Cherat Packaging Annual Report 2021

Cherat Packaging Limited
A Ghulam Faruque Group Company
for all your

Packaging
Needs
Annual Report 2021

About this Report
Cherat Packaging’s Annual Report is the blend of Company’s voyage
of success and progress through values and objectives internalizing
its core competitive advantage and value systems and externalizing
through successful implementation of corporate strategy to achieve
its vision and service to the society.
This report is prepared with an aim to provide users of this report,
the Company’s insight, strategic edge, risks & opportunities, current
& future challenges and its strategic thinking that drives CPL to its
success.
Our annual report focuses on three main functions:
- Providing understanding of our business model, value chain, risks
and its mitigation strategies;
- Providing Company’s approach of achieving sustainable growth
and achieve its short and long-term objectives; and
- Clearly identifying management strategies with its impact on
financial results of the Company and value creation for the society.
In producing this report, we referred to the framework of International
Integrated Reporting, requirements of regulatory bodies, International
Financial Reporting Standards and Companies Act, 2017.
Going forward, we intend to make continuous improvements to our
Annual Report as a medium of communication with our stakeholders.
Reporting Scope: Cherat Packaging Limited
Reporting Period: July 01, 2020 to June 30, 2021
Accounting standards: International Financial Reporting Standards
(IFRS) however, if contradiction between IFRS and Companies Act,
2017 occur, requirement of Companies Act, 2017 shall prevail.
PKR
Chapters
Organizational
Overview and
External Risks and
Environment Strategy and Opportunities
Resource
Allocation
Performance
and Position
Governance
Outlook
Stakeholders’
Relationship & Striving for
Engagement Excellence in
Sustainability & Corporate
Corporate Social Reporting
Responsibility
Financial
Glossary of Statements
Terms
Hatch of nature’s bounties is
packaged naturally to protect,
preserve, nurture and reach its
optimum potential. The walnut
has a shell; the pea has a pod;
the coconut, a husk. That is the
natural order of added protection
and freshness.
Organizational
Overview
and External
Environment
15 Nature of Business 38 Geographical Presence - Local /
17 Vision & Mission International
18 Our Values 40 Position in the Value Chain
21 Culture 42 Significant Factors Affecting the

External Environment
23 Ethics
44 Composition of Local and Imported
25 Code of Conduct Material and Sensitivity Analysis Due
26 Group Structure to Exchange Fluctuation
29 Company Information 44 Significant Change from Prior Year
30 Journey at a Glance 46 Competitive Landscape and Market
Positioning
32 Hall of Fame
47 Competitive Edge
35 Organizational Structure
48 Our Business Model
36 Factory Site Organizational Structure
Annual Report 2021 5

6 Cherat Packaging Limited
Products
Only a forward thinking company recognizes your needs, your
wants, your desires, before you do. To have our immediate
and end customers respond to our products with “I didn’t
know I needed this!” is the ultimate response sought.
Many of the products that we consume today have their

origins in nature. Each one of nature’s bounties is packaged
to naturally protect, preserve, nurture and reach customers
in its optimum potential. Manufactured products, like natural
products, must also reach the consumer with the added
value that packaging provides.

Protect
The point of any packaging material is for the product
inside it to reach the customer in an optimum condition.
Our selection and process, for our packaging material, is
straightforward. We source the finest quality of raw materials
available, for weather resistance, strength, printing result, as
well as for the distances it must travel. We ensure that each
packaging component meets quality standards demanded
by our customers. Our packaging improves delivery of your
product and brand.

Preserve
At Cherat Packaging our products are designed to capture,
enhance and protect the products that they envelope. The
diversity of our product range ensures that our customers
are able to select the most appropriate packaging material
to suit their specifications. Kraft Paper, Polypropylene woven
fabric and Flexible films if it has to do with packaging, CPL is
one of the Pakistan’s largest, most respected, single window
packaging supplier.

Pivotal
The pea has a pod. The walnut has a shell. The coconut,
a husk. Much like in nature edibles and other consumers
products are wrapped, packaged in such a way so as to
protect, preserve and enable to maintain freshness. Today
our buying habits seek convenience and trusted brands
reign in the marketplace. Hence, furthering our claim that
packaging is pivotal.

Nature of Business
Cherat Packaging Limited – a prominent name in the packaging industry – is a Ghulam
Faruque Group (GFG) company. Established almost 32 years ago, CPL started its
journey by producing quality cement sacks and became the leading manufacturer
of cement sacks. Since 2011, the Company entered and soon became the leading
manufacturer of Polypropylene bags. During 2018, the Company yet again achieved
a milestone by launching its Flexible Packaging Division. The Company acquired
state-of-the-art Plant and Machinery from the top manufacturers around the globe.
The Company is listed on the Pakistan Stock Exchange. CPL has a number of
certifications and is a recipient of various prestigious awards including the Pakistan
Stock Exchange’s Top Companies Award, Management Association of Pakistan’s
Best Company Award and ICAP & ICMAP’s Best Corporate Reporting Award. CPL is
the leading Company in the region to have production capability of producing bags
from Kraftpaper, Polypropylene and Flexible Packaging products.
The Company is also active in exporting bags to different parts of the world. We are
supplying bags to sugar, wheat, chemical and other sectors as well. The plant has
an annual production capacity of 595 million bags (Kraft paper and Polypropylene
combined) and 12.6 million Kgs (Flexible Packaging material).
Cherat Packaging is well-known for its innovation and introduction of new products
like 2-ply bags and lowest grammage PP bags without compromising on quality
standards. CPL stands for providing its unmatched services in its new venture of
Flexible Packaging.
Our Certifications

Vision
To be a preferred supplier of packaging solutions
combined with efficient manufacturing facility
and satisfied customers.
Mission
To seek increased market share by anticipating
emerging trends and introducing new products
for meeting the demands of our valued
customers and ensuring adequate return to our
shareholders.

Our
Values

RESPECT
is our way of life
OWNERSHIP
is our way to success
QUALITY
is our legacy
FAIRNESS
is our way of work

Culture
Organizational culture in Cherat Packaging Limited is a manifestation of shared
values and beliefs, which we practice every day to move towards a better and
more successful organization. These shared values have a strong influence on the
respective teams and help them in a win win outcome for both the employees and
the organization. Our values provide the foundation of our culture and bind us into a
world class team yearning to outperform the competition.

Ethics
Our Code of Conduct reflects our commitment to meet the expectations of our
stakeholders and contains the fundamental principles and rules concerning ethical
business conduct.
Cherat Packaging Limited (CPL) is committed to conduct its business with honesty
and integrity, and we expect all our employees to maintain high standards in
accordance with the Code.
CPL’s Code of Conduct forms an integral part of the terms of employment of all
employees. The Company insists on full compliance and does not tolerate any
misconduct and unlawful behaviour. Breach of the CPL Code of Conduct may lead
to disciplinary action up to and including termination of employment.
It is the obligation of every employee to be responsible, honest, trustworthy,

conscientious and dedicated to the highest standards of ethical business practices.
The employees have a legal, moral and ethical responsibility to report to their Line
Managers or Compliance Committee, any known or suspected violations of law,
regulations and/or corporate policies.

Code of Conduct
The Code of Conduct of the Company is based on the customers or other business partners may disclose such
principles of honesty, integrity and professionalism at information to any third party or use such information
every stage. for his or her personal benefit while employed with the
Company or thereafter, unless prior written approval is
Scope obtained from a duly authorized person, or the disclosure
The Code of Conduct policy is applicable to all regular of confidential information is required by mandatory law,
and direct contract staff in the company and its locations. any governmental agency, court or other quasi-judicial or
regulatory body.
Compliance Committee and Reporting of Violations
Cherat Packaging has established a Compliance Protection and Information Security
Committee to provide advice concerning compliance Cherat Packaging has a policy that sets out rules on data
with the code of conduct. All employees are encouraged protection and the legal conditions that must be satisfied
to report any suspected violation of this Code of Conduct in relation to the obtaining, handling, processing, storage,
to their Line Managers (Functional Heads) or Compliance transportation and destruction of personal information.
Committee or their respective Executive Director. We comply with all applicable laws & regulations
regarding the collection, processing and use of personal
Compliance with the Law data. Any illegal collection, processing or use of personal
The observance of the laws and regulations of the legal data of our employees, suppliers, customers and third
systems in which we operate is mandatory for all employees parties is strictly prohibited. All personal data must be
in their dealings with customers, suppliers, competitors, safeguarded with appropriate care and protected against
other employees, government bodies and officials. unauthorized access by third parties at all time.
Competition and Anti-trust Law Handling and Safeguarding

Cherat Packaging obligates its employees for strict of Cherat Packaging’s Property
compliance with Competition and Anti-trust Laws Employees must handle Cherat Packaging’s property
wherever it operates. (including both tangible & intangible) with due care and
in a responsible manner. Cherat Packaging does not
Bribery and Corruption tolerate any unauthorized use or misappropriation of its
Cherat Packaging is committed to conducting its property or services.
business in an open, honest and ethical manner in all the
jurisdictions in which it operates and will not engage in Equal Treatment and Fair Working Conditions
any form of bribery or corruption in order to secure any Cherat Packaging is committed to promoting equality of
kind of business advantage. opportunity for all staff and job applicants. We aim to
create a working environment in which all individuals are
Money Laundering able to make best use of their skills and abilities, free from
It is Cherat Packaging’s policy to refrain from conducting discrimination or harassment, and in which all decisions
business with persons or entities who are involved in or promotions are objectively based on merit. We do
criminal or illegal activities. All employees have to adhere not tolerate any form of discrimination, harassment or
to applicable anti-money laundering laws and regulations. bullying in the workplace.
Product Quality Health, Safety and Environmental Protection

We discover, develop and manufacture high-quality We focus on all aspects of occupational health, safety and
products that meet all regulatory requirements, and environmental protection. We identify and manage health,
pursue quality beyond compliance in both our products safety and environmental risks in our activities and over
and processes. We focus on regularly updating ourselves the entire value chain of our products and services.
with technological advancements to produce under the
highest standards and maintain all relevant technical and We make efficient use of natural resources and minimize
professional standards. the environmental impact of our activities and products
over their life cycle.
Books, Records and Financial Reporting
The accuracy and completeness of our books, records Conflict of Interest
and financial reporting is of critical importance for Cherat Employees may not engage in any activities, on or off the
Packaging. We fulfill all applicable legal obligations with job, that conflict with the Company’s business interest,
regard to public filings and reporting. nor they may use their position with the Company for
their personal gains, or for the improper benefit to others.
Confidentiality
It is our policy that no employee entrusted with As a policy, conflict of interest or the mere appearance of
confidential information about the Company, its suppliers, such a conflict must be avoided.

Group Structure Faruque (Pvt.) Ltd
Since its inception, the Ghulam Faruque Group has Parent Company
continuously strengthened and diversified its lines of
Established in 1964 as a Parent
operations. Faruque (Pvt) Ltd is the Parent Company; details
Company of the Group, it
and brief profile of other leading group companies / ventures primarily serves as an investment
are as follows: arm of the Group.
Mirpurkhas Sugar Mills Ltd

Manufacturer of Cane Sugar
Established in 1964, its principal activity is
manufacturing and selling of sugar. It is located
about 230 km from the port city of Karachi
in Mirpurkhas and is listed on the Pakistan
Stock Exchange Limited. The Company has a
crushing capacity of 12,500 tons per day and is
one of the most efficient sugar mills in Pakistan.
Moreover, it is involved in development
of higher yield sugar cane varieties on its
experimental farm. In order to further diversify
its operations, the Company has decided to
set up a Paper and Board project.The project
will serve to enhance the business prospects
of the Company and will allow the company to
leverage synergies and enhance its revenues
from avenues other than sugar.
Cherat Cement Company Ltd

Manufacturer of Ordinary Portland Cement
Incorporated in 1981 and its main business activity
is manufacturing, marketing and sale of Ordinary
Portland Cement. The Company is amongst the
pioneers of the cement industry in Pakistan and is
the number 1 cement in its region. The Company’s
annual installed capacity is around of 4.5 million
tons. The plant is located at Village Lakrai, District
Nowshera, Khyber Pakhtunkhwa (KPK) province. Due
to plant’s geographical position, it is ideally located
to export cement to Afghanistan as well as cater
the local market needs. The Company is registered
on Pakistan Stock Exchange Limited and is also an
ISO 9001 and 14001 certified and also a recipient
of the several prestigious awards like South Asian
Federation of Accountants (SAFA) Award, Business
Excellence award in Export category, Pakistan Stock
Exchange Top Companies Award, Management
Association of Pakistan’s Best Company Award and UniEnergy Limited
Best Corporate and Sustainability Report Award. Joint Venture for Renewable
The Company has planned to establish a green field Wind Energy
cement plant at D.I.Khan.

Zensoft (Pvt.) Ltd
Information Systems Services Provider Specializing in Business
Software Solutions
It was established in 1998 and is engaged in development of computer software.
The Company specializes in providing high quality business solutions.
Greaves Pakistan (Pvt.) Ltd

Providing Specialized Engineering Sales and Services
It was established in 1859 to provide specialized engineering equipment sales
and services. However in 1964, the Group acquired a controlling interest in
the shares of the Company and by 1981 Greaves became a wholly owned
subsidiary of Faruque (Pvt.) Ltd. Greaves has the following divisions namely
i) Power Generation, ii) CNG Equipment, iii) Industrial Machinery, iv) Solar
Energy, v) LED, vi) Elevator, vii) Earth Moving & Construction Machinery, viii)
Air Compressor ix) Fuel Dispenser and x) UPS.
Greaves Airconditioning (Pvt.) Ltd
Equipment Suppliers and HVAC Solution Provider
Commencing operations in 1975, this Company is the only HVAC solution
provider of its kind and is the sole distributor of York (JCI) products in Pakistan.
It is involved in providing a wide array of services related to HVAC equipment
that includes designing, installation and maintenance of central and packaged
units. Moreover, it has also launched residential light air conditioning units
under the brand name of Euro Aire.
Greaves CNG (Pvt.) Ltd
Retail Sales of CNG to end consumers
Greaves CNG was established in 2001 with a prime motive to install CNG
facilities at the retail outlets of Petroleum Companies. It is a preferred third
party investor for all major petroleum companies in Pakistan.
Greaves Engineering Services (Pvt.) Ltd
HVAC Contractors
Established in 2003, its principal activity is to provide services associated with
airconditioning, installation and maintenance of central and packaged units.
Unicol Ltd
Joint Venture Distillery Producing
Ethanol and Liquid Carbon Dioxide (CO2)
Unicol was incorporated in 2003 as a public unlisted company having a joint
venture with equal shareholding between Faran Sugar Mills Limited, Mehran
Sugar Mills Limited, and Mirpurkhas Sugar Mills Limited. All three sponsor
companies are listed at the Pakistan Stock Exchange Limited. It is engaged
in the production and marketing of the finest quality superfine ethanol being
produced from molasses. Unicol produces various grades of ethanol including
super fine ENA Anhydrous (99.9%), ENA (>96%), and B Grade (>92%). It is
also engaged in the production and marketing of food-grade liquid carbon
dioxide (LCO2). Unicol has an installed ethanol capacity of 56,000 MT per
annum while LCO2 installed capacity of 18,000MT per annum. Unicol exports
its complete production of ethanol to various regions across the globe. Unicol
is the proud recipient of the FPCCI Prime Minister of Pakistan Award and the
FPCCI Best Export Performance Award for 2017-18.
Madian Hydro Power Ltd

Joint Venture for Establishing
148 MW Hydro Power Plant.

Company Information
Board of Directors Bankers (Islamic)
Mr. Akbarali Pesnani Chairman Al Baraka Bank (Pakistan) Ltd
Mr. Amer Faruque Chief Executive Askari Bank Ltd
Mr. Aslam Faruque Director Bank Alfalah Ltd
Mr. Shehryar Faruque Director Bank Al Habib Ltd
Mr. Arif Faruque Director Bankislami Pakistan Ltd
Mr. Ali H. Shirazi Director Dubai Islamic Bank Pakistan Ltd
Mr. Abid Vazir Director MCB Islamic Bank Ltd
Mr. Sher Afzal Khan Mazari Director Meezan Bank Ltd
Ms. Maleeha Humayun Bangash Director
Share Registrar
Audit Committee CDC Share Registrar Services Limited
Mr. Ali H. Shirazi Chairman CDC House, 99-B, Block ‘B’, S.M.C.H.S.,
Mr. Arif Faruque Member Main Shahrah-e-Faisal, Karachi-74400
Mr. Shehryar Faruque Member Tel: 0800-23275 UAN: 111-111-500
Email: [email protected]
Human Resource and Remuneration Committee
Mr. Sher Afzal Khan Mazari Chairman Contact Us
Mr. Amer Faruque Member UAN: 111-000-009
Mr. Aslam Faruque Member Email: [email protected]
Web: www.gfg.com.pk
Chief Operating Officer & CFO
Mr. Yasir Masood Registered Office
1st Floor, Betani Arcade,
Director & Company Secretary Jamrud Road, Peshawar
Mr. Abid Vazir Tel: (+9291) 5842285, 5842272
Fax: (+9291) 5840447
Head of Internal Audit
Mr. Aamir Saleem Head Office
Modern Motors House, Beaumont Road,
Auditors Karachi-75530
EY Ford Rhodes Tel: (+9221) 35683566-67, 35688348, 35689538
Chartered Accountants Fax: (+9221) 35683425
Legal Advisor Factory

K.M.S. Law Associates Plot No. 26, Gadoon Amazai
Industrial Estate, District Swabi,
Bankers Khyber Pakhtunkhwa
Allied Bank Ltd Tel: (+92938) 270125, 270221
Bank Al Habib Ltd Fax: (+92938) 270126
Faysal Bank Ltd
Habib Bank Ltd Regional Offices
Habib Metropolitan Bank Ltd
Industrial & Commercial Bank of China Ltd Lahore
MCB Bank Ltd 3, Sundar Das Road
National Bank of Pakistan Tel: (+9242) 36286249-50, 36308259
Samba Bank Ltd Fax: (+9242) 36286204
Soneri Bank Ltd
The Bank of Punjab Islamabad
United Bank Ltd 1st Floor, Razia Sharif Plaza,
Jinnah Avenue, Blue Area
Non-Banking Financial Institution Tel: (+9251) 2344531-33
Pakistan Kuwait Investment Co. (Pvt) Ltd Fax: (+9251) 2344534, 2344550

Journey at a Glance
Cherat Packaging
Limited started Added 3rd Tuber and
production with one Bottomer to production
Tuber and one Bottomer line, making the total Installed 1st PP Line
having installed capacity Acquired effective production having capacity of 65
of 50 million papersacks ISO 9001 QMS capacity to 160 million million PP bags per
per annum. Certificate. paper bags per annum. annum.
1992 1998 2006 2012

1996 2003 2009
Installed 2nd Bottomer to Added 2nd Tuber to Added 4th Tuber and
the production line. the production line and Bottomer to production
thus increasing the total line. With this addition
production capacity to the total installed
105 million paper bags capacity reached 265
per annum. million paper bags
per annum.

Arrival of Universal
Papersack line with an
annual capacity of 135
million bags per annum.
Decision to enter in
to the field of Flexible
Packaging and signing
Installed 2nd convertex of contract for acquiring Completion of Flexible
of 2nd PP Line and main plant of Flexible Packaging Project
increased the capacity to Packaging project with enhancing production
145 million PP bags Windmoller & Holscher capacity from 7.2 million
per annum. and other suppliers. Kgs to 12.6 million Kgs.
2014 2017 2019

2013 2016 2018 2021
Installed 1st convertex Installation of 3rd PP Installation of Universal Established LC

of 2nd PP line increasing Line having annual Papersack Line – for the import
total capacity to 105 capacity of 50 million Installation of Roto of 4th line of
million PP bags per bags per annum. & Flexo printers and PP having
annum. laminator of the Flexible production
Packaging Division. capacity of 65
million bags.

Hall of Fame
Best Corporate Reporting Award ICAP & ICMAP
Every year a joint committee of Institute of Chartered Accountants of Pakistan (ICAP) and Institute of Cost
and Management Accountants of Pakistan (ICMAP) organize Best Corporate Report Awards. These awards
are based on the evaluation criteria which is focused to promote integrated thinking within the organization.
Inspiration has been derived from the ‘Content Elements’ of the International Integrated Reporting Framework
for the evaluation criteria. Furthermore, the purpose of this criteria is to increase the level of accountability and
stewardship of reporting organizations and enable effective decision making.
Cherat Packaging participated in these prestigious awards for the financial years 2014 to 2020 and secured 1st
position in “Others Category” for all the seven years. Apart from the above, the Company’s Annual Report for
the year ended June 30, 2017 also secured overall 1st position nationwide.

Corporate Excellence Award South Asian Federation of Accountants
Management Association of Pakistan (MAP) recognizes (SAFA) Award
and honors companies showing outstanding In recognition of the Cherat Packaging’s endeavor for
performance and demonstrating progress and transparency in corporate reporting, the Annual Report
enlightened management practices. MAP conducts of the Company was nominated in SAFA Awards for
a financial evaluation followed by management Corporate Governance Disclosure Award 2017. The
practices appraisals, based on which it rewards the event was held in Bangladesh and the Company
best-managed companies in Pakistan by instituting was awarded Certificate of Merit for Improvement in
the Corporate Excellence Awards. As Cherat Transparency, Accountability & Governance in Corporate
Packaging Limited believes in transparent reporting Governance Disclosures in Annual Report 2015.
and information symmetry, it nurtures the culture of
adopting best management practices generally applied
by the business community. As a result, the company’s
outstanding performance was also recognized by the
Management Association of Pakistan on account of Best
Management practices. The Company was awarded
Corporate Excellence Certificates and Awards in “Paper
and Board” category for the years 2015 through 2019.
Pakistan Stock Exchange Top

Companies Award
Every year, Pakistan Stock Exchange
acknowledges the performance of
the Top Companies on the basis of
comprehensive criteria, which includes
Dividend Payout, Capital Efficiency, Forbes: Asia’s Best Under
Profitability, Free-float of shares, A Billion Company
Transparency, Corporate Governance In 2018, Cherat Packaging was also
& Investors Relations and Compliance nominated for the Forbes- Asia’s Best Under
with Listing of Companies & Securities A Billion Company. Forbes annual Best Under
Regulations. A Billion list highlights 200 Asia-Pacific public
companies with less than $1 billion in revenue
The Company’s outstanding performance and consistent top and bottom-line growth.
has also been recognized by the In 2018, candidates came from 13 countries
Pakistan Stock Exchange and averaged 55% growth in sales, a 24%
and the Company has profit margin, and 113% growth in earnings
been awarded with the per share.
Top Companies Award for
the year 2016.

Organizational Structure
Shareholders
Board of Directors
Board Committees
Chief Executive Officer
Chief Operating Officer

& CFO
Executive Director
Corporate Affairs
Resident Director
Factory
General Manager
Marketing-FPD
Deputy Executive Director General Manager

Internal Audit Marketing-PSD/PPD
Asst. General Manager

General Manager Administration
Procurement

Human Resource
Information Technology
HSE
Administrative Functional
Reporting Reporting

Factory Site
Organizational Structure
Deputy Manager Asst. General Manager Deputy Manager

Quality Control HSE IT
General Manager General Manager

PSD PPD
Production Services Production Services

• HOD Tubers • HOD Electrical • HOD Extrusion • HOD Electrical
• HOD Bottomers • HOD Mechanical • HOD Weaving • HOD Mechanical
• HOD Universal • HOD Stores • HOD Lamination • HOD Stores
Papersack Line
• HOD Printing
• HOD Conversion

Chief Operating Officer

& CFO
Resident Director
Senior Manager General Manager

Human Resource Finance
& Admin
General Manager
FPD
Production Services
• HOD Roto printing • HOD Electrical
• HOD Flexo printing • HOD Mechanical
• HOD Extrusion • HOD Stores
• HOD Lamination • HOD Dispatches
• HOD Cylinder making
• HOD Plate making
• HOD Bag making

Local Presence
Factory
Gadoon
Peshawar
Islamabad
Registered Office
Lahore
Sales Office
Karachi Sales Office
Head Office

International Presence
Asia
Pakistan
Europe
Africa

Position in the Value Chain
Packaging impacts the sale-ability of a product. Therefore, quality packaging is the key to product success. Cherat
Packaging Limited lies right in centre of the product value chain.
Raw Material
• Papersack-
Mondi Packaging
• Polypropylene
Granules - SABIC
• Films and
Granules for PE film
Cement Customers
Sugar
Chemical
Rice
FMCG
The Company procures the finest
quality raw material from world
renowned suppliers and converts
it to bags based on customer
demand and specifications. The
Flexible Packaging business is
also conducted on the same
norms so as to maintain a high
product quality.

Conversion,
Manufacturing
& Printing
• Paper bags
• Polypropylene bags
• Printed films
Final Products

Significant Factors Affecting
the External Environment
It’s not possible for Organizations to work in vacuum. Organizations are affected by its external environment. Some
of these factors are listed and elaborated below:
P E S
Political Economic Social
Factor
Political factors determine the Economic factors refer to the Social responsibility of a company
extent to which a government financial state of the country. cannot be ignored. The Company
Description
may influence the economy A strong economy invigorates must play its role in betterment of
or a certain industry. Political business and vice versa. society in which it operates. Health
uncertainty trembles the issues, education problems are
business environment. among the social problems.
- Political uncertainties - Increased inflation - Make HSE department more

rigorous
- Rifts among political parties - Loss of business due to
Significant change
pandemic - COVID-19 Pandemic affecting

from last year
Pakistan
- Business lock-downs
- Pandemic influencing
imported raw material prices
and availability
The Company continuously Cherat Packaging Limited has The Company always strives to
analyzes and monitors the been on strong financial standing. be a part of social causes and for
political situation of the The company keeps optimal the betterment of society. For this
country including changes Debt:Equity ratio. Furthermore, it purpose, the Company donates
in duty structures, taxes and has negotiated competitive rates in various social causes including
other levies to mitigate any with various banks for its financing education programs and health &
unwarranted affect. needs. Additionally, healthy relation safety of society.
Organization’s response
with suppliers ensures timely

On the business front, the
supply of material at competitive
Company has full-fledged HSE
rates.
department which works for the
Responding to lock-down situation betterment and welfare of workers
developed due to COVID-19, at factory.
the Company implemented IT
The Company implemented
support solution facilitating work-
ISO 45001 to comply with HSE
from-home. The timely response
international standards.
prevented work loss.
The Company implemented SOPs
The Company benefited from SBP’s
vigorously to prevent its workplace
loan for repayment of Wages and
from COVID-19.
Salaries.
The Company also availed SBP’s
loan deferment option to further
strengthen its cash flows.

T L E
Technological Legal Environmental
Factor
Technology plays a vital role in Companies are required to abide by Almost every manufacturing
success of any company. various laws and regulations. Every company has an impact on the
Description
responsible company must follow environment. Climate changes and

Technologically primitive all rules and regulations laid by the water shortage is the major area of
companies often end-up being Government. concern.
shutdown
- Fine tuning of Flexible - Companies Act, 2017 - Implementation of EMS ISO

Packaging machinery for 14001:2015
- Income Tax Ordinance
Significant change
product innovation
- Inclusion of Renewable energy
from last year
- Up-gradation of network and - Sales Tax Act including solar and hydel power
security measures - SECP Acts, Rules and
Regulations
- Code of Corporate
Governance
- IFRS Amendments
The Company is equipped The Company abides by all the The Company has always strived
with latest technology to face laws enacted by Government. The to work for the betterment of
the challenges of dynamic Company has employed various the environment. The Company
environment. Product professionals of respective fields so has worked with an international
innovation is inevitable to that the Company would strongly agency on environment. The
meet the ever changing and strictly follow all the laws that Company is fully compliant of
customer demands. Therefore are applicable to the Company. NEQS standards. Company is EMS
Organization’s response
technological up keep of ISO 14001:2015 certified company

machinery is preordained. and abides by international rules
on environmental protection.
The Company continuously
monitors and improves its The Company is also receiving
networking infrastructure for around 1 MW electricity under
smooth data processing and Wheeling Regime Energy Purchase
prevention from cyber threats Agreement from Pakhtunkhwa
Energy Development Organization
(PEDO). Moreover, the Company
has installed, subsequent to the
year end, solar power project
at its Flexible Packaging plant.
This will help Company to switch
from conventional power source
to green energy, adding value to
environment.

Composition of Local and Imported
Material and Sensitivity Analysis due
to Exchange Fluctuation
Cherat Packaging Limited is the leading company in Pakistan producing Kraft paper, Polypropylene bags and
Flexible Packaging material. The Company mainly imports its raw materials for Kraft paper and Polypropylene
bags, however, some material like films, inks and solvents etc. are procured from the local market.
The Company is exposed to foreign currency fluctuation not only for its direct imported raw materials but also for
those materials which are although procured locally but materials are commercially imported by our suppliers.
Keeping all other factors constant, 10% increase or decrease in exchange rate during the year would have an
impact of Rs. 527.23 million on profit before tax of the Company.
Raw Material Composition
Imported 75%
Local 25%
Significant Change from Prior Year

The Company performance improved significantly as it has posted profit of Rs. 855 million. Enormous increase in
bags sale owing to massive growth of cement industry aided the Company to rebound immensely. Further, though
marginally, Flexible Packaging also managed to reduce its loss showing its correct direction towards profit making
division.

Competitive Landscape and Market
Positioning
Cherat Packaging Limited is a diversified packaging company – with Paper, Polypropylene and Flexible Packaging
segments. Cement, sugar, fertilizer, and chemical companies require both Paper and Polypropylene bags based
on market acceptability and type of material to be packed and sold (industrial products) while FMCG companies
demand Flexible Packaging. The Company’s major revenue is derived from Bags Manufacturing Division (Paper
bags and Polypropylene bags). Cherat Packaging is the leader in cement packaging while it is setting foot in
Flexible Packaging industry. CPL gained a rich experience of thousands of man-hours during its journey of more
than 32 years. With promising outlook on the back of construction package and resultant growth of Cement sector,
the Company is focusing on expanding its market share while for Flexible Packaging, the Company is focusing to
intrude deeper into FMCG packaging industry in the years to come.
POWER OF SUPPLIERS
Cherat Packaging values its suppliers as business partners. CPL has developed strategic partnership with top
international raw material suppliers like Mondi Packaging and SABIC. Various raw materials are being procured
locally like inks, solvents and various films for Flexible Packaging Division. The Company identifies finest suppliers
and nurture strategic partnership with them. By virtue of these partnerships, the Company has preferred supply of
raw material without unnecessary delays that helped Company continuing its production during recent pandemic.
POWER OF CUSTOMERS
Cherat Packaging has a legacy of putting customers first. The Company is reputed for catering customer demands
including development of cost effective solutions. The Company has a customer base with its reputation being a
hallmark of quality.
THREAT OF NEW ENTRANTS

The packaging industry has seen a rise in competition. New plants have been installed not only in Kraftpaper and
Polypropylene bags but also for Flexible Packaging material in the past few years. However, Cherat Packaging
has a strategic edge over the others. However, recent expansion in the cement industry and an anticipated rise in
the consumption of cement in various projects will turn the table around. The Company is positioned well to cater
large orders because of its state-of-the-art production facility, large production capacity, superior quality and top
quality input materials.
COMPETITION
Large number of producers in Flexible Packaging industry makes it one of the most competitive industry however,
most of the suppliers are either small or disorganized that leaves a great potential for organized sector like Cherat
Packaging. The Company already has Rotogravure and Flexographic printers, and Extrusion line all procured from
top European suppliers. In support, the Company installed bag making, spout insertion machine, cylinder making
machine, lamination machines and other auxiliary equipment that give boost to its unmatched production ability.
THREAT OF SUBSTITUTE PRODUCTS

Cement Packaging is done in Paper and Polypropylene hence makes them substitute to each other, however, CPL
possess both Paper and PP production facility making it immune to any substitution between products.
The Company has well positioned itself to cater future demands and growth. Revival of economy and increase in
construction activity will benefit Company in the days to come.

Competitive Edge
The journey of Cherat Packaging is marked with HI TORQUE that defined its competitive edge it has developed
over the years.
Human capital
CPL’s success is on the back of great human potential. Cherat Packaging believes in efficient HR management,
training and development, performance measurement and talent recognition. Cherat Packaging has diversified
employee base with hundreds of man-hour experience.
Innovation
Cherat Packaging has always been front runner in product innovation and product development. CPL’s 2ply bags
and lowest gram PP bags are unmatched with respect to price and quality.
Top suppliers
Cherat Packaging believes in procuring best quality raw material from top suppliers. The Company sources its
core raw material from Mondi Packaging and SABIC while local material are sourced from various local suppliers
after robust quality checks at our state-of-the-art lab.
Outstanding customer support

Cherat Packaging values its customers as business partners. The Company envisages its success in the success
of its customers. Cherat Packaging regularly holds meetings with its customers for their specific requirements
and helps them in development of new product packaging.
Regular expansions
CPL has been expanding exponentially over the last decade. With a humble start of 1 tuber and 1 bottomer in
1992, the Company is now a leading packaging company with a combined capacity of 595 million bags and 12.6
million KGs of Flexible Packaging material.
Quality
Cherat Packaging pledges not to compromise on quality. Today, quality and CPL are synonymous in packaging
industry.
Unmatched production facility

CPL’s production facility includes state-of-the-art latest machinery procured from top European companies. This
facility enables the Company to produce finest quality packaging material for its customers.
Economies of Scale
Being the leading Company to contain facility of Kraftpaper bags, Polypropylene bags and Flexible Packaging
Material, the Company enjoys economies of scale. Many functions of the Company fall under common umbrella
significantly reducing its redundant costs.

Our Business Model
Inputs Process
CPL’s business model is interwoven with its vision, mission

and values. The business model consists of employing
HUMAN CAPITAL resources, enhanced by competitive edge and human capital
- 242 employees to transform inputs such as raw material into innovative
packaging solutions to our customers with a focus to
contribute towards local community, surrounding environment
and stakeholders.
MANUFACTURED CAPITAL
- 5 Paper lines
- 3 PP lines
- Flexible Packaging Division (FPD)
o Flexo
o Roto
o Extrusion
o Cylinder making
o Auxiliary machines Our Business Model
- Raw material procured: Rs. 8.36 billion
t
men
iron
n v
FINANCIAL CAPITAL l E 2-43
Deliverables
4
na
- From net assets of
St 52-58
ter
Pg
P
rat
Rs. 4.77 billion to Rs. 6.04 billion.
Ex
eg y
- Strong credit rating – A (PACRA)
Inputs
Business
Diversifications
Outcome
INTELLECTUAL CAPITAL
- Lowest grammage PP bag
R
dg e
- 2 Ply bags
i sk
Pg
- Conversion of Roto jobs into Flexo
7
eE
Ma
-4
60 g
46
- End-to-end solution from product

itiv
64
n
-
Pg
a
em
designing to actual supply
et
p en
m
- Quality certifications. Co t
SOCIAL AND
RELATIONSHIP CAPITAL
- Largest international suppliers
o Mondi Packaging
o SABIC
o Windmoller & Holscher
- Strong customer base in Bags
Manufacturing Division (BMD)
- Evolving customer base in FPD
- Best raw material procurement Today’s packaging industry is fast paced. The Company’s
success depends on understanding customer requirements,
NATURAL CAPITAL anticipation of future trends, challenges and opportunities,
and partnering with suppliers and human capital to discover
- Adherence to EMS long-term and sustainable solution to all our stakeholders.
- Conventional to green energy

Outputs Outcomes
Employees HUMAN CAPITAL

253 - Training and development
- Promotions
- New hirings
- 253 employees
Turnover:
Rs. 11.26 billion MANUFACTURED CAPITAL
- Turnover increased by
Rs. 1.82 billion
- Investment in new support machines
- Initiation of PP line 4 project having
production capacity of 65 Million bags
FINANCIAL CAPITAL
Net profit: - Net profit Rs. 855.09 million
Rs. 855.09 million - Market price appreciation to Rs. 198.91
in June 2021 from Rs. 117.15
in June 2020.
- Operating cash flows generated
Rs. 1.50 billion
Investment in infrastructure INTELLECTUAL CAPITAL

improvement and security: - Improvement in network security
Rs. 5.09 million - Secured Remote Working Facility
Dividends@ 50% SOCIAL AND RELATIONSHIP CAPITAL

- Preferred supply of raw material
Exports: - Uninterrupted production
Rs. 367 million - New customers in FPD
- Increased exports
Relations enhanced with - Charity and donation
Mondi Packaging, SABIC - Dividend to shareholders
and Windmoller & Holcher
Solar power project of NATURAL CAPITAL

Rs. 120 million - Adherence to EMS
- Conversion to Hydel Power
Around 1MW electricity P.M through PEDO
from PEDO - Installation of Solar Power project

Strategy and
Resource
Allocation
52 Strategic Objectives
53 Resource Allocation Plan
54 Liquidity Strategy
54 Significant Plans and Decision
54 Significant Change in Objective
and Strategies
55 The Effect of Technological
Change, Societal Issues,
Environmental Challenges
57 Specific Process Used to Make
Strategic Decision
58 SWOT Analysis

Strategic Objectives
The basis of our strategy stems from aim of increasing shareholders’ wealth by following best business practices
and being a responsible corporate citizen.
Short, Medium and Long-term Objectives

Our short-term objective is to improve efficiency of our operations through continuous improvement, cost reduction
and workers’ training. In medium term, we intend to grow through expansion of our core business by investing
in state-of-the-art machinery, improving customer management and new and upgraded products. Build on short
and medium term objectives, we aim to achieve excellence in business and diversify operations through related
diversification strategy in the long-term.
Strategies in Place
Our Core Objective
The core objective of our management is to achieve excellence in business where our venture may be regarded as
amongst the best blue-chip stocks in the country. To achieve our objectives, the management strategically strives
to enhance stakeholders’ value and customer satisfaction. The shareholders’ value is maximized through return
on investment, which management believes can be achieved through revenue maximization and cost control
measures.
The Strategic Edge

CPL expanded exceptionally over the last few years. With expansion into FPD, CPL is now one of the few companies
in the region to offer varied types of packing solutions, making it the medium of choice facilitating its customers in
purchasing with respect to quality packaging material for their valuable products.
Sales and Marketing

Marketing targets and budgets are aggressively designed by the management to achieve highest possible returns.
Though sale prices reduced during the year in line with market conditions and international prices, revenue of the
Company increased mainly due to high growth in cement bags and Flexible Packaging material sales.
High anomaly in custom duties were catered during Finance Act 2020 which reduced undesired difference
between paper and pp raw materials. Bags sale increased due to increased construction activities in the
country. The Company also managed to increase its revenue from Flexible Packaging Division. This was on
account of increased quantity sold and improved prices. However, this increase was not fully translated into GP
improvement owing to unstable raw material prices, even though, the Company improved its gross profit margin
of its Flexible Packaging Division.
Cost Management
Aiming at cost reduction coupled with environment concerns, CPL secured supply of hydro power from PEDO.
This has reduced cost of production of BMD realizing a substantial saving. State-of-the-art -machinery also played
vital role in effective cost management and energy conservation. The company kept strict controls and effective
management to keep cost under acceptable limits. The controls are managed through effective reporting structure
and active internal audit department. The recommendations for any improvement are independently submitted to
Board’s Audit Committee. The management implements suggested improvements and corrective actions where
applicable.
Our endeavour is to create value for our shareholders by ensuring a maximum return on investment and achieve
customer satisfaction by way of providing our clients a world class product.
We aim to develop the long-term sustainability of the organization by grooming and training our employees and
providing a congenial work environment, where they are motivated to perform at the highest standards.
We remain committed to the highest ethical and moral business values and to the true spirit of the Code of
Corporate Governance.

Resource Allocation Plan
Business Growth
Social &
Human Manufactured Relationship
Capital Capital Capital
Financial Intellectual
Capital Capital
Our Strategy
Cherat Packaging Limited is committed to increasing revenue streams to optimize shareholders’ wealth and offer
our best efforts to provide best value to all our stakeholders for their engagement with the Company.
Human Capital
Cherat Packaging Limited believes in optimization of human potential. For this purpose, the Company conducted
various workshops and seminars, both in-house and outsourced, to enhance its human capital potential.
Furthermore, the Company launched ‘Values Roll-out’ drive in order to reiterate the core values and blend them
further into the Company culture. Additionally, the Company also conducts various other activities for its employees
as highlighted in the calendar of notable events.
Manufactured Capital
CPL takes pride to be the leader in possessing state-of-the-art machinery. The Company is exploring various areas
of potential. Further, the Company is also putting its effort to increase its production and widen its market share.
In Flexible Packaging Division, the Company is in partnership with its clients to work out various alternate cost
effective solutions which would not only benefit the Company in shape of increased revenue but also the clients in
shape of cheaper yet high quality product.
Financial Capital
The Company has a long-term loan of Rs. 2.79 billion (including long-term loan for the payment of Wages
and Salaries) and short-term loan of Rs. 1.94 billion. Short-term loan of the Company reduced due to efficient
management of working capital despite increase in business activity. The Company had procured extra stock
last year which benefited the Company in current financial year. The annual target has been disseminated to
operational departments according to budget targets. The Company is confident that it will manage to keep short-
term loan to a reasonable level.
Intellectual Capital
The Company takes pride for being front runner in innovation and providing better solutions to its Customers at
lowest cost possible. The Company continuously invests on development of new products based on changing
market trends and consumption patterns. To achieve this objective, the Company has state-of-the-art lab at its
factory which not only continuously monitors quality of products but also thoroughly tests innovated products to
ensure its quality surpasses the Company’s standard.
Social and Relationship Capital
We recognize that the viability of our enterprise depends on our ability to sustain strong relationships with customers,
vendors and with the wider community for whom we also create value. We invest in a series of initiatives that
enhance collaboration and ongoing dialogue with our customers and vendors. We also contribute to the sustainable
growth of our communities by offering job for local skilled and unskilled workforce.

Liquidity Strategy
Current Liquidity Position
Cherat Packaging Limited has always been settling its liabilities well in time without any unnecessary delays. The
Company has financing arrangements with all leading banks of Pakistan at competitive rates amounting to Rs.
6.95 billion. The Company regularly monitors its debtors and keeps outstanding days in-line with industry norms.
Additionally, the Company reviews its bank position on daily basis to ensure its liquidity.
Currently, the Company has short-term borrowings of Rs. 1,945 million and long-term loan of Rs. 2,786 million.
The Company managed to reduce its short-term borrowings by Rs. 685 million as compared to last year through
effective inventory management. The Company had availed SBP’s loan deferment option through which an
amount of Rs. 480 million relating to current maturity was deferred however, with improved financial health, the
Company has revoked principal deferment facility on one of its loan and repaid the principal as per schedule
amounting to Rs. 120 million. Therefore, the Company’s principal deferment now stands at Rs. 380 million.
The Company has a sustainable growth with increased profitability and business stability. The gearing of the
Company has also been monitored and controlled in line with the business objectives. Strong liquidity of the
Company is evidenced by current ratio of 1.69. The Company has decent credit ratings of ‘A’ in long-term and
‘A1’ in short term. The Company managed to earn healthy cash flows during the year through its operations. The
cash flows were used to repay its financial liabilities. Cash flows are being monitored on a daily basis. Adequate
debt equity ratio is maintained. The Company regularly monitors the debt equity ratio to keep the Company from
any excessive debt pressure.
Financing Arrangements
The Company has cordial business relations with all the reputed banks and financial institutions of the Country.
Adequate unutilized short term financing facilities are available with the Company. Historically, the Company
has obtained long term loans to finance expansion projects at attractive markup rates. Recently, the Company
also availed relief offered by SBP against salaries and wages at a discounted rate. Moreover, during the year the
Company has obtained long-term financing from an Islamic bank under State Bank of Pakistan’s Islamic Financing
Facility for Renewable Energy to setup a Solar Power Project.
Significant Plans and Decisions

The Company plans to expand its production capacity based on market demand and future outlook. Accordingly,
installation of fourth Polypropylene line is continuing as planned and expected to be commissioned by December
31, 2021. This plant will have a production capacity of approximately 65 million bags per annum. Moreover, work
on the installation of solar panels at the Flexible Packaging plant will be completed in August/September 2021. This
will help the Company to produce green energy and reduce electricity costs.
Significant Change in Objectives and Strategies

There is no material change in Company’s objectives and strategies from the prior years.

The Effect of Technological Change, Societal
Issues, Environmental Challenges
The world is facing material challenges in business arena. These challenges are putting ever mounting pressure on
companies to stay responsible, sustainable and profitable. Cherat Packaging has been vigilant in analyzing these
challenges and taking all possible measures to align itself with best practices regarding these challenges.
Material
Challenges Technological Change Societal Issues Environmental Challenges
Dimension(s) of Ever changing fast paced Population and demographic Climate change & loss of ecosystem,
the challenge technology changes, human rights, health, resource shortages
education, poverty
Impact on Investment in plant and machinery - Employment of local population; - Consider carbon footprint;
strategy including infrastructure.
- Respect local values; - Sourcing raw material from socially
responsible companies
- Provide congenial working
environment;
- Donate for education cause and
elevate poverty
Our response The Company monitors changes Cherat Packaging is located in Cherat Packaging considers
in technology closely. It has a remote area of Swabi. CPL environment an important aspect
strategic relations with supplier has become one of the leading of the business. The Company
of major machinery (Windmoller employer of local community is complaint of EMS to keep its
and Holscher) through which the helping them earn their living environmental impact in check.
Company closely monitors changes through congenial working Cherat Packaging sources its major
in technology that may benefit environment with special focus on raw material from renowned and
in increasing productivity and health and safety of workers. socially responsible suppliers like
reducing cost. Cherat Packaging maintains an Mondi Packaging and SABIC. Mondi
ambulance for its workers and Packaging sources its paper raw
community at large. material from sustainable forest hence
Cherat Packaging has been active impact on ecosystem and natural
in donating for various education resource is minimal.
and poverty elevation causes.
Technological Societal Environmental

Specific Processes used
to Make Strategic Decisions
Tactical decisions have been a forté of Cherat Packaging Limited. It has come a long way through robust decision
making process that the Company has developed over the years. New investments, expansions, diversifications
etc. all the decisions carry inherent risk. CPL takes into consideration various aspects like market dynamics,
technological changes, competitors approach and response, and economic conditions to name a few. Cherat
Packaging’s success and leadership position in packaging business is the evidence of strategic thinking and
strong evaluation process.
As mentioned, CPL has developed multi-layer decision making process to consider and make investment.
Indentification of investment need

• Responsible department
• Basic data and rationale 1
Identification of various
Evaluation of options
• Technical feasibility
2 options to investment decision
• Considering market conditions
• Considering value chain
- Market analysis - Competitors • Considering suppliers and customers
3
- Technology - Customers
- Suppliers - Market saturation
• Financial feasibility
- NPV - Payback period
Presenting report to Chief Executive
- Hurdle rate considerations
• Considering technical feasibility and
4
- Sensitivity analysis
market conditions
• Comparing results with finance
Decision by BOD decisions
• Detail discussion of requirement • Considering business rationale
5
and need of investment • Opinions from finance and technical
• Opinion and inputs from all team
directors, especially from
independent directors
Specific Processes used to Establish and Monitor Culture of the Organization

Cherat Packaging’s culture is a manifestation of its shared values and beliefs. At Cherat Packaging, we promote
high values of Respect, Fairness, Quality and Ownership.
Cherat Packaging regularly promotes its values among employees, especially the new inductees.
We embrace and encourage our employees’ differences in age, color, disability, ethnicity, family or marital status,
gender identity or expression, language, national origin, physical and mental ability, political affiliation, race,
religion, sexual orientation, socio-economic status, veteran status, and other characteristics that make our
employees unique.
At Cherat Packaging Limited, we have a responsibility to treat others with dignity and respect at all times.
Core values are integral part of our annual performance evaluations of our employees. Through performance
evaluations, we evaluate our employees’ performance against annual SMART goals, behavioral traits and trainings
& professional developments.
Company’s Attitude to Risk and Mechanisms for Addressing Integrity and

Ethical Issues
Cherat Packaging Limited has developed robust policy of addressing integrity and ethical issues in shape of its
Whistle Blowing Policy.

SWOT Analysis
Strengths Weaknesses Opportunities Threats

- Advanced technology - Expanding customer base in FPD - High growth in cement sector - Reduced PSDP spending
Cherat Packaging takes pride Expanding customer base is a Cherat Packaging’s highest Government may reduce PSDP
of possessing state-of-the-art challenging task for the Company. production capacity provides spending to cater dwindling
machinery. The Company possesses Many Companies are buying opportunity to tap high demand in economic situation. Reducing
595 million bags capacity in BMD products from unorganized sector. cement packaging. The Company PSDP may have a negative impact
and 12.6 million KGs capacity in Further, customers feel reluctant to is in process of installing its 4th PP indirectly on Cherat Packaging
FPD. develop product from new supplier line providing it an edge over other through reduction in cement
viewing sensitivity of marketing of companies to cater abnormally high demand.
- Hundreds of Man-hour experience
packaging. demand.
- Rising cost of imported raw
Cherat Packaging has diversified
Moreover, COVID-19 pandemic - Export expansion materials
employee base with hundreds of
imposed lock downs resulting in
man-hour experience. Cherat Packaging has been Raw material cost component
limited mobility. Hence, product
exporting its products since 2011. is a substantial part of the
- Preferred supplier/Strategic development dependent on
The name of Cherat Packaging overall cost of production of the
partnerships customer site visits, were curtailed.
Limited is now well known in Company. Suppliers increase
Cherat Packaging built strategic This majorly barred the Company
international market. The Company the cost of products supplied in
partnerships with top suppliers from creating new products.
continually explores international view of international economic
of raw material and production markets to expand its exports. conditions including rising costs
machines (Mondi Packaging, SABIC of international fuel prices. To
- Product Shift
and Windmoller & Holcher). This mitigate this threat, the company
gives a strategic edge over its The Company being able to offer analyzes raw material prices offered
competitors in shape of preferred both forms of printing at its FPD, by various suppliers on a regular
supply and first-hand knowledge of it has an edge over its many basis to compare and control its
technological advancements. competitors. Many existing products purchasing cost. Moreover, it has
are now transforming from Roto strategic relationships with key
- Market leader in Cement Packaging
printing to Flexo printing hence new international raw material suppliers
Cherat Packaging is the market products are now being developed which benefit the Company in price
leader of cement packaging. Since which provides ample room to CPL negotiation and prompt material
its inception, it has developed its to tap customers. delivery.
name as a synonym to quality and
commitment. - New entrants
- Highest production capacity in Viewing high anticipated growth of

Cement Packaging cement sector, new entrants are
entering into cement packaging
Cherat Packaging possess highest business but with low capacity.
production capacity in Cement However, Cherat Packaging is
Packaging. As mentioned earlier, its the largest producer of Cement
production capacity is 595 million Packaging hence it can cater large
bags in BMD. orders further, with hundreds
of man-hour experience, CPL’s
packaging is of high quality with
minimal rejections.

Risks and
Opportunities
60 Risks and Opportunities
64 Materiality Approach
64 Initiatives taken to promote and
enable innovation

Risks and Opportunities
The Board of Cherat Packaging Limited (CPL) structures, authority limits and accountabilities, well
principally assumes the responsibility to mitigate all implemented policies and procedures and budgeting
possible risks and to identify and utilize potential events for review processes.
that may affect the Company. This principle keeps the The Board of Directors of the Company establishes
Company within its risk appetite and helps to achieve corporate strategies and business objectives.
its corporate objectives. Moreover, the Board’s Audit Committee is responsible
for Internal Controls in the Company. The Internal
RISKS and External Auditors’ reports are submitted to the
CPL is susceptible to various risks. However, through Audit Committee for its review, which after detailed
comprehensive planning and an acute business deliberations and suggestions for improvement are
understanding of the management, the Company submitted to the Board of Directors.
continues to identify and mitigate actual, potential
and perceived risks. The Company maintains an Following are the major risks which may affect our
established control framework comprising clear business operations and mitigating strategies for
controlling these risks.
Risk Level / Area of

Impact Risk Impact Source Key Source of Uncertainty Mitigating Strategy
Raw material cost component The Company analyses raw

is a substantial part of the material prices offered by
overall cost of production of the various suppliers on a regular
Company. Suppliers increase basis to compare and control
the cost of products supplied in its purchasing cost. Moreover, it
High / High Rising cost of Financial External
view of international economic has strategic relationships with
imported raw capital
conditions including rising costs key international raw material
material
of international fuel prices. suppliers which benefit the
Company in price negotiation
and prompt material delivery.
It becomes challenging for The Company regularly

the Company to compete in scrutinizes the parity
the market due to frequent fluctuations and whenever
High / High Exchange Rate Financial External fluctuation of PKR parity against needed, enters into hedging
Fluctuation capital USD and Euro. arrangements.
Pandemic like COVID-19 The Company developed SOPs

induced lock down which for workplace allowing the
affected supply of raw material, Company to continue its work
and reduced production and under controlled environment.
sales. Further, the Company maintains
reasonable stock that leverages
the Company to continue its
production in case of disrupted
Moderate / Operations risk Financial External
supply.
High capital
Moreover, the Company
maintains strategic partnership
with key suppliers to avail
preferred supply of raw
material.

Any shortage of the material The Company manages strategic

may hamper the production and relationship with best and high
sales activity of the Company. quality international suppliers
To keep competitive edge and of raw material, as already
Moderate / Availability of Manufactured External to gain more market share mentioned. Further, effective
High Imported Raw capital, inventory management accounts
Material relationship forthcoming production plan to
capital determine safety stock level and
reordering of raw materials.
The Company extends credit The Company regularly analyses

to its customers. There lies a the credit position and credit
risk factor that the customers worthiness of its customers
may fail to discharge their and extends credits based on
obligations and cause a minimum risk of financial loss.
financial loss to the Company. The Company also receives
advance against sales, local LC
Moderate / Credit Risk Financial Internal or post-dated cheques where the
High capital risk factors are higher than the
Company’s pre-defined standards.
Moreover, the Company regularly
monitors its outstanding debtors
and endeavour to keep days
outstanding to allowed number of
days.
Any increase in raw material Management has addressed

cost or increase in volume of the risk of shortage of working
Low / High Working Financial External raw material stock or debts may capital by availing the sufficient
Capital capital limit the avenues for availability credit lines from the diversified
Management of sufficient working capital. financial institutions in order to
meet the short-term requirements
of the Company.
The energy cost component The Company cannot avoid

is an important factor of the usage of Government supplied
overall cost of product. Any rise electricity as the cost of self-
in energy cost would hurt the generated electricity is much
profitability of the Company. higher than current energy
cost. Keeping this in mind, the
management of the Company
strives to keep production
wastage to a minimum level and
Low / High Rise in Energy Manufactured External productivity at the highest. Higher
Costs capital, productivity helps reduce energy
relationship cost per bag and thereby increase
capital profitability of the Company.
Moreover, the Company has
most modern and most efficient
machinery in place. The Company
has installed, subsequent to the
year end, 0.96 mw of solar power
project that would reduce energy
cost. Further, arrangement with
PEDO Khyber Pakhtunkhwa for
hydel power yield reduction in
energy cost.

Key employees and workers The Company values its workers

leave the company causing lack and employees as essential
of competent workforce. capital. Therefore, it provides
Low / Employee Human Capital Internal
a congenial environment
Moderate turnover
and growth opportunities.
Furthermore, the Company has a
robust succession plan in place.
Destruction of production The Company has comprehensive

facility due to natural disaster. insurance cover in case of any
catastrophic event. Further,
the Company has taken into
consideration every possible
aspect of safety measures during
Low / High Natural Manufactured External construction and erection of
Catastrophe capital building and plant. Further, the
Company has well-established
disaster recovery plan and
data backup to cope with any
unwarranted event.
Loss of Company data and The Company has a

theft of sensitive information. comprehensive disaster recovery
Low / High Information Manufactured External policy to address the risk. The
systems risk capital Company maintains back-up
servers to recover data in case of
any disaster.

Risks and Opportunities
Opportunities
Opportunity Impact Area Source Key Source Opportunity Strategy to Materialize
Production capability to produce With this great strategic edge, the

One Window Manufactured Internal bags made of Kraftpaper, Company is in tactical position to
Operations capital Polypropylene and Flexible secure more local market share and
Packaging material. enjoy benefits of economies of scale.
Highest combined production The Company actively pursues local

Production Manufactured Internal capacity. and international markets to fully
Capacity capital utilize its potential capacity and earn
higher return for its shareholders.
Most modern and state-of-the-art Efficient machinery enables the

machinery for both Kraft paper and company to operate with the minimum
Modern Manufactured External Polypropylene bags and Flexible cost of production, thereby offering its
Equipment capital Packaging material. customers low grammage high quality
bags in cheap price. This in turn
results not only in customer retention
but also attracts new customers.
Developed the capability to The Company is committed to explore

Diversification Relationship Internal produce not only Cement bags all possible avenues to maximize the
capital, but also sugar, rice, chemical and pace of growth of the Company and
Manufactured Flexible Packaging laminated and Shareholders wealth.
capital LDPE bags.
Provide congenial work Provide effective environment

environment where employee feels without excessive work pressure.
Efficient and Human Capital Internal Continuous training and development
motivated for work.
congenial work of employees. Benefit aligned with
environment efficient and effective work and team
management.
Relationship Expected growth in FMCG The Company invested in Flexible

Growth of capital, External market owing to CPEC and other Packaging plant with Flexo, Roto and
FMCG market Manufactured developmental projects. Extrusion machines to materialize
capital potential growth.
High growth in construction Viewing the potential growth and

High growth in Industry owing to construction bottleneck of our production facility,
Construction Manufactured Internal packages and other Economic the Company invested in enhancing
sector capital activities. its PP line by 65 million bags per
annum.

Materiality Approach
The Board of Directors of Cherat Packaging reposes authority and power to the Company’s management for
taking day to day decisions. The management however, observes the approach of materiality in applying power
and authority.
Materiality is a matter of judgment and the Company thinks that a matter is material if, individually or in aggregate,
they are expected to significantly affect the performance and profitability of the Company. In order to execute day
to day operations/ transactions delegation of powers has also been defined clearly and formalized procedures are
followed for their execution.
Initiatives taken to promote and enable innovation

Cherat Packaging has been a front runner in innovation in packaging business. Previously, CPL had introduced
2 ply bags for cement companies that were well received by the cement industry. In PP segment, CPL was able
to produce lowest grammage bag in the world with same high quality and strength. This innovative product is
unmatched and the faculty remains a symbol of CPL exclusively. In FPD, CPL was able to convert Roto printing
jobs into Flexographic printing jobs with same sharpness and quality. Moreover, the Company keeps in touch
with its strategic partner (Windmoller & Holscher) to grab firsthand knowledge about advancement in production
machines and new trends in packaging. This helps the Company in applying those new innovations providing
its customers best quality innovative products with loads of options. Further, to keep its production quality at its
optimal, CPL regularly conducts in-house trainings to enhance skills of its workers.

Governance
67 Notice of Annual General Meeting 85 Human Resource Policies
70 Directors’ Profiles 86 Safety of Records Policy
75 Chairman’s Review 87 Conflict of Interest Policy
77 Directors’ Report to the Members 88 Whistle Blower Policy
81 Chairman’s significant commitments 89 Insider Trading Policy
and any changes thereto 90 Information System Security Policy
81 How the Board operates and 91 Non-Executive and Independent
the matters delegated to the Directors’ Remuneration Policy
Management
91 Policy on Related Party Transactions
81 Annual Evaluation of Board, Chief
Executive Officer (CEO), Committees 94 Investors’ Grievance Policy
and Individual Members 94 Business Continuity and Disaster
81 Directors’ Orientation and Training Recovery Policy
81 Governance Practices Exceeding 94 Diversity Policy
Legal Requirements 96 Business Continuity and Disaster
82 Related Parties Recovery Plan
82 Statement of Management’s 97 Independent Auditor’s Review Report
Responsibility towards the on the Statement of Compliance
Preparation and Presentation of Contained in Listed Companies
Financial Statements (Code of Corporate Governance)
Regulations, 2019
82 Detail of Board Meetings Outside
Pakistan 98 Statement of Compliance with Listed
Companies (Code of Corporate
82 Female Director Governance) Regulations, 2019
82 Independent Director 100 Role and Responsibilities of the
82 Executive Director(s) serving as Chairman and the Chief Executive
Non-Executive and Independent Officer
Director in Other Companies / Body 102 Salient Features of Terms of
Corporate Reference of the Audit Committee
83 IT Governance Policy and the Human Resource &
84 Social and Environmental Remuneration Committee
Responsibility Policy 104 Report of the Audit Committee

Notice of Annual General Meeting
Notice is hereby given that the 32nd Annual General Meeting of Cherat Packaging Limited will be held on Thursday,
October 21, 2021 at 11:00 a.m. at the Registered Office of the Company at Betani Arcade, Jamrud Road, Peshawar,
to transact the following businesses:
ORDINARY BUSINESS
1. To receive and consider the Audited Accounts of the Company for the year ended June 30, 2021 with the
Directors’ and the Auditors’ Reports thereon.
2. To consider and approve the payment of final cash dividend @ 40% (Rs. 4.00 per share). This is in addition to
interim cash dividend @10% (Re. 1.00 per share) already paid to the shareholders for the financial year ended
June 30, 2021 as recommended by the Board of Directors.
3. To appoint Auditors for the year 2021/22 and to fix their remuneration.
4. To transact any other business with the permission of the chair.
SPECIAL BUSINESS
5. To consider and approve the following resolution as Special Resolution:
a) “RESOLVED that the transactions carried out in the normal course of business with related parties and
associated companies as disclosed in Note 38 of the Financial Statements during the year ended June
30, 2021, be and are hereby ratified and approved.”
b) “FURTHER RESOLVED that the Board of Directors of the Company be and is hereby authorized to approve
all transactions to be carried out in the normal course of business with related parties and associated
companies during the ensuing year ending June 30, 2022.”
A statement under section 134 of the Companies Act, 2017, pertaining to the above-mentioned Special Business,
is attached with the notice.
By Order of
the Board of Directors
Abid Vazir
Director & Company
Karachi: August 24, 2021 Secretary

NOTES:
1. The register of members of the Company will be closed from Friday, October 15, 2021 to Thursday, October
21, 2021 (both days inclusive) and no transfers will be registered during that time. Shares received in order at
the Office of the Share Registrar of the Company, M/s. CDC Share Registrar Services Limited (CDCSRSL),
CDC House, 99-B, Block ‘B’, S.M.C.H.S., Main Shahrah-e-Faisal, Karachi-74400 at the close of business on
Thursday, October 14, 2021 will be treated in time for the above entitlement.
2. A member of the Company eligible to attend, speak and vote at the Annual General Meeting may appoint
another member as his/her proxy to attend, speak and vote in his/her stead. Proxies to be effective must be in
writing and must be received by the Company’s Head Office 48 hours before the Meeting.
3. Shareholders of the Company whose shares are registered in their account/sub-account with Central
Depository System (CDS) are requested to bring original Computerized National Identity Card along with their
account number in CDS and participant’s ID number for verification.
4. Shareholders of the Company are requested to immediately notify any change in their addresses to the Share
Registrar of the Company.
5. Shareholders who have not yet submitted photocopy of their valid Computerized National Identity Card (CNIC)
are requested to send the same to the Share Registrar of the Company.
6. As per Section 72 of the Companies Act, 2017 every existing listed company shall be required to replace its
physical shares with book-entry form in a manner as may be specified and from the date notified by the SECP.
The shareholders having physical shareholding are therefore requested to open CDC sub-account with any of
the brokers or investor account directly with CDC to place their physical shares into scrip less form.
7. Shareholders are hereby reminded that Section 242 of the Companies Act, 2017 provides that in case of a
listed company, any cash dividend declared by the company must be paid electronically directly into the bank
accounts of the shareholders. In order to receive dividends directly into their bank account, shareholders are
requested to fill in E-Dividend Mandate Form available on the Company’s website i.e. www.gfg.com.pk and
send it duly signed along with a copy of CNIC to the Registrar of the Company M/s. CDC Share Registrar
Services Limited in case of physical shares. In case shares are held in CDC, then E-Dividend Mandate Form
must be submitted directly to shareholder’s broker/participant/CDC investor account services. In-case of non-
submission of IBAN, the Company will withhold the payment of dividends under the Companies (Distribution
of Dividends) Regulations, 2017. Further, the information regarding gross dividend, tax/zakat deduction and
net amount of dividend will be provided through the Centralized Cash Dividend Register (CCDR), therefore,
shareholders should register themselves to CDC’s eServices Portal at https://eservices.cdcaccess.com.pk.
8. In compliance of Section 244 of the Companies Act 2017, once the Company has completed stipulated
formalities, any unclaimed dividend and /or shares that have remained outstanding for a period of three years
from the date of becoming due and payable or more shall be credited to the Federal Government (in case of
dividend) or delivered to the SECP (in case of physical shares). Shareholders who by any reason could not
collect and remain their unclaimed dividend/shares are advised to contact our Share Registrar of the Company,
M/s. CDC Share Registrar Services Limited (CDCSRSL), CDC House, 99-B, Block ‘B’, S.M.C.H.S., Main
Shahrah-e-Faisal, Karachi-74400 to collect/inquire about their unclaimed dividend or shares, if any.
9. All Shareholders are advised to check their status on Active Taxpayers List (ATL) available on FBR Website and
if required take necessary actions for inclusion of their name in ATL. In case a person’s name does not appear
in the ATL, the applicable tax rate will be increased by hundred percent.
10. In case of joint account, please intimate proportion of shareholding of each account holder along with their
individual status on the ATL.
11. Withholding Tax exemption from the dividend income shall only be allowed if copy of valid tax exemption
certificate is made available to CDC Share Registrar Services Limited by first day of Book Closure.

12. With reference to S.R.O. 787(I)/2014 dated September 8, 2014 issued by SECP; shareholders have option to
receive Annual Audited Financial Statements and Notice of General Meeting through email. Shareholders of
the Company are requested to give their consent to the Company’s Head Office to update our record if they
wish to receive Annual Audited Financial Statements and Notice of General Meeting through email. However, if
shareholder, in addition, request for hard copy of Audited Financial Statements, the same shall be provided free
of cost within seven [7] days of receipt of such written request.
13. Members can also avail video conference facility, in this regard, please fill the following and submit to the Head
Office of the Company seven (7) days before holding of the Annual General Meeting. If the Company receives
consent from members holding in aggregate 10% or more shareholding residing at a geographical location,
to participate in the meeting through video conference at least seven (7) days prior to date of the meeting, the
Company will arrange video conference facility in the city subject to availability of such facility in that city.
“I/We, ____________________ of __________________, being a member of Cherat Packaging Limited, holder of

________________ ordinary share(s) as per Registered Folio No.________ hereby opt for video conference facility
at _____________”.
Statement Under Section 134 of the Companies Act, 2017
The statement sets out material facts concerning “Special Business” to be transacted at the Annual General Meeting
of the Company to be held on October 21, 2021. The approval of the Members of the Company will be sought for:
During the financial year ended June 30, 2021 the Company carried out transactions with its associated companies
and related parties in accordance with its policies and applicable laws and regulation. Related party transactions
require shareholders’ approval under sections 207 and 208 of the Companies Act, 2017. Such transactions are
being placed before the shareholders for their approval through special resolution proposed to be passed in the
Annual General Meeting.
The shareholders are requested to ratify the transactions which have been disclosed in Note no. 38 of the Financial
Statements for the year ended June 30, 2021 and further to authorize the Board of Directors to conduct transactions
with related parties or associated companies for the year ending June 30, 2022.
Party wise breakup of transactions as disclosed in Note no. 38 of the Financial Statements for the year ended June
30, 2021 is given below:
Name of Related Party Nature of Transaction Amount (Rs’000)
Cherat Cement Company Limited Dividend Paid 6,245

Dividend Received 5,328
Purchase of Goods 2,819
Sale of Goods 2,442,229
Employees Provident & Gratuity Fund Contribution To Fund 31,202
Faruque (Pvt) Limited Dividend Paid 8,714
Services Received 35,606
Greaves Airconditioning (Pvt) Limited Purchase of Fixed Assets 29,988
Purchase of Goods 35
Services Received 14,991
Greaves Pakistan (Private) Limited Dividend Paid 4,270
Purchase of Fixed Assets 105,235
Purchase of Goods 769
Services Received 36
Jubilee General Insurance Company Limited Insurance Premium 12,156
Key Management Personnel Remuneration 162,751
Mirpurkhas Sugar Mills Limited Dividend Paid 4,221
Sale of Goods 3,367
Zensoft (Pvt) Limited Software Consultancy Charges 14,999

Directors’
Profile
Mr. Akbarali Pesnani Mr. Aslam Faruque
Chairman Director
Mr. Akbarali Pesnani is an MBA and fellow Mr. Aslam Faruque is a graduate with a major
member of both the Institute of Chartered in Marketing. He is the Chief Executive of
Accountants and Institute of Cost and Mirpurkhas Sugar Mills Ltd., Unicol Ltd. and
Management Accountants of Pakistan. He has UniEnergy Ltd. He is on the Board of Directors
served as Chairman Gwadar Port and Gwadar of Mirpurkhas Sugar Mills Ltd., Greaves
Port Implementation Authority from 2004 to Airconditioning (Pvt.) Ltd., Greaves Engineering
2006. Mr. Pesnani has been associated with Services (Pvt.) Ltd., and is also serving as
the Aga Khan Development Network at senior Senior Vice Chairman of Pakistan Sugar Mills
levels for over 44 years. Presently he is the Association - Center.
Chairman of Cherat Packaging Ltd., and Aga
Khan Cultural Service Pakistan and a Director In the past, he has also served as the Chairman
on the Board of Cherat Cement Company Ltd. of Pakistan Sugar Mills Association - Center as
Jubilee General Insurance Co. Ltd. Agha Steel well as Sindh Zone, and Director of Sui Southern
Ltd. and Pakistan Cables Ltd. His association Gas Company Ltd., State Life Insurance
with the Ghulam Faruque Group dates back Corporation of Pakistan and Pakistan Industrial
almost 40 years. Development Corporation.
Mr. Amer Faruque Mr. Shehryar Faruque

Chief Executive Director
Mr. Amer Faruque is the Chief Executive of Mr. Shehryar Faruque is a graduate from Davis
the Company. He is a Bachelor of Science & Elkins College, Elkins, WV, USA. He serves
(BS) graduate in Business Administration on the Board of Directors of Faruque (Private)
majoring in Management / Marketing from Limited, Zensoft (Private) Ltd and Greaves
Drake University, Des Moines, Iowa, USA. He Modaraba Management Company (Private) Ltd.
serves as a member of the Board of Directors
of Mirpurkhas Sugar Mills Ltd., Faruque (Pvt.)
Ltd., Greaves Pakistan (Pvt.) Ltd., Greaves CNG
(Pvt.) Ltd., Greaves Modaraba Management
Company (Pvt.) Ltd. and Executive Director
Marketing of Cherat Cement Co. Ltd. In the
past he has served as a member of the Board of Mr. Arif Faruque
Governors of Ghulam Ishaq Khan (GIK) Institute Director
of Engineering Sciences and Technology and
Lahore University of Management Sciences Mr. Arif Faruque is a Swiss - qualified Attorney-
(LUMS) and the Centre of International Private at-Law and also holds Masters Degrees in both
Enterprise (CIPE). He is also the Honorary Law and Business Administration from the
Consul of Brazil in Peshawar. USA. He is the Chief Executive of Faruque (Pvt.)
Ltd. as well as Madian Hydro Power Ltd. He is
on the Board of Directors of Mirpurkhas Sugar
Mills Ltd., Cherat Cement Company Ltd. and
UniEnergy Ltd. Besides the above, he is also
a member of the Board of Governors of Lahore
University of Management Sciences.

Mr. Ali H. Shirazi Mr. Sher Afzal Khan Mazari
Director Director
Mr. Ali H. Shirazi graduated with a BA from Yale Mr. Sher Afzal Mazari is a progressive
University, USA in 2000 and thereafter completed agriculturist with landholdings in the Rajanpur
his Masters in Law from Bristol University, UK in district of South Punjab, who is committed to
2005. He has worked with the Bank of Tokyo- developing sustainable solutions to the current
Mitsubishi in New York as well as American challenges of farming and land management.
Honda in Torrance, California. He is a member Prior to this, he had a 34 year corporate career
of the Atlas Group Executive Committee, across a range of Industries from Chemicals to
responsible for Group’s Financial Services, and Foods and Fast Moving Consumer Goods.
also serves as President/Chief Executive of
Atlas Battery Ltd. He is on the Board of Cherat After graduating from Boston University,
Packaging Ltd., Atlas Asset Management Ltd., Sher Afzal began his career with ICI and then
Atlas Insurance Ltd., Shirazi Investments (Pvt) moved to Unilever, where he worked for 25
Ltd., Shirazi Trading Company (Pvt) Ltd., Zhenfa years. During this time, he has worked in senior
Pakistan New Energy Company Ltd., Pakistan Marketing, Communications Corporate Affairs
Cables Ltd., Naymat Collateral Management and Sustainable Business roles, initially in
Company Ltd., Techlogix International Ltd., Pakistan and then overseas, covering regions
National Management Foundation (sponsoring as diverse as Asia, Middle East and Africa.
body of LUMS), Atlas Foundation, Pakistan
Society for Training and Development (President) He is deeply committed to driving a sustainable
and Young Presidents’ Organization-Pakistan business agenda, and believes that it is vital
(YPO). He has previously also served on the that sustainability should be at the core of
Board of National Clearing Company of Pakistan business strategy and operations, for the long-
Ltd. (NCCPL). term benefit of society and the environment.
He is a Certified Director from the Pakistan Institute Mr. Sher Afzal’s deep understanding and
of Corporate Governance and completed the knowledge of operating in developing, emerging
Owner/President Management Program (OPM) and frontier markets has convinced him on the
from Harvard Business School in 2018. vital need for tailoring global business best
practice to suit local environments. He is also a
firm believer in ethical and transparent business
operations that not only meet local regulatory
requirements but are also in strict compliance
Mr. Abid Vazir with global standards of corporate governance.
Director
Mr. Abid Vazir has been associated with Ghulam
Faruque Group since 2000. In addition to his
other responsibilities, he is also serving as the
Executive Director of the Group. Mr. Vazir is the
Chief Executive of Greaves Airconditioning (Pvt.)
Ltd. and Greaves Engineering Services (Pvt.)
Ltd. He is also a Director of Greaves CNG (Pvt.)
Ltd. and a member of the Executive Committee
of the Management Association of Pakistan.
Mr. Abid Vazir holds an MBA degree from

Lahore University of Management Sciences
(LUMS), enrolled in the Dean’s Honors List.
He belongs to the first batch of graduates of
College of Business Management (IoBM) and
also holds an MBA degree from the Institute.
Mr. Vazir is an Associate member of the
Institute of Chartered Secretaries of Pakistan
and a Certified Director from Pakistan Institute
of Corporate Governance (PICG).

Ms. Maleeha Humayun
Bangash
Director
Ms. Maleeha Bangash is recognized as a She has developed the expertise of starting up
Banking & Financial Industry expert, with and establishing companies and organizations
around 22 years of rich and varied experience where she was in core roles and was devising
obtained in Singapore, Turkey and Pakistan. and driving the entire launch of firms both locally
She brings with her trailblazing experience and abroad. Ms. Bangash has served in private
in Corporate Banking, Wealth Management, sector Banking & Financial Institutions in senior
Investment Management, Capital Markets, leadership roles, including Group Head/Senior
Private Equity and Commercial Banking, Executive Vice President, Chief Strategy Officer,
both locally and abroad. She has hands on Head of Strategy, Business Development and
knowledge of the Capital Markets as well Product Structuring.
as command over the letter and spirit of the
relevant rules and regulations. Currently being Previously, Ms. Bangash had served a term
invited to international financial services fora, in the Federal Government of Pakistan
as panelist, speaker/practitioner for “Guru as Founding Member (Equiv. Grade 21),
Sessions”. (Malaysia, Singapore, University Competition Commission of Pakistan (CCP),
of Chicago network, International Finance where she was in charge of Advocacy, Mergers
Corporation-IFC). Her present engagement is in & Acquisitions Review, as well as Competition
Digital Banking & Digital Finance. Research. She also set up the Acquisitions &
Mergers Facilitation Office (AMFO) at the CCP.
She holds an MBA in Investments and Finance She is a Visiting Fellow at Pakistan Institute of
from the University of Chicago, Booth School Development Economics (PIDE).
of Business, where she graduated with Honors;
Prior to this she obtained her MBA in Marketing Ms. Maleeha Bangash has completed her
and Finance from the Lahore University of Director’s Training Program from Pakistan
Management Sciences (LUMS). Institute of Corporate Governance (PICG) and
is a Certified Director.
Ms. Maleeha Bangash has held the position of
Managing Director for the World Bank Group’s
Investment Climate Reform Unit in partnership
with the Punjab Government, and has served
under the KP Finance Minister, for a World
Bank Group assignment with the Khyber-
Pakhtunkhwa Government, as the Head of
Ease of Doing Business (EoDB) and Investment
Climate. In these roles, she did groundbreaking
work to improve Pakistan’s Ranking on the
EoDB Index, provide Access to Finance to
businesses, create dialogue between the public
and private sectors, and improve the overall
business climate in both provinces.
Prior to this she held the position of Dy. CEO

in Bank AL Habib subsidiary Habib Asset
Management. She commenced her career in the
Corporate Banking Group of MCB Bank Ltd. A
business strategist and financial industry expert,
she has served in leading roles at Habib Asset
Management Limited, UBL Fund Management
(United Bank Ltd), JS Investments and MCB
Asset Management Co (MCB Bank Ltd). She
has also worked in the telecommunications and
textiles industries.

Chairman’s Review
The year in review was dominated by an unprecedented global health crisis, during which the Covid-19 pandemic
battered the world’s economy. It not only sent financial shock waves to the global economy but also led to slowdown
in industrial activities worldwide. However, due to prudent policies of the government supported by financial
stimulus package, Pakistan emerged from the crisis relatively unscathed. The national economy is showing signs
of recovery as the country has recorded a GDP growth of 3.9% for the year.
Despite the pandemic related challenges, Cherat Packaging continued to operate and serve its customers in order
to meet their packaging requirements. Because of its growth-oriented strategy, the Company has become one of
the largest and most diversified player of the packaging industry. With its state-of-the-art equipment, highly qualified
personnel, and quality packaging solutions, the Company has not only been able to attract new customers but
also retain its existing customers. The recently established Flexible Packaging division is receiving an encouraging
response from the market as the Company is supplying Flexible Packaging materials to a number of reputable
customers in Pakistan. In a period of economic recovery following the outbreak of Covid-19 pandemic, the
Company continued to focus on its long term objective of sustainable growth and value creation. Strong activity in
the construction sector has resulted in an upward trend in sales of cement packaging materials.
With the onset of the pandemic, the SBP took proactive measures to support the economy, and introduced a range
of concessionary finance schemes. Supportive economic measures like reduction in discount rates, introduction of
financing schemes like wage financing, principal repayment deferrals, and TERF facilities have created impetus for
revival of economic activities in the country. Furthermore, introduction of construction package and Naya Pakistan
Housing Scheme along with State Bank of Pakistan’s regulatory push to banks to provide cheap housing loans is
also resulting in enhanced economic activities and higher cement sales, which will eventually benefit the Company
going forward.
I am pleased to report that the Board of Directors has performed its duties and responsibilities diligently and has
contributed towards guiding the Company in its strategic affairs. It focused on major risk areas and remained
actively involved in the strategic planning process of the Company. The Board recognizes that well defined
corporate governance processes are important to preserve and enhance stakeholders’ value. All Directors including
Independent Directors, fully participated and contributed in the decision making process of the Board. The Board
carried out its annual self-evaluation in line with the requirements of Code of Corporate Governance.
Despite significant impact of Covid- 19 pandemic on national as well as global economy, the growth parameters
for the Company remain strong as ever. The spread of fourth wave of Covid-19 has once again led to lockdowns
and restrictions in the country. The Company will continue to pace itself with the dynamic business environment to
meet the changing demand of its customers thus ensuring sustainable growth and profitability.
I would like to extend my thanks and appreciation to all the staff members, customers, suppliers, bankers,
shareholders and the Board of Directors for their commitment and hard work.
Karachi: Akbarali Pesnani

August 24, 2021 Chairman

Directors’ Report to the Members
for the year ended June 30, 2021
The Board of Directors is pleased to present to you the Financial Highlights
annual report of the Company along with the audited
12,000
financial statements for the year ended June 30, 2021.
10,000
Overview:
(Rs. in Million)
The past year was challenging for businesses all over 8,000
the globe due to adverse effects of the Coronavirus
pandemic. Like many other countries around 6,000
the world, Pakistan’s economy also experienced
limitations to growth. However, timely measures taken 4,000
by the government to curtail the spread of novel
COVID-19 outbreak and to support the economy has 2,000
made the outlook for 2021 less daunting and has put
the country on a path to economic growth. 0
2021 2020
Years
Business Review: Net Sales Gross Profit Net Profit
In a year of economic turbulence, Cherat Packaging
performed exceptionally well to support its customers
and delivered a strong financial performance. Historic Financial Performance:
increase in consumption of cement in the country has Higher sales volumes have resulted in a 19% increase
had a positive impact on the sales of cement bags in the revenues for the Company during the year
produced by the Company during the year under under review. Despite witnessing inflationary pressure
review. There was also an increase in the quantity on several input items including kraft paper and
of Flexible Packaging material sold by the Company polypropylene granules, the Company efficiently
during the year. Being one of the most diversified managed its cost of production. During the year,
packaging player, the Company produced and there was an increase in other expenses mainly due
supplied high quality cement bags made from kraft to provision for WPPF and WWF owing to higher
paper and polypropylene granules. It also supplied profitability. There was a decline in finance cost due to
reduction in discount rates and low-cost wage financing
bags to sugar, chemicals and other allied sectors.
facility availed by the Company. For the year ended
Besides the above, the Company also supplied June 30, 2021 the Company posted an after-tax profit
Flexible Packaging materials to its valuable customers of Rs. 855 million compared to Rs. 70 million last year.
as it targeted a new customer base, including FMCG
sector. As a result, the Company was able to enhance Dividend Payout:
revenues over last year. The Company has always strived to be consistent
in its approach towards distribution of profits. The
decision on dividend payout is made after taking into
The Flexible Packaging division has made a name for
consideration various parameters like Company’s
itself as it continues to make inroads into new market financial performance, its business needs, growth
segments. Several reputable customers have already prospects and expansion plans. For the year under
placed their trust for flexible packaging material with review, the Board of Directors is pleased to recommend
the Company while many more are in the process of a final cash dividend of Rs. 4 per share. This is in
final trials. Going forward, increase in sales volumes addition to an interim cash dividend of Re. 1 per share.
and ongoing improvements in operational efficiencies
Expansion of Polypropylene Plant &
are expected to have a positive impact on the overall
installation of Solar Panels:
financial results of the division. Work on the installation of fourth Polypropylene
line at the existing site in Gadoon Amazai, Khyber
The financial highlights for the current year and that of Pakhtunkhwa Province is progressing as planned
last year are indicated below: and is expected to be commissioned by December
31, 2021. The plant, which has been acquired from
2021 2020 M/s. Windmoller & Holscher – the leading supplier of
(Rupees in million)
such equipment, will have a production capacity of
approximately 65 million bags per annum taking the
• Net sales 11,255.10 9,436.19 total production capacity of the Polypropylene Division
• Gross Profit 1,937.63 1,173.73 to 260 million bags per annum. The civil works are
• Net Profit 855.09 70.24 currently in full swing. Work on the installation of 0.96

MW solar panels at the Flexible Packaging plant will • Appropriate accounting policies have been
be completed in August/September 2021, which will consistently applied in preparation of financial
help reduce rising electricity costs. statements and accounting estimates are based
on reasonable and prudent judgment.
Corporate Social Responsibility:
The Company is committed to play its due role • International Financial Reporting Standards,
in the society in the interest of all stakeholders as applicable in Pakistan, have been followed
particularly towards its people and environment. In in preparation of financial statements and any
line with its corporate social responsibility policies, departure therefrom has been adequately
the Company has always endeavored to improve disclosed and explained.
the overall conditions of the people living around • The system of internal controls is sound in design
the manufacturing plants and the surrounding areas. and has been effectively implemented and
Following the outbreak of Covid-19, the Company monitored.
reached out to those who required help and extended
necessary support. The Company continues to • There are no significant doubts upon the
contribute to various reputable charitable institutes Company’s ability to continue as a going concern.
and social causes as it envisions a better environment, • There has been no material departure from the
a better economy, and a better Pakistan. best practices of Corporate Governance.
Safety, Health and Environment: • Key operating and financial data for the last six (6)
The Company strongly believes in maintaining high years in summarized form is annexed.
standards in health and safety of its people. Several • There is nothing outstanding against your
measures have been taken by the Company to Company on account of taxes, duties, levies and
respond to the changing business needs due to charges except for those which occur in normal
outbreak of Covid-19 through implementation of course of business.
protocols on health and employee safety to ensure all
staff members are protected as best possible from this • The Company maintains Provident and Gratuity
virus. In this regard, the Company has encouraged all Fund accounts for its employees. Stated below
its staff to get vaccinated and almost the entire staff are the values of the investments of the funds as
has received at least one dose of the vaccine. Personal on June 30, 2021.
protection equipment was provided to all levels of staff Provident Fund Rs. 213 million
and measures like social distancing, contact tracing,
random testing etc. were introduced by the Company Gratuity Fund Rs. 108 million
to ensure well being of employees and continuity of
business. Whenever the need arose, the Company Board of Directors:
conducted Covid tests of its staff, at its cost, and also Total number of Directors on the board is 9. Its
allowed them to work from home. composition is as follows:
The production facilities of the Company have been • Male Directors 8
compliant with the prevailing standards of safety • Female Director 1
in the industry. The Company has a dedicated
HSE department to oversee the implementation of a. Independent Directors 3
HSE objectives. The department not only ensures i. Mr. Ali H. Shirazi
compliance with the best HSE practices but also ii. Mr. Sher Afzal Khan Mazari
carries out regular fire and safety training of the staff. iii. Ms. Maleeha Humayun Bangash
Due to the strong commitment of the Company on
strict compliance with HSE standards, no major b. Non-Executive Directors 4
accident was reported during the year. i. Mr. Akbarali Pesnani
ii. Mr. Aslam Faruque
Contribution to National Exchequer:
The Company contributed over Rs. 3 billion to the iii. Mr. Shehryar Faruque
government treasury in form of taxes, excise duty, iv. Mr. Arif Faruque
income tax and sales tax during the year. c. Executive Directors 2
i. Mr. Amer Faruque
Statement on Corporate and Financial Reporting
Framework: ii. Mr. Abid Vazir
• The financial statements prepared by the d. Female Director 1
management of the Company present its state of i. Ms. Maleeha Humayun Bangash
affairs fairly, the result of its operations, cash flows
and changes in equity. • During the year, seven meetings of the Board of
• Proper books of account of the Company have Directors were convened. The attendance record
been maintained. of each director is as follows:

Name of Director Meetings Attended Performance Evaluation of Board of
Directors and Board Committees:
• Mr. Akbarali Pesnani 7 The Company carries out annual evaluation of the
• Mr. Amer Faruque 7 Board of Directors, its Committees and Individual
Directors as part of Code of Corporate Governance.
• Mr. Aslam Faruque 7
Strict level of confidentiality is exercised by the
• Mr. Shehryar Faruque 7 Company Secretary upon receipt of completed
• Mr. Arif Faruque 7 questionnaires. In order to ensure transparency of
• Mr. Abid Naqvi * 2 the process, the Company has engaged M/s. Grant
• Mr. Ali H. Shirazi 7 Thornton Anjum Rahman, Chartered Accountants to
• Mr. Abid Vazir 7 compile results and prepare a report for the Board of
Directors. The contents of the report are evaluated and
• Mr. Sher Afzal Khan Mazari ** 5 areas that require improvement are identified.
• Ms. Maleeha Humayun Bangash ** 5
Related Parties Transactions:
* Mr. Abid Naqvi retired from the Board on October All transactions with related parties have been
26, 2020. executed at agreed terms and have been properly
disclosed in the financial statements of the Company.
** Mr. Sher Afzal Khan Mazari and Ms. Maleeha
Humayun Bangash were elected as Directors on Statement of Compliance with Code of
October 26, 2020. Corporate Governance:
The Company has fully complied with requirements of
• During the year, four meetings of the Audit the Listed Companies (Code of Corporate Governance)
Committee were convened. The attendance Regulations, 2019. Statement of Compliance is
record of each member is as follows: provided under the relevant section of the report.
Name of Director Meetings Attended UniEnergy Limited:

UniEnergy – a joint venture wind power project, has
• Mr. Abid Naqvi * 2 been granted Letter of Intent and formally allotted land
• Mr. Arif Faruque 4 for setting up the project at Jhimpir, district Thatta. The
• Mr. Shehryar Faruque 4 JV partners have made initial equity investment in the
• Mr. Ali H. Shirazi * 2 company to meet the ongoing financial requirements
for the project. In this regard, Cherat Packaging has
* Mr. Abid Naqvi retired from the Board on October made an equity investment of Rs. 4.62 million following
26, 2020. Mr. Ali H. Shirazi was made a member of the approval of the shareholders. The government has,
the Audit Committee in his place. so far, not notified the tariff for the project.
• During the year, three meetings of the Human Risk and Opportunities:
• Risk Management
Resource and Remuneration Committee were
The Board of Directors kept a close watch on the
convened. The attendance record of each member socio-economic environment and consequential
is as follows: internal and external risks that might impact the
Name of Director Meetings Attended safe and smooth operations and performance
of the Company. As caretakers of the interest
• Mr. Sher Afzal Khan Mazari 3 of stakeholders, the Directors remained vigilant
• Mr. Aslam Faruque 3 in identifying and mitigating risks through the
• Mr. Amer Faruque 3 year. The Board of Directors identified potential
risks, assessed their impact on the Company
• The pattern of shareholding is annexed with the and formulated strategies to mitigate risks to
report. the business. These strategies were monitored
throughout the hierarchy of the Company through
• Earnings per share (EPS) during the year was Rs. the Audit Committee.
20.12 compared to Rs. 1.65 last year.
• Risk Assessment
Directors’ Remuneration: Businesses face numerous uncertainties that
Through the Articles of the Company, the Board of might pose threats to its objectives and if not
Directors is authorized to fix remuneration of Non- addressed may cause preventable losses. The
Executive and Independent Directors from time Board of Directors of the Company has carried out
to time. In this regard, the Board of Directors has assessments of both internal and external risks
developed a Remuneration policy for Non-executive that it might face. Rising costs of raw materials
and Independent Directors of the company. The detail is the most imminent risk facing the company.
of Directors’ remuneration is disclosed in Note 37 of the Devaluation of Pakistani rupee has made the risk
Financial Statements for the year ended June 30, 2021. more pronounced. In order to curb the negative
impact of this, the Company has invested in

strategic relationships with its key international long-term objective of being a leading player in the
suppliers and ensured timely negotiations, pre- field of packaging. In a period of rising demand for
orders and timely delivery. Availability of raw cement packaging, the Company remains confident
materials is another risk that is faced by the of enhancing its market share and achieving greater
company. economies of scale.
• Debt Repayment Recently, inflationary trend has been witnessed in
The Company has always paid off all its due international freights and major commodity prices
debts on time. The State Bank of Pakistan had like oil, which is having an impact on the Company’s
allowed companies to defer principal repayment production costs. Global shortage and consequent
of their long-term loans falling due within a year increase in prices of kraft paper and polypropylene
to help them overcome the financial impact of granules remain main areas of challenge for the
Covid-19 without affecting their credit history. Company. However, the Company would like to
Although the Company had availed this principal place on record its appreciation for the support it
deferment facility for Fixed Assets Refinance has received from M/s. Mondi Packaging and Sabic.
Loan – II, IV and V, it repaid the deferred principal Furthermore, increase in fuel prices has resulted in a
payment in respect of Fixed Assets Refinance surge in inland transportation costs. The government
Loan – II during the year 2020/21. Furthermore, has also increased the power tariff, which is also having
the Company has also obtained wage financing an impact on production costs. In order to reduce
scheme offered by State Bank of Pakistan at its electricity costs, the Company is installing 0.96
extremely competitive interest rates. MW solar panels at its Flexible Packaging division.
Furthermore, the Company is also receiving around
• Capital Structure 1 MW electricity under Wheeling Regime Energy
The Company’s current debt to equity percentage Purchase Agreement from Pakhtunkhwa Energy
is about 32:68. The gearing ratio is improving Development Organization (PEDO) at a reduced rate
as the Company is making regular profits. It will since June 2020. In these highly uncertain times, your
further improve after full capacity utilization. Company is closely monitoring the situation and will
Future Prospects: continue to take appropriate measures to safeguard
The Company remains cautiously optimistic for the the interests of stakeholders. There are also certain
year ahead. Development of multiple vaccines and macroeconomic risks, which will become clearer in
their gradual roll-out have created hope of healthy due course of time.
recovery next year. Despite measures taken by the Appointment of Auditors:
government to curtail the spread of Covid-19 and to The present auditors M/s. EY Ford Rhodes, Chartered
support the economy, the year ahead is expected to Accountants, retire and being eligible, offer themselves
remain challenging for the country as the government for reappointment.
currently faces the daunting task of stimulating
economic growth without significantly increasing the Acknowledgement:
inflationary pressures. The management would like to express its gratitude
to all customers, financial institutions, staff members,
Investments in existing businesses and diversification suppliers and shareholders who have been associated
into new areas of packaging have allowed the with the Company for their continued support and
Company to position itself to meet the demand for cooperation. It would like to particularly thank Mondi
packaging materials from not only cement sector Packaging and Windmoller & Holscher for their
but also from other industries such as FMCG sector. cooperation and support to the Company.
This strategy has resulted in an alignment with its
On behalf of
the Board of Directors
Akbarali Pesnani Amer Faruque

Chairman Chief Executive
Karachi: August 24, 2021

Chairman’s Significant Commitments and any Changes Thereto
Mr. Akberali Pesnani is serving Cherat Packaging Limited as the Chairman of the Board. Apart from his associations
as mentioned in Directors’ profile, he does not have any significant commitment.
How the Board Operates and the Matters Delegated to the Management
At the time of appointment of director, the Chairman of the Board communicates a complete set of document of
roles, responsibilities and powers as director of the Company. These roles, responsibilities and powers (which
includes decision making powers) are in accordance with the provisions of applicable and relevant laws.
Management is primarily responsible for implementing the strategies as approved by the Board of Directors. It
is the responsibility of management to conduct the routine business operations of the Company in an effective
and ethical manner in accordance with the strategies and goals as approved by the Board and to identify and
administer the key risks and opportunities which could impact the Company in the ordinary course of execution of
its business. Management is also concerned in keeping the Board members updated regarding any changes in the
operating environment. It is also the responsibility of management, with the supervision of the Board and its Audit
Committee, to prepare financial statements that fairly present the financial position of the Company in accordance
with applicable accounting standards and legal requirements.
Annual Evaluation of Board, Chief Executive Officer (CEO),

Committees and Individual Members
Board evaluation mechanisms facilitate the Board of Directors in evaluating and assessing its performance and
ability to provide strategic leadership and oversight to the senior management of the Company. Accordingly,
appropriate procedures have been developed based on emerging and leading practices to assist in the assessment
of the Board, its committees and the individual directors themselves.
Questionnaires have been developed based on relevant criteria such as effectiveness, accountability, planning,
leadership and strategy formulation by the Board and also its committees. Directors are also asked to fill out a self-
evaluation questionnaire which focuses on their participation and satisfaction with the different proceedings of the
Board and their individual role as a member. In addition, a separate evaluation questionnaire for Chief Executive
Officer has also been developed for his performance. The performance evaluation of the CEO is carried out by all
the Directors.
These questionnaires are circulated annually and are filled out by the Directors anonymously. The collected answers
are then compiled by an independent chartered accountant firm.
The Company has engaged M/s. Grant Thornton Anjum Rahman, Chartered Accountants to ensure transparency
of the process.
Directors’ Orientation and Training

All the directors of the Company are well experienced and have diverse backgrounds. At the time of induction
of any new director, he or she is given proper orientation about the operations of the Company and his or her
fiduciary responsibilities. The Company had also arranged an in house Directors’ training program to apprise the
directors of their authorities and responsibilities. Five directors of the Company namely Mr. Shehryar Faruque,
Mr. Akbarali Pesnani, Mr. Ali H. Shirazi, Mr. Abid Vazir and Ms. Maleeha Humayun Bangash are also certified
under the Board Development Series Program offered by Pakistan Institute of Corporate Governance (PICG).
The Company also conducted an orientation session for Directors.
Governance Practices Exceeding Legal Requirements

Cherat Packaging has always believed in going the extra mile and staying ahead of the game. In line with this strategy,
not only have we complied with all mandatory legal compliances under the Code of Corporate Governance, the
Companies Act 2017 and other applicable rules, regulations and standards, we have also carried out the following
activities in addition to the legal requirements;

a. Integrated Reporting Framework: The management reports various other essential information in this annual
report which is not required by law. We are trying to adapt integrated reporting framework.
b. Implementations of HSE: The Company has developed and implemented aggressive HSE strategies at its
Plants to ensure 100% safety of its people and equipment.
c. Dissemination of information: The Company has always ensured that all material information is communicated
to the PSX, the SECP and the Company’s shareholders as soon as it becomes available. At all times we have
ensured that such information is sent out much before the deadlines set out in the laws.
Related Parties
As required under fourth schedule of the Companies Act, 2017, detailed disclosures regarding related party
transactions have been presented in note 38 to the Financial Statements. Such disclosure is in line with the
requirements of the 4th Schedule to the Companies Act, 2017 and applicable International Financial Reporting
Standards.
Statement of Management’s Responsibility towards the Preparation

and Presentation of Financial Statements
The Company, its Board of Directors and the management have always been keen to follow the standards set down
by governing institutions. In lights of the same strict compliance of all standards set out by ICAP, the Companies
Act, the International Accounting Reporting Standards have been adhered to and otherwise good and responsible
reporting has been our general practice.
Directors are kept informed and updated: To keep update to the Directors with major amendments and changes
in applicable relevant laws.
Detail of Board Meetings Outside Pakistan

During the year 7 meetings of the Board of Directors were held. As recommended by SECP Guidelines and to keep
the costs in control the management conducted all meetings in Pakistan.
Keeping in view of the COVID-19 pandemic, all Board Meetings were conducted through video conference.
Female Director
Ms. Maleeha Humayun Bangash was elected as an Independent female Director on October 26, 2020 on the Board
and the requirement for a female director on the board of a listed company has been complied.
Independent Director
Cherat Packaging Limited has ensured that the composition of its Board of Directors is compliant with all prevailing
legal and governance requirements. All independent Directors have submitted along with their consent to act as
Director, the declaration as required under the Code or Companies Act, 2017, to the Company that they meet the
criteria of Independent Director.
Executive Director(s) serving as Non-Executive and Independent

Director in other companies / body corporate
Our Chief Executive Mr. Amer Faruque is serving as a non-executive director in one listed Company and three
other private companies. Furthermore, Mr. Abid Vazir Executive Director is also on the Board of four other private
companies, details of which are available in the Directors’ Profile section.

IT Governance Policy
Cherat Packaging has a well conceived and implemented IT Governance Policy which seeks to ensure that IT
is aligned with CPL’s organizational goals and strategies and delivers value to the organization. The policy is
designed to promote effective, efficient, timely and informed decision-making concerning CPL’s IT investments
and operations. Specifically the policy aims to establish the IT governance structure and its associated procedures,
roles and responsibilities, as a critical component of the overall IT Management (ITM) Framework, which guides the
management in implementation and monitoring of IT investments for CPL.
Cherat Packaging’s IT Governance Policy is mainly charged with:
• Establishing a shared vision of how Information Technology can add value to the organization;
• Establishing Information Technology goals and the strategies for achieving those goals;
• Establishing principles and guidelines for making Information Technology decisions and managing initiatives;
• Overseeing the management of institutional Information Technology initiatives;
• Establishing and communicating organizational Information Technology priorities;
• Determining Information Technology priorities in resource allocation;
• Establishing, amending and retiring as necessary, organizational Information Technology and other technology
related policies; and
• Determining the distribution of responsibility between the IT Department and end users.

Social & Environmental
Responsibility Policy
Cherat Packaging’s Social and Environmental Responsibility Policy envisages an active commitment and
participation on the part of the Company in various social work initiatives as part of its corporate social
responsibility. Being a conscientious member of the corporate community, the Company contributes to various
social and charitable causes including health and education sectors. In this regard, it has worked with many
reputable organizations and NGOs in Pakistan.
The Company also participated in flood relief activities and helped Internally Displaced People (IDP). Cherat
Packaging has always stood by the people of Pakistan in their hour of need and shall always continue to do so.
Cherat Packaging is fully committed to acting in an environmentally responsible manner. To achieve this result, CPL:
• ensures its product and operations comply with relevant environmental legislation and regulations.
• maintains and continually improves its environmental management systems and complies with requirements
as out layed by specific markets or local regulations.
• operates in a manner that is committed to continuous improvement in environmental sustainability through

recycling, conservation of resources, prevention of pollution, product development and promotion of
environmental responsibility amongst its employees.
• does not produce any hazardous material from its factory.
• informs suppliers, including contractors, of its environmental expectations and requires them to adopt
environmental management practices aligned with these expectations.

Human Resource Policies
At Cherat Packaging Limited we attribute our continued
success to our people. Our employees are our enduring
Succession Planning
Our Succession Planning policy is aimed at building a
advantage and it is our ability to create high performance
pipeline for future leadership and creating backups for
teams in a culture of inclusiveness, professionalism
critical roles.
and excellence that drives our growth. To maintain
our HR competitiveness, we remain focused on The salient features of this policy are detailed as under:
areas of talent management, learning & development;
succession planning, and the development of a robust • Talent Assessment is conducted based on
Management Trainee Program. achievements, Competencies and Group Values.
• Gap Analysis is done to determine time period and
Attracting the Best Talent tools needed to groom/ develop them as possible
To support the Company’s objective of acquiring successors. Put through an outbound Leadership
the best talent, we have recalibrated our Trainee Course to determine areas of development viz a
Engineer Program as “Future Leaders Program” to viz leadership.
make it dynamic in its offerings to students allowing
them to challenge their potential. By providing • On-going coaching/ rotation/ training and
graduating students with an exhilarating route to developmental plans are in place to bring out best
enter our Graduate Trainee Engineering programs, in class talent for succession.
we undertook several campus recruitment drives • To deep reach successors at all levels, upward
at leading Engineering educational institutions with mobility is a pre-requisite in the hiring programme.
an aim to find the best talent that would build the
company-wide pipeline of emerging leaders and also
to be part of our enterprising organizational culture.
Core Values
Values are what support the vision, shape the culture
and reflect what an organization values. They are the
Industrial Relations essence of the organization’s identity – the principles,
We maintain excellent relations with our employees and beliefs or philosophy of values.
labour. There is a formal labour union in place which
represents all classes of workers and independently Our Core Values (Respect, Fairness, Quality,
takes care of all labour related issues. The Company Ownership) are imbedded in our recruitment process,
takes every reasonable step for swift and amicable performance appraisals and recognition initiatives.
resolution of all their issues.

Safety of Records Policy
Cherat Packaging is effectively implementing the policy to ensure the safety of records. All records must be retained
for as long as they are required to meet legal, administrative, operational and other requirements of the Company.
The main purposes of the Company Policy are:
• To ensure that the Company’s records are created, managed, retained and disposed off in an effective and
efficient manner;
• To facilitate the efficient management of the Company’s records through the development of a coordinated
Records Management Program;
• To ensure preservation of the Company’s records of permanent value to support both protection of privacy and
freedom of information services throughout the Company to promote collegiality and knowledge sharing;
• Information will be held only as long as required and disposed off in accordance with the record retention
policy and retention schedules; and
• Records and information are owned by the Company, not by the individual or team.

Conflict of Interest Policy
A Conflict of Interest Policy has been developed by Cherat Packaging to provide a framework for all directors of the
Company (“Directors”) to disclose actual, potential or perceived conflicts of interest.
The policy provides guidance on what constitutes a conflict of interest and how it will be managed and monitored
by the Company.
The policy is applicable to Directors as the Company strongly believes that a Director owes certain fiduciary duties,
including the duties of loyalty, diligence and confidential to the Company which requires that the Directors act in good
faith on behalf of the Company and to exercise his or her powers for stakeholders’ interests and not for their own or
others interest.
Management of Conflict of Interest

The Company stands fully committed to the transparent disclosures, management and monitoring of actual potential
or perceived conflicts of interest. All Directors under the policy are obligated and have a duty to avoid actual, potential
or perceived conflicts of interest.
Any Director with personal interest, relationship or responsibility which conflicts with the interest of the Company or
its shareholders shall excuse himself or herself from any discussions on the matter that would give rise to the conflict
of interest and, if necessary, from the Board meeting, or applicable part thereof.

Whistle Blower Policy
An important aspect of accountability and transparency is a mechanism to enable all individuals to voice concerns
internally in a responsible and effective manner when they discover information which they believe shows serious
malpractice.
Our whistle blower policy is therefore fundamental to the organization’s professional integrity. In addition, it reinforces
the value the organization places on staff to be honest and respected members of their individual professions. It
provides a method of properly addressing bona fide concerns that individuals within the organization might have,
while also offering whistle blowers protection from victimization, harassment or disciplinary proceedings.
It should be emphasized that the policy is intended to assist only those individuals who believe they have discovered
malpractice or impropriety. It is not designed to question financial or business decisions taken by the organization
nor should it be used to reconsider any matters which have been investigated under the harassment, grievance or
disciplinary policies and procedures.
Fundamental elements of our Whistle Blower Policy are highlighted below:
• All staff are protected from victimization, harassment or disciplinary action as a result of any disclosure, where
the disclosure is made in good faith and is not made maliciously or for personal gain.
• All disclosures are required to be made in writing.
• Disclosures made anonymously are not entertained.
• Disclosures made are investigated fully including interviews with all the witnesses and other parties involved.
• All whistle blowers’ disclosures made are treated as confidential and the identity of the whistle blower is
protected at all stages in any internal matter or investigation.
• Disciplinary action (up to and including dismissal) may be taken against the wrongdoer dependent on the
results of the investigation.
• There are no adverse consequences for anyone who reports a whistle blowing concern in good faith. However, any
individual found responsible for making allegations maliciously or in bad faith may be subject to disciplinary action.
During the year no whistle blowing incidence was reported under the mentioned procedure.

Insider Trading Policy
Cherat Packaging has taken definitive steps in ensuring that all employees, officers, members of the Board and
all such relevant persons follow strict guidelines while trading in the shares of the Company. The Insider Trading
Policy codifies the Company’s standards on trading and enabling the trading of securities of the Company or other
publicly-traded companies while in possession of material non-public information.
The general guidelines within the policy state that:

i. No trading in the securities of the Company is permitted for directors and all employees who are “Executives”
as defined in the relevant laws, within the Closed Periods announced by the Company.
ii. No insider may purchase or sell any Company security while in possession of material non-public information
about the Company, its customers, suppliers, consultants or other companies with which the Company has
contractual relationships or may be negotiating transactions.
iii. No insider who knows of any material non-public information about the Company may communicate that
information to any other person, including family and friends.
iv. In addition, no insider may purchase or sell any security of any other company, whether or not issued by the
Company, while in possession of material non-public information about that company that was obtained in the
course of his or her involvement with the Company in the way of conducting official business. No insider who
knows of any such material non-public information may communicate that information to any other person,
including family and friends.
The Company’s Responsibility to Disclose Inside Information

The Company’s responsibility, in case of inside information made known to a third party, shall be to ensure that in
such case the knowledge is given full public disclosure or if such information still needs to be kept non-public then
the Company must ensure that the third party is placed under legal obligation to maintain confidentiality.

Information System Security Policy
Objective f. Information on security matters will be made
The objective of Information Security is to ensure available to all staff.
continuity of business of the Company and to
g. All breaches of information security, actual or
minimize business damage by preventing and limiting
suspected, will be reported to and investigated
the impact of security incidents.
by the Information Security Officer / Internal
Policy Audit.
1. The purpose of the Policy is to protect Company
3. Standards will be produced to support the
information assets from all threats, whether
policy. These standards will include regulations,
internal or external, deliberate or accidental.
guidelines and procedures covering matters such
These assets relate to information stored and
as (not limited to) data security, backup, virus
processed electronically.
control and passwords.
2. It is the Policy of the Company to ensure that:
4. Business requirements for the available of
a. Information will be protected against
information and information system will be met.
unauthorized access.
5. The role and responsibility for managing
b. Confidentiality of information will be assured,
information security will be assigned to a
by protection from unauthorized disclosure or
designated Information Security Officer / Internal
intelligible interruption.
Audit.
c. Integrity of information (its accuracy and
6. The information Security Officer / Internal Audit
completeness) will be maintained by
will be responsible for maintaining the Policy
protecting against unauthorized modification.
and providing advice and guidance on its
d. Regulatory and legislative requirements will implementation.
be met, including record keeping, according
7. All managers are responsible for implementing
to Information Security Management System
the Policy within their business areas, and for
standard.
adherence by their staff.
e. Disaster Recovery plans will be produced,
8. It is responsibility of each employee to adhere to
maintained and tested, to ensure that
the Policy.
information and vital services are available to
the Company when needed.

Non-Executive & Independent defined under Section 208 of the Companies Act 2017.
The policy is applicable on all individuals responsible
Directors’ Remuneration Policy to initiate, authorize, record and report Related Party
Transactions.
Preamble
The Board of Directors (the “Board”) of Cherat The Policy is applicable to all Related Party
Packaging Limited (the “Company”) has adopted this Transactions irrespective of their value and size.
Policy upon the implementation of Section 170 of the
Companies Act 2017 read with Regulation No. 17 of This Policy is intended to work in conjunction with
the Code of Corporate Governance. Amendments, regulatory provisions and other Company policies.
from time to time, to the Policy, if any, shall be
considered by the Board in lights of changes in Definitions
applicable laws and/or such external circumstances
(i) Arm’s length transaction means a transaction
that directly apply to the scope of this Policy.
which is subject to such terms and conditions and
Scope and Applicability is carried out in a way, as if-
The Policy shall apply to all Non-Executive and
a) the parties to the transaction were unrelated
Independent Directors who attend Board meetings,
in any way;
Audit Committee meetings, Human Resource and
Remuneration Committee meetings and any other b) the parties were free from any undue influence,
meetings called by the Board. control or pressure;
Terms of the Policy c) through its relevant decision-makers, each
Through the Articles of the Company, the Board is party was sufficiently knowledgeable about
authorized to fix remuneration of Non-Executive and the circumstances of the transaction,
Independent Directors from time to time. The fee of sufficiently experienced in business and
the Non-Executive and Independent Directors for sufficiently well advised to be able to form a
attending the Board and Committee meetings of the sound business judgment as to what was in
Company shall be as determined by the Board of its interests; and
Directors from time to time.
d) each party was concerned only to achieve the
Policy on Related Party best available commercial result for itself in all
the circumstances.
Transactions
(ii) Office of profit means any office:
Preamble
The Board of Directors (the “Board”) of Cherat a) where such office is held by a director, if the
Packaging Limited (the “Company”) has adopted director holding it receives from the company
this Policy pursuant to the provisions of Section 208 anything by way of remuneration over and
of the Companies Act 2017 read with Regulation above the remuneration to which he is entitled
No. 15 of the Listed Companies (Code of Corporate as director, by way of salary, fee, commission,
Governance) Regulations, 2019 and the Companies perquisites, any rent-free accommodation, or
(Related Party Transactions and Maintenance of otherwise.
Related Records) Regulations, 2018 issued by the
b) where such office is held by an individual other
Securities and Exchange Commission of Pakistan.
than a director or by any firm, private company
Scope of the Policy or other body corporate, if the individual, firm,
This Policy applies to transactions between the private company or body corporate holding it
Company and one or more of its Related Parties. It receives from the company anything by way
provides a framework for governance and reporting of remuneration, salary, fee, commission,
of Related Party Transactions. It is intended to ensure perquisites, any rent-free accommodation, or
due and timely identification, approval, disclosure and otherwise.
reporting of transactions between the Company and
(iii) Related party includes
any of its Related Parties. Amendments, from time
to time, to the Policy, if any, shall be considered and a) a director or his relative;
approved by the Board. The policy covers all Related
Party Transactions of Cherat Packaging Limited as b) a key managerial personnel or his relative;

a key managerial personnel shall mean the i. sale, purchase or supply of any goods or materials;
following;
• the Chief Executive Officer of the ii. selling or otherwise disposing of, or buying,
Company; property of any kind;
• the Company Secretary of the Company;
• the whole time Directors on the Board of iii. leasing of property of any kind;
the Company; and
• the Chief Financial Officer of the iv. availing or rendering of any services;
Company.
v. appointment of any agent for purchase or sale of
c) a firm, in which a director, manager or his goods, materials, services or property; and
relative is a partner;
vi. such related party‘s appointment to any office or
d) a private company in which a director or place of profit in the company, its or associated
manager is a member or director; company, provided:
e) a public company in which a director or a. where majority of the directors are interested
manager is a director or holds along with in any of the above transactions, the matter
his relatives, any shares of its paid up share shall be placed before the general meeting for
capital; approval as special resolution;
f) any body corporate whose chief executive or b. also that nothing in this sub-section shall
manager is accustomed to act in accordance apply to any transactions entered into by the
with the advice, directions or instructions of a company in its ordinary course of business on
director or manager; an arm‘s length basis.
g) any person on whose advice, directions

or instructions a director or manager is
Disclosure and Approval of
accustomed to act: Related Party Transactions
h) any company which is: The board shall approve related party transactions
that require its approval and the following minimum
• a holding, subsidiary or an associated information shall be circulated and disclosed to the
company of such company; or directors along with agenda for board’s meeting called
• a subsidiary of a holding company to for approval of related party transactions:
which it is also a subsidiary
(i) name of related party;
i) such other person as may be specified.
(ii) names of the interested or concerned persons or
j) relative means spouse, siblings and lineal directors;
ascendants and descendants of a person.
(iii) nature of relationship, interest or concern along
Provided that nothing in sub-clauses (f) and (g) shall with complete information of financial or other
apply to the advice, directions or instructions given in interest or concern of directors, managers or key
a professional capacity. managerial personnel in the related party;
*All other terms will be construed as per the (iv) detail, description, terms and conditions of
Companies Act 2017 and all other relevant laws. transactions;
Types of related party (v) amount of transactions;
transactions (vi) time frame or duration of the transactions or

contracts or arrangements;
Any contract or arrangement with respect to the
following, but not limited to these; (vii) pricing policy;

(viii) recommendations of the Audit Committee, where v. Every contract or arrangement entered into with
applicable; and a Related Party shall be referred to in the Board’s
report to the shareholders along with justifications;
(ix) any other relevant and material information that is
necessary for the board to make a well informed vi. Management shall maintain records of the
decision regarding the approval of related party transactions undertaken with Related Parties;
transactions.
vii. If a director or any other employee enters into
any contract or arrangement with a Related Party
Identification of Related Party without obtaining the consent of the Board or
Transactions approval by a special resolution in the general
meeting, and if it is not ratified by the Board or, as
Every Director will be responsible for providing a notice the case may be, by the shareholders at a meeting
containing the following information to the Board of within 90 days from the date of the contract, such
Directors on an annual basis: contract or arrangement shall be voidable at the
discretion of the Board.
i. a firm, in which the director, manager or his relative
is a partner; Maintenance of Record
ii. a private company in which the director or The Company shall maintain one or more registers
manager is a member or director; with regards to transactions undertaken with Related
Parties and contracts or arrangements in which
iii. a public company in which the director or manager directors are interested, in the manner prescribed, and
is a director or holds along with his relatives, any shall enter therein the particulars of:
shares of its paid up share capital;
i. contracts or arrangements, in which any director
iv. any body corporate whose chief executive or is, directly or indirectly, concerned or interested;
manager is accustomed to act in accordance and
with the advice, directions or instructions of the
director or manager; ii. contracts or arrangements with a related party
with respect to transactions to which section 208
v. any person on whose advice, directions or of the Companies Act 2017 applies.
instructions the director or manager is accustomed
to act.
Pricing Methodology
Terms of the policy Any related party transactions carried out on
agreed terms shall use one of the following pricing
The terms of reference for the Policy are as follows: methodologies:
i. The management shall obtain approval of the i. Comparable Uncontrolled Price method;
policy by the Board;
ii. Resale Price method;
ii. The management may enter into any contract
or arrangement with a Related Party only in iii. Cost Plus method; and
accordance with the policy approved by the
Board, subject to such conditions as may be iv. Profit Split method
specified;
iii. The management shall obtain approval of the Scope of Limitation

Board for contracts that are not on arm’s length
basis or not in the ordinary course of business; In the event of any conflict between the provisions of
this Policy and the Companies Act 2017 or any other
iv. The management shall present all Related Party statutory enactments, rules, the provisions of the
transactions to the Audit Committee for their Companies Act 2017 or statutory enactments, rules
recommendation to the Board for approval; shall prevail over this Policy.

Investor’s Grievance Policy or marital status, gender identity or expression,
language, national origin, physical and mental ability,
The Company has an Investors’ Grievance Policy in political affiliation, race, religion, sexual orientation,
place. Any complaint or observation received either socio-economic status, veteran status, and other
directly by the Corporate Department or during General characteristics that make our employees unique.
Meetings are addressed by the Company Secretary.
The Shareholders are given the information as desired Cherat Packaging Limited’s diversity initiatives
by them as per the law well in time. All the written are applicable but not limited to our practices and
complaints are replied in writing. Our share registrar policies on recruitment and selection; compensation
is CDC Share Registrar Services Limited (CDCSRSL) and benefits; professional development and training;
which is leading name in the field. The Company has promotions; transfers; social and recreational
many old and loyal shareholders, which shows the programs; layoffs; terminations; and the ongoing
trust of the shareholders in the management of the development of a work environment built on the
Company. premise of gender and diversity equity that encourages
and enforces:
Business Continuity and Disaster • Respectful communication and cooperation
Recovery Policy between all employees.
The Board of Directors has approved and continuously
• Teamwork and employee participation, permitting
reviews the IT Policy and Business Continuity Plan of
the representation of all groups and employee
the Company. The management has arranged offsite
perspectives.
data storage facilities. All the key records are being
maintained at different locations. Employees are
• Work/life balance through flexible work schedules
aware of the steps required to be taken in case of any
to accommodate employees’ varying needs.
emergency. For further details kindly refer business
continuity and disaster recovery plan.
• Employer and employee contributions to the
communities we serve to promote a greater
Diversity Policy understanding and respect for the diversity.
Cherat Packaging Limited is committed to fostering,
All employees of Cherat Packaging Limited have a
cultivating and preserving a culture of diversity and
responsibility to treat others with dignity and respect
inclusion.
at all times. All employees are expected to exhibit
conduct that reflects inclusion during work, at work
Our human capital is the most valuable asset we have.
functions on or off the work site, and at all other
The collective sum of the individual differences, life
company sponsored and participative events. All
experiences, knowledge, inventiveness, innovation,
employees are also required to attend and complete
self-expression, unique capabilities and talent that our
annual diversity awareness training to enhance their
employees invest in their work represents a significant
knowledge to fulfill this responsibility.
part of not only our culture, but our reputation and
company’s achievement as well.
Any employee found to have exhibited any
inappropriate conduct or behavior against others may
We embrace and encourage our employees’
be subject to disciplinary action.
differences in age, color, disability, ethnicity, family

Business Continuity and
Disaster Recovery Plan
Introduction
The concept of Business Continuity Planning has over the past few years, emerged as a major business management
requirement.
Business Continuity Planning is a process used to develop a practical plan for how a business could recover or
partially restore critical business activities within a predetermined time frame after a crisis or disaster. The resulting
plan is called a Business Continuity Plan.
The Plan
Cherat Packaging Limited has in place a fully functional Business Continuity Plan. This plan provides policy and
guidance to ensure that the Company can respond effectively to natural, technological, and man-made incidents, or
incidents that result in loss of access to an entire, or parts of a facility or loss of service due to equipment or systems
failures. The objective is to restore essential services as swiftly as possible. Summarized plan is listed below.
The Company has created two business continuity teams i.e. BCP coordination team and BCP response team and
defined roles and responsibilities for both the teams.
Furthermore, the plan has identified certain business functions as critical. In respect of those functions, key
processes, key staff, recovery time and recovery steps are specified. The purpose is to ensure that all processes
involved in the critical functions are executed in an effective and timely manner.
Manufacturing Facilities
Manufacturing facility of the Company is in Gadoon Amazai, KPK Province of Pakistan. The Company’s
manufacturing facility is a state-of-the-art construction and the structure is earthquake proof. The building is fire
resilient and is fully equipped with modern firefighting equipment. It also meets HSE requirements at all levels.
Despite of all these arrangements, Insurance coverage is made at the maximum level. In case of any natural
disaster, the Company would be able to recover its financial loss through insurance coverage. Hence, partial
loss would not affect the Company operations. Moreover, other locations of the Group are available as alternate
locations therefore; interruptions, if any, can be managed.
Identification of Potential Issues and the Plan Update
Potential issues are identified and up dated from time to time to have an up to the mark solution for the anticipated
problems. For such identification, independent studies are conducted and drills are carried out. Plans are updated
based on the results of the studies and drills.
Disaster Recovery Plan and IT Infrastructure
The Company has its production server facility at PTCL Karachi with backup server facility at Lahore. In case
of any disaster, the Company would be able to continue its operations smoothly. Availability of servers at such
distant locations enables the Company to perform its IT functions without any glitches in case of any infrastructural
damage at any one location. Moreover, the company has multiple locations within Pakistan. Operations can be
carried through all of the locations situated in Pakistan. During lock downs imposed by Government in view of
Covid-19, Company employees worked from home smoothly via VPN clients.
Marketing and Other Staff
Being a part of Ghulam Faruque Group, the Company senior management is present throughout Pakistan and not
at any one location. In case of any mishap, operations can be taken over and continued from any other location.

Independent Auditor’s Review Report
to the members of Cherat Packaging Limited (the Company)
Review Report on the Statement of Compliance contained in
Listed Companies (Code of Corporate Governance) Regulations, 2019
EY Ford Rhodes UAN: +9221 111 113937 (EYFR)

Chartered Accountants Tel: +9221 3565 0007-11
Progressive Plaza, Beaumont Road Fax: +9221 3568 1965
P.O. Box 15541, Karachi 75530 [email protected]
Pakistan ey.com/pk
We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate
Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of Cherat Packaging Limited
for the year ended 30 June 2021 in accordance with the requirements of regulation 36 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.
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.
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 30 June 2021.
Chartered Accountants
Place: Karachi
Date: 02 September 2021

Statement of Compliance
with Listed Companies (Code of Corporate Governance) Regulations, 2019
For the year ended June 30, 2021
The company has complied with the requirements of has complied with the requirements of Act and the
the Regulations in the following manner:- Regulations with respect to frequency, recording
and circulating minutes of meeting of board;
1. The total number of Directors are 9 (nine) as per
the following: 8. The Board have a formal policy and transparent
procedures for remuneration of directors in
a. Male: 8 accordance with the Act and these Regulations;
b. Female: 1
9. Following Directors and Executives attended
2. The Composition of board is as follows: Directors’ Training program till June 30, 2021:
Category Names Name of Director:

Independent Directors Mr. Ali H. Shirazi Mr. Shehryar Faruque Director
Mr. Sher Afzal Khan Mazari Mr. Akbarali Pesnani Director
Ms. Maleeha Humayun Bangash
Mr. Ali. H. Shirazi Director
Non - Executive Directors Mr. Aslam Faruque
Mr. Shehryar Faruque Mr. Abid Vazir Director &
Mr. Arif Faruque Company
Mr. Akbarali Pesnani Secretary
Executive Directors Mr. Amer Faruque Ms. Maleeha Humayun Bangash Director
Mr. Abid Vazir
Female Director Ms. Maleeha Humayun Bangash Name of Executive & Designation:
Mr. Yasir Masood
3. The directors have confirmed that none of them Chief Operating Officer & Chief Financial Officer
is serving as a director on more than seven listed
companies, including this company; 10. The Board has approved appointment of Chief
Financial Officer, Company Secretary and Head
4. The company has prepared a Code of Conduct of Internal Audit, including their remuneration
and has ensured that appropriate steps have been and terms and conditions of employment and
taken to disseminate it throughout the company complied with relevant requirements of the
along with its supporting policies and procedures; Regulations;

5. The Board has developed a vision/mission 11. Chief Financial Officer and Chief Executive Officer
statement, overall corporate strategy and duly endorsed the financial statements before
significant policies of the company. The Board approval of the Board;
has ensured that complete record of particulars of
significant policies along with the date of approval 12. The board has formed committees comprising of
or updating is maintained by the company; members given below:

6. All the powers of the Board have been duly a) Audit Committee
exercised and decisions on relevant matters have Mr. Ali H. Shirazi Chairman
been taken by Board/shareholders as empowered Mr. Arif Faruque Member
by the relevant provisions of the Act and these Mr. Shehryar Faruque Member
Regulations;
b) HR and Remuneration Committee
7. The meetings of the Board were presided over by Mr. Sher Afzal Khan Mazari Chairman
the Chairman and, in his absence, by a director Mr. Amer Faruque Member
elected by the Board for this purpose. The Board Mr. Aslam Faruque Member

of the Institute of Chartered Accountants of
13. The terms of reference of the aforesaid committees Pakistan and registered with Audit Oversight
have been formed, documented and advised to Board of Pakistan, that they and all their partners
the committee for compliance; are in compliance with International Federation
of Accountants (IFAC) guidelines on code of
14. The frequency of meetings (quarterly/half yearly/ ethics as adopted by the Institute of Chartered
yearly) of the committee were as per following,-: Accountants of Pakistan and that they and the
partners of the firm involved in the audit are not
a) Audit Committee. - Quarterly a close relative (spouse, parent, dependent and
non-dependent children) of the chief executive
officer, chief financial officer, head of internal audit,
b) HR and Remuneration
company secretary or director of the company;
Committee. - Half Yearly
17. The statutory auditors or the persons associated
15. The Board has set up an effective internal with them have not been appointed to provide
audit function supervised by a Head of Internal other services except in accordance with the
Audit who is considered suitably qualified and Act, these Regulations or any other regulatory
experienced for the purpose and is conversant requirement and the auditors have confirmed
with the policies and procedures of the company; that they have observed IFAC guidelines in this
regard; and
16. The statutory auditors of the company have
confirmed that they have been given a satisfactory 18. We confirm that all requirements of regulations 3,
rating under the Quality Control Review program 6, 7, 8, 27, 32, 33 and 36 have been complied with.
On behalf of the Board

of Directors
Akbarali Pesnani Amer Faruque

Chairman Chief Executive
Karachi: August 24, 2021

Role and Responsibilities of the
Chairman and the Chief Executive Officer
Being a corporate governance compliant company, Cherat Packaging designates separate persons for the
positions of the Chairman of the Board of Directors and the office of the Chief Executive Officer with clear division
of roles and responsibilities.
Pursuant to the provisions of Section 192(2) of the Companies Act 2017, the Board of Directors of Cherat Packaging
Limited has outlined the roles and responsibilities of the Chairman as well as the Chief Executive Officer (“CEO”) of
the Company, which are detailed herein below;
Chairman
The principal role of the Chairman of the Board is to manage and to provide leadership to the Board of Directors
of the Company. The Chairman is accountable to the Board. The Chairman acts as the communicator for Board
decisions where appropriate.
More specifically, the duties and responsibilities of the Chairman are as follows:
• acting as a liaison between management and the Board, through the CEO;
• keeping abreast generally of the activities of the Company and its management;
• ensuring that the Directors are properly informed and that sufficient information is provided to enable the
Directors to form appropriate judgments and make informed decisions;
• preparing the review report (to be included with the annual financial statements) on the overall performance
of the Board of Directors and effectiveness of the role played by the Board of Directors in achieving the
Company’s objectives;
• developing and setting the agendas for meetings of the Board;
• acting as Chair at meetings of the Board;
• ensuring that the minutes of Board meetings are appropriately recorded and reviewing and signing minutes of
Board meetings;
• presiding over the Board meetings and ensuring that all relevant information has been made available to the
Board;
• confirming the quorum of the meeting;
• ensuring that the agenda, notice of meeting alongwith all relevant material were circulated within stipulated
time;
• ensuring that the minutes of the Board meetings are kept in accordance with applicable laws;
• ensuring that the appropriate recording and circulation of the minutes of the Board meeting to the Directors
and officers entitled to attend the Board meetings;
• safeguarding shareholders’ interest in the Company;
• issuing the letter to the directors at the commencement of each three year term of the Directors setting out their
role, obligations, powers and responsibilities;
• ensuring that the Board is playing an effective role in fulfilling its responsibilities;
• determining the date, time and location of the annual or extraordinary general meetings of shareholders and to
develop the agenda for the meeting;
• presiding as chairman at every General Meeting of the Company;
• recommending to the Board, after consultation with the Directors and management, the appointment of
members of the Committees of the Board;
• assessing and making recommendations to the Board annually regarding the effectiveness of the Board.

The CEO is, subject to control and directions of the Board, entrusted with the powers of management of affairs of
the Company. In such capacity the CEO’s role and responsibilities include:
• planning, formulating and implementing strategic policies;

• ensuring the achievement of productivity and profitability targets and efficient Company operations;
• ensuring that necessary coordination exists between various departments of the Company to achieve smooth
and effective operations;
• maintaining an ongoing dialogue with the Directors in regard to changes in and implementation of Company’s
policies and the performance and development of the Company’s business;
• ensuring that the Company’s interests and assets are properly protected and maintained and all the required
Government obligations are complied with in a timely manner;
• maintaining a close liaison with the Government, customers, suppliers and sales offices;
• chalking out human resource policies for achieving high professional standards, overall progress / betterment
of the Company as a whole;
• ensuring that proper succession planning for all levels of hierarchy exist in the Company and the same is
constantly updated;
• ensuring proper functioning of the Management Committees of the Company of which he is the chairman;
• preparing and presenting personally to the Board of Directors following reports/details:
o annual business plan, cash flow projections and long term plans.
o budgets including capital, manpower and overhead budgets along with variance analysis.
o quarterly operating results of the Company in terms of its operating divisions and segments.
o promulgation or amendment of the law, rules or regulations, accounting standards and such other matters
as may affect the Company.
o reviewing performance against budgets / targets, revenue and capital expenditure, profits, other
administration, commercial, personnel and other matters of importance to the Company.
• ensuring that open and progressive atmosphere is created among employees giving them a sense of
participation and providing them with an opportunity to give their best.

Salient Features of Terms of Reference of the
Audit Committee and the Human Resource
& Remuneration Committee
The Board is assisted by two Committees, namely (i) major judgmental areas;
the Audit Committee and the Human Resource &
(ii) significant adjustments resulting from the audit;
Remuneration Committee, to support its decision-
making in their respective domains: (iii) going concern assumption;
AUDIT COMMITTEE (iv) any changes in accounting policies and

Mr. Ali H. Shirazi Chairman practices;
Mr. Arif Faruque Member (v) compliance with applicable accounting
Mr. Shehryar Faruque Member standards;
The Audit Committee comprises of three Non- (vi) compliance with these regulations and other
Executive Directors one of whom is independent and statutory and regulatory requirements; and
he is the Chairman of the committee. The Head of (vii) all related party transactions.
Internal Audit and the external auditor attend Audit
Committee meetings. c) review preliminary announcements of results prior
to external communication and publication;
Meetings of the Audit Committee are held at least
once every quarter. The Committee reviews the annual d) facilitate the external audit and discussion with
financial statements in presence of external auditors. external auditors of major observations arising
The recommendations of the Audit Committee are from interim and final audits and any matter that
then submitted for approval of financial results of the the auditors may wish to highlight (in the absence
Company by the Board. During the year 2020-21, the of management, where necessary);
Audit Committee held Four [4] meetings. The minutes
e) review management letter issued by external
of the meetings of the Audit Committee are provided
auditors and management’s response thereto;
to all the members, Directors and the Chief Financial
Officer. The Head of Internal Audit attends the Audit f) ensure coordination between the internal and
Committee meetings regularly and meets the Audit external auditors of the company;
Committee without the presence of the Management,
at least once a year, to point out various risks, their g) review the scope and extent of internal audit,
intensity and suggestions for mitigating risks and audit plan, reporting framework and procedures
improvement areas. The business risks identified and ensure that the internal audit function has
are then referred to the respective departments and adequate resources and is appropriately placed
mitigating actions are then implemented. within the company;
Terms of reference of Audit Committee h) consider major findings of internal investigations

The Code of Corporate Governance mandates that of activities characterized by fraud, corruption
the Board of Directors of the Company shall determine and abuse of power and management’s response
the Terms of Reference of the Audit Committee. thereto;
In light of the mandate the Board of Directors of Cherat i) ascertain that the internal control systems
Packaging Limited has drafted and approved the including financial and operational controls,
following terms of Reference for its Audit Committee. accounting systems for timely and appropriate
This is a non-exhaustive list and only outlines the most recording of purchases and sales, receipts and
important guidelines for the Committee. Amendments to payments, assets and liabilities and the reporting
these shall be made from time to time in line with change structure are adequate and effective;
in laws, and internal and external relevant factors. j) review the company’s statement on internal
The Committee shall; control systems prior to endorsement by the
a) determine appropriate measures to safeguard the board of directors and internal audit reports;
company’s assets; k) institute special projects, value for money studies
b) review annual and interim financial statements of or other investigations on any matter specified
the company, prior to their approval by the Board by the board of directors, in consultation with the
of Directors, focusing on: chief executive officer and consider remittance of

any matter to the external auditors or to any other The Committee shall;
external body; i. recommend to the Board for consideration and
approval a policy framework for determining
l) determine of compliance with relevant statutory
remuneration of directors (both executive and
requirements;
non-executive directors and members of senior
m) monitor compliance with these regulations and management). The definition of senior management
identify significant violations thereof; will be determined by the Board which shall
normally include the first layer of management
n) review arrangement for staff and management to below the chief executive officer level;
report to audit committee in confidence, concerns,
if any, about actual or potential improprieties ii. undertake annually a formal process of evaluation
in financial and other matters and recommend of performance of the Board as a whole and its
instituting remedial and mitigating measures; committees either directly or by engaging external
independent consultants and if so appointed,
o) recommend to the board of directors the a statement to that effect shall be made in the
appointment of external auditors, their removal, directors’ report disclosing name, qualifications
audit fees, the provision of any service permissible and major terms of appointment;
to be rendered to the company by the external
auditors in addition to audit of its financial iii.
recommend human resource management
statements. The board of directors shall give due policies to the Board;
consideration to the recommendations of the
iv. recommend to the Board the selection, evaluation,
audit committee and where it acts otherwise it
development, compensation (including retirement
shall record the reasons thereof.
benefits) of chief operating officer, chief financial
p) consider any other issue or matter as may be officer, company secretary and head of internal
assigned by the board of directors. audit;
HUMAN RESOURCE & REMUNERATION v. carry out consideration and approval on

COMMITTEE recommendations of Chief Executive Officer on
Mr. Sher Afzal Khan Mazari Chairman such matters for key management positions who
Mr. Amer Faruque Member report directly to Chief Executive Officer or Chief
Mr. Aslam Faruque Member Operating Officer;
The Human Resource & Remuneration Committee vi. where human resource and remuneration
(HR & RC) comprises of three members. The Chairman consultants are appointed, their credentials shall
is an Independent Director whereas the other two be known by the committee and a statement shall
members are the Chief Executive Officer and a Non- be made by them as to whether they have any
Executive Director. Meetings are conducted at least other connection with the Company; and
annually or at such other frequency as the Chairman
vii. carry out all actions in addition to those stated
may determine. The minutes of the meetings of the
above, in order to ensure that the Company’s risks
HR & RC meeting are provided to all members and
are mitigated and growth in the right direction is
Directors. The Committee held three [3] meetings
taking place.
during the year.
Records: All documentation related to the holding,
Terms of Reference of the Human Resource and
proceedings and recommendations of the HR & R
Remuneration Committee
Committee shall be ensured by and stored with the
The Code of Corporate Governance mandates that
Secretary (HR & RC).
the Board of Directors of the Company shall determine
the Terms of Reference of the Human Resource and Strategy and Performance
Remuneration Committee. The Board reviews the implementation of
organization’s strategic & financial plans, Board
In light of the mandate the Board of Directors of
meeting agendas and supporting documents provide
Cherat Packaging Limited has drafted and approved
sufficient information and time to explore & resolve
the following terms of Reference for its HR&RC. This
key issues. Board members demonstrate preparation
is a non-exhaustive list and only outlines the most
for meetings through active participation in decision
important guidelines for the Committee. Amendments
making.
to these shall be made from time to time in line with
change in laws, and internal and external relevant
factors.

Report of the Audit Committee
Audit Committee involved in the Company’s operations. Further, on
the basis of this plan, audits are conducted and
Mr. Ali H. Shirazi Chairman reports are submitted. The Committee on the
Mr. Arif Faruque Member basis of the said reports reviews the adequacy of
controls and compliance shortcomings in areas
Mr. Shehryar Faruque Member
audited and discuss corrective actions in the light
The Audit Committee of the Company comprises of of management responses. Regular follow ups
two Non-Executive Directors and one Independent of these reports are also taken. This ensures the
Non-Executive Director who is the Chairman of the continual evaluation of controls and improved
Committee. The Head of Internal Audit attends Audit compliance. Minutes of Audit Committee meetings
Committee meetings. The Chief Executive Officer are timely circulated to the Board of Directors.
and Chief Financial Officer attend Audit Committee
3. For continuous improvement of internal controls,
meetings by invitation. The Audit Committee also
the Committee also discussed the internal
separately meets the external auditors at least once in
controls and the management letter with the
a year without the presence of the Management.
external auditors.
Meetings of the Audit Committee are held at least once
EXTERNAL AUDIT
every quarter. Four meetings of the Audit Committee
1. The external auditors M/s. EY Ford Rhodes,
were held during the year 2020-2021. Based on
Chartered Accountants were allowed direct
reviews and discussions in these meetings, the Audit
access to the Audit Committee and necessary
Committee reports that:
coordination with internal auditors was ensured.
1. The Company has issued a Statement of Major findings arising from audits and any matters
Compliance with the Code of Corporate that the external auditors wished to highlight were
Governance which has also been reviewed and freely discussed with them.
certified by the auditors of the Company.
2. The Audit Committee has reviewed and discussed
2. The Audit Committee reviewed and approved with the external auditors and management, all
the quarterly, half yearly and annual financial the Key Audit Matters and other issues identified
statements of the Company and recommended during the external audit along with the methods
them for approval of the Board of Directors. used to address the same.
Further, the financial statements comply with
3. Being eligible for reappointment as Auditors
the requirements of the Fourth Schedule to the
of the Company, the Audit Committee has
Companies Act, 2017, and applicable International
recommended the appointment of M/s. EY Ford
Accounting Standards and International Financial
Rhodes, Chartered Accountants as External
Reporting Standards notified by SECP.
Auditors of the Company for the year ending June
3. The Audit Committee has reviewed and approved 30, 2022 as it is one of the Big Four audit firm
all related party transactions. and has thorough knowledge of the Company’s
business and industry due to long association
4. The Audit Committee takes into account any with the Company.
feedback from the Board of Directors and
incorporates for improvement. 4. The Company also obtains taxation related
services from M/s. EY Ford Rhodes, Chartered
INTERNAL AUDIT AND RISK MANAGEMENT Accountants as it is one of the reputed firm
1. For appraisal of internal controls and monitoring in provision of said services and has sound
compliance, the Company has in place an professional policies and procedure to ensure
appropriately staffed, Internal Audit department. compliance of independence.
The Audit Committee reviewed the resources and
performance of the Internal Audit department to
ensure that they were adequate for the planned
scope of the Internal Audit function. Head of
Internal Audit Department has direct access to
the Audit Committee.
2. An Internal Audit Risk Assessment document is Ali H. Shirazi
submitted to the Audit Committee and based on August 23, 2021 Chairman
that an Audit Plan is prepared to mitigate the risks

Performance and Position
106 Analysis of the Financial and Non- 126 Comments on Horizontal Analysis
Financial Performance 127 Comments on Vertical Analysis
108 Key Performance Indicators 128 Graphical Presentation of Statement
108 Methods and Assumptions in of Financial Position & Statement of
Compiling Indicators Profit or Loss
109 Non-Financial Indicators 130 Statement of Summary of Cash
110 Change in Indicators and Flows - Last Six Years
Performance Measures 131 Comments on Statement of Cash
111 Quarterly Performance Analysis Flows
112 Quarterly Results Analysis 132 Statement of Cash Flows - Direct

Method
113 Ratios
133 Key Financial Information - Last Six
114 Comments on Ratios Years
115 Graphical Presentation of Analysis of 134 Segmental View of Business
Financial Statements Performance
118 DuPont Chart 135 Share Price Sensitivity Analysis
119 DuPont Analysis 136 Calendar of Notable Events
120 Free Cash Flows 139 Sap SuccessFactors Implementation
121 Economic Value Added at GFG
122 Horizontal Analysis - Last Six Years 140 Business Rationale of Major Capital
Expenditure
124 Vertical Analysis - Last Six Years

Analysis of the Financial and
Non-Financial Performance
The Company sets both financial and non-financial

targets. These targets are against financial and
Financial Indicators
non-financial indicators. Financial indicators reflect Actual Results
revenue, costs, profitability and liquidity etc., while
non-financial indicators reflect brand image, human Year 2020-21 has been a productive one for the
resource development and growth/expansion etc. Company. Despite of various external factors which
made business environment extremely difficult. In the
The Company produces annual budget based on midst of challenging circumstances, the Company
the inputs from all of its departments like marketing, maintained its market leadership.
production, procurement, IT, HSE etc. These inputs are
assimilated into a master budget which is presented Having said that, during these tough times, the
to Board of Directors. The BoD, after deliberations, Company’s performance surpassed expectation
approves the master budget. The Company managed owing to exceptional growth of Cement demand. The
to surpass its revenue targets this year. High growth company posted a net profit of Rs. 855 Million, which
in cement industry coupled with relatively stable is higher by Rs. 785 Million as compared to last year.
PKR parity and discount rates helped in improved This increase is mainly because of increased turnover,
performance. The Company continuously monitors improved profit margins and reduction in finance cost.
cash flows, gearing and liquidity to evaluate the
deviation and take corrective measures to keep all
indicators within the range. The Company also met its
non-financial targets in the areas of marketing, human
resources and growth to a greater extent.

Summarized operating performance of the Company for the current year as compared to last year is as follows:
2021 2020
(Rupees in million)
Net sales 11,255.10 9,436.19
Cost of sales 9,317.48 8,262.46
Gross Profit 1,937.63 1,173.73
Expenses & taxes 1,082.53 1,103.49
Net Profit 855.09 70.24
The Company sold 334.23 million bags, further analysis of sales is listed below:
2021 2020
(Figures in Million)
Local sales (Bags) 318.757 261.272
Export sales (Bags) 15.472 9.856
Total sales (Bags) 334.229 271.128
Flexible Packaging (Kgs) 4.659 4.344
Bags Sales increased because of increase in construction activities in the country. Revenue from Flexible Packaging
Division also increased. This was due to increase in quantity sold and improvements in prices. However, this
increase was not fully translated on account of unstable raw material prices.
In Rupee terms, sales analysis is reproduced below: 2021 2020

Local sales (Rupees in million)
Kraft Paper & Polypropylene Bags 8,848.69 7,529.65
Flexible Packaging 2,039.68 1,662.23
Export sales - Cement Packaging 366.73 244.31

Total sales 11,255.10 9,436.19
Budgeted Results
The Company has robust system of budgeting process. The budget is made challenging yet achievable. The
Company has achieved following results against budget:
2021 2021
(Actual) (Budget)
(Rupees in million)
Net sales 11,255.10 10,187.53
Cost of sales 9,317.48 8,855.70
Gross Profit 1,937.63 1,331.83
Expenses & taxes 1,082.53 863.00
Net Profit 855.09 468.83
Analyzing the situation that prevailed last year, the Company had set targets of revenue and margins. Unparalleled
growth in cement industry helped the Company to surpass its anticipated targets. Moreover, export market also
responded well and generated good results. Strategic decision making and procurement strategy contributed in
better results. Therefore, the Company achieved almost double the expected profit for the year.
Dividend
The Company has a legacy of paying dividends. This year, the Company announced/ paid 50% cash dividend for the
year 2021 which includes interim dividend of 10%.
Payment on Account of Duties, Taxes, Levies etc.

The Company fulfills its obligations well in time whether it involves vendors or Government. The Company has no
outstanding or overdue duties, taxes or levies during the year.

Key Performance Indicators
Financial Indicators
Sales Gross Market
11,255
profit price per share
(Rs. Million) 1,938

(Rs. Million)
198.91 (Rs.)
Increased by
19.28 (%)
Increased by
65.08
Increased by
69.79
(%) (%)
Profit Profit Earnings

before tax after tax per share
1,199
(Rs. Million)
855
(Rs. Million)
20.12(Rs.)
Increased by Increased by Increased by
11.15
(Times)
11.17
(Times)
11.17
(Times)
Breakup Financial Working Cash

value per share leverage capital dividend
142.09 (Rs.)
0.78
(Times)
2,704.06
(Rs. Million)
212.54
(Rs. Million)
Decreased by
31.06
Increased by Increased by
26.50 30.70
Increased by
(%) (%) (%)

4.00(Times)
Methods and Assumptions in Compiling Indicators

The Company monitors its indicators which effectively reflect the Company’s performance.
The Company analyze its market positioning, competitors and general market conditions while compiling its
indicators. It also analyses sales, gross profit, profit after tax and EPS on regular basis to gauge its performance.
These are basic indicators of Company’s financial performance and profitability.
Market price is the measure of perception of the Company in the market. Market price of the Company’s shares
mainly increased due to the fact that the Company performed extraordinary in these tough times.
The Company manages its dividend policy with the purpose of increasing shareholders’ wealth. Dividend is the
amount allocated out of profit for the payment to shareholders. The Company takes its decisions of cash or stock
dividend based on market conditions, share price and governing laws and regulations.
Comparing cash flow from operating activities with profit before tax can give insights into how a company finances
short-term capital. The Company regularly analyses its cash flows and tries to keep it on positive side. This improved
mainly due to increase in turnover, profit margins and effective working capital management.

Non-Financial Indicators
Capital Forms Objective KPI Monitored Future Relevance
Product Development & Innovation Produce high quality and low The Company believes in
cost bags for various industries. innovation and introducing new
Conversion of Roto Printing jobs to varieties for cement, FMCG and
Flexo Printing to offer economical other industries in Pakistan.
solutions to the customers.
Business Diversification Analyze various prospects of Business diversification is our

investments in packaging industry and long-term objective. Leadership is
invest in the most promising venture. our continuous endeavour and has
Manufactured Capital to be maintained today and invest
Maintain industry leadership and Market share, price management and in operational efficiency, staff
expand sales identification of new markets. training and economies of scale to
maintain it in the years to come.
Enhance operational efficiency and Production efficiency ratios
efficient inventory management and Activity ratios.
Economize on cost eliminating Optimization of available resources

redundancies and better allocation
of fixed costs.
Sustainability Keep a close eye on Current Ratio,

Gearing and Interest Cover.
Health & Safety of workers Provision of a congenial and clean We believe in continuously
environment along with safety for providing environment which
smooth work. harmonize the workers’ efforts in
Human Capital higher productivity.
Training and Education Continuous training of employees
and workers. Monitor training need
analysis with special focus on health
and safety at work.
Shareholder Value EPS, ROE, feet Turnover and DPS We value our relationship with all
our stakeholders therefore, we
Stock Value Analyse market price as a measure of will continue to strive to improve
relationship capital shareholders’ value. Improve our
Relationship Capital customer services and maintain
Suppliers and Customers Assess the payment stream timely payments.
Relationships and ensure timely payment.
Provide customer EU maximum
support beyond customer supplier
relationship.
Highest product strength at lowest Regularly monitor avenues We shall continue to innovate
Intellectual capital cost in industry to increase product strength. products and provide best possible
Produce low gram bags for better packaging solutions.
Maintain industry leadership yield to facilitate our customers.
All the above KPIs will remain relevant in the near future.

Change in Indicators and
Performance Measures
Key Performance Indicators (KPIs) provide understanding of a company’s performance in key areas. These
indicators are a gauge to analyze current standing of the company and likely path the company would follow.
Cherat Packaging Limited has identified following KPIs that are critical to its business. While identifying KPIs, the
Company analyzed various indicators, their interpretations and accordingly their extent to which they may correctly
and clearly communicate the Company’s performance.
Change in important indicators is as follows
Change in Financial Indicators

Financial indicators of the Company remained same as last year however, following financial indicators are of most
importance:
Financial Leverage
Long term loan of the Company is currently at Rs. 2.79 billion. These loans mainly consist of Rs. 1.90 billion
related to Flexible Packaging Project (including loan obtained for solar power project) while other Rs. 0.89 billion is
related to previous expansion in PP, installation of Universal Papersack Line and loan obtained to finance payment
of wages and salaries under SBP’s scheme. The Company analyzes its financial health and ensures that the
Company remains at optimum financial position.
Working Capital
Working capital is an essential part of the Company’s operations. The Company has been managing its working
capital efficiently. As of the end of FY 2021, working capital of the Company increased as compared to last year.
Working capital mainly increased because of increase in sales and operations.
Change in Non-Financial Indicators

Non-financial indicators of the Company remained same as last year. However, following indicators are of utmost
importance.
Human Capital
The Company keeps on working to elevate the human capital potential so that the Company can reduce its cost.
The Company believes that the enhancement in human capital skills elevates the profitability of the Company.
Relationship Capital
Expansion into new business of Flexible Packaging made this indicator more vital than before. The Company will
ensure to run its new business venture efficiently and effectively to increase shareholders’ wealth and stakeholders’
value. Moreover, the Company will ensure tn keep better relations with suppliers and as well as with customers
through timely payments to vendors and provision of support to customers beyond expectations.
Intellectual Capital
The Company has always been the front runner when it comes to innovation. The Company intends to carry on this
legacy in Flexible Packaging Division also therefore the Company has included this indicator as it is an important
key area.

Quarterly Performance Analysis
Sep-20 Dec-20 Mar-21 Jun-21 Total
(Rupees in ‘000)
Sales - Net 2,522,947 2,770,425 2,927,018 3,034,712 11,255,102

Cost of Good Sold (2,138,611) (2,291,641) (2,428,443) (2,458,782) (9,317,477)
GROSS PROFIT 384,336 478,784 498,575 575,930 1,937,625

Distribution Expenses (44,155) (40,086) (61,467) (48,930) (194,638)
Administrative Expenses (22,260) (29,578) (26,697) (27,383) (105,918)
Other charges (14,616) (22,068) (23,204) (29,556) (89,444)
(81,031) (91,732) (111,368) (105,869) (390,000)

Other Income 5,433 5,046 12,647 12,543 35,669

OPERATING PROFIT 308,738 392,098 399,854 482,604 1,583,294

Finance Cost (116,772) (88,847) (94,625) (84,528) (384,772)

Profit before taxation 191,966 303,251 305,229 398,076 1,198,522

Taxation (54,343) (87,194) (90,705) (111,188) (343,430)

Profit after taxation 137,623 216,057 214,524 286,888 855,092
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Quarterly Results Analysis
Quarter 1
Sales: Due to Government’s special consideration to construction sector cement demand increased.
This resulted in rise in dispatches and sales revenue.
Cost of sales: Cost of sales increased in alignment with increase in sales revenue / dispatches.
Operating profit: Improvement of operating profit is due to increase in dispatches as stated above.
Net Profit: Apart from the reason stated above, reduction in interest rate also contributed in increase in
Profit After Tax.
Quarter 2
Sales: In quarter ended December 2020, increase in dispatches of Bag Manufacturing Division and
Flexible Packaging Division resulted in increase in sales revenue.
Cost of sales: Cost of sales increased due to increase in dispatches.
Operating profit: Operating profit of Company increased due to increase in gross profit in wake of increased
dispatches.
Net Profit: A swing in Profit after Tax is due to reduced finance cost in addition to facts as mentioned above.
Quarter 3
Sales: Increase in sales revenue is mainly due to increase in dispatches of paper bags. BMD prices
largely remained same however FPD prices improved in the quarter.
Cost of sales: Raw material prices increased globally causing increase in COGS along with increase due to
dispatches.
Operating profit: Operating profit witnessed little growth due to escalation of PP granules cost causing reduced
GP in BMD along with slump in supply of PP bags during the quarter.
Net Profit: Due to the reasons mentioned above, Profit after Tax increased slightly during this quarter.
Quarter 4
Sales: Due to increase in raw material prices globally, sale prices were increased in this quarter. This
resulted in increase in sales revenue. However, this was not completely translated into sales
revenue due to reduction in quantity sold.
Cost of sales: Cost of sales increased due to increase in raw material prices globally. However, due to
reduction in quantity sold, the total COGS almost remain same as last quarter.
Operating profit: A club of improvement in sales revenue and control over production efficiency resulted in a
shape of increased operating profit.
Net Profit: Increase in operating profit resulted in increased Profit after Tax. Further, reduced finance cost
owing to better operations and lower running finance utilization also contributed in highest
Profit after Tax for the quarter during the year.

Ratios
Ratio Description
Profitability Ratios: Unit 2021 2020 2019 2018 2017 2016

Gross Profit ratio % 17.22 12.44 17.31 15.49 19.50 22.97
Net Profit to Sales % 7.60 0.74 6.95 10.03 10.89 13.33
EBITDA Margin to Sales % 17.04 12.97 18.10 15.31 18.36 21.71
Operating leverage ratio Times 4.12 (1.47) 2.17 (1.38) 3.85 2.05
Return on Equity % 15.81 1.52 12.53 16.67 19.15 33.30
Return on Capital employed % 9.69 0.93 7.66 9.69 15.17 25.53
Effective tax rate % 28.65 28.82 14.73 7.03 27.84 29.80
Shareholder’s Funds % 47.98 42.78 39.35 48.20 72.16 70.79
Return on Shareholders’ Funds % 14.16 1.47 12.60 15.75 17.48 27.69
Liquidity Ratios:
Current ratio Times 1.69 1.59 1.56 2.21 3.69 2.71
Quick / Acid test ratio Times 0.89 0.84 0.75 1.12 1.76 1.26
Cash to Current Liabilities Times 0.01 - - - 0.02 0.02
Cash flow from Operations to Sales Times 0.13 0.17 (0.10) - 0.06 0.19
Investment / Market Ratios:

Earnings per share (EPS) Rs. 20.12 1.65 13.24 18.87 23.71 31.55
Price to book ratio Times 1.40 1.04 0.70 1.07 1.75 3.05
Market Value Per Share
at the end of the year Rs. 198.91 117.15 80.64 143.69 237.78 341.77
Low during the year Rs. 119.44 49.16 80.00 132.40 237.78 191.97
High during the year Rs. 249.28 138.49 192.45 279.01 415.00 347.36
Price Earnings ratio Times 9.89 70.90 6.09 7.61 10.03 10.83
Break up value per share* Rs. 142.09 112.32 115.58 134.40 135.68 112.02
Dividend Yield ratio Times 0.03 0.01 0.06 0.05 0.04 0.03
Dividend Payout ratio Times 0.25 0.61 0.38 0.37 0.40 0.32
Dividend Cover ratio Times 4.02 1.65 2.91 3.02 2.50 3.10
Cash Dividend Rs.(000’) 212,535 42,507 193,220 235,212 281,252 296,055
Cash Dividend per share Rs. 5.00 1.00 5.00 7.00 9.50 10.00
Stock Dividend % - - 10.00 15.00 - -
Capital Structure Ratios:

Financial leverage ratio Times 0.78 1.14 1.31 0.83 0.19 0.13
Weighted average cost of debt % 7.91 14.20 9.18 4.18 4.00 9.39
Net borrowing / EBITDA Times 2.46 4.42 3.97 3.45 0.64 0.27
Average operating working capital
as %age of sales % 45.50 53.98 53.07 39.23 31.67 26.89
Debt to Equity ratio Times 32 : 68 37 : 63 39 : 61 38 : 62 13 : 87 8 : 92
Interest Cover ratio Times 4.11 1.13 2.30 6.96 16.17 19.07
Activity / Turnover Ratios:

Inventory turnover ratio Times 3.23 2.87 2.61 3.42 3.66 4.74
No. of Days in Inventory Days 112 125 138 105 98 76
Debtor turnover ratio Times 5.33 5.34 6.17 7.26 7.97 8.96
No. of Days in Receivables Days 68 67 58 50 45 40
Total Assets turnover ratio Times 0.89 0.85 0.71 0.76 1.16 1.47
Fixed Assets turnover ratio Times 2.24 1.85 1.57 1.48 3.53 4.17
Creditor turnover ratio Times 16.29 18.25 19.16 10.34 18.68 25.64
No. of Days in Creditors Days 22 20 19 35 19 14
Operating Cycle Days 157 172 177 120 124 102
Employee Productivity Ratios:

Production per employees Rs. 36,705 32,632 29,963 34,942 49,657 67,231
Revenue per employee Rs. 44,841 37,150 35,342 40,992 61,961 87,198
Staff turnover ratio % 5.53 4.55 4.98 1.45 5.43 6.49
Non Financial Ratios:

% of Plant Availability (BMD) % 54.99 45.91 46.42 58.24 76.51 83.24
% of Plant Availability (FPD) % 45.62 47.94 15.15 4.16 - -
Others:
Spare inventory as a % Assets costs % 2.71 2.49 2.29 1.06 1.52 1.65
Maintenance cost as
% of Operating expenses % 2.35 2.54 2.15 1.46 1.48 1.30
*This includes all investments made at fair value. The Company have all its investments in related parties only.

Comments on Ratios
Profitability
The Company has remarkable profitability ratios over last few years. This is due to better decision making in response to
prevalent market conditions. In the year 2016, the Company has witnessed incredible achievement in sales, production and
profitability; and recorded highest ever profit of Rs. 918 million. In the years 2017 and 2018, regardless of increase in sales
quantity, the profitability ratios were impacted because of increased market competition. Moreover, increase in raw material
prices, currency devaluation and shortage of Kraft paper put high pressure on the Company’s profit.
In the year 2019, challenging socio-economic conditions i.e. weakening currency, higher discount rates and decelerated
economic activities hampered the Company’s sales. However, the Company was still able to maintain its profitability ratios.
Since March 2020, the whole world was affected by the global pandemic i.e. COVID-19 and Pakistan is not an exception.
Businesses were severely affected due to lock downs in order to curtail the spread of the virus. However, due to measures
taken by the Company, in the year 2020, the Company was able to generate a profit of Rs. 70 million and reasonable
profitability ratios in those testing times. In the current year, the Company was able to post highest ever Sales Revenue
of Rs. 11.26 billion and highest profit of Rs. 855 million in last five years. This is due to multiple factors which includes
extraordinary increase in cement demand, measures taken by the Government to reduce impact of pandemic, effective
marketing strategies, etc
Liquidity
Company has enhanced its long term, short term financing and working capital requirements from previous years due to
expansion in recent years. With strong working capital management, better profitability and cash generating policies, the
Company was able to report better liquidity position in the current year.
Investment / Market
Investment / Market Ratios are the direct reflection of the overall performance of the Company. In the current year, the
Company has reported EPS of Rs. 20.12 which is the highest since the year 2018. This is due to increase in sales, production
efficiency and effective marketing strategies. Moreover, the market price of the Company’s shares also increased during the
year. This is mainly because of the fact that the Company performed well against the expectations of the shareholders.
Capital Structure
The Company continuously monitors its capital structure and aims to keep it at its optimum level. Financial leverage was
highest in the financial year 2019. However, the ratio went down in later years on account of increase in operations, effective
working capital management (which resulted in reduction in short term borrowings), better profitability and loan repayments.
Activity / Turnover
The inventory turnover of the Company witnessed healthy trend as the Company strives to implement effective inventory
management. As the major raw materials of the Company are imported, the inventory turnover days of the Company remain
on the higher side. To be competitive in the market and to gain market share, the Company extends credit to its customers
keeping in view the credit worthiness of the customer. The Company seeks to maintain level up to 45 days credit. The
Company believes in strong relations with vendors to assure smooth supply of goods and services which is why it strives to
keep the creditors turnover at lower level. Implementation of effective management policies increased asset turnover ratio
of the Company.
Employee Productivity Ratios:

Company has always strived hard to provide better working environment for its staff to keep its employees motivated for
better productivity and performance. Employee productivity has increased over last 4 years due to better human resource
management and effective recruitment process of the Company.

Non-Financial Ratios:
The history of Cherat Packaging is marked with expansions and growth. In the recent years, the Company installed Flexible
Packaging Project in order to cater fast evolving consumer market and new trends in packaging industry; and Universal
Papersack line. The Universal Papersack line is capable of producing paper bags of various sizes. The availability ratio is in
line with the market demand.
Other Ratios:
The Company has installed state-of-the-art machineries from reputable vendors. As a result of which the Company is not
only benefited through quality output and efficiency in production, but also maintenance cost / spares inventory are kept
on a lower side. Moreover, in the recent years, the said ratios have slightly increased due to diversification and expansions.

Graphical Presentation of
Analysis of Financial Statements

Dupont Chart
Raw Material Fuel & Power Salaries,Wages Depreciation & Taxes Other Costs
Consumption & Benefits Amortization
7,612,398 291,354 707,013 334,355 343,430 1,111,460
(Rs.in‘000) (Rs.in‘000) (Rs.in‘000) (Rs.in‘000) (Rs.in‘000) (Rs.in‘000)
Current Non-Current Current Non-Current

Net Sales Total Cost Assets Assets Liabilities Liabilities
11,255,102 10,400,010 6,608,344 5,978,810 3,904,287 2,643,027
(Rs.in‘000) (Rs.in‘000) (Rs.in‘000) (Rs.in‘000) (Rs.in‘000) (Rs.in‘000)
Share Capital Total Total

Net Profit Net Sales Total Assets & Reserves Liabilities Total Assets Liabilities
855,092 11,255,102 12,587,154 6,039,840 6,547,314 12,587,154 6,541,469
(Rs.in‘000) (Rs.in‘000) (Rs.in‘000) (Rs.in‘000) (Rs.in‘000) (Rs.in‘000) (Rs.in‘000)
Net Profit Asset Share Capital

Margin Turnover Total Assets & Reserves
7.60% 0.89 12,587,154 6,039,840
(Times) (Rs.in‘000) (Rs.in‘000)
Return on Financial
Assets Leverage
6.76% 2.08
(Times)
Return on
Equity
14.06%

Dupont Analysis
Net Profit Margin Assets Turnover Financial Leverage

ROE
Year Net Profit / Sales Sales / Total Assets Total Assets / Total Equity
A B C AxBxC
2016 13.33% 1.47 1.41 27.69%
2017 10.89% 1.16 1.39 17.56%
2018 10.03% 0.76 2.07 15.81%
2019 6.95% 0.71 2.54 12.60%
2020 0.74% 0.85 2.34 1.47%
2021 7.60% 0.89 2.08 14.06%
Graphical Presentation of Dupont Analysis

35
30
25
ROE (Percentage)
20
15
10
0
2016 2017 2018 2019 2020 2021
Years
Comments on DuPont Analysis

1. Profit margin of the Company increased during the year due to high growth in cement sector, favorable
Government policies and reduction in discount rate.
2. Asset Turnover slightly increased during the year because of increase in revenue with a corresponding increase
in assets of the Company.
3. Although, Long term financing, including current maturity increased as compared to last year, financial charges
declined due to better profit, reduced short term borrowings and decline in discount rates.
4. ROE Significantly increased during the year due to increase in profit of the Company, which is a result of various
economic factors such as reduction in discount rates and favorable Government policies for construction related
businesses. Further Asset turnover and financial leverage has also improved during the year.

Free Cash Flows
Free Cash Flows to the Firm 2021 2020 2019 2018 2017 2016
(Rupees in ‘000)
Earning before interest and taxes 1,583,294 882,181 1,166,634 893,145 1,037,061 1,380,395

Adjustment for non-cash items 308,968 377,561 276,404 170,312 131,470 92,494

Working capital changes (392,560) 311,532 (2,219,521) (1,064,481) (793,190) (158,836)

Net cash generated from
operating activities 1,499,702 1,571,274 (776,483) (1,024) 375,341 1,314,053

Capital expenditure (259,209) (283,154) (673,827) (3,158,595) (316,727) (382,570)

Free cash flows to the firm 1,240,493 1,288,120 (1,450,310) (3,159,619) 58,614 931,483

Free Cash Flows to the Equity Holders

Free cash flow to the firm 1,240,493 1,288,120 (1,450,310) (3,159,619) 58,614 931,483
Net borrowings (695,550) 398,005 2,078,720 2,985,256 351,174 (905,016)
Finance cost paid (475,949) (801,027) (383,380) (77,293) (51,155) (96,419)

Free cash flow to the equity holders 68,994 89,088 245,030 (251,656) 358,633 (69,952)
Comments
Free cash flow to the firm slightly decreased as compared to last year mainly due to increase in working capital
requirement. Free cash flow to the equity holders also declined as compared to last year due to the fact that the
company made certain repayments of debts.
Graphical presentation of free cash flow analysis

Free cash flows to the firm and equity holders

Economic Value Added
2021 2020
(Rupees in ‘000)
Net Operating Profit After Tax 1,239,864 853,738
Cost of capital (616,950) (909,274)
Economic value added 622,914 (55,536)
Total Assets 12,587,154 11,160,731
Current Liabilities (3,904,287) (3,511,290)
Invested Capital 8,682,867 7,649,441
WACC 7.11% 11.89%
Cost of capital 616,950 909,274
Comments
As compared to last year, the economic value addition of the Company increased due to increase in operating
profit after tax of the Company and decrease in WACC . Operating profit after tax of the Company mainly increased
due to increase in Cement demand, effective marketing strategies, efficient production process etc. whereas,
WACC of the Company reduced on account of reduction in overall KIBOR rates.

Horizontal Analysis - Last Six Years
2021 2020
(Rupees in ‘000) % (Rupees in ‘000) %
Statement of Financial Position

ASSETS
Non-Current Assets 5,978,810 7% 5,580,510 5%
Current Assets 6,608,344 18% 5,580,221 -7%
Total Assets 12,587,154 13% 11,160,731 -2%
EQUITY AND LIABILITIES

Share Capital and Reserves 6,039,840 27% 4,774,404 7%
Non-Current Liabilities 2,643,027 -8% 2,875,037 -5%
Current Liabilities 3,904,287 11% 3,511,290 -9%
Total Equity and Liabilities 12,587,154 13% 11,160,731 -2%
Statement of Profit or Loss

Turnover – net 11,255,102 19% 9,436,193 17%
Gross profit 1,937,625 65% 1,173,729 -16%
Operating profit 1,583,294 79% 882,181 -24%
Profit before taxation 1,198,522 1115% 98,678 -85%
Profit after taxation 855,092 1117% 70,235 -88%

2019 2018 2017 2016
(Rupees in ‘000) % (Rupees in ‘000) % (Rupees in ‘000) % (Rupees in ‘000) %
5,328,751 1% 5,273,537 95% 2,703,235 24% 2,174,501 23%
6,022,692 47% 4,095,137 43% 2,863,159 14% 2,510,213 15%
11,351,443 21% 9,368,674 68% 5,566,394 19% 4,684,714 19%
4,466,238 -1% 4,516,005 12% 4,016,877 21% 3,316,291 51%
3,033,486 1% 2,997,929 287% 774,085 76% 440,975 -46%
3,851,719 108% 1,854,740 139% 775,432 -16% 927,448 0%
11,351,443 21% 9,368,674 68% 5,566,394 19% 4,684,714 19%

8,093,407 14% 7,091,653 10% 6,443,932 -6% 6,888,605 11%
1,400,649 28% 1,098,332 -13% 1,256,478 -21% 1,582,067 21%
1,166,634 31% 893,145 -14% 1,037,061 -25% 1,380,395 22%
660,080 -14% 764,883 -21% 972,943 -26% 1,307,991 42%
562,873 -21% 711,079 1% 702,049 -24% 918,239 41%

Vertical Analysis - Last Six Years
2021 2020

ASSETS
Non-Current Assets 5,978,810 47% 5,580,510 50%
Current Assets 6,608,344 53% 5,580,221 50%
Total Assets 12,587,154 100% 11,160,731 100%
Share Capital and Reserves 6,039,840 48% 4,774,404 43%
Non-Current Liabilities 2,643,027 21% 2,875,037 26%
Current Liabilities 3,904,287 31% 3,511,290 31%
Total Equity and Liabilities 12,587,154 100% 11,160,731 100%

Turnover – net 11,255,102 100% 9,436,193 100%
Gross profit 1,937,625 17% 1,173,729 12%
Operating profit 1,583,294 14% 882,181 9%
Profit before taxation 1,198,522 11% 98,678 1%
Profit after taxation 855,092 8% 70,235 1%

2019 2018 2017 2016
(Rupees in ‘000) % (Rupees in ‘000) % (Rupees in ‘000) % (Rupees in ‘000) %
5,328,751 47% 5,273,537 56% 2,703,235 49% 2,174,501 46%
6,022,692 53% 4,095,137 44% 2,863,159 51% 2,510,213 54%
11,351,443 100% 9,368,674 100% 5,566,394 100% 4,684,714 100%
4,466,238 39% 4,516,005 48% 4,016,877 72% 3,316,291 71%
3,033,486 27% 2,997,929 32% 774,085 14% 440,975 9%
3,851,719 34% 1,854,740 20% 775,432 14% 927,448 20%
11,351,443 100% 9,368,674 100% 5,566,394 100% 4,684,714 100%

8,093,407 100% 7,091,653 100% 6,443,932 100% 6,888,605 100%
1,400,649 17% 1,098,332 15% 1,256,478 19% 1,582,067 23%
1,166,634 14% 893,145 13% 1,037,061 16% 1,380,395 20%
660,080 8% 764,883 11% 972,943 15% 1,307,991 19%
562,873 7% 711,079 10% 702,049 11% 918,239 13%

Comments on Horizontal Analysis
Fixed Asset
Growth in Fixed Assets value evidences expansion made by the Company.
Investments
With the growth in economy and PSX index, the share price of Cherat Cement Company Limited increased
by Rs. 90.21 per share which is representing increase in share price by 103%. Hence unrealized capital
gain of Rs. 481 Million is reflected this year while cumulative unrealized gain reached up to Rs. 744 Million
approximately.
Stores, spare parts & loose tools, Stock in trade and Trade debts
Stores, spare parts & loose tools, Stock in trade and Trade debts increased steadily over past six years on account
of increase in operations and expansions.
Taxation
During the year, the Company has recorded profit of Rs. 855 million approximately. Current year provision is
adjusted against alternate corporate tax & minimum taxes therefore a jump of Rs. 315 Million in taxation is observed
in comparison with last year.
Share Capital & Reserves
Analysis shows that continuous progress in shareholders, equity is mainly due to profit reported by the Company
during last six years coupled with growth in reserves is due to escalation in share price of Cherat Cement
Company Limited.
Long Term Loans
Long term loan did not reduced as expected as compared to last year mainly due to draw down of loan against
installation of Solar power plant of Rs. 105 million approximately and deferment of principal repayment against
Flexible Packaging plant.
Current Liabilities
Increase in current liabilities of the Company over last 3 years is in alignment with increase in business activities.
Company is managing to buy raw material at improved credit terms to maintain sufficient working capital.
STATEMENT OF PROFIT OR LOSS
Turnover
Turnover of the Company has reached approximately Rs. 11.2 billion at the year ended 2021 whereas the said
turnover was Rs. 6,443 million at the year ended 2017. Increase in turnover is corroborating the Company’s
continuous growth and expansions over the last 6 years.
Gross Profit
In the midst of increasing raw material prices and increasing exchange rate, the Company reported a gross profit
of Rs. 1,937 Million for the year ended 2021. The highest gross profit is confirming the company’s efficiency in
production and effective operations management achieved through the installation of state-of-the-art plant and
machinery, effective inventory and supply chain management and retention of valuable human resource.
Operating Profit
Higher gross profit directly influenced operating profit of the Company. The Company managed its administrative
and other expenses to keep it under acceptable limits hence it helped the Company in achieving better operating
profit as compared to previous years.
Finance Cost
A major improvement in finance cost is reflected in the year 2021 which is due to reduction in mark-up rates and
repayment of loans. Further, loans related to repayment of Salaries and wages at lower mark up rate also helped
the Company in reducing its finance cost.
Net Profit
The Company had achieved a milestone of highest net profit of Rs. 918 million in the year 2016. After expansion of
FPD, the Company’s net profit reduced owing to loss sustained by flexible packaging division since FPD was a new
venture and the Company was following market penetration strategy. However, in the current year, the Company
achieved Rs. 855 million due to better margins and effective operations management.

Comments on Vertical Analysis
Non-Current Assets
Major increase in Non-Current Assets is due to increase in long term investments. Market price of Cherat Cement
Company Limited’s shares increased by Rs. 90.21 per share as a result of which investment value increased by
approximately Rs. 481 million as on June 30, 2021.
Current Assets
Current Assets of the Company primarily increased due to increase in trade debts and stock-in-trade. This increase
is in line with the increase in operations of the Company.
Long-term loan
During the year, long-term financing mainly declined because of repayment of loans. However, the impact of the
said repayment was not fully translated because of additional financing obtained during the year. These additional
financing include financing in respect of renewable energy and payment of wages and salaries.
STATEMENT OF PROFIT OR LOSS
Gross profit
For the year ended June 30, 2021, the Company reported highest ever gross profit of Rs. 1.9 billion. This was
majorly on account of increase in cement demand, effective marketing strategies, measures taken by Government
to reduce effect of pandemic, efficient production process, etc.
Net profit
Net profit reported by the Company during the year is highest since the year 2017. This is due to the increase in
gross profit (as discussed above) and reduction in finance Costs.

Graphical Presentation of Statement of Financial
Position & Statement of Profit or Loss

Summary of Statement of
Cash Flows-Last Six Years
2021 2020 2019 2018 2017 2016
(Rupees in ‘000)
Net cash generated from / (used in)

operating activities 1,499,702 1,571,274 (776,483) (1,024) 375,341 1,314,053
Net cash used in investing activities (236,108) (274,392) (650,862) (3,135,215) (397,802) (363,085)
Net cash (used in) / generated from

financing activities (1,256,148) (1,294,999) 1,431,846 3,129,449 20,374 (943,937)

Net increase / (decrease) in cash
and cash equivalents 7,446 1,883 4,501 (6,790) (2,087) 7,031

Cash and cash equivalents as
at the beginning of the year 15,022 13,139 8,638 15,428 17,515 10,484

Cash and cash equivalents
as at the end of the year 22,468 15,022 13,139 8,638 15,428 17,515

Comments on Statement of Cash Flows
Cash flow from operating activities witnessed great fluctuation during the period from FY 2016 to FY 2018. The
major reason was the optimization of stock-in-trade level with respect to new polypropylene bags plant operations.
Operating cash flows witnessed high growth in FY 2016. In FY 2016, the ever highest performance of the Company
caused cash flows from operating activities to increase further. Decrease in profit in FY 2017 impacted the cash
flow negatively. Further, the operating cash flows fell slightly on negative side mainly on account of decreased
profit before tax, increased investment in stock in anticipation of expected operation of Flexible Packaging project
and payments of sales tax and withholding tax on import of various machinery of Flexible Packaging. In FY 2019,
full-fledge operations of FPD, increased discount rate and dwindling PKR parity caused the operating cash flows
to decrease further. In FY 2020 the Company witnessed the highest operating cash flows due to effective working
capital management. However, during the current year, the main reason for a slight decrease in operating cash
flows is of stock-in-trade level with respect to FPD plant operations.

The Company has been in continuous expansion. From FY 2016 to FY 2018, the Company installed two PP lines
enhancing its production capacity to 195 million bags per annum. In FY 2018, the Company installed Universal
Papersack line enhancing its production capacity to 400 million KP bags per annum. Correspondingly, the Company
also initiated Flexible Packaging line in 2018. The Company installed remaining machineries of Flexible Packaging
Division in FY 2019. In current year, the Company also installed certain other machineries for Flexible Packaging
Division. In FY 2021, Company initated solar power project to look after its energy needs.

Cash flows from financing activities are direct reflection of the above two. During the FY 2018, the Company issued
right shares and obtained loans to finance its new venture into Flexible Packaging and enhancing its production
capacity of KP bags by installing Universal Papersack line. In FY 2019, tough business conditions and higher
operational costs compelled the Company to utilize its running finance facility. in the FY 2020, the Company, due
to its effective working capital management, was able to reduce its running finance utilization. During the current
year, Company had further repaid its short term borrowings owing to better profitability than last year.

Statement of Cash Flows Direct Method
CASH FLOWS FROM OPERATING ACTIVITIES 2021 2020

(Rupees in ‘000)

Cash receipts from customers 11,011,092 9,061,310
Cash paid to suppliers and employees (9,266,679) (7,388,983)
Cash generated from operations 1,744,413 1,672,327

Net income tax paid (244,811) (102,122)
Long-term loans and security deposits - net 100 1,875
Net cash generated from operating activities 1,499,702 1,572,080

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure incurred - net of borrowing costs (259,209) (283,154)
Additions to intangible assets - (689)
Proceeds from sale of operating property, plant and equipment 17,773 4,608
Dividend received 5,328 4,843
Net cash used in investing activities (236,108) (274,392)

CASH FLOWS FROM FINANCING ACTIVITIES
Long-term financing - net (9,511) (79,246)
Dividend paid (84,649) (95,967)
Short-term borrowings (686,039) (319,565)
Finance costs paid (475,949) (801,027)
Net cash used in financing activities (1,256,148) (1,295,805)

Net increase in cash and cash equivalents 7,446 1,883

Cash and cash equivalents as at the beginning of the year 15,022 13,139

Cash and cash equivalents as at the end of the year 22,468 15,022

Key Financial Information - Last Six Years
2021 2020 2019 2018 2017 2016
(Quantity in million)
Production BMD (Bags) 327.17 273.17 276.18 346.55 351.97 341.29
Production FPD (Kgs) 4.607 4.429 1.261 0.003 - -
Sales BMD (Bags) 334.23 271.13 270.53 344.78 352.18 341.13
Sales FPD (Kgs) 4.659 4.344 1.171 0.003 - -
Summary of Statement
of Financial Position (Rupees in million)
Assets
Non-Current Assets 5,979 5,580 5,329 5,274 2,703 2,175
Current Assets 6,608 5,580 6,023 4,095 2,863 2,510

Total Assets 12,587 11,160 11,352 9,369 5,566 4,685

Equity and Liabilities
Shareholders Equity 6,040 4,774 4,466 4,516 4,017 3,316
Non-Current Liabilities 2,643 2,875 3,034 2,998 774 441
Current Liabilities 3,904 3,511 3,852 1,855 775 928

Equity and Liabilities 12,587 11,160 11,352 9,369 5,566 4,685

Summary of Statement
of Profit or Loss
Turnover-Net 11,255 9,436 8,093 7,092 6,444 6,889
Gross profit 1,938 1,174 1,401 1,098 1,256 1,582
Operating profit 1,583 882 1,167 893 1,037 1,380
Profit before tax 1,199 99 660 765 973 1,308
Profit after tax 855 70 563 711 702 918
BMD = Bags Manufacturing Division

FPD = Flexible Packaging Division

Segmental View of Business Performance
During these difficult times of Pandemic, the Company made exceptional performance on the back of tremendous
cement demand. Further strategic partnership with international suppliers helped the Company in reaping the
benefits of high demands. The Company also managed to increase its export
Segmental View
The Company is investing in various clients (especially FMCGs) in shape of samples and test products. Various
clients are testing our products and the Company is receiving positive response. The Company expects that FPD
sales will increase in coming years. Though, FPD contribution in total sales remained same at 18% as was last year,
however, the FPD revenue witnessed an increase of 23% in revenue as compared to last year.
2021 2020
BMD 82% BMD 82%
FPD 18% FPD 18%
Market Share
Cherat Packaging is the largest producer of Cement bags in Pakistan. The Company is the gateway to innovation in
cement packaging as it has introduced various groundbreaking innovations which not only benefited customers but
also lead the Company to be the leader of the cement packaging industry. The Company enjoys prominent edge
over its competitors regarding market share by virtue of its diversified investment in KP and PP bags. Moreover,
the Company entered into Flexible Packaging Division in 2018 and through penetration strategy, the Company is
gaining market acceptance and increasing its market share gradually.
Explanation of Negative Changes in Performance over the Period

Over the year, the Company performed well surpassing expectation. However, in 2020 the Company witnessed
decline in profits, though it had closed its financial year in positive zone. Again in 2021, the company rebounded
astoundingly closing its financial year at a net profit of Rs 855 Million.
Debt Repayment
As reported in Directors’ Report, no default occurred during the year.

Share Price Sensitivity Analysis
The Shares of Cherat Packaging Limited have been of the Company. Company has installed, subsequent to the
historically viewed as a safe and stable investment, year end, Solar panels as an alternate source of energy. It
though the recent market recession and weak position of will result in saving of energy cost.
National Economy had a negative influence on the price
of the Company’s shares. The Share price varied from Interest Rates
a minimum of Rs. 117.15 per share to a maximum of Rs The Company uses debt financing to finance its increased
249.28 per share during the year. The Company’s impetus working capital requirements due to expanded operations;
towards sustained growth along with signs of stability in moreover, during this year Company had received subsidized
macroeconomic factors, may lead to a stable Share price loan for disbursements of salaries & wages. Finance cost
in future. Alternatively, this can be further affected by the of the Company reduced due to extra mile support by the
following factors: Government authorities. Further during the current financial
year, reduction in KIBOR directly impacted the financial
Government Policies performance of the Company positively.
Government Policies impact the whole business arena
adversely or otherwise. Any positive or negative decision Law & Order
by the Government would impact the Company’s financial Company’s performance is influenced by the political
performance. disturbances inside and outside the country. Uncertainty
in political conditions and law and order situation have an
Exchange Gain / Loss immediate effect on Company’s performance and ultimately
The Company is required to import Kraft paper and Resin on share price.
from world re-knowned companies round the globe
therefore payment has be made in foreign currencies i.e; Plant Operations
Euro and USD. The Company suffers exchange gain/loss The Company has state-of-the-art production facility
due to movement of Pak Rupee versus Euro / US Dollar and especially the Polypropylene Plant and Flexible Packaging
therefore company’s profitability get affected. which leads to higher production and better production
efficiency. The Company believes in providing optimum job
Material Price Sensitivity satisfaction to workers and staff which minimizes issues at
The profitability of the Company is highly dependent on production facilities.
raw material prices and sales volume which ultimately also
affects the share price. Increase in economic activity will The purpose of the investment in latest plant and machinery
leads to better prices and sales volumes. There are various is to maximize production output within stipulated time,
raw materials which are used in the production either locally minimize production wastages, meeting criteria for MNCs
procured or imported by the Company. Imported resins standards and certifications and to take care about the
are directly influenced by international crude oil prices and health and safety of workers and staff members.
hence affect the financial performance of the Company. The Cement and Allied Sector
Energy Crisis Although the Company is diversifying its operations,
The current energy crisis directly impacted the operations nonetheless, the Company’s main business is the production
of the Company. Continuous hike in energy rates and and sale of cement sacks which links it directly to cement
appreciation of fuel prices affects the financial performance sector. Any positive growth in cement industry would directly
impact the financial performance of the Company.
Sensitivity Analysis of Change in Market Capitalization

Share Price as of 30.06.2021 Rs. 198.91
Market Capitalization as of 30.06.2021 Rs. 8,457,159,892
Change in Share Price by
Change in Market Capitalization
+10% Rs. 845,715,989
- 10% Rs. (845,715,989)
1,200,000 300
1,000,000
240
800,000
180
600,000
120
400,000
60
200,000
0 0

Calendar of Notable Events
July 2020 - June 2021
14th Independence Day

August 2020
Celebration
27th Board of Directors
Meeting –Annual
2020
14th Received 1st prize

in Best Corporate
February 2021
October 2020
March 2021
and Sustainability
Report Award
2019 organized by 11th Board of Directors 08th International
ICAP & ICMAP Meeting – 2nd Women’s Day 2021
Quarter 2021
22nd Board of Directors
Meeting –1st
Quarter 2021
26th 31st AGM at
Registered Office
December 2020
November 2020
April 2021
04th Corporate Briefing 15th Attended National 28th Board of Directors

Session
Finance Olympiad Meeting – 3rd
organized by ICAP Quarter 2021
June 2021
25th Board of Directors

Meeting –Budget
2021/22
30th Year End Closing

Sap SuccessFactors
Implementation at Gfg
An organization cannot lead to success unless it has vital and dedicated human capital. To further support HR
processes and help our employees reach new heights of performance elevations, the Company decided to
implement SAP SuccessFactors. SAP SuccessFactors is a flexible, global HR solution that supports HR processes
and employee self-services for the total workforce. With SAP SuccessFactors, we will enable a more flexible,
engaged workforce that can adapt to constant change and achieve peak performance.
GFG is implementing SAP SuccessFactors with following objectives:
• Align HR with corporate strategy to drive growth;
• Attract, identify, and retain top performers and develop future leaders;
• Connect to HR and non-HR applications and processes Solution;
• Robust technology for core HR, talent acquisition, talent management, and people analytics;
• Guided workflows allowing best practices to be melded with integrations to other systems;
• Global HR solutions and best practices;
• Strong partner ecosystem and extensible platform with complementary apps Benefits;
• Address the HR needs with easier app building and integration;
• Make faster, informed decisions based on data-driven insight across HR processes ;
• Boost overall business success by aligning HR to business goals;
• Increase profitability by saving man-hours and achieving efficiency in processes.

Business Rationale of
Major Capital Expenditure
Growth
Cherat Packaging Limited is a growth-oriented Company. Historically, it grew over the years; especially during last
few years Company managed to increase production capacity in existing production facilities and also opened
doors in era of packaging of Flexible Packaging material that enabled Company to provide packaging material
to FMCGs, Pharmaceutical industries etc. in addition with Cement sacks, Sugar bags, flour bags, rice bags, etc.
Solar Power Project

In this competitive time, Company is looking to increase its production efficiency. In order to control production
cost, Company is installing 0.96 MW Solar panels at its Flexible Packaging Division which is expected to be
completed by Aug/ Sep 2021. The Company’s decision of installation of alternate source of energy is in compliance
with ISO 14000 Environmental management system and said decision will definitely reflect positive impact on
Company’s financial position in longer run.
Current Year Expansion

With the increase in demand of PP Bags by multiple industries as demand of Cement, flour, sugar etc. is increasing
with the amelioration in economy. In this context, the Company is in process of expanding its PP bags production
through installation of state of the art new PP line (PP Line IV) from world renowned German based plant manufacturer
i.e. Windmöller & Hölscher at subsidized loan granted by Government. The installation of said line will enhance
Company production capacities that will enable Company to meet increasing demand of existing consumers and it
will allow company to target new customers. The installation of new PP line will switch Company towards smarter
level of production and result in cost saving, due to economies of scale.

Outlook
142 Forward Looking Statement
143 Financial Projections
143 Sources of Information and
Assumptions Used for Forecasts
143 Company Performance Against
Last Year Projections
143 Status of Projects

Forward Looking Statement
The Covid-19 pandemic has disconcerted lives across has diversified its business by entering into new
all countries and negatively affected global economic areas of packaging to align its long-term objective
growth beyond expectations. These concerns are of being a leading player in the field of packaging
compounded by the emergence of new disease Methodical investments in enhancement of
variants and rolling pandemic hot spots. Despite the production capacities by adding latest available
development of new vaccines and their gradual roll machinery, allow the company to have efficient
out, many are still wondering what recovery could look production facility which makes the products
like. Vaccination drive in Pakistan is also on the go in financially viable both for the company and the
search of healthy recovery. Regardless of the measures customers. Alongside, the Company always strives to
taken by the Government to subside the Covid-19 explore new products through in-house research and
impact and to support the economy, the year ahead discovering novel, improved and cheaper solutions
is expected to remain demanding for the country as which gives the Company a strategic-edge over its
the Government presently faces the intimidating task competitive products and also binds the customers
of instigating economic growth without significantly in long term relationship. Previously, the Company
increasing the inflationary pressures. However, local had successfully introduced 2ply kraft paper bags
cement demand is expected to continue its present and lowest grammage PP bags for cement industry.
trend in wake of Govrnment packages for construction Likewise, the Company successfully converted few
industry including Naya Pakistan Housing scheme & Roto based high cost products into Flexo based
Special Economic Zones for CPEC. Moreover, delays low cost products as per the customer needs and
in the implementation of critical structural reforms due feedback. The Company is expecting that the
to resurgence of COVID-19 could lead to further fiscal FMCG companies will gain benefit from this update.
and macroeconomics imbalance which may result Continuous product development and introduction
in lower PSDP expenditure and hence lower cement of new products in different target markets not only
consumption may directly impact the Company’s helps the company to meet the customer demand
sales. Interest rates may also rise which may result for packaging but also helps maintain the company
in increased financial cost burden on the Company. status as the leading supplier of the quality packaging
Consequently, the Company remains cautiously solution for local and international markets.
optimistic for the year ahead.
The Company follows all regulations as they
Like other market players of the segments in which are imposed in Pakistan. The Company is ISO
company is operating, it is exposed to devaluation 9001:2015 (Quality Management System), ISO
of Pakistani rupee and inflationary increase in the 14001: 2015 (Environment Management System),
cost of raw materials including kraft paper and ISO 45001:2018 (Occupational Health and Safety),
polypropylene granules due to global shortage. FSSC (Food Safety Management Systems), SEDEX
In order to curb the negative impact of this, the (Supplier Ethical Data Exchange), BRC (British Retail
company has invested in strategic relationships Consortium), Halal and PSQCA (Pakistan Standards
with its key international suppliers and ensured and Quality Control Authority) certified.
timely negotiations, pre-orders and timely delivery.
Availability of power at competitive rates is also an As explained earlier, situation arising out of Covid-19
important factor for the Company. In order to reduce presents a major challenge due to its ability to impact
its electricity costs, the Company has, subsequent the demand of local industries and consumers. On
to the year end, commissioned 0.96 MW solar the human resource side, the Company has taken
power panels at its Flexible Packaging Division. appropriate measures including strict implementation
Furthermore, the Company is also receiving around of protocols on health and employee safety in wake
1 MW electricity under Wheeling Regime Energy of the disease. Employees were allowed to work from
Purchase Agreement from Pakhtunkhwa Energy home to comply with the Government instructions
Development Organization (PEDO) at a reduced rate whenever needed. As the management fully supports
than conventional electricity cost since June 2020. the Government’s stance of vaccination, it ensured
The Company is persistently refining its operational that all of its employees get vaccinated. This is to
efficiencies and utilizing its available resources ensure that all staff members remain as safe as
to counter the current pressure situation and to possible and impact on business operations is kept
safeguard interests of all stakeholders. as minimal as possible. The Company conducted
adequate technical trainings for the identified
The Company’s philosophy is to grow its business employees based on the last year’s Training Need
by remaining in control of the developments taking Analysis (TNA) and performance appraisal of the
place in the industry. Over the years, the company Company personnel. The same process is followed on

yearly basis. The Company has developed extensive formal feasibility. The feasibility is then presented
training program for all levels of management. The to the Board of Directors. Thorough discussion on
Company will be conducting these trainings and the practicalities of the assumptions and financial
continue to support its employees in enhancing their viability of the project is conducted and the results
professional capabilities in future also which would and assumptions are approved. Special attention is
equip the employees with required technical and paid to avoid the wishful thinking and to make the
management skills in the years to come. project payback more realistic.
The company management is adroitly monitoring the Company Performance Against

business needs and is taking all suitable measures to
protect the interests of stakeholders. Last Year Projections
The Company anticipated moderate growth keeping
in view the impact of ongoing Covid-19 pandemic
Financial Projections resulting in lock downs imposed by the Government.
Keeping in view the foregoing, the Company is However, to combat this emergency caused by
positive about future prospects and expects to Covid-19, the Government and State Bank of
perform well in the ensuing years. The Company Pakistan took a number of measures to help local
expects pressure on local and export markets in industries by introducing various relief measures
view of ongoing Covid-19 crises, which will affect including reduction in discount rates, deferment
us also. Competition in the local bags sales is also of long-term loan facility, low rate wage financing
expected to increase which may make the business scheme and announcement of Construction
environment more challenging for the Company. Package. The above mentioned measures fuelled
However, the Company foresees to minimize its much needed growth in the construction industry
impact through implementation of lean manufacturing in particular. Being part of the construction industry,
concept and introduction of new and improved bag the Company also managed to grow its paper and
features. The mark-up rates prevailing at the end of PP bags sales in terms of quantity on the back of
the year are expected to increase a bit during the increased cement demand during the year and
coming financial year. The Company is expected to posted an increase of 10.48% in overall Company
have higher revenue from Flexible Packaging Division revenues as compared to the revenue projected in
due to increased expected capacity utilization. last year. Rationalization in import duty of kraft paper
Furthermore, the Company expects to achieve higher also reduced the cost of production. Further, reduced
export due to devaluation of PKR. Future revenue discount rate also helped the Company in lowering
projections based on management’s best judgement down its financial cost burden. Almost all financial
and estimates are as follows: and nonfinancial targets established during last year
2021/22 2022/23 2023/24 were met to a greater extent.
(Rupees in thousand)
Revenue 14,365,295 15,286,258 16,649,721 Status of Projects

No major projects were in progress during the year.
However, to manage increasing demand in cement,
Sources of Information and the Company has opened an LC to commission line IV
Assumptions Used for Forecasts having capacity of 65 Million bags for polypropylene
The Company produces master budget based bags manufacturing. For financing, the Company
on a comprehensive budget drive annually and has already negotiated a loan under TERF Scheme
updates forecast keeping in view market conditions, offered by SBP carrying subsidized markup rate.
historical results and outlook. Each department Civil works for this line started during the year and is
including marketing, production, HR etc. gives input progressing as planned. The project is expected to
while producing budget and forecast. Information be commissioned by the end of this calendar year.
like Customer sales, average sale price, seasonal Although, the Company has already registered its
fluctuations, economic outlook are taken into account impact in Flexible Packaging market, certain smaller
while preparing budget for the following year. scale developments including enhancement in
Flexible Packaging machinery to augment the already
For any new ventures, information is gathered installed plant are underway. Viewing the huge
from available market research on the anticipated product line in different segments, this technological
products. If needed, professional services of a upkeep by the Company is imperative in capturing
consultant are also sought to fine tune the data other annexed markets of Flexible Packaging.
and underlying assumptions before making a

Stakeholders’
Relationship
and Engagement
146 Stakeholders’ Engagement
147 Minority Shareholders
147 Matters raised in the last AGM
148 Statement of Value Addition
and Distribution of Wealth

Stakeholders’ Engagement
The Company has a policy of maintaining relationships Our supply chain management team is in continuous
based on trust and collaboration with all its stakeholders. contact with suppliers and vendors through meetings and
Shareholders Engagement procedure embrace correspondences to resolve all queries for on time deliveries.
communication, compliance with laws & regulations,
customer centric as well as society focused approach. Cooperation of our suppliers gives us an extra edge over
our competitors.
Our stakeholders extend valuable contribution towards
our growth and existence. Procedure for stakeholders’ 4. BANKS AND OTHER LENDERS
engagement includes effective communication, good We value our relationship with our financial partners
harmony and compliance with laws & regulations. We and lenders. Financial risk management and business
cannot truly execute our purpose without input from our sustainability are few of the interests of this segment of
stakeholders. stakeholders. Periodic briefings, quarterly financial reporting,
Head Office and Site visits are the important means for our
1. SHAREHOLDERS engagement with this category of stakeholders.
Safeguarding our shareholders’ interest is our prime
responsibility. Our shareholders’ interest revolves Bank and other institutes help us in obtaining loans at
around good returns, profitability, growth and regulatory attractive rates and advise on strategic issues whenever
compliances. We respond to our shareholders’ expectations needed.
through improvement in business mechanics, effective
governance and corporate reporting framework. Annual 5. REGULATORS
General Meetings and statutory reporting are the most Our commitment to compliance with laws and regulations
effective means of our engagement with our shareholders. is evident from our Corporate and Legal team‘s continued
efforts for efficient and effective legal and regulatory
Support of shareholders is critical in achieving the Company obedience. The engagement includes submission of
objectives. periodic reports, responding to enquiries and meetings as
and when required.
Investors’ Grievance Policy
The Company has an investors’ Grievance Policy in place. Active engagement with regulators improves level of
Any complaints or observations received either directly by compliance.
the Corporate Department or during General Meetings are
addressed by the Company Secretary. The Shareholders 6. EMPLOYEES
are given the information as desired by them as per the Our company has extensive employee engagement schemes
law well in time. All the written complaints are replied in in place. The employees’ issues revolve around work life
writing. Our share registrar is CDC Share Registrar Services balance, training and development and rewards. We have
Limited (CDCSRSL) which is a leading name in the field. educational loan schemes, in-house and outside training
The Company has many old and loyal shareholders, which programs and long-term employment reward schemes in
shows the trust of the Shareholders in the management of place to value our employees as Human Capital. Employee
the Company. meetings are on regular intervals in form of Annual get-
together, celebrating sports day and team building activities.
2. CUSTOMERS AND TRANSPORTERS
Sustaining and developing long term relationships with our Employees engagement improves the level of dedication
customers and transporters forms the key of our business’ and hard work.
success. Their expectations are focused on product quality,
pricing and service delivery. Our sales and marketing team 7. INSTITUTIONAL INVESTORS AND ANALYSTS’
remain in close contact to this segment of our stakeholders BRIEFING
to resolve issues on a priority basis. We continue to engage Institutional investors regularly obtain general business
with our customers and transporters through meetings and briefings and financial reports from management. Formal
market visits and communications. meetings are also arranged whenever needed.
We derive success from the brand loyalty of Cherat and the Without compromising the confidentiality, business analysts
cooperation from our transporters. are provided with information and briefings as and when they
require. The strong connection with institutional investors
3. SUPPLIERS AND VENDORS and analysts facilitates in avoiding any misconception /
Efficient supplier network is a key for effective working rumours in the market.
capital management. To achieve this objective, we conduct
market surveys to strengthen our bond with our suppliers The Company arranges briefing with individual institutional
and vendors. We believe in strategic relationships and we investors from time to time. Conference calls with foreign
have strategic alliance with Mondi Packaging, Sabic and investors were also made to discuss the performance of the
Windmoller & Holscher. company and the cement packaging industry. Corporate
Briefing Session was also held.

8. CORPORATE BRIEFING SESSIONS INVESTOR RELATIONS SECTION
In compliance with PSX requirements, the Company To keep transparency in the relationship between the
conducted Corporate Briefing Session. The briefing was well Company and its shareholders, the website of Cherat
attended by analysts, shareholders and potential investors. Packaging Ltd (http://gfg.com.pk/cpl) contains all the major
The Chief Operating Officer (COO) of the Company financial information needed for investors’ decision making in
presented its financial results, analysis, future prospects and a separate tab of “Investor Relations”.
challenges. COO also discussed all the queries raised by
participants at a great length. Further, presentation by CEO is also uploaded each year on
the website (https://gfg.com.pk/cpl).
AGM PROCEEDINGS
The last AGM was conducted at the registered office of
the Company at Betani Arcade Jamrud Road Peshawar on
Monday October 26, 2020 at 11:00 a.m. The meeting was
properly organized and well attended by the Shareholders.
The Shareholders appreciated the untiring efforts made by
the management in achieving another remarkable year in
terms of production and sales despite of tough economic
conditions.
Shareholders raised different questions on the Financial

Statements, especially with respect to economic situation
and company’s future outlook. The questions were
9. MEDIA answered in detail by the management after which the
Ads and campaigns are launched in media based on Financial Statements were approved by the Shareholders.
marketing requirements.
The Chairman answered the questions of Shareholders.
Interaction with media improves the Company’s brand Shareholders posed their confidence in the strategic
image. approach of the Company. Shareholders asked regarding
Flexible Packaging performance. They were informed
10. LOCAL COMMUNITY that the Company is approaching various customers
The Company actively participates in various social work aggressively. They were also informed that the loss is
initiatives as part of its corporate social responsibility. Being decreasing gradually as the Company is gaining further
a conscientious member of the corporate community, recognition in the Flexible Packaging market.
the Company contributes to various social and charitable
causes including health, education and social sectors. During Shareholders also gave approval for appointment of M/s. EY
the year the company contributed for health and Safety of Ford Rhodes, Chartered Accountants as external Auditors
the people in its vicinity by joining hands with the Khyber and distribution of cash dividend.
Pakhtunkhwa authority against COVID-19. In the past the
Company has worked for the rehabilitation of flood affectees Matters raised in the last AGM
and IDPs. Cherat Packaging has worked with many reputable Shareholders, appreciated the Company efforts of closing
organizations and NGOs. The Company has always stood by the Company financial results in a positive zone in the era of
the people of Pakistan in their hour of need and shall always pandemic where most Companies suffered losses.
continue to do so.
Replying to a query regarding significant decline in profit
Further, the Company takes care of people living in its vicinity during the financial year 2020, the management informed
through regular donations for development of household, that the main cause of reduced profit were high finance
education and medical facilities. The management cost, sudden deterioration of PKR parity against EURO and
encourages hiring workforce from local vicinity and USD and low cement demand. However, things are now
employment of less privileged and special persons are also changing with the introduction of packages announced by
considered. the Government and hopeful that the Company will return
to better profits.
MINORITY SHAREHOLDERS
The management of the Company believe, encourage and Responding to a query on power cost, the management
ensure the equitable treatment of all shareholders including updated that in order to reduce its electricity costs, the
minority shareholders to attend, speak and vote at the Company is installing 0.96 MW solar panels at its Flexible
General Meetings and appoint another member as his/her Packaging division. Furthermore, the Company has also
proxy in his/her absence. The notices of General Meetings started receiving around 1MW electricity under Wheeling
are circulated by the Company within the regulatory time Regime Energy Purchase Agreement from Pakhtunkhwa
frames to the registered addresses of the shareholders Energy Development Organization (PEDO) at a reduced rate
(including minority shareholders) as well as it is published in since June 2020.
Urdu and English newspapers.

Statement of Value Addition
and Distribution of Wealth
2021 2020
Wealth generated
Net Sales (including Sales Tax) 13,112,436 99.73% 11,002,598 99.80%
Other operating Income 35,669 0.27% 21,631 0.20%
13,148,105 100.00% 11,024,229 100.00%
Distribution of wealth
Cost of sales (Excluding employees’ remuneration) 8,746,040 66.52% 7,791,188 70.67%
Distribution, Administration and certain other expenses
(Excluding employees’ remuneration) 168,309 1.28% 193,896 1.76%
Employees’ remuneration 771,182 5.86% 587,477 5.33%
Government as direct taxes
(including Workers’ Welfare Fund) 364,121 2.77% 29,071 0.26%
Government as indirect taxes 1,857,334 14.13% 1,566,405 14.21%
Dividends* 212,535 1.62% 42,507 0.39%
To debt providers 384,772 2.92% 783,503 7.11%
To society as donation 1,255 0.01% 2,454 0.02%
Retained 642,557 4.89% 27,728 0.25%
13,148,105 100.00% 11,024,229 100.00%
*Subsequent to year ended June 30, 2021, the Board of Directors in its meeting held on August , 2021 has proposed final cash dividend @ Rs. 4 per share amounting to Rs. 170.27 million (2020: Rs. 1 per share
amounting to Rs. 42.507 million ) for approval of the members at the Annual General Meeting.
Distribution of Wealth 2021

Cost of sales (Excluding employees’ remuneration) 66.52%
(Excluding employees’ remuneration) 1.28%
2021
Employees’ remuneration 5.86%
(including Workers’ Welfare Fund) 2.77%
Government as indirect taxes 14.13%
Dividends* 1.62%
To debt providers 2.92%
To society as donation 0.01%
Retained 4.89%
Distribution of Wealth 2020

Cost of sales (Excluding employees’ remuneration) 70.67%
(Excluding employees’ remuneration) 1.76%
2020
Employees’ remuneration 5.33%
(including Workers’ Welfare Fund) 0.26%
Government as indirect taxes 14.21%
Dividends* 0.39%
To debt providers 7.11%
To society as donation 0.02%
Retained 0.25%

Sustainability and
Corporate Social
Responsibility
150 Highlights of Various Aspects
of Sustainability
158 Pandemic Recovery Plan
160 Highlights of Corporate Social
Responsibility

Highlights of Various
Aspects of Sustainability
We remain committed to continuous improvement in Health, Safety and Environment aspects as we expanded our business
and production capacities. The Company has always been aware of its responsibility towards the people, environment and
climate of Pakistan and has strived to ensure the well being of all.
To fulfill the aforesaid responsibility and to ensure effective systems of monitoring and reporting of necessary compliance with
health, safety and environment aspects, the Company has established a dedicated and adequately staffed HSE department.
This department of the Company is involved in environmental protection, occupational health and safety, compliance and
certain other aspects. HSE Department’s objective includes, but is not limited to, prevention of accidents, emergency cases and
health issues at work along with environmental protection.
Certifications acquired / to be acquired and international standards adopted
The production facility remained fully compliant with industry standards and safety requirements. For this purpose, the Company
has fully adopted and has obtained certification of Total Quality Management (TQM) system (i.e. ISO 9001: 2015). Further, in
order to strive towards the continuous improvement in Health, Safety and Environment aspects, the Company has obtained
ISO 14001: 2015 , ISO 45001:2018 , FSSC and Halal certifications. Moreover, to align itself with the industry standards, the
Company obtained SEDEX along with the NOC for our chemical tanks from environmental protection agency and BRC (British
Retail Consortium).
Company fully complies with regulatory requirements of National Environmental Quality Standards (NEQS). In addition to the
aforesaid, the Company also complies with the requirements of Pakistan Standards & Quality Control Authority’s standards.
The highlights of the Company’s performance, policies, initiatives and plans in place relating to various aspects of sustainability
are as follows:
1. ECONOMIC responsible corporate citizens, therefore, it

The economic dimension of sustainability is important we monitor and measure our
concerns the Company’s impact on the economic ongoing indirect economic impacts in the
conditions of its stakeholders. wider context. The Company supports in
development of infrastructure and other
a. Economic Performance facilities of the country in general and of our
Cherat Packaging is committed to provide factory vicinity in particular.
continuous growth and value for all
stakeholders. This growth and value can 2. ENVIRONMENTAL
be quantified and assessed accurately The Company’s aim in respect of environment
through the audited financial statements of is to reduce all adverse environmental aspects
the Company and the statement of value arising out of our operations. In order to meet
addition and its distribution, which are part this purpose, we have acquired most advanced
of this report. technology plant which controls industrial
waste at lowest levels. Further, to improve the
b. Market Presence environment, natural tree plantation has been
Our Company’s presence in the market has done in the factory premises.
significant impacts in terms of employment
and business opportunities provided. The
Company encourages hiring of workforce
from local community at each area of
business operations from entry level to
the senior management. The Company
also gives business opportunities to local
transporters and contractors. Moreover, due
to expansion / new projects the Company
has awarded contracts to local vendors for
civil works and other key areas.
c. Indirect Economic Impacts

Our growth and development means the
growth and development of our homeland
Pakistan. Additionally, we consider ourselves

Moreover, the Company maintains and continually energy is conserved by the addition of the
improves its environmental management systems most modern, state-of-the-art machinery,
and complies with requirements as outlaid by which also results production of quality
specific markets or local regulations. Further, the products in the most efficient and effective
Company operates in a manner that is committed manner. In addition to the above, in order
to continuous improvement in environmental to conserve energy, the management of the
sustainability through recycling, conservation Company strives to keep production wastage
of resources, prevention of pollution, product to a minimum level and productivity at the
development and promotion of environmental highest level.
responsibility amongst its employees.
Furthermore, as discussed above, the Company
fully complies with the regulatory requirements of
NEQS.
The highlights of the Company’s performance,

policies, initiatives and plans in place relating to
certain aspects of this dimension of sustainability
are as follows:
a. Energy
Energy is an important component of our
production process and the energy crisis
may directly impact the operations of the
Company. Therefore, efficient energy usage b. Products
is not only vital in terms of the environment, The Company is mainly engaged in
but also because it can provide the Company manufacturing, marketing and sale of
a competitive edge in terms of cost factors. products that are reusable and recyclable;
and, accordingly, have little or no impact over
For this purpose and being a responsible environment. For Flexi Products Company is
corporate citizen, the Company initiated a always in touch with raw material and machine
program to conserve energy. In this regard, the suppliers to introduce environmental friendly
Company has installed low powered highly products.
efficient Light Emitting Diode (LED) lights at
all its locations. Further, the Company has
devised a production plan in order to use its
production facility efficiently with lesser energy
usage. Moreover, Subsequent to year end, the
Company has completed the commissioning
of 0.96 MW solar power project. These solar
panels would help to produce green energy.
c. Emissions
Emissions control relates directly to climate
change and the impact of gaseous emissions
on the ozone layer. As a manufacturing
concern, this is of vital importance.
In addition to this, the Company has also The Company is in full compliance with
acquired energy form Pakhtunkhwa Energy Regulation. All of our emission parameters
Development Organization (PEDO) in order to monitored from manufacturing process are
obtain hydro power which will also help us well below their respective limits as specified
in usage of green energy. Furthermore, the in NEQS.

d. Effluents and Waste
As a manufacturing concern, this is an f. Quality Management
important topic as it has an impact not only The Company is committed to the
on our own operations, but also on local manufacturing of high quality packaging
communities where waste is generated and materials. Our manufacturing facilities
disposed of. Accordingly, the Company has are accredited to Quality Management
invested in a high quality plant technology to System ISO 9001:2015. The consistency of
avoid industrial waste and to control industrial performance of our products is vital for our
effluents. Although the industrial effluents are customers so the raw materials, intermediate
on a very low side in this industry, management and final products are regularly tested as part
is fully aware of its responsibilities in this of the whole production process.
regard and related policies are already in
place. Employees are given proper training to o Quality Management Procedures
minimize the wastage. Our Quality Management procedures
include:
Further, the Company has invested in
the state-of-the-art Solvents Re-cycling
machine which enables it to recycle the
chemicals/solvents and reuse the material
instead of disposing it as a waste. Moreover,
solid chemical waste are disposed off to
EPA (Environmental Protection Agency)
approved vendors which in turn will ensure
safe disposal of waste and would ultimately
minimize harmful impacts on the environment.
The Company also continuously monitors
discharge level of waste water and performs
lab tests on it to ascertain the environmental
impact.
e. Transport
Papersack Division (PSD)
Our products are transported to the customers
Our Quality Management process includes
through heavy trucks. The Company is
Testing from Raw Material to final inspection
cognizant of the fact that these trucks could
up to pre-delivery stage of papersacks. This
have impact on surroundings as small mishaps
generally includes:
can lead to heavy accidents. In order to mitigate
this risk, the Company has adopted measures
• Strength Properties Analysis of Kraftpaper.
for safe transportation i.e. quantity-wise trucks
are being used in order to avoid over or under • Inspection of Printing Inks to ensure
loading. Truck`s capacity is effectively utilized Customer’s approved Colour Shades.
due to which risk of accidents resulting from • Arrangements and Inspection of Polymer
overloading is avoided and it also helps Stereo as per customers approved Artworks.
company economically.
• Preparation and Inspection of Glue through
Mixture of 02 Starches of different grades.
• In-Process inspection at different stages of
Tubes & Bags manufacturing.
• Final Inspection of Bags Including Drop
Testing and Bales packing Quality Checks
and moisture content before packing of
bales.
• Hourly sampling and testing at each stage.
• Counting of Bags on Machines / Pallets /
Bailing Process and cross checking after
packing.

Polypropylene Division (PPD) o In-house Quality Control Laboratory
Our Quality Management includes Monitoring The key to comprehensive quality control
and Testing of whole manufacturing process is the use of an in-house laboratory. Having
of Polypropylene (PP) sacks at 06 different an in-house, state-of-the-art laboratory
stages, from printing to pre-delivery stage. is absolutely necessary to manufacture
This generally includes: superior quality products. Our Quality Control
laboratory is a primary component to achieve
• Different Quality Tests of Tape at Extrusion our mission of maintaining strict control
line including Denier, Tenacity, and Elongation over every aspect of manufacture. Quality
etc. is an integral part of our ISO 9001:2015
certification.
• Inspection of Fabric Rolls for size, density
and strength while running on Looms in Our in-house laboratory allows for timely,
weaving Section. accurate, cost-effective testing that ensures
every product, from raw material to finished
• Inspection of Lamination Process on Coating goods, meets all quality requirements. Our
Line for GSM. products are tested before being released for
sale. Such stringent attention to quality control
• Arrangements and Inspection of Polymer is extremely difficult to accomplish without a
Sterios as per customers’ approved Artworks. state-of-the-art, in-house laboratory.
• Inspection of Printing Inks for Color and

Viscosity on receipt and inspection of Printed
Fabric.
• In-Process inspection on Convertex

and Auto cutting machines during Bags
manufacturing.
• Final Inspection of Bags Including Air

Permeability, Dimensions, welding and Bales
packing Quality.
• Counting of Bags on Machines / Pallets /

Bailing Process and cross checking after
packing.
Flexible Packaging Division 3. SOCIAL
Our Quality Management includes Monitoring The social dimension of sustainability concerns
and Testing of Flexible Packaging materials the impacts the Company has on the social
at all stages, from printing to pre delivery systems within which it operates. The highlights
stage. This generally includes: of the Company’s performance, policies,
initiatives and plans in place relating to certain
• Performance of various Quality Tests on all aspects of this dimension are as follows:
types of incoming local and imported Films
including GSM, Thickness, Seal temperature, a. Employment
Seal strength, Co-efficient of fraction (COF) The Company has given tremendous
and Dyne Level etc. employment opportunities through
continuous expansion of business /
• Performance of viscosity test on all types of production lines and new projects. New
incoming inks and adhesives. employment opportunities are provided to
• Moisture and purity level tests on all types of local people from Gadoon Amazai, Peshawar,
incoming solvents. Lahore, Islamabad and Karachi. Additionally,
a number of factory workers have been hired
• In-process inspection at printing, lamination from nearby villages and hamlets, thereby
and slitting stages of flexible packaging creating good employment opportunities for
material manufacturing. the locals.

The Company is recognized among top visitors and third parties through which full
employers due to its excellent employee compliance with safety measures is ensured.
benefits. Following benefits are provided to In addition, Health and Safety concerns are
full-time permanent employees: explicitly included in SMART goals of head
of departments and senior management of
- Health care plant.
- Life insurance
- Education assistance Hundred percent compliance with policy
- Furniture facility programmes resulted in the conclusion of the
- Leave fare assistance year with no reportable occupational illness.
- Provident fund These programmes include the regular
- Gratuity testing of plant equipment and sites from
- Earned leaves a health perspective, as well as monitoring
- Company maintained vehicles; and of employee health. Additionally, health
- Others. awareness sessions on basic lifesaving
techniques, medical emergency handling
b. Industrial Relations and first aid were conducted during the year.
We maintain excellent relations with our
employees & labour and the Company takes Our production lines achieved the whole
every reasonable step for swift and amicable year without any major injury. Reported injury
resolution of all their issues. The Company case if happen, is thoroughly investigated
also inducts apprentices in its Apprenticeship by trained personnel and findings are
Program through which graduates from subsequently circulated Company wide.
reputable institutions are regularly inducted. Once investigations are completed, actions
A management trainee program is also in and recommendations are assigned to
place to meet the future requirements. individuals with a strict follow-up system put
in place to avoid any recurrence.
c. Occupational Health and Safety
We manage and utilize resources and o Health & Safety training
operations in such a way that the safety and Our workers are sufficiently trained
health of our people is ensured. We believe through fire & safety trainings and are
our safety and health responsibilities extend also adequately equipped with Personal
beyond protection and enhancement of our Protection Equipments which is monitored
own facilities. We have dedicated safety staff at regular intervals. Workers are also trained
at our plant. by theoretical explanations and practical
drills to handle unforeseen emergencies.
Regular mock drills are also carried out
to familiarize everyone with the steps and
procedure to follow in emergency situations.
Mock drills of chemical spillage, firefighting,
evacuation, casualty handling and security
are also conducted. Moreover, safety audits
are also conducted on regular basis. Further,
daily toolbox discussions are also conducted
in the factory on various topics including
workplace hazards and safe work practices.
o Firefighting Equipment
In order to strive towards creating a safe
working environment, the Company,
inter alia, has made multi million rupees
At Cherat Packaging, Health and Safety is investment to install firefighting equipments.
the first and foremost agenda topic for our These equipments include state of the art fire
each in-house and higher management detection system, CO2 Suppression System
meetings. The Company has made safety and General fire system (including fire pump,
manual containing policies and procedures. fire sprinklers & valves, hydrant valves,
Moreover, a mechanism is in place for portable fire extinguisher, fire hose, etc.).

o Safe Men Hours
Production facilities ensure safety of
employees through adherence of strict
policies and procedures on health and safety.
A proper record of safe men-hours is

maintained. Any minor issues are handled
by in-house dispensary.
To deal with the fire resulted due to

hazardous chemicals, the company has also
made investment in International Standards
conforming Foam System (including
inductors and allied equipment) keeping in
view the business requirements
The aforementioned investment will not
only help the Company on continuity of
its operations and safety of its materials
/ equipments but more importantly it will
also ensure the safety of its workforce. d. Training and Education
Firefighting equipment is checked on regular The training, education and development of
basis to ensure its proper functioning. our people are topics of critical importance to
us. The Company hires energetic, talented,
o Safe working environment and motivated human resources and provides
The Company believes that it is imperative them a congenial and healthy working
to provide its workforce with the congenial, environment to utilize their capabilities
healthy and safe working environment which efficiently. The Company believes that its
includes, but is not limited to, provision of core strength is its people, who strive every
clean drinking water and healthy subsidized day to meet individual challenges and help
food. the Company achieve its collective targets.
The Company has in place a Performance
The Company, in order to create a safe Review Process in order to recognize
working environment, is also fulfilling all employees’ contribution and reward them
regulatory requirements in respect of handling according to their performances.
and storage of hazardous chemicals which
includes preparation of proper / safe storage Moreover, Training Need Analysis (TNA)
area and obtainment of necessary licenses. is effectively in place where in-house
As discussed above, International Standards and external trainings are arranged at all
conforming Foam System is also in place for management levels. The Company offers
fire resulted due to hazardous chemicals. education assistance plan to nurture growth
and encourage professional education
Further, in order to achieve aforesaid purpose, of employees. The education assistance
the Company has adequately placed safety program not only equips employees
signboards at all important visible places. with improved academics and technical
These safety signboards include road traffic knowledge but also provides the Company
signs in order to regulate traffic in the factory with rightly equipped human resource
premises, signs to remind workforce of using to face the new challenges offered by
and wearing safety equipments, fire safety expansions, diversifications and business
signs, etc. growth. Further, eligible employees receive
Service Awards based on their performance

and length of service. The management’s
objective is to recognize and reward i. Consumer Protection Measures
employees’ contribution to the business. The Company ensures that the packaging
This process helps the availability of high material is packed and dispatched to
quality workforce which plays a vital role in its consumers in a safe manner. It also
achieving day-to-day targets and tactical complies with all safety standards and
and strategic objectives of the Company. industrial requirements. The Company
ensures that the customers get best value
for money.
j. Business Ethics and Anti-Corruption

Measures
The Company is fully committed to
promoting the highest standards of
ethical behavior throughout its business.
The management condemns corrupt
and fraudulent practices and ensures
transparency, integrity and honesty in all
aspects of work. The Company expects
all its employees to perform services
with integrity and professionalism.
e. Equal Opportunity and Non- Fundamental to this is the adoption of a
discrimination ‘zero tolerance’ approach to all forms of
The Company is committed in promoting corruption and misrepresentation.
equality of opportunity for all staff and job
applicants. We aim to create a working k. Local Communities
environment in which all individuals We strive for the development of
are able to make best use of their skills communities surrounding us. Investment
and abilities, free from discrimination or in the communities we operate in, and
harassment, and in which all decisions near vicinities, are strong focus for
or promotions are objectively based on the Company. Further details on this
merit. We do not tolerate any form of topic are presented under the next
discrimination, harassment or bullying in section “Highlights of Corporate Social
the workplace. Responsibility”.
f. Child Labour Following other aspects of sustainability have been

The Company has strict policy over discussed under the topic “Code of Conduct”:
prohibition of child labour. No child has - Compliance with the law;
ever been employed by the Company and - Competition and Anti-trust law; and
the same policy will go in future. - Protection and Information Security.
g. Forced or Compulsory Labour • HSE Management Systems:

The Company believes in free working Tools that help an organization continually improve
environment; no employed worker is its health, safety and environmental performance
forced or compulsory labour. contain organizational elements that follow a
continuous cycle of planning, implementing,
h. Grievance Mechanism checking, and improving. Our workforce is routinely
The Company is committed to provide updated about occupational health, safety and
every opportunity to employees for re- environment concerns through a continuous
dress of valid grievances (arising from work process of training and coaching at different
related issues). The management does not levels. To enhance safety awareness and to build a
discriminate against any employee who culture of continuous improvement in personal and
elects to use the grievance procedure. process safety, a comprehensive communication
structure has been established such as daily,
The purpose of this policy is to encourage weekly and monthly safety reviews.
healthy relationship between employees
in order to ensure smooth running of the Safety measures at the Company have been
business. taken according to the work environment (by

conducting risk assessment) at our plants and the
corporate offices. At all offices of the Company,
safety is everybody’s responsibility therefore
every area/ functional head is the owner of safety
practices under the umbrella of HSE principles.
The operation teams at all locations collaborate in
implementation of HSE policies and procedures.
To sustain HSE awareness and to build a culture of
continuous improvement in personal and process
safety, different committees at appropriate levels
are formed and periodic reviews are regularly
carried out.
HSE department works day in and out in different

areas/ functions of the Company. Following are
the key highlights:
• Monthly Inspections
• Trainings & Awareness Sessions
• Emergency drills on different Scenarios
• Compliance of Permit to Work
• Ambulance Operations handling community
emergencies (CSR)
• Monitoring & Compliance of Site Procedures
during Ongoing Projects
• Awareness & Compliance monitoring of
COVID-19 SOPs
A summary of awareness sessions conducted
during the year are presented below:
Awareness / Preparedness
Quarter Sessions Topics / Scenarios
Conducted
First Aid, Chemical safety Electrical

safety, Work at height protocols ERT
First 14 training, Permit to work, Firefighting, Fire
emergency procedure and Hot work. Fire
Emergency drill was excercised
Hot work , Emergency response plan
Compressed cylinders safety Forklift
Second 14
operations, Firefighting Risk assessment.
MEDEVAC Drill was excercised
First Aid, Chemical safety Electrical
safety, Work at height protocols ERT
training, Permit to work, Work at height,
Third 17
Firefighting PPEs and full body harness.
Fire Hydrant Operations drill was
excercised
Hot work, Emergency response plan
Compressed cylinders safety Forklift
operations, Firefighting Risk assessment,
Fourth 10 Machine safety Supervisory and behavior
training Fire Emergency FPD. Evacuation
drill was excercised

Pandemic
Recovery
Plan
COVID-19 is a global pandemic, which has affected
the whole world and Pakistan is not an exception.
Business and economic environment are severely
adversely affected due to intermittent lock downs
during the year. In response to these challenging
situation, the Company developed Pandemic
Recovery Plan to cater COVID-19.
Pandemic Recovery Plan (PRP) is different to some

extent from traditional disaster recovery and business
continuity plans. The latter plans are more focused on
technology while the former one is more concerned with
human capital. The PRP more focuses on identifying
critical business operations and identify needed human
capital for smooth operations. CPL offices and factory
implemented work place control measures to safeguard
employees against spread of the virus. These measures
include compulsory mask usage, hand sanitizers and
temperature check on work place entry points.
The Company developed PRP by focusing preventive

measures and response measures. Key elements of
these measures are mentioned hereunder, which aim at
restoring economic viability under stress situation. • Vaccination drive at factory in compliance
with Government guidelines to ensure that all
PREVENTIVE MEASURES the employees including contractual staff is
A. Awareness vaccinated.
One of the most essential element of pandemic
preparedness is ensuring that employees are • Ensuring PCR Covid testing of all employees
educated on the fact, and safety measures having any symptoms or were in close contact
that are required to be followed to prevent local with the positive cases. Cost of these test were
transmission. Employees must also be aware of fully reimbursed by the Company.
the Company’s response, SOPs and strategies
during pandemic period to mitigate any adverse • Ensuring fully paid leaves to affected employees.
effect on the Company’s critical operations.
• Develop other flexible policies for scheduling
B. Specific Preventive Measures and telework and adjust leave policies to allow
Every possible step was taken for the health and employees to stay home;
safety of our employees at Head Office, Sales
Offices and factory Site. The identified Basic • Provide disinfectant at business premises;
Protective Measures were effective against
Pandemic. The Company implemented these • Checking of visitors and employees at all entry
measures during COVID-19 response: and exit points of all workplaces;

• Intensify e-meetings and teleworking; respect to employees working environment
including appropriate tools for users to work
• Install disinfectant dispensers in the workplace; successfully from home and enough bandwidth
to adequately support the number of remote
• Placement of panaflex, sign boards, etc at visible users that may be necessary during different
locations to discourage employees/clients who situations.
are ill from entering the workplace/business
setting; F. Critical Suppliers and Vendors
It is also important to remember that a pandemic
• Reinforce standard practices to maintain social outbreak could be widespread and not just
distancing, such as avoiding greetings like affect a single business – third party providers
handshakes; on which the Company depends on for goods
and services could also be affected. Therefore,
• Restrict number of employees at workplace to incorporating backup plans for key suppliers and
practice social distancing; vendors must be a part of planning.
• Restricting traveling within Head Office, Sales G. Communication

Offices and Factory Site; It is necessary to ensure that critical information
can be exchanged so employees are kept abreast
• Promote and facilitate ‘respiratory hygiene’; of any developments or changes in requirements
as the situation progresses. We ensure that our
• Oblige the clean desk policy. organization has incorporated these focus areas
into its planning and it assist in preparedness to
RESPONSE MEASURES respond to a pandemic.
C. Formation of Covid Response Team (CRT)
The Company formed a separate Covid
Response Team. The team includes key
management personnel from all departments.
Key function of the team is to develop
organization response, provide guidance, and
monitor pandemic response implementation.
D. Cross Training
The Company fosters cross training of employees
to ensure that business functions can be
performed in the absence of essential personnel
for the successful continuance of operations.
Cross training processes protects against single
point of failure in knowledge in the event that
the only person trained to perform a task is
unavailable.
E. Remote Working
Planning for personnel to work from home can be
an option during a pandemic episode. However,
it is important that this recovery solution is
thoroughly tested to ensure its viability. Several COVID Preventive Guidelines Manual
measures are integrated and implemented with

Highlights of Corporate
Social Responsibility
The Company actively participates in various social work main focus of the Company is to donate for education
initiatives as part of its corporate social responsibility. Being and health. The company has been donating and
a conscientious member of the corporate community, the working with many reputable organizations and NGOs
Company contributes generously to various social and in Pakistan like The Aga Khan University and The
charitable causes including towards health, education and Citizens Foundation.
social sectors. In the past the Company has worked for the
rehabilitation of flood affectees and IDPs. Cherat Packaging e. Educational awareness session at ICAP
has worked with many reputable organizations and NGOs. As a part of educational development, Company`s Chief
The Company has always stood by the people of Pakistan in Operating Officer & CFO delivered lecture at ICAP`s
their hour of need and shall always continue to do so. seminar for passing out students in order to enhance
their morale and to motivate them.
a. Community Investment & Welfare Schemes
The Company invests in community and welfare
schemes through donations to education and health
sectors.
b. Ambulance Service
Keeping in view the needs of local community and staff
members, the Company is maintaining an Ambulance
service for ease of transportation of patients to
Hospitals. The Ambulance is fully equipped with
necessary medical equipment and is accompanied with
qualified paramedic staff. Moreover, a help line service
is operational in order to make it more reachable.
f. Rural Development Programs & Employment of
c. National Cause Donations Special Persons
The Company has always stood by the people of The Company takes care of people living in its
Pakistan in their hour of need and shall always continue vicinity through regular donations for development
to do so. The Company has donated generously in the of household, education and medical facilities. As
past for the flood victims and IDPs. discussed above, the management encourages hiring
workforce from local vicinity and employment of less
During Covid-19, the Company distributed ration privileged and special persons are also considered.
supply to local community in collaboration with KPK
authorities. g. Ration Drive
The Company has a legacy of donating ration for flood,
d. Details of Charity Account earthquake victims & IDPs. Similarly during COVID-19,
The Company makes donations to support less the Company distributed ration to the needy people of
privileged people of the society. Over the years, the its locality and its staff.

Striving for
Excellence
in Corporate
Reporting
162 Statement of Unreserved
Compliance of International
Financial Reporting Standards
(IFRSs) Issued by International
Accounting Standard Board
(IASB)
162 Adoption of Islamic Financial
Accounting Standards (IFAS)
162 Ratios in respect of Companies
listed on the Islamic indices
163 Adoption and Statement of
Adherence with the International
Integrated Reporting Framework

Statement of Unreserved Compliance
of International Financial Reporting
Standards (IFRSs) issued by International
Accounting Standards Board (IASB)
Cherat Packaging Limited is preparing statutory financial statements in accordance with the IFRS issued by IASB
as notified under the Companies Act 2017 including the disclosure requirements of fourth schedule.
However, SECP has not notified adoption of following IFRS:
IASB effective date

Standards
(annual periods beginning on or after)
IFRS 1 - First Time Adoption of IFRSs 01 January 2004
IFRS 17 - Insurance Contracts 01 January 2023
In addition to this, note 2.3.2 to the financial statement specify few standards and interpretations which are yet to
be effective in Pakistan. The Company believes that that the impact of the above standards and those referred in
note 2.3.2 does not have any material impact to the financial statements.
Amer Faruque
Karachi: August 24, 2021 Chief Executive
Adoption of Islamic Financial Accounting Standards (IFAS)

The Company fully complied with Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered
Accountants of Pakistan as notified under the Companies Act, 2017
Ratios in respect of Companies listed on the Islamic indices

Ratios Unit 2021 2020
Loan on interest to market capitalization % 38.41 72.59
Interest-taking deposits to market capitalization % 0.02 0.06
Income generated from prohibited component to total income % 0.06 0.57
Net liquid assets per share to market value per share % 27.32 34.97

Adoption and Statement of
Adherence with the International
Integrated Reporting Framework
Overview: methodologies used. The Company makes every
This annual report (report) of the Cherat Packaging effort to ensure the accuracy of the sustainability as
Limited (Company) has been prepared in guidelines of well as the information being provided.
the International Integrated Reporting (IR) framework
and the Global Reporting Initiative (GRI) Standards. Role of the Board:
The report is aim to provide its stakeholders a quality, The Board of Directors (the Board) has crucial role,
concise and transparent briefing of the Company’s since directors are elected by shareholders and IR
ability, position and expertise to create sustainable framework is a mechanism of ensuring long-term
value, which is vital for its position, performance and value creation and increasing transparency. The IR
reporting capabilities. Since then the Company has framework requires involvement and support of the
adapted its structure in response to global changes Board and Chief Executive.
and development, the Company advanced its
management processes. Henceforth, the Management of the Company is
guided to achieve Company objectives by advising,
Management of the Company is following the spirit assessing, and monitoring the business strategies
of adhering to the best corporate and governance and ensuring the execution and modification of these
practices. The management is also committed to activities.
achieve excellence in all aspects of transparent
reporting. The Company also achieved good stage Role of Management:
of compliance. The Company also considers the The Management has laid the business foundation
importance and strengthening of this report in terms of built on the principles of ethics and corporate
information connectivity and demonstration of results professionalism. The same is being developed by
impact regarding various capital employed. devising and disseminating procedural steps and
policies thereby highlighting need of good governance
Business operations: and resource allocation in achieving the desired
The Company is engaged in manufacturing, marketing objectives.
and sale of cement bags and Flexible Packaging
material. The data and information presented in this Financial and Non-Financial Information:
report pertains to its plants, marketing offices and The report also includes both financial and non-
head office. financial information about the Company’s brand,
financial structure, operations, performance, insight,
Objectives and Contents: risks & opportunities and outcome attributable to the
The contents of this report are based on Company’s value creation ability.
engagement with its stakeholders, IR framework
and GRI Standards sustainability and to provide The Company has adopted the IR framework to give
quality information of interest of various group of an overview of the Company’s business affairs and
stakeholders of impacts of activities on economy, philosophy by connecting and presenting the financial
market, environment and society as well as long-term and non-financial information considering the varied
sustainability of the Company’s business. interests of stakeholders.
It is imperative to ensure that the material is The forward-looking statement explains the future
being presented in such a way that it enables the challenges and how the Company plans to address
stakeholders to better understand these activities. The these.
business strategy information has been linked directly
to business activities and non-financial information. Connectivity, Monitoring and Control:
The Company’s reporting is monitored and ensure
Methodologies: that the relevant information is shared in the most
In compilation of data basic scientific measurements, suited way for the stakeholders. Connectivity of the
mathematical calculation methods, accounting information is another aspect which needs to be
principles, actual basis and other different logical addressed properly.

Thus, the stakeholders are made aware of the creation potential taking into account risks and
Company’s philosophy and attitude towards opportunities. The Company believes that to the
achieving the enhanced stakeholders’ value and stakeholders provide better understanding of its
customer satisfaction. The stakeholders’ value is business strategies, opportunities & risks, business
maximized through returns on investment, which model, governance, performance which creates value
management believes can be achieved through to the Company and its shareholders. The Company
revenue maximization and cost control measures. shall continue to improve the information produced to
make it even easier to understand.
Other factors:
This report also includes other factors, which Materiality:
challenged the economic performance of the The report includes the information relevant for its
Company. stakeholders to make decisions on the organization’s
economic, social and environmental performance.
The Company also provides an overview of Health,
Safety and Environment (HSE) to its stakeholders Reporting period:
and addresses complaints and grievances. Achieving This report of the Company is published annually and
sustainable corporate value by focusing economic, covers period beginning from July 01, 2020 till June
societal, technological and environmental factors and 30, 2021.
their impacts is the Company’s core strength.
Our Report:
The analysis and conclusions presented in this report This report of the Company has included following
demonstrates various factors that have been taken content elements for the users of this report:
into account and the management is taking measures
to increase the resiliency of the business and its • Organizational overview and external environment
operations. • Strategy and resource allocation
• Risks and opportunities
• Governance
Users:
• Performance and position
This report intended to address the needs of users, • Stakeholders’ relationship and engagement
investors, stakeholders, suppliers, employee, • Sustainability and corporate social responsibility
regulators and society to provide view of value • Striving for Excellence in corporate reporting
Amer Faruque
Karachi: August 24, 2021 Chief Executive

Glossary of Terms
Annual General Meeting (AGM) A mandatory, yearly gathering of a publicly traded Company’s executives, directors
and interested shareholders.
BCR Best Corporate Report
BMD Bag Manufacturing Division
BRC British Retail Consortium
CDC Central Depository Company
COVID-19 COVID is a disease caused by a new strain of coronavirus. ‘CO’ stands for corona,
‘VI’ for virus, and ‘D’ for disease.
CPEC China Pakistan Economic Corridor
CPL Cherat Packaging Limited
Debt An amount owed for funds borrowed.
EBITDA Earnings before Interest, Taxes, Depreciation and Amortization.
EMS Environmental Management System
EPS Earnings Per Share
FCF Free Cash Flow
FMCG Fast Moving Consumer Goods
FPD Flexible Packaging Division
HSE Health, Safety, and Environment
IAS International Accounting Standards (Accounting standards of the IASB)
IASB International Accounting Standards Board.
IFRS International Financial Reporting Standards.
KIBOR Karachi Inter Bank Offer Rate.
KPK Khyber Pakhtunkhwa
PACRA Pakistan Credit Rating Agency
PARITY The exchange rate between the currencies of two countries
PEDO Pakhtunkhwa Energy Development Organization
Principal In commercial law, the principal is the amount that is received, in the case of a loan,
or the amount from which flows the interest.
PRP Pandemic Recovery Plan
PSDP Public Sector Development Program
PSQCA Pakistan Standard and Quality Control Authority
Security A pledge made to secure the performance of a contract or the fulfilment of an
obligation.
SEDEX Supplier Ethical Data Exchange
Shariah-Compliant Finance/Banking Facility which meets all of the requirements of Shariah law and the principles
articulated for “Islamic Finance”.
SOP Standard Operating Procedure
Spread Rate charged by the bank over KIBOR.
Term The maturity or length of time until final repayment on a loan, bond, sale or other
contractual obligation.
WACC Weighted Average Cost of Capital
Working Capital Current assets minus current liabilities.

Bcr Criteria Index
S.No. Framework for Annual Reporting Best Corporate Report Awards 2021 Reference
1 ORGANIZATIONAL OVERVIEW AND EXTERNAL ENVIRONMENT
What does the organization do and circumstances under which it operates
1.01 Principal business activities and markets local and international including key brands, products and services. 15, 38-41, 39, 151, 181
1.02 Geographical location and address of all business units including sales units and plants. 29, 38, 39, 181
1.03 Mission, vision, code of conduct, culture, ethics and values. 17, 19, 21, 23, 25
1.04 Ownership, operating structure and relationship with group companies (i.e. subsidiary, associated undertaking etc.) and number of countries in which
the organization operates. Also name and country of origin of the holding company/subsidiary company, if such companies are a foreign company. 26-27
1.05 Organization chart indicating functional and administrative reporting, presented with legends. 35-37
1.06 Identification of the key elements of the business model of the company through simple diagram supported by a clear explanation of the relevance of those elements
to the organization. (The key elements of business model are Inputs, Business activities, Outputs and Outcomes). 48-49
1.07 Key quantitative information (Number of persons employed as on the date of financial statements and average number of employees during the
year, separately disclosing factory employees). 48-49,216
1.08 Position of the reporting organization within the value chain showing connection with other businesses in the upstream and downstream value chain.
(This disclosure shall be provided by the companies in service and non-service sector organizations through graphical presentation). 40-41
1.09 Significant factors effecting the external environment and the associated organization’s response (external environment includes commercial, political, economic,
social, technological, environmental and legal environment). Also describe the effect of seasonality on business in terms of production and sales. 42-43
1.10 Significant changes from prior years (regarding the information disclosed in this section). 44
1.11 Composition of local versus imported material and sensitivity analysis in narrative form due to foreign currency fluctuations. 44
1.12 Competitive landscape and market positioning (considering factors such as the threat of new competition and substitute products or services, the
bargaining power of customers and suppliers, relative strengths and weaknesses of competitors and customer demand and the intensity of competitive rivalry). 46-47
2 STRATEGY AND RESOURCE ALLOCATION
Where does the organization want to go and how does it intend to get there
2.01 Short, medium and long term strategic objectives. 52
2.02 Strategies in place or intended to be implemented to achieve those strategic objectives. 52
2.03 Resource allocation plans to implement the strategy and financial capital structure.
(Resource mean CAPITALS including financial capital (e.g. liquidity, cash flows, financing arrangements); human capital, manufactured capital (e.g. building, equipment,
infrastructure); intellectual capital (e.g. patents, copyrights, software, licenses, knowledge, system, procedures); social and relationship capital and natural capital). 53
2.04 The effect of technological change, societal issues such as (population and demographic changes, human rights, health, poverty, collective values
and educational systems), environmental challenges, such as climate change, the loss of ecosystems, and resource shortages, on the company
strategy and resource allocation. 55
2.05 Specific processes used to make strategic decisions and to establish and monitor the culture of the organization, including its attitude to risk and mechanisms for
addressing integrity and ethical issues. 57
2.06 Key performance indicators (KPIs) to measure the achievement against strategic objectives including statement as to whether the indicators used
will continue to be relevant in the future. 108-109
2.07 Strategy to overcome liquidity problem and the company’s plan to manage its repayment of debts and meet operational losses. 54
2.08 Significant plans and decisions such as corporate restructuring, business expansion and discontinuance of operations etc. 54
2.09 Significant changes in objectives and strategies from prior years. 54
3 RISKS AND OPPORTUNITIES
Specific risks and opportunities that affect the organization’s ability to create value over the short, medium and long term, and how it is dealing withthem
3.01 Key risks and opportunities effecting availability, quality and affordability of CAPITALS in the short, medium and long term.
3.02 Description of the Risk Management Framework including risk management methodology.
3.03 Sources of risks and opportunities (internal and external).
3.04 The initiatives taken by the company in promoting and enabling innovation.
3.05 Assessment of the ‘likelihood’ that the risk or opportunity will come to fruition and the ‘magnitude’ of its effect if it does. 60-64
3.06 Specific steps being taken to mitigate or manage key risks or to create value from key opportunities by identifying the associated strategic objectives, strategies, plans,
policies, targets and KPIs.
3.07 Board’s efforts for determining the company’s level of risk tolerance by establishing risk management policies.
3.08 A statement from the board of directors that they have carried out a robust assessment of the principal risks facing the company, including those that would threaten
the business model, future performance and solvency or liquidity. 79
3.09 Inadequacy in the capital structure and plans to address such inadequacy. 80
4 GOVERNANCE
How does the organization’s governance structure support its ability to create value in the short, medium and long term
4.01 Board composition:
a) Leadership structure of those charged with governance. 35-36, 78, 29
b) Name of independent directors indicating justification for their independence. 78, 82
c Profile of each director including education, experience and involvement / engagement of in other entities as CEO, Director, CFO or Trustee etc. 71-73
4.02 Review Report by the Chairman of the company on the overall performance of the board and effectiveness of the role played by the board in
achieving the company’s objectives. 75
4.03 A statement of how the board operates, including a high-level statement of which types of decisions are to be taken by the board and which are to be delegated
to management. 81
4.04 Shariah Advisor Report and Profile of the Shariah Advisor / Members’ of the Shariah Board. N/A
4.05 Annual evaluation of performance, along with description of criteria used for the members of the board and its committees, CEO and the Chairman. 79, 81
4.06 Disclosure if the board’s performance evaluation is carried out by an external consultant once in three years. 79, 81
4.07 Details of formal orientation courses for directors. 81
4.08 Directors’ Training Program (DTP) attended by directors, female executive and head of department from the institutes approved by the SECP and
names of those who availed exemptions during the year. 81, 98
4.09 Description of external oversight of various functions like systems audit / internal audit by an external specialist and other measures taken to enhance credibility of
internal controls and systems. 78, 104
4.10 a) Policy for remuneration to non-executive directors including independent directors.
b) Policy of retention of board fee by the executive director earned by him against his services as non-executive director in other companies. 79, 91
4.11 Policy for security clearance of foreign directors. N/A
4.12 How the organization’s implemented governance practices exceeding legal requirements. 81

4.13 Board’s policy on diversity (including gender), any measurable objectives that it has set for implementing the policy, and progress on achieving the objectives. 94
4.14 No. of companies in which the executive director of the reporting organization is serving as non-executive director. 71-72, 82
4.15 a) Names of related parties in Pakistan and outside Pakistan, with whom the company had entered into transactions or had agreements and / or arrangements in
place during the financial year, along with the basis of relationship describing common directorship and percentage of shareholding. 26-27, 91-93, 213, 214, 217
b Contract or arrangement with the related party other than in the ordinary course of business on an arm’s length basis, if any along with the justification for
entering into such contract or arrangement.
c) Approved policy for related party transactions including policy for disclosure of interest by directors in this regard.
4.16 Details of board meetings held outside Pakistan during the year. 82
4.17 Disclosure of policy for actual and perceived conflicts of interest relating to members of the board of directors and a disclosure that how such a conflict is managed
and monitored. 87
4.18 Investors’ grievance policy. 94
4.19 Policy for safety records of the company. 86
4.20 Disclosure of IT Governance Policy. 83
4.21 Disclosure of Whistle blowing policy established to receive, handle complains in a fair and transparent manner and providing protection to the complainant against
victimization, and disclosure of the number of such incidences reported to the Audit Committee during the year. 88
4.22 Human resource management policies including preparation of a succession plan. 85
4.23 Social and environmental responsibility policy. 84
4.24 Review by the board of the organization’s business continuity plan or disaster recovery plan. 94, 96
4.25 Disclosure of beneficial (including indirect) ownership and flow chart of group shareholding and relationship as holding company, subsidiary company or associated
undertaking. 26-27, 217
4.26 Compliance with the Best Practices of Code of Corporate Governance (No marks in case of any non-compliance). 79, 97-99
4.27 A brief description about role of the Chairman and the CEO. 100-101
4.28 Shares held by Sponsors / Directors / Executives. 217
4.29 Salient features of TOR and attendance in meetings of the board committees (Audit, Human Resource, Nomination and Risk management). 102-103
4.30 Timely Communication
Date of authorization of financial statements by the board of directors:
within 40 days ---6 marks 215
within 60 days ---3 marks
(Entities requiring approval from a Regulator before finalization of their Financial Statements would be provided a 20 days relaxation, on providing evidence to
the Committee).
4.31 Audit Committee Report should describe the work of the committee in discharging its responsibilities.
The report should include:
a Composition of the committee with at least one member qualified as “financially literate and all members are non-executive / Independent directors including the
Chairman of the Audit Committee.
b) Role of the committee in discharging its responsibilities for the significant issues in relation to the financial statements, and how these issues were addressed
with details where particular attention was paid in this regard.
c) Committee’s overall approach to risk management and internal control, and its processes, outcomes and disclosure.
d) Role of Internal Audit to risk management and internal control, and approach to Internal Audit to have direct access to Audit Committee and evaluation of
Internal Auditor’s performance. 104
e) Review of arrangement for staff and management to report to Audit Committee in confidence, concerns, if any, about actual or potential improprieties in financial
and other matters and recommended instituting remedial and mitigating measures.
f) An explanation as to how it has assessed the effectiveness of the external audit process and the approach taken to the appointment or reappointment of the
external auditor, and information on the length of tenure of the current statutory auditor; and if the external auditor provides non-audit services, an explanation
as to how auditor’s objectivity and independence is safeguarded.
g If Audit Committee recommends external auditors other than the retiring external auditors, before the lapse of three consecutive years, reasons shall be reported.
h) The Audit Committee’s views whether the Annual Report was fair, balanced and understandable and also whether it provided the necessary information for
shareholders to assess the company’s position and performance, business model and strategy.
i) Results of the self-evaluation of the Audit Committee carried out of its own performance.
4.32 Presence of the chairman of the Audit Committee at the AGM to answer questions on the Audit Committee’s activities and matters within the scope of the
Audit Committee’s responsibilities. 147
4.33 Where an external search consultancy has been used in the appointment of the Chairman or a non-executive director, it should be disclosed if it has any other
connection with the company. N/A
4.34 Chairman’s significant commitments and any changes thereto. 81
4.35 Disclosure about the Government of Pakistan policies related to company’s business/sector in Directors’ Report and their impact on the company business
and performance. 77-80
4.36 Pandemic Recovery Plan by the management and policy statement. 158-159
5 PERFORMANCE AND POSITION
To what extent has the organization achieved its strategic objectives for the period and what are its outcomes in terms of effects on the capitals
5.01 Analysis of the financial and non-financial performance using both qualitative and quantitative indicators showing linkage between:
(a) Past and current performance; and
(b) Performance against targets /budget
(c) Objectives to assess stewardship of management. 106-112
The analysis should cover significant deviations from previous year in operating results and the reasons for loss, if incurred and future prospects of profits.
Note: Analysis of non-financial performance shall be presented for material non-financial KPIs relevant for the business and
stakeholders around other forms of capitals as mentioned under International Integrated Reporting Framework <IR>, i.e. human capital, manufactured
capital, intellectual capital, social and relationship capital and natural capital. Inspiration can also be taken from the Specific Standard Disclosures of G4
Guidelines of the Global Reporting Initiative (GRI) for measurement and reporting on non-financial KPIs.
5.02 Analysis of financial statements:
a) Financial Ratios (Refer Annexure ‘I’) 113-117
b) DuPont Analysis 118-119
c) Free Cash Flow 120
d) Economic Value Added (EVA) 121
5.03 Combined analysis both vertical and horizontal of the Balance Sheet and Profit and Loss Account for last 6 years. 122-129

5.04
Summary of Cash Flow Statement for last 6 years. 130
5.05
Graphical presentation of the Balance Sheet, Profit & Loss Account and analysis in 5.02, 5.03 and 5.04 above. 115,118,119-121,128-130
5.06
Explanation of negative change in the performance against prior year including analysis of variation in results reported in interim reports with the final accounts,
including comments on the results disclosed as per 5.02, 5.03 and 5.04 above. 114,119-121,126,127,131, 134
5.07 Information about defaults in payment of any debts and reasons thereof period. 134
5.08 Methods and assumptions used in compiling the indicators. 108
5.09 Cash Flow Statement based on Direct Method (separate Cash Flow for specific funds e.g. Zakat). 132
5.10 Segmental review of business performance. 134, 206-208
5.11 Share price sensitivity analysis using key variables (i.e. selling price, raw material cost, interest rate and currency) with the consequent impact on the company’s earning. 135
5.12 History of major events during the year. 136-137
5.13 Business rationale of major capital expenditure /projects during the year and for hose planned for next year. 140
5.14 Brief description and reasons;
a) For not declaring dividend despite earning profits and future prospects of dividend. 107
b) Where any payment on account of taxes, duties, levies etc. is overdue or outstanding.
5.15 CEO presentation video on the organization’s website explaining the business overview, performance, strategy and outlook. (Please provide reference / web link on
company’s annual report). 147
6 OUTLOOK
Challenges and uncertainties that the organization is likely to encounter in pursuing its strategy, and what are the potential implications for its business model and
future performance
6.01 Forward looking statement in narrative and quantitative form including projections or forecasts about known trends and uncertainties that could affect the entity’s
resources, revenues and operations in the short, medium and long term. 142-143
Also explaining the external environment including political, economic, social, technological, environmental and legal environment that is likely to be faced in the short,
medium and long term and how it will affect the organization in terms of its business performance, strategic objectives and availability, quality and affordability of capitals.
6.02 Explanation as to how the performance of the entity meets the forward looking disclosures made in the previous year. 143
6.03 Status of the projects in progress and were disclosed in the forward looking statement in the previous year. 143
6.04 Sources of information and assumptions used for projections / forecasts in the forward looking statement and assistance taken by any external consultant. 143
6.05 How the organization is currently equipped in responding to the critical challenges and uncertainties that are likely to arise. 142
7 STAKEHOLDERS RELATIONSHIP AND ENGAGEMENT
State of key stakeholder relationships and how the organization has responded to key stakeholders’ legitimate needs and interests
7.01 How the company has identified its stakeholders. 146-147
7.02 Stakeholders’ engagement process and the frequency of such engagements during the year. Explanation on how these relationships are likely to affect the
performance and value of the entity, and how those relationships are managed. These engagements may be with:
a) Institutional investors;
b) Customers & suppliers;
c) Banks and other lenders; 146-147
d) Media;
e) Regulators;
f) Local committees and
g) Analysts.
7.03 Steps taken by the management to encourage the minority shareholders to attend the general meetings. 147
7.04 Investors’ Relations section on the corporate website. 147
7.05 Issues raised in the last AGM, decisions taken and their implementation status. 147
7.06 Statement of value added and its distribution with graphical presentation:
a) Employees as remuneration
b) Government as taxes (separately direct and indirect)
c) Shareholders as dividends 148
d) Providers of financial capital as financial charges
e) Society as donation; and
f) Retained within the business
7.07 Stakeholders engagement policy and steps board has taken to solicit and understand the views of stakeholders through corporate briefing sessions and disclosure of
brief summary of Analyst briefing conducted during the year. 146-147
7.08 Highlights about redressal of investors’ complaints. 146
8 SPECIFIC DISCLOSURES OF THE FINANCIAL STATEMENTS
8.01 For Specific Disclosures of the Financial Statements please refer Annexure ‘II’. Refer Page 70
8.02 Industry specific additional disclosures (if applicable):
a) Insurance Company - Annexure ‘III’ N/A
b) Banking Company - Annexure ‘IV’ N/A
c) Shariah compliant companies/ companies listed on the Islamic Indices - Annexure ‘V’” Refer Page 70
9 SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY
9.01 Highlights of the entity’s performance, policies, initiatives and plans in place relating to the various aspects of sustainability and corporate social responsibility (including
environment related obligation applicable on the company and initiatives taken to fulfil during the year and company’s responsibility towards the staff, their health & safety). 150-157, 160
9.02 Certifications acquired and international standards adopted for best sustainability and CSR practices. 150-157, 160
10 BUSINESS MODEL
Business model is a system of transforming inputs, through business activities, into outputs and outcomes that aims to fulfil the organization’s strategic purposes and
create value over the short, medium and long term
10.1 Describe the business model including inputs, business activities, outputs and outcomes in accordance with the guidance as set out under section 4C of the
International Integrated Reporting Framework <IR>. 48-49
11 STRIVING FOR EXCELLENCE IN CORPORATE REPORTING
11.01 Statement by management of unreserved compliance of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). 162
11.02 Adoption of International Integrated Reporting Framework <IR> by fully applying the ‘Fundamental Concepts’ and ‘Guiding Principles’ of <IR> into their corporate
reporting in addition to the ‘Content Elements’ (disclosures) of <IR>, as covered in this criteria. 163, 164

11.03 Disclosures beyond BCR criteria (Note: The participating organization to send the list of additional disclosures to BCR Committee). 30-33, 82, 89, 90, 96, 113
13 OTHERS
13.01 BCR criteria cross referred with page numbers of the annual report. 167-171
13.02 Brief about contents, scope and boundaries of the annual report. 1
13.03 SWOT analysis. 58
ANNEXURE ‘I’ - FINANCIAL RATIOS - Financial Sector
Profitability Ratios 113
Shariah compliant companies and the companies listed on the Islamic Indices
Following additional ratios are required for Shariah compliant companies and the companies listed on the Islamic Indices.
In case of Listed companies:
a) Loan on interest to market capitalization of the company; (loan on interest whether longterm or short-term debt should not exceed thirty percent of the market
capitalization of the company).
b) Total interest-taking deposits to market capitalization of Total Equity; (total interest-taking deposits whether short-, medium- or long-term, should not exceed thirty
percent of the market capitalization of total equity). 162
c) Income generated from prohibited component to Total Income (income generated from prohibited component should not exceed five percent of the total income of
the company).
d) Net liquid assets per share to market value per share; (should be at least twenty-five percent) (Net Liquid Assets is calculated as = Liquid Assets – Current Liabilities).
ANNEXURE ‘II’ – SPECIFIC DISCLOSURES OF THE FINANCIAL STATEMENTS
1 Fair value of Property, Plant and Equipment. 194
2 Segment analysis of segment revenue, segment results and profit before tax. 206-208
3 Reconciliation of weighted average number of shares for calculating EPS and diluted EPS. 206
4 Particulars of significant/ material assets and immovable property including location and area of land. 181
5 Disclosure of product wise data mentioning, product revenue, profit etc. 206, 207
6 Disclosure of discounts on revenue. 202
7 Sector wise analysis of deposits and advances. 195, 196
8 Complete set of financial statements (Balance sheet, Income statement & Cash flow) for Islamic banking operations. N/A
9 Status for adoption of Islamic Financial Accounting Standards (IFAS) issued by the ICAP. 162
10 Summary of significant transactions and events that have affected the company‘s financial position and performance during the year. 181
11 Forced sale value in case of revaluation of Property, Plant and Equipment or investment property. N/A
12 Distribution of shareholders (Number of shares as well as category wise, e.g. Promoter, Directors/Executives or close family member of Directors/Executives etc.). 216-217
13 Particulars of major foreign shareholders, other than natural person, holding more than 5% of paid up capital in the company in Pattern of Shareholding. 217
14 Particulars where company has given loans or advances or has made investments in foreign companies or undertakings. N/A
15 Accounts Receivable in respect of Export Sales - Name of company or undertaking in case of related party and in case of default brief description of any legal action
taken against the defaulting parties. 195, 196
16 Treasury shares in respect of issued share capital of a company. N/A
17 In describing legal proceedings, under any court, agency or government authority, whether local or foreign, include name of the court, agency or authority in which the
proceedings are pending, the date instituted, the principal parties thereto, a description of the factual basis of the proceeding and the relief sought. 202
18 Management assessment of sufficiency of tax provision made in the company’s financial statements shall be stated along with comparisons of tax provision as per
accounts vis a vis tax assessment for last three years. 206
19 Income tax reconciliation as required by IFRS and applicable tax regime for the year. 206
20 In respect of loans and advances, other than those to the suppliers of goods or services, the name of the borrower and terms of repayment if the loan or advance
exceeds rupees one million, together with the collateral security, if any. N/A
21 Disclosure about Human Resource Accounting (includes the disclosure of process of identifying and measuring the cost incurred by the company to recruit, select,
hire, train, develop, allocate, conserve, reward and utilize human assets). 214
22 In financial statements issued after initial or secondary public offering(s) of securities or issuance of debt instrument(s) implementation of plans as disclosed in the
prospectus/offering document with regards to utilization of proceeds raised till full implementation of such plans. N/A
23 Where any property or asset acquired with the funds of the company and is not held in the name of the company or is not in the possession and control of the
company, this fact along with reasons for the property or asset not being in the name of or possession or control of the company shall be stated; and the description
and value of the property or asset, the person in whose name and possession or control it is held shall be disclosed. N/A
24 Standards, amendments and interpretations adopted during the current year along with their impact on the company’s financial statements. 182-183
25 Standards, amendments and interpretations, not yet effective and not adopted along with their impact on the company’s financial statements. 182-183
ANNEXURE ‘V’ - SPECIFIC DISCLOSURES REQUIRED FOR SHARIAH COMPLIANT COMPANIES AND THE COMPANIES LISTED ON THE ISLAMIC INDICES
Following disclosures are required under clause 10 of the Fourth Schedule of the Companies Act, 2017 for Sharia complaint companies and the companies listed on Islamic index:
a) Loans/advances obtained as per Islamic mode;
b) Shariah compliant bank deposits/bank balances;
c) Profit earned from shariah compliant bank deposits/bank balances;
d) Revenue earned from a shariah compliant business segment;
e) Gain/loss or dividend earned from shariah compliant investments; 213
f) Exchange gain earned from actual currency;
g) Mark up paid on Islamic mode of financing;
h) Relationship with shariah compliant banks; and
i) Profits earned or interest paid on any conventional loan or advance.

Financial
Statements
172 Independent Auditors’ Report
176 Statement of Financial Position
177 Statement of Profit or Loss
178 Statement of Comprehensive Income
179 Statement of Cash Flows
180 Statement of Changes in Equity
181 Notes to the Financial Statements
216 Pattern of Shareholding
217 Categories of Shareholding
220 Notice of Annual General Meeting
(Urdu)
224 Directors’ Report to the Members
(Urdu)
Proxy Form
Proxy Form (Urdu)
E-Dividend Mandate Form

Independent Auditor’s Report
EY Ford Rhodes UAN: +9221 111 113937 (EYFR)

Chartered Accountants Tel: +9221 3565 0007-11
Progressive Plaza, Beaumont Road Fax: +9221 3568 1965
P.O.Box 15541, Karachi 75530 [email protected]
Pakistan ey.com/pk
To the members of Cherat Packaging Limited
Report on the Audit of the Financial Statements
Opinion
We have audited the annexed financial statements of Cherat Packaging Limited (the Company), which comprise
the statement of financial position as at 30 June 2021, and the statement of profit or loss, the statement of
comprehensive income, the statement of cash flows and the statement of changes in equity 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, the statement of comprehensive income, the statement
of cash flows and the statement of changes in equity 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 30 June 2021 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 period. 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.

Following is the Key audit matter:
Key audit matter How the matter was addressed in our audit
1. Valuation of stock-in-trade
As at reporting date, the Company held stock-in-trade Our key audit procedures in this area amongst others
amounting to Rs. 3,152.295 million which constitutes included the following:
25.044% of total assets, as disclosed in note 10 to the - Obtained an understanding of the Company’s
financial statements. valuation process for stock-in-trade and tested
controls relevant to such process.
As described in note 3.5 to the financial statements,
stock-in-trade is measured at lower of cost and Net - Tested the calculations of per unit cost of finished
Realizable Value (NRV). The cost of work-in-process and goods and assessed the appropriateness of
finished goods is determined at average manufacturing management’s basis for the allocation of cost and
cost including a proportion of production overheads. production overheads.
Judgements are required to determine the appropriate
basis for costing and its valuation. - Observed physical stock count activities to
ascertain the condition and existence of stock-in-
Given the significance of the amount involved and the trade, performed testing on a sample of items to
level of judgements and estimates required to value the assess their NRV and evaluated the adequacy of
stock-in-trade, we have identified valuation of stock-in- NRV adjustment for stock-in-trade as at the year
trade as a key audit matter. end.
- Assessed the adequacy of the related disclosures

in accordance with the applicable financial
reporting standards.
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.
The 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, the statement of comprehensive income,
the statement of cash flows and the statement of changes in equity 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) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the
Company and deposited in the Central Zakat Fund established under section 7 of that Ordinance
The engagement partner on the audit resulting in this independent auditor’s report is Tariq Feroz Khan.
Chartered Accountants
Place: Karachi
Date: 02 September 2021

as at June 30, 2021
Note 2021 2020
(Rupees in ‘000)
ASSETS

NON-CURRENT ASSETS
Fixed assets
Property, plant and equipment 4 5,015,073 5,096,317
Intangible assets 5 4,649 5,635
5,019,722 5,101,952
Long-term investments 6 949,710 469,080
Long-term loan 7 - 100
Long-term security deposits 8 9,378 9,378

5,978,810 5,580,510
CURRENT ASSETS
Stores, spare parts and loose tools 9 389,371 322,853
Stock-in-trade 10 3,152,295 2,622,464
Trade debts 11 2,254,629 1,966,580
Loans and advances 12 11,682 776
Trade deposits and short-term prepayments 13 39,937 40,334
Other receivables 14 162,475 277,050
Taxation – net 575,487 335,142
Cash and bank balances 15 22,468 15,022

6,608,344 5,580,221
TOTAL ASSETS

12,587,154 11,160,731

SHARE CAPITAL AND RESERVES

Share capital 16 425,069 425,069
Reserves 17 5,614,771 4,349,335

6,039,840 4,774,404
NON-CURRENT LIABILITIES
Long-term financing 18 2,065,544 2,638,802
Deferred taxation 19 571,478 226,669
Government grant 20 6,005 9,566

2,643,027 2,875,037
CURRENT LIABILITIES
Trade and other payables 21 1,146,325 534,434
Accrued mark-up 88,392 178,365
Short-term borrowings 22 1,944,741 2,630,780
Current maturity of long-term financing 18 703,007 154,600
Current maturity of Government grant 20 11,535 3,189
Unclaimed dividend 23 10,287 9,922
3,904,287 3,511,290
CONTINGENCIES AND COMMITMENTS

24
TOTAL EQUITY AND LIABILITIES 12,587,154 11,160,731

The annexed notes from 1 to 43 form an integral part of these financial statements.
Amer Faruque Aslam Faruque Yasir Masood

Chief Executive Director Chief Financial Officer

Note 2021 2020
(Rupees in ‘000)
Turnover – net 25 11,255,102 9,436,193

Cost of sales 26 (9,317,477) (8,262,464)

Gross profit 1,937,625 1,173,729

Distribution costs 27 (194,638) (164,781)
Administrative expenses 28 (105,918) (95,009)
Other expenses 29 (89,444) (53,389)
(390,000) (313,179)

Other income 30 35,669 21,631

Operating profit 1,583,294 882,181

Finance costs 31 (384,772) (783,503)

Profit before taxation 1,198,522 98,678

Taxation
Current (4,466) (141,498)
Prior - 1,238
Deferred (338,964) 111,817
32 (343,430) (28,443)

Net profit for the year 855,092 70,235

Earnings per share - basic and diluted 33 Rs. 20.12 Rs. 1.65



Statement of Comprehensive Income
2021 2020
(Rupees in ‘000)
Net profit for the year 855,092 70,235

Other comprehensive income

Items that may not be reclassified subsequently to
the statement of profit or loss:
Unrealized gain on remeasurement of equity instrument
at fair value through other comprehensive income 480,611 314,465
Actuarial gain on defined benefit plan - net of deferred tax 14,747 20,072
495,358 334,537
Total comprehensive income for the year 1,350,450 404,772



Statement of Cash Flows
Note 2021 2020
(Rupees in ‘000)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 1,198,522 98,678
Adjustments for:
Depreciation 4.1.4 333,369 340,010
Amortization 5.1 986 1,375
Gain on disposal of operating property, plant and equipment 4.1.5 (9,485) (1,271)
Allowance for Expected Credit Loss 29 - 25,704
Exchange loss 29 - 17,037
Government grant amortized 20 (10,555) (403)
Share of profit from joint venture 30 (19) (48)
Dividend income 30 (5,328) (4,843)
Finance costs 31 384,772 783,503
693,740 1,161,064
1,892,262 1,259,742
(Increase) / decrease in current assets:
Stores, spare parts and loose tools (66,518) (16,758)
Stock-in-trade (529,831) 506,090
Trade debts (288,049) (423,149)
Loans and advances (10,906) 993
Trade deposits and short-term prepayments 397 2,999
Other receivables 114,575 310,337
(780,332) 380,512
Increase in current liabilities:
Trade and other payables 632,483 31,267
Cash generated from operations 1,744,413 1,671,521
Income tax paid (244,811) (102,122)
Long-term loans and security deposit - net 100 1,875
Net cash generated from operating activities 1,499,702 1,571,274
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure incurred - net of borrowing costs 4.2 (259,209) (283,154)
Additions to intangible assets 5 - (689)
Proceeds from disposal of operating property, plant and equipment 4.1.5 17,773 4,608
Dividend received 5,328 4,843
Net cash used in investing activities (236,108) (274,392)
CASH FLOWS FROM FINANCING ACTIVITIES
Long-term financing - net (9,511) (78,440)
Short-term borrowings (686,039) (319,565)
Finance costs paid (475,949) (801,027)
Dividend paid (84,649) (95,967)
Net cash used in financing activities (1,256,148) (1,294,999)
Net increase in cash and cash equivalents 7,446 1,883
Cash and cash equivalents as at the beginning of the year 15,022 13,139
Cash and cash equivalents as at the end of the year 15 22,468 15,022


Statement of Changes in Equity
Reserves
Issued, Capital Other Components
Reserve Revenue Reserves of Equity
Sub-
scribed Actuarial Unrealized Total
and (loss) / gain (loss) / gain Sub-total
Paid-up Share General Unappro-
priated on gratuity on listed
Capital premium reserve profit fund-net of equity
deferred tax investment
(Rupees in ‘000)
Balance as at July 01, 2019 386,426 998,628 180,000 2,971,612 (19,830) (50,598) 4,079,812 4,466,238

Final cash dividend for the year ended
June 30, 2019 @ Rs. 2.5 per share - - - (96,606) - - (96,606) (96,606)

Bonus shares issued in the ratio of 10
shares for every 100 shares held 38,643 - - (38,643) - - (38,643) -

Net profit for the year - - - 70,235 - - 70,235 70,235

Other comprehensive income for the year - - - - 20,072 314,465 334,537 334,537

Total comprehensive income for the year - - - 70,235 20,072 314,465 404,772 404,772

Balance as at June 30, 2020 425,069 998,628 180,000 2,906,598 242 263,867 4,349,335 4,774,404

Balance as at July 01, 2020 425,069 998,628 180,000 2,906,598 242 263,867 4,349,335 4,774,404

Final cash dividend for the year ended
June 30, 2020 @ Re. 1.00 per share - - - (42,507) - - (42,507) (42,507)

Interim cash dividend for the year ended
June 30, 2021 @ Re. 1.00 per share - - - (42,507) - - (42,507) (42,507)

Net profit for the year - - - 855,092 - - 855,092 855,092

Other comprehensive income for the year - - - - 14,747 480,611 495,358 495,358

Total comprehensive income for the year - - - 855,092 14,747 480,611 1,350,450 1,350,450

Balance as at June 30, 2021 425,069 998,628 180,000 3,676,676 14,989 744,478 5,614,771 6,039,840




Notes to the Financial Statements
1. THE COMPANY AND ITS OPERATIONS

1.1 Cherat Packaging Limited (the Company) was incorporated in Pakistan as a public company limited
by shares in the year 1989. Its main business activities are manufacturing, marketing and sale of
paper sacks, polypropylene bags and flexible packaging material. The Company is listed on Pakistan
Stock Exchange Limited. The geographical location and addresses of the Company’s business units /
immovable assets are as under:

Business unit Address
Registered office / sales office 1st Floor, Betani Arcade, Jamrud Road, Peshawar
Head office 3rd Floor, Modern Motors House, Beaumont Road,
Karachi
Sales office 3, Sunder Das Road, Lahore
Sales office 1st Floor, Razia Sharif Plaza, Jinnah Avenue, Blue Area,
Islamabad

Bags manufacturing division Plot # 26 Gadoon Amazai Industrial Estate, District Swabi
(immoveable assets) (Land measuring area - 13 acres)

Flexible packaging division Plot # 4, Gadoon Amazai Industrial Estate, District Swabi
(immoveable assets) (Land measuring area - 8.09 acres)

1.2 Summary of significant transaction(s) and event(s) that have affected Company’s financial position and
performance during the year is as follows:

1.2.1 Impact of Covid-19 on the Financial Statements

Covid-19 is a global pandemic which has affected the whole world and Pakistan is not an exception.
Businesses are badly affected due to lock downs to fight Covid-19 since March 2020. Construction and
FMCG sectors were fortunate to be moderately affected in this situation. Consequently, our operations
were moderately affected. The situation, however, has now improved on the back of steps taken by the
Government. The Company has taken all necessary measures for the health and safety of its employees.
Employees were also allowed to work from their homes during Covid-19. The Management fully
support the Government’s stance of vaccination. It believes that almost all of its staff will get vaccinated
by the end of August 2021. The Company also availed Government’s schemes for financing wages &
salaries and deferment of principal repayments and made required disclosures. There is no significant
accounting impact of Covid-19 in these financial statements.
1.2.2 Overall, the finance cost of the Company significantly decreased primarily due to the decrease in
discount rate by the State Bank of Pakistan (SBP).

2. BASIS OF PREPARATION

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:

- International Financial Reporting Standards (IFRS) issued by the International Accounting Standards
Board (IASB) as notified under the Companies Act, 2017 (the Act);


- Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of
Pakistan as notified under the Act; and

- Provisions of and directives issued under the Act.

Where provisions of and directives issued under the Act differ from the IFRS, the provisions of and
directives issued under the Act, have been followed.

2.2 Accounting convention

These financial statements have been prepared on the basis of historical cost convention except for
certain items as disclosed in the relevant accounting policies.

2.3 New standards, amendments, improvements to approved accounting standards and the framework for
financial reporting

2.3.1 Amendments to the approved accounting standards and the framework for financial reporting that
became effective during the current year

The Company has adopted the following amendments to International Financial Reporting Standards
(IFRSs) and the framework for financial reporting which became effective for the current year:
Amendment or framework
IFRS 3 Business Combinations - Definition of a Business
(Amendments)
IFRS 9 / IAS 39 / IFRS 7 Interest Rate Benchmark Reform (Amendments)
IAS 1 / IAS 8 Definition of Material (Amendments)
Conceptual Framework for Financial Reporting

The adoption of the above amendments to the approved accounting standards and the framework for
financial reporting did not have any material effect on the financial statements.

2.3.2 Standards, amendments and improvements to the approved accounting standards that are not yet
effective

The following amendments and improvements to the approved accounting standards as applicable in
Pakistan would be effective from the dates mentioned below against the respective amendments or
improvements:

Effective date (annual periods
Amendment or improvement beginning on or after)

IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16 Interest Rate Benchmark Reform - Phase 2 (Amendment) January 01, 2021
IFRS 16 Covid-19 Related Rent Concessions
beyond 30 June 2021 (Amendments) April 01, 2021
IFRS 3 Reference to the Conceptual Framework (Amendments) January 01, 2022
IAS 16 Property, Plant and Equipment: Proceeds
before Intended Use (Amendments) January 01, 2022
IAS 37 Onerous Contracts – Costs of Fulfilling a Contract (Amendments) January 01, 2022
IAS 1 Classification of Liabilities as Current or Non-current (Amendments) January 01, 2023
IAS 1 Disclosure of Accounting Policies (Amendments) January 01, 2023
IAS 8 Definition of Accounting Estimates (Amendments) January 01, 2023
IAS 12 Deferred tax related to Assets and Liabilities
arising from a single transaction (Amendments) January 01, 2023
IFRS 10 / IAS 28 Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture (Amendment) Not yet finalized

Improvements to accounting standards issued by the IASB (2018-2020 cycle)

beginning on or after)
IFRS 9 Financial Instruments – Fees in the ‘10 percent’
test for derecognition of financial liabilities January 01, 2022
IAS 41 Agriculture – Taxation in fair value measurements January 01, 2022
IFRS 16 Leases: Lease incentives January 01, 2022
The above amendments and improvements to the approved accounting standards are not expected to
have any material impact on the Company’s financial statements in the period of initial application.
Further, the following new standards have been issued by IASB which are yet to be notified by the
SECP for the purpose of applicability in Pakistan and are not expected to have any material impact on
the Company’s financial statements in the period of initial application.

beginning on or after)
Standard
IFRS 1 First-time Adoption of International Financial
Reporting Standards 01 January 2004
IFRS 17 Insurance Contracts 01 January 2023
2.4 Significant accounting estimates and judgments

The preparation of the Company’s financial statements requires management to make judgments,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and
liabilities, and the disclosure of contingent liabilities and assets, at the end of the reporting period.
However, uncertainty about these estimates and judgements could result in outcomes that require
a material adjustment to the carrying amount of the asset or liability affected in future periods. The
management continually evaluates estimates and judgments which are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable under
current circumstances. Revisions to accounting estimates are recognized prospectively.
In the process of applying the accounting policies, management has made the following estimates and
judgments which are significant to the financial statements:
2.4.1 Property, plant and equipment

The Company reviews appropriateness of the rate of depreciation, useful life and residual value used
in the calculation of depreciation. Further, where applicable, an estimate of the recoverable amount of
asset is made for possible impairment on an annual basis. In making these estimates, the Company
uses the technical resources available with the Company. Any change in the estimates in the future
might affect the carrying amount of respective item of operating property, plant and equipment, with
corresponding effects on the depreciation charge and impairment, if any, for that period.
2.4.2 Taxation

Current
In applying the estimate for income tax payable, the Company takes into account the applicable tax
laws and the decision by appellate authorities on certain issues in the past. Any instance where the
Company’s view differs from the view taken by the income tax department at the assessment stage and
where the Company considers that its view on items of material nature is in accordance with law, the
amounts are shown as contingency.


Deferred
Deferred tax is provided in full using the balance sheet liability method on all temporary differences
arising at the statement of financial position date, between the tax bases of the assets and the liabilities
and their carrying amounts. Deferred tax liabilities are generally recognized for all taxable temporary
differences and deferred tax assets are recognized for all deductible temporary differences, unused tax
losses and unused tax credits to the extent that it is probable that sufficient future taxable profits will be
available against which these can be utilized.
Deferred tax is calculated at the rates that are expected to apply to the period when the differences
may reverse, based on tax rates and tax laws that have been enacted or substantively enacted by the
statement of financial position date. In this regard, the effects on deferred taxation of the portion of
income expected to be subject to final tax regime is adjusted. Deferred tax is charged or credited to the
statement of profit or loss.
2.4.3 Stock-in-trade, stores, spare parts and loose tools

The Company reviews the Net Realizable Value (NRV) of stock-in-trade, stores and spare parts and
loose tools to assess any diminution in the respective carrying values. NRV is estimated with reference
to the estimated selling price in the ordinary course of business less the estimated costs of completion
and estimated costs necessary to make the sale.
2.4.4 Staff retirement benefits

Certain actuarial assumptions have been adopted for valuation of present value of defined benefit
obligations and fair value of plan assets. Any change in these assumptions in future years might affect
gains and losses in those years. The actuarial valuation involves making assumptions about discount
rate, expected rate of return on assets, future salary increases and mortality rates.
2.4.5 Contingencies

The assessment of the contingencies inherently involves the exercise of significant judgment as the
outcome of the future events cannot be predicted with certainty. The Company, based on the availability
of the latest information, estimates the value of contingent assets and liabilities which may differ on the
occurrence / non-occurrence of the uncertain future events.
2.4.6 Allowance for Expected Credit Losses (ECL) on financial assets

The Company has applied the standard’s simplified approach and has calculated ECLs based on
lifetime expected credit losses. The Company has established a provision matrix that is based on the
Company’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors
and the economic environment. At every reporting date, the historical credit loss experience is updated
and forward-looking factors are analyzed. The Company’s historical credit loss experience and forecast
of economic conditions may not be representative of actual default in the future.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out
below. These polices have been consistently applied to all the years presented, unless otherwise stated.
3.1 Property, plant and equipment

Property, plant and equipment except for land and capital work-in-progress are stated at cost less
accumulated depreciation and impairment loss, if any. Land and capital work-in-progress are stated at
cost less impairment, if any. Capital work-in progress consists of expenditure incurred and advances
made in the course of an asset’s construction and installation. Depreciation is charged to statement of
profit or loss applying the reducing balance method except for computers which are depreciated on
straight-line method, at the rates mentioned in note 4.1 to these financial statements, and certain plant

and machinery of flexible packaging division as mentioned in note 4.1.1 to these financial statements
which are depreciated using the units of production method. Depreciation is charged from the month in
which an asset is available for use, while no depreciation is charged in the month in which an asset is
disposed off.
Maintenance and repairs are charged to the statement of profit or loss as and when incurred. Major
renewals and improvements which increase the asset’s remaining useful economic life or the performance
beyond the current estimated levels are capitalized and the assets so replaced, if any, are retired.
Gains or losses on disposal of property, plant and equipment, if any, are recognized in the statement of
profit or loss.
The carrying values of property, plant and equipment are reviewed for impairment annually when events
or changes in circumstances indicate that the carrying values may not be recoverable. If such indications
exist and where the carrying values exceed the estimated recoverable amounts, the assets are written
down to the recoverable amounts.
3.2 Intangible assets

An intangible asset is recognized if it is probable that the future economic benefits that are attributable
to the asset will flow to the Company and the cost of such assets can also be measured reliably.
Computer software and implementation costs that are directly associated with the computer and
computer controlled machines which cannot operate without the related specific software, are included
in the cost of respective assets. Software which is not an integral part of the related hardware is classified
as intangible asset.
Intangible assets are stated at cost less accumulated amortization and impairment loss, if any. Intangible
assets are amortized on straight line method when assets are available for use. Amortization is charged
from the month of the year in which addition / capitalization occurs while no amortization is charged in
the month in which an asset is disposed off.
3.3 Investments

3.3.1 Joint Venture

The Company has interest in a jointly controlled entity. The Company combines its share and recognizes
its interest in the joint venture using the equity method. Under equity method, the investment in joint
venture is carried in the statement of financial position at cost plus post acquisition changes in the
Company’s share of net assets of the joint venture. The statement of profit or loss reflects the share of
the results of operations of joint venture.
After application of the equity method, the Company determines whether it is necessary to recognize
an additional impairment loss on the Company’s investment in joint venture. The Company determines
at each reporting date whether there is any objective evidence that the investment in joint venture is
impaired. If this is the case, the Company calculates the amount of impairment loss as the difference
between the recoverable amount of joint venture and their carrying value and recognizes the amount in
the statement of profit or loss.
Financial statements of joint venture are prepared for same reporting period as that of the Company,
using consistent accounting policies in line with that of the Company.
3.3.2 At fair value through other comprehensive income

These investments are initially recognized at cost, being the fair value of the consideration paid including
transaction cost. Subsequent to initial recognition, these investments are re-measured at fair value
(quoted market price).

All gains or losses from change in the fair value of these investments are recognized directly in other
comprehensive income.

3.3.3 At fair value through profit or loss

Financial assets that are acquired principally for the purpose of generating profit from short-term
fluctuation in prices are classified as ‘financial assets at fair value through profit or loss’ category.
These investments are initially recognized at fair value, relevant transaction costs are taken directly to
the statement of profit or loss and subsequently measured at fair value. Net gains and losses arising on
changes in fair value of these financial assets are taken to the statement of profit or loss in the period in
which they arise.
3.4 Stores, spare parts and loose tools

These are valued at lower of weighted average cost and estimated NRV except items in-transit, if any,
which are stated at invoice value plus other charges incurred thereon up to the date of the statement of
financial position.
Provision / write-off, if required, is made in financial statements for slow moving, obsolete and unusable
items to bring their carrying value down to NRV.
3.5 Stock-in-trade

Raw materials and finished goods are valued at lower of weighted average cost and estimated NRV,
except items in-transit, if any, which are valued at cost comprising invoice values plus other charges
incurred thereon up to the date of statement of financial position.
Work-in-process is valued at weighted average cost including a proportion of manufacturing overheads.
Cost signifies in relation to:

Raw and packing material - Purchase cost and other direct expenses on weighted
average basis

Finished goods and work-in-process - Cost of direct material, labour and proportion of manufacturing
overheads

Stock-in-transit - Invoice value plus other charges paid thereon up to the
statement of financial position date
Provision, if required is made in the financial statements for slow moving, obsolete and unusable items
to bring their carrying value down to NRV. NRV signifies the estimated selling price in the ordinary course
of business less the estimated cost of completion and selling expenses.
3.6 Trade debts, loans, deposits and other receivables

Trade debts, loans, deposits and other receivables are stated initially at fair value and subsequently
measured at amortized cost using the effective interest rate method. Provision is made on the basis of
lifetime ECLs that result from all possible default events over the expected life of the trade debts, loans
and other receivables. Bad debts are written off when considered irrecoverable.
3.7 Cash and cash equivalents

These are stated at cost. For the purpose of statement of cash flows, cash and cash equivalents comprise
of cash in hand and bank balances.

3.8 Share capital

Ordinary shares are classified as equity and recognized at their face value. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds.
3.9 Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
3.9.1 Financial assets

The financial assets of the Company mainly include investments excluding investment in a joint venture,
loans, deposits, trade debts, other receivables and cash & bank balances.
On initial recognition, a financial asset is classified as measured at amortised cost, Fair Value through
Other Comprehensive Income (FVOCI) – debt investment, FVOCI – equity investment, or Fair Value
through Profit or Loss (FVTPL).
The classification of financial assets is generally based on the business model in which a financial asset
is managed and its contractual cash flow characteristics.
Based on the business model of the Company, the financial assets of the Company are measured and
classified as follows:
- Investments, excluding investment in a joint venture are carried at FVOCI – equity investment; and
- Trade debts and other financial assets are carried at amortised cost.
3.9.2 Financial liabilities

Financial liabilities - loans and borrowings are initially recognized at fair value, net of transaction costs
incurred and subsequently carried at amortized cost using the effective interest method. These are
classified as current liabilities unless the Company has an unconditional / contractual right to defer
settlement of the liability for at least twelve months after the statement of financial position date. The
Company has not designated any financial liabilities at FVTPL.
3.9.3 Offsetting of financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported in the statement of financial
position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and
there is an intention to settle on a net basis or to realize the assets and settle liabilities simultaneously.
Incomes and expenses arising from such assets and liabilities are also offset accordingly.
3.10 Government grant
Government grants are recognized where there is reasonable assurance that the grant will be received
and all attached conditions will be complied with. When the grant relates to expense, it is recognized
as income on a systematic basis over the periods that the related costs, for which it is intended to
compensate, are expensed out.
3.11 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.

3.12 Contract liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Company
has received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before the Company transfers goods or services to the customer, a contract liability is
recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities
are recognised as revenue when the Company performs under the contract.
3.13 Foreign currency transactions

Transactions in foreign currencies are translated into Pakistani Rupees at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at
the statement of financial position date are translated into Pakistani Rupees at the foreign exchange rate
ruling at that date. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translations at the year-end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognized in the statement of profit or loss.
3.14 Revenue recognition

Revenue is recognized at the point in time when control of the asset is transferred to the customer. The
Company has concluded that it is acting as a principal in its revenue arrangements. Revenue is measured
at fair value of the consideration received or receivable and is recognized on the following basis:
3.14.1 Sale of goods

Revenue from sale of goods is recognized when or as control of goods have been transferred to a
customer either over time or at a point in time, when the performance obligations are met. It is recorded
at net of trade discounts and rebates.
3.14.2 Other income

Profit on savings accounts is recognized on effective interest rate method.
Dividend income is recognized when the right to receive such payment is established.
Other revenues are accounted when performance obligations are met.

3.15 Staff retirement benefits

3.15.1 Gratuity fund

The Company operates an approved and funded gratuity scheme for all eligible employees who have
completed the minimum qualifying period of service. The scheme is administered by the trustees
nominated under the trust deed. The contributions to the scheme are made in accordance with actuarial
valuation using Projected Unit Credit method. Actuarial gains and losses are recognized in full in the
period in which they occur in the other comprehensive income. All the past service costs are recognized
at the earlier of when the amendments or curtailment occurs and when the Company has recognized
related restructuring or terminations benefits.
3.15.2 Provident fund

The Company operates an approved defined contributory provident fund scheme for all permanent
employees who have completed the minimum qualifying period of service. Equal monthly contributions
are made by the Company and the employees to the fund at the rate of 8.33% of basic salary.

3.16 Provisions

Provisions are recognized when the Company has a present (legal or constructive) obligation as a result of
past events, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate of the obligation can be made. Provisions are reviewed at each
statement of financial position date and adjusted to reflect the current best estimate.
3.17 Taxation

3.17.1 Current
Provision for current tax is based in accordance with Income Tax Ordinance, 2001.

3.17.2 Deferred
Deferred tax is recognized using the balance sheet liability method, on all temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts appearing in the financial
statements. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax
assets are recognized for all deductible temporary differences to the extent that it is probable that the
temporary differences will reverse in the future and taxable income will be available against which the
temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow
all or part of the deferred tax assets to be utilized.
As the provision for taxation has been made partially under the normal basis and partially under the final
tax regime, therefore, the deferred tax liability has been recognized on a proportionate basis in accordance
with Technical Release 27 issued by the Institute of Chartered Accountants of Pakistan.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates and tax laws that have been
enacted or substantially enacted by the statement of financial position date.
Deferred tax assets and liabilities are offset only if there is a legally enforceable right to offset current tax
assets and liabilities and they relate to the income tax levied by the same tax authority.
3.17.3 Sales tax

Revenues, expenses and assets are recognized net of amount of sales tax except:

- where sales tax incurred on a purchase of asset or service is not recoverable from the taxation
authority, in which case the sales tax is recognized as part of the cost of acquisition of the asset or
as part of the expense item as applicable;
- receivables or payables that are stated with the amount of sales tax included; and
- the net amount of sales tax recoverable from, or payable to, the taxation authority is included as part
of assets or liabilities in the statement of financial position.
3.18 Earnings per share
The Company presents basic and diluted Earnings Per Share (EPS) data for its ordinary shares. Basic EPS
is calculated by dividing the profit or 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 adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of
ordinary shares outstanding adjusted for the effects of all dilutive potential ordinary shares.

3.19 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective assets. All other borrowing costs are expensed in the period in which
they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with
the borrowing of funds.
3.20 Impairment of non-financial assets

The carrying amount of non-financial assets other than inventories are assessed at each reporting date
to ascertain whether there is any indication of impairment. If any such indication exists then the asset’s
recoverable amount is estimated. An impairment loss is recognized, as an expense in the statement of
profit or loss, for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. Value in use
is ascertained through discounting of the estimated future cash flows using a discount rate that reflects
the current market assessments of the time value of money and the risk specific to the assets. For the
purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units).
3.21 Impairment of financial assets

The Company recognizes an allowance for expected credit losses (ECLs) for all debt instruments not
held at fair value through profit or loss. ECLs are based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows that the Company expects to receive,
discounted at an approximation of the original effective interest rate. The expected cash flows will include
cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual
terms. For trade debts, the Company applies a simplified approach in calculating ECLs. Therefore,
the Company does not track changes in credit risk but instead recognizes a loss allowance based on
lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on
its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the
economic environment. The Company considers a financial asset in default when contractual payments
are 180 days past due. Further, the Company may consider a financial asset to be in default when internal
or external information indicates that the Company is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the Company. A financial
asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
3.22 Dividend and appropriation to reserves

Dividend and appropriation to reserves are recognized in the financial statements in the period in which
these are approved. Transfer between reserves made subsequent to the statement of financial position
date is considered as a non-adjusting event and is recognized in the financial statements in the period
in which such transfers are made.
3.23 Functional and presentation currency

These financial statements are presented in Pakistani Rupees, which is the Company’s functional and
presentation currency.

3.24 Segment reporting

Segment reporting is based on the operating (business) segments of the Company. An operating
segment is a component of the Company that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of

the Company’s other components. An operating segment’s operating results are reviewed regularly by
the Chief Executive Officer (CEO) to make decisions about resources to be allocated to the segment and
assess its performance, and for which discrete financial information is available.
Segment results that are reported to the CEO include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets,
income tax assets, liabilities and related income and expenditures. Segment capital expenditure is the
total cost incurred during the year to acquire property, plant and equipment.
3.25 Short-term leases

The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those
leases that have a lease term of 12 months or less from the commencement date and do not contain a
purchase option). Lease payments on such leases are recognized as expense on a straight-line basis
over the lease term.
3.26 Contingent liabilities

A contingent liability is disclosed when the Company has a possible obligation as a result of past events,
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 the Company has a present legal or
constructive 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 obligation cannot
be measured with sufficient reliability.
4. PROPERTY, PLANT AND EQUIPMENT

Note 2021 2020
(Rupees in ‘000)
Operating property, plant and equipment 4.1 4,757,442 4,953,165
Capital work-in-progress (CWIP) 4.2 257,631 143,152
5,015,073 5,096,317
4.1 Operating property, plant and equipment
COST Accumulated DEPRECIATION

Book
Value Deprecia-
As at As at As at Charge for As at tion
2021 Additions Disposals as at June rate %
July 01, June 30, July 01, Disposals the year June 30,
Description (Note 4.2) (Note 4.1.5) 30, 2021 per annum
2020 2021 2020 (Note 4.1.4) 2021
(Rupees in ‘000)
Leasehold land 72,417 4,605 - 77,022 - - - - 77,022 -
Building on
leasehold land 1,291,816 12,713 - 1,304,529 274,041 - 82,350 356,391 948,138 5-10
Plant and
machinery 4,308,963 34,098 - 4,343,061 1,057,713 - 171,953 1,229,666 3,113,395 5-7.5
Power and other

installations 189,154 26,951 - 216,105 52,987 - 11,900 64,887 151,218 7.5-10
Furniture and
fittings 55,229 9,147 - 64,376 10,423 - 4,932 15,355 49,021 5-10
Vehicles 158,922 41,534 (18,854) 181,602 69,562 (11,053) 23,191 81,700 99,902 20
Equipment 379,652 8,994 (383) 388,263 60,852 - 24,920 85,772 302,491 7.5-10
Computers 51,377 7,892 (322) 58,947 28,787 (218) 14,123 42,692 16,255 33.33
6,507,530 145,934 (19,559) 6,633,905 1,554,365 (11,271) 333,369 1,876,463 4,757,442

Book
Value Deprecia-
As at As at As at Charge for As at tion
2020 Additions as at June rate %
July 01, Disposals June 30, July 01, Disposals the year June 30,
Description (Note 4.2) 30, 2020 per annum
2019 (Note 4.1.5) 2020 2019 (Note 4.1.4) 2020
(Rupees in ‘000)
Leasehold land 57,080 15,337 - 72,417 - - - - 72,417 -

Building on
leasehold land 1,210,390 81,426 - 1,291,816 187,049 - 86,992 274,041 1,017,775 5-10

Plant and
machinery 4,239,435 69,528 - 4,308,963 876,058 - 181,655 1,057,713 3,251,250 5-7.5

Power and other
Installations 189,154 - - 189,154 40,729 - 12,258 52,987 136,167 7.5-10

Furniture and
fittings 33,728 21,568 (67) 55,229 6,578 (9) 3,854 10,423 44,806 5-10

Vehicles 149,485 18,856 (9,419) 158,922 55,613 (6,257) 20,206 69,562 89,360 20

Equipment 325,651 54,001 - 379,652 36,936 - 23,916 60,852 318,800 7.5-10

Computers 38,554 12,968 (145) 51,377 17,686 (28) 11,129 28,787 22,590 33.33

6,243,477 273,684 (9,631) 6,507,530 1,220,649 (6,294) 340,010 1,554,365 4,953,165
4.1.1 Following plant and machinery relating to Flexible Packaging Division are depreciated using units of
production method:

- Flexo graphic printer
- Rotogravure printer
- Extrusion line
- Laminators

4.1.2 Particulars of significant plant and machinery are given below:

Kraft paper bags plant
Tuber – 4 machines
Bottomer – 4 machines
Universal Papersack Line (tuber and bottomer)
Polypropylene bags plant

Extrusion line – 3 machines
Weaving line – 3 machines
Coating line – 3 machines
Printing line – 3 machines
Bags conversion line – 5 machines
Flexible packaging plant

Flexo graphic printer
Rotogravure printer
Extrusion line
Laminator – 2 machines
Bag making machine


4.1.3 Reconciliation of book value: Note 2021 2020
(Rupees in ‘000)
Book value as at the beginning of the year 4,953,165 5,022,828
Additions during the year - at cost 145,934 273,684
Depreciation charge for the year (333,369) (340,010)
Disposals during the year at book value 4.1.5 (8,288) (3,337)
Book value as at the end of the year 4,757,442 4,953,165
4.1.4 The depreciation charge for the year has been allocated to:
Note 2021 2020
(Rupees in ‘000)
Cost of sales 26 323,628 330,075
Distribution costs 27 7,330 7,142
Administrative expenses 28 2,411 2,793
333,369 340,010
4.1.5 The following operating property, plant and equipment were disposed off during the year:
Book Sale Gain Particulars of buyers and
Description Cost value proceeds (Note 30) Mode of disposal
relationship, if any
Vehicles
Toyota Corolla 2,019 999 999 - Employee car scheme Mr. Shahid Anwer - Employee
Audi 6,880 3,618 8,800 5,182 Tender Mr. Muhammad Asif
Suzuki Cultus 1,745 1,164 1,745 581 Insurance claim EFU Insurance
Individual assets having book

value less than Rs. 500,000
Vehicles 8,210 2,020 5,608 3,588

Equipment 383 383 383 -
Computer 322 104 238 134

2021 19,559 8,288 17,773 9,485
2020 9,631 3,337 4,608 1,271
4.1.5.1 None of the buyers had any relationship with any Director of the Company.
4.2 Capital work-in-progress
Leasehold Building on Plant and Power and Furniture

land leasehold other
machinery installations and fittings Vehicles Equipment Computers Total
land
(Rupees in ‘000)
Balance as at June 30, 2019

- 81,218 39,436 - 1,119 - 11,040 869 133,682
Capital expenditure incurred /

advances made during the year 15,337 10,370 111,078 21,560 20,578 20,916 71,216 12,099 283,154
Transferred to operating
property, plant and equipment (15,337) (81,426) (69,528) - (21,568) (18,856) (54,001) (12,968) (273,684)

Balance as at June 30, 2020

- 10,162 80,986 21,560 129 2,060 28,255 - 143,152
Capital expenditure incurred /

advances made during the year 4,605 47,060 - 110,781 9,388 42,161 38,526 7,892 260,413
Transferred to operating
property, plant and equipment (4,605) (12,713) (34,098) (26,951) (9,147) (41,534) (8,994) (7,892) (145,934)

Balance as at June 30, 2021 - 44,509 46,888 105,390 370 2,687 57,787 - 257,631

4.2.1 During the year borrowing costs, on long-term financing obtained specifically for this purpose (note:
18.3), have been capitalized amounting to Rs. 1.204 million, using a capitalization rate of 3.75% (2020:
Nil) per annum (2020: Nil) in Flexible Packaging Division.
4.3 Fair value of property, plant and equipment
The Company assessed fair value of property, plant and equipment (excluding land and building) in
December 2019 through an independent valuer. The Company used the fair value of plant and machinery
as per the valuation report and included all assets capitalized subsequently at book value. Resultantly,
the fair value of property, plant and equipment assessed amounts to Rs. 5.46 billion (2020: Rs. 5.57
billion); however, the same has not been incorporated in these financial statements.
5. INTANGIBLE ASSETS
Book Value Amortization
Additions Disposals As at as at Rate %
Description As at As at Disposals For the As at
during the during the July 01, June 30, per annum
July 01, June 30, year June 30,
year year
(Rupees in ‘000)
2021 ERP
System/Software 16,158 - - 16,158 10,523 - 986 11,509 4,649 10

2020 ERP
System/Software 15,469 689 - 16,158 9,148 - 1,375 10,523 5,635 10
5.1 The amortization charge for the year has been allocated to:
Note 2021 2020
(Rupees in ‘000)
Cost of sales 26 769 1,064

Administrative expenses 28 217 311
986 1,375
6. LONG-TERM INVESTMENTS

Investment in related party

At fair value through other comprehensive income 6.1 945,027 464,416

Joint Venture
Investment in a Joint Venture 6.2 4,683 4,664
949,710 469,080
6.1 At fair value through other comprehensive income
Cherat Cement Company Limited

5,327,698 (2020: 5,327,698) ordinary shares of Rs. 10/- each 945,027 464,416
6.2 Investment in a joint venture
As at the beginning of the year 6.2.1 4,664 4,616

Share of profit - unaudited 30 19 48
As at the end of the year 4,683 4,664
6.2.1 Represents 462,000 shares (2020: 462,000) of Rs. 10/- each representing 4.62% interest in UniEnergy
Limited (UEL), a public unlisted Company. UEL is formed for the generation and transmission of wind
power; however, the company has not yet commenced its commercial operations.
6.3 Investments in associated companies and undertakings have been made in accordance with the
requirements of the Companies Act, 2017.

7. LONG-TERM LOAN – secured, considered good
Note 2021 2020
(Rupees in ‘000)
Employee 7.1 33 133
Less: Current maturity 12 (33) (33)
- 100

7.1 Represents loan given to an employee as per the Company’s policy. The loan carries mark-up @ 10%
per annum and is secured against the provident fund balance of the employee.

8. LONG-TERM SECURITY DEPOSITS – considered good
Note 2021 2020
Sector wise analysis is as follows: (Rupees in ‘000)
Government sector – secured 9,228 9,228
Other sectors – unsecured 150 150
8.1 9,378 9,378
8.1 These deposits do not carry any interest.
9. STORES, SPARE PARTS AND LOOSE TOOLS

Stores 39,550 43,101
Spare parts 340,927 277,481
Loose tools 1,082 541
381,559 321,123
Stores-in-transit 7,812 1,730
389,371 322,853
10. STOCK-IN-TRADE

Raw material
In hand 1,706,229 957,086
In bonded warehouse 6,963 590,786
in-transit 943,179 504,044
2,656,371 2,051,916
Work-in-process 244,483 207,436
Finished goods 239,891 344,330
Polypropylene scrap goods / reworkable material 11,550 18,782
3,152,295 2,622,464
11. TRADE DEBTS

Considered good
- secured 11.1 85,178 33,854
- unsecured 11.3 2,213,121 1,976,396
2,298,299 2,010,250
Less: Allowance for Expected Credit Loss (43,670) (43,670)
11.2 2,254,629 1,966,580
11.1 Represents local sales and export sales. Export sales were made to Africa (2020: Africa) under Letter of
Credit and advance (2020: Letter of Credit).
11.2 Trade receivables are generally on 45 days term. Aging analysis of trade debts is as follows:
Note 2021 2020
(Rupees in ‘000)
Neither past due nor impaired 11.3 1,433,035 1,002,166
Past due but not impaired
- within 270 days 821,594 964,414
2,254,629 1,966,580

11.3 Includes Rs. 0.34 million receivable from Mirpurkhas Sugar Mills Limited, a related party. Maximum
aggregate amount outstanding at the end of any month during the year was Rs. 2.07 million (2020: Nil).
12. LOANS AND ADVANCES – considered good Note 2021 2020

(Rupees in ‘000)
Current portion of long term loans 7 33 33

Advances
Suppliers 12.1 & 12.2 7,342 743
Letters of credit 4,307 -
11,649 743
11,682 776
12.1 Sector wise analysis is as follow:

Government sector – secured 1,694 -
Other sectors – unsecured 5,648 743
7,342 743
12.2 These advances do not carry any interest.

13. TRADE DEPOSITS AND SHORT-TERM PREPAYMENTS

Trade deposits - unsecured, considered good 13.1 35,385 35,470
Short-term prepayments 4,552 4,864
39,937 40,334
13.1 These deposits were paid to non-governmental shipping agencies and do not carry any interest.
14. Other receivables Note 2021 2020

(Rupees in ‘000)
Sales tax adjustable 148,766 273,868
Gratuity fund 14.1 2,451 -
Others 11,258 3,182
162,475 277,050
14.1 Gratuity-fund Defined benefit plan

The Company operates an approved funded gratuity scheme for all eligible employees. Actuarial valuation
of the scheme is carried out every year and the latest actuarial valuation was carried out as at June 30, 2021.
2021 2020
(Rupees in ‘000)
Amounts recognized in the statement of financial position:
Present value of defined benefit obligations 105,978 95,427
Fair value of plan assets (108,429) (77,098)
(Asset) / liability recognized in the statement of financial position (2,451) 18,329

Amounts recognized in the statement of profit or loss:
Current service cost 15,063 12,936
Interest cost 7,823 10,650
Expected return on plan assets (6,954) (6,874)
15,932 16,712
Amounts recognized in other comprehensive income:
Actuarial gain / (loss) on defined benefit obligations 5,548 (259)
Actuarial gain on plan assets 15,044 20,331
20,592 20,072

Movement in the (asset) / liability in the Note 2021 2020
statement of financial position: (Rupees in ‘000)
As at the beginning of the year 18,329 33,689
Net charge for the year 15,932 16,712
Re-measurement chargeable in other comprehensive income (20,592) (20,072)
Contributions (16,120) (12,000)
As at the end of the year (2,451) 18,329

Movement in the present value of defined benefit obligation:
Current service cost 15,063 12,936
Interest cost 7,823 10,650
Benefits paid during the year (6,787) (8,686)
Actuarial (gain) / loss (5,548) 259

Movement in the fair value of plan assets:
Expected return 6,954 6,874
Contributions 16,120 12,000
Benefits paid during the year (6,787) (8,686)
Actuarial gain 15,044 20,331

Principal actuarial assumptions used are as follows: (Percentage)
Expected rate of increase in salary level – long term 9.50 7.50
Valuation discount rate 14.1.1 10.00 8.50
Rate of return on plan assets 10.00 8.50

2021 2020
Mortality rates SLIC 2001-2005 SLIC 2001-2005

14.1.1 The discount rate of 10% is representative of yields on long-term Government Bonds.

14.1.2 Expected gratuity expense to the plan for the year ending June 30, 2022 is Rs. 15.68 million.
14.1.3 Comparison for past years:

As at June 30, 2021 2020 2019 2018 2017
(Rupees in ‘000)
Present value of defined benefit obligations 105,978 95,427 80,268 67,420 (50,057)
Fair value of plan assets (108,429) (77,098) (46,579) (61,556) 91,705
(Surplus) / deficit (2,451) 18,329 33,689 5,864 41,648
Experience adjustment on plan liabilities 5,548 (259) (473) 2,174 3,261

Experience adjustment on plan assets 15,044 20,331 27,527 33,638 (20,987)
20,592 20,072 27,054 35,812 (17,726)
14.1.4 Composition of plan assets are as follows: 2021 2020

(Rupees in ‘000)
Government Securities 56,460 46,986
Mutual Funds / Shares 50,261 22,870
Bank balances 1,708 7,242
108,429 77,098

The expected return on plan assets is based on the market expectations and depends upon the
asset portfolio of the Company, at the beginning of the period, for returns over the entire life of related
obligation. The return on plan assets was assumed to equal the discount rate. Actual gain on plan assets
during the year amounts to Rs. 21.99 million (2020: Rs. 27.21 million).
2021
14.1.5 Sensitivity analysis
Discount rate Salary increase
+100 bps -100 bps +100 bps -100 bps
(Rupees in million)
Present value of obligations 100.269 (112.227) 112.707 (99.739)
15. CASH AND BANK BALANCES

Note 2021 2020
(Rupees in ‘000)
Cash in hand 668 397
Bank balances

Islamic banks
Current accounts 4,215 3,198

Conventional banks
Current accounts 15,691 8,441
Savings accounts 15.1 1,894 2,986
17,585 11,427
22,468 15,022

15.1 These carry effective profit rate of 5.50% (2020: 10.31%) per annum.

16. SHARE CAPITAL

16.1 Authorized capital
2021 2020 2021 2020

Number of shares (Rupees in ‘000)
100,000,000 100,000,000 Ordinary shares of Rs. 10/- each 1,000,000 1,000,000
16.2 Issued, subscribed and paid-up capital
2021 2020 2021 2020

Number of shares (Rupees in ‘000)
Ordinary shares of
Rs. 10/- each
26,207,242 26,207,242 - Issued as fully paid in cash 262,072 262,072
16,299,593 16,299,593 - Issued as bonus shares 162,997 162,997
42,506,835 42,506,835 425,069 425,069

16.3 Following is the detail of shares held by the related parties:
2021 2020
(Number of shares)
Faruque (Private) Limited 4,356,896 4,356,896
Cherat Cement Company Limited 3,122,532 3,122,532
Mirpurkhas Sugar Mills Limited 2,110,490 2,110,490
Greaves Pakistan (Private) Limited 2,135,034 2,135,034
11,724,952 11,724,952

16.4 Voting rights, Board selection, right of first refusal and block voting are in proportion to the shareholding.
17. RESERVES
Note 2021 2020

(Rupees in ‘000)
Capital reserve
Share premium 998,628 998,628

Revenue reserve
General reserve 180,000 180,000
Unappropriated profit 3,676,676 2,906,598
3,856,676 3,086,598
Other Components of Equity
Actuarial gain on gratuity fund-net of deferred tax 14,989 242
Unrealized gain on equity investment 744,478 263,867
759,467 264,109
5,614,771 4,349,335
18. LONG-TERM FINANCING - secured

Islamic banks
Fixed Assets Refinance Loan – I 18.1 225,000 315,000
Fixed Assets Refinance Loan – II 18.2 420,000 540,000
Islamic Finance Facility for Renewable Energy 18.3 103,366 -
748,366 855,000
Conventional banks
Fixed Assets Refinance Loan – III - 40,000
Fixed Assets Refinance Loan – IV 18.4 & 18.7 1,200,000 1,200,000
Fixed Assets Refinance Loan – V 18.5 & 18.7 600,000 600,000
1,800,000 1,840,000
2,548,366 2,695,000
Refinance Scheme for Payment of Wages and Salaries 18.6 & 20 220,185 98,402
2,768,551 2,793,402
Less: Current maturity of long-term financing (703,007) (154,600)
2,065,544 2,638,802

18.1 Represents long-term financing obtained from an Islamic bank under Diminishing Musharakah for the
import of Polypropylene Plant. It carries profit at the rate of 6 months’ KIBOR + 0.2% per annum. The
financing is repayable in 10 equal semi-annual installments which commenced after 30 months from
the date of first draw down i.e. from January 2019. The financing is secured against first pari-passu
hypothecation charge of Rs. 667 million over specific plant and machinery of the Company.
18.2 Represents long-term financing obtained from an Islamic bank under Diminishing Musharakah for the
import of Universal Papersack Line. The loan carries a profit rate of 6 months’ KIBOR + 0.2% per annum.
The financing is repayable in 10 equal semi-annual installments which commenced after 30 months from
the date of first drawdown i.e. from January 2020. It is secured against first pari-passu hypothecation
charge of Rs. 800 million on plant and machinery of the Company. As explained in note 18.7, during
the year the Company has revoked the principal deferment facility and paid the installments as per the
regular repayment schedule.
18.3 Represents a long-term financing obtained from an Islamic bank under State Bank of Pakistan’s Islamic
Financing Facility for Renewable Energy (IFRE) to setup a 0.96 MW Solar Power Project. It carries a flat
profit rate of SBP’s rate of 2% + 1.75% per annum. The financing is repayable in 20 equal semi-annual
installments commencing after 6 months from the date of first draw down i.e. April 2021. It is secured
against first pari-passu hypothecation charge of Rs. 160 million on plant and machinery of the Company.

18.4 Represents long-term financing obtained from a conventional bank for the import of Flexible Packaging
Plant. It carries mark-up at the rate of 6 months KIBOR+ 0.15% per annum. The financing is repayable
in 10 equal semi-annual installments commencing after 30 months from first draw down i.e. from August
2020 (considering one year deferment as explained in note 18.7, repayment will commence from August
2021). The financing is secured against first pari-passu hypothecation charge of Rs. 1,600 million on
plant and machinery of the Company. During the year, the Company has availed the principal deferment
facility, as mentioned in Note 18.7 of these financial statements.
18.5 Represents long-term financing obtained from a conventional bank for the import of Flexible Packaging
Plant. It carries mark-up at the rate of 6 months’ KIBOR+ 0.15% per annum. The financing is repayable
in 10 equal semi-annual installments commencing after 30 months from first draw down i.e. from
December 2020 (considering one year deferment as explained in note 18.7, repayment will commence
from December 2021). The financing is secured against first pari-passu hypothecation charge of Rs. 800
million on plant and machinery of the Company. During the year, the Company has availed the principal
deferment facility, as mentioned in Note 18.7 of these financial statements.
18.6 Represents long-term financing obtained from a conventional bank under the Refinance Scheme for
Payment of Wages and Salaries by State Bank of Pakistan. It carries a flat mark-up at the rate of 0.5%
to 1 % per annum. The SBP allowed rate as per the scheme is up to 3%. However, the effective interest
rate is calculated at respective draw down dates and the loan has been recognized at the present
value. The loan is repayable in 8 equal quarterly installments commenced from April 2021 discounted
at the effective rate of interest. The differential markup has been recognized as government grant (as
mentioned in note 20) which will be amortized to other income over the period of the facility. The financing
is secured against first pari-passu hypothecation charge over current assets of the Company.
18.7 The Company has availed the principal deferment facility for Fixed Assets Refinance Loan-II, Fixed
Assets Refinance Loan-IV and Fixed Assets Refinance Loan-V offered by the State Bank of Pakistan
through BPRD circular no. 13 of 2020 to dampen adverse effects of the Covid-19 and to provide relief
to the businesses. However, as mentioned in note 18.2, during the year the Company has revoked the
principal deferment facility and paid the installments as per the regular repayment schedule of Fixed
Assets Refinance Loan - II. Under this facility, the principal repayments of these loans fell due in the
financial year 2020-21 were deferred for one year and repayments will be restarted from financial year
2021-22 amounting to Rs. 360 million in total. However, servicing of the markup / profit was not affected.
Such deferment did not affect the credit history of the Company and accordingly was not reported in the
Electronic Credit Information Bureau (eCIB) as restructuring.
19. DEFERRED TAXATION

Note 2021 2020
Temporary taxable differences (Rupees in ‘000)
Accelerated tax depreciation 593,623 559,842
Deferred tax on actuarial gain on defined benefit plan 5,845 -

Temporary deductible differences
Unused tax credits (7,454) (18,624)
Unused minimum tax - (138,328)
Unused Alternate Corporate Tax (20,536) (176,221)
571,478 226,669
20. GOVERNMENT GRANT

As at the beginning of the year 12,755 -
Recognized during the year 15,340 13,158
Amortized during the year 30 (10,555) (403)
As at the end of the year 20.1 17,540 12,755
Current maturity (11,535) (3,189)
6,005 9,566

20.1 As aforementioned in note 18.6, the purpose of the government grant is to facilitate the Company in
making timely payments of salaries and wages to its employees in light of the Covid-19 pandemic. The
grant is conditional upon the fact that the Company would not terminate any employee, due / owing to
cash flow limitations, for a period of three months from the date of receipt of the first tranche.
21. TRADE AND OTHER PAYABLES Note 2021 2020

(Rupees in ‘000)
Creditors 334,548 228,537
Contract liabilities 21.1 2,712 708
Gratuity fund 14.1 - 18,329
Bills payable 357,338 106,305
Accrued liabilities 178,732 111,406
Sindh Infrastructure Development Cess 24.1 181,920 55,947
Workers’ Profits Participation Fund 21.2 64,169 5,194
Workers’ Welfare Fund 21.3 20,691 -
Retention money 6,215 8,008
1,146,325 534,434

21.1 These contract liabilities are unsecured and received under normal course of business. Revenue
recognized during the year from amounts included in contract liabilities at the beginning of the year
amounts to Rs. 0.71 million. (2020: Rs. 1.67 million).
21.2 Workers’ Profits Participation Fund Note 2021 2020

(Rupees in ‘000)
Interest thereon 31 16 620
5,210 35,410
Payments during the year (5,210) (35,410)
- -
Charge for the year 29 64,169 5,194

21.3 Workers’ Welfare Fund

As at the beginning of the year - -
Charge for the year 29 20,691 628.00
20,691 628.00
Adjusted during the year - (628.00)
As at the end of the year 20,691 -

22. SHORT-TERM BORROWINGS

Conventional banks
Short-term running finance 22.1 1,209,657 1,663,497

Islamic banks
Running Musharakah 22.2 735,084 967,283
1,944,741 2,630,780

22.1 Represents facilities obtained from various conventional banks amounting to Rs. 5,250 million (2020: Rs.
4,850 million) out of which Rs. 4,040.34 million (2020: Rs. 3,187 million) remains unutilized at the year
end. These facilities are secured against registered joint pari-passu hypothecation charge over stocks
and book debts for Rs. 6,471 million (2020: Rs. 6,466.67 million) and ranking hypothecation charge over
stocks and book debts of Rs. 534 million (2020: Nil). These facilities carry mark up of 1 and 3 months’
KIBOR plus spread ranging from 0.25% to 1.00% (2020: 1 and 3 months’ KIBOR plus spread ranging
from 0.20% to 1.00%) per annum.

22.2 Represents facilities obtained from various Islamic banks amounting to Rs. 1,700 million (2020: Rs.
1,600 million) out of which Rs. 964.92 million remains unutilized (2020: Rs. 632.72 million) at the year
end. These facilities are secured against registered joint pari-passu hypothecation charge over stocks
and book debts for Rs. 2,133.33 million (2020: Rs. 2,133.33) and ranking hypothecation charge over
stocks and book debts of Rs. 134 million (2020: Nil). These facilities carry profit rate of 1 and 3 months
KIBOR plus spread ranging from 0.20% to 0.75% (2020: 1 and 3 months’ KIBOR plus spread ranging
from 0.20% to 0.75%) per annum.
23. UNCLAIMED DIVIDEND

During the year, in accordance with section 244 of the Act, a separate bank account have been opened
and the amount has been transferred.

24. CONTINGENCIES AND COMMITMENTS Note 2021 2020
(Rupees in ‘000)

Outstanding letters of guarantee – conventional bank 24.1 62,857 156,910

Outstanding letters of credit – conventional banks 974,849 509,546

Duties payable on bonded stock 236 29,437

Capital commitments 24.3 14,597 38,851

24.1 Government of Sindh imposed an infrastructure fee on the goods entering or leaving the province
through the Sindh Finance (Amendment) Ordinance, 2007 which was challenged in the Honorable Sindh
High Court which granted an interim relief in May 2011, whereby the goods of petitioners will be cleared
by the Excise and Taxation Department on payment of 50% of the disputed amount and on furnishing
bank guarantee for the balance 50% amount till the final outcome of the case. The Company became
a party to the arrangement in February 2014 and issued bank guarantees in favor of the Department.
In the month of June 2021, Honorable High Court of Sindh has decided the case in favor of Excise and
Taxation Department putting the implementation of the decision in abeyance for 90 days, during which
the decision can be challenged in The Honorable Supreme Court of Pakistan. The amount of guarantee
issued up to June 30, 2021 for infrastructure fee is Rs. 182 million. The management has accrued
the amount in these financial statements. However, subsequent to the year end, the Company has
challenged the decision in The Honorable Supreme Court of Pakistan.
24.2 Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC) was
established in KPK with an aim to develop and manage industrial zones in KPK. The KPEZDMC offered
various incentives on development projects within KPK from the financial year 2016 to December 2019.
The Company has applied for the incentive against its Polypropylene bags line and other expansions
up till June 30, 2017. The total amount of incentive claimed is Rs. 147.94 million. This case is now in
final stage of approval. The amount is expected to be disbursed in two phases by the KPEZDMC. The
management of the Company is hopeful that the said amount will be realized in the following year,
however, as a matter of prudence, no income has yet been recorded in these financial statements.
24.3 Represents capital commitments extended to related parties.
25. TURNOVER – net 2021 2020

(Rupees in ‘000)

Local sales 12,750,443 10,761,299
Less: Sales tax 1,857,334 1,566,405
10,893,109 9,194,894
Less: Discounts & rebates 4,734 3,015
Net local sales 10,888,375 9,191,879
Export sales 366,727 244,314
11,255,102 9,436,193

25.1 All revenue earned by the Company is shariah compliant.

26. COST OF SALES
Note 2021 2020
Raw material consumed (Rupees in ‘000)
Stock as at the beginning of the year 957,086 2,181,600
Purchases 8,363,687 5,593,977
9,320,773 7,775,577
Stock as at the end of the year 10 (1,706,229) (957,086)
7,614,544 6,818,491
Duty drawback on export (2,146) (66)
7,612,398 6,818,425
Manufacturing overheads
Salaries, wages and benefits 26.1 571,437 471,276
Stores, spare parts and loose tools consumed 157,614 139,402
Fuel and power 291,354 304,307
Packing charges 192,195 155,425
Rent, rates and taxes 9,179 4,219
Repairs and maintenance 19,270 17,256
Depreciation 4.1.4 323,628 330,075
Amortization 5.1 769 1,064
Insurance 42,940 51,668
General office expenses 3,811 1,821
Vehicle running expenses 15,235 12,562
Travelling and conveyance 6,176 9,018
Communication expenses 5,061 4,817
Printing and stationery 2,158 2,416
Legal and professional charges 13,161 11,994
Freight and cartage 1,653 1,510
Subscription 3,257 2,264
Stores and spares parts – written off 162 58
Others 4,151 4,476
1,663,211 1,525,628
9,275,609 8,344,053

Work-in-process 207,436 175,331
As at the beginning of the year 10 (244,483) (207,436)
As at the end of the year (37,047) (32,105)

Polypropylene scrap goods / reworkable material
As at the end of the year 10 (11,550) (18,782)
Sales (32,756) (15,486)
(25,524) (23,476)
Cost of goods manufactured 9,213,038 8,288,472

Finished goods 344,330 318,322
As at the beginning of the year 10 (239,891) (344,330)
As at the end of the year 104,439 (26,008)
9,317,477 8,262,464
26.1 Includes expenditure in respect of provident fund and gratuity fund amounting to Rs. 11.75 million and
Rs. 12.27 million (2020: Rs. 11.15 million and Rs. 13.01 million ) respectively.

27. DISTRIBUTION COSTS Note 2021 2020
(Rupees in ‘000)
Salaries and benefits 27.1 62,648 50,017
Travelling and conveyance 1,747 9,317
Repair and maintenance 214 352
Rent, rates and taxes 1,720 1,241
Insurance 2,376 5,006
Printing and stationery 103 4,327
Depreciation 4.1.4 7,330 7,142
Freight and cartage 94,514 75,147
Export expenses 9,728 7,049
Others 8,282 260
194,638 164,781

28. ADMINISTRATIVE EXPENSES Note 2021 2020

(Rupees in ‘000)
Salaries and benefits 28.1 72,928 60,990
Directors’ fee 3,280 2,040
Travelling and conveyance 576 2,271
Printing and stationery 1,972 1,906
Rent, rates and taxes 1,545 900
Legal and professional charges 6,056 7,060
Insurance 5,198 4,000
Subscription 3,071 2,998
Advertisement 310 820
Depreciation 4.1.4 2,411 2,793
Amortization 5.1 217 311
Repairs and maintenance 227 454
General office expenses 972 193
Utilities 338 241
Others 19 22
105,918 95,009

Note 2021 2020

29. OTHER EXPENSES
(Rupees in ‘000)

Auditors’ remuneration 29.1 3,329 2,372
Donations 29.2 1,255 2,454
Allowance for Expected Credit Loss - 25,704
Workers’ Profits Participation Fund 21.2 64,169 5,194
Workers’ Welfare Fund 21.3 20,691 628
Exchange loss - 17,037
89,444 53,389

29.1 Auditors’ remuneration 2021 2020
(Rupees in ‘000)
Audit fee 1,000 935

Half yearly review and CCG certification 300 484
Tax and other services 1,641 586
Out of pocket expenses 388 367
3,329 2,372

29.2 Recipients of donations do not include any donee in which any director or his spouse had any interest
except for donation paid to Ghulam Faruque Trust. Following directors of the Company are also trustees
of the said trust:

- Mr. Amer Faruque
- Mr. Aslam Faruque
- Mr. Shehryar Faruque

30. OTHER INCOME Note 2021 2020
(Rupees in ‘000)
Income from financial assets
Profit on savings accounts - conventional banks 691 562
Dividend income from an associated company
– Cherat Cement Company Limited 30.1 5,328 4,843
Share of profit from investment in a joint
venture– UniEnergy Limited 6.2 19 48
16,593 5,856
Income from non-financial assets
Government grant amortized 20 10,555 403
Gain on disposal of operating property, plant and equipment 4.1.5 9,485 1,271
Scrap sales 9,591 14,504
35,669 21,631

30.1 Cherat Cement Company Limited is included as shariah compliant company at Pakistan Stock Exchange
under KMIALLSHR index and KMI-30 index.

31. FINANCE COSTS 2021 2020
Note
(Rupees in ‘000)
Islamic banks
Mark-up on long-term financing 53,974 122,478
Mark-up on short-term borrowings 47,905 83,722
Bank charges and duties 2,450 302
104,329 206,502
Conventional banks
Mark-up on long-term financing 144,404 251,358
Mark-up on short-term borrowings 113,601 321,240
Mark-up on Refinance Scheme for Payment of Wages and Salaries 17,776 90
Guarantee commission 2,290 1,761
Bank charges and duties 2,356 1,932
280,427 576,381
384,756 782,883
Interest on Workers’ Profits Participation Fund 21.2 16 620
384,772 783,503
32. TAXATION

Provision for tax in these financial statements is calculated on the basis of Normal Tax Regime under the
Income Tax Ordinance (ITO), 2001.

32.1 The Company computes tax based on the generally accepted interpretations of the tax laws to ensure
that the sufficient provision for the purpose of taxation is available which can be analyzed as follows:
Tax year Provision Tax Excess/(under)
Note for taxation assessed provision
(Rupees in ‘000)
2020 Nil Nil Nil
2019 32.2 24,624 Nil 24,624
2018 Nil Nil Nil
32.2 During financial year 2019, the Company had recorded tax credit under section 65B of ITO, 2001 @ 10%
on commissioning and installation of plant and machinery as per law. Through Finance Act, 2019, the
government had reduced tax credit under section 65B of ITO, 2001 from 10% to 5% retrospectively
for the tax year 2019 and abolished for subsequent years. However, the management is hopeful that
retrospective change may not be maintainable in the eyes of law and had challenged the amendment in
Honorable Peshawar High Court and obtained a stay order. However, the Company has claimed full tax
credit in the income tax return for the tax year 2019.
32.3 During the tax year 2020, the Deputy Commissioner Inland Revenue, Regional Tax Office, Peshawar
issued Order under section 161/205 of the Income Tax Ordinance 2001 raising the demand of Rs. 56.88
million with respect to the tax year 2014 without giving opportunity of being heard to the Company.
The management had filed Appeal before the Commissioner (Appeals), Peshawar to remand back the
aforesaid Order. During the year, the Order was remanded back for correct and fact based proceedings.
32.4 Reconciliation between tax expense and accounting profit 2021

(Rupees in ‘000)

Accounting profit for the year before taxation 1,198,522
Tax at applicable rate of 29% (2020: Rate 29%) 347,571

Tax effect of Tax credits 916
Tax effect of Final Tax Regime (8,310)
Tax effect of income taxable at lower rates (746)
Others 3,999
343,430
Effective tax % 29%
32.5 Provision for taxation for the prior year was based on Minimum Tax u/s 113 of the ITO. Accordingly
reconciliation between tax expense and accounting profit has not been presented for the year ended
June 30, 2020.
33.

EARNINGS PER SHARE Note 2021 2020
Net profit for the year (Rupees ‘000) 855,092 70,235

Weighted average number of ordinary shares in issue 33.1 42,506,835 42,506,835

Basic earnings per share 33.2 Rs. 20.12 Rs. 1.65

33.1 Weighted average number of ordinary shares

No shares were issued during the year, therefore, calculation of weighted number of ordinary shares has
not been presented.

33.2 There is no dilutive effect on basic earnings per share of the Company.

34. SEGMENT REPORTING

For management purposes, the activities of the Company are organized into two operating segments as shown
below. The Company operates in the said reportable operating segments based on the nature of the products,
risks and returns, organizational and management structure, and internal financial reporting systems.

Type of Segments Nature of business

Bags manufacturing division Kraft paper and Polypropylene bags manufacturing
Flexible packaging division Extrusion, Flexo Graphic and Rotogravure printing

34.1 Segment analysis and reconciliation for the year ended June 30, 2021
Bags Manufactur- Flexible Packaging Total
ing Division Division
2021 2020 2021 2020 2021 2020
(Rupees in ‘000)
Sales
External sales 9,215,424 7,773,968 2,039,678 1,662,225 11,255,102 9,436,193
Inter-segment sales - - - - - -
Total Revenue 9,215,424 7,773,968 2,039,678 1,662,225 11,255,102 9,436,193

Depreciation and amortization 181,545 188,406 152,810 152,979 334,355 341,385
Finance cost 55,029 129,898 143,349 243,938 198,378 373,836

Profit / (loss) before tax and before
unallocated expenses 1,926,164 1,147,060 (487,473) (606,957) 1,438,691 540,103

Unallocated corporate expenses
Finance cost - - - - (186,394) (409,667)
Other expenses - - - - (89,444) (53,389)
Other income - - - - 35,669 21,631
Taxation - - - - (343,430) (28,443)
Profit after taxation - - - - 855,092 70,235

Segment assets 6,382,627 6,059,876 4,427,745 3,950,535 10,810,372 10,010,411
Unallocated assets - - - - 1,776,782 1,150,320
Total assets 6,382,627 6,059,876 4,427,745 3,950,535 12,587,154 11,160,731

Segment liabilities 665,227 895,000 1,943,662 1,800,000 2,608,889 2,695,000
Unallocated liabilities - - - - 3,938,425 3,691,327
Total liabilities 665,227 895,000 1,943,662 1,800,000 6,547,314 6,386,327

Segment capital expenditure 128,126 92,054 132,287 191,100 260,413 283,154

34.1.1 Segment results, assets and liabilities include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Certain assets and liabilities of the Company cannot be
allocated to a specific segment. Accordingly, these amounts have been classified as unallocated.

Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are
expected to be used for more than one year.

34.2 Reconciliation of segment assets and liabilities to total assets and liabilities

34.2.1 Segment assets 2021 2020
(Rupees in ‘000)
Allocated segment assets 10,810,372 10,010,411
Long-term investments 949,710 469,080
Other receivables 162,475 277,050
Taxation – net 575,487 335,142
Other unallocated assets 89,110 69,048
12,587,154 11,160,731
34.2.2 Segment liabilities

Allocated liabilities 2,608,889 2,695,000
Deferred taxation 571,478 226,669
Trade and other payables 1,146,325 534,434
Short-term borrowings – secured 1,944,741 2,630,780
Other unallocated liabilities 248,012 121,079
6,547,314 6,386,327

34.3 Geographical segments
2021 2020
Sales are made by the Company in the following countries: (Rupees in ‘000)
Pakistan 10,888,375 9,191,879
Afghanistan 28,628 18,954
Congo 197,422 193,193
Liberia 73,843 -
Other countries 66,834 32,167
11,255,102 9,436,193
34.4 All non-current assets of the Company at the end of the current and preceding year were located in
Pakistan.

34.5 Information about major customers

Sales to three (2020: two) customers of the Company from the bags manufacturing division represent
approximately Rs. 4,157.52 million (2020: Rs. 2,768.20 million) of the Company’s total revenue. These
customers represent 10% or more revenue individually in the total revenue of the Company.
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s activities expose it to a variety of financial risks i.e. market risk (including currency
risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to minimize
potential adverse effects on the Company’s financial performance.
The Company’s senior management oversees the management of these risks. The Company’s senior
management provides policies for overall risk management, as well as policies covering specific areas
such as foreign exchange risk, interest rate risk and credit risk, use of financial derivatives, financial
instruments and investment of excess liquidity. It is the Company’s policy that no trading in derivatives
for speculative purposes shall be undertaken. The Board of Directors review and agree policies for
managing each of these risks which are summarized below:
35.1 Market risk

Market risk is the risk that fair value of future cash flows will fluctuate because of changes in market
prices. Market prices comprise three types of risk: interest rate risk, currency risk, and other price risk,
such as equity risk.
35.1.1 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the financial instruments will fluctuate
because of changes in the market interest rates. The Company’s interest rate risk arises from long-term
and short-term borrowings obtained with floating rates. Borrowings of the Company are substantially
obtained in the functional currency. The following figures demonstrate the sensitivity to a reasonably
possible change in interest rate, with all other variables held constant, of the Company’s profit before tax:
(Increase) / Effect on
decrease in profit
basis points before tax
2021 (Rupees in ‘000)
KIBOR + 100 (47,133)
KIBOR - 100 47,133

2020
KIBOR + 100 (53,258)
KIBOR - 100 53,258


35.1.2 Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of the changes in foreign exchange rates. The Company’s exposure to the risk of
changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue
or expenses are denominated in a different currency from the Company’s functional currency).
2021 2020
(‘000)
Bills payable - Euro (1,044) (190)

- US Dollar (1,013) (709)
Trade debts - US Dollar 538 219

The following significant exchange rates have been applied at reporting dates:
2021 2020
(Rupees)
Exchange rates - Euro 188.71 189.73
- US Dollar 158.30 168.75

The management keeps on evaluating different options available for hedging purposes. The following
table demonstrates the sensitivity to a reasonably possible change in the Euro and US dollar exchange
rates, with all other variables held constant, of the Company’s equity.

Change in
(Rupees in `000)
rate (%)
30 June 2021-Euro + 10 (19,701)
- 10 19,701
30 June 2021-US Dollar + 10 (7,519)
- 10 7,519
30 June 2020-Euro + 10 (3,605)
- 10 3,605
30 June 2020-US Dollar + 10 (8,269)
- 10 8,269
35.1.3 Equity price risk

The Company’s investment in listed equity securities are susceptible to market price risk arising from
uncertainties about future values of the investment securities.

At the date of statement of financial position, the exposure to listed equity securities was Rs. 945.03
million. A decrease of 10% in the share price of these securities would have an impact of approximately
Rs. 94.50 million on the statement of comprehensive income or the statement of profit or loss depending
whether or not the decline is significant and prolonged. An increase of 10% in the share price of the
listed security would impact the statement of comprehensive income or statement of profit or loss with
the similar amount.

35.2 Credit Risk

Credit risk is the risk which arises with the possibility that one party to a financial instrument will fail
to discharge its obligation and cause the other party to incur a financial loss. Concentrations of credit
risk arise when a number of counter parties are engaged in similar business activities or have similar
economic features that would cause their ability to meet contractual obligations to be similarly affected
by changes in economic, political or other conditions. Concentrations of credit risk indicate the relative
sensitivity of the Company’s performance to developments affecting a particular industry.

The Company seeks to minimize the credit risk exposure through having exposures only to parties
considered credit worthy and obtaining securities where applicable. The maximum exposure to credit
risk at the reporting date with no defaults in the past on year is:
Note 2021 2020
(Rupees in ‘000)
Long-term investments 6 945,027 464,416
Long-term security deposits 8 9,378 9,378
Trade debts 11 2,254,629 1,966,580
Loans and advances 12 11,682 776
Trade deposits 13 35,385 35,470
Other receivables 14 13,709 3,182
Bank balances 15 21,800 14,625
3,291,610 2,494,427
Set out below is the information about the credit risk exposure on the Company’s trade debts:
2021 2020
Neither past due Within 270 days Neither past due Within 270 days
nor impaired nor impaired
(Rupees in ‘000)
Expected credit loss effective rate 0% 5% 0% 4%
Estimated total gross carrying amount 1,433,035 865,264 1,002,166 1,008,084
Expected credit loss - 43,670 - 43,670
35.2.1 Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference
to external credit ratings or to historical information about counter party default rates:
2021 2020
Long-term investment (Rupees in ‘000)

A 945,027 464,416
Trade debts

Customers with no defaults in the past one year 2,254,629 1,966,580
Bank balances
A1+ 19,467 12,147
A 2,333 2,478

21,800 14,625

All other financial assets are not exposed to any material credit risk.
35.3

Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall
due. The Company applies prudent liquidity risk management by maintaining sufficient cash and the

availability of funding through an adequate amount of committed credit facilities.
The table below summarizes the maturity profile of the Company’s financial liabilities at the following
reporting dates based on contractual undiscounted payments.
2021 2020
INTEREST BEARING INTEREST BEARING
NON- NON-
INTEREST Total INTEREST Total
Less than One to Total Less than One to Total
one year five years BEARING one year five years BEARING
(Rupees in ‘000)
Long-term financing 714,542 2,071,549 2,786,091 - 2,786,091 154,600 2,638,802 2,793,402 - 2,793,402
Trade & other payables - - - 879,545 879,545 - - - 529,240 529,240
Unclaimed dividend - - - 10,287 10,287 - - - 9,922 9,922
Accrued mark-up - - - 88,392 88,392 - - - 178,365 178,365
Short-term borrowings 1,944,741 - 1,944,741 - 1,944,741 2,630,780 - 2,630,780 - 2,630,780
2,659,283 2,071,549 4,730,832 978,224 5,709,056 2,785,380 2,638,802 5,424,182 717,527 6,141,709

Effective interest / yield rates for the monetary liabilities are mentioned in the respective notes to the
financial statements.

35.4 Capital risk management

The primary objective of the Company’s capital management is to maintain healthy capital ratios, strong
credit rating and optimal capital structures in order to ensure ample availability of finance for its existing
and potential investment projects, to maximize shareholders value and reduce the cost of capital.

The Company manages its capital structure and makes adjustment to it, in light of changes in economic
conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of
dividend paid to shareholders, return capital to shareholders or issue new shares.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net
debt. Net debt is calculated as total loans and borrowings including any finance cost thereon, less cash
and cash equivalents.

The gearing ratios as at June 30, 2021 and 2020 are as follows:
2021 2020
(Rupees in ‘000)
Long-term financing 2,786,091 2,793,402
Short-term borrowings 1,944,741 2,630,780
Total debt 4,819,224 5,602,547
Cash and cash equivalents (22,468) (15,022)
Net debt 4,796,756 5,587,525

Share capital 425,069 425,069
Reserves 5,614,771 4,349,335
Total capital 6,039,840 4,774,404
Capital and net debt 10,836,596 10,361,929

Gearing ratio 44.26% 53.92%

The Company finances its expansion projects through equity, borrowings and management of its working
capital with a view to maintain an appropriate mix between various sources of finance to minimize risk.
35.5 Fair value measurement

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.
The carrying values of all financial assets and liabilities reflected in the financial statements approximate
fair values.
The following table shows assets recognized at fair value, analyzed between those whose fair value is
based on:
Level 1: Quoted prices in active markets for identical assets or liabilities,

Level 2: Those involving inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices); and
Level 3: Those whose inputs for the asset or liability that are not based on observable market data
(unobservable inputs).

The table below categorized fair value measurement of financial instruments by the level in the fair value
hierarchy into which the fair value measurement is categorized:
2021
Level 1 Level 2 Level 3 Total
(Rupees in ‘000)
Listed equity investment 945,027 - - 945,027
2020
Level 1 Level 2 Level 3 Total
(Rupees in ‘000)
Listed equity investment 464,416 - - 464,416
During the year, there were no transfers between level 1 and level 2 fair value measurements, and
no transfers into and out of level 3 fair value measurement.
35.5.1 Financial instruments which are tradable in an open market are revalued at the market prices prevailing
on the statement of financial position date.
35.6 Changes in liabilities to cash flows arising from financing activities:

2021
Long-term Short-term Un-claimed Accrued
financing borrowings dividend mark-up
(Rupees in ‘000)
As at the beginning of the year 2,793,402 2,630,780 9,922 178,365
Changes from financing cash flows

Borrowings - net (9,511) (686,039) - -
Dividend paid - - (84,649) -
Finance costs paid - - - (475,949)
(9,511) (686,039) (84,649) (475,949)
Other changes
Amortization of Government grant (15,340) - - -
Finance costs - including borrowing
cost capitalized - - - 385,976
Dividend declared - - 85,014 -
As at the end of the year 2,768,551 1,944,741 10,287 88,392
2020
Long-term Short-term Un-claimed Accrued
financing borrowings dividend mark-up
(Rupees in ‘000)
As at the beginning of the year 2,885,000 2,950,345 9,283 195,889
Changes from financing cash flows

Borrowings - net (78,440) (319,565) - -
Dividend paid - - (95,967) -
Finance costs paid - - - (801,027)
(78,440) (319,565) (95,967) (801,027)
Other changes
Amortization of Government grant (13,158) - - -
Finance costs - - - 783,503
Dividend declared - - 96,606 -
As at the end of the year 2,793,402 2,630,780 9,922 178,365

36. SHARIAH COMPLIANCE DISCLOSURES

In compliance of the fourth schedule to the Companies Act, 2017, Shariah compliant companies and
companies listed on the Islamic Index shall disclose the following:
Note 2021 2020
(Rupees in ‘000)
Long-term loans obtained as per Islamic mode 18 748,366 855,000
Short-term borrowings as per Islamic mode 22 735,084 967,283
Shariah compliant bank balances 15 4,215 3,198
Revenue earned from shariah compliant business segment 34 11,255,102 9,436,193
Dividend earned from shariah compliant investment 30 5,328 4,843
Finance costs on Islamic mode of financing 31 101,879 206,200
Profit earned from any conventional loan or advances 30 691 562
Finance costs on conventional mode of financing 31 275,781 572,688

Relationships with Islamic banks are disclosed in note 18 and note 22 to these financial statements.

37. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

2021 2020
Executives / Executives /
Key Employees Key Employees
(Rupees in ‘000)
Managerial remuneration 75,784 78,513
Bonus 37,008 13,333
Housing allowance 29,049 33,910
Retirement benefits 8,355 9,222
Utilities 6,387 7,462
Leave fare assistance 6,168 5,155
162,751 147,595

Number 26 27

37.1 No remuneration was paid to the Chief Executive Officer and any of the directors. However, Chief
Executive Officer and a director are provided with the Company maintained cars. In addition, certain
executives are provided with the Company maintained cars, telephone facility, utilities and some other
facilities, which are reimbursed at actual to the extent of their entitlements.

37.2 The aggregate amount charged in the financial statements for meeting fee to 9 Directors (including 7
non – executive Directors) amounted to Rs. 3.28 million (2020: 8 directors - Rs. 2.04 million).

38. TRANSACTIONS WITH RELATED PARTIES

38.1 The related parties of the Company comprise of associated companies, directors, executives, retirement
funds, companies with common directorship and key management personnel of the Company. Amounts due
from / to related parties are disclosed in respective notes to these financial statements. The Company enters
into transactions with related parties on agreed terms as approved by the Board of Directors. Transactions
with related parties other than those disclosed elsewhere in the financial statements, are as follows:
Relationship Nature of transactions 2021 2020

(Rupees in ‘000)
Associates Sale of goods 2,445,596 2,103,442
Purchase of goods 3,623 2,324
Purchase of fixed asset 135,223 53,196
Services received 62,789 58,623
IT support charges 14,999 13,749
Dividends paid 23,450 26,648
Dividends received 5,328 4,843

In addition, certain actual administrative expenses are being shared amongst the group companies.

38.2 Following are the related parties with whom the Company had entered into transactions or have
arrangement / agreement in place:
Aggregate %
S.No. Company name of shareholding
by related party
1 Faruque (Pvt.) Ltd. 10.25
2 Cherat Cement Company Ltd. 7.35
3 Mirpurkhas Sugar Mills Ltd. 4.97
4 Greaves Pakistan (Pvt.) Ltd. 5.02
5 Greaves Airconditioning (Pvt.) Ltd. -
6 Zensoft (Pvt.) Ltd. -
7 Unicol Limited -
8 UniEnergy Ltd. -
9 Jubilee General Insurance Company Ltd. -
10 Cherat Packaging Limited – Employees’ Provident fund 0.17
11 Cherat Packaging Limited – Employees’ Gratuity fund -

38.3 None of the key management personnel had any arrangement with the Company other than the
employment contract.
38.4 Investment out of provident fund has been made in accordance with the provisions of section 218 of the
companies Act, 2017 and the rules formulated for this purpose.
39. NUMBER OF EMPLOYEES

The total number of employees and average number of employees at year end and during the year
respectively are as follows:
2021 2020
(Number)
Total Factory Total Factory
Total number of employees as at June 30, 251 222 254 221

Average number of employees during the year 253 222 242 216

39.1 During the year, the Company made an expenditure of Rs. 3.41 million (2020: Rs. 1.29 million) in respect
of staff recruitment, selection, hiring, rewarding, utilization, training and development of the human
assets.

2021 2020

40. CAPACITY Bags Flexible Bags Flexible
manufacturing packaging manufacturing packaging
division division division division
Bags’000 KGs ‘000 Bags’000 KGs ‘000
Annual installed capacity as of June 30, 595,000 12,600 595,000 12,600

Actual production for the year 327,172 5,748 273,171 6,040

Capacity utilization is in line with the market demand during the year.

41. DATE OF AUTHORIZATION

These financial statements were authorized for issue on August 24, 2021 by the Board of Directors of
the Company.

42. DIVIDEND AND APPROPRIATIONS

Subsequent to year ended June 30, 2021, the Board of Directors in its meeting held on August 24, 2021
has proposed final cash dividend @ Rs. 4 per share amounting Rs. 170.03 million (2020: Re. 1/- per
share amounting to Rs. 42.51 million) for approval of the members at the Annual General Meeting. This
is in addition to the interim cash dividend @ Re. 1/- per share amounting to Rs. 42.51 million (2020: Nil
per share amounting to Rs. Nil) approved by the Board of Directors for the year ended June 30, 2021.
43. GENERAL

43.1 Figures have been reclassified wherever necessary for better presentation.

43.2 Figures have been rounded off to the nearest thousand of Rupees unless otherwise stated.


Pattern of Shareholding
as at June 30, 2021
No. of Shareholding
Shares Held
Shareholders From To
305 1 to 100 12,511
343 101 to 500 99,888
209 501 to 1000 159,695
445 1001 to 5000 1,064,388
123 5001 to 10000 877,171
35 10001 to 15000 442,284
27 15001 to 20000 478,506
25 20001 to 25000 552,018
10 25001 to 30000 266,417
15 30001 to 35000 478,726
5 35001 to 40000 187,333
5 40001 to 45000 220,133
4 45001 to 50000 192,202
5 50001 to 55000 259,909
7 55001 to 60000 401,120
4 60001 to 65000 249,128
3 65001 to 70000 204,572
2 70001 to 75000 144,546
6 75001 to 80000 468,880
1 80001 to 85000 84,875
4 85001 to 90000 358,550
1 90001 to 95000 90,821
2 95001 to 100000 200,000
2 105001 to 110000 211,505
1 110001 to 115000 113,598
1 115001 to 120000 116,500
1 125001 to 130000 129,684
1 130001 to 135000 130,225
1 150001 to 155000 150,243
3 160001 to 165000 489,410
2 175001 to 180000 358,614
1 180001 to 185000 185,000
1 205001 to 210000 208,556
1 210001 to 215000 211,413
1 225001 to 230000 229,500
1 245001 to 250000 250,000
1 250001 to 255000 252,000
1 255001 to 260000 255,440
1 265001 to 270000 265,171
1 285001 to 290000 286,759
1 290001 to 295000 291,814
1 295001 to 300000 297,621
1 330001 to 335000 330,564
2 340001 to 345000 682,760
1 345001 to 350000 350,000
1 360001 to 365000 362,492
1 365001 to 370000 369,711
1 375001 to 380000 379,846
1 390001 to 395000 394,802
2 420001 to 425000 847,000
1 435001 to 440000 438,546
1 485001 to 490000 488,296
1 640001 to 645000 643,546
1 655001 to 660000 655,681
1 745001 to 750000 749,761
1 770001 to 775000 771,966
1 980001 to 985000 981,834
1 1185001 to 1190000 1,185,800
1 1465001 to 1470000 1,469,407
1 2110001 to 2115000 2,110,490
1 2135001 to 2140000 2,135,034
1 3120001 to 3125000 3,122,532
1 3840001 to 3845000 3,841,000
1 3910001 to 3915000 3,912,145
1 4355001 to 4360000 4,356,896
1634 42,506,835

Categories of Shareholding
as at June 30, 2021
No. of
Shareholders’ Category Shareholders Shares Held Percentage
Directors, Chief Executive Officer and their spouse(s) and minor children
MR. AKBARALI PESNANI 1 113,598 0.27
MRS. SAKINA PESNANI 1 12,347 0.03
MR. AMER FARUQUE 1 208,556 0.49
MRS. AMINA FARUQUE 1 330,564 0.78
MR. ASLAM FARUQUE 1 379,846 0.89
MR. SHEHRYAR FARUQUE 1 297,621 0.70
MR. ARIF DINO FARUQUE 1 655,681 1.54
MR. ABID VAZIR 1 110 0.00
MR. ALI H.SHIRAZI 1 1,518 0.00
MS. MALEEHA HUMAYUN BANGASH 1 1 0.00

Associated Companies, undertakings and related parties

FARUQUE (PRIVATE) LIMITED 1 4,356,896 10.25
CHERAT CEMENT COMPANY LIMITED 1 3,122,532 7.35
MIRPURKHAS SUGAR MILLS LIMITED 1 2,110,490 4.97
GREAVES PAKISTAN (PRIVATE) LIMITED 1 2,135,034 5.02

Executives 19,700 0.05

NIT & ICP - - -

Banks, Development Financial Institutions,

Non Banking Financial Institutions 2 574,626 1.35

Insurance Companies 7 10,505,901 24.72

Modarabas and Mutual Funds

FIRST ALNOOR MODARABA 1 8,494 0.02
MCBFSL - TRUSTEE JS VALUE FUND 1 56,000 0.13
CDC - TRUSTEE JS LARGE CAP. FUND 1 52,200 0.12
CDC - TRUSTEE MEEZAN BALANCED FUND 1 40 0.00
CDC - TRUSTEE UNIT TRUST OF PAKISTAN 1 73,000 0.17
CDC - TRUSTEE AL MEEZAN MUTUAL FUND 1 180 0.00
CDC - TRUSTEE MEEZAN ISLAMIC FUND 1 161,847 0.38
CDC - TRUSTEE JS PENSION SAVINGS FUND - EQUITY ACCOUNT 1 21,900 0.05
MC FSL - TRUSTEE JS GROWTH FUND 1 229,500 0.54
CDC - TRUSTEE JS ISLAMIC DEDICATED EQUITY FUND (JSIDEF) 1 4,021 0.01
CDC - TRUSTEE FAYSAL ISLAMIC DEDICATED EQUITY FUND 1 78,900 0.19

General Public
a. Local 1,535 13,903,028 32.70
b. Foreign 15 766,843 1.80

Foreign Companies 1 2,000 0.00

Others 49 2,323,861 5.47

TOTAL 1,634 42,506,835 100.00

Shareholders holding 10% or more Shares Held Percentage

FARUQUE (PRIVATE) LIMITED 4,356,896 10.25

2020 2021

Proxy Form
32nd Annual
General Meeting 2021
I / We
of
being a member of CHERAT PACKAGING LIMITED, hereby appoint
of another member of the Company as my / our proxy to
attend & vote for me / us and on my / our behalf at the 32nd Annual General meeting of the Company to be held
on Thursday, 21st October, 2021 at 11:00 a.m. and at any adjournment thereof.
Witnesses:
1. Signature:
Name:
Address:
Signature of Revenue
Shareholder Stamp
CNIC or
Passport No.
2. Signature:
Name:
Address:
(Signature should agree
CNIC or with the specimen signature
registered with the Company)
Passport No.
Shares Held: _______________________________

Notes:
1. Proxies, in order to be effective, must be received at the Company’s
Registered Office not later than 48 hours before the time for holding
Folio No. CDC Account No.
the meeting and must be duly stamped, signed and witnessed.
Participant Account
2. CDC Shareholders, entitled to attend, speak and vote at this I.D. No.
meeting, must bring with them their Computerized National Identity
Cards (CNIC) / Passports in original to prove his/her identity, and in
case of Proxy, must enclose an attested copy of his/her CNIC or
Passport.
3. In case of corporate entity, the Board of Directors’ resolution /

power of attorney with specimen signature of the nominee should CNIC No. - -
be attached with the proxy form.

32
11:00 2021 21 ‫رعمجات‬ 32

E-Dividend Mandate Form
To: Date: ____________
I hereby communicate to receive my future dividends directly in my bank account as detailed below:
Shareholder’s Detail
Name of Company Cherat Packaging Limited

Name of shareholder
Folio No./CDC Participants ID A/c No.
CNIC No
Passport No. (in case of foreign shareholder)
Cell Number & Land Line Number
Email Address (Mandatory)
Shareholder’s Bank Detail
Title of Bank Account (Mandatory)
International Bank Account Number (IBAN) ‐ Mandatory (24 Digits)
P K
Bank’s Name
Branch Name and Address
It is stated that the above mentioned information is correct and in case of any change therein, I will
immediately intimate Participant / Share Registrar accordingly.
Yours sincerely,
___________________
Signature of Shareholder
(Please affix company stamp in case of corporate entity)
Notes:
COMPANY WITHHOLD THE PAYMENT OF DIVIDEND OF A MEMBER WHERE THE MEMBER HAS NOT PROVIDED THE
COMPLETE INFORMATION OR DOCUMENTS AS SPECIFIED.
The shareholders who hold shares in Central Depository Company are requested to submit the above- mentioned Dividend Mandate
Form, duly filled-in, to the relevant Broker/Participants/Investor Account Services of the Central Depository Company of Pakistan
Limited where Member’s CDC account is being dealt.The shareholders who hold shares in physical form are requested to submit the
above mentioned Dividend Mandate Form, duly filled-in, to the share Registrar of the Company, as mentioned below:
M/s CDC Share Registrar Services Limited

CDC House, 99-B, Block-B, S.M.C.H.S, Main Shahra-e-Faisal, Karachi-74400, Pakistan
Tel: 0800-23275, 111-111-500, Fax: 021-34326053

Cherat Packaging Limited
Head Office: Modern Motors, House Beaumont Road,
Karachi 75530, Pakistan UAN: (9221) 111-000-009
Email: [email protected] l Web: www.gfg.com.pk

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Cherat Packaging Limited

A Ghulam Faruque Group Company

for all your

Annual Report 2021

18 Our Values 40 Position in the Value Chain

21 Culture 42 Significant Factors Affecting the

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Many of the products that we consume today have their

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18 Cherat Packaging Limited

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It is the obligation of every employee to be responsible, honest, trustworthy,

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Competition and Anti-trust Law Handling and Safeguarding

Product Quality Health, Safety and Environmental Protection

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Mirpurkhas Sugar Mills Ltd

Cherat Cement Company Ltd

26 Cherat Packaging Limited

Greaves Pakistan (Pvt.) Ltd

Madian Hydro Power Ltd

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Legal Advisor Factory

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1992 1998 2006 2012

30 Cherat Packaging Limited

2014 2017 2019

Installed 1st convertex Installation of 3rd PP Installation of Universal Established LC

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Pakistan Stock Exchange Top

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Chief Executive Officer

Chief Operating Officer

Deputy Executive Director General Manager

Asst. General Manager

Asst. General Manager

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Deputy Manager Asst. General Manager Deputy Manager

General Manager General Manager

Production Services Production Services

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Chief Operating Officer

Senior Manager General Manager

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Karachi Sales Office

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40 Cherat Packaging Limited

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- Political uncertainties - Increased inflation - Make HSE department more

pandemic - COVID-19 Pandemic affecting

with suppliers ensures timely

42 Cherat Packaging Limited