Saif Group 0335-5557717 31st Annual Report 2020 DESIGN MEDIA SOLUTIONS DESIGN MEDIA SOLUTIONS Certified ISO 9001:2008 Certified ISO 14001:2004 Saif Textile Mills Limited 3rd Floor, City Centre, Plot#40, Main Bank Road, Saddar Cantt., Rawalpindi by: and Produced Designed Saif Group Tel: +92-51-5700824-8, Cell: +92-300-5000395 Saif Textile Mills Limited REVIEW REPORT BY THE CHAIRMAN I am pleased to present my review on the overall volatility in our business. the overall performance of the Board of The role of the Board has been pivotal in Saif Textile Mills Ltd. (the Company) and achieving the Company’s objectives. The its effectiveness in achieving Company Board has developed short, medium and objectives. long-term plans to achieve its strategic For the financial year ended June 30, objectives. Independent and Non-Executive 2020, an annual appraisal of the Board, its Directors provided depth of expertise and Committees and individual directors was support for effective decision making. carried out as per the directives of Listed Overall, I feel that the strategic direction Companies (Code of Corporate Governance) of the Company for the long-term is clear Regulations, 2019. The performance was and appropriate. Moreover, the processes evaluated on various parameters such as adopted in developing and reviewing the structure, composition, quality, diversity, corporate strategy and execution are experience, competencies, performance commendable, which are truly reflected of specific duties and obligations, quality of by the improving financial results of the decision-making and overall effectiveness Company. Major decisions were referred to of the Board. the Board which were decided timely and I am pleased to note that the Board has prudently. performed its duties and responsibilities I remain firmly committed to ensuring that diligently and effectively to achieve the Company complies with all the relevant business goals of the Company. The Board codes, rules, regulations and ensuring committees also provided great assistance that our management team continues to through their timely reports to the Board, make decisions that will create value for thus contributing towards crucial business shareholders. decisions. I would also like to recognize the role and Individual Board members appear to be efforts of the executive management team competent, hard-working and demonstrate for their strong and insightful leadership a strong commitment towards overall during the past year and also their flexibility performance of the Company. Their and willingness to receive feedback. I would behaviour in the Board meetings was seen also like to express my gratitude for the to be professional and constructive. Time efforts of all our workers for their dedication was suitably apportioned to both strategic and all stakeholders for reposing their trust and operational level discussions and in us. suggesting appropriate resolutions. During the year, five board meetings were conducted. All the Board members received agendas and supporting material, including follow up materials, well in time before the Board and committee meetings. Attendance (Osman Saifullah Khan) of members in meetings was always proper Chairman and regular. There was no code of conduct violation observed. Performance objectives were reviewed against actual results and Islamabad were found reasonably satisfactory given October 07, 2020 dIRECTORS’ REPORT TO THE SHAREHOLDERS DEAR SHAREHOLDERS, PROFIT APPROPRIATION On behalf of Board of Directors, it gives me Considering the current financial position, The immense pleasure to present the 31st Annual Board in its meeting held on October 07, 2020 Audited Financial statements for the year ended has recommended a cash dividend of Rs. Nil June 30, 2020. per share i.e. Nil% (June 30, 2019: final cash OVERVIEW dividend @ 10% i.e., Re. 1 per share). During the year turnover of the company EARNINGS / (LOSS) PER SHARE reduced by 15% to close at Rs.7,651 million Loss per share during the period under report as compared to Rs. 8,975 million last year. The worked out to Rs. (25.43) (2019: Rs 31.44 emergence of COVID-19 has caused major earnings per share). disruptions to economic activity around the FUTURE OUTLOOK world including Pakistan and thereafter due to country-wide lockdown most of the textile mills The future outlook remains entirely hinged on the remained shutdown. In March, the mill was shut post-COVID economic recovery. The pandemic down for 3 days and till year-end we continued has imposed extraordinary challenges to all our production at 50% of capacity. During sectors of the economy. Presently, the textile lockdown production curtailment seriously industry is operating at 100% capacity and if affected operating profitability because fixed this continues, it is expected that the economy costs during this period were not fully absorbed. will resume its growth momentum that would Further, due to Rupee devaluation, increase in boost the demand for textile products in coming working capital requirement and high KIBOR, months. the finance cost increased from Rs 595 million We appreciate the economic relief measures to Rs 855 million. The Company has posted a taken by the Government in response to loss before tax of Rs. (624) million, compared pandemic, these include interest rate reduction, to a profit of Rs. 919 million last year (including payroll financing, and announcement of other income of loan written back of Rs 910 stimulus package to ensure liquidity to cushion million). growth and employment. Further, keeping in During the year the Company repaid long term view the unprecedented economic situation, loan installment worth Rs. 289 million and the Federal Budget 2020-21 was presented markup worth Rs 201 million. We are confident without imposing any new taxes. that we will continue to meet all our future CORPORATE GOVERNANCE financial commitments through our internal cash flows. We are pleased to report that your Company has taken necessary steps to comply with The Company is ISO certified in 9001:2015 the provisions of the Code of Corporate (Quality Management system) and 45001:2008 Governance. (Occupational Health & Safety Management system). The entity rating of the Company has The statement on Corporate Governance and been maintained at A- for Long Term and A2 for Financial Reporting Frame Work is given below: Short Term by Pakistan Credit Rating Agency Limited (PACRA) with outlook stable. dIRECTORS’ REPORT TO THE SHAREHOLDERS • The financial statements prepared by the • The system of internal controls is sound management of the company present in design and has been effectively fairly its true state of affairs, the results of implemented and monitored. its operations, cash flows and changes in • There are no doubts upon the Company’s equity. ability to continue as a going concern • Proper books of accounts have been • There has been no trading of shares by maintained by the company. CEO, Directors, CFO, Company Secretary, • Appropriate accounting policies have their spouses and minor children, during the been consistently applied in preparation year other than that disclosed in pattern of of financial statements and accounting shareholding. estimates are based on reasonable and • There has been no material departure from prudent judgment. the best practices of code of corporate • International Accounting Standards, as governance. applicable in Pakistan, have been followed in preparation of financial statements. The key operating and financial data of the Company for last six years is given below:- 2020 2019 2018 2017 2016 2015 (Rupees in thousand) Operating Fixed Assets 6,552,480 5,400,232 4,991,596 4,485,732 4,604,928 3,521,737 Net Worth (Restated) 3,161,279 3,198,422 2,401,918 2,273,053 2,240,867 1,683,278 Turnover 7,651,433 8,975,842 7,852,240 7,586,301 6,697,773 7,945,789 Gross Profit 637,418 1,037,813 855,018 763,013 621,988 701,134 Gross Profit Margin (% 8.33 11.56 10.89 10.06 9.28 8.82 age) Net Profit/(Loss)-After (671,610) 830,319 45,868 22,945 (49,132) (54,588) Taxation Net Profit/(Loss) Margin (8.78) 9.25 0.58 0.30 (0.73) (0.69) (% age) • The board of Directors has adopted a Elected Directors Numbers Mission Statement and a Statement of a) Male 07 Overall Corporate Strategy. b) Female 01 • Regarding outstanding taxes and levies, please refer note 17 to the annexed audited Composition Numbers statements. a) Independent Director 02 • Composition of Board b) Non-Executive 05 Directors The board of Directors as at June 30, 2020 consist of: c) Executive Directors 01 dIRECTORS’ REPORT TO THE SHAREHOLDERS • Attendance of Board Meetings appraised through the evaluation system which is based on quantitative and qualitative values. • During the year under report five meetings It includes the performance of the business, the of the Board of Directors were held. The accomplishment of objectives with reference attendance by each Director was as follows: to profits, organization building, succession planning and corporate success. Name of Director Meetings Attended DIRECTORS’ REMUNERATION Mr. Osman Saifullah Khan 04 The remuneration of the Board members is approved by the Board itself. However, Ms. Hoor Yousafzai 03 in accordance with the Code of Corporate Mr. Assad Saifullah Khan 05 Governance, it is ensured that no Director takes Mr. Faisal Saifullah Khan 01 part in deciding his own remuneration. The Mr. Rashid Ibrahim 04 Company does not pay remuneration to non- executive directors except fee for attending Mr. Muhammad Danish 01 the meetings. For information on remuneration Rana Muhammad Shafi 05 of Directors and CEO in 2019-20, please refer Mr. Zaheen-Ud-Din 05 notes to the Financial Statements. Qureshi EXTERNAL AUDITORS Leave of absence was granted to Directors who could The present auditors, M/s Shinewing Hameed not attend any of the Board meetings. Chaudhri & Co. Chartered Accountants, retire and being eligible, offer themselves for re- • Board’s Audit Committee appointment.