ELAHI COTTON MILLS LIMITED
Annual Reports 2003
COMPANY'S INFORMATION
BOARD OF DIRECTORS
MAHBOOBELAHI
MAHFOOZ ELAHI
MAHMOOD ELAHI
ABDUL RASHEED
FARRUKH AHMED
NAVEED AKHTER
S. M. RAUNAQ UD DIN
CHIEF EXECUTIVE
MAHBOOB ELAHI
AUDIT COMMITTEE
MAHFOOZ ELAHI
FARRUKH AHMED
NAVEED AKHTER
AUDITORS
MIS. S M. MASOOD & CO.
CHARTERED ACCOUNTANTS
23 EAST, SAEED PLAZA,
BLUE AREA,
ISLAMABAD.
REGISTERED OFFICE
270-SECTOR 1-9,
INDUSTRIAL AREA,
ISLAMABAD.
MILLS
JURIAN, MANDRA,
TEHSIL GUJAR KHAN,
DISTRICT RAWALPINDI.
STATEMENTS OF COMPLIANCE OF THE
CODE OF CORPORATE GOVERNANCE
The Directors state that:-
a)        The Financial Statements, prepared by the Management present a
true and fair state of affairs of the Company, the results of its
operations, cash flows and changes in equity.
b)        Proper Books of Accounts have been maintained.
c)        Appropriate Accounting Policies have been consistently applied 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.
e)        The system of Internal Control is sound in design and has been
effectively implemented and monitored.
f)         The management has devised a plan to enable the Company to
continue as a going concern which involves
AUDITORS:
The auditor M/S. S. M. Masood & Company, Chartered Accountants, retire and being
eligible offer themselves for re-appointment. The Audit Committee has recommended to
appoint retiring Auditors.
SHAREHOLDING :
A statement showing the pattern of share holding by the shareholders of the Company
as on September 30, 2003 is annexed herewith.
FUTURE PROSPECTS AND OUTLOOK :
The management of the company is making efforts to restart the Mills. The Company is
in process of restructuring and rescheduling of its loan liabilities with the Banks and has
applied to the State Bank of Pakistan. The SBP Committee is considering our request for
settlement of loans liabilities under BPD circular No. 29 dated October 15, 2002.
The Directors have to comment on Auditors qualification as under:
Habib Bank Limited has filed the suit for the recovery of their dues in Lahore High Court,
Rawalpindi Bench, Rawalpindi. The Company has not charged the mark up on Demand
Finance-l and Short Term Running Finance as the same has not been charged by the
Habib Bank Limited due to the suit filed.
The company has incurred net loss of Rs 8.665 million, This loss is due to the closure of
Mills, factory overhead cost, financial and administrative expenses. Despite of losses,
the management is committed with the company and will continue to its support. The
State Bank of Pakistan vide circular dated 15th October, 2002 has launched a scheme of
settlement of irrecoverable loan and advances with financial institutions. The Company
has applied under the above said scheme. The SBP Committee is considering our
request for settlement of loans and it is hoped that issue will be settled soon. With the
successful settlement of loan and liabilities and injection of working capital the Mill will be
in operation in the Year 2003-04 and will continue as a Going Concern.
Tax deducted at source under income tax ordinance, 2001 up to September 30, 2003
amounting to Rs 657972 was not deposited due to financial constraints. Some of the
Syed Muhammad Raunaq           2          Appointed    on    June
uddin                                                        04, 2003 in place of
above.
ACKNOWLEDGEMENT :
The Board of Directors are pleased to record word of thanks to its members. The
Staff - management remained pleasantly co-operative .1 together with fellow
Directors, wish acknowledge our gratitude to the staff members for performing
their duties.
ON BEHALF OF THE BOARD
Islamabad,
December 06, 2003.
( MAHBOOB ELAHI)
Chief Executive
1.           Restructuring of loans through SBP scheme
2.          Arrangement of alternative funding
g) There has been no material departure from the best practices of
Corporate Governance as detailed in the listing regulations.
h) Significant deviation from last year in operating results of the
Company and reasons thereof have been explained.
i) The key operating and financial data for the last six years is
annexed.
j) There are no outstanding statutory payments on account of taxes,
duties, levies and charges except as shown in notes to the
accounts.
k) The Company is operating as un-funded Gratuity Fund which were
not invested and were retained for business of the Company.
m) Eight meetings of the Board of Directors of the Company were held
during the year. The attendance of each Directors at the meeting of
the Board of Directors is as under:-
Name of Director		Number of
		Meetings
		attended
Mr. Mahboob Elahi		8
Mr. Mahfooz Elahi		8
Mr. Mahmood Elahi		8
Mr. Abdul Rasheed		8
Mr. Naveed Akhter		8
Mr. Farrukh Ahmed		8
Rana Ahmed Khan,		2	Resigned on June 04,
ICP nominee Director			2003
10.       The Board has approved appointment of a Chief Financial Officer, Head of
Internal Audit and the Board approved the terms and conditions.
11.       The Directors report for this year has been prepared in compliance with the
requirements of the code and fully describes the salient matters required to be
disclosed.
12.       The financial statements of the Company have been duly endorsed by Chief
Executive Officer and Chief Financial Officer before approval of the Board..
13.       The Directors, Chief Executive do not hold any interest in the shares of the
Company other than those disclosed in the pattern of shareholding.
14.       The Company has complied with all the Corporate and financial reporting
requirements of the Code.
15.       The Board has formed an audit committee, It comprises three members.
16.       The meetings of the Audit Committee were held once every quarter for prior
approval of interim and final results of the Company as required by the Code.
The terms of reference of the Committee have been formed and advised to the
Committee for compliance.
17.       The Board has set-up an effective internal audit function who are considered
suitably qualified and experienced for the purpose and are involved in the internal
audit function on a full time basis.
18        The 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, that they are not aware of any instance
where shares of the Company are held by any of the partner of the firm, their
spouse and minor children and are compliant wjth International Federation of
Accountants guidelines on code of ethics as adopted by Institute of Chartered
Accountants of Pakistan.
19        The statutory Auditors or the persons associated with them have not been
appointed to provide other services except in accordance with the listing
regulations and the auditors have confirmed that they have IFAC guidelines in
this regard.
20        We confirm that all other material principles contained in the Code have been
complied.
CHIEF EXECUTIVE                                                                                          DIRECTOR
Islamabad December 06, 2003
STATEMENT OF COMPLIANCE WITH BEST PRACTICES ON TRANSFER PRICING.
The Company has complied with the best practices on Transfer Pricing as contained in
the Listing Regulation No. 38 of the Karachi Stock Exchange.
CHIEF EXECUTIVE                                                                              DIRECTOR
STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CORPORATE
GOVERNANCE TO THE MEMBERS.
This statement is being presented to the Company with the code of corporate
governance contained in the listing regulations of Stock Exchanges for the purpose of
establishing a frame work with best practices of good corporate governance.
1.         The Company welcomes the induction of independent Non-Executive Directors
on the Board. At present the Board includes two independent non executive
Directors
2.         The Directors of the Company have confirmed that none of them are serving as a
Director in ten or more listed companies.
3.        All the Directors of the Company are registered tax payer and none of them have
defaulted in payment of any duties to a Banking Company, a Development
Financial Institution or a non-Banking Financial Institution or Stock Exchanges.
4.        A casual vacancy occurring in the Board on 07.05.2003 was filled within 30 days
thereof.
5.         The Company has prepared a "Statement of Ethics and Business Practices"
which has been signed by all Directors and employees of the Company.
6.         The Board has developed a   vision / mission statement over all corporate
strategy. Significant policies of the Company are being developed.
7.         All major decisions on material transaction or significant matters are taken by the
Board and are documented by a resolution passed at the meeting of the Board.
8.         The meetings of the Board were presided by the Chairman and Board meets at
least once in every quarter. Written notices of the Board meetings, alongwith
agenda and working papers, were circulated at least seven days before the
meetings.  The minutes of the  meetings were appropriately recorded  and
circulated.
9.         Orientation course for its Directors has been arranged to appraise them of their
duties and responsibilities.
CATEGORIES OF SHARE HOLDING AS ON SEPTEMBER 30, 2003
CATEGORIES OF SHARE HOLDERS					NUMBERS	SHARES
						HELD
ASSOCIATED COMPANIES, UNDERTAKINGS AND
RELATED PARTIES
NIT & ICP
INVESTMENT CORPORATION OF PAKISTAN					1	158,867
DIRECTORS, CEO, & THEIR SPOUSES AND
MINOR CHILDREN
Mr. Mahboob Elahi, Director / Chief Executive					1	96,000
Mr. Mahfooz Elahi S/o Mr. Mahboob Elahi, Director					1	74,250
Mr. Mahmood Elahi S/o Mr. Mahboob Elahi, Director					1	74,250
Mrs. Samina Begum w/o Mr. Mahboob Elahi					1	73,500
EXECUTIVE					NIL	NIL
PUBLIC SECTOR COMPANIES & CORPORATIONS					NIL	NIL
BANKS, DEVELOPMENT FINANCE INSTITUTIONS
Habib Bank Limited					1	190,900
NON BANKING FINANCIAL INSTITUTIONS					NIL	NIL
INSURANCE COMPANIES, MODARABS & MUTUAL
FUNDS					NIL	NIL
JOINT STOCK COMPANIES					NIL	NIL
INVESTMENT COMPANIES					NIL	NIL
INDIVIDUALS					401	632,233
OTHERS					NIL	NIL
TOTAL						1,300,000
SIX YEARS AT A GLANCE
PARTICULARS		2001-2002	2000-2001	1999-2000	1998-1999	1997-1998	1996-1997
Paid up capital		13,000,000	13,000,000	13,000,000	13,000,000	13,000,000	13,000,000
Reserve		10,327	—	—	—	—	-
Fixed asset at cost		58,912,523	63,160,623	67,114,554	71,119,009	77,266,847	68,303,237
Capital work in progress		—	~	—	474,884	463,435	269,929
Accumulated depreciation		64,709,103	62,914,127	58,763,654	54,537,797	49,718,782	44,034,770
Long term investment		32,995	25,000	25,000	25,000	25,000	25,000
Current assets		20,237,169	39,597,732	37,339,895	78,362,627	79,676,222