Dawood Cotton Mills Limited
Annual Reports 2003
CONTENTS
Company Information
Operating Highlights
Notice of Annual General Meeting -
Directors' Repor
Vision / Mission Statement
Statement of Ethics and
Business Practices
Statement of Compliance with
Code of Corporate Governance
Review Report to the Members on
Code of Corporate Governance
Auditors' Report to the Members
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Accounts
Pattern of Holding of Shares
COMPANY INFORMATION
Board of Directors
M. Hussain Dawood (Chairman)
Shahzada Dawood (Chief Executive)
Khawaja Amanullah
A. Samad Dawood
A. Aziz Moon
Haroon Mahenti
Yousuf A. Deshi
Board Audit Committee
Khawaja Amanullah (Chairman)
A. Samad Dawood (Member)
A. Aziz Moon (Member)
Company Secretary
Yousuf A. Deshi
Head of Internal Audit
M.Hanif Hussain
Auditors
Gangat & Company
(Chartered Accountants)
Bankers
Bank AI-Habib Limited
Habib Bank Limited
Metropolitan Bank Limited
Registered Office
35-A, Shahrah-e-Abdul Hameed Bin Baadees
(Empress Road), Lahore.
Karachi Office / Shares Department
Dawood Centre,
M.T. Khan Road,
Karachi-75530
Mills
Landhi Industrial Area,
Karachi-75120
OPERATING HIGHLIGHTS
Six Years at a Glance
PARTICULARS			UNIT	2003	2002	2001	2000	1999	1998
A) INCOME STATEMENT
1   Sales Value			Rs. in Thousands	647,465	485,892	308,341	84,406	77,147	73,687
2  Gross Profit/(Loss)			Rs. in Thousands	41,183	22,676	-5,222	5,804	-12,707	-17,891
3  Operating Profit/(Loss)			Rs. in Thousands	16,577	4,057	-21,604	-7,024	-22,711	-28,126
4  Profit Before Taxation			Rs. in Thousands	82,909	84,811	49,408	100,218	53,647	68,850
5  Profit After Taxation			Rs. in Thousands	76,459	79,811	42,908	92,718	53,647	53,850
B) DIVIDEND
1   Cash Dividend			%	25	-	35	65	60	40
2  Bonus Shares			%	50	100	-	-	-	-
3 Total Dividend			%	75	100	35	65	60	40
C) BALANCE SHEET
1  Total Assets Employed			Rs. in Thousands	1,647,916	993,047	580,908	599,866	549,654	552,839
2  Current Assets			Rs. in Thousands	364,609	248,865	186,564	209,790	432,370	419,218
3  Current Liabilities			Rs. in Thousands	175,076	90,198	103,491	142,389	136,872	140,266
4  Paid-up Capital			Rs. in Thousands	222,708	74,236	74,236	74,236	74,236	74,236
5  Shareholders' Equity			Rs. in Thousands	1,426,200	849,441	424.013	407,088	362,624	353,518
6  No. of Ordinary Shares			In Thousands	22,270.81	7,423.60	7,423.60	7,423.60	7,423.60	7,423.60
D) RATIO ANALYSIS
1   Gross Profit/(Loss)			%	6.36	4.67	-1.69	6.88	-16.47	-24.28
2  Earning Per Share			Rs.	3.43	10.75	5.78	12.49	7.23	7.25
3  Dividend Yield			%	11.72	27.7	10.61	15.85	30	18.18
4  Return on Equity			%	5.36	9.4	10.12	22.78	14.79	15.23
5  Break-up Value of Shares			Rs.	64.04	114.42	57.12	54.84	48.85	47.62
6  Market Value of Shares			Rs.	64	36.1	33	41	20	22
E) PRODUCTION
1   Capacity		Yarn	Kgs. in Thousands	12,355	6,988	6,988	6,988	6,988	6,988
		Cloth	Meters in Thousands	8,698	8,698	8,698	8,698	7,649	7,649
2 Actual Production		Yarn	Kgs. in Thousands	8,580	6,440	4,365	648	390	1,675
		Cloth	Meters in Thousands	2,668	2,137	77	-	-	-
3 Capacity Utilization		Yarn	%	69.45	92.16	62.46	9.27	5.58	23.97
		Cloth	%	30.67	24.57	0.89	-	-	-
F) OTHERS
1   Employees			Nos.	1,105	763	737	335	73	229
2 Capital Expenditure			Rs. in Thousands	1,318	49,639	74,659	874	-	807
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the fifty-third Annual General Meeting of the members of Dawood Cotton
Mills Limited will Insha Allah be held on December 31,2003 at 12:30 p.m. at the Company's Registered
Office at 35-A, Shahra-e-Abdul Hameed Bin Baadees (Empress Road), Lahore to transact the following
business after recitation from the Holy Quran:
1.    To confirm the minutes of the fifty-second Annual General Meeting held on January 23,2003;
2.    To receive, consider and adopt the Audited Accounts of the Company for the year ended
September 30,2003 together with the Directors' and Auditors' Reports thereon;
3.    To consider and approve payment of final cash dividend @ Rs. 2.50 i.e. (25%) per share in addition to
Bonus Shares already issued @ 50% i.e. one share for every two ordinary shares held as
recommended by the Board of Directors;
4.    To appoint Auditors for the year ended September 30,2004 and to fix their remuneration. The present
auditors M/s Gangat & Co. (Chartered Accountants) retire and being eligible, offer themselves for
re-appointment;
5.    To transact any other business with the permission of the Chairman;
By Order of the Board
Karachi                                                                                                                (Yousuf A. Deshi)
December 03, 2003                                                                                            Director I Secretary
Notes:
1.    The share transfer books of the Company will remain closed from December 24, 2003 to
December 31,2003 (both days inclusive).
2.    A member entitled to attend and vote at the Meeting may appoint another member as his / her proxy
to attend and vote. Votes may be given personally or by an attorney or in case of Corporation by a duly
authorized representative. The instrument of proxy duly executed should be lodged at the Registered
Office of the Company or at Dawood Centre, M.T. Khan Road, Karachi-75530 not later than forty-
eight hours before the Meeting.
3.    A Beneficial Owner of the Company through Central Depository Company (CDC) or his / her proxy,
entitled to attend and vote at this meeting, must bring original NIC or passport to prove his / her
identity. Proxy Form of a shareholder through CDC must be accompanied with attested copies of NIC
or passport of such shareholder and his / her proxy. Representatives of corporate members should
bring the usual documents required for such purpose.
4.    The members are requested to notify the change in addresses, if any, immediately.
DIRECTORS' REPORT
Dear Members
Assatam-o-Alaikum
The Directors are pleased to present their Annual Report together with the Audited Financial Statements
for the year ended September 30,2003 before the fifty-third Annual General Meeting of the Company.
Operating Results
The gross profit has increased to Rs. 41,182,525 during the year under review, as compared to
Rs. 22,676,173 for the previous year. The gross profit percentage has improved to 6.36% as compared to
4.67% for the previous year. The net profit before taxation for the year is Rs. 82,909,032 as compared to
Rs. 84,811,233 for the previous year, after providing for depreciation, all the operating, administrative,
selling & distribution and financial expenses. The summary of the financial results is:
					2003	2002
					Rupees	Rupees
Sales					647,465,309	485,891,595
Gross profit					41,182,525	22,676,173
Operating profit					16,576,743	4,056,552
Other income					75,844,039	90,732,140
Profit before taxation					82,909,032	84,811,233
Taxation
(Including deferred taxation)					-6,450,000	-5,000,000
Profit after taxation					76,459,032	79,811,233
Un-appropriated profit brought forward					207,019,633	201,444,420
Profit available for appropriation					283,478,665	281,255,653
Bonus Shares
At the last annual general meeting held on January 23,2003 7,423,602 Bonus Shares of Rs. 10/- each in
the ratio of one bonus share for every share held on January 15,2003 were issued.
In addition, the Board of Directors has decided to issue Bonus Shares in the ratio of one share for every
two shares held i.e. 50% on May 30, 2003 for the year 2002-2003 thus the paid up capital stands at
Rs. 222,708,0607-.
Dividend
The Directors recommend a payment of final cash dividend of 25% (Rs. 2.50 per share) on the paid up
capital of the Company in addition to the bonus shares @ 50% already issued during the year. The
following appropriations have been recommended:
Profit available for appropriation					283,478,665	281 ,255,653
Appropriations:
Bonus shares @ 50% already issued (2002 : 100%)					74,236,020	74,236,020
Final cash dividend on ordinary shares @ 25% (2002 : nil)					55,677,015	-
					129,913,035	74,236,020
Un-appropriated profit carried forward					153,565,630	207,019,633
Earnings Per Share - Basic					3.43	3.58
Corporate and Financial Reporting Frame Work
a)         The financial statements have been drawn up by the   management in conformity with the
Companies Ordinance 1984. These statements fairly present Company's state of affairs, the
result of its operations, cash flows and changes in equity;
b)          Proper books of accounts have been maintained by the Company;
c)          Appropriate accounting policies have been consistently applied except for the change in policy
referred in Note 3.2 to the accounts in preparation of financial statements and accounting
estimates are based on reasonable and prudent judgment;
d)          International Accounting Standards, as applicable in Pakistan, have been followed in preparation
of financial statements and any departure therefrom has been adequately disclosed;
e)         The system of internal control is sound in design and has been effectively implemented and
monitored;
f)          There are no significant doubts upon the Company's ability to continue as a going concern;
g)         The annual audited financial statements are circulated within four months of the close of the
financial year.