S.G. Fibres Limited - Annual Reports 2003





S.G. FIBRE LTD
ANNUAL REPORTS 2003


COMPANY INFORMATION
NOTICE OF ANNUAL GENERAL MEETING
CHAIRMAN REVIEW
DIRECTORS' REPORT
CORPORATE GOVERNANCE
VISION / MISSION STATEMENT
AUDITORS' REPORT TO THE MEMBERS
BALANCE SHEET
PROFIT & LOSS ACCOUNT
CASH FLOW STATEMENT
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE ACCOUNTS
PATTERN OF SHAREHOLDING

Chairmans' Review

On behalf of the Board of Directors I welcome you to the 35th Annual General Meeting of the company to present Annual
Account for the year ended 30th June, 2003 and the Auditors Report thereon. During the year your Company sustained a loss
of Rs.64.126 million after charging depreciation of Rs.82.238 million. Thus Profit before charging depreciation works out
to Rs.18.111 million.

The profitability of the company continued to be affected by the depressed sale prices due to unfavorable market conditions
and fluctuation in international prices of petrochemical products. As the prices of petrochemical products rose in the intonational
market the same are reciprocated by increase in prices of chips. Some of the main factors and constraints are elaborated below:

a) As you know, S. G. Power Limited is the only supplier of electricity to S. G. Fibre Limited. If anything goes wrong
with S. G. Power Limited, it reflects on the activities of S. G. Fibre Limited. During the year under review the supply
of gas to S. G. Power Limited has been contaminated with oil, as a result of which generators of S. G. Power Limited
used to be shut down many times in a day, and the power supply to us was also interrupted. Consequently entire plant
was shut down, which cost tremendous losses to the company.

b) Moreover frequent drop in gas pressure of S.G. Power has become an every day feature. This problem is still going
on, resulted in interruption of power supply to S. G. Fibre Ltd. which also effected production. Being a continuous
processing plant frequent shut down of plant is unbearable. Every shut down causes losses of lacs of rupees. We
suffered huge losses due to frequent shut down of plant because of above mentioned reasons.

c). Gulf war also left drastic impact on prices of chips. Due to war, prices of petroleum and petrochemical products had
gone up in the international market. Chips which is our prime raw material is also a petrochemical product and the
prices of chips also reacted accordingly. The high price of raw material is not being absorbed by the market. Following
is comparison of pre war & post war prices of chips.

Month. Local Imported

January 2003 Rs.49,000/ M.T $. 650/ M.T.

March 2003 Rs.68,000/M.T $.1,1007 M.T

Due to increase in prices of chips, we had to curtail the production instead of closing the factory, so as to avail long
term benefit. As a result scores of hand loom factories had been closed and we had to unload the inventory at reduced
price which caused heavy losses.

_d)_____The long standing problem of damping of yarn from far caster countries is also persisting.

e) Government of Pakistan also gave a thorough blow to already dying industry of Polyester Filament Yarn. Duty on

yarn had been reduced first from 35% to 25% and then from 25% to 20%. As a result of which the Polyester Filament
Yarn manufacturing units are paying duty @ 20% while the chips manufacturers are taking full advantage of duty
structure by paying only 13%, and the difference of 7% is a huge burden on the industry. Owing to this unjustified
and un-realistic duty structure 12 units, out of 21 were closed. The matter was taken up to the higher authorities at
all forums of Government of Pakistan, by Filament Yam Manufacturers Association. Everybody listened to our plight
patiently and sympathetically but no positive steps have been taken to address the problems of Polyester Filament
Yarn industry.

Notice of Annual General Meeting

Notice is hereby given that the 35th Annual General Meeting of S.G. Fibre Ltd. will be held on Saturday,
25th October, 2003 at 2:30 p.m at its Registered office, B-40, S.l.T.E. Karachi to transact the following
business:

1- To confirm the Minutes of the Annual General meeting held on 26th October, 2002.

2- To receive consider and adopt the audited accounts of the Company for the year ended June 30, 2003
together with the Directors' and Auditors' Reports thereon.

3- To appoint the Auditors of the Company for the year ended June 30, 2004 and fix their remuneration
M/ s. Muniff Ziauddin & Co., Chartered Accountants, the present Auditors retire and being eligible,
offer themselves for re-appointment.

4- To transact any other business with the permission of the Chair.

By order of the Board

Karachi: Muneer Ahmed

September 23rd, 2003 Company Secretary

NOTES:

1- The Share transfer books of the Company with remain closed from 17th October, 2003 to 25th
October 2003 (Both days inclusive).

2- A member entailed to attend and vote at this meeting may appoint another member as his/ her proxy
to attend and vote instead of him/ her. Proxies in order to be effective must be received at the registered
office not less than 48 hours before the time of Meeting.

3- Members are requested to communicate to me Company of any change in their addresses.

The Polyester Filament Yarn industry is badly affected by the above factors. Especially textile sector, major consumer of our
products, has been affected drastically resulting into substantial decline of our sales to this sector. Consequently profitability
is likely to remain under pressure owing to fluctuation. Despite difficult environment the company is taking new initiatives
on its own for the future growth of the company.

Due to un-flagging efforts of the Directors, your company has been able to explore intonational market for the export of Value
Added products. As a new strategy the management is planning to diversify its products from normal yarn to highly Value
Added products.

AL - Hamdolillah your company has become the only exporter of Polyester Filament Yarn from Pakistan. Our products
are highly admired in European market and most of the sales are made in advance. Hopefully your company will gradually
diversify its entire local sales into export sales.

In order to achieve this goal your company has made an investment of Rs.771million since 1996 from its own sources. We are
almost half way through, and there is still someway to go.

Comparison of export during the last five years is given hereunder:

Year	Exports Rs.
1999	106,818
2000	284,174
2001	3,178,699
2002	20,694,559
2003	55,888,622

CURRENT RATIO is not according to the requirements of Prudential Regulations, as the company has paid off its major long
term borrowings and liabilities during the year. This has been the managements policy from the very beginning to reduce the
liability as much as policy. Company had borrowed Long Term loans but in order to get rid of the liability as early as possible
we generated the funds from all sources and paid off the long term loans. This was also necessary in order to save the high financial
cost of old long term loans acquired before the present lower mark up rates available in the financial market. The company will
negotiate to obtain long term loans on current market rates.

The company firmly believes that as partners for progress, the company will continue to enjoy full confidence, cooperation and
support from all concerned and specially banks for the development and progress of the company to achieve even better results
and to meet the future challenges in the years ahead.

FUTURE OUTLOOK

Company has changed its philosophy to gradually switch over from local sales to export sales, as there is great potential for our
products in the International market. Inshaallah in ensuing years we will exert our fullest efforts to divert our sales more and more
towards exports and will be able to take the graph of profits vertically.

ACKNOWLEDGEMENT.

On behalf of all the directors, I would like to place on record appreciations for the dedicated efforts made by the staff and executives
of the Company and hope the same spirit of devotion and dedication will continue in future.

S.M.AHMED

Chairman

Directors' Report 2003

STATEMENTS ON CORPORATE AND FINANCIAL REPORTING FRAME WORK.

a) The financial statement for the year ended June 30, 2003 have been prepared by the manag
present fairly its states of affairs, the results of its operation, cash flows and changes in

b) The company has maintained proper books of accounts

c) The Interational Accounting Standards, as applicable in Pakistan, have been followed in prep
of financial statements

d) Appropriate accounting policies have been consistently applied except for the change as expla
the note 2.3 to the accounts, with which the auditors of the company concur, in preparation of fij
statements and accounting estimates are based on reasonable and prudent jud\|

e) There are no significant doubts upon the Company's ability to continue as a going concern.

f) The system of internal control is sound and being continuously monitored

g) There has been no material deviation from the best practices of code of corporate governance as d
by the listing regulations i) Specified pattern of share holding is annexed to this i

h) The directors ,CEO, CFO, Company Secretary and their spouse and minor children did not ca

any transaction in the share of the company during the year.

i) Key operating financial data for the last six years in summarized form is am

j) Compliance of code of corporate governance is annexed.

k) During the year five 5 meetings of the Board of Directors were held.

Attendance by each director is as follows:

Name of Directors			No. of Meeting Attended
Mr. S. M. Ahmed		Chairman	5
Mst. Zubaida Khatoon		Director	3
Mr. Sohail Ahmed		Chief Executive	5
Mr. AsimAhmed		Executive Director	5
Mrs. Saba Sohail		Director	3
Mrs. Tania Asim		Director	2
Mr. Wajahat A, Baqai		Nominee Director NBP	2

Leave of absence was granted to Directors who could not attend some of the Board meetings.
Audit Committee

In accordance with the requirements of Code of Corporate Governance, an audit committee has b
formed and following are its members:

Mr.Asim Ahmed		Chairman
Mr.Jawed Rizvi		Member
Mr.Muneer Ahmed		Secretary

The Board of Directors of S.G.Fibre Limited have pleasure in presenting the 35th Annual Report and Audited Financial Statements
together with Auditors' Report thereon for the year ended 30th June 2003.

FINANCIAL RESULTS:

During the year under review your company sustained a loss of Rs.64.126 million .The financial results may be analyzed as under:

SALES					1,027,362,606
COST OF SALES					942,577.97
GROSS PROFIT					84,784,633
ADMIN & SELLING EXPENSES				44,719,589
FINANCIAL CHARGES				35,035,576
OTHER CHARGES				772,119
OTHER INCOME				-13,853,967	66,673,317
PROFIT BEFORE DEPRECIATION					18,111,316
DEPRECIATION					82,237,815
LOSS AFTER DEPRECIATION					-64,126,499

The company continues to operate under pressure from a number of areas like high prices of raw material, low sales and depressed
selling prices. There has been a marginal increase of 0.47 % in volume of sales but at the same time value of sale has decreased
by 1% .This is only due to depressed sale prices. Consequently we had to curb the production. A comparison of the same is given
below:

				2003	2002
Turn over				1,183,737,597	1,195,669,610
Sales volume M.Tons				8,817	8,770
Production M.Tons				9,066	8,772

Corporate Governance

Statement of compliance with code of corporate governance.

This statement is being presented to comply with the Code of Corporate Governance contained in the listing regulations of
Karachi Stock Exchange for the purpose of establishing a framework of good governance, whereby a listed company is managed
in compliance with the best practice of corporate governance:

The company has applied the principles contained in the Code in the following manner:

1. The Board comprises 7 Directors inducting CEO. The Company encourages representation of independent non-
executive directors and directors representing minority interest on its Board of Directors. At present the Board
includes 4 non-executive directors.

2. The Directors have confirmed that none of them is serving as a director in more than ten listed companies, including
this company.

3. All me resident directors of the company are registered as taxpayers and none of them has defaulted in payment of
any loan to a banking company, a DEI or an NBFI or, being a member of a stock exchange, has been declared as a
defaulter by that stock exchange.

4 No casual vacancy occurred in the Board during the current year.

5. The Company has prepared a Statement of Ethics and Business Practice which has been signed by all the directors
and employees of the Company.

6. The Board has developed a vision statement ,overall corporate strategy and significant policies of the Company. A
complete record of particulars of significant policies along with the dates on which they were approved or amended
has been approved.

7. All the powers of the Board have been duly exercised and decision on material transactions, including appointment
and determination of remuneration and terms and conditions of employment of the CEO and other executive directors,
have been taken by the Board.

8. The meeting of the board were presided over by the Chairman. The Board met at least once in every quarter. Written
notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before
the meeting. The minutes of the meetings were appropriately recorded and circulated.

9. The Board arranged one orientation course for its directors during the year to apprise them of their duties and
responsibilities.

10. The Chief Financial Officer and Company Secretary were appointed prior to the implementation of the Code of
Corporate Governance. Remuneration, terms and conditions in case of future appointments on these positions will
be approved by the Board.. However, the appointment of head of internal audit and terms and conditions of his
employment have been approved by the Board.

11. The directors report 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 were duly endorsed by CEO and CFO before approval of the Board.

13. The directors, CEO and executives do not hold any interest in the shares of the company other than that disclosed
in the pattern of shareholder.

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 compasses 3 members, of whom 2 are non-executive directors
including the Chairman of the company.

16. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final
results of the company and as required by the Code. The terms of reference of the committee have been formed
and advised to the committee for compliance.

Key Operating and financial results of last six years is given below:

		2003	2002	2001	2000	1999	1998
Earning and Distribution
Sales		1,027,362,606	1,007,247,061	972,570,773	808,032,031	720,181,090	781,704,637
Profit /(Loss) before tax		-61,273,364	12,366,942	65,086,921	-61,213,275	-89,662,996	50,490,978
Taxes		21,356,260	42,950,867	4,871,205	5,283,519	7,944,167	3,908,523
Net Earnings		-82,629,624	-30,583,925	60,215,716	-66,496,794	-97,607,163	46,582,455
Dividend		-	-	33,000,000	-	-	24,000,000
Retained in Business		-82,629,624	-30,583,925	27,215,716	-66,496,794	-97,607,163	22,582,455
Net earning Per share (Rs.)		-5.51	-2.04	4.01	-4.43	-6.51	3.11
Dividend declared Per share (Rs.		-	-	2.2	-	-	1.6