of IFRS 15 did not have an impact on the timing and
amounts of revenue recognition of the Company.
Apart from providing more extensive disclosures, the application of IFRS 15 has not had a significant impact on
the financial position and / or financial performance of the Company for the reasons described above. Accordingly
there was no adjustment to retained earnings on application of IFRS 15 at 1 January 2019. However as required
the Company has disaggregated revenue recognised from contracts with customers into categories that depict
how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
IFRS 9 replaces the provisions of IAS 39 ‘Financial Instruments: Recognition and Measurement’ that relates to
the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial
instruments, impairment of financial assets and hedge accounting. The Company has applied the modified
retrospective method upon adoption of IFRS 9 as allowed under the Standard. This method requires the recognition
of the cumulative effect (without practical expedients) of initially applying IFRS 9 to retained earnings. Accordingly,
the informations presented for 2018 have not been restated i.e. it is presented, as previously reported under IAS
39 and related interpretations.
The details of new significant accounting policies and the nature and effect of the changes to previous accounting
policies are set out below:
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial
liabilities. However, it eliminates the previous IAS 39 categories for financial assets of held to maturity, loans
and receivables, held for trading and available for sale. Although IFRS 9 classifies the financial assets in several
categories, the only category currently applicable to the Company is measurement at 'ammortised cost'.
A financial asset is measured at ammortised cost if it meets both of the following conditions and is not designated
as at fair value through profit or loss:
- It is held within business model whose objective is to hold assets to collect contractual cashflows;
- its contractual terms give rise on specified dates to cashflows that are solely payments of principals and
interest on prinicpal amount outstanding.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
A financial asset is initially measured at fair value plus, transaction costs that are directly attributable to its
acquisition.
The adoption of IFRS 9 did not have a significant effect on the Company's accounting policies related to the
financial liabilities.
The accounting policies that apply to financial instruments are stated in notes 3.8, 3.15 and 3.17 to the financial
statements.
ii Impact of the change in classification and measurement of financial assets due to adoption of IFRS 9
The following table explain the original measurement categories under IAS 39 and the new measurement
categories under IFRS 9 for each class of the Company's financial assets as at 31 December 2019:
IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (ECL) model. IFRS 9 introduces
a forward looking expected credit losses model, rather than the current incurred loss model, when assessing
the impairment of financial assets in the scope of IFRS 9. The new impairment model applies to financial assets
measured at amortized cost, contract assets and debt investments at FVOCI, but not to investments in equity
instruments.
The Company has applied the IFRS 9 simplified approach to measure expected credit losses using a lifetime
expected loss allowance for all trade and other receivables. Impairment losses (if any) relating to trade and
other receivables, are presented separately in the statement of profit or loss. Trade and other receivables are
written off when there is no reasonable expectation of recovery. Management uses actual credit loss experience
over past years to base the calculation of ECL on the adoption of IFRS 9. Given the Company’s experience
of collection history and no historical loss rates / bad debts and normal receivable aging, the move from an
incurred loss model to an expected loss model has had no impact on the financial position and / or the financial
performance of the Company. Bank balances and other financial instruments are also measured at under the
expected credit model. However, since these assets are short term in nature or not considered to be material
/ carry significant credit risk, no credit loss is expected on these balances.
On 1 January 2019, the Company adopted IFRS 16 Leases. This IFRS has introduced a single lease accounting
model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months,
unless the underlying asset is of low value. A lessee is required to recognize a right-of use asset representing its
right to use the underlying leased asset and a lease liability representing its obligation to make lease payments.
IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17 - Leases. Accordingly, a lessor
continues to classify its leases as operating leases or finance leases, and to account for these two types of leases
differently.
The significant judgments in the implementation were determining if a contract contained a lease, and the
determination of whether the Company is reasonably certain that it will exercise extension options present in lease
contracts. The significant estimates were the determination of incremental borrowing rates. The discount rate
applied to lease liabilities on the transition date 1 January 2019 was 15.23 percent.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
The impact of IFRS 16 on the Company is primarily where the Company is a lessee in property lease contracts.
The Company has elected to adopt simplified approach on transition and has not restated comparative information.
On 1 January 2019, the Company recognized a lease liability, being the remaining lease payments, including
extension options where renewal is reasonably certain, discounted using the Company’s incremental borrowing
rate at the date of initial application. The corresponding right-of-use asset recognized is the amount of the lease
liability adjusted by prepaid related to those leases. The balance sheet has increased as a result of the recognition
of lease liability and right-to-use assets as of 1 January 2019 was Rs. 75,779 thousand with no adjustment to
retained earnings. The asset is presented in ‘Fixed Assets’ and the liability is presented in ‘Liability against right
of use assets’ presented separately on the statement of financial position. Also in relation to those leases under
IFRS 16, the Company has recognized depreciation and interest costs, instead of operating lease expenses.
Upto 31 December 2018, assets held under property leases, not equivalent to ownership rights, were classified
as operating leases and were not recognized as asset in the statement of financial position. Payments or accruals
under operating leases were recognised in profit and loss on a straight line basis over term of the lease.
In view of the application of above IFRS, the Company's accounting policy for right-of-use assets and its related
lease liability are given in notes 3.1.3 and 3.12 to these financial statements.
89
5.1 Operating fixed assets
2019
COST / REVALUED AMOUNT* Rate DEPRECIATION Written down
As at 1 Additions Disposals Adjustment Surplus on Impairment As at 31 % As at 1 Charge Disposals Impairment Adjustment As at 31 value as at
January due to Revaluation December January for the due to December 31 December
ZIL Limited
Owned
Freehold land* 203,407 - - - - - 203,407 - - - - - - - 203,407
Leasehold land* 156,486 - - - - - 156,486 2.59 & 10 - 4,361 - - - 4,361 152,125
Building on freehold land* 62,734 - - - - - 62,734 10 - 6,273 - - - 6,273 56,461
Building on leasehold land* 1,515 - - - - - 1,515 10 - 152 - - - 152 1,363
Plant, machinery and
equipment* 182,078 29,839 (184) - - (7,848) 203,885 10 - 19,316 (3) (772) - 18,541 185,344
Capital spares* 22,014 8,508 - - - (1,113) 29,409 10 9,583 2,006 - (388) - 11,201 18,208
Furniture and fixtures 20,510 523 (250) - - - 20,783 20 9,580 2,241 (141) - - 11,680 9,103
Computers 26,908 4,521 (1,209) - - - 30,220 30 15,886 3,746 (940) - - 18,692 11,528
Vehicles 76,752 17,519 (15,754) - - - 78,517 20 20,607 12,078 (8,024) - - 24,661 53,856
For the year ended 31 December 2019
Leased
Leasehold 6,135 - - - - - 6,135 20 409 1,145 - - - 1,554 4,581
758,539 60,910 (17,397) - - (8,961) 793,091 56,065 51,318 (9,108) (1,160
) - 97,115 695,976
Right of use assets - - -
Notes to the Financial Statements
Right of use assets (buildings) 5.6 - 75,779 - - - - 75,779 20 - 14,358 - - - 14,358 61,421
758,539 136,689 (17,397) - - (8,961
) 868,870 56,065 65,676 )
(9,108 )
(1,160 - 111,473 757,397
2018
COST / REVALUED AMOUNT* Rate DEPRECIATION Written down
As at 1 Additions Disposals Adjustment Surplus on Impairment As at 31 % As at 1 Charge Disposals Impairment Adjustment As at 31 value as at
January due to Revaluation December January for the due to December 31 December
2018 revaluation 2018 2018 year revaluation 2018 2018
Note --------------------------------------------- (Rupees in '000) --------------------------------------------- --------------------------------------------- (Rupees in '000) ---------------------------------------------
Owned
Freehold land* 90,000 - - - 113,407 - 203,407 - - - - - - - 203,407
Leasehold land* 88,000 - - (4,982) 73,468 - 156,486 2.59 & 10 2,506 2,476 - - (4,982) - 156,486
Building on freehold land* 46,501 3,904 - (9,161) 21,490 - 62,734 10 4,625 4,536 - - (9,161) - 62,734
Building on leasehold land* 1,800 - - (342) 57 - 1,515 10 180 162 - - (342) - 1,515
Plant, machinery and
equipment* 192,946 19,329 (3,132) (36,594) 9,529 - 182,078 10 18,168 18,753 (327) - (36,594) - 182,078
Capital spares* 17,084 4,930 - - - - 22,014 10 8,476 1,107 - - - 9,583 12,431
Furniture and fixtures 19,297 1,213 - - - - 20,510 10 8,464 1,116 - - - 9,580 10,930
Computers 19,493 9,351 (1,936) - - - 26,908 30 13,828 3,496 (1,438) - - 15,886 11,022
Vehicles 67,963 34,838 (26,049) - - - 76,752 20 28,807 9,688 (17,888) - - 20,607 56,145
Leased
Vehicles - 6,135 - - - - 6,135 20 - 409 - - - 409 5,726
543,084 79,700 (31,117) (51,079) 217,951 - 758,539 85,054 41,743 (19,653) - (51,079) 56,065 702,474
5.1.1 Cost of above assets include cost of assets of Rs. Nil value (2018: Rs. 2.227 million) at the reporting date which are still in use.
5.1.2 Factory of the Company is situated at 3.65 acres of land at link hali road Hyderabad and 11 acres of idle land is situated at plot no G1 chemical
area eastern industrial zone Port Qasim Authority Karachi.
5.1.3 During the year ended 31 December 2019, the Company revised the depreciation rate on furniture and fixtures with effect from
90
01 January 2019 from 10% to 20% as it more appropriately reflects the remaining expected pattern of usage. The financial impact of re-
Annual Report 2019
estimation is 1.121 million which has been recognised in the profit and loss account as an expense.
5.2 Capital work in progress As at 01 Additions (Transfers to As at 31
January operating December
2019 assets) 2019
---------------------------- (Rupees in '000) ----------------------------
ZIL Limited
Payments for:
- Building on freehold land - 531 - 531
- Plant, machinery and equipments 3,014 27,285 (29,839) 460
- Furniture and fixtures 385 242 (523) 104
- Vehicles (advance) 3,270 14,249 (17,519) -
- Capital spares - 8,508 (8,508) -
- Computers - 5,587 (4,521) 1,066
6,669 56,402 (60,910) 2,161
Written
Year of Accumulated down Sale Gain / (loss) Mode of Sold to / Other
purchase Cost depreciation value proceeds on disposal disposal settled from Particulars
Items having net book value --------------------------------- (Rupees in '000) ---------------------------------
Notes to the Financial Statements
Vehicles
Honda City Aspire 2018 1,971 297 1,674 1,980 306 Negotiation Mr.Saad Ahmed Individual Buyer
Toyota Carolla 2018 1,902 505 1,397 1,420 23 As per policy Mr. Asad Ali Malik Employee
Toyota Carolla 2016 1,888 838 1,050 1,051 1 As per policy Mr. Syed Shiblee Employee
Toyota Carolla 2013 1,673 1229 444 443 (1) As per policy Mr. M.Ibrahim Employee
Suzuki Cultus 2014 1,039 628 411 411 - As per policy Mr.Usman Ali Employee
Suzuki Mehran 2016 708 306 402 402 - As per policy Mr. Shoaib Ali Khan Employee
Suzuki Mehran 2016 758 374 384 378 ) As per policy(6 Mr. Syed Waqaruddin Employee
Suzuki WagonR 2014 1,094 732 362 363 1 As per policy Mr. Mohsin Khan Employee
Suzuki Cultus 2014 1,039 695 344 348 4 As per policy Mr. Khurram Rizvi Employee
Suzuki Cultus 2014 1,034 692 342 343 1 As per policy Mr. Kunwar Viqar Employee
Suzuki Cultus 2014 1,039 697 342 343 1 As per policy Mr. Syed Abid Raza Employee
Suzuki Cultus 2014 1,049 723 326 347 21 As per policy Mr. Zubair Employee
Computers
UPS Batteries 2017 292 123 169 72 (97) Negotiation PDPL Energy (Pvt) Ltd Company
15,486 7,839 7,647 7,901 254
Net book value not exceeding
Rs. 100,000 each (several and cummulative
amount not material either) 1,911 1,269 642 718 76 Negotiation Several -
91
31 December 2018 31,117 19,653 11,464 18,307 6,843
Annual Report 2019
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
5.4 Depreciation on property, plant and equipment - operating fixed assets and amortization on intangibles asset for
the year has been allocated as follows:
Note 2019 2018
(Rupees in '000)
Depreciation on property, plant and equipment - operating fixed assets 5.1 65,676 41,743
Amortization on intangible assets 6 127 298
65,803 42,041
5.5 At 31 December 2019, the written down value of the temporarily idle property, plant and equipments comprising
of leasehold land and building (and leasehod improvements on leasehold land) amounted to Rs. 152.125 million
and Rs 1.4 million respectively.
5.6 This represents the right of use assets recognised in the financial statements as more fully explained in note 4.3
to the financial statements.
6. INTANGIBLE ASSETS
2019
COST Rate AMORTIZATION Written down
As at 1 Additions As at 31 % As at 1 For the As at 31 value as at 31
January December January year December December
2019 2019 2019 2019 2019
------------------- (Rupees in '000) ------------------- -------------------------------- (Rupees in '000) --------------------------------
Computer software and licenses 15,954 - 15,954 30 15,726 127 15,853 101
2018
COST Rate AMORTIZATION Written down
As at 1 Additions As at 31 % As at 1 For the As at 31 value as at 31
January December January year December December
2018 2018 2018 2018 2018
------------------- (Rupees in '000) ------------------- -------------------------------- (Rupees in '000) --------------------------------
Computer software and licenses 15,718 236 15,954 30 15,428 298 15,726 228
6.1 Cost of above assets include cost of assets of Rs. 14.976 million (2018: Rs. 2.227 million) having net book value
of Nil value at the reporting date which are still in use.
Considered good
Office and warehouse premises 1,593 1,593
Considered doubtful
Others 121 121
Provision held against others (121) (121)
- -
1,593 1,593
8. LONG TERM LOANS TO EMPLOYEES - secured
Considered good
Loans to employees 8.1 1,862 1,790
Less: current maturity (1,232) (1,006)
Long term portion 630 784
92
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
8.1 These mark-up free loans have been given to the employees. These are recoverable in 6 to 60 equal monthly
instalments and are secured against employees' provident fund balances. These have not been discounted to their
present value, as the financial impact is not material.
Deferred tax asset and liability comprises of taxable and deductible temporary differences in respect of the following:
Balance Recognized Recognised Recognized Balance Recognized Recognised Recognized Balance as at
as at 1 in profit in in other as at 31 in profit in in other 31
January and loss surplus on comprehensive December and loss surplus on comprehensive December
2018 account revaluation income 2018 account revaluation income 2019
of of
property, property,
plant and plant and
equipment equipment
------------------------------------------------------------------------------------ (Rupees in '000) ------------------------------------------------------------------------------------
- provision for defined benefit plans 30,904 (6,497) - 1,253 25,660 4,002 - 1,413 31,075
- provision against slow moving and
obsolete stock and doubtful trade debts 10,967 (2,316) - - 8,651 6,085 - - 14,736
- tax losses (note 9.1) 35,938 9,559 - - 45,497 (32,347) - - 13,150
77,809 746 - 1,253 79,808 (22,260) - 1,413 58,961
Deferred tax liability - net 9,025 8,354 6,821 (25,180) (980) (19,603) (8,554) 1,413 (27,724)
9.1 This represents deferred tax of Rs. 13.15 million (2018: Rs. 12.24 million) recorded on unabsorbed tax depreciation
and amortisation.
9.2 Deferred tax balance has been recognised at the rates at which these are expected to be settled / realised.
9.3 The management has recorded deferred tax asset based on financial projections indicating the absorption of
deferred tax asset over a number of future years against future expected taxable profits. The financial projections
involve certain key assumptions such as sales price and composition, raw materials, labour prices and distribution
channels, etc. Any significant change in the key assumptions may have an effect on the absorption of the deferred
tax asset. Nonetheless, the management is confident of the achievement of its targeted results.
93
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
Raw material
- in hand 69,897 64,303
- in transit 5,942 24,875
75,839 89,178
11.1 At 31 December 2019, finished goods costing Rs. 13.926 (2018: Nil) were stated at their net realisable value of
Rs. 7.975 million (2018: Nil).
94
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
Cash at banks
- current / collection accounts 20,239 43,350
- profit and loss sharing account 14.1 3,245 84
23,484 43,434
14.2 These carry profit rate of 5.5% per annum and were encashed subsequent to the year end.
3,550,000 3,550,000 Fully paid ordinary shares of Rs. 10 each issued for cash 35,500 35,500
50,000 50,000 Fully paid ordinary shares of Rs. 10 each issued for
consideration other than cash 500 500
2,522,600 2,522,600 Fully paid ordinary shares of Rs. 10 each issued as
bonus shares 25,226 25,226
6,122,600 6,122,600 61,226 61,226
95
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
17.1 Gratuity and other staff retirement benefit scheme (defined benefit obligations)
The Company operates two unfunded defined benefit plans namely the gratuity scheme and other staff retirement
benefit scheme for its permanent eligible employees. Gratuity and the other retirement benefit are payable under
the schemes to employees on cessation of employment on basic salary on the following grounds:
- Death
- Retirement
- Resignation
The number of employees covered under the following defined benefit schemes are:
2019 2018
---------- (Number) ----------
Gratuity Scheme 171 172
Other Retirement Benefit Scheme 30 33
The latest actuarial valuations of the above gratuity and retirement benefit schemes were carried out as at 31
December 2019 under the Project Unit Credit Method. Principal actuarial assumptions used in the valuation of the
schemes are as follows:
Gratuity Scheme Other Staff retirement benefit scheme
2019 2018 2019 2018
Financial assumptions (%) (%) (%) (%)
Demographic assumptions
Payable to defined benefit schemes 17.5 87,162 77,726 19,993 21,304 107,155 98,580
96
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
The following amounts have been charged to the profit and loss account in respect of defined benefit plan and
other benefits:
Other staff retirement
Gratuity Scheme benefits scheme Total
2019 2018 2019 2018 2019 2018
---------------------------------- (Rupees in '000) ----------------------------------
Current service cost 7,657 6,955 1,781 845 9,438 7,800
Interest cost 7,305 5,611 1,866 1,895 9,171 7,506
14,962 12,566 3,647 2,740 18,609 15,306
17.9 Expected accrual of expenses in respect of gratuity scheme and other staff retirement benefit scheme in the next
financial year on the advice of the actuary are as follows:
(Rupees in '000)
Sensitivity analysis has been performed by varying one assumption keeping all other assumptions constant and
calculating the impact on the present value of the defined benefit obligations under the various employee benefit
schemes. The increase / decrease in the present value of defined benefit obligations as a result of change in each
assumption is summarized below:
Present value obligation Rate effect
Gratuity Other staff Gratuity Other staff
Scheme retirement Scheme retirement
benefits benefits
scheme scheme
--------------------- (Rupees in '000) ---------------------
Discount rate effect
97
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
The sensitivity analysis prepared presented above may not be representative of the actual change in the defined benefit obligation as it
is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Liabilities against assets subject to finance lease - long term portion 18.1 3,563 4,515
Liabilities against right of use assets - long term portion 18.2 56,592 -
60,155 4,515
18.1 The Company has acquired a vehicle under finance lease arrangement from First Habib Modaraba. The lease is for a period of five years
expiring on 27 September 2023, with an option to purchase the asset at nominal amount. Effective interest rate is 10.27%.
At the end of the reporting period, the future minimum lease payments under finance lease arrangement were as follows:
Minimum Lease Future Present value
Payments Finance Cost of Minimum
Lease
Payment
---------------------- (Rupees in '000) ----------------------
Not later than one year 1,583 588 995
Later than one year and not later than five years 4,223 660 3,563
5,806 1,248 4,558
Less: Current portion 995
3,563
18.2 This represents the liability recognised against the right of use assets on more fully explained in note 4.3. Other relevant details are as
follows:
18.3 Current maturity of liabilities against leased assets Note 2019 2018
(Rupees in '000)
Liabilities against assets subject to finance lease 995 941
Liability against right of use assets 10,187 -
11,182 941
98
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
20.2 The facility for running finance available from a commercial bank of Rs. 200 million (2018: Rs. 300 million) carries mark-up at 1 month
KIBOR+1% (2018: 1 month KIBOR+0.75%) per annum valid until 30 April 2020 and is generally renewable . The facility is secured by
first pari passu charge by way of hypothecation over all present and future current assets of the Company of Rs. 400 million and first
pari passu charge of Rs. 113.33 million over all plant and machinery of the Company. At 31 December 2019, unutilised facility for running
finance aggregated to Rs. 200 million (2018: Rs. 300 million). At 31 December 2019, LC sight and usance facility available amounted
to Rs. 200 million (31 December 2018: Rs. 200 million).
20.3 At 31 December 2019, unutilised letter of credit facilities from certain banks amounted to Rs. 353.43 million (31 December 2018:
Rs. 357.85 million). These are secured against the import bills of the Company. Total facilities sanctioned to the Company amounted to
Rs. 420 million (31 December 2018: Rs. 420 million).
Tax at the applicable tax rate of 29% (31 December 2018: 29%) 36,427 17,156
Tax credit - (1,931)
Tax effect of increase in tax losses due to the allowance of
previously disallowed expenses - (11,000)
Insurance commission income taxed at lower rate 48 47
Effect of prior year tax 3,934 17,616
Effect of change in future tax rate - 1,644
Additional charge due to minimum tax liability 23,046 21,014
Permanent differences (3,586) (13,322)
Tax expense 59,869 31,224
21.2 In view of loss for the financial year ended 31 December 2015, provision for tax for the then year ended 31 December 2015, including
the minimum tax under the Income Tax Ordinance, 2001, was not made in the financial statements for the year ended 31 December 2015.
The Company had obtained an opinion from a tax advisor based on which it believes that it is not required to pay tax under section 113
of the Income Tax Ordinance, 2001, in view of gross loss for the year ended 31 December 2015, before the set off of depreciation and
other inadmissible expenses under the Income Tax Ordinance, 2001 (as under the above section minimum tax is not payable in case of
gross loss before the set off of depreciation and other inadmissible expenses). However, Finance Act 2016 has deleted the said proviso
of gross loss. The management, believes that the minimum tax for the year ended 31 December 2015 is not payable as the amendment
to the said proviso is applicable for tax year 2017 and onwards and accordingly provision for minimum tax amounting to Rs. 14.23 million
has not been made. However, CIR had levied minimum tax on the Company vide an amended assessment order,
against which the Company has filed an appeal with the CIR Appeals. During the year ended 31 December 2018, CIR(A) vide an order
dated 5 October 2018 has confirmed the levy of minimum tax. Disagreeing with this, the Company has filed an appeal with the Appellate
Tribunal Inland Revenue, since the management believes that the minimum tax for the year ended 31 December 2015 is not payable
due to the reason given above.
99
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
21.3 Income Tax Assessments of the Company have been completed up to and including the financial year ended 31 December 2018 with
the exception of accounting years 2007, 2011, 2012, 2014, 2015, and 2016. For financial year ended 2011, audit proceedings were
initiated and completed vide order passed under section 122(1)(5) of the Income Tax Ordinance, 2001 in which certain disallowances
were made amounting to Rs. 12.289 million against which appeal was filed by the Company. The appeal was heard and then subsequently
the CIR Appeals passed a revised order in which certain expenses earlier disallowed were allowed amounting to Rs. 4.66 million while
expenses amounting to Rs. 6.65 million were remanded back by CIR Appeals to Deputy Commissioner Inland Revenue (DCIR). In respect
of the remaining amount, the Company has already filed an appeal before the Appellate Tribunal Inland Revenue (ATIR) which is pending
decision. Based on the Company's tax advisor's view, a favourable decision is expected and therefore the subject demand is expected
to be quashed.
Furthermore, on 21 April 2015, an order under sub-section (5A) of section 122 of the Income Tax Ordinance, 2001 was passed by the
Additional Commissioner Inland Revenue for the financial year 2012, in which tax demand of Rs. 0.75 million was raised against certain
disallowances. The Company has filed an appeal against the alleged order before the Commissioner Inland Revenue Appeals who vide
its order dated 8 September 2016 has allowed certain expenses of Rs. 1.82 million which were earlier disallowed (tax effect being
Rs. 0.65 million). In respect of the remaining amount, the Company has already filed an appeal before the ATIR which is pending decision.
Based on the Company's tax advisor's view, a favourable decision is expected and therefore the subject demand is expected to be
quashed.
21.4 Return for the financial year 2007 was selected for audit under section 177 of Income Tax Ordinance 2001 and an amended assessment
order dated 30 March 2009 was passed in which certain disallowances were made by the taxation authorities. Disagreeing to the above,
the Company filed an appeal before the Commissioner Inland Revenue, Appeal (CIR-A) and also filed an appeal before the CIR-A against
the refusal of the Taxation Officer to rectify certain mistakes. The CIR-A vide his order No. 15 and 16 dated 25 October 2011 deleted all
the additions except for the alledged unreconciled production of manufactured goods amounting to Rs. 3.3 million. The Company filed
an appeal before Appellate Tribunal Inland Revenue (ATIR) for not allowing relief in respect of disallowance of Rs. 3.3 million on account
of alledged unreconciled production of manufactured goods. Further, the tax department has also filed an appeal before ATIR on certain
reliefs of Rs. 4.8 million earlier decided in favour of the Company. In the Appellate Order (AO) dated 8 October 2013 passed by the ATIR,
the issue of unreconciled production was deleted (decided in favour of the Company) simultaneously setting aside the same for reverification.
In response to it the department filed MA in response to which, ATIR passed AO dated 5 May 2015 by remanding back the issue for
reverification of unreconciled difference, strictly in the light of history of the case and subsequent years. Following the judgement of ATIR,
department has initiated set-aside proceedings. The Company has submitted the response and details regarding unreconciled production.
No order has been passed by the department in relation to the set-aside proceedings. The Company expects a decision in its favour.
21.5 Returns for the financial years ended 31 December 2014 and 31 December 2015 were amended under section 122(9) of Income Tax
Ordinance 2001 and amended assessment orders dated 22 September 2017 and 18 April 2017 respectively were passed in which certain
disallowances were made by the taxation authorities. Disagreeing to the above, the Company had filed appeals before the CIR Appeals.
During the year 2018, these appeals were partly decided in favour of the Company by the CIR(A), allowing the Company expenses
amounting to Rs. 15.70 million (for year ended 31 December 2014) and Rs. 36.6 million (for year ended 31 December 2015). The tax
authorities have filed appeals before the ATIR against the CIR(A)'s order to allow relief to the Company. The Company expects a decision
in its favor.
21.6 During the current year, on 25 September 2019 an order under sub section (1) of section 122 of the Income Tax Ordinance, 2001 was
passed by the Deputy Commissioner Inland Revenue (DCIR) for the financial year 2016 in which certain disallowances amounting to
Rs. 9.83 million were made. Disagreeing to the above, the company has filed an appeal before the Commissioner Inland Revenue -
Appeals against the alleged order of DCIR, which is pending decision. However, adequate provision is being held by the Company.
22.1 Contingencies
22.1.1 Bank guarantees have been issued in favour of Sui Southern Gas Company Limited for the supply of gas aggregating to Rs. 7.02 million
(31 December 2018: Rs. 7.02 million) in addition to which security deposit of Rs. 2.786 million has also been given to Sui Southern Gas
Company Limited. Bank guarantee has also been issued in favour of Pakistan State Oil for issuance of PSO fleet cards aggregating to
Rs. 1.3 million (31 December 2018: Rs. 1.3 million) against which security deposit of Rs. 0.65 million have been given. These guarantees
are also secured in the manner explained in note 20.2 to these financial statements.
22.1.3 In addition, an ex-employee had filed a case on 25 March 2015 against the Company in National Industrial Relations Commission (NIRC)
Multan for reinstatement on the job. The management based on discussions with the legal advisor is of the view that they have a good
prospect of a decision in its favour. The amount involved cannot be presently determined, although it is not considered to be material.
100
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
22.2 Commitments
22.2.1 Commitments under letters of credit for the import of stock in trade items at 31 December 2019 amounted to
Rs. 33.762 million (31 December 2018: Rs. 25.657 million) representing the LCs opened by the year end but no
shipment made by that date.
22.2.2 Commitments relating to capital expenditure as at 31 December 2019 amounted to Rs. 4.918 million
(2018: Rs. 4.8 million).
2019 2018
23. SALES - net
(Rupees in '000)
Gross sales 3,254,521 2,569,323
2,419,329 1,894,705
23.1 Company's main product toilet soap falls under Third Schedule under the Sales Tax Act, 1990 (Act) under Pakistan
Custom Terrif (PCT) headings 3401.1100 and 3401.2000. These products are chargeable to Sales Tax under sub-
section 2 of section 3 of the above Act at seventeen percent of the retail price. Accordingly the base price on which
sales tax has been calculated is Rs. 3,572 million.
- The contract liability of Rs. 43.147 million as at 31 December 2018 has been fully recognised in the statement
of profit and loss account of the current year ended 31 December 2019. The contract liability as of 31 December
2019 would be recorded in the revenue only when the sales have taken place (and was so recorded in 2020).
- Credit periods has been specified for each customers regarding the credit sales to them. However, most of the
portion of the net balance due as of the year-end was collected subsequent to the year end.
- These are no other performance obligation connected with the sales as recorded during the current year.
101
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
102
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
24.3 Salaries, wages and other benefits include Rs. 9.54 million (31 December 2018: Rs. 9.4 million) in respect of the
accrual for defined benefit obligations of the Company and contribution of Rs. 2.54 million (2018: Rs. 2.12) to the
provident fund.
25.1 These include Rs. 2.5 million (31 December 2018: Rs. 2 million) in respect of the accrual for defined benefit
obligations of the Company and contribution of Rs. 3.7 million (2018: Rs 2.8 million) to the provident fund.
103
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
26.1 These include Rs. 4.5 million (2018: Rs. 3.2 million) in respect of the accrual for defined benefit obligations of the
Company and contribution of Rs. 2.5 million (2018: Rs 2.2 million) to the provident fund.
(Number of shares)
(Rupees)
104
31. REMUNERATION OF CHIEF EXECUTIVE, DIRECTOR AND EXECUTIVES
Key Management Personnel Non Executive Executives
Chief Executive Director (Chair person) Other Key Management
(Key Management Person) (Non-Executive Director & Key
ZIL Limited
Managerial remuneration 8,175 7,290 7,200 6,240 14,687 13,023 6,570 4,681 36,632 31,234
Provident fund 818 729 - - 1,437 1,226 657 468 2,912 2,423
Special pay 5,496 4,900 - - 9,872 8,754 4,417 3,147 19,785 16,801
Housing and utilities 4,605 4,109 - - 8,275 7,404 3,697 2,631 16,577 14,144
Medical 117 192 - - 571 490 112 69 800 751
Incentive 4,451 2,101 - - 4,478 3,181 1,264 1,077 10,193 6,359
For the year ended 31 December 2019
Number of persons 1 1 1 1 5 5 4 3 11 10
Notes to the Financial Statements
The chief executive and certain executives of the Company are provided with free use of cars and medical facilities in accordance with their
entitlements.
Executives are those employees, other than the Chief Executive and directors, whose basic salary exceeds twelve hundred thousand Rupees
in a financial year.
In addition to the above, aggregate amount charged in these financial statements for director's fee paid to non-executive directors was
Rs. 0.83 million (31 December 2018: Rs. 0.66 million).
The investments out of provident fund have been made in accordance with the requirement of Section 218 of the Companies Act, 2017 and the
rules formulated for this purpose.
105
Annual Report 2019
ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
Overview
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
- Operational risk
This note presents information about the Company's exposure to each of the above risks, the Company's objectives,
policies and processes for measuring and managing risk, and the Company's management of capital.
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s
risk management framework. The Board of Directors is responsible for developing and monitoring the Company's
risk management policies.
The Company's risk management policies are established to identify and analyse the risks faced by the Company,
to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies
and systems are reviewed regularly to reflect changes in market conditions and the Company's activities.
The Company, through its training and management standards and procedures, aims to maintain a disciplined and
constructive control environment in which all employees understand their roles and obligations.
The Company's Audit Committee oversees how management monitors compliance with the Company’s risk
management policies and procedures. The Company's Audit Committee is assisted in its oversight role by Internal
Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures,
the results of which are reported to the Audit Committee.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails
to meet its contractual obligations, and arises principally from the Company's receivables from customers.
The carrying amount of financial assets represents the maximum credit exposure.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
Credit risk of the Company arises principally from long term deposits, loans to employees, trade debts, others
receivables and bank balances.
As at 31 December, the concentration of the financial assets in terms of the economic sectors was as follows:
2019 2018
(Rupees in '000)
The bank balances (including security deposit) are held with banks and financial institutions counterparties,
which are rated as follows:
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The
Company has established a credit policy under which each new customer is analysed individually for creditworthiness
before the Company's standard payment and delivery terms and conditions are offered and also obtains
security / advance payments, wherever considered necessary. Sale limits are established for each customer and
reviewed regularly.
Most of the customers have been transacting with the Company since many years. The Company establishes an
allowance for impairment that represents its estimate of incurred losses in respect of trade debts.
2019 2018
Gross Impairment Gross Impairment
loss loss
(Rupees in '000) (Rupees in '000)
Management believes that the unimpaired amounts that are due for more than 60 days are good and collectible
in full, based on historical payment behaviour of the customers. Movement of provision against doubtful trade debts
is disclosed in note 12.3.
None of the financial assets of the Company are past due or impaired except as disclosed in notes 7, 12 and 13
to these financial statements.
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to
managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they
are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to
the Company's reputation. The Company aims to maintain the level of its cash and cash equivalents at an amount
in excess of expected cash outflows on financial liabilities by continuous monitoring of forecast and actual cash
outflows. The Company also monitors the level of expected cash inflows on trade and other receivables together
with expected cash outflows on trade and other payables. In addition, the Company maintains lines of credit to
meet its expected cash outflows (refer note 20).
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
The following are the remaining contractual maturities of financial liabilities at the reporting date.
The amounts are gross and undiscounted:
2019
12 months
Carrying Contractual or less More than
amount cash flows (on demand) 12 months
Non-derivative financial liabilities --------------------------- (Rupees in '000) ---------------------------
2018
12 months
Carrying Contractual or less More than
amount cash flows (on demand) 12 months
Non-derivative financial liabilities --------------------------- (Rupees in '000) ---------------------------
Market risk is the risk that changes in market prices - such foreign exchange rates, interest rates and equity
prices - will effect the Company's income or the value of its holding of financial instruments. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while optimising
the return. market. The Company is exposed to currency risk and interest rate risk only.
Currency risk is the risk that the value of financial instrument will fluctuate due to a change in foreign exchange
rates. It arises mainly where payables exist due to transactions entered in foreign currencies.
The Company is exposed to currency risk on trade credit liability that is denominated in a foreign currency (primarily
U.S. Dollar). The Company’s exposure to foreign currency risk is as follows:
2019 2018
(Rupees US Dollars (Rupees US Dollars
in '000) in '000)
Above exposure is payable by the Company in Rupees at the rate on which these are settled by the Company.
Currently, the Company does not obtain forward cover against the net exposure.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
Sensitivity risk
A five percent strengthening / (weakening) of the Rupee against US Dollar at the year ended 31 December 2019
would have increased / (decreased) equity and profit and loss account by Rs. 9.177 million (31 December 2018:
Rs. 3.108 million). This analysis assumes that all other variables, in particular interest rates, remaining constant.
The analysis is performed on the same basis as of December 2018.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. Company's interest rate exposure arises on deposits with banks. At the balance
sheet date the interest rate profile of the Company’s interest-bearing financial instrument was as follows:
Carrying amount
Note 2019 2018
(Rupees in '000)
The Company does not account for any fixed rate financial assets and liabilities at fair value through profit
and loss. Therefore, a change in interest rates at reporting date would not affect profit and loss.
A change of 100 basis points in interest rates at the year end would not have a material impact on equity and profit
for the year ended 31 December 2020 and 31 December 2019.
The objective of the Company when managing capital is to safeguard its ability to continue as a going concern
so that it can continue to provide returns for shareholders and benefits for other stakeholders; and to maintain a
strong capital base to support the sustained development of its businesses. The Company is not subject to externally
imposed capital requirements.
The Company 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 Company may
adjust the amount of dividend to the shareholders or issue bonus / new shares.
The Company finances its operations through equity and borrowings and also manages of working capital with a
view to maintain an appropriate mix between various sources of finance to minimize risk.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
33.4.3.1 Reconciliation of movements of liabilities to cash flows arising from financing activities
2019
Liabilities Revenue reserve
Short term Liability Share General Unappropri- Total
borrowings against asset capital reserve ated
(including subject to profits
accrued finance lease
markup)
--------------------------------------- (Rupees in '000) ---------------------------------------
Balance as at 1 January 2019 192,502 5,456 61,226 6,000 117,279 382,463
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the
processes, technology and infrastructure supporting the Company’s operations either internally within the Company
or externally at the Company’s service providers, and from external factors other than credit, market and liquidity
risks such as those arising from legal and regulatory requirements and generally accepted standards of investment
management behaviour. Operational risks arise from all of the Company’s activities.
The Company’s objective is to manage operational risk so as to balance limiting of financial losses and damage
to its reputation with achieving its objective of generating returns for stakeholders.
The primary responsibility for the development and implementation of controls over operational risk rests with the
board of directors. This responsibility encompasses the controls in the following areas:
- requirements for appropriate segregation of duties between various functions, roles and responsibilities;
- requirements for the reconciliation and monitoring of transactions;
- compliance with regulatory and other legal requirements;
- documentation of controls and procedures;
- requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures
to address the risks identified;
- ethical and business standards; and
- risk mitigation, including insurance where this is effective.
- senior management ensures that the Company's staff have adequate training and experience and fosters
effective communication related to operational risk management.
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
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 a going concern without any intention
or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms.
The fair value of financial assets and liabilities traded in active markets i.e. listed equity shares are based on the
quoted market prices at the close of trading on the period end date. The quoted market prices used for financial
assets held by the Company is current bid price.
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available
from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent
actual and regularly occurring market transactions on an arm’s length basis.
IFRS 13, 'Fair Value Measurements' requires the Company 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 that the entity can access at the
measurement date (level 1).
- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly (level 2).
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including
their levels in the fair value hierarchy:
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
33.6.1 The Company has not disclosed the fair values of the above financial assets and financial liabilities, as these are
either short term in nature or repriced, periodically. Therefore, their carrying amounts are reasonable approximations
of their fair values.
Due to growing competition, availabilty of foreign brands and purchasing of finished goods, the assessed plant
capacity could not be fully utilized as for certain part of the year only one shift operated. Further during the year
5,133 metric tons of finished goods were purchased externally.
Related parties of the Company comprise of associated companies, companies with common directors, major
shareholders, staff retirement funds, directors and key management personnel. Details of transactions with related
parties and balances with them, unless disclosed elsewhere are as follows:
Note 2019 2018
Transactions with related parties: (Rupees in '000)
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ZIL Limited Annual Report 2019
Notes to the Financial Statements
For the year ended 31 December 2019
35.1 Contribution to the provident fund is made in accordance with the requirements of staff service rules.
35.2 Remuneration of key management personnel in accordance with their terms of employment are given in note 31.
These financial statements have been prepared on the basis of a single reportable segment which is consistent
with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker is
responsible for allocating resources and assessing performance of the operating segments.
The internal reporting provided to the chief operating decision-maker relating to the Company's assets, liabilities
and performance is prepared on a consistent basis with the measurement and recognition principles of approved
accounting standards as applicable in Pakistan.
The Company does not have different reportable segments since all of the Company products are similar in nature
and managed by the Company on a similar basis.
During the year, sales to one specific customer was more than 10% of the Company's total sales amounting to
Rs. 682 million constituting 22% of the Company's sales (2018: Rs. 605 million constituting 24% of the Company's
sales).
As at 31 December 2019 there were three shareholders (31 December 2018: 1) who held more than 10% of the
Company's share capital. The holdings were 26.87%, 16.24% and 21.60% (31 December 2018: 38.81%).
The number of employees as on the year end were 171 (31 December 2018: 173) and average number of employees
during the year were 172 (31 December 2018: 173).
The total number of factory employees as at year end were 30 (2018: 33) and average number of factory employees
were 33 (2018: 35).
38. GENERAL
38.1 Security deposits of Rs. 3.849 million earlier classified as long term security deposits have been reclassified to
short term security deposits for a better presentation.
These financial statements were authorised for issue in the Board of Directors meeting held on March 5th, 2020.
The Board of Directors in their meeting held on March 5th, 2020 have for the year ended December 31st 2019,
proposed final cash dividend of Rs. 3.50 per share (2018: Rs. 1.50 per share) amounting to Rs. 21.429 million
(2018: Rs. 9.184 million) for approval by the members of the Company in the Annual General Meeting to be held
on 29th May, 2020. The financial statements for the year ended 31st December 2019 do not include the effect of
the proposed cash dividend, which will be recognised in the financial statements for the year ending December
31st 2020.
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Annual Report 2019
Notice of 60th Annual General Meeting
NOTICE IS HEREBY GIVEN that the Sixtieth Annual General Meeting of ZIL Limited will be held
on Friday, May 29, 2020 at 11:30 am to transact the following business at Karachi.
In wake of the outbreak of COVID-19 (Corona Virus Disease - 2019) shareholders are encouraged to
attend the Meeting online as per the instructions given in notes section below.
ORDINARY BUSINESS:
1. To confirm the minutes of the last Extraordinary General Meeting held on Thursday,
June 27, 2019.
2. To receive, consider and approve the Audited Financial Statements of the Company together
with the Directors’ and Auditors’ report thereon for the year ended December 31, 2019.
3. To approve as recommended by directors a final cash dividend @ 35% per share for the
financial year 2019.
Muhammad Shahid
Karachi: May 06, 2020 Company Secretary
NOTES:
i) In order to determine the entitlement of Final Dividend, and to participate and vote via video link in
the AGM of the Company , Share Transfer Book Closure dates shall remain the same i.e. April 10,
2020 to April 16, 2020, as previously mentioned in the initial notice of holding the Annual General
Meeting and Book Closure published through PUCARS. Furthermore, only those shareholders will
be entitled for the dividend payment and to vote at the AGM whose names will appear in the Register
of Members on April 10, 2020.
ii) A member entitled to attend and vote at the meeting may appoint another person as his/her proxy
to attend and vote in his/her place. Proxies completed in all respect, in order to be effective, must
be received at the Registered Office of the Company not less than forty eight (48) hours before the
time of meeting or email scanned copy of the same at agm@zil.com.pk. Attested copy of shareholder’s
Computerized National Identity Card (CNIC) must be attached with the Form.
iii) Members are requested to notify the change in their addresses, if any, immediately to the Share
Registrars of the company, M/s THK Associates (Pvt) Ltd. 1st Floor, 40 – C, Block-6, P.E.C.H.S.,
Karachi 75400 Pakistan.
iv) The CDC/sub account holders are required to follow the guidelines as laid down by Securities &
Exchange Commission of Pakistan contained in Circular No.1 of 2000.
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Notice of 60th Annual General Meeting
SPECIAL NOTES TO THE SHAREHOLDERS:
As per SECP directives the dividend of shareholders whose valid CNICs, are not available with the
Share Registrar could be withheld. All shareholders having physical shareholding are therefore
advised to submit a photocopy of their valid CNICs immediately, if already not provided, to the Share
Registrar of the company without any further delay.
Under the provisions of Section 242 of the Companies Act, 2017, it is mandatory for a listed company
including to pay cash dividend to its shareholders ONLY through electronic mode directly into bank
account designated by the entitled shareholders. In order to receive dividend directly into their bank
account, shareholders are requested to fill in ELECTRONIC CREDIT MANDATE FORM available
at Company’s website and send it duly signed along with a copy of CNIC to the Share Registrar
of the Company in case of physical shares. In case of shares held in CDC then ELECTRONIC
CREDIT MANDATE FORM must be submitted directly to shareholder’s broker/participant/ CDC
account services. In case of non-receipt of IBAN detail, the Company will be constrained to withhold
payment of dividend under Companies (Distribution of Dividends) Regulations, 2017.
Shareholders of the Company are hereby informed that as per the record, there are some
unclaimed/uncollected / unpaid dividends and shares. Shareholders who could not collect their
dividends/shares are advised to contact Company`s Share Registrar, to collect/enquire about their
unclaimed dividend or shares, if any. In compliance with Section 244 (2) of the Companies Act, 2017,
after having completed the stipulated procedure, of three (3) years or more from the date due and
payable, shall be deposited to the credit of Federal Government in case of unclaimed dividend and
in case of shares, shall be delivered to SECP.
In pursuance of SECP Circular No. 5 dated March 17, 2020, Circular No. 6 dated March 22, 2020
and Circular No. 10 dated April 1, 2020 respectively regarding Regulatory Relief to dilute impact of
Corona Virus (COVID 19) for Corporate Sector, the proceedings of the AGM shall be held online
through video link only. The shareholders attending AGM through video link are requested to post/send
their respective questions/comments/suggestions along with their Name and Folio Number on the
following email address or WhatsApp number according to their convenience.
Email ID: agm@zil.com.pk
WhatsApp number 0334-3155091
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Notice of 60th Annual General Meeting
In pursuance of SECP Circular No. 10 dated April 1, 2020 regarding Regulatory Relief to dilute
impact of Corona Virus (COVID 19) for Corporate Sector, the Annual Report shall be circulated via
email to those shareholders whose email addresses are present in the records/database of the
company. The Annual Report has also been uploaded at the Company’s website and is readily
accessible to the shareholders (www.zil.com.pk).
In view of the evolving situation on the spread of the COVID-19, ZIL Limited has decided to conduct
above Shareholders’ Meeting online in order to protect the wellbeing of the shareholders.
The shareholders will be able to login and participate in the AGM proceedings through their
smartphones or computer devices from their homes or any convenient location after completing all
the formalities required for the verification and identification of the shareholders.
In this regard, shareholders are required to update their valid e-mail addresses with the Share
Registrar, latest by May 15, 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 www.zil.com.pk in investor relation section.
The shareholders who have already updated their valid e-mail addresses with the Company or its
Share Registrar and are interested to attend AGM may send below information at agm@zil.com.pk
for their / their appointed proxy’s verification. Such information should be sent from their duly registered
valid e-mail address for the registration purposes latest by May 24, 2020.
S. No. Name of the CNIC Number Folio Number Cell Number Registered
Shareholder E-mail Address
In case of appointment of a proxy, please communicate above information for the individual who has
been appointed as proxy of the Shareholder to participate and vote on behalf of the respective
shareholder along with the duly signed proxy form.
ix. Transmission of Annual Audited Financial Statements and Notice of AGM to Members
through CD / DVD / USB and E-mail:
SECP through its SRO 470(1)/2016, dated May 31, 2016, has allowed companies to circulate the
annual balance sheet, profit and loss account, auditors’ report and Directors’ report etc (“annual
audited accounts”) along with notice of general meeting to its members through CD/DVD/USB and
email at their registered addresses. In view of the above, the Company has sent its Annual Report
2019 to its members in electronic form. The Company has placed on its website i.e. www.zil.com.pk
a standard request form containing postal and e-mail address of Company Secretary/Share Registrar,
so that shareholders may request a hard copy of the Annual Audited Accounts. The Company will
provide one hard copy free of cost to the requesting shareholder at their registered address within
one week of the request.
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Annual Report 2019
Notice of 60th Annual General Meeting
x. Deduction of Withholding Tax on the Amount of Dividend:
The Government of Pakistan through Finance Act, 2019, has made amendment in Section 150 of
the Income Tax Ordinance, 2001, whereby, withholding tax on dividends has been enhanced as
follows:
In case of joint-shareholders, tax is to be deducted as per ratio of their shares in the ownership.
Federal Board of Revenue (“FBR”) has provided the Active Tax-Payer List (“ATL”), for identification
on the basis of National Tax Number (“NTN”)/Computerized National Identity Card (“CNIC”) number;
hence, in case of non-availability of valid NTN/CNIC number of the respective shareholder with the
Company’s Share Registrar and Transfer Agent, he/she will be treated as ‘Non-Filer’ and accordingly
tax at the rate of 30% would be deducted. Therefore, the shareholders who have not yet provided
such information are requested to ensure that their valid NTN/CNIC number should be available
with the Share Registrar and Transfer Agent of ZIL Limited, whereas, shareholders having CDC
Accounts would requires to provide their valid NTN/CNIC number to their respective CDC participants.
xi. Requirement of Valid Tax Exemption Certificate for Claim of Exemption U/S 150 of the Income
Tax Ordinance, 2001:
Please be advised that in wake of recent judgments of respective courts of law, the exemption
certificate u/s 159 of the Income Tax Ordinance, 2001, is mandatory to claim tax exemption u/s 150.
Accordingly, the Company may not be awarding exemption on the basis of Clause 47B of Part IV
of Second Schedule to the Income Tax Ordinance, 2001. However, if an entity has filed a petition
against the FBR, in any relevant court, a certified true copy of the Stay Order of honorable court
along with all latest court proceedings (if any) would be required in lieu of valid tax exemption
certificate, for non-deduction of withholding tax. In case of non-availability of valid tax exemption,
deduction of tax under relevant sections shall be made accordingly.
The Joint Account Holders whose shareholding details as to Principal Shareholder have not yet been
determined for deduction of withholding tax on the upcoming dividend of the Company, are requested
to please furnish to the Company’s Share Registrar and Transfer Agent at below mentioned address,
the shareholding details of yourself as Principal Shareholder and your Joint Holder(s) in the following
manner, enabling the Company to compute withholding tax of each shareholder accordingly:
Name of Principal
CDC Account Shareholding CNIC No.
Shareholder/Joint Signature
No./Folio No. Proportion (%) (copy attached)
Holders
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Notice of 60th Annual General Meeting
Kindly note that in case of non-receipt of the information each Account Holder will be assumed to
hold equal proportion of shares and the deduction will be made accordingly.
The Shareholders having physical shareholding may open CDC sub-account with any of the brokers
or Investor Account directly with CDC to place their physical shares into script-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 Stock Exchange.
As per record, some of the shareholders are maintaining more than one folio under the same
particulars. Carrying two different folios may be a hassle for the shareholders to reconcile and receive
different benefits in the shape of dividends/ bonus. In order to provide better services and convenience,
such shareholders are requested to send requests to the Company’s Share Registrar and Transfer
Agent at the below mentioned address to merge their folios into one folio.
• While sending the copy of NTN/CNIC number, the shareholders are requested to quote their
respective folio numbers for identification purpose.
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Annual Report 2019
Important Information for Shareholder
Annual General Meeting
The annual shareholders’ meeting will be held on Friday, May 29, 2020 at 11:30 am at Karachi, Pakistan.
Shareholders are encouraged to participate in the meeting oline.
In order to determine the entitlement the Share Transfer Books closure dates of the Company shall
remain the same i.e. from April 10, 2020 to April 16, 2020 as previously mentioned in the initial notice
of AGM and book closure published through PUCARS.
Registered Office
Shares Registrar
Under Section 242 of the Companies Act 2017, it is mandatory for all listed Companies to pay cash
dividend to its shareholders only through electronic mode directly into the bank account designate by
the entitled shareholders.
In order to receive dividend directly into their bank account, shareholders are requested (if not already
provided) to fill in Bank Mandate Form for Electronic Credit of Cash Dividend available in the Annual
Report and also on the Company’s website and send it duly signed along with a copy of valid CNIC to
the Share Registrar of the Company, THK Associates (Pvt.) Limited, 1st Floor, 40 – C, Block 6, P.E.C.H.S.
Karachi 75400, in case of physical shares.
In case shares are held in CDC, electronic dividend mandate form must be directly submitted to
shareholder’s brokers/participant/CDC account services.
In case of non-receipt of information, the Company will be constrained to withhold payment of dividend
to shareholders as per section 243(3) of the Companies Act, 2017.
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Annual Report 2019
Transmission of Annual Audited Financial Statements and Notice of AGM to Members through
CD/DVD/USB and e-mail
The SECP through SRO 470 (1)/2016 dated May 31, 2016 has allowed companies to circulate the
annual balance sheet and profit and loss account, auditor’s report and directors report etc.
(“annual audited accounts”) along with notice of general meeting to its shareholders in electronic form
through CD/DVD/USB and email at their registered addresses. This would result in timely delivery of
Annual Audited Accounts to the shareholders. The Company has placed on its website i.e. www.zil.com.pk
a standard request form containing postal and e-mail address of Company Secretary/Share Registrar,
so that shareholders may request a hard copy of the Annual Audited Accounts. The Company will provide
one hard copy free of cost to the requesting shareholder at their registered address within one week of
the request.
Stock Code
The stock code for dealing in equity shares of ZIL Limited at Pakistan Stock Exchange is ZIL.
Shares Registrar
ZIL Limited shares department is operated by THK Associates (Pvt) Limited. It is managed by a
well-experienced team of professionals and is equipped with the necessary infrastructure in terms of
computer facilities and comprehensive set of systems and procedures for conducting the registration
functions.
The share registrar has online connectivity with Central Depository Company of Pakistan Limited. It
undertakes activities pertaining to dematerialized of shares, shares transfers, transmissions, issue of
duplicate / replaced share certificates, change of address and other related matters.
For assistance, shareholders may contact either the Registered Office or the shares Registrar.
Statutory Compliance
During the year, the company has complied with all applicable provisions, filed all returns/forms and
furnished the all relevant particulars as required under The Companies Act 2017 and Securities Act, 2015
and allied rules, the Securities and Exchange Commission of Pakistan (SECP) regulations and the listing
requirements.
Dividend
Keeping in view the profitability of the company, the Board of Directors recommended final cash dividend
Rs. 3.50 per share i.e 35% for the year ended December 31, 2019.
Earnings per share basic and diluted for the year Rs. 10.74 [(2018: Rs. 4.56)].
Shareholder’s Grievances
To date none of the shareholders has filed any letter of complaint against any service provided by the
company to its shareholders.
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Annual Report 2019
Legal Proceedings
No case has ever been filed by shareholders against the Company for non-receipt of shares.
Pursuant to section 132 of the Companies Act, 2017, ZIL Limited holds a General Meeting of
shareholders at least once a year. Every shareholders has right to attend the General Meeting. The
notice of such meeting is sent to all the shareholders at least 21 days before the meeting and also
advertised in at least one English and one Urdu newspaper having circulation in Karachi and Lahore.
All ordinary shares issued by the Company carry equal voting rights. Generally, matters at the general
meetings are decided by a show of hands in the first instance. Voting by show of hands operates on the
principle of the “One Member-one Vote”. If majority of shareholders raise their hands in favour of a
particular resolution, it is taken as passed, unless a poll is demanded.
Since the fundamental voting principle in a Company is “One share-One Vote”, voting takes place by a
poll, if demanded. On a poll being taken, the decision arrived by poll is final, overruling any decision
taken on a show of hands.
Proxies
Pursuant to Section 137 of the Companies Act, 2017 and according to the Memorandum and Articles
of Association of the Company, every shareholders of the Company who is entitled to attend and vote
at a general meeting of the Company can appoint another person as his/her proxy to attend and vote
instead of him/her.
Every notice calling a General meeting of the Company contains a statement that a shareholder entitled
to attend and vote is entitled to appoint a proxy. A proxy need not be a member of the Company.
The instrument appointing a proxy (duly signed by the shareholder appointing that proxy) should be
deposited at the office of the company not less then forty-eight hours before the meeting or email scanned
copy of the same at agm@zil.com.pk at attested copy of shareholder’s CNIC must be attached with the
proxy form.
Web Presence
Update information regarding the company can be accessed at ZIL Limited website, www.zil.com.pk.
The website contains the latest financial results of the company together with Company’s profile, the
corporate philosophy and major products.
Quarterly Reports
The Company publishes interim reports for the first, second and third quarters of the financial year. The
interim reports for the preceding year can be accessed at ZIL’s website www.zil.com.pk or printed copies
can be obtained by writing to the Company Secretary.
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Annual Report 2019
126
on Friday May 29, 2020, at 11:30 am at Karachi, Pakistan and at any adjournment thereof.
Paste Revenue
Stamp of Rs. 5/-
than forty-eight hours before the meeting. A proxy need not be a member of the company.