Nishat Mills Limited

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Growing Inclusively
Annual Report 2021 01

CONTENTS
CORPORATE
Company Information ................................................................................. 2
Directors’ Profile.......................................................................................... 4
Vision and Mission ..................................................................................... 6
Chairman’s Review Report ......................................................................... 7
Directors’ Report ........................................................................................ 8
Financial Highlights .................................................................................. 21
Statement of Compliance with Listed Companies (Code of Corporate
Governance) Regulations, 2019 ............................................................ 23
Independent Auditors’ Review Report to the Members on the
Statement of Compliance contained in Listed Companies (Code of
Corporate Governance) Regulations, 2019 ........................................... 26
Notice of Annual General Meeting ........................................................... 27

FINANCIAL STATEMENTS OF NISHAT MILLS LIMITED

Independent Auditor’s Report to the members ....................................... 34
Statement of Financial Position ................................................................ 40
Statement of Profit or Loss ....................................................................... 42
Statement of Comprehensive Income ...................................................... 43
Statement of Changes in Equity ............................................................... 44
Statement of Cash Flows ......................................................................... 45
Notes to the Financial Statements ........................................................... 46

CONSOLIDATED FINANCIAL STATEMENTS OF NISHAT MILLS LIMITED

AND ITS SUBSIDIARIES
Directors’ Report .................................................................................... 118
Independent Auditor’s Report to the members ..................................... 119
Consolidated Statement of Financial Position ....................................... 126
Consolidated Statement of Profit or Loss ............................................. 128
Consolidated Statement of Comprehensive Income ............................ 129
Consolidated Statement of Changes in Equity ..................................... 130
Consolidated Statement of Cash Flows ................................................. 131
Notes to the Consolidated Financial Statements .................................. 132
Pattern of Holding of the Shares ............................................................ 221
Directors’ Report Consolidated in Urdu ................................................. 228
Directors’ Report in Urdu ....................................................................... 240
Forms of Proxy in Urdu & English
 02 Nishat Mills Limited

COMPANY INFORMATION
Board of Directors Chief Financial Officer JS Bank Limited
Mian Umer Mansha Mr. Mohammad Azam Meezan Bank Limited
Chief Executive Officer MCB Bank Limited
Company Secretary MCB Islamic Bank Limited
Mian Hassan Mansha Mr. Khalid Mahmood Chohan National Bank of Pakistan
Chairman Pak Brunei Investment
Auditors Company Limited
Mrs. Mehak Adi Riaz Ahmad & Company Pakistan Kuwait Investment
Mrs. Sara Aqeel Chartered Accountants Company (Private) Limited
Syed Zahid Hussain Samba Bank Limited
Mr. Farid Noor Ali Fazal Legal Advisor Silk Bank Limited
Mr. Mahmood Akhtar Mr. M. Aurangzeb Khan, Soneri Bank Limited
Advocate, Chamber No. 6, District Summit Bank Limited
Audit Committee Court, Faisalabad. Standard Chartered Bank
Mrs. Mehak Adil (Pakistan) Limited
Chairperson / Member Bankers to the Company The Bank of Punjab
Albaraka Bank (Pakistan) Limited The Bank of Punjab - Taqwa
Syed Zahid Hussain Allied Bank Limited Islamic Banking
Member Askari Bank Limited The Bank of Khyber
Bank Alfalah Limited United Bank Limited
Mr. Mahmood Akhtar Bank Al Habib Limited
Member Bank Islami Pakistan Limited
Citibank N.A.
Human Resource & Dubai Islamic Bank Pakistan Limited
Remuneration (HR & R) Faysal Bank Limited
Committee Faysal Bank Limited - Islamic
Mrs. Sara Aqeel Banking
Chairperson / Member Habib Bank Limited
Habib Metropolitan Bank Limited
Mian Umer Mansha Industrial and Commercial Bank
Member of China Limited

Mr. Mahmood Akhtar

Member
 Annual Report 2021 03

Mills Branch Office, Lahore

Siddique Trade Centre,
Spinning units, Yarn Dyeing Terry Unit Office No. PL-29, PL Floor,
& Power plant 7 K.M. Nishat Avenue Off 22 K.M. 72 Main Boulevard Gulberg II,
Nishatabad, Faisalabad. Ferozepur Road, Lahore. Lahore.
Tel: 042-35781682
Spinning units & Power plant Apparel Unit
20 K.M. Sheikhupura Faisalabad 2 K.M. Nishat Avenue Off 22 K.M. Head Office
Road, Feroze Watwan. Ferozepur Road, Lahore. 7, Main Gulberg, Lahore.
Tel: 042-35716351-59, 042-111 332 200
Spinning units & Power plant Registered office Fax: 042-35716349-50
Plot No. 172-180 & 188-197, Nishat House, E-mail: nishat@nishatmills.com
M-3 Industrial City, Sahianwala, 53 - A, Lawrence Road, Lahore. Website: www.nishatmillsltd.com
FIEDMC, 2 K.M. Jhumra Chiniot Tel: 042-36360154, 042-111 113 333
Road, Chak Jhumra, Faisalabad. Fax: 042-36367414 Liaison Office
1st Floor, Karachi Chambers,
Weaving units & Power plant Shares Registrar Hasrat Mohani Road, Karachi.
12 K.M. Faisalabad Road, THK Associates (Private) Limited Tel: 021-32414721-23
Sheikhupura. Fax: 021-32412936
Head Office, Karachi
Weaving units, Dyeing & Plot No. 32-C Jami Commercial
Finishing unit, Processing unit, Street No. 2, DHA Phase VII,
Stitching units and Power Karachi 75500.
plants Tel: 021-111 000 322
5 K.M. Nishat Avenue Off 22 Fax: 021-35310191
K.M. Ferozepur Road, Lahore.
 04 Nishat Mills Limited

DIRECTORS’ PROFILE

Mian Umer Mansha Mian Hassan Mansha Syed Zahid Hussain Mr. Farid Noor Ali Fazal
Chief Executive Officer Chairman Non-Executive Director Non-Executive Director

Mian Umer Mansha Mian Hassan Mansha Syed Zahid Hussain Mr. Farid Noor Ali
received his Bachelors has been serving on is a seasoned Fazal is a Bachelor of
degree from Babson the Board of various professional in Commerce, Bachelor of
College, Boston, USA. listed companies for Pakistan’s corporate Laws and Bachelor of
He has been serving on several years. He also world. He possesses Management. He has
the Board of Directors serves on the Board of multi-faceted talents more than 48 years’
of various listed Nishat Power Limited, and has attained experience of
companies for more Security General exemplary marketing. He worked
than 26 years. Insurance Company accomplishments. He on various positions in
Limited, Lalpir Power has in-depth Middle East and USA.
He also serves on the Limited, Pakgen Power knowledge of a wide He is associated with
Board of Adamjee Limited, Nishat Hotels range of subjects and cement industry in one
Insurance Company and Properties Limited, has extensively form or the other and
Limited, MCB Bank Nishat (Aziz Avenue) diversified experience was the acting
Limited, Adamjee Life Hotels and Properties and exposure in senior chairman of All
Assurance Company Limited, Nishat positions. He has Pakistan Cement
Limited, Nishat Dairy (Raiwind) Hotels and earned B.Sc, LLB and Manufacturers
(Private) Limited, Properties Limited, MA in International Association in 2002. He
Nishat Hotels and Nishat Dairy (Private) Relations. He has a also serves on the
Properties Limited, Limited, Pakistan vast experience of Board of D. G. Khan
Nishat (Raiwind) Hotels Aviators and Aviation working as Chairman / Cement Company
and Properties Limited, (Private) Limited, Chief Executive / Limited and Nishat
Nishat Developers Nishat Real Estate Director of various state Paper Products
(Private) Limited, Development owned enterprises and Company Limited.
Nishat Sutas Dairy Company (Private) listed companies. He
Limited, Hyundai Limited, Nishat has also served as the
Nishat Motor (Private) Agriculture Farming High Commissioner /
Limited, Nishat (Private) Limited and Ambassador of
Agriculture Farming Hyundai Nishat Motor Pakistan in Kenya, with
(Private) Limited, Nishat (Private) Limited. accredited assignments
Agrotech Farms of Ambassadorship in
(Private) Limited and Tanzania, Uganda,
National Textile Rwanda, Krundse,
Foundation. Ethiopia and Eritrea. He
is a fellow member of
the Institute of
Management, England,
International
Biographical, Center,
the USA and the
Institute of Marketing
Management, Karachi.
 Annual Report 2021 05

Mr. Mahmood Akhtar Mrs. Sara Aqeel Mrs. Mehak Adil

Non-Executive Director Independent Director Independent Director

Mr. Mahmood Akhtar Mrs. Sara Aqeel Mrs. Mehak Adil

holds an MBA degree is a qualified lawyer, holds an LLM from the
from Punjab University with a significant London School of
and has over 38 years experience in litigation Economics and Political
of managerial and academics. She Science, with a
experience spread holds a gold medal in specialization in
across various Bachelors of Law and Corporate and
industries. He also has worked with Commercial Law. Mrs.
serves on the Board of Ramday Law Mehak started her
D. G. Khan Cement associates. Her work career as a corporate
Company Limited, includes cases lawyer at Cornelius,
Lalpir Power Limited, pertaining to the Lane and Mufti in 2015,
Nishat Power Limited, corporate sector with a where she was
Security General special focus on the engaged in various
Insurance Company Banking Sector. In corporate and
Limited, Nishat addition, she has also commercial cases.
Hospitality (Private) taught Law at Pakistan Mrs. Mehak is an
Limited, Nishat Paper College of Law and Advocate of the High
Products Company acted as a coordinator Courts in Pakistan, with
Limited, and Nishat for the external expertise in domestic
Commodities (Private) program of Law offered and international
Limited. by the University of dispute resolution,
London. including international
Over the years she has arbitration.
participated in a
number of skills
training programs
which have focused
primarily on
International Law,
pertaining to Trade,
Human Rights and
Comparative
Jurisprudence.
 06 Nishat Mills Limited

VISION, MISSION & CORE VALUES

VISION STATEMENT:

To be and remain industry lead by safeguarding stakeholders’ interest, serving community and playing a
meaningful role in the economy of Pakistan.

MISSION STATEMENT:

To increase financial returns by pursuing sustainable business, producing the best quality products and
providing excellent customer services while adopting best practices.

CORE VALUES:

Value Slogan Connotation

Novelty Be Open to Nishat is open to innovation & creativity at organization

Newness level, systems level and individual level.

Integrity Be Honest Nishat operates through lawful means and fulfils its legal,
moral and ethical responsibilities.

Sustainability Be Sensitive to Nishat ensures best use of environmental resources by

Environment adopting benchmark process and bringing continuous
improvement in the same.

Humbleness Be Empathic Nishat encourages culture of mutual respect, support and

develops congenial environment for people at workplace.

Accountability Be Responsible Nishat believes in 'participative decision making' and

assures that everyone should take responsibility for all
decisions at all levels.

Trust Trust the People Nishat trusts its employees the most and believes in
attaining sustainable competitive advantage through its
Human Capital.
 Annual Report 2021 07

CHAIRMAN’S REVIEW REPORT

I am pleased to present you the annual report of Nishat Mills Limited (the “Company”) for the year ended
30 June 2021. I congratulate all shareholders and other stakeholders about the exceptional financial
performance of the Company during the year. The Board of Directors (the “Board”) expects the Company
will maintain this spectacular growth trajectory in the coming years considering bright future prospects of
textile sector.

The Company has a seven-member Board which comprises of individuals with diverse and
multi-generational background having core competencies, knowledge, skills and experience relevant to
the business of the Company. The Company follows the best practices relating to corporate governance
and complies with all the relevant requirements of Companies Act, 2017 and the Listed Companies (Code
of Corporate Governance) Regulations, 2019 (the “Code”) with respect to composition, meetings and
procedures of the Board of Directors (the “Board”) and its Committees. During the year, Mrs. Sara Aqeel
obtained Certificate of Directors Education from Pakistan Institute of Corporate Governance in
accordance with the requirements of the Code.

The Board has developed a mechanism for annual evaluation of Board’s own performance, Members of
the Board and its Committees in compliance with the provisions of Listed Companies (Code of Corporate
Governance) Regulations, 2019. The performance evaluation mechanism ensures that all statutory and
legal requirements are fulfilled with regard to procedures, meetings and oversight role of the Board. The
Board carried out annual evaluation of Board’s own performance, Members of the Board and its
Committees on 28 April 2021. The performance of the Board, its Members and Committees was
satisfactory.

During the financial year 2020-21, the Board successfully achieved targets and objectives set for the
growth of the Company by performing the following functions:

• Performed effective and robust oversight.

• Reviewed and approved overall corporate strategy, annual business plan, key financial performance
indicators and other budgetary targets.
• Ensured the quality and appropriateness of financial reporting and the transparency of disclosures in
annual and quarterly financial statements.
• Carried out risk assessment, especially, of regulatory and legal requirements, market trends, cotton
supply and price, energy availability and cost, foreign exchange fluctuations, interest rate and liquidity
risks.
• Reviewed effectiveness of internal control system.
• Performed the due diligence of investments and evaluated returns.
• Reviewed and approved the financing / borrowing facilities.
• Ensured timely dissemination of price sensitive and inside information to relevant regulatory
authorities.

Mian Hassan Mansha

Chairman

Lahore
20 September 2021
 08 Nishat Mills Limited

FINANCIAL REVIEW

Directors’ Financial Performance

Report Profit after tax of the Company increased exponentially by

Rs. 2,416.186 million (68.91%) in the current financial year as
compared to the corresponding last year. The Company
achieved such unprecedented growth in profitability despite
significant increase in raw material cost and adverse impact of
Directors of Nishat Mills coronavirus pandemic.

Limited (“the Company”) 2021 2020

Financial highlights
are pleased to present Rupees (000) Rupees (000)

Revenue 71,431,010 60,904,096

the annual report of the Gross profit 9,317,855 7,276,126
EBITDA 11,137,991 8,719,892
Company for the year Depreciation 2,838,310 2,738,196
Finance cost 1,229,179 1,502,412
ended 30 June 2021 Dividend Income 2,722,637 2,044,302
Pre-tax profit 7,070,502 4,479,284
along with the financial After tax profit 5,922,470 3,506,284

statements and auditors’ Topline of the Company grew to Rs. 71,431.010 million which is
report thereon. historically the highest ever revenue. Its main reason was
remarkable increase in local sales by Rs. 8,229.101 million on
account of both quantity and rate variances. Export sales also
increased by Rs. 1,018.229 million mainly due to quantity
variance. Duty drawback incentive on export sales also
contributed to increase in revenue by Rs. 388.220 million in the
current year as compared to the corresponding last year. The
Company also achieved 10% growth in garments and home
 Annual Report 2021 09

textile exports in terms of US Dollars in the current profitability of the Company. Dividend income
year as compared to the corresponding last year increased by 33.18% from Rs. 2,044.302 million to
which made it eligible to avail the remaining 50% Rs. 2,722.637 million.
duty drawback incentive available on achievement
of 10% growth in exports as stipulated in “Duty Dividend Income
4,000,000
Drawback on Taxes Order 2018-21”.
3,000,000

Rupees (000)
Revenue 2,000,000
80,000,000
1,000,000
60,000,000
-
Rupees (000)

40,000,000
2016-17 2017-18 2018-19 2019-20 2020-21
20,000,000
Years
10,000,000

-
2016-17 2017-18 2018-19 2019-20 2020-21 Finance cost of the Company decreased by 18.19%
Years from Rs. 1,502.412 million to Rs. 1,229.179 million in
the current year as compared to the corresponding
Last five years’ review of gross profit shows that it last year. The main reasons for decrease in finance
has increased steadily over the period. It increased cost was reduction in average borrowing cost of the
by 2,041.729 million (28.06%) from Rs. 7,276.126 Company and increased cash inflows.
million in the last corresponding year to Rs.
9,317.855 million in the current year. The Company Finance Cost
achieved this unprecedented increase due to better 1,800,000
1,600,000
cost management, otherwise raw material cost had 1,400,000
increased significantly during the financial year 1,200,000
Rupees (000)

1,000,000
under review. 800,000
600,000
400,000
Gross Profit 200,000
10,000,000 -
9,000,000 2016-17 2017-18 2018-19 2019-20 2020-21
8,000,000
7,000,000 Years
Rupees (000)

6,000,000
5,000,000
4,000,000 Fixed Capital Expenditure
3,000,000
2,000,000
1,000,000
- Acquisition of innovative technologies and continuous
2016-17 2017-18 2018-19 2019-20 2020-21
BMR is pivot to the long-term investment strategy of
Years
the Company in order to meet present and future
demands of the customers. The Company invested
EBITDA of the Company impressively increased by Rs. 7,615.598 million into new projects as compared
Rs. 2,418.099 million (27.73%) in the current to the last year when we expended Rs. 5,132.005
financial year as compared to the corresponding last million.
year. This shows a strong liquidity, as a result of
Fixed Capital Expenditure
exceptional profits which has enabled the Company 8,000,000
to easily finance its working capital needs.
6,000,000
Rupees (000)

4,000,000
EBITDA
12,000,000
2,000,000
10,000,000
8,000,000 -
Rupees (000)

6,000,000 2016-17 2017-18 2018-19 2019-20 2020-21

4,000,000 Years
2,000,000
- Working Capital Management
2016-17 2017-18 2018-19 2019-20 2020-21

Years As a result of remarkable profitability, cash flow

position of the Company has further improved in this
Once again, well-diversified portfolio of long-term year. Current and quick ratios have increased from
equity investments contributed fairly in the 1.36 to 1.39 and 0.59 to 0.76 respectivley.
 10 Nishat Mills Limited

Current Ratio Nishat Group (“the Group”) is one of the largest

1.40 and leading business houses in Pakistan. It
1.35 operates in 12 sectors of national economy. The
1.30 Group has 2 textile companies: Nishat Mills
Limited and Nishat Linen (Private) Limited. Nishat
Ratio

1.25

1.20
Mills Limited is the parent company while Nishat
Linen (Private) Limited is its wholly owned
1.15
2016-17 2017-18 2018-19 2019-20 2020-21
subsidiary. The principal objects of the Subsidiary
Years
are to operate retail outlets for sale of textile and
other products and to sell the textile products by
processing the textile goods in own and outside
Quick Ratio
0.80 manufacturing facilities.
0.60
Financial performance of both of these textile
0.40 companies was exceptional during the year.
Ratio

Consolidated Earnings per Share (EPS) recorded

0.20
an exponential growth of Rs. 10.34 (104.02%)
- from Rs. 9.94 in the corresponding last year to Rs.
2016-17 2017-18 2018-19 2019-20 2020-21
20.28 in the current year. The review of last five
Years
years indicates that consolidated EPS was the
highest during financial year 2021.
Earnings per share
Consolidated Earnings per Share of
Earnings per share (EPS) of the Company increased Nishat Mills Limited and Nishat Linen (Private) Limited

from Rs. 9.97 in the corresponding last year to Rs. 25.00

16.84 in the current year which is a remarkable

Rupees per Share

20.00
increase of Rs. 6.87 (68.91%). This unprecedented 15.00
growth in earnings is reflective of management’s 10.00
commitment to enhance shareholders’ wealth.
5.00

-
Earnings per Share 2016-17 2017-18 2018-19 2019-20 2020-21
20.00 Years
Rupees per Share

15.00

10.00

5.00
The management successfully mitigated the risk of
- hike in cotton prices by procuring major portion of its
2016-17 2017-18 2018-19 2019-20 2020-21
required cotton stocks by the end of October 2020.
Years

Apart from adverse impact of Covid-19 pandemic on

demand of textile products, cotton prices
Appropriations continuously and disproportionately increased as
compared to yarn prices during the first half of the
The Board of Directors of the Company has financial year 2020-21 which caused severe
recommended 40% cash dividend (2020: 40%) and business challenge for Spinning Division. However,
transferring of Rupees 4,516 million (2020: Rupees ban on cotton yarn imports from India and sizeable
2,101 million) to general reserve. orders received by local fabric manufacturers due to
health conditions in neighboring countries impacted
SEGMENT ANALYSIS by Covid-19 pandemic, subsequently, resulted in
rapid hike in local yarn prices. Yarn prices in
Spinning international market also followed the local market
trends, but impact of expensive cotton on yarn
Raw cotton prices increased consistently during the prices in local market was more pervasive as
financial year 2020-21 due to shortage of local compared to international yarn market. Therefore,
cotton, ban on imports from India and increase in the during the second half of financial year, yarn prices
rates of imported cotton mainly as a result of buying in local market increased exceptionally and in export
of US cotton by China under a trade deal with US. market improved reasonably.
 Annual Report 2021 11

Yarn Sales Quantity Grey Cloth Sales Quantity

40,000 90,000

30,000 85,000

Meters (000)
Kgs (000)

20,000 80,000

10,000 75,000

- 70,000
2016-17 2017-18 2018-19 2019-20 2020-21
2016-17 2017-18 2018-19 2019-20 2020-21
Years
Years

Yarn Sales Value Grey Cloth Sales Value

14,000,000 20,000,000
12,000,000
10,000,000 15,000,000
Rupees (000)

Rupees (000)
8,000,000
10,000,000
6,000,000
4,000,000
5,000,000
2,000,000
-
-
2016-17 2017-18 2018-19 2019-20 2020-21
2016-17 2017-18 2018-19 2019-20 2020-21
Years
Years

Yarn Sales Rate Grey Cloth Sales Rate

500 200

400
Rupees per meter

150
Rupees Per Kg

300
100
200

100 50

- -
2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21
Years Years

Weaving Dyeing

During the financial year 2020-21, Weaving Division Dyeing Division faced unprecedented difficulties due
could not perform to its potential due to multiple to imposition of coronavirus restrictions all over the
waves of coronavirus in Europe where its main world in order to reduce spread of disease. Since the
customer base is located. It severely affected retail people have to work and stay at home, demand for
sector; therefore, fashion business remained slow branded fashion apparel decreased significantly. But
throughout the year. However, technical fabric Dyeing Division performed well and sustained under
business, particularly abrasives, showed positive these unparalleled circumstances despite decrease
trend due to shortage of fabric in the supply chain in sales of processing cloth by 21.87% in current
and increasing demand. Similarly, sale of workwear financial year as compared to the corresponding last
cloth also increased because of increase in demand financial year.
soon after softening of lockdown restrictions world
over. Vaccination process, which was rolled out in the
world at the end of the second quarter of the current
A new weaving unit comprising 130 wider width financial year, has started showing positive results.
Airjet looms will be commissioned into production in Lots of Covid-19 restrictions have been lifted in U.S.
October, 2021 which will enable us to produce a and Europe. Due to significant improvement in
wide range of greige cloth and fulfill increased Covid-19 situation, brands and retailers in U.S. and
demand of home textile sector. Europe are anticipating substantial growth in
demand of apparel in Spring / Summer seasons of
In future, key part of our strategy is to increase our financial year 2021-22. This is the reason that almost
share in export of high value products. The Division all of our customers have increased their order
expects a growth in profitability due to market driven quantities for these seasons as compared to
exchange rate and rise in greige cloth prices during previous year.
the next year.
 12 Nishat Mills Limited

Processed Cloth Sales Quantity Processed Cloth and Made-ups Sales Quantity
60,000 35,000

50,000 30,000
25,000
40,000
Meters (000)

Meters (000)
20,000
30,000
15,000
20,000
10,000
10,000 5,000
- -
2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21
Years Years

Processed Cloth Sales Value Processed Cloth and Made-ups Sales Value
20,000,000 16,000,000
14,000,000
15,000,000 12,000,000
Rupees (000)

Rupees (000)
10,000,000
10,000,000 8,000,000
6,000,000
5,000,000 4,000,000
2,000,000
- -
2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21
Years Years

Processed Cloth Sales Rate Processed Cloth and Made-ups Sales Rate
400 500
450
400
Rupees per meter

300
350
300
Rupees

200 250
200
100 150
100
50
- -
2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21
Years Years

Home Textile Garments

Financial year 2020-21 started with an extraordinary Despite Covid-19 challenges, management of
demand for home textile products because people Garments Division resiliently pursued its strategy of
were spending most of their time at homes due to providing high quality products during the financial
extended lockdowns which induced people for year. Believing it a time to adapt, management
home improvements. As physical stores were re-evaluated its operations and processes, and
closed, online stores satisfied this increased successfully implemented improvements which are
demand. This positive demand continued all through evident from improved financial results. Garments
half year till December 2020 producing exclusive sales of the Division increased by 26.26% in the
growth and extraordinary margins. However, despite current year as compared to the corresponding year.
continued demand during the last six months of the
financial year, home textile sector faced serious Sustainable growth is an important element of
problems due to drastic currency revaluation, long-term strategy of the Division which the
increase in raw material prices and rise in freight management intends to achieve by investing in
lines charges which squeezed margins. automated and sustainable technologies, energy
optimization, efficiency enhancements by
Terry unit was commissioned into production during implementation of new and improved labour
the financial year and it is showing promising results. incentive systems. The aim of these initiatives is not
Considering the future demand of the terry products, only increasing profitability but also helping staff and
management has planned to double the existing workers to enhance their skillsets. Garments Division
capacity. is a vital part in the value chain of the Company.
Therefore, management has planned to double the
production capacity by increasing it up to 1.2 million
garments per month.
 Annual Report 2021 13

Garments Sales Quantity maintain sustainable success. Our risk and

10,000
opportunity management encompass an effective
8,000 framework to conduct business in a well-controlled
Garments (000)

6,000 environment where risks are mitigated and

4,000
opportunities are availed. Each risk and opportunity
are properly weighted and considered before
2,000
making any choice. Decisions are formulated only if
-
2016-17 2017-18 2018-19 2019-20 2020-21 opportunities outweigh risks.
Years
Following is the summary of risks and strategies to
Garments Sales Value mitigate those risks:
9,000,000
8,000,000
7,000,000 STRATEGIC RISKS
Rupees (000)

6,000,000
5,000,000
4,000,000 We are operating in a competitive environment
3,000,000
2,000,000
where innovation, quality and cost matters. This risk
1,000,000 is mitigated through continuous research &
-
2016-17 2017-18 2018-19 2019-20 2020-21 development and persistent introduction of new
Years technologies under BMR. Strategic risk is
considered as the most crucial of all the risks. Head
Garments Sales Rate of all business divisions meet at regular intervals to
1,200
form an integrated approach towards tackling risks
Rupees per garment

1,000

800
present both at the international and national level.
600

400
BUSINESS RISKS
200

-
The Company faces a number of following business
2016-17 2017-18 2018-19 2019-20 2020-21 risks:
Years

Cotton Supply and Price

Power Generation
The supply and prices of cotton is subject to the act
The Company is committed to invest in diversified of nature and demand dynamics of local and
and sustainable energy projects such as solar international cotton markets. There is always a risk
power. Existing solar power generation capacity is of non-availability of cotton and upward shift in the
3.54 MW. Installation of further 3.20 MW solar power cotton prices in local and international markets. The
plant at Spinning Division, Feroze Watwan is Company mitigates this risk by the procurement of
underway. Management has also finalized the plan the cotton in bulk at the start of the harvesting
for acquisition of 3.53 MW solar power plant for season.
Weaving Division, Bhikki. Another 900 KWh solar
power plant will be installed on the roof top of new Export Demand and Price
factory building of Garments Division, Lahore in
order to enhance existing solar power capacity of The exports are major part of our revenue. We face
the Division to 2.10 MW. the risk of pandemics, competition and decline in
demand of our products in international markets. We
As energy requirements of Garments Division are minimize this risk by building strong relations with
expected to grow due to anticipated increase in customers, broadening our customer base,
production, a plan is in process to acquire a 2.5 MW developing innovative products without
gas engine with waste heat recovery boiler and air compromising on quality and providing timely
compressor. deliveries to customers.

RISKS AND OPPORTUNITIES Energy Availability and Cost

Nishat Mills Limited takes risks and creates The rising cost and un-availability of energy i.e.
opportunities in the normal course of business. electricity and gas shortage is a major threat to
Taking risk is important to remain competitive and manufacturing industry. This risk, if remains
 14 Nishat Mills Limited

unmitigated, can render us misfit to compete in the Capital risk

international markets. The Company has mitigated
the risk of rising energy cost by opting for diversified When managing capital, it is our objective to
fuels such as coal, furnace oil, bio-mass, diesel safeguard the Company’s ability to continue as a
along with solar energy. The measures to conserve going concern in order to provide returns for
energy have also been taken at all manufacturing shareholders and benefits to other stakeholders and
facilities of the Company. Likewise, risk of to maintain an optimal capital structure to reduce
non-availability of the energy has been minimized by the cost of capital. The Company maintains low
installing power plants for generating electricity at all leveraged capital structure. We monitor the capital
locations of the Company along with securing structure on the basis of the gearing ratio.
electricity connections from WAPDA.
OPPORTUNITIES
FINANCIAL RISKS
As the leading textile company of the country, the
The Board of Directors of the Company is Company is in a position to avail and exploit a
responsible to formulate the financial risk number of opportunities. Following is the summary
management policies which are implemented by the of some exciting opportunities:
Finance Department of the Company. The Company
faces the following financial risks: • Regionally diversified customer base across the
world provides a sustainable growth to export
Currency risk sales;

The Company is exposed to currency risk arising • Vibrant local and international subsidiary
from various currency exposures, primarily with companies create demand for our products;
respect to United States Dollar (USD), Arab Emirates
Dirham (AED), Euro and Japanese Yen (JPY). The • Vertical integration makes it possible to exploit
Company’s foreign exchange risk exposure is operational synergies;
restricted to the bank balances and the amounts
receivable / payable from / to the foreign entities. • Abundant supply of cotton in the country;

Interest rate risk • High population growth of the country is a source

of suitable manpower and a stimulus in creating
The Company’s interest rate risk arises from long the demand for textile products.
term financing, short term borrowings, loans and
advances to subsidiary companies and bank TEXTILE INDUSTRY OVERVIEW
balances in saving accounts. Financial instruments
at fixed rate expose the Company to fair value Financial year 2020-21 was very tough for the textile
interest rate risk. sector because coronavirus outbreak severely
affected the world economy. The year was marred
Credit risk by repeated lockdowns and restrictions because
second and third waves of pandemic hit the world.
The Company’s credit exposure to credit risk and As vaccination process has already been started,
impairment losses relates to its trade debts. This risk hopefully, coronavirus restrictions will be lifted soon
is mitigated by the fact that majority of our in the export market.
customers have a strong financial standing and we
have a long-standing business relationship with all Textile industry remained under tremendous
our customers. We do not expect nonperformance pressure because of skyrocketing raw material cost.
by our customers; hence, the credit risk is minimal. We have been facing an unprecedented rise in the
price of cotton and synthetic fiber since the
Liquidity risk beginning of the second quarter of current financial
year. While the total requirement of Pakistan textile
It is at the minimum due to the availability of enough industry is 15 million bales per year, country could
funds through committed credit facilities from the produce only half of the required quantity as
Banks and Financial institutions. indicated by following chart:
 Annual Report 2021 15

Year Hectare % Change Bales % Change (kgs / Hec) % Change

(000) (000)
2016-17 2,489 - 10,671 - 729 -
2017-18 2,700 8.5 11,946 11.9 753 3.3
2018-19 2,373 (12.1) 9,861 (17.5) 707 (6.1)
2019-20 2,517 6.1 9,148 (7.2) 618 (12.6)
2020-21 (P) 2,079 (17.4) 7,064 (22.8) 578 (6.5)

Source: Pakistan Bureau of Statistics.

SUBSIDIARY COMPANIES 4. Nishat Commodities (Private) Limited

The Company has also annexed consolidated This is a wholly owned subsidiary of the
financial statements along with separate financial Company. The principle object of the subsidiary
statements in accordance with the requirements of is to carry on the business of trading of
International Financial Reporting Standards and commodities including fuels, coals, building
Companies Act, 2017. Following is a brief material in any form or shape manufactured,
description of all subsidiary companies of Nishat semi-manufactured, raw materials and their
Mills Limited: import and sale in Pakistan. The subsidiary
started its operations in March 2016.
1. Nishat Power Limited
5. Lalpir Solar Power (Private) Limited
The Company owns and controls 51.01%
shares of this subsidiary. The subsidiary is listed Lalpir Solar Power (Private) Limited is a Private
on Pakistan Stock Exchange Limited. The Limited Company incorporated in Pakistan on
principle business of the subsidiary is to build, 09 November 2015. It is a wholly owned
operate and maintain a fuel powered station subsidiary of Nishat Power Limited which is a
having gross capacity of 200MW in Jamber subsidiary of Nishat Mills Limited. The
Kalan, Tehsil Pattoki, District Kasur, Punjab, subsidiary did not started its commercial
Pakistan. The subsidiary commenced its operations because it did not get Power
commercial production on 09 June 2010. Acquisition Request and Consent from Central
Power Purchasing Agency. Therefore, voluntary
2. Nishat Linen (Private) Limited winding up of the company under the
Companies Act, 2017 is being considered.
This is a wholly owned subsidiary of the
Company. The principle objects of the 6. Nishat Linen Trading LLC
Subsidiary are to operate retail outlets for sale
of textile and other products and to sell the Nishat Linen Trading LLC is a Limited Liability
textile products by processing the textile goods Company incorporated in Dubai, UAE. It is a
in own and outside manufacturing facilities. The wholly owned subsidiary of the Company. The
subsidiary started its operations in July 2011 subsidiary is principally engaged in trading of
and is presently operating 109 retail outlets textile, blankets, towels, linens, ready-made
including e-stores in Pakistan. garments, garments accessories and leather
products along with ancillaries thereto through
3. Nishat Hospitality (Private) Limited retail outlets and warehouses across United
Arab Emirates. The subsidiary started its
This is a wholly owned subsidiary of the commercial operations in May 2011 and is
Company. Subsidiary’s object is to run a chain presently operating 14 retail outlets in UAE.
of hotels across the country. Currently it is
operating a four star hotel in Lahore on 7. Nishat International FZE
international standards under the name of “The
Nishat St. James Hotel”. The subsidiary started This is also a wholly owned subsidiary of Nishat
its operations on 01 March 2014. Mills Limited. It was incorporated as a Free
Zone Establishment Limited Liability Company
in Jebel Ali Free Zone, Dubai according to the
laws of United Arab Emirates (UAE). It has been
16 Nishat Mills Limited

registered in the FZE register on February 07,

2013. The principal activity of the Subsidiary
Company is trading in textile products such as
blankets, towels & linens, ready-made
garments, garments accessories and leather
products such as shoes, handbags and all such
ancillaries thereto.

8. China Guangzhou Nishat Global Co., Ltd.

China Guangzhou Nishat Global Co., Ltd. is

incorporated in Yuexiu District, Guangzhou,
China, as Foreign Invested Commercial
Enterprises “FICE”, in accordance with the Law
of Peoples Republic of China on
Foreign-Capital enterprises and other relevant
Laws and Regulations. China Guangzhou
Nishat Global Co., Ltd. is a wholly owned
subsidiary of Nishat International FZE which is a
wholly owned subsidiary of Nishat Mills Limited.
The principal business of the Subsidiary is
wholesale, commission agency (excluding
auction), import and export of textile goods and
women fashion accessories. The subsidiary
started its commercial operations in January
2014.

9. Nishat USA Inc.

The subsidiary is a corporation service

company incorporated in the State of New
York. It is a wholly owned subsidiary of the
Company and was acquired by the Company
on 01 October 2008. The corporation is a liaison
office of the Company’s marketing department
providing access, information and other
services relating to US Market.

CORPORATE SOCIAL RESPONSIBILITY

The Company spends a lot of resources and

undertakes efforts for the welfare of society.
Following is the brief snapshot of corporate social
responsibility:

Occupational Safety and Health

The Company is committed to provide a safe and

healthy workplace by complying with the relevant
safety and health regulations. Therefore,
management has taken appropriate steps during
Covid-19 pandemic to protect health of its
employees and restrict the spread of virus. The
Company has taken a number of steps such as
arrangement of awareness sessions about the virus,
installation of sanitizing walk through gates,
 Annual Report 2021 17

checking of temperature at all entry points, provision

of hand sanitizers, implementation of emergency
response plan and installation of face scans
attendance system in order to avoid physical
contact with objects. Management has continuously
encouraged its employees to get themselves and
their families vaccinated. The Company also
arranged vaccination facilities at its factory
locations. We have also prepared a database where
the information about vaccinated people is stores
along with “Immunization Certificate for Covid-19”
number issued by Ministry of National Health
Services Regulations and Coordination.

Community Welfare Schemes

General public welfare is one of the top priorities of

the Company; therefore, management has taken a
number of initiatives to help society. We supported
CARE Foundation, an NGO, to establish a school of
1,000 children at Bhikki in 2011. CARE foundation
works to educate and empower underprivileged
children and has established such schools across
Pakistan. The Company is also pivotal in providing
trained manpower to the nation by arranging training
of thousands of young people each year.

We arrange medical camps for malaria, typhoid,

dengue, eye sight and polio vaccination for workers,
their families and general public living near
manufacturing facilities. The Company has also
established dispensaries under the supervision of
qualified doctors at its mills which are equipped with
ambulances.

Equal Opportunity Employer

Diversity and inclusion are ingrained in our values

and culture. Therefore, we provide equal opportunity
for employment and career progression to women,
disabled and minorities. There is fair representation
of women at the Board of Directors of the Company.
All Board committees are headed by female
directors. Women also occupies senior management
positions who actively formulate and control
strategic direction of the Company. Since
recognition of women rights is a social matter, we
celebrate women’s achievements in the social,
economic, cultural, and political spheres on 8th
March of every year.
 18 Nishat Mills Limited

Environment Protection CORPORATE GOVERNANCE

The Company’s approach towards environment Best Corporate Practices

includes both preservation of natural resources and
procurement of alternative technologies to ensure Directors are committed to good corporate
environmental sustainability. Every year the governance and comply with the requirements of the
Company arranges plantation of thousands of trees Listed Companies (Code of Corporate Governance)
at its manufacturing facilities and nearby localities Regulations, 2019.
with the objective to curtail pollution. Waste water is
treated in Effluent Water Treatment Plants before The statement of compliance with the Listed
discharge. The Company is investing heavily in solar Companies (Code of Corporate Governance)
energy. At present, 3.54 MW of electricity is generated Regulations, 2019 is enclosed.
from solar power plants and projects of 7.63 MW are
under acquisition and installation phase. Board Committees:

Waste Recycling Audit Committee

Waste recycling is another way to protect The audit committee is performing its duties in line
environment and discharge our responsibility towards with its terms of reference as determined by the
society. The Company has installed water treatment Board of Directors. During the year under review,
plants, cotton recycling plants and oil recycling four Audit Committee Meetings were held,
machines at different sites to recycle the water, waste attendance position was as under:-
cloth and oil for maximum saving of natural resources.
No. of
Energy Conservation Sr.# Name of Director Meetings
Attended
The Company is committed to reduce use of fossil
fuels for electricity generation and decrease in 1 Mrs. Mehak Adil
emission of CO2 in environment. We have installed (Member/Chairperson) 3
LED lights, powerless ventilators, solar power 2 Syed Zahid Hussain (Member) 4
plants, natural lights (solatubes), solar water heating 3 Mr. Mahmood Akhtar (Member) 4
systems and waste heat recovery units at our
production facilities. Human Resource & Remuneration (HR&R)
Committee
Consumer Protection Measures
The Human Resource & Remuneration Committee is
The Company observes international safety performing its duties in line with its terms of
standards during manufacturing and shipment of its reference as determined by the Board of Directors.
goods to the customers. We installed metal During the year under review, two Human Resource
detectors for prevention and detection of any & Remuneration Committee Meetings were held,
harmful substance in the products. attendance position was as under:-

The Company meets the Oeko Tex Standards 100 No. of

which is an independent testing and certification Sr.# Name of Director Meetings
system for textile raw materials, intermediate and Attended
end products at all stages of production. The
Company has also acquired C-TPAT Certification 1 Mian Umer Mansha (Member) 2
(Customs-Trade Partnership against Terrorism) for 2 Mrs. Sara Aqeel
all of its production facilities. C-TPAT is a voluntary (Member/Chairperson) 2
supply chain security program aimed at improving 3 Mr. Mahmood Akhtar (Member) 2
the security of private companies’ supply chains
with respect to terrorism. Further, the Company has
obtained SA-8000, WRAP and SEDEX certifications.
 Annual Report 2021 19

Meetings of the Board of Directors 8. Value of investments in respect of retirement

benefits fund: Provident Fund: 30th June,
During the year under review, five meetings of the 2021: Rs. 4,407.174 million Un-audited, (2020:
Board of Directors of the Company were held in Rs. 3,765.537 million Audited).
Pakistan and the attendance position was as
follows: Transactions with related parties

No. of The Company has fully complied with best practices

Sr.# Name of Director Meetings on Transfer Pricing as contained in Companies
Attended (Related Party Transactions and Maintenance of
Related Records) Regulations, 2018 while executing
1 Mian Umer Mansha 5 all transactions with related parties. The detail of
(Chief Executive Officer) arrangements for transactions, as approved by the
2 Mian Hassan Mansha (Chairman) 5 Board during the year, other than transactions in the
3 Syed Zahid Hussain 5 ordinary course of business is as follows:
4 Mr. Mahmood Akhtar 5
5 Mr. Farid Noor Ali Fazal 5 1. Further investment of up to Rs. 2 billion as loan
6 Mrs. Sara Aqeel 5 and advances in Nishat Linen (Private) Limited,
7 Mrs. Mehak Adil 4 a wholly owned subsidiary, in accordance with
our investment policy to earn higher interest
Directors’ Statement rate as compared to other investment
opportunities available to the Company.
Following is the Directors’ statement on Corporate
and Financial Reporting framework: 2. The issuance of corporate guarantees up to Rs.
2,250 million to the lenders of Nishat Sutas
1. The financial statements, prepared by the Dairy (Private) Limited, an associated
management of the Company, present fairly its company, to ensure smooth availability of the
state of affairs, the result of its operations, cash credit facilities to the associated from Banks /
flows and changes in equity. financial institutions.

2. Proper books of account of the Company have 3. Sale of land to Nishat Sutas Dairy (Private)
been maintained. Limited, an associated company, to earn
capital gain.
3. Appropriate accounting policies have been
consistently applied in preparation of the Auditors
financial statements and accounting estimates
are based on reasonable and prudent Riaz Ahmad & Company, Chartered Accountants,
judgment. current auditors will retire on the conclusion of
Annual General Meeting of the Company. Being
4. International Financial Reporting Standards, as eligible, they have offered themselves for
applicable in Pakistan, have been followed in reappointment for the year ending 30 June 2022. As
preparation of financial statements. suggested by Audit Committee, the Board of
Directors has recommended reappointment of Riaz
5. The system of internal control is sound in Ahmad & Company, Chartered Accountants for
design and has been effectively implemented approval of shareholders in forth coming Annual
and monitored. General Meeting.

6. There are no significant doubts upon the SUBSEQUENT EVENTS

Company’s ability to continue as a going
concern. The Board of Directors of the Company has
proposed a cash dividend of Rupees 4 per share in
7. There has been no material departure from the their meeting held on 20 September 2021.
best practices of corporate governance.
 20 Nishat Mills Limited

No other material changes and commitments Internal Audit function duly established by the
affecting the financial position of the Company Board. Audit Committee reviews the internal control
occurred between 30 June 2021 and 20 September system on quarterly basis in accordance with the
2021. term of its reference.

FUTURE PROSPECTS DIRECTORS’ REMUNERATION

Major challenge affecting the Company in the The Board of Directors has approved Directors’
financial year 2021-22 is continuously rising prices of Remuneration Policy. The main features of the policy
cotton which will have negative impact on the are as follows:
dynamics of international textile markets and,
resultantly, on profitability of the Company. On the • The Company shall not pay remuneration to its
other hand, appreciation of USD against PKR non-executive directors including independent
determined by interaction of the market forces directors except for meeting fee for attending
would have a positive effect on the earnings. meetings of Board and its Committees.

Expansion projects initiated by the Company under • The Company will reimburse or incur expenses
Temporary Economic Refinance Facility (TERF) are of travelling and accommodation of Directors in
underway and expected to be completed as per relation to attending meetings of the Board and
schedule. The new open-end yarn unit having its Committees.
production capacity of 700 bags per day is expected
to be commissioned in the second quarter of the • The Directors’ Remuneration Policy will be
financial year 2021-22. Other major project of 130 reviewed and approved by the Board of
wider width looms is expected to start its Directors from time to time.
commercial production in October 2021.
PATTERN OF SHAREHOLDING

ADEQUACY OF INTERNAL FINANCIAL A statement of the pattern of shareholding as at June

CONTROLS 30, 2021, which is required to be disclosed under the
reporting framework, is annexed to this report.
The Company has established an effective and
efficient system of internal and financial controls to ACKNOWLEDGEMENT
safeguard the assets of the Company, prevent and
detect fraud and ensure compliance with all Directors are pleased and thankful to the employees
statutory and legal requirements. The internal control for their continued dedication of efforts for the
structure is regularly reviewed and monitored by the Company.

For and on behalf of the Board of Directors.

Mian Umer Mansha Farid Noor Ali Fazal

Chief Executive Officer Director

Lahore
20 September 2021
 Annual Report 2021 21

FINANCIAL HIGHLIGHTS
Rupees in thousand

2021 2020 2019 2018 2017 2016

Summarized Statement of Financial Position

Non-Current Assets
Property, Plant and Equipment 35,926,594 31,292,722 28,968,219 28,180,049 27,767,699 24,715,095
Long Term Investments 48,620,695 37,979,074 34,930,333 44,757,279 60,008,322 55,399,080
Other Non-Current Assets 1,104,867 865,591 849,580 756,020 756,107 634,214

Current Assets
Stores, Spares and Loose Tools 2,605,602 2,256,569 3,102,988 1,714,031 2,106,878 1,269,509
Stock in Trade 17,972,691 20,753,543 17,008,459 12,243,652 12,722,712 9,933,736
Short Term Investments - - - 2,581,520 2,535,973 2,065,217
Other Current Assets 24,881,925 17,513,415 15,685,813 12,503,482 11,632,584 12,582,368

Total Assets 131,112,374 110,660,914 100,545,392 102,736,033 117,530,275 106,599,219

Shareholders' Equity 85,747,779 71,427,860 66,615,270 75,713,145 88,762,796 82,155,155

Non-Current liabilities
Long Term Financing 11,577,915 9,222,781 5,259,927 5,190,839 5,245,629 4,629,456
Deferred Liabilities 1,055,992 302,672 215,440 571,833 783,292 261,567

Current Liabilities
Short Term Borrowings 18,718,262 19,329,768 17,982,262 12,507,590 14,697,393 10,475,657
Current Portion of Non-Current Liabilities 4,206,123 703,032 1,784,470 2,144,900 2,093,024 1,980,768
Other Current Liabilities 9,806,303 9,674,801 8,688,023 6,607,726 5,948,141 7,096,616

Total Equity and Liabilities 131,112,374 110,660,914 100,545,392 102,736,033 117,530,275 106,599,219

Statement of Profit or Loss

Revenue 71,431,010 60,904,096 63,499,029 53,729,124 49,247,657 47,999,179
Gross Profit 9,317,855 7,276,126 7,656,601 5,550,446 5,379,838 6,239,391
EBITDA 11,137,991 8,719,892 11,211,441 8,395,775 8,233,100 8,937,616
Other Income 3,750,188 3,032,390 5,158,380 4,102,639 4,259,666 4,079,054
Profit Before Tax 7,070,502 4,479,284 6,897,048 4,957,127 5,020,342 5,725,038
Profit After Tax 5,922,470 3,506,284 5,859,048 4,097,127 4,262,342 4,923,038

Cash Flows
Operating Activities 5,722,435 1,560,005 905,102 2,153,808 (1,381,006) 4,704,482
Cash Flow from Investing Activities (3,378,461) (4,828,502) (3,957,796) 1,851,315 (3,890,837) 735,980
Cash Flow from Financing Activities 2,800,130 2,820,113 3,524,492 (3,944,241) 3,200,620 (3,377,513)
Changes in Cash & Cash Equivalents 5,144,104 (448,384) 471,798 60,882 (2,071,223) 2,062,949
Cash and Cash Equivalents at Year End 5,272,345 128,241 576,625 104,827 43,945 2,115,168

Ratios
Profitability Ratios
Gross profit % 13.04 11.95 12.06 10.33 10.92 13.00
EBITDA to sales % 15.59 14.32 17.66 15.63 16.72 18.62
Pre tax Profit % 9.90 7.35 10.86 9.23 10.19 11.93
After tax Profit % 8.29 5.76 9.23 7.63 8.65 10.26
Return on Equity % 7.54 5.08 8.23 4.98 4.99 6.22
Return on Capital Employed % 9.26 7.82 11.16 6.75 6.53 8.01
Operating Leverage Ratio 2.24 7.38 2.42 0.03 (4.75) (1.66)
 22 Nishat Mills Limited

2021 2020 2019 2018 2017 2016

Liquidity Ratios
Current Ratio 1.39 1.36 1.26 1.37 1.28 1.32
Quick Ratio 0.76 0.59 0.55 0.71 0.62 0.75
Cash to Current Liabilities Times 0.16 0.00 0.02 0.00 0.00 0.11
Cash Flows from Operations to Sales Times 0.08 0.03 0.01 0.04 (0.03) 0.10

Activity / Turnover Ratios

Inventory Turnover Ratio Times 3.21 2.84 3.82 3.86 3.87 4.12
No. of Days in Inventory Days 113.71 128.87 95.55 94.56 94.32 88.83
Debtors Turnover Ratio Times 13.19 13.54 14.53 17.12 21.89 18.22
No. of Days in Receivables Days 27.67 27.03 25.12 21.32 16.67 20.09
Creditors Turnover Ratio Times 3.75 3.49 4.39 4.46 4.30 4.65
No. of Days in Creditors Days 97.33 104.87 83.14 81.84 84.88 78.71
Operating Cycle Days 44.05 51.03 37.53 34.04 26.11 30.21
Total Assets Turnover Ratio Times 0.54 0.55 0.63 0.52 0.42 0.45
Fixed Assets turnover Ratio Times 1.99 1.95 2.19 1.91 1.77 1.94

Investment / Market Ratios

Earnings Per Share Rs. 16.84 9.97 16.66 11.65 12.12 14.00
Price Earning Ratio Times 5.54 7.82 5.60 12.10 13.09 7.71
Dividend Yield Ratio % 4.29 5.13 4.29 3.37 3.15 4.63
Dividend Payout Ratio % 23.75 40.12 24.01 40.77 41.24 35.71
Dividend Cover Ratio Times 4.21 2.49 4.17 2.45 2.42 2.80
Dividend Per Share Rs. 4.00 4.00 4.00 4.75 5.00 5.00
Break-up Value Rs. 243.88 203.15 189.46 215.34 252.45 233.66
Proposed Dividend % 40.00 40.00 40.00 47.50 50 50

Market value per share

Closing Rs. 93.30 78.01 93.34 140.92 158.68 107.90
High Rs. 124.89 119.75 153.73 171.56 185.63 86.83
Low Rs. 79.73 53.00 91.69 130.03 110.65 122.05

Capital Structure Ratios

Financial Leverage Ratio % 38.83 40.96 37.57 26.21 24.83 20.80
Weighted Average Cost of Debt % 3.93 5.54 7.44 4.75 4.68 5.82
Debt to Equity Ratio % 13.50 12.91 7.90 6.86 5.91 5.64
Interest Cover Ratio Times 6.75 3.98 5.13 5.99 6.49 6.47
Gearing Ratio % 27.97 29.06 27.31 20.77 19.89 17.22

Production machines
No. of Spindles 263,832 262,035 247,968 238,032 230,736 227,640
No. of Looms 790 790 790 794 795 805
No. of Thermosole Dyeing Machines 5 5 5 5 5 6
No. of Rotary Printing Machines 4 4 4 4 4 4
No. of Digital Printing Machines 10 10 9 8 7 2
No. of Stitching Machines 4,489 3,592 4,149 4,239 3,757 3,400
 Annual Report 2021 23

STATEMENT OF COMPLIANCE
with Listed Companies (Code of Corporate Governance) Regulations, 2019

Name of company : Nishat Mills Limited

Year ended : June 30, 2021

The company has complied with the requirements of the Regulations in the following manner:

1. The total number of directors are Seven (7) as per the following:

a. Male: 5
b. Female: 2

2. The composition of board is as follows:

Category Names
Independent Directors Mrs. Sara Aqeel
Mrs. Mehak Adil
Non-Executive Directors Mian Hassan Mansha
Syed Zahid Hussain
Mr. Mahmood Akhtar
Mr. Farid Noor Ali Fazal
Executive Director Mian Umer Mansha
(Chief Executive Officer)
3. The Directors have confirmed that none of them is serving as a director on more than seven listed
companies, including this company;

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

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

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

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

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

9. The Board has arranged Director’s Training Program for the following:

Names of Directors
Mr. Mahmood Akhtar
Mr. Farid Noor Ali Fazal
Mrs. Sara Aqeel

Following Directors meet the exemption criteria of minimum of 14 years of education and 15 years of
experience on the Boards of listed companies, hence are exempt from Director’s Training Program.

Names of Directors
Mian Umer Mansha
Syed Zahid Hussain
 24 Nishat Mills Limited

10. The Board has approved appointment of chief financial officer, company secretary and head of internal
audit, including their remuneration and terms and conditions of employment and complied with relevant
requirements of the Regulations;

11. Chief financial officer and chief executive officer duly endorsed the financial statements before approval of
the Board;

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

a) Audit Committee:

Names Designation held

Mrs. Mehak Adil Chairperson

Syed Zahid Hussain Member
Mr. Mahmood Akhtar Member

b) HR and Remuneration Committee:

Names Designation held

Mrs. Sara Aqeel Chairperson

Mian Umer Mansha Member
Mr. Mahmood Akhtar Member

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

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

a) Audit Committee:

Four quarterly meetings were held during the financial year ended June 30, 2021.

b) HR and Remuneration Committee:

Two meetings of HR and Remuneration Committee were held during the financial year ended June 30,
2021.

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

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

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

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

19. Explanation for non-compliance with requirements, other than regulations 3, 6, 7, 8, 27, 32, 33 and 36 are
below:
 Annual Report 2021 25

Sr. No. Requirement Explanation of Non-Compliance Regulation

Number

1 Nomination Committee Currently, the Board has not constituted 29

The Board may constitute a separate a separate nomination committee and the
committee, designated as the nomination functions are being performed by the
committee, of such number and class of human resource and remuneration
directors, as it may deem appropriate in committee.
its circumstances.

2 Risk Management Committee Currently, the Board has not constituted 30

The Board may constitute the risk a risk management committee and a
management committee, of such number senior officer of the Company performs
and class of directors, as it may deem the requisite functions and apprise the
appropriate in its circumstances, to carry Board accordingly.
out a review of effectiveness of risk
management procedures and present a
report to the Board.

3 Disclosure of significant policies on Although these are well circulated 35

website among the relevant employees and
The Company may post key elements of its directors, the Board shall consider
significant policies, brief synopsis of terms posting such policies and synopsis on its
of reference of the Board’s committees on website in near future.
its website and key elements of the
directors’ remuneration policy.

4 Directors’ Training 5 out of 7 directors of the Company have 19(1)

It is encouraged that by June 30, 2021 at either acquired Directors’ Training
least 75% of the directors on the Board Program certification or are exempt from
have acquired the prescribed certification Director’s Training Program. The
under any director training program Company has planned to arrange
offered by institutions, local or foreign, Directors’ Training Program certification
that meet the criteria specified by the for remaining two directors before June
Commission and approved by it. 30, 2022.

5 Directors’ Training The Company has planned to arrange 19(3)

Companies are encouraged to arrange Directors’ Training Program certification
training for at least one female executive for female executives over the next few
every year under the Directors’ Training years.
Program from year July 2020.

6 Responsibilities of the Board and its Non-mandatory provisions of the 10(1)

members Regulations are partially complied. The
The Board is responsible for adoption of company is deliberating on full
corporate governance practices by the compliance with all the provisions of the
company. Regulations.

20. The two elected independent directors have requisite competencies, skills, knowledge and experience to
discharge and execute their duties competently, as per applicable laws and regulations. As they fulfill the
necessary requirements as per applicable laws and regulations, hence, appointment of a third independent
director is not warranted.

Mian Hassan Mansha

Chairman

Lahore
20 September 2021
 26 Nishat Mills Limited

INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Nishat Mills Limited

Review Report on the Statement of Compliance contained in Listed Companies (Code of Corporate
Governance) Regulations, 2019

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate
Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of Nishat Mills Limited (the
Company) for the year ended 30 June 2021 in accordance with the requirements of regulation 36 of the
Regulations.

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

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

The Regulations 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 30 June 2021.

RIAZ AHMAD & COMPANY

Chartered Accountants

Lahore
September 24, 2021
 Annual Report 2021 27

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that Annual General Meeting of the Members of Nishat Mills Limited (the “Company”) will be
held on October 28, 2021 (Thursday) at 03:30 p.m. at Emporium Mall, the Nishat Hotel, Trade and Finance Centre
Block, Near Expo Centre, Abdul Haq Road, Johar Town, Lahore, to transact the following business:

1. To receive, consider and adopt the Audited Un-consolidated and Consolidated Financial Statements of the
Company for the year ended June 30, 2021 together with the Chairman Review, Directors’ and Auditors’ reports
thereon.

2. To approve Final Cash Dividend @ 40% [i.e. Rs. 4/- (Rupees Four Only) Per Ordinary Share] as recommended by
the Board of Directors.

3. To appoint statutory Auditors for the year ending June 30, 2022 and fix their remuneration.

By order of the Board

Lahore (KHALID MAHMOOD CHOHAN)

September 20, 2021 COMPANY SECRETARY

NOTES:

BOOK CLOSURE NOTICE:

The Ordinary Shares Transfer Books of the Company will remain closed from 21-10-2021 to 28-10-2021 (both days
inclusive) for entitlement of 40% Final Cash Dividend [i.e. Rs.4/- (Rupees Four Only) Per Ordinary Share] for the
year ended June 30, 2021 and attending and voting at Annual General Meeting. Physical transfers / CDS Transactions
IDs received in order in all respects up to 1:00 p.m. on 20-10-2021 at the office of Share Registrar, THK Associates
(Private) Limited, Karachi Office: 32-C, Jami Commercial Street No. 2, DHA Phase VII, Karachi, Lahore Office:
Siddique Trade Centre, Office No. PL-29, PL Floor, 72 Main Boulevard, Gulberg II, Lahore, shall be considered in time
for entitlement of above said 40% Final Cash Dividend and attending of AGM.

PROXIES:

A member eligible to attend and vote at this meeting may appoint another member his / her proxy to attend and vote
instead of him / her. Proxies in order to be effective must reach the Company’s registered office not less than 48 hours
before the time for holding the meeting. Proxies of the Members through CDC shall be accompanied with attested
copies of their CNIC. In case of corporate entity, the Board’s Resolution / power of attorney with specimen signature
shall be furnished along with proxy form to the Company. The shareholders through CDC are requested to bring
original CNIC, Account Number and Participant Account Number to produce at the time of attending the meeting.

Shareholders are requested to immediately notify the change in address, if any.

Members who have deposited their shares into Central Depository Company of Pakistan Limited (“CDC”) will further
have to follow the under mentioned guidelines as laid down by the Securities and Exchange Commission of Pakistan.

A. For Attending the Meeting

a. In case of Individuals, the account holder and / or sub-account holder and their registration details are
uploaded as per the CDC Regulations, shall authenticate his / her identity by showing his / her original
CNIC or, original Passport at the time of attending the Meeting.

b. In case of corporate entity, the Board’s resolution / power of attorney with specimen signature of the
nominee shall be produced (unless it has been provided earlier) at the time of the Meeting.
 28 Nishat Mills Limited

B. For Appointing Proxies

a. In case of individuals, the account holder and / or sub-account holder and their registration details are
uploaded as per the CDC Regulations, shall submit the proxy form as per above requirements.

b. The proxy form shall be witnessed by two persons, whose names, addresses and CNIC numbers shall be
mentioned on the form.

c. Attested copies of the CNIC or the passport of beneficial owners and the proxy shall be furnished with the
proxy form.

d. The proxy shall produce his original CNIC or original passport at the time of the Meeting.

e. In case of corporate entity, the Board’s resolution / power of attorney with specimen signature shall be
furnished (unless it has been provided earlier) along with proxy form to the Company.

DEDUCTION OF WITHHOLDING TAX ON DIVIDEND:

Pursuant to the provisions of the Finance Act, 2020 the rates of deduction of income tax from dividend payments
under the Income Tax Ordinance, 2001 have been revised as follows:

- Filer 15%
- Non-Filer 30%

All shareholders are advised to check their status on Active Taxpayers List (ATL) available on FBR Website and may, if
required, take necessary actions for inclusion of their name in ATL to avail the lower rate of tax deduction.

DEDUCTION OF WITHHOLDING TAX ON DIVIDEND IN CASE OF JOINT ACCOUNT HOLDERS:

All shareholders who hold shares jointly are requested to provide following information regarding shareholding
proportions of Principal Shareholder and Joint-holder(s) in respect of shares held by them to our Share Registrar THK
Associates (Private) Limited, Karachi Office: 32-C, Jami Commercial Street No. 2, DHA Phase VII, Karachi, Lahore
Office: Siddique Trade Centre, Office No. PL-29, PL Floor, 72 Main Boulevard, Gulberg II, Lahore, latest by October
20, 2021, otherwise each joint holder shall be assumed to have an equal number of shares.

Name of the Company Nishat Mills Limited

Folio No. / CDS A/C No.
No. of Shares Held
Principal Name & CNIC
Shareholder Shareholding Proportion (No. of Shares)
Joint Name & CNIC
Shareholder(s) Shareholding Proportion (No. of Shares)

Signature of Primary Shareholder_______________________________

EXEMPTION OF WITHHOLDING TAX:

Withholding tax exemption from dividend income, shall only be allowed if copy of valid tax exemption certificate is
made available to our Share Registrar Office, Share Registrar THK Associates (Private) Limited, Karachi
Office: 32-C, Jami Commercial Street No. 2, DHA Phase VII, Karachi, Lahore Office: Siddique Trade Centre, Office
No.PL-29, PL Floor, 72 Main Boulevard, Gulberg II, Lahore, up to October 20, 2021.

SUBMISSION OF COPY OF CNIC (MANDATORY):

Individuals including all joint holders holding physical share certificates are requested to submit a copy of their valid
CNIC if not already provided to the Company or our Share Registrar, THK Associates (Private) Limited, Karachi Office:
32-C, Jami Commercial Street No. 2, DHA Phase VII, Karachi, Lahore Office: Siddique Trade Centre, Office No.PL-29,
PL Floor, 72 Main Boulevard, Gulberg II, Lahore. The Shareholders while sending CNIC must quote their respective
folio numbers.
 Annual Report 2021 29

In case of non-receipt of the copy of a valid CNIC, the Company would be unable to comply with SRO 831(1)/2012
dated July 05, 2012 of SECP and would be constrained under SECP’s Order dated June 08, 2016 under Section
251(2) of the Companies Ordinance, 1984 to withhold the dispatch of dividend warrants to such shareholders.

ZAKAT DECLARATION (CZ-50):

Zakat will be deducted from the dividends at source under the Zakat & Usher Laws and will be deposited within the
prescribed period with the relevant authority. Please submit your Zakat declarations under Zakat and Usher
Ordinance, 1980 & Rule 4 of Zakat (Deduction & Refund) Rules, 1981 CZ-50 Form, in case you want to claim
exemption, with your brokers or the Central Depository Company of Pakistan Limited (in case the shares are held in
CDC-Sub Account or CDC Investor Account) or to our Share Registrar, THK Associates (Private) Limited, Karachi
Office: 32-C, Jami Commercial Street No. 2, DHA Phase VII, Karachi, Lahore Office: Siddique Trade Centre, Office
No. PL-29, PL Floor, 72 Main Boulevard, Gulberg II, Lahore. The Shareholders while sending the Zakat Declarations,
as the case may be must quote company name and their respective folio numbers.

Shareholders should also notify our Share Registrar, THK Associates (Private) Limited regarding any change in their
addresses.

MANDATORY PAYMENT OF CASH DIVIDEND THROUGH ELECTRONIC MODE:

The provisions of Section 242 of the Companies Act, 2017 require the listed companies that any dividend payable in
cash shall only be paid through electronic mode directly into the bank account designated by the entitled
shareholders. The shareholders who have not provided their bank account details so far are advised to provide their
below electronic dividend mandate information to Company’s Share Registrar at the address given above and update
their CDC accounts / Sub accounts as the case may be, enabling the Company to credit your future dividend
promptly, if any.

Folio No. / Investor

Account Number / CDC
Sub Account No.
Title of Account
IBAN Number
Bank Name
Branch
Branch Address

Mobile Number
Name of Network
(if ported)
Email Address

Signature of Shareholder_______________________________

TRANSMISSION OF ANNUAL FINANCIAL STATEMENTS THROUGH EMAIL:

In pursuance of the directions given by the Securities and Exchange Commission of Pakistan (SECP) vide SRO 787 (I)
/ 2014 dated September 8, 2014, those shareholders who desire to receive Annual Financial Statements in future
through email instead of receiving the same by Post are advised to give their formal consent along with their valid
email address on a standard request form which is available at the Company’s website i.e. www.nishatmillsltd.com
and send the said form duly signed by the shareholder along with copy of his / her CNIC to the Company’s Share
Registrar THK Associates (Private) Limited. Please note that giving email address for receiving of Annual Financial
Statements instead of receiving the same by post is optional, in case you do not wish to avail this facility please ignore
this notice, Financial Statements will be sent in compact disk to the registered address of the shareholders.
 30 Nishat Mills Limited

CIRCULATION OF ANNUAL REPORTS THROUGH DIGITAL STORAGE:

Pursuant to the SECP’s notification SRO 470 (I) / 2016 dated 31st May, 2016 the Members of Nishat Mills Limited in
EOGM held on 31st March 2017 had accorded their consent for transmission of annual reports including audited
annual financial statements and other information contained therein of the Company through CD / DVD / USB instead
of transmitting the same in hard copies. The shareholders who wish to receive hard copies of the aforesaid documents
may send to the Company Secretary / Share registrar, the standard request form available on the Company’s website
and the Company will provide the aforesaid documents to the shareholders on demand, free of cost, within one week
of such demand.

UNCLAIMED DIVIDEND / SHARES:

Shareholders who could not collect their dividend / physical shares are advised to contact our Share Registrar to
collect / enquire about their unclaimed dividend or shares, if any.

VIDEO CONFERENCE FACILITY:

In terms of the Companies Act, 2017, members residing in a city holding at least 10% of the total paid up share capital
may demand the facility of video-link for participating in the annual general meeting. The request for video-link facility
shall be received by the Share Registrar at their address at least 7 days prior to the date of the meeting on the
Standard Form available on the website of the Company.

VIDEO LINK FACILITY FOR MEETING:

In light of COVID-19 situation, the Securities and Exchange Commission of Pakistan (“SECP”) has advised vide
Circular No. 4 of 2021 dated 15 February, 2021 to provide participation of the members through electronic means. The
members can attend the AGM via video link using smart phones / tablets. To attend the meeting through video link,
members and their proxies are requested to register themselves by providing the following information along with valid
copy of Computerized National Identity Card (both sides) / passport, attested copy of board resolution / power of
attorney (in case of corporate shareholders) through email at kchohan@nishatmills.com or
smahmood@dgcement.com by October 23, 2021.

Name of Member / CNIC No. Folio No. / CDC Cell No. / Email ID
Proxyholder Account No. Whatsapp No.

CONVERSION OF PHYSICAL SHARES INTO BOOK ENTRY FORM:

As per Section 72 of the Companies Act, 2017, all existing companies are required to convert their physical shares into
book-entry form within a period not exceeding four years from the date of commencement of the Companies Act,
2017.

The Securities & Exchange Commission of Pakistan through its circular # CSD/ED/Misc./2016-639-640 dated March
26, 2021 has advised the listed companies to pursue their such members who still hold shares in physical form, to
convert their shares into book-entry form.

We hereby request all members who are holding shares in physical form to convert their shares into book-entry form
at the earliest. They are also suggested to contact the Central Depository Company of Pakistan Limited or any active
member / stock broker of the Pakistan Stock Exchange to open an account in the Central Depository System and to
facilitate conversion of physical shares into book-entry form. Members are informed that holding shares in book-entry
form has several benefits including but not limited to secure and convenient custody of shares, conveniently tradeable
and transferable, no risk of the loss, damage or theft, no stamp duty on transfer of shares in book-entry form and
hassle free credit of bonus or right shares.

We once again strongly advise members of the Company, in their best interest, to convert their physical shares into
book-entry form at earliest.
 Annual Report 2021 31

Statement under Rule 4(2) of the Companies (Investment in Associated Companies or

Associated Undertakings) Regulations, 2017
Name of
Investee MCB Bank Hyundai Nishat Motor Nishat Hotels and Nishat Sutas
Company Limited (Private) Limited Properties Limited Dairy Limited

Total Investment Equity investment Equity investment Guarantee / Equity investment Investment of Rs. 1 Equity investment
Approved: up to Rupees up to Rupees 960 continuing Stand up to Rupees 200 billion by way of up to Rupees 950
2.144 billion for the million was by Letter(s) of million was working capital million was
period of three (3) approved by Credit (SBLC) for approved for the loan was approved approved for the
years was members in EOGM an amount of up to period of three (3) for the period of period of three (3)
approved by held on March 28, Rupees 1,200 years by members one year by years by members
members in EOGM 2018 which was million was in EOGM held on members in AGM in AGM held on
held on March 31, subsequently approved by April 17, 2019. held on October October 28, 2019.
2020. enhanced up to Rs. members in EOGM 28, 2019.
1,267.680 million held on March 28,
for a period of four 2018 which was
(4) years by subsequently
members in AGM enhanced up to
held on October Rupees 1,532.544
28, 2019. million for a tenure
of 7.5 years by
members in AGM
held on October
28, 2019.

Amount of Nil Investment of Bank guarantees of Investment of Nil Investment of

Investment Made Rupees 1,078.476 up to Rupees 29.61 Rupees 523.525
to date: million has been Rs. 1,532.520 million has been million has been
made against this million have been made against this made against this
approval to date. issued against this approval to date. approval to date.
approval to date.

Reasons for No investment has Partial investment Eight bank Partial investment No loan was Partial investment
deviations from been made in has been made in guarantees from has been made in extended after the has been made in
the approved investee company investee company. different banks investee company. approval because investee company.
timeline of after the approval. Further investment have been Further investment fund Further investment
investment, Investment will be will be made extended after the will be made request was not will be made
where made depending depending on the approval. Further depending on the made by the depending on the
investment on market financial need of guarantees will be financial need of investee company. financial need of
decision was to conditions at investee company. arranged on investee company. Further, approval investee company.
be implemented appropriate time. requirement of has been expired
in specified time: investee company. because it was
valid for the period
of only one year till
27 October 2020.

Material change At the time of At the time of At the time of At the time of At the time of At the time of
in financial Approval, as per Approval, as per Approval, as per approval, as per approval, as per approval, the
statements of latest available latest available latest available latest available latest available investee company
associated audited financial audited financial audited financial audited financial audited financial had not
company or statements for the statements for the statements for the statements for the statements for the commenced its
associated year ended year ended year ended year ended June year ended June operations,
undertaking December December December 30, 2018, the basic 30, 2019 the basic therefore EPS and
since date of the 31, 2019 the basic 31, 2018 the basic 31, 2018 the basic loss per share was profit per share breakup value of
resolution earnings per share loss per share was loss per share was Re.0.30 and was Rs. 1.42 and share was not
passed for was Rs. 20.23 and Rs. 1.44 and Rs. 1.44 and breakup value per breakup value per available. As per
approval of breakup value per breakup value per breakup value per share was share was Rs. latest available
investment in share was share was share was Rs. Rs. 12.65. 18.09. As per latest audited financial
such company: Rs. 142.54. Rs. 9.03. As per 9.03. As per latest As per latest available statements for the
As per latest latest available available audited available un-audited year ended
available audited audited financial financial un-audited financial December 31,
financial statements statements for the statements for the financial statements for the 2020 the basic loss
for the year ended year ended year ended statements for the year ended June per share is
December December 31, December 31, year ended June 30, 2021 the basic Rs. 1.19 and
31, 2020 the basic 2020 the basic loss 2020 the basic loss 30, 2021 the basic earnings per share breakup value per
earnings per share per share is per share is Rs. earnings per share is Re. 0.34 and share is Rs. 8.10.
was Rs. 24.50 and Rs. 2.65 and 2.65 and breakup is Re. 0.34 and breakup value per As per latest
breakup value per breakup value per value per share is breakup value per share is Rs. 18.92. available
share was Rs. share is Rs. 6.97. Rs. 6.97. As per share is Rs. 18.92. un-audited half
160.42. As per As per latest latest un-audited yearly financial
latest available available available half yearly statements for the
un-audited half un-audited half financial half year ended 30
yearly financial yearly financial statements for the June 2021, the
statements for the statements for the half year ended basic loss per
half year ended half year ended June 30, 2021 the share is Rs. 1.03
June 30, 2021 the June 30, 2021 the basic earnings per and breakup value
basic earnings per basic earnings per share is Re. 0.06 per share is
share is Rs. 12.44 share is Re. 0.06 and breakup value Rs. 7.08.
and breakup value and breakup value per share is Rs.
per share is per share is 7.11.
Rs. 150.73. Rs. 7.11.
 Financial Statements of
Nishat Mills Limited
for the year ended June 30, 2021
 34 Nishat Mills Limited

INDEPENDENT AUDITOR’S REPORT

To the members of Nishat Mills Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the annexed financial statements of Nishat Mills Limited (the Company), which comprise the
statement of financial position as at 30 June 2021, and the statement of profit or loss, the statement of
comprehensive income, the statement of changes in equity, the statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies and other
explanatory information, and we state that we have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purposes of the audit.

In our opinion and to the best of our information and according to the explanations given to us, the statement
of financial position, the statement of profit or loss, the statement of 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 30 June 2021 and of the profit, other comprehensive income, the changes
in equity and its cash flows for the year then ended.

Basis for Opinion

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

Key Audit Matters

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

Following are the key audit matters:

Sr.
Key audit matters How the matters were addressed in our audit
No.

1. Inventory existence and valuation

Inventory as at 30 June 2021 amounted to Our procedures over existence and valuation of
Rupees 20,578.293 million, break up of inventory included, but were not limited to:
which is as follows:
• To test the quantity of inventories at all locations,
- Stores, spare parts and loose tools we assessed the corresponding inventory
Rupees 2,605.602 million observation instructions and participated in
inventory counts on sites. Based on samples, we
- Stock-in-trade Rupees 17,972.691 performed test counts and compared the
million quantities counted by us with the results of the
counts of the management.
Inventory is measured at the lower of cost
 Annual Report 2021 35

Sr.
Key audit matters How the matters were addressed in our audit
No.

and net realizable value. • For a sample of inventory items, re-performed

the weighted average cost calculation and
We identified existence and valuation of compared the weighted average cost appearing
inventory as a key audit matter due to its on valuation sheets.
size, representing 15.70% of the total assets
of the Company as at 30 June 2021, and the • We tested that the ageing report used by
judgment involved in valuation. management correctly aged inventory items by
agreeing a sample of aged inventory items to the
For further information on inventory, refer to last recorded invoice.
the following:
• On a sample basis, we tested the net realizable
value of inventory items to recent selling prices
- Summary of significant accounting and re-performed the calculation of the inventory
policies, Inventories note 2.17 to the write down, if any.
financial statements.
• We assessed the percentage write down applied
- Stores, spares parts and loose tools to older inventory with reference to historic
note 18 and Stock-in-trade note 19 to inventory write downs and recoveries on slow
the financial statements. moving inventory.

• In the context of our testing of the calculation, we

analysed individual cost components and traced
them back to the corresponding underlying
documents. We furthermore challenged changes
in unit costs.

• We also made enquires of management,

including those outside of the finance function,
and considered the results of our testing above
to determine whether any specific write downs
were required.

2. Investments in equity securities

Quoted investments: Our procedures included, but were not limited to:

The Company’s portfolio of quoted • We documented and assessed the processes

investments, except for investment in and controls in place to record investment
quoted subsidiary company, makes up transactions and to value the portfolio.
27.83% of total assets. Due to materiality of
quoted investments in the context of the • We agreed the valuation of all of quoted
financial statements as a whole and the investments from prices quoted on Pakistan Stock
requirements of applicable accounting and Exchange Limited and redemption price in case of
reporting standards relating to classification, open-end mutual fund except for investment in
measurement and disclosures of subsidiary company measured at cost less
investments in related parties, they are impairment loss, if any, in accordance with the
considered to be the area which had the provisions of IAS 27 ‘Separate Financial
greatest effect on our overall audit strategy Statements’.
and allocation of resources in planning and
completing our audit. • We agreed the holding of all quoted investments
from the Account Balance Report of Central
Depository Company of Pakistan Limited,
Statement of Account, in case of open-end
mutual fund and physical share certificates in
hand.

• We verified the accuracy of management’s

 36 Nishat Mills Limited

Sr.
Key audit matters How the matters were addressed in our audit
No.

Un-quoted investments: judgement used in classification of quoted

investments in related parties.
Investments in unquoted equity securities
except for investments in unquoted Our procedures included, but were not limited to:
subsidiary companies are accounted for as
financial assets at fair value through other • We evaluated the independent professional
comprehensive income and are subject to valuer’s competence, capabilities and objectivity.
fair valuation at each reporting date.
Investments in unquoted subsidiary • We assessed the valuation methodology used by
companies are stated at cost less the independent professional valuer to estimate
impairment loss, if any. The investments as the fair value of the investments.
at 30 June 2021 are valued by an
independent professional valuer. With • We checked, on a sample basis, the accuracy
reference to the valuation, management and reasonableness of the input data provided
estimated the fair value of the investments at by management to the independent professional
Rupees 7,603.461 million at year end. valuer, to supporting evidence, such as approved
budgets and considering the reasonableness of
Investee companies are operating in these budgets by comparing the budgets to the
Insurance, Packaging, Dairy, Hotel and historical results and market data.
Shopping Mall, Automobile and Energy
sectors and therefore, fair values are highly • We assessed the reasonableness of cash flows
dependent on their expansion plans and projection, challenging and performing audit
significant management judgements. procedures on management’s assumptions such
Accordingly, the valuation of the as the future business growth driven by future
investments was considered as one of the expansion plan, future products selling prices
key audit matters. and operating costs, discount rate by comparing
the assumptions to historical results and
The fair values were determined based on published market and industry data and
the present value technique. The valuations comparing the current year’s results with the
involved significant judgements and prior year forecast and other relevant information.
estimates from management, including Our internal valuation expert has been engaged
future business growth driven by future to assist the review on valuation methodology
expansion plans, future products selling and discount rate. In addition, we had discussed
prices and operating costs of the investee, with the management of the investee companies
discount rate, etc. to understand the business and assessed if there
was any inconsistency in the assumptions used
For further information, refer to the following: in the cash flows projection.

- Summary of significant accounting • We agreed holding of all un-quoted investments

policies, Investments note 2.10 to the from physical share certificates in hand.
financial statements.
• We performed sensitivity analysis in
- Long term investments note 15 to the consideration of the potential impact of
financial statements. reasonably possible upside or downside changes
in these key assumptions.

• We verified the accuracy of management

calculation used for the impairment testing, in
case of subsidiary companies carried at cost less
impairment loss, if any.

3. Capital expenditures

The Company is investing significant Our procedures included, but were not limited to:
amounts in its operations and there are a
number of areas where management • We tested operating effectiveness of controls in
judgement impacts the carrying value of place over the property, plant and equipment
 Annual Report 2021 37

Sr.
Key audit matters How the matters were addressed in our audit
No.

property, plant and equipment and its cycle including the controls over whether costs
respective depreciation profile. These incurred on activities is capital or operating in
include among other the decision to nature.
capitalize or expense costs; and review of
useful life of the assets including the impact • We evaluated the appropriateness of
of changes in the Company’s strategy. capitalization policies and depreciation rates.

We focused on this area since the amounts • We performed tests of details on costs
have a significant impact on the financial capitalized.
position of the Company and there is
significant management judgment required • We verified the accuracy of management’s
that has significant impact on the reporting calculation used for the impairment testing.
of the financial position for the Company.
Therefore, considered as one of the key
audit matters.

For further information, refer to the following:

- Summary of significant accounting

policies, property, plant, equipment
and deprecation note 2.6 to the
financial statements.

- Property, plant and equipment note

13 to the financial statements.

4. Revenue recognition

The Company recognized net revenue of Our procedures included, but were not limited to:
Rupees 71,431.010 million for the year
ended 30 June 2021. • We obtained an understanding of the process
relating to recognition of revenue and testing the
We identified recognition of revenue as a key design, implementation and operating
audit matter because revenue is one of the effectiveness of key internal controls over
key performance indicator of the Company recording of revenue.
and gives rise to an inherent risk that
revenue could be subject to misstatement to • We compared a sample of revenue transactions
meet expectations or targets. recorded during the year with sales orders, sales
invoices, delivery documents and other relevant
For further information, refer to the following: underlying documents.

- Summary of significant accounting • We compared a sample of revenue transactions

policies, Revenue recognition note recorded around the year-end with the sales
2.24 to the financial statements. orders, sales invoices, delivery documents and
other relevant underlying documentation to
- Revenue note 27 to the financial assess if the related revenue was recorded in the
statements. appropriate accounting period.

• We assessed whether the accounting policies for

revenue recognition complies with the
requirements of IFRS 15 ‘Revenue from
Contracts with Customers’.

• We also considered the appropriateness of

disclosures in the financial statements.
 38 Nishat Mills Limited

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 auditor’s report thereon.

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

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

Responsibilities of Management and Board of Directors for the Financial Statements

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

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

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

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an 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.

• 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
 Annual Report 2021 39

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 period 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.

Report on Other Legal and Regulatory Requirements

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

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

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

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

d) 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 Syed Mustafa Ali.

RIAZ AHMAD & COMPANY

Chartered Accountants

Lahore
Date: 24 September 2021
 40 Nishat Mills Limited

Statement of Financial Position

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorized share capital

1,100,000,000 (2020: 1,100,000,000) ordinary

shares of Rupees 10 each 11,000,000 11,000,000

Issued, subscribed and paid-up share capital 3 3,515,999 3,515,999

Reserves 4 82,231,780 67,911,861
Total equity 85,747,779 71,427,860

LIABILITIES

NON-CURRENT LIABILITIES

Long term financing - secured 5 11,577,915 9,222,781

Deferred liabilities 6 1,055,992 302,672
12,633,907 9,525,453

CURRENT LIABILITIES

Trade and other payables 7 9,512,304 9,357,977

Accrued mark-up 8 196,382 226,228
Short term borrowings 9 18,718,262 19,329,768
Current portion of non-current liabilities 10 4,206,123 703,032
Unclaimed dividend 11 97,617 90,596
32,730,688 29,707,601
TOTAL LIABILITIES 45,364,595 39,233,054

CONTINGENCIES AND COMMITMENTS 12

TOTAL EQUITY AND LIABILITIES 131,112,374 110,660,914

The annexed notes form an integral part of these financial statements.

CHIEF EXECUTIVE OFFICER

 Annual Report 2021 41

2021 2020
Note (Rupees in thousand)

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 13 35,926,594 31,292,722

Investment properties 14 479,506 455,544
Long term investments 15 48,620,695 37,979,074
Long term loans 16 468,377 305,264
Long term deposits 17 156,984 104,783
85,652,156 70,137,387

CURRENT ASSETS

Stores, spare parts and loose tools 18 2,605,602 2,256,569

Stock-in-trade 19 17,972,691 20,753,543
Trade debts 20 6,549,252 4,285,103
Loans and advances 21 7,675,599 8,868,122
Advance income tax - net 22 572,307 559,080
Short term deposits and prepayments 23 80,828 67,629
Other receivables 24 4,702,709 3,568,565
Accrued interest 25 28,885 36,675
Cash and bank balances 26 5,272,345 128,241
45,460,218 40,523,527

TOTAL ASSETS 131,112,374 110,660,914

DIRECTOR CHIEF FINANCIAL OFFICER

 42 Nishat Mills Limited

Statement of Profit or Loss

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

REVENUE 27 71,431,010 60,904,096

COST OF SALES 28 (62,113,155) (53,627,970)
GROSS PROFIT 9,317,855 7,276,126

DISTRIBUTION COST 29 (3,096,473) (2,875,340)

ADMINISTRATIVE EXPENSES 30 (1,340,093) (1,238,301)
OTHER EXPENSES 31 (331,796) (213,179)
(4,768,362) (4,326,820)
4,549,493 2,949,306

OTHER INCOME 32 3,750,188 3,032,390

PROFIT FROM OPERATIONS 8,299,681 5,981,696

FINANCE COST 33 (1,229,179) (1,502,412)

PROFIT BEFORE TAXATION 7,070,502 4,479,284

TAXATION 34 (1,148,032) (973,000)

PROFIT AFTER TAXATION 5,922,470 3,506,284

EARNINGS PER SHARE - BASIC AND

DILUTED (RUPEES) 35 16.84 9.97

The annexed notes form an integral part of these financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

 Annual Report 2021 43

Statement of Comprehensive Income

For the year ended June 30, 2021
2021 2020
(Rupees in thousand)

PROFIT AFTER TAXATION 5,922,470 3,506,284

OTHER COMPREHENSIVE INCOME

Items that will not be reclassified to profit or loss:

Surplus arising on remeasurement of investments at fair value

through other comprehensive income 10,400,145 2,799,937

Deferred income tax relating to this item (596,297) (87,232)

9,803,848 2,712,705

Items that may be reclassified subsequently to profit or loss - -

Other comprehensive income for the year - net of tax 9,803,848 2,712,705

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 15,726,318 6,218,989

The annexed notes form an integral part of these financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

 (Rupees in thousand)
Reserves
Capital Reserves Revenue Reserves
44

Share Total
Capital Premium on Fair value General Unapprop- Total Equity
Issue of reserve FVTOCI Sub Total Reserve riated Sub Total
Right Shares investments Profit

Balance as at 01 July 2019 3,515,999 5,499,530 11,026,453 16,525,983 40,779,028 5,794,260 46,573,288 63,099,271 66,615,270

Transaction with owners - Final dividend for the year

ended 30 June 2019 @ Rupees 4.00 per share - - - - - (1,406,399) (1,406,399) (1,406,399) (1,406,399)
Transferred to general reserve - - - - 4,386,000 (4,386,000) - - -
For the year ended June 30, 2021

Profit for the year - - - - - 3,506,284 3,506,284 3,506,284 3,506,284

Other comprehensive income for the year - - 2,712,705 2,712,705 - - - 2,712,705 2,712,705
Total comprehensive income for the year - - 2,712,705 2,712,705 - 3,506,284 3,506,284 6,218,989 6,218,989
Balance as at 30 June 2020 3,515,999 5,499,530 13,739,158 19,238,688 45,165,028 3,508,145 48,673,173 67,911,861 71,427,860
Statement of Changes In Equity

Transaction with owners - Final dividend for the year

ended 30 June 2020 @ Rupees 4.00 per share - - - - - (1,406,399) (1,406,399) (1,406,399) (1,406,399)
Transferred to general reserve - - - - 2,101,000 (2,101,000) - - -
Profit for the year - - - - - 5,922,470 5,922,470 5,922,470 5,922,470
Other comprehensive income for the year - - 9,803,848 9,803,848 - - - 9,803,848 9,803,848
Total comprehensive income for the year - - 9,803,848 9,803,848 - 5,922,470 5,922,470 15,726,318 15,726,318
Balance as at 30 June 2021 3,515,999 5,499,530 23,543,006 29,042,536 47,266,028 5,923,216 53,189,244 82,231,780 85,747,779

The annexed notes form an integral part of these financial statements.

Nishat Mills Limited

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

 Annual Report 2021 45

Statement of Cash Flows

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 36 8,488,377 4,014,282

Finance cost paid (1,185,463) (1,511,521)
Income tax paid (1,161,259) (1,009,748)
Exchange gain on forward exchange contracts received 1,237 107,279
Gas infrastructure development cess paid (168,369) -
Net increase in long term loans (199,887) (49,864)
Net (Increase) / decrease in long term deposits (52,201) 9,577

Net cash generated from operating activities 5,722,435 1,560,005

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditure on property, plant and equipment (7,615,598) (5,132,005)

Proceeds from sale of property, plant and equipment 172,056 91,403
Investments made (241,476) (808,410)
Loans and advances to subsidiary companies (41,838,370) (39,353,653)
Repayment of loans from subsidiary companies 43,089,828 37,941,748
Interest received 332,462 388,113
Dividends received 2,722,637 2,044,302

Net cash used in investing activities (3,378,461) (4,828,502)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term financing 6,421,187 4,245,115

Repayment of long term financing (1,610,173) (1,363,699)
Short term borrowings - net (611,506) 1,347,506
Dividend paid (1,399,378) (1,408,809)

Net cash from financing activities 2,800,130 2,820,113

Net increase / (decrease) in cash and cash equivalents 5,144,104 (448,384)

Cash and cash equivalents at the beginning of the year 128,241 576,625

Cash and cash equivalents at the end of the year 5,272,345 128,241

The annexed notes form an integral part of these financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

 46 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
1 THE COMPANY AND ITS OPERATIONS

1.1 Nishat Mills Limited (the Company) is a public limited Company incorporated in Pakistan under the
Companies Act, 1913 (Now Companies Act, 2017) and listed on Pakistan Stock Exchange Limited. Its
registered office is situated at 53-A, Lawrence Road, Lahore. The Company is engaged in the business
of textile manufacturing and of spinning, combing, weaving, bleaching, dyeing, printing, stitching,
apparel, buying, selling and otherwise dealing in yarn, linen, cloth and other goods and fabrics made from
raw cotton, synthetic fibre and cloth and to generate, accumulate, distribute, supply and sell electricity.

1.2 Geographical location and addresses of all business units are as follows:

Sr.
No. Manufacturing units and offices Address

1 Spinning units, yarn dyeing unit and power plant Nishatabad, Faisalabad.
2 Spinning units and power plant Plot No. 172-180 and 188-197, M-3 Industrial City,
Sahianwala, FIEDMC, 2 K.M., Jhumra Chiniot
Road, Chak Jhumra, Faisalabad.
3 Spinning units and power plant 20 K.M., Sheikhupura Road, Feroze Wattwan.
4 Weaving units and power plant 12 K.M., Faisalabad Road, Sheikhupura.
5 Weaving units, dyeing and finishing unit, 5 K.M., Nishat Avenue Off 22 K.M., Ferozepur
processing unit, stitching units and power plants Road, Lahore.
6 Terry unit 7 K.M., Nishat Avenue Off 22 K.M., Ferozepur
Road, Lahore.
7 Apparel unit 2 K.M., Nishat Avenue Off 22 K.M., Ferozepur
Road, Lahore.
8 Head office 7-Main Gulberg, Lahore.
9 Office 1st Floor, Karachi Chambers, Hasrat Mohani
Road, Karachi.
10 Registered office Nishat House, 53-A, Lawrence Road, Lahore.

1.3 These financial statements are the separate financial statements of the Company. Consolidated financial
statements of the Company are prepared separately. Details of the Company’s investments in
subsidiaries and associates are stated in note 15 to these financial statements.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

2.1 Basis of preparation

a) Statement of compliance

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

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

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

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

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

b) Accounting convention

These financial statements have been prepared under the historical cost convention except as
otherwise stated in the respective accounting policies.
 Annual Report 2021 47

c) Critical accounting estimates and judgments

The preparation of financial statements in conformity with the approved accounting standards
requires the use of certain critical accounting estimates. It also requires the management to exercise
its judgment in the process of applying the Company's accounting policies. Estimates and
judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The areas where various assumptions and estimates are significant to the Company's financial
statements or where judgments were exercised in application of accounting policies are as follows:

Financial instruments – fair value

The fair value of financial instruments that are not traded in an active market is determined by using
valuation techniques based on assumptions that are dependent on conditions existing at the
reporting date.

Useful lives, patterns of economic benefits and impairment

Estimates with respect to residual values and useful lives and pattern of flow of economic benefits
are based on the analysis of the management of the Company. Further, the Company reviews the
value of assets for possible impairment on an annual basis. Any change in the estimates in the future
might affect the carrying amount of respective item of property, plant and equipment and investment
properties with a corresponding effect on the depreciation charge and impairment.

Inventories

Inventory write-down is made based on the current market conditions, historical experience and
selling goods of similar nature. It could change significantly as a result of changes in market
conditions. A review is made on each reporting date on inventories for excess inventories,
obsolescence and declines in net realisable value and an allowance is recorded against the inventory
balances for any such declines.

Income tax

In making the estimates for income tax currently payable by the Company, the management takes
into account the current income tax law and the decisions of appellate authorities on certain issues
in the past.

Allowance for expected credit losses

The allowance for Expected Credit Losses (ECLs) assessment requires a degree of estimation and
judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and
makes assumptions to allocate an overall expected credit loss rate for each group. These
assumptions include recent sales experience and historical collection rates.

Provisions

As the actual outflows can differ from estimates made for provisions due to changes in laws,
regulations, public expectations, technology, prices and conditions, and can take place many years
in the future, the carrying amounts of provisions are reviewed at each reporting date and adjusted to
take account of such changes. Any adjustments to the amount of previously recognised provision is
recognised in the statement of profit or loss unless the provision was originally recognised as part of
cost of an asset.

Contingencies

The Company reviews the status of all pending litigations and claims against the Company. Based
on the judgment and the advice of the legal advisors for the estimated financial outcome, appropriate
disclosure or provision is made. The actual outcome of these litigations and claims can have an effect
 48 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
on the carrying amounts of the liabilities recognized at the statement of financial position date.

Impairment of investments in subsidiaries

In making an estimate of recoverable amount of the Company's investments in subsidiaries, the

management considers future cash flows.

Revenue from contracts with customers involving sale of goods

When recognizing revenue in relation to the sale of goods to customers, the key performance
obligation of the Company is considered to be the point of delivery of the goods to the customer, as
this is deemed to be the time that the customer obtains control of the promised goods and therefore
the benefits of unimpeded access.

d) Amendments to published approved accounting standards that are effective in current year
and are relevant to the Company

Following amendments to published approved accounting standards are mandatory for the
Company’s accounting periods beginning on or after 01 July 2020:

• IAS 1 (Amendments) ‘Presentation of Financial Statements’ and IAS 8 (Amendments)

‘Accounting Policies, Changes in Accounting Estimates and Errors’;
• International Accounting Standards Board’s revised Conceptual Framework – March 2018
• IFRS 3 (Amendments) ‘Business Combination’;
• IFRS 16 (Amendments) ‘Leases’;
• Interest Rate Benchmark Reform which amended IFRS 9 ‘Financial Instruments’, IAS 39
‘Financial Instruments: Recognition and Measurement’ and IFRS 7 ‘Financial Instruments:
Disclosures’.

The above-mentioned amendments to approved accounting standards did not have any impact on
the amounts recognised in prior period and are not expected to significantly affect the current or
future periods.

e) Amendments to published approved accounting standards that are effective in current year
but not relevant to the Company

There are amendments to published standards that are mandatory for accounting periods beginning
on or after 01 July 2020 but are considered not to be relevant or do not have any significant impact
on the Company’s financial statements and are therefore not detailed in these financial statements.

f) Amendments to published approved accounting standards that are not yet effective but
relevant to the Company

Following amendments to existing standards have been published and are mandatory for the
Company’s accounting periods beginning on or after 01 July 2021 or later periods:

Classification of liabilities as current or non-current (Amendments to IAS 1 ‘Presentation of Financial

Statements’) effective for the annual period beginning on or after 01 January 2023. These
amendments in the standards have been added to further clarify when a liability is classified as
current. The standard also amends the aspect of classification of liability as non-current by requiring
the assessment of the entity’s right at the end of the reporting period to defer the settlement of
liability for at least twelve months after the reporting period. An entity shall apply those amendments
retrospectively in accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and
Errors’.

Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37 ‘Provisions, Contingent

Liabilities and Contingent Assets’) effective for the annual period beginning on or after 01 January
2022 amends IAS 1 ‘Presentation of Financial Statements’ by mainly adding paragraphs which
 Annual Report 2021 49

clarifies what comprise the cost of fulfilling a contract. Cost of fulfilling a contract is relevant when
determining whether a contract is onerous. An entity is required to apply the amendments to
contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting
period in which it first applies the amendments (the date of initial application). Restatement of
comparative information is not required, instead the amendments require an entity to recognize the
cumulative effect of initially applying the amendments as an adjustment to the opening balance of
retained earnings or other component of equity, as appropriate, at the date of initial application.

Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16 ‘Property,
Plant and Equipment’) effective for the annual period beginning on or after 1 January 2022. Clarifies
that sales proceeds and cost of items produced while bringing an item of property, plant and
equipment to the location and condition necessary for it to be capable of operating in the manner
intended by management e.g. when testing etc., are recognized in profit or loss in accordance with
applicable Standards. The entity measures the cost of those items applying the measurement
requirements of IAS 2 ‘Inventories’. The standard also removes the requirement of deducting the net
sales proceeds from cost of testing. An entity shall apply those amendments retrospectively, but only
to items of property, plant and equipment that are brought to the location and condition necessary
for them to be capable of operating in the manner intended by management on or after the beginning
of the earliest period presented in the financial statements in which the entity first applies the
amendments. The entity shall recognize the cumulative effect of initially applying the amendments as
an adjustment to the opening balance of retained earnings (or other component of equity, as
appropriate) at the beginning of that earliest period presented.

The following annual improvements to IFRS standards 2018-2020 are effective for annual reporting
periods beginning on or after 01 January 2022:

- IFRS 9 ‘Financial Instruments’ – The amendment clarifies that an entity includes only fees paid
or received between the entity (the borrower) and the lender, including fees paid or received by
either the entity or the lender on the other’s behalf, when it applies the ‘10 per cent’ test in
paragraph B3.3.6 of IFRS 9 in assessing whether to derecognize a financial liability.

- IFRS 16 ‘Leases’ – The amendment partially amends Illustrative Example 13 accompanying IFRS
16 ‘Leases’ by excluding the illustration of reimbursement of leasehold improvements by the
lessor. The objective of the amendment is to resolve any potential confusion that might arise in
lease incentives.

Disclosure of Accounting Policies (Amendments to IAS 1 ‘Presentation of Financial Statements’ and

IFRS Practice Statement 2 ‘Making Materiality Judgement’) effective for annual periods beginning on
or after 01 January 2023. These amendments are intended to help preparers in deciding which
accounting policies to disclose in their financial statements. Earlier, IAS 1 states that an entity shall
disclose its ‘significant accounting policies’ in their financial statements. These amendments shall
assist the entities to disclose their ‘material accounting policies’ in their financial statements.

Covid-19-Related Rent Concessions (Amendment to IFRS 16 ‘Leases’) effective for annual reporting
periods beginning on or after 01 April 2021. These amendments permit a lessee to apply the practical
expedient regarding COVID-19-related rent concessions. The entity shall recognize the cumulative
effect of initially applying the amendments as an adjustment to the opening balance of retained
earnings (or other component of equity, as appropriate) at the beginning of that earliest period
presented.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS
12 ‘Income taxes’) effective for annual periods beginning on or after 01 January 2023. These
amendments clarify how companies account for deferred tax on transactions such as leases and
decommissioning obligations.

Change in definition of Accounting Estimate (Amendments to IAS 8 ‘Accounting Policies, Changes in

Accounting Estimates and Errors) effective for annual periods beginning on or after 1 January 2023.
This change replaced the definition of Accounting Estimate with a new definition, intended to help
 50 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
entities to distinguish between accounting policies and accounting estimates.

The International Accounting Standards Board (IASB) has published 'Reference to the Conceptual
Framework (Amendments to IFRS 3)' with amendments to IFRS 3 'Business Combinations' that
update an outdated reference in IFRS 3 without significantly changing its requirements. Effective for
business combinations for which the acquisition date is on or after the beginning of annual period
beginning on or after 01 January 2022. The amendments also add to IFRS 3 an exception to its
requirement for an entity to refer to the Conceptual Framework to determine what constitutes an
asset or a liability. The standard is effective for transactions in the future and therefore would not have
an impact on past financial statements.

Interest Rate Benchmark Reform – Phase 2 which amended IFRS 9 ‘Financial Instruments’, IAS 39
‘Financial Instruments: Recognition and Measurement’, IFRS 4 ‘Insurance Contracts’ and IFRS 7
‘Financial Instruments: Disclosures’ is applicable for annual financial periods beginning on or after 01
January 2021. The changes made relate to the modification of financial assets, financial liabilities and
lease liabilities, specific hedge accounting requirements, and disclosure requirements applying IFRS
7 to accompany the amendments regarding modifications and hedge accounting.

The above amendments and improvements are likely to have no significant impact on the financial
statements.

g) Standards and amendments to approved published standards that are not yet effective and
not considered relevant to the Company

There are other standards and amendments to published standards that are mandatory for
accounting periods beginning on or after 01 July 2021 but are considered not to be relevant or do not
have any significant impact on the Company’s financial statements and are therefore not detailed in
these financial statements.

2.2 Employee benefit

The Company operates an approved funded provident fund scheme covering all its permanent
employees and permanent employees of a Group Company. Equal monthly contributions are made both
by the Company, other Group Company and employees at the rate of 9.5 percent of the basic salary to
the fund. The Company's contributions to the fund are charged to statement of profit or loss.

2.3 Taxation

Current

Provision for current tax is based on the taxable income for the year determined in accordance with the
prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or
tax rates expected to apply to the profit for the year, if enacted. The charge for current tax also includes
adjustments, where considered necessary, to provision for tax made in previous years arising from
assessments framed during the year for such years.

Deferred

Deferred tax is accounted for using the liability method in respect of all temporary differences arising from
differences between the carrying amount of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are
generally recognized for all taxable temporary differences and deferred tax assets to the extent that it is
probable that taxable profits will be available against which the deductible temporary differences, unused
tax losses and tax credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences
reverse based on tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited in the statement of profit or loss, except to the extent that it relates to
 Annual Report 2021 51

items recognized in other comprehensive income or directly in equity. In this case, the tax is also
recognized in other comprehensive income or directly in equity, respectively.

2.4 Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the
primary economic environment in which the Company operates (the functional currency). The financial
statements are presented in Pak Rupees, which is the Company’s functional and presentation currency.
Figures are rounded off to the nearest thousand of Pak Rupees.

2.5 Foreign currency transactions and translation

All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at exchange rates
prevailing at the reporting date. Transactions in foreign currencies are translated into Pak Rupees at
exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are charged or credited to statement of profit or
loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign
currency are translated into Pak Rupees at exchange rates prevailing at the date of transaction.
Non-monetary assets and liabilities denominated in foreign currency that are stated at fair value are
translated into Pak Rupees at exchange rates prevailing at the date when fair values are determined.

2.6 Property, plant, equipment and depreciation

Operating fixed assets

Operating fixed assets except freehold land are stated at cost less accumulated depreciation and
accumulated impairment losses (if any). Cost of operating fixed assets consists of historical cost,
borrowing cost pertaining to erection / construction period of qualifying assets and other directly
attributable costs of bringing the asset to working condition. Freehold land is stated at cost less any
recognized impairment loss.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Company and the cost of the item can be measured reliably. All other repair and maintenance costs
are charged to statement of profit or loss during the period in which they are incurred.

Depreciation

Depreciation on operating fixed assets is charged to the statement of profit or loss applying the reducing
balance method so as to write off the cost / depreciable amount of the assets over their estimated useful
lives at the rates given in note 13.1. The Company charges the depreciation on additions from the date
when the asset is available for use and on deletions up to the date when the asset is de-recognized. The
residual values and useful lives are reviewed by the management, at each financial year-end and adjusted
if impact on depreciation is significant.

De-recognition

An item of operating fixed assets is de-recognized upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included
in the statement of profit or loss in the year the asset is de-recognized.

Capital work-in-progress

Capital work-in-progress is stated at cost less identified impairment losses, if any. All expenditure
connected with specific assets incurred during installation and construction period are carried under
capital work-in-progress. These are transferred to operating fixed assets as and when these are available
for use.
 52 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2.7 Investment properties

Land and buildings held for capital appreciation or to earn rental income are classified as investment
properties. Investment properties except land, are stated at cost less accumulated depreciation and any
recognized impairment loss. Land is stated at cost less any recognized impairment loss. Depreciation on
buildings is charged to the statement of profit or loss applying the reducing balance method so as to write
off the cost of buildings over their estimated useful lives at a rate of 10% per annum.

2.8 Right-of-use assets

A right-of-use asset is recognized at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any
lease payments made at or before the commencement date net of any lease incentives received, any
initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs
expected to be incurred for dismantling and removing the underlying asset, and restoring the site or
asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is shorter. Where the Company expects to obtain ownership
of the leased asset at the end of the lease term, the depreciation is charged over its estimated useful life.
Right-of use assets are subject to impairment or adjusted for any re-measurement of lease liabilities.

The Company has elected not to recognize a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on
these assets are charged to income as incurred.

2.9 Lease liabilities

A lease liability is recognized at the commencement date of a lease. The lease liability is initially
recognized at the present value of the lease payments to be made over the term of the lease, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's
incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives
receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid
under residual value guarantees, exercise price of a purchase option when the exercise of the option is
reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that
do not depend on an index or a rate are expensed in the period in which they are incurred.

Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts are re-measured if there is a change in the following: future lease payments arising from a
change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is re-measured, an adjustment is made to the corresponding
right-of-use asset, or to statement of profit or loss if the carrying amount of the right-of-use asset is fully
written down.

2.10 Investments and other financial assets

a) Classification

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income, or
through profit or loss), and

• those to be measured at amortized cost

The classification depends on the Company’s business model for managing the financial assets and
the contractual terms of the cash flows.
 Annual Report 2021 53

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in debt instruments, this will depend on the business model
in which the investment is held. For investments in equity instruments, this will depend on whether
the Company has made an irrevocable election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income. The Company reclassifies debt
investments when and only when its business model for managing those assets changes.

b) Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs that are directly attributable
to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing
the asset and the cash flow characteristics of the asset. There are three measurement categories into
which the Company classifies its debt instruments:

Amortized cost

Financial assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortised cost. Interest income
from these financial assets is included in other income using the effective interest rate method. Any
gain or loss arising on derecognition is recognised directly in profit or loss and presented in other
income / (other expenses) together with foreign exchange gains and losses. Impairment losses are
presented as separate line item in the statement of profit or loss.

Fair value through other comprehensive income (FVTOCI)

Financial assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, are
measured at FVTOCI. Movements in the carrying amount are taken through other comprehensive
income, except for the recognition of impairment losses (and reversal of impairment losses), interest
income and foreign exchange gains and losses which are recognised in profit or loss. When the
financial asset is derecognised, the cumulative gain or loss previously recognised in other
comprehensive income is reclassified from equity to profit or loss and recognised in other income /
(other expenses). Interest income from these financial assets is included in other income using the
effective interest rate method. Foreign exchange gains and losses are presented in other income /
(other expenses) and impairment losses are presented as separate line item in the statement of profit
or loss.

Fair value through profit or loss (FVTPL)

Assets that do not meet the criteria for amortised cost or FVTOCI are measured at FVTPL. A gain or
loss on a debt instrument that is subsequently measured at FVTPL is recognised in profit or loss and
presented net within other income / (other expenses) in the period in which it arises.

Equity instruments

The Company subsequently measures all equity investments at fair value for financial instruments quoted
in an active market, the fair value corresponds to a market price (level 1). For financial instruments that
are not quoted in an active market, the fair value is determined using valuation techniques including
reference to recent arm’s length market transactions or transactions involving financial instruments which
 54 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
are substantially the same (level 2), or discounted cash flow analysis including, to the greatest possible
extent, assumptions consistent with observable market data (level 3).

Fair value through other comprehensive income (FVTOCI)

Where the Company’s management has elected to present fair value gains and losses on equity
investments in other comprehensive income, there is no subsequent reclassification of fair value
gains and losses to profit or loss. Impairment losses (and reversal of impairment losses) on equity
investments measured at FVTOCI are not reported separately from other changes in fair value.

Fair value through profit or loss (FVTPL)

Changes in the fair value of equity investments at fair value through profit or loss are recognised in
other income / (other expenses) in the statement of profit or loss as applicable.

Dividends from such investments continue to be recognised in profit or loss as other income when the
Company’s right to receive payments is established.

2.11 Financial liabilities – classification and measurement

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified
as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including
any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured
at amortized cost using the effective interest method. Interest expense and foreign exchange gains and
losses are recognized in statement of profit or loss. Any gain or loss on de-recognition is also included in
profit or loss.

2.12 Impairment of financial assets

The Company recognizes loss allowances for ECLs on:

- Financial assets measured at amortized cost;

- Debt investments measured at FVTOCI; and
- Contract assets.

The Company measures loss allowances at an amount equal to lifetime ECLs, except for the following,
which are measured at 12-month ECLs:

- Debt securities that are determined to have low credit risk at the reporting date; and

- Other debt securities and bank balances 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.

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).

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 qualitative
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
 Annual Report 2021 55

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.

The Company has elected to measure loss allowances for trade debts using IFRS 9 simplified approach
and has calculated ECLs based on lifetime ECLs. The Company has established a matrix that is based
on the Company's historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment. 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 qualitative information and analysis, based on the Company's historical
experience and informed credit assessment including forward-looking information.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying
amount of the assets.

The gross carrying amount of a financial asset is written off when the Company has no reasonable
expectations of recovering of a financial asset in its entirety or a portion thereof. The Company
individually makes an assessment with respect to the timing and amount of write-off based on whether
there is a reasonable expectation of recovery. The Company expects no significant recovery from the
amount written off. However, financial assets that are written off could still be subject to enforcement
activities in order to comply with the Company's procedures for recovery of amounts due.

At each reporting date, the Company assesses whether financial assets carried at amortised cost and
debt securities at FVTOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more
events that have a detrimental impact on the estimated future cash flows of the financial asset have
occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:

- significant financial difficulty of the debtor;

- a breach of contract such as a default;
- the restructuring of a loan or advance by the Company on terms that the Company would not
consider otherwise;
- it is probable that the debtor will enter bankruptcy or other financial reorganization; or
- the disappearance of an active market for a security because of financial difficulties.

2.13 De-recognition of financial assets and financial liabilities

a) Financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the
asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which
substantially all of the risks and rewards of ownership of the financial asset are transferred, or it
neither transfers nor retains substantially all of the risks and rewards of ownership and does not
retain control over the transferred asset. Any interest in such derecognized financial assets that is
created or retained by the Company is recognized as a separate asset or liability.

b) Financial liabilities

The Company derecognizes a financial liability (or a part of financial liability) from its statement of
financial position when the obligation specified in the contract is discharged or cancelled or expires.

2.14 Offsetting of financial instruments

Financial assets and financial liabilities are set off and the net amount is reported in the financial
statements when there is a legal enforceable right to set off and the Company intends either to settle on
a net basis or to realize the assets and to settle the liabilities simultaneously.
 56 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2.15 Investment in subsidiaries

Investments in subsidiaries are stated at cost less impairment loss, if any, in accordance with the
provisions of IAS 27 'Separate Financial Statements'.

2.16 Investment in associates - (with significant influence)

The Company is required to prepare separate financial statements, hence, in accordance with the
requirements of IAS 27 'Separate Financial Statements', the investments in associates are accounted for
in accordance with IFRS 9 'Financial Instruments’ and are classified as fair value through other
comprehensive income (FVTOCI).

2.17 Inventories

Inventories, except for stock in transit and waste stock / rags, are stated at lower of cost and net
realizable value. Cost is determined as follows:

Stores, spare parts and loose tools

Useable stores, spare parts and loose tools are valued principally at moving average cost, while items
considered obsolete are carried at nil value. Items in transit are valued at cost comprising invoice value
plus other charges paid thereon.

Stock-in-trade

Cost of raw material, work-in-process and finished goods is determined as follows:

(i) For raw materials: Annual average basis.

(ii) For work-in-process and finished goods: Average manufacturing cost including a portion of
production overheads.

Materials in transit are valued at cost comprising invoice value plus other charges paid thereon. Waste
stock / rags are valued at net realizable value.

Net realizable value signifies the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make a sale.

2.18 Trade debts and other receivables

Trade debts are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses.

Other receivables are recognised at amortised cost, less any allowance for expected credit losses.

2.19 Non–current assets (or disposal groups) held for sale

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount
is to be recovered principally through a sale transaction and a sale is considered highly probable. They
are stated at the lower of carrying amount and fair value less costs to sell.

2.20 Borrowings

Financing and borrowings are recognized initially at fair value and are subsequently stated at amortized
cost. Any difference between the proceeds and the redemption value is recognized in the statement of
profit or loss over the period of the borrowings using the effective interest method.
 Annual Report 2021 57

2.21 Borrowing cost

Interest, mark-up and other charges on long-term finances are capitalized up to the date of
commissioning of respective qualifying assets acquired out of the proceeds of such long-term finances.
All other interest, mark-up and other charges are recognized in statement of profit or loss.

2.22 Share capital

Ordinary shares are classified as share capital. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax.

2.23 Trade and other payables

Liabilities for trade and other amounts payable are initially recognized at fair value, which is normally the
transaction cost.

2.24 Revenue recognition

Sale of goods

Revenue from the sale of goods is recognised at the point in time when the customer obtains control
of the goods, which is generally at the time of delivery.

Processing services

The Company provides processing services to local customers. These services are sold separately
and the Company’s contract with the customer for services constitute a single performance
obligation.

Revenue from services is recognized at the point in time, generally at the time of dispatch. There are
no terms giving rise to variable consideration under the Company’s contracts with its customers.

Interest

Interest income is recognised as interest accrues using the effective interest method. This is a
method of calculating the amortised cost of a financial asset and allocating the interest income over
the relevant period using the effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of the
financial asset.

Rent

Rent revenue from investment properties is recognised on a straight-line basis over the lease term.
Lease incentives granted are recognised as part of the rental revenue. Contingent rentals are
recognised as income in the period when earned.

Sale of electricity

Revenue from sale of electricity is recognized at the time of transmission.

Dividend

Dividend on investments is recognized when right to receive the dividend is established.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.
 58 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2.25 Contract assets

Contract assets arise when the Company performs its performance obligations by transferring goods to
a customer before the customer pays its consideration or before payment is due. Contract assets are
treated as financial assets for impairment purposes.

2.26 Customer acquisition costs

Customer acquisition costs are capitalised as an asset where such costs are incremental to obtaining a
contract with a customer and are expected to be recovered. Customer acquisition costs are amortised
on a straight-line basis over the term of the contract.

Costs to obtain a contract that would have been incurred regardless of whether the contract was
obtained or which are not otherwise recoverable from a customer are expensed as incurred to profit or
loss. Incremental costs of obtaining a contract where the contract term is less than one year is
immediately expensed to profit or loss.

2.27 Customer fulfilment costs

Customer fulfilment costs are capitalised as an asset when all the following are met: (i) the costs relate
directly to the contract or specifically identifiable proposed contract; (ii) the costs generate or enhance
resources of the Company that will be used to satisfy future performance obligations; and (iii) the costs
are expected to be recovered. Customer fulfilment costs are amortised on a straight-line basis over the
term of the contract.

2.28 Right of return assets

Right of return assets represents the right to recover inventory sold to customers and is based on an
estimate of customers who may exercise their right to return the goods and claim a refund. Such rights
are measured at the value at which the inventory was previously carried prior to sale, less expected
recovery costs and any impairment.

2.29 Contract liabilities

Contract liability is the obligation of the Company to transfer goods to a customer for which the Company
has received consideration from the customer. If a customer pays consideration before the Company
transfers goods, a contract liability is recognized when the payment is made. Contract liabilities are
recognized as revenue when the Company performs its performance obligations under the contract.

2.30 Refund liabilities

Refund liabilities are recognised where the Company receives consideration from a customer and expects
to refund some, or all, of that consideration to the customer. A refund liability is measured at the amount
of consideration received or receivable for which the Company does not expect to be entitled and is
updated at the end of each reporting period for changes in circumstances. Historical data is used across
product lines to estimate such returns at the time of sale based on an expected value methodology.

2.31 Provisions

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

2.32 Earnings per share

The Company presents earnings per share (EPS) data for its ordinary shares. EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year.
 Annual Report 2021 59

2.33 Contingent assets

Contingent assets are disclosed when the Company has a possible asset that arises from past events
and whose existence will only be confirmed by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the Company. Contingent assets are not
recognized until their realization becomes certain.

2.34 Contingent liabilities

Contingent liability is disclosed when the Company has a possible obligation as a result of past events
whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Company. Contingent liabilities are not recognized, only
disclosed, unless the possibility of a future outflow of resources is considered remote. In the event that
the outflow of resources associated with a contingent liability is assessed as probable, and if the size of
the outflow can be reliably estimated, a provision is recognized in the financial statements.

2.35 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to depreciation and are tested annually for
impairment. Assets that are subject to depreciation are reviewed for impairment at each statement of
financial position date or whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognized for the amount for which assets carrying
amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial
assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting
date. Reversals of the impairment losses are restricted to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been determined, net of depreciation or
amortization, if impairment losses had not been recognized. An impairment loss or reversal of impairment
loss is recognized in the statement of profit or loss.

2.36 Derivative financial instruments

Derivatives are initially recognized at fair value. Any directly attributable transaction costs are recognized
in the statement of profit or loss as incurred. They are subsequently remeasured at fair value on regular
basis and at each reporting date as a minimum, with all their gains and losses, realized and unrealized,
recognized in the statement of profit or loss.

2.37 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit
accounts and other short term highly liquid instruments that are readily convertible into known amounts
of cash and which are subject to insignificant risk of changes in values.

2.38 Ijara contracts

Under the Ijarah contracts the Company obtains usufruct of an asset for an agreed period for an agreed
consideration. The Company accounts for its Ijarah contracts in accordance with the requirements of
IFAS 2 ‘Ijarah’. Accordingly, the Company as a Mustaj’ir (lessee) in the Ijarah contract recognises the
Ujrah (lease) payments as an expense in the profit and loss on straight line basis over the Ijarah term.

2.39 Segment reporting

Segment reporting is based on the operating (business) segments of the Company. An operating
segment is a component of the Company that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to the transactions with any
of the Company's other components. An operating segment's operating results are reviewed regularly by
the chief executive officer to make decisions about resources to be allocated to the segment and assess
its performance, and for which discrete financial information is available.
 60 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
Segment results that are reported to the chief executive officer include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis. Those incomes, expenses, assets,
liabilities and other balances which cannot be allocated to a particular segment on a reasonable basis are
reported as unallocated.

The Company has following reportable business segments: Spinning at Faisalabad (I and II) and Feroze
Wattwan (I and II) (Producing different quality of yarn including dyed yarn and sewing thread using natural
and artificial fibres), Weaving at Bhikki and Lahore (Producing different quality of greige fabric using yarn),
Dyeing (Producing dyed fabric using different qualities of greige fabric), Home Textile (Manufacturing of
home textile articles using processed fabric produced from greige fabric), Terry (Manufacturing of terry
and bath products), Garments (Manufacturing of garments using processed fabric) and Power
Generation (Generation and distribution of power using gas, oil, steam, coal and biomass).

Transaction among the business segments are recorded at cost. Inter segment sales and purchases are
eliminated from the total.

2.40 Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that
the grant will be received and the Company will comply with all attached conditions.

Government grants relating to costs are deferred and recognised in the profit or loss over the period
necessary to match them with the costs that they are intended to compensate.

Government grants relating to the purchase of property, plant and equipment are included in non-current
liabilities as deferred income and are credited to profit or loss over the expected lives of the related
assets.

2.41 Dividend and other appropriations

Dividend distribution to the Company's shareholders is recognized as a liability in the Company's

financial statements in the period in which the dividends are declared and other appropriations are
recognized in the period in which these are approved by the Board of Directors.

3 ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL

2021 2020 2021 2020

(Number of Shares) Note (Rupees in thousand)

270,446,606 270,446,606 Ordinary shares of Rupees 10 each

fully paid-up in cash 2,704,466 2,704,466

2,804,079 2,804,079 Ordinary shares of Rupees 10 each

issued to shareholders of Nishat
Apparel Limited under the Scheme
of Amalgamation 28,041 28,041

23,577,990 23,577,990 Ordinary shares of Rupees 10 each

issued as fully paid for consideration
other than cash 3.1 235,780 235,780

54,771,173 54,771,173 Ordinary shares of Rupees 10 each

issued as fully paid bonus shares 547,712 547,712

351,599,848 351,599,848 3,515,999 3,515,999

3.1 These mainly include shares issued to members of Umer Fabrics Limited as per the Scheme of
Arrangement as approved by the Honourable Lahore High Court, Lahore.
 Annual Report 2021 61

3.2 Ordinary shares of the Company held by the associated companies:

2021 2020
(Number of Shares)

D.G. Khan Cement Company Limited 30,289,501 30,289,501

Adamjee Insurance Company Limited 2,050 2,050
MCB Bank Limited 227 227
Adamjee Life Assurance Company Limited 400 400
Nishat (Aziz Avenue) Hotels and Properties Limited 275,000 -
30,567,178 30,292,178

2021 2020
Note (Rupees in thousand)

4 RESERVES

Composition of reserves is as follows:

Capital reserves

Premium on issue of right shares 4.1 5,499,530 5,499,530

Fair value reserve FVTOCI investments - net
of deferred income tax 4.2 23,543,006 13,739,158
29,042,536 19,238,688
Revenue reserves

General reserve 47,266,028 45,165,028

Unappropriated profit 5,923,216 3,508,145
53,189,244 48,673,173
82,231,780 67,911,861

4.1 This reserve can be utilized by the Company only for the purposes specified in section 81 of the
Companies Act, 2017.

4.2 This represents the unrealized gain on re-measurement of investments at fair value through other
comprehensive income and is not available for distribution. Reconciliation of fair value reserve - net of
deferred tax is as under:

2021 2020
Note (Rupees in thousand)

Balance as on 01 July 14,041,830 11,241,893

Less: Fair value adjustment during the year 10,400,145 2,799,937
24,441,975 14,041,830

Less: Deferred income tax liability (898,969) (302,672)

Balance as on 30 June 23,543,006 13,739,158

5 LONG TERM FINANCING - SECURED

Long term loans 5.1 12,802,915 9,210,417

Long term musharika 5.2 1,773,910 715,396
14,576,825 9,925,813
Less: Current portion shown under current liabilities 10 (2,998,910) (703,032)
11,577,915 9,222,781
 62 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021

Rate of Number of Interest Interest

Lender 2021 2020 Interest Per Security
Installments Repricing Payable
Annum
(Rupees in thousand)

5.1 Long term loans

Allied Bank - 16,060 3 Month Twenty four Quarterly Quarterly First pari passu hypothecation
Limited offer KIBOR equal quarterly charge of Rupees 1,334
+ 0.50% installments million over all present and
commenced on future plant, machinery and
24 August 2014 equipment of the Company
and ended on (excluding plant and
24 May 2021 machinery in respect of which
(Note 5.4). the Company has already
created exclusive charges in
the favour of its existing
creditors).

Allied Bank 571,582 609,478 SBP rate for Two hundred - Quarterly First pari passu charge of
Limited LTFF and twenty unequal Rupees 1,333 million
+ 0.25% installments (inclusive of 25% margin on all
commenced present and future plant and
on 27 March 2018 machinery of the Company).
and ending on
05 June 2024
(Note 5.4).

Allied Bank 739,561 772,933 SBP rate for Four hundred - Quarterly First pari passu hypothecation
Limited LTFF and eighty four charge of Rupees 1,334
+ 0.25% unequal installments million over all present and
commenced on future plant, machinery and
28 December 2018 equipment of the Company
and ending on (excluding plant and
13 July 2025 machinery in respect of which
(Note 5.4). the Company has already
created exclusive charges in
the favour of its existing
creditors).

Allied Bank 869,087 908,011 SBP rate for Two hundred - Quarterly First pari passu charge of
Limited LTFF and twenty unequal Rupees 1,267 million over all
+ 0.25% installments present and future plant,
commenced on machinery and equipment of
26 January 2020 the Company (excluding plant
and ending on and machinery in respect of
17 September 2026 which the Company has
(Note 5.4). already created exclusive
charges in the favour of its
existing creditors).

Allied Bank 222,715 222,715 SBP rate for Sixty unequal - Quarterly
Limited LTFF installments
+ 0.35% commencing on
24 January 2022
and ending on
28 October 2026.
First pari passu charge of
545,572 546,274 SBP rate for Four hundred and - Quarterly Rupees 1,267 million over all
LTFF forty three unequal present and future plant,
+ 0.50% installments machinery and equipment of
commenced on the Company (excluding plant
18 May 2021 and machinery in respect of
and ending on which the Company has
11 February 2027. already created exclusive
charges in the favour of its
95,000 100,000 SBP rate for Twenty equal - Quarterly existing charge holders /
financing quarterly installments creditors).
power plants commenced on
using 14 May 2021
renewable and ending on
energy 14 February 2026.
+ 0.50%

863,287 868,989
 Annual Report 2021 63

Rate of Number of Interest Interest

Lender 2021 2020 Interest Per Security
Installments Repricing Payable
Annum
(Rupees in thousand)

Allied Bank 716,713 891,696 SBP rate for Sixteen unequal - Quarterly First pari passu hypothecation
Limited refinance installments charge of Rupees 1,334
scheme for commenced on million over all the present
payment of 01 January 2021 and future plant, machinery
salaries and and ending on and equipment of the
wages 16 November 2022 Company (excluding plant
+ 0.50% (Note 5.6). and machinery in respect of
which the Company has
already created exclusive
charges in favour of its
existing creditors).

Askari Bank 315,989 - SBP rate for Two hundred twenty - Quarterly Ranking charge of Rupees
Limited LTFF unequal installments 467 million over all present
+ 0.65% commencing on and future plant, machinery
23 February 2022 and equipment (excluding all
and ending on exclusive charges over plant
05 April 2027. and machinery) of the
Company.

Bank Alfalah 548,500 596,935 SBP rate for Four hundred and - Quarterly First pari passu charge of
Limited LTFF sixty unequal Rupees 1,334 million on all
+ 0.35% installments present and future plant and
commenced on machinery (excluding plant
02 February 2018 and machinery in respect of
and ending on which the Company has
25 May 2024 already created exclusive
(Note 5.4). charges in the favour of
existing creditors).

Bank Alfalah 168,547 182,592 SBP rate Twenty equal - Quarterly First pari passu hypothecation
Limited for LTFF quarterly installments charge of Rupees 400 million
+ 0.35% commenced on over all present and future
31 August 2018 plant and machinery of the
and ending on Company (excluding plant
31 May 2024 and machinery in respect of
(Note 5.4). which the Company has
already created exclusive
charges in favour of existing
charge holders).

Bank Alfalah 218,714 218,714 SBP rate One hundred - Quarterly

Limited for LTFF unequal installments
First pari passu hypothecation
+ 0.50% commencing on
charge of Rupees 1,334
23 December 2021
million on all present and
and ending on
future plant and machinery
21 October 2026.
(excluding plant and
Bank Alfalah 761,853 - SBP rate Forty unequal - Quarterly machinery in respect of which
Limited for TERF installments the Company has already
+ 1.00% commencing on created exclusive charges in
28 August 2022 favour of its existing charge
and ending on holders).
09 June 2027
(Note 5.8).

Faysal Bank 119,156 139,016 SBP rate Twenty unequal - Quarterly First pari passu charge of
Limited for LTFF installments Rupees 267 million on all
+ 0.30% commenced on present and future plant and
22 November 2018 machinery of the Company
and ending on (excluding those on which
24 May 2024 charge has already been
(Note 5.4). created).

Faysal Bank 266,725 267,338 SBP rate Eighty unequal - Quarterly First pari passu charge of
Limited for LTFF installments Rupees 400 million on all
+ 0.30% commenced on present and future plant and
18 January 2020 machinery (excluding plant
and ending on and machinery in respect of
05 November 2025 which the Company has
(Note 5.4). already created exclusive
charges in favour of existing
creditors).
 64 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021

Rate of Number of Interest Interest

Lender 2021 2020 Interest Per Security
Installments Repricing Payable
Annum
(Rupees in thousand)

Habib Bank 424,904 461,591 SBP rate One hundred and - Quarterly Note 5.3
Limited for LTFF eighty unequal
+ 0.40% installments
commenced on
17 September 2017
and ending on
25 November 2023
(Note 5.4).

Habib Bank 668,592 705,753 SBP rate Twenty equal - Quarterly

Limited for LTFF quarterly installments
First pari passu charge of
+ 0.25% commenced on
Rupees 4,084 million over all
27 February 2020
present and future plant,
and ending on
machinery and equipment of
27 November 2025
the Company (excluding plant
(Note 5.4).
and machinery in respect of
which the Company has
already created exclusive
192,827 231,392 SBP rate for Twenty equal - Quarterly charges in the favour of its
financing quarterly installments existing creditors).
power plants commenced on
using 27 February 2020 and
renewable ending on
energy 27 November 2024.
+ 0.25%

861,419 937,145

Habib 997,499 866,900 SBP rate One hundred - Quarterly First pari passu hypothecation
Metropolitan for LTFF unequal installments charge of Rupees 1,334
Bank Limited + 0.65% commencing on million over plant and
24 September 2021 machinery (excluding plant
and ending on and machinery in respect of
22 July 2026. which the Company has
already created exclusive
charges in favour of its
existing charge holders).

Habib 842,390 - SBP rate Ninety six unequal - Quarterly Ranking charge of Rupees
Metropolitan for TERF installments 1,334 million over plant and
Bank Limited + 0.85% commencing on machinery of the Company.
19 July 2023 and
ending on
11 June 2031
(Note 5.8).

National Bank 39,028 44,466 SBP rate One hundred and - Quarterly First pari passu hypothecation
of Pakistan for LTFF twenty unequal charge of Rupees 534 million
+ 0.50% installments on all present and future plant
commenced on and machinery (excluding
12 April 2017 and plant and machinery which is
ending on under exclusive charges in
03 June 2023 favour of creditors).
(Note 5.4).

National Bank 139,545 - 3 Month Sixty four unequal Quarterly Quarterly Ranking charge of Rupees
of Pakistan offer installments 1,334 million on present and
KIBOR commencing on future plant and machinery
+ 1.50% 17 September 2023 (excluding plant and
and ending on machinery in respect of which
23 June 2031 the Company has already
(Note. 5.5). created exclusive charges in
favour of its existing charges
holders / creditors).
 Annual Report 2021 65

Rate of Number of Interest Interest

Lender 2021 2020 Interest Per Security
Installments Repricing Payable
Annum
(Rupees in thousand)

Pak Brunei 188,286 202,474 SBP rate Three hundred - Quarterly First pari passu charge of
Investment for LTFF and twenty unequal Rupees 400 million over all
Company Limited + 0.25% installments the present and future plant
commenced on and machinery of the
30 August 2018 Company with 25% margin
and ending on excluding those assets (part
28 December 2024 of the plant and machinery)
(Note 5.4). on which the Company has
created exclusive charges in
favour of existing creditors.

Pakistan Kuwait 35,679 42,174 SBP rate One hundred and - Quarterly
First pari passu charge of
Investment for LTFF sixty unequal
Rupees 400 million on all
Company (Private) + 1.00% installments
present and future plant and
Limited commenced on
machinery of the Company
11 June 2016 and
with 25% margin.
ending on
26 January 2023
Ranking hypothecation
(Note 5.4).
charge of Rupees 267 million
14,807 16,440 SBP rate Two hundred and - Quarterly on plant and machinery of the
for LTFF fifty eight unequal Company (excluding plant
+ 0.75% installments and machinery in respect of
commenced on which the Company has
15 September 2016 already created exclusive
and ending on charges in favour of its
29 September 2023 existing charge holders /
(Note 5.4). creditors).

50,486 58,614

Pakistan Kuwait 981,040 998,210 SBP rate for Seventy two unequal - Quarterly First pari passu hypothecation
Investment LTFF installments charge of Rupees 1,334
Company (Private) + 0.65% commenced on million on all present and
Limited 10 May 2021 and future plant and machinery
ending on (excluding plant and
13 January 2028. machinery in respect of which
the Company has already
created exclusive charges in
favour of its existing charge
holders / creditors) of the
Company with 25% margin.

The Bank 146,755 169,255 SBP rate for One hundred and - Quarterly First pari passu charge of
of Punjab LTFF sixty unequal Rupees 667 million on all
+ 0.50% installments present and future plant and
commenced on machinery (other than the
30 January 2017 and specific machinery against
ending on 07 April 2023 which exclusive charges have
(Note 5.4). already been created in
favour of existing charge
holders) of the Company.

United Bank 110,980 - 3 Month Thirty two equal Quarterly Quarterly

Limited offer installments
KIBOR commencing on
+ 1.25% 28 September 2023 Ranking charge of Rupees
and ending on 3,000 million over all present
28 June 2031 and future plant and
(Note. 5.5). machinery (excluding those
assets over which exclusive
1,860,869 - SBP rate Four hundred eighty - Quarterly charges have already been
for TERF unequal installments created in favour of existing
+ 1.25% commencing on creditors) of the Company.
08 July 2023 and
ending on
11 June 2031
(Note 5.8).
1,971,849 -

12,802,915 9,210,417
 66 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021

Rate of Number of Interest Interest

Lender 2021 2020 Interest Per Security
Installments Repricing Payable
Annum
(Rupees in thousand)

5.2 Long term musharika

Habib Bank - 27,896 3 Month offer Fifty six unequal Quarterly Quarterly Note 5.3
Limited KIBOR + installments
0.35% commenced on
19 May 2016 and
ended on
01 June 2021
(Note 5.4).

Standard - 687,500 3 Month offer Seventeen unequal Quarterly Quarterly Specific charge of Rupees
Chartered Bank KIBOR installments 1,339 million over fixed assets
(Pakistan) Limited commenced on of the Company inclusive of
14 February 2019 25% margin.
and ended on
25 May 2021.

Faysal Bank 707,633 - SBP rate for Eight equal quarterly - Quarterly First pari passu charge of
Limited Islamic installments Rupees 1,333 million over all
refinance commenced on the present and future plant,
scheme for 30 March 2021 and machinery and equipment of
payment of ending on the Company (excluding plant
salaries and 30 December 2022 and machinery in respect of
wages (Note 5.7). which the Company has
+ 0.50% already created exclusive
charges in favour of its
existing creditors).

Faysal Bank 803,328 - SBP rate for Two hundred - Quarterly

Limited ILTFF unequal installments First pari passu charge of
+ 0.70% commencing on Rupees 2,200 million over
24 March 2022 and present and future plant,
ending on machinery and equipment of
25 June 2027. the Company (excluding plant
and machinery in respect of
262,949 - SBP rate for Forty unequal - Quarterly which the Company has
Islamic installments already created exclusive
renewable commencing on charges in favour of its
energy 07 July 2022 and existing charge holders /
financing ending on creditors).
scheme 26 February 2027.
1,066,277 - + 0.70%
1,773,910 715,396

14,576,825 9,925,813

5.3 Long term loan and long term musharika from Habib Bank Limited are secured against first pari passu hypothecation charge of
Rupees 4,000 million on present and future fixed assets of the Company excluding specific and exclusive charges.

5.4 Repayment period includes deferment of repayment of principal loan amount by one year in accordance with the State Bank of
Pakistan BPRD Circular Letter No. 13 of 2020 dated 26 March 2020.

5.5 During the year, these long term loans did not carry rate of interest of State Bank of Pakistan Temporary Economic Refinance
Facility (TERF). Hence, does not contain any element of government grant.

5.6 This long term loan is obtained by the Company under SBP Refinance Scheme for payment of salaries and wages . This is
recognized and measured in accordance with IFRS 9 'Financial Instruments'. Fair value adjustment is recognized at discount rate
ranging from 6.87% to 7.36% per annum.

5.7 This long term musharika is obtained by the Company under SBP Islamic Refinance Scheme for payment of salaries and wages .
This is recognized and measured in accordance with IFRS 9 'Financial Instruments'. Fair value adjustment is recognized at
discount rate ranging from 7.45% to 7.49% per annum.

5.8 These loans are obtained by the Company under SBP Temporary Economic Refinance Facility (TERF). These are recognized and
measured in accordance with IFRS 9 'Financial Instruments'. Fair value adjustment is recognized at discount rate of 2.60% per
annum.
 Annual Report 2021 67

2021 2020
Note (Rupees in thousand)

6 DEFERRED LIABILITIES

Deferred income tax 6.1 898,969 302,672

Gas Infrastructure Development Cess (GIDC) payable 6.2 78,039 -
Deferred income - Government grant 6.3 78,984 -
1,055,992 302,672

6.1 This represents deferred income tax liability on unrealized gain on remeasurement of investments at fair
value through other comprehensive income. Provision for deferred income tax on other temporary
differences was not considered necessary as the Company is chargeable to tax under section 169 of the
Income Tax Ordinance, 2001.

6.2 Gas Infrastructure Development Cess (GIDC) Payable

2021 2020
Note (Rupees in thousand)

Gas Infrastructure Development Cess payable at amortized cost 1,299,041 -

Add: Adjustment due to impact of IFRS 9 33 73,562 -
Less: Payments made during the year (168,369) -
Balance as on 30 June 1,204,234 -
Less: Current portion shown under current liabilities 10 (1,126,195) -
78,039 -

6.2.1 This represents Gas Infrastructure Development Cess (GIDC) that was levied through GIDC Act, 2015.
During the year, Honourable Supreme Court of Pakistan upheld the GIDC Act, 2015 to be constitutional
and intra vires. The Company has filed a review petition in Honourable Sindh High Court, Karachi which is
pending adjudication. GIDC payable has been recognized at amortized cost in accordance with IFRS 9.

2021 2020
Note (Rupees in thousand)

6.3 Deferred income - Government grant

Government grant recognized during the year 253,819 -

Less: Amortized during the year (93,817) -
160,002 -
Less: Current portion shown under current liabilities 10 (81,018) -
78,984 -

6.3.1 The State Bank of Pakistan (SBP), through its Circular No. 01 and 02 of 2020 dated 17 March 2020 and
Circular No. 09 of 2020 dated 08 May 2020 introduced a Temporary Economic Refinance Facility (TERF)
for setting of new industrial units and for undertaking Balancing, Modernization and Replacement and /
or expansion of projects / businesses and through Circular No. 06 of 2020 dated 10 April 2020 introduced
a Refinance Scheme for payment of wages and salaries to the workers and employees of business
concerns. These refinances were available through Banks / DFIs. One of the key feature of these
refinance facilities is that borrowers can obtain loan at mark-up rates that are below normal lending rates.
As per International Accounting Standard (IAS) 20 'Accounting for Government Grants and Disclosure of
Government Assistance', the benefit of a Government loan at a below-market rate of interest is treated
as a Government grant. The Company has obtained these loans as disclosed in note 5 to the financial
statements. In accordance with IFRS 9 'Financial Instruments', loans obtained under the refinance
 68 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
facilities were initially recognized at fair value which is the present value of loans proceeds received,
discounted using prevailing market rates of interest for a similar instrument. Hence, the benefit of the
below-market rate of interest has been measured as the difference between the initial carrying value of
the loan determined in accordance with IFRS 9 and the proceeds received. This benefit is accounted for
and presented as deferred grant in accordance with IAS 20. The grant is being amortized in the statement
of profit or loss, in line with the recognition of interest expense the grant is compensating. There are no
unfulfilled conditions or contingencies attached to this grant.

2021 2020
Note (Rupees in thousand)

7 TRADE AND OTHER PAYABLES

Creditors 7.1 5,637,086 6,167,454

Sindh infrastructure cess payable 7.2 614,314 521,840
Accrued liabilities 1,627,183 1,415,195
Contract liabilities - unsecured 7.1 1,173,749 956,879
Securities from contractors - Interest free and
repayable on completion of contracts 7.3 13,940 13,561
Retention money payable 64,126 32,156
Payable to Employees' Provident Fund Trust 33 39,988
Income tax deducted at source 846 782
Fair value of forward exchange contracts 57,429 6,206
Workers' profit participation fund 7.4 318,505 203,916
Workers' welfare fund 5,093 -
9,512,304 9,357,977

7.1 These include amounts due to following related parties:

Creditors

Nishat Linen (Private) Limited - subsidiary company 165,768 103,068

Nishat USA Inc. - subsidiary company 3,502 3,665
Nishat Hospitality (Private) Limited - subsidiary company - 132
Hyundai Nishat Motor (Private) Limited - associated company - 37
D.G. Khan Cement Company Limited - associated company - 8,376
Security General Insurance Company Limited
- associated company 10,489 25,008
Adamjee Insurance Company Limited - associated company 20,626 15,382
Nishat Hotels and Properties Limited - associated company 17 289
Sanifa Agri Services Limited - associated company - 403
Nishat (Chunian) Limited - related party 46,530 173,798
246,932 330,158

Contract liabilities - unsecured

Nishat Hotels and Properties Limited - associated company - 820

Nishat (Chunian) Limited - related party 10 -
10 820
 Annual Report 2021 69

2021 2020
(Rupees in thousand)

7.2 Sindh infrastructure cess payable

Balance as on 01 July 521,840 432,106

Add: Provision made during the year 92,474 89,734
Balance as on 30 June 614,314 521,840

7.2.1 This represents provision for infrastructure cess imposed by the Province of Sindh through Sindh Finance
Act, 1994 and its subsequent versions including the final version i.e. Sindh Development and
Maintenance of Infrastructure Cess Act, 2017. The Company filed writ petition in Honourable Sindh High
Court, Karachi whereby stay was granted and directions were given to provide bank guarantees in favor
of Director Excise and Taxation, Karachi. The Honourable Sindh High Court, Karachi passed order dated
04 June 2021 against the Company and directed that bank guarantees should be encashed. Being
aggrieved by the order, the Company along with others filed petitions for leave to appeal before
Honourable Supreme Court of Pakistan against the Sindh High Court’s judgment in relation to Sindh
infrastructure development cess. On 01 September 2021, after hearing the petitioners, the Honourable
Supreme Court dictated the order in open court granting leave to appeal to the petitioners and restraining
the Sindh Government from encashing the bank guarantees furnished in pursuance of the interim orders
passed by the Sindh High Court. The Honourable Supreme Court also direct the release of future
consignments subject to furnishing of bank guarantees for the disputed amount.

7.3 These deposits have been utilized for the purpose of business in accordance with the terms of written
agreements with contractors.

2021 2020
Note (Rupees in thousand)

7.4 Workers' profit participation fund

Balance as on 01 July 203,916 311,682

Add: Provision for the year 31 318,505 204,045
Add: Interest for the year 33 179 3,826
522,600 519,553
Less: Payments during the year (204,095) (315,637)
Balance as on 30 June 318,505 203,916

7.4.1 Interest is paid at prescribed rate under the Companies Profits (Workers Participation) Act, 1968 on funds
utilized by the Company till the date of allocation to workers.

2021 2020
Note (Rupees in thousand)

8 ACCRUED MARK-UP

Long term financing 73,458 49,687

Short term borrowings 8.1 122,924 176,541
196,382 226,228

8.1 This includes mark-up of Rupees 1.637 million (2020: Rupees 2.803 million) payable to MCB Bank
Limited - associated company.
 70 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

9 SHORT TERM BORROWINGS

From banking companies - secured

State Bank of Pakistan (SBP) refinance 9.1 & 9.3 17,503,652 14,184,868
Other short term finances 9.1 & 9.4 - 2,743,549
Temporary bank overdrafts 9.1, 9.2 & 9.5 1,214,610 2,401,351
18,718,262 19,329,768

9.1 These finances are obtained from banking companies under mark up arrangements and are secured
against joint pari passu hypothecation charge on all present and future current assets, other instruments
and ranking hypothecation charge on plant and machinery of the Company.

9.2 These finances include Rupees 278.182 million (2020: Rupees 76.206 million) from MCB Bank Limited -
associated company, which has been utilized for working capital requirements.

9.3 The rates of mark-up range from 2.20% to 3.00% (2020: 2.15% to 3.00%) per annum during the year on
the balance outstanding.

9.4 The rates of mark-up range from 1.87% to 8.52% (2020: 1.87% to 14.01%) per annum during the year
on the balance outstanding.

9.5 The rates of mark-up range from 7.05% to 9.28% (2020: 8.75% to 15.56%) per annum during the year
on the balance outstanding.

2021 2020
Note (Rupees in thousand)

10 CURRENT PORTION OF NON-CURRENT LIABILITIES

Current portion of long term financing - secured 5 2,998,910 703,032

Current portion of GIDC payable 6.2 1,126,195 -
Current portion of deferred income - Government grant 6.3 81,018 -
4,206,123 703,032

11 UNCLAIMED DIVIDEND

97,617 90,596

12 CONTINGENCIES AND COMMITMENTS

a) Contingencies

i) Guarantees of Rupees 3,438.360 million (2020: Rupees 2,941.607 million) are given by the banks of
the Company to Sui Northern Gas Pipelines Limited against gas connections, Shell Pakistan Limited
and Pakistan State Oil Limited against purchase of furnace oil, Director Excise and Taxation, Karachi
against infrastructure cess, Chairman Punjab Revenue Authority, Lahore against infrastructure cess,
Directorate of Cotton Cess Management against cotton cess, Collector of Customs against
regulatory duty, State Bank of Pakistan against mark-up subsidy, Inspector General Frontier Corps
KP (South) and The President of Islamic Republic of Pakistan through the Controller of Military
Accounts (Defence Purchase) against fulfillment of sales orders, High Court of Sindh, Karachi against
 Annual Report 2021 71

the matter of importation of LED lights and to the bank of Hyundai Nishat Motor (Private) Limited
(associated company) to secure financial assistance to the associated company. Further, the
Company has issued cross corporate guarantees of Rupees 1,173.333 million (2020: Rupees
266.667 million), Rupees 41.600 million (2020: Rupees 21.600 million) and Rupees 1,750 million
(2020: Rupees Nil) on behalf of Nishat Linen (Private) Limited - wholly owned subsidiary company,
Nishat Hospitality (Private) Limited - wholly owned subsidiary company and Nishat Sutas Dairy
Limited - associated company respectively to secure the obligations of subsidiary companies and
associated company towards their lenders.

ii) Post dated cheques of Rupees 10,758.912 million (2020: Rupees 8,223.314 million) are issued to
customs authorities in respect of duties on imported items availed on the basis of consumption and
export plans. If documents of exports are not provided on due dates, cheques issued as security
shall be encashable.

b) Commitments

i) Contracts for capital expenditure are approximately of Rupees 3,469.028 million

(2020: Rupees 297.715 million).

ii) Letters of credit other than for capital expenditure are of Rupees 4,219.586 million
(2020: Rupees 2,146.440 million).

iii) Outstanding foreign currency forward contracts of Rupees 6,400.041 million

(2020: Rupees 389.348 million).

2021 2020
Note (Rupees in thousand)

13 PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 13.1 29,713,681 28,834,861

Capital work-in-progress 13.2 6,212,913 2,457,861
35,926,594 31,292,722
13.1 Operating fixed assets

Furniture,
72

Buildings on
Freehold Plant and Electric Factory fixtures and Computer
freehold Vehicles Total
land machinery installations equipment office equipment
land
equipment
(Rupees in thousand)
At 30 June 2019
Cost 1,810,233 11,496,248 35,828,163 1,008,932 425,869 436,140 235,063 657,474 51,898,122
Accumulated depreciation - (4,924,129) (16,875,970) (612,922) (243,526) (255,210) (193,228) (342,238) (23,447,223)
Net book value 1,810,233 6,572,119 18,952,193 396,010 182,343 180,930 41,835 315,236 28,450,899

Year ended 30 June 2020

Opening net book value 1,810,233 6,572,119 18,952,193 396,010 182,343 180,930 41,835 315,236 28,450,899
For the year ended June 30, 2021

Additions 26,823 393,818 2,582,793 10,379 5,686 18,699 24,577 146,230 3,209,005
Disposals:
Cost - (4,300) (143,885) (1,575) - (230) (2,395) (82,596) (234,981)
Accumulated depreciation - 3,302 100,439 1,001 - 83 1,687 54,733 161,245
- (998) (43,446) (574) - (147) (708) (27,863) (73,736)
Depreciation charge - (660,111) (1,927,042) (40,130) (18,538) (19,574) (15,942) (69,970) (2,751,307)
Closing net book value 1,837,056 6,304,828 19,564,498 365,685 169,491 179,908 49,762 363,633 28,834,861

At 30 June 2020
Cost 1,837,056 11,885,766 38,267,071 1,017,736 431,555 454,609 257,245 721,108 54,872,146
Accumulated depreciation - (5,580,938) (18,702,573) (652,051) (262,064) (274,701) (207,483) (357,475) (26,037,285)
Notes to the Financial Statements

Net book value 1,837,056 6,304,828 19,564,498 365,685 169,491 179,908 49,762 363,633 28,834,861

Year ended 30 June 2021

Opening net book value 1,837,056 6,304,828 19,564,498 365,685 169,491 179,908 49,762 363,633 28,834,861
Additions 20,823 515,129 3,135,514 31,570 17,196 38,765 23,453 186,739 3,969,189
Reversal of provision (98,528) - - - - - - - (98,528)

Transferred to investment properties:

Cost (19,541) (99,410) - - - - - - (118,951)
Accumulated depreciation - 90,155 - - - - - - 90,155
(19,541) (9,255) - - - - - - (28,796)
Disposals:
Cost (62,001) - (142,994) - - - (1,986) (78,346) (285,327)
Accumulated depreciation - - 118,234 - - - 1,583 46,056 165,873
(62,001) - (24,760) - - - (403) (32,290) (119,454)

Depreciation charge - (651,571) (2,020,417) (38,031) (17,857) (19,816) (18,358) (77,541) (2,843,591)
Nishat Mills Limited

Closing net book value 1,677,809 6,159,131 20,654,835 359,224 168,830 198,857 54,454 440,541 29,713,681

At 30 June 2021
Cost 1,677,809 12,301,485 41,259,591 1,049,306 448,751 493,374 278,712 829,501 58,338,529
Accumulated depreciation - (6,142,354) (20,604,756) (690,082) (279,921) (294,517) (224,258) (388,960) (28,624,848)
Net book value 1,677,809 6,159,131 20,654,835 359,224 168,830 198,857 54,454 440,541 29,713,681

Annual rate of depreciation (%) - 10 10 10 10 10 30 20

13.1.1 Detail of operating fixed assets, exceeding the book value of Rupees 500,000, disposed of during the year is as follows:

Quantity Accumulated Net book Sale Gain / Mode of

Description Cost Particulars of purchasers
Nos. depreciation value proceeds (Loss) disposal

(Rupees in thousand)

Freehold Land

Land 68K-1/2S - 61,984 - 61,984 67,000 5,016 Negotiation Nishat Sutas Dairy Limited - associated company, Lahore.
61,984 - 61,984 67,000 5,016

Plant and Machinery

Picanol Optimax (Dobby) Loom 4 24,540 17,475 7,065 9,000 1,935 Negotiation Union Denim Mills, Karachi.
Rotary Printing Machine Stork 1 56,794 47,877 8,917 9,000 83 Negotiation Lahore Dyeing & Printing Mills Limited, Lahore.
Annual Report 2021

Savio Cone Winder 1 9,394 7,812 1,582 1,581 (1) Negotiation Venus Industries (Private) Limited, Faisalabad.
Air Compressor & Air Dryer 6 20,183 18,804 1,379 3,500 2,121 Negotiation Gagan Textile, Karachi.
Toyota Air Jet Looms 3 7,174 5,939 1,235 4,350 3,115 Negotiation Gagan Textile, Karachi.
Toyota Air Jet Looms 3 9,566 7,923 1,643 5,800 4,157 Negotiation Gagan Textile, Karachi.
Stitching Machines 125 3,525 2,759 766 583 (183) Negotiation Mr. Habib-ur-Rehman, Faisalabad.
Chiller LG Double Steam 1 5,329 4,369 960 1,455 495 Negotiation Iceberg Industries (Private) Limited, Lahore.
136,505 112,958 23,547 35,269 11,722

Vehicles

Honda Civic LE-16A-1745 1 3,072 1,706 1,366 2,700 1,334 Negotiation Mr. Abdullah Khalid, Lahore.
Toyota Corolla LEC-15-6451 1 1,683 1,110 573 851 278 Company's Policy Mr. Mateen Javaid, Company's employee, Faisalabad.
Toyota Corolla LEC-15-2519 1 1,693 1,137 556 903 347 Company's Policy Mr. Sardar Mahmood Akhtar, Company's employee, Lahore.
Honda City LEB-16-1269 1 1,706 1,074 632 910 278 Company's Policy Mr. Mumtaz Hassan, Company's employee, Lahore.
Suzuki Swift LEF-16-2702 1 1,332 809 523 709 186 Company's Policy Mr. Kamran Shafique Hashmi, Company's employee, Lahore.
Hyundai Tucson AAC-254 1 5,809 702 5,107 5,500 393 Negotiation Mr. Musa Ayub Khan, Lahore.
Suzuki Swift LED-16-3239 1 1,328 807 521 708 187 Company's Policy Mr. Ikhlaq Ahmad, Company's employee, Lahore.
Toyota Corolla LEB-18A-4941 1 2,927 1,014 1,913 2,927 1,014 Negotiation Mr. Najam Yousaf, Company’s employee, Lahore.
Honda Civic LEH-16-6047 1 2,436 1,463 973 1,312 339 Company's Policy Mr. Najam Yousaf, Company’s employee, Lahore.
Toyota Corolla LEF-15-5460 1 1,684 1,073 611 899 288 Company's Policy Mr. Rana Hammad Latif Khan, Company's employee, Lahore.
Suzuki Cultus LEH-17-3801 1 1,276 630 646 875 229 Negotiation Mr. Kashif Nazir, Company's ex-employee, Faisalabad.
Honda City LEB-18A-4424 1 1,348 490 858 1,183 325 Negotiation Mr. Rashid Ali, Company's ex-employee, Faisalabad.
Suzuki Swift LEC-16-1538 1 1,468 923 545 783 238 Company's Policy Mr. Rahat Ali, Company's employee, Faisalabad.
Toyota Corolla LEF-15-1831 1 1,695 1,152 543 905 362 Company's Policy Mr. Mukhtar Ahmad, Company's employee, Lahore.
Toyota Corolla LED-18-2590 1 1,825 705 1,120 1,750 630 Insurance Claim Security General Insurance Company Limited
- associated company, Lahore.
31,282 14,795 16,487 22,915 6,428

Aggregate of other items of property,

plant and equipment with individual
73

book values not exceeding Rupees 500,000 55,556 38,120 17,436 46,872 29,436

285,327 165,873 119,454 172,056 52,602

 74 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

13.1.2 Depreciation charge for the year has

been allocated as follows:

Cost of sales 28 2,751,106 2,642,450

Distribution cost 29 10,415 8,322
Administrative expenses 30 71,955 82,994
Capital work-in-progress 10,115 17,541
2,843,591 2,751,307

13.1.3 Particulars of immovable properties (i.e. land and buildings) are as follows:

Manufacturing units and office Address Area of land

Acres

Manufacturing units

Spinning units and Yarn dyeing unit Nishatabad, Faisalabad. 86.56

Spinning units and Power plant Plot No. 172-180 & 188-197, M-3 Industrial City, 90.45
Sahianwala, FIEDMC, 2 K.M., Jhumra
Chiniot Road, Chak Jhumra, Faisalabad.

Spinning units and Power plant 20 K.M., Sheikhupura Road, Feroze Wattwan. 67.12

Weaving units and Power plant 12 K.M., Faisalabad Road, Sheikhupura. 85.53

Weaving units, Dyeing and finishing 5 K.M., Nishat Avenue, Off 22 K.M., Ferozepur 115.64
units, Processing unit, Stitching Road, Lahore.
units and Power plants

Terry unit 7 K.M., Nishat Avenue, Off 22 K.M., Ferozepur 12.54

Road, Lahore.

Apparel unit 2 K.M., Nishat Avenue, Off 22 K.M., Ferozepur 16.32

Road, Lahore.

Office 7-Main Gulberg, Lahore. 1.12

475.28
13.2 Capital-work-in-progress

Furniture,
Advances for Buildings on Unallocated
Plant and Electric fixtures
purchase of freehold Vehicles capital Total
machinery installations and office
freehold land land expenditures
equipment

(Rupees in thousand)
At 30 June 2019 23,658 86,916 370,471 1,163 1,948 11,283 21,881 517,320

Add: Additions during the year 32,612 598,310 3,716,773 5,321 11,730 141,206 99,195 4,605,147

Less: Transferred to operating fixed assets

during the year (26,823) (389,265) (2,062,056) (4,820) (11,632) (146,230) (23,780) (2,664,606)

At 30 June 2020 29,447 295,961 2,025,188 1,664 2,046 6,259 97,296 2,457,861
Annual Report 2021

Add: Additions during the year 12,054 1,679,455 5,225,387 34,017 29,629 215,262 36,263 7,232,067

Less: Transferred to operating fixed assets

during the year (15,008) (484,796) (2,623,730) (18,113) (19,056) (186,739) (129,573) (3,477,015)

At 30 June 2021 26,493 1,490,620 4,626,845 17,568 12,619 34,782 3,986 6,212,913

13.2.1 Vehicles include advance of Rupees 2.878 million given to Hyundai Nishat Motor (Private) Limited.
75
 76 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
14 INVESTMENT PROPERTIES

Note Land Buildings Total

(Rupees in thousand)

At 30 June 2019
Cost 415,672 175,034 590,706
Accumulated depreciation - (130,732) (130,732)
Net book value 415,672 44,302 459,974

Year ended 30 June 2020

Opening net book value 415,672 44,302 459,974
Depreciation charge 31 - (4,430) (4,430)
Closing net book value 415,672 39,872 455,544

At 30 June 2020
Cost 415,672 175,034 590,706
Accumulated depreciation - (135,162) (135,162)
Net book value 415,672 39,872 455,544

Year ended 30 June 2021

Opening net book value 415,672 39,872 455,544
Transferred from operating fixed assets:
Cost 19,541 99,410 118,951
Accumulated depreciation - (90,155) (90,155)
19,541 9,255 28,796
Depreciation charge 31 - (4,834) (4,834)
Closing net book value 435,213 44,293 479,506

At 30 June 2021
Cost 435,213 274,444 709,657
Accumulated depreciation - (230,151) (230,151)
Net book value 435,213 44,293 479,506

14.1 Depreciation at the rate of 10 percent per annum on buildings amounting to Rupees 4.834 million (2020:
Rupees 4.430 million) charged during the year is allocated to other expenses. No expenses directly
related to investment properties were incurred during the year. The market value of land and buildings is
estimated at Rupees 4,887.528 million (2020: Rupees 4,622.255 million). Forced sale value of investment
properties as on the reporting date is Rupees 4,151.557 million (2020: Rupees 3,925.883 million). The
valuation has been carried out by an independent valuer.

14.2 Land and buildings having book value of Rupees 309.108 million (2020: Rupees 309.108 million) and
Rupees 28.167 million (2020: Rupees 31.296 million) respectively have been given on operating lease to
Nishat Hospitality (Private) Limited - subsidiary company.

14.3 Land having book value of Rupees 99.693 million (2020: Rupees 99.693 million) has been given on
operating lease to Nishat Linen (Private) Limited - subsidiary company.

14.4 Land and buildings having book value of Rupees 0.006 million (2020: Rupees Nil) and Rupees 8.408
million (2020: Rupees Nil) respectively have been given on operating lease to Hyundai Nishat Motor
(Private) Limited - associated company.
 Annual Report 2021 77

14.5 Particulars of investment properties (i.e. land and buildings) are as follows:

Description Address Area of land

Kanal

Factory land 21 K.M., Ferozepur Road, Lahore. 33.65

Commercial building Mian Mehmood Kasuri Road, Gulberg III, Lahore. 6.04
Factory land and building Nishatabad, Faisalabad. 44.00

2021 2020
Note (Rupees in thousand)

15 LONG TERM INVESTMENTS

Equity instruments 15.1 48,620,695 37,979,074

15.1 Equity instruments

Subsidiary companies

Nishat Power Limited - quoted

180,632,955 (2020: 180,632,955) fully paid ordinary shares
of Rupees 10 each. Equity held 51.01% (2020: 51.01%) 1,806,329 1,806,329

Nishat USA Inc. - unquoted 40

200 (2020: 200) fully paid shares with no par value
per share. Equity held 100% (2020: 100%) 3,547 3,547

Nishat Linen (Private) Limited - unquoted 15.1.1

1,067,913 (2020: 1,067,913) fully paid ordinary shares of
Rupees 10 each. Equity held 100% (2020: 100%) 261,603 261,603

Nishat Linen Trading LLC - unquoted 15.1.2 & 40

4,900 (2020: 4,900) fully paid shares of
UAE Dirhams 1,000 each. 259,403 259,403

Nishat Hospitality (Private) Limited - unquoted

169,999,901 (2020: 169,999,901) fully paid ordinary shares
of Rupees 10 each. Equity held 100% (2020: 100%) 1,699,999 1,699,999

Nishat International FZE - unquoted 40

18 (2020: 18) fully paid shares of UAE Dirhams 1,000,000
each. Equity held 100% (2020: 100%) 492,042 492,042
Advance for purchase of shares 9,070 9,070
501,112 501,112

Nishat Commodities (Private) Limited - unquoted 15.1.3

1,000 (2020: 1,000) fully paid ordinary shares of Rupees 10
each. Equity held 100% (2020: 100%) 10 10
 78 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

Equity instruments
Fair value through other comprehensive income
Associated companies (with significant influence)
D.G. Khan Cement Company Limited - quoted
137,574,201 (2020: 137,574,201) fully paid ordinary shares
of Rupees 10 each. Equity held 31.40% (2020: 31.40%) 3,418,145 3,418,145

Nishat Paper Products Company Limited - unquoted 15.1.4

11,634,199 (2020: 11,634,199) fully paid ordinary shares of
Rupees 10 each. Equity held 25% (2020: 25%) 106,802 106,802

Lalpir Power Limited - quoted 15.1.5

109,393,555 (2020: 109,393,555) fully paid ordinary shares of
Rupees 10 each. Equity held 28.80% (2020: 28.80%) 1,640,306 1,640,306

Pakgen Power Limited - quoted 15.1.5

102,524,728 (2020: 102,524,728) fully paid ordinary shares of
Rupees 10 each. Equity held 27.55% (2020: 27.55%) 1,272,194 1,272,194

Nishat Dairy (Private) Limited - unquoted 15.1.6

60,000,000 (2020: 60,000,000) fully paid ordinary shares of
Rupees 10 each. Equity held 12.24% (2020: 12.24%) 496,200 496,200

Nishat Energy Limited - unquoted 15.1.7

250,000 (2020: 250,000) fully paid ordinary shares of
Rupees 10 each. Equity held 25% (2020: 25%) - -

Nishat Hotels and Properties Limited - unquoted 15.1.8

74,022,917 (2020: 74,022,917) fully paid ordinary shares of
Rupees 10 each. Equity held 6.08% (2020: 7.40%) 740,229 740,229

Hyundai Nishat Motor (Private) Limited - unquoted 15.1.9 &

113,847,600 (2020: 89,700,000) fully paid ordinary shares of 15.1.10
Rupees 10 each. Equity held 12% (2020: 12%) 1,138,476 897,000

Security General Insurance Company Limited - unquoted 15.1.11

10,226,244 (2020: 10,226,244) fully paid ordinary shares of
Rupees 10 each. Equity held 15.02% (2020: 15.02%) 11,188 11,188

Nishat Sutas Dairy Limited - unquoted 15.1.12

16,630,000 (2020: 16,630,000) fully paid ordinary shares of
Rupees 10 each. Equity held 34.46% (2020: 34.46%) 166,300 166,300

Equity instruments
Fair value through other comprehensive income
Associated companies (others)

MCB Bank Limited - quoted

88,015,291 (2020: 88,015,291) fully paid ordinary shares of
Rupees 10 each. Equity held 7.43% (2020: 7.43%) 10,208,262 10,208,262

Adamjee Insurance Company Limited - quoted

102,809 (2020: 102,809) fully paid ordinary shares of
Rupees 10 each. Equity held 0.03% (2020: 0.03%) 2,116 2,116
 Annual Report 2021 79

2021 2020
(Rupees in thousand)

Equity instruments

Fair value through other comprehensive income

Related party

Nishat (Chunian) Limited - quoted

32,689,338 (2020: 32,689,338) fully paid ordinary shares of
Rupees 10 each. Equity held 13.61% (2020: 13.61%) 378,955 378,955

Others
Alhamra Islamic Stock Fund - quoted
1,121,410 (2020: 1,121,410) units. 3,135 3,135

Pakistan Petroleum Limited - quoted

599,998 (2020: 599,998) fully paid ordinary shares of
Rupees 10 each. Equity held 0.02% (2020: 0.02%) 64,409 64,409
24,178,720 23,937,244

Add: Fair value adjustment 24,441,975 14,041,830

48,620,695 37,979,074

15.1.1 Investment in Nishat Linen (Private) Limited includes 2 shares held in the name of nominee
directors of the Company.

15.1.2 The Company is also the beneficial owner of remaining 5,100 (2020: 5,100) shares of UAE
Dirham 1,000 each of Nishat Linen Trading LLC held under Nominee Agreement dated 30
December 2010, whereby the Company has right over all dividends, interests, benefits and other
distributions on liquidation. The Company through the powers given to it under Article 11 of the
Memorandum of Association of the investee company, exercises full control on the management
of Nishat Linen Trading LLC.

15.1.3 Investment in Nishat Commodities (Private) Limited includes 2 shares held in the name of
nominee directors of the Company.

15.1.4 Fair value per ordinary share of Nishat Paper Products Company Limited is determined at
Rupees 42.26 (2020: Rupees 47.23) by an independent valuer using present value technique.

15.1.5 Investments in Lalpir Power Limited and Pakgen Power Limited include 550 and 500 shares
respectively, held in the name of ex-nominee director of the Company.

15.1.6 Fair value per ordinary share of Nishat Dairy (Private) Limited is determined at Rupees 7.29
(2020: Rupees 6.26) by an independent valuer using present value technique.

15.1.7 Investment in Nishat Energy Limited has been fully provided during the year ended 30 June
2017, being no more a going concern.

15.1.8 Fair value per ordinary share of Nishat Hotels and Properties Limited is determined at Rupees
19.73 (2020: Rupees 13.95) by an independent valuer using present value technique.
 80 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
15.1.9 Investment in Hyundai Nishat Motor (Private) Limited includes 4 shares held in the name of
nominee directors of the Company.

15.1.10 Fair value per ordinary share of Hyundai Nishat Motor (Private) Limited is determined at Rupees
38.42 (2020: Rupees 12.20) by an independent valuer using present value technique.

15.1.11 Fair value per ordinary share of Security General Insurance Company Limited is determined at
Rupees 65.87 (2020: Rupees 57.79) by an independent valuer using present value technique.

15.1.12 Nishat Sutas Dairy Limited has not yet started its operations, hence, cost of investment is
considered as an appropriate estimate of fair value.

2021 2020
Note (Rupees in thousand)

16 LONG TERM LOANS

Considered good:
Executives - secured 16.1 & 16.2 408,852 226,090
Other employees - secured 16.2 217,059 199,934
625,911 426,024

Less: Current portion shown under current assets 21

Executives 93,079 59,288
Other employees 64,455 61,472
157,534 120,760
468,377 305,264

16.1 Maximum aggregate balance due from executives at the end of any month during the year was Rupees
408.852 million (2020: Rupees 226.809 million).

16.2 These represent loans given to executives and other employees as per the Company's policy for house
construction and general purposes. These are secured against balance to the credit of employees in the
provident fund trust and are recoverable in equal monthly installments. Interest charged during the year
range from 0% to 4% (2020: 0% to 4%) per annum on the balance outstanding.

16.3 The fair value adjustment in accordance with the requirements of IFRS 9 'Financial Instruments' arising in
respect of staff loans is not considered material and hence not recognized.

17 LONG TERM DEPOSITS

Security deposits 156,984 104,783

18 STORES, SPARE PARTS AND LOOSE TOOLS

Stores 18.1 1,761,183 1,549,127

Spare parts 842,338 707,508
Loose tools 6,222 4,152
2,609,743 2,260,787

Less: Provision for slow moving, obsolete and damaged store items 18.2 (4,141) (4,218)
2,605,602 2,256,569
 Annual Report 2021 81

18.1 These include stores in transit of Rupees 274.334 million (2020: Rupees 215.818 million).

18.2 Provision for slow moving, obsolete and damaged store items

2021 2020
Note (Rupees in thousand)

Balance as on 01 July 4,218 4,224

Less: Provision reversed during the year 32 (77) (6)
Balance as on 30 June 4,141 4,218

19 STOCK IN TRADE

Raw materials 9,283,755 12,821,768

Work-in-process 19.2 2,814,471 2,032,268
Finished goods 19.3 5,874,465 5,899,507
17,972,691 20,753,543

19.1 Stock in trade of Rupees 503.811 million (2020: Rupees 564.159 million) is being carried at net realizable
value.

19.2 This includes stock of Rupees 17.961 million (2020: Rupees 11.612 million) sent to outside parties for
processing.

19.3 Finished goods include stock in transit of Rupees 1,888.392 million (2020: Rupees 1,296.236 million).

19.4 The aggregate amount of write-down of inventories to net realizable value recognized as an expense
during the year was Rupees 22.161 million (2020: Rupees 20.298 million).

2021 2020
Note (Rupees in thousand)

20 TRADE DEBTS

Considered good:

Secured (against letters of credit) 1,048,918 1,004,826

Unsecured:
- Related parties 20.3 & 20.4 365,157 512,589
- Others 5,150,837 2,783,184
6,564,912 4,300,599
Less: Allowance for expected credit losses 20.5 (15,660) (15,496)
6,549,252 4,285,103

20.1 Foreign jurisdictions of trade debts

Europe 1,826,134 1,315,838

Asia, Africa and Australia 1,061,145 702,049
United States of America and Canada 1,178,982 559,675
4,066,261 2,577,562
 82 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2021 2020
(Rupees in thousand)

20.2 Types of counterparties

Export
Corporate 1,026,393 775,849
Other 3,039,868 1,801,713
4,066,261 2,577,562

Local
Corporate 2,060,122 1,160,034
Other 438,529 563,003
2,498,651 1,723,037
6,564,912 4,300,599

20.3 This represents amounts due from following related parties. These are neither past due nor impaired:

2021 2020
(Rupees in thousand)

Nishat Linen (Private) Limited - subsidiary company 115,437 453,458

Nishat Hotels and Properties (Private) Limited - associated company 72 -
Hyundai Nishat Motor (Private) Limited - associated company 547 2,110
MCB Bank Limited - associated company - 37
Nishat International FZE - subsidiary company 249,101 56,984
365,157 512,589

20.4 The maximum aggregate amount receivable from related parties at the end of any month during the year
was as follows:

2021 2020
Note (Rupees in thousand)

Nishat Linen (Private) Limited - subsidiary company 1,819,892 1,038,652

Nishat Hotels and Properties (Private) Limited - associated company 1,042 -

Hyundai Nishat Motor (Private) Limited - associated company 4,833 7,071

MCB Bank Limited - associated company - 37

Nishat International FZE - subsidiary company 249,101 61,533

20.5 Allowance for expected credit losses

Balance as on 01 July 15,496 15,219

Add: Recognized during the year 31 164 277
Balance as on 30 June 15,660 15,496
 Annual Report 2021 83

2021 2020
Note (Rupees in thousand)

21 LOANS AND ADVANCES

Considered good:

Employees - interest free:

– Executives 990 646
– Other employees 1,645 1,687
2,635 2,333

Current portion of long term loans 16 157,534 120,760

Advances to suppliers 21.1 96,187 102,234
Letters of credit 4,331 2,329
Other advances 21.1 7,414,912 8,640,466
7,675,599 8,868,122

Considered doubtful:

Others 108 108

Less: Provision for doubtful debts 108 108
- -
7,675,599 8,868,122

21.1 These include amounts due from following related parties. These are neither past due nor impaired:

2021 2020
(Rupees in thousand)

Advances to suppliers
D.G. Khan Cement Company Limited - associated company 3,533 -

Other advances
Nishat Linen (Private) Limited - subsidiary company 7,301,984 8,553,442
Nishat Commodities (Private) Limited - subsidiary company 105 100
7,302,089 8,553,542

21.2 The maximum aggregate amount receivable from related parties at the end of any month during the year
was as follows:

2021 2020
(Rupees in thousand)

Nishat Linen (Private) Limited - subsidiary company 12,459,012 10,480,819

D.G. Khan Cement Company Limited - associated company 3,533 -

Nishat Commodities (Private) Limited - subsidiary company 105 100

 84 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

22 ADVANCE INCOME TAX - NET

Advance income tax 1,720,339 1,532,080

Provision for taxation (1,148,032) (973,000)
572,307 559,080

23 SHORT TERM DEPOSITS AND PREPAYMENTS

Deposits 486 486

Prepayments 80,342 67,143
80,828 67,629

24 OTHER RECEIVABLES

Considered good:

Export rebate and claims 124,772 167,730

Duty draw back 1,218,043 576,897
Sales tax refundable 3,274,640 2,745,670
Fair value of forward exchange contracts 8,672 345
Miscellaneous receivables 24.1 76,582 77,923
4,702,709 3,568,565

24.1 These include Rupees 41.677 million (2020: Rupees 41 million) receivable from Nishat Hospitality (Private)
Limited - subsidiary company. It is in the ordinary course of business, interest free and past due. The
maximum aggregate amount receivable from Nishat Hospitality (Private) Limited - subsidiary company at
the end of any month during the year was Rupees 62.253 million (2020: Rupees 41 million). The age
analysis of this balance is more than 6 months (2020: 1 to 6 months).

25 ACCRUED INTEREST

2021 2020
Note (Rupees in thousand)

On short term loans and advances to:

Nishat Linen (Private) Limited - subsidiary company 25.1 17,642 36,659
Profit receivable on bank deposits 25.2 11,243 16
28,885 36,675

25.1 These are neither past due nor impaired. The maximum aggregate amount receivable from related parties
at the end of any month during the year was as follows:

Nishat Linen (Private) Limited - subsidiary company 41,855 51,544

Nishat Hospitality (Private) Limited - subsidiary company - 56

25.2 Profit on bank deposits of Rupees 11.243 million (2020: Rupees Nil) is receivable from MCB Bank Limited
- associated company. These are neither past due nor impaired. The maximum aggregate amount
receivable from MCB Bank Limited - associated company at the end of any month during the year was
Rs 11.243 million.
 Annual Report 2021 85

2021 2020
Note (Rupees in thousand)

26 CASH AND BANK BALANCES

With banks:

On current accounts 26.1 & 26.2

Including US$ 195,575 (2020: US$ 37,817) 178,051 20,870

Term deposit receipts 26.3 & 26.4 5,075,000 90,596

On PLS saving accounts 26.5

Including US$ 117 (2020: US$ 117) 242 20
5,253,293 111,486
Cash in hand 19,052 16,755
5,272,345 128,241

26.1 Cash at banks includes balance of Rupees 3.906 million (2020: Rupees 3.649 million) with MCB Bank
Limited - associated company.

26.2 Cash at banks includes balance of Rupees 0.443 million (2020: Rupees 0.074 million) with MCB Islamic
Bank Limited - related party.

26.3 The term deposits with banking companies having maturity period upto one month carried rate of profit
ranging from 6.35% to 7.20% (2020: 6.40% to 14%) per annum.

26.4 This represents term deposit receipt of Rupees 5,075 million (2020: Rupees Nil) having maturity period of
30 days and carry profit at the rate ranging from 6.70% to 6.80% (2020: Nil) per annum with MCB Bank
Limited - associated company.

26.5 Rate of profit on bank deposits range from 5.50% to 5.55% (2020: 8% to 8.75%) per annum.

2021 2020
Note (Rupees in thousand)

27 REVENUE

Revenue from contracts with customers:

Export sales 46,364,366 45,346,137

Local sales 27.1 18,021,220 9,792,119
Processing income 6,021,237 5,159,573
70,406,823 60,297,829
Export rebate 228,790 199,090
Duty draw back 795,397 407,177
71,431,010 60,904,096

27.1 Local sales

Sales 27.1.1 21,902,683 12,336,152

Less: Sales tax (3,881,463) (2,544,033)
18,021,220 9,792,119

27.1.1 These include sales of Rupees 10,063.857 million (2020: Rupees 2,977.374 million) made to direct
exporters against standard purchase orders (SPOs). Further, local sales include waste sales of Rupees
2,055.750 million (2020: Rupees 1,329.396 million).
27.2 The amount of Rupees 507.198 million included in contract liabilities (Note 7) at 30 June 2020 has been recognised as revenue in 2021 (2020: Rupees 206.547 million).

27.3 Disaggregation of revenue from contracts with customers

86

In the following table, revenue from contracts with customers is disaggregated by primary geographical market, major products and service lines and timing of revenue recognition:

Home Textile
Spinning Weaving Dyeing Garments Power Generation Total
and Terry
Description
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

(Rupees in thousand)
Region

Europe 280,073 417,371 8,297,897 8,546,070 407,566 379,909 9,163,902 6,796,648 4,259,144 4,254,270 - - 22,408,582 20,394,268
For the year ended June 30, 2021

United States of America and Canada 111,351 174,340 666,998 950,993 14,967 19,056 3,272,902 1,942,770 3,552,638 1,777,276 - - 7,618,856 4,864,435
Asia, Africa, Australia 5,418,179 5,840,160 2,045,855 2,059,456 7,717,403 11,339,362 1,794,530 1,108,864 385,148 345,859 - - 17,361,115 20,693,701
Pakistan 10,863,279 5,101,420 6,279,483 3,848,734 3,504,263 2,948,002 3,173,668 2,880,932 167,945 129,377 53,819 43,227 24,042,457 14,951,692
16,672,882 11,533,291 17,290,233 15,405,253 11,644,199 14,686,329 17,405,002 12,729,214 8,364,875 6,506,782 53,819 43,227 71,431,010 60,904,096

Timing of revenue recognition

Products and services transferred at a point in time 16,672,882 11,533,291 17,290,233 15,405,253 11,644,199 14,686,329 17,405,002 12,729,214 8,364,875 6,506,782 53,819 43,227 71,431,010 60,904,096
Products and services transferred over time - - - - - - - - - - - - - -
Notes to the Financial Statements

16,672,882 11,533,291 17,290,233 15,405,253 11,644,199 14,686,329 17,405,002 12,729,214 8,364,875 6,506,782 53,819 43,227 71,431,010 60,904,096

Major products / service lines

Yarn 16,439,073 11,217,597 - - - - - - - - - - 16,439,073 11,217,597

Comber Noil 233,809 315,694 - - - - - - - - - - 233,809 315,694
Grey Cloth - - 17,290,233 15,405,253 - - - - - - - - 17,290,233 15,405,253
Process Cloth - - - - 11,644,199 14,686,329 - - - - - - 11,644,199 14,686,329
Made Ups - - - - - - 16,381,568 12,729,214 - - - - 16,381,568 12,729,214
Garments - - - - - - - - 8,364,875 6,506,782 - - 8,364,875 6,506,782
Towels and Bath Robe - - - - - - 1,023,434 - - - - - 1,023,434 -
Electricity - - - - - - - - - - 53,819 43,227 53,819 43,227
16,672,882 11,533,291 17,290,233 15,405,253 11,644,199 14,686,329 17,405,002 12,729,214 8,364,875 6,506,782 53,819 43,227 71,431,010 60,904,096
Nishat Mills Limited

27.4 Revenue is recognised at point in time as per the terms and conditions of underlying contracts with customers.
 Annual Report 2021 87

2021 2020
Note (Rupees in thousand)

28 COST OF SALES

Raw materials consumed 28.1 35,741,113 31,278,042

Processing charges 368,169 368,437
Salaries, wages and other benefits 28.2 7,396,591 6,363,510
Stores, spare parts and loose tools consumed 7,683,252 6,797,584
Packing materials consumed 1,817,735 1,320,633
Repair and maintenance 451,401 367,026
Fuel and power 6,071,039 5,990,329
Insurance 45,340 50,123
Other factory overheads 544,570 508,668
Depreciation 13.1.2 2,751,106 2,642,450
62,870,316 55,686,802

Work-in-process
Opening stock 2,032,268 2,015,512
Closing stock (2,814,471) (2,032,268)
(782,203) (16,756)
Cost of goods manufactured 62,088,113 55,670,046

Finished goods
Opening stock 5,899,507 3,857,431
Closing stock (5,874,465) (5,899,507)
25,042 (2,042,076)
62,113,155 53,627,970

28.1 Raw materials consumed

Opening stock 12,821,768 11,135,516

Add: Purchased during the year 32,203,100 32,964,294
45,024,868 44,099,810
Less: Closing stock (9,283,755) (12,821,768)
35,741,113 31,278,042

28.2 Salaries, wages and other benefits include provident fund contribution of Rupees 197.258 million (2020:
Rupees 185.766 million) by the Company.
 88 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

29 DISTRIBUTION COST

Salaries and other benefits 29.1 536,995 500,062

Outward freight and handling 1,442,292 1,218,212
Commission to selling agents 774,117 666,384
Royalty 29.2 9,103 11,591
Fuel cost 139,261 177,148
Travelling and conveyance 23,604 126,211
Rent, rates and taxes 11,932 17,085
Postage and telephone 92,383 95,856
Insurance 16,802 18,932
Vehicles’ running 21,090 17,695
Entertainment 7,350 7,223
Printing and stationery 3,526 2,794
Repair and maintenance 5,571 7,603
Fee and subscription 2,032 222
Depreciation 13.1.2 10,415 8,322
3,096,473 2,875,340

29.1 Salaries and other benefits include provident fund contribution of Rupees 27.278 million
(2020: Rupees 25.794 million) by the Company.

29.2 Particulars of royalty paid during the year are as follows:

Relationship with the

2021 2020
Name of the company Registered address Company or directors
Related / Other (Rupees in thousand)

American and Efird LLC 22 American Street, Other 5,967 6,299

Mount Holly, North
Carolina, 28120.

2021 2020
Note (Rupees in thousand)

30 ADMINISTRATIVE EXPENSES

Salaries and other benefits 30.1 987,202 883,755

Vehicles’ running 47,109 42,813
Travelling and conveyance 14,880 30,456
Rent, rates and taxes 2,489 2,787
Insurance 8,715 8,916
Entertainment 29,416 24,082
Legal and professional 21,110 23,114
Auditor's remuneration 30.2 6,380 5,807
Advertisement 346 1,488
Postage and telephone 7,340 6,900
Electricity and gas 12,281 10,525
Printing and stationery 23,532 20,540
Repair and maintenance 48,084 38,514
Fee and subscription 8,851 7,253
Depreciation 13.1.2 71,955 82,994
Miscellaneous 50,403 48,357
1,340,093 1,238,301
 Annual Report 2021 89

30.1 Salaries and other benefits include provident fund contribution of Rupees 40.529 million
(2020: Rupees 36.635 million) by the Company.

2021 2020
Note (Rupees in thousand)

30.2 Auditor’s remuneration

Audit fee 5,053 4,594

Half yearly review 1,057 961
Other certifications 75 75
Reimbursable expenses 195 177
6,380 5,807

31 OTHER EXPENSES

Workers’ profit participation fund 7.4 318,505 204,045

Workers’ welfare fund 5,093 -
Allowance for expected credit losses 20.5 164 277
Impact of de-recognition of financial instrument carried
at amortized cost - 4,106
Depreciation on investment properties 14 4,834 4,430
Donations 31.1 & 31.2 3,200 321
331,796 213,179

31.1 The name of donee to whom donation amount exceeded Rupees 1 million (2020: Nill) is as follows:

Pakistan Textile Council 31.3 2,500 -

31.2 There is no interest of any director or his spouse in donees’ fund.

31.3 The Company is a member of Pakistan Textile Council (a company set up under Section 42 of the
Companies Act, 2017).

2021 2020
Note (Rupees in thousand)

32 OTHER INCOME

Income from financial assets

Dividend income 32.1 2,722,637 2,044,302

Profit on deposits with banks 119,182 97,132
Net exchange gain 26,275 122,843
Interest income on loans and advances to subsidiary companies 313,445 396,814
Gain on initial recognition of GIDC payable at amortized cost 52,766 -
Other 10,002 9,602
3,244,307 2,670,693
Income from non-financial assets

Gain on sale of property, plant and equipment 52,602 17,667

Scrap sales 286,786 198,198
Rental income 166,416 145,826
Reversal of provision for slow moving, obsolete and damaged
store items 18.2 77 6
505,881 361,697
3,750,188 3,032,390
 90 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

32.1 Dividend income

From related party / associated companies /

subsidiary companies

Nishat (Chunian) Limited - related party 32,689 81,723

Nishat International FZE - subsidiary company - 7,580
D.G. Khan Cement Company Limited
- associated company - 137,574
MCB Bank Limited - associated company 1,716,298 1,584,275
Adamjee Insurance Company Limited - associated company 257 257
Security General Insurance Company Limited - associated company 51,131 51,131
Pakgen Power Limited - associated company 333,204 -
Nishat Commodities (Private) Limited - subsidiary company 30,000 -
Nishat Linen (Private) Limited - subsidiary company 21,358 -
Nishat USA Inc. - subsidiary company 40 -
Lalpir Power Limited - associated company 355,527 -
Nishat Power Limited - subsidiary company 180,633 180,633
2,721,137 2,043,173

Others

Pakistan Petroleum Limited 1,500 1,000

Alhamra Islamic Stock Fund - 129
2,722,637 2,044,302

33 FINANCE COST

Mark-up on:
Long term financing 284,817 294,601
Short term borrowings 611,549 928,695
Interest on workers’ profit participation fund 7.4 179 3,826
Adjustment due to impact of IFRS 9 on GIDC 6.2 73,562 -
Bank charges and commission 259,072 275,290
1,229,179 1,502,412

34 TAXATION

Current 1,148,032 973,000

34.1 The Company falls under the ambit of presumptive tax regime under section 169 of the Income Tax
Ordinance, 2001. Provision for income tax is made accordingly. Further, provision against income from
other sources is made under the relevant provisions of the Income Tax Ordinance, 2001.

34.2 Provision for deferred income tax is not required as the Company is chargeable to tax under section 169
of the Income Tax Ordinance, 2001 and no temporary differences are expected to arise in the foreseeable
future except for deferred tax liability as explained in note 6.
 Annual Report 2021 91

2021 2020
(Rupees in thousand)

34.3 Reconciliation between tax expense and accounting profit

Accounting profit before taxation 7,070,502 4,479,284

Applicable tax rate 29% 29%

Tax on accounting profit 2,050,446 1,298,992

Tax effect of dividend income taxed at a lower rate (446,372) (299,732)

Tax effect of final tax regime income taxed at a lower rate (160,505) 150,236
Tax effect of income that are not considered in determining
taxable liability (297,014) (175,818)
Others 1,477 (678)
1,148,032 973,000

35 EARNINGS PER SHARE - BASIC AND DILUTED

There is no dilutive effect on the basic earnings per share which is based on:

2021 2020

Profit attributable to ordinary shareholders (Rupees in thousand) 5,922,470 3,506,284

Weighted average number of ordinary shares (Numbers) 351,599,848 351,599,848

Earnings per share (Rupees) 16.84 9.97

2021 2020
Note (Rupees in thousand)

36 CASH GENERATED FROM OPERATIONS

Profit before taxation 7,070,502 4,479,284

Adjustments for non-cash charges and other items:

Depreciation 2,838,310 2,738,196

Gain on sale of property, plant and equipment (52,602) (17,667)
Dividend income (2,722,637) (2,044,302)
Allowance for expected credit losses 164 277
Net exchange gain (26,275) (122,843)
Interest income on loans and advances to subsidiary companies (313,445) (396,814)
Impact of de-recognition of financial instrument carried at amortized cost - 4,106
Finance cost 1,229,179 1,502,412
Reversal of provision for slow moving, obsolete and damaged store items (77) (6)
Gain on initial recognition of GIDC payable at amortised cost (110,431) -
Working capital changes 36.1 575,689 (2,128,361)
8,488,377 4,014,282
 92 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2021 2020
(Rupees in thousand)

36.1 Working capital changes

(Increase) / decrease in current assets:

- Stores, spare parts and loose tools (348,956) 846,425
- Stock in trade 2,780,852 (3,745,084)
- Trade debts (2,196,379) 398,804
- Loans and advances (22,161) 81,997
- Short term deposits and prepayments (13,199) 7,340
- Other receivables (1,137,043) (717,517)
(936,886) (3,128,035)

Increase in trade and other payables 1,512,575 999,674

575,689 (2,128,361)

36.2 Reconciliation of movement of liabilities to cash flows arising from financing activities.

2021
Liabilities from financing activities
Long term Short term Unclaimed Total
financing borrowings dividend
( Rupees in thousand )

Balance as at 01 July 2020 9,925,813 19,329,768 90,596 29,346,177

Long term financing obtained 6,421,187 - - 6,421,187
Repayment of long term financing (1,610,173) - - (1,610,173)
Short term borrowings - net - (611,506) - (611,506)
Dividend declared - - 1,406,399 1,406,399
Dividend paid - - (1,399,378) (1,399,378)
Other changes - non-cash movement (160,002) - - (160,002)
Balance as at 30 June 2021 14,576,825 18,718,262 97,617 33,392,704

2020
Liabilities from financing activities
Long term Short term Unclaimed Total
financing borrowings dividend
( Rupees in thousand )

Balance as at 01 July 2019 7,044,397 17,982,262 93,006 25,119,665

Long term financing obtained 4,245,115 - - 4,245,115
Repayment of long term financing (1,363,699) - - (1,363,699)
Short term borrowings - net - 1,347,506 - 1,347,506
Dividend declared - - 1,406,399 1,406,399
Dividend paid - - (1,408,809) (1,408,809)
Balance as at 30 June 2020 9,925,813 19,329,768 90,596 29,346,177
 Annual Report 2021 93

37 EVENTS AFTER THE REPORTING PERIOD

The Board of Directors of the Company has proposed a cash dividend for the year ended 30 June 2021 of
Rupees 4 per share (2020: Rupees 4 per share) at their meeting held on 20 September, 2021. The Board of
Directors also proposed to transfer Rupees 4,516 million (2020: Rupees 2,101 million) from un-appropriated profit
to general reserve. However, these events have been considered as non-adjusting events under IAS 10 'Events
after the Reporting Period' and have not been recognized in these financial statements.

38 REMUNERATION OF CHIEF EXECUTIVE OFFICER, DIRECTOR AND EXECUTIVES

The aggregate amount charged in the financial statements for remuneration including all benefits to Chief
Executive Officer, Director and Executives of the Company is as follows:

Chief Executive Officer Director Executives

2021 2020 2021 2020 2021 2020
( Rupees in thousand )
Managerial remuneration 37,189 32,503 - 11,163 683,563 554,058
Allowances
Cost of living allowance - - - 1 1,023 781
House rent 13,521 13,001 - 216 174,176 148,293
Conveyance - - - - 904 880
Medical 3,380 3,250 - 912 57,482 47,939
Utilities - - - 3,385 75,673 61,649
Special allowance - - - 2 646 529
Contribution to provident fund trust - - - 871 56,650 47,016
Leave encashment - - - - 18,091 12,867
54,090 48,754 - 16,550 1,068,208 874,012

Number of persons 1 1 Note 38.4 Note 38.4 261 222

38.1 Chief Executive Officer and certain executives of the Company are provided with Company maintained
vehicles and certain executives are also provided with free housing facility alongwith utilities.

38.2 Aggregate amount charged in the financial statements for meeting fee to five directors (2020: five
directors) was Rupees 1.490 million (2020: Rupees 1.080 million).

38.3 No remuneration was paid to non-executive directors of the Company.

38.4 This represents remuneration including all benefits paid to a director for the period from July 2019 to
March 2020. As on the reporting date, there are no paid directors of the Company.
 94 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
39 TRANSACTIONS WITH RELATED PARTIES

The related parties comprise subsidiary companies, associated undertakings, other related parties, post
employment benefit plan and key management personnel. The Company in the normal course of business carries
out transactions with various related parties. Detail of transactions with related parties, other than those which
have been specifically disclosed elsewhere in these financial statements are as follows:

2021 2020
(Rupees in thousand)

Subsidiary companies

Investment made - 405,000

Dividend income 232,031 188,213
Purchase of goods and services 963,962 472,165
Sale of goods and services 8,069,801 7,303,323
Interest income 313,445 396,814
Rental income 77,710 61,810
Short term loans given 41,838,370 39,353,653
Repayment of short term loans 43,089,828 37,941,748

Associated companies

Investment made 241,476 403,300

Purchase of goods and services 155,859 76,595
Sale of goods and services 37,912 12,181
Interest income 28,572 -
Rental income 6,035 1,228
Purchase of operating fixed assets 44,434 -
Sale of operating fixed assets 67,000 819
Dividend income 2,456,417 1,773,237
Dividend paid 122,105 121,487
Insurance premium paid 160,090 144,897
Insurance claims received 59,983 50,440
Finance cost 8,230 14,811

Other related parties

Dividend income 32,689 81,723

Purchase of goods and services 2,440,916 2,699,390
Sale of goods and services 536,703 176,937
Company’s contribution to provident fund trust 266,667 249,304

39.1 Detail of compensation to key management personnel comprising of chief executive officer, director and
executives is disclosed in note 38.
 Annual Report 2021 95

39.2 Following are the related parties with whom the Company had entered into transactions or have arrangements /
agreements in place:

Transactions
entered or
agreements and
Name of the related party Basis of relationship / or arrangements in Percentage of
place during the shareholding
financial year ended
2021 2020

Nishat USA Inc. Wholly owned subsidiary company Yes Yes 100
Nishat Agriculture Farming
(Private) Limited Common directorship No Yes None
Nishat Dairy (Private) Limited Common directorship and shareholding Yes No 12.24
Nishat Sutas Dairy Limited Common directorship and shareholding Yes Yes 31.46
Nishat Hotels and
Properties Limited Common directorship and shareholding Yes Yes 6.08
Nishat (Raiwind) Hotels and
Properties Limited Common directorship No No None
Nishat (Aziz Avenue) Hotels
and Properties Limited Common directorship No No None
Security General Insurance
Company Limited Common directorship and shareholding Yes Yes 15.02
Nishat Commodities Wholly owned subsidiary company and
(Private) Limited common directorship Yes Yes 100
Nishat Hospitality
(Private) Limited Wholly owned subsidiary company Yes Yes 100
Nishat Power Limited Common directorship and subsidiary company Yes Yes 51.01
Nishat Energy Limited Shareholding No No 25
Pakgen Power Limited Common directorship and shareholding Yes No 27.55
Lalpir Power Limited Common directorship and shareholding Yes No 28.80
Nishat Paper Products
Company Limited Common directorship and shareholding No No 25
Nishat Linen (Private) Limited Wholly owned subsidiary company Yes Yes 100
Nishat Linen Trading LLC Wholly owned subsidiary company No No 100
Nishat International FZE Wholly owned subsidiary company Yes Yes 100
China Guangzhou Nishat Wholly owned subsidiary of Nishat
Global Co., Ltd. International FZE (subsidiary company) No No 100
Pakistan Aviators and Aviation
(Private) Limited Common directorship No No None
Nishat Developers
(Private) Limited Common directorship No No None
Nishat Real Estates
Development Company
(Private) Limited Common directorship No No None
Hyundai Nishat Motor
(Private) Limited Common directorship and shareholding Yes Yes 12
D.G. Khan Cement Company
Limited Common directorship and shareholding Yes Yes 31.40
Adamjee Life Assurance
Company Limited Common directorship Yes Yes None
Adamjee Insurance Company
Limited Common directorship and shareholding Yes Yes 0.03
MCB Bank Limited Common directorship and shareholding Yes Yes 7.43
MCB Islamic Bank Limited Wholly owned subsidiary of
associated company No Yes None
Nishat (Chunian) Limited Shareholding Yes Yes 13.61
Lalpir Solar Power Wholly owned subsidiary of Nishat
(Private) Limited Power Limited (subsidiary company) No No 51.01
Nishat Agrotech Farms
Supplies (Private) Limited Common directorship No No None
Nishat Chunian Power Executive of the Company is appointed
Limited (NCPL) as Director on the Board of NCPL No No None
Sanifa Agri Services Limited Associate of wholly owned
subsidiary company No Yes None
Nishat Mills Employees
Provident Fund Trust Post-employment benefit plan Yes Yes None
 96 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
39.3 Particulars of companies incorporated outside Pakistan with whom the Company had entered into transactions or had
agreements and / or arrangements in place are as follows:

Country of Percentage of
Name of the Company Basis of association
incorporation shareholding

Nishat USA Inc. USA Wholly owned subsidiary company 100

Nishat Linen Trading LLC UAE Wholly owned subsidiary company 100

Nishat International FZE UAE Wholly owned subsidiary company 100

China Guangzhou Nishat Global Co., Ltd. China Wholly owned subsidiary of 100
Nishat International FZE
40 As on 30 June 2021, disclosures relating to investments and advance made in foreign companies are as follows:

Amount of investment / advance Litigations Default / Gain / (loss) on

Terms and
Amount of breach
Name of the Beneficial conditions of against disposal of
Jurisdiction Made during returns relating to
company owner Rupees in Foreign currency investment / investee foreign
the year received foreign
thousand advance company investment
ended 30 June company
Rupees in thousand
Long term investments:

Nishat USA Inc. USA Nishat Mills 2009 3,547 USD 37,500 Investment in 40 None None Not applicable
Limited shares of
subsidiary
company

Nishat Linen Trading LLC UAE Nishat Mills 2011 259,403 AED 10,000,000 Investment in None None None Not applicable
Annual Report 2021

Limited shares of
subsidiary
company

Nishat International FZE UAE Nishat Mills 2013 492,042 AED 18,000,000 Investment in None None None Not applicable
Limited shares of
subsidiary
company

Advance:

Nishat International FZE UAE Nishat Mills 2014 9,070 AED 337,500 Advance for None None None Not applicable
Limited purchase of
shares of
subsidiary
company
97
40.1 As on 30 June 2020, disclosures relating to investments and advance made in foreign companies are as follows:

Amount of investment / advance Default /

Terms and Litigations Gain / (loss)
Amount of breach
Beneficial against
98

Name of the Jurisdiction conditions of on disposal

Made during Rupees in Foreign currency returns relating to
company owner investment / investee of foreign
the year thousand received foreign
advance company investment
ended 30 June company

Rupees in thousand
Long term investments:

Nishat USA Inc. USA Nishat Mills 2009 3,547 USD 37,500 Investment in None None None Not applicable
Limited shares of
subsidiary
company

Nishat Linen Trading LLC UAE Nishat Mills 2011 259,403 AED 10,000,000 Investment in None None None Not applicable
For the year ended June 30, 2021

Limited shares of
subsidiary
company

Nishat International FZE UAE Nishat Mills 2013 492,042 AED 18,000,000 Investment in 7,580 None None Not applicable
Limited shares of
subsidiary
company
Notes to the Financial Statements

Advance:

Nishat International FZE UAE Nishat Mills 2014 9,070 AED 337,500 Advance for None None None Not applicable
Limited purchase of
shares of
subsidiary
company

41 PROVIDENT FUND

As at the reporting date, The Nishat Mills Employees Provident Fund Trust is in the process of regularizing its investments in accordance with section 218 of the Companies Act, 2017
and the regulations formulated for this purpose by Securities and Exchange Commission of Pakistan.

42 NUMBER OF EMPLOYEES
Nishat Mills Limited

2021 2020

Number of employees as on 30 June 20,599 18,278

Average number of employees during the year 19,369 18,558
43 SEGMENT INFORMATION

Spinning Weaving Home Textile and Terry

Elimination of
Power
Dyeing Garments inter-segment Total - Company
Generation
Faisalabad I Faisalabad II Feroze Wattwan I Feroze Wattwan II Bhikki Lahore Home Textile Terry transactions

2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

(Rupees in thousand)
Revenue from contracts with customers
External 7,066,585 4,519,146 3,120,068 2,936,491 5,042,402 3,398,942 1,443,827 678,712 14,152,370 12,376,103 3,137,863 3,029,150 11,644,199 14,686,329 16,381,568 12,729,214 1,023,434 - 8,364,875 6,506,782 53,819 43,227 - - 71,431,010 60,904,096
Intersegment 3,626,248 3,338,599 1,602,101 1,537,651 2,455,622 1,734,759 518,498 114,000 6,214,599 5,700,935 4,544,798 4,068,903 743,501 541,079 257,754 331,033 34,736 - 4,156 - 6,814,585 6,550,874 (26,816,598) (23,917,833) - -
10,692,833 7,857,745 4,722,169 4,474,142 7,498,024 5,133,701 1,962,325 792,712 20,366,969 18,077,038 7,682,661 7,098,053 12,387,700 15,227,408 16,639,322 13,060,247 1,058,170 - 8,369,031 6,506,782 6,868,404 6,594,101 (26,816,598) (23,917,833) 71,431,010 60,904,096
Cost of sales (9,567,320) (7,121,048) (4,308,874) (4,910,727) (6,697,955) (5,280,206) (1,763,288) (676,816) (18,761,629) (16,392,603) (7,215,557) (6,705,384) (11,019,991) (13,054,215) (14,655,885) (11,230,069) (959,856) - (7,131,640) (5,593,699) (6,847,758) (6,581,036) 26,816,598 23,917,833 (62,113,155) (53,627,970)
Gross profit / (loss) 1,125,513 736,697 413,295 (436,585) 800,069 (146,505) 199,037 115,896 1,605,340 1,684,435 467,104 392,669 1,367,709 2,173,193 1,983,437 1,830,178 98,314 - 1,237,391 913,083 20,646 13,065 - - 9,317,855 7,276,126
Distribution cost (141,307) (156,547) (34,163) (17,274) (134,076) (161,175) (12,070) (3,291) (611,043) (575,548) (146,563) (127,170) (582,011) (632,048) (785,091) (689,171) (67,069) - (583,080) (513,054) - (62) - - (3,096,473) (2,875,340)
Administrative expenses (212,639) (183,681) (62,454) (60,007) (98,288) (92,947) (15,785) (4,890) (187,392) (188,415) (91,536) (90,368) (171,847) (190,242) (264,579) (251,184) (32,023) - (148,398) (129,384) (55,152) (47,183) - - (1,340,093) (1,238,301)
(353,946) (340,228) (96,617) (77,281) (232,364) (254,122) (27,855) (8,181) (798,435) (763,963) (238,099) (217,538) (753,858) (822,290) (1,049,670) (940,355) (99,092) - (731,478) (642,438) (55,152) (47,245) - - (4,436,566) (4,113,641)
Profit / (loss) before taxation and unallocated
income and expenses 771,567 396,469 316,678 (513,866) 567,705 (400,627) 171,182 107,715 806,905 920,472 229,005 175,131 613,851 1,350,903 933,767 889,823 (778) - 505,913 270,645 (34,506) (34,180) - - 4,881,289 3,162,485
Annual Report 2021

Unallocated income and expenses:

Other expenses (331,796) (213,179)
Other income 3,750,188 3,032,390
Finance cost (1,229,179) (1,502,412)
Taxation (1,148,032) (973,000)
Profit after taxation 5,922,470 3,506,284

43.1 Reconciliation of reportable segment assets and liabilities

Spinning Weaving Home Textile and Terry

Power
Dyeing Garments Generation Total - Company
Faisalabad I Faisalabad II Feroze Wattwan I Feroze Wattwan II Bhikki Lahore Home Textile Terry

2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

(Rupees in thousand)
Total assets for reportable segments 6,492,179 9,434,886 6,907,881 4,101,580 5,225,646 6,833,108 1,756,639 1,815,833 8,302,579 6,205,215 1,769,035 964,856 7,884,050 8,308,669 9,410,844 8,824,933 3,223,473 1,745,976 5,885,327 3,905,344 7,156,366 7,140,653 64,014,019 59,281,053
Unallocated assets:
Long term investments 48,620,695 37,979,074
Other receivables 4,702,709 3,568,565
Cash and bank balances 5,272,345 128,241
Other corporate assets 8,502,606 9,703,981
Total assets as per statement of financial position 131,112,374 110,660,914

Total liabilities for reportable segments 1,114,294 921,782 81,057 208,341 195,930 202,895 13,494 17,232 914,771 908,113 328,338 178,886 1,059,416 851,351 1,893,715 1,359,831 150,375 36,573 1,117,157 729,280 1,575,018 3,092,256 8,443,565 8,506,540
Unallocated liabilities:
Deferred liabilities 1,055,992 302,672
Other corporate liabilities 35,865,038 30,423,842
Total liabilities as per statement of
financial position 45,364,595 39,233,054
99
 100 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
43.2 Geographical information

The Company's revenue from external customers by geographical locations is detailed below:

2021 2020
(Rupees in thousand)

Europe 22,408,582 20,394,268

United States of America and Canada 7,618,856 4,864,435
Asia, Africa and Australia 17,361,115 20,693,701
Pakistan 24,042,457 14,951,692
71,431,010 60,904,096

43.3 All non-current assets of the Company as at reporting dates are located and operating in Pakistan.

43.4 Revenue from major customers

The Company's revenue is earned from a large mix of customers.

2021 2020
(Figures in thousand)

44 PLANT CAPACITY AND ACTUAL PRODUCTION

Spinning
100% plant capacity converted to 20s count based
on 3 shifts per day for 1,095 shifts (2020: 1,029 shifts) (Kgs.) 90,821 86,111

Actual production converted to 20s count based

on 3 shifts per day for 1,095 shifts (2020: 1,029 shifts) (Kgs.) 79,689 65,466

Weaving
100% plant capacity at 50 picks based on 3 shifts
per day for 1,095 shifts (2020: 1,029 shifts) (Sq.Mtr.) 309,458 289,273

Actual production converted to 50 picks based

on 3 shifts per day for 1,095 shifts (2020: 1,029 shifts) (Sq.Mtr.) 295,932 275,483

Dyeing and Finishing

Production capacity for 3 shifts per day for 1,095 shifts
(2020: 1,029 shifts) (Mtr.) 56,400 52,856

Actual production on 3 shifts per day for 1,095 shifts

(2020: 1,029 shifts) (Mtr.) 33,105 42,912

Power Plant
Generation capacity (MWH) 989 932

Actual generation (MWH) 389 361

Processing, Stitching, Apparel and Terry

The plant capacity of these divisions is indeterminable due to multi product plants involving varying processes of
manufacturing and run length of order lots.
 Annual Report 2021 101

44.1 Reason for low production

Under utilization of available capacity for spinning, weaving, dyeing and finishing is mainly due to normal
maintenance. Actual power generation in comparison to installed is low due to periodical, scheduled and
unscheduled maintenance and low demand.

In the note of plant capacity and actual production, plant capacity of each segment was adjusted last
year to incorporate the impact of temporary suspension of operations due to lock down announced by
the Government of the Punjab. The Company resumed its operations after implementing necessary
standard operating procedures.

45 FINANCIAL RISK MANAGEMENT

45.1 Financial risk factors

The Company's activities expose it to a variety of financial risks: market risk (including currency risk,
other price risk and interest rate risk), credit risk and liquidity risk. The Company's overall risk
management programme focuses on the unpredictability of financial markets and seeks to minimize
potential adverse effects on the Company's financial performance. The Company uses derivative
financial instruments to hedge certain risk exposures.

Risk management is carried out by the Company's finance department under policies approved by the
Board of Directors. The Company's finance department evaluates and hedges financial risks. The Board
provides principles for overall risk management, as well as policies covering specific areas such as
currency risk, other price risk, interest rate risk, credit risk, liquidity risk, use of derivative financial
instruments and non-derivative financial instruments and investment of excess liquidity.

a) Market risk

i) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. Currency risk arises mainly from future commercial
transactions or receivables and payables that exist due to transactions in foreign currencies.

The Company is exposed to currency risk arising from various currency exposures, primarily with respect
to the United States Dollar (USD), Arab Emirates Dirham (AED), Euro, Japanese Yen (JPY) and Swiss
Franc (CHF). Currently, the Company's foreign exchange risk exposure is restricted to bank balances and
the amounts receivable / payable from / to the foreign entities. The Company's exposure to currency risk
was as follows:

2021 2020

Cash at banks - USD 195,692 37,934

Trade debts - USD 22,937,415 14,824,462
Trade debts - Euro 1,652,710 994,934
Trade debts - AED 5,840,582 1,244,456
Trade and other payables - USD (2,094,954) (1,935,624)
Trade and other payables - Euro (170,203) (155,010)
Trade and other payables - JPY (652,985) (131,220)
Trade and other payables - CHF - (11,835)
Net exposure - USD 21,038,153 12,926,772
Net exposure - Euro 1,482,507 839,924
Net exposure - AED 5,840,582 1,244,456
Net exposure – JPY (652,985) (131,220)
Net exposure – CHF - (11,835)
 102 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
The following significant exchange rates were applied during the year:

2021 2020

Rupees per US Dollar

Average rate 159.53 158.82
Reporting date rate 157.60 168.25

Rupees per Euro

Average rate 189.17 175.53
Reporting date rate 185.80 189.11

Rupees per AED

Average rate 43.22 43.20
Reporting date rate 42.65 45.79

Rupees per JPY

Average rate 1.49 1.47
Reporting date rate 1.42 1.57

Rupees per CHF

Average rate 174.46 163.18
Reporting date rate 168.81 177.43

Sensitivity analysis

If the functional currency, at reporting date, had weakened / strengthened by 5% against the USD, Euro,
AED, JPY and CHF with all other variables held constant, the impact on profit after taxation for the year
would have been Rupees 180.540 million (2020: Rupees 112.317 million) higher / lower mainly as a result
of exchange gains / losses on translation of foreign exchange denominated financial instruments.
Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis. In
management's opinion, the sensitivity analysis is unrepresentative of inherent currency risk as the year
end exposure does not reflect the exposure during the year.

ii) Other price risk

Other price risk represents the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices (other than those arising from interest rate risk or currency
risk), whether those changes are caused by factors specific to the individual financial instrument or its
issuer, or factors affecting all similar financial instruments traded in the market. The Company is not
exposed to commodity price risk.

Sensitivity analysis

The table below summarizes the impact of increase / decrease in the Pakistan Stock Exchange (PSX)
Index on the Company's equity (fair value reserve FVTOCI investments). The analysis is based on the
assumption that the equity index had increased / decreased by 5% with all other variables held constant
and all the Company's equity instruments moved according to the historical correlation with the index:

Impact on statement of other

Index comprehensive income
(fair value reserve)

2021 2020
(Rupees in thousand)

PSX (5% increase) 1,806,663 1,464,979

PSX (5% decrease) (1,806,663) (1,464,979)

Equity (fair value reserve) would increase / decrease as a result of gains / losses on equity investments
classified as FVTOCI.z
 Annual Report 2021 103

iii) Interest rate risk

This represents the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.
The Company's interest rate risk arises from long term financing, short term borrowings, bank balances
in saving accounts, term deposit receipts, loans to employees and advances to subsidiary company.
Financial instruments at variable rates expose the Company to cash flow interest rate risk. Financial
instruments at fixed rate expose the Company to fair value interest rate risk.
At the reporting date, the interest rate profile of the Company’s interest bearing financial instruments was:

2021 2020
(Rupees in thousand)

Fixed rate instruments

Financial liabilities
Long term financing 14,326,300 8,302,661
Short term borrowings 17,503,652 14,373,417

Financial assets
Term deposit receipts 5,075,000 90,596
Loans to employees 265,626 258,590

Floating rate instruments

Financial assets
Bank balances - saving accounts 242 20
Advances to subsidiary company 7,301,984 8,553,442

Financial liabilities
Long term financing 250,525 1,623,152
Short term borrowings 1,214,610 4,956,351

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit
or loss. Therefore, a change in interest rate at the reporting date would not affect profit or loss of the
Company.

Cash flow sensitivity analysis for variable rate instruments

If interest rates at the year end date, fluctuates by 1% higher / lower with all other variables held constant,
profit after taxation for the year would have been Rupees 54.898 million (2020: Rupees 18.565 million)
higher / lower, mainly as a result of higher / lower interest income on floating rate financial instruments.
This analysis is prepared assuming the amounts of financial instruments outstanding at reporting dates
were outstanding for the whole year.

b) Credit risk
Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the
other party by failing to discharge an obligation. The carrying amount of financial assets represents the
maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:

2021 2020
(Rupees in thousand)

Long term investments 44,088,692 33,447,071

Loans and advances 8,043,458 9,068,823
Deposits 157,470 105,269
Trade debts 6,549,252 4,285,103
Other receivables 85,254 78,268
Accrued interest 28,885 36,675
Bank balances 5,253,293 111,486
64,206,304 47,132,695
 104 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external
credit ratings (if available) or to historical information about counterparty default rate:

Rating 2021 2020

Short term Long term Agency (Rupees in thousand)

Banks

National Bank of Pakistan A1+ AAA PACRA 526 123

Allied Bank Limited A1+ AAA PACRA 4,533 376
Askari Bank Limited A1+ AA+ PACRA 46 441
Bank Alfalah Limited A1+ AA+ PACRA 356 90,637
Faysal Bank Limited A1+ AA PACRA 8 108
Habib Bank Limited A-1+ AAA JCR-VIS 18,722 1,268
Habib Metropolitan Bank Limited A1+ AA+ PACRA 23,163 1,360
JS Bank Limited A1+ AA- PACRA 24 66
MCB Bank Limited A1+ AAA PACRA 5,078,905 3,649
Samba Bank Limited A-1 AA JCR-VIS 274 140
Silk Bank Limited A-2 A- JCR-VIS 68 73
Standard Chartered Bank (Pakistan) Limited A1+ AAA PACRA 70,560 5,902
United Bank Limited A-1+ AAA JCR-VIS 1,710 1,783
AlBaraka Bank (Pakistan) Limited A1 A PACRA 268 268
Bank Islami Pakistan Limited A1 A+ PACRA 190 390
Meezan Bank Limited A-1+ AAA JCR-VIS 36,469 2,929
Dubai Islamic Bank Pakistan Limited A-1+ AA JCR-VIS 352 352
The Bank of Punjab A1+ AA+ PACRA 285 176
Soneri Bank Limited A1+ AA- PACRA 2,470 394
Summit Bank Limited A-3 BBB- JCR-VIS 257 257
Industrial and Commercial Bank of China P-1 A1 Moody’s 97 6
MCB Islamic Bank Limited A1 A PACRA 443 74
Bank Al-Habib Limited A1+ AAA PACRA 13,412 629
Citi Bank N.A P-1 Aa3 Moody's 149 79
Bank of Khyber A1 A PACRA 6 6
5,253,293 111,486

Long term investments

Adamjee Insurance Company Limited AA+ PACRA 4,263 3,404

Security General Insurance Company Limited AA JCR-VIS 673,603 590,975
Alhamra Islamic Stock Fund AM1 PACRA 12,661 9,723
Nishat (Chunian) Limited A A-2 JCR-VIS 1,643,947 1,060,769
MCB Bank Limited A1+ AAA PACRA 14,067,484 14,264,638
Pakistan Petroleum Limited Unknown - 52,098 52,068
D.G. Khan Cement Company Limited A1+ AA- PACRA 16,222,749 11,739,206
Pakgen Power Limited A1 AA PACRA 2,528,260 1,231,322
Lalpir Power Limited A1 AA PACRA 1,953,769 1,276,623
Nishat Paper Products Company Limited A1 A PACRA 491,661 549,483
Nishat Hotels and Properties Limited A2 A- PACRA 1,460,472 1,032,620
Hyundai Nishat Motor (Private) Limited Unknown - 4,374,025 1,094,340
Nishat Dairy (Private) Limited Unknown - 437,400 375,600
Nishat Sutas Dairy Limited Unknown - 166,300 166,300
44,088,692 33,447,071
49,341,985 33,558,557
 Annual Report 2021 105

The Company's exposure to credit risk and allowance for expected credit losses related to trade debts is disclosed in Note 20.

Due to the Company's long standing business relationships with these counterparties and after giving due consideration to
their strong financial standing, the management does not expect non-performance by these counterparties on their obligations
to the Company. Accordingly, the credit risk is minimal.

Trade debts

The Company applies the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss
allowance for all trade debts.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and
the days past due. These trade receivables are netted off with the collateral obtained, if any, from these customers to calculate
the net exposure towards these customers. The Company has concluded that the expected loss rates for trade debts against
local sales are different from the expected loss rates for trade debts against export sales.

The expected loss rates are based on the payment profiles of sales over a period of 36 months before 30 June 2021 and the
corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and
forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The
Company has identified the Gross Domestic Product, Unemployment, Interest and the inflation Index of the country in which it
majorly sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on
expected changes in these factors.

On that basis, the loss allowance as at 30 June 2021 and 30 June 2020 was determined as follows:

At 30 June 2021
Local sales Export sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% (Rupees in thousand) % (Rupees in thousand)

Not past due 0% 2,477,007 - 0% 4,066,261 -

Up to 30 days 0.20% 109 0.22 0.00% - -
31 to 60 days 15.27% 1,984 303 0.00% - -
61 to 90 days 30.63% 35 11 0.00% - -
91 to 180 days 57.69% 36 21 0.00% - -
181 to 360 days 68.48% 13,182 9,027 0.00% - -
Above 360 days 100.00% 6,298 6,298 100.00% - -
2,498,651 15,660 4,066,261 -
Trade debts which are not subject
to risk of default - - - -
Total 2,498,651 15,660 4,066,261 -

At 30 June 2020
Local sales Export sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% (Rupees in thousand) % (Rupees in thousand)

Not past due 0% 1,612,944 - 0% 2,577,562 -

Up to 30 days 0.66% 69,723 460 0.00% - -
31 to 60 days 21.12% 24,000 5,069 0.00% - -
61 to 90 days 32.15% 8,598 2,283 0.00% - -
91 to 180 days 57.64% 40 23 0.00% - -
181 to 360 days 75.14% 279 208 0.00% - -
Above 360 days 100.00% 7,453 7,453 100.00% - -
1,723,037 15,496 2,577,562 -
Trade debts which are not subject
to risk of default - - - -
Total 1,723,037 15,496 2,577,562 -
 106 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
c) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities.

The Company manages liquidity risk by maintaining sufficient cash and the availability of funding through an
adequate amount of committed credit facilities. At 30 June 2021, the Company had Rupees 38,572.153 million
(2020: Rupees 33,658.337 million) available borrowing limits from financial institutions and Rupees 5,272.345
million (2020: Rupees 128.241 million) cash and bank balances. The management believes the liquidity risk to be
low. Following are the contractual maturities of financial liabilities, including interest payments. The amount
disclosed in the table are undiscounted cash flows:

Contractual maturities of financial liabilities as at 30 June 2021

Carrying Contractual 6 months 6-12 1-2 More than

amount cash flows or less months Years 2 Years
(Rupees in thousand)

Non-derivative financial liabilities:

Long term financing 14,576,825 15,810,353 1,594,565 1,744,091 3,250,652 9,221,045

Trade and other payables 7,342,335 7,342,335 7,342,335 - - -
Unclaimed dividend 97,617 97,617 97,617 - - -
Short term borrowings 18,718,262 19,074,836 19,024,948 49,888 - -
Accrued mark-up 196,382 196,382 196,382 - - -

Derivative financial liabilities 57,429 57,429 57,429 - - -

40,988,850 42,578,952 28,313,276 1,793,979 3,250,652 9,221,045

Contractual maturities of financial liabilities as at 30 June 2020

Carrying Contractual 6 months 6-12 1-2 More than

amount cash flows or less months Years 2 Years
(Rupees in thousand)

Non-derivative financial liabilities:

Long term financing 9,925,813 10,698,231 158,930 806,388 2,755,819 6,977,094

Trade and other payables 7,628,366 7,628,366 7,628,366 - - -
Unclaimed dividend 90,596 90,596 90,596 - - -
Short term borrowings 19,329,768 19,885,294 19,771,393 113,901 - -
Accrued mark-up 226,228 226,228 226,228 - - -

Derivative financial liabilities 6,206 6,206 6,206 - - -

37,206,977 38,534,921 27,881,719 920,289 2,755,819 6,977,094

The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest
rates / mark-up rates effective as at 30 June. The rates of interest / mark-up have been disclosed in note 5 and
note 9 to these financial statements.
 Annual Report 2021 107

45.2 Financial instruments by categories

Amortised
FVTPL FVTOCI Total
cost

(Rupees in thousand)

As at 30 June 2021

Assets as per statement of financial position

Long term investments - - 44,088,692 44,088,692
Loans and advances - 8,043,458 - 8,043,458
Deposits - 157,470 - 157,470
Trade debts - 6,549,252 - 6,549,252
Other receivables 8,672 76,582 - 85,254
Accrued interest - 28,885 - 28,885
Cash and bank balances - 5,272,345 - 5,272,345
8,672 20,127,992 44,088,692 64,225,356

Amortized cost FVTPL Total

(Rupees in thousand)

Liabilities as per statement of financial position

Long term financing 14,576,825 - 14,576,825

Accrued mark-up 196,382 - 196,382
Short term borrowings 18,718,262 - 18,718,262
Trade and other payables 7,342,335 57,429 7,399,764
Unclaimed dividend 97,617 - 97,617
40,931,421 57,429 40,988,850

Amortised
FVTPL FVTOCI Total
cost

(Rupees in thousand)

As at 30 June 2020

Assets as per statement of financial position

Long term investments - - 33,447,071 33,447,071
Loans and advances - 9,068,823 - 9,068,823
Deposits - 105,269 - 105,269
Trade debts - 4,285,103 - 4,285,103
Other receivables 345 77,923 - 78,268
Accrued interest - 36,675 - 36,675
Cash and bank balances - 128,241 - 128,241
345 13,702,034 33,447,071 47,149,450
 108 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021

Amortized cost FVTPL Total

(Rupees in thousand)

Liabilities as per statement of financial position

Long term financing 9,925,813 - 9,925,813

Accrued mark-up 226,228 - 226,228
Short term borrowings 19,329,768 - 19,329,768
Trade and other payables 7,628,366 6,206 7,634,572
Unclaimed dividend 90,596 - 90,596
37,200,771 6,206 37,206,977

45.3 Reconciliation of financial assets and financial liabilities to the line items presented in the statement of
financial position is as follows:

2021
Assets as per
Financial Non-financial statement of
assets assets financial
position
(Rupees in thousand)

Assets
Long term investments 44,088,692 4,532,003 48,620,695
Loans and advances 8,043,458 100,518 8,143,976
Deposits and prepayments 157,470 80,342 237,812
Trade debts 6,549,252 - 6,549,252
Other receivables 85,254 4,617,455 4,702,709
Accrued interest 28,885 - 28,885
Cash and bank balances 5,272,345 - 5,272,345
64,225,356 9,330,318 73,555,674

2021
Liabilities as
Financial Non-financial per statement
liabilities liabilities of financial
position
(Rupees in thousand)

Liabilities
Long term financing 14,576,825 - 14,576,825
Accrued mark-up 196,382 - 196,382
Short term borrowings 18,718,262 - 18,718,262
Trade and other payables 7,399,764 2,112,540 9,512,304
Unclaimed dividend 97,617 - 97,617
40,988,850 2,112,540 43,101,390
 Annual Report 2021 109

2020
Assets as per
Financial Non-financial statement of
assets assets financial
position
(Rupees in thousand)

Assets
Long term investments 33,447,071 4,532,003 37,979,074
Loans and advances 9,068,823 104,563 9,173,386
Deposits and prepayments 105,269 67,143 172,412
Trade debts 4,285,103 - 4,285,103
Other receivables 78,268 3,490,297 3,568,565
Accrued interest 36,675 - 36,675
Cash and bank balances 128,241 - 128,241
47,149,450 8,194,006 55,343,456

2020
Liabilities as
Financial Non-financial per statement
liabilities liabilities of financial
position
(Rupees in thousand)

Liabilities
Long term financing 9,925,813 - 9,925,813
Accrued mark-up 226,228 - 226,228
Short term borrowings 19,329,768 - 19,329,768
Trade and other payables 7,634,572 1,723,405 9,357,977
Unclaimed dividend 90,596 - 90,596
37,206,977 1,723,405 38,930,382

45.4 Offsetting financial assets and financial liabilities

As on reporting date, recognized financial instruments are not subject to off setting as there are no
enforceable master netting arrangements and similar agreements.

45.5 Capital risk management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as
a going concern in order to provide returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the
capital structure, the Company may adjust the amount of dividends paid to shareholders, issue new
shares or sell assets to reduce debt. Consistent with others in the industry and the requirements of the
lenders, the Company monitors the capital structure on the basis of gearing ratio. This ratio is calculated
as borrowings divided by total capital employed. Borrowings represent long term financing and short
term borrowings obtained by the Company as referred to in note 5 and note 9 respectively. Total capital
employed includes 'total equity' as shown in the statement of financial position plus 'borrowings'. The
Company's strategy, remained unchanged from last year. In accordance with the terms of agreement with
the lenders of long term finances in connection with deferment of principal amount for twelve months,
there is restriction on distribution of dividends by the Company during the relief period.
 110 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
2021 2020

Borrowings Rupees in thousand 33,295,087 29,255,581

Total equity Rupees in thousand 85,747,779 71,427,860
Total capital employed Rupees in thousand 119,042,866 100,683,441

Gearing ratio Percentage 27.97 29.06

The decrease in the gearing ratio resulted primarily from increase in equity of the Company.

46 RECOGNIZED FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS

i) Fair value hierarchy

Judgements and estimates are made in determining the fair values of the financial instruments that are
recognized and measured at fair value in these financial statements. To provide an indication about the reliability
of the inputs used in determining fair value, the Company has classified its financial instruments into the following
three levels. An explanation of each level follows underneath the table.

Recurring fair value measurements

Level 1 Level 2 Level 3 Total
At 30 June 2021
(Rupees in thousand)

Financial assets
Fair value through other comprehensive income 36,485,231 - 7,603,461 44,088,692
Derivative financial assets - 8,672 - 8,672
Total financial assets 36,485,231 8,672 7,603,461 44,097,364

Financial liabilities
Derivative financial liabilities - 57,429 - 57,429
Total financial liabilities - 57,429 - 57,429

Recurring fair value measurements

Level 1 Level 2 Level 3 Total
At 30 June 2020
(Rupees in thousand)

Financial assets
Fair value through other comprehensive income 29,637,753 - 3,809,318 33,447,071
Derivative financial assets - 345 - 345
Total financial assets 29,637,753 345 3,809,318 33,447,416

Financial liabilities
Derivative financial liabilities - 6,206 - 6,206
Total financial liabilities - 6,206 - 6,206
 Annual Report 2021 111

The above table does not include fair value information for financial assets and financial liabilities not measured
at fair value if the carrying amounts are a reasonable approximation of fair value. Due to short term nature,
carrying amounts of certain financial assets and financial liabilities are considered to be the same as their fair
value. For the majority of the non-current receivables, the fair values are also not significantly different to their
carrying amounts.

There were no transfers between levels 1 and 2 for recurring fair value measurements during the year. Further
there was no transfer out of level 3 measurements.

The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the end
of the reporting period.

Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and
trading and equity securities) is based on quoted market prices at the end of the reporting period. The
quoted market price used for financial assets held by the Company is the current bid price. These
instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined using valuation techniques which maximize the use of
observable market data and rely as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3. This is the case for unlisted equity securities.

ii) Valuation techniques used to determine fair values

Specific valuation techniques used to value financial instruments include the use of quoted market prices or
dealer quotes for similar instruments and the fair value of the remaining financial instruments is determined using
discounted cash flow analysis.

iii) Fair value measurements using significant unobservable inputs (level 3)

The following table presents the changes in level 3 items for the year ended 30 June 2021 and 30 June 2020:

Unlisted equity
securities

(Rupees in thousand)

Balance as on 01 July 2019 3,004,950

Add: Investment made during the year 403,300

Add : Surplus recognized in other comprehensive income 401,068
Balance as on 30 June 2020 3,809,318

Add: Investment made during the year 241,476

Add: Surplus recognized in other comprehensive income 3,552,667
Balance as on 30 June 2021 7,603,461
 112 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
iv) Valuation inputs and relationships to fair value

The following table summarizes the quantitative information about the significant unobservable inputs used in level 3 fair value
measurements.

Range of inputs
Relationship of
Description Fair value at (probability-
Unobservable inputs unobservable
weighted average)
inputs to
30 June 2021 30 June 2020 30 June 2021 fair value

(Rupees in thousand)

Fair value through other

comprehensive income
Nishat Paper Products 491,661 549,483 Terminal growth 4.00% Increase / decrease in
Company Limited factor terminal growth factor
by 1% and decrease /
Risk adjusted 16.86% increase in discount
discount rate rate by 1% would
increase / decrease
fair value by Rupees
+138.796 million /
- 102.381 million.
Nishat Dairy (Private) Limited 437,400 375,600 Terminal growth 4.00% Increase / decrease in
factor terminal growth factor
by 1% and decrease /
Risk adjusted 15.09% increase in discount
discount rate rate by 1% would
increase / decrease
fair value by Rupees
+ 84.000 million /
- 58.200 million.
Security General Insurance 673,603 590,975 Terminal growth 4.00% Increase / decrease in
Company Limited factor terminal growth factor
by 1% and decrease /
Risk adjusted 14.20% increase in discount
discount rate rate by 1% would
increase / decrease
fair value by Rupees
+157.075 million /
- 106.455 million.
Nishat Hotels and 1,460,472 1,032,620 Terminal growth 4.00% Increase / decrease in
Properties Limited factor terminal growth factor
by 1% and decrease /
Risk adjusted 8.66% increase in discount
discount rate rate by 1% would
increase / decrease
fair value by Rupees
+ 1,272.454 million /
- 518.901 million.
Hyundai Nishat Motor 4,374,025 1,094,340 Terminal growth 4.00% Increase / decrease in
(Private) Limited factor terminal growth factor
by 1% and decrease /
Risk adjusted 16.56% increase in discount
discount rate rate by 1% would
increase / decrease
fair value by Rupees
+ 631.854 million /
- 474.745 million.

There were no significant inter-relationships between unobservable inputs that materially affect fair values.

Valuation processes

Independent valuer performs the valuations of non-property items required for financial reporting purposes, including
level 3 fair values. The independent valuer reports directly to the Chief Financial Officer. Discussions of valuation
processes and results are held between the Chief Financial Officer and the valuation team at least once every year, in
line with the Company’s annual reporting period.
 Annual Report 2021 113

The main level 3 inputs used by the Company are derived and evaluated as follows:

Discount rates for financial instruments are determined using a capital asset pricing model to calculate a rate that
reflects current market assessments of the time value of money and the risk specific to the asset.

Earnings growth factor for unlisted equity securities are estimated based on market information for similar types of
companies.

Changes in level 2 and 3 fair values are analyzed at the end of yearly reporting period during the valuation discussion
between the Chief Financial Officer and the independent valuer. As part of this discussion the independent valuer
presents a report that explains the reason for the fair value movements.

47 FAIR VALUE MEASUREMENTS - NON-FINANCIAL ASSETS

i) Fair value hierarchy

Judgements and estimates are made for non-financial assets not measured at fair value in these financial
statements but for which the fair value is described in these financial statements. To provide an indication about
the reliability of the inputs used in determining fair value, the Company has classified its non-financial assets into
the following three levels.

At 30 June 2021 Level 1 Level 2 Level 3 Total

(Rupees in thousand)

Investment properties - 4,887,528 - 4,887,528

Total non-financial assets - 4,887,528 - 4,887,528

At 30 June 2020 Level 1 Level 2 Level 3 Total

(Rupees in thousand)

Investment properties - 4,622,255 - 4,622,255

Total non-financial assets - 4,622,255 - 4,622,255

The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the end
of the reporting period.

There were no transfers between levels 1 and 2 for recurring fair value measurements during the year. Further,
there was no transfer in and out of level 3 measurements.

ii) Valuation techniques used to determine level 2 fair values

The Company obtains independent valuations for its investment properties at least annually. At the end of each
reporting period, the management updates the assessment of the fair value of each property, taking into account
the most recent independent valuations. The management determines a property’s value within a range of
reasonable fair value estimates. The best evidence of fair value is current prices in an active market for similar
properties.

Valuation processes

The Company engages external, independent and qualified valuer to determine the fair value of the Company’s
investment properties at the end of every financial year. As at 30 June 2021, the fair values of the investment
properties have been determined by Al-Hadi Financial & Legal Consultants (an approved valuer).

Changes in fair values are analyzed at the end of each year during the valuation discussion between the Chief
Financial Officer and the valuer. As part of this discussion the team presents a report that explains the reason for
the fair value movements.
 114 Nishat Mills Limited

Notes to the Financial Statements

For the year ended June 30, 2021
48 DISCLOSURES BY COMPANY LISTED ON ISLAMIC INDEX

2021 2020
Note (Rupees in thousand)

Description

Loans / advances obtained as per Islamic mode:

Loans 5&9 6,885,008 4,754,667
Advances 7 1,173,749 956,879

Shariah compliant bank deposits / bank balances

Bank balances 26 37,722 4,336

Profit earned from shariah compliant bank deposits

/ bank balances
Profit on deposits with banks 32 - -

Revenue earned from shariah compliant business 71,431,010 60,904,096

Gain / (loss) or dividend earned from shariah

complaint investments
Dividend income 32.1 1,500 401,059
Unrealized gain on remeasurement of investment at FVTOCI 4,483,573 3,488,630

Exchange gain earned 47,183 33,752

Mark-up paid on Islamic mode of financing 187,637 566,422

Profits earned or interest paid on any conventional

loans / advances
Profit earned on loans to subsidiary companies 313,445 396,814
Interest paid on loans 744,369 659,533
Profit earned on deposits with banks 119,182 97,132
Interest income on loans to employees 10,002 9,602

Relationship with shariah compliant banks

Name Relationship

Habib Bank Limited Bank balance and long term financing

Standard Chartered Bank (Pakistan) Limited Bank balance, short term borrowings and long term
(Saadiq Islamic Banking) financing
Al-Baraka Bank (Pakistan) Limited Bank balance
Bank Islami Pakistan Limited Bank balance and short term borrowings
Meezan Bank Limited Bank balance, short term borrowings and long term financing
Dubai Islamic Bank Pakistan Limited Bank balance and long term financing
MCB Islamic Bank Limited Bank balance
Faysal Bank Limited (Barkat Islami) Short term borrowings
The Bank of Punjab (Taqwa Islamic Banking) Short term borrowings
 Annual Report 2021 115

49 UNUTILIZED CREDIT FACILITIES

Non-funded Funded
2021 2020 2021 2020
(Rupees in thousand)

Total facilities 14,975,000 12,220,000 72,455,000 60,822,000

Utilized at the end of the year 8,764,087 5,099,551 40,093,760 34,284,112
Unutilized at the end of the year 6,210,913 7,120,449 32,361,240 26,537,888

50 IMPACT OF COVID-19 (CORONA VIRUS)

The pandemic of COVID-19 that has rapidly spread all across the world has not only endangered human lives but
has also adversely impacted the global economy. During the year, the Government of the Punjab and
Government of Sindh from time to time announced temporary smart lock downs as a measure to reduce the
spread of the COVID -19. However, after implementing all the necessary Standard Operating Procedures (SOPs)
to ensure safety of employees, the Company continued to carry out its operations and has taken all necessary
steps to ensure smooth and adequate continuation of its business. Management is actively monitoring the
impact of the pandemic on its financial condition, liquidity, operations, supply chain, and workforce, which at this
point is not considered to be significant. During the year, the Company has availed SBP's refinance scheme for
payment of wages and salaries and Temporary Economic Refinance Facility (TERF) as explained in note 5 to
these financial statements. Further, management believes that the Company has sufficient liquidity available to
continue to meet its financial commitments for the foreseeable future when they become due. From the very
outset of COVID-19, the management has adopted various policies and practices to minimize adverse impact of
COVID-19 on the business and is continuously monitoring the situation in order to proactively address any
challenges which may arise from COVID-19.

51 DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorized for issue on 20 September, 2021 by the Board of Directors of the
Company.

52 CORRESPONDING FIGURES

Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However, no
significant rearrangements have been made.

53 GENERAL

Figures have been rounded off to the nearest thousand of Rupees unless otherwise stated.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

Consolidated Financial Statements of
Nishat Mills Limited
and its Subsidiaries
for the year ended June 30, 2021
 118 Nishat Mills Limited and its Subsidiaries

DIRECTORS’ REPORT
The Directors are pleased to present their report together with the consolidated financial statement of Nishat
Mills Limited (“the Holding Company”) and its Subsidiary Companies (together referred to as Group) for the year
ended 30 June 2021. The consolidated results comprise of financial statements of Nishat Mills Limited, Nishat
Power Limited, Nishat Linen (Private) Limited, Nishat Hospitality (Private) Limited, Nishat USA Inc., Nishat Linen
Trading LLC, Nishat International FZE, China Guangzhou Nishat Global Company Limited, Nishat Commodities
(Private) Limited and Lalpir Solar Power (Private) Limited.

The Holding Company has annexed its consolidated financial statements along with its separate financial
statements, in accordance with the requirements of International Financial Reporting Standards and Companies
Act, 2017. The Directors’ Report, giving a commentary on the performance of Nishat Mills Limited for the year
ended 30 June 2021 has been presented separately. It also includes a brief description of all the subsidiary
companies of the Holding Company.

Clarification to Qualifications in Audit Report

In their Report to the Members, Auditors have stated that consolidated financial statements include un-audited
figures pertaining to Nishat USA Incorporated, a wholly owned subsidiary of Nishat Mills Limited. This
Subsidiary Company is incorporated under the Business Corporation Law of the State of New York. The
governing law does not require audit of financial statements of the Subsidiary Company. Hence, we have used
un-audited financial statements of the Subsidiary Company to prepare Consolidated Financial Statements.

We would like to draw your attention to emphasis of matter paragraph (c) of the independent auditors’ report to
the members which refers to Note 1(a) to the consolidated financial statements and states that the Lalpir Solar
Power (Private) Limited (LSPPL) is no longer a going concern, therefore, the financial statements of LSPPL have
been prepared on the basis of estimated realizable / settlement values of assets and liabilities respectively.
LSPPL had fulfilled initialed conditions required for the supply of electricity, but it could not get Power
Acquisition Request and Consent from Central Power Purchasing Agency. Accordingly, there does not seem to
be any commercial justification to retain this company and incur costs thereon. Therefore, the Board of
Directors of the Company has decided to voluntary winding up the Subsidiary, LSPPL, subject to the approval
of shareholders through special resolution. The Subsidiary will be wound up voluntary in accordance with the
requirement of the Companies Act, 2017. Therefore, financial accounts of LSPPL for year 2021 have been
prepared on non-going concern basis.

For and on behalf of the Board of Directors

Mian Umer Mansha Farid Noor Ali Fazal

Chief Executive Officer Director

20 September 2021
Lahore
 Annual Report 2021 119

INDEPENDENT AUDITOR’S REPORT

To the members of Nishat Mills Limited

Qualified Opinion

We have audited the annexed consolidated financial statements of Nishat Mills Limited and its subsidiaries (the
Group), which comprise the consolidated statement of financial position as at 30 June 2021, and the
consolidated statement of profit or loss, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year then
ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies and other explanatory information.

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our
report, the consolidated financial statements give a true and fair view of the consolidated financial position of
the Group as at 30 June 2021, and its consolidated financial performance and its consolidated cash flows for
the year then ended in accordance with the accounting and reporting standards as applicable in Pakistan.

Basis for Qualified Opinion

The financial statements of Nishat USA, Inc. (Subsidiary Company) for the year ended 30 June 2021 were
unaudited. Hence, total assets of Rupees 15,014,570 as at 30 June 2021 and total turnover and net profit of
Rupees 47,951,455 and Rupees 241,638 respectively for the year ended 30 June 2021 pertaining to the
aforesaid Company have been incorporated in these consolidated financial statements by the management
using un-audited financial statements.

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

Emphasis of Matters

We draw attention to Note 1(a) to the consolidated financial statements, which states that the Lalpir Solar Power
(Private) Limited – Subsidiary Company is no longer a going concern, therefore, the financial statements of
Lalpir Solar Power (Private) Limited have been prepared on the basis of estimated realizable / settlement values
of assets and liabilities respectively. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified
Opinion section we have determined the matters described below to be the key audit matters to be
communicated in our report.
 120 Nishat Mills Limited and its Subsidiaries

Following are the key audit matters:

Sr.
Key audit matters How the matters were addressed in our audit
No.

1. Accounting for equity accounted

associates

Investments in equity-accounted associates Our procedures included, but were not limited to:
amounted to Rupees 39,550 million (22.48%
of total assets) as at 30 June 2021. • We perused the supporting documentation and
ensured that they are properly accounted for in
There is a risk that associates are not accordance with International Accounting
accounted for and disclosed properly. Standard (IAS) 28 ‘Investments in Associates and
Joint Ventures’.
As such, we have identified the impairment
assessment, equity accounting and • We ensured proper equity accounting was
disclosure for the investments in equity carried out during the year by looking at the
accounted associates as representing key post-acquisition change in the Group’s share of
audit matters due to the significance of the net assets of the associates. In particular, we
balance to the consolidated financial have:
statements as a whole.
- Tested additions of investments made during
The Group’s management conducts its the year.
impairment test to assess the recoverability
of the equity accounted associates and - Checked the accuracy for computation of
considers whether there are indicators of share of dividend income and profit or loss and
impairment with respect to these other comprehensive income of the associates.
investments. Impairment assessments of
these investments require significant • We assessed the adequacy of the disclosures
judgement and there is the risk that presented within the consolidated financial
valuation of the investments may be statements to ensure they are in accordance with
incorrect and any potential impairment International Financial Reporting Standard (IFRS)
charge miscalculated. 12 ‘Disclosure of Interests in Other Entities’.

For further information on investments in • We sent group audit instructions to the

equity-accounted associates, refer to the respective component auditors to gain comfort
following: on the audit procedures performed by the
component auditors over the financial
- Summary of significant accounting statements of associates.
policies, Consolidation – Associates
note 2.2(b) to the consolidated • We evaluated the reasonableness of
financial statements. management’s assumptions and estimates used
in determining the recoverable values of material
- Critical accounting estimates and investments. We assessed the assumptions and
judgements note 2.1(c) estimates based on our knowledge of the Group
and the industries.
- Long term investments note 18 to the
consolidated financial statements.

2. Assessment of control and significant

influence on investments

There is a risk that management has made Our procedures included, but were not limited to:
an error in judgement or may have not fully
considered all rules, facts and • We tested the design and implementation of key
circumstances in assessing whether the controls around the application of the accounting
Group has control or significant influence on standards and evaluated the significant
 Annual Report 2021 121

Sr.
Key audit matters How the matters were addressed in our audit
No.
its investments which may have significant judgements that management exercised in
consequences on the consolidated financial determining whether the Group controls or have
statements. significant influence over the investee
companies.
For further information, refer to the following:
• We reviewed documents to support any key
- Summary of significant accounting judgments management has made in
policies, Consolidation note 2.2 to the determining whether they control or have
consolidated financial statements. significant influence over an investee e.g. power
over relevant activities.
- Note 1 and Note 18 to the consolidated
financial statements. • We have tested the consolidation process to
assess whether the conclusions reached have
been appropriately applied in the preparation of
the consolidated financial statements and
adequate disclosures have been made in the
consolidated financial statements.

3. Inventory existence and valuation

Inventory of the textile business of the Group Our procedures over existence and valuation of
as at 30 June 2021 represented a material inventory included, but were not limited to:
position in the consolidated statement of
financial position. • To test the quantity of inventories at all locations,
we assessed the corresponding inventory
Inventory is measured at the lower of cost observation instructions and participated in
and net realizable value. inventory counts on sites. Based on samples, we
performed test counts and compared the
We identified existence and valuation of quantities counted by us with the results of the
inventory as a key audit matter due to its counts of the management.
size, representing 15.79% of total assets of
the Group as at 30 June 2021, and the • For a sample of inventory items, re-performed
judgment involved in valuation. the weighted average cost calculation and
compared the weighted average cost appearing
For further information on inventory, refer to on valuation sheets.
the following:
• We tested that the ageing report used by
- Summary of significant accounting management correctly aged inventory items by
policies, Inventories note 2.17 to the agreeing a sample of aged inventory items to the
consolidated financial statements. last recorded invoice.

- Stores, spares and loose tools note 20 • On a sample basis, we tested the net realizable
and Stock-in-trade note 21 to the value of inventory items to recent selling prices
consolidated financial statements. and re-performed the calculation of the inventory
write down, if any.

• We assessed the percentage write down applied

to older inventory with reference to historic
inventory write downs and recoveries on slow
moving inventory.

• In the context of our testing of the calculation, we

analysed individual cost components and traced
them back to the corresponding underlying
documents. We furthermore challenged changes
in unit costs.

• We also made enquires of management,

 122 Nishat Mills Limited and its Subsidiaries

Sr.
Key audit matters How the matters were addressed in our audit
No.

including those outside of the finance function,

and considered the results of our testing above
to determine whether any specific write downs
were required.

4. Capital expenditures

The textile business of the Group is investing Our procedures included, but were not limited to:
significant amounts in its operations and
there are a number of areas where • We tested operating effectiveness of controls in
management judgement impacts the place over the property, plant and equipment
carrying value of property, plant and cycle including the controls over whether costs
equipment and its respective depreciation incurred on activities is capital or operating in
profile. These include among other the nature.
decision to capitalize or expense costs; and
review of useful life of the assets including • We evaluated the appropriateness of
the impact of changes in the Group’s capitalization policies and depreciation rates.
strategy.
• We performed tests of details on costs
We focused on this area since the amounts capitalized.
have a significant impact on the financial
position of the Group and there is significant • We verified the accuracy of management’s
management judgment required that has calculation used for the impairment testing.
significant impact on the reporting of the
financial position for the Group. Therefore,
considered as one of the key audit matters.

For further information, refer to the following:

- Summary of significant accounting

policies, Property, plant, equipment
and deprecation note 2.7 to the
consolidated financial statements.

- Property, plant and equipment note 15

to the consolidated financial
statements.

5. Revenue recognition

We identified recognition of revenue of Our procedures included, but were not limited to:
textile business of the Group as a key audit
matter because revenue is one of the key • We obtained an understanding of the process
performance indicators and gives rise to an relating to recognition of revenue and testing the
inherent risk that revenue could be subject design, implementation and operating
to misstatement to meet expectations or effectiveness of key internal controls over
targets. recording of revenue.

For further information, refer to the following: • We compared a sample of revenue transactions
recorded during the year with sales orders, sales
- Summary of significant accounting invoices, delivery documents and other relevant
policies, Revenue from contracts with underlying documents.
customers note 2.24 to the
consolidated financial statements. • We compared a sample of revenue transactions
 Annual Report 2021 123

Sr.
Key audit matters How the matters were addressed in our audit
No.

- Revenue note 30 to the consolidated recorded around the year-end with the sales
financial statements. orders, sales invoices, delivery documents and
other relevant underlying documentation to
assess if the related revenue was recorded in the
appropriate accounting period.

• We assessed whether the accounting policies for

revenue recognition complies with the
requirements of IFRS 15 ‘Revenue from
Contracts with Customers’.

• We also considered the appropriateness of

disclosures in the consolidated financial
statements.

6. Master Agreement and PPA Amendment

Agreement

On 12 February 2021, Nishat Power Limited We issued instructions to the component auditor.
– Subsidiary Company signed the Amend- We, as group auditor, evaluated the procedures
ment to the Power Purchase Agreement performed by the component auditor in respect of
(PPA) and Master Agreement (the Agree- the Agreements. The procedures, amongst others
ments) with Central Power Purchasing included the following:
Agency (Guarantee) Limited (CPPA-G /
Power Purchaser) whereby settlements • Assessed whether the revenue and related trade
relating to capacity revenue dispute and its debts / receivables have been recognized in
receivable have been made. The settlement accordance with the applicable accounting
resulted in an impairment of Rupees policies.
141.474 million. Further, pursuant to the
PPA Amendment Agreement, the existing • Obtained and assessed details of the
term of Power Purchase Agreement (PPA) of Agreements and discussed the same with the
twenty-five years has been extended by 68 Subsidiary Company’s management.
days. The Subsidiary Company in consider-
ation also agreed to forgo certain amounts • Inspected the minutes of the meetings of Board
under the Final Award. of Directors and Audit Committees during the
year ended 30 June 2021.
Further, subject to the terms of the PPA
Amendment Agreement, the Subsidiary • Checked that the invoices raised by the
Company agreed to forgo its rights to late Subsidiary Company during the year are in
payment interest on late payment interest accordance with the requirements of PPA and
invoices. the aforesaid Agreements.

Signing of the above-mentioned Agree- • Circularized confirmation of trade debts

ments is a significant event during the year receivables to CPPA-G.
and the evaluation of its impact involves
significant management judgment, there- • Assessed the adequacy of impairment in relation
fore, we considered this as a key audit to the disputed capacity receivables.
matter.
• Assessed adequacy of the accounting treatment
For further information, refer to the following: and related disclosures made in the consolidated
financial statements, with regards to applicable
- Note 1(a) to the consolidated financial accounting and reporting standards.
statements.
- Trade debts note 22.6 to the
consolidated financial statements.
 124 Nishat Mills Limited and its Subsidiaries

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 consolidated financial statements and our auditor’s report
thereon.

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

In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. As described in the Basis for Qualified Opinion section above,
the Group should have consolidated Nishat USA, Inc. (Subsidiary Company) based on audited financial
statements. Accordingly, we are unable to conclude whether or not the other information is materially misstated
with respect to this matter.

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

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

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

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

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an 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 consolidated financial statements.

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

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

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
 Annual Report 2021 125

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

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

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

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

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

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

From the matters communicated with the Board of Directors, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key
audit matters. We describe these matters in our 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.

The engagement partner on the audit resulting in this independent auditor’s report is Syed Mustafa Ali.

RIAZ AHMAD & COMPANY

Chartered Accountants

Lahore
Date: 24 September 2021
 126 Nishat Mills Limited and its Subsidiaries

Consolidated Statement of Financial Position

As at June 30, 2021
2021 2020
Note (Rupees in thousand)

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorized share capital

1,100,000,000 (2020: 1,100,000,000) ordinary

shares of Rupees 10 each 11,000,000 11,000,000

Issued, subscribed and paid-up share capital 3 3,515,999 3,515,999

Reserves 4 104,414,731 92,836,718

Equity attributable to equity holders of the Holding Company 107,930,730 96,352,717

Non-controlling interest 12,741,966 11,606,574

Total equity 120,672,696 107,959,291

LIABILITIES

NON-CURRENT LIABILITIES

Long term financing 5 11,705,985 9,372,451

Lease liabilities 6 1,368,868 1,765,873
Long term security deposits 7 269,078 271,133
Retirement benefit obligation 23,008 19,466
Deferred liabilities 8 2,572,634 1,974,551
15,939,573 13,403,474

CURRENT LIABILITIES

Trade and other payables 9 11,390,058 11,184,265

Accrued mark-up 10 269,569 395,513
Short term borrowings 11 22,385,156 24,080,517
Current portion of non-current liabilities 12 5,144,607 1,263,901
Unclaimed dividend 13 115,497 111,267
39,304,887 37,035,463

TOTAL LIABILITIES 55,244,460 50,438,937

CONTINGENCIES AND COMMITMENTS 14

TOTAL EQUITY AND LIABILITIES 175,917,156 158,398,228

The annexed notes form an integral part of these consolidated financial statements.

CHIEF EXECUTIVE OFFICER

 Annual Report 2021 127

2021 2020
Note (Rupees in thousand)

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 15 47,644,512 43,724,143

Intangible assets 16 - 1,259
Right-of-use assets 17 1,739,404 2,030,736
Long term investments 18 55,330,247 50,115,435
Long term loans 19 532,541 361,635
Long term deposits 277,579 225,882
105,524,283 96,459,090

CURRENT ASSETS

Stores, spare parts and loose tools 20 3,307,714 2,979,540

Stock-in-trade 21 25,795,008 28,367,135
Trade debts 22 27,111,194 23,604,593
Loans and advances 23 1,089,975 719,759
Advance income tax - net 24 1,054,299 652,738
Short term deposits and prepayments 25 191,671 184,401
Other receivables 26 5,431,355 4,652,267
Accrued interest 27 13,659 2,301
Short term investment 28 - 17,677
Cash and bank balances 29 6,397,998 758,727
70,392,873 61,939,138

TOTAL ASSETS 175,917,156 158,398,228

DIRECTOR CHIEF FINANCIAL OFFICER

 128 Nishat Mills Limited and its Subsidiaries

Consolidated Statement of Profit or Loss

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

REVENUE 30 104,727,458 88,709,830

COST OF SALES 31 (86,066,252) (70,822,039)
GROSS PROFIT 18,661,206 17,887,791

DISTRIBUTION COST 32 (6,456,276) (6,093,102)

ADMINISTRATIVE EXPENSES 33 (2,182,075) (2,223,204)
OTHER EXPENSES 34 (597,767) (218,300)
(9,236,118) (8,534,606)
9,425,088 9,353,185

OTHER INCOME 35 2,732,075 2,351,438

PROFIT FROM OPERATIONS 12,157,163 11,704,623

FINANCE COST 36 (1,881,452) (2,957,854)

10,275,711 8,746,769

SHARE OF PROFIT FROM ASSOCIATES 18.2 2,848,522 864,092

PROFIT BEFORE TAXATION 13,124,233 9,610,861

TAXATION 37 (1,918,637) (839,106)

PROFIT AFTER TAXATION 11,205,596 8,771,755

SHARE OF PROFIT ATTRIBUTABLE TO:

EQUITY HOLDERS OF HOLDING COMPANY 9,896,748 6,352,753

NON-CONTROLLING INTEREST 1,308,848 2,419,002
11,205,596 8,771,755

EARNINGS PER SHARE - BASIC AND DILUTED (RUPEES) 38 28.15 18.07

The annexed notes form an integral part of these consolidated financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

 Annual Report 2021 129

Consolidated Statement of Comprehensive Income

For the year ended June 30, 2021
2021 2020
(Rupees in thousand)

PROFIT AFTER TAXATION 11,205,596 8,771,755

OTHER COMPREHENSIVE INCOME / (LOSS)

Items that will not be reclassified to profit or loss:

Remeasurement of retirement benefits of associates - net of tax 20,439 2,140

Surplus / (deficit) arising on remeasurement of investments at
fair value through other comprehensive income 389,857 (1,279,310)
Share of surplus / (deficit) on remeasurement of investments at
fair value through other comprehensive income of associates - net of tax 977,284 (535,646)
Deferred income tax relating to deficit on investments at fair value
through other comprehensive income 302,512 18,572
1,690,092 (1,794,244)

Items that may be reclassified subsequently to profit or loss:

Exchange differences on translating foreign operations (37,902) 5,491

Other comprehensive income / (loss) for the year - net of tax 1,652,190 (1,788,753)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 12,857,786 6,983,002

SHARE OF TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:

EQUITY HOLDERS OF HOLDING COMPANY 11,548,938 4,564,000

NON-CONTROLLING INTEREST 1,308,848 2,419,002
12,857,786 6,983,002

The annexed notes form an integral part of these consolidated financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

 (Rupees in thousand)

Attributable to Equity Holders of the Holding Company

Capital Reserves Revenue Reserves
Share Non- Total
130

Capital Premium on Fair value Exchange Capital Total Shareholders’ Controlling Equity
reserve Statutory Redemption Maintenance General Unappropriated
issue of Translation Sub Total Sub Total Reserves Equity Interest
FVTOCI Reserve Reserve Fund Reserve Reserve Profit
right shares investments Reserve

Balance as at 01 July 2019 3,515,999 5,499,530 9,727,048 219,168 835 111,002 1,608,668 17,166,251 64,764,214 7,815,002 72,579,216 89,745,467 93,261,466 9,361,028 102,622,494

Transaction with owners - Final dividend for the

year ended 30 June 2019 @ Rupees 4.00 per share - - - - - - - - - (1,406,399) (1,406,399) (1,406,399) (1,406,399) - (1,406,399)

Transferred to general reserve - - - - - - - - 6,399,000 (6,399,000) - - - - -

Transaction with owners - Dividend relating to year

2019 paid to non-controlling interest - - - - - - - - - - - - - (173,456) (173,456)

Profit for the year - - - - - - - - - 6,352,753 6,352,753 6,352,753 6,352,753 2,419,002 8,771,755
For the year ended June 30, 2021

Other comprehensive income / (loss) for the year - - (1,796,384) 5,491 - - - (1,790,893) - 2,140 2,140 (1,788,753) (1,788,753) - (1,788,753)

Total comprehensive income for the year - - (1,796,384) 5,491 - - - (1,790,893) - 6,354,893 6,354,893 4,564,000 4,564,000 2,419,002 6,983,002

Net movement - - - - - - - - - (66,350) (66,350) (66,350) (66,350) - (66,350)

Balance as at 30 June 2020 3,515,999 5,499,530 7,930,664 224,659 835 111,002 1,608,668 15,375,358 71,163,214 6,298,146 77,461,360 92,836,718 96,352,717 11,606,574 107,959,291

Adjustments due to equity accounted investee companies - - (579,789) - - - - (579,789) - 2,015,263 2,015,263 1,435,474 1,435,474 - 1,435,474

Transaction with owners - Final dividend for the year

ended 30 June 2020 @ Rupees 4.00 per share - - - - - - - - - (1,406,399) (1,406,399) (1,406,399) (1,406,399) - (1,406,399)

Transferred to general reserve - - - - - - - - 4,890,000 (4,890,000) - - - - -

Transaction with owners - Dividend relating to year 2020

paid to non-controlling interest - - - - - - - - - - - - - (173,456) (173,456)

Transferred to statutory reserve - - - - 3,347 - - 3,347 - (3,347) (3,347) - - - -

Profit for the year - - - - - - - - - 9,896,748 9,896,748 9,896,748 9,896,748 1,308,848 11,205,596
Consolidated Statement of Changes In Equity

Other comprehensive income for the year - - 1,669,653 (37,902) - - - 1,631,751 - 20,439 20,439 1,652,190 1,652,190 - 1,652,190

Total comprehensive income for the year - - 1,669,653 (37,902) - - - 1,631,751 - 9,917,187 9,917,187 11,548,938 11,548,938 1,308,848 12,857,786

Balance as at 30 June 2021 3,515,999 5,499,530 9,020,528 186,757 4,182 111,002 1,608,668 16,430,667 76,053,214 11,930,850 87,984,064 104,414,731 107,930,730 12,741,966 120,672,696

The annexed notes form an integral part of these consolidated financial statements.
Nishat Mills Limited and its Subsidiaries

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

 Annual Report 2021 131

Consolidated Statement of Cash Flows

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 39 13,601,745 10,125,221

Finance cost paid (1,933,834) (3,031,586)
Income tax paid (1,579,446) (1,296,718)
Long term security deposits (paid) / received (2,055) 54,103
Exchange gain on forward exchange contracts received 1,237 107,279
Gas infrastructure development cess paid (168,369) -
Net increase in retirement benefit obligation 2,550 151
Net increase in long term loans (211,159) (62,807)
Net increase in long term deposits (51,697) (11,981)

Net cash generated from operating activities 9,658,972 5,883,662

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment 397,167 97,272

Capital expenditure on property, plant and equipment (7,919,907) (5,791,497)
Dividends received 2,490,606 1,856,089
Investments made (259,820) (430,587)
Proceeds from sale of investments 36,021 -
Interest received 122,563 112,982
Net cash used in investing activities (5,133,370) (4,155,741)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term financing 6,744,988 4,454,967

Repayment of long term financing (1,756,252) (4,404,834)
Repayment of lease liabilities (566,179) (347,769)
Exchange differences on translation of net investments
in foreign subsidiaries (37,902) 15,704
Short term borrowings - net (1,695,361) (322,057)
Dividend paid (1,575,625) (1,585,627)

Net cash from / (used in) financing activities 1,113,669 (2,189,616)

Net increase / (decrease) in cash and cash equivalents 5,639,271 (461,695)

Cash and cash equivalents at the beginning of the year 758,727 1,220,422

Cash and cash equivalents at the end of the year 6,397,998 758,727

The annexed notes form an integral part of these consolidated financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

 132 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
1 THE GROUP AND ITS OPERATIONS

a) The Group consists of:

Holding Company

- Nishat Mills Limited

Subsidiary Companies

- Nishat Power Limited

- Nishat Linen (Private) Limited
- Nishat Hospitality (Private) Limited
- Nishat USA, Inc.
- Nishat Linen Trading LLC
- Nishat International FZE
- China Guangzhou Nishat Global Co., Ltd.
- Nishat Commodities (Private) Limited
- Lalpir Solar Power (Private) Limited

NISHAT MILLS LIMITED

Nishat Mills Limited is a public limited Company incorporated in Pakistan under the Companies Act, 1913 (Now
Companies Act, 2017) and listed on Pakistan Stock Exchange Limited. Its registered office is situated at 53-A,
Lawrence Road, Lahore. The Company is engaged in the business of textile manufacturing and of spinning, combing,
weaving, bleaching, dyeing, printing, stitching, apparel, buying, selling and otherwise dealing in yarn, linen, cloth and
other goods and fabrics made from raw cotton, synthetic fibre and cloth and to generate, accumulate, distribute,
supply and sell electricity. Geographical location and addresses of all business units are as follows:

Sr.
Manufacturing units and offices Address
No.

1 Spinning units, yarn dyeing unit and power plant Nishatabad, Faisalabad.
2 Spinning units and power plant Plot No. 172-180 and 188-197, M-3 Industrial City,
Sahianwala, FIEDMC, 2 K.M., Jhumra Chiniot
Road, Chak Jhumra, Faisalabad.
3 Spinning units and power plant 20 K.M., Sheikhupura Road, Feroze Wattwan.
4 Weaving units and power plant 12 K.M., Faisalabad Road, Sheikhupura.
5 Weaving units, dyeing and finishing unit, 5 K.M., Nishat Avenue Off 22 K.M., Ferozepur
processing unit, stitching units and power plants Road, Lahore.
6 Terry unit 7 K.M., Nishat Avenue Off 22 K.M., Ferozepur
Road, Lahore.
7 Apparel unit 2 K.M., Nishat Avenue Off 22 K.M., Ferozepur
Road, Lahore.
8 Head office 7-Main Gulberg, Lahore.
9 Office 1st Floor, Karachi Chambers, Hasrat Mohani
Road, Karachi.
10 Registered office Nishat House, 53 - A, Lawrence Road, Lahore.

NISHAT POWER LIMITED

Nishat Power Limited is a public limited Company incorporated in Pakistan under the repealed Companies Ordinance,
1984 (Now Companies Act, 2017) and listed on Pakistan Stock Exchange Limited. The Company is a subsidiary of
Nishat Mills Limited. The principal activity of the Company is to build, own, operate and maintain a fuel fired power
station having gross capacity of 200 MW ISO in Jamber Kalan, Tehsil Pattoki, District Kasur, Punjab, Pakistan. Its
 Annual Report 2021 133

registered office is situated at 53-A, Lawrence Road, Lahore. Its head office is situated at 1-B, Aziz Avenue, Canal
Road, Gulberg V, Lahore. The Company had a Power Purchase Agreement (‘PPA’) with its sole customer, National
Transmission and Despatch Company Limited (‘NTDC’) for twenty five years which commenced from 09 June 2010.
During the year on 12 February 2021, the Company entered into a Novation Agreement to the PPA with NTDC and
Central Power Purchasing Agency (Guarantee) Limited (‘CPPA-G’ and also referred to as the ‘Power Purchaser’),
whereby, NTDC irrevocably transferred all of its rights, obligations and liabilities under the PPA to CPPA-G and
thereafter, NTDC ceased to be a party to the PPA, and CPPA-G became a party to the PPA in place of NTDC. Further,
on the same day, the Company entered into the PPA Amendment Agreement, whereby, the current Agreement Year
that was ending on 08 June 2021 was extended by sixty eight (68) days to 15 August 2021. Therefore, the existing
term of the PPA Agreement has been extended by sixty eight days to twenty five years and sixty eight days ending on
15 August 2035. Ownership interest held by non-controlling interests in Nishat Power Limited is 48.99% (2020:
48.99%).

Significant events during the period

Master Agreement and Power Purchase Amendment Agreement of Nishat Power Limited – Subsidiary
Company

Nishat Power Limited – Subsidiary Company in the larger national interest and sustainability of the power sector,
voluntarily agreed to alter its existing contractual arrangements with the CPPA-G for the sale and purchase of
electricity. In this respect, the Subsidiary Company entered into a “Master Agreement” and a “PPA Amendment
Agreement” (hereinafter referred to as the 'Agreements') on 12 February 2021. Under these Agreements, the
Subsidiary Company and CPPA-G have primarily agreed on the following matters that are subject to fulfilment of
certain terms and conditions mentioned in the Agreements:

- Mechanism of settlement of long outstanding acknowledged receivables as at 30 November 2020 aggregating to

Rupees 14,252.802 million, in two installments;

- Discounts in tariff components i.e. Return on Equity (ROE) including Return on Equity During Construction (RoEDC)
shall be changed to 17% per annum in Pak Rupee (PKR) calculated at PKR / USD exchange rate of PKR 148 / USD,
with no future USD indexation. However, the existing ROE and RoEDC, together with applicable indexation, shall
continue to be applied until the date when the applicable exchange rate under the present tariff reaches PKR 168 /
USD, whereupon the revised RoE and RoEDC shall become applicable for reminder of the term of the PPA. The
revised tariff will be effective subject to notification by Government of Pakistan ('GoP') and payment of first installment
by CPPA-G;

- Any future savings in fuel, subject to certain conditions stipulated in the Master Agreement, shall be shared between
CPPA-G and the Subsidiary Company on a sliding scale ratio ranging from 70:30 to 40:60 for any efficiency above
NEPRA determined benchmark. Furthermore, any future savings in Operations & Maintenance ('O&M') shall be shared
50:50, subject to certain conditions stipulated in the Master Agreement;

- Delayed payment rate' as referred in note 22.6 of these consolidated financial statements has been amended to (a)
for the first sixty (60) days, KIBOR plus two percent per annum, compounded semi-annually; (b) for any period
thereafter sixty (60) days, KIBOR plus four-point five percent per annum, each compounded semi-annually. However,
this shall come into effect after NEPRA approves the adjustment in tariff and its terms strictly per the scope of Tariff
Adjustment Application and CPPA-G has paid the two installments as mentioned above in respect of long outstanding
acknowledged receivables;

- Conversion of the PPA to 'Take and Pay Basis' when competitive trading arrangement is implemented and becomes
fully operational, as per terms stipulated in the Generation License;

- On 07 August 2017, the Subsidiary Company instituted arbitration proceedings against NTDC / Government of
Pakistan by filing a Request for Arbitration ('RFA') with the London Court of International Arbitration ('LCIA') (the
'Arbitration Proceedings') for disallowing an amount of Rupees 1,084.748 million relating to delayed payment charges
on outstanding delayed payment invoices. In July 2020, a Final Award was given in favour of the Subsidiary Company,
 134 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
whereby, the Arbitrator accepted Subsidiary Company's request and directed NTDC / CPPA-G to pay to the
Subsidiary Company (i) interest at the Delayed Payment Rate (DPR) on Delayed Payment (DP) invoices, which is
estimated at Rupees 1,620.95 million up to 30 June 2021 and may vary as per legal advice (ii) DP invoices submitted
pursuant to section 9.6 of the PPA consistent with the first-in-first-out principle (iii) pay legal costs in the sum of
Rupees 12,771,207 (iv) hearing expenses in the sum of GBP 17,393 (equivalent to Rupees 3.802 million) and (v)
Arbitration cost in the sum of GBP 44,136 (equivalent to Rupees 9.647 million).

During the year on 05 January 2021, CPPA-G filed a suit in Civil Court, Lahore, to set aside the Final Award issued by
LCIA. Meanwhile, the Subsidiary Company also filed the Final Award for enforcement and implementation in Lahore
High Court on 13 January 2021. Both the civil suit by CPPA-G and the enforcement application by the Subsidiary
Company are pending adjudication.

However, under the Master Agreement, the CPPA-G has agreed to ensure that all present and future invoices shall
follow the PPA's mandated FIFO payment principle. As long as this principle is followed by the CPPA-G in relation to
past and future payments, the Subsidiary Company in consideration thereof has agreed to forgo and waive all of its
claims of delayed payment charges on delayed payment invoices and it shall withdraw all such invoices. However, this
will have no impact on the existing revenue and receivables of the Subsidiary Company, as the Subsidiary Company
has not recognized the income and corresponding receivable for the said amounts on prudence basis.

- Amicable resolution of the capacity revenue dispute involving Rupees 816.033 million for the period ('disputed
period') in which the plant was not fully available for power generation due to non-availability of fuel owing to
non-payment by CPPA-G. Pursuant to the PPA Amendment Agreement, the disputed period has been treated as an
Other Force Majeure Event (‘OFME’) under the PPA. The OFME period has commenced on 09 June 2021 and will end
on 15 August 2021, consequently, the term of PPA has been extended by 68 days, till 15 August 2035. The accounting
implications of the same have been detailed under note 22.6 to these consolidated financial statements.

Further, the management has also assessed the accounting implications of the above mentioned developments in
relation to the impairment of cash generating unit ('CGU') comprising of tangible and intangible assets under IAS 36,
‘Impairment of assets’. However, according to management's assessment, there is no impact on these consolidated
financial statements.

NISHAT LINEN (PRIVATE) LIMITED

Nishat Linen (Private) Limited, a wholly owned subsidiary of Nishat Mills Limited, is a private limited company
incorporated in Pakistan under the repealed Companies Ordinance, 1984 (Now Companies Act, 2017) on 15 March
2011. The registered office of Nishat Linen (Private) Limited is situated at 7- Main, Gulberg Lahore. The principal
objects of the Company are to operate retail outlets for sale of textile and other products and to sale the textile
products by processing the textile goods in own and outside manufacturing facility. Geographical location and
addresses of all business units are as follows:

Sr.
Business Units Address
No.

Manufacturing unit and office

1 Stitching Unit and office 21 K.M., Ferozepur Road, Lahore.

Stores

1 Nishat Emporium Mall Shop # G-26, Nishat Emporium Mall, Abdul Haque Road,
Johar Town, Lahore.
2 Swarovski-Emporium Mall Shop # KG-05, Ground Floor, Nishat Emporium Mall, Abdul
Haque Road, Johar Town, Lahore.
3 Gulberg Galleria Shop # 13, Ground Floor U/G1 & L/G2, Gulberg Galleria,
18-Main Boulevard, Gulberg III, Lahore.
 Annual Report 2021 135

Sr.
Business Units Address
No.

4 Packages Mall Packages Mall, Walton Road, Lahore.

5 Tariq Road Plot No. 172-5, P.E.C.H.S, Block 2, Tariq Road, Karachi.
6 Wapda Town Main Boulevard, Johar Town, (Opposite Shaukat Khanum
Hospital), Lahore.
7 Fashion Avenue Fashion Avenue, Shop No. 5-7, College Block, Main
Boulevard, Allama Iqbal Town, Lahore.
8 Fair Price Shop - Karachi Plot No. CA-1-2, Ali Centre, Alfalah Cooperative Housing
Society Limited, Shah Faisal Colony, Karachi.
9 Canal West Bank Shop No. 1-3, Ground Floor Sraw Plaza, Near Muhafiz Town,
Phase 1, Canal West Bank Road, Lahore.
10 Phase IV DHA 176 DD, Commercial Area, Phase 4, DHA, Lahore.
11 Doctors Hospital 86 G/1, Johar Town (Opposite Doctors Hospital), Lahore.
12 Link Road Model Town Opposite Raja Sahib, Link Road Model Town, Lahore.
13 Sukkur Shop No. 63, Military Road, Sukkur.
14 Shadman 118-Shadman, Lahore.
15 FPS Chauburji Shop No. 2, Development Scheme, Chauburji, Lahore.
16 Gulshan Ravi Factory Outlet, Shop No. 12-C, Main Boulevard Gulshan
Ravi, Lahore.
17 Thokar Niaz Baig Factory Outlet, Ground Floor, 55th Avenue, Thokar Niaz Baig,
Raiwind Road, Lahore.
18 E-Store 21 K.M., Ferozepur Road, Lahore.
19 Clifton G.F2, Jamalistan Shopping Center, DC-1, Block 8, Clifton,
Karachi.
20 Dolmen Clifton D-3, 1st Floor, Dolmen City, Block 4, Scheme 5, Clifton,
Karachi.
21 Dolmen Tariq Road SF-21, 2nd Floor, Dolmen Mall, Block 3, P.E.C.H.S., Tariq
Road, Karachi.
22 Wazirabad G-58, Hajipura, Wazirabad.
23 Ocean Mall Shop 250-254, 2nd Floor, Ocean Mall, Plot No. G-3,
Khyaban-e-Iqbal, Block 9, Clifton, Karachi.
24 KDA Outlet Store NL Outlet Store, 565-A, Block 3, KDA Scheme 24,
Gulshan-e-Iqbal, Karachi.
25 Mariam Heights Shop No. 2, Mariam Heights, Plot No. 1, Main
Shaheed-e-Millat Road (Opposite Naheed and Chase Super
Market), Karachi.
26 Lucky One Mall Lucky One Mall, Shop No. F-31, 1st Floor, Block 21, F.B.
Area, Main Rashid Minhas Road, Karachi.
27 Atrium Mall 1st Floor, Atrium Mall, Staff Lines, Fatima Jinnah Road,
Cantt. Karachi.
28 Millennium Mall Millennium Mall, Main Rashid Minhas Road, Adjacent
Drive-In Cinema, Gulshan-e-Iqbal, Karachi.
29 ANB Center ANB Center, Plot No. 13-V, (Behind PSO Petrol Pump) Jinnah
Super Market, F-7 Markaz, Islamabad.
30 F-10 Block No. 7, Malik Arcade, F-10 Markaz, Islamabad.
31 Centaurus Mall Shop No. 120, 1st Floor, Centaurus Shopping Mall, Jinnah
Avenue Plot No. 1, Blue Area, F-8/G-8, Islamabad.
32 Bahria Town Phase 7 Plaza 155, (Near Shaheen Chowk), Spring North, Phase 7,
Bahria Town, Islamabad.
33 PWD Ground Floor, Plaza No. 10, Main Road, Block A, PWD,
Islamabad.
 136 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021

Sr.
Business Units Address
No.

34 World Trade Center World Trade Center, G.T. Road, Defence Housing Authority,
Phase II, Islamabad.
35 Awami Trade Center Awami Trade Center, Ground Floor, 31-33, G-9 Markaz,
Islamabad.
36 Adamjee Road Plot No. 5, Saddar, Adamjee Road, Rawalpindi.
37 Satellite Town Shop No. 3, Abbas Arcade, 5th Road, Satellite Town,
Commercial Market, Rawalpindi.
38 Crystal Mall Crystal Mall, Main Bosan Road, Multan.
39 Gulshan Market Factory Outlet, Shop No. 3, Block-S, 100 Feet Road,
Gulshan Market, New Multan Colony, Multan.
40 S.P Chowk Plot No. 1-A, S.P Chowk, Nusrat Road, Multan Cantt.,
Multan.
41 Masooma Shop No. 2-3, Masooma Shopping Center, Legacy Tower,
Koh-e-Noor City, Jaranwala Road, Faisalabad.
42 D-Ground 1298/B, Chen One Road, Peoples Colony No. 1, Faisalabad.
43 Gulberg Road Shop No. P-424, Jinnah Colony, Gulberg Road, Faisalabad.
44 The Boulevard Mall Shop No. 1, Ground Floor, The Boulevard Mall, Near Suzuki
Burj Motors, East Canal Road, Faisalabad.
45 Taj Shopping Center Ground Floor Taj Shopping Center, (Near National Bank)
Govt. Girls College Road, Satellite Town, Gujranwala.
46 Fazal Centre Hall No. 5, Fazal Centre, G.T. Road, Rahwali Cantt.,
Gujranwala.
47 Town Branch JB Tower, Ground Floor, University Road, Peshawar.
48 Cantt Branch Deans Trade Center, Islamia Road Cantt., Peshawar.
49 Abdullah Mall Abdullah Mall, Ground Floor, Kutchery Road, Gujrat.
50 Sialkot 97-A, Liberty Market, Aziz Shaheed Road, (Near Silver Spoon
Restaurant) Cantt., Sialkot.
51 Bahawalpur Shop No. 2, Haqqi Centre, (Opposite Commissioner House)
Adjacent to DIG House, Bahawalpur.
52 Sargodha Shop No. 39, Raas Tower, Qasim Park, Opposite MCB Bank,
Main University Road, Sargodha.
53 Abbottabad Mansehra Road, Opposite Faisal Bank, Abbottabad.
54 Mardan Afaq Centre, (Opposite Premier Sugar Mills) Nowshera Road,
Mardan.
55 Sahiwal Azaan Heights, Jahaz Chowk, Sahiwal.
56 Swat Shop No. F-1 & F-2, Swat Trade Center, (Opposite Swat
Serena Hotel) Allah Chowk, Saidu Sharif, Swat.
57 Mandi Bahauddin Shop No. G9, Ground Floor, Hakim Mall, Jail Road, Mandi
Bahauddin.
58 Jhelum Shop No. 1-14, Ground Floor, Adnan Plaza, Jhelum.
59 Boulevard Mall First Floor A-14, Boulevard Mall, Auto Bhan Road, S.I.T.E.,
Hyderabad.
60 Burewala Opposite Imran Petroleum, Near Stadium Road, Multan
Road, Burewala.
61 Quetta Shop No. 1, Ground Floor, Millennium Mall, Gulistan Road,
Quetta.
62 Muzaffarabad Shop No. 1, Ground Floor, Al-Rahim Plaza, Neelum Valley
Road (Lower Plate), Muzaffarabad.
63 Sheikhupura Lower Ground, Khanjee Center, Civil Quarter Road,
Sheikhupura.
64 D.G. Khan Shop No. 32-33, Block No. 15, Traffic Chowk, Dera Ghazi
Khan.
 Annual Report 2021 137

Sr.
Business Units Address
No.

65 Rahim Yar Khan 5-Model Town, Near Town Hall, Opposite U Microfinance
Bank, Rahim Yar Khan.
66 Lalamusa Factory Outlet, Lower Ground Floor, City Mall, G.T. Road,
Lalamusa.
67 Fair Price Shop Sukheki Nishat Dairy, Sukheki.
68 Wah Cantt Shop No. 7-8 Lower Ground & Shop No. 7-8 Ground Floor,
City Centre Phase 2, New City, Wah Cantt.
69 Kasur Chandani Chowk, Plaza No. 216, Near Bank Alfalah, Railway
Road, Kasur.
70 Fair Price Shop - Lahore 21 K.M., Ferozepur Road, Lahore.
71 Fair Price Shop – Bhikhi Nishat Mills Limited, Weaving Unit Bhikhi, Sheikhupura.
72 Fair Price Shop –Faisalabad Nishat Mills Limited, Nishatabad, Faisalabad.
73 Centaurus – Inglot Shop No. 315, 3rd Floor, The Centaurus Mall, F-8,
Islamabad.
74 WTC – Inglot Shop No. 25, Hyperstar Floor Plot No. 1 Main G.T. Road DHA
Phase 2, Islamabad.
75 DMC – Inglot D-3, 1st Floor, Dolmen City, Block 4, Scheme 5, Clifton,
Karachi.
76 Emporium – Inglot Ground Floor, G-43, Emporium Mall, Lahore.
77 Swarovski Centaurus Plot No. 1, Tower A, 16th Floor, The Centaurus Mall,
Islamabad.
78 Packages – Inglot Shop No. 1065, Ist Floor, Packages Mall, Lahore.
79 Crystal Mall – Inglot Crystal Mall, Chungi No. 9, Bosan Road, Multan.
80 Sargodha – Inglot Plot No. 39, Raas Tower, Qasim Park University Road,
Sargodha.
81 Nishat Linen Tower 5-A-3, Mian Mahmood Ali Kasuri Road, Gulberg III, Lahore.
82 Factory Outlet - Lahore Karim Block, Allama Iqbal Town, Lahore.
83 The Mall – Karachi Shop No. 105, Ground Floor, Shanti Nagar, Main Rashid
Minhas Road, Opposite Aladin Amusement Park, Karachi.
84 Bahria Town - Rawalpindi Building 117, Civic Center, Phase 4, Bahria Town,
Rawalpindi.
85 Taj Shopping Center – Gujranwala Ground Floor, Taj Shopping Center, (Near National Bank)
Govt. Girls College Road, Satellite Town, Gujranwala.
86 Al Barkat Center – Gujranwala Shop No. 1839-A, Al Barkat Center, Near Marinate
Restaurant, G.T. Road, Gujranwala.
87 Dera Ismail Khan Opposite Liaqat Park, East Circular Road, Dera Ismail Khan.
88 Jhang 1 K.M., Faisalabad Road, Jhang Sadar.
89 Layyah Shop No. 2, College Road, Layyah.
90 Mirpur Shop No. 64, Sector F-1, Kotli Road, Mirpur Azad Kashmir.
91 Okara Tehsil Road, A-Block, Okara.
92 Hafizabad Vanike Road, Hafizabad.
93 Attock Kamra Road, near Fuel Mart CNG Station, Attock.
94 Phalia Shop No. 01, French Galleria, Gujrat Road, Phalia.
95 Boulevard Mall – Inglot Shop No. 8, The Boulevard Mall, East Canal Road, Near
Suzuki Burj Motors Showroom, Saeed Colony, Faisalabad.
96 Lucky Mall – Inglot Lucky One Mall, F-13, 1st Floor, Lucky One Mall, Rashid
Minhas Road, Karachi.
97 Swarovski – DMC Swarovski Shop No. 11A, Ground Floor, World Trade Center,
Islamabad.
98 Nishat Linen Tower – Inglot 5-A-3, Mian Mahmood Ali Kasuri Road, Gulberg III, Lahore.
99 Nishat Linen Tower – Swarovski 5-A-3, Mian Mahmood Ali Kasuri Road, Gulberg III, Lahore.
100 Swarovski-WTC Shop No. 11A, Ground Floor, World Trade Center, Islamabad.
 138 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021

Sr.
Business Units Address
No.

101 Faisalabad Swarovski Shop No. G-10, Ground Floor, The Boulevard Shopping Mall,
East Canal Road, Faisalabad.
102 North Nazimabad Karachi Plot No. D-10/A, Block H, Main Khayaban-e-Sher Shah Suri,
North Nazimabad, Karachi.
103 Hyderabad Shop No. 23-A, Unit 3, Main Auto Bhan Road, Hyderabad.
104 Vehari Shop No.1, Ground and First Floor, Mall of Vehari, Hasilpur
Road, Vehari.
105 Daska Shop No.1, College Road, Daska.
106 Chandni Chowk Plot No. 221/B, 4th Road, Adjacent to KFC, Chandni Chowk,
Satellite Town, Rawalpindi.
107 Gojra Opposite Paradise City, Jhang Road, Gojra.
108 Sahiwal Shop No.1, Girls College Road, Sahiwal.
109 Haripur Akhtar Nawaz Plaza, Main Haripur Road, Haripur.

NISHAT HOSPITALITY (PRIVATE) LIMITED

Nishat Hospitality (Private) Limited, a wholly owned subsidiary of Nishat Mills Limited, is a private limited company
incorporated in Pakistan under the repealed Companies Ordinance, 1984 (Now Companies Act, 2017) on 01 July
2011. The registered office of Nishat Hospitality (Private) Limited is situated at 1-B Aziz Avenue, Canal Bank,
Gulberg-V, Lahore. The principal business place of the Company is situated at 9-A, Mian Mehmood Ali Kasuri Road,
Gulberg-III, Lahore. The principal activity of the Company is to carry on the business of hotels, cafes, restaurants and
lodging or apartment houses, bakers and confectioners in Pakistan and outside Pakistan.

The Company has incurred a loss after taxation of Rupees 99.479 million during the year ended 30 June 2021 while
the accumulated losses stand at Rupees 450 million (2020: Rupees 350 million) as at 30 June 2021. Current liabilities
exceed current assets by Rupees 34 million (2020: Rupees 10 million). These conditions may cast significant doubt
about the Company's ability to continue as a going concern. The continuation of the Company as a going concern is
dependent on its ability to attain satisfactory levels of profitability and liquidity in future and maintain its liabilities at
serviceable levels. The management has carried out a going concern assessment of the Company and believes that
the going concern assumption used for the preparation of financial statements is appropriate and no material
uncertainty exists. This assessment is based on:

a. Successful execution of the business projections approved by the Board of Directors ('BOD') that includes
increase in revenue through increase in room rates and average occupancy, currently the room rates have been
reduced due to covid, as per the projections the Company's cash flow for the next 5 years is positive, the major
impact in the statement of profit or loss is of depreciation charged to right-of-use asset and finance cost charged
on lease liability. The Company is expected to be in gross profits from the next year.

b. A resolution has been passed by the Board of Directors of the Holding Company wherein the Holding Company
have committed to support the Company to continue as a going concern. In the past, the Holding Company has
also provided support to the Company through short term loans.

Accordingly, no material uncertainties leading to a significant doubt about going concern have been identified.

NISHAT USA, INC.

Nishat USA, Inc. is a foreign subsidiary incorporated under the Business Corporation Laws of the State of New York.
The registered office of Nishat USA, Inc. is situated at 676 Broadway, New York, NY 10012, U.S.A. The principal
business of the Company is to provide marketing services to Nishat Mills Limited - Holding Company. Nishat Mills
Limited acquired 100% shareholding of Nishat USA, Inc. on 01 October 2008.
 Annual Report 2021 139

NISHAT LINEN TRADING LLC

Nishat Linen Trading LLC is a limited liability company formed in pursuance to statutory provisions of the United Arab
Emirates (UAE) Federal Law No. (8) of 1984 as amended and registered with the Department of Economic
Development, Government of Dubai. Nishat Linen Trading LLC is a subsidiary of Nishat Mills Limited as Nishat Mills
Limited, through the powers given to it under Article 11 of the Memorandum of Association, exercise full control on
the management of Nishat Linen Trading LLC. Date of incorporation of the Company was 29 December 2010. The
registered office of Nishat Linen Trading LLC is situated at P.O. Box 28189 Dubai, UAE. The principal business of
Nishat Linen Trading LLC is to operate retail outlets in UAE for sale of textile and related products. The registered
address of Nishat Linen Trading LLC in U.A.E. is located at Shop No. SC 128, Dubai Festival City, P.O. Box 28189
Dubai, United Arab Emirates and the branches are located at:

Sr. No. Business Units

1 Dubai Outlet Mall, Al Ain Street, Dubai, United Arab Emirates.

2 Shop No. 03 (A) , AL Esbeq BLDG, Souk Al Kabeer, DUBAI, United Arab Emirates.
3 Unit No. M-101C, Oasis Center Mall, Dubai, United Arab Emirates.
4 Unit No. 1543, Arabian Centre, Dubai, United Arab Emirates.
5 FC 34, Al Ghurair Mall, Dubai, United Arab Emirates.
6 Shop No. F232-F233, 2nd Floor, Mega Mall, Sharjah, United Arab Emirates.
7 E276, Second Floor, Al Wahda Mall, Abu Dhabi, United Arab Emirates.
8 Shop No. F-17 Al Ain Mall, Al Ain, United Arab Emirates.
9 Shop No. RB154-RB155-RB156, 1st Floor, Sharq Mall, Abu Dhabi, United Arab Emirates.
10 Shop No. U-029, 1st Floor, City Centre, Al Nahda Street, Sharjah, United Arab Emirates.
11 Shop No. B-016 2nd Floor City Centre Ajman Mall, Ajman , United Arab Emirates.
12 Shop No. C072, Ground Floor, Mirdif, Dubai, United Arab Emirates.
13 Shop No. B-015, 2nd Floor, City Centre, Al Zahia, Sharjah, United Arab Emirates.

NISHAT INTERNATIONAL FZE

Nishat International FZE is incorporated as free zone establishment with limited liability in accordance with the Law
No. 9 of 1992 and licensed by the Registrar of Jebel Ali Free Zone Authority. Nishat International FZE is a wholly owned
subsidiary of Nishat Mills Limited. Date of incorporation of the Company was 07 February 2013. The registered office
of Nishat International FZE is situated at P.O. Box 114622, Jebel Ali Free Zone, Dubai. The principal business of the
Company is trading in textile and related products.

CHINA GUANGZHOU NISHAT GLOBAL CO., LTD.

China Guangzhou Nishat Global Co., Ltd. is a Company incorporated in People's Republic of China on 25 November
2013. It is a wholly owned subsidiary of Nishat International FZE which is a wholly owned subsidiary of Nishat Mills
Limited. The primary function of Nishat Global China Company Limited is to competitively source products for the
retail outlets operated by Group companies in Pakistan and the UAE. The registered office of Nishat Global China
Company Limited is situated at N801, No. 371-375 East Huanshi Road, Yuexiu District, Guangzhou City, China.

NISHAT COMMODITIES (PRIVATE) LIMITED

Nishat Commodities (Private) Limited is a private limited Company incorporated in Pakistan on 16 July 2015 under the
repealed Companies Ordinance, 1984 (Now Companies Act, 2017). It is a wholly owned subsidiary of Nishat Mills
Limited. Its registered office is situated at 53-A, Lawrence Road, Lahore. The principal object of the Company is to
carry on the business of trading of commodities including fuels, coals, building material in any form or shape
manufactured, semi-manufactured, raw materials and their import and sale in Pakistan. Geographical location and
addresses of all business units are as follows:
 140 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
addresses of all business units are as follows:

Sr. No. Business units Address

1 Head office 5 K.M., Nishat Avenue, Off 22 K.M., Ferozepur Road, Lahore.
2 Sub-office 1st Floor, Chamber Hasrat Mohani Road, Karachi.
3 Registered office Nishat House, 53-A, Lawrence Road, Lahore.

LALPIR SOLAR POWER (PRIVATE) LIMITED

Lalpir Solar Power (Private) Limited is a private limited Company incorporated in Pakistan on 19 November 2015 under
the repealed Companies Ordinance, 1984 (Now Companies Act, 2017). It is a wholly owned subsidiary of Nishat
Power Limited which is a subsidiary of Nishat Mills Limited. Its registered office is situated at 53-A, Lawrence Road,
Lahore. The principal activity of the Company is to build, own, operate and maintain or invest in a solar PV power
project having gross capacity upto 20 MWp. The Company achieved various milestones like approval of feasibility
study, No Objection Certificate (NOC) from Environmental Protection Agency (EPA), approval of Grid Interconnection
Study (GIS) from Multan Electric Power Company Limited (MEPCO) and from National Transmission and Despatch
Company Limited (NTDCL). Further, consent for purchasing power from the project have also been provided by
MEPCO. Generation Licence No. SPGL/26/2018 has been granted by National Electric Power Regulatory Authority
(NEPRA) to the Company for its 11.120 MW Solar PV Power Project located at Mauza Verar, Sipra Mehmood Kot,
District Muzaffargarh, in the province of Punjab, pursuant to Section 14(B) of the Regulation of Generation,
Transmission and Distribution of Electric Power Act, 1997 / Amendment Act, 2018. The upfront solar tariff announced
by NEPRA expired on 30 June 2016.

The management of the Company continuously tried its best to get Power Acquisition Request and Consent to
Procure Power from Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) so that development of the
project can be moved forward. However, CPPA-G informed the Company that Ministry of Energy has conveyed the
Cabinet Committee on Energy (CCoE) decision to CPPA-G and further sent a list of 145 projects as approved by the
Cabinet for necessary action. The CPPA-G stated that power project of the Company is not included in the list of 145
projects, therefore, CPPA-G is of the view that request of the Company cannot be entertained. Furthermore, during
the previous year, Alternate Energy Development Board (AEDB) informed that Solar PV Power Project of the Company
is placed under category Ill of the amended decision of the CCoE. All category-Ill projects are allowed by the CCoE to
proceed ahead subject to becoming successful in the competitive bidding process to be undertaken by AEDB, based
on the quantum ascertained for each technology by Indicative Generation Capacity Expansion Plan (IGCEP) by
NTDCL.

The management understand that to-date, no such competitive bidding process has been undertaken even the
IGCEP has not been finalized to-date. The response of CPPA-G and AEDB have made the Solar PV Power Project of
the Company more complicated. During the year, on request of the Company, the Letter of Intent had been cancelled
by AEDB. Subsequent to the reporting period, on request of the Company, NEPRA has cancelled the Generation
License of the Company. Hence, voluntary winding up of the Company under the Companies Act, 2017 is being
considered.

In view of the aforesaid reasons, the Company is not considered a going concern.

b) Significant restrictions

Cash and bank balances held in foreign countries are subject to local exchange control regulations. These
regulations provide for restrictions on exporting capital from these countries, other than through normal
dividends. The carrying amount of these assets included within the consolidated financial statements to which
these restrictions apply is Rupees 597.422 million (2020: Rupees 410.121 million).

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the preparation of these consolidated financial statements are set
out below. These policies have been consistently applied to all years presented, unless otherwise stated:
 Annual Report 2021 141

2.1 Basis of preparation

a) Statement of compliance

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

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

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

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

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

b) Accounting convention

These consolidated financial statements have been prepared under the historical cost convention
except as otherwise stated in the respective accounting policies.

c) Critical accounting estimates and judgments

The preparation of these consolidated financial statements in conformity with the approved
accounting standards requires the use of certain critical accounting estimates. It also requires the
management to exercise its judgment in the process of applying the accounting policies. Estimates
and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The areas where various assumptions and estimates are significant to the consolidated financial
statements or where judgments were exercised in application of accounting policies are as follows:

Financial instruments – fair value

The fair value of financial instruments that are not traded in an active market is determined by using
valuation techniques based on assumptions that are dependent on conditions existing at the
reporting date.

Useful lives, patterns of economic benefits and impairment

Estimates with respect to residual values and useful lives and pattern of flow of economic benefits
are based on the analysis of the management. Further, the Group reviews the value of assets for
possible impairment on an annual basis. Any change in the estimates in the future might affect the
carrying amount of respective item of property, plant and equipment and investment properties with
a corresponding effect on the depreciation charge and impairment.

Inventories

Inventory write-down is made based on the current market conditions, historical experience and
selling goods of similar nature. It could change significantly as a result of changes in market
conditions. A review is made on each reporting date on inventories for excess inventories,
obsolescence and declines in net realisable value and an allowance is recorded against the
inventory balances for any such declines.

Income tax

In making the estimates for income tax currently payable by the Group, the management takes into
 142 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
account the current income tax law and the decisions of appellate authorities on certain issues in the
past.

Allowance for expected credit losses

The allowance for Expected Credit Losses (ECLs) assessment requires a degree of estimation and
judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and
makes assumptions to allocate an overall expected credit loss rate for each group. These
assumptions include recent sales experience and historical collection rates.

Provisions

As the actual outflows can differ from estimates made for provisions due to changes in laws,
regulations, public expectations, technology, prices and conditions, and can take place many years
in the future, the carrying amounts of provisions are reviewed at each reporting date and adjusted to
take account of such changes. Any adjustments to the amount of previously recognised provision is
recognised in the consolidated statement of profit or loss unless the provision was originally
recognised as part of cost of an asset.

Contingencies

The Group reviews the status of all pending litigations and claims against the Group. Based on the
judgment and the advice of the legal advisors for the estimated financial outcome, appropriate
disclosure or provision is made. The actual outcome of these litigations and claims can have an
effect on the carrying amounts of the liabilities recognized at the consolidated statement of financial
position date.

Revenue from contracts with customers involving sale of goods

When recognizing revenue in relation to the sale of goods to customers, the key performance
obligation of the Group is considered to be the point of delivery of the goods to the customer, as this
is deemed to be the time that the customer obtains control of the promised goods and therefore the
benefits of unimpeded access.

Impairment of investments in equity method accounted for associates

In making an estimate of recoverable amount of the Group's investments in equity method

accounted for associates, the management considers future cash flows.

d) Amendments to published approved accounting standards that are effective in current year
and are relevant to the Group

Following amendments to published approved accounting standards are mandatory for the Group’s
accounting periods beginning on or after 01 July 2020:

• IAS 1 (Amendments) ‘Presentation of Financial Statements’ and IAS 8 (Amendments)

‘Accounting Policies, Changes in Accounting Estimates and Errors’;
• International Accounting Standards Board’s revised Conceptual Framework – March 2018;
• IFRS 3 (Amendments) ‘Business Combination’;
• IFRS 16 (Amendments) ‘Leases’;
• Interest Rate Benchmark Reform which amended IFRS 9 ‘Financial Instruments’, IAS 39
‘Financial Instruments: Recognition and Measurement’ and IFRS 7 ‘Financial Instruments:
Disclosures’.

The above-mentioned amendments did not have any impact on the amounts recognised in prior
periods and are not expected to significantly affect the current or future periods.
 Annual Report 2021 143

e) Amendments to published approved accounting standards that are effective in current year
but not relevant to the Group

There are amendments to published standards that are mandatory for accounting period beginning
on or after 01 July 2020 but are considered not to be relevant or do not have any significant impact
on the Group's financial statements and are therefore not detailed in these consolidated financial
statements.

f) Amendments to published approved accounting standards that are not yet effective but
relevant to the Group

Following amendments to existing standards have been published and are mandatory for the
Group’s accounting periods beginning on or after 01 July 2021 or later periods:

Classification of liabilities as current or non-current (Amendments to IAS 1 ‘Presentation of Financial

Statements’) effective for the annual period beginning on or after 01 January 2023. These
amendments in the standards have been added to further clarify when a liability is classified as
current. The standard also amends the aspect of classification of liability as non-current by requiring
the assessment of the entity’s right at the end of the reporting period to defer the settlement of
liability for at least twelve months after the reporting period. An entity shall apply those amendments
retrospectively in accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates
and Errors’.

Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37 ‘Provisions, Contingent

Liabilities and Contingent Assets’) effective for the annual period beginning on or after 01 January
2022 amends IAS 1 ‘Presentation of Financial Statements’ by mainly adding paragraphs which
clarifies what comprise the cost of fulfilling a contract. Cost of fulfilling a contract is relevant when
determining whether a contract is onerous. An entity is required to apply the amendments to
contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting
period in which it first applies the amendments (the date of initial application). Restatement of
comparative information is not required, instead the amendments require an entity to recognize the
cumulative effect of initially applying the amendments as an adjustment to the opening balance of
retained earnings or other component of equity, as appropriate, at the date of initial application.

Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16 ‘Property,
Plant and Equipment’) effective for the annual period beginning on or after 1 January 2022. Clarifies
that sales proceeds and cost of items produced while bringing an item of property, plant and
equipment to the location and condition necessary for it to be capable of operating in the manner
intended by management e.g. when testing etc., are recognized in profit or loss in accordance with
applicable Standards. The entity measures the cost of those items applying the measurement
requirements of IAS 2 ‘Inventories’. The standard also removes the requirement of deducting the net
sales proceeds from cost of testing. An entity shall apply those amendments retrospectively, but
only to items of property, plant and equipment that are brought to the location and condition
necessary for them to be capable of operating in the manner intended by management on or after
the beginning of the earliest period presented in the financial statements in which the entity first
applies the amendments. The entity shall recognize the cumulative effect of initially applying the
amendments as an adjustment to the opening balance of retained earnings (or other component of
equity, as appropriate) at the beginning of that earliest period presented.

The following annual improvements to IFRS standards 2018-2020 are effective for annual reporting
periods beginning on or after 01 January 2022:

- IFRS 9 ‘Financial Instruments’ – The amendment clarifies that an entity includes only fees paid
or received between the entity (the borrower) and the lender, including fees paid or received by
either the entity or the lender on the other’s behalf, when it applies the ‘10 per cent’ test in
paragraph B3.3.6 of IFRS 9 in assessing whether to derecognize a financial liability.
 144 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
- IFRS 16 ‘Leases’ – The amendment partially amends Illustrative Example 13 accompanying IFRS
16 ‘Leases’ by excluding the illustration of reimbursement of leasehold improvements by the
lessor. The objective of the amendment is to resolve any potential confusion that might arise in
lease incentives.

- IAS 41 ‘Agriculture’ – The amendment removes the requirement in paragraph 22 of IAS 41 for
entities to exclude taxation cash flows when measuring the fair value of a biological asset using
a present value technique.

Disclosure of Accounting Policies (Amendments to IAS 1 ‘Presentation of Financial Statements’ and

IFRS Practice Statement 2 ‘Making Materiality Judgement’) effective for annual periods beginning
on or after 01 January 2023. These amendments are intended to help preparers in deciding which
accounting policies to disclose in their financial statements. Earlier, IAS 1 states that an entity shall
disclose its ‘significant accounting policies’ in their financial statements. These amendments shall
assist the entities to disclose their ‘material accounting policies’ in their financial statements.

Covid-19-Related Rent Concessions (Amendment to IFRS 16 ‘Leases’) effective for annual reporting
periods beginning on or after 01 April 2021. These amendments permit a lessee to apply the
practical expedient regarding COVID-19-related rent concessions. The entity shall recognize the
cumulative effect of initially applying the amendments as an adjustment to the opening balance of
retained earnings (or other component of equity, as appropriate) at the beginning of that earliest
period presented.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS
12 ‘Income taxes’) effective for annual periods beginning on or after 01 January 2023. These
amendments clarify how companies account for deferred tax on transactions such as leases and
decommissioning obligations.

Change in definition of Accounting Estimate (Amendments to IAS 8 ‘Accounting Policies, Changes

in Accounting Estimates and Errors) effective for annual periods beginning on or after 1 January
2023. This change replaced the definition of Accounting Estimate with a new definition, intended to
help entities to distinguish between accounting policies and accounting estimates.

The International Accounting Standards Board (IASB) has published 'Reference to the Conceptual
Framework (Amendments to IFRS 3)' with amendments to IFRS 3 'Business Combinations' that
update an outdated reference in IFRS 3 without significantly changing its requirements. Effective for
business combinations for which the acquisition date is on or after the beginning of annual period
beginning on or after 01 January 2022. The amendments also add to IFRS 3 an exception to its
requirement for an entity to refer to the Conceptual Framework to determine what constitutes an
asset or a liability. The standard is effective for transactions in the future and therefore would not
have an impact on past financial statements.

Interest Rate Benchmark Reform – Phase 2 which amended IFRS 9 ‘Financial Instruments’, IAS 39
‘Financial Instruments: Recognition and Measurement’, IFRS 4 ‘Insurance Contracts’ and IFRS 7
‘Financial Instruments: Disclosures’ is applicable for annual financial periods beginning on or after
01 January 2021. The changes made relate to the modification of financial assets, financial liabilities
and lease liabilities, specific hedge accounting requirements, and disclosure requirements applying
IFRS 7 to accompany the amendments regarding modifications and hedge accounting.

The above amendments and improvements are likely to have no significant impact on the
consolidated financial statements.

g) Standards and amendments to approved published standards that are not yet effective and
not considered relevant to the Group

There are other standards and amendments to published standards that are mandatory for
accounting periods beginning on or after 01 July 2021 but are considered not to be relevant or do
 Annual Report 2021 145

not have any significant impact on the Group's financial statements and are therefore not detailed in
these consolidated financial statements.

2.2 Consolidation

a) Subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.

The assets and liabilities of Subsidiary Companies have been consolidated on a line by line basis
and carrying value of investments held by the Holding Company is eliminated against Holding
Company's share in paid up capital of the Subsidiary Companies.

Intragroup balances and transactions have been eliminated.

Non-controlling interests are that part of net results of the operations and of net assets of Subsidiary
Companies attributable to interest which are not owned by the Holding Company. Non-controlling
interests are presented as separate item in the consolidated financial statements.

b) Associates

Associates are all entities over which the Group has significant influence but not control or joint
control. Investments in associates are accounted for using the equity method of accounting, after
initially being recognised at cost.

Under the equity method of accounting, the investments are initially recognised at cost and adjusted
thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in
profit or loss, and the Group’s share of movements in other comprehensive income of the investee
in other comprehensive income. Dividends received or receivable from associates are recognised as
a reduction in the carrying amount of the investment.

When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest
in the entity, including any other unsecured long-term receivables, the Group does not recognise
further losses, unless it has incurred obligations or made payments on behalf of the other entity.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent
of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting policies of equity
accounted investees have been changed where necessary to ensure consistency with the policies
adopted by the Group.

Investments in equity method accounted for associates are tested for impairment in accordance
with the provision of IAS 36 `Impairment of Assets`.

c) Translation of the financial statements of foreign subsidiaries

The financial statements of foreign subsidiaries of which the functional currency is different from that
used in preparing the Group's financial statements are translated in functional currency of the
Group. Statement of financial position items are translated at the exchange rate at the reporting date
and statement of profit or loss items are converted at the average rate for the period. Any resulting
translation differences are recognized under exchange translation reserve in consolidated reserves.
 146 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2.3 Employee benefit

The Group operates approved funded provident fund scheme covering all permanent employees. Equal
monthly contributions are made both by the employer and employees to the fund. The employer's
contributions to the fund are charged to consolidated statement of profit or loss.

2.4 Taxation

Current

Provision for current tax is based on the taxable income for the year determined in accordance with the
prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or
tax rates expected to apply to the profit for the year if enacted. The charge for current tax also includes
adjustments, where considered necessary, to provision for tax made in previous years arising from
assessments framed during the year for such years.

The profits and gains of Nishat Power Limited - Subsidiary Company derived from electric power
generation are exempt from tax in terms of Clause (132) of Part I of the Second Schedule to the Income
Tax Ordinance, 2001, subject to the conditions and limitations provided therein. Under Clause 11(v) of
Part IV of the Second Schedule to the Income Tax Ordinance, 2001, the Subsidiary Company is also
exempt from levy of minimum tax on 'turnover' under section 113 of the Income Tax Ordinance, 2001.
However, full provision is made in the consolidated statement of profit or loss on income from sources
not covered under the above clauses at current rates of taxation after taking into account, tax credits and
rebates available, if any.

Provision for income tax on the income of foreign subsidiaries - Nishat USA, Inc. and China Guangzhou
Nishat Global Co., Ltd. is computed in accordance with the tax legislation in force in the country where
the income is taxable.

Deferred

Deferred tax is accounted for using the liability method in respect of all temporary differences arising from
differences between the carrying amount of assets and liabilities in the consolidated financial statements
and the corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are
generally recognized for all taxable temporary differences and deferred tax assets to the extent that it is
probable that taxable profits will be available against which the deductible temporary differences, unused
tax losses and tax credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences
reverse based on tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited in the consolidated statement of profit or loss, except to the extent
that it relates to items recognized in other comprehensive income or directly in equity. In this case the tax
is also recognized in other comprehensive income or directly in equity, respectively.

Nishat Power Limited - Subsidiary Company has not made provision for deferred tax as the Subsidiary
Company's management believes that the temporary differences will not reverse in the foreseeable future
due to the fact that the profits and gains of the Company derived from electric power generation are
exempt from tax subject to the conditions and limitations provided for in terms of Clause 132 of Part I of
the Second Schedule to the Income Tax Ordinance, 2001.

2.5 Goodwill

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non
controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in
the acquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and
the liabilities assumed. If, after reassessment, the net of the acquisition date amounts of the identifiable
 Annual Report 2021 147

assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of
any non controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in
the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually.

2.6 Foreign currencies

These consolidated financial statements are presented in Pak Rupees, which is the Group’s functional
currency. All monetary assets and liabilities denominated in foreign currencies are translated into Pak
Rupees at the rates of exchange prevailing at the reporting date, while the transactions in foreign
currencies (except the results of foreign operation which are translated to Pak Rupees at the average rate
of exchange for the year) during the year are initially recorded in functional currency at the rates of
exchange prevailing at the transaction date. All non-monetary items are translated into Pak Rupees at
exchange rates prevailing on the date of transaction or on the date when fair values are determined.
Exchange gains and losses are recorded in the consolidated statement of profit or loss.

2.7 Property, plant, equipment and depreciation

Operating fixed assets

Operating fixed assets except freehold land are stated at cost less accumulated depreciation and
accumulated impairment losses (if any). Cost of operating fixed assets consists of historical cost,
borrowing cost pertaining to erection / construction period of qualifying assets and other directly
attributable costs of bringing the asset to working condition. Freehold land is stated at cost less any
recognized impairment loss.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. All other repair and maintenance costs are
charged to consolidated statement of profit or loss during the period in which they are incurred. Major
spare parts and stand-by equipment qualify as property, plant and equipment when an entity expects to
use them for more than one year.

Depreciation

Depreciation on operating fixed assets is charged to consolidated statement of profit or loss applying the
reducing balance method, except in case of Nishat Power Limited and Nishat Linen Trading LLC
(Subsidiary Companies), where this accounting estimate is based on straight line method, so as to write
off the cost / depreciable amount of the assets over their estimated useful lives at the rates given in Note
15.1. The depreciation is charged on additions from the date when the asset is available for use and on
deletions upto the date when the asset is de-recognized. The residual values and useful lives are
reviewed by the management, at each financial year end and adjusted if impact on depreciation is
significant.

During the year ended 30 June 2021, the existing term of the PPA was extended by a period of 68 days
as an 'Other Force Majeure Event', as referred to in Note 1(a) to these consolidated financial statements,
thereby resulting in an increase in useful lives of buildings and roads on freehold land and plant and
machinery of Nishat Power Limited - Subsidiary Company for the same number of days. Such a change
in useful lives has been accounted for as a change in an accounting estimate in accordance with IAS 8
'Accounting Policies, Changes in Accounting Estimates and Errors'. The effect of this change in the
accounting estimate on the profit before taxation for the year ended 30 June 2021, carrying amount of
operating fixed assets as at the reporting date and future profits before taxation is not material, hence,
has not been detailed in these consolidated financial statements.

De-recognition

An item of operating fixed assets is de-recognized upon disposal or when no future economic benefits
 148 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included
in the consolidated statement of profit or loss in the year the asset is de-recognized.

Capital work-in-progress

Capital work-in-progress is stated at cost less identified impairment losses, if any. All expenditure
connected with specific assets incurred during installation and construction period are carried under
capital work-in-progress. These are transferred to operating fixed assets as and when these are available
for use.

2.8 Investment properties

Land and buildings held for capital appreciation or to earn rental income are classified as investment
properties. Investment properties except land, are stated at cost less accumulated depreciation and any
recognized impairment loss. Land is stated at cost less any recognized impairment loss (if any).
Depreciation is charged to consolidated statement of profit or loss applying the reducing balance method
so as to write off the cost of buildings over its estimated useful lives at a rate of 10% per annum.

2.9 Intangible assets

Amortization on additions to intangible assets is charged from the date when the asset is acquired or
capitalized upto the date when the asset is de-recognized.

2.10 Right-of-use assets

A right-of-use asset is recognized at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any
lease payments made at or before the commencement date net of any lease incentives received, any initial
direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected
to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straight line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is shorter. Where the Group expects to obtain ownership of
the leased asset at the end of the lease term, the depreciation is charged over its estimated useful life.
Right-of use assets are subject to impairment or adjusted for any re-measurement of lease liabilities.

The Group has elected not to recognize a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on
these assets are charged to income as incurred.

2.11 Lease liabilities

A lease liability is recognized at the commencement date of a lease. The lease liability is initially
recognized at the present value of the lease payments to be made over the term of the lease, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's
incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives
receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid
under residual value guarantees, exercise price of a purchase option when the exercise of the option is
reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that
do not depend on an index or a rate are expensed in the period in which they are incurred.

Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts are re-measured if there is a change in the following: future lease payments arising from a
change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is re-measured, an adjustment is made to the corresponding
right-of-use asset, or to consolidated statement of profit or loss if the carrying amount of the right-of-use
asset is fully written down.
 Annual Report 2021 149

Nishat Power Limited - Subsidiary Company has a Power Purchase Agreement (PPA) with its sole
customer, CPPA-G for twenty five years and sixty eight days which commenced from 09 June 2010.
SECP through SRO 986(I)/2019 dated 02 September 2019, has granted exemption from the requirements
of IFRS 16 to all companies to the extent of their power purchase agreements executed before 01
January 2019. Therefore, IFRS 16 will not have any impact on the consolidated financial statements to
the extent of power purchase agreement of Nishat Power Limited - Subsidiary Company.

Under IFRS 16, the consideration required to be made by the lessee for the right to use the asset is to be
accounted for as a finance lease. Nishat Power Limited - Subsidiary Company’s power plant’s control
due to purchase of total output by CPPA-G appears to fall under the scope of finance lease under IFRS
16. Consequently, if Nishat Power Limited - Subsidiary Company was to follow IFRS 16 with respect to
its power purchase agreement, the effect on these consolidated financial statements would be as
follows:

2021 2020
(Rupees in thousand)

De-recognition of property, plant and equipment (8,467,959) (9,125,477)

De-recognition of trade debts (7,134,685) (6,065,265)

Recognition of lease debtor 10,748,829 9,738,063

Decrease in un-appropriated profit at the beginning of the year (5,452,679) (3,589,601)

Increase / (decrease) in profit for the year 598,864 (1,863,078)
Decrease in un-appropriated profit at the end of the year (4,853,815) (5,452,679)

2.12 Investments and other financial assets

a) Classification

The Group classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income, or
through profit or loss), and

• those to be measured at amortized cost

The classification depends on the Group's business model for managing the financial assets and the
contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in debt instruments, this will depend on the business
model in which the investment is held. For investments in equity instruments, this will depend on
whether the Group has made an irrevocable election at the time of initial recognition to account for
the equity investment at fair value through other comprehensive income. The Group reclassifies debt
investments when and only when its business model for managing those assets changes.

b) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs that are directly attributable
to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.
 150 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Group's business model for managing
the asset and the cash flow characteristics of the asset. There are three measurement categories into
which the Group classifies its debt instruments:

Amortized cost

Financial assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortised cost. Interest income
from these financial assets is included in other income using the effective interest rate method. Any
gain or loss arising on derecognition is recognised directly in profit or loss and presented in other
income / (other expenses) together with foreign exchange gains and losses. Impairment losses are
presented as separate line item in the consolidated statement of profit or loss.

Fair value through other comprehensive income (FVTOCI)

Financial assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, are
measured at FVTOCI. Movements in the carrying amount are taken through other comprehensive
income, except for the recognition of impairment losses (and reversal of impairment losses), interest
income and foreign exchange gains and losses which are recognised in profit or loss. When the
financial asset is derecognised, the cumulative gain or loss previously recognised in other
comprehensive income is reclassified from equity to profit or loss and recognised in other income /
(other expenses). Interest income from these financial assets is included in other income using the
effective interest rate method. Foreign exchange gains and losses are presented in other income /
(other expenses) and impairment losses are presented as separate line item in the consolidated
statement of profit or loss.

Fair value through profit or loss (FVTPL)

Assets that do not meet the criteria for amortised cost or FVTOCI are measured at FVTPL. A gain or
loss on a debt instrument that is subsequently measured at FVTPL is recognised in profit or loss and
presented net within other income / (other expenses) in the period in which it arises.

Equity instruments

The Group subsequently measures all equity investments at fair value for financial instruments quoted in
an active market, the fair value corresponds to a market price (level 1). For financial instruments that are
not quoted in an active market, the fair value is determined using valuation techniques including
reference to recent arm’s length market transactions or transactions involving financial instruments
whichare substantially the same (level 2), or discounted cash flow analysis including, to the greatest
possible extent, assumptions consistent with observable market data (level 3).

Fair value through other comprehensive income (FVTOCI)

Where the Group's management has elected to present fair value gains and losses on equity
investments in other comprehensive income, there is no subsequent reclassification of fair value
gains and losses to profit or loss. Impairment losses (and reversal of impairment losses) on equity
investments measured at FVTOCI are not reported separately from other changes in fair value.

Fair value through profit or loss

Changes in the fair value of equity investments at fair value through profit or loss are recognised in
 Annual Report 2021 151

other income / (other expenses) in the consolidated statement of profit or loss as applicable.

Dividends from such investments continue to be recognised in profit or loss as other income when the
Group's right to receive payments is established.

2.13 Financial liabilities – classification and measurement

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified
as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including
any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured
at amortized cost using the effective interest method. Interest expense and foreign exchange gains and
losses are recognized in consolidated statement of profit or loss. Any gain or loss on de-recognition is
also included in profit or loss.

2.14 Impairment of financial assets

a. Financial assets other than those due from Government of Pakistan

The Group recognizes loss allowances for ECLs on:

- Financial assets measured at amortized cost;

- Debt investments measured at FVTOCI; and
- Contract assets.

The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which
are measured at 12-month ECLs:

- Debt securities that are determined to have low credit risk at the reporting date; and

- Other debt securities and bank balances 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.

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).

When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Group considers reasonable and supportable information
that is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on the Group’s historical experience and informed credit assessment
and including forward-looking information.

The Group 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 Group is exposed to credit risk.

The Group has elected to measure loss allowances for trade debts using IFRS 9 simplified approach and
has calculated ECLs based on lifetime ECLs. The Group has established a matrix that is based on the
Group 's historical credit loss experience, adjusted for forward-looking factors specific to the debtors and
the economic environment. When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating ECLs, the Group considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes both
 152 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
quantitative and qualitative information and analysis, based on the Group's historical experience and
informed credit assessment including forward-looking information.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying
amount of the assets.

The gross carrying amount of a financial asset is written off when the Group has no reasonable
expectations of recovering of a financial asset in its entirety or a portion thereof. The Group individually
makes an assessment with respect to the timing and amount of write-off based on whether there is a
reasonable expectation of recovery. The Group expects no significant recovery from the amount written
off. However, financial assets that are written off could still be subject to enforcement activities in order
to comply with the Group's procedures for recovery of amounts due.

At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt
securities at FVTOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events
that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:

- significant financial difficulty of the debtor;

- a breach of contract such as a default;
- the restructuring of a loan or advance by the Group on terms that the Group would not consider
otherwise;
- it is probable that the debtor will enter bankruptcy or other financial reorganization; or
- the disappearance of an active market for a security because of financial difficulties.

b. Financial assets other than those due from Government of Pakistan

In respect of financial assets due from the Government of Pakistan, SECP through SRO 985(I)/2019
dated 02 September 2019 notified that the requirements contained in IFRS 9 with respect to
application of Expected Credit Losses (ECLs) method shall not be applicable till 30 June 2021 and
that such companies shall follow relevant requirements of International Accounting Standard ('IAS')
39 in respect of above referred financial assets during the exemption period. Accordingly, the Group
has not followed the requirements of IFRS 9 with respect to application of Expected Credit Losses
in respect of trade debts and other receivables due from CPPA-G.

2.15 De-recognition of financial assets and financial liabilities

a) Financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the
asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which
substantially all of the risks and rewards of ownership of the financial asset are transferred, or it
neither transfers nor retains substantially all of the risks and rewards of ownership and does not
retain control over the transferred asset. Any interest in such derecognized financial assets that is
created or retained by the Group is recognized as a separate asset or liability.

b) Financial liabilities

The Group derecognizes a financial liability (or a part of financial liability) from its consolidated
statement of financial position when the obligation specified in the contract is discharged or
cancelled or expires.

2.16 Offsetting of financial instruments

Financial assets and financial liabilities are set off and the net amount is reported in the consolidated
financial statements when there is a legal enforceable right to set off and the Group intends either to settle
 Annual Report 2021 153

on a net basis or to realize the assets and to settle the liabilities simultaneously.

2.17 Inventories

Inventories, except for stock in transit and waste stock / rags are stated at lower of cost and net realizable
value. Cost is determined as follows:

Stores, spare parts and loose tools

Useable stores, spare parts and loose tools are valued principally at moving average cost, while items
considered obsolete are carried at nil value. Items in transit are valued at cost comprising invoice value
plus other charges paid thereon.

Stock-in-trade

Cost of raw material, work-in-process and finished goods is determined as follows:

(i) For raw materials: Annual average basis.

(ii) For work-in-process and finished goods: Average manufacturing cost including a portion of
production overheads.

Materials in transit are valued at cost comprising invoice value plus other charges paid thereon. Waste
stock / rags are valued at net realizable value.

Net realizable value signifies the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make a sale.

2.18 Trade debts and other receivables

Trade debts are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses.

Other receivables are recognised at amortised cost, less any allowance for expected credit losses.

However, in respect of companies holding financial assets due from the Government of Pakistan, SECP
through SRO 985(I)/2019 dated 02 September 2019 has notified that the requirements contained in IFRS
9 with respect to application of expected credit losses method shall not be applicable till 30 June 2021
and that such companies shall follow relevant requirements of IAS 39 in respect of above referred
financial assets during the exemption period.

2.19 Non–current assets (or disposal groups) held for sale

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount
is to be recovered principally through a sale transaction and a sale is considered highly probable. They
are stated at the lower of carrying amount and fair value less costs to sell.

2.20 Borrowings

Financing and borrowings are recognized initially at fair value and are subsequently stated at amortized
cost. Any difference between the proceeds and the redemption value is recognized in the consolidated
statement of profit or loss over the period of the borrowings using the effective interest method.

2.21 Borrowing cost

Interest, mark-up and other charges on finances are capitalized up to the date of commissioning of
respective qualifying assets acquired out of the proceeds of such finances. All other interest, mark-up
and other charges are recognized in consolidated statement of profit or loss.
 154 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2.22 Share capital

Ordinary shares are classified as share capital. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax.

2.23 Trade and other payables

Liabilities for trade and other amounts payable are initially recognized at fair value, which is normally the
transaction cost.

2.24 Revenue recognition

Sale of goods

Revenue from the sale of goods is recognised at the point in time when the customer obtains control of
the goods, which is generally at the time of delivery.

Processing services

The Group provides processing services to local customers. These services are sold separately and the
Company’s contract with the customer for services constitute a single performance obligation.

Revenue from services is recognized at the point in time, generally at the time of dispatch. There are no
terms giving rise to variable consideration under the Group’s contracts with its customers.

Interest

Interest income is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Rent

Rent revenue from investment properties is recognised on a straight-line basis over the lease term. Lease
incentives granted are recognised as part of the rental revenue. Contingent rentals are recognised as
income in the period when earned.

Sale of electricity

Revenue from the sale of electricity to CPPA-G, the sole customer of Nishat Power Limited – Subsidiary
Group, is recorded on the following basis:

Capacity purchase price revenue is recognized over time, based on the capacity made available to
CPPA-G, at rates as specified under the PPA with CPPA-G, as amended from time to time; and Energy
purchase price revenue is recognized at a ‘point in time’, as and when the Net Electrical Output (NEO) are
delivered to NTDC.

Capacity and Energy revenue is recognized based on the rates determined under the mechanism laid
down in the PPA.

Delayed payment mark-up on amounts due under the PPA is accrued on time proportion basis by
reference to the amount outstanding and the applicable rate of return under the PPA.

Invoices are generally raised on a monthly basis and are due after 30 days from acknowledgment by
CPPA-G.
 Annual Report 2021 155

Dividend

Dividend on equity investments is recognized when right to receive the dividend is established.

Hotel business

Revenue from hotel ownership comprises amounts earned in respect of rental of rooms, food and
beverage sales, and other ancillary services and goods supplied by the Group. For each of the revenue
streams, the Group recognizes revenue over time or at a point in time specifically after the performance
obligation of transfer of goods or services to the customer has been fulfilled. Revenue is recognized over
the period when rooms are occupied or services are performed. Revenue from sale of food and
beverages and goods is recognized at the point of sale when the food and beverages and goods are
delivered to customers. Payment is due immediately when the hotel guests occupies the room and
receives the services and goods.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

2.25 Contract assets

Contract assets arise when the Group performs its performance obligations by transferring goods to a
customer before the customer pays its consideration or before payment is due. Contract assets are
treated as financial assets for impairment purposes.

2.26 Customer acquisition costs

Customer acquisition costs are capitalised as an asset where such costs are incremental to obtaining a
contract with a customer and are expected to be recovered. Customer acquisition costs are amortised
on a straight-line basis over the term of the contract.

Costs to obtain a contract that would have been incurred regardless of whether the contract was
obtained or which are not otherwise recoverable from a customer are expensed as incurred to profit or
loss. Incremental costs of obtaining a contract where the contract term is less than one year is
immediately expensed to profit or loss.

2.27 Customer fulfilment costs

Customer fulfilment costs are capitalised as an asset when all the following are met: (i) the costs relate
directly to the contract or specifically identifiable proposed contract; (ii) the costs generate or enhance
resources of the Group that will be used to satisfy future performance obligations; and (iii) the costs are
expected to be recovered. Customer fulfilment costs are amortised on a straight-line basis over the term
of the contract.

2.28 Right of return assets

Right of return assets represents the right to recover inventory sold to customers and is based on an
estimate of customers who may exercise their right to return the goods and claim a refund. Such rights
are measured at the value at which the inventory was previously carried prior to sale, less expected
recovery costs and any impairment.

2.29 Contract liabilities

Contract liability is the obligation of the Group to transfer goods to a customer for which the Group has
received consideration from the customer. If a customer pays consideration before the Group transfers
goods, a contract liability is recognized when the payment is made. Contract liabilities are recognized as
revenue when the Group performs its performance obligations under the contract.
 156 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2.30 Refund liabilities

Refund liabilities are recognised where the Group receives consideration from a customer and expects to
refund some, or all, of that consideration to the customer. A refund liability is measured at the amount of
consideration received or receivable for which the Group does not expect to be entitled and is updated
at the end of each reporting period for changes in circumstances. Historical data is used across product
lines to estimate such returns at the time of sale based on an expected value methodology.

2.31 Provisions

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

2.32 Earnings per share

Earnings per share (EPS) is calculated by dividing the profit or loss attributable to ordinary shareholders
of the Holding Company by the weighted average number of ordinary shares outstanding during the year.

2.33 Contingent assets

Contingent assets are disclosed when the Group has a possible asset that arises from past events and
whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Group. Contingent assets are not recognized until their
realization becomes certain.

2.34 Contingent liabilities

Contingent liability is disclosed when the Group has a possible obligation as a result of past events
whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Group. Contingent liabilities are not recognized, only
disclosed, unless the possibility of a future outflow of resources is considered remote. In the event that
the outflow of resources associated with a contingent liability is assessed as probable, and if the size of
the outflow can be reliably estimated, a provision is recognized in the consolidated financial statements.

2.35 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to depreciation and are tested annually for
impairment. Assets that are subject to depreciation are reviewed for impairment at each consolidated
statement of financial position date or whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount for which
assets carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at
each reporting date. Reversals of the impairment losses are restricted to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if impairment losses had not been recognized. An impairment loss or
reversal of impairment loss is recognized in the consolidated statement of profit or loss.

2.36 Derivative financial instruments

Derivative that do not qualify for hedge accounting are recognized in the consolidated statement of
financial position at estimated fair value with corresponding effect to consolidated statement of profit or
loss. Derivative financial instruments are carried as assets when fair value is positive and liabilities when
fair value is negative.
 Annual Report 2021 157

2.37 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit
accounts and other short term highly liquid instruments that are readily convertible into known amounts
of cash and which are subject to insignificant risk of changes in values.

2.38 Ijara contracts

Under the Ijarah contracts the Group obtains usufruct of an asset for an agreed period for an agreed
consideration. The Group accounts for its Ijarah contracts in accordance with the requirements of IFAS 2
‘Ijarah’. Accordingly, the Group as a Mustaj’ir (lessee) in the Ijarah contract recognises the Ujrah (lease)
payments as an expense in the profit and loss on straight line basis over the Ijarah term.

2.39 Segment reporting

Segment reporting is based on the operating (business) segments of the Group. An operating segment is
a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to the transactions with any of the Group's other
components. An operating segment's operating results are reviewed regularly by the Group's chief
operating decision makers to make decisions about resources to be allocated to the segment and assess
its performance, and for which discrete financial information is available.

Segment results that are reported to the chief operating decision makers include items directly
attributable to a segment as well as those that can be allocated on a reasonable basis. Those incomes,
expenses, assets, liabilities and other balances which can not be allocated to a particular segment on a
reasonable basis are reported as unallocated.

The Group has following reportable business segments: Spinning at Faisalabad (I and II), Feroze Wattwan
(I and II) and Lahore (Producing different quality of yarn including dyed yarn and sewing thread using
natural and artificial fibres), Weaving at Bhikki and Lahore (Producing different quality of greige fabric
using yarn), Dyeing (Producing dyed fabric using different qualities of greige fabric), Home Textile
(Manufacturing of home textile articles using processed fabric produced from greige fabric), Terry
(Manufacturing of terry and bath products), Garments (Manufacturing of garments using processed
fabric), Power Generation (Generation, transmission and distribution of power using gas, oil, steam, coal
and biomass) and Hotel (Business of hotel and allied services).

Transaction among the business segments are recorded at cost. Inter segment sales and purchases are
eliminated from the total.

2.40 Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that
the grant will be received and the Group will comply with all attached conditions.

Government grants relating to costs are deferred and recognised in the profit or loss over the period
necessary to match them with the costs that they are intended to compensate.

Government grants relating to the purchase of property, plant and equipment are included in non-current
liabilities as deferred income and are credited to profit or loss over the expected lives of the related
assets.

2.41 Dividend and other appropriations

Dividend distribution to the shareholders is recognized as a liability in the consolidated financial

statements in the periods in which the dividends are declared and other appropriations are recognized in
the period in which these are approved by the Board of Directors.
 158 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
3 ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL

2021 2020 2021 2020

(Number of Shares) Note (Rupees in thousand)

270,446,606 270,446,606 Ordinary shares of Rupees 10 each

fully paid up in cash 2,704,466 2,704,466

2,804,079 2,804,079 Ordinary shares of Rupees 10 each

issued to shareholders of Nishat
Apparel Limited under the Scheme
of Amalgamation 28,041 28,041

23,577,990 23,577,990 Ordinary shares of Rupees 10 each

issued as fully paid for consideration
other than cash 3.1 235,780 235,780

54,771,173 54,771,173 Ordinary shares of Rupees 10 each

issued as fully paid bonus shares 547,712 547,712

351,599,848 351,599,848 3,515,999 3,515,999

3.1 These mainly include shares issued to members of Umer Fabrics Limited as per the Scheme of
Arrangement as approved by the Honourable Lahore High Court, Lahore.

3.2 Ordinary shares of the Holding Company held by the associated companies:

2021 2020
(Number of Shares)

D.G. Khan Cement Company Limited 30,289,501 30,289,501

Adamjee Insurance Company Limited 2,050 2,050
MCB Bank Limited 227 227
Adamjee Life Assurance Company Limited 400 400
Nishat (Aziz Avenue) Hotels and Properties Limited 275,000 -
30,567,178 30,292,178
 Annual Report 2021 159

2021 2020
Note (Rupees in thousand)

4 RESERVES

Composition of reserves is as follows:

Capital reserves

Premium on issue of right shares 4.1 5,499,530 5,499,530

Fair value reserve FVTOCI investments - net of deferred
income tax 4.2 9,020,528 7,930,664
Exchange translation reserve 2.2(c) 186,757 224,659
Statutory reserve 4.3 4,182 835
Maintenance reserve 4.4 1,608,668 1,608,668
Capital redemption reserve fund 4.5 111,002 111,002
16,430,667 15,375,358

Revenue reserves

General 76,053,214 71,163,214

Unappropriated profit 11,930,850 6,298,146
87,984,064 77,461,360
104,414,731 92,836,718

4.1 This reserve can be utilized by the Holding Company only for the purposes specified in section 81 of the
Companies Act, 2017.

4.2 This represents the unrealized gain on re-measurement of investments at fair value through other
comprehensive income and is not available for distribution. Reconciliation of fair value reserve net of
deferred tax is as under:

2021 2020
(Rupees in thousand)

Balance as on 01 July 8,056,768 9,871,724

Adjustment due to equity accounted investee (579,789) -
Fair value adjustment during the year 389,857 (1,279,310)
Share of fair value reserve of associates 977,284 (535,646)
8,844,120 8,056,768
Add / (Less): Deferred income tax 176,408 (126,104)
Balance as on 30 June 9,020,528 7,930,664
 160 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
4.3 As required by UAE Federal Law No. (2) of 2015 and the Articles of Association of Nishat Linen Trading
LLC - Subsidiary Company, 10% of the profit for the year has to be transferred to a legal reserve until it
is equivalent to 50% of paid-up capital of the Subsidiary Company. This reserve is not available for
distribution.

4.4 This represents maintenance reserve set aside from retained earnings by Nishat Power Limited -
Subsidiary Company for the purpose of meeting repair and maintenance costs associated with major
maintenance of the plant in coming years. The reserve is not available for distribution of profits through
dividend and will be utilized on actual occurrence of expenditure.

4.5 An equity accounted associate created the fund for redemption of preference shares. The preference
shares were redeemed during the year ended 30 June 2007.

2021 2020
Note (Rupees in thousand)

5 LONG TERM FINANCING

From banking companies - secured

Long term loans 5.1 12,802,915 9,210,417

Long term musharika 5.2 2,144,200 923,197
Motor vehicles' loans 5.10 1,186 2,540
14,948,301 10,136,154

Less: Current portion shown under current liabilities 12 (3,242,316) (763,703)

11,705,985 9,372,451
 Annual Report 2021 161

Rate of Number of Interest Interest

Lender 2021 2020 Interest Per Security
Installments Repricing Payable
Annum
(Rupees in thousand)

5.1 Long term loans

Nishat Mills Limited - Holding Company

Allied Bank - 16,060 3 Month Twenty four Quarterly Quarterly First pari passu hypothecation
Limited offer KIBOR equal quarterly charge of Rupees 1,334
+ 0.50% installments million over all present and
commenced on future plant, machinery and
24 August 2014 equipment of the Holding
and ended on Company (excluding plant
24 May 2021 and machinery in respect of
(Note 5.4). which the Company has
already created exclusive
charges in the favour of its
existing creditors).

Allied Bank 571,582 609,478 SBP rate for Two hundred - Quarterly First pari passu charge of
Limited LTFF and twenty unequal Rupees 1,333 million
+ 0.25% installments (inclusive of 25% margin on all
commenced present and future plant and
on 27 March 2018 machinery of the Holding
and ending on Company).
05 June 2024
(Note 5.4).

Allied Bank 739,561 772,933 SBP rate for Four hundred - Quarterly First pari passu hypothecation
Limited LTFF and eighty four charge of Rupees 1,334
+ 0.25% unequal installments million over all present and
commenced on future plant, machinery and
28 December 2018 equipment of the Holding
and ending on Company (excluding plant
13 July 2025 and machinery in respect of
(Note 5.4). which the Holding Company
has already created exclusive
charges in the favour of its
existing creditors).
Allied Bank 869,087 908,011 SBP rate for Two hundred - Quarterly First pari passu charge of
Limited LTFF and twenty unequal Rupees 1,267 million over all
+ 0.25% installments present and future plant,
commenced on machinery and equipment of
26 January 2020 the Holding Company
and ending on (excluding plant and
17 September 2026 machinery in respect of which
(Note 5.4). the Holding Company has
already created exclusive
charges in the favour of its
existing creditors).
Allied Bank 222,715 222,715 SBP rate for Sixty unequal - Quarterly
Limited LTFF installments
+ 0.35% commencing on
24 January 2022
and ending on
28 October 2026. First pari passu charge of
Rupees 1,267 million over all
545,572 546,274 SBP rate for Four hundred and - Quarterly
present and future plant,
LTFF forty three unequal
machinery and equipment of
+ 0.50% installments
the Holding Company
commenced on
(excluding plant and
18 May 2021
machinery in respect of which
and ending on
the Holding Company has
11 February 2027.
already created exclusive
charges in the favour of its
95,000 100,000 SBP rate for Twenty equal - Quarterly
existing charge holders /
financing quarterly installments
creditors).
power plants commenced on
using 14 May 2021
renewable and ending on
energy 14 February 2026.
+ 0.50%

863,287 868,989
 162 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021

Rate of Number of Interest Interest

Lender 2021 2020 Interest Per Security
Installments Repricing Payable
Annum
(Rupees in thousand)

Allied Bank 716,713 891,696 SBP rate for Sixteen unequal - Quarterly First pari passu hypothecation
Limited refinance installments charge of Rupees 1,334
scheme for commenced on million over all the present
payment of 01 January 2021 and future plant, machinery
salaries and and ending on and equipment of the Holding
wages 16 November 2022 Company (excluding plant
+ 0.50% (Note 5.6). and machinery in respect of
which the Holding Company
has already created exclusive
charges in favour of its
existing creditors).

Askari Bank 315,989 - SBP rate for Two hundred twenty - Quarterly Ranking charge of Rupees
Limited LTFF unequal installments 467 million over all present
+ 0.65% commencing on and future plant, machinery
23 February 2022 and equipment (excluding all
and ending on exclusive charges over plant
05 April 2027. and machinery) of the Holding
Company.

Bank Alfalah 548,500 596,935 SBP rate for Four hundred and - Quarterly First pari passu charge of
Limited LTFF sixty unequal Rupees 1,334 million on all
+ 0.35% installments present and future plant and
commenced on machinery (excluding plant
02 February 2018 and machinery in respect of
and ending on which the Holding Company
25 May 2024 has already created exclusive
(Note 5.4). charges in the favour of
existing creditors).

Bank Alfalah 168,547 182,592 SBP rate Twenty equal - Quarterly First pari passu hypothecation
Limited for LTFF quarterly installments charge of Rupees 400 million
+ 0.35% commenced on over all present and future
31 August 2018 plant and machinery of the
and ending on Holding Company (excluding
31 May 2024 plant and machinery in
(Note 5.4). respect of which the Holding
Company has already created
exclusive charges in favour of
existing charge holders).

Bank Alfalah 218,714 218,714 SBP rate One hundred - Quarterly

Limited for LTFF unequal installments
First pari passu hypothecation
+ 0.50% commencing on
charge of Rupees 1,334
23 December 2021
million on all present and
and ending on
future plant and machinery
21 October 2026.
(excluding plant and
Bank Alfalah 761,853 - SBP rate Forty unequal - Quarterly machinery in respect of which
Limited for TERF installments the Holding Company has
+ 1.00% commencing on already created exclusive
28 August 2022 charges in favour of its
and ending on existing charge holders).
09 June 2027
(Note 5.8).

Faysal Bank 119,156 139,016 SBP rate Twenty unequal - Quarterly First pari passu charge of
Limited for LTFF installments Rupees 267 million on all
+ 0.30% commenced on present and future plant and
22 November 2018 machinery of the Holding
and ending on Company (excluding those on
24 May 2024 which charge has already
(Note 5.4). been created).

Faysal Bank 266,725 267,338 SBP rate Eighty unequal - Quarterly First pari passu charge of
Limited for LTFF installments Rupees 400 million on all
+ 0.30% commenced on present and future plant and
18 January 2020 machinery (excluding plant
and ending on and machinery in respect of
05 November 2025 which the Holding Company
(Note 5.4). has already created exclusive
charges in favour of existing
creditors).
 Annual Report 2021 163

Rate of Number of Interest Interest

Lender 2021 2020 Interest Per Security
Installments Repricing Payable
Annum
(Rupees in thousand)

Habib Bank 424,904 461,591 SBP rate One hundred and - Quarterly Note 5.3
Limited for LTFF eighty unequal
+ 0.40% installments
commenced on
17 September 2017
and ending on
25 November 2023
(Note 5.4).

Habib Bank 668,592 705,753 SBP rate Twenty equal - Quarterly

Limited for LTFF quarterly installments
First pari passu charge of
+ 0.25% commenced on
Rupees 4,084 million over all
27 February 2020
present and future plant,
and ending on
machinery and equipment of
27 November 2025
the Holding Company
(Note 5.4).
(excluding plant and
192,827 231,392 SBP rate for Twenty equal - Quarterly machinery in respect of which
financing quarterly installments the Holding Company has
power plants commenced on already created exclusive
using 27 February 2020 and charges in the favour of its
renewable ending on existing creditors).
energy 27 November 2024.
+ 0.25%

861,419 937,145

Habib 997,499 866,900 SBP rate One hundred - Quarterly First pari passu hypothecation
Metropolitan for LTFF unequal installments charge of Rupees 1,334
Bank Limited + 0.65% commencing on million over plant and
24 September 2021 machinery (excluding plant
and ending on and machinery in respect of
22 July 2026. which the Holding Company
has already created exclusive
charges in favour of its
existing charge holders).

Habib 842,390 - SBP rate Ninety six unequal - Quarterly Ranking charge of Rupees
Metropolitan for TERF installments 1,334 million over plant and
Bank Limited + 0.85% commencing on machinery of the Holding
19 July 2023 and Company.
ending on 11 June 2031
(Note 5.8).

National Bank 39,028 44,466 SBP rate One hundred and - Quarterly First pari passu hypothecation
of Pakistan for LTFF twenty unequal charge of Rupees 534 million
+ 0.50% installments on all present and future plant
commenced on and machinery (excluding
12 April 2017 and plant and machinery which is
ending on 03 June 2023 under exclusive charges in
(Note 5.4). favour of creditors).

National Bank 139,545 - 3 Month Sixty four unequal Quarterly Quarterly Ranking charge of Rupees
of Pakistan offer installments 1,334 million on present and
KIBOR commencing on future plant and machinery
+ 1.50% 17 September 2023 (excluding plant and
and ending on machinery in respect of which
23 June 2031 the Holding Company has
(Note. 5.5). already created exclusive
charges in favour of its existing
charges holders / creditors).
Pak Brunei 188,286 202,474 SBP rate Three hundred - Quarterly First pari passu charge of
Investment for LTFF and twenty unequal Rupees 400 million over all the
Company Limited + 0.25% installments present and future plant and
commenced on machinery of the Holding
30 August 2018 Company with 25% margin
and ending on excluding those assets (part of
28 December 2024 the plant and machinery) on
(Note 5.4). which the Holding Company
has created exclusive charges
in favour of existing creditors.
 164 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021

Rate of Number of Interest Interest

Lender 2021 2020 Interest Per Security
Installments Repricing Payable
Annum
(Rupees in thousand)

Pakistan Kuwait 35,679 42,174 SBP rate One hundred and - Quarterly
First pari passu charge of
Investment for LTFF sixty unequal
Rupees 400 million on all
Company (Private) + 1.00% installments
present and future plant and
Limited commenced on
machinery of the Holding
11 June 2016 and
Company with 25% margin.
ending on
26 January 2023
Ranking hypothecation
(Note 5.4).
charge of Rupees 267 million
14,807 16,440 SBP rate Two hundred and - Quarterly on plant and machinery of the
for LTFF fifty eight unequal Holding Company (excluding
+ 0.75% installments plant and machinery in
commenced on respect of which the Holding
15 September 2016 Company has already created
and ending on exclusive charges in favour of
29 September 2023 its existing charge holders /
(Note 5.4). creditors).

50,486 58,614

Pakistan Kuwait 981,040 998,210 SBP rate for Seventy two unequal - Quarterly First pari passu hypothecation
Investment LTFF installments charge of Rupees 1,334 million
Company (Private) + 0.65% commenced on on all present and future plant
Limited 10 May 2021 and and machinery (excluding plant
ending on and machinery in respect of
13 January 2028. which the Holding Company
has already created exclusive
charges in favour of its existing
charge holders / creditors) of
the Holding Company with
25% margin.

The Bank 146,755 169,255 SBP rate for One hundred and - Quarterly First pari passu charge of
of Punjab LTFF sixty unequal Rupees 667 million on all
+ 0.50% installments present and future plant and
commenced on machinery (other than the
30 January 2017 and specific machinery against
ending on 07 April 2023 which exclusive charges have
(Note 5.4). already been created in favour
of existing charge holders) of
the Holding Company.

United Bank 110,980 - 3 Month Thirty two equal Quarterly Quarterly

Limited offer installments
KIBOR commencing on
+ 1.25% 28 September 2023 Ranking charge of Rupees
and ending on 3,000 million over all present
28 June 2031 and future plant and
(Note. 5.5). machinery (excluding those
assets over which exclusive
1,860,869 - SBP rate Four hundred eighty - Quarterly charges have already been
for TERF unequal installments created in favour of existing
+ 1.25% commencing on creditors) of the Holding
08 July 2023 and Company.
ending on
11 June 2031
(Note 5.8).
1,971,849 -

12,802,915 9,210,417

5.2 Long term musharika

Nishat Mills Limited - Holding Company
Habib Bank - 27,896 3 Month offer Fifty six unequal Quarterly Quarterly Note 5.3
Limited KIBOR + installments
0.35% commenced on
19 May 2016 and
ended on
01 June 2021
(Note 5.4).
 Annual Report 2021 165

Rate of Number of Interest Interest

Lender 2021 2020 Interest Per Security
Installments Repricing Payable
Annum
(Rupees in thousand)

Standard - 687,500 3 Month offer Seventeen unequal Quarterly Quarterly Specific charge of Rupees
Chartered Bank KIBOR installments 1,339 million over fixed assets
(Pakistan) Limited commenced on of the Holding Company
14 February 2019 inclusive of 25% margin.
and ended on
25 May 2021.

Faysal Bank 707,633 - SBP rate for Eight equal quarterly - Quarterly First pari passu charge of
Limited Islamic installments Rupees 1,333 million over all
refinance commenced on the present and future plant,
scheme for 30 March 2021 and machinery and equipment of
payment of ending on the Holding Company
salaries and 30 December 2022 (excluding plant and machinery
wages (Note 5.7). in respect of which the Holding
+ 0.50% Company has already created
exclusive charges in favour of
its existing creditors).

Faysal Bank 803,328 - SBP rate for Two hundred - Quarterly

Limited ILTFF unequal installments First pari passu charge of
+ 0.70% commencing on Rupees 2,200 million over
24 March 2022 and present and future plant,
ending on machinery and equipment of
25 June 2027. the Holding Company
(excluding plant and
262,949 - SBP rate for Forty unequal - Quarterly machinery in respect of which
Islamic installments the Holding Company has
renewable commencing on already created exclusive
energy 07 July 2022 and charges in favour of its
financing ending on existing charge holders /
scheme 26 February 2027. creditors).
+ 0.70%
1,066,277 -

Nishat Linen (Private) Limited - Subsidiary Company

Faysal Bank 241,059 119,878 SBP rate for Eight equal - Quarterly Cross corporate guarantee of
Limited Islamic quarterly installments Rupees 506.667 million of
refinance commenced on Nishat Mills Limited
scheme for 30 March 2021 and - Holding company.
payment of ending on
salaries and 30 December 2022
wages (Note 5.7).
+ 0.50%
241,059 119,878

Nishat Hospitality (Private) Limited - Subsidiary Company

Faysal Bank 18,523 14,100 SBP rate for Eight equal - Quarterly Cross corporate guarantee of
Limited Salaries & installments commenced Rupees 41.600 million of
Wages on 31 March 2021 Nishat Mills Limited - Holding
+ 0.50% and ending on Company.
31 December 2022
(Note 5.7).
18,523 14,100

Nishat Power Limited - Subsidiary Company

Faysal Bank 110,708 73,823 SBP rate for Eight equal - Quarterly Pari passu charge over all the
Limited Salaries & installments commenced present and future fuel stock /
Wages on 31 March 2021 inventory and energy revenue
+ 0.50% to and ending on receivables of Nishat Power
0.75% 31 December 2022 Limited - Subsidiary
(Note 5.9). Company.
110,708 73,823

2,144,200 923,197
 166 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
5.3 Long term loan and long term musharika from Habib Bank Limited are secured against first pari passu
hypothecation charge of Rupees 4,000 million on present and future fixed assets of the Holding Company
excluding specific and exclusive charges.

5.4 Repayment period includes deferment of repayment of principal loan amount by one year in accordance
with the State Bank of Pakistan BPRD Circular Letter No. 13 of 2020 dated 26 March 2020.

5.5 During the year, these long term financing did not carry rate of interest of State Bank of Pakistan
Temporary Economic Refinance Facility (TERF). Hence, does not contain any element of government
grant.

5.6 These long term financing are obtained by the Group under SBP Refinance Scheme for payment of
salaries and wages. These are recognized and measured in accordance with IFRS 9 'Financial
Instruments'. Fair value adjustment is recognized at discount rate ranging from 6.87% to 7.76% per
annum.

5.7 These long term musharika are obtained by the Group under SBP Islamic Refinance Scheme for payment
of salaries and wages. These are recognized and measured in accordance with IFRS 9 'Financial
Instruments'. Fair value adjustment is recognized at discount rate ranging from 7.44% to 8.44% per
annum.

5.8 These loans are obtained by the Holding Company under SBP Temporary Economic Refinance Facility
(TERF). These are recognized and measured in accordance with IFRS 9 'Financial Instruments'. Fair value
adjustment is recognized at discount rate of 2.60% per annum.

5.9 The fair value adjustment in accordance with the requirement of IFRS 9 'Financial Instruments' arising in
respect of this loan is not considered material and hence not recognized.

5.10 These represent loans obtained by Nishat International FZE - Subsidiary Company from a bank for
purchase of vehicles at an interest rate of 8.80% per annum repayable in 48 monthly installments.

2021 2020
Note (Rupees in thousand)

6 LEASE LIABILITIES

Total lease liabilities 2,049,784 2,266,071

Less: Current portion shown under current liabilities 12 (680,916) (500,198)
1,368,868 1,765,873

6.1 Reconciliation of lease liabilities

Balance as on 01 July 2,266,071 -

Add: Adjustment on adoption of IFRS 16 - 1,931,672
Add: Additions during the year 342,406 682,168
Add: Interest accrued on lease liabilities 244,750 264,457
Add: Impact of lease modification 180,387 -
Less: Impact of rent concessions (90,344) -
Less: Impact of lease termination (79,390) -
Less: Payments during the period (794,088) (613,152)
Add: Currency retranslation (20,008) 926
Balance as on 30 June 2,049,784 2,266,071
 Annual Report 2021 167

2021 2020
(Rupees in thousand)

6.2 Maturity analysis of lease liabilities is as follows:

Upto 6 months 462,607 437,029

6-12 months 393,753 388,709
1-2 years 536,644 777,283
More than 2 years 1,200,654 1,376,248
2,593,658 2,979,269
Less: Future finance cost (543,874) (713,198)
Present value of finance lease liabilities 2,049,784 2,266,071

7 LONG TERM SECURITY DEPOSITS

These represent interest free security deposits received from stockists in connection with 'Nishat Linen' retail
outlets in Pakistan. These security deposits have been utilized for the purpose of business in accordance with the
terms of written agreements with stockists.

2021 2020
Note (Rupees in thousand)

8 DEFERRED LIABILITIES

Deferred income tax 8.1 2,411,249 1,973,011

Gas Infrastructure Development Cess (GIDC) payable 8.2 78,039 -
Deferred income - Government grant 8.3 81,409 -
Accumulating compensated absences 1,937 1,540
2,572,634 1,974,551

8.1 Deferred income tax

The liability for deferred taxation originated due to temporary

difference relating to:

Taxable temporary differences on:

Un-quoted equity investment at FVTOCI - 126,104

Investments in associates under equity method 3,085,803 2,566,707
Right-of-use assets 448,930 547,136
Accelerated tax depreciation 8.1.4 148,554 156,652
3,683,287 3,396,599

Deductible temporary difference on:

Turnover tax carried forward 8.1.5 (301,656) (588,552)

Lease liabilities (552,889) (625,366)
Equity Investments at FVTOCI (176,408) -
Accumulating compensated absences 8.1.6 (561) (447)
Unabsorbed tax depreciation losses 8.1.6 (205,297) (198,136)
Others 8.1.6 (35,227) (11,087)
(1,272,038) (1,423,588)
2,411,249 1,973,011
 168 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
8.1.1 Movement in taxable temporary differences and deductible temporary differences during the year is as follows:

2021
Recognised in
Recognised in Statement of
Opening Closing
Statement of other
Balance Balance
profit or loss comprehensive
income
Rupees in thousand
Taxable temporary differences on:
Un-quoted equity investment at FVTOCI 126,104 - (126,104) -
Investments in associates under equity method 2,566,707 519,096 - 3,085,803
Right-of-use assets 547,136 (98,206) - 448,930
Accelerated tax depreciation 156,652 (8,098) - 148,554

Deductible temporary difference on:

Turnover tax carried forward (588,552) 286,896 - (301,656)
Lease liabilities (625,366) 72,477 - (552,889)
Equity Investments at FVTOCI - - (176,408) (176,408)
Accumulating compensated absences (447) (114) - (561)
Unabsorbed tax depreciation losses (198,136) (7,161) - (205,297)
Others (11,087) (24,140) - (35,227)
1,973,011 740,750 (302,512) 2,411,249

2020
Recognised in
Recognised in Statement of
Opening Closing
Statement of other
Balance Balance
profit or loss comprehensive
income
Rupees in thousand
Taxable temporary differences on:
Un-quoted equity investment at FVTOCI 144,676 - (18,572) 126,104
Investments in associates under equity method 2,543,239 23,468 - 2,566,707
Right-of-use assets - 547,136 - 547,136
Accelerated tax depreciation 141,506 15,146 - 156,652

Deductible temporary difference on:

Turnover tax carried forward (286,401) (302,151) - (588,552)
Lease liabilities - (625,366) - (625,366)
Accumulating compensated absences (673) 226 - (447)
Unabsorbed tax depreciation losses (142,612) (55,524) - (198,136)
Others - (11,087) - (11,087)
2,399,735 (408,152) (18,572) 1,973,011

8.1.2 Deductible temporary differences are considered to the extent that the realization of related tax benefits is
probable from reversal of existing taxable temporary differences and future taxable profits. Provision for deferred
tax on temporary differences other than relating to unrealized gain on remeasurement of investments at FVTOCI
of the Holding Company was not considered necessary as it is chargeable to tax under section 169 of the Income
Tax Ordinance, 2001. Temporary differences of Nishat Power Limited - Subsidiary Company are not expected to
reverse in the foreseeable future due to the fact that the profits and gains derived from electric power generation
are exempt from tax. Nishat Hospitality (Private) Limited - Subsidiary Company has not recognised deferred tax
assets of Rupees 30.100 million (2020: Rupees 34.325 million) in respect of minimum tax paid and available for
carry forward under section 113 and 153 of the Income Tax Ordinance, 2001, as sufficient tax profit would not be
available to set these off in the foreseeable future.
 Annual Report 2021 169

8.1.3 Minimum tax available for carry forward under Section 113 of the Income Tax Ordinance, 2001
is estimated at Rupees 301.656 million (2020: Rupees 588.552 million).

2021
Accounting year
Accounting year to which the Amount of in which
minimum tax relates minimum tax minimum tax
will expire

Rupees in thousand
2020 274,691 2025
2019 26,965 2024
301,656

2020
Accounting year
Accounting year to which the Amount of in which
minimum tax relates minimum tax minimum tax
will expire

Rupees in thousand

2020 283,106 2025

2019 99,892 2024
2018 94,852 2023
2016 110,702 2021
588,552

8.1.4 This relates to Nishat Hospitality (Private) Limited, Nishat Linen (Private) Limited and Nishat
Commodities (Private) Limited - Subsidiary Companies.

8.1.5 This relates to Nishat Linen (Private) Limited - Subsidiary Company.

8.1.6 These relate to Nishat Hospitality (Private) Limited - Subsidiary Company.

2021 2020
Note (Rupees in thousand)

8.2 Gas Infrastructure Development Cess (GIDC) Payable

Gas Infrastructure Development Cess payable at amortized cost 1,299,041 -

Add: Adjustment due to impact of IFRS 9 36 73,562 -
Less: Payments made during the year (168,369) -

Balance as on 30 June 1,204,234 -

Less: Current portion shown under current liabilities 12 (1,126,195) -
78,039 -

8.2.1 This represents Gas Infrastructure Development Cess (GIDC) that was levied through GIDC Act,
2015. During the year, Honourable Supreme Court of Pakistan upheld the GIDC Act, 2015 to be
constitutional and intra vires. Nishat Mills Limited - Holding Company has filed a review petition
in Honourable Sindh High Court, Karachi which is pending adjudication. GIDC payable has been
recognized at amortized cost in accordance with IFRS 9.
 170 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

8.3 Deferred income - Government grant

Government grant recognized during the year 291,514 -

Less: Amortized during the year (114,925) -
176,589 -
Less: Current portion shown under current liabilities 12 (95,180) -
81,409 -

8.3.1 The State Bank of Pakistan (SBP), through its Circular No. 01 and 02 of 2020 dated 17 March
2020 and Circular No. 09 of 2020 dated 08 May 2020 introduced a Temporary Economic
Refinance Facility (TERF) for setting of new industrial units and for undertaking Balancing,
Modernization and Replacement and / or expansion of projects / businesses and through
Circular No. 06 of 2020 dated 10 April 2020 introduced a Refinance Scheme for payment of
wages and salaries to the workers and employees of business concerns. These refinances were
available through Banks / DFIs. One of the key feature of these refinance facilities is that
borrowers can obtain loan at mark-up rates that are below normal lending rates. As per
International Accounting Standard (IAS) 20 'Accounting for Government Grants and Disclosure
of Government Assistance', the benefit of a Government loan at a below-market rate of interest
is treated as a Government grant. The Holding Company, Nishat Linen (Private) Limited -
Subsidiary Company and Nishat Hospitality (Private) Limited - Subsidiary Company have
obtained these loans as disclosed in note 5 to the consolidated financial statements. In
accordance with IFRS 9 'Financial Instruments', loans obtained under the refinance facilities
were initially recognized at fair value which is the present value of loans proceeds received,
discounted using prevailing market rates of interest for a similar instrument. Hence, the benefit
of the below-market rate of interest has been measured as the difference between the initial
carrying value of the loan determined in accordance with IFRS 9 and the proceeds received.
This benefit is accounted for and presented as deferred grant in accordance with IAS 20. The
grant is being amortized in the consolidated statement of profit or loss, in line with the
recognition of interest expense the grant is compensating. There are no unfulfilled conditions or
contingencies attached to this grant.

2021 2020
Note (Rupees in thousand)

9 TRADE AND OTHER PAYABLES

Creditors 9.1 6,317,153 7,086,255

Sindh infrastructure payable 9.2 674,951 567,972
Accrued liabilities 1,845,103 1,665,606
Contract liabilities - unsecured 9.1 1,248,442 1,021,564
Securities from contractors - interest free and repayable
on completion of contracts 9.3 19,174 13,561
Retention money payable 68,600 36,500
Income tax deducted at source 846 782
Payable to employees provident fund trust 5,165 45,277
Fair value of forward exchange contracts 57,429 6,206
Workers' profit participation fund 9.4 967,594 639,524
Workers' welfare fund 185,601 101,018
11,390,058 11,184,265
 Annual Report 2021 171

2021 2020
(Rupees in thousand)

9.1 These include amounts due to following related parties:

Creditors

D.G. Khan Cement Company Limited - associated company 383 8,543

Security General Insurance Company Limited - associated company 12,837 31,332
Adamjee Insurance Company Limited - associated company 27,595 25,726
Sanifa Agri Services Limited - associated company - 2,379
Hyundai Nishat Motors (Private) Limited - associated company 59 37
Nishat (Chunian) Limited - related party 75,050 194,584
Nishat Hotels and Properties Limited - associated company 95 31,477
116,019 294,078

Contract liabilities - unsecured

Nishat (Chunian) Limited - related party 10 -

Nishat Hotels and Properties Limited - associated company - 820
10 820

9.2 Sindh infrastructure cess payable

Balance as on 01 July 567,973 466,336

Add: Provision made during the year 106,978 101,636
Balance as on 30 June 674,951 567,972

9.2.1 This represents provision for infrastructure cess imposed by the Province of Sindh through
Sindh Finance Act, 1994 and its subsequent versions including the final version i.e. Sindh
Development and Maintenance of Infrastructure Cess Act, 2017. Nishat Mills Limited - Holding
Company, Nishat Commodities (Private) Limited - Subsidiary Company and Nishat Linen
(Private) Limited - Subsidiary Company filed writ petition in Honourable Sindh High Court,
Karachi whereby stay was granted and directions were given to provide bank guarantees in
favor of Director Excise and Taxation, Karachi. The Honourable Sindh High Court, Karachi
passed order dated 04 June 2021 against the Group Companies and directed that bank
guarantees should be encashed. Being aggrieved by the order, the Group along with others filed
petitions for leave to appeal before Honourable Supreme Court of Pakistan against the Sindh
High Court’s judgment in relation to Sindh infrastructure development cess. On 01 September
2021, after hearing the petitioners, the Honourable Supreme Court dictated the order in open
court granting leave to appeal to the petitioners and restraining the Sindh Government from
encashing the bank guarantees furnished in pursuance of the interim orders passed by the
Sindh High Court. The Honourable Supreme Court also directed to release the future
consignments subject to furnishing of bank guarantees for the disputed amount.

9.3 These deposits have been utilized for the purpose of business in accordance with the terms of written
agreements with contractors.
 172 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

9.4 Workers' profit participation fund

Balance as on 01 July 639,524 517,276

Add: Provision for the year 531,986 451,176
Add: Interest for the year 36 179 4,124
1,171,689 972,576
Less: Payments during the year (204,095) (333,052)
967,594 639,524

9.4.1 Interest is paid at prescribed rate under the Companies Profit (Workers' Participation) Act, 1968
on funds utilized till the date of allocation to workers.

2021 2020
Note (Rupees in thousand)

10 ACCRUED MARK-UP

Long term financing 73,697 49,911

Short term borrowings 10.1 195,872 345,602
269,569 395,513

10.1 This includes markup of Rupees 1.637 million (2020: Rupees 2.803 million) payable to MCB
Bank Limited - associated company.

2021 2020
Note (Rupees in thousand)

11 SHORT TERM BORROWINGS

From banking companies - secured

Nishat Mills Limited - Holding Company

State Bank of Pakistan (SBP) refinance 11.1 & 11.3 18,371,589 14,184,868
Other short term finances 11.1 & 11.4 - 2,743,549
Temporary bank overdrafts 11.1, 11.2 & 11.5 346,674 2,401,351
18,718,263 19,329,768

Nishat Power Limited - Subsidiary Company

Short term running finances 11.6 3,192,050 4,750,749
Term finances 11.7 450,000 -
3,642,050 4,750,749

Nishat Linen (Private) Limited - Subsidiary Company

Temporary bank overdrafts 11.9 24,843 -
22,385,156 24,080,517
 Annual Report 2021 173

11.1 These finances are obtained from banking companies under mark up arrangements and are secured
against joint pari passu hypothecation charge on all present and future current assets, other instruments
and ranking hypothecation charge on plant and machinery of the Holding Company.

11.2 These finances include Rupees 278.182 million (2020: Rupees 76.206 million) from MCB Bank Limited -
associated company, which has been utilized for working capital requirements.

11.3 The rates of mark-up range from 2.20% to 3.00% (2020: 2.15% to 3.00%) per annum during the year on
the balance outstanding.

11.4 The rates of mark-up range from 1.87% to 8.52% (2020: 1.87% to 14.01%) per annum during the year
on the balance outstanding.

11.5 The rates of mark-up range from 7.05% to 9.28% (2020: 8.75% to 15.56%) per annum during the year
on the balance outstanding.

11.6 The total running finance and running musharka main facilities obtained from various commercial banks
under mark-up arrangements aggregate Rupees 10,251.52 million (2020: Rupees 10,251.52 million).
Such facilities have been obtained at mark-up rates ranging from one month to three months KIBOR plus
0.2% to 2% per annum, payable quarterly, on the balance outstanding. The aggregate facilities are
secured against charge on present and future current assets of Nishat Power Limited - Subsidiary
Company. The mark-up rate charged during the year on the outstanding balance ranged from 7.46% to
12.19% (2020: 8.86% to 15.85%) per annum. Various sub facilities comprising money market loans and
letters of guarantee have also been utilized under the aforementioned main facilities.

11.7 The total murabaha, term finance / money market main and sub-limit facilities obtained from various
commercial banks under mark-up arrangements aggregate Rupees 1,400 million (2020: Rupees 1,650
million). Such facilities have been obtained at mark-up rates ranging from one week to six months KIBOR
plus 0.10% to 0.40%, payable at the maturity of the respective murabaha transaction / term finance
facility. The aggregate facilities are secured against charge on present and future current assets of Nishat
Power Limited - Subsidiary Company. The mark-up rate charged during the year on the outstanding
balance ranged from 7.55% to 7.72% (2020: 11% to 13.81%) per annum.

11.8 The main facilities for opening letters of credit and guarantees aggregate Rupees 750 million (2020:
Rupees 500 million). The amount utilized at 30 June 2021, for letters of credit was Rupees 2.33 million
(2020: Rupees Nil) and for letters of guarantee was Rupees 613.000 million (2020: Rupees 113.000
million). The aggregate facilities for opening letters of credit and guarantee are secured by charge on
present and future current assets including fuel stocks / inventory of the Nishat Power Limited -
Subsidiary Company and by lien over import documents.

11.9 This finance is obtained from Allied Bank Limited under mark up arrangement and is secured against first
pari passu hypothecation charge over all present and future current assets of Nishat Linen (Private) Limited
- Subsidiary Company and corporate guarantee from Nishat Mills Limited - Holding Company. The rate of
mark up ranges from 8.54% to 8.84% (2020: Nil) per annum during the year on the balance outstanding.

2021 2020
Note (Rupees in thousand)

12 CURRENT PORTION OF NON-CURRENT LIABILITIES

Current portion of long term financing 5 3,242,316 763,703

Current portion of lease liabilities 6 680,916 500,198
Current portion of GIDC payable 8.2 1,126,195 -
Current portion of deferred income - Government grant 8.3 95,180 -
5,144,607 1,263,901
 174 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2021 2020
(Rupees in thousand)

13 UNCLAIMED DIVIDEND
115,497 111,267

14 CONTINGENCIES AND COMMITMENTS

a) Contingencies

i) Guarantees of Rupees 3,438.360 million (2020: Rupees 2,941.607 million) are given by the banks of
Holding Company to Sui Northern Gas Pipelines Limited against gas connections, Shell Pakistan
Limited and Pakistan State Oil Limited against purchase of furnace oil, Director Excise and
Taxation, Karachi against infrastructure cess, Chairman Punjab Revenue Authority, Lahore against
infrastructure cess, Directorate of Cotton Cess Management against cotton cess, Collector of
Customs against regulatory duty, State Bank of Pakistan against mark-up subsidy, Inspector
General Frontier Corps KP (South) and The President of Islamic Republic of Pakistan through the
Controller of Military Accounts (Defence Purchase) against fulfillment of sales orders, High Court of
Sindh, Karachi against the matter of importation of LED lights and to the bank of Hyundai Nishat
Motor (Private) Limited - associated company to secure financial assistance to the associated
company. Further, the Holding Company has issued cross corporate guarantees of Rupees
1,173.333 million (2020: Rupees 266.667 million), Rupees 41.60 million (2020: Rupees 21.600
million) and Rupees 1,750 million (2020: Rupees Nil) on behalf of Nishat Linen (Private) Limited -
Subsidiary Company, Nishat Hospitality (Private) Limited - Subsidiary Company and Nishat Sutas
Dairy Limited - associated company respectively to secure the obligations of subsidiary companies
and associated company towards their lenders.

ii) Post dated cheques of Rupees 10,758.912 million (2020: Rupees 8,223.314 million) are issued by
Holding Company to customs authorities in respect of duties on imported items availed on the
basis of consumption and export plans. If documents of exports are not provided on due dates,
cheques issued as security shall be encashable.

iii) Holding Company's share in contingencies of associates accounted for under equity method is
Rupees 4,137 million (2020: Rupees 5,203 million).

iv) A sales tax demand of Rupees 1,218.132 million was raised against Nishat Power Limited -
Subsidiary Company through order dated 11 December 2013, passed by the Assistant
Commissioner Inland Revenue ('ACIR') disallowing input sales tax for the tax periods of July 2010
through June 2012. The disallowance was primarily made on the grounds that since revenue
derived by Subsidiary Company on account of 'capacity revenue' was not chargeable to sales tax,
input sales tax claimed by the Subsidiary Company was required to be apportioned with only the
input sales tax attributable to other revenue stream i.e. 'energy revenue' admissible to the
Subsidiary Company. Upon appeal before Commissioner Inland Revenue (Appeals) ['CIR(A)'], such
issue was decided in Subsidiary Company's favour, however, certain other issues agitated by the
Subsidiary Company were not adjudicated. Both the Subsidiary Company and department have
filed appeals against the order of CIR(A) before Appellate Tribunal Inland Revenue ('ATIR'), which
are pending adjudication.

Subsequently, the above explained issue was taken up by department for tax periods of July 2009
to June 2013 (involving input sales tax of Rupees 1,722.811 million), however, the Subsidiary
Company assailed the underlying proceedings before Lahore High Court ('LHC') directly and in this
 Annual Report 2021 175

respect, through order dated 31 October 2016, LHC accepted the Subsidiary Company's stance
and annulled the proceedings. The department has challenged the decision of LHC before
Supreme Court of Pakistan and has also preferred an Intra Court Appeal against such order which
are pending adjudication.

Similarly, for financial year 2014, Subsidiary Company's case was selected for 'audit' and such
issue again formed the core of audit proceedings (involving input sales tax of Rupees 596.091
million). The Subsidiary Company challenged the jurisdiction in respect of audit proceedings before
LHC and while LHC directed the management to join the subject proceedings, department was
debarred from passing the adjudication order. During the year 2019, LHC dismissed the petition in
favour of the department, by allowing the department to complete the audit proceedings that are
pending for completion. During the year on 26 January 2021, the department raised demand
against such proceedings, however, Subsidiary Company obtained interim relief from Appellate
Tribunal Inland Revenue by applying stay against such demand. The matter is currently pending
adjudication.

Similarly, during the year in respect of tax periods July 2016 to June 2017, Subsidiary Company's
case was selected for 'audit' and such issue again formed the core of audit proceedings (involving
input sales tax of Rupees 541.486 million). The proceedings are underway, however, matter is
currently pending adjudication before ACIR.

Since the issue has already been decided in Subsidiary Company's favour on merits by LHC and
based on advice of the Subsidiary Company's legal counsel, no provision on these accounts have
been made in these consolidated financial statements.

v) On 16 April 2019, the Commissioner Inland Revenue through an order raised a demand of Rupees
179.046 million against Nishat Power Limited - Subsidiary Company, mainly on account of input tax
claimed on inadmissible expenses in sales tax return for the tax periods of July 2014 to June 2017
and sales tax default on account of suppression of sales related to tax period June 2016. The
Subsidiary Company filed application for grant of stay before the ATIR against recovery of the
aforesaid demand that was duly granted. Further, the Subsidiary Company has filed appeals before
CIR(A) and ATIR against the order which are pending adjudication. Management has strong
grounds to believe that the case will be decided in Subsidiary Company's favour. Therefore, no
provision has been made on this account in these consolidated financial statements.

vi) On 13 February 2019, National Electric Power Regulatory Authority ('NEPRA') issued a show cause
to Nishat Power Limited - Subsidiary Company along with other Independent Power Producers to
provide rationale of abnormal profits earned since commercial operation date (COD) that eventually
led to initiation of proceedings against the Subsidiary Company by NEPRA on March 18, 2019. The
Subsidiary Company challenged the authority of NEPRA to take suo moto action before the
Islamabad High Court (IHC) wherein, on 1 April 2019, IHC provided interim relief by suspending the
suo moto proceedings. The case is currently pending adjudication before IHC. Management is
confident that based on the facts and law, there will be no adverse implications for the Subsidiary
Company.

vii) On 16 March 2020, Government of Pakistan ('GoP') issued a report through which it was alleged
that savings were made by the Independent Power Producers ('IPPs'), including Nishat Power
Limited - Subsidiary Company, in the tariff components in violation of applicable GoP Policies, tariff
determined by National Electric Power Regulatory Authority ('NEPRA') and the relevant Project
Agreements. The Subsidiary Company rejected such claims, and discussions were made with the
GoP to resolve the dispute.
 176 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
During the year on 12 February 2021, the Subsidiary Company under the Agreements as referred
in note 1(a), agreed that the abovementioned dispute will be resolved through arbitration under the
Arbitration Submission Agreement between the Subsidiary Company and GoP.

Management believes that there are strong grounds that the matter will ultimately be decided in
Subsidiary Company's favor. Furthermore, its financial impact cannot be reasonably estimated at
this stage, hence, no provision in this respect has been made in these consolidated financial
statements.

viii) The banks have issued the following on behalf of Nishat Power Limited - Subsidiary Company:

(a) Letter of guarantee of Rupees 11.5 million (2020: Rupees 11.5 million) in favour of Director
Excise and Taxation, Karachi, under direction of Sindh High Court in respect of suit filed for levy
of infrastructure cess.

(b) Letters of guarantee of Rupees 600 million (2020: Rupees 100 million) in favour of fuel
suppliers.

(c) Letter of guarantee of Rupees 1.5 million (2020: Rupees 1.5 million) in favour of Punjab
Revenue Authority, Lahore.

ix) Guarantees of Rupees 107.350 million (2020: Rupees 100.350 million) are given by Nishat Linen
(Private) Limited - Subsidiary Company to Director Excise and Taxation, Karachi against
infrastructure cess, Chairman Punjab Revenue Authority, Lahore against infrastructure cess and
Collectors of Customs against import consignments.

x) Through notice dated 25 January 2018, issued by the Deputy Commissioner Inland Revenue (DCIR)
under sections 161/205 of the Income Tax Ordinance, 2001, Nishat Linen (Private) Limited -
Subsidiary Company had been called upon to demonstrate its compliance with various withholding
provisions of the Income Tax Ordinance, 2001. The subject proceedings have been finalized
through order dated 03 August 2018, whereby, aggregate default amounting to Rupees 2.551
million has been adjudged against the Subsidiary Company. Subsidiary Company’s appeal before
Commissioner Inland Revenue (Appeals) [CIR(A)] was successful except for the legal issue
amounting to Rupees 1.419 million. Appeal on this point has been filed before the Appellate
Tribunal Inland Revenue which is pending adjudication. Subsidiary Company is confident of
favorable outcome of its appeal based on advice of the tax advisor.

xi) Bank guarantee of Rupees 1.900 million (2020: Rupees 1.900 million) is given by the bank of Nishat
Commodities (Private) Limited - Subsidiary Company in favour of Director, Excise and Taxation,
Karachi to cover the disputed amount of Sindh infrastructure cess.

b) Commitments

i) Contracts for capital expenditure of the Group are approximately of Rupees 3,469.028 million
(2020: Rupees 322.818 million).

ii) Letters of credit other than for capital expenditure of the Group are of Rupees 4,451.831 million
(2020: Rupees 2,381.289 million).

iii) Outstanding foreign currency forward contracts of the Group are Rupees 6,400.041 million (2020:
Rupees 389.348 million).
 Annual Report 2021 177

iv) The amount of future payments under non-cancellable operating lease and the period in which
these payments will become due from Nishat Power Limited - Subsidiary Company is as follows:

2021 2020
Note (Rupees in thousand)

Not later than one year 3,894 3,894

15 PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 15.1 41,256,832 41,076,157

Capital work in progress 15.2 6,283,283 2,542,740
Major spare parts and standby equipment 15.3 104,397 105,246
47,644,512 43,724,143
15.1 OPERATING FIXED ASSETS
Furniture, Kitchen
Freehold Buildings on Plant and Electric Factory fixtures and Computer equipment Total
Vehicles
land freehold machinery installations equipment office equipment and crockery
178

land equipment items

(Rupees in thousand)
At 30 June 2019
Cost 2,692,795 13,654,423 52,635,929 1,292,678 436,259 953,339 380,503 946,979 32,504 73,025,409
Currency retranslation - 80,914 - - - 6,025 3,164 3,601 - 93,704
2,692,795 13,735,337 52,635,929 1,292,678 436,259 959,364 383,667 950,580 32,504 73,119,113
Accumulated depreciation - (5,850,804) (24,041,635) (724,724) (247,080) (423,461) (292,215) (456,482) (24,687) (32,061,088)
Currency retranslation - (52,566) - - - (2,568) (2,751) (2,313) - (60,198)
- (5,903,370) (24,041,635) (724,724) (247,080) (426,029) (294,966) (458,795) (24,687) (32,121,286)
Accumulated impairment - - (162,601) - - - - - - (162,601)
Net book value 2,692,795 7,831,967 28,431,693 567,954 189,179 533,335 88,701 491,785 7,817 40,835,226

Year ended 30 June 2020

Opening net book value 2,692,795 7,831,967 28,431,693 567,954 189,179 533,335 88,701 491,785 7,817 40,835,226
For the year ended June 30, 2021

Additions 26,823 722,042 2,725,766 133,747 10,344 160,117 59,401 177,140 1,134 4,016,514
Disposals:
Cost - (4,300) (274,588) (1,575) - (230) (3,950) (91,838) - (376,481)
Accumulated depreciation - 3,302 230,456 1,001 - 83 3,242 61,399 - 299,483
- (998) (44,132) (574) - (147) (708) (30,439) - (76,998)
Depreciation charge - (816,270) (2,574,598) (65,338) (19,430) (65,221) (35,886) (121,879) (1,886) (3,700,508)
Currency retranslation - 1,554 - - - 299 (84) 154 - 1,923
Closing net book value 2,719,618 7,738,295 28,538,729 635,789 180,093 628,383 111,424 516,761 7,065 41,076,157

At 30 June 2020
Cost 2,719,618 14,453,079 55,087,107 1,424,850 446,603 1,119,251 439,118 1,035,882 33,638 76,759,146
Currency retranslation - 9,116 - - - 657 277 501 - 10,551
2,719,618 14,462,195 55,087,107 1,424,850 446,603 1,119,908 439,395 1,036,383 33,638 76,769,697
Accumulated depreciation - (6,716,338) (26,385,777) (789,061) (266,510) (491,167) (327,610) (519,275) (26,573) (35,522,311)
Currency retranslation - (7,562) - - - (358) (361) (347) - (8,628)
- (6,723,900) (26,385,777) (789,061) (266,510) (491,525) (327,971) (519,622) (26,573) (35,530,939)
Accumulated impairment - - (162,601) - - - - - - (162,601)
Net book value 2,719,618 7,738,295 28,538,729 635,789 180,093 628,383 111,424 516,761 7,065 41,076,157

Year ended 30 June 2021

Opening net book value 2,719,618 7,738,295 28,538,729 635,789 180,093 628,383 111,424 516,761 7,065 41,076,157
Additions 20,823 585,474 3,148,475 43,114 18,010 61,356 37,682 398,603 58 4,313,595
Reversal of provision (98,528) - - - - - - - - (98,528)
Disposals:
Cost (107,722) (28,905) (144,243) (45) - (278) (3,485) (143,830) - (428,508)
Accumulated depreciation - 8,249 119,483 - - 21 2,792 105,033 - 235,578
Notes to the Consolidated Financial Statements

(107,722) (20,656) (24,760) (45) - (257) (693) (38,797) - (192,930)

Depreciation charge - (814,889) (2,680,682) (65,459) (18,951) (69,774) (40,353) (143,000) (1,570) (3,834,678)
Currency retranslation - (5,640) - - - (761) (59) (324) - (6,784)
Closing net book value 2,534,191 7,482,584 28,981,762 613,399 179,152 618,947 108,001 733,243 5,553 41,256,832

At 30 June 2021
Cost 2,534,191 15,018,764 58,091,339 1,467,919 464,613 1,180,986 473,592 1,291,156 33,696 80,556,256
Currency retranslation - (22,190) - - - (1,558) (873) (1,535) - (26,156)
2,534,19 14,996,574 58,091,339 1,467,919 464,613 1,179,428 472,719 1,289,621 33,696 80,530,100
Accumulated depreciation - (7,530,540) (28,946,976) (854,520) (285,461) (561,278) (365,532) (557,589) (28,143) (39,130,039)
Currency retranslation - 16,550 - - - 797 814 1,211 - 19,372
- (7,513,990) (28,946,976) (854,520) (285,461) (560,481) (364,718) (556,378) (28,143) (39,110,667)
Accumulated impairment - - (162,601) - - - - - - (162,601)
Net book value 2,534,191 7,482,584 28,981,762 613,399 179,152 618,947 108,001 733,243 5,553 41,256,832
Nishat Mills Limited and its Subsidiaries

Annual rate of depreciation (%) - 3.99-10 4-32.9 and 10 10 10 30-33 20 20-33

number of
hours used
15.1.1 Detail of operating fixed assets, exceeding the book value of Rupees 500,000 disposed of during the year is as follows:

Quantity Cost Accumulated Net book Sale Gain / Mode of

Description Particulars of purchasers
Nos. depreciation value proceeds (loss) disposal

(Rupees in thousand)

Freehold land
Land 68K-1/2S 61,984 - 61,984 67,000 5,016 Negotiation Nishat Sutas Dairy Limited - associated company,
Lahore.
Land DHA Phase 8 45,721 - 45,721 151,450 105,729 Negotiation Mr. Muhammad Raza Sehjpal, Lahore.
107,705 - 107,705 218,450 110,745

Buildings on freehold land

Annual Report 2021

Building DHA Phase 8 28,905 8,249 20,656 28,905 8,249 Negotiation Mr. Muhammad Raza Sehjpal, Lahore.
28,905 8,249 20,656 28,905 8,249

Plant and Machinery

Picanol Optimax (Dobby) Loom 4 24,540 17,475 7,065 9,000 1,935 Negotiation Union Denim Mills, Karachi.
Rotary Printing Machine Stork 1 56,794 47,877 8,917 9,000 83 Negotiation Lahore Dyeing & Printing Mills Limited, Lahore.
Savio Cone Winder 1 9,394 7,812 1,582 1,581 (1) Negotiation Venus Industries (Private) Limited, Faisalabad.
Air Compressor & Air Dryer 6 20,183 18,804 1,379 3,500 2,121 Negotiation Gagan Textile, Karachi.
Toyota Air Jet Looms 3 7,174 5,939 1,235 4,350 3,115 Negotiation Gagan Textile, Karachi.
Toyota Air Jet Looms 3 9,566 7,923 1,643 5,800 4,157 Negotiation Gagan Textile, Karachi.
Stitching Machines 125 3,525 2,759 766 583 (183) Negotiation Mr. Habib-ur-Rehman, Faisalabad.
Chiller LG Double Steam 1 5,329 4,369 960 1,455 495 Negotiation Iceberg Industries (Private) Limited, Lahore.
136,505 112,958 23,547 35,269 11,722
179
 Quantity Cost Accumulated Net book Sale Gain / Mode of
Description Particulars of purchasers
Nos. depreciation value proceeds (loss) disposal
180

(Rupees in thousand)

Vehicles

Honda Civic LE-16A-1745 1 3,072 1,706 1,366 2,700 1,334 Negotiation Mr. Abdullah Khalid, Lahore.
Toyota Corolla LEC-15-6451 1 1,683 1,110 573 851 278 Company's Policy Mr. Mateen Javaid, Company's employee, Faisalabad.
Toyota Corolla LEC-15-2519 1 1,693 1,137 556 903 347 Company's Policy Mr. Sardar Mahmood Akhtar, Company's employee,
Lahore.
Honda City LEB-16-1269 1 1,706 1,074 632 910 278 Company's Policy Mr. Mumtaz Hassan, Company's employee, Lahore.
Suzuki Swift LEF-16-2702 1 1,332 809 523 709 186 Company's Policy Mr. Kamran Shafique Hashmi, Company's employee,
Lahore.
For the year ended June 30, 2021

Hyundai Tucson AAC-254 1 5,809 702 5,107 5,500 393 Negotiation Mr. Musa Ayub Khan, Lahore.
Suzuki Swift LED-16-3239 1 1,328 807 521 708 187 Company's Policy Mr. Ikhlaq Ahmad, Company's employee, Lahore.
Toyota Corolla LEB-18A-4941 1 2,927 1,014 1,913 2,927 1,014 Negotiation Mr. Najam Yousaf, Company’s employee, Lahore.
Honda Civic LEH-16-6047 1 2,436 1,463 973 1,312 339 Company's Policy Mr. Najam Yousaf, Company’s employee, Lahore.
Toyota Corolla LEF-15-5460 1 1,684 1,073 611 899 288 Company's Policy Mr. Rana Hammad Latif Khan, Company's employee,
Lahore.
Suzuki Cultus LEH-17-3801 1 1,276 630 646 875 229 Negotiation Mr. Kashif Nazir, Company's ex-employee, Faisalabad.
Honda City LEB-18A-4424 1 1,348 490 858 1,183 325 Negotiation Mr. Rashid Ali, Company's ex-employee, Faisalabad.
Suzuki Swift LEC-16-1538 1 1,468 923 545 783 238 Company's Policy Mr. Rahat Ali, Company's employee, Faisalabad.
Toyota Corolla LEF-15-1831 1 1,695 1,152 543 905 362 Company's Policy Mr. Mukhtar Ahmad, Company's employee, Lahore.
Toyota Corolla LED-18-2590 1 1,825 705 1,120 1,750 630 Insurance Claim Security General Insurance Company Limited -
associated company, Lahore.
Toyota Hilux LES-18-8716 1 2,625 959 1,666 2,800 1,134 Insurance Claim Security General Insurance Company Limited -
associated company, Lahore.
Suzuki Swift LEC-17-5779 1 1,360 722 638 870 232 Negotiation Mr. Munib Ghani, Company's ex-employee, Lahore.
Honda Civic LE-16A-2953 1 1,925 1,133 792 1,084 292 Company's Policy Miss Sobia Ashraf, Company's ex-employee, Lahore.
Honda City LEB-16-2885 1 1,695 1,050 645 904 259 Company's Policy Mr. Faisal Rabbani, Company's employee, Lahore.
Honda Civic LEB-17-2922 1 2,584 1,852 732 732 - Company's Policy Mr. Mubashir Saddique, Company’s employee,
Lahore.
Notes to the Consolidated Financial Statements

Honda Civic LEA-16A-7755 1 3,073 2,407 666 666 - Company's Policy Mr. Muhammad Nawaz, Company's employee,
Lahore.
44,544 22,918 21,626 29,971 8,345

Aggregate of other items of property,

plant and equipment with individual book
values not exceeding Rupees 500,000
110,849 91,453 19,396 84,572 65,176
Nishat Mills Limited and its Subsidiaries

428,508 235,578 192,930 397,167 204,237

 Annual Report 2021 181

2021 2020
Note (Rupees in thousand)

15.1.2 Depreciation and amortization charge

for the year has been allocated as follows:

Cost of sales 31 3,580,811 3,455,552

Distribution cost 32 54,942 50,239
Administrative expenses 33 190,069 179,656
Capital work-in-progress 10,115 17,541
3,835,937 3,702,988

15.1.3 Particulars of immovable fixed assets are as follows:

Description Address Area of land

Acres

Spinning units, Yarn dyeing unit Nishatabad, Faisalabad. 92.06

and Power plant
Spinning units and Power plant Plot No. 172-180 & 188-197,
M-3 Industrial City, Sahianwala,
FIEDMC, 2 K.M., Jhumra Chiniot
Road, Chak Jhumra, Faisalabad. 90.45
Spinning units and Power plant 20 K.M., Sheikhupura Road, Feroze Wattwan. 67.12
Weaving units and Power plant 12 K.M., Faisalabad Road, Sheikhupura. 85.53
Weaving units, Dyeing and finishing 5 K.M., Nishat Avenue Off 22 K.M.,
units, Processing unit, Stitching Ferozepur Road, Lahore. 115.64
units and Power plants
Terry unit 7 K.M., Nishat Avenue Off 22 K.M.,
Ferozepur Road, Lahore. 12.54
Apparel unit 2 K.M., Nishat Avenue Off 22 K.M.,
Ferozepur Road, Lahore. 16.32
Office 7-Main Gulberg, Lahore. 1.12
NL Tower (Retail Outlet) 5/A-3 Gulberg, Lahore. 0.25
Power Plant- Nishat Power Limited Jamber Kalan, Tehsil Pattoki, District Kasur. 34.07
Factory land 21 K.M., Ferozepur Road, Lahore. 4.21
Commercial building Mian Mehmood Kasuri Road, Gulberg III, Lahore. 0.76
520.07
15.2 Capital-work-in-progress

Furniture,
Advances for Buildings on Advances for Unallocated
Plant and Electric fixtures
purchase of freehold purchase of capital Total
182

machinery installations and office

freehold land land vehicles expenditures
equipment

(Rupees in thousand)
At 30 June 2019 23,658 199,825 394,653 20,642 8,776 13,334 27,069 687,957
Add: Additions during the year 54,123 534,678 3,701,052 1,639 153,496 176,206 98,781 4,719,975
Less: Transferred to operating fixed
assets during the year (26,823) (414,074) (2,064,754) (4,820) (160,117) (148,281) (23,780) (2,842,649)
Less: Charged to profit or loss during the year (200) - - (17,461) (109) - - (17,770)
For the year ended June 30, 2021

Less: Impairment loss - - (4,773) - - - - (4,773)

At 30 June 2020 50,758 320,429 2,026,178 - 2,046 41,259 102,070 2,542,740

Add: Additions during the year 12,054 1,698,866 5,254,492 35,680 34,810 180,262 37,178 7,253,342

Less: Transferred to operating fixed

assets during the year (15,008) (520,207) (2,612,317) (18,113) (23,704) (186,739) (129,573) (3,505,661)
Less: Charged to profit or loss during the year - (7,138) - - - - - (7,138)
At 30 June 2021 47,804 1,491,950 4,668,353 17,567 13,152 34,782 9,675 6,283,283

15.2.1 Advances for purchase of vehicles include advance of Rupees 2.878 million given to Hyundai Nishat Motor (Private) Limited - associated company.
Notes to the Consolidated Financial Statements
Nishat Mills Limited and its Subsidiaries
 Annual Report 2021 183

2021 2020
(Rupees in thousand)

15.3 Major spare parts and standby equipment

Opening balance 105,246 174,201

Add: Additions during the year 17,808 37,502
123,054 211,703
Less: Transferred during the year (18,657) (106,457)
Closing balance 104,397 105,246

16 INTANGIBLE ASSETS

FRANCHISE COMPUTER Total

FEE SOFTWARE
(Rupees in thousand)

At 30 June 2019
Cost 9,834 25,178 35,012
Accumulated amortization (9,834) (21,439) (31,273)
Net book value - 3,739 3,739

Year ended 30 June 2020

Opening net book value - 3,739 3,739
Amortization charged - (2,480) (2,480)
Closing net book value - 1,259 1,259

At 30 June 2020
Cost 9,834 25,178 35,012
Accumulated amortization (9,834) (23,919) (33,753)
Net book value - 1,259 1,259

Year ended 30 June 2021

Opening net book value - 1,259 1,259
Amortization charged - (1,259) (1,259)
Closing net book value - - -

At 30 June 2021
Cost 9,834 25,178 35,012
Accumulated amortization (9,834) (25,178) (35,012)
Net book value - - -

Annual amortization rate (%) 20 20

 184 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
17 RIGHT-OF-USE ASSETS

Land Buildings Total

(Rupees in thousand)

Reconciliation of net carrying amount of right-of-use assets:

Balance as on 01 July 2019 30,911 1,992,517 2,023,428
Add: Additions during the year - 682,168 682,168
Less: Depreciation for the year (10,843) (653,802) (664,645)
Less: Currency retranslation (395) (9,820) (10,215)
Balance as on 30 June 2020 19,673 2,011,063 2,030,736
Add: Additions during the year - 339,233 339,233
Add: Impact of lease modification - 180,387 180,387
Less: Impact of lease termination - (69,406) (69,406)
Less: Depreciation for the year (6,549) (717,041) (723,590)
Less: Currency retranslation (1,263) (16,693) (17,956)
Balance as on 30 June 2021 11,861 1,727,543 1,739,404

Lease of land

Nishat International FZE - Subsidiary Company obtained land on lease for warehouse purpose. Lease period is
5 years.

Lease of buildings

The Group obtained buildings on lease for godowns and shops. Lease terms are negotiated on an individual
basis and contain a wide range of different terms and conditions. Lease periods range from two to fourteen years.

2021 2020
Note (Rupees in thousand)

17.1 Depreciation charge for the year has been

allocated as follows:

Distribution cost 32 717,041 504,552

Administrative expenses 33 6,549 160,093
723,590 664,645

18 LONG TERM INVESTMENTS

Equity instruments 18.1 55,330,247 50,115,435

 Annual Report 2021 185

2021 2020
Note (Rupees in thousand)

18.1 Equity instruments

Associates (with significant influence)

- under equity method

D.G. Khan Cement Company Limited - quoted

137,574,201 (2020: 137,574,201) fully paid ordinary shares
of Rupees 10 each. Equity held 31.40% (2020: 31.40%) 23,683,395 21,537,608

Lalpir Power Limited - quoted 18.1.1

109,393,555 (2020: 109,393,555) fully paid ordinary
Rupees 10 each. Equity held 28.80% (2020: 28.80%) 5,013,325 4,798,766

Pakgen Power Limited - quoted 18.1.1

102,524,728 (2020: 102,524,728) fully paid ordinary shares of
Rupees 10 each. Equity held 27.55% (2020: 27.55%) 6,443,324 5,870,717

Nishat Paper Products Company Limited - unquoted

11,634,199 (2020: 11,634,199) fully paid ordinary shares of
Rupees 10 each. Equity held 25% (2020: 25%) 511,656 381,216

Nishat Dairy (Private) Limited - unquoted

60,000,000 (2020: 60,000,000) fully paid ordinary shares
of Rupees 10 each. Equity held 12.24% (2020: 12.24%) 306,768 315,510

Hyundai Nishat Motor (Private) Limited - unquoted 18.1.2

113,847,600 (2020: 89,700,000) fully paid ordinary shares of
Rupees 10 each. Equity held 12% (2020: 12%) 809,210 609,670

Sanifa Agri Services Limited - unquoted 18.1.3

6,591,600 (2020: 6,591,600) fully paid ordinary shares of
Rupees 10 each. Equity held 33.33% (2020: 33.33%) - -

Nishat Hotels and Properties Limited - unquoted

74,022,917 (2020: 74,022,917) fully paid ordinary shares of
Rupees 10 each. Equity held 6.08% (2020: 7.40%) 556,422 454,075

Nishat Sutas Dairy Limited - unquoted

16,630,000 (2020: 16,630,000) fully paid ordinary shares of
Rupees 10 each. Equity held 34.46% (2020: 34.46%) 117,682 166,300

Security General Insurance Company Limited - unquoted

10,226,244 (2020: 10,226,244) fully paid ordinary shares of
Rupees 10 each. Equity held 15.02% (2020: 15.02%) 2,108,012 590,977

Equity investments accounted for under equity method 39,549,794 34,724,839

 186 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2021 2020
(Rupees in thousand)

Equity instruments
Fair value through other comprehensive income
Associated companies (Others)

Adamjee Insurance Company Limited - quoted

102,809 (2020: 102,809) fully paid ordinary shares of
Rupees 10 each. Equity held 0.03% (2020: 0.03%) 2,116 2,116

MCB Bank Limited - quoted

88,015,291 (2020: 88,015,291) fully paid ordinary shares of
Rupees 10 each. Equity held 7.43% (2020: 7.43%) 12,851,084 12,851,084
12,853,200 12,853,200

Related party

Nishat (Chunian) Limited - quoted

32,689,338 (2020: 32,689,338) fully paid ordinary shares of
Rupees 10 each. Equity held 13.61% (2020: 13.61%) 378,955 378,955

Others

Alhamra Islamic Stock Fund - quoted

1,121,410 (2020: 1,121,410) units. 3,135 3,135

Pakistan Petroleum Limited - quoted

599,998 (2020: 599,998) fully paid ordinary shares of
Rupees 10 each. Equity held 0.02% (2020: 0.02%) 64,409 64,409
67,544 67,544
13,299,699 13,299,699
Add: Fair value adjustment 2,480,754 2,090,897
Equity investments classified at fair value through other
comprehensive income 15,780,453 15,390,596
55,330,247 50,115,435

18.1.1 Investments in Lalpir Power Limited and Pakgen Power Limited include 550 and 500 shares
respectively, held in the name of ex- nominee director of the Holding Company.

18.1.2 Investments in Hyundai Nishat Motor (Private) Limited include 4 shares held in the name of
nominee directors of the Holding Company.

18.1.3 This includes 1,600 (2020: 1,600) shares held in the name of chief financial officer of the Holding
Company and senior officer of the Holding Company.
18.2 Reconciliation of investments in associates under equity method:

D. G. Khan Cement Nishat Paper Products Nishat Dairy Nishat Hotels and Hyundai Nishat Motor Sanifa Agri Security General Insurance Nishat Sutas Total
Lalpir Power Limited Pakgen Power Limited Nishat Energy Limited
Company Limited Company Limited (Private) Limited Properties Limited (Private) Limited Services Limited Company Limited Dairy Limited
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

(Rupees in thousand)
Cost 3,418,145 3,418,145 116,342 116,342 600,000 600,000 1,640,306 1,640,306 1,272,194 1,272,194 5,000 5,000 740,229 740,229 1,187,899 897,000 65,916 65,916 1,977,028 590,977 166,300 166,300 11,189,359 9,512,409
Share of post acquisition reserves:
As at 01 July 18,119,463 19,465,168 264,874 234,773 (284,490) (269,874) 3,158,460 2,346,626 4,598,523 3,537,554 (3,314) (3,314) (286,154) (158,850) (287,330) (96,122) (65,916) (34,856) - - - - 25,214,116 25,021,105
Share of profit / (loss) after income tax 1,168,480 (677,820) 131,247 32,669 (8,742) (14,616) 570,014 814,518 904,091 1,058,913 - - 18,687 (127,304) (91,359) (191,208) - (31,060) 162,684 - (48,618) - 2,806,484 864,092
Prior year adjustments - - - - - - - - - - - - 42,038 - - - - - - - - - 42,038 -
Adjustment due to deemed disposal of
equity accounted investee - - - - - - - - - - - - 41,622 - - - - - - - - - 41,622 -
Share of other comprehensive income / (loss) 977,307 (530,311) (807) (2,568) - - 72 (2,684) 1,720 2,056 - - - - - - - - 19,431 - - - 997,723 (533,507)
Dividend received - (137,574) - - - - (355,527) - (333,204) - - - - - - - - - (51,131) - - - (739,862) (137,574)
As at 30 June 2,145,787 (1,345,705) 130,440 30,101 (8,742) (14,616) 214,559 811,834 572,607 1,060,969 - - 102,347 (127,304) (91,359) (191,208) - (31,060) 130,984 - (48,618) - 3,148,005 193,011
20,265,250 18,119,463 395,314 264,874 (293,232) (284,490) 3,373,019 3,158,460 5,171,130 4,598,523 (3,314) (3,314) (183,807) (286,154) (378,689) (287,330) (65,916) (65,916) 130,984 - (48,618) - 28,362,121 25,214,116
Impairment loss - - - - - - - - - - (1,686) (1,686) - - - - - - - - - - (1,686) (1,686)
As at 30 June 23,683,395 21,537,608 511,656 381,216 306,768 315,510 5,013,325 4,798,766 6,443,324 5,870,717 - - 556,422 454,075 809,210 609,670 - - 2,108,012 590,977 117,682 166,300 39,549,794 34,724,839
18.2.1 Summarized statement of financial position
Current assets 36,851,264 34,095,100 4,371,178 3,598,217 658,496 612,409 19,943,086 21,379,614 20,692,161 25,252,302 47 47 5,308,085 2,300,727 12,792,145 5,220,993 188,162 44,253 - - 280,376 -
Non-current assets 101,043,433 95,456,434 1,571,757 1,585,161 2,664,456 2,667,958 6,329,438 7,439,204 5,530,199 6,391,553 - - 22,463,804 22,508,944 15,127,480 12,939,943 124,376 131,343 - - 303,514 -
Total assets 137,894,697 129,551,534 5,942,935 5,183,378 3,322,952 3,280,367 26,272,524 28,818,818 26,222,360 31,643,855 47 47 27,771,889 24,809,671 27,919,625 18,160,936 312,538 175,596 28,126,727 - 583,890 -
Current liabilities 40,295,520 37,624,257 3,122,728 2,778,731 685,045 701,991 8,818,472 12,090,882 2,808,167 10,285,981 225 150 3,409,526 5,373,571 11,327,001 3,999,727 368,488 150,145 - - 6,136 -
Non-current liabilities 24,121,304 25,283,120 774,345 880,543 152,352 21,255 46,688 65,564 25,042 47,339 - - 15,308,086 13,384,915 9,849,211 8,668,771 19,861 26,757 - - - -
Total liabilities 64,416,824 62,907,377 3,897,073 3,659,274 837,397 723,246 8,865,160 12,156,446 2,833,209 10,333,320 225 150 18,717,612 18,758,486 21,176,212 12,668,498 388,349 176,902 14,092,026 - 6,136 -
Share deposit money - - - - - - - - - - - - - - - - - - - - 236,238 -
Annual Report 2021

Net assets 73,477,873 66,644,157 2,045,862 1,524,104 2,485,555 2,557,121 17,407,364 16,662,372 23,389,151 21,310,535 (178) (103) 9,054,277 6,051,185 6,743,413 5,492,438 (75,811) (1,306) 14,034,701 - 341,516 -
Reconciliation to carrying amounts:
As at 01 July 66,644,157 70,929,823 1,524,104 1,403,702 2,557,121 2,676,531 16,662,372 13,843,503 21,310,535 17,459,466 (103) (28) 6,051,185 7,771,509 5,492,438 5,110,838 (1,306) 64,678 13,162,525 - 428,278 -
Prior year adjustments - (1,408) - - (141) - - - - - - - 1,750,645 (241,551) - - - - - - - -
Transactions with owners in their capacity as owners - - - - - - - - - - - - 1,000,000 - 2,012,300 1,975,000 - 28,500 - - - -
Profit / (loss) after income tax 3,721,273 (2,158,661) 524,987 130,675 (71,425) (119,410) 1,979,218 2,828,187 3,281,639 3,843,606 (75) (75) 252,447 (1,478,773) (761,325) (1,593,400) (74,505) (94,484) 1,083,115 - (86,762) -
Other comprehensive income / (loss) 3,112,443 (1,687,478) (3,229) (10,273) - - 250 (9,318) 6,243 7,463 - - - - - - - - 129,373 - - -
Dividend paid - (438,119) - - - - (1,234,476) - (1,209,266) - - - - - - - - - (340,312) - - -
As at 30 June 73,477,873 66,644,157 2,045,862 1,524,104 2,485,555 2,557,121 17,407,364 16,662,372 23,389,151 21,310,535 (178) (103) 9,054,277 6,051,185 6,743,413 5,492,438 (75,811) (1,306) 14,034,701 - 341,516 -
Group's share (%) 31.40% 31.40% 25.00% 25.00% 12.24% 12.24% 28.80% 28.80% 27.55% 27.55% 37.75% 37.75% 6.08% 7.40% 12.00% 12.00% 33.33% 33.33% 15.02% 15.02% 34.46% -
Group's share 23,072,003 20,926,216 511,467 381,027 304,250 312,992 5,013,325 4,798,766 6,443,324 5,870,717 - - 550,142 447,796 809,210 659,093 - - 2,108,012 - 117,682 -
Goodwill 611,392 611,392 189 189 2,518 2,518 - - - - - - 6,280 6,279 - (49,423) - - - - - -
Carrying amount 23,683,395 21,537,608 511,656 381,216 306,768 315,510 5,013,325 4,798,766 6,443,324 5,870,717 - - 556,422 454,075 809,210 609,670 - - 2,108,012 - 117,682 -

18.2.2 Summarized statement of comprehensive income

Revenue 45,107,690 38,033,124 3,979,518 4,273,014 2,026,538 1,734,733 15,106,583 10,673,957 13,475,015 10,444,956 - - 6,075,016 3,855,646 21,804,942 997,604 256,211 351,011 867,721 - - -
Profit / (loss) for the year 3,721,273 (2,158,661) 524,987 130,675 (71,425) (119,410) 1,979,218 2,828,187 3,281,639 3,843,606 (75) (75) 252,447 (1,478,773) (761,325) (1,593,400) (74,505) (94,484) 1,083,115 - (86,762) -
Other comprehensive income / (loss) 3,112,443 (1,687,478) (3,229) (10,273) - - 250 (9,318) 6,243 7,463 - - - - - - - - 129,373 - - -
Total comprehensive income / (loss) 6,833,716 (3,846,139) 521,758 120,402 (71,425) (119,410) 1,979,468 2,818,869 3,287,882 3,851,069 (75) (75) 252,447 (1,478,773) (761,325) (1,593,400) (74,505) (94,484) 1,212,488 - (86,762) -

Dividend received from associates - 137,574 - - - - 355,527 - 333,204 - - - - - - - - - 51,131 - - -

18.3 Adamjee Insurance Company Limited and MCB Bank Limited are associated companies due to common directorship.

18.4 Interests in associates

Country of % of ownership Measurement

Name of associated company Note Quoted fair value Carrying amount
incorporation interest method
2021 2020 2021 2020 2021 2020
(Rupees in thousand)

D.G. Khan Cement Company Limited 18.4.1 Pakistan 31.40% 31.40% Equity method 1,622,750 11,739,207 23,683,395 21,537,608
Nishat Paper Products Company Limited 18.4.2 Pakistan 25.00% 25.00% Equity method -* -* 511,656 381,216
Nishat Dairy (Private) Limited 18.4.3 Pakistan 12.24% 12.24% Equity method -* -* 306,768 315,510
Lalpir Power Limited 18.4.4 Pakistan 28.80% 28.80% Equity method 1,953,769 1,276,623 5,013,325 4,798,766
Pakgen Power Limited 18.4.5 Pakistan 27.55% 27.55% Equity method 2,528,260 1,231,322 6,443,324 5,870,717
Nishat Energy Limited 18.4.6 Pakistan 37.75% 37.75% Equity method -* -* - -
Nishat Hotels and Properties Limited 18.4.7 Pakistan 6.08% 7.40% Equity method -* -* 556,422 454,075
Hyundai Nishat Motor (Private) Limited 18.4.8 Pakistan 12.00% 12.00% Equity method -* -* 809,210 609,670
Sanifa Agri Services Limited 18.4.9 Pakistan 33.33% 33.33% Equity method -* -* - -
Security General Insurance Limited 18.4.10 Pakistan 15.02% 15.02% Equity method -* -* 2,108,012 590,977
Nishat Sutas Dairy Limited 18.4.11 Pakistan 34.46% 34.46% Equity method -* -* 117,682 166,300

18.4.1 D.G. Khan Cement Company Limited is engaged in production and sale of clinker, ordinary portland and sulphate resistant cement.
18.4.2 Nishat Paper Products Company Limited is engaged in the manufacture and sale of paper products and packaging material.
18.4.3 Nishat Dairy (Private) Limited is engaged in the business of production of raw milk.
18.4.4 The principle activities of Lalpir Power Limited are to own, operate and maintain an oil fired power station having gross capacity of 362 MW in Mehmood Kot, Muzaffargarh, Punjab, Pakistan.
18.4.5 The principle activities of Pakgen Power Limited are to own, operate and maintain an oil fired power station having gross capacity of 365 MW in Mehmood Kot, Muzaffargarh, Punjab, Pakistan.
18.4.6 The principle activity of Nishat Energy Limited is to build, own, operate and maintain coal power station having gross capacity of 660 MW with net estimated generation capacity of 600 MW at Mouza Ameer Pur, Rahim Yar Khan, Punjab, Pakistan.
18.4.7 The principle activity of Nishat Hotels and Properties Limited is to establish and manage shopping mall and hotel operations in Pakistan.
187

18.4.8 The principle activity of Hyundai Nishat Motor (Private) Limited is to import, assembly and distribution of both passenger and commercial category automobiles.
18.4.9 The principle activity of Sanifa Agri Services Limited is to produce and market high quality cotton seeds in Pakistan.
18.4.10 The principle activity of Security General Insurance Company Limited is to provide general insurance services in spheres of fire, marine, motor and miscellaneous.
18.4.11 The principle activity of Nishat Sutas Dairy Limited is to manufacture, produce, distribute, market, acquire, process, package, sell, resell, import, export, preserve, deep freeze and otherwise deal in all types and kinds of milk and dairy based products.
*No quoted price available.
 188 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

19 LONG TERM LOANS

Considered good:
Executives - secured 19.1 & 19.2 441,035 253,434
Other employees - secured 19.2 270,603 247,045
711,638 500,479

Less: Current portion shown under current assets 23

Executives 97,851 63,365
Other employees 81,246 75,479
179,097 138,844
532,541 361,635

19.1 Maximum aggregate balance due from executives at the end of any month during the year was
Rupees 445.436 million (2020: Rupees 254.502 million).

19.2 These represent house construction and motor vehicle loans given to executives and employees of the
Holding Company, Nishat Linen (Private) Limited - Subsidiary Company and Nishat Power Limited -
Subsidiary Company and are secured against balance to the credit of employee in the provident fund
trusts of the respective Group companies and against registration of cars in the joint name of the
respective Group companies and the employee. These are recoverable in equal monthly installments.
Interest charged during the year range from 0% to 4% (2020: 0% to 4%) per annum on the balance
outstandings.

19.3 The fair value adjustment in accordance with the requirements of IFRS 9 'Financial Instruments' arising in
respect of staff loans is not considered material and hence not recognized.

20 STORES, SPARE PARTS AND LOOSE TOOLS

2021 2020
Note (Rupees in thousand)

Stores 20.1 1,798,256 1,599,830

Spare parts 1,497,981 1,369,757
Loose tools 15,618 14,171
3,311,855 2,983,758
Less: Provision for slow moving, obsolete and damaged store items 20.2 (4,141) (4,218)
3,307,714 2,979,540

20.1 This includes stores in transit of Rupees 276.755 million (2020: Rupees 215.881 million).

20.2 Provision for slow moving, obsolete and damaged store items

2021 2020
Note (Rupees in thousand)

Balance as on 01 July 4,218 4,224

Less: Provision reversed during the year 35 (77) (6)
Balance as on 30 June 4,141 4,218
 Annual Report 2021 189

2021 2020
Note (Rupees in thousand)

21 STOCK IN TRADE

Raw materials 13,129,823 16,750,509

Work in process 21.2 3,044,441 2,244,439

Finished goods 21.3 & 21.5 9,641,809 9,393,252

Less: Provision for slow moving and obsolete stocks (21,065) (21,065)
9,620,744 9,372,187
25,795,008 28,367,135

21.1 Stock in trade of Rupees 605.335 million (2020: Rupees 654.768 million) is being carried at net realizable
value.

21.2 This includes stock of Rupees 17.961 million (2020: Rupees 11.612 million) sent to outside parties for
processing.

21.3 Finished goods include stock in transit of Rupees 2,215.892 million (2020: Rupees 1,384.397 million).

21.4 The aggregate amount of write-down of inventories to net realizable value recognized as an expense
during the year was Rupees 22.249 million (2020: Rupees 22.364 million).

21.5 Finished goods include stock of Rupees 705.532 million (2020: Rupees 558.751 million) which is in the
possession of stockists of Nishat Linen (Private) Limited - Subsidiary Company.

2021 2020
Note (Rupees in thousand)

22 TRADE DEBTS

Considered good:

Secured 20,013,100 19,237,356

Unsecured:
- Related parties 22.2, 22.3 & 22.4 6,851 48,124
- Other 22.5 7,119,480 4,349,703
27,139,431 23,635,183
Less: Allowance for expected credit losses 22.7 (28,237) (30,590)
27,111,194 23,604,593

22.1 Types of counterparties

Export
Corporate 1,029,888 800,812
Other 3,039,868 1,801,713
4,069,756 2,602,525

Local
Corporate 22,467,750 20,212,349
Other 601,925 820,309
23,069,675 21,032,658
27,139,431 23,635,183
 190 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2021 2020
(Rupees in thousand)

22.2 This represents amount due from following related parties:

Adamjee Insurance Company Limited - associated company 16 594

Hyundai Nishat Motor (Private) Limited - associated company 547 2,110
Adamjee Life Assurance Company Limited - associated company 18 1
Nishat Hotels and Properties Limited - associated company 2,926 4,729
MCB Bank Limited - associated company 70 104
Nishat (Chunian) Limited - related party 3,274 40,586
6,851 48,124

22.3 The maximum aggregate amount receivable from related parties at the end of any month during the year
was as follows:
2021 2020
(Rupees in thousand)

Adamjee Insurance Company Limited - associated company 234 595

Hyundai Nishat Motor (Private) Limited - associated company 4,833 7,071
Adamjee Life Assurance Company Limited - associated company 72 130
Nishat Hotels and Properties Limited - associated company 1,327 6,491
MCB Bank Limited - associated company 1,190 1,559
MCB Islamic Bank Limited - related party - 679
Nishat (Chunian) Limited - related party 36,736 40,586

22.4 As at 30 June 2021, trade debts due from related parties amounting to Rupees 0.543 million (2020:
Rupees 45.976 million) were pas due but not impaired. The ageing analysis of these trade debts is as
follows:

2021 2020
(Rupees in thousand)

Upto 1 month 525 45,588

1 to 6 months 16 388
more than 6 months 2 -
543 45,976

22.5 Trade receivables of Nishat Power Limited - Subsidiary Company from CPPA-G are considered good.
These are secured by a guarantee from the Government of Pakistan under the Implementation
Agreement and are in the normal course of business and interest free, however, a delayed payment
mark-up at the rate of three months KIBOR plus 4.5% per annum is charged in case the amounts are not
paid within due dates. The rate of delayed payment mark-up charged during the year on outstanding
amounts ranged from 11.53% to 18.42% (2020: 10.64% to 18.42%) per annum. Trade debts include
unbilled receivables of Rupees 3,533.134 million (2020: Rupees 2,740.517 million).

22.6 Trade debts of Nishat Power Limited - Subsidiary Company - prior to the signing of the Agreements, as
referred to in note 1(a) to these consolidated financial statements include an amount of Rupees 816.033
million relating to capacity revenue not acknowledged by NTDC/CPPA-G as the plant was not fully
available for power generation. However, the sole reason of this under-utilization of plant capacity was
non-availability of fuel owing to non-payment by NTDC/CPPA-G.
 Annual Report 2021 191

Since management considered that the primary reason for claiming these payments was that plant was
available, however, it could not generate electricity due to non-payment by NTDC/CPPA-G, therefore,
management believed that Nishat Power Limited - Subsidiary Company cannot be penalized in the form
of payment deductions due to NTDC/CPPA-G’s default of making timely payments under the PPA.
Hence, Nishat Power Limited - Subsidiary Company took up this issue in consultation with
NTDC/CPPA-G and appointed an Expert for dispute resolution under the PPA.

On 15 August 2015, the Expert gave his determination whereby the aforesaid amount was determined to
be payable to Nishat Power Limited - Subsidiary Company by NTDC/CPPA-G. Pursuant to the Expert’s
determination, Nishat Power Limited - Subsidiary Company demanded the payment of the aforesaid
amount of Rupees 816.033 million from NTDC/CPPA-G. The Subsidiary Company filed a request for
arbitration in the London Court of International Arbitration ('LCIA'), whereby an Arbitrator was appointed.

On 29 October 2017, the Arbitrator declared his Final Award whereby he ordered NTDC/CPPA-G to pay
to Nishat Power Limited - Subsidiary Company: i) Rupees 816.033 million pursuant to Expert’s
determination; ii) Rupees 189.385 million being Pre award interest; iii) Rupees 9.203 million for breach of
arbitration agreement; iv) Rupees 1.684 million and USD 612,310 (equivalent to Rupees 96.623 million)
for Nishat Power Limited - Subsidiary Company's cost of proceedings; v) GBP 30,157 (equivalent to
Rupees 6.592 million) for Nishat Power Limited - Subsidiary Company’s LCIA cost of Arbitration and vi)
Interest at KIBOR + 4.5% compounded semi-annually from the date of Final Award until payment of these
amounts by NTDC/CPPA-G (“the Final Award”) that works out to Rupees 504.044 million up to 30 June
2021. Thereafter, on 29 November 2017, Nishat Power Limited - Subsidiary Company filed an application
before Lahore High Court for implementation / enforcement of Final Award that is pending adjudication.
On prudence basis, the amounts other than the principal of Rupees 816.033 million were not recognised
in these consolidated financial statements.

On 12 February 2021, as part of the PPA Amendment Agreement as referred to in note 1(a) to these
consolidated financial statements, the CPPA-G and Nishat Power Limited - Subsidiary Company
acknowledged that the dispute relating to withheld capacity payments of Rupees 816.033 million, which
was awarded by the London Court of International Arbitration, has now been settled through the
extended disputed period of 68 days which shall be treated as an "Other Force Majeure Event" under the
PPA. Further, CPPA-G agreed to make certain payments to Nishat Power Limited - Subsidiary Company,
subject to certain terms, as compensation of the withheld capacity payments. In return, Nishat Power
Limited - Subsidiary Company agreed to forgo certain amounts declared under the Final Award as
enumerated above. Further, subject to fulfillment of certain conditions, Nishat Power Limited - Subsidiary
Company and CPPA-G agreed to file a joint application before the Lahore High Court for the withdrawal
of the enforcement proceedings before the Honorable Lahore High Court.

Pursuant to the provisions of PPA Amendment Agreement as mentioned above, out of the recongized
receivable of Rupees 816.033 million, Nishat Power Limited - Subsidiary Company has assessed that
amounts aggregating Rupees 141.47 million are no longer recoverable and therefore, such amounts have
been written off during the year in other expenses. On account of the remaining receivable, amounts
aggregating Rupees 328.691 million have been duly verified by the CPPA-G for the year.

2021 2020
(Rupees in thousand)

22.7 Allowance for expected credit losses

Opening balance 30,590 28,453

(Less) / Add: (Reversal of allowance) / allowance for
expected credit losses (2,353) 2,137
28,237 30,590
 192 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

23 LOANS AND ADVANCES

Considered good:

Employees - interest free:

– Executives 990 646
– Other employees 10,801 13,188
11,791 13,834
Current portion of long term loans 19 179,097 138,844
Advances to suppliers 23.1 449,356 251,714
Letters of credit 4,586 2,575
Other advances 23.2 445,145 312,792
1,089,975 719,759

Considered doubtful:

Others 108 108

Less: Provision for doubtful debts 108 108
- -
1,089,975 719,759

23.1 These include Rupees 3.533 million (2020: Rupees Nil) due from D.G. Khan Cement Company Limited -
associated company. This is neither past due nor impaired. Maximum aggregate amount receivable at the
end of any month during the year was Rupees 3.533 million (2020: Rupees Nil).

23.2 These include Rupees 104.300 million (2020: Rupees 45.000 million) advanced to Sanifa Agri Services
Limited - associated company. This is neither past due nor impaired. The maximum aggregate amount
receivable at the end of any month during the year was 104.300 million (2020: Rupees 45.000 million).

2021 2020
(Rupees in thousand)

24 ADVANCE INCOME TAX - NET

Advance income tax 2,235,684 1,938,825

Provision for taxation (1,181,385) (1,286,087)
1,054,299 652,738

25 SHORT TERM DEPOSITS AND PREPAYMENTS

Deposits 59,409 61,543

Prepayments 132,262 122,858
191,671 184,401
 Annual Report 2021 193

2021 2020
Note (Rupees in thousand)

26 OTHER RECEIVABLES

Considered good:

Export rebate and claims 124,772 167,730

Duty drawback 1,218,043 576,897
Sales tax refundable 3,307,061 3,306,544
Fair value of forward exchange contracts 8,672 345
Workers' profit participation fund receivable 26.1 583,636 450,280
Workers' welfare fund receivable 151,035 98,852
Miscellaneous receivables 38,136 51,619
5,431,355 4,652,267

26.1 Under section 9.3(a) of the Power Purchase Agreement (PPA) between Nishat Power Limited - Subsidiary
Company and NTDCL, payments to Workers' Profit Participation Fund are recoverable from NTDCL as a
pass through item.

27 ACCRUED INTEREST

27.1 This includes due from MCB Bank Limited - associated company amounting to Rupees 11.564 million
(2020: Rupees 0.094 million) and from Sanifa Agri Services Limited - associated company amounting to
Rupees 2.095 million (2020: Rupees 1.432 million).

27.2 The maximum aggregate amount due from MCB Bank Limited - associated company and Sanifa Agri
Services Limited - associated company at the end of any month during the year was Rupees 11.904
million (2020: Rupees 0.094 million) and Rupees 2.095 million (2020: Rupees 1.432 million) respectively.

28 SHORT TERM INVESTMENT

28.1 This represented investment of Nishat Power Limited - subsidiary company amounting to Rupees Nil
(2020: Rupees 17.677 million) in 3 month Government Treasury Bills which borne mark-up at 7.80% per
annum.

2021 2020
Note (Rupees in thousand)

29 CASH AND BANK BALANCES

With banks:
On current accounts 29.1 & 29.2
Including US$ 233,398 (2020: US$ 82,398) and UAE
Dirhams 13,381,880 (2020: UAE Dirhams 8,604,600) 1,209,586 557,158
Term deposit receipts 29.1 & 29.3 5,104,500 149,396
On PLS saving accounts 29.1 & 29.4
Including US$ 117 (2020: US$ 117) 34,281 17,459
6,348,367 724,013
Cash in hand
Including UAE Dirhams 485,897 (2020: UAE Dirhams 188,154) 49,631 34,714
6,397,998 758,727
 194 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
29.1 Cash at banks includes balance of Rupees 5,128.271 million (2020: Rupees 31.700 million) with MCB
Bank Limited - associated company.

29.2 Cash at banks includes balance of Rupees 0.705 million (2020: Rupees 0.077 million) with MCB Islamic
Bank Limited - related party.

29.3 These represent term deposits with banking companies having maturity period of upto one month and
carry profit at the rates ranging from 5.20% to 7.20% (2020: 6.40% to 6.50%) per annum.

29.4 Rate of profit on Pak Rupees bank deposits ranges from 5.50% to 7.00% (2020: 6.29% to 14.00%) per
annum.

2021 2020
Note (Rupees in thousand)

30 REVENUE

Revenue from contracts with customers:

Export sales 47,467,270 45,725,446
Local sales 30.1 55,599,701 42,039,527
Processing income 636,300 338,590
103,703,271 88,103,563
Export rebate 228,790 199,090
Duty drawback 795,397 407,177
104,727,458 88,709,830

30.1 Local sales

Sales 30.1.1 66,349,789 50,174,951

Less: Sales tax 8,255,240 5,774,939
Less: Discount 2,494,848 2,360,485
55,599,701 42,039,527

30.1.1 These include sale of Rupees 10,063.857 million (2020: Rupees 2,977.374 million) made to
direct exporters against standard purchase orders (SPOs). Further, local sales includes waste
sales of Rupees 2,738.545 million (2020: Rupees 1,818.936 million).
30.2 The amount of Rupees 561.746 million included in contract liabilities (Note 9) at 30 June 2020 has been recognised as revenue in 2021 (2020: Rupees 246.635 million).

30.3 Disaggregation of revenue from contracts with customers

In the following table, revenue from contracts with customers is disaggregated by primary geographical market, major products and service lines and timing of revenue recognition:

Spinning Weaving Dyeing Home Textile Garments Power Generation Room Rental Other Hotel Total - Group
Description and Terry Services Ancillary Services
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
(Rupees in thousand)

Region

Europe 280,073 417,371 8,297,897 8,546,070 407,566 379,909 9,163,902 6,796,648 4,259,144 4,254,270 - - - - - - 22,408,582 20,394,268
United States of America and Canada 111,351 174,340 666,998 950,993 14,967 19,056 3,272,902 1,942,770 3,600,589 1,825,549 - - - - - - 7,666,807 4,912,708
Asia, Africa, Australia 4,299,139 4,633,080 2,045,855 2,059,457 7,765,354 11,387,635 3,968,523 2,646,979 337,197 297,586 - - - - - - 18,416,068 21,024,737
Pakistan 25,695,284 16,266,260 5,585,355 2,825,505 3,456,312 2,899,729 9,554,104 8,294,946 167,945 128,858 11,486,321 11,781,598 246,322 154,848 44,358 26,373 56,236,001 42,378,117
30,385,847 21,491,051 16,596,105 14,382,025 11,644,199 14,686,329 25,959,431 19,681,343 8,364,875 6,506,263 11,486,321 11,781,598 246,322 154,848 44,358 26,373 104,727,458 88,709,830

Timing of revenue recognition

Products and services transferred at a point in time 30,385,847 21,491,051 16,596,105 14,382,025 11,644,199 14,686,329 25,959,431 19,681,343 8,364,875 6,506,263 11,486,321 11,781,598 246,322 154,848 44,358 26,373 104,727,458 88,709,830
Annual Report 2021

Products and services transferred over time - - - - - - - - - - - - - - - - - -

30,385,847 21,491,051 16,596,105 14,382,025 11,644,199 14,686,329 25,959,431 19,681,343 8,364,875 6,506,263 11,486,321 11,781,598 246,322 154,848 44,358 26,373 104,727,458 88,709,830
Major products / service lines

Yarn 29,621,073 20,789,327 - - - - - - - - - - - - - - 29,621,073 20,789,327

Comber Noil 233,809 315,694 - - - - - - - - - - - - - - 233,809 315,694
Grey Cloth - - 16,596,105 14,382,025 - - 1,199 253 - - - - - - - - 16,597,304 14,382,278
Processed Cloth - - - - 11,644,199 14,686,329 22,645,199 5,918,214 - - - - - - - - 34,289,398 20,604,543
Cosmetics - - - - - - 159,388 89,154 - - - - - - - - 159,388 89,154
Waste 530,965 386,030 - - - - 121,728 67,150 - - - - - - - - 652,693 453,180
Others - - - - - - 249,155 132,657 - - - - - - - - 249,155 132,657
Made Ups - - - - - - 1,759,328 13,473,915 - - - - - - - - 1,759,328 13,473,915
Garments - - - - - - - - 8,364,875 6,506,263 - - - - - - 8,364,875 6,506,263
Towels and Bath Robe - - - - - - 1,023,434 - - - - - - - - - 1,023,434 -
Electricity - - - - - - - - - - 11,486,321 11,781,598 - - - - 11,486,321 11,781,598
Room Rental Services - - - - - - - - - - - - 246,322 154,848 - - 246,322 154,848
Other Hotel Ancillary Services - - - - - - - - - - - - - - 44,358 26,373 44,358 26,373
30,385,847 21,491,051 16,596,105 14,382,025 11,644,199 14,686,329 25,959,431 19,681,343 8,364,875 6,506,263 11,486,321 11,781,598 246,322 154,848 44,358 26,373 104,727,458 88,709,830

30.4 Revenue is recognised at point in time as per the terms and conditions of underlying contracts with customers.
195
 196 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

31 COST OF SALES

Raw materials consumed 56,873,417 45,987,292

Processing charges 782,206 742,535
Salaries, wages and other benefits 31.1 8,393,421 7,218,329
Stores, spare parts and loose tools consumed 7,822,218 6,971,855
Packing materials consumed 1,936,572 1,439,156
Repair and maintenance 490,681 413,155
Fuel and power 6,131,769 6,034,186
Insurance 341,551 326,699
Royalty 31.2 - 7,800
Other factory overheads 762,165 734,800
Depreciation and amortization 15.1.2 3,580,811 3,455,552
87,114,811 73,331,359

Work-in-process

Opening stock 2,244,439 2,218,560

Closing stock (3,044,441) (2,244,439)
(800,002) (25,879)
Cost of goods manufactured 86,314,809 73,305,480

Finished goods

Opening stock 9,393,252 6,909,811

Closing stock (9,641,809) (9,393,252)
(248,557) (2,483,441)
86,066,252 70,822,039

31.1 Salaries, wages and other benefits include provident fund contributions of Rupees 235.457 million (2020:
Rupees 221.109 million) and Rupees 0.788 million (2020: Rupees 0.362 million) in respect of provision for
compensated absences.

31.2 This represents the amount of royalty being paid to Saint James's Club Limited, London.
 Annual Report 2021 197

2021 2020
Note (Rupees in thousand)

32 DISTRIBUTION COST

Salaries and other benefits 32.1 1,034,984 925,254

Outward freight and handling 1,929,363 1,679,658
Sales promotion 902,095 653,834
Commission to selling agents 774,117 666,384
Royalty 32.2 84,940 71,843
Fuel cost 140,160 178,411
Travelling and conveyance 30,258 138,172
Rent, rates and taxes 20,427 61,521
Postage and telephone 103,989 133,679
Insurance 25,355 27,666
Vehicles’ running 24,857 20,029
Entertainment 19,032 14,594
Advertisement 266,671 502,981
Electricity and gas 101,838 120,065
Printing and stationery 5,641 5,459
Repair and maintenance 217,936 332,515
Fee and subscription 2,630 6,246
Depreciation on right-of-use assets 17.1 717,041 504,552
Depreciation 15.1.2 54,942 50,239
6,456,276 6,093,102

32.1 Salaries and other benefits include provident fund contributions of Rupees 48.239 million (2020: Rupees
43.931 million).

32.2 Particulars of royalty paid during the year are as follows:

Relationship with the

2021 2020
Name of the company Registered address Group or directors
Related / Other (Rupees in thousand)

American and Efird LLC 22 American Street, Other 71,110 52,312

Mount Holly, North
Carolina, 28120.
 198 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

33 ADMINISTRATIVE EXPENSES

Salaries and other benefits 33.1 1,425,800 1,315,633

Vehicles’ running 56,088 53,359
Travelling and conveyance 136,397 158,229
Rent, rates and taxes 40,018 34,229
Insurance 19,829 20,094
Entertainment 33,605 27,786
Legal and professional 30,624 60,479
Auditors’ remuneration 33.2 16,868 15,556
Advertisement 594 1,805
Postage and telephone 25,197 25,396
Electricity and gas 25,040 20,630
Printing and stationery 26,578 23,077
Repair and maintenance 61,115 45,994
Fee and subscription 19,540 18,176
Depreciation on right-of-use assets 17.1 6,549 160,093
Depreciation 15.1.2 190,069 179,656
Miscellaneous 68,164 63,012
2,182,075 2,223,204

33.1 Salaries and other benefits include provident fund contributions of Rupees 53.647 million (2020: Rupees
50.105 million), Rupees 0.599 million (2020: Rupee 0.316 million) in respect of provision for compensated
absences and Rupees 3.260 million (2020: Rupees 3.374 million) in respect of retirement benefit -
gratuity.

2021 2020
(Rupees in thousand)

33.2 Auditors' remuneration

Riaz Ahmad and Company

Audit fee 6,090 5,631

Half yearly review 1,057 961
Other certifications 155 155
Reimbursable expenses 195 177
7,497 6,924

A.F. Ferguson and Company

Statutory audit fee 2,640 2,490
Half yearly review 892 875
Tax services 1,926 495
Other certification services 155 380
Reimbursable expenses 171 332
5,784 4,572

Crowe Mak
Audit fee 3,501 3,964
Reimbursable expenses 86 96
3,587 4,060
16,868 15,556
 Annual Report 2021 199

2021 2020
Note (Rupees in thousand)

34 OTHER EXPENSES

Workers’ profit participation fund 398,631 204,045

Trade debts written off 163,536 2,918
Impairment loss on capital work-in-progress - 4,773
Impact of de-recognition of financial instrument carried
at amortized cost - 4,106
Workers' welfare fund 32,400 -
Allowance for expected credit losses - 2,137
Donations 34.1 & 34.2 3,200 321
597,767 218,300

34.1 The name of donee to whom donation amount exceeded Rupees 1 million (2020: Nil) is as follows:

Pakistan Textile Council 34.3 2,500 -

34.2 There is no interest of any director or his spouse in donees’ fund.

34.3 Nishat Mills Limited - Holding Company is a member of Pakistan Textile Council (a company set up under
Section 42 of the Companies Act, 2017).

2021 2020
Note (Rupees in thousand)

35 OTHER INCOME

Income from financial assets

Dividend income 35.1 1,750,744 1,718,515
Profit on deposits with banks 127,631 106,923
Net exchange gain 25,917 123,339
Reversal of allowance for expected credit losses 2,353 -
Interest income on loan to associated company 6,290 3,132
Gain on liquidation of subsidiary - 66,350
1,912,935 2,018,259

Income from non-financial assets

Gain on sale of property, plant and equipment 204,237 20,273
Scrap sales 291,815 210,073
Rental income 103,254 86,896
Gain on initial recognition of GIDC payable at amortized cost 52,766 -
Rent concessions 90,344 -
Gain on termination of leases 9,983 -
Reversal of provision for slow moving, obsolete and damaged
store items 20.2 77 6
Liabilities written back 10,990 2,488
Others 55,674 13,443
819,140 333,179
2,732,075 2,351,438
 200 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
2021 2020
Note (Rupees in thousand)

35.1 Dividend income

From related party / associated companies

MCB Bank Limited 1,716,298 1,584,275

Nishat (Chunian) Limited 32,689 81,723
Adamjee Insurance Company Limited 257 257
Security General Insurance Company Limited - 51,131
1,749,244 1,717,386

Others

Pakistan Petroleum Limited 1,500 1,000

Alhamra Islamic Stock Fund - 129
1,500 1,129
1,750,744 1,718,515

36 FINANCE COST

Mark-up on:

Long term financing 288,902 552,175

Short term borrowings 950,833 1,811,486
Mark-up on lease liabilities 244,750 264,457
Interest on workers’ profit participation fund 9.4 179 4,124
Adjustment due to impact of IFRS 9 on GIDC 8.2 73,562 -
Bank charges and commission 323,226 325,612
1,881,452 2,957,854

37 TAXATION

Current - for the year 1,181,385 1,286,087

Deferred 740,750 (408,152)
Prior year adjustment (3,498) (38,829)
1,918,637 839,106

38 EARNINGS PER SHARE - BASIC AND DILUTED

There is no dilutive effect on the basic earnings per share which is based on:

2021 2020

Profit attributable to ordinary shareholders of

Holding Company (Rupees in thousand) 9,896,748 6,352,753

Weighted average number of ordinary shares of

Holding Company (Numbers) 351,599,848 351,599,848

Earnings per share (Rupees) 28.15 18.07

 Annual Report 2021 201

2021 2020
Note (Rupees in thousand)

39 CASH GENERATED FROM OPERATIONS

Profit before taxation 13,124,233 9,610,861

Adjustments for non-cash charges and other items:

Depreciation and amortization 3,825,822 3,685,447

Depreciation on right-of-use assets 723,590 664,645
Impairment loss on capital work-in-progress - 4,773
Impact of de-recognition of financial instrument carried at amortized cost - 4,106
Gain on liquidation of subsidiary - (66,350)
Trade debts written off 163,536 2,918
Reversal of provision for slow moving, obsolete and damaged store items (77) (6)
(Reversal of allowance) / allowance for expected credit losses (2,353) 2,137
Net exchange gain (25,917) (123,339)
Gain on sale of property, plant and equipment (204,237) (20,273)
Dividend income (1,750,744) (1,718,515)
Profit on deposits with banks (127,631) (106,923)
Interest income on loan to associated company (6,290) (3,132)
Share of profit from associates (2,848,522) (864,092)
Provision for accumulated compensated absences 1,388 677
Adjustment due to deemed disposal of equity accounted investee (41,622) -
Liabilities written back (10,990) (2,488)
Finance cost 1,881,452 2,957,854
Gain on initial recognition of GIDC payable at amortized cost (110,431) -
Rent concessions (90,344) -
Gain on termination of leases (9,983) -
Working capital changes 39.1 (889,135) (3,903,079)
13,601,745 10,125,221

39.1 Working capital changes

(Increase) / decrease in current assets:

- Stores, spare parts and loose tools (328,097) 928,557
- Stock in trade 2,572,127 (3,998,249)
- Trade debts (3,600,208) (1,799,160)
- Loans and advances (329,963) 135,144
- Short term deposits and prepayments (7,270) 45,734
- Other receivables (770,761) (954,056)
(2,464,172) (5,642,030)
Increase in trade and other payables 1,575,037 1,738,951
(889,135) (3,903,079)
 202 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
39.2 Reconciliation of movement of liabilities to cash flows arising from financing activities.

2021

Liabilities from financing activities

Exchange
Long term Lease Short term Unclaimed
translation Total
financing liabilities borrowings dividend reserve
(Rupees in thousand)

Balance as at 01 July 2020 10,136,154 2,266,071 24,080,517 111,267 224,659 36,818,668

Lease liabilities recognized - 342,406 - - - 342,406
Repayment of lease liabilities - (794,088) - - - (794,088)
Financing obtained 6,744,988 - - - - 6,744,988
Repayment of financing (1,756,252) - - - - (1,756,252)
Dividend declared - - - 1,579,855 - 1,579,855
Dividend paid - - - (1,575,625) - (1,575,625)
Short term borrowings - net - - (1,695,361) - - (1,695,361)
Exchange differences on translation
of net investments in
subsidiary companies - - - - (37,902) (37,902)
Other changes - non-cash (176,589) - - - - (176,589)
Interest accrued on lease liabilities - 244,750 - - - 244,750
Impact of lease modification - 180,387 - - - 180,387
Impact of rent concessions - (90,344) - - - (90,344)
Impact of lease termination - (79,390) - - - (79,390)
Currency retranslation - (20,008) - - - (20,008)
Balance as at 30 June 2021 14,948,301 2,049,784 22,385,156 115,497 186,757 39,685,495

2020

Liabilities from financing activities

Exchange
Long term Lease Short term Unclaimed
translation Total
financing liabilities borrowings dividend reserve
(Rupees in thousand)

Balance as at 01 July 2019 10,086,021 - 24,402,574 114,673 219,168 34,822,436

Lease liabilities recognized - 2,613,840 - - - 2,613,840
Repayment of lease liabilities - (347,769) - - - (347,769)
Financing obtained 4,454,967 - - - - 4,454,967
Repayment of financing (4,404,834) - - - - (4,404,834)
Dividend declared - - - 1,582,221 - 1,582,221
Dividend paid - - - (1,585,627) - (1,585,627)
Short term borrowings - net - - (322,057) - - (322,057)
Exchange differences on translation
of net investments in
subsidiary companies - - - - 5,491 5,491
Balance as at 30 June 2020 10,136,154 2,266,071 24,080,517 111,267 224,659 36,818,668

40 EVENTS AFTER THE REPORTING PERIOD

The Board of Directors of the Nishat Mills Limited - Holding Company has proposed a cash dividend for the year ended 30 June
2021 of Rupees 4.00 per share (2020: Rupees 4.00 per share) at their meeting held on 20 September, 2021. The Board of
Directors also proposed to transfer Rupees 10,524 million (2020: Rupees 4,890 million) from un-appropriated profit to general
reserve. However, these events have been considered as non-adjusting events under IAS 10 'Events after the Reporting Period'
and have not been recognized in these consolidated financial statements.
 Annual Report 2021 203

41 REMUNERATION OF CHIEF EXECUTIVE OFFICER, DIRECTOR AND EXECUTIVES

The aggregate amount charged in these consolidated financial statements for remuneration including all benefits
to Chief Executive Officer, Director and Executives of the Holding Company is as follows:

Chief Executive Officer Director Executives

2021 2020 2021 2020 2021 2020
(Rupees in thousand)

Managerial remuneration 37,189 32,503 - 11,163 683,563 554,058

Allowances
Cost of living allowance - - - 1 1,023 781
House rent 13,521 13,001 - 216 174,176 148,293
Conveyance - - - - 904 880
Medical 3,380 3,250 - 912 57,482 47,939
Utilities - - - 3,385 75,673 61,649
Special allowance - - - 2 646 529

Contribution to provident fund trust - - - 871 56,650 47,016

Leave encashment - - - - 18,091 12,867
54,090 48,754 - 16,550 1,068,208 874,012

Number of persons 1 1 Note 41.4 Note 41.4 261 222

41.1 Chief Executive Officer and certain executives of the Holding Company are provided with Company
maintained vehicles and certain executives are also provided with free housing facility along with utilities.

41.2 Aggregate amount charged in these consolidated financial statements for meeting fee to five directors
(2020: five directors) of the Holding Company was Rupees 1.490 million (2020: Rupees 1.080 million).

41.3 No remuneration was paid to non-executive directors of the Holding Company.

41.4 This represents remuneration including all benefits paid to a director for the period from July 2019 to
March 2020. As on the reporting date, there are no paid directors of the Holding Company.
 204 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
42 TRANSACTIONS WITH RELATED PARTIES

The related parties comprise associated undertakings, other related companies, post employment benefit plan
and key management personnel. The Group in the normal course of business carries out transactions with
various related parties. Detail of transactions with related parties, other than those which have been specifically
disclosed elsewhere in these consolidated financial statements are as follows:

2021 2020
(Rupees in thousand)

Associated companies

Investment made 241,476 412,800

Short term loans made 69,300 45,000
Purchase of goods and services 781,080 297,713
Repayment of short term loans 10,000 -
Sharing of expenses 8,100 11,082
Sale of goods and services 282,711 77,136
Rental income 6,035 1,228
Purchase of operating fixed assets 64,227 -
Sale of operating fixed assets 67,270 819
Rent paid 80,092 78,920
Dividend paid 122,105 121,487
Insurance premium paid 487,777 437,800
Interest income 40,647 9,401
Insurance claims received 72,620 56,136
Finance cost 8,230 36,250

Other related parties

Dividend income 32,689 81,723

Purchase of goods and services 2,440,916 2,961,120
Sale of goods and services 536,734 368,302
Finance cost - 637
Group’s contribution to provident fund trusts 338,947 316,254
 Annual Report 2021 205

42.1 Detail of compensation to key management personnel comprising of chief executive officer, directors and executives
is disclosed in note 41.

42.2 Following are the related parties with whom the Group had entered into transactions or have arrangements /
agreements in place:

Transactions
entered or
agreements and / or
arrangements in Percentage of
Name of the related party Basis of relationship
place during the shareholding
financial year ended
2021 2020

Nishat Agriculture Farming

(Private) Limited Common directorship No Yes None
Nishat Dairy (Private) Limited Common directorship and shareholding Yes Yes 12.24
Nishat Sutas Dairy Limited Common directorship and shareholding Yes Yes 34.46
Nishat Hotels and Properties
Limited Common directorship and shareholding Yes Yes 6.08
Nishat (Raiwind) Hotels and
Properties Limited Common directorship No No None
Nishat (Aziz Avenue) Hotels
and Properties Limited Common directorship No Yes None
Security General Insurance
Company Limited Common directorship and shareholding Yes Yes 15.02
Nishat Energy Limited Shareholding No No 37.75
Pakgen Power Limited Common directorship and shareholding Yes Yes 27.55
Lalpir Power Limited Common directorship and shareholding Yes Yes 28.80
Nishat Paper Products
Company Limited Common directorship and shareholding No No 25.00
Pakistan Aviators and
Aviation (Private) Limited Common directorship Yes Yes None
Nishat Developers
(Private) Limited Common directorship Yes Yes None
Nishat Real Estates
Development Company
(Private) Limited Common directorship No No None
Hyundai Nishat Motor
(Private) Limited Common directorship and shareholding Yes Yes 12.00
D.G. Khan Cement Company
Limited Common directorship and shareholding Yes Yes 31.40
Adamjee Life Assurance
Company Limited Common directorship Yes Yes None
Adamjee Insurance
Company Limited Common directorship and shareholding Yes Yes 0.03
MCB Bank Limited Common directorship and shareholding Yes Yes 7.43
MCB Islamic Bank Limited Wholly owned subsidiary of
associated company Yes Yes None
Nishat (Chunian) Limited Shareholding Yes Yes 13.61
Nishat Agrotech Farms
Supplies (Private) Limited Common directorship No No None
Nishat Chunian Power Executive of the Holding Company is
Limited (NCPL) appointed as Director on the Board of NCPL No No None
Sanifa Agri Services Limited Associated Company Yes Yes None
Employees Provident
Fund Trusts Post-employment benefit plans Yes Yes None
 206 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
43 PROVIDENT FUNDS

43.1 Nishat Mills Limited - Holding Company and Nishat Linen (Private) Limited - Subsidiary Company

As at the reporting date, the Nishat Mills Employees Provident Fund Trust is in the process of regularizing
its investments in accordance with section 218 of the Companies Act, 2017 and the regulations
formulated for this purpose by Securities and Exchange Commission of Pakistan.

43.2 Nishat Power Limited - Subsidiary Company

The investments by the provident fund in collective investment schemes, listed equity and debt securities
have been made in accordance with the provisions of section 218 of the Companies Act, 2017 and the
conditions specified thereunder.

43.3 Nishat Hospitality (Private) Limited - Subsidiary Company

The investments by the provident fund have been made in accordance with the provisions of section 218
of the Companies Act and the Employees Contributory Funds (Investment in Listed Securities)
Regulations, 2018 ('Regulations') formulated for this purpose except for:

-Investment in listed debt securities is in excess of 50% of the size of the fund.

2021 2020

44 NUMBER OF EMPLOYEES

Number of employees as on 30 June 23,907 21,577

Average number of employees during the year 22,732 21,876

 Annual Report 2021 207

2021 2020
(Figures in thousand)

45 PLANT CAPACITY AND ACTUAL PRODUCTION

a) Holding Company - Nishat Mills Limited

Spinning
100 % plant capacity converted to 20s count based
on 3 shifts per day for 1,095 shifts (2020: 1,029 shifts) (Kgs.) 90,821 86,111

Actual production converted to 20s count based

on 3 shifts per day for 1,095 shifts (2020: 1,029 shifts) (Kgs.) 79,689 65,466

Weaving
100 % plant capacity at 50 picks based on 3 shifts
per day for 1,095 shifts (2020: 1,029 shifts) (Sq.Mtr) 309,458 289,273

Actual production converted to 50 picks based

on 3 shifts per day for 1,095 shifts (2020: 1,029 shifts) (Sq.Mtr) 295,932 275,483

Dyeing and Finishing

Production capacity for 3 shifts per day for 1,095 shifts
(2020: 1,029 shifts) (Mtr) 56,400 52,856

Actual production on 3 shifts per day for 1,095 shifts

(2020: 1,029 shifts) (Mtr) 33,105 42,912

Power Plant
Generation capacity (MWH) 989 932

Actual generation (MWH) 389 361

Processing, Stitching, Apparel and Terry

The plant capacity of these divisions is indeterminable due to multi product plants involving varying
processes of manufacturing and run length of order lots.

b) Subsidiary Company - Nishat Power Limited

Installed capacity [Based on 8,760 hours (2020: 8,784 hours)] MWH 1,711 1,715
Actual energy delivered MWH 523 277

c) Subsidiary Company - Nishat Hospitality (Private) Limited Total rooms available

Nishat Suites 31,753 21,789

45.1 REASON FOR LOW PRODUCTION

a) Under utilization of available capacity by the Holding Company for spinning, weaving, dyeing and
finishing is mainly due to normal maintenance. Actual power generation in comparison to installed is low
due to periodical, scheduled and unscheduled maintenance and low demand.

In the note of plant capacity and actual production, plant capacity of each segment of the Holding
Company was adjusted last year to incorporate the impact of temporary suspension of operations due to
lock down announced by the Government of the Punjab. The Holding Company resumed its operations
after implementing necessary standard operating procedures.

b) Output produced by the plant of Nishat Power Limited - Subsidiary Company is dependent on the load
demanded by CPPA-G and plant availability.
46 SEGMENT INFORMATION
Spinning Weaving Elimination of Inter-
Dyeing Home Textile Terry Garments Power Generation Hotel Total - Group
Faisalabad-I Faisalabad-II Feroze Wattwan I Feroze Wattwan II Lahore Bhikki Lahore segment transactions
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
(Rupees in thousand)

Revenue
208

External 4,119,786 2,073,195 2,634,067 2,936,491 4,323,324 2,659,042 1,203,589 599,924 18,105,081 13,222,399 13,500,697 11,368,682 3,095,408 3,013,343 11,644,199 14,686,329 24,935,997 19,681,343 1,023,434 - 8,364,875 6,506,263 11,486,321 11,781,598 290,680 181,221 - - 104,727,458 88,709,830
Intersegment 6,573,047 5,784,550 2,088,102 1,537,651 3,174,700 2,474,659 758,736 192,788 253,474 123,278 6,866,272 6,708,356 4,587,253 4,084,710 743,501 541,079 262,554 333,275 34,736 - 4,156 519 6,814,585 6,550,874 765 637 (32,161,881) (28,332,376) - -
10,692,833 7,857,745 4,722,169 4,474,142 7,498,024 5,133,701 1,962,325 792,712 18,358,555 13,345,677 20,366,969 18,077,038 7,682,661 7,098,053 12,387,700 15,227,408 25,198,551 20,014,618 1,058,170 - 8,369,031 6,506,782 18,300,906 18,332,472 291,445 181,858 (32,161,881) (28,332,376) 104,727,458 88,709,830
Cost of sales (9,572,154) (7,125,478) (4,308,874) (4,910,727) (6,697,955) (5,280,206) (1,763,288) (676,816) (16,567,699) (12,503,195) (18,761,629) (16,392,603) (7,215,557) (6,705,384) (11,033,997) (13,054,215) (19,108,577) (14,778,884) (959,856) - (7,131,640) (5,593,738) (14,837,120) (11,901,033) (269,787) (232,136) 32,161,881 28,332,376 (86,066,252) (70,822,039)
Gross profit / (loss) 1,120,679 732,267 413,295 (436,585) 800,069 (146,505) 199,037 115,896 1,790,856 842,482 1,605,340 1,684,435 467,104 392,669 1,353,703 2,173,193 6,089,974 5,235,734 98,314 - 1,237,391 913,044 3,463,786 6,431,439 21,658 (50,278) - - 18,661,206 17,887,791
Distribution cost (141,307) (156,547) (34,163) (17,274) (134,076) (161,175) (12,070) (3,291) (277,539) (191,201) (611,043) (575,548) (146,563) (127,170) (595,743) (643,431) (3,861,000) (3,704,478) (67,069) - (575,703) (512,925) - (62) - - - - (6,456,276) (6,093,102)
Administrative expenses (212,639) (183,681) (62,454) (60,007) (98,288) (92,947) (15,785) (4,890) (2,660) (1,663) (187,392) (188,415) (91,536) (90,368) (171,847) (190,242) (741,166) (836,471) (32,023) - (148,398) (129,384) (358,899) (384,063) (58,988) (61,073) - - (2,182,075) (2,223,204)
(353,946) (340,228) (96,617) (77,281) (232,364) (254,122) (27,855) (8,181) (280,199) (192,864) (798,435) (763,963) (238,099) (217,538) (767,590) (833,673) (4,602,166) (4,540,949) (99,092) - (724,101) (642,309) (358,899) (384,125) (58,988) (61,073) - - (8,638,351) (8,316,306)
Profit / (loss) before taxation and unallocated
income and expenses 766,733 392,039 316,678 (513,866) 567,705 (400,627) 171,182 107,715 1,510,657 649,618 806,905 920,472 229,005 175,131 586,113 1,339,520 1,487,808 694,785 (778) - 513,290 270,735 3,104,887 6,047,314 (37,330) (111,351) - - 10,022,855 9,571,485

Unallocated income and expenses:

Other expenses (597,767) (218,300)
Other income 2,732,075 2,351,438
For the year ended June 30, 2021

Finance cost (1,881,452) (2,957,854)

Share of profit from associates 2,848,522 864,092
Taxation (1,918,637) (839,106)
Profit after taxation 11,205,596 8,771,755

46.1 Reconciliation of reportable segment assets and liabilities

Spinning Weaving
Dyeing Home Textile Terry Garments Power Generation Hotel Total - Group
Faisalabad-I Faisalabad-II Feroze Wattwan I Feroze Wattwan II Lahore Bhikki Lahore
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
(Rupees in thousand)

Total assets for reportable segments 6,421,325 9,101,824 6,907,881 4,101,580 5,225,646 6,833,108 1,756,639 1,815,833 3,946,394 2,705,048 8,302,579 6,172,890 1,769,035 963,573 7,893,110 8,314,687 16,494,436 17,235,218 3,223,473 1,745,976 5,885,327 3,905,344 36,562,808 35,676,590 1,255,855 1,361,070 105,644,508 99,932,741
Unallocated assets:
Long term investments 55,330,247 50,115,435
Short term investment - 17,677
Other receivables 5,431,355 4,652,267
Cash and bank balances 6,397,998 758,727
Other corporate assets 3,113,048 2,921,381
Total assets as per consolidated statement
of financial position 175,917,156 158,398,228

Total liabilities for reportable segments 950,585 841,152 81,057 208,341 195,930 202,895 13,494 17,232 259,486 539,423 914,771 908,113 328,338 178,886 1,067,200 861,031 3,174,725 2,563,533 150,375 36,573 1,115,098 727,221 6,353,665 8,721,222 58,134 119,289 14,662,858 15,924,911

Unallocated liabilities:
Deferred liabilities 2,572,634 1,973,011
Other corporate liabilities 38,008,968 32,541,015
Total liabilities as per consolidated
Notes to the Consolidated Financial Statements

statement of financial position 55,244,460 50,438,937

46.2 Geographical information

The Group's revenue from external customers by geographical location is detailed below:
2021 2020
(Rupees in thousand)

Europe 22,408,582 20,394,268

Asia, Africa and Australia 18,416,068 21,024,737
United States of America and Canada 7,666,807 4,912,708
Pakistan 56,236,001 42,378,117
104,727,458 88,709,830
Nishat Mills Limited and its Subsidiaries

46.3 Significant non-current assets of the Group as at reporting dates are located and operating in Pakistan.
46.4 Revenue from major customers
Nishat Power Limited - Subsidiary Company sells electricity only to CPPA-G whereas the Group's revenue from other segments is earned from a large mix of customers.
 Annual Report 2021 209

47 INTERESTS IN OTHER ENTITIES

47.1 Non-controlling interest (NCI)

Set out below is summarised financial information for Nishat Power Limited - Subsidiary Company that
has non-controlling interests that are material to the Group. The amount disclosed for Subsidiary
Company are before inter-company eliminations.

2021 2020
(Rupees in thousand)

Summarised statement of financial position

Current assets 21,958,032 19,928,993

Current liabilities 4,739,844 5,571,430
Net current assets 17,218,188 14,357,563

Non-current assets 8,828,036 9,395,029

Non-current liabilities 36,903 55,367
Net non-current assets 8,791,133 9,339,662

Net assets 26,009,321 23,697,225

Accumulated non-controlling interest 12,741,966 11,609,271

Summarised statement of comprehensive income

Revenue 11,432,571 11,738,487

Profit for the year 2,680,319 4,942,595

Other comprehensive income - -
Total comprehensive income 2,680,319 4,942,595

Profit allocated to non-controlling interest 1,308,848 2,419,002

Dividend paid to non-controlling interest 173,456 173,456

Summarised cash flows

Cash flows from operating activities 1,928,773 5,073,890

Cash flows used in investing activities (105,524) (96,472)
Cash flows used in financing activities (316,807) (3,323,797)
Net increase in cash and cash equivalents 1,506,442 1,653,621
 210 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
48 FINANCIAL RISK MANAGEMENT

48.1 Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, other
price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management
programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse
effects on the Group's financial performance. The Group uses derivative financial instruments to hedge
certain risk exposures.

Risk management is carried out by the finance departments of the Holding Company and Subsidiary
Companies under the policies approved by their respective Board of Directors. The Holding Company
and Subsidiary Companies' finance departments evaluates and hedge financial risks. The Board of each
Group Company provides principles for overall risk management, as well as policies covering specific
areas such as currency risk, other price risk, interest rate risk, credit risk, liquidity risk, use of derivative
financial instruments and non-derivative financial instruments and investment of excess liquidity.

a) Market risk

i) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. Currency risk arises mainly from future commercial
transactions or receivables and payables that exist due to transactions in foreign currencies.

The Group is exposed to currency risk arising from various currency exposures, primarily with respect to
the United States Dollar (USD), Euro, United Arab Emirates Dirham (AED), Japanese Yen (JPY) and Swiss
Franc (CHF). Currently, the Group's foreign exchange risk exposure is restricted to bank balances, long
term loan, security deposit and the amounts receivable / payable from / to the foreign entities. The
Group's exposure to currency risk was as follows:

2021 2020

Cash at banks - USD 233,515 37,934

Cash in hand and at banks - AED 13,867,777 -
Trade debts - USD 22,937,415 14,824,462
Trade debts - Euro 1,652,710 994,934
Trade debts - AED 9,642,554 1,244,456
Trade and other payables - USD (2,519,879) (1,535,624)
Trade and other payables - Euro (170,203) (155,010)
Trade and other payables - AED (9,029,257) (1,384)
Trade and other payables - JPY (652,985) (131,220)
Trade and other payables - CHF - (11,835)
Net exposure - USD 20,651,051 13,326,772
Net exposure - Euro 1,482,507 839,924
Net exposure - AED 14,481,074 1,243,072
Net exposure - JPY (652,985) (131,220)
Net exposure - CHF - (11,835)
 Annual Report 2021 211

2021 2020

The following significant exchange rates were applied during the year:

Rupees per US Dollar

Average rate 159.53 158.82
Reporting date rate 157.60 168.25
Rupees per Euro
Average rate 189.17 175.53
Reporting date rate 185.80 189.11
Rupees per AED
Average rate 43.22 43.20
Reporting date rate 42.65 45.79
Rupees per JPY
Average rate 1.49 1.47
Reporting date rate 1.42 1.57
Rupees per CHF
Average rate 174.46 163.18
Reporting date rate 168.81 177.43

Sensitivity Analysis

If the functional currency, at reporting date, had weakened / strengthened by 5% against the USD, Euro,
AED, JPY and CHF with all other variables held constant, the impact on profit after taxation for the year
would have been Rupees 207.377 million (2020: Rupees 122.784 million) higher / lower, mainly as a result
of exchange gains / losses on translation of foreign exchange denominated financial instruments.
Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis. In
management's opinion, the sensitivity analysis is unrepresentative of inherent currency risk as the year
end exposure does not reflect the exposure during the year.

ii) Other price risk

Other price risk represents the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices (other than those arising from interest rate risk or currency
risk), whether those changes are caused by factors specific to the individual financial instrument or its
issuer, or factors affecting all similar financial instruments traded in the market. The Group is not exposed
to commodity price risk.

Sensitivity Analysis

The table below summarises the impact of increase / decrease in the Pakistan Stock Exchange (PSX) Index
on Group's other comprehensive income (fair value reserve) for the year. The analysis is based on the
assumption that the equity index had increased / decreased by 5% with all other variables held constant
and all the Group's equity instruments moved according to the historical correlation with the index.

Impact on statement of other

Index comprehensive income
(fair value reserve)

2021 2020
(Rupees in thousand)

PSX (5% increase) 771,424 752,621

PSX (5% decrease) (771,424) (752,621)

Equity (fair value reserve) would increase / decrease as a result of gains / losses on equity investments
classified as fair value through other comprehensive income.
 212 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
iii) Interest rate risk

This represents the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.

The Group's interest rate risk mainly arises from long term financing, short term borrowings, loans to
employees, trade debts, bank balances in saving accounts and term deposit receipts. Financial
instruments at variable rates expose the Group to cash flow interest rate risk. Financial instruments at
fixed rate expose the Group to fair value interest rate risk.

At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:

2021 2020
(Rupees in thousand)

Fixed rate instruments

Financial assets
Short term investment - 17,677
Loans to employees 265,626 258,950
Term deposit receipts 5,104,500 149,396
Financial liabilities
Long term financing 14,696,590 8,393,124
Short term borrowings 18,371,589 14,184,868

Floating rate instruments

Financial assets
Bank balances - saving accounts 34,281 17,459
Trade debts - overdue 11,802,542 11,020,051
Financial liabilities
Long term financing 251,711 1,743,030
Short term borrowings 4,013,567 9,895,649

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or
loss. Therefore, a change in interest rate at the reporting date would not affect profit or loss of the Group.

Cash flow sensitivity analysis for variable rate instruments

If interest rates at the year end date, fluctuates by 1% higher / lower with all other variables held constant,
profit after taxation for the year would have been Rupees 7.572 million higher / lower (2020: Rupees 6.012
million lower / higher) mainly as a result of higher / lower interest on floating rate financial instruments.
This analysis is prepared assuming the amount of financial instruments outstanding at reporting date
were outstanding for the whole year.

b) Credit risk
Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the
other party by failing to discharge an obligation. The carrying amount of financial assets represents the
maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:

Investments 15,780,453 15,390,596

Loans and advances 1,168,574 827,105
Deposits 336,988 287,425
Trade debts 27,111,194 23,604,593
Other receivables 46,808 51,964
Accrued interest 13,659 2,301
Bank balances 6,348,367 724,013
50,806,043 40,887,997
 Annual Report 2021 213

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external
credit ratings (If available) or to historical information about counterparty default rate:

Rating 2021 2020

Short term Long term Agency (Rupees in thousand)

Banks

National Bank of Pakistan A1+ AAA PACRA 1,434 8,766

Allied Bank Limited A1+ AAA PACRA 4,549 391
Askari Bank Limited A1+ AA+ PACRA 61 454
Bank Alfalah Limited A1+ AA+ PACRA 12,087 135,577
Faysal Bank Limited A1+ AA PACRA 15,811 35,214
Habib Bank Limited A-1+ AAA JCR-VIS 19,585 2,374
Habib Metropolitan Bank Limited A1+ AA+ PACRA 23,163 1,360
JS Bank Limited A1+ AA- PACRA 24 66
MCB Bank Limited A1+ AAA PACRA 6,026,704 154,619
Samba Bank Limited A1+ AAA JCR-VIS 274 298,056
Silk Bank Limited A-1 AA JCR-VIS 68 73
Standard Chartered Bank (Pakistan) Limited A-2 A- PACRA 80,265 37,610
United Bank Limited A1+ AAA JCR-VIS 1,790 10,463
Al Baraka Bank (Pakistan) Limited A-1+ AAA PACRA 268 269
Citi Bank N.A. P-1 Aa3 Moody's 203 133
Bank Islami Pakistan Limited A1 A+ PACRA 191 391
Meezan Bank Limited A-1+ AAA JCR-VIS 36,573 5,320
Dubai Islamic Bank Pakistan Limited A-1+ AA JCR-VIS 352 354
The Bank of Punjab A1+ AA+ PACRA 297 189
Soneri Bank Limited A1+ AA- PACRA 2,470 394
Summit Bank Limited A-3 BBB- JCR-VIS 257 257
Industrial and Commercial Bank of China P-1 A1 Moody’s 114 6
MCB Islamic Bank Limited A1 A PACRA 705 239
HAB Bank Unknown - 5,961 7,501
Bank of China P-1 A1 Moody’s 4,913 16,548
Habib Bank AG Zurich, UAE NP Caa1 Moody’s 53,957 6,752
ICBC Standard Bank F1 A- Moody’s 42,788 -
Bank Al-Habib Limited A1+ AAA PACRA 13,496 629
Burj Bank Limited A-1 A+ JCR-VIS 1 2
The Bank of Khyber A1 A PACRA 6 6
6,348,367 724,013

Investments

Adamjee Insurance Company Limited AA+ PACRA 4,263 3,404

Alhamra Islamic Stock Fund AM1 PACRA 12,661 9,723
Nishat (Chunian) Limited A A-2 JCR-VIS 1,643,947 1,060,767
MCB Bank Limited A1+ AAA PACRA 14,067,484 14,264,635
Pakistan Petroleum Limited Unknown - 52,098 52,067
15,780,453 15,390,596
22,128,820 16,114,609
 214 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
Due to the Group's long standing business relationships with these counterparties and after giving due consideration to their
strong financial standing, management does not expect non-performance by these counterparties on their obligations to the
Group. Accordingly the credit risk is minimal.

Trade debts

The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss
allowance for all trade debts other than those due from Government of Pakistan.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and
the days past due. These trade receivables are netted off with the collateral obtained, if any, from these customers to calculate
the net exposure towards these customers. The Group has concluded that the expected loss rates for trade debts against local
sales are different from the expected loss rates for trade debts against export sales.

The expected loss rates are based on the payment profiles of sales over a period of 36 months before 30 June 2021 and the
corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and
forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The
Group has identified the Gross Domestic Product, Unemployment, Interest and the inflation index to be the most relevant
factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.

c) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

The Group manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of
committed credit facilities. At 30 June 2021, the Group had Rupees 58,213.768 million (2020: Rupees 51,454.504 million)
available borrowing / financing limits from financial institutions and Rupees 6,397.998 million (2020: Rupees 758.727 million)
cash and bank balances. Management believes the liquidity risk to be low. Following are the contractual maturities of financial
liabilities, including interest payments. The amounts disclosed in the table are undiscounted cash flows.

Contractual maturities of financial liabilities as at 30 June 2021:

Carrying Contractual 6 months 6-12 1-2 More than

amount cash flows or less months Years 2 Years
(Rupees in thousand)

Non-derivative financial liabilities:

Long term financing 14,948,301 16,198,322 1,767,748 1,829,938 3,379,591 9,221,045

Lease liabilities 2,049,784 2,593,658 462,607 393,753 536,644 1,200,654
Long term security deposits 269,078 269,078 - - - 269,078
Trade and other payables 8,250,030 8,250,030 8,250,030 - - -
Unclaimed dividend 115,497 115,497 115,497 - - -
Short term borrowings 22,385,156 22,742,829 22,692,941 49,888 - -
Accrued mark-up 269,569 269,569 269,569 - - -

Derivative financial liabilities 57,429 57,429 57,429 - - -

48,344,844 50,496,412 33,615,821 2,273,579 3,916,235 10,690,777
 Annual Report 2021 215

Contractual maturities of financial liabilities as at 30 June 2020:

Carrying Contractual 6 months 6-12 1-2 More than

amount cash flows or less months Years 2 Years
(Rupees in thousand)
Non-derivative financial liabilities
Long term financing 10,136,154 10,897,863 189,136 835,386 2,868,216 7,005,125
Lease liabilities 2,266,071 2,979,269 437,029 388,709 777,283 1,376,248
Long term security deposits 271,133 271,133 - - - 271,133
Trade and other payables 8,801,922 8,801,922 8,801,922 - - -
Unclaimed dividend 111,267 111,267 111,267 - - -
Short term borrowings 24,080,517 24,465,279 24,434,181 31,098 - -
Accrued mark-up 395,513 395,513 395,513 - - -

Derivative financial liabilities 6,206 6,206 6,206 - - -

46,068,783 47,928,452 34,375,254 1,255,193 3,645,499 8,652,506

The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest rates /
mark-up rates effective as at 30 June. The rates of interest / markup have been disclosed in note 5 and note 11 to these
consolidated financial statements.

48.2 Financial instruments by categories

Amortized
FVTPL FVTOCI Total
cost
(Rupees in thousand)

As at 30 June 2021

Assets as per consolidated statement

of financial position
Investments - - 15,780,453 15,780,453
Loans and advances - 1,168,574 - 1,168,574
Deposits - 336,988 - 336,988
Trade debts - 27,111,194 - 27,111,194
Other receivables 8,672 38,136 - 46,808
Accrued interest - 13,659 - 13,659
Cash and bank balances - 6,397,998 - 6,397,998
8,672 35,066,549 15,780,453 50,855,674

FVTPL Amortized cost Total

(Rupees in thousand)

Liabilities as per consolidated

statement of financial position

Long term financing - 14,948,301 14,948,301

Lease liabilities - 2,049,784 2,049,784
Long term security deposits - 269,078 269,078
Trade and other payables 57,429 8,250,030 8,307,459
Short term borrowings - 22,385,156 22,385,156
Unclaimed dividend - 115,497 115,497
Accrued mark-up - 269,569 269,569
57,429 48,287,415 48,344,844
 216 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021

Amortised
FVTPL FVTOCI Total
cost
(Rupees in thousand)

As at 30 June 2020

Assets as per consolidated statement

of financial position
Investments - - 15,390,596 15,390,596
Loans and advances - 827,105 - 827,105
Deposits - 287,425 - 287,425
Trade debts - 23,604,593 - 23,604,593
Other receivables 345 51,619 - 51,964
Accrued interest - 2,301 - 2,301
Cash and bank balances - 758,727 - 758,727
345 25,531,770 15,390,596 40,922,711

FVTPL Amortized cost Total

(Rupees in thousand)

Liabilities as per consolidated statement

of financial position

Long term financing - 10,136,154 10,136,154

Lease liabilities - 2,266,071 2,266,071
Long term security deposits - 271,133 271,133
Trade and other payables 6,206 8,801,922 8,808,128
Short term borrowings - 24,080,517 24,080,517
Unclaimed dividend - 111,267 111,267
Accrued mark-up - 395,513 395,513
6,206 46,062,577 46,068,783

48.3 Reconciliation of financial assets and financial liabilities to the line items presented in the
statement of financial position is as follows:

2021
Assets as per
Financial Non-financial consolidated
assets assets statement of
financial position
(Rupees in thousand)

Assets
Investments 15,780,453 39,549,794 55,330,247
Loans and advances 1,168,574 453,942 1,622,516
Deposits and prepayments 336,988 132,262 469,250
Trade debts 27,111,194 - 27,111,194
Other receivables 46,808 5,384,547 5,431,355
Accrued interest 13,659 - 13,659
Cash and bank balances 6,397,998 - 6,397,998
50,855,674 45,520,545 96,376,219
 Annual Report 2021 217

2021
Liabilities as
Financial Non-financial per consolidated
liabilities liabilities statement of
financial position
(Rupees in thousand)

Liabilities
Long term financing 14,948,301 - 14,948,301
Lease liabilities 2,049,784 - 2,049,784
Long term security deposits 269,078 - 269,078
Trade and other payables 8,307,459 3,082,599 11,390,058
Short term borrowings 22,385,156 - 22,385,156
Unclaimed dividend 115,497 - 115,497
Accrued mark-up 269,569 - 269,569
48,344,844 3,082,599 51,427,443

2020
Assets as per
Financial Non-financial consolidated
assets assets statement of
financial position
(Rupees in thousand)

Assets
Investments 15,390,596 34,742,516 50,133,112
Loans and advances 827,105 254,289 1,081,394
Deposits and prepayments 287,425 122,858 410,283
Trade debts 23,604,593 - 23,604,593
Other receivables 51,964 4,600,303 4,652,267
Accrued interest 2,301 - 2,301
Cash and bank balances 758,727 - 758,727
40,922,711 39,719,966 80,642,677

2020
Liabilities as
Financial Non-financial per consolidated
liabilities liabilities statement of
financial position
(Rupees in thousand)

Liabilities
Long term financing 10,136,154 - 10,136,154
Lease liabilities 2,266,071 - 2,266,071
Long term security deposits 271,133 - 271,133
Trade and other payables 8,808,128 2,376,137 11,184,265
Short term borrowings 24,080,517 - 24,080,517
Unclaimed dividend 111,267 - 111,267
Accrued mark-up 395,513 - 395,513
46,068,783 2,376,137 48,444,920
 218 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021
49 Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry and the requirements of the lenders, the Group monitors the capital
structure on the basis of gearing ratio. This ratio is calculated as borrowings divided by total capital employed.
Borrowings represent long term financing, short term borrowings obtained by the Group as referred to in note 5
and note 11 respectively. Total capital employed includes 'total equity' as shown in the consolidated statement
of financial position plus 'borrowings'.

2021 2020

Borrowings Rupees in thousand 37,333,457 34,216,671

Total equity Rupees in thousand 120,672,696 107,959,291
Total capital employed Rupees in thousand 158,006,153 142,175,962

Gearing ratio Percentage 23.63 24.07

50 FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS

i) Fair value hierarchy

Judgments and estimates are made in determining the fair values of the financial instruments that are recognised
and measured at fair value in these consolidated financial statements. To provide an indication about the
reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the
following three levels. An explanation of each level follows underneath the table.

Recurring fair value measurements

Level 1 Level 2 Level 3 Total
At 30 June 2021
(Rupees in thousand)

Financial assets
Fair value through other
comprehensive income 15,780,453 - - 15,780,453
Derivative financial assets - 8,672 - 8,672
Total financial assets 15,780,453 8,672 - 15,789,125

Financial liabilities
Derivative financial liabilities - 57,429 - 57,429
Total financial liabilities - 57,429 - 57,429
 Annual Report 2021 219

Recurring fair value measurements

Level 1 Level 2 Level 3 Total
At 30 June 2020
(Rupees in thousand)

Financial assets
Fair value through other
comprehensive income 15,390,596 - - 15,390,596
Derivative financial assets - 345 - 345
Total financial assets 15,390,596 345 - 15,390,941

Financial liabilities
Derivative financial liabilities - 6,206 - 6,206
Total financial liabilities - 6,206 - 6,206

The above table does not include fair value information for financial assets and financial liabilities not measured
at fair value if the carrying amounts are a reasonable approximation of fair value. Due to short term nature,
carrying amounts of certain financial assets and financial liabilities are considered to be the same as their fair
value. For the majority of the non-current receivables, the fair values are also not significantly different to their
carrying amounts.

There were no transfers between levels 1 and 2 for recurring fair value measurements during the year. Further
there was no transfer out of level 3 measurements.

The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of
the reporting period.

Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and
equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price
used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable
market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value
an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3. This is the case for unlisted equity securities.

(ii) Valuation techniques used to determine fair values

Specific valuation techniques used to value financial instruments include the use of quoted market prices or
dealer quotes for similar instruments.
 220 Nishat Mills Limited and its Subsidiaries

Notes to the Consolidated Financial Statements

For the year ended June 30, 2021

51 UNUTILIZED CREDIT FACILITIES

Non-funded Funded
2021 2020 2021 2020
(Rupees in thousand)

Total facilities 15,832,350 12,820,350 83,747,869 71,367,390

Utilized at the end of the year 8,766,417 5,099,551 25,534,101 19,912,886
Unutilized at the end of the year 7,065,933 7,720,799 58,213,768 51,454,504

52 DATE OF AUTHORIZATION FOR ISSUE

These consolidated financial statements were authorized for issue on 20 September, 2021 by the Board of
Directors.

53 CORRESPONDING FIGURES

Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However, no
significant rearrangements have been made.

54 GENERAL

Figures have been rounded off to the nearest thousand of Rupees unless otherwise stated.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

 Annual Report 2021 221

Pattern of Holding
of the Shares held by the Shareholders of Nishat Mills Limited as at June 30, 2021

Number of Having shares

Shares Held Percentage
Shareholders From To

4,388 1 100 154,611 0.04

4,222 101 500 1,181,932 0.34
1,466 501 1,000 1,213,531 0.35
1,880 1,001 5,000 4,853,574 1.38
436 5,001 10,000 3,377,977 0.96
156 10,001 15,000 2,015,708 0.57
109 15,001 20,000 1,945,175 0.55
81 20,001 25,000 1,915,079 0.54
51 25,001 30,000 1,427,256 0.41
35 30,001 35,000 1,158,266 0.33
26 35,001 40,000 996,119 0.28
17 40,001 45,000 737,428 0.21
32 45,001 50,000 1,565,011 0.45
15 50,001 55,000 803,537 0.23
13 55,001 60,000 758,200 0.22
9 60,001 65,000 572,538 0.16
4 65,001 70,000 277,000 0.08
15 70,001 75,000 1,093,799 0.31
6 75,001 80,000 471,118 0.13
9 80,001 85,000 743,437 0.21
10 85,001 90,000 886,787 0.25
3 90,001 95,000 278,097 0.08
19 95,001 100,000 1,883,600 0.54
5 100,001 105,000 514,900 0.15
7 105,001 110,000 755,625 0.21
1 110,001 115,000 113,000 0.03
8 115,001 120,000 946,542 0.27
4 120,001 125,000 490,306 0.14
10 125,001 130,000 1,282,726 0.36
3 130,001 135,000 401,222 0.11
2 135,001 140,000 277,081 0.08
1 140,001 145,000 145,000 0.04
7 145,001 150,000 1,043,931 0.30
1 150,001 155,000 154,500 0.04
2 155,001 160,000 315,500 0.09
5 160,001 165,000 814,655 0.23
2 165,001 170,000 331,200 0.09
6 170,001 175,000 1,037,520 0.30
2 175,001 180,000 357,400 0.10
1 180,001 185,000 184,300 0.05
1 190,001 195,000 195,000 0.06
7 195,001 200,000 1,393,800 0.40
2 200,001 205,000 403,200 0.11
1 205,001 210,000 210,000 0.06
1 210,001 215,000 211,771 0.06
5 215,001 220,000 1,086,875 0.31
3 220,001 225,000 672,500 0.19
1 225,001 230,000 225,438 0.06
2 230,001 235,000 468,500 0.13
2 235,001 240,000 477,500 0.14
 222 Nishat Mills Limited

Pattern of Holding
of the Shares held by the Shareholders of Nishat Mills Limited as at June 30, 2021

Number of Having shares

Shares Held Percentage
Shareholders From To

2 240,001 245,000 486,000 0.14

1 245,001 250,000 250,000 0.07
1 250,001 255,000 252,500 0.07
2 255,001 260,000 513,500 0.15
1 260,001 265,000 264,000 0.08
3 265,001 270,000 803,100 0.23
2 270,001 275,000 546,400 0.16
1 275,001 280,000 279,500 0.08
2 290,001 295,000 587,000 0.17
2 305,001 310,000 612,592 0.17
2 310,001 315,000 627,270 0.18
1 315,001 320,000 318,500 0.09
2 320,001 325,000 645,200 0.18
1 325,001 330,000 325,300 0.09
1 330,001 335,000 333,000 0.09
1 335,001 340,000 339,500 0.10
1 345,001 350,000 350,000 0.10
2 355,001 360,000 715,100 0.20
1 360,001 365,000 364,000 0.10
2 365,001 370,000 734,616 0.21
1 390,001 395,000 391,000 0.11
4 395,001 400,000 1,600,000 0.46
1 435,001 440,000 440,000 0.13
1 445,001 450,000 446,550 0.13
1 455,001 460,000 456,700 0.13
1 470,001 475,000 473,800 0.13
1 490,001 495,000 495,000 0.14
3 495,001 500,000 1,500,000 0.43
1 510,001 515,000 515,000 0.15
1 535,001 540,000 536,500 0.15
1 550,001 555,000 551,474 0.16
1 570,001 575,000 573,995 0.16
1 585,001 590,000 587,100 0.17
1 590,001 595,000 593,280 0.17
2 595,001 600,000 1,200,000 0.34
1 610,001 615,000 610,143 0.17
1 620,001 625,000 620,500 0.18
1 625,001 630,000 628,100 0.18
1 635,001 640,000 638,126 0.18
1 660,001 665,000 664,500 0.19
1 670,001 675,000 675,000 0.19
1 695,001 700,000 700,000 0.20
1 700,001 705,000 701,900 0.20
1 705,001 710,000 706,100 0.20
1 780,001 785,000 783,000 0.22
1 795,001 800,000 800,000 0.23
1 830,001 835,000 834,400 0.24
1 855,001 860,000 857,700 0.24
1 885,001 890,000 890,000 0.25
1 970,001 975,000 971,900 0.28
 Annual Report 2021 223

Pattern of Holding
of the Shares held by the Shareholders of Nishat Mills Limited as at June 30, 2021

Number of Having shares

Shares Held Percentage
Shareholders From To

1 995,001 1,000,000 996,501 0.28

1 1,055,001 1,060,000 1,057,000 0.30
1 1,060,001 1,065,000 1,061,285 0.30
1 1,080,001 1,085,000 1,082,100 0.31
1 1,100,001 1,105,000 1,102,300 0.31
1 1,120,001 1,125,000 1,125,000 0.32
1 1,155,001 1,160,000 1,158,900 0.33
1 1,195,001 1,200,000 1,196,971 0.34
1 1,270,001 1,275,000 1,272,500 0.36
1 1,295,001 1,300,000 1,300,000 0.37
1 1,310,001 1,315,000 1,313,500 0.37
1 1,320,001 1,325,000 1,323,000 0.38
1 1,375,001 1,380,000 1,380,000 0.39
1 1,440,001 1,445,000 1,442,000 0.41
1 1,450,001 1,455,000 1,451,500 0.41
1 1,470,001 1,475,000 1,470,300 0.42
1 1,510,001 1,515,000 1,512,300 0.43
1 1,570,001 1,575,000 1,572,000 0.45
1 1,620,001 1,625,000 1,625,000 0.46
1 1,815,001 1,820,000 1,820,000 0.52
1 1,945,001 1,950,000 1,946,841 0.55
1 1,985,001 1,990,000 1,986,500 0.57
1 2,410,001 2,415,000 2,415,000 0.69
1 2,545,001 2,550,000 2,549,700 0.73
1 2,725,001 2,730,000 2,728,028 0.78
1 2,810,001 2,815,000 2,814,900 0.80
1 2,835,001 2,840,000 2,839,871 0.81
1 3,170,001 3,175,000 3,171,882 0.90
1 3,235,001 3,240,000 3,236,899 0.92
1 3,245,001 3,250,000 3,250,000 0.92
1 3,485,001 3,490,000 3,488,454 0.99
1 3,995,001 4,000,000 4,000,000 1.14
1 4,065,001 4,070,000 4,066,831 1.16
1 4,420,001 4,425,000 4,423,400 1.26
1 4,780,001 4,785,000 4,785,000 1.36
1 5,380,001 5,385,000 5,383,500 1.53
1 6,450,001 6,455,000 6,450,913 1.83
1 7,225,001 7,230,000 7,230,000 2.06
1 9,245,001 9,250,000 9,247,800 2.63
1 14,495,001 14,500,000 14,496,760 4.12
1 15,075,001 15,080,000 15,075,149 4.29
1 18,695,001 18,700,000 18,698,357 5.32
1 21,190,001 21,195,000 21,191,146 6.03
1 23,100,001 23,105,000 23,101,426 6.57
1 25,670,001 25,675,000 25,673,659 7.30
1 26,245,001 26,250,000 26,248,841 7.47
1 29,225,001 29,230,000 29,228,216 8.31

13,208 351,599,848 100.00

 224 Nishat Mills Limited

Pattern of Holding
of the Shares held by the Shareholders of Nishat Mills Limited as at June 30, 2021

Sr. Categories of Shareholders Shares Held Percentage

No.

1 DIRECTORS, CEO, THEIR SPOUSE AND MINOR CHILDREN 88,667,588 25.22

2 ASSOCIATED COMPANIES, UNDERTAKINGS AND RELATED PARTIES 30,567,178 8.69

3 NIT AND ICP 85,203 0.02

4 Banks Development Financial Institutions, Non banking

Financial Institutions 23,287,571 6.62

5 Insurance Companies 17,237,866 4.91

6 Modarabas And Mutual Funds 35,123,744 9.99

7 Shareholders Holding 5% or above 177,714,710 50.54

8 General Public
Local 103,150,935 29.34
Foreign 4,386,016 1.25

9 Others
Foreign Companies 20,965,033 5.96
Investment Companies 1,086,622 0.31
Joint Stock Companies 17,275,760 4.91
Provident / Pension Funds and Miscellaneous 9,766,332 2.78
 Annual Report 2021 225

Information Under Listing Regulation No. 5.19.11 (X) of Pakistan

Stock Exchange Limited Rule Book as on June 30, 2021
Sr. Categories of Shareholders Shares Held Percentage
No.

I) ASSOCIATED COMPANIES, UNDERTAKINGS AND RELATED PARTIES

D. G. KHAN CEMENT COMPANY LIMITED 30,289,501 8.61

ADAMJEE INSURANCE COMPANY LIMITED 2,050 0.00
MCB BANK LIMITED 227 0.00
ADAMJEE LIFE ASSURANCE COMPANY LIMITED 400 0.00
NISHAT (AZIZ AVENUE) HOTELS AND PROPERITIES LIMITED 275,000 0.08

II) MUTUAL FUNDS:

PRUDENTIAL STOCKS FUND LIMITED 110 0.0000

SAFEWAY MUTUAL FUND LIMITED 13 0.0000
PRUDENTIAL STOCKS FUND LTD (03360) 23,500 0.0067
HRSG OUTSOURCING (PVT) LIMITED EMPLOYEES GRATUITY FUND 46,500 0.0132
HRSG OUTSOURCING (PVT) LIMITED EMPLOYEES PROVIDENT FUND 100,000 0.0284
TRUSTEE CHERAT CEMENT CO.LTD.EMP.PRO.FND 10,000 0.0028
KASB INVEST (PRIVATE) LIMITED 2,000 0.0006
MCBFSL - TRUSTEE JS VALUE FUND 119,000 0.0338
CDC - TRUSTEE JS LARGE CAP. FUND 78,500 0.0223
CDC - TRUSTEE ATLAS STOCK MARKET FUND 1,986,500 0.5650
CDC - TRUSTEE MEEZAN BALANCED FUND 314,100 0.0893
CDC - TRUSTEE UBL GROWTH AND INCOME FUND 128,500 0.0365
CDC - TRUSTEE JS ISLAMIC FUND 83,000 0.0236
CDC - TRUSTEE ALFALAH GHP VALUE FUND 146,500 0.0417
CDC - TRUSTEE UNIT TRUST OF PAKISTAN 223,500 0.0636
CDC - TRUSTEE AKD INDEX TRACKER FUND 37,647 0.0107
CDC - TRUSTEE AKD OPPORTUNITY FUND 1,057,000 0.3006
CDC - TRUSTEE AL MEEZAN MUTUAL FUND 628,100 0.1786
CDC - TRUSTEE MEEZAN ISLAMIC FUND 5,383,500 1.5311
CDC - TRUSTEE UBL STOCK ADVANTAGE FUND 1,196,971 0.3404
CRESCENT STANDARD BUSINESS MANAGEMENT (PVT) LIMITED 1 0.0000
CDC - TRUSTEE ATLAS ISLAMIC STOCK FUND 620,500 0.1765
CDC - TRUSTEE AL-AMEEN SHARIAH STOCK FUND 3,171,882 0.9021
CDC - TRUSTEE NBP STOCK FUND 2,549,700 0.7252
CDC - TRUSTEE NBP BALANCED FUND 202,200 0.0575
CDC - TRUSTEE ALFALAH GHP INCOME FUND 30,500 0.0087
CDC - TRUSTEE ASKARI ASSET ALLOCATION FUND 34,500 0.0098
CDC - TRUSTEE MEEZAN TAHAFFUZ PENSION FUND - EQUITY SUB FUND 857,700 0.2439
CDC - TRUSTEE APF-EQUITY SUB FUND 101,300 0.0288
CDC - TRUSTEE JS PENSION SAVINGS FUND - EQUITY ACCOUNT 34,500 0.0098
CDC - TRUSTEE ALFALAH GHP ISLAMIC STOCK FUND 551,474 0.1568
CDC - TRUSTEE NBP ISLAMIC SARMAYA IZAFA FUND 1,470,300 0.4182
CDC - TRUSTEE APIF - EQUITY SUB FUND 122,000 0.0347
MC FSL TRUSTEE JS - INCOME FUND 10,500 0.0030
MC FSL - TRUSTEE JS GROWTH FUND 515,000 0.1465
CDC - TRUSTEE HBL MULTI - ASSET FUND 8,700 0.0025
CDC - TRUSTEE JS ISLAMIC PENSION SAVINGS FUND-EQUITY ACCOUNT 23,500 0.0067
CDC - TRUSTEE ALFALAH GHP STOCK FUND 473,800 0.1348
 226 Nishat Mills Limited

Information Under Listing Regulation No. 5.19.11 (X) of Pakistan

Stock Exchange Limited Rule Book as on June 30, 2021
Sr. Categories of Shareholders Shares Held Percentage
No.

CDC - TRUSTEE ALFALAH GHP ALPHA FUND 196,300 0.0558

CDC - TRUSTEE NIT-EQUITY MARKET OPPORTUNITY FUND 1,946,841 0.5537
CDC - TRUSTEE ABL STOCK FUND 536,500 0.1526
CDC - TRUSTEE FIRST HABIB STOCK FUND 18,000 0.0051
CDC - TRUSTEE LAKSON EQUITY FUND 706,100 0.2008
CDC - TRUSTEE NBP SARMAYA IZAFA FUND 235,000 0.0668
CDC - TRUSTEE NBP MAHANA AMDANI FUND - MT 39,500 0.0112
CDC-TRUSTEE HBL ISLAMIC STOCK FUND 45,100 0.0128
CDC - TRUSTEE NBP FINANCIAL SECTOR INCOME FUND 154,500 0.0439
CDC - TRUSTEE HBL IPF EQUITY SUB FUND 25,500 0.0073
CDC - TRUSTEE HBL PF EQUITY SUB FUND 26,000 0.0074
CDC - TRUSTEE KSE MEEZAN INDEX FUND 446,550 0.1270
MCBFSL - TRUSTEE PAK OMAN ADVANTAGE ASSET ALLOCATION FUND 31,500 0.0090
MCBFSL - TRUSTEE PAK OMAN ISLAMIC ASSET ALLOCATION FUND 58,000 0.0165
CDC-TRUSTEE FIRST HABIB ISLAMIC STOCK FUND 48,700 0.0139
CDC - TRUSTEE ATLAS INCOME FUND - MT 65,000 0.0185
CDC-TRUSTEE UBL INCOME OPPORTUNITY FUND 264,000 0.0751
MCBFSL - TRUSTEE ABL ISLAMIC STOCK FUND 293,800 0.0836
CDC - TRUSTEE UBL ASSET ALLOCATION FUND 36,100 0.0103
CDC - TRUSTEE FIRST CAPITAL MUTUAL FUND 30,000 0.0085
CDC - TRUSTEE AL-AMEEN ISLAMIC ASSET ALLOCATION FUND 293,200 0.0834
CDC - TRUSTEE AWT ISLAMIC STOCK FUND 162,000 0.0461
CDC-TRUSTEE AL-AMEEN ISLAMIC RET. SAV. FUND-EQUITY SUB FUND 323,200 0.0919
CDC - TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 3,236,899 0.9206
CDC - TRUSTEE HBL ISLAMIC EQUITY FUND 35,000 0.0100
CDC - TRUSTEE NBP ISLAMIC STOCK FUND 1,512,300 0.4301
CDC - TRUSTEE NBP INCOME OPPORTUNITY FUND - MT 47,000 0.0134
CDC - TRUSTEE AWT STOCK FUND 89,600 0.0255
CDC - TRUSTEE NIT ISLAMIC EQUITY FUND 355,100 0.1010
CDC-TRUSTEE NITIPF EQUITY SUB-FUND 25,000 0.0071
CDC-TRUSTEE NITPF EQUITY SUB-FUND 14,500 0.0041
CDC - TRUSTEE NBP SAVINGS FUND - MT 83,500 0.0237
CDC - TRUSTEE NBP ISLAMIC ACTIVE ALLOCATION EQUITY FUND 162,100 0.0461
CDC - TRUSTEE HBL ISLAMIC ASSET ALLOCATION FUND 22,200 0.0063
CDC - TRUSTEE FAYSAL MTS FUND - MT 10,000 0.0028
CDC - TRUSTEE MEEZAN ASSET ALLOCATION FUND 197,500 0.0562
CDC - TRUSTEE LAKSON TACTICAL FUND 86,987 0.0247
CDC - TRUSTEE LAKSON ISLAMIC TACTICAL FUND 74,199 0.0211
CDC - TRUSTEE ALFALAH GHP ISLAMIC DEDICATED EQUITY FUND 125,726 0.0358
CDC TRUSTEE - MEEZAN DEDICATED EQUITY FUND 127,200 0.0362
CDC - TRUSTEE FIRST HABIB ASSET ALLOCATION FUND 7,500 0.0021
MCBFSL - TRUSTEE AKD ISLAMIC STOCK FUND 110,000 0.0313
CDC - TRUSTEE JS ISLAMIC DEDICATED EQUITY FUND (JSIDEF) 5,139 0.0015
CDC - TRUSTEE NBP ISLAMIC REGULAR INCOME FUND 35,000 0.0100
CDC - TRUSTEE ATLAS ISLAMIC DEDICATED STOCK FUND 59,500 0.0169
CDC - TRUSTEE GOLDEN ARROW STOCK FUND 171,000 0.0486
CDC - TRUSTEE NIT ASSET ALLOCATION FUND 55,000 0.0156
CDC - TRUSTEE AGIPF EQUITY SUB-FUND 18,600 0.0053
CDC - TRUSTEE AGPF EQUITY SUB-FUND 12,800 0.0036
 Annual Report 2021 227

Information Under Listing Regulation No. 5.19.11 (X) of Pakistan

Stock Exchange Limited Rule Book as on June 30, 2021
Sr. Categories of Shareholders Shares Held Percentage
No.

III) DIRECTORS, CEO, THEIR SPOUSE AND MINOR CHILDREN

1. MIAN UMER MANSHA DIRECTOR /

CHIEF EXECUTIVE OFFICER 44,292,572 12.60
2. MIAN HASSAN MANSHA DIRECTOR / CHAIRMAN 44,372,016 12.62
3. MR. MAHMOOD AKHTAR DIRECTOR 500 0.00
4. MR. FARID NOOR ALI FAZAL DIRECTOR 500 0.00
5. MRS. SARA AQEEL DIRECTOR 1,500 0.00
6. MRS. MEHAK ADIL DIRECTOR 500 0.00

IV) EXECUTIVES

MR. MAQSOOD AHMAD 500 0.0001

V) PUBLIC SECTOR, COMPANIES AND CORPORATIONS

JOINT STOCK COMPANIES 17,275,760 4.91

VI) SHAREHOLDERS HOLDING FIVE PERCENT OR MORE

VOTING INTEREST IN THE LISTED COMPANY

1. MRS NAZ MANSHA SHAREHOLDER 29,188,712 8.30

2. MIAN RAZA MANSHA SHAREHOLDER 29,571,909 8.41
3. MIAN UMER MANSHA DIRECTOR / CHIEF EXECUTIVE OFFICER 44,292,572 12.60
4. MIAN HASSAN MANSHA DIRECTOR / CHAIRMAN 44,372,016 12.62
5. D. G. KHAN CEMENT ASSOCIATED COMPANY 30,289,501 8.61
COMPANY LIMITED

VII) BANKS, DEVELOPMENT FINANCIAL INSTITUTIONS,

NON-BANKING FINANCIAL INSTITUTIONS, INSURANCE
COMPANIES, TAKAFUL, MODARABAS AND PENSION FUNDS

1. INVESTMENT COMPANIES 1,086,622 0.31

2. INSURANCE COMPANIES 17,237,866 4.90
3. FINANCIAL INSTITUTIONS 23,287,571 6.62
4. MODARABAS COMPANIES 120,005 0.03
5. PENSION / PROVIDENT FUNDS 9,766,332 2.78

INFORMATION UNDER LISTING REGULATION NO. 5.19.11 (XII) OF PAKISTAN STOCK EXCHANGE
LIMITED RULE BOOK AS ON JUNE 30, 2021

There is no trading in the shares of the Company, carried out by its Directors, Chief Executive Officer, Chief
Financial Officer, Head of Internal Audit, Company Secretary, their spouses and minor children and other
employees of the Company for whom the Board of Directors have set the threshold.
228 Nishat Mills Limited
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 240 Nishat Mills Limited

(000) 2020 (000) 2021

60,904,096 71,431,010

7,276,126 9,317,855

8,719,892 11,137,991

2,738,196 2,838,310

1,502,412 1,229,179

2,044,302 2,722,637

4,479,284 7,070,502

3,506,284 5,922,470
 Form of Proxy

I /We

of

being a member of Nishat Mills Limited, hereby appoint

of

or failing him/her

of

member(s) of the Company, as my/our proxy in my/our absence to attend and vote for me/us and on my/our behalf at
the Annual General Meeting of the Company to be held on October 28, 2021 (Thursday), at 03:30 p.m at Emporium
Mall, The Nishat Hotel, Trade and Finance Centre Block, Near Expo Centre, Abdul Haq Road, Johar Town, Lahore.

as witness may hand this day of 2021

Please
Signed by the said member affix
revenue
in presence of stamp
Rs. 50

Signature(s) of Member(s)

Signature of witness Signature of witness

Name Name

Address Address

CNIC # CNIC #

Please quote:

Folio No. Shares held CDC A/C. No.

Important: This instrument appointing a proxy, duly completed, must be received at the Registered Office of the Company
at Nishat House, 53-A, Lawrence Road, Lahore not later than 48 hours before the time to holding the annual general
meeting.
 AFFIX
CORRECT
POSTAGE

The Company Secretary

NISHAT MILLS LIMITED

Nishat House,
53-A, Lawrence Road, Lahore.
Tel: 042 - 36360154
UAN: 042 - 111 113 333
2021
 AFFIX
CORRECT
POSTAGE

The Company Secretary

NISHAT MILLS LIMITED

Nishat House,
53-A, Lawrence Road, Lahore.
Tel: 042 - 36360154
UAN: 042 - 111 113 333
 VERSATILE Ph: +92 42 3717 3282

REGISTERED OFFICE:
Nishat House, 53-A, Lawrence Road, Lahore
Tel: 042-36360154, 042-111 113 333
nishat@nishatmills.com
www.nishatmillsltd.com