Annual Report 2008 - Colgate Palmolive Pakistan

Over Two Decades of Excellence 13

NOTICE OF MEETING 

NOTICE IS HEREBY GIVEN that the 30th Annual General Meeting of COLGATE-PALMOLIVE (PAKISTAN) LIMITED will be held on 

Thursday September 18, 2008 at 11:00 a.m. at Avari Towers Hotel, Fatima Jinnah Road, Karachi to transact the following 

business: 

ORDINARY BUSINESS 

1. To receive, consider and adopt the audited financial statements for the year ended June 30, 2008 together with the 

Directors’ and Auditors’ Reports thereon. 

2. To declare final dividend in cash @ 100% i.e. Rs.10/- per share of Rs.10/- each and by way of issue of fully paid bonus 

shares @ 25% i.e. in the proportion of one share for every four shares held by the members as recommended by the 

Board of Directors. 

3. To appoint auditors and fix their remuneration. 

SPECIAL BUSINESS 

4. To consider, subject to declaration of the final dividend as above, to capitalize a sum of Rs.47,774,460 by way of issue 

of 4,777,446 fully paid bonus shares of Rs.10/- each and if thought fit to pass an ordinary resolution in the matter. 

5. To consider increase in authorized share capital of the Company from Rs.200,000,000 to Rs.400,000,000 divided into 

40,000,000 ordinary shares of Rs.10/- each and if thought fit to pass an ordinary resolution in the matter. 

A statement under section 160 of the Companies Ordinance, 1984 in the above matters togetherwith draft of the ordinary 

resolutions to be passed pertaining to item Nos. 4 & 5 is annexed. 

By Order of the Board 

MANSOOR AHMED 

KARACHI: August 19, 2008 Company Secretary 

NOTES: 

1. The share transfer books of the Company will remain closed from September 12, 2008 to September 18, 2008, both 

days inclusive. Transfers received in order by the Shares Registrar of the Company M/s. FAMCO Associates (Private) 

Limited, State Life Building No.2-A, 4th Floor, I.I.Chundrigar Road, Karachi upto September 11, 2008 will be considered 

in time for entitlement of the bonus shares and dividend. 

2. A member who has deposited his/her shares into Central Depository Company of Pakistan Limited, must bring his/her 

participant’s ID number and account/sub-account number alongwith original Computerized National Identity Card 

(CNIC) or original Passport at the time of attending the meeting. 

3. A member entitled to attend and vote at the general meeting may appoint another member as his/her proxy to attend, 

speak and vote instead of him/her. 

STATEMENT UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984 

Pertaining to item No. 4 

The Board of Directors has recommended to the members of the Company to declare final dividend in cash @ 100% and 

by way of issue of fully paid bonus shares @ 25% for the year ended June 30, 2008. Subject to approval of the Board 

of Directors’ recommendation as above, the resolution as under will be considered to be passed by the members as an 

ordinary resolution: 

“RESOLVED THAT: 

i) a sum of Rs.47,774,460 out of the profit for the year ended June 30, 2008 be capitalized and applied in making payment 

in full of 4,777,446 ordinary shares of Rs.10/- each and that the said shares be allotted as fully paid up bonus shares to 

those members of the Company whose names appear in the register of members on September 18, 2008 @ 25% i.e. in 

the proportion of 1 share for every 4 existing shares held by the members and that such new shares shall rank pari passu 

in all respects with the existing ordinary shares of the Company, however, they will not qualify for the final cash dividend 

declared for the year ended June 30, 2008; 

ii) in the event of any member holding less than 4 shares or a number of shares which is not an exact multiple of 4, the 

fractional entitlements of shares of such members shall be consolidated into whole new shares and the Directors of the 

Company be and are hereby authorized to arrange sale of the shares constituted thereby in such manner as they may 

think fit and to pay the proceeds of the sale to such of the members according to their entitlement; 

iii) for the purpose of giving effect to the above, the Directors be and are hereby authorized to take all necessary steps in 

the matter and to settle any question or difficulties that may arise with in regard to the distribution of the said new shares 

as they think fit.” 

Pertaining to item No. 5 

At present the authorized share capital of the Company is Rs. 200,000,000 and the paid-up capital is Rs.191,097,860. The 

Board of Directors recommends to increase the authorized share capital to Rs. 400,000,000 in order to facilitate increase 

in the paid-up capital as and when required to do so, and if thought fit by the members to pass the following resolution 

as an ordinary resolution: 

“RESOLVED THAT the authorized share capital of the Company be and is hereby increased to Rs. 400,000,000 divided into 

40,000,000 ordinary shares of Rs.10/- each and that Clause V of the Memorandum of Association and Article 3 of the Articles 

of Association of the Company be and are hereby amended accordingly.” 

The Directors are interested in the business to the extent of their entitlement of bonus shares as ordinary shareholders. 

4. Forms of proxy to be valid must be properly filled-in/executed and received at the Company’s Registered Office not 

later than 48 hours before the time of the meeting. 

5. Members are requested to notify the Shares Registrar of the Company promptly of any change in their addresses. 

6. Members who have not yet submitted photocopy of their Computerized National Identity Cards (CNIC) are requested 

to send the same to our Shares Registrar at the earliest. 

7. Form of Proxy is enclosed herewith. 

Over Two Decades of Excellence 25

FINANCIAL SUMMARY 

Year Ended June 30, 2008 

9,000 

Gross sales 

Rs in million 

8,977 

2,500 

Shareholders' equity 

Rs in million 

40.00 

Earnings Per Share 

Rupees 

8,000 

7,000 

6,000 

5,000 

4,000 

3,000 

6,286 

7,446 

2,000 

1,500 

1,000 

1,299 

1,707 

2,142 

35.00 

30.00 

25.00 

20.00 

15.00 

26.10 

31.65 

35.55 

2,000 

500 

10.00 

1,000 

5.00 

- 

2006 2007 2008 

- 

2006 2007 2008 

- 

2006 2007 2008 

Year ended June 30 

Rupees in million except EPS 2006 2007 % Change 2008 % Change 

Gross Sales 6,286 7,446 18.5% 8,977 20.6% 

Operating Income 783 911 16.3% 1,041 14.3% 

Net Profit After Tax 499 605 21.2% 679 12.2% 

Earnings per share (Rs.) 26.10 31.65 21.3% 35.55 12.3% 

Shareholders' Equity 1,299 1,707 31.4% 2,142 25.5% 

Over Two Decades of Excellence

STATEMENT OF VALUE ADDED 

Wealth Generated 

Year ended June 30 

2008 2007 

(Rs in million) 

Total revenue net of discount and allowances 8,529 7,032 

Bought-in-material and services 5,740 4,722 

2,789 2,310 

Wealth Distributed 

To Employees 

Salaries, benefits and other costs 319 275 

To Government 

Income tax, sales tax 1,665 1,329 

To Providers of Capital 

Dividend to shareholders 239 283 

Mark up/interest expenses on borrowed funds 20 15 

Retained for Reinvestment and Growth 

Depreciation and Retained Profits 546 408 

2,789 2,310 

60% 

60.0% 

50.0% 

40.0% 

30.0% 

20.0% 

10.0% 

19% 

11% 

9% 

1% 

0.0% 

To Government 

Depreciation & 

Retained Profit 

To Employees To Shareholders To Lenders 

Over Two Decades of Excellence

BALANCE SHEET 

as at June 30, 2008 

ASSETS 

Note 2008 2007 

(Rupees in '000) 

NON-CURRENT ASSETS 

Property, plant and equipment 5 966,355 864,837 

Intangible assets 6 11,600 17,400 

Long term loans 7 18,551 14,185 

Long term security deposits 8 2,962 3,521 

999,468 899,943 

CURRENT ASSETS 

Stores and spares 9 14,085 16,742 

Stock in trade 10 1,006,364 777,851 

Trade debts 11 177,983 144,263 

Loans and advances 12 95,412 37,763 

Trade deposits, short term prepayments and 

other receivables 13 57,741 30,670 

Profit receivable from banks 14 2,291 119 

Taxation 11,842 27,023 

Short term investments - available for sale 15 180,201 295,455 

Cash and bank balances 16 592,937 420,696 

2,138,856 1,750,582 

TOTAL ASSETS 3,138,324 2,650,525 

EQUITY AND LIABILITIES 

SHARE CAPITAL AND RESERVES 

Authorised share capital 

20,000,000 ordinary shares of Rs 10 each 200,000 200,000 

Issued, subscribed and paid-up share capital 17 191,098 152,879 

Reserves 18 1,950,245 1,553,776 

Surplus on revaluation of investments 15 201 455 

2,141,544 1,707,110 

LIABILITIES 

NON-CURRENT LIABILITIES 

Long term loan 19 3,125 5,625 

Deferred taxation 20 154,900 115,242 

Long term deposits 21 4,465 4,098 

162,490 124,965 

CURRENT LIABILITIES 

Trade and other payables 22 786,145 623,463 

Accrued mark-up 23 700 3,506 

Current maturity of long term loan 19 2,500 2,500 

Short term borrowings 24 44,945 188,981 

834,290 818,450 

TOTAL LIABILITIES 996,780 943,415 

CONTINGENCIES AND COMMITMENTS 25 

TOTAL EQUITY AND LIABILITIES 3,138,324 2,650,525 

The annexed notes 1 to 42 form an integral part of these financial statements. 

ZULFIQAR ALI LAKHANI 

Chief Executive 

TASLEEMUDDIN A. BATLAY 

Director 

35

PROFIT AND LOSS ACCOUNT 

for the year ended June 30, 2008 



Turnover 8,976,538 7,445,820 

Sales tax (1,249,907) (1,036,767) 

Special excise duty (73,495) - 

Trade discounts (521,208) (474,629) 

Net turnover 7,131,928 5,934,424 

Cost of sales 26 (5,035,128) (4,054,746) 

Gross profit 2,096,800 1,879,678 

Selling and distribution costs 27 (981,933) (907,481) 

Administrative expenses 28 (73,053) (60,407) 

Other operating expenses 29 (74,839) (61,795) 

Other operating income 30 73,909 61,411 

Profit from operations 1,040,884 911,406 

Finance costs 31 (19,875) (14,801) 

Profit before taxation 1,021,009 896,605 

Taxation 32 (341,716) (291,854) 

Profit after taxation 679,293 604,751 

Earnings per share (Rupees) - restated 33 35.55 31.65 

The appropriations from profits are set out in the statement of changes in equity. 


STATEMENT OF CHANGES IN EQUITY 


Issued, 

subscribed 

and paid-up 

share capital 

Capital 

reserve - 

share 

premium 

Revenue reserves 

General 

reserve 


Unappropriated 

profit 

Surplus on 

revaluation 

of 

investments 

Balance as at July 1, 2006 122,303 13,456 660,000 501,830 1,367 1,298,956 

Profit for the year ended June 30, 2007 - - - 604,751 - 604,751 

Final dividend for the year ended June 30, 2006 

(Rs 16 per share) - - - (195,685) - (195,685) 

Bonus shares issued at the rate of one share 

for every four shares held 30,576 - - (30,576) - - 

Transfer to general reserve - - 270,000 (270,000) - - 

Gain realised during the year ended June 30, 

2007 on disposal of investments - - - - (912) (912) 

Balance as at June 30, 2007 152,879 13,456 930,000 610,320 455 1,707,110 

Balance as at July 1, 2007 152,879 13,456 930,000 610,320 455 1,707,110 

Profit for the year ended June 30, 2008 - - - 679,293 - 679,293 

Final dividend for the year ended June 30, 2007 

(Rs 16 per share) - - - (244,605) - (244,605) 

Bonus shares issued at the rate of one share 

for every four shares held 38,219 - - (38,219) - - 

Transfer to general reserve - - 320,000 (320,000) - - 

Gain realised during the year ended June 30, 

2008 on disposal of investments - - - - (254) (254) 

Balance as at June 30, 2008 191,098 13,456 1,250,000 686,789 201 2,141,544 

Total 





Director 




Director 

37

CASH FLOW STATEMENT 


CASH FLOWS FROM OPERATING ACTIVITIES 



Cash generated from operations 34 919,796 847,583 

Finance costs paid (22,681) (11,571) 

Taxes paid (286,877) (431,496) 

Long term loans (5,966) (6,880) 

Long term security deposits 559 (1,538) 

Long term deposits 367 253 

Net cash inflow from operating activities 605,198 396,351 

CASH FLOWS FROM INVESTING ACTIVITIES 

Fixed capital expenditure (251,449) (213,993) 

Sale proceeds on disposal of property, plant and equipment 44,233 2,092 

Profit on savings accounts 29,295 31,377 

Profit on a term deposit account 85 - 

Profit on short term investments received - 2,557 

Sale proceeds on disposal of short term investments 465,654 243,819 

Purchase of short term investments (330,000) (370,027) 

Net cash outflow due to investing activities (42,182) (304,175) 

CASH FLOWS FROM FINANCING ACTIVITIES 

Long term loan (2,500) (54,064) 

Liabilities against assets subject to finance leases - (1,658) 

Repayments of short term borrowings (188,981) - 

Short term borrowings 44,945 188,981 

Dividend paid (244,239) (195,377) 

Net cash outflow due to financing activities (390,775) (62,118) 

Net increase in cash and cash equivalents 172,241 30,058 

Cash and cash equivalents at the beginning of the year 420,696 390,638 

Cash and cash equivalents at the end of the year 16 592,937 420,696 


NOTES TO AND FORMING PART OF 

THE FINANCIAL STATEMENTS 


1. STATUS AND NATURE OF BUSINESS AND A SIGNIFICANT EVENT DURING THE YEAR 

1.1 Status and nature of business 

Colgate-Palmolive (Pakistan) Limited ("the company") was initially incorporated in Pakistan on December 5, 1977 as a public limited 

company with the name of National Detergents Limited. The name of the company was changed to Colgate-Palmolive (Pakistan) 

Limited on March 28, 1990 when the company entered into a Participation Agreement with Colgate-Palmolive Company, USA. 

The company is listed on the Karachi and Lahore Stock Exchanges. The registered office of the company is situated at Lakson 

Square, Building No. 2, Sarwar Shaheed Road, Karachi, Pakistan. 

The company is mainly engaged in the manufacture and sale of detergents, personal care and other related products. 

1.2 Significant event during the year 

On December 28, 2007, the stock godown at the factory of the company situated in Kotri was torched as a result of riots which 

led to destruction of certain raw and packing materials and finished goods. Further, the packing department of the factory situated 

over the stock godown was also affected by heat generated by the fire in the stock godown which damaged the electronic 

circuitry, central processing units and other electronic components of the machinery used in packing of detergents. The company 

had lodged insurance claims in respect of loss of stock in trade, damage to property, plant and equipment and consequential 

loss of profit. The claims in respect of stock in trade and consequential loss of profit have been settled during the year. Further, 

the claim against damage to property, plant and equipment has been acknowledged by the insurance company in July 2008 and 

a part payment has been received against the claim before June 30, 2008. 

2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE 

These financial statements have been prepared in accordance with the requirements of approved accounting standards as applicable 

in Pakistan, the Companies Ordinance, 1984 (the Ordinance) and the directives issued by the Securities and Exchange Commission 

of Pakistan (SECP). Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) as notified 

under the provisions of the Ordinance. However, the requirements of the Ordinance or directives issued by the SECP have been 

followed in case where their requirements are not consistent with the requirements of the approved accounting standards. 

Standards, interpretations and amendments to published approved accounting standards that are not yet effective: 

The following standards, amendments and International Financial Reporting Interpretations Committee (IFRIC) interpretations to 

existing standards have been published and are mandatory for accounting periods beginning on or after January 1, 2008: 

IFRS 7, 'Financial instruments: Disclosures' (effective from July 1, 2008) introduces new disclosures relating to financial instruments 

and does not have any impact on the classification and valuation of the financial instruments. 

IAS 23 (Amendment) 'Borrowing costs' (effective from January 1, 2009). It requires an entity to capitalise borrowing costs directly 

attributable to the acquisition, construction or production of a qualifying asset (one that takes substantial period of time to get 

ready for use or sale) as part of the cost of that asset. On adoption of the above amendment, the option of immediately expensing 

those borrowing costs will be withdrawn. 




Director 

IFRIC Interpretation 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction' (effective 

from January 1, 2008). IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of surplus that can be recognised 

as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding 

requirements. The management is in the process of assessing the impact of its adoption on the company's financial statements. 

Standards, amendments to published standards and new interpretations becoming effective in the year ended June 30, 2008 

but not relevant: 

There are certain new standards, amendments and interpretations that were mandatory for accounting period beginning on or 

after July 1, 2007 but are considered not to be relevant or have any significant effect on the company's operations and are, 

therefore, not disclosed in these financial statements. 

39

3. SIGNIFICANT ACCOUNTING POLICIES 

3.1 Accounting Convention 

These financial statements have been prepared under the historical cost convention except for recognition of certain staff retirement 

benefit at present value as referred to in note 3.13 and certain financial instruments that have been accounted for on the basis 

of their fair values as referred to in note 3.17. 

3.2 Property, plant and equipment 

3.2.1 Owned 

These are stated at cost less accumulated depreciation and accumulated impairment losses, if any, except for leasehold land and 

capital work in progress which are stated at cost. 

Consistent with prior years, assets having cost exceeding the minimum threshold as determined by the management are capitalised. 

All other assets are charged to income in the year when acquired. 

Depreciation is charged to income applying the reducing balance method and by applying rates (as stated in note 5.1.2) on the 

opening book value of the assets. Depreciation on additions is charged from the month in which the asset is put to use and on 

disposal upto the month of disposal at the rates stated in note 5.1.2. 

No depreciation is charged if the asset's residual value exceeds its carrying amount. 

Residual values and the useful lives are reviewed at each balance sheet date and adjusted if expectations differ significantly from 

previous estimates. The management estimates that the financial impact of changes in the residual values and the useful lives 

during the year ended June 30, 2008 is immaterial. 

Residual values are determined by the management as the amount it expects it would receive currently for an item of property, 

plant and equipment if it was already of the age and in the condition expected at the end of its useful life based on the prevailing 

market prices of similar assets already at the end of their useful lives. 

Useful lives are determined by the management based on the expected usage of assets, physical wear and tear, technical and 

commercial obsolescence, legal and similar limits on the use of the assets and other similar factors. 

Normal repairs and maintenance are charged to income as and when incurred. Major renewals and improvements are capitalised 

and assets so replaced, if any, are retired. 

Profit or loss on disposal of assets is recognised in income currently. 

3.2.2 Assets subject to finance leases 

The company accounts for property, plant and equipment held under finance leases by recording the asset and the related liability. 

These amounts are determined on the basis of discounted value of minimum lease payments or fair value whichever is lower. 

Financial charges are allocated to the accounting period in a manner so as to provide a constant periodic rate of charge on the 

outstanding liability. Depreciation is charged to income applying the reducing balance method at rates stated in note 5.1.2 below. 

3.2.3 Assets held under operating leases 

Lease rentals payable on assets held under operating leases are recognised in income currently. 

3.2.4 Capital work in progress 

Consistent with prior years, all expenditures connected with specific assets incurred during installation and construction period 

are carried under capital work in progress. These are transferred to specific assets as and when assets are available for use. 

3.3 Intangible assets 

An intangible asset is an identifiable non-monetary asset without physical substance. 

Intangible assets are recognised when it is probable that the expected future economic benefits will flow to the entity and the 

cost of the asset can be measured reliably. 

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses, if any. Amortisation is 

charged over the estimated useful life of the asset as specified in note 6.2 on a systematic basis applying the straight line 

method. 

Useful lives of intangible operating assets are reviewed, at each balance sheet date and adjusted if the impact of amortisation is 

significant. 

3.4 Impairment 

The company assesses at each balance sheet date whether there is any indication that property, plant and equipment and intangible 

assets may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are 

recorded in excess of their recoverable amounts. Where carrying values exceed recoverable amounts, assets are written down 

to their recoverable amounts and the differences are recognised in income currently. 

3.5 Stores and spares 

Consistent with prior years, stores and spares are valued at lower of cost using the moving average method and estimated net 

realisable value. Items in transit are valued at cost as accumulated upto the balance sheet date. Provision for obsolete items, if 

any, is based on their condition as at the balance sheet date depending upon the management's judgement. 

Consistent with prior years, loose tools are charged to income as and when purchased as their inventory is generally not significant. 

3.6 Stock in trade 

Stock in trade is valued at the lower of cost and estimated net realisable value. Cost is determined as follows: 

Stages of stock in trade 

Raw and packing material 

Raw and packing material in bonded 

warehouse and in transit 

Work in process 

Finished goods 

Trading goods 

Basis of valuation 

- Moving average cost 

- Cost accumulated upto the balance sheet date 

- Cost of direct materials and appropriate portion of production overheads 

- Cost of direct materials and appropriate portion of production overheads 

- First in first out basis 

Net realisable value is determined on the basis of estimated selling price of the product in the ordinary course of business less 

estimated costs of completion and the estimated costs necessary to be incurred for its sale. 

3.7 Trade debts and other receivables 

Trade debts and other receivables are carried at original invoice amount less an estimate for doubtful debts based on the review 

of outstanding debts. Accordingly, a provision is made against those debts having no movement during the current financial year 

and which are also considered as doubtful by the management. Debts, considered irrecoverable, are written off, as and when 

identified. 

3.8 Taxation 

Current 

Provision for current taxation is based on taxable income for the year at the current rates of taxation after taking into account 

tax credits and tax rebates available, if any, and tax paid on presumptive basis or minimum tax at the rate of 0.5 percent of 

turnover, whichever is higher. 

41

Deferred 

Consistent with prior years: 

- Deferred tax is recognised using the balance sheet liability method on all temporary differences between the carrying amounts 

of the assets and liabilities and their tax bases after adjusting for the impact of the temporary differences arising on account 

of the tax liability under the Final Tax Regime (FTR). 

- Deferred tax liabilities are recognised for all major taxable temporary differences. 

- Deferred tax assets are recognised for all major deductible temporary differences to the extent that it is probable that taxable 

profit will be available against which the deductible temporary differences can be utilised. 

- The carrying amount of the deferred tax asset is reviewed at each balance sheet date and is recognised only to the extent 

that it is probable that future taxable profits will be available against which the assets may be utilised. Deferred tax assets are 

reduced to the extent that it is no longer probable that the related tax benefit will be realised. 

- Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it 

becomes probable that future taxable profits will allow deferred tax asset to be recovered. 

- Deferred tax assets and liabilities are measured at the tax rate that are expected to apply to the year when the asset is utilised 

or the liabiltiy is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date. 

3.9 Investments 

The management determines appropriate classification of its investments in accordance with the requirements of IAS 39: 'Financial 

Instruments: Recognition and Measurement' (IAS 39) at the time of purchase of investment and reevaluates this classification on 

a regular basis. The existing investment portfolio of the company has been categorised as 'available for sale'. 

'Available for sale' financial assets are those financial assets that are not (a) loans and receivables originated by the company, (b) 

held to maturity investments, or (c) financial assets held for trading. 

Investments classified as 'available for sale' are initially recognised at cost and are subsequently remeasured to fair value. Surplus 

/ deficit arising due to movement in fair values of 'available for sale' investments is transferred to equity. 

Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred 

and the company has transferred substantially all risks and rewards of ownership. 

Impairment of investments is recognised when there is a permanent diminution in the value of the investments. 

3.10 Cash and cash equivalents 

Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of the cash flow statement, cash and cash 

equivalents comprise of cash in hand, deposits held with banks and running finances under mark-up arrangement. 

3.11 Borrowing costs 

Consistent with prior years, borrowing costs are recognised as an expense in the period in which these are incurred. 

3.12 Provisions 

Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable 

that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can 

be made of the amount of the obligation. 

3.13 Staff retirement benefits 

Defined benefit plan 

The company operates a defined benefit plan i.e. an approved funded gratuity scheme for all its permanent employees subject 

to attainment of retirement age and minimum service of prescribed period. Contributions are made to the fund on the basis of 

actuarial recommendations. Actuarial valuation is carried out using the projected unit credit method. 

Actuarial gains / losses exceeding 10 percent of the higher of the present value of the defined benefit obligation and fair value of 

plan assets, at the beginning of the year, are amortised over average future service of the employees. 

Defined contribution plan 

The company operates an approved funded provident fund scheme for all its permanent employees. Equal monthly contributions 

are made, both by the company and its employees, to the fund at the rate of 9 per cent of the basic salaries of employees. 

Compensated absences 

The liability in respect of compensated absences of employees is accounted for in the period in which the absences accrue. 

3.14 Revenue recognition 

Sales are recognised on despatch of goods to customers. 

Profit on bank balances are recognised on a time proportion basis on the principal amount outstanding and at the applicable rate. 

Cumulative gain or loss previously recognised in equity on revaluation of fair values of 'available for sale' financial assets are 

recognised in income at the time of their derecognition. 

Insurance commission income is recognised as and when received. 

3.15 Foreign currency translation 

Transactions in foreign currencies are translated in Pakistan rupees (functional and presentation currency) at the exchange rate 

prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pakistan rupees at 

the rates of exchange approximating those prevalent at the balance sheet date. Exchange differences are charged to income 

currently. 

3.16 Dividend and other appropriations 

Dividend is recognised as a liability in the period in which it is declared. Appropriations of profit are reflected in the statement of 

changes in equity in the period in which such appropriations are approved. 

3.17 Financial instruments 

All financial assets and liabilities are recognised at the time when the company becomes a party to the contractual provisions of 

the instruments. All financial assets and liabilities are initially measured at cost, which is the fair value of the consideration given 

and received respectively. Consistent with prior years, these financial assets and liabilities are subsequently measured at fair value, 

amortised cost or cost, as the case may be. The particular measurement methods adopted are disclosed in the individual policy 

statements associated with each item. 

43

Consistent with prior years, financial assets are derecognised when the rights to receive cash flows from the assets have expired 

or have been transferred and the company has transferred substantially all risks and rewards of ownership. Financial liabilities are 

derecognised when they are extinguished i.e. when the obligations are discharged, cancelled or expired. 

Any gain or loss on the recognition and derecognition of the financial assets and liabilities is included in the income for the year 

in which it arises. 

3.18 Off-setting of financial assets and financial liabilities 

A financial asset and a financial liability is set off and the net amount is reported in the financial statements if the company has a 

legally enforceable right to set off the transaction and also intends either to settle on a net basis or to realise the asset and settle 

the liability simultaneously. 

3.19 Transactions with related parties 

The company enters into transactions with related parties for sale or purchase of goods and services on an arm's length basis. 

3.20 Contingent liabilities 

Consistent with prior years contingent liability is disclosed when: 

- there is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or 

non occurrence of one or more uncertain future events not wholly within the control of the company; or 

- there is present obligation that arises from past events but it is not probable that an outflow of resources embodying economic 

benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. 

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS 

The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical 

accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting 

policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant 

to the financial statements are as follows: 

a) Assumptions and estimates used in determining the residual values and useful lives of property, plant and equipment 

(note 5); 

b) Assumptions and estimates used in writing down items of stock in trade to their net realisable value (note 10); 

c) Assumptions and estimates used in calculating the provision for doubtful debts (note 11); 

d) Assumptions and estimates used in the classification of investments (note 15); 

e) Assumptions and estimates used in the recognition of deferred taxation (note 20); and 

f) Assumptions and estimates used in accounting for defined benefit plan (note 39). 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectation 

of future events that are believed to be reasonable under the circumstances. 

5. PROPERTY, PLANT AND EQUIPMENT 



Operating fixed assets 5.1 961,098 739,628 

Capital work in progress 5.2 5,257 125,209 

966,355 864,837 

5.1 Operating fixed assets 

5.1.1 The following is a statement of operating fixed assets: 

Leasehold 

land 

Factory 

building on 

leasehold 

land 

Plant 

and 

machinery 

Electric 

fittings Gas 

and installation 

installation 


At July 1, 2006 

Cost 10,355 149,067 639,383 50,555 225 15,286 50,367 87,934 2,571 25,875 15,574 1,047,192 

Accumulated depreciation - (57,054) (231,153) (14,720) (124) (9,201) (25,821) (27,780) (1,004) (16,921) (10,298) (394,076) 

Net book value 10,355 92,013 408,230 35,835 101 6,085 24,546 60,154 1,567 8,954 5,276 653,116 

Year ended June 30, 2007 

Opening net book value 10,355 92,013 408,230 35,835 101 6,085 24,546 60,154 1,567 8,954 5,276 653,116 

Additions - 3,445 11,014 1,705 - 1,062 5,598 22,586 - 2,645 736 48,791 

Transfers from capital work in 

progress during the year - 47,713 68,957 6,789 - 71 2,306 - - - 322 126,158 

Transfers from finance lease - - - - - - - 2,571 (2,571) - - - 

Depreciation on transfers - - - - - - - (1,200) 1,200 - - - 

Disposals 

Cost - - - - - - - (1,431) - (290) (104) (1,825) 

Depreciation - - - - - - - 687 - 154 75 916 

Net book value - - - - - - - (744) - (136) (29) (909) 

Write offs 

Cost - (518) - - - (262) - - - (576) (171) (1,527) 

Depreciation - 326 - - - 183 - - - 500 135 1,144 

Net book value - (192) - - - (79) - - - (76) (36) (383) 

Depreciation charge for the year - (11,057) (45,264) (4,081) (10) (998) (4,332) (17,179) (196) (3,172) (856) (87,145) 

Closing net book value 10,355 131,922 442,937 40,248 91 6,141 28,118 66,188 - 8,215 5,413 739,628 

At June 30, 2007 

Cost 10,355 199,707 719,354 59,049 225 16,157 58,271 111,660 - 27,654 16,357 1,218,789 

Accumulated depreciation - (67,785) (276,417) (18,801) (134) (10,016) (30,153) (45,472) - (19,439) (10,944) (479,161) 

Net book value 10,355 131,922 442,937 40,248 91 6,141 28,118 66,188 - 8,215 5,413 739,628 

At July 1, 2007 

Cost 10,355 199,707 719,354 59,049 225 16,157 58,271 111,660 - 27,654 16,357 1,218,789 


Net book value 10,355 131,922 442,937 40,248 91 6,141 28,118 66,188 - 8,215 5,413 739,628 

Year ended June 30, 2008 

Opening net book value 10,355 131,922 442,937 40,248 91 6,141 28,118 66,188 - 8,215 5,413 739,628 

Additions - 11,041 113,578 5,517 - 1,119 25,493 58,504 - 11,143 3,498 229,893 

Transfers from capital work in 

progress during the year - 12,921 124,172 3,371 - 7 568 - - - 469 141,508 

Disposals 

Cost - - (36,350) (9,516) - (2,410) (9,002) (8,581) - (2,788) (972) (69,619) 

Depreciation - - 10,083 2,751 - 726 4,348 4,413 - 1,892 546 24,759 

Net book value - - (26,267) (6,765) - (1,684) (4,654) (4,168) - (896) (426) (44,860) 

Write offs 

Cost - - (7) - - (15) (400) - - (1,324) (395) (2,141) 

Depreciation - - 2 - - 9 241 - - 1,186 298 1,736 

Net book value - - (5) - - (6) (159) - - (138) (97) (405) 

Depreciation charge for the year - (14,816) (52,201) (3,846) (9) (835) (5,590) (22,433) - (3,958) (978) (104,666) 

Closing net book value 10,355 141,068 602,214 38,525 82 4,742 43,776 98,091 - 14,366 7,879 961,098 

At June 30, 2008 

Cost 10,355 223,669 920,747 58,421 225 14,858 74,930 161,583 - 34,685 18,957 1,518,430 


Net book value 10,355 141,068 602,214 38,525 82 4,742 43,776 98,091 - 14,366 7,879 961,098 

Furniture 

and 

fixtures 

Tools 

and 

equipment 

owned 

Vehicles 

Held 

under 

finance 

lease 

Computers 

and 

accessories 

Office 

equipment 

Total 

45

5.1.2 Depreciation on operating fixed assets is charged at the following rates: 

Annual rate of depreciation (%) 

Factory building on leasehold land 10 

Plant and machinery 10 

Electric fittings and installation 10 

Gas installation 10 

Furniture and fixtures 15 

Tools and equipment 15 

Vehicles 20 & 25 

Computers and accessories 33 

Office equipment 15 

5.1.3 Included in fixed assets are few items having cost of Rs 29.907 million (2007: Rs 30.116 million) held by related parties and of Rs 

26.878 million (2007: Rs 13.831 million) held by third parties for manufacturing certain products of the company. These fixed assets 

are free of lien and the company has full rights of repossession of these assets. 

5.1.4 During the year, the company has identified certain items of property, plant and equipment from which further economic benefits 

are no longer being derived. Therefore, assets having cost of Rs 2.141 million (2007: Rs 1.527 million) and net book value of Rs 

1.737 million (2007: Rs 0.383 million) have been retired from active use and have been written off in these financial statements. 

5.1.5 No impairment relating to operating fixed assets has been recognised in the current year. 

5.1.6 Disposals of property, plant and equipment having a net book value exceeding Rs 50,000, either individually or in aggregate, during 

the year are as follows: 

Particulars Mode of Cost Accumulted Net book Sale Proceeds / Gain / (loss) Particulars 

disposal depreciation value Receivable from of purchasers 

Insurance 

Company* 


Vehicles Bid 268 199 69 167 98 Samiuddin 

House No. C-14, University Road, 

Sector 38A, Karachi 

Bid 774 474 300 470 170 Muhammad Taimur Dar 

Banglow No. 282, D'croz Road, 

Garden East, Karachi. 

Bid 590 281 309 325 16 Amjad Suhail 

House No. 692/17, Ancholi Society, 

F.B. Area, Karachi. 

Bid 886 335 551 575 24 Captain Jameel, House No. 357, 

Sharfabad, Karachi. 

Insurance claim 2,833 1,191 1,642 1,990 348 Century Insurance Company Limited, 

Lakson Square, Building No. 3, 

Sarwar Shaheed Road, Karachi. 

Insurance claim 1,250 291 959 1,140 181 Century Insurance Company Limited, 



6,601 2,771 3,830 4,667 837 

Computers and 

accessories Insurance claim 96 13 83 86 3 Century Insurance Company Limited, 



Insurance claim 83 13 70 85 15 Century Insurance Company Limited, 


179 26 153 171 18 Sarwar Shaheed Road, Karachi. 

Office equipment Trade-in 225 160 65 15 (50) United Business Systems Private Limited 

43-L/4, Block 6, P.E.C.H.S., Karachi. 

Fixed assets destroyed 

due to fire (note 1.2) Insurance claim 58,958 18,990 39,968 39,968 - Century Insurance Company Limited, 



Others 

Items having net book 

value of less than 

Rs 50,000 each Various 3,656 2,812 844 4,380 3,536 Various 

2008 69,619 24,759 44,860 44,233 4,341 

*4,968 

2007 1,825 916 909 2,092 1,183 

5.1.7 Depreciation charge for the year has been allocated as follows: 



Cost of sales 26.1 80,921 69,085 

Selling and distribution costs 27 20,497 15,560 

Administrative expenses 28 3,248 2,500 

104,666 87,145 

5.2 Capital work in progress 

The following is a statement of capital work in progress: 

Factory Plant and Electric 

building on machinery fittings and Other assets Total 

leasehold land 

installation 


Balance as at July 1, 2006 37,825 43,681 3,970 689 86,165 

Capital expenditure incurred 

during the year 21,888 134,256 5,980 3,078 165,202 

Transfer to operating 

fixed assets (47,713) (68,957) (6,789) (2,699) (126,158) 

Balance as at June 30, 2007 12,000 108,980 3,161 1,068 125,209 

Balance as at July 1, 2007 12,000 108,980 3,161 1,068 125,209 

Capital expenditure incurred 

during the year 1,995 15,371 210 3,980 21,556 

Transfer to operating 

fixed assets (12,921) (124,172) (3,371) (1,044) (141,508) 

Balance as at June 30, 2008 1,074 179 - 4,004 5,257 

47

6. INTANGIBLE ASSETS 

Note 

Goodwill 


7. LONG TERM LOANS 



At July 1, 2006 

Cost 43,500 

Accumulated amortisation (20,300) 

Net book value 23,200 

Year ended June 30, 2007 

Opening net book value 23,200 

Additions - 

Disposals - 

23,200 

Amortisation for the year 6.2 & 27 (5,800) 

Closing net book value 17,400 

At June 30, 2007 

Cost 43,500 



At July 1, 2007 

Cost 43,500 



Year ended June 30, 2008 

Opening net book value 17,400 

Additions - 

Disposals - 

17,400 

Amortisation for the year 6.2 & 27 (5,800) 

Closing net book value 11,600 

At June 30, 2008 

Cost 43,500 



6.1 These represent amounts paid on acquisition of the brand "Sparkle" from Transpak Corporation Limited. 

6.2 Cosistent with prior years, goodwill is being amortised over the useful life of 10 years. 

6.3 The intangible assets include a trade mark costing Rs 1.500 million in respect of the brand "Sparkle" purchased on January 4, 2001. 

The trade mark was fully amortised during the year ended June 30, 2007. However, it is still in active use. 

Considered good 

- due from executives 7.1, 7.2 & 7.3 972 1,573 

- due from other employees 7.2 25,787 19,220 

26,759 20,793 

Recoverable within one year 12 (8,208) (6,608) 

18,551 14,185 

7.1 Reconciliation of carrying amount of loans to executives: 

Opening balance as at July 1 1,573 2,636 

Disbursements 352 570 

Repayments (953) (1,633) 

Closing balance as at June 30 972 1,573 

7.2 These loans are interest free and have been given to executives and other employees of the company for purchase of house 

and vehicles and for personal use in accordance with their terms of employment. These loans are to be repaid over a period of 

five years in equal monthly installments. Vehicles purchased under this scheme are registered in the name of the company and 

the title is transferred when the loan is fully repaid. The remaining loans are adjustable against final settlement of staff provident 

fund. 

7.3 The maximum aggregate amount of loans due from executives at the end of any month during the year was Rs 1.741 million 

(2007: Rs 2.924 million). 

7.4 Long term loans are being carried at cost because the effect of carrying these balances at amortised cost would not have been 

material. 

8. LONG TERM SECURITY DEPOSITS 

Long term security deposits 2,962 3,521 

8.1 This includes Term Deposit Receipt (TDR) amounting to Rs 1.7 million (2007: Rs 1.7 million) issued by a banking company. The TDR 

has been issued to provide security to a banking company for issue of guarantee against a lien on the TDR. The TDR carries profit 

at the rate of 5% (2007: 5%) per annum and shall mature on August 30, 2008 at which time the management intends to rollover 

the TDR. 

9. STORES AND SPARES 

Stores 8,068 7,072 

Spares 6,017 9,670 

26.1.3 14,085 16,742 

49

10. STOCK IN TRADE 



11.3 The movement in the provision for doubtful debts for the year is as follows: 



Raw materials 

- in hand 414,218 328,158 

- in bonded warehouse 60,558 40,718 

- in transit 240,374 94,571 

26.1.1 715,150 463,447 

Packing materials 

- in hand 68,674 38,574 

- in transit 12,240 8,950 

- with third parties 1,023 2,620 

26.1.2 81,937 50,144 

Work in process 26.1 9,588 5,756 

Finished goods 

- in hand 10.1 135,524 188,732 

- in transit 19,357 22,186 

154,881 210,918 

Trading goods 

- in hand 44,808 41,581 

- in transit - 6,005 

44,808 47,586 

1,006,364 777,851 

10.1 This includes stocks carried at fair value less cost to sell amounting to Rs 5.605 million (2007: Rs 9.096 million). 

11. TRADE DEBTS 


- due from related parties 11.1 & 11.2 5,583 5,697 

- others 172,400 138,566 

177,983 144,263 

Considered doubtful 

- others 6,568 5,955 

184,551 150,218 

Less: Provision for doubtful debts 11.3 6,568 5,955 

177,983 144,263 

11.1 Trade debts include the following amounts due from related parties: 

Merit Packaging Limited 11 1 

Century Paper and Board Mills 33 - 

Rollins Industries (Private) Limited 5,539 5,696 

5,583 5,697 

Balance at the beginning of the year 5,955 4,168 

Provision for the year 29 1,338 2,000 

Bad debt written off (725) (213) 

Balance at the end of the year 6,568 5,955 

12. LOANS AND ADVANCES 


Current portion of long term loans 

- due from executives 964 1,018 

- due from other employees 7,244 5,590 

7 8,208 6,608 

Advances 

- to employees 12.1 7,682 7,827 

- to contractors and suppliers 12.2 40,909 21,730 

- against letter of credit 38,613 1,598 

95,412 37,763 

12.1 Advances to employees are provided to meet business expenses and are settled as and when the expenses are incurred. 

12.2 Advances include the following amounts due from related parties: 

Rollins Industries (Private) Limited 2,417 - 

Colgate-Palmolive (Pakistan) Limited Employees 

Contributory Provident Fund Trust 861 - 

Century Insurance Company Limited 356 - 

3,634 - 

13. TRADE DEPOSITS, SHORT TERM PREPAYMENTS AND OTHER RECEIVABLES 

Trade deposits and short term prepayments 

Security deposits 4,976 2,384 

Prepayments 14,012 6,474 

18,988 8,858 

Other receivables 

Receivable from related parties 13.1 & 13.2 38,224 8,302 

Custom duty refundable 245 - 

Claims receivable from an insurance company 284 290 

Others - 13,220 

38,753 21,812 

57,741 30,670 

11.2 The maximum aggregate amount of receivable due from related parties at the end of any month during the year was Rs 44.324 

million (2007: Rs 11.202 million). 

51

13.1 Other receivables include the following amounts due from related parties: 



Century Insurance Company Limited 13.3 34,683 6,600 

Clover Pakistan Limited 1,090 761 

Colgate-Palmolive Philippine 6 6 

Tetley Clover (Private) Limited 2,445 935 

38,224 8,302 

13.2 The maximum aggregate amount receivable from related parties at the end of any month during the year was Rs 161.395 million 

(2007: Rs 9.315 million). 

13.3 This includes receivable from Century Insurance Company Limited amounting to Rs 4.968 million (2007: nil) which represents 

balance amount receivable against the insurance claim for fixed assets fully destroyed on December 28, 2007 and Rs 27.867 million 

(2007: nil) against repairs to fixed assets damaged on that date as fully explained in note 1.2. 

14. PROFIT RECEIVABLE FROM BANKS 

Profit on savings accounts 1,869 119 

Profit on a term deposit account 422 - 

2,291 119 

15. SHORT TERM INVESTMENTS - available for sale 

2008 2007 2008 2007 

Number of units 


United Money Market Fund - 454,240 - 50,000 

United Growth & Income Fund - 448,258 - 50,000 

NAFA Cash Fund 7,431,077 7,234,273 80,000 80,000 

MCB Dynamic Cash Fund 141,070 338,636 15,000 35,000 

IGI Income Fund 97,466 245,990 10,000 25,000 

JS Income Fund 240,616 53,802 25,000 30,000 

(formerly UTP Income Fund) 

Atlas Income Fund 38,224 27,532 20,000 15,000 

KASB Liquid Fund 96,974 90,432 10,000 10,000 

AKD Income Fund 194,455 - 10,000 - 

BMA Chundrigar Road Savings Fund 927,592 - 10,000 - 

180,000 295,000 

Surplus on revaluation of investments 201 455 

180,201 295,455 

16. CASH AND BANK BALANCES 

With banks on: 

- Current accounts 55,092 30,558 

- Savings accounts 16.1 359,427 357,511 

- Term deposit account 16.1 100,000 - 

514,519 388,069 

Cheques in hand 77,730 32,059 

Cash in hand 688 568 

592,937 420,696 

16.1 The rates of profit on these savings and term deposit account range between 0.75% to 13.60% and 14% respectively (2007: 

0.75% to 11.80%) per annum. 

17. ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL 

2008 2007 Note 2008 2007 

Number of shares 


5,882,353 5,882,353 Ordinary shares of Rs 10 58,824 58,824 

each fully paid in cash 

13,227,433 9,405,476 Ordinary shares of Rs 10 each 17.1 132,274 94,055 

issued as fully paid bonus shares 

19,109,786 15,287,829 191,098 152,879 

17.1 These shares include 3,821,957 bonus shares of Rs 10 each (2007: 3,057,566 bonus shares of Rs 10 each) issued by the company 

during the year. 

18. RESERVES 

Capital reserve 

- Share premium reserve 13,456 13,456 

Revenue reserve 

- General reserve 1,250,000 930,000 

- Unappropriated profit 686,789 610,320 

1,950,245 1,553,776 

19. LONG TERM LOAN 

Secured - From ABN Amro Bank N.V 19.1 5,625 8,125 

Less: Current maturity shown under current liabilities 2,500 2,500 

3,125 5,625 

19.1 The company has obtained a loan from ABN Amro Bank N.V of Rs 10 million to finance the expansion of existing plant and 

machinery. This facility is secured against pari passu charge over fixed assets including immovable property of the company. 

Markup is charged at the rate of three month's KIBOR plus 110 bps per annum. The loan is repayable in sixteen equal quarterly 

installments of Rs 0.625 million each, which commenced from October 2006. 

20. DEFERRED TAXATION 

Credit / (debit) balances arising in respect of 

timing differences relating to: 

Accelerated tax depreciation allowance 159,998 119,812 

Provision for compensated absences (2,799) (2,486) 

Provision for doubtful debts (2,299) (2,084) 

154,900 115,242 

21. LONG TERM DEPOSITS 

Security deposits obtained from: 

- Distributors 3,960 3,593 

- Transporters 500 500 

- Others 5 5 

4,465 4,098 

21.1 These deposits are interest free and are not refundable during the subsistence of relationship with the company. 

53

22. TRADE AND OTHER PAYABLES 



24. SHORT TERM BORROWINGS 



Trade creditors 22.1 404,324 297,260 

Accrued liabilities 77,973 102,629 

Bills payable 117,779 99,098 

Amounts due to distributors 19,174 7,105 

Special excise duty payable 4,574 - 

Sales tax payable 51,250 26,819 

Royalty payable to an associated undertaking 30,316 21,253 

Workers' profits participation fund 22.3 54,648 47,737 

Workers' welfare fund 17,265 13,300 

Retention money payable 42 1,625 

Unclaimed dividend 1,647 1,281 

Others 22.2 7,153 5,356 

786,145 623,463 

22.1 These balances include the following amounts due to related parties: 

Hasanali Karabhai Foundation 339 257 

Princeton Travels (Private) Limited 39 26 

Merit Packaging Limited 1,483 - 

Century Insurance Company Limited 3,357 374 

Rollins Industries (Private) Limited - 16,597 

Century Publication (Private) Limited 2,250 750 

SIZA (Private) Limited 18 - 

Cyber Inernet Services (Private) Limited 353 354 

Century Paper & Board Mills Limited 16,318 12,218 

24,157 30,576 

22.2 These balances include the following amounts due to related parties: 

Colgate-Palmolive Pakistan Limited Employees 

Contributory Provident Fund Trust - 533 

Reliance Chemicals (Private) Limited 19 - 

Colgate-Palmolive Thailand 1,029 920 

1,048 1,453 

22.3 Workers' profits participation fund 

Balance at the beginning of the year 47,737 41,284 

Allocation for the year 29 54,648 47,737 

102,385 89,021 

Less: Payments during the year 47,737 41,284 

Balance at the end of the year 54,648 47,737 

23. ACCRUED MARK-UP 

Accrued markup on: 

- Long term loan 110 154 

- Short term borrowings 590 3,352 

700 3,506 

Secured - From banks 

- Running finance facilities 24.1 & 24.2 - - 

- Import credit facilities 24.1 & 24.3 44,945 188,981 

44,945 188,981 

24.1 The company has arranged short-term borrowing facilities from various banks on mark-up basis to the extent of Rs 837 million 

(2007: Rs 712 million), which can be interchangeably utilised as running finance facilities or import credit facilities. These facilities 

had expired during the year and were renewed subsequently. The renewed facilities are available for various periods expiring 

between July 30, 2008 to March 31, 2009. The arrangements are secured by a joint hypothecation of stocks, stores and spares, 

trade debts, other current assets and second charge on moveable assets of the company. 

24.2 The mark-up on short-term running finance facilities ranges between 10.92% to 13.81% (2007: 10.03% to 11.63%) per annum. 

24.3 The import credit facility is priced at LIBOR plus 2% per annum (2007: LIBOR plus spread ranging between 0.7% to 1% per annum). 

24.4 The facilities for opening letters of credit and guarantee as at June 30, 2008 aggregate Rs 2,468.700 million and Rs 30 million 

respectively (2007: Rs 1,672 million and Rs 30 million respectively) of which the amounts remaining unutilised at the year end were 

Rs 2,092.745 million and Rs 15.400 million (2007: Rs 1,446.811 million and Rs 15.400 million) respectively. 

25. CONTINGENCIES AND COMMITMENTS 

25.1 Contingencies 

25.1.1 As a result of recovery suit of Rs 31.455 million filed by the Octroi Contractor against the Government of Sindh, Union Council 

Bulari and Kotri Association of Trade and Industries (KATI) in the Civil Court, the Honorable Senior Judge issued a decree of Rs 

7.336 million in favor of Octroi Contractor. KATI has filed an appeal in the High Court of Sindh whereas the Octroi Contractor has 

also filed an appeal requesting to enhance the amount of decree. Subsequently, the case has been transferred to the Additional 

District Judge Kotri by the High Court of Sindh. The District Judge allowed the appeal in favour of KATI and remanded the case 

to Senior Civil Judge Kotri for adjudication which is still awaited. If the appeal is dismissed then the company, being a member 

of KATI, would be required to pay its share as determined by the Court out of the total decree amount. The management of the 

company, based on the advice of its legal counsel handling the subject matter, is confident that the appeal will be decided in 

favour of KATI. Accordingly, no provision has been made in the financial statements on this account. 

25.1.2 The company has received a notice from the Honourable High Court of Sindh concerning an appeal filed by the Commissioner of 

Income Tax against a decision made in favour of the company by the Income Tax Appellate Tribunal (ITAT) for the assessment 

year 1991-92. The case is pending for regular hearing in the Honourable High Court of Sindh and the legal counsel of the company 

is of the opinion that the company has a good arguable case. 

25.1.3 Cases have been filed against the company by some employees claiming approximately Rs 0.629 million (2007: Rs 0.939 million) 

in aggregate. Provision has not been made in these financial statements for the abovementioned amounts as the management 

of the company, based on the advice of its legal counsel handling the subject cases, is of the opinion that matters shall be decided 

in the company's favour. 

25.1.4 Post dated cheques have been issued to custom authorities as a security in respect of duties and taxes amounting Rs 59.595 

million (2007: Rs 6.929 million) payable at the time of exbonding of imported goods. In the event the goods are not cleared from 

custom warehouse within the prescribed time period, cheques issued as security shall be encashable. 

25.1.5 Contingent liabilities in respect of indemnities given to the financial institutions for guarantees issued by them in the normal course 

of business aggregate Rs 14.600 million (2007: Rs 14.600 million). 

55

25.2 Commitments 

25.2.1 Commitments in respect of capital expenditure amount to Rs 12.175 million (2007: Rs 13.155 million). 

26.1.1 Raw materials consumed 



25.2.2 Outstanding letters of credit and acceptances amount to Rs 276.878 million (2007: Rs 129.204 million). 

25.2.3 Outstanding duties leviable on clearing of stocks amount to Rs 18.864 million (2007: Rs 1.042 million). 

25.2.4 Commitments for rentals under operating lease agreements in respect of vehicles are as under: 



Not later than one year - 433 

Balance at the end of the year - 433 

26. COST OF SALES 

Opening stock of finished goods (including trading goods and by-products) 258,504 167,209 

Cost of goods manufactured 26.1 4,118,167 3,388,991 

Purchases of trading goods 882,330 757,050 

5,259,001 4,313,250 

Less: Cost of finished goods and work in process damaged due to fire 26.1.4 24,184 - 

Less: Closing stock of finished goods (including trading good 

and by-products) 10 199,689 258,504 

5,035,128 4,054,746 

26.1 Cost of goods manufactured 

Opening stock of work in process 5,756 3,428 

Raw materials consumed 26.1.1 & 26.2 2,895,709 2,362,310 

Packing materials consumed 26.1.2 & 26.2 798,764 653,961 

Stores and spares consumed 26.1.3 & 26.2 19,359 18,906 

Salaries, wages and other benefits 156,045 132,753 

Gratuity 39.8 5,048 5,115 

Provident fund 3,968 3,641 

Power and fuel 101,777 89,543 

Repairs and maintenance 15,373 12,282 

Rent, rates and taxes 1,340 1,285 

Insurance 10,010 8,608 

Laboratory expenses 2,461 1,849 

Cartage 10,782 9,214 

Depreciation 5.1.7 80,921 69,085 

Other manufacturing expenses 21,162 23,127 

4,128,475 3,395,107 

Less: Recovery from related parties 720 360 

4,127,755 3,394,747 

Less: Closing stock of work in process 10 9,588 5,756 

4,118,167 3,388,991 

Opening stock 463,447 378,705 

Purchases 3,153,224 2,447,052 

3,616,671 2,825,757 

Less: Cost of raw materials damaged due to fire 26.1.4 5,812 - 

Less: Closing stock 10 715,150 463,447 

2,895,709 2,362,310 

26.1.2 Packing materials consumed 


Purchases 847,939 639,098 

898,083 704,105 

Less: Cost of packing materials damaged due to fire 26.1.4 17,382 - 


798,764 653,961 

26.1.3 Stores and spares consumed 


Purchases 16,702 19,508 

33,444 35,648 


19,359 18,906 

26.1.4 This represents insurance claim received from Century Insurance Company Limited against loss of stock due to fire at factory 

premises on December 28, 2007 as fully explained in note 1.2. 

26.2 Cost of sales includes amounts written off during the year in respect of the following: 

- Raw materials 810 2,290 

- Packing materials 2,898 1,613 

- Finished goods 1,752 - 

- Stores and spares 18 381 

57

27. SELLING AND DISTRIBUTION COSTS 



29. OTHER OPERATING EXPENSES 




Gratuity 39.8 1,885 1,910 


Travelling and conveyance 20,577 20,907 

Repairs and maintenance 3,228 832 

Vehicle running expenses 46,195 38,343 

Advertising and sales promotion 483,611 468,858 

Royalty on sale of licensed products 31,912 22,372 

Postage, telephone and internet charges 6,237 5,001 


Printing and stationery 1,992 1,414 

Subscription and membership 342 570 

Legal and professional 731 206 

Freight 243,709 232,386 

Electricity 2,312 1,694 

Insurance 6,004 4,650 

Security service charges 1,779 1,642 

Depreciation 5.1.7 20,497 15,560 

Amortisation 6 5,800 5,800 

Other expenses 190 12 

988,625 917,984 

Less: Recovery from related parties 6,692 10,503 

981,933 907,481 

28. ADMINISTRATIVE EXPENSES 


Gratuity 39.8 1,938 1,964 


Travelling and conveyance 2,125 1,363 

Repairs and maintenance 410 330 

Vehicle running expenses 3,209 2,371 

Postage, telephone and internet charges 1,830 1,717 


Printing and stationery 1,749 1,256 

Subscription and membership 1,666 3,284 

Legal and professional 2,671 1,069 

Electricity 1,421 1,155 

Insurance 1,728 1,426 

Security service charges 63 45 

Depreciation 5.1.7 3,248 2,500 

Others 126 145 

73,795 61,318 

Less: Recovery from related parties 742 911 

73,053 60,407 

Workers' profits participation fund 22.3 54,648 47,737 

Workers' welfare fund 

- current year 17,265 13,300 

- prior year 41 (2,906) 

17,306 10,394 

Auditors' remuneration 29.1 721 731 

Property, plant and equipment written off 405 383 

Donations 29.2 391 550 

Advances to employees written off 30 - 

Provision for doubtful debts 11.3 1,338 2,000 

74,839 61,795 

29.1 Auditors' remuneration 

Audit fee 240 240 

Fee for half yearly review and other certifications 295 275 

Out of pocket expenses 186 216 

721 731 

29.2 Donations include the following in which a director is interested: 

Name of director Interest Name and address of donee 

in donee 

Mr. Iqbal Ali Lakhani (See note below) Special Olympics Pakistan, 

205, Sunset Tower, Sunset Boulevard, 

DHA, Phase-II, Karachi 240 300 

Note: Spouse of Mr. Iqbal Ali Lakhani is the Program Chief Executive of the donee organisation. 

30. OTHER OPERATING INCOME 

Insurance commission 3,455 3,307 

Profit on savings accounts 31,045 22,222 

Profit on a term deposit account 507 7,063 

Profit on short term investments - 2,159 

Profit on disposal of short term investments 20,654 8,792 

Gain on disposal of property, plant and equipment 5.1.6 4,341 1,183 

Sale of scrap 639 248 

Insurance claim against consequential loss of profit 55,737 - 

Exchange (loss) / gain (44,350) 1,107 

Sales tax refund 524 7,604 

Profit on sale of material 247 7,386 

Others 1,110 340 

73,909 61,411 

59

31. FINANCE COSTS 



34. CASH GENERATED FROM OPERATIONS 



Markup on: 

- Long term loan 751 4,455 

- Liabilities against assets subject to finance leases - 48 

- Short term borrowings 14,408 6,302 

Guarantee commission 258 232 

Bank commission and other charges 4,458 3,764 

19,875 14,801 

32. TAXATION 

Current 

- for the year 300,600 283,000 

- for prior years 1,458 (6,856) 

Deferred 39,658 15,710 

341,716 291,854 

32.1 Reconciliation between the average effective tax rate and the applicable tax rate. 


Percentage 

Applicable tax rate 35.00 35.00 

Tax effect of expenses that are not allowable 

in determining taxable income (0.71) (0.45) 

Effect of income assessed under presumptive tax regime (0.28) (0.99) 

Tax effect of income tax provision relating to prior year 0.14 (0.77) 

Tax impact arising due to origination of temporary differences (0.68) (0.24) 

33.47 32.55 

33. EARNINGS PER SHARE 



Profit after taxation 679,293 604,751 

(Number of shares) 

Weighted average number of ordinary shares outstanding 

during the year - restated 19,109,786 19,109,786 

(Rupees) 

Earnings per share - restated 35.55 31.65 

33.1 A diluted earnings per share has not been presented as the company does not have any convertible instruments as at June 30, 

2007 and 2008 which would have any effect on the earnings per share, if the option to convert is exercised. 

Profit before taxation 1,021,009 896,605 

Adjustment for non-cash charges and other items: 

Depreciation and amortisation expense 110,466 92,945 

Gain on sale of property, plant and equipment (4,341) (1,183) 

Provision for doubtful debts 1,338 2,000 

Advances to employees written off 30 - 

Profit on savings accounts (31,045) (22,222) 

Profit on a term deposit account (507) (7,063) 

Profit on short term investments - (2,159) 

Profit on disposal of short term investments (20,654) (8,792) 

Finance costs 19,875 14,801 

Exchange loss / (gain) 44,350 (1,107) 

Property, plant and equipment written off 405 383 

Working capital changes 34.1 (221,130) (116,625) 

919,796 847,583 

34.1 Working capital changes 

(Increase) / decrease in current assets: 

Stores and spares 2,657 (602) 

Stock in trade (228,513) (163,502) 

Trade debts (35,058) (40,481) 

Loans and advances (56,079) 211 

Trade deposits, short term prepayments and 

other receivables (22,103) (19,807) 

(339,096) (224,181) 

Increase in current liabilities: 

Trade and other payables 117,966 107,556 

(221,130) (116,625) 

35. PROPOSED DIVIDEND 

The Board of Directors at the meeting held on August 19, 2008 have proposed for the year ended June 30, 2008 cash dividend 

of Rs 10 per share (2007: Rs 16 per share), amounting to Rs 191.098 million (2007: 244.606 million), bonus issue of 4.777 million 

shares (2007: 3.822 million shares) at the rate of one share for every four shares held (2007: one share for every four shares held) 

and transfer to general reserve of Rs 440 million (2007: Rs 320 million) subject to the approval of members at the annual general 

meeting to be held on September 18, 2008. 

61

36. RELATED PARTY DISCLOSURES 

36.1 Disclosure of transactions between the company and related parties. 

The related parties comprise associated companies, staff retirement funds, directors and key management personnel. The company 

in the normal course of business carries out transactions with various related parties. Significant balances and transactions with 

related parties are as follows: 

Nature of transaction Note Relationship 2008 2007 

with the company 


Sale of goods, services provided and 

reimbursement of expenses 

Century Paper & Boards Mills Limited Associate 266 115 

Clover Pakistan Limited Associate 10,436 10,090 

Lakson Tobacco Company Limited 36.6 Associate - 1,105 

Merit Packaging Limited Associate 51 40 

Rollins Industries (Private) Limited 36.3 Related party 294,127 254,116 

Tetley Clover (Private) Limited Associate 2,048 1,657 

306,928 267,123 

Purchase of goods, services received and 

reimbursement of expenses 

Century Insurance Company Limited Associate 34,270 26,668 

Century Paper & Board Mills Limited Associate 118,278 89,132 

Century Publication (Private) Limited Associate 8,661 11,069 

Clover Pakistan Limited Associate 1,532 993 

Colgate-Palmolive China Subsidiary of CP-USA 87,937 68,122 

Colgate-Palmolive Vietnam Subsidiary of CP-USA 10,651 11,524 

Colgate-Palmolive Company USA Joint venture company 41,936 24,330 

Colgate-Palmolive Hong Kong Subsidiary of CP-USA 791 125 

Colgate-Palmolive Thailand Subsidiary of CP-USA 6,886 8,574 

Colgate-Palmolive Turkey Subsidiary of CP-USA 160 - 

Cyber Internet Services (Private) Limited Associate 4,792 5,254 

Lakson Tobacco Company Limited 36.6 Associate - 124 

Lakson Business Solution (Formerly C.R.I.S.S.) Associate 119 - 

Merit Packaging Limited Associate 7,752 404 

Accuracy Surgicals (Private) Limited Associate - 45 

Princeton Travels (Private) Limited Associate 6,092 6,312 

Rollins Industries (Private) Limited 36.3 Related party 1,054,975 930,816 

SIZA (Private) Limited Associate 19 9 

SIZA Foods (Private) Limited Associate 100 100 

Tetley Clover (Private) Limited Associate - 6 

1,384,951 1,183,607 

Rent, allied and other charges 

Century Paper & Board Mills Limited Associate 181 294 

Hasanali Karabhai Foundation Associate 8,219 6,960 

SIZA Services (Private) Limited Associate 402 344 

Reliance Chemicals (Private) Limited Associate 1,723 1,875 

10,525 9,473 

Nature of transaction Note Relationship 2008 2007 

with the company 


Royalty charges 


Sale of property, plant and equipment 

Clover Pakistan Limited Associate 83 498 

Tetley Clover (Private) Limited Associate 35 - 

Rollins Industries (Private) Limited 36.3 Related party - 30 

118 528 

Contribution to staff retirement benefits 

Colgate-Palmolive (Pakistan) Limited Employees 

Contributory Provident Fund Trust Employees fund 9,271 5,714 

Colgate-Palmolive (Pakistan) Limited 

Employees Gratuity Fund Employees fund 8,871 8,989 

18,142 14,703 

Donations 

Special Olympics Pakistan 36.4 240 300 

Compensation paid to key management 

personnel 

Short-term employee benefits including 

Key management 

compensated absences personnel 26,662 27,961 

Post employment benefits --do-- 2,946 1,266 

29,608 29,227 

Insurance claims received 


Insurance commission income 


Purchase of property, plant and equipment 

Cyber Internet Services (Private) Limited Associate - 180 

Lakson Business Solutions Limited 36.5 Associate 133 453 

Clover Pakistan Limited Associate 1,055 - 

SIZA (Private) Limited Associate 1,080 - 

SIZA Foods (Private) Limited Associate 567 - 

2,835 633 

Dividend paid 


Century Insurance Company Limited Associate 90 72 

Premier Fashions (Private) Limited Associate 18,751 3,268 

SIZA (Private) Limited Associate 19,190 15,352 

SIZA Services (Private) Limited Associate 50,839 12,829 

SIZA Commodities (Private) Limited Associate 11,938 9,551 

174,190 99,777 

63

36.2 The related party status of outstanding balances as at June 30, 2008 are included in trade debts (note 11), other receivables (note 

13), and trade and other payables (note 22) respectively. 

36.3 Rollins Industries (Private) Limited is a third party whose manufacturing process is dependent on the company. 

36.4 Spouse of Mr. Iqbal Ali Lakhani is Program Chief Executive of Special Olympics Pakistan. 

36.5 The former name of Lakson Business Solutions Limited was Cyber Rapid Integrated Software Solutions (Private) Limited. 

36.6 Transactions with Lakson Tobacco Company Limited (LTCL) are disclosed for the period from July 1, 2006 to March 8, 2007 as 

the company ceased to be a related party thereafter due to change in shareholding of LTCL. 

37. REMUNERATION OF CHIEF EXECUTIVE, DIRECTOR AND EXECUTIVES 

37.1 The aggregate amount charged in these financial statements for remuneration, including certain benefits to the chief executive, 

the director and executives of the company, are as follows: 

Chief Executive Director Executives 

2008 2007 2008 2007 2008 2007 


Managerial remuneration 5,382 5,382 1,708 1,557 33,526 25,537 

Bonus / commission 1,827 5,591 287 261 6,063 4,628 

Reversal of excess accrual 

of bonus in previous year - (1,212) - - - - 

Gratuity - - 414 310 1,868 498 

Provident fund - - 154 141 2,686 2,054 

Housing 1,614 1,614 768 676 15,114 10,058 

Utilities 355 359 - 12 - 981 

Motor vehicles 533 503 179 164 3,380 2,489 

Others - - 231 222 5,405 3,745 

9,711 12,237 3,741 3,343 68,042 49,990 

Number of persons 1 1 1 1 36 28 

37.2 Chief executive, a working director and the executives of the company are also provided with company maintained cars. 

38. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES 

38.1 Interest rate risk exposure 

Interest / mark-up rate risk arises from the possibility that changes in interest / mark-up rates will affect the value of financial 

instruments. In respect of income earning financial assets and interest / mark-up bearing financial liabilities, the following table 

provides information about the exposure of the company to interest / mark-up rate risk at the balance sheet date based on 

contractual re-pricing or maturity dates, whichever is earlier. 

The information relating to company's exposure to interest rate risk based on maturity dates is as follows: 

Interest / mark-up bearing Non-interest / mark-up bearing Total Total 

Maturity Maturity Sub-total Maturity Maturity Sub-total 2008 2007 

within one after one within one after one 

year year year year 


Financial assets 

Long term loans - - - 8,208 18,551 26,759 26,759 20,793 

Long term security deposits - 1,700 1,700 - 1,262 1,262 2,962 3,521 

Trade debts - - - 184,551 - 184,551 184,551 150,218 

Trade deposits, short term 

prepayments and other receivables - - - 43,484 - 43,484 43,484 24,196 

Profit receivable from banks - - - 2,291 - 2,291 2,291 119 

Short term investments - - - 180,201 - 180,201 180,201 295,455 

Cash and bank balances 459,427 - 459,427 133,510 - 133,510 592,937 420,696 

2008 459,427 1,700 461,127 552,245 19,813 572,058 1,033,185 914,998 

2007 357,511 1,700 359,211 539,781 16,006 555,787 914,998 

Financial liabilities 

Long term loan 2,500 3,125 5,625 - - - 5,625 8,125 

Long term deposits - - - - 4,465 4,465 4,465 4,098 

Trade and other payables - - - 639,234 - 639,234 639,234 528,502 

Accrued mark-up - - - 700 - 700 700 3,506 

Short term borrowings 44,945 - 44,945 - - - 44,945 188,981 

2008 47,445 3,125 50,570 639,934 4,465 644,399 694,969 733,212 

2007 191,481 5,625 197,106 532,008 4,098 536,106 733,212 

Off-balance sheet items 

Letters of credit 384 139,006 

Indemnity bonds and guarantees 14,600 14,600 

The effective interest/mark-up rates as at June 30 for financial instruments are as follows: 


Percentage 

Long term security deposits 5.00 5.00 

Balances with banks in: 

- savings accounts 0.75 to 13.60 0.75 to 11.80 

- term deposit account 14.00 7.25 to 11.80 

Long term loan 11.36 10.99 

Short term borrowings 

- running finance facilities 10.92 to 13.81 10.03 to 11.63 

- import credit facilities 4.70 6.06 to 6.31 

65

38.2 Credit risk and concentration of credit risk 

Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties fail completely to 

perform as contracted. Out of the total financial assets of Rs 1,033.185 million (2007: Rs 914.998 million), the financial assets that 

are subject to credit risk amounted to Rs 1,032.497 million (2007: Rs 914.430 million). The company believes that it is not exposed 

to major concentration of credit risk. To manage exposure to credit risk, the company applies credit limits to its customers. 

38.3 Foreign exchange risk management 

Foreign currency risk arises mainly where receivable and payables exist due to transactions entered into foreign currencies. The 

company is exposed to foreign currency risk on certain transactions with group companies that are entered in a currency other 

than Pakistan Rupees. The company uses forward foreign exchange contracts to hedge its foreign currency risk, when considered 

appropriate. 

38.4 Liquidity risk management 

39. GRATUITY 

39.1 The disclosures made in notes 39.2 to 39.13 are based on the information included in the actuarial valuation report as of June 

30, 2008. 

39.2 The actuarial valuation of gratuity plan was carried out as of June 30, 2008. The projected unit credit method, using the following 

significant financial assumptions, has been used for the actuarial valuation: 


Percentage 

- Discount rate - per annum compound 12.00 10.00 

- Expected rate of increase in salaries - per annum 11.00 9.00 

- Expected rate of return on plan assets - per annum 10.00 9.00 

39.3 Mortality rate 

The company applies prudent risk management policies by maintaining sufficient cash and marketable securities and the availability 

of funding through an adequate amount of committed credit facilities. Company's treasury aims at maintaining flexibility in funding 

by keeping committed credit lines available. 

38.5 Fair value of financial instruments 

The rates assumed were based on the EFU 61-66 mortality table. 

39.4 The amounts recognised in the balance sheet are as follows: 



Fair value is an amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in 

an arm's length transaction. Consequently, differences may arise between the carrying value and the fair value estimates. 

As at June 30, 2008 the net fair value of all financial assets and financial liabilities are estimated to approximate their carrying values. 

38.6 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. 

In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return 

capital to shareholders or issue new shares or sell assets to reduce debt. 

Consistent with others in the industry, the company manages its capital risk by monitoring its debt levels and liquid assets and 

keeping in view future investment requirements and expectation of the shareholders. Debt is calculated as total borrowings ('long 

term loan' and 'short term borrowings' as shown in the balance sheet). Total capital comprises shareholders' equity as shown in 

the balance sheet under 'share capital and reserves'. 

The salient information relating to capital risk management of the company as of June 30, 2008 and 2007 were as follows: 



Total borrowings 19 & 24 50,570 197,106 

Less: Cash and cash equivalents 16 592,937 420,696 

Excess of liquid assets over total borrowings 542,367 223,590 

Present value of defined benefit obligation 39.5 72,505 62,378 

Fair value of plan assets 39.6 (49,149) (42,781) 

Deficit 23,356 19,597 

Unrecognised net actuarial gains (12,335) (6,739) 

Unrecognised past service cost (11,021) (12,858) 

Payable to the gratuity fund - - 

39.5 Movement in defined benefit obligation 

Present value of defined benefit 

obligation as at July 1, 2007 / 2006 62,378 50,312 

Current service cost 5,039 5,098 

Interest cost 6,238 4,528 

Actuarial losses 3,442 3,704 

Benefits paid (4,592) (1,264) 

Fair value as at June 30 72,505 62,378 

39.6 Movement in fair value of plan assets 

Fair value as at July 1, 2007 / 2006 42,781 28,910 

Expected return on plan assets 4,278 2,602 

Actuarial gains (2,189) 3,544 

Company contributions 8,871 8,989 

Benefits paid (4,592) (1,264) 

Fair value as at June 30 49,149 42,781 

Total equity 2,141,544 1,707,110 

As at June 30, 2008 and 2007, the company had an excess of liquid assets over total borrowings, hence, its exposure to capital 

risk is minimal. 

67

39.7 Movement in net liability in the balance sheet is as follows: 



39.11 Plan assets comprise of the following: 


(Rupees in '000) Percentage (Rupees in '000) Percentage 

Opening balance of net liability - - 

Charge for the year 39.8 8,871 8,989 

Contributions made during the year to the fund (8,871) (8,989) 

Closing balance of net liability - - 

39.8 Charge for the year has been allocated as under: 

Cost of sales 26.1 5,048 5,115 

Selling and distribution costs 27 1,885 1,910 

Administrative expenses 28 1,938 1,964 

8,871 8,989 

39.9 The following amounts have been charged to income in respect of the gratuity plan: 

Current service cost 5,039 5,098 

Interest cost 6,238 4,528 

Past service cost - non vested 1,836 1,836 

Actuarial loss charge 36 129 

Expected return on plan assets (4,278) (2,602) 

8,871 8,989 

Actual return on plan assets 2,089 6,145 

39.10 Amounts for the current period and previous four annual periods of the fair value of plan assets, present value of the defined 

benefit obligation and the deficit arising thereon are as follows: 

2008 2007 2006 2005 2004 


As at June 30 

Present value of defined 

benefit obligation 72,505 62,378 50,312 41,978 37,210 

Fair value of plan assets (49,149) (42,781) (28,910) (17,685) (16,868) 

Deficit 23,356 19,597 21,402 24,293 20,342 

Experience adjustment: 

(Loss) / gain on plan assets 

(as percentage of plan assets) (4.46) 8.28 4.51 (3.64) (4.78) 

Loss / (gain) on obligations 

(as a percentage of obligation) 4.75 5.94 1.04 12.26 (0.65) 

Shares 4,937 10 5,430 12 

Debt 34,956 71 22,562 53 

Cash 7,134 15 11,023 26 

Others 2,122 4 3,766 9 

49,149 100 42,781 100 

39.12 The expected return on plan assets is based on the market expectations and depends upon the asset portfolio of the company, 

at the beginning of the period, for returns over the entire life of related obligation. 

39.13 Expected contribution to post employment benefit plan for the year ending June 30, 2009 is Rs 11.159 million. 

40. PLANT CAPACITY AND ACTUAL PRODUCTION 


(Quantities in tons) 

Capacity 105,500 105,500 

Production 96,796 90,656 

The underutilisation of capacity was due to market constraints. 

41. CORRESPONDING FIGURES 

41.1 Note Reclassification from Note Reclassification to (Rupees in '000) 

component 

component 

31 Markup on short term borrowings 31 Markup on long term loan 1,046 

34 Profit on bank deposits 34 Profit on savings accounts (22,222) 

Profit on a term deposit account (7,063) 

34.1 Trade and other payables 34 Exchange gain (1,107) 

41.2 The following reclassifications has been made in the cash flow for better presentation: 

Reclassification from component Reclassification to component (Rupees in '000) 

Long term loans Loans and advances 2,264 

Long term deposits (net) Long term security deposits (1,538) 

Long term deposits 253 

42. DATE OF AUTHORISATION FOR ISSUE 

These financial statements were authorised for issue on August 19, 2008 by the Board of Directors of the company. 




Director 

69

PATTERN OF HOLDING OF SHARES 

Held by the Shareholders as at June 30, 2008 

Incorporation Number K-5010 OF 1997-78 

CUIN Registration NO.005832 

No of Shareholdings Total 

shareholders From To Share held 

282 1 100 shares 8,973 

180 101 500 Shares 46,458 

60 501 1,000 Shares 44,535 

43 1,001 5,000 Shares 96,174 

8 5,001 10,000 Shares 57,010 

1 10,001 15,000 Shares 12,280 

3 15,001 20,000 Shares 56,540 

1 20,001 25,000 Shares 23,720 

1 60,001 65,000 Shares 64,316 

1 65,001 70,000 Shares 65,670 

1 205,001 210,000 Shares 205,433 

1 940,001 945,000 Shares 942,061 

1 1,495,001 1,500,000 Shares 1,499,193 

1 1,765,001 1,770,000 Shares 1,765,614 

1 3,090,001 3,095,000 Shares 3,092,072 

1 5,395,001 5,400,000 Shares 5,396,805 

1 5,730,001 5,735,000 shares 5,732,932 

587 Total 19,109,786 

Categories of shareholders shares held Percentage 

Directors, Chief Executive Officer, and their spouse and minor children 275,776 1.44 

Associated Companies, undertakings and related parties 11,760,715 61.54 

NIT and ICP 309 0.002 

Banks, Development Financial Institutions, 

Non Banking Financial Institutions 19,015 0.10 

Insurance Companies - - 

Modarabas and Mutual Funds 3,281 0.02 

Share holders holding 10% 14,221,809 74.42 

General Public 1,317,758 6.90 

DETAILS OF PATTERN OF SHAREHOLDING 

REQUIREMENTS OF CODE OF CORPORATE 

GOVERNANCE 

a) ASSOCIATED COMPANIES SHARES HELD 

1. Siza (Private) Limited 1,499,193 

2. Siza Services (Private) Limited 5,396,805 

3. Siza Commodities (Private) Limited 1,765,614 

4. Premier Fashions (Private) Limited 3,092,072 

5. Century Insurance Company Limited 7,031 

b) NIT AND ICP 

1. National Bank of Pakistan, Trustee Deptt. 156 

2. Investment Corporation of Pakistan 153 

c) DIRECTORS, CEO AND THEIR SPOUSE AND MINOR CHILDREN 

1. Mr. Iqbal Ali Lakhani Director 2,152 

2. Mr. Zulfiqar Ali Lakhani Director/Chief Executive 625 

3. Mr. Amin Mohammed Lakhani Director 2,097 

4. Mr. Tasleemuddin Ahmed Batlay Director 781 

5. Mr. A. Aziz H. Ebrahim Director 64,316 

6. Mr. Peter Justin Skala Nominee of 

Colgate-Palmolive 

NIL 

Company, USA 

7. Mr. Peter John Graylin Nominee of 

Colgate-Palmolive 

Company, USA 

8. Mrs.Ronak Iqbal Lakhani W/o Iqbal Ali Lakhani 205,433 

9. Mrs. Fatima Lakhani W/o Zulfiqar Ali Lakhani 125 

10. Mrs.Saira Amin Lakhani W/o Amin Mohammed Lakhani 247 

d) EXECUTIVES 17,050 

e) PUBLIC SECTOR COMPANIES AND CORPORATIONS NIL 

f ) 

BANKS, DEVELOPMENT FINANCE INSTITUTIONS, 

NON-BANKING FINANCE INSTITUTIONS, 

INSURANCE COMPANIES, 

MODARABAS AND MUTUAL FUNDS: 22,296 

[Other than those reported at a(5) 

NIL 

Note: Some of the shareholders are reflected in more than one category 



g) SHAREHOLDERS HOLDING 10% OR MORE 

1. M/s. Colgate-Palmolive Co., USA. 5,732,932 

[Other than those reported at a(2)& a(4)] 

h) INDIVIDUALS AND OTHER THAN THOSE 

MENTIONED ABOVE 1,300,708 

19,109,786 

71

BALANCE SHEET 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 


Property,plant and equipment 966,355 864,837 739,281 622,419 558,156 336,694 

Intangible assets 11,600 17,400 23,200 29,000 35,100 41,770 

Long term loans and security deposits 21,513 17,706 11,534 8,324 6,943 8,433 

999,468 899,943 774,015 659,743 600,199 386,897 

Current assets 2,138,856 1,750,582 1,337,476 877,981 808,825 674,985 

Current liabilities 834,290 818,450 699,948 436,201 463,218 355,984 

1,304,566 932,132 637,528 441,780 345,607 319,001 

TOTAL ASSETS EMPLOYED 2,304,034 1,832,075 1,411,543 1,101,523 945,806 705,898 

REPRESENTED BY 

Equity 

Paid-up capital 191,098 152,879 122,303 122,303 122,303 122,303 

Reserves 1,950,245 1,553,776 1,175,286 829,310 648,639 447,334 

Surplus on revaluation of investments 201 455 1,367 

2,141,544 1,707,110 1,298,956 951,613 770,942 569,637 

Non-Current liabilities 

Liabilities against assets subject to 

finance leases 1,085 1,658 1,078 10,445 

Long term loans,deposits and 

deferred taxation 162,490 124,965 111,502 148,252 173,786 125,816 

162,490 124,965 112,587 149,910 174,864 136,261 

2,304,034 1,832,075 1,411,543 1,101,523 945,806 705,898 

PROFIT AND LOSS ACCOUNT 

OPERATING AND FINANCIAL HIGHLIGHTS 

Turnover 8,976,538 7,445,820 6,286,355 4,883,261 4,195,162 3,461,557 

Less : Sales tax & sed 1,323,402 1,036,767 878,335 636,929 576,991 476,025 

: Trade discounts 521,208 474,629 402,325 326,109 269,856 251,047 

1,844,610 1,511,396 1,280,660 963,038 846,847 727,072 

Net turnover 7,131,928 5,934,424 5,005,695 3,920,223 3,348,315 2,734,485 

Cost of sales 5,035,128 4,054,746 3,390,485 2,861,841 2,386,323 1,977,197 

Gross profit 2,096,800 1,879,678 1,615,210 1,058,382 961,992 757,288 

Administrative,selling and distribution cost (1,054,986) (967,888) (807,743) (548,232) (488,147) (456,349) 

Other operating expenses (74,839) (61,795) (59,527) (36,718) (34,163) (20,641) 

Other operating income 73,909 61,411 34,702 8,185 10,960 11,997 

(1,055,916) (968,272) (832,568) (576,765) (511,350) (464,993) 

Profit from operations 1,040,884 911,406 782,642 481,617 450,642 292,295 

Finance costs 19,875 14,801 13,309 14,526 14,082 22,016 

Profit before taxation 1,021,009 896,605 769,333 467,091 436,560 270,279 

Taxation 341,716 291,854 270,478 164,117 149,643 95,257 

Profit after taxation 679,293 604,751 498,855 302,974 286,917 175,022 

OPERATING AND FINANCIAL 

HIGHLIGHTS-CONTINUED 

FINANCIAL RATIOS 

RATE OF RETURN 

2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003 

Pre tax return on equity % 48 53 59 49 57 47 

Post tax return on equity % 32 35 38 32 37 31 

Return on average capital employed % 33 37 40 30 35 27 

Interest cover times 52 62 59 33 32 13 

PROFITABILITY 

Gross profit margin % 29 32 32 27 29 28 

Operating profit to sales % 15 15 16 12 13 11 

Pre tax profit to sales % 14 15 15 12 13 10 

Post tax profit to sales % 10 10 10 8 9 6 

LIQUIDITY 

Current Ratio ratio 2.6:1 2.1:1 1.9:1 2.0:1 1.8:1 1.9:1 

Quick ratio ratio 1.3:1 1.2:1 1.0:1 0.8:1 0.8:1 1.0:1 

FINANCIAL GEARING 

Debt equity ratio ratio 07:93 07:93 08:92 14:86 18:82 19:81 

Gearing ratio times 0.47 0.55 0.63 0.62 0.83 0.86 

CAPITAL EFFICIENCY 

Debtors turnover days 9 9 8 8 10 13 

Inventory turnover days 52 48 45 50 47 45 

Total assets turnover times 2 2 2 3 2 3 

Property, plant and equipment turnover times 7 7 7 6 6 8 

INVESTMENT MEASURES PER 

ORDINARY SHARE 

Earnings per share - restated Rs 35.55 31.65 26.10 15.85 15.01 9.16 

Dividend cash (including proposed) Rs 10.00 16.00 16.00 12.50 10.00 7.00 

Dividend payout (including bonus) % 35 47 57 63 53 61 

Dividend yield % 2 4 5 6 6 8 

Price earning ratio - restated times 17.58 14.85 13.25 12.25 11.66 9.65 

Break-up value - restated Rs 112.07 89.33 67.97 49.80 40.34 29.81 

Market value - low Rs 430 325.00 175.00 155.00 87.50 57.25 

Market value - high Rs 825 480.00 371.15 289.00 203.00 154.00 

Market value - year end Rs 624.79 470.00 346.00 194.25 175.00 88.35 

Market capitalization Rs in mn 11,940 7,185 4,232 2,376 2,140 1,081 

Dividend - Cash % 100 160 160 125 100 70 

Dividend - Bonus shares % 25 25 25 - - - 

* Restated from 2003 to 2007 

73

FORM OF PROXY 

I/We 

of 

a member of COLGATE-PALMOLIVE (PAKISTAN) LIMITED 

hereby appoint 

of 

or failing him 

of 

who is/are also member/s of Colgate-Palmolive (Pakistan) Limited to act as my/our proxy and to vote for 

me/us and on my/our behalf at the Annual General Meeting of the shareholders of the Company to be held 

on the 18 th day of September 2008 and at any adjournment thereof. 

Signed this day of 2008. 

Folio 

No. 

CDC Participant 

ID No. 

CDC Account/ 

Sub-Account No. 

No. of 

shares held 

Signature over 

Revenue Stamp 

Witness 1 Witness 2 

Signature 

Name 

CNIC No. 

Address 

Signature 

Name 

CNIC No. 

Address 

Notes: 1. The proxy must be a member of the Company. 

2. The signature must tally with the specimen signature/s registered with the Company. 

3. If a proxy is granted by a member who has deposited his/her shares in Central Depository 

Company of Pakistan Limited, the proxy must be accompanied with participant's ID number 

and CDC account/sub-account number alongwith attested photocopies of Computerized National 

identity Card (CNIC) or the Passport of the beneficial owner. Representatives of corporate 

members should bring the usual documents required for such purpose. 

4. The instrument of Proxy properly completed should be deposited at the Registered Office of 

the Company not less than 48 hours before the time of the meeting

Fold Here 

AFFIX 

CORRECT 

POSTAGE 

Company Secretary 

COLGATE-PALMOLIVE (PAKITAN) LIMITED 


Sarwar Shaheed Road, 

Karachi-74200. 

Phone: 5698000 

Fold Here 

Fold Here 

Fold Here 

Fold Here 

Fold Here

Annual Report 2008 - Colgate Palmolive Pakistan

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