Dar Es Salaam Textile Mills : Transmission of Annual Accounts for the year ended 2022-06-30

CHAIRPERSON'S REVIEW REPORT

As we closed another financial year, it is my immense pleasure to present the review report under the requirement of section 192 of the Companies Act, 2017 for the year ended June 30, 2022 highlighting the Company's performance and the role of the Board of Directors in guiding the management to carry out its responsibility for the benefit of its stakeholders.

During the year; the Company remained committed to implement its new business strategy and is focusing to improve its liquidity. The focus of the Company'smanagement is to settle the Company's liabilities towards lenders and other creditors and to utilize available funds for implementation of alternate business plan. I am confident that the Company will be successful in meeting the future challenges and targets.

Overall performance of the Board

According to the requirements of the Companies Act and Code of Corporate Governance, the Directors have performed their duties diligently and effectively in the best interest of the Company.

For the purpose of Board evaluation, a comprehensive criteria has been developed. The Board has recently completed its annual self-evaluation for the year ended June 30, 2022 and I report that:

The overall performance of the Board for the year, measured on the basis of approved criteria, was satisfactory.

Secretaries of all Committees conducted annual evaluation and for which questionnaire were circulated to members to give their explanation and feedback on performance of the Committee.

During the year; the Board played an effective role in managing the affairs of the Company in the following manner:

• The Board has ensured that there is adequate representation of non-executive and independent directors on the Board and its committees as laid down in the Code and shall ensure to implement the requirements of new Code in its true letter and spirit;
• The Board performed their duties and reviewed, discussed and approved business strategies, corporate objectives, plans, financial statements and other reports. Members received clear and complete agendas and relevant written material in sufficient time prior to Board and committee meetings;
• The Board has ensured that members of the Board and its respective committees possess adequate skills, experience and knowledge to manage the affairs of the Company. The Board shall ensure that the directors shall be provided with the requisite training to enable them to perform their duties in an effective manner to ensure that directors seek certification in accordance with the Code;
• The Board recognizes that well defined corporate governance processes is vital in enhancing corporate accountability and is committed to ensure high standards of corporate governance to preserve and maintain stakeholder value;
• The Board has a clear understanding of the stakeholders (shareholders, employees, vendors, society at large) whom the Company serves. The Board has a strategic vision of how the Organization should evolve over the next three to five years. Further, the Board sets annual goals and targets for the management in all major performance areas;

• All the significant issues were presented before the Board or its committees to strengthen and formalize the corporate decision-making process and particularly all the related party transactions executed by the Company were approved by the Board on the recommendations of the Audit Committee;
• The Board has ensured that sound system of internal controls are in place; and
• The Board has complied with all the regulatory requirements and acted in accordance with the applicable laws and best practices.

Material Fact

On 30th November 2022, the management sold the land and building of the company. The management has successfully settled substantial part of its liabilities. The management is fully committed to implement its alternate business plan as discussed in numerous board meetings.

Ms. Abida Mukhtar was appointed Chief Executive Officer of the Company. She succeeded Mr. Faisal Mukhtar who retired after a successful career as Chief Executive Officer and appointed as the Chairman of the Board.

Acknowledgement

Being the Chairman of the Board, I would like to thank all our Board members for their commitment and contribution. I will remain firmly committed to ensure that the Company complies with all the relevant provisions of the Code and other regulations and ensuring that our management team continues to take decision that will create value for you in the short, medium and long term.

Lahore	FAISAL MUKHTAR
October 05, 2022	Chairman

DIRECTOR'S REPORT

The Directors of Dar es Salaam Textile Mills Limited ("the Company") take pleasure in presenting the 32nd Annual Accounts for the year ending June 30th, 2022.

Economic Outlook

The Pakistani economy has witnessed turbulent times over the past two quarters - the war in Ukraine, political instability, rising inflation has added to the woes of the common man. With the recent catastrophic floods impacting over 33 million Pakistanis, destroying cotton fields, grain harvests and farm animals; the economy will have a long road to recovery.

Despite the challenging times, with regards to the Company, the management is excited to share that the Company sold its land and building. The management is currently utilising its receipt to settle its liabilities and has successfully managed to pay off a substantial part of its liabilities. During the last six to eight months, the Company has discharged the majority of its liabilities and believes that it will be able to close the transaction during the financial year 2023. After the closure of its transaction, it will gear up to implement the alternate business plan. It will seek to implement its alternate business plan post closure either to find a strategic investor or start a new line of business that yields beneficial returns to the Company and its Shareholders. The management will discuss with the regulators to withdraw its winding up proceeding initiated by the regulator. The management is of the considered view that alternate business plan can only be implemented if the regulator allows revival of the company by withdrawing the winding up proceedings. Lastly, the management with a heavy heart ends its journey as a textile unit and is now hopeful and excited to start its new venture.

The Company earned net profit of PKR 228.96 million for the period ended June 30th 2022, with EPS of PKR 28.62 per share vis-à-vis net profit of PKR 21.11 million and EPS of PKR 2.64 per share in the corresponding period. Furthermore, as stated in the Auditors Review Report, the management made further efforts for removal certain reservations of the Auditors and despite the adverse opinion of the Auditors, it is confident that it will revive this opinion.

Description	June 30,	June 30,
	2022(PKR)	2021(PKR)
Sales	-	-
Other Income *	374,233,654	23,952,982
Admin & Operating Expenses	(15,586,090)	(16,015,959)
Operating Profit /(Loss)	230,994,593	6,520,417
Changes in fair value of investment property	0	19,760,000
Finance costs	(368,011)	(788,383)
Income tax expense	(1,666,413)	(4,380,163)
Profit/(loss) after taxation	228,960,169	21,111,871
Earnings Per share	28.62	2.639

Furthermore, as illustrated in the Auditors report, the management made further efforts for removal of certain reservations of the Auditors and despite the adverse opinion of the Auditor, it is confident that it will revive an unmodified opinion.

Corporate Social Responsibility (CSR)

The Company gives high priority to its social responsibilities and is committed to the highest standards of corporate behaviour despite of the fact that it has increased its cost of doing business. The Company believes in having shared value and having healthy work place. Since the operations of the Company have been suspended for the time being hence much monetary spending on CSR initiatives is not being carried out. The Company upon implementation of its alternate business plans aims to continue its CSR initiatives in the areas of healthcare, education, environment protection, water and sanitation, child welfare, infrastructure development and other social welfare activities.

Related Party transactions

All related party transactions during the financial year ended on June 30, 2022 were placed before the Audit Committee and the Board for their review and subsequently approved. These transactions were reviewed by the Audit Committee

and approved by the Board. All these transactions were in line with the transfer pricing methods and the policy for related parties approved by the Board. Code of Conduct

The Company strives to enhance corporate governance as one of the most important tasks for its management, based on the Company's basic principle, in order to strengthen the trust of our shareholders, customers & society and seek sustainable growth and enhance corporate value.

Corporate and Financial Reporting Framework

The financial statements prepared by the management of the Company present fairly its state of affairs, the result of its operations, cash flow and changes in equity. The Company is committed to good corporate governance and financial statements together with notes have been drawn up with in conformity with the provisions of the Companies Act, 2017. International Financial Reporting Standards have been followed in preparation of these financial statements and accounting policies have been consistently applied in preparation of the financial statements.

Compliance with the Code of Corporate Governance

The requirement of the Code of Corporate Governance set out by the Pakistan Stock Exchange in their listing regulations relevant for the year ended June 30, 2022 were duly complied with and a statement to this effect is attached with the report.

The Board of Directors

The Board of Directors is composed of seven members, with statutory representation of different category of directors, which includes an independent director, non-executive directors and executive directors as required by the Listed Companies (Code of Corporate Governance) Regulations, 2017. The Board is responsible for making strategic decisions with respect to important management matters, including execution of important business activities and other matters as prescribed by law. These decisions are made after deliberating matters according to established criteria: assessing risks and giving due consideration to ground realities. The Board is also responsible for supervising and monitoring conduct guidelines. The composition of Board of Directors (the Board) is as follows:

Category		Names
Independent Directors	Mr.	Muhammad Gul Nawaz
		Mr.	Muhammad Yousaf Khan
Non-executive Directors		Mr.	Faisal Mukhtar
		Mrs. Mahwesh Faisal Mukhtar
		Mr.	Ejaz Hussain
Executive Directors		Mrs. Nilofar Mukhtar
		Ms. Abida Mukhtar

Board Meeting and Attendance

During the year five meetings of the Board of Directors of the company were held attendance by each director is shown below:

Sr. No	Name	Attendance
1.	Mrs Nilofar Mukhtar	5
2.	Mr. Faisal Mukhtar	5
3.	Mrs. Mahwesh Faisal Mukhtar	5
4.	Ms. Abida Mukhtar	5
5.	Ejaz Hussain	5
6.	Mr. Muhammad Yousaf	5
7.	Muhammad Gul Nawaz	5

The Board of directors has established Audit Committee as well as HR and Remuneration Committee in compliance with the Code of Corporate Governance which comprises of the following members, no. of meetings by each member is also given:

Audit Committee Meeting and Attendance

During the year four meetings of the audit committee of the company were held; attendance by each member is as under

Sr. No	Name	Attendance
1.	Mr. Muhammad Gul Nawaz	4
2.	Mrs. Mahwesh Faisal Mukhtar	4
3.	Mr. Faisal Mukhtar	4

HR and Remuneration Committee

During the year, one meeting of HR and Remuneration Committee of the company was held; attendance by each member is as under.

Sr. No	Name	Attendance
1.	Mr. Muhammad Yousaf	1
2.	Mr. Faisal Mukhtar	1
3.	Ms. Mahwesh Faisal Mukhtar	1

Internal Financial Controls

A system of sound internal control is established and implemented at all levels within the Company. The system of internal control is sound in design for ensuring achievement of company's objectives, operational effectiveness and efficiency, reliable financial reporting and compliance with laws, regulations and policies.

Financial Statements

The financial statements of the company have been duly audited and signed by the auditors of the Company, M/S Rizwan & Company Chartered Accountants, and their report is attached with the financial statements. Auditors of the Company have given an adverse opinion despite the discussions that the pandemic resulted in the withdrawals of from potential deals by two interested parties. The response of your directors with respect to the same are as follows:

Reservation	Justification

1. As at reporting date; the Company's accumulated loss stood at Rupees 70.384 million (2021: Rupees 322.412 million) against paid up capital of Rupees 80.000 million and had disposed off its all of assets and had settled obligations towards lenders and other creditors. Note 2 to the financial statements further indicates conditions and events causing material uncertainty over the Company's ability to continue as a going concern. The sponsors of the Company have withdrawn loan of Rupees 36.28 million in such financial distressed faced by the Company to revive the Company. The Company has neither taken steps for implementation of alternate business plan as envisaged in shareholders' meeting on November 20, 2021 including process of change of its object clause and name of the Company nor provide any timeline for implementation of alternate business plan to revive the Company which creates doubt over the viability of alternate business plan. Securities and Exchange Commission of Pakistan has

The management is aware of the challenges it has faced over the past several years and has made continuous efforts to revive /revamp the company.

The management wishes to implement its alternate business plan in a structured manner. It plans to settle its liabilities and ensure that the transaction is closed before it embarks on implementation of its business plan. Currently, receivable is pending from the buyer side. After the close of the transaction, then the management can only then go ahead with an alternate business plan.

In regards to the SECP initiating a winding up proceeding, the management is providing quarterly updates to SECP and is keeping them updated about the future plans of the Company. The management will discuss with the regulators to withdraw its winding down petition so that the company can move ahead with its alternate business plan.