Ittefaq 2018 PDF

ITTEFAQ IRON INDUSTRIES LTD.
Annual Report 2018

CONTENTS
Key Figures 2
Company Information 4
Vision 6
Mission 7
Strategy Goals 8
Core Values 9
Notice of Annual General Meeting 10
Code of Business Conduct & Ethics 15
Profiles of Directors 18
Company Profile 20
Organization Chart 25
Chief Executive Message 26
Director Report to Members 27
Last Five year Financial review 34
Pattern of Shareholding 36
Statement of Compliance with the code 45
of Corporate Governance
Review Report to the Members 48
FINANCIAL STATEMENTS
Auditor's Report to the Members 52
Balance Sheet 58
Profit and Loss Account 59
Statement of Comprehensive Income 60
Statement of Changes in Equity 61
Cash Flow Statement 62
Notes to the Financial Statement 63
Director Reports in Urdu 97
Proxy Form in Urdu & English 100
ITTEFAQ IRON INDUSTRIES LTD. 1 Annual Report 2018

Sales Revenue
PKR in
Million 6,197.999,269
(20 17: 4,442.102,67 8)
EBITDA
PKR in
Million 650.000,000
(2017: 430 .704,533)
Profit before Tax & Depreciation

PKR in
Million 546.533,748
(2017: 319 .296,913)
Profit after Taxation

PKR in
Million 269.820,582
(2017: 140 .861,268)
Earning per share

PKR in
Million 2.06
(2017: 1.55)

Return on Capital Employed
% 12.420
(2017: 4.80)
Total Assest
PKR in
Million 6,024.369,404
(20 17: 5,142.699,42 4)
Current Ratio
% 2.6
(2017: 1.52)
Shareholder Equity
PKR in
Million 3,240.056,429
(20 17: 2,934.413,26 3)
Breakup value per share

PKR in
Million 2.06
(2017: 1.55)

CORPORATE INFORMATION
Board of Directors Hr & R Committee
Mian Muhammad Pervaiz Shafi Chairman Javed Sadiq Chairman

Shahzad Javed Chief Executive Khalida Pervaiz Member
Javed Sadiq Director Sumbleen Usman Member
Khalid Mustafa Director
Khalida Pervaiz Director Chief Financial Officer
Sumbleen Usman Director
Ayesha Fahid Director Amir Munir Bhatti (FCMA)
Audit Committee Share Registrar
Javed Sadiq Chairman M/s. Corplink (Pvt.) Ltd

Adnan Younas Committee Sec. Share Registrar & Corporate Consultants
Khalid Mustafa Member Wing Arcade, 1-K, Commercial
Khalida Pervaiz Member Model Town, Lahore
Ayesha Fahid Member Tel; 042-35916714, Fax; 042-35869037
Email; [email protected]
Company Secretary
Registered Office
Muhammad Shahzad Bazmi (AFPA)
40 B-II, Gulberg III, Lahore
Auditors Tel: 042-35765021-26, Fax; 042-35759546
Email;
Kaleem & Co.
Chartered Accountants Company Website
H.No.134, C Link 4, St # 2
Cavalary Ground Lahore www.ittefaqsteel.com
Mills Legal Advisor
8-KM Manga Raiwind Road Muhammad Shahzad Bazmi

Near Rousa Stop Advocate High Court
Tel: 042-35397001-8 40 B-II, Gulberg III, Lahore
Tel: 042-35765021-26, Fax; 042-35759546
Bankers Email: [email protected]
National Bank of Pakistan

Bank of Punjab
Soneri Bank Ltd.

Vision
STATEMENT
To c on tri bute to the

society by creating better
v alue , in no vati ve
technology, high quality
S t ee l p r o d u c t s a n d
superior services.

MISSION
STATEMENT
Ittefaq Steel aims to proceed on its path to be the

leading provider of quality steel products, through
employees empower men t with s afe and
environmentally sound practice.

STRATEGIC
GOALS
Providing Customer Satisfaction by serving with

superior quality production of Steel bar, Girder etc
a t l ow es t c os t . E n s u r i ng Se c u r it y an d
Accountability for employees, production facilities
and products.
Ensuring efficient Resource Management by
managing human, financial, technical and
infrastructural resources so as to support all our
strategic goals and to ensure highest possible
value addition to stakeholders.

CORE VALUES
Striv ing for c ontinuous improvement and
innovation with commitment and responsibility:
Treating stakeholders with respect, courtesy and
competence; Practicing highest personal and
professional integrity; Maintaining teamwork, trust
a n d s u p p o r t w i t h o p en a n d c a n d i d
communication; and Ensuring cost consciousness
in all decisions and operations.

NOTICE OF THE ANNUAL
GENERAL MEETING
Notice is hereby given that the 13 th Annual General Meeting of the members of
ITTEFAQ IRON INDUSTERIES LIMITED will be held on Thursday , October 25, 2018 at 12:00
noon at registered office, 40 B II, Gulberg-III, Lahore to transact the following business.
ORDINARY BUSINESS
1. To confirm the minutes of the lastAnnual General Meeting held on Saturday,

October 28, 2017.
2. To receive, consider and adopt the audited financial statements of the
Companyfor the year ended June 30, 2018 together with the Directors and
Auditors Report thereon.
3. To consider and approve payment of Rs:0.50 (5%) per Share as cash dividend
and 10% bonus shares for the year ended June 30, 2018 as recommended by
the Board of Directors to comply with the requirement of Section 5(A) of the
Income Ordinance, 2001
4. To appoint Auditors for the year ending June 30, 2019 and to fix their
remuneration. The present auditor M/s. Kaleem& Co., Chartered Accountants,
the retiring auditors, who being eligible, have offered themselves for re-
appointment.
5. Any other Business with the permission of the Chairman.
BY ORDER OF THE BOARD
Lahore: Muhammad Shahzad Bazmi

October 3, 2018 Company Secretary.

NOTES:
1. Book closure
Share transfer books of the Company will remain closed from October 18, 2018
to October 25, 2018(both days inclusive). Physical transfers/ CDS transaction IDs
received in order by the Company's Share Registrar, M/s. Corplink(Pvt.) Limited
Wings Arcade,1-K, Commercial, Model Town, Lahore, up to the close of
business on October 17, 2018 will be treated in time.
2. The individual members or representatives of corporate members of the
Company in CDC must bring original National Identity Card or Passport, CDC
Account and Participant ID Numbers to prove identity and verification at the
time of Meeting. CDC account holders will further have to follow the under-
mentioned guidelines as laid down in Circular No.1 dated January 26, 2000
issued by the Securities and Exchange Commission of Pakistan.
a) For Attending AGM
.In case of individuals, the account holder or sub-account holder whose
securities and registration details are uploaded as per the Regulations, shall
produce proof of his/her identity by showing original Computerized National
Identity Card(CNIC), at the time of the meeting.
In case of corporate entity , the Board of Directors, resolution/power of
attorney with the specimen signature of the nominee shall be produced
(unless it has been provided earlier) at the time of the meeting.
b) For Appointing Proxy
A member entitled to attend and vote at the above meeting may appoint a
person/representative as Proxy to attend and vote on his behalf at the
Meeting. The instrument of Proxy duly executed in accordance with the
Articles of Association of the Company must be received at the Registered
Office of the Company not less than 48 hours before the time of holding the
meeting. Form of Proxy is available at Company Website.
c) For Zakat
Members are requested to submit declaration (CZ-50 ) as per Zakat &Ushr
Ordinance, 1980, for Zakat exemption and advise change in address, if any.
3- E-DIVIDEND
As per section 242 of the Companies Act, 2017, in case of Public Listed Company, any
dividend payable in cash shall only be paid through electronic mode directly into the
bank account designated by the entitled shareholders. Therefore, through this notice,

all shareholders are requested to update their bank account detail in the Central
Depository System through respective participants. In case of physical shares, to
provide bank account details to our share Registrar, M/s Corplink (Pvt.) Limited E-
Div id en d ma ndate f orm is av ail abl e on t he Com pany websi te at
www.ittefaqsteel.com
Please note that after 31s t October, 2017all cash dividends, declared by the company,
will only be remitted to designated bank account and not otherwise, so please ensure
an early update of your particular to avoid any inconvenience in future.
4-CIRCULATION OF NOTICE OF MEETING & ANNUAL ACCOUNTS

With reference to SRO 787 (I/2014 dated 8th September, 2014) issued by SECP,
shareholders have an option to receive Annual Audited Financial Statements and
Notice of Annual General Meeting through email. Shareholders of the Company are
requested to give their consent on prescribed format to our Share Registrar, M/s
Corplink (Pvt.) LimitedWings Arcade,1-K Commercial, Model Town, Lahore, to update
our record if they wish to receive Annual Audited Financial Statement and Notice of
Annual General Meeting through email. However, if a shareholder, in addition,
requests for a hard copy of the Audited Financial Statements, the same shall be
provided free of cost within Seven (07) Days of receipt of such request.
5-Deduction of Income Tax from Dividend under Section 150 of the

Income Tax Ordinance, 2001:
The current prescribed rates for the deduction of withholding tax from payment of
dividend by the companies are as under:
· For filers of income tax returns: 15%
· For non-filers of income tax returns: 20%
The income tax is deducted from the payment of dividend according to the Active
Tax-Payers List (ATL) provided on the website of FBR. Further, according to
clarification received from Federal Board of Revenue (FBR), withholding tax will be
determined separately on 'Filer/Non-Filer' status of Principal shareholder as well as
joint-holder(s) based on their shareholding proportions, in case of joint accounts
held by the shareholders.
In this regard, all shareholders who hold shares jointly are requested to provide

shareholding proportions of Principal shareholder and Joint-holders in respect of
shares held by them to our Shares Registrar, in writing as follows:
ITTEFAQ IRON INDUSTRIES LIMITED

FORM OF JOINT SHAREHOLDING PROPORATION
Folio/CDC Names of Total Percentage CNIC no Signatures
Account principal and shares of shares (copy
no. joint shareholders held attached)
(proportion)
6-Video conferencing facility

Pursuant to provisions of SECP Circular No.10 of 2014 dated May 21,2014, if the
Company receives consent from members holding aggregate 10% or more
shareholding, residing in geographical location to participate in the meeting through
video conference at least 10 days prior to the date of meeting, the Company will
arrange video conference facility in that city.
7. Members requested to notify any changes in their mailing addresses to the

Company's Share Registrar as soon as possible.
8. For any query/information, the shareholders may contact corporate affairs

department, 042-35765029, email address [email protected] or Company's
Share Registrars, M/s Corplink (Pvt.) Limited, Wings Arcade,1-K Commercial, Model
Town, Lahore. Phone:042-35916714, 042-35916719. Email:[email protected]
BY ORDER OF THE BOARD
Lahore: Muhammad Shahzad Bazmi

October 3, 2018 Company Secretary.

CODE OF CONDUCT
The Code of Conduct sets out the Company's objectives and its responsibilities to
various stakeholders and the ethical standards required from its Directors and
employees to meet such objectives and responsibilities.
FINANCIAL DISCLOSURE
All transactions should be accurately reflected in the books of accounts according to

applicable accounting principles. Falsification of the Company's books, any of the
recorded bank accounts and transactions is strictly prohibited.
CONFLICT OF INTEREST
The Directors and employees of the Company must recognize that in the course of
performing their duties, they may be out into a position where there is a conflict in the
performance of such duty and a personal interest they may have. It is the overriding
intention of the Company that all business transactions conducted by it are on arm's
length basis.
COMPLIANCE WITH LAWS, DIRECTIVES & RULES
Compliance with all applicable laws, regulations, directives and rules including those
issued by the Board of Directors and Management.
CONFIDENTIALITY
Confidentiality of the Company's internal confidential information must be

maintained and upheld, which includes proprietary, technical, business, financial,
joint-venture, customer and employee information that is not available publicly.
TIME MANAGEMENT
The Directors and the employees of the Company shall ensure that they adopt

efficient and productive time management schedules.
BUSINESS INTEGRITY
The Directors and employees will strive to promote honesty, integrity and fairness in all
aspects of the Company's business and their dealings with vendors, contractors,
customers, Joint Venture participants and Government officials.
INSIDER TRADING
Every Director and employee who has knowledge of confidential material

information is prohibited from trading in securities of the Company.
HEALTH, SAFETY & ENVIRONMENT
The Company, its Directors and employees will Endeavour to exercise a systematic
approach to health, safety and environmental management, in order to achieve
continuous performance improvement.
INVOLVEMENT IN POLITICS, GIFTS & BRIBARY
Company shall not make payments or other contributions to political parties and
organizations. Employees must ensure that if they elect to take part in any form of
political activity in their spare time, such activity does not and will not have any
adverse effects on the Company and such activities must be within the legally
permissible limits. The Directors and employees shall not give or accept gifts,
entertainment, or any other personal benefit or privilege that could influence business
dealings.
COMPLIANCE
All Directors and employees must understand and adhere to the Company's business
practices and Code of Conduct. They must commit to individual conduct in
accordance with the Company's business practices and Code of Conduct and

observe both the spirit and the letter of the Code in their dealings on the Company's
behalf.
ACCOUNTABILITY
Failure to adhere to the Company's business practices or Code of Conduct may

result in disciplinary action, which could include dismissal.

PROFILE OF DIRECTORS
Mr. Shahzad Javed , Chief Executive Officer / Director
Mr. Shahzad Javed is the son of Mian Muhammad Javed Shafi; one of the most
eminent industrialists of the country with a superior vision and dynamic brand of
leadership. Mr. Shahzad Javed had held the directorships at , Ittefaq Sugar Mills Ltd.,
Ittefaq Power Ltd, Kashmir Feeds Ltd and Ittefaq Bio Tech Pvt Ltd.
Mr. Shahzad Javed is instrumental in making strategic decisions for the Company and
has led the Company to become one of the leading players in steel sector. He did
early education from Aitchison College Lahore Pakistan. Further h e did his B.Sc from
United State of America. He is an enthusiastic and devoted industrialist.
Mr. Mian Muhammad Pervaiz Shafi, Director
Mr. Pervaiz has a rich and diversified experience of 40 years in iron and steel industry
and is renowned as one of the most experienced industrialists of the steel industry. He
has also served as the Director of Ittefaq Sugar and Kashmir Sugar Mills Ltd. Under his
leadership the Company expects to achieve new heights and can further excel in the
steel industry. Mr. Pervaiz is also serving as a member of audit committee of the
Company.
Mr. Javed Sadiq, Director
Mr. Sadiq is serving as an independent director and has brought significant diversity to
the board of Ittefaq Iron Industries (Formerly Ittefaq Sons Limited). Previously, he has
served on the boards of National Investment Trust, Regional Development Finance
Corporation, Lahore University of Management Sciences and State Cement
Corporation and currently holds directorships in The United Insurance Co. of Pakistan
and Green star Social Marketing. Having a remarkable history of more than four
decades, Mr. Sadiq has served various prestigious organizations including National
Development Finance Corporation as Director, EVP Karachi, SVP Zonal Head Lahore,
Overseas Employment Corporation as Manager Marketing Planning and
Development, MICAS Association Pakistan as Deputy General Manager, Decca Ltd.
London as System and O&M Analyst and BBC London in audience Research
Development. He has also worked with First national Bank Modaraba as the CEO and
Industrial Development Bank of Pakistan as a Chairman.
Mr. Sadiq has also rendered consultancy services to NDFC for the affairs related to
Karachi Electric, Wapda and National Book Foundation. Also, he has provided his
consultancy for the billion, transmission and distribution departments of KE.
Mr. Sadiq is also a member of audit committee of the Company. He holds the degree
of B.A (Hons.) from University of Liverpool, England and is also an M.A in International

Relations & Economy from University of Manchester, England.
Mr. Khalid Mustafa, Director
Mr. Khalid Mustafa is a graduate from M.A.O College, Lahore. He has a vast and
illustrious experience of transport and steel business having served in the sectors in
various capacities. He possesses keen interest in Pakistan Politics and sports. He was
elected as councillor in local body election thrice and has also served as chairman
bait-ul- mall Lahore.
Mrs. Khalida Pervaiz, Director
Mrs. Khalida Pervaiz is daughter of Mian Khalid Siraj who was ex-partner of Ittefaq
Foundries. She has also served as director in Ittefaq Sugar Mills Ltd. At present she is on
the board as well as a member of Human Resource Committee & Remuneration and
has taken numerous initiatives for the development of HR function of the Company.
She is also supervising a charitable institution and actively participates in social work.
Mrs. Ayesha Fahid, Director
Mrs. Ayesha Fahid is a graduate from Lahore College. Her presence on the board and
as a member of Audit Committee has brought numerous initiatives to set high
standards and benchmarks for the performance of the Company. She also aims to
work for the improvement of product portfolio of the Company and expanding its
customer base.
Mrs. Sumbleen Usman, Director
Mrs. Usman is a graduate from Lahore College. Apart from serving the board she is
supervising the procurement of raw materials and is also serving as a member of HR
& Remuneration Committee.

COMPANY PROFILE
Ittefaq the name of itself has over the years become synonymous with quality
structural steel in Pakistan.
Ittefaq steel is made up of 1000 team-mates whose goal is to take care of the
customers. We are accomplished this by being the safest highest quality and most
productive steel products company is Pakistan. We are committed to doing this
while being cultural and environmental stewards in communities where we live
and work. We are succeeding by working together.
The company's attention is focused on customer's satisfaction, development of

products, research and quality control however, the main concern since the
beginning has been to emphasize on investment in the national manpower, as it is
the real capital of the company.
The company's long term investment in a combination of advanced technologies
with the highly trained and motivated work force has been the key factor in
bringing us to this point in our development. Today, by the grace of ALLAH we are
leading a way in heavy industry by providing structure and alloy steel in the form of
billet & bars in all type of industrial, residential sectors.
Product Profile
Ittefq Steel is the leading steel rolling mill in Pakistan with the capability to
manufacture international quality products with various standards, such as DIN,
ASTM etc. the company has created a name for itself and is known as the pioneer
in steel products. Our state of the arts rolling mill can produce structure steel (with
close tolerance and the required mechanical properties) and cater yo stringentt
requirements for critical applications. Highly responsive and flexible production
capability producing trailor made solution has resulted in Ittefaq Steel becaome a
preffered supplies to key customers of structural steel in the region. Ittefaq steel is
also able to minimize the leading time required to provide consistent international
quality structural steel angels flat bars, channels, round and girders in a wide
range of sizes.
PRODUCTS
DEFORMED BARS
Ittefeq Steel has been shaping steel for the nation for more than 50 Years. Our
Deformed steel bars of Grade 40 and Grade 60 are produced in all American and

British Standards Sizes from 10mm to 50mm. The Deformed bars are manufactured in a
state if the art fully computerized plant. Well trained staff operates the plant with
through quality control at all stages of manufacturing process. Ittefaq steel has also
introduced international quality ittefaq thermex TMT bars.
GIRDER, T-IRON, I & BEAM, CHANNEL & ANGEL
I-Beam are commonly made of structured steel. A common type of I-Beam is the
Rolled Steel joist (RJS). These sections have parallel flanges. Ittefaq Steel is
manufacturing I & H-Beam, Girder, T-Iron, Channel and Angle that has no match in
strength and durability. All these products are available in different sizes as per your
need and convenience.
STEEL BILLETS
Ittefaq Steel has quickly emerged as one of the most productive mills in Pakistan
producing high quality industrial steel conforming to international standards industrial
section, angles girders, channels, rounds, and special shapes. Throughout our melt
shop from steel scrap to billets we maintain strict control over the composition of our
steel. Ittefaq steel quality system is based in the key principals of ISO and is focused on
production products consistently right, to meet the customer requirements.
PRODUCTION FACILITIES
INDUCTION FURNACES
Melt shop is the heart of steel making operation at ittefaq. Here, steel scrap is
transformed in to a semi-finished product (Called a Billet) of correct size and chemistry,
in two medium frequency induction furnace each having of 15 ton capacity per heat
LADLE REFINING FURNACES
Ladle Refining Furnace with a capacity of 20 ton per heat is used for refining liquid steel
to produce high quality alloy steel. LRF reduces the dissolved gas content and helps in
improved quality with better content and helps in improved quality with better
recover of Ferro Alloys.

AOD CONVERTER
A.O.D is an improved Air-Oxygen Decarburization (AOD) Convertor. At Ittefaq Steel,

our AOD has a capacity of 22 tons per heat for making Stainless Steel and low carbon
alloy steels.
CONTINUOUS CASTING
The two strand 6/11 radius continous caster is occupied with special features, for the
production of 100mm X 100mm to 200mm x 200mm steel billet.
BAR ROLLING MILL
Fully automatic rolling of 20” straight with auto controlled re-heating furnace has the
capacity to roll steel bars from 10mm to 50mm size according to international
standards.
STRUCTURAL MILL
A 24” modern structural mill has been recently installed with a rolling capacity of 35-40
ton per hour to produce Ms Joist, Ms Channel, Ms Angle, Ms T-Iron, Round Bar and
other shapes of steel structure.
Quality
Ittefaq iron industries limited is committed to supply quality products strictly as per
customer requirement. A well equipped metallurgical labortary has always been
need of the day to ensure products being produced as per requisite standards for this
purpose company have established a well equipped modern steel testing laboratory
to ensure strict quality control at all stages i.e. from induction of raw material to the
dispatch of finish products.
Quality assurance laboratory installed is one of the most modern laboratories in

Pakistan equipped with the following testing facilities required for quality production
of steel and R & D purpose for further advancement in the relevant field.
Emission Spectrometer
A twenty seven channel optical Emission spectrometer for direct analysis of solid
metallic samples of ferrous metals with high precision accuracy least inter element

interference particularly for trace element analysis of world famous German Spectro
Lab brand has been installed and Commissioned under foreign experts for quick and
accurate analysis of results and to print out reports in addition to save analysis data for
traceability.
LECO CS – 230 Analyzer

LEO CS – 230 has been installed to determine precisely carbon & sulphur contents of
steel and other carbonaceous material over a wide range of composition. The
equipment is of German origin and has been designed for more accurate results in
quick basis with built in computer to print out analysis report.
Universal Tensile Testing Machine

A modern hydraulic tensile testing machine with maximum load capacity 2000KN is
installed with servo control to test various metallic and non-metallic materials for
tension, compression, bending and shearing strength. It is capable of testing the
characteristic of material on physical and technological properties machine is
equipped with computer software and printer. It can control the test procedures as
the set programs and can also display record, process and print the test results and
can draw test curves automatically in real time. This machine has been recently
imported installed and commissioned under the supervision of foreign experts and is
presently the biggest capacity computerized machine in any steel industry in
Pakistan. Besides this, there is already a 1000-KN capacity machine in the mechanical
testing lab to share the load of testing.
Moreover this machine complies with ISO 7500-1, ISO-6892, ISP-15630, ASTMA-730,
ASTME4, ASTME9, ASTMD 76, JISZ 2841 standards.
Hardness Testing
Two latest model hardness testers have been installed in the laboratory for
determining brinnel Rockwell and Vickers hardness of ferrous nonferrous and hard
alloys with complete measuring range.
Metallography
Metallography is a powerful material investigation tool. Its lead to establish product

reliability and to determine the failure of materials. Keeping in view the vital role of
Metallography laboratory has been installed and is under functioning. The laboratory
comprises of a metallurgical microscope equipped with reflected illumination which
provides bright field, dark field, polarization observation and photography. Moreover
a computer system with image analyzer software is attached to the microscope for
online microstructure analysis.
Chemical Analysis
In addition to above mentioned testing facilities, there exists a complete and up to

date chemical laboratory for analysis of ferrous and Ferro alloys. A dedicated and
experienced R & D team is engaged in developing new products and upgrading
existing formulations. We develop and produce products to meet the entire
satisfaction of the customer. We continuously upgrade the product based in the
feedback from end user. Our field representative keep a track of performance of
each supply and forward the feedback to our technical experts. Who analyze and
make necessary changes, if required. Our valued customers are assured of best
quality material.
Sample Preparation
The goal of metallo graphic specimen preparation is to reveal the true structure of the
material. True structure enables the analyst to examine a specimen surface that show
a precise image of the material. Mechanical preparation (i.e) (cutting, grinding and
polishing) is the most common method of preparing samples for microscopic
examination.
A complete range of equipment for cutting, grinding, fine grinding, cold mounting
and embedding, hot compression mounting has been installed in the metallographic
laboratory for proper preparation of samples for metallographic.

ORGANOGRAM OF COMPANY
BOARD OF
DIRECTORS
Audit Chief Human

Committee Executive Resource &
Officer Remuneration
Head of Head of Sales Executive Chief Financial Company

Internal Audit & Marketing Director Officer Secretary
Head of Head of ERP Manager

Manufacturing Accounts
Head of Head of Manager

Financial Analysis
Supply Chain Taxation
Manager HR Head of
Budgeting
Manager
Admin
Manager IT

CHIEF EXECUTIVE MESSAGE
Dear Shareholders:
I am really pleased to share with you a snapshot of our
excellent performance during the financial year
ending on June 30, 2018.
Throughout the year, by making our best efforts, we
laid down the foundation of our success brick by brick
and block by block and achieved all our targets set
for the period in spite of over-all challenges faced by
the steel industry and political instability in the
country. The company achieved highest ever
production level and turnover in its history. This year
we earned Rs 6.5 billion gross profit which is 67% higher
as compared to the last year.
The importance of infrastructure cannot be over-
emphasized for the development of any country and
steel industry in this regard plays a very vital role. The government should come
forward and facilitate the sector enabling it to play its due role in development of the
country.
In the short as well as long run the prospects for the industry's expansion and growth are
quite bright due to the ongoing China Pakistan Economic Corridor (CPEC) projects
and the government's decision to start the construction of Diamer-Bhasha dam.
Being a lead player we are fully focused and committed to achieving maximum
possible value for our shareholders by fully exploiting the growth potential of the
industry. In the near future, we are going to get installed a new furnace and re-
modification rolling mill as part of our expansion program. We are also taking steps to
get an LNG connection for our mills to overcome the shortage of natural gas. For the
consumer/domestic construction market, we are also going to launch a new brand
by the name of Ittefaq Gold to further strengthen our position and enhance our over-
all market share.
This year's tremendous achievements would not have been possible without the
support of our shareholders and untiring efforts of our executive management team
as well as the staff from top to bottom. I thank you all for your support and efforts
toward making the company a significant player in the steel industry of the country.

DIRECTORS'
REPORT
It gives me great pleasure in
presenting you the Company's 13th
Annual Report and Audited
Accounts for the year
ended 30th June 2018.

OPERATING RESULTS (Rs. In Million)
PARTICULARS 2017-18 2016-17

Gross Sale 6679.991 4544.932
Net Sales 6197.999 4442.102
Operating Profit 544.042 319.554
Profit Before Tax 415.141 198.736
Profit After Tax 269.820 140.861
Review Of Operating Results 1. Dividend

I am really pleased to share with you a The Board is pleased to propose a cash
snapshot of our excellent performance dividend of Rs:0.50 per share i.e 5% and 10%
during the financial year ending on June bonus shares for the year ended June 30,
30, 2018. 2018.
Throughout the year, by making our best
efforts, we laid down the foundation of 2. Role of Chief Executive Officer (CEO) /
our success brick by brick and block by Managing Director (MD)
block and achieved all our targets set for CEO/MD is responsible for execution of
the period in spite of over-all challenges Company's long term strategy with a view to
faced by the steel industry and political creating shareholders value. The CEO/MD
instability in the country. The company takes execution of Company's long term
achieved highest ever production level strategy with a view to creating shareholders
and turnover in its history. This year we value. The CEO/MD takes all day to day
earned Rs 619 Million gross profit which is
decisions to accomplish Company's short
67% higher as compared to the last year.
and long term objective/plans. He acts as a
In current year ,we are fully focused and
committ ed t o ach ieving maximu m direct liaison between the Board and the
possible value for our shareholders by fully C o mpany man age me nt . He al s o
exploiting the growth potential of the communicates in behalf of the Company to
industry. In the near future, we are going share holder, employees, Govt. authorities,
to get installed a new furnace and re- other stakeholders and the public. CEO/MD
modification rolling mill as part of our acts as a director, decision maker and
expansion program. We are also taking leader. The communicator role involves
steps to get an LNG connection for our interaction with the outside world, as well as
mills to overcome the shortage of natural th e organiz ation's ma nagement and
ga s. For t he con su me r/ d omes t ic employees; the decision making role
construction market, we are also going to involves high level decisions about policy
launch a new brand by the name of and strategy. As a leader of the company,
Ittefaq Gold to further strengthen our he motivates employees and inculcates
position and enhance our over-all market requisite enthusiasm and spirit in them.
share.

3. General and when required.
The Directors of the Ittefaq Iron Industries ltd.
(IIIL) are pleased to present annual report 8. Best practices of Corporate Governance
together with Audited financial statements IIIL, as a model corporate entity, pursues
of the company for the year ended 30 th June perfection by adherence to the best
2018 and auditors' Report thereon. corporate and ethical practices. Braod
practices of corporate Governance, as
4. Presentation of financial Statements given in the Companies Act 2017, are being
Financial statements prepared by the applied and implemented in true letter and
Management present the Company's state spirit. All periodic financial statements of the
of affairs, results of its operations, cash flows Company were circulated to the Directors,
and changes in equity in a fair and accurate duly endorsed by Chief Executive officer and
manner. Chief Financial Officer, for approval before
publication. Quarterly unaudited Financial
5. Accounting policies Statements along with Director's review were
Appropriat e accou nt ing policies are published and circulated to the shareholders
consistent ly applied in preparation of and regulators within one Month. Half Yearly
finan cial stat ement s and account in g statements reviewed by Board after the
estimates are based on reasonable and closing date and shall be presented to the
th
prudent judgment. shareholders in the 13 annual General
th
Meeting on 25 October for final approval.
6. Books of Accounts
Proper books of accounts are maintained. (a) . Shareholding Pattern.
Compliance with IAS and IFRS International Pattern of shareholding of the Company in
Reporting standards (IAS) and international accordance with Listed Companies (Code
Financial Reporting standards (IFRS), as of Corpor ate Governance) Regulation, 2017
applicable in Pakistan, have been followed and the Companies Act 2017, as on 30th
June 2018, is attached on page 83 of the
in preparation of financial statements.
report.
7. Internal control System
(b). Shareholders' Information.
An internal control system is designed to To update the shareholders about the
provide reasonable assurance that the operations, growth and state of affairs of the
company ensures compliance of policies, Company , the mana g ement prompt ly
plans and laws, efficient use of resources, d i sseminat es all mat erial in format ion
accomplishment of goals besides availability includi ng announcement of interim and final
and integrity of financial and management results to Pak istan Stock Exchange. Quarterly,
information. The internal control system of Half Yearly and Annual Financial Statements
FCCL is very comprehensive, effective are accordingly ci rculated within stipulated
imp lem ent ed an d bei ng mon it ored time frame to all concerned . Likewise,
regularly. The company has increase its notices and announcements of dividend are
emphasis on control procedures of business transmitted to all stakeholders and regulators
unit to confirm that corporate policies are within th e time laid down i n List ed
executed and corrections are applied as C o m p a ni e s ( C o d e o f Co r p o r a t e
Governance) Regulation, 2017 and the

Compan ies Act 2017. These are also 13. Meetings of Board of Directors
up l oaded immed iately on Company's The Board meeting are held in every quarter
website. of reviewing and approving the adopting of
Company's financial statements, coupled
9. Human Resource Committee with review and adoption of business Plan.
The Committee comprises of three members During this year, six meetings of Board of
including its Chairman. Three members are Directors were held with the attendance.
non-executive directors, while chairman of
the Committee is an independent director 14. Committees of the Board
During this year, two meetings of the Human Following Committees were constituted to
Resource Committee were held with the work under the guidance of Board of
attendance. Director.
10. Role of Chairman 15. Audit Committee

Leads the Board of Directors, represents the The Committee comprises of five members
Group and acts as an overall custodian of including its Chairman. Three members are
the Group on behalf of the Board and non-executive directors, while chairman of
stakeholders. Responsible for ensuring the the Committee is an independent director
Board's effectiveness, he empowers the during this year, five meetings of the Audit
Board as a whole to play a full and Committee were held with the attendance.
constructive role in the development and
determination of the Company's strategy 16. Board of Director's Remuneration
and overall objective. All Directors of the Company are Non-
Executive Directors except the CEO/MD. The
11. Board Composition Director are paid remuneration for attending
Com pa ny boa rd com pr ises of t wo the Board/Committee meeting, as per
independent directors, seven Non-Executive approval policy. The relevant details are
Directors (Including Chairman) and one indicated in notes.
Executive Director (CEO/MD). The diverse
knowledge, expertise and skills of the 17. Qualifications of CFO and Head of
members enhance the effectiveness of our Internal Audit.
board. Our board competition represents Chief Financi al Officer and Head of Internal
the interests of all categories of shareholders. Audi t possess the requisite qual ification and
experience as prescr ibed in the Listed
12. Performance Evaluation of the Board C o m p a n i e s ( C o d e o f Co r p o r a t e
Pursuant to Listed Companies (Code of Governance) Regul ation, 2017.
Corporate Governance) Regulations, 2017
th e Board of Directors a pproved a 18. T r ain ing of the Board Members.
comprehensive mechanism for evaluation The Company takes keen interest in the
of Board's own performance. The human professional develo pm ent of its Boa rd
Resources and Remuneration Committee mem ber s and managed necessary tra inings
will un dertak e a forma l process for of its Board members as per the requirement s
evaluation of performance of the Board as a of the Listed Co mpa nies (Code of Cor por ate
whole and its Committees. Governance) Regulation, 2017.

19. Approval of Vi sion. Mis sion an d estim ates a re ba sed on reasonable and
Corporate Strategy by the Board. prudent judgm ents.
Pursuant to Listed Companies (Co de o f
Corp ora te Governance) Regulati on,2017, c . I nt ern at i on al F i n an ci al R e p ort in g
the Board of Directors has carefully reviewed Standards , as applicable in Pakistan, have
and appro ved the Vis ion, Mission and been followed in pr epa ra tion of f inancial
Corporate Strategy of the Company. It statem ents and any departures, there from,
comprehensively states the id eology wi th has been ad equ ately di s c lo s ed and
which IIIL was incorporated. We ensure that explained.
our Vision and Mission set the direction for our
overa l l co rp o rat e s tra tegy. The ent ire d. The system of internal control is sou nd in
organization is connected and driven by the design and i s effectively implem ented and
purpose and it serves the decision mak ing monitored.
criterion on our day to day business.
e. There are no significant doubts upon the
20. Code of Conduct. Company's ab ility to continue a s a going
Pursua nt to Listed Companies (Code of concern.
Corporate Governance) Regulation, 2017,
IIIL adheres to the best ethical standa rds in 22. Salient Aspects of Company's Control
the conduct of bus iness. Accordi ngly, the and Reporting Systems
Code of Conduct of the Company is Th e Company comp lies with all t he
approved by the Board of Directors and requirements of the Companies Act 2017
placed on the website of the company. and Listed Companies (Code of Corporate
Governance) Regulations, 2017. To fulfill this
21. Li sted Compani es (Code of Cor pora te
role, the Board is responsible to implement
Govern anc e) Regula tions, 201 7.
overall corporate governance guidelines in
During the ye ar Security and Exchang e
the Company, including approval of the
Commiss ion of Pa kistan ( SECP) issued Listed
C o m p a ni e s ( C o de o f Co r p o r a t e strategic direction as recommended by the
Governance) Regulations, 2017 for listed Management, approving and monitoring
companies, revising the previous regulations. capital expenditures, Appointing, removing
The Board of Directors is fully aware of the and creating succession policies for the
req uirem ents of the revised Code which is sen ior management, establishing and
applicable since 1" January 2018 and is mo n i t o r i ng t he ac h i e v e m e n t o f
making nec essary arrangements to ensure management's goal and ensuring the
compli ance. As part of comp liance of the i n t eg r i t y o f i n t e rn a l c o n t r o l a n d
cod e, we confi rm the foll owing:- man agement information systems. The
Board is also responsible for approving and
a. The financial statements prepared by monitoring financial and other reporting.
Company Management present f ai rly its
state of affairs , results of its opera tions, cash 23. Relations with Company Personnel
flows and changes in equity. Relations between the management and
the workers continued to remain cordial,
b. App rop riate accounting poli cies have based on mutual respect and trust. The
been consistentl y applied in pr epara ti on of
company has allocated funds for Provident
finan ci a l stat em e nt s and a c coun t in g

Fund and Profit Participation Fund for its Company is approved by the Board of
employees. Considerable investment has Directors and placed on Compan y' s
been made for welfare of staff in order to websit e , whi c h en ab l es of ficers and
provide safe and conductive environment. employees to share their concerns which are
addressed through necessary corrective
24. Gratuity Funds Investment. measures.
The Company also operates funded Gratuity
Fund Scheme covering all its permanent 29. Disclosures.
employees in accordance with Gratuity To the best of our knowledge, Directors
Fund Rule. (except as shown on page 36 of the report
on p at te rn of sha reh ol din g), Chie f
25. Related Party Transactions. E x e cut i ve / Ma na g i ng D ir ect or , CFO ,
Pursuant to Listed Companies (Code of Company Sec retary, Company Auditor s,
Corpora te Governance) Regulation, 2017, the ir spouses and their minor chi ldr en have
the Company adheres to the highest ethical not undertaken any trading in s hares of the
standards in the conduct of business. Policy Company during the FY 2017 -18.
on Related Party Transactions of the
Company is approved by the Board of
Directors.
26. External Auditors.

M/s Kaleem & Co, chartered accountants,
has completed the Annual Aud it for the year
ended 30th June 2018 and wil l retire on
conclusi on of the Annual General Meeting.
In view of the good cor porate governance
practices, the Board has recommended, for
approval by the shareholders duly endorsed
by Aud it Commi ttee, the appointment of
M/s Kaleem & Co, Chartered Accountants,
as External Aud itors of the Company for the
yea r ending 30' June 201 9.
27. Social Environmental Policy .

IIIL follows the best possible ethical standards
in the conduct of business . Accord ingly,
Social Environmental Policy of the Company,
duly approved by the Board of Directors, is
placed on the website of the Company.
28. Whistle Blowing Policy.

Pursuant to Listed Companies (Code of
Corporate Governance) Regulation, 2017,
IIIL is committed to achieve high standards of
integrity, ethical values and accountab ility.
Accordingly, whi stle blowing policy of the

MESSAGES OF THE CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
The directors endorse the contents of the Chairman's and Chief Executive Officer's
messages. ACKNOWLEDGEMENTS
The Board expresses its gratitude for the efforts of all its employees, executives, workers
and stakeholders which enabled the management to run the Company smoothly
throughout the year. It is expected that the same cooperation would be forthcoming
in future years.
On behalf of the Board
Shahzad Javed Mian Muhammad Pervaiz Shafi

(CEO) (Director)
Lahore : Sep 26, 2018

Last Five year Financial Review

THE COMPANIES ACT, 2017 FORM 34
(Section 227(2)(f)
PATTERN OF SHAREHOLDING
ITTEFAQ IRON INDUSTRIES LIMITED

Categories of Share Holders
As on 30th June, 2018

Catagories of Shareholding required under Code of Corporate Governance (CCG)
As on June 30, 2018

STATEMENT OF COMPLIANCE
with the Code of Corporate Governance
Name of Company : ITTEFAQ IRON INDUSTRIES LIMITED
YEAR ENDED: JUNE 30, 2018
1. The total number of directors are 7(Seven) as per the following:

a) Male : 4
b) Female : 3
2. The composition of board is as follows:
a) Independent Directors:
· Mr. Javed Sadiq
b) Other-Non Executive Director:
· Mr. Khalid Mustafa
· Mrs.Khalida Pervaiz
· Mrs.Sumbleen Usman
· Mrs. Ayesha Fahid
c) Executive Director :
· Mian Muhammad Pervaiz Shafi
· Mr. Shahzad Javed
3. The Directors have confirmed that none of them is serving as Director on more
than five listed companies including this Company(excluding the listed
subsidiaries of listed holding companies where applicable).
4. The company has prepared a Code of Conduct and has ensured that
appropriate steps have been taken to disseminate it throughout the company
along with its supporting policies and procedures.
5. The board has developed a vision/ mission statement overall corporate
strategy and significant policies of the company. A complete record of
particulars of significant policies along with the dates on which they were
approved amended has been maintained.
6. All the powers of the board have been duly exercised and decisions on relevant
matters have been taken by board /shareholders as empowered by the
relevant provisions of the Act and these Regulations.
7. The meetings of the Board were presided over by the Chairman and the Board
met at least once in every Quarter. Written notices of the Board Meetings, along
with agenda and working papers were circulated at least seven days before
the meetings. The minutes of the meetings were appropriately recorded and
circulated.
8. The board of directors have a formal policy and transparent procedures for
remuneration of directors in accordance with the Act and these regulations.
9. The Company takes keen interest i n the professional develop ment of its Board
member s a nd managed necessary tr ainings of its Board members as per the

requirements of the Li sted Companies (Code of Corp orate Governance)
Regulation , 2017.
10. The board has approved appointment of CFO, Company Secretary and Head
of Internal Audit , including their remuneration and terms and conditions of
employment and complied with relevant requirements of the Regulations.
11. CFO and CEO duly endorsed the financial statements before approval of the
board.
12. The board has formed committees comprising of members given below:
a) Audit Committee
Javed Sadiq Chairman
Adnan Younas Committee Sec
Khalid Mustafa Member
Khalida Pervaiz Member
Ayesha Fahid Member
b) Hr & R Committee
Javed Sadiq Chairman
Sumbleen Usman Member
Khalida Pervaiz Member
13. The terms of reference of the aforesaid committees have been formed ,
documented and advised to the committee for compliance.
14. The frequency of meeting (quarterly/half year/yearly) of the committee were
as per following:
NAME Total Meeting Held

a) Audit Commitee 5
b) HR & Remuneration Committee 2
15. The board has set up an effective internal audit function. The auditors are
considered suitably qualified and experienced for the purpose and are
conversant with the policies and procedures of the Company.
16. The statutory auditor of the Company has confirmed he has been given a
satisfactory rating under the quality control review program of the ICAP and
registered with Audit Oversight Board of Pakistan , that he, spouses and minor
children do not hold shares of the Company and firm is compliance with
international Federation of Accountants (IFAC) guidelines on code of ethics as
adopted by the ICAP.
17. The statutory auditor has not been appointed to provide other services except
in accordance with the Act, these regulations or any other regulatory
requirement and the auditor has confirmed that he has observed IFAC

guidelines in this regard.
18. We confirmed that all other requirements of the Regulations have been
complied with.
Mian Muhammad Pervaiz Shafi Shahzad Javed

Chairman Chief Executive Officer
Lahore: Dated September 26, 2018

We have reviewed the enclosed Statement of Compliance with the Listed
Companies (Code of Corporate Governance) Regulations, 2017 (the Regulations)
prepared by the Board of Directors of Ittefaq Iron Industries Limited (the Company) for
the year ended June 30, 2018 in accordance with the requirements of regulation 40 of
the Regulations.
The responsibility for compliance with the Regulations is that of the Board of Directors
of the Company. Our responsibility is to review whether the Statement of Compliance
reflects the status of the Company's compliance with the provisions of the Regulations
and report if it does not and to highlight any non-compliance with the requirements of
the Regulations. A review is limited primarily to inquiries of the Company's personnel
and review of various documents prepared by the Company to comply with the
Regulations.
As a part of our audit of the financial statements we are required to obtain an
understanding of the accounting and internal control systems sufficient to plan the
audit and develop an effective audit approach. We are not required to consider
whether the Board of Directors' statement on internal control covers all risks and
controls or to form an opinion on the effectiveness of such internal controls, the
Company's corporate governance procedures and risks.
The Regulations require the Company to place before the Audit Committee, and
upon recommendation of the Audit Committee, place before the Board of Directors
for their review and approval, its related party transactions and also ensure
compliance with the requirements of section 208 of the Companies Act, 2017. We are
only required and have ensured compliance of this requirement to the extent of the
approval of the related party transactions by the Board of Directors upon
recommendation of the Audit Committee. We have not carried out procedures to
assess and determine the Company's process for identification of related parties and
that whether the related party transactions were undertaken at arm's length price or
not.
Based on our review, nothing has come to our attention which causes us to believe
that the Statement of Compliance does not appropriately reflect the Company's
compliance, in all material respects, with the requirements contained in the
Regulations as applicable to the Company for the year ended June 30, 2018.
Lahore: Dated September 26, 2018

Financial Statements
For the year ended 30 June 2018
ITTEFAQ IRON INDUSTRIES LTD. Annual Report 2018

50
ITTEFAQ IRON INDUSTRIES LTD.

AUDITOR'S REPORT
AS AT 30 June 2018
KALEEM & COMPANY
To the Members of Ittefaq Iron Industries Limited CHARTERED ACCOUNTANTS
Report on the Audit of the Financial Statements

Opinion
We have audited the annexed financial statements of Ittefaq Iron Industries Limited
(the Company), which comprise the statement of financial position as at June 30,
2018, and the statement of profit or loss and other comprehensive income, the
statement of changes in equity, the statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting
policies and other explanatory information, and we state that we have obtained all
the information and explanations which, to the best of our knowledge and belief,
were necessary for the purposes of the audit.
In our opinion and to the best of our information and according to the explanations
given to us, the statement of financial position, the statement of profit or loss and other
comprehensive income, the statement of changes in equity and the statement of
cash flows together with the notes forming part thereof conform with the accounting
and reporting standards as applicable in Pakistan and give the information required
by the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively
give a true and fair view of the state of the Company's affairs as at June 30, 2018 and of
the profit and other comprehensive income, the changes in equity and its cash flows
for the year then ended.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing
(ISAs) as applicable in Pakistan. Our responsibilities under those standards are further
described in the Auditor's Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Company in accordance with the
International Ethics Standards Board for Accountants' Code of Ethics for Professional
Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the
Code) and we have fulfilled our other ethical responsibilities in accordance with the
Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current year. These
matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

Information Other than the Financial Statements and Auditor's Report Thereon
Management is responsible for the other information. The other information comprises the information
included in the annual report, but does not include the financial statements and our auditor's report
thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with the accounting and reporting standards as applicable in Pakistan and the
requirements of Companies Act, 2017 (XIX of 2017) and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.
Board of directors are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company's ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
report. However, future events or conditions may cause the Company to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
We communicate with the board of directors regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide the board of directors with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those
matters that were of most significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We describe these matters in
our auditor's report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on Other Legal and Regulatory Requirements
Based on our audit, we further report that in our opinion:
(a) Proper books of account have been kept by the Company as required by the
Companies Act, 2017 (XIX of 2017);
(b) the statement of financial position, the statement of profit or loss and other
comprehensive income, the statement of changes in equity and the statement of
cash flows together with the notes thereon have been drawn up in conformity with the
Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account
and returns;
(c) Investments made, expenditure incurred and guarantees extended during the
year were for the purpose of the Company's business; and
(d) No zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
Muhammad Kaleem Rathor Kaleem & Company

(Engagement Partner) Chartered Accountants
Lahore
Date: September 26, 2018

BALANCE SHEET
AS AT 30 June 2018

PROFIT AND LOSS ACCOUNT

STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF CHANGES IN EQUITY

CASH FLOW STATEMENT

NOTES TO THE ACCOUNTS
1. LEGAL STATUS AND NATURE OF BUSINESS
Ittefaq Iron Industries Limited ("The Company") (Formerly Ittefaq Sons Private Limited) was
incorporated on February 20, 2004 and converted into public unquoted company on 05
January 2017. The company also changed its name from (Ittefaq Sons (Private) Limited)
to (Ittefaq Iron Industries Limited) on 09 february 2017. The Company was listed on
Pakistan Stock Exchange on 3rd July 2017. The principal activity of the company is
manufacturing of Iron Bars and Girders. The registered office of the company is situated
at 40, B-II Gulberg III M. M. Alam Road, Lahore.
2. BASIS OF PREPRATION
2.1 Statement of Compliance

These financial statements have been prepared in accordance with the
accounting and reporting standards as applicable in Pakistan. The accounting
and reporting standards applicable in Pakistan comprise of:
- International Financial Reporting Standards (IFRSs) issued by the International
Accounting Standards Board (IASB) as notified under the Companies Act, 2017;
and
- Provision of directives issued under the company’s Act. 2017.
- Where provisions of and directives issued under the Companies Act, 2017 differ
from the IFRSs, the provisions of and directives issued under the Companies Act,
2017 have been followed.
2.2 Basis for Measurement

These accounts have been prepared under historical cost convention without any
adjustments for the effects of inflation or current values. Historical cost is generally
based on the fair value of the consideration given in exchange for goods and
services. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the
measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating fair value of an asset or
liability, the Company takes into the characteristics of the asset or liability if market
participants would take those characteristics into account when pricing the asset
or liability at the measurement date. Fair value for measurement and/or disclosure
purposes in these financials statements is determined on such basis, except for
share based-payment transactions that are within the scope of IFRS-2, leasing
transactions that are within the scope of IFRS-16, and measurements that have
some similarities to fair value but are not fair value, such as net realizable value in
IAS-2 or value in use in IAS-36.

2.3 Functional and presentation currency
These financial statements are presented in Pakistan Rupees, which is the
Company's functional currency. All amounts have been rounded to the nearest
rupees, unless otherwise indicated.
2.4 Use of significant estimates and judgments

The preparation of financial statements in conformity with accounting and
reporting standards, as applicable in Pakistan, requires management to make
judgments, estimates and assumptions that affect the application of the
accounting policies and the reported amounts of assets, liabilities, income and
expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgments
about the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
The estimates underlying the assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Information about the judgments made by the management in the application of
the accounting policies, that have the most significant effect on the amount
recognized in these financial statements, assumptions and estimation
uncertainties with significant risk of material adjustment to the carrying amount of
assets and liabilities in the next year are described in the following notes:
- Property, plant and equipment and intangible assets (notes 3.1 and 3.3).
- Trade debts (note 3.6)
- Stores and spares (note 3.4)
- Stock-in-trade (note 3.5)
- Taxation (note 3.17)
- Staff retirement benefits (note 3.21)
- Impairment (note 3.8)
- Provisions and contingent liabilities (note 3.20 and 3.27)
2.5 Change in accounting standards, interpretations and amendments to published

approved accounting standards
a) Standards, interpretations and amendments to published approved accounting

standards that are effective and relevant:
- IAS 7, 'Statement of Cash Flows' amendments introduce an additional
disclosure that will enable users of financial statements to evaluate changes in
liabilities arising from financing activities. The amendment is part of the IASB's
Disclosure Initiative, which continues to explore how financial statement
disclosure can be improved. In the first year of adoption, comparative
information need not be provided. The relevant disclosure have been made in

these financial statements (Refer note 33.4 to these financial statements).
- The Companies Act, 2017 (the Act) has also brought certain changes with
regard to preparation and presentation of annual financial statements of the
Company. Further, the disclosure requirements contained in the fourth
schedule to the Act have been revised, resulting in the elimination of
duplicative disclosures with the IFRS disclosure requiremen ts and
incorporation of significant additional disclosures which have been included
in these financial statements.
b) Standards, interpretations and amendments to published approved

accounting standards that are effective but not relevant:
There are certain new standards, amendments to the approved accounting
standards and new interpretations that are mandatory for accounting
periods beginning on or after 1 July 2017. However, these do not have any
significant impact on the Company's financial reporting and therefore have
not been detailed in these financial statements.
c) Standards, interpretations and amendments to published approved

accounting standards that are not yet effective:
The following are the new standards, amendments to existing approved
accounting standards and new interpretations that will be effective for the
periods beginning on or after 1 July 2018, that may have an impact on the
financial statements of the Company:
- Classification and Measurement of Share-based Payment Transactions -
amendments to IFRS 2 clarify the accounting for certain types of
arrangements and are effective for annual periods beginning on or after 1
January 2018. The amendments cover three accounting areas:
(a) Measurement of cash-settled share-based payments;
(b) Classification of share-based payments settled net of tax withholdings;
(c) Accounting for a modification of a share-based payment from cash
settled to equity-settled.
The new requirements could affect the classification and/or measurement of
these arrangements and potentially the timing and amount of expense
recognized for new and outstanding awards. The amendments are not likely to
have an impact on Company's financial statements.
- Transfers of Investment Property (Amendments to IAS 40 'Investment

Property'- effective for annual periods beginning on or after 1 January 2018)
clarifies that an entity shall transfer a property to, or from, investment property
when, and only when there is a change in use. A change in use occurs when
the property meets, or ceases to meet, the definition of investment property
and there is evidence of the change in use. In isolation, a change in
management's intentions for the use of a property does not provide evidence
of a change in use. The amendments are not likely to have an impact on
Company's financial statements.

- Annual Improvements to IFRSs 2014-2016 Cycle [Amendments to IAS 28
'Investments in Associates and Joint Ventures'] (effective for annual periods
beginning on or after 1 January 2018) clarifies that a venture capital
organization and other similar entities may elect to measure investments in
associates and joint ventures at fair value through profit or loss, for each
associate or joint venture separately at the time of initial recognition of
investment. Furthermore, similar election is available to non-investment entity
that has an interest in an associate or joint venture that is an investment entity,
when applying the equity method, to retain the fair value measurement
applied by that investment entity associate or joint venture to the investment
entity associate's or joint venture's interests in subsidiaries. This election is made
separately for each investment entity associate or joint venture. The
amendments are not likely to have an impact on Company's financial
statements.
- IFRIC 22 'Foreign Currency Transactions and Advance Consideration' (effective

for annual periods beginning on or after 1 January 2018) clarifies which date
should be used for translation when a foreign currency transaction involves
payment or receipt in advance of the item it relates to. The related item is
translated using the exchange rate on the date the advance foreign currency
is received or paid and the prepayment or deferred income is recognized. The
date of the transaction for the purpose of determining the exchange rate to
use on initial recognition of the related asset, expense or income (or part of it)
would remain the date on which receipt of payment from advance
consideration was recognized. If there are multiple payments or receipts in
advance, the entity shall determine a date of the transaction for each
payment or receipt of advance consideration. The application of
interpretation is not likely to have an impact on Company's financial
statements.
- IFRIC 23 'Uncertainty over Income Tax Treatments' (effective for annual periods
beginning on or after 1 January 2019) clarifies the accounting for income tax
when there is uncertainty over income tax treatments under IAS 12. The
interpretation requires the uncertainty over tax treatment be reflected in the
measurement of current and deferred tax. The application of interpretation is
not likely to have material impact on Company's financial statements.
- IFRS 15 'Revenue from contracts with customers' (effective for annual periods
beginning on or after 1 July 2018). IFRS 15 establishes a comprehensive
framework for determining whether, how much and when revenue is
recognized. It replaces existing revenue recognition guidance, including IAS 18
'Revenue', IAS 11 'Construction Contracts' and IFRIC 13 'Customer Loyalty
Programmes'. The Company is currently in the process of analyzing the

potential impact of changes required in revenue recognition policies on
adoption of the standard.
- IFRS 9 'Financial Instruments' and amendment - Prepayment Features

with Negative Compensation (effective for annual periods beginning on or
after 1 July 2018 and 1 January 2019 respectively). IFRS 9 replaces the existing
guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9
includes revised guidance on the classification and measurement of financial
instruments, a new expected credit loss model for calculating impairment on
financial assets, and new general hedge accounting requirements. It also
carries forward the guidance on recognition and derecognition of financial
instruments from IAS 39. The Company is currently in the process of analyzing
the potential impact of changes required in classification and measurement of
financial instruments and the impact of expected loss model on adoption of
the standard.
- IFRS 16 'Leases' (effective for annual period beginning on or after 1 January

2019). IFRS 16 replaces existing leasing guidance, including IAS 17 'Leases', IFRIC
4 'Determining whether an Arrangement contains a Lease', SIC-15 'Operating
Leases- Incentives' and SIC-27 'Evaluating the Substance of Transactions
Involving the Legal Form of a Lease'. IFRS 16 introduces a single, on-balance
sheet lease accounting model for lessees. A lessee recognizes a right-of-use
asset representing its right to use the underlying asset and a lease liability
representing its obligation to make lease payments. There are recognition
exemptions for short-term leases and leases of low-value items. Lessor
accounting remains similar to the current standard i.e. lessors continue to
classify leases as finance or operating leases. Management is not expecting
any impact of the standard on Company's financial reporting.
- Amendment to IAS 28 'Investments in Associates and Joint Ventures' - Long Term

Interests in Associates and Joint Ventures (effective for annual period
beginning on or after 1 January 2019). The amendment will affect companies
that finance such entities with preference shares or with loans for which
repayment is not expected in the foreseeable future (referred to as long-term
interests or 'LTI'). The amendment and accompanying example state that LTI
are in the scope of both IFRS 9 and IAS 28 and explain the annual sequence in
which both standards are to be applied. The amendments are not likely to
have an impact on Company's financial statements.
- Amendments to IAS 19 'Employee Benefits'- Plan Amendment, Curtailment

or Settlement (effective for annual periods beginning on or after 1 January
2019). The amendments clarify that on amendment, curtailment or settlement
of a defined benefit plan, a company now uses updated actuarial
assumptions to determine its current service cost and net interest for the period;

and the effect of the asset ceiling is disregarded when calculating the gain or
loss on any settlement of the plan and is dealt with separately in other
comprehensive income. The application of amendments are not likely to have
an impact on Company's financial statements.
- Annual Improvements to IFRS Standards 2015–2017 Cycle - the improvements
address amendments to following approved accounting standards:
- IFRS 3 Business Combinations and IFRS 11 Joint Arrangement - the

amendment aims to clarify the accounting treatment when a company
increases its interest in a joint operation that meets the definition of a business. A
company remeasures its previously held interest in a joint operation when it
obtains control of the business. A company does not remeasure its previously
held interest in a joint operation when it obtains joint control of the business.
- IAS 12 Income Taxes - the amendment clarifies that all income tax
consequences of dividends
(including payments on financial instruments classified as equity) are
recognized consistently with the transaction that generates the distributable
profits.
- IAS 23 Borrowing Costs - the amendment clarifies that a company treats

as part of general borrowings any borrowing originally made to develop an
asset when the asset is ready for its intended use or sale. The above
improvements to standards are not likely to have material / significant impact
on Company's financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies as set out below are consistently applied for all
periods presented in these financial statements:
3.1 Property plant and equipments
These are stated at cost less accumulated depreciation and accumulated

impairment losses, (if any), except freehold land which is stated at cost less
accumulated impairment losses (if any). Cost comprises of historical cost,
borrowing cost pertaining to the erection period and directly attributable costs of
bringing the assets to working condition. These costs are transferred to specific
assets as and when assets are available for use. Subsequent costs are included in
the assets carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economics benefits associated with the item will
flow to the Company and the cost of the item can be measured reliably. Cost
incurred to replace a component of an item of property, plant and equipment is
capitalized and the asset so replaced is derecognized. The cost of the day to day

servicing of property, plant and equipment are recognized in profit or loss
account.
Depreciation is charged to income applying the reducing balance method at the
rates given in relevant notes to the financial statements to write off the cost of
operating fixed assets over their expected useful life. Depreciation on additions is
charged from the date when the asset is available for use and on deletions up to
the date when the asset is deleted. An item of property, plant and equipment is
derecognized upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss on disposal or derecognition (calculated at
the difference between the net disposal proceeds and carrying amount of the
asset) is taken to profit and loss account.
Impairment test for property, plant and equipment is performed when there is an
indication of impairment. At each period end, an assessment is made to
determine whether there is any indication of impairment. If any such indications
exist, an estimate of the asset's recoverable amount is calculated being the higher
of the fair value of the asset less cost to sell and the asset's value in use. If the
carrying amount of the asset exceeds its recoverable amount, the property, plant
and equipment is impaired and an impairment loss is charged to the profit and loss
account so as to reduce the carrying amount of property, plant and equipment to
its recoverable amount. Fair value is determined as the amount that would be
obtained from the sale of the asset in an arm's length transaction between
knowledgeable and willing parties. Value in use is determined as the present value
of the estimated future cash flows expected to arise from the continued use of the
property, plant and equipment in its present form and its eventual disposal. An
impairment loss is recovered if there has been a change in the estimate used to
determine the recoverable amount. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortization, if no
impairment loss had been recognized.
3.2 Capital work-in-progress

Capital work-in-progress is stated at cost less identified impairment losses, if any. All
expenditure connected with specific assets incurred during installation and
construction period are carried under capital working-progress. These are
transferred to specific assets as and when these are available for use. All costs or
expenditures attributable to work-in-progress are capitalized and apportioned to
buildings and plant and machinery at the time of commencement of commercial
operations.
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. Cost of the intangible asset (i.e. computer software) includes purchase
cost and directly attributable expenses incidental to bring the asset for its intended
use.
Costs associated with maintaining computer software are recognised as an
expense as and when incurred.
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 on a systematic basis applying the straight line
method at the rate of 33.33%.
Useful lives of intangible operating assets are reviewed, at each date of statement
of financial position and adjusted if the impact of amortisation is significant.
The carrying amount of the intangible assets is reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised in the profit or loss for the amount by
which the asset's carrying amount exceeds its recoverable amount. Reversal of
impairment losses are also recognised in the profit or loss, however, it is restricted to
the original cost of the asset.
3.4 Stores, spares and loose tools

Store and spares are valued at moving average cost or net realizable value (NRV).
Item in transit is valued at cost comprising invoice value plus other charges paid
thereon.
3.5 Stock In Trade

Stock-in-trade is valued at lower of average cost and net realizable value except
waste which is valued at net realizable value determined on the basis of contract
prices. Average cost and net realizable value are defined as under:
Cost is determined as follows:

- For Raw Materials, Weighted average cost.
- For Work-in-Process, At weighted average manufacturing cost (Direct Labour,
Material and Appropriate Manufacturing Overheads)
- Finished Goods
- Net Realizable Value, Net realizable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.
3.6 Trade Debts and Other Receivables

Trade debts are carried at original invoice amount less an estimate made for
doubtful debts based on a review of all outstanding amounts at the year end. Bad
debts are written off when identified.
3.7 Directors / Sponsors Loan

The company has discounted loan using market based interest rate on loans with
similar terms and conditions.
3.8 Impairment
The management of the Company reviews carrying amounts of its assets including
receivables and advances and cash generating units for possible impairment and
makes formal estimates of recoverable amount if there is any such indication.
3.9 Surplus On Revaluation Of Fixed Assets

Revaluation of freehold land, building on freehold land and plant and machinery
is carried out with sufficient regularity to ensure that the carrying amount of assets
does not differ materially from the fair value. Any revaluation increase in the
carrying amount of freehold land, building on freehold land and plant and
machinery is recognized, net of tax, in other comprehensive income and
presented as a separate component of equity as “Revaluation surplus on
property, plant and equipment “except to the extent that it reverses a
revaluation decrease / deficit for the same asset previously recognised in profit
and loss account, in which case the increase is first recognized in profit and loss
account to the extent of the decrease previously charged. Any decreases that
reverse previous increases of the same asset are first recognized in other
comprehensive income to the extent of the remaining surplus attributable to
the asset, all other decreases are charged to profit and loss account. The
revaluation reserve is not available for distribution to the Company's shareholders.
Each year, the difference between depreciation based on the revalued carrying
amount of the asset charged to profit and loss account and depreciation based
on the asset's original cost, net of tax, is reclassified from revaluation surplus to
retained earnings.
3.10 Prior Year

This includes adjustments, where considered necessary, to existing provision for tax
made in previous years arising from assessments framed during the period for such
years.
3.11 Sales Tax And Federal Excise Duty

Revenues, expenses and assets are recognized net of amount of sales tax and
federal excise duty except:
- Where amount incurred on a purchase of asset or service is not recoverable
from the taxation authority, the tax / duty is recognized as part of the cost of
acquisition of the asset or as part of the expense item, as applicable; and
- Receivables or payables that are stated with the amount of sales tax and
federal excise duty included.
The net amount of sales tax and federal excise duty recoverable from, or payable
to, the taxation authority is included as part of receivables or payables in the
balance sheet.

3.12 Assets Subject to Finance Lease
Leases where the company has substantially all the risks and rewards of ownership
are classified as finances leases. At inception, finance leases are capitalized at the
lower of present value of minimum lease payments under the lease agreements
and the fair value of the assets, less accumulated depreciation and impairment
loss, if any.
The related rental obligations, net of finance costs, are included in liabilities
against assets subject to finance lease. The liabilities are classified as current and
non-current depending upon the timing of the payment.
Each lease payment is allocated between the liability and finance costs so as to
achieve a constant rate on the balance outstanding. The interest element of the
rental is charged to profit and loss account over the lease term.
Assets acquired under a finance lease are depreciated over the estimated useful
life of the assets on reducing balance method at the rates specified in schedule.
Depreciation of leased assets is charged to profit and loss account.
Depreciation on additions is charged from the month the asset is available for use
while no depreciation is charged in the month in which the asset is disposed off.
The finance cost is calculated at the interest rates implicit in the lease and are
charged to profit and loss account.
3.13 Share Capital

Ordinary shares are classified as equity instruments and recognized at their fair
value. Transaction costs of an equity transaction are accounted for as a
deduction from equity to the extent they are incremental costs directly
attributable to the equity transaction that otherwise would have been avoided.
The costs of an equity transaction that is abandoned are recognized as an
expense.
Transaction costs that relate jointly to more than one transaction such as costs of a
concurrent offering of shares and a stock exchange listing are allocated to those
transactions using a basis of allocation that is rational and consistent with similar
transactions.
3.14 Foreign Currencies

Foreign Currency transactions are converted into Pak Rupees using the rates
prevailing on the date of transaction while monetary assets & liabilities are
converted into Pak Rupees using the rates of exchange prevailing at the balance
sheet date. Exchange gains and losses on conversion are charged to income
currently.
3.15 Trade and Other Payables

Liabilities for trade and other amounts payable are carried at cost which is the fair
value of the consideration to be paid in future for goods and services received.
Whether or not billed to the Company. Provisions are recognized when the
Company has a present legal or constructive obligations as results of past events, It

is probable that an out flow of resources embodying economic benefits will be
required to settle the obligation and reliable estimate of the amount can be
made. Provisions are reviewed at each balance sheet date and adjusted to
reflect the current best estimate.
3.16 Earnings Per Share

The company presents basic and diluted earnings per share (EPS). Basic EPS is
calculated by dividing the profit and loss attributable to ordinary shareholders of
the company by the weighted average number of ordinary shares outstanding
during the period. Diluted EPS is determined by using profit and loss attributable to
ordinary shareholders and the weighted average number of ordinary shares
outstanding, adjusted for the affects of all dilutive potential ordinary shares.
3.17 Taxation
Income tax expense comprises current and deferred tax. Income tax expense is
recognised in the profit and loss account, except to the extent that it relates to
items recognised directly in equity or in other comprehensive income, in which
case it is recognised in equity or in other comprehensive income respectively. In
making the estimates for income taxes currently payable by the Company, the
management considers the current income tax law and the decisions of appellate
authorities on certain issues in the past.
Current
Current tax is the expected tax payable or receivable on the taxable income or
loss for the year, using tax rates enacted or substantively enacted at the reporting
date, and any adjustment to tax payable or receivable in respect of previous
years.
Provisions for current taxation is based on taxability of certain income streams of
the Company under presumptive / final tax regime at the applicable tax rates and
remaining income streams chargeable at current rate of taxation under the
normal tax regime and / or minimum tax liability or alternate corporate tax as
applicable, after taking into account tax credits and tax rebates available, if any.
Deferred
Deferred tax is recognised using balance sheet liability method, providing for
temporary difference between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The
amount of deferred tax provided is based on the expected manner of realisation
or settlement of the carrying amount of assets and liabilities, using the tax rates
enacted or substantively enacted at the reporting date.
The Company recognises a deferred tax asset to the extent that it is probable that
taxable profits for the foreseeable future will be available against which the assets
can be utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.

3.18 Cash and cash equivalents
Cash and cash equivalents are carried in the statement of financial position at
cost. For the purposes of the statement of cash flows, cash and cash equivalents
consist of cash and bank balances, cheques in hand, deposits held at call with
banks, other short term highly liquid investments with original maturities of three
months or less, running finance under mark-up arrangements and short term loans
which form an integral part of the Company's cash management.
3.19 Borrowings and their cost

Borrowings are recognized initially at fair value less attributable transaction cost.
Subsequent to initial recognition, these are stated at amortized cost with any
difference between cost and redemption value being recognized in the profit and
loss / equity over the period of the borrowings on an effective interest basis.
Borrowings are recorded at the proceeds received. Borrowing costs are

recognized as an expense in the period in which these are incurred except to the
extent of borrowing costs that are directly attributable to the acquisition,
construction and commissioning of a qualifying asset. Such borrowing costs, if any ,
are capitalized as part of the cost of that asset.
3.20 Provisions
Provisions are recognized when the company has a present legal or constructive
obligation as a result of past events, if it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a
reliable estimate of the amount can be made. Provisions are reviewed periodically
and adjusted to reflect the current best estimate.
3.21 Employee Benefits

The cost of defined benefit retirement plan (gratuity) is determined using actuarial
valuations (projected unit credit method) performed by independent actuaries.
The actuarial valuation involves making assumptions about discount rates, future
salary increases, and mortality rates. All assumptions are reviewed at each
reporting date.
3.22 Revenue Recognition

Revenue is measured at fair value of the consideration received or receivable and
represents amounts receivable for goods and services provided in the normal
course of business.
- Sale of goods is recorded when significant risks and rewards of ownership are
transferred to the customer;
- Interest and rental income are recognized on accrual basis.
- Sale of scrap is recognized on actual realization basis.

3.23 Foreign currency transactions
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
date of statement of financial position. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translations of
monetary assets and liabilities denominated in foreign currencies are recognised
in the profit or loss.
3.24 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.
3.25 Financial instruments
3.25.1 Financial assets

The Company classifies its financial assets in the following categories: at fair
value through profit or loss, loans and receivables, available for sale and held to
maturity. The classification depends on the purpose for which the financial
assets were acquired. Management determines the classification of its financial
assets at the time of initial recognition.
(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held
for trading and financial assets designated upon initial recognition as at
fair value through profit or loss. A financial asset is classified as held for
trading if acquired principally for the purpose of selling in the short term.
Assets in this category are classified as current assets.
(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
(c) Held to maturity

Held to maturity are financial assets with fixed or determinable payments
and fixed maturity that are quoted in an active market, where
management has the intention and ability to hold till maturity are carried
at amortised cost.
(d) Available for sale financial assets

Available for sale financial assets are non-derivatives that are either
designated in this category or not classified in any of the other categories.

They are included in non-current assets unless management intends to
dispose of the investments within twelve months from the reporting date.
Available for sale financial assets in such case are classified as short term
investments in the statement of financial position.
When securities classified as available for sale are sold or impaired, the
accu mu lated fa ir valu e ad just men ts recogn ised a s “O th er
comprehensive income” are included in the profit or loss as gains and
losses on disposal of short term investments. Interest on available for sale
securities calculated using effective interest method is recognised as profit
or loss. Dividends on available for sale equity instruments are recognised in
the profit or loss when the Company's right to receive payments is
established.
All financial assets are recognised at the time when the Company
becomes a party to the contractual provisions of the instrument. Regular
purchases and sales of investments are recognised at trade date i.e. the
date on which the Company commits to purchase or sell the asset.
Financial assets are initially recognised at fair value plus transaction costs
for all financial assets not carried at fair value through profit or loss.
Financial assets carried at fair value through profit or loss are initially
recognised at fair value and transaction costs are expensed in the profit or
loss.
Available for sale financial assets and financial assets at fair value through
profit or loss are subsequently carried at fair value. 'Loans and receivables'
and 'held to maturity' investments are carried at amortised cost using
effective interest rate method.
Gains or losses arising, from changes in the fair value of the 'financial assets
at fair value through profit or loss' are recognised in the profit or loss.
Changes in the fair value of instruments classified as 'available for sale' are
recognised in 'Other comprehensive income' until derecognised or
impaired, when the accumulated fair value adjustments recognised in
unrealised surplus on revaluation of investments are included in the profit or
loss for the year.
The fair values of quoted investments are based on current prices. If the
market for a financial asset is not active (for unlisted securities), the
Company measures the investments at cost less impairment in value, if
any.
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.
The Company assesses at each date of statement of financial position
whether there is objective evidence that a financial asset or group of
financial assets is impaired.

3.25.2 Financial liabilities
All financial liabilities are recognised at the time when the Company becomes a
party to the contractual provisions of the instrument. All financial liabilities are
initially measured at cost, which is the fair value of the consideration given.
Financial liabilities, other than those at fair value through profit or loss, are
measured at amortised cost using the effective yield method.
A financial liability is derecognised when the obligation under the liability is
discharged or cancelled or expired. Where an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange
and modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in respective carrying amounts
is recognised in the profit or loss.
3.26 Off-setting of financial assets and financial liabilities

A financial asset and a financial liability is offset 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.
3.27 Contingent liabilities

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.
3.28 Contingent assets

Contingent assets are disclosed when there is a possible asset 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. Contingent assets are not recognised until their realisation become
virtually certain.
3.29 Investments
All investments are initially recognized at cost being the fair value of consideration
given.
These investments are being measured at fair value, being their market value at
balance sheet date. The resulting gain or loss is included in profit or loss for the
period. Whereas, cost is calculated on moving average basis.
Classification of investments is made based on the intended purpose of holding

such investments, which is as follows:
3.29.1 Held for Trading Securities

These are investments securities, which are acquired principally for the purpose
of generating profit, from short-term fluctuations in price.
3.29.2 Held to Maturity Securities

These are investments securities with fixed or determinable payments and fixed
maturity and the company has the positive intent and ability to hold till maturity.
3.29.3 Available for sale securities

These are investments, which do not fall under the category of held for trading or
held to maturity.
3.30 Transactions with Related Parties

Transactions with related parties are priced on arm's length basis. Prices for these
transactions are determined on the basis of comparable uncontrolled price
method, which sets the price with reference to comparable goods and services
sold in an economically comparable market to a buyer unrelated to the seller.
Sales, purchases and other transactions with related parties are carried out on
commercial terms and conditions.

28,571,512
400,814,539

34
34 .1
34 .2
35
36
37
38

13 25, 2018
2018.
2016

Head Office
40-B II Gulberg III, Lahore (Pakistan)
Phone: +92-42-35765021-26
[email protected]

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ITTEFAQ IRON INDUSTRIES LTD.

Annual Report 2018

ITTEFAQ IRON INDUSTRIES LTD. 1 Annual Report 2018

Profit before Tax & Depreciation

Profit after Taxation

Earning per share

ITTEFAQ IRON INDUSTRIES LTD. 2 Annual Report 2018

Breakup value per share

ITTEFAQ IRON INDUSTRIES LTD. 3 Annual Report 2018

Mian Muhammad Pervaiz Shafi Chairman Javed Sadiq Chairman

Audit Committee Share Registrar

Javed Sadiq Chairman M/s. Corplink (Pvt.) Ltd

Mills Legal Advisor

8-KM Manga Raiwind Road Muhammad Shahzad Bazmi

National Bank of Pakistan

ITTEFAQ IRON INDUSTRIES LTD. 4 Annual Report 2018

To c on tri bute to the

ITTEFAQ IRON INDUSTRIES LTD. 6 Annual Report 2018

Ittefaq Steel aims to proceed on its path to be the

ITTEFAQ IRON INDUSTRIES LTD. 7 Annual Report 2018

Providing Customer Satisfaction by serving with

ITTEFAQ IRON INDUSTRIES LTD. 8 Annual Report 2018

ITTEFAQ IRON INDUSTRIES LTD. 9 Annual Report 2018

1. To confirm the minutes of the lastAnnual General Meeting held on Saturday,

BY ORDER OF THE BOARD

Lahore: Muhammad Shahzad Bazmi

ITTEFAQ IRON INDUSTRIES LTD. 10 Annual Report 2018

ITTEFAQ IRON INDUSTRIES LTD. 11 Annual Report 2018

4-CIRCULATION OF NOTICE OF MEETING & ANNUAL ACCOUNTS

5-Deduction of Income Tax from Dividend under Section 150 of the

ITTEFAQ IRON INDUSTRIES LTD. 12 Annual Report 2018

ITTEFAQ IRON INDUSTRIES LIMITED

6-Video conferencing facility

7. Members requested to notify any changes in their mailing addresses to the

8. For any query/information, the shareholders may contact corporate affairs

BY ORDER OF THE BOARD

Lahore: Muhammad Shahzad Bazmi

ITTEFAQ IRON INDUSTRIES LTD. 13 Annual Report 2018

All transactions should be accurately reflected in the books of accounts according to

COMPLIANCE WITH LAWS, DIRECTIVES & RULES

Confidentiality of the Company's internal confidential information must be

ITTEFAQ IRON INDUSTRIES LTD. 15 Annual Report 2018

Every Director and employee who has knowledge of confidential material

HEALTH, SAFETY & ENVIRONMENT

INVOLVEMENT IN POLITICS, GIFTS & BRIBARY

ITTEFAQ IRON INDUSTRIES LTD. 16 Annual Report 2018

Failure to adhere to the Company's business practices or Code of Conduct may

ITTEFAQ IRON INDUSTRIES LTD. 17 Annual Report 2018

Mr. Mian Muhammad Pervaiz Shafi, Director

Mr. Javed Sadiq, Director

ITTEFAQ IRON INDUSTRIES LTD. 18 Annual Report 2018

Mr. Khalid Mustafa, Director

Mrs. Khalida Pervaiz, Director

Mrs. Ayesha Fahid, Director

Mrs. Sumbleen Usman, Director

ITTEFAQ IRON INDUSTRIES LTD. 19 Annual Report 2018

structural steel in Pakistan.

The company's attention is focused on customer's satisfaction, development of