Creating Value: Annual Report 2020

CREATING
VALUE
ANNUAL REPORT 2020
ANNUAL REPORT
2020
CREATING
VALUE
Since its inception, International Steels Limited has been driven by its vision to
promote industrial development in Pakistan.
From investing in state of the art technology to redefining what it is to be
“Made in Pakistan”, ISL has been determined to transform the industrial landscape
of the country and at the same time, remain conscious of the society at large.
For us, steel is the fabric that shapes tomorrow with sustainability and resilience.
Annual Report 2020
Table of Contents
Company Introduction • Business Review
• Financials
Corporate Profile 08 • Earnings Per Share
Milestones 10 • Dividend
Company Information 12 • Recommendation of the Board Audit
Vision, Mission & Core Values 14 Committee for Appointment of Auditor
Strategic Objectives 16 • Appropriations
Calendar of Major Events 18 • Contribution to National Exchequer
Code of Conduct 22 and the Economy
Business at a Glance 24 • Provident Fund & Gratuity Scheme
Organization Chart 26 • Future Prospects
Mechanism for Providing Information 27 • Acknowledgement
Directors’ Report (Urdu) 41
Chairman’s Review
Sustainability Report
Chairman’s Review 30
Chairman’s Review (Urdu) 31 Our Relationship with Society
and Community 46
Directors’ Report 10 UNGC Principles 47
Our Stakeholders 48
Directors’ Report 34 Stakeholders Communication 49
• Global Steel Scenario Employees 52
• Pakistan’s economy Customers 56
• Manufacturing Operations Shareholders 57
• Sales Community 60
• JCR-VIS Credit Rating
• Energy Management Corporate Governance
• Health, Safety and Environment
• Human Resources Board of Directors Profile 64
• Corporate Social Responsibility List of Other Directorships 68
• Risk Management Governance Framework 70
6
International Steels Limited
Board Committees 76 Financial Statements

Directors Participation in Board
and Sub Committee Meetings 80 Independent Auditor’s Report to the Members 104
Management Team 80 Statement of Financial Position 108
Report of the Board Audit Committee Statement of Profit or Loss 109
on Adherence to the Code of Statement of Comprehensive Income 110
Corporate Governance 81 Statement of Cash Flows 111
Statement of Compliance with Listed Statement of Changes in Equity 112
Companies (Code Of Corporate Notes to the Financial Statements 113
Governance) Regulations, 2019 83
Review Report on Statement Stakeholders information
of Compliance Contained in Listed
Companies (Code Of Corporate Ownership 160
Governance) Regulations, 2019 85 Pattern of Shareholding 161
Categories of Shareholders 162
Financial Summary Key Shareholding 162
Shareholders Composition 163
Financial Highlights 88 Share Price Trend vs Volume Traded 163
Analysis of Financial Statements Notice of Annual General Meeting 164
• Statement of Financial Position 89 Notice of Annual General Meeting (Urdu) 174
• Statement of Profit or Loss 90
• Statement of Cash Flows 91 Forms
Key Financial Indicators 93
Six Years at a Glance 95 Consent of Annual Report through Emails 175
Du Point Analysis 98 E-Dividend Mandate Form 177
Quarterly Performance Analysis 99 Proxy Form 179
Statement of Value Addition 100 Proxy Form (Urdu) 180
Statement of Cash Flows 101
Free Cash Flow 102
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Annual Report 2020
CORPORATE
PROFILE
Corporate Profile
8
International Steels Limited “ISL” is the largest flat steel manufacturer in Pakistan. The company was
incorporated in 2007 and commenced production in 2010. To date, the company has invested approximately
US$ 250 million in establishing a state of the art flat steel complex.
ISL’s manufacturing facilities are located on 32 acres in the port city of Karachi, where the company produces
Cold Rolled Steel, Galvanized Steel and Color Coated Steel for numerous industrial and commercial
applications. The company has a strong nationwide supplier network that is served through regional offices in
Lahore, Islamabad and Multan. ISL exports to more than 20 countries worldwide. In its short history, ISL has
carried out extensive large scale expansion activities to enhance production. With the latest expansion, the
company now has a capacity of over 1,000,000 Metric Tons.
The company has played an important role in developing the large scale industrial manufacturing sector of
Pakistan. ISL’s high quality steel serves as an essential input for various upstream and downstream industries
of the country. Through consistently expanding manufacturing capacity, the company has substituted a
significant portion of Pakistan’s flat steel imports, resulting in foreign exchange saving for the country.
ISL believes in sustainability of operations and aims to maintain good relationship with all its stakeholders.
Driven by the Clean, Lean and Green approach, the company strives to continuously reduce its carbon footprint,
promote effective utilization of resources, reduce waste and promote green practices through recycling and
reusing resources. The company partakes in various social initiatives to promote wellbeing and welfare in
society. ISL is a frequent supporter of various health care and educational initiatives in the country.
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Annual Report 2020
MILESTONES
2007
Incorporated in September
2008-9
Civil works and plant installation
2010-11
Cold Rolling and Galvanizing complex is
in process commissioned
Installation of 18 Mega Watt
Power generation plant Commercial operations of Cold Rolling and
commences Galvanizing Complex commences Installed
capacity 250,000 MT
ISL gets listed on
Pakistan Stock Exchange Certifications
acquired:
ISO 9001
Quality Management System
ISO 14001
Environmental Management
ISO 18001
Occupational Health & Safety Management
Systems
2015
Production exceeds 280,000 MT
2016
Second Galvanizing plant is
2017
Commercial production of the enhanced
commissioned and starts commercial 4-Hi Continuous Compact Mill commences,
Sales exceed 257,000 MT production Galvanizing capacity
Cold Rolled capacity increases to 500,000
increased to 450,000 MT from
MT from 250,000 MT
Net turnover exceeds PKR 21 150,000 MT
Billion Production exceeds 370,000 MT
Pakistan’s first Color Coating line is
established at ISL Color Coating capacity Sales volume exceeds 364,000 MT
84,000 MT
Net turnover exceeds PKR 20 Billion
A new electrolysis plant is installed to
produce Hydrogen
Second strand on the 4-Hi Reversing
Mill is commissioned, converting it into a
Continuous Compact Mill “CCM”
Sales volume exceeds 239,000 MT Net
turnover exceeds PKR 17.5 Billion
10
2012
Commercial operations of Cold
2013
2014
Rolling and Galvanizing Complex
Sales exceed 161,000 MT Sales exceed 217,000 MT
commences Installed capacity
250,000 MT Net turnover exceeds PKR 13 Billion Net turnover exceeds PKR 17 Billion
ISL gets listed on
Pakistan Stock Exchange
Certifications acquired:
ISO 9001
Quality Management System
ISO 14001
Environmental Management
ISO 18001
Occupational Health & Safety
Management Systems
2018
Debottlenecking of Push Pull
2019
Second Continuous Compact Mill “CCM-2” commences
2020
ISL Service Center commences operations
pickling line. Pickling capacity commercial production. Cold Rolling capacity increases to The state of the art service center is
enhances to 600,000 MT from 1,000,000 MT from 500,000 MT envisioned to provide value added services
500,000 MT to the customers.
Annealing capacity is enhanced Annealing capacity increases to
Successful commissioning of 360,000 MT from 300,000 MT ISL bags 1st award at the 7th Employer
additional annealing capacity of the year award in the Medium National
New continuous picking line is commissioned and starts
Annealing capacity enhanced to Category.
commercial production Capacity of new continuous picking line
200,000 MT from 160,000 MT
1,000,000 MT ISL received 43rd FPCCI Best Export
Second Continuous Compact Mill Performance Awards 2018-19
“CCM-2” is commissioned
International Steels Limited (ISL) wins the
Sales volume exceeds 539,000 MT
SNI certification of Indonesia is prestigious Top 25 Performing Companies
acquired Sales value exceeds PKR 47 Billion award conferred by the Pakistan Stock
exchange
Production exceeds 465,000 MT ISL wins Federation of Pakistan Chambers of Commerce and
Industry (FPCCI) Export Award 2017 in the Steel category ISL wins Management Association of
Sales volume exceeds
Pakistan (MAP) Corporate Excellence Award
490,000 MT Pakistan Stock Exchange’s status at Morgan Stanley Composite 2020 for the second consecutive year
Index (MSCI) is upgraded to “Emerging Market” and ISL is listed
Net turnover exceeds
in the MSCI
PKR 33 Billion
ISL wins Management Association of Pakistan (MAP) Corporate
Excellence Award 2019
JCR-VIS credit rating company awards ISL a credit rating of
“A+/A-1”
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Annual Report 2020
COMPANY
INFORMATION
12
Chairman (Non-Executive) Registered Office

Mr. Towfiq H. Chinoy 101, Beaumont Plaza, 10, Beaumont Road, Karachi – 75530
Telephone Nos: +9221-35680045-54, UAN: 021-111-019-019
Independent Directors Fax: +9221-35680373, E-mail: [email protected]
Dr. Amjad Waheed
Ms. Nausheen Ahmad Lahore Office
Mr. Nihal Cassim Chinoy House, 6 Bank Square, Lahore - 54000
Mr. Zakaullah Khan Telephone Nos:+9242-37229752-55, UAN:+9242-111-019-019
Fax: 9242-37249755 E-Mail: [email protected]
Non-Executive Directors
Mr. Fuad Azim Hashimi Islamabad Office
Mr. Kamal A. Chinoy Office No.303-A, 3rd Floor Evacuee Trust Complex
Mr. Koji Fukushima Sector F-5/1 Agha Khan Road, Islamabad.
Mr. Mustapha A. Chinoy Telephone Nos: +9251-2823041 - 2 Fax: 051-28230413
Director & Chief Executive Officer Multan Office

Mr. Yousuf H. Mirza Office No. 708-A, “The United Mall” ,Plot No. 74,
Abdali Road, Multan
Director & Chief Operating Officer Telephone Nos: +9261-4570571
Mr. Samir M. Chinoy
Factory
Chief Financial Officer 399 - 404, Rehri Road, Landhi, Karachi.
Mr. Mujtaba Hussain Telephone Nos: +9221-35013104 - 5
Fax: 9221 35013108 E-mail: [email protected]
Company Secretary
Mr. Mohammad Irfan Bhatti Service Center
Plot# LE-73-79, 102-103, 112-118, 125-129
Chief Internal Auditor Survey # Nc.98, Near Arabian Country Club,
Mrs. Asema Tapal National Industrial Park, Bin Qasim, Karachi
External Auditors Website

M/s KPMG Taseer Hadi & Co. www.isl.com.pk
Legal Advisor(s) Bankers

Mrs. Sana Shaikh Fikree Allied Bank Limited
Bank Al Habib Limited
Investor Relations Contact Bank Alfalah Limited
Shares Registrar Dubai Islamic Bank Pakistan Limited
THK Associates (Pvt.) Ltd Faysal Bank Limited
40-C, Block-6, P.E.C.H.S, Habib Bank Limited
Off: Shahrah-e-Faisal, Karachi Habib Metropolitan Bank Limited
Phone: +9221-111-000-322 Fax: Industrial and Commercial Bank of China Limited
+9221-34168271 MCB Bank Limited
Email: [email protected] MCB Islamic Bank Limited
Meezan Bank Limited
Samba Bank Limited
Standard Chartered Bank (Pakistan) Limited
United Bank Limited
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Annual Report 2020
VISION
MISSION
CORE VALUES
14
To be the premium manufacturer of

flat steel products in Pakistan.
To establish our presence in the steel industry by providing superior quality products and
reliable services, catering to the customers’ needs, at competitive prices; thereby
generating value and close partnership. We take pride in providing an environment which
cultivates teamwork and leadership capabilities to manage our company as a model
corporate citizen, complying with highest standards of business ethics.
We incorporate the following core values in our organization culture:
Integrity
We are committed to maintain highest ethical standards and ensure a culture of trust and
openness internally as well as externally.
Diversity
We are an equal opportunity employer with zero bias against gender, race, ethnicity and
religion. We at ISL, encourage openness, expression of opinions etc.
Respect for People

We are committed to foster a culture where people come first. We hire, develop and retain
our people to work as synergized teams in line with our mission and vision.
Fairness
We are committed to implement such policies and procedures which translate into fair
and equitable treatment of all stakeholders, including selection, hiring, rewarding and
compensating all employees
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Annual Report 2020
STRATEGIC
OBJECTIVES
16
Creating Shared Value

ISL aims to strengthen its relationship with its shareholders by maximizing value for them and
ensuring fair returns through operational excellence. Striving to bring innovation through its products,
processes and services while optimizing the resources, ISL applies best operational practices and
continuously improves them through institutional learning.
Investing in Human Capital

The company attributes its success to its human capital and its quality. It strives to attract, develop
and retain the best talent available, providing career growth opportunities through a system of skill
development, motivation and rewards. Aspiring to be an “Employer of Choice”, we are committed to
providing a safe, collaborative and high performance workplace to our employees.
Investing in Technology
ISL aims to become a technology driven company, one that fulfills its commitment to its customers by
effectively anticipating customers’ requirements. The company strives to exceed expectations by
utilizing and continuously enhancing its technical capabilities and service levels.
Reducing Waste
The company makes considerable efforts to reducing waste, thereby promoting efficient utilization of
resources and lowering waste levels, ultimately promoting efficiency throughout the value chain.
Ensuring Sustainability
ISL aims to strengthen its relationship with its shareholders by maximizing value for them and
ensuring fair returns through operational excellence. Striving to bring innovation through its products,
processes and services while optimizing the resources, ISL applies best operational practices and
continuously improves them through institutional learning.
17
Annual Report 2020
Calendar of Major Events
25 October
ISL bags 1st award at the 7th Employer of the year
award in the Medium National Category. Mr. Mujtaba
Hussain, CFO ISL received the award from Information
Minister Sindh, Mr. Saeed Ghani
15 November
ISL received 43rd FPCCI Best Export Performance
Awards 2018-19 held at Governor House Sindh.
Mr. Yousuf Mirza, CEO ISL received the award
from the President of Pakistan, His Excellence
Mr. Arif Alvi
27 December
International Steels Limited (ISL) wins the
prestigious Top 25 Performing Companies award
conferred by the Pakistan Stock exchange.
Mr. Towfiq H. Chinoy, Chairman ISL, received the
Award from the Prime Minister of Pakistan, His
Excellence Mr. Imran Khan
18
02 February
International Steels Limited (ISL) participated in the
Citizen’s Archive of Pakistan’s (CAP) Family carnival
2020 with fun filled activities for children to raise
awareness about environmental consciousness
19 February
ISL employees and management participated in a
team building activity based tree plantation drive
to promote environment conservation and to foster
team spirit among the participants.
16 June
ISL Service Center Commences operations. The
state of the art service center is envisioned to provide
value added services to the customers.
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Annual Report 2020
20
CREATING
OPPORTUNITIES
Since its inception, the company has consistently invested in enhancing its production
capacity and developing new products to serve a wide range of customers.
Starting with an initial capacity of 250,000 MT, ISL has evolved to a 1,000,000 MT
steel complex, providing steels of various specifications that serve a wide range of
applications. Besides increasing capacity, the company has also invested in enhancing
its value proposition through a fully equipped service center, which renders steel in a
ready to use form.
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Annual Report 2020
Code of Conduct
The Code of Conduct is equally applicable to the ii) An employee should avoid any situation in
Board of Directors as well as all the employees of the which he or she, or a family member, might
Company. The salient features of the Code of Conduct profit personally either (directly or indirectly),
are as follows: from the company’s facilities, its products, or
company’s relationships with its vendors or
(a Business Ethics customers.
i) The company’s policy is to conduct its business iii) An employee should not permit himself/herself
with honesty and integrity and be ethical in its (or members of his/her family) to be obligated
dealings, showing respect for the interest of (other than in the course of normal banking
all stakeholders including its shareholders, relationships) to any organization or individual
employees, customers, suppliers and the with whom the company has a business
society. relationship. However, business lunches,
dinners or social invitations, nominal giveaways
ii) The company is dedicated to providing a safe
and attendance at conferences and seminars
and non-discriminatory working environment
would not be considered a violation of this
for all employees.
Code.
iii) The company does not support any political
iv) In case an employee is offered or receives
party or contributes funds to groups whose
something of value which he/she believes may
activities promote political interests.
be impermissible under this Code, he / she
iv) The company is committed to provide products should disclose the matter.
which consistently offer value in terms of price
v) All employees shall avoid any kind of bribery,
and quality and are safe for their intended use,
extortion and all other forms of corruption.
to satisfy customer needs and expectations.
vi) Conflict of interest shall be avoided and
v) The Board of Directors and the Management
promptly disclosed where they exist and
are both committed to ensure that the company
guidance should be sought from superiors.
is a responsible corporate citizen and the
business shall be carried out in a sustainable
(c) Accounting Records, Controls & Statements
manner.
i) All books, records, accounts and statements
vi) The operations shall be carried out with
should conform to generally accepted and
minimum adverse effect on the environment
applicable accounting principles and to all
and producing quality products in a healthy and
applicable laws and regulations and should be
safe working environment.
maintained accurately.
vii) We, as a responsible corporate citizen shall
ii) Employees are expected to sign only
promote our role towards betterment of the
documents or records which they believe to be
society in health and education sectors as a
accurate and truthful.
part of our Corporate Social Responsibility.
(d) Environment
(b Conflicts Of Interest
i) The company is committed to carry its
i) Every employee should conduct his/her
business in an environmentally sound and
personal and business affairs in a manner such
sustainable manner and promote preservation
that neither a conflict, nor the appearance of a
and sustainability of the environment.
conflict, arises between those interests and the
interests of the Company.
22
ii) All employees are required to adhere strictly to all v) Any legally prohibited or controlled substances
applicable environmental laws and regulations if found in the possession of any employee will
that impact the company’s operations. be confiscated and where appropriate, turned
over to the authorities.
(e) Regulatory Compliance
(g) Miscellaneous
i) The company is committed to make prompt
public disclosure of “material information” i) All employees are required to comply with this
regarding the company as prescribed in the code of conduct and are personally responsible
Pakistan Stock Exchange Regulations, if for doing so. Employees must comply with any
required. rules set out in this code of conduct. Breach
of any principles within the code may result
ii) Where an employee is privy to the information,
in disciplinary action and a serious breach
which is generally referred to as “material inside
– such as if any employee is found to be in
information”, the same must be held in strict
wanton abuse of the code and their action
confidence by the employee involved until it is
cause reputational risk or damage or financial
publicly released.
loss to the Company may amount to gross
iii) The employees shall abide by the appropriate misconduct, which may result in summary
Competition Laws and shall not enter into dismissal. Further, the company reserves the
understandings, arrangements or agreements right to seek redress and damages from such
with competitors, which have the effect of fixing individuals.
or controlling prices, dividing and allocating
ii) Employees at all levels will be required to certify
markets or territories, or boycotting suppliers
annually that they understand the code and that
or customers.
they are in full compliance with this code. The
Board monitors the findings of this certification
(f) Personal Conduct
on annual basis.
i) All employees should conduct themselves
iii) The Company has in place a confidential
with the highest degree of integrity and
“Whistle Blowing policy” as whistleblowing
professionalism in the workplace or any other
mechanism and process to encourage the
location while on company business.
reporting of any non-compliance with this code
ii) The employees shall be careful while dealing of conduct.
with personal or business associates and not
disclose, divulge or provide any information
regarding the company to anyone except
where the same is used as a part of his/ her
official obligations and as required for official
purpose and shall abide by the Close Period
announced by the company from time to time
and also sign a Non-Disclosure Agreement if
the need arises.
iii) All employees should avoid any kind of bribery,
extortion and all other forms of corruption.
iv) Employees should always be cognizant ofthe
need to adhere strictly to all safety policies and
regulations.
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Annual Report 2020
Business at a Glance
Cold Rolled Steel
Our cold rolling mill is a modern, advanced facility designed and supplied by SMS Siemag, Germany. With strict
quality control processes and advanced technology, our product provides outstanding finish and workability,
highly valued by customers in the automobile, home appliances, furniture, drum, tube, filter, tin plate and various
other industrial segments. Cold rolled steel manufactured by ISL is available in thicknesses ranging from 0.15
mm to 3.0 mm and is offered in a maximum width of 1,250 mm. ISL’s CRC is provided in a range of product
specifications, ranging from drawing to structural and surface finishes from bright to matt to meet our customer
specific requirements. After the recent expansions, ISL’s capacity has increased to over 1,000,000 MT.
Hot Dip Galvanized Steel
Our Hot Dipped Galvanized Steel is produced on a state-of-the-art, fully automated production line. The best
available raw materials and processes are applied under controlled conditions to produce material of the highest
quality. Our manufacturing facility, a dynamic production team and adherence to strict quality control measures
ensures a product of the highest grade. Hot dip galvanized steel is available in thicknesses ranging from 0.15
mm – 2.50 mm. After addition of our new galvanizing line, ISL’s capacity to produce galvanized steel increased to
450,000 MT.
Color Coated Steel
Our Continuous Color Coil Coating facility was developed using wet paint coating technology. The 84,000 MT
facility allows us to produce high quality color coated sheets on various substrates like Cold Rolled, Galvanized,
Galvalume, Aluminum and Stainless Steel sheets. The high quality color coating enhances the corrosion resistance
substrate and adds to the aesthetic appeal. Color coated steel is available in thicknesses ranging from 0.20 mm
– 1.50 mm.
Service Center
ISL has established a fully equipped state of the art service center, located close to various major industries and the
port. The facility will provide value added services such as cutting, slitting and profiling of steel as per customer’s
requirement, increasing the usability and application of steel for various industrial and commercial applications.
24
Regional Network
Regional Office ISLAMABAD
LAHORE Regional Office
MULTAN Regional Office
KARACHI
Head Office, Factory &

Service Center
Global Footprint
25
Annual Report 2020
Organization Chart
Shareholders
Board of
Directors
Human
Audit Resource &
Committee Remuneration
Committee
Chief Executive
Officer
Mr. Yousuf H. Mirza
Internal Audit
Chief Operating
Officer
Mr. Samir
M. Chinoy
Finance Manufacturing
Procurement Sales & Marketing
Legal &
HSE / QMS
Corporate Affairs
Information
Technology
Corporate /
Human Resource
Goverment
Management
Relations
26
Mechanism for Providing Information
Formal Reporting Line
The current organization/structure of the Company consists of various departments/divisions, each of which is led
by a divisional head. These divisional heads are responsible for the reforms of their respective divisions and the
Board can then have access to them.
Employees
Employees are encouraged to express their views and forward their suggestions. We follow an open door policy and
employees are free to send emails, phone or even talk directly to the CEO. The employees can give suggestions,
grievances and concerns or raise any matter related to the Company. In case the matter is of significant nature,
the same is addressed in the meetings of the Managing Committee, the Board of Directors or the relevant Board
committee.
The Company also has a Whistle Blowing Policy to enable employees to raise serious concerns to the Management
regarding the business or Company without fear and repercussions.
The CEO also meets the entire Managing Committee at least once every quarter through which they are provided an
opportunity to express their concerns and suggestions directly to the CEO. These meeting are aimed at capturing
free and first hand suggestions.
Shareholders
Every year the Annual General Meeting of shareholders is held in accordance with the requirements of the Companies’
Act 2017, which is attended by the Board, CEO, Company Secretary, CFO and the senior management of the
Company. The interactive session with the shareholders allows the shareholders to ask questions on financial,
economic, social and other issues and also give suggestions and recommendations. The CEO responds to all
questions.
The Company has also provided contact details of all relevant personals for general and specific queries on its
website.
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Annual Report 2020
28
CREATING
DIFFERENCE
ISL is determined to make Pakistan self-sufficient in high quality steel. To this
end, the company continues to invest in its people and technology. To date, ISL has
invested over US$ 250 million.
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Annual Report 2020
Chairman’s Review
Pakistan with a steel consumption at just above Act, 2015, and allowed the gas companies to recover
40kgs per capita is amongst the lowest in the world. arrears.
As the country develops, we will see an accelerated
consumption of steel. With our recently enhanced The Board recognizes that well defined corporate
capacity of almost one million tons per annum, we are governance processes are vital to enhancing
confident that your company will be well placed to meet accountability. We are committed to ensuring high
the rapidly expanding consumption. standards of corporate governance to maintain
stakeholder value. The Company has an independent
As a leading steel manufacturer of the country, we Internal Audit department and follows a risk-based audit
continually look to innovate value-added steel solutions. methodology. Apart from the Board Audit Committee
Aligned with this goal, in June 2020 your company (BAC) and Board Human Resource Committee (HRRC)
commissioned, on fifteen acres of land in National meetings, the Board met six times during the year.
Industrial Park, Bin Qasim, a Service Centre catering to Four of these meetings were for review and approval of
the auto industry, the white goods industry, and other operational and financial results, and two were for the
consumers. endorsement of the strategy and budget. The Board
has been diligent and has contributed effectively in
In September 2019, the previous Board completed its guiding ISL in all its strategic affairs.
tenure and a new Board was elected for three years. I
would like to thank the retiring Board members Messrs The Board is aware of the challenges ahead, but our
Kemal Shoaib, Tariq Iqbal Khan, Kamran Y. Mirza, Syed belief in Pakistan remains unshakeable as we focus our
Salim Raza, and Riyaz T. Chinoy for their contribution. effort towards sustainable growth in an industry which
The outgoing directors have been replaced by Dr. Amjad is one of the prime indicators of economic progress.
Waheed, Ms. Nausheen Ahmed, Mr. Nihal Cassim, Mr.
Zakaullah Khan, and Mr. Fuad Azim Hashimi. During The company’s business is built on ethics, hard work,
the year, Mr. Kazuteru Mihara resigned from the Board and concern for others. Our group firmly believes that
and the Board appointed Mr. Koji Fukushima to fill the contribution to our community has, and always will
casual vacancy within the statutory period. be, a matrix of our success. We remain dedicated
to our core values and strive to maintain long-term
The financial year under report faced severe pressure relationships with all stakeholders. With an experienced
due to the external business environment. The first half Board of Directors and committed Management Team,
of the fiscal year was negatively impacted by austerity we remain equipped to meet the continuing challenges.
measures due to fiscal reforms, higher interest rates,
and lower demand. The second half of the year was The Board would like to thank all stakeholders for their
affected by the COVID-19 pandemic. We concentrated support and loyalty. Your faith in these challenging times
on increasing exports to offset the drop in domestic has allowed us to perform and show positive results in
sales. During FY 2019-20 our exports were 84,000 a difficult business environment.
MT valuing USD 57 million. June 2020 saw an abrupt
resumption of business activity which has continued We continue to pray to Allah for the continued success
into the current quarter. The economic and fiscal of your Company and the benefit of all stakeholders, as
measures introduced by the government to stimulate well as for Pakistan in general.
the economy have proved effective and your company
has succeeded in increasing its overall market share.
The financial results for the year reflect a negative trend.

This has been further accentuated by our having to Towfiq H. Chinoy
make a provision against the reversal of a judgment by Chairman
the Supreme Court. This reversal validated the GIDC Karachi 25 August 2020
30
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Annual Report 2020
32
CREATING
RELIABILITY
ISL remains committed towards reducing Pakistan’s reliance on imported steel.
The company has substituted a significant portion of the country’s steel imports
through localizing an essential raw material. To date, ISL has saved over $245
Million of foreign exchange outflow and contributed towards diversifying the
country’s export base.
33
Annual Report 2020
Directors’ Report
The Directors of International Steels Limited are pleased FY2020 due to the sustained manufacturing recession.
to present the 13th Annual Report accompanied by the US is also witnessing a sharp manufacturing recession
audited financial statements for the year ended June amidst COVID-19. Surging unemployment, reduced
30, 2020. income and confidence have impaired residential
construction, which will have a further damaging effect
Boards Composition & Remuneration on the steel demand.
Composition of the Board and the names of Members
of Board Sub-committees may be referred at Page The developing economies are less equipped to
No. 64 & 76. The company has a formal policy and tackle COVID-19 making their recovery and return to
transparent procedures for remuneration of its Directors normalization more difficult. Limited fiscal space to
in accordance with the Companies Act, 2017 and the support the economy, a fall in commodity prices, capital
Listed Companies (Code of Corporate Governance) flight and currency depreciation render the decline of
Regulations, 2019. steel demand in some developing countries as severe
as that in developed economies.
The remuneration, including the Directors fee for
attending the board meetings paid to the Directors and Pakistan’s Economy
Chief Executive Officer is disclosed on Page 147 (Note The business environment in the FY 2020 was generally
32 financial statements). unfavorable. The first half of the fiscal year was marred by
inflationary pressure, depressed spending power due to
Global Steel Scenario higher policy rates and austerity measures on account
World crude steel production declined slightly by 2% of fiscal reforms, leading to suppressed economic
to remain at 1.8 billion metric tons during the year, as activity. The large-scale manufacturing was down by
compared to the last year’s production of 1.83 billion 10.2% as compared to last year leading to significantly
metric tons. China continued to dominate the global reduced business activity across all segments of the
steel market by increasing its share in the global output economy. The situation was further exacerbated by the
from 53% in 2019 to around 56% in 2020. COVID-19 pandemic. The complete lockdown brought
the whole economy to a standstill and with the same
The outbreak of COVID-19, novel coronavirus, in the last lockdown across the globe, international trade, travel
quarter of the FY 2020 impacted almost all industries and business activity declined significantly.
and sectors worldwide; two of the most impacted ones
were manufacturing and travel & transportation. The Pakistan managed to contain the devastating effects
major steel producing countries were already persisting of the COVID-19 through its lockdown strategy. The
with their protectionist measures. Foremost being State Bank of Pakistan (SBP) responded to the crisis by
the United States continuing with 25% duty on steel cutting the policy rate by a cumulative 625 basis points
imports from around the world. Despite the decline in to 7.0 percent since March 2020. However, the rate
the global steel production, Chinese steel production remained as high as 13.25% for better part of the year.
grew by 3.4% crossing the 1 billion metric tons mark
for the first time. China’s surging production is largely The GDP growth rate went into negative by 0.4%.
due to its capacity replacement program though its Exchange rate further depreciated by 2.6% during
pace slowed down in the FY 2020 as compared to the FY2020 on the back of a cumulative depreciation of
last year. Growth in real estate sector and infrastructure 34% during FY2019. Headline inflation recorded at
stimulated the overall increase in consumption of steel 11.22% during Jul-Apr FY2020 as against 6.51%
products. However, the outbreak of novel coronavirus during the same period last year. Rose to as high as
affected the steel demand in China since December 14.6% in January 2020 but fell to 8.5% in April 2020.
2019. However, some positive results of the Government’s
macro-economic reforms, particularly in the Current
EU steel demand suffered a contraction of 5.6% in Account Deficit, which narrowed 77.9 % to $2.97 billion
34
in July-June FY2020 from $13.43 billion in the previous volumes mainly witnessed in the Galvanized sales
year, equivalent to 1.1% of GDP as compared to 4.8% which decreased by 23% whereas the sales volumes
of GDP during the last year. Remittances have also of Cold Rolled Products decreased by 17%. The
increased supporting the foreign exchange reserves. total sales volumes of the prime product remained at
418,000 metric tons comprising 237,500 metric tons
Steel demand in the country contracted from a further of Galvanized and 180,500 metric tons of Cold Rolled
decline of 36.5% in automobile production along with Products. The Company continued to consolidate
international price dynamics. At the same time, cuts and leverage its nation-wide dealer network, however
in development spending and a general slowdown in special focus has remained on exploring and developing
economic activities coupled with COVID-19 outbreak the export markets.
reduced the demand for iron and steel urging the local
steel industry to curtail their production. All these factors JCR-VIS Credit Rating
contributed to the negative growth of 8% in iron and In 2019, the Company was last awarded the rating of
steel industry. Nevertheless, the COVID-19 pandemic ‘A+/A-1’ (Single A Plus / A – One) by JCR-VIS Credit
is presenting a fair few short-term challenges to the Rating Company Limited. Outlook assigned to the
steel industry. The quickening recovery in the country rating was ‘Stable’.
indicates that the industry should be able to weather
this storm. Energy Management
Company’s 19 MW power plant continued to operate
Manufacturing Operations satisfactorily and in line with our practice, we continued
Current year production was 412,000 tons, reflecting to supply excess energy to K- Electric.
a decrease of 26% over the previous year based on
subdued demand and shutdowns relating to gas Health, Safety & Environment
shortages in winter months and COVID-19 pandemic. Company believes in and is fully committed to improve
Health, Safety and Environment standards to achieve
Sales sustainable HSE performance. Process Safety &
To counter the domestic weak demand, your Behavior Based Safety across the organization is
company carried out aggressive market development ensured through HSE Management System integrated
activities, focusing on new, untapped and emergent with the company’s organization scheme and the
opportunities, in wake of global socioeconomic Company is on track of continuous improvement with
conditions and changing global trade dynamics due to focus to achieve & sustain leading levels. The Company
growing protectionism against traditional suppliers. As conducts training and awareness sessions on behavior
a result, the company managed to achieve 1.3 times based safety to create a sustainable and safe working
higher export sales as compared to last year. However, environment for our people, customers and contractors.
the overall sales value declined by 16% at Rs. 48.1
billion as compared to the last year’s sales of Rs. 57.5 Your Company was quick to implement the Standard
billion. Operating Procedures (SOPs) to combat COVID-19.
The Company continued its operations during the
The gross margin remained under pressure due pandemic with strict adherence to the SOPs. 77 staff
to fluctuations in exchange rate and volatility in members were tested showing symptoms of COVID-19
international steel prices. The finance cost for the year out of which 25 came positive. The Company provided
increased sharply mainly due to extremely high interest full medical and financial assistance to them and they
rates in the first 9 months of the year. have completely recovered.
Effected by economic slow-down and COVID-19 Implementation of focused safety programs,

pandemic, the Company saw a dip in its overall sales environmental standards and strong visible leadership
35
Annual Report 2020
resulted yet another year without any major incidents. including Strategic, Operational, Compliance and
Your company continued to comply with National Financial Reporting Risk.
Environmental Quality Standards including best
practices for air emissions, noise, portable water and Adequate controls have been designed and
industrial effluent. communicated to the staff via various policy and
procedural guidelines, which are executed and self-
Human Resources assessed by the process/control owners.
The Company maintained industrial peace and a positive
and enabling work-environment for all employees in An independent Internal Audit Department, under direct
the organization by promoting candor and fairness. reporting to the Board Audit Committee, evaluates and
The Company continues its efforts on development of oversees the design and operating effectiveness of
personnel at all levels, proactively building capabilities these controls.
and retaining talent for business continuity. Employee
engagement has been managed with robust policies Business Review
and procedures. The state of the art gymnasium was In 2020, the Company targeted to maintain its growth
inaugurated to encourage employees to adapt a streak but saw a decline in its production and sales.
healthy life style. The Company posted the revenue of Rs. 48.1 billion
against Rs. 57.5 billion last year. The rolling production
The Company has formulated a firm succession during the year was 424,300 tons against 584,400
plan, which includes performance evaluation and tons last year. Whereas, the total saleable production
appropriate training requirements for development of was 412,000 tons as compared to 555,000 tons of last
potential future leaders. The Company continued to year. The profit margins remained under pressure due
enhance capabilities of employees by providing them to the increased international steel prices coupled with
development opportunities internationally as well as the unprecedented volatility in the exchange rates and
at prestigious institutions like LUMS, IBA, ICAP and hike in the interest rates. The gross margin reduced
Management Association of Pakistan. to 8.8% from 11.2% last year because of Supreme
Court decision on Gas Infrastructure Development
The Company successfully continued its operations Cess (GIDC) due to which Rs. 1,240 million of GIDC
with an optimal headcount of 692. Despite facing was recognized against the self-consumption out of
the COVID-19 crisis with less encouraging financial which Rs. 224 million was additionally provided during
results this year, the Company did not lay off any of its the year. However, GIDC component of Rs. 737 million
employees. against K-Electric recognized as contingent liability. This
amount is recoverable form the utility provider during
Corporate Social Responsibility the course of next 24 months. The Company posted
The Company believes in supporting the community profit before tax of Rs. 443 million and profit after tax
and has a policy to contribute at least 1.5% of its of Rs. 495 million against profit before tax of Rs. 3,679
profit after tax. Despite having low profits this year, the million and profit after tax of Rs. 2,664 million last year.
Company donated Rs. 19.2 million, constituting a much
higher percentage of its profits to various organizations The new installed capacity of Compact Cold Rolling
in the areas of healthcare and education including The doubling the existing rolling capacity of the Company
Citizen Foundation, AAS Trust, Karachi Relief Trust, to 1,000,000 tons, but could not be utilized fully due to
Karwan-e-Hayat, Al-Rehmat Benevolent Trust and the dampened demand and an overall slow down in the
Hunar Foundation. Major amount of this total donation local market. Nevertheless, the enhanced production
was given in relation to the COVID-19 relief efforts of capacity has enabled the Company to increase its
the Government. market share with fulfilling the demand in local and
international markets and helping the economy in terms
Risk Management of import substitution.
The Risk Management Infrastructure of the company is
based upon Enterprise Risk Management methodology/ The increased focus with a well-marked strategy to
framework addressing the major risk categories target the export markets yielded positive results
36
increasing the Company’s export sales by 1.3 times to from operations to Rs. 1,968 million, a decrease of Rs.
Rs. 9 billion as compared to Rs. 3.97 billion of export 1,518 million from last year.
sales last year. The export volumes have also gone up
from last year’s 34,700 tons to 84,250 tons. Earnings per share
Earnings per share for the year ended June 30, 2020
Financials was Rs. 1.14 compared with Rs. 6.12 per share last
The Company had witnessed negative growth in the year.
current year’s revenue collection of Rs. 48.1 billion,
which is 16% lower than last year. The gross margins Dividend
stood at Rs. 4,213 million compared with Rs. 6,449 Due to current economic conditions and business
million last year. challenges the Company has decided to preserve cash
in order to create more value for its shareholders and
Administrative expenses reduced to Rs. 263 million as therefore not to pay any dividend for the year ended
compared to the administrative expenses of last year of June 30, 2020.
Rs. 284 million. Selling and freight expenses increased
by 27%, due to increased focus and investment on Recommendation of the Board Audit Committee
exports and the marketing activities. for appointment of auditor
The present external auditors M/s KPMG Taseer Hadi &
Other operating expenses reduced to Rs. 334 million Co., Chartered Accountants were appointed since FY
as compared to the last year’s expenses of Rs. 534 2010-11. The Management and the Board of Directors
million. Financial charges increased by 80% and stood are grateful for their services which will end on the
at Rs. 2,315 million mainly due to hike in the interest conclusion of the 13th Annual General Meeting which
rates and massive depreciation of PKR against the will be held on September 29, 2020. Board of Directors
USD, resulting in higher financing requirements. and Board Audit Committee have recommended
M/s A.F. Ferguson & Co., Chartered Accountants for
Overall your Company is focused on improving working appointment as statutory auditors for the year 2020-21
capital and cash flow management. However, the at the prevailing fees of retiring auditors.
interest payments declined the net cash generated
Appropriations
2020 2019
Rupees in ‘000
Profit after tax for the year 494,851 2,664,373
Interim Dividend (2020 Rs. Nil per share; 2019 Rs. 1.5 per share) - (652,500)
Final Dividend (2020 Rs. Nil per share; 2019 Rs. 1.5 per share) - (652,500)
Contribution to National Exchequer and the The values of the provident fund and the gratuity
Economy scheme at the year end were Rs. 194.7 million and Rs.
Your Company made a contribution of Rs. 9,914 million 192.9 million.
to the National Exchequer during the year by way of
income tax, sales tax, custom duties and other levies. Future Prospects
The company operates with 1,000,000 tons of
Provident Fund & Gratuity Scheme commercial production capacity of cold rolling. The
The Company provides retirement benefits to its new Compact Cold Rolling Mill is complemented by
employees. These include a non-contributory defined a new continuous pickling line, additional annealing
benefit Gratuity Scheme for all employees and a furnaces and acid regeneration facility. The expanded
contributory Provident Fund for all employees except capacity will enable your company to recapture its
unionized staff. Both plans are funded schemes market share in the local and international markets and
recognized by tax authorities. be instrumental in imports substitution. A dedicated
service center has also become operational at the
37
Annual Report 2020
Port Qasim Area of Karachi. The strategic location of Such support is required to not only meet normal
the center is aimed at increasing the Company’s value commercial challenges but also those posed by security
proposition and service offerings. issues and tough economic conditions. The confidence
and goodwill of the stakeholders has allowed the
Recognition Company to sustain and grow over the years.
Your company won the Best Export Performance
Award in the Iron and Steel Products category at We continue to pray to Allah for the success of the
the 41st & 42nd Annual Export Awards Ceremony Company and for the benefit of all stakeholders, and
of FPCCI. For the first time, ISL made it in the list of the country in general.
top 25 companies announced by the Pakistan Stock
Exchange. Recognising the company’s adherence
to the corporate governance best practices, the
company was awarded the Management Association
of Pakistan Corporate Excellence Award for the second
consecutive year. Yousuf H. Mirza Towfiq H. Chinoy
Chief Executive Officer Chairman
Acknowledgement
The Board would like to thank all of their stakeholders,
employees, customers, suppliers, shareholders, Karachi 25 August 2020
bankers and any others for their support and loyalty.
38
39
Annual Report 2020
40
76 64
147
41
Annual Report 2020
42
CREATING
COLLABORATIONS
Committed towards Brand Pakistan, ISL has been contributing towards diversifying
Pakistan’s export base by exporting flat steel to over 20 countries across 5 continents,
to some of the most quality conscious markets such as the USA, South Africa, Australia
and various countries in the MENA region, to name a few.
To date, the company has contributed over US$191 Million worth of exports to
Pakistan’s foreign exchange receipts. ISL has also received “The Export Trophy Award”
by Federation of Pakistan Chambers of Commerce and Industry (FPCCI) for two
consecutive years in 2017 and 2018.
43
Annual Report 2020
44
CREATING
CONSCIOUSNESS
SUSTAINABILITY REPORT 2020
45
Annual Report 2020
Our Relationship with the Society and

Community
As a leading flat steel manufacturer of the country, ISL and air, thereby ensuring sustainability of life, both
strives to contribute in the society’s development. Steel above and below land.
serves as an indispensable raw material for numerous
things in everyday life, and developing societies face ISL’s over 700 people strong workforce is driven by
increasing demand for steel. Through providing this the company’s core values and principles, who work
ever essential material, we enable development of the tirelessly to create a safe workplace for their peers
country. and maximize value for the various stakeholders of
the company. Over the years, we have consistently
The ever evolving social landscape creates new, embraced management best practices and adopted
sometimes unpredictable challenges, the most recent policies that ensure a fair and competitive workplace,
one that has affected multiple societies across the free from discrimination and biases of any nature. Our
globe is the COVID 19 Pandemic. Causing widespread people remain committed towards playing an active
suspension of socioeconomic activities, the pandemic role for society’s benefit in causes we hold close to our
has created a global health emergency, resulting in hearts.
mass illnesses and fatalities in many countries. Nearly
the entire world is struggling to contain the spread of Moving forward, we are conscious of the need to
this virus, and at the same time, many countries are accelerate and scale up the integration of sustainability
easing lockdown to revive the economy to avert risk of in our operations. We will remain dedicated to our
increasing poverty and malnutrition. Amid this period core values and vision. While continuing our socially
of global slowdown and uncertainty, protectionism is responsible approach, we will always maintain our
also increasing in global markets, further exacerbating primary aim of promoting human welfare and protecting
economic challenges for developing countries. Ensuring the environment.
a better tomorrow requires foresight and tangible
actions to address these issues today.
Cognizant of the importance of business continuity and

profitability to our ability in remaining sustainable, we
took various precautions to ensure safety of our people
and compliance with government and WHO advisories, Yousuf H. Mirza
and were able to resume operations at the first available Chief Executive Officer
opportunity. Efficiency and competitiveness is essential
in remaining operational in an environment of increasing 25 August 2020
competition, and growing protectionism and shutdown
in the global market.
The company benchmarks itself against global quality

standards and best practices to ensure that our products
and services remain competitive and ecofriendly. The
company remains committed to reduce its dependency
on harmful materials, being driven by the clean, lean and
green approach. The company embraces environment
friendly practices, reducing waste and reusing
resources as frequently as possible. The company
undertakes various environment conservation initiatives
to preserve essential natural resources such as water
46
10 UN GC Principles
ISL has benchmarked its sustainability and corporate conduct with the United Nations Global Compact (UNGC).
Corporate sustainability starts with a company’s value system and a principled approach to doing business. This
means operating in ways that, at a minimum, meets fundamental responsibilities in the areas of human rights,
labor, environment and anti-corruption. Responsible businesses enact the same values and principles wherever
they have a presence, and know that good practices in one area do not offset harm in another. By incorporating
the Global Compact principles into strategies, policies and procedures, and establishing a culture of transparency
and integrity, we aspire to set the stage for long-term sustainability
Human Rights
Principle 1 Principle 2
Businesses should make sure that they are not
support and respect complicit in human
the protection of rights abuses.
internationally proclaimed
human rights;
Labor
Principle 3 Principle 4 Principle 5 Principle 6
Businesses should the elimination of the effective the elimination of
uphold the freedom all forms of abolition of child discrimination
of association and the forced and labor; and in respect of
effective recognition of the compulsory employment and
right to collective labor; occupation.
bargaining;
Environment
Principle 7 Principle 8 Principle 9
Businesses should undertake initiatives encourage the
support a to promote greater development and diffusion
precautionary approach environmental of environmentally
to environmental
responsibility; and friendly technologies.
challenges;
Anti-Corruption
Principle 10
Businesses should work
against corruption in
all its forms, including
extortion and
bribery.
47
Annual Report 2020
Who We Serve? Our Stakeholders
Shareholders
Maximize Shareholder value and uphold highest standards

of transparency and openness, while assuming the most
stringent level of corporate governance
Employees
Provide employment opportunities to a wide spectrum of people

with skills and competencies. Practice diversity and inclusion without
exception and maintain practices that upholds employee welfare,
wellbeing and zero tolerance for sexual harassment and misconduct.
Customers
Provide world class products at fair and transparent prices to

customers, enable downstream industries to flourish with easy
access to an essential raw material. Develop products to serve
the various industrial segments of the country.
Government
Contribute to the government revenue collection, promote

import substitution and solve country’s major challenges
through our value chain.
Society
Promote welfare for society through real value creation, address

the major human development issues of the society. Support
corporate and social entities, in promoting social development
goals and areas that are traditionally overlooked.
48
Stakeholders Communication
Stakeholder Frequency Activities Value Creation
Employee Ongoing · Employee feedbacks · Career Growth

· Surveys · Learning and
· In house trainings development
· Town hall meetings · Health and
· Emails Safety
Customers Ongoing · Customer Visits · Quality product

· Exhibitions · Fair pricing
· Company organized events · Timely
Deliverability
Shareholders Quarterly Shareholders and providers of capital are · Sustained
engaged by corporate and secretarial practices economic
department. The mode of engagement is returns
Annual General Meeting (AGM) and Extra- · Business growth
Ordinary General Meeting (EOGM).
Society Ongoing Social Welfare,
Better access to
opportunities
Government & Ongoing/As and Meeting with Key Stakeholders Adequate
industrial groups when representation
Knowledge
sharing
External Associations
ISL engages with various government and non-government associations to present our social and environmental
impact and remain in coordination for further improvement.
Name of Agency ISL
Pakistan Environmental Agency √
Sindh & Punjab Environment Protection Agencies √

Federal Board of Revenue √
Civil Defense √
Labor Directorate √
Pakistan Federations Association √
49
Annual Report 2020
50
CREATING
IMPACT
For ISL, winning is all about creating an impact that matters. This drives the company
to actively support various social, educational and healthcare related initiatives in the
country. The company partakes in various social activities to promote wellbeing and
welfare to society. Every year, ISL allocates atleast 1.5% of after tax profit for social
uplift and charitable causes.
51
Annual Report 2020
Employees
ISL strives to contribute to society’s development by and operations of the company. This enables them to
creating employment opportunities, enabling skill perform their job roles with full fervor and enthusiasm,
development and on the job training and promoting thereby, improving their capacity to deliver their targets.
employees’ wellbeing by providing a safe and
comfortable work environment. Wellbeing
ISL positions physical and mental health management
In a constantly evolving and highly competitive business as the foundation of work-life management, and
environment, the bigeest competitive advantage of any encourages employees to work efficiently to create
company is its human capital. Our Human Resources sufficient time for their private lives. The aim is to
Department (HRD) works on implementing HR Related promote a work style that allows employees to maintain
policies to ensure that our business objectives are and enhance their health while being highly productive.
met on a continuous basis, and at the same time, the There are frequent activities in place to provide
employees are provided career and self-development entertainment and means of recreations to employees
opportunities that enable them to evolve in high at the company.
performance workers, who deliver the values and vision
of the company.
ISL is driven by the Group’s code of conduct that

professes fair work place, Diversity in Gender, race and
religion, Teamwork, respect for people, and safety and
wellbeing of all employees.
GYM
ISL promotes physical wellbeing of its employees and
has established a fully furnished State of the art GYM at
ISL facility where all team members can avail facilities.
Cycling Event
In order to promote healthy life choices among
employees, the company conducted a Cycling event
Orientation and Induction that was attended by employees with their families.
ISL recruits the best talent from industry and provide
them a comprehensive orientation plan to help them Coping with the New Normal
learn about our business, customers and operations. In view of lockdown and the impact it has on social
The ISL recruitment process evaluates and selects the lives, the company organized an event Titled Coping
most suitable talent specific to the role, on standard with lockdown. The session, conducted by Dr. Tahir
criteria. Besides skill and aptitude, we also seek to Barlas, highlighted the importance of staying positive
evaluate the value system of a potential candidate during the lockdown and suggested activities to
before selection. We believe in nurturing human capital. enhance morale.
Every employee that joins the company goes through
a rigorous orientation at the company to familiarize Diversity and Inclusion
them with the organization structure, its core values ISL is an equal opportunity employer that believes in
52
providing everyone the right to a livelihood regardless We also ensure that our employment terms include
of cast creed culture and religion. Over the years generous leave allowances, flexible timings and other
our strength of female workforce has increased benefits including both retirement benefits of provident
substantially, and we continue to develop roles in the fund and gratuity.
company that are gender neutral.
ISL benchmarks its compensation plans with
Training and Development comparative companies and periodically carry out
The company makes significant efforts to train their salary surveys.
employees. This involves trainings at all levels, in house
and ex house as well. ISL believes in the fair compensation of our contract
workers. The company presently employs approximately
contract workers who receive minimum wages, medical
registration and insurance. Furthermore, they are
eligible for the Workers Profit Participation Fund. This
highlights the fact that our responsibility lies equally for
all our stakeholders.
Employee Survey
Gender Equality
Being a large scale industrial manufacturer, located in
suburbs of the city, it is difficult to attract and retain
women, which is further exacerbated by the limited
access of public transportation for women and the
governmental timing restriction of female-based factory
workers. Notwithstanding the challenges, ISL has ISL regularly conducts conduct anonymous employee
steadily promoted diversity, with a drastic increase surveys. Once completed, the HR team does thorough
in female headcount, from none in the early days subjective and objective assessment to create a
to the present head count of 13, including senior presentation with the survey results. The HR team
management. These team members serve in diverse holds department wise meetings in which positive and
functions ranging from Finance, Marketing, supply negative feedback of the employees is discussed and
chain and production. corrective action taken accordingly.
ISL strives to become an employer of choice for the The 7th EFP Awards for Best HR Practices
massive talent pool of Pakistan’s labor force and actively ISL participated and won first place in the Annual
works to attract and retain employees of all ages within Employers Federation of Pakistan competition for
the organizations. best HR practices for the year 2018. This event
highlights best practices in the areas of Corporate &
Compensation and Benefits General Management, HR Management, OSH&E,
Our compensation includes provident and gratuity Skill Enhancement, Compliances and Sustainable
funds in addition to our comprehensive health plan, life Development.
insurance, mobile phone, transport and fuel allowances.
53
Annual Report 2020
Safety Record Personal Safety

ISL invests in considerable efforts in providing a safe In view of the situation created by the COVID 19
and injury free workplace for its employees and visitors Pandemic, employees were given a rotation plan and
to the company. The company has engaged various not more than 50% attendance was ensured. This was
consultants to assess the safety of the company facility, done in view of social distancing norms that would
and inculcate the culture of safety in the company’s prevent any person to person infection all meetings
teams. were conducted online to adhere to the SOP of social
distancing.
The health and safety of our employees is of high
significance to us. We are responsible for providing a As a part of daily routine work, ISL employees are
healthy and injury free environment for our employees required to embrace safety as a mindset. Personal
and contractors. ISL strives to achieve this through protective equipment relevant to the job nature are
our OHSE Management System (Occupational Health required to be worn before starwork. These range
Safety and Environment System) that is implemented from safety gloves, safety goggles and ear protectors.
by the HSE Department. Furthermore, people are required to walk along
3.5 Lost Time incident
Through this program, we have set reporting parameters 3.20 Frequency rate
that minimize the impact of behaviors that could lead to 3.00
3.0 2.91
unfavorable events. Our HSE program also enhances
the sense of responsibility for keeping the workplace
2.5
safe and with minimal or no hazards. For example,
the team has created signage that includes large clear
2.0 1.86
illustrations that are placed throughout the factory floor
Safe Workplace
1.5
During the year, the Covid 19 Pandemic impacted
the country. In a proactive approach, the company 1.0
0.72
followed all government SOPs and regulations and took
precautionary measures proactively. Whilst the initial 0.5
lockdown phase saw suspension of activities, upon
gradual resumption, care was taken to provide for a safe 0.0
2016 2017 2018 2019 2020
and hygienic workplace. All Company facilities were
disinfected frequently as per the norms and standards designated safety pathways in the factory premises.
set by the WHO and government. Entry points of For specialized activities that pose a potential risk such
every company facility were equipped with disinfection as working at height, a safety clearance or “permit
booth, where every visitor must pass through before to work” is required in order to ensure that adequate
entering the premises. Temperature of every visitor was safety measures have been employed.
recorded and hand sanitizers’ availability was ensured
across the company.
54
Safety Awareness Fire Drills

Our HSE department has encourages awareness and During the period, several Fire Drills were carried out at
consciousness of implementing safe work practices. In various locations of the company across Pakistan, and
order to inculcate a safety culture, the company has the use and countermeasures in the event of a fire were
conducted several safety awareness trainings to ISL demonstrated to employees.
employees that create a safety mindset at the grass
root levels. Logistic Safety Measures
Our sales and marketing collaterals provide detailed
2,000 Hours of Safety Training accounts of safe handling of products, thereby
Imparted (HRS)
reducing the chances of transit injury as a result of coil
1,684
1,618 transportations.
1,500
1,000
500
0
2019 2020
55
Annual Report 2020
Customers
Our ISL considers customers one of the most essential In view of increasing demand, the company has
part of our value system. The company attributes its established a fully equipped service center, in close
success to its ability to serve its diverse customers base proximity to various industries that will enable superior
across the globe. Upholding Customer requirements service deliverability. Besides providing value added
as the most important part of our existence, ISL’s services, the service center will enhance ISL’s customer
sales and marketing teams work tirelessly to exceed experience, providing customers with reduced
customer expectations through value added services turnaround time from source to production.
and rigorous after sales support.
Transparency in Pricing
Customer Knowledge Our organizations support price transparency by
Our marketing teams impart full product and customer providing a single yet comprehensive country price list
knowledge through various marketing collaterals and that is shared with all our customers. The company
through interactions. ISL’s sales teams interact with prices its products competitively, in view of prevailing
customers on a personal basis through visits and at global steel prices. Furthermore, all our customers have
expos and exhibitions. The company has created access to our regional offices throughout the country
customer friendly marketing collateral that is readily to ensure timely feedback for any purchase follow up
available across Pakistan regarding all the product or concerns.
information. We highlight all product specifications,
including the variety of the product, and the quality After Sales Support
certifications that each product has received. ISL provides customer support throughout it sales
network. The support ranging from complains regarding
Value Added Services quality, to service and availability. ISL encourages open
Besides providing full width coils to customers, ISL communication with customers.
offers various services such as Cut to length, Slitting
and various profiles depending upon customer’s need.
Such services render the product in a more usable form,
thereby improving value proposition for the customers.
56
Shareholders
ISL aspires to be a model corporate citizens, by outgoing directors for their contribution to the company
upholding and creating value for our shareholders. In and welcomes the new directors to the Board. Like
order to ensure fair returns to our shareholders, our their predecessors, the new board members are
teams work hard to ensure maximum value is generated distinguished professionals and come from a diverse
for our shareholders. background, which will enable them to set a strategic
direction for the company that will maximize value for
The below table illustrates our ten-year record of our the shareholders.
dividend payouts and our profits after tax.
PSX Top 25 Companies Awards
Quarterly and Annual reports The company was nominated and received the PSX
The company prepares and disseminates periodic top 25 Share award. The award, conferred by the
performance reports in compliance with the law. These Honorable Prime Minister of Pakistan, His Excellence
reports provide an accurate and detailed insight into Mr. Imran Khan, depicts our commitment to maximize
company’s performance, the challenges and the shareholder return and to create value at the grassroots.
outlook for the future.
Board of Directors
During the period, the company elected new Directors
to the company board, upon completion of the term
of the current Directors. The company thanks the
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Annual Report 2020
58
CREATING
EFFICIENCY
ISL aspires to be a carbon negative organization. Driven by the Clean, Lean and Green
approach towards responsible and sustainable manufacturing, we are always working
towards making our operations as environment friendly as possible, from investing in
green technologies to reducing and treating our waste.
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Annual Report 2020
Community
At ISL, we seek to address some of the challenges that our society faces. Being a large scale industrial manufacturer provides
us a position to become an enabler and facilitator of human development through our operations.
Our corporate culture is driven by the inclinations of our founder, Mr. Amir S. Chinoy, towards being a strong supporter of the
local community. ISL has integrated responsibility in our donation policy, in which charitable donations are made either directly
through the organization or through the Amir Sultan Chinoy Foundation (ASCF).
Policy Donation
Donation Policy ISL donates atleast 1.5 % of its profits (after tax and dividend income),
towards social uplift and community welfare activities every year.
Total Amount of Donations in FY 2019-20 Rs. 19.2 Million
The company considers the community as one of the most important stakeholders in the path to sustainability. Driven by
purpose, the company seeks to create sustainability.
The Amir Sultan Chinoy Foundation Vocational Training

The Amir Sultan Chinoy Foundation is one of Pakistan’s ISL continues to support vocational training institutions as we
oldest foundations. It was established in 1968 as The believe that the future of the country lies in skill development
Friendship Foundation by Amir Sultan Chinoy in accordance of the vast population, which will then potentially contribute
with the wishes of his father Sir Sultan Mehrally Chinoy. In to the country’s growth. ISL’s support to Hunar Foundation,
1980 the foundation was renamed as the Amir Sultan Chinoy a leading vocation training institution of the country, seeks to
Foundation. develop skills in the population, which enables people to earn
a livelihood. Besides skill development, ISL facilitates learning
Till this day the foundation continues to operate in accordance through study tours and visits to impart firsthand knowledge
with the wishes of Amir Sultan Chinoy who established the of a high tech industrial complex.
foundation to help further the advancement of education,
learning and industry in all its branches. Amphitheatre at the IBA main campus
Presently, ISL continues to contribute to the Amir Sultan The Group sponsored the Amir S. Chinoy Amphitheatre at the
Chinoy Foundation (ASCF) – which is mandated to focus on IBA main campus student’s c enter.
education, health and social advancement.
Environmental Responsibility
Education ISL is conscious of the ways our business activities can
Our Group believes that if health care is the basic foundation potentially impact the environment. Recognizing access to
of life, then education is the essential building blocks for a water and basic resources as a fundamental human right,
more successful life. Within our donation policy, we ensure the company takes various measures to reduce its impact on
to support the education of the underprivileged, higher the environment. As Pakistan faces energy and clean water
education and arts programs. Through our various programs scarcity issues, we believe that our most direct and visible
in the last decade over 11,000 children have gained a higher impacts come from our environmental efficiencies.
quality of education.
Although our raw materials, steel and zinc does not have
The Citizen Foundation (TCF) Rahbar Mentorship a direct impact on environment, we believe in minimizing
Program impact to the environment as a result of our operations.
ISL’s ongoing commitment to education for the underprivileged Most of the technologies and equipment in our operations
continues with the employees participating in the “Rahbar are environmentally efficient and compliant with international
Program”. The program allows employees to act as mentors and national norms. Environmental aspects are taken into
for students and to guide them towards becoming good consideration by us and included in all our project costing
citizens and to motivate them to always strive for the best. and purchase process. Furthermore, all future investments
are preceded by an environmental impact assessment.
ISL employees voluntarily participates in The Citizens
Foundation’s flagship volunteer-based youth mentoring Driven by the Clean, Lean and Green Approach, ISL strives to
program RAHBAR. Rahbar is a youth mentoring program. continuously adopt environment-friendly practices during its
The vision of the Rahbar program is «to sow the seed of manufacturing processes.
positive thought process; leave the students with some food
for thought.» While embracing sustainable technologies, ISL strives to
60
minimize its environmental impact though effective resource Luxury Hotel. The activity had two goals, the educating the
utilization, waste reduction and recycling of resources, as public on adopting environmental-friendly practices and
frequently as possible. taking initiatives to preserve ecosystems by taking simple and
effective steps.
Effluent and Sewage Water Treatment
ISL›s Effluent Treatment Plant collects, neutralizes and Healthcare
filters the entire solvent-based waste generated during the Health is the basic foundation of all life. As a responsible
manufacturing process, making it reusable. The reverse corporate citizen, we recognize that there are limitations
osmosis system generates 54m3/hour of water to meet its for underprivileged members of society and their reach to
industrial needs without relying on the city›s main water supply quality healthcare. Our donation policy supports the provision
system. The Sewage treatment plant recycles the water used of health care in areas of need and the funding healthcare
at the factory premises and is then utilized to water plants and institutions.
vegetation present in the factory premises.
Permanent Endowment Fund
Emission Control In 2010, the Group made a substantial contribution towards
Although the company’s operations do not have a major the “Amir Sultan Chinoy Chair” at the Aga Khan University
impact on the environment, the company proactively seeks to Hospital in Karachi - a permanent endowment fund.
minimize any environmental impact that may arise as a result
of manufacturing operations, such as the installation of an Health Clinic in Landhi, Karachi
incinerator at the color coating line, that neutralizes the fumes In 2016, ISL partnered with SINA Clinic to create a health
released in the atmosphere. clinic. This is a significant achievement in this area, as it
benefits several members of the society there at nominal
Waste Heat Utilization: costs. Located at a close proximity to ISL factory, workers
ISL recovers significant amount of waste heat generated from are also able to reap the benefit of this clinic. In its first year of
operations and utilizes it in various production operations operation the clinic served 25,890 adults and children.
and also powers a 1.2 Mega Watt Steam Turbine to generate
additional electricity. The heat absorption chiller generates Sponsoring ASB – Architects and Builders Sourcebook
chilled water for air-conditioning, whereas, steam boiler uses 20
waste heat from exhaust gases to generate steam. ISL continued to support the Architect community by
sponsoring the 2020 edition of the Architects and Builders
In-house Co-Generation Power Plant: Sourcebook. A leading directory for construction materials
ISL has installed a natural gas burning power plant with 6 and solutions in Pakistan, the publication is widely used by
generators that creates 19 Mega Watt of power by co- Architects and industry professionals across the country.
generation, meeting the needs of ISL›s steel complex and Besides promoting ISL’s products the guidebook also creates
supplying surplus electricity to the Grid. awareness regarding environmentally sustainable building
materials.
Acid Regeneration Plant (ARP)
The pickling line utilizes a large amount of Hydrochloric acid to
remove surface impurities from hot rolled coils. Direct disposal
of the contaminated acid poses threat to the environment,
therefore ISL›s Acid Regeneration Plant (ARP) recycles and
reconditions Hydrochloric acid from the pickling line, making
98% of the acid reusable.
Environment Conservation and Awareness

WWF Plantation & Beach Cleaning Activity
With the impact that global warming has on the world at
the moment, ISL partnered with WWF (World Wide Fund)
Pakistan to plant eleven hundred mangrove trees along the
coastal areas of Karachi to reduce the impact of flooding
in the local area. Furthermore, employee’s participated in
cleaning up the beach that surrounded the mangrove forest
to prevent the local wildlife from eating chemical waste.
“Take a Pledge for Environment” Activity at CAP Family

Carnival
ISL supports social engagement initiatives, such as Citizen’s
Archive Pakistan (CAP), whose core projects include cultural
and educational programming for low-income communities
in. ISL supported the Citizen Family Carnival 2020 at Beach
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Annual Report 2020
62
CORPORATE
GOVERNANCE
63
Annual Report 2020
Board of Directors’ Profile

Mr. Towfiq H. Chinoy He has also attended management development
Chairman Since: September 25, 2019 programs at Said Business School, University of Oxford,
Director Since: September 3, 2007 INSEAD and at NanYang Technological University,
Singapore. Currently he is Director of IIL Americas Inc.,
Towfiq H. Chinoy was Managing Director of International German Pakistan Chamber of Commerce & Industry
Industries Limited (IIL) for 37 years until 2011. He was and Employers Federation of Pakistan.
founding Managing Director of International Steels
Limited (ISL) and served for 8 years until 2015. Dr. Amjad Waheed, CFA
Director Since: September 25, 2019
Towfiq Chinoy is serving as Chairman of ISL’s board and
as Advisor to IIL. Currently, he is also the non-executive Dr. Amjad Waheed holds a Doctorate in Business
Chairman of Packages Limited a Director of Standard Administration with a major in Investments and Finance
Chartered Bank (Pakistan) Limited. and of National from Southern Illinois University, USA and is also
Foods Limited. He is also a Trustee of the Mohatta a Chartered Financial Analyst (CFA). Since the last
Palace Gallery Trust and Habib University Foundation. fourteen years, he is CEO of NBP Fund Management
Limited (NBP Funds), which is a subsidiary of National
Amongst the positions he has previously held are Bank of Pakistan, with Baltoro Growth Fund as the other
Chairman of the Board of Governors at Indus Valley joint venture partner. NBP Funds is presently managing
School of Art & Architecture for two terms, Chairman of several mutual and pension funds, and portfolios. Total
Jubilee General Insurance Company Ltd for 23 years, assets under management of NBP Funds are presently
Chairman of Pakistan Cables Ltd for 14 years and over Rs. 138 billion. NBP Funds is one of the highest
Chairman of PICIC Commercial Bank Ltd for 3 years. rated Asset Management Company in Pakistan.
He has also been a Director of National Refinery Ltd.,
Before joining NBP Funds, Dr. Amjad was Head of
Linde Pakistan Ltd, Jubilee Life Insurance Co. Ltd and
Equity Mutual Funds & Portfolios at Riyadh Bank, Saudi
the Pakistan Centre for Philanthropy.
Arabia, for about five years where he was managing

USD 7.5 billion invested in 22 mutual funds. Prior to that
Towfiq Chinoy has also served on the Advisory Boards
he was Head of Investments at NIT, and Chief Operation
of the Ministry of Communications, Engineering
Officer of FC-ABN AMRO Equities for several years.
Development Board and Port Qasim Authority –
Before moving back to Pakistan, Dr. Amjad Waheed
Government of Pakistan and has been a Vice-Chairman
was Assistant Professor of Finance at Tennessee State
of the Pakistan Business Council.
University, USA and he has published several articles in
top journals of the world such as Journal of Banking &
Mr. Yousuf H. Mirza
Finance and Financial Management.
Chief Executive Officer Since: August 14, 2015
Dr. Amjad Waheed has served on the boards of various
Mr. Yousuf Husain Mirza was appointed as the Chief companies including Siemens (Pakistan) Engineering
Executive Officer w.e.f. August 14, 2015. Before Co. Ltd., Nishat Mills Ltd., PICIC, Askari Bank Ltd.,
appointment as CEO, he was the Chief Operating Millat Tractors Ltd., Fauji Fertilizer Company Ltd.,
Officer of International Steels Limited since August Pakistan Tobacco Company Ltd., Parke-Davis &
2013. Prior to joining ISL, he served as Managing Company Ltd., Treet Corporation Ltd., Atlas Investment
Director of Linde Pakistan Limited, and served in Bank Ltd., Bata Pakistan Ltd. He has also served as
various senior management assignments with group Chairman, Mutual Fund Association of Pakistan. Dr.
subsidiaries in the Philippines, Malaysia and south east Amjad Waheed is presently serving on the boards of
Asia for over ten years. Bank Islami Pakistan Limited., Mehran Sugar Mills
Limited., Gul Ahmed Textile Mills Limited., Mutual
He has a graduate degree in Mechanical Engineering
Fund Association of Pakistan (MUFAP) and Institute of
from NED University of Technology and also has an MBA
Financial Markets of Pakistan (IFMP).
from the Institute of Business Administration Karachi.
64
Dr. Amjad Waheed is a certified director from Pakistan Foundation (Pakistan), Aga Khan University Foundation
Institute of Corporate Governance (PICG). & NGO Resource Centre. He has also served as a
Director of ICI Pakistan Ltd, Pakistan Security Printing
Fuad Azim Hashimi Corporation, Atlas Insurance Ltd, First International
Director Since: September 25, 2019 Investment Bank, Atlas Power Limited, Askari Bank
Limited, NBP Fund Management Limited, Atlas Battery
Fuad Azim Hashimi is a fellow of the Institute of Chartered Ltd. and Pakistan Centre of Philanthropy. He has also
Accountants in England and Wales and currently heads served on the Undergraduate Admissions Committee of
Pakistan Business Council’s Centre of Excellence in the Aga Khan University, the University of Pennsylvania
Responsible Business (CERB). The mission of CERB is Alumni Committee for Pakistan and on the Board of
to bring about a change in mind-sets of business and Governors of Army Burn Hall Institutions.
industry leaders towards long-term sustainable value
creation. Mr. Koji Fukushima
Director Since: April 14, 2020
Through leadership of the Pakistan Institute of Corporate
Governance from 2007 until 2016, he played a key role
Mr. Koji Fukushima is presently the General Manager of
to further corporate governance practices in Pakistan.
International Steel Sheet & Slab Business Department of
He is a member of the Private Sector Advisory Group of
Sumitomo Corporation, Tokyo Japan and has 30 years
International Finance Corporation, World Bank Group.
of diversified experience in working in Metal Product
His career over the earlier 43 years has provided him Business Divisions including international trading of
with a strong foundation in public accounting (he steel sheet & strip and management in Steel Service
was a partner for 10 years in A. F. Ferguson & Co, a Centers. He has also held international experience for
member firm of PricewaterhouseCoopers) as well as working with CS Metal Co. Ltd., Thailand and Saigon
management of diversified business and commercial Steel Services & Processing Corp. Ltd., Vietnam.
ventures, in Pakistan and abroad, ranging from banking,
office automation and information technology to mutual Ms. Nausheen Ahmad
funds. Director Since: September 25, 2019
Mr. Kamal A. Chinoy Nausheen Ahmad oversees the Legal, Company

Director Since: September 3, 2007 Secretariat and Corporate Communications functions of
ICI Pakistan Limited. Having spent over three decades
Mr. Kamal A. Chinoy is a graduate of the Wharton in the corporate sector, Nausheen brings with her a
School, University of Pennsylvania, USA. He is the tremendous amount of experience and expertise in the
Chairman of Jubilee Life Insurance Company Limited legal field, as well as proven leadership skills. She held
and serves as a director on the Board of International the position of Legal Counsel at Pakistan Petroleum
Industries Limited, International Steels Limited, and Ltd, Unilever Pakistan Ltd, and ICI Pakistan Ltd, before
Pakistan Cables Limited. He has recently retired from moving onto HBL. Nausheen spent 12 years at HBL as
the position of CEO of Pakistan Cables Limited after the Company Secretary and Head of Legal. She then
27 years. returned to ICI Pakistan in July 2018.
He is also Honorary Consul General of the Republic Nausheen has an LLM degree from the University of
of Cyprus. Mr. Kamal A. Chinoy is a member of the London, an LLB from Kings College London, and a
Executive Committee of the International Chamber degree in the Philosophy of Religion from Kings College
of Commerce (ICC) Pakistan and Past President of London. She was called to the Bar from the Honourable
the Management Association of Pakistan (MAP). He Society of Grays Inn London and is registered as an
has previously served as Chairman of the Aga Khan Advocate of the Sindh High Court. Nausheen was also
65
Annual Report 2020
accredited as a mediator and master trainer by the Association of Pakistan. He takes particular interest
Centre for Effective Dispute Resolution, UK. in facilitating the development of the capital market
and the protection of minority shareholders through
Throughout her professional career, Nausheen has held
improvements to the regulatory framework.
several leadership positions. She served on the Board
of First Women Bank Limited (FWBL) as Non-Executive Nihal’s current focus is aimed at philanthropic activities
Director. Nausheen presently serves as Director on the both as a donor and as a project participant.
Board of Meezan Bank Limited and is also a member of
Meezan Human Resources Committee. Mr. Mustapha A. Chinoy
Director Since: August 15, 2018
With her strong interest in Corporate Governance and
Training, Nausheen has been undertaking Directors
Mr. Mustapha A. Chinoy is a B.Sc. in Economics from
Certification trainings with Pakistan Institute of
Wharton School of Finance, University of Pennsylvania,
Corporate Governance (PICG), the Institute of Business
USA with majors in Industrial Management and
Administration (IBA) and the Institute of Business
Marketing. Upon return from United States, he took
Management (IoBM) formerly CBM.
up the position of Marketing Manager at International
Industries Ltd. He is currently the Chairman of
Mr. Nihal Cassim
International Industries Ltd., Pakistan Cables Ltd., and
a director on the Board of Travel Solutions (Pvt) Ltd.,
Global E-Commerce Services (Pvt.) Ltd., Crea8ive
Nihal Cassim is the Chief Executive of Ubiquity Trading
Bench (Pvt.) Ltd. , Global Reservation (Pvt.) Ltd. and
Limited (previously Safeway Fund Limited), a former
Binary Vibes (Pvt) Ltd. He is the Chief Executive of
Asset Management Company that managed two equity
Intermark (Pvt.) Ltd. He has previously served on the
funds listed on the PSX. Before taking up this position,
Board of Union Bank Ltd. until it was acquired by
he was engaged in his own corporate finance practice in
Standard Chartered Bank.
Pakistan and concluded various assignments including
advisory services to the sellers of Crescent Leasing and
Mr. Zakaullah Khan
certain sellers of PICIC including NIT. In Canada, Nihal
was Vice-President and Head of small-cap Investment
Banking for First Associates’ (now Blackmont Capital,
Mr. Zakaullah Khan is an old Ravian with a Master
a CI Financial Company) where he conducted several
Degree in Economics and MBA from the Institute of
transactions in M&A, equity financing and corporate
Business Administration, Karachi University. He was
finance advisory. Prior to this, Nihal was responsible
associated with the International Industries Limited
for the corporate development of TVX Gold Inc. and
for more than four decades and retired as Director
was involved in its $4 billion merger with Kinross Gold.
Marketing. He also served as the Head of Electrical
He began his investment banking career at HSBC
Construction Department of IIL. He is the founding
Securities, Canada.
trustee of Al - Rehmat Benevolent Trust.
Nihal is an MBA (Finance & MIS) from McGill University.
He is currently a Director on the Boards and Audit Mr. Samir M. Chinoy
Committees of Ubiquity Trading Limited (Formerly Executive Director / Chief Operating Officer Since:
Safeway Fund Limited), Ferozsons Laboratories Limited, September 27, 2016
The Organic Meat Company Limited and National
Institutional Facilitation Technologies (Pvt) Limited (NIFT) Mr. Samir M. Chinoy is the Chief Operating Officer
and its subsidiary ISM (Pvt) Limited. Nihal has served of International Steels Ltd. He is a graduate of
two terms as a director on the Board of Mutual Funds Babson College, USA with a Bachelor’s of Science in
66
Finance and Entrepreneurship and a minor in Human Chairman, of the Amir Sultan Chinoy Foundation he is a
Communication. Prior to International Steels Limited director of Mirpurkhas Sugar Mills Ltd., Pakgen Power
Mr. Chinoy worked at Pakistan Cables, Deloitte & Ltd., Intermark (Pvt) Ltd., Book & Go (Pvt) Ltd. and IIL
Touché, New York and Foothill Capital (A Wells Fargo Australia Pty Ltd. Mr. Chinoy is a certified Director from
Company), Boston. Mr. Chinoy has served on the the Pakistan Institute of Corporate Governance.
management committee of Landhi Association of
Trade and Industry and has held the position of Vice Mr.
Chinoy has served on the management committee of
Landhi Association of Trade and Industry and has held
the position of Vice Chairman. In addition to being the
67
Annual Report 2020
List of Directorships
Name Business occupation and directorship (if any)
TOWFIQ H. CHINOY International Steels Limited

Packages Ltd.
National Foods Ltd.
Standard Chartered Bank (Pakistan) Ltd.
Mohatta Palace Gallery Trust
Habib University Foundation
Beaumont Plaza Owners / Occupants Welfare Association
Karachi Relief Trust
MUSTAPHA A. CHINOY International Steels Limited

International Industries Ltd.
Pakistan Cables Ltd.
Intermark (Pvt) Ltd.
Travel Solutions (Pvt) Ltd.
Global e-Commerce Services (Pvt) Ltd.
Crea8ive Bench (Pvt) Ltd.
Global Reservation (Pvt) Ltd.
Binary Vibes (Pvt) Ltd.
KAMAL A. CHINOY International Steels Limited

International Industries Ltd.
Pakistan Cables Ltd.
Jubilee Life Insurance Company Ltd.
FUAD A. HASHIMI International Steels Limited
DR. AMJAD WAHEED International Steels Limited

Mehran Sugar Mills Ltd.
Gul Ahmed Textile Mills Ltd.
Bank Islami Pakistan Ltd.
NBP Fund Management Ltd.
Mutual Fund Association of Pakistan (MUFAP)
Institute of Financial Markets of Pakistan (IFMP)
NAUSHEEN AHMAD International Steels Limited

Meezan Bank Ltd.
68
Name Business occupation and directorship (if any)
NIHAL CASSIM International Steels Limited

Ferozsons Laboratories Ltd.
Ubiquity Trading Ltd.
National Institutional Facilitation Technologies (Pvt) Ltd.
Image Systems Marketing (Pvt) Ltd.
The Organic Meat Company Ltd.
KOJI FUKUSHIMA International Steels Limited
SAMIR M. CHINOY International Steels Limited

Intermark (Pvt) Ltd.
IIL Australia Pty Ltd.
Mirpur Khas Sugar Mills Ltd.
Pakgen Power Limited
Book & Go (Pvt) Ltd.
Amir Sultan Chinoy Foundation
Landhi Association of Trade & Industries
YOUSUF H. MIRZA International Steels Limited

German Pakistan Chamber of Commerce and Industry
Employers Federation of Pakistan
IIL Americas Inc.

ZAKAULLAH KHAN
Al-Rehmat Benevolent Trust
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Annual Report 2020
Governance Framework
The main philosophy of business followed by the The Board of Directors
sponsors of International Steels Limited for the
The Board of Directors consists of qualified individuals
last many decades has been to create value for all
possessing knowledge, experience and skills in various
stakeholders through fair and sound business practices,
professions, with the leadership and vision to provide
which translates into policies approved by the Board
oversight to the company. The Board is headed by Mr.
implemented throughout the company to enhance the
Towfiq H. Chinoy, a Non- Executive Chairman; out of
economic and social values of all stakeholders of the
11 Directors, 4 are Independent Directors. The current
company.
Board composition reflects a good mix of experience,
Compliance Statement diversity in backgrounds, skills and qualifications.
All Directors have many years of experience and are
Living up to its standards the Board of Directors has,
fully aware of their duties and responsibilities under
throughout the year 2019-20, complied with the Code
the Code of Corporate Governance. At present eight
of Corporate Governance, the listing requirements of
Directors have acquired the formal Directors Training
the Pakistan Stock Exchange Limited and the Financial
Certificates, while two Directors possess sufficient skills
Reporting framework of Securities & Exchange
and experience of the Board room as described in the
Commission of Pakistan (SECP).
Code of Corporate Governance, whereas a newly
The Directors confirm that that the following has been appointed director will acquire DTP in due course. In
complied: compliance of the Clause 7 of the Companies (Code
of Corporate Governance) Regulations, 2019 a female
a) The financial statements have been prepared which director was elected at the last election of the Board
fairly represent the state of affairs of the company, of Directors at the 12th annual general meeting in
the result of its operations, cash flows and changes September 2019.
in equity.
In the year 2019-20, a digital interface was introduced
b) Proper books of accounts of the company have to update Board of Directors by providing Companies
been maintained. Act, 2017, Companies (Code of Corporate Governance)
Regulations, 2019, relevant portions of PSX Rule Book,
c) Appropriate accounting policies have been
Company’s Memorandum & Articles of Association and
consistently applied in preparation of financial
various Policies & Procedures.
statements and accounting estimates are based on
reasonable and prudent business judgment. To further its role of providing oversight and strategic
guidelines to the company, the Board has formulated a
d) International Financial Reporting Standards (IFRS),
Board Charter to define its role of strategic leadership and
as applicable in Pakistan, have been followed
provide oversight to the management. The Board has
in preparation of financial statements and any
constituted an Audit Committee and Human Resources
departures therefrom have been adequately
& Remuneration Committee. The composition, role and
disclosed and explained.
responsibilities of the Committees are clearly defined in
e) The system of internal control is sound in design and their respective Terms of References.
has been effectively implemented and monitored.
A meeting calendar is issued annually to reflect
The Internal Audit function is led by the Chief Internal
the dates planned for the Board, Audit and HR&R
Auditor supported by in-house staff.
Committees. All the Board members are provided
f) There are no significant doubts upon the company’s appropriate documents through Diligent Board
ability to continue as a going concern. application in advance of each meeting which normally
includes a detailed analysis of business and matters,
g) There is no material departure from the best practices
where the Board will be required to make a decision or
of corporate governance as per regulations.
give its approval.
70
During the year 2019-20, the Board had six (6) meetings, law & the Board. He recommends and implements the
out of which four (4) were held to review the quarterly business plans and is responsible for overall control
results, a meeting was held to appoint Chairman, CEO and operation of the Company.
and to reconstitute the Audit and HR&R Committees.
Business Philosophy & Best Corporate Practices
Whereas another meeting was held to approve budget
for the ensuing year. The average attendance of the We believe in ethical practices, sustainable
directors in Board meetings during the year was 85% manufacturing processes, transparent reporting to the
shareholders and in the best practices of Corporate
The Board of Directors has complied with the Code
Governance to ensure success and better results for
of Corporate Governance, the listing requirements of
all stakeholders.
Pakistan Stock Exchange Limited and the Financial
Reporting framework of Securities & Exchange The Board Charter defines the scope of the Board’s
Commission of Pakistan. activities in setting the tone at the top, formulating
strategies and providing oversight to the management
Changes in the Board
for sustainable growth of the business.
At the 12th annual general meeting of the Company on
The Board members actively participate in the meetings
September 25, 2019, eleven (11) Directors namely Mr.
to provide guidance concerning the company’s
Towfiq H. Chinoy, Mr. Mustapha A. Chinoy, Mr. Kamal
business activities, operational plans, review corporate
A. Chinoy, Dr. Amjad Waheed, Mr. Fuad Azim Hashimi,
operations and formulate and review all significant
Ms. Nausheen Ahmad, Mr. Nihal Cassim, Mr. Zakaullah
policies. The Board firmly adheres to the best ethical
Khan, Mr. Kazuteru Mihara, Mr. Samir M. Chinoy and
practices and fully recognizes its responsibilities for
Mr. Yousuf H. Mirza were elected for a term of three
protection and efficient utilization of company assets
(3) years. Subsequent to the election in 2019, a casual
for legitimate business objectives and compliance with
vacancy was created by the resignation of Mr. Kazuteru
laws and regulations. The Chairman ensures that the
Mihara that was filled by the appointment of Mr. Koji
discussions held during the Board meetings and the
Fukushima as Director for the remaining period of the
consequent decisions arising are duly recorded and
existing term of the Board of Directors.
circulated to all the directors within fourteen (14) days.
Board Meetings Outside Pakistan The CFO and the Company Secretary attended all
the meetings of the Board as required by the Code of
During the year 2019-20, no Board meetings were held
Corporate Governance.
outside Pakistan
All periodic financial statements and other working
Roles and Responsibilities of the Chair- man and
papers for the consideration of the Board/ committees
Chief Executive
are circulated to the directors well before the meetings
The Board of Directors provides the overall direction so as to give sufficient time to the directors to make
for the Company operations and provides oversight decisions on an informed basis. This year the Board
for various policies and monitors the management in has held five (5) meetings, agendas of which were duly
the light of operational and financial plans. The roles of circulated through Diligent Board application at least a
Board and the Chief Executive Officer have been clearly week before the meetings.
defined where the Board is responsible for strategic
Timely Communication of Financial Results
guidance and providing directions for sustainable
business. The Chairman and the Chief Executive have The quarterly un-audited financial statements and
separate and distinct roles. The Chairman has all the the half-yearly financial statements (reviewed by the
powers vested in him under the Listed Companies Auditors) were duly circulated within thirty (30) days and
(Code of Corporate Governance) Regulations, 2019 and sixty (60) days respectively along with the Directors’
presides over all Board Meetings. The Chief Executive Report. Annual Financial statements were authorized
performs his duties under the powers vested by the by the Board of Directors and communicated to the
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Annual Report 2020
Pakistan Stock Exchange within fifty six (56) Days from Directors Remuneration Policy
the close of the financial year. Additionally, all important
A formal policy to review and approve the remuneration
disclosures, including the financial statement, were
of non-executive directors’ is well in place. The Company
also made on the Company’s website to keep the
believes in remunerating its non-executive directors
stakeholders duly informed.
and Chairman adequately to justify their continued
Board Evaluation quality guidance and contributions to the Company’s
objectives, good corporate governance, and sustained
The Board of Directors has formulated a policy to
long-term value creation for shareholders, while
evaluate its own performance, the salient features of
maintaining their independent status.
which are as follows:
Risk Management
1. The Board Evaluation Methodology to be adopted
as self-evaluation of the Board as a whole through Risk management is crucial to any business, which
an agreed questionnaire. includes identification and assessment of various risks
followed by coordinated application of resources,
2. The evaluation exercise is to be carried out every
to economically minimize, monitor and control the
year.
impact of such risks and maximize the realization of
3. The evaluation system is designed to address areas opportunities.
of critical importance and should include, but not be
Management periodically reviews major financial and
limited to, the following:
operating risks faced by the business.
a) Appraising the basic organization of the Board of
Internal Control Framework
Directors;
b) The effectiveness and efficiency of the operation The Company maintains an established control
of the Board and its sub committees; framework comprising clear structures, authority
limits, and accountabilities, well understood policies
c) Assess the Board’s overall scope of
and procedures and budgeting for review processes.
responsibilities;
All policies and control procedures are documented
d) Evaluate the flow of information; and
in manuals. The Board establishes corporate strategy
e) Validate the support and information provided by and the Company’s business objectives.
management.
The Board Audit Committee has been entrusted with
4. The Board would review the results and suggest the main responsibility of Internal Controls.
measures to improve the areas identified for
improvement. The Audit Committee receives the Audit reports by
the Internal and External auditors, and after detailed
In the year 2019-20, in compliance with the Clause deliberations, and suggesting improvements, periodic
28(6)(ii) of the Listed Companies (Code of Corporate reports are submitted to the Board of Directors. The
Governance) Regulations, 2019, the Pakistan Institute Company places a high value on transparency, both
of Corporate Governance was engaged to coordinate internally and externally, in its corporate management. It
for the evaluation of Board’s own & members’ focuses consistently on the implementation of efficient
performance and the results were shared with the management practices for the purpose of achieving
Board. The Board is continuing its Self-Evaluation clear and quantifiable commitments.
since many years and has identified areas for further
improvement in line with global best practices. The The Head of Internal Audit is being assisted by in-house
main focus remained on strategic growth, business executives to carry out the Internal Control functions.
opportunities, risk management, Board composition The Management has placed an explicit internal control
and providing oversight to the management. framework with clear structures, authority limits, and
accountabilities, well defined policies and detailed
72
procedures, enabling the Audit Committee and the 8. Contribution to national exchequer.
Board to have clear understanding of risk areas and to 9. Consumer protection measures.
place effective controls to mitigate these risks.
Our role as a corporate citizen is as important to us
Disclosure of Conflict of Interest as satisfaction of our customers and earning a fair
return for our shareholders. We are committed to work
The Company has taken measures to prevent conflict
for the betterment and prosperity of our stakeholders.
of interests between directors, employees and the
Management has endeavored to provide a safe and
Company. In this regard, a clear policy on conflict of
healthy work atmosphere by adopting practices and
interests is contained in the Code of Conduct duly
creating working conditions which are safe and healthy
approved by the Board of Directors which is placed
for our employees, vendors, contractors, suppliers and
on Page No. 22. As per the Code of Corporate
customers.
Governance the Company annually circulates and
obtains an acknowledgement of the Code of Conduct We are committed to providing better educational and
from all employees and directors. Further, the directors health facilities to the less fortunate people especially to
and key employees are reminded to abstain from our stakeholders.
insider trading of shares and to avoid dealing in shares
during close period. In line with our philosophy of CSR we regularly maintain
and support TCF school – Amir Sultan Chinoy Campus
Every director is required to bring to the attention of in the vicinity of Landhi along with offering need based
the board complete details regarding any material scholarships to NED University students for a better
transaction which has a conflict of interest for prior tomorrow of our younger generation. We also support
approval of the Board. The interested directors neither NGOs like SIUT, LRBT, Kidney Center. SINA Health,
participate in discussions nor vote on such matters. Education & Welfare Trust and Amir Sultan Chinoy
Foundation to help the deserving patients for their
The complete details of all transaction with related
treatment.
parties are provided to the Board for approval. These
transactions are also fully disclosed in the annual Sustainability Measures
financial statement of the company.
All aspects of sustainability including efficient operational
Corporate Social Responsibility procedures, effective internal controls, ethical behavior,
and energy conservation are an integral part of our
The Company has implemented comprehensive policies
business model.
on “Occupational Health, Safety & Environment” and
“Donations, Charities and Contributions” to meet its We also believe that employees are most critical in the
Corporate Social Responsibilities. The social and progress, growth and sustainability of any organization.
environmental responsibility reflects the company’s
recognition that there is as strong positive correlation For more details, please refer to our “Sustainability
between financial performance and corporate, Report” which has been circulated and is available on
social and environmental responsibility. Social and our website (www.isl.com.pk)
environment responsibility include the following:
Engaging Stakeholders & Transparency
1. Community investment and welfare schemes.
Development of stakeholders’ relationship is of
2. Environmental protection measures. significant importance for the company. Building
3. Occupational health and safety. “stakeholder’s engagement”, compliance with
4. Business ethics and anti-corruption measures. regulatory requirements and terms and conditions are
one of the main business principles by which we abide.
5. Energy conservation.
To bring an accurate understanding of the company’s
6. Industrial relations.
management policies and business activities to all
7. National cause donations. its stakeholders, it strives to make full disclosure of
73
Annual Report 2020
all material information to all stakeholders by various highlights, investor information, and other requisite
announcements on its website, to the Stock Exchange information specified under the relevant regulations has
and other sources available to help investors to make been placed on the corporate website of the company
informed decisions. It encourages full participation which is updated on regular basis.
of the members in the General Meetings by sending
Safety of Company Records
corporate results and sufficient information following the
prescribed timeline so as to enable the shareholders International Steels Limited has a firm “Document &
to participate on an informed basis. While increasing Record Control Policy” for establishing, approving,
management transparency, it aims to strengthen reviewing, changing, maintaining, replacing, retrieving,
its relationships and trust with shareholders and retaining, distributing and administering control of all
investors. Our stakeholders include but are not limited documents and data that relate to the Company and
to customers, employees, government, shareholders, has taken the following concrete measures to ensure
suppliers, local communities and bankers. safety/security of the records and creating a paperless
environment.
Corporate Briefing Session
• All important documents such as, minutes and
In compliance of the listing regulations of the Pakistan
proceedings of the Board & its sub-committees,
Stock Exchange, Company arranges corporate briefing
Annual General Meeting, statutory certificates, title
session annually to answer queries of the various
documents of the Company property and all other
stakeholders including investors and financial analysts.
important communications and records are digitally
Policy for Investor Grievances scanned and archived on secured Company
servers.
The Company has an “Investor Relation Policy” that
• All important original documents are placed at a
sets out the principles in providing the shareholders
neutral, secured and well known vault.
and prospective investors with necessary information
to make well informed investment decisions and to • Record keeping of accounting books is being
ensure a level playing field. arranged at a separate location.
Investor grievances and complaints are very important Human Resources Management Policies and
and are properly reviewed to minimize the recurrence Succession Planning
of similar issues in future. The following principles are
A comprehensive set of policies has been well
adhered to with regards to investor grievances:
implemented to cover all aspects related to HR. The
1. Investors are treated fairly at all times. main focus of the policies is to train, motivate and
retain valuable human assets for the future growth of
2. Complaints raised are dealt with in a courteous and
the Company. In order to maintain continuity of the
timely manner.
business operations, particularly at senior management
3. Various modes of communication like email,
and key managerial levels, a well-defined Succession
telephone, meetings and raising matters at the
Policy is in practice.
Annual General Meeting are available to investors
to raise grievances. Information Technology Policy
4. Queries and complaints are treated fairly and
A well-defined Information Technology Policy is in
efficiently.
place to help achieve efficient and effective use of
5. Employees work in good faith and without prejudice I.T resources in order to establish priorities, strategy
towards the interest of the creditors. delivery, increase productivity and deliver right services
to users.
Detailed company information regarding financial
74
The I.T Steering Committee comprising of CEO, COO, Pattern of Shareholding

CFO, General Manager Manufacturing and HoD IT
A statement on the pattern of shareholding along with
are responsible for taking major I.T decisions. The I.T
categories of shareholders, where disclosure is required
Head is responsible for ensuring communication of
under the reporting framework and the statement of
I.T security policies to all users of Companies. Further,
shares held by the directors and executives as on June
Internal Audit is responsible for monitoring compliance
30, 2020 is placed on Page No. 161.
of I.T policies. The Policy on Information Technology
is focused upon information security, human resource
security, access control, information system acquisition
development and maintenance, business continuity
management, incident management, website and ERP.
Whistleblowing Policy
We are committed to creating an atmosphere in

which our people can freely communicate their
concerns to their supervisors and Functional Heads.
Our Whistleblowing Policy has been in place as ISL’s
‘whistle-blowing’ system to report any corrupt or
unethical behavior – if employees feel that they are not
able to use the normal management routes.
Policy of security clearance of Foreign Directors
Committed to the well-being of our Board, the Company

has in place various protocols and procedures to
ensure the safety and security of its Board including
Foreign Directors.
Issues Raised at Last AGM
While general clarifications were sought by shareholders

on company published financial statements during the
12th Annual General Meeting of the Company held on
September 25, 2019, no significant issues were raised.
Dividend to Shareholders
The EPS for the year ended June 30, 2020 was Rs.
1.14, compred to 6.12 for the FY2018-19 however,
the Directors did not recommend any dividend for its
shareholders
75
Annual Report 2020
Board Committees
The Board is assisted by four Committees, namely Terms of Reference of the Audit Committee
the Audit Committee and the Human Resource &
The Audit Committee is mainly responsible for
Remuneration Committee to support its decision
reviewing the financial statements, ensuring proper
making in their respective domains.
internal controls to align operations in accordance with
(a) Board Audit Committee the mission, vision and business plans and monitoring
compliance with all applicable laws and regulations
The Audit Committee comprises of the following:
and accounting and financial reporting standards.
1) Dr. Amjad Waheed The salient features of terms of reference of the Audit
Chairman - Independent Director Committee are as follows:
2) Mr. Fuad Azim Hashimi i) Recommending to the Board the appointment of
Member – Non-Executive Director internal and external auditors.
3) Mr. Kamal A. Chinoy ii) Consideration of questions regarding resignation
Member - Non-Executive Director or removal of external auditors, audit fees and
4) Mr. Nihal Cassim provision by the external auditors of any services
Member - Independent Director to the company in addition to the audit of financial
5) Ms. Asema Tapal statements.
Secretary - Chief Internal Auditor iii) Determination of appropriate measures to
safeguard the company’s assets.
The Audit Committee comprises of four (4) Directors,
iv) Review of preliminary announcements of results
out of which two (2) are independent. The Chief
prior to publication.
Financial Officer and the Chief Internal Auditor attend
the BAC meetings, while the Chief Executive Officer is v) Review of quarterly, half-yearly and annual financial
invited to attend the meetings. statements of the company, prior to their approval
by the Board, focusing on major judgmental
The Audit Committee also separately meets the areas, significant adjustments resulting from the
internal and external auditors at least once in a year audit, any changes in accounting policies and
without the presence of the management. Meetings practices, compliance with applicable accounting
of the Audit Committee are held at least once every standards and compliance with listing regulations
quarter, the recommendations of the Audit Committee and other statutory and regulatory requirements.
are then submitted for approval of financial results of
vi) Facilitating the external audit and discussion with
the company by the Board. During the year 2019-20,
external auditors on major observations arising
the Audit Committee held four (5) meetings. The Chief
from audit and any matter that the auditors may
Internal Auditor is the Secretary of the Board Audit
wish to highlight (without the presence of the
Committee. The minutes of the meetings of the Audit
management, where necessary).
Committee are provided to all members, directors and
vii) Review of the Management Letter issued by
the Chief Financial Officer.
external auditors and the management’s response
The Chief Internal Auditor meets the Audit Committee thereto.
without the presence of the management, at least viii) Ensuring coordination between the internal and
once a year, to point out various risks, their intensity external auditors of the company.
and suggestions for mitigating risks and improvement
ix) Review of the scope and extent of internal audit
areas. The business risks identified are then referred to
and ensuring that the internal audit function is
the respective departments and corrective actions are
adequately resourced and placed within the
then implemented.
organization.
76
x) Consideration of major findings of internal as the Chairman may determine. Head of Human
investigations and the management’s response Resources, is the Secretary of the Committee. The
thereto. Committee held two (2) meetings during the year.
xi) Ascertaining that the internal control system
Terms of Reference of Human Resource &
including financial and operational controls,
Remuneration Committee
accounting system and reporting structure are
adequate and effective. The Committee defines the HR policy framework
xii) Review of company’s statement on internal control and makes recommendations to the Board in the
systems prior to endorsement by the Board. evaluation and approval of employee benefit plans
and succession planning. The Committee defines the
xiii) Instituting special projects, value for money studies
HR policy framework and makes recommendations to
or other investigations on any matter specified by
the Board in the evaluation and approval of employee
the Board, in consultation with the Chief Executive
benefit plans and succession planning.
and to consider remittance of any matter to the
external auditors or to any other external body. The salient features of the Terms of Reference of
xiv) Determination of compliance with relevant HR&RC are as follows:
statutory requirements review of periodic financial
1. Major HR Policy / frameworks including
statements and preliminary announcements of
compensation.
results prior to the external communication and
publication with a view to highlight. 2. Overall organizational structure.
xv) Monitoring compliance together with the external 3. Organization model and periodically seek
auditors and internal audit with the best practices assessment of the same.
of corporate governance and identification of 4. Succession planning for key executives, including
significant violations such as fraud, corruption, the CEO.
and abuse of power thereof. 5. Recruitment, remuneration and evaluation of the
xvi) Consideration of any other issue or matter as may CEO and his direct reports, including CFO, Group
be assigned by the Board. Chief Internal Auditor and the Company Secretary.
xvii) The Board Audit Committee has completed its 6. The CEO, being a member of the HR&RC shall
independent evaluation. not be a part of Committee meetings, if his / her
compensation/performance is being discussed /
(b) Human Resources & Remuneration
evaluated.
Committee
7. Charter of demands and negotiated settlements
Mr. Zakaullah Khan with CBA.
Chairman- Independent Director 8. Compensation of the non-executive directors.
Ms. Nausheen Ahmad 9. Board Remuneration Policy & Procedure
Member- Independent Director
10. Board Evaluation Policy and Procedure for the
Mr. Mustapha A. Chinoy Board as a Whole and for the Individual Directors.
Member – Non-Executive Director
Mr. Yousuf H. Mirza
Member – Chief Executive Officer
Mr. Bilal Khawar
Secretary – General Manager HR
The Committee comprises of four (4) members. The

Chairman is an independent director. Meetings are
conducted at least quarterly or at such other frequency
77
Annual Report 2020
78
CREATING
LEADERSHIP
The company’s organization culture is people centric. It encourages diversity
and inclusion, collaborative problem solving, constant improvement and open
communication across the organization. ISL strives to create a safe workplace with
focus on the wellbeing of its employees, respect for people and zero tolerance for
discrimination and harassment in any form.
The company has invested more than 11,000 man hours in cultivating and developing
its human resources in various functions spanning from manufacturing, planning,
product development HR to Sales and Marketing.
79
Annual Report 2020
Directors’ Participation in Board and

Sub Committee Meetings
Audit Committee Human Resources
Board / Sub Committee Board Meetings *** Meetings & Remuneration
*** Committee ***
Meetings held during FY 2019-20 6 5 2
Mr. Towfiq H. Chinoy 5/6 1/1 1/1

Mr. Yousuf H. Mirza 6/6 2/2
Mr. Mustapha A. Chinoy 6/6 1/1
Mr. Kamal A. Chinoy 4/6 5/5 1/1
Dr. Amjad Waheed 5/5 4/4
Mr. Fuad Azim Hashimi 5/5 4/4
Mr. Zakaullah Khan 1/5 1/1
Ms. Nausheen Ahmad 5/5 1/1
Mr. Nihal Cassim 5/5 4/4
Mr. Samir M. Chinoy 6/6
Mr. Koji Fukushima 2/2
Mr. Kemal Shoaib * 1/1 1/1
Mr. Tariq Iqbal Khan * 1/1 1/1
Mr. Kamran Y. Mirza * -/1 1/1 1/1
Syed Salim Raza * 1/1
Mr. Riyaz T. Chinoy * 1/1
Mr. Kazuteru Mihara ** 2/2
* Retired as the Board of Directors completed its term in September 2019

** Resigned in February 2020
*** BOD Sub-Committees reconstituted in September 2019
Management Team
Good corporate governance is the basis of our decision making and control processes. The management’s decision
making is based on long term strategic objectives in which the Board, provides strategic oversight and guidance
to the management and monitors the performance of the company regarding business objectives, shareholders’
interests and regulatory compliance.
The Management Committee is headed by the Chief Executive Officer and the Functional Heads are:
11. Mr. Yousuf H. Mirza Chief Executive Officer

22. Mr. Samir M. Chinoy Chief Operating Officer
33. Mr. Mujtaba Hussain Chief Financial Officer
44. Mr. Zafar Majeed General Manager Manufacturing
55. Mr. Bilal Khawar General Manager Human Resources
66. Mr. Mustafa Khan General Manager Sales & Marketing
77. Mr. Ibrahim Memon General Manager Information Technology
88. Mr. Mohammad Irfan Bhatti Company Secretary
99. Mr. Yasir Sohail Divisional Manager - CRM
80
Report of the Board Audit Committee on

Adherence to the Code of Corporate Governance
The Board Audit Committee has concluded its annual Secretary along with the price, number of shares,
review of the conduct and operations of the company form of share certificates and nature of transaction.
for the year ended June 30, 2020 and reports that: All such transactions have been disclosed.
• The company has adhered in full, without any Internal Audit Function
material departure, with both the mandatory and
voluntary provisions of the listing regulations of • The Company’s internal Audit function is being
the Pakistan Stock Exchange, Code of Corporate looked after by the Chief Internal Auditor in
Governance, Company’s Code of Conduct and compliance of the Code of Corporate Governance,
Values and the international best practices of who is assisted by in-house staff. The Chief Internal
governance throughout the year. Auditor reports directly to the Chairman of the Board
Audit Committee.
• The company has issued a “Statement of Compliance
with the Code of Corporate Governance” which has • The company’s system of internal control is sound
also been reviewed and certified by the auditors of in design and has been continually evaluated for
the company. effectiveness and control.
• Appropriate accounting policies have been • The Board Audit Committee has ensured the
consistently applied except those disclosed achievement of operational, compliance and
in financial statements. Applicable accounting financial reporting objectives, safeguarding of
standards were followed in preparation of the the assets of the company and the shareholders
financial statements of the company on a going wealth through effective financial, operational and
concern basis for the financial year ended June 30, compliance controls and risk management at all
2020 which present fairly the state of affairs, results levels within the company.
of operations, profits, cash flows and changes in
equity of the company for the year under review. • Coordination between the external and internal
auditors was facilitated to ensure efficiency and
• The Chief Executive Officer and the Chief Financial contribution to the company’s objectives, including
Officer have reviewed the financial statements of the a reliable financial reporting system and compliance
company and the Chairman & Board of Directors with laws and regulations.
Report. They acknowledge their responsibility
for true and fair presentation of the financial External Auditors
statements, accuracy of reporting, compliance with
regulations and applicable accounting standards • The statutory auditors of the company, KPMG
and establishment and maintenance of internal Taseer Hadi & Co., Chartered Accountants, have
controls and systems of the company. completed their audit of the company’s financial
statements and the Statement of Compliance with
• Accounting estimates are based on reasonable and the Code of Corporate Governance for the financial
prudent judgment. Proper, accurate and adequate year ended June 2020 ,30 and shall retire on the
accounting records have been maintained by the conclusion of the 13th Annual General Meeting.
company in accordance with the Companies Act
2017. • The final Management Letter is required to be
submitted within 45 days of the date of the Auditors’
• The financial statements comply with the Report on the financial statements under the
requirements of the Fourth Schedule to the listing regulations and shall therefore accordingly
Companies Act, 2017 and applicable International be discussed in the next Board Audit Committee
Accounting Standards and International Financial meeting.
Reporting Standards notified by the SECP.
• The Audit firm has been given a satisfactory rating
• All direct and indirect trading in and holdings of the under the Quality Control Review Programme of
company’s shares by Directors and executives or the Institute of Chartered Accountants of Pakistan
their spouses were notified in writing to the Company (ICAP) and the firm is fully compliant with the
81
Annual Report 2020
International Federation of Accountants (IFAC) be appointed as statutory Auditors for the year
Guidelines on Code of Ethics, as adopted by ICAP. ending June 30, 2021 at a fee to be mutually agreed,
The auditors have indicated their willingness to any Federal or Provincial taxes and reimbursements
continue as auditors. of out of pocket expenses at actuals.
• Being eligible for reappointment under the

listing regulations, the Board Audit Committee
recommends their reappointment for the financial
year ending 30th June 2020 on terms & remuneration
negotiated by the Chief Executive Officer.
Dr. Amjad Waheed
• The existing Auditors, KPMG Taseer Hadi & Co., Chairman-Board Audit Committee
Chartered Accountants, retiring at the conclusion Karachi
of the 13th AGM of the company and the board
recommends that A.F. Ferguson & Co., Chartered 19 August 2020
Accountants (a member firm of the PWC network),
who have indicated their consent to act as Auditors,
82
Statement of Compliance
with Listed Companies (Code of Corporate Governance) Regulations, 2019
International Steels Limited elected by the Board for this purpose. The Board
Year Ending June 30, 2020 has complied with the requirements of Act and the
Regulations with respect to frequency, recording
The company has complied with the requirements of and circulating minutes of meeting of the Board;
the Regulations in the following manner:-
8. The Board have a formal policy and transparent
1. The total number of directors are 11 as per the procedures for remuneration of directors in
following: accordance with the Act and these Regulations;
a Male Ten (10) 9. Eight Directors of the Company have already

acquired Director Training Certification. Whereas as
b Female One (1)
per Clause 19(2) of the Listed Companies (Code
2. The composition of board is as follows: of Corporate Governance) Regulations, 2019.
Regulations, 2019. Moreover, a new director will
acquire DTP certificate within the allowed time;
Category Names
Independent Directors Dr. Amjad Waheed 10. The Board has approved appointment of chief
Ms. Nausheen Ahmad financial officer, company secretary and head of
Mr. Nihal Cassim internal audit, including their remuneration and
Mr. Zakaullah Khan terms and conditions of employment and complied
Non-executive Directors Mr. Towfiq H. Chinoy with relevant requirements of the Regulations;
Mr. Fuad Azim Hashmi
Mr. Kamal A. Chinoy 11. Chief financial officer and chief executive officer duly
Mr. Koji Fukushima endorsed the financial statements before approval
Mr. Mustapha A. Chinoy of the Board;
Executive Directors Mr. Yousuf H. Mirza 12. The Board has formed committees comprising of
Mr. Samir M. Chinoy members given below.-
3. The directors have confirmed that none of them a) Audit Committee

is serving as a director on more than seven listed 1. Dr. Amjad Waheed
companies, including this company; Chairman (Independent Director)
2. Mr. Fuad Azim Hashimi
4. The company has prepared a code of conduct Member (Non-Executive Director)
and has ensured that appropriate steps have been 3. Mr. Kamal A. Chinoy
taken to disseminate it throughout the company Member (Non-Executive Director)
along with its supporting policies and procedures;
4. Mr. Nihal Cassim
Member (Independent Director)
5. The Board has developed a vision/mission
statement, overall corporate strategy and
b) Human Resources & Remuneration Committee
significant policies of the company. The Board has
ensured that complete record of particulars of the
1. Mr. Zakaullah Khan
significant policies along with their date of approval
Chairman (Independent Director)
or updating is maintained by the company;
2. Mr. Mustapha A. Chinoy
6. All the powers of the Board have been duly Member (Non-Executive Director)
exercised and decisions on relevant matters 3. Ms. Nausheen Ahmad
have been taken by the Board/ shareholders as Member (Independent Director)
empowered by the relevant provisions of the Act 4. Mr. Yousuf H. Mirza
and these Regulations; Member (Chief Executive Officer)
7. The meetings of the Board were presided over by

the Chairman and, in his absence, by a director
83
Annual Report 2020
13. The terms of reference of the aforesaid committees are in compliance with International Federation of
have been formed, documented and advised to the Accountants (IFAC) guidelines on code of ethics as
committee for compliance; adopted by the Institute of Chartered Accountants
of Pakistan and that they and the partners of the
14. The frequency of meetings during the year -2019 firm involved in the audit are not a close relative
2020 of the committee were as follows: (spouse, parent, dependent and non-dependent
children) of the chief executive officer, chief financial
Frequency of officer, head of internal audit, company secretary or
Name of the Committee director of the company;
the Meeting
Board Audit Committee 5
Board Human Resources & 17. The statutory auditors or the persons associated
Remuneration Committee 2 with them have not been appointed to provide other
services except in accordance with the Act, these
15. The Board has set up an effective internal audit Regulations or any other regulatory requirement
function, which is supervised by the Head of and the auditors have confirmed that they have
Internal Audit, who is considered suitably qualified observed IFAC guidelines in this regard;
and experienced for the purpose and is conversant
with the policies and procedures of the Company; 18. We confirm that all requirements of regulations 3,
6, 7, 8, 27, 32, 33 and 36 of the regulations have
16. The statutory auditors of the company have been complied with
confirmed that they have been given a satisfactory
rating under the Quality Control Review program
of the Institute of Chartered Accountants of
Pakistan and registered with Audit Oversight
Board of Pakistan, that they and all their partners
Yousuf H. Mirza Towfiq H. Chinoy

Chief Executive Officer Chairman
International Steels Limited International Steels Limited
Dated: 25 August 2020
84
Review Report on the Statement of Compliance

as per Listed Companies (Code of Corporate Governance) Regulations, 2019
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 International Steels Limited
(the Company) for the year ended 30th June 2020 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 and
also ensure compliance with the requirements of section 208 of the Companies Act, 2017. We are only required
and have ensured compliance of this requirement to the extent of the approval of the related party transactions
by the Board of Directors upon recommendation of the Audit Committee. We have not carried out procedures to
assess and determine the Company’s process for identification of related parties and that whether the related party
transactions were undertaken at arm›s length price or not.
Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance
does not appropriately reflect the Company’s compliance, in all material respects, with the requirements contained
in the Regulations as applicable to the Company for the year ended 30th June 2020.
KPMG Taseer Hadi & Co.

Chartered Accountants
Karachi
06 September 2020
85
Annual Report 2020
Financial
Summary
86
87
Annual Report 2020
Financial Highlights
2020 2019
(Rupees in ‘000) %
Sales 48,081,937 57,484,354 -16.4% -

Gross profit 4,212,857 6,449,052 -34.7% -
Operating profit 2,756,978 4,968,433 -44.5% -
Profit before tax 442,171 3,679,118 -88.0% -
Profit after tax 494,851 2,664,373 -81.4% -
Earning per shares - Basic & Diluted (Rupees) 1.14 6.12 -81.4% -
Shareholders equity 12,726,000 12,878,270 -1.2% -
Property, Plant & Equipment 20,688,000 19,862,302 4.2% +
Book Value per shares (Rupees) 29.26 29.61 -1.2% -
Business Growth Shareholder Value Accretion

Sales Revenue Earning per share
60000 12
50000 10
(Rs. In million)
40000 8
(Rupees)
30000 6
20000 4
10000 2
0 0
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Sales revenue growth Earning per share growth

-16.36% 21.8% -81.37% 19.9%
Over 2019 CAGR over 6 years Over 2019 CAGR over 6 years
Profit before tax Book value per share

6000 30
5000 25
(Rs. In million)
4000 20
(Rupees)
3000 15
2000 10
1000 5
0 0
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Profit before tax Book value per share

-87.96% 13.4% -1.81% 18.1%
Profit after tax Shareholder equity

5000 15000
4000 12000
(Rs. In million)
(Rs. In million)
3000 9000
2000 6000
1000 3000
0 0
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Profit after tax Book value per share

-81.39% 19.7% -1.18% 18.1%
88
Analysis of Financial Statements

Statement of Financial Position
2020 2019 2018 2017 2016 2015

(Rupees in ‘000)
Property, plant and equipment 20,638,354 19,862,302 18,262,610 13,639,451 12,620,022 12,332,043
Right-of-use assets 49,377 - - - - -
Intangible Assets 1,197 2,736 2,565 3,903 - 551
Other non current assets 100 100 100 100 100 100
Current assets 22,172,184 19,896,904 17,327,314 12,727,641 8,364,006 6,742,081
Total assets 42,861,212 39,762,042 35,592,589 26,371,095 20,984,128 19,074,775
Shareholders’ equity 12,725,815 12,878,270 11,825,008 8,554,247 7,142,626 5,529,942
Non current liabilities 6,579,726 8,597,759 8,476,513 5,101,271 4,880,217 6,132,696
Current portion of long term financing 1,487,634 909,943 1,201,679 1,197,073 699,016 849,878
Short term borrowings 11,520,404 10,191,219 8,462,310 5,039,236 3,523,755 4,069,462
Other current liabilities 10,547,633 7,184,851 5,627,079 6,479,268 4,738,514 2,492,797
Total equity and liabilities 42,861,212 39,762,042 35,592,589 26,371,095 20,984,128 19,074,775
Vertical Analysis Percentage
Property, plant and equipment 48.2 50.0 51.3 51.7 60.1 64.7
Intangible Assets 0.0 0.0 0.0 0.0 - 0.0
Other non current assets 0.0 0.0 0.0 0.0 0.0 0.0
Current assets 51.7 50.0 48.7 48.3 39.9 35.3
Total assets 100.0 100.0 100.0 100.0 100.0 100.0
Shareholders’ equity 29.7 32.4 33.2 32.4 34.0 29.0
Non current liabilities 15.4 21.6 23.8 19.3 23.3 32.2
Current portion of long term financing 3.5 2.3 3.4 4.5 3.3 4.5
Short term borrowings 26.9 25.6 23.8 19.1 16.8 21.3
Other current liabilities 24.6 18.1 15.8 24.6 22.6 13.1
Total equity and liabilities 100.0 100.0 100.0 100.0 100.0 100.0
Horizontal Analysis Percentage
Property, plant and equipment 3.9 8.8 33.9 8.1 2.3 26.2
Intangible Assets (56.3) 6.7 (34.3) - (100.0) (85.6)
Other non current assets - - - - - -
Current assets 11.4 14.8 36.1 52.2 24.1 (5.1)
Total assets 7.8 11.7 35.0 25.7 10.0 13.0
Shareholders’ equity (1.2) 8.9 38.2 19.8 29.2 (4.2)
Non current liabilities (23.5) 1.4 66.2 4.5 (20.4) (81.4)
Current portion of long term financing 63.5 (24.3) 0.4 71.3 (17.8) 13.3
Short term borrowings 13.0 20.4 67.9 43.0 (13.4) (16.5)
Other current liabilities 46.8 27.7 (13.2) 36.7 90.1 18.6
Total equity and liabilities 7.8 11.7 35.0 25.7 10.0 13.0
89
Annual Report 2020

Statement of Profit or Loss
2020 2019 2018 2017 2016 2015

(Rupees in ‘000)
Sales - Net 48,081,937 57,484,354 49,159,626 34,822,276 21,152,552 18,234,397
Cost of sales (43,869,080) (51,035,302) (41,528,466) (28,916,159) (18,246,288) (16,749,095)
Gross profit 4,212,857 6,449,052 7,631,160 5,906,117 2,906,264 1,485,302
Administrative, Selling and Distribution expenses (1,157,145) (986,231) (719,689) (548,670) (368,341) (335,729)
Other operating expenses (334,257) (533,801) (661,595) (424,951) (264,675) (22,119)
Other operating income 35,523 39,413 92,552 131,778 112,773 136,368
Operating Profit before finance costs 2,756,978 4,968,433 6,342,428 5,064,274 2,386,021 1,263,822
Finance costs (2,314,807) (1,289,315) (539,116) (455,500) (731,525) (1,028,277)
Profit before taxation 442,171 3,679,118 5,803,312 4,608,774 1,654,496 235,545
Taxation 52,680 (1,014,745) (1,438,354) (1,564,752) (575,532) (33,765)
Profit after taxation 494,851 2,664,373 4,364,958 3,044,022 1,078,964 201,780
Sales - Net 100.0 100.0 100.0 100.0 100.0 100.0

Cost of sales (91.2) (88.8) (84.5) (83.0) (86.3) (91.9)
Gross profit 8.8 11.2 15.5 17.0 13.7 8.1
Administrative, Selling and Distribution expenses (2.4) (1.7) (1.5) (1.6) (1.7) (1.8)
Other operating expenses (0.7) (0.9) (1.3) (1.2) (1.3) (0.1)
Other operating income 0.1 0.1 0.2 0.4 0.5 0.7
Operating Profit before finance costs 5.7 8.6 12.9 14.5 11.3 6.9
Finance costs (4.8) (2.2) (1.1) (1.3) (3.5) (5.6)
Profit before taxation 0.9 6.4 11.8 13.2 7.8 1.3
Taxation 0.1 (1.8) (2.9) (4.5) (2.7) (0.2)
Profit after taxation 1.0 4.6 8.9 8.7 5.1 1.1
Sales - Net (16.4) 16.9 41.2 64.6 16.0 (14.4)

Cost of sales (14.0) 22.9 43.6 58.5 8.9 (12.0)
Gross profit (34.7) (15.5) 29.2 103.2 95.7 (33.9)
Administrative, Selling and Distribution expenses 17.3 37.0 31.2 49.0 9.7 20.9
Other operating expenses (37.4) (19.3) 55.7 60.6 1,096.6 (88.1)
Other operating income (9.9) (57.4) (29.8) 16.9 (17.3) 89.9
Operating Profit before finance costs (44.5) (21.7) 25.2 112.2 88.8 (31.9)
Finance costs 79.5 139.2 18.4 (37.7) (28.9) 4.8
Profit before taxation (88.0) (36.6) 25.9 178.6 602.4 (73.1)
Taxation (105.2) (29.5) (8.1) 171.9 1,604.5 (81.7)
Profit after taxation (81.4) (39.0) 43.4 182.1 434.7 (70.7)
90

Statement of Cash Flows
2020 2019 2018 2017 2016 2015

(Rupees in ‘000)
Net cash generated from operating activities 1,968,216 3,486,111 293,548 1,568,756 2,871,600 1,498,302
Net cash outflows from investing activities (2,248,797) (2,257,935) (5,470,778) (1,787,168) (479,346) (3,095,455)
Net cash (outflows)/inflows from financing activities (2,056,101) (2,384,558) 2,479,575 505,738 (5,038,790) 2,521,336
Net increase/ (decrease) in cash and cash equivalents (2,336,682) (1,156,382) (2,697,655) 287,326 (2,646,536) 924,183
Net cash generated from operating activities 84.2 301.5 10.9 546.0 108.5 162.1
Net cash outflows from investing activities (96.2) (195.3) (202.8) (622.0) (18.1) (334.9)
Net cash (outflows)/inflows from financing activities (88.0) (206.2) 91.9 176.0 (190.4) 272.8
Net increase/ (decrease) in cash and cash equivalents (100.0) (100.0) (100.0) 100.0 (100.0) 100.0
Net cash generated from operating activities (43.5) 1,087.6 (81.3) (45.4) 91.7 21,718.9
Net cash outflows from investing activities 0.4 58.7 (206.1) (272.8) 84.5 (825.0)
Net cash (outflows)/inflows from financing activities (13.8) 196.2 390.3 110.0 (299.8) 26.2
Net increase/ (decrease) in cash and cash equivalents 102.1 (57.1) (1,038.9) 110.9 (386.4) (44.6)
4000
3000
2000
1000
0
(Rs. In million)
-1000
-2000
-3000
-4000
-5000
Operating activities Investing activities Financing activities
-6000
2015 2016 2017 2018 2019 2020
91
Annual Report 2020

Assets
25000
20000
(Rs. In million)
15000
10000
5000
0
Fixed Assets Inventory Debtors Other Assets
2015 2016 2017 2018 2019 2020
Equity & Liabilities

15000
12000
(Rs. In million)
9000
6000
3000
0
Equity Non-Current liabilities Short term borrowings Trade & other payable Other current liabilities
2015 2016 2017 2018 2019 2020
Sales and Cost of Sales

60000
50000
40000
(Rs. In million)
30000
20000
10000
0
Sales Cost
2015 2016 2017 2018 2019 2020
92
Key Financial Indicators
CONVERSION COST
2020 2019
2020 2019
(Rupees in million)
Salaries, wages and benefits 573 546
Electricity, gas and water 1,710 1,351
Depreciation and amortization 1,265 967
Stores and spares consumed 178 124
Repairs and maintenance 95 103
Others 163 186
Total 3,983 3,277
PRODUCT WISE SALES BREAK UP
2020 2019
2020 2019
(Rupees in million)
Galvanized Coils 25,427 31,755
Cold rolled Coils 18,447 20,967
Colored Coils 2,426 1,740
Bi-Products 1,782 3,022
TOTAL 48,082 57,484
93
Annual Report 2020
Key Financial Indicators
60000
Net Sales / Gross Profit
50000
40000 2018 2019 2020

30000
Rs in Million
20000
Net sales 49,160 57,484 48,082
10000
Gross profit 7,631 6,449 4,213
0
2018 2019 2020
600000
Raw Material Purchases
500000
400000 2018 2019 2020

Tons
300000
200000
Tons 501,482 538,028 494,157
100000
0
2018 2019 2020
600000 Production
500000
400000
2018 2019 2020
Tons
300000
200000 Tons 470,841 584,408 424,355

100000
0
2018 2019 2020
94
Six Years at a Glance

2020 2019 2018 2017 2016 2015
KEY INDICATORS
Profitability Ratios
Gross profit ratio % 8.76 11.22 15.52 16.96 13.74 8.14
Profit before tax to sales % 0.92 6.40 11.81 13.24 7.82 1.29
Profit after tax to sales % 1.03 4.63 8.88 8.74 5.10 1.11
EBITDA Margin to Sales % 8.34 10.49 14.62 16.75 14.64 9.90
Operating Leverage % 2.05 (0.78) 0.56 1.37 5.02 1.51
Return on Shareholders’ Equity % 3.90 20.69 36.91 35.58 16.51 3.65
Operating profit on Capital Employed % 14.28 23.13 31.24 39.23 21.11 9.86
Return on Total Assets % 1.16 6.70 12.26 11.54 5.62 1.06
Liquidity Ratios
Current ratio times 0.94 1.09 1.13 1.00 0.93 0.91
Quick / Acid test ratio times 0.30 0.29 0.21 0.25 0.34 0.31
Cash to Current Liabilities 0.005 0.022 0.007 0.004 0.004 0.005
Cash flow from Operations to Sales 0.04 0.06 0.01 0.05 0.14 0.08
Free cash flow to the firm Rs.millions 3,238 2,007 (5,308) (1,360) 3,087 (598)
Free cash flow to the equity holder Rs.millions (189) 488 (2,496) (1,570) 598 1,419
Turnover Ratios
Inventory turnover ratio times 2.90 3.32 2.83 2.92 3.31 3.71
Debtor turnover ratio (KE) times 17.85 12.21 15.08 11.51 12.83 9.87
Debtor turnover in days (KE) days 20 30 24 32 28 37
Debtor turnover ratio times 51.04 76.00 69.79 54.20 47.90 23.55
Creditor turnover ratio times 11.38 22.41 13.59 7.51 6.97 11.30
Total assets turnover ratio times 1.12 1.45 1.38 1.32 1.01 0.96
Fixed assets turnover ratio times 2.32 2.89 2.69 2.55 1.68 1.48
Capital employed turnover ratio times 2.49 2.73 2.35 2.47 1.71 1.54
Operating Cycle
Inventory turnover days 126 110 129 125 110 98
Debtor turnover days 7 5 5 7 8 16
Creditor turnover days (32) (16) (27) (49) (52) (32)
Operating cycle days 101 98 107 83 66 81
Investment / Market Ratios

Earnings per share - basic and diluted Rs 1.14 6.12 10.03 7.00 2.71 0.46
Price earning ratio times 45.31 6.49 10.14 18.27 13.14 60.58
Market value per share at the end of the year Rs 51.65 39.71 101.70 127.89 35.62 28.10
Market value per share high during the year Rs 62.28 116.50 149.75 167.80 45.00 32.24
Market value per share low during the year Rs 27.61 33.94 86.00 35.89 22.80 21.75
Break-up value per share - Including Revaluation Surplus Rs 29.26 29.61 27.18 19.66 16.42 12.71
Break-up value per share - Excluding Revaluation Surplus Rs 26.37 26.64 25.02 17.47 14.18 11.44
Price to book ratio 1.77 1.34 3.74 6.50 2.17 2.21
Cash Dividend % - 30.00 45.00 35.00 12.50 -
Dividend Yield ratio % - 7.55 4.42 2.74 3.51 -
Dividend Cover times - 2.04 2.23 2.00 2.17 -
Dividend Payout % - 49.02 44.85 50.00 46.12 -
Dividend per share Rs - 3.00 4.50 3.50 1.25 -
Capital Structure Ratios

Financial leverage ratio 2.25 1.91 1.39 1.15 1.16 1.93
Total Debt : Equity ratio 59:41 58:42 58:42 54:46 54:46 66:34
Interest cover times 1.19 3.89 11.76 11.32 3.53 1.27
95
Annual Report 2020
Profitability Ratios
20
15
10
0
GP % PAT % EBITDA Operating Leverage Return on Total Assets
2015 2016 2017 2018 2019 2020
Liquidity Ratios
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Current ratio Quick test ratio Cash to Current Liabilities Cash flow from Operations
to Sales
2015 2016 2017 2018 2019 2020
Turnover Ratios
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Total assets turnover ratio Fixed assets turnover ratio Capital employed turnover ratio
2015 2016 2017 2018 2019 2020
Operating Cycle
150
120
90
60
30
0
-30
-60
Inventory turnover in days Debtor turnover in days Creditor turnover in days Operating cycle in days
2015 2016 2017 2018 2019 2020
96
Investment Ratios
80
70
60
50
40
30
20
10
0
EPS Price earning ratio Break-up value per share
2015 2016 2017 2018 2019 2020
Dividend Ratios
50
40
30
20
10
0
- - -
Cash Dividend Dividend Yield Dividend Payout
2015 2016 2017 2018 2019 2020
Capital Structure Ratios
12
10
0
Financial leverage ratio Interest cover
2015 2016 2017 2018 2019 2020
97
Annual Report 2020
DuPont Analysis
Return on Equity
3.9%
÷
Ownership Ratio Return on Assets
29.7% 1.2%
÷ x
Total Assets Owners’ Equity Assets Turnover Net Profit Margin
Rs. 42,861,212 Rs. 12,725,815 1.12 1.03%
+ – ÷ ÷
Owners’ Equity Total Liabilities Total Assets Sales Net Profit
Rs. 12,725,815 Rs. 30,135,397 Rs. 42,861,212 Rs. 48,081,937 Rs. 494,851
+ + –
Non-Current Current Non-Current Current Assets Total Cost Sales
Liabilities Liabilities Assets
Rs. 22,172,184 Rs. 47,587,086 Rs. 48,081,937
Rs. 6,597,426 Rs. 23,555,671 Rs. 20,689,028
98
Quarterly Performance Analysis
2020
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Total
Amount % Amount % Amount % Amount % Amount %
Rs. in Millions
Revenue 11,545 100.00 13,819 100.00 13,128 100.00 9,589 100.00 48,082 100.00
Cost of sales (10,311) (89.31) (12,830) (92.84) (11,952) (91.04) (8,776) (91.52) (43,869) (91.24)
Gross Profit 1,234 10.69 989 7.16 1,176 8.96 813 8.48 4,213 8.76
Selling and distribution cost (244) (2.11) (198) (1.43) (290) (2.21) (162) (1.69) (894) (1.86)
Administration cost (62) (0.53) (73) (0.53) (63) (0.48) (65) (0.67) (263) (0.55)
Operating Profit 928 8.04 719 5.20 823 6.27 586 6.11 3,056 6.36
Other expenses (24) (0.21) 26 0.19 (165) (1.26) (171) (1.78) (334) (0.70)
Other income 65 0.56 30 0.22 10 0.08 (69) (0.72) 36 0.07
EBIT 969 8.39 775 5.61 668 5.09 346 3.61 2,757 5.73
Finance cost (667) (5.78) (679) (4.91) (401) (3.05) (568) (5.93) (2,315) (4.81)
PBT 301 2.61 96 0.69 267 2.04 (223) (2.32) 442 0.92
Taxation 47 0.40 22 0.16 (78) (0.59) 62 0.64 53 0.11
PAT 348 3.01 118 0.85 190 1.45 (161) (1.68) 495 1.03
EPS 0.80 0.27 0.44 (0.37) 1.14
100% 38%
60%
11%
26% 20% 28% 19% 23%
80% 22% 24%
23%
27% 28% 23%
60% 25%
29%
34%
40% 23% 24%
29% 22% 70%
25% 68%
20%
24% 25% 29% 31% 32%
20%
0%
Sales Sales GP GP PBT PBT PAT PAT
-20% 2019 2020 2019 2020 2019 2020 2019 2020
-40% -50% -33%
-60%
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
Earnings Per Share
8
7
6
5
4
3
2
1
0
-1 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Full Year
2019 2020
99
Annual Report 2020
Statement of Value Addition

2020 2019
Rs. In ‘000 % Rs. In ‘000 %
Wealth Generated:
Sales including sales tax 54,743,805 99.9 66,614,879 99.9
Other operating income 36,000 0.1 39,413 0.1
54,779,805 100 66,654,292 100
Wealth Distributed:
Cost of material & Services 39,814,930 72.7 47,453,735 71.2
To Employees
Salaries & other related cost 828,893 1.5 810,382 1.2
To Government
Taxes 9,891,605 18.1 13,097,727 19.7
Worker Profit Participation Fund 22,064 0.0 197,024 0.3
Workers Welfare Fund - 0.0 63,287 0.1
9,913,669 18.1 13,358,038 20.0
To Providers of Capital
Dividend to Shareholders - 0.0 1,305,000 2.0
Finance cost 2,314,807 4.2 1,289,315 1.9
2,314,807 4.2 2,594,315 3.9
To Society
Donation 19,200 0.0 45,477 0.1
Retained in the business

For replacement of fixed assets
Depreciation & Amortization 1,412,178 2.6 1,078,449 1.6
To provide for growth: Retained profit 494,851 0.9 1,359,373 2.0
1,907,029 3.5 2,437,822 3.7
54,779,328 100.0 66,654,292 100.0
2020 2019
2020 2019
% %
Cost of material & Services 72.7 71.2
To Government 18.1 20.0
To Providers of Capital 4.2 3.9
Depreciation & Amortization 2.6 1.6
To Employees 1.5 1.2
Retained profit 0.9 2.0
To Society 0.0 0.1
100
Statement of Cash Flows - Direct Method

2020 2019
(Rupees in ‘000)
CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers 55,298,953 66,861,526
Cash paid to suppliers / service providers and employees (48,294,782) (59,993,069)
Workers fund (85,310) (314,587)
Sales tax payment (1,720,946) (827,311)
Finance cost paid (2,395,026) (1,141,097)
Income on bank deposits received 5,444 1,849
Staff gratuity paid (23,617) (47,534)
Compensated absences paid (9,027) (6,905)
Income tax paid (807,473) (1,046,761)
Net cash generated from operating activities 1,968,216 3,486,111
CASH FLOWS FROM INVESTING ACTIVITIES

Payment for acquisition of property, plant and equipment (2,209,723) (2,278,452)
Right-of-use assets (67,865) -
Payment for acquisition of intangible asset - (1,561)
Proceeds from disposal of property, plant and equipment 28,791 22,078
Net cash used in investing activities (2,248,797) (2,257,935)
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term finance 713,876 600,000
Repayment of long term finance (1,461,144) (1,292,876)
(Repayment) / proceeds short term borrowings - net (710,781) 269,437
Lease liability 54,853 -
Dividend paid (652,905) (1,961,119)
Net cash (used in) / generated from financing activities (2,056,101) (2,384,558)
Net decrease in cash and cash equivalents (2,336,682) (1,156,382)
Cash and cash equivalents at beginning of the year (6,232,042) (5,075,660)

Cash and cash equivalents at end of the year (8,568,724) (6,232,042)
CASH AND CASH EQUIVALENTS COMPRISE OF:

Cash and bank balances 106,196 402,912
Short term borrowings - running finance (secured) (8,674,920) (6,634,954)
(8,568,724) (6,232,042)
101
Annual Report 2020
Free Cash Flow

2020 2019 2018 2017 2016 2015
Free cash flow to the firm Rs. in Millions
Profit before taxation 442 3,679 5,803 4,609 1,654 236

Finance cost 2,315 1,289 539 732 1,028 982
Operating Profit 2,757 4,968 6,342 5,340 2,682 1,218
Effective tax rate 11.91% 27.58% 24.79% 33.95% 28.75% 14.41%
Net operating profit after tax 3,085 3,598 4,770 3,527 1,912 1,043
Depreciation and amortization 1,411 1,078 858 769 711 542
Capital expenditure incurred (2,210) (2,280) (5,492) (1,812) (492) (3,122)
Changes in working capital 952 (390) (5,444) (3,844) 956 939
Free cash flow to the firm 3,238 2,006 (5,308) (1,360) 3,087 (598)
Free cash flow to the Equity holders
Free cash flow to the firm 3,238 2,006 (5,308) (1,360) 3,087 (598)
Net borrowing - raised / (repaid) (747) (693) 3,152 74 (1,847) 2,840
Interest payment - net of tax (2,680) (826) (340) (284) (641) (823)
Free cash flow to the Equity holders (189) 487 (2,496) (1,570) 599 1,419
4000
3000
2000
1000
0
Rs . Miillions
-1000
-2000
-3000
-4000
-5000
-6000 2015 2016 2017 2018 2019 2020
1500
1000
500
0
Rs . Miillions
-500
-1000
-1500
-2000
-2500
2015 2016 2017 2018 2019 2020
102
Financial
Statements
103
Annual Report 2020
Independent Auditor’s Report to the Members

Opinion
We have audited the annexed financial statements of International Steels Limited (the Company), which comprise
the statement of financial position as at 30 June 2020, and the statement of profit or loss, the statement of
comprehensive income, the statement of changes in equity, the statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies and other explanatory
information, and we state that we have obtained all the information and explanations which, to the best of our
knowledge and belief, were necessary for the purposes of the audit.
In our opinion and to the best of our information and according to the explanations given to us, the statement of
financial position, statement of profit or loss, statement of comprehensive income, the statement of changes in
equity and the statement of cash flows together with the notes forming part thereof conform with the accounting
and reporting standards as applicable in Pakistan and give the information required by the Companies Act, 2017
(XIX of 2017), in the manner so required and respectively give a true and fair view of the state of the Company’s
affairs as at 30 June 2020 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 are the Key audit matters:
104
S Key audit matters How the matters were addressed in our audit
No.
1. Revenue recognition Our key audit procedures amongst others,
included the following:
Refer notes 3.10, 21 and 36.1 to the financial
· We obtained an understanding of, assessed and
statements relating to revenue recognition.
tested the design and operating effectiveness
of controls designed to ensure that revenue is
The Company generates revenue from sale of
recognized in the appropriate accounting period;
goods to domestic as well as export customers.
Sales to domestic customers and export customers
· We assessed the appropriateness of the
represents 84% and 16% of total sales respectively.
Company’s accounting policies for revenue
Sales to related parties represent 5% of total sales.
recognition and compliance of those policies
We identified revenue recognition as key audit with applicable accounting standards;
matter as it is one of the key performance indicators
of the Company and because of the potential risk · We compared, on a sample basis, specific
that revenue transactions may not being recognized revenue transactions recorded before and after
in the appropriate period. the reporting date with underlying documentation
to assess whether revenue has been recognized
in the appropriate accounting period; and
· We inspected credit notes issued to record sales

returns subsequent to year end, if any.
2. Valuation of stock in trade Our key audit procedures amongst others,
included the following:
Refer note 3.6, 8, 22 and 36.1 to the financial
· We obtained an understanding of internal controls
statements relating to valuation of stock-in-trade
over purchases and valuation of stock in trade
and testing, on a sample basis, their design,
Inventory forms a significant part of the Company’s implementation and operating effectiveness;
assets. During the year 58% of raw materials were
purchased by the Company from a related party. · We compared on a sample basis specific
purchases (including those from related party)
We identified the valuation of stock in trade as key with underlying supporting documents /
audit matter as it directly affects the profitability of agreements, if any;
the Company.
· We compared calculations of the allocation of
directly attributable costs with the underlying
supporting documents;
· We obtained an understanding of management’s

determination of net realizable value (NRV) and
the key estimates adopted, including future
selling prices, future costs to complete work-in-
process and costs necessary to make the sale
and their basis; and
· We compared the NRV, on a sample basis, to

the cost of finished goods to assess whether
any adjustments are required to value inventory
in accordance with applicable accounting and
reporting standards.
105
Annual Report 2020
Information Other than the Financial Statements and Auditor’s Report Thereon
Management is responsible for the other information. The Other Information comprises the information included in
the Annual Report but does not include the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the Other Information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this Other Information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with the accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act,
2017(XIX of 2017) and for such internal control as management determines is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Board of directors are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
106
We communicate with the board of directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the board of directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter
or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on Other Legal and Regulatory Requirements

Based on our audit, we further report that in our opinion:
a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX
of 2017);
b) the statement of financial position, the statement of profit or loss and other comprehensive income, the
statement of changes in equity and the statement of cash flows together with the notes thereon have been
drawn up in conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books
of account;
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 Muhammad Taufiq.
KPMG Taseer Hadi & Co.

Chartered Accountants
Karachi
06 September 2020
107
Annual Report 2020
Statement of Financial Position

As at 30 June 2020
Note 2020 2019

ASSETS (Rupees in ‘000)
Non-current assets
Property, plant and equipment 4 20,638,354 19,862,302
Right-of-use assets 5 49,377 -
Intangible assets 6 1,197 2,736
Long term deposit with Central Depository Company of Pakistan Limited 100 100
20,689,028 19,865,138
Current assets
Stores and spares 7 668,960 610,974
Stock-in-trade 8 15,132,206 14,647,959
Trade debts 9 1,015,744 868,035
Receivable from K-Electric Limited (KE) 39,393 38,997
Advances, trade deposits and prepayments 10 135,604 108,988
Staff retirement benefits 31 7,238 -
Sales tax receivable 4,033,659 2,312,713
Taxation-net 11 1,033,184 906,326
Cash and bank balances 12 106,196 402,912
22,172,184 19,896,904
Total assets 42,861,212 39,762,042
EQUITY AND LIABILITIES
Share capital and reserves

Authorised share capital
500,000,000 (2019: 500,000,000) ordinary shares of Rs. 10 each 5,000,000 5,000,000
Share capital
Issued, subscribed and paid-up capital 13 4,350,000 4,350,000
Revenue reserve
Unappropriated profit 7,121,607 7,240,140
Capital reserve
Revaluation surplus on property, plant and equipment 14 1,254,208 1,288,130
Total shareholders’ equity 12,725,815 12,878,270
LIABILITIES
Non-current liabilities
Long term finance-secured 15 5,042,182 6,367,141
Deferred taxation 16 1,499,446 2,230,618
Lease liabilities 5 38,098 -
6,579,726 8,597,759
Current liabilities
Trade and other payables 17 8,921,279 5,612,295
Contract liabilities 18 1,377,396 1,259,011
Short term borrowings-secured 19 11,520,404 10,191,219
Unpaid dividend - 2,385
Unclaimed dividend 8,433 6,453
Current portion of long term finance 15 1,487,634 909,943
Current portion of lease liabilities 5 16,755 -
Accrued mark-up 223,770 304,707
23,555,671 18,286,013
Total liabilities 30,135,397 26,883,772
Contingencies and commitments 20
TOTAL EQUITY AND LIABILITIES 42,861,212 39,762,042
The annexed notes from 1 to 41 form an integral part of these financial statements.
Dr. Amjad Waheed Mujtaba Hussain Yousuf H. Mirza

Director & Chairman Chief Financial Chief Executive
Board Audit Committee Officer Officer
108
Statement of Profit or Loss

For the year ended 30 June 2020
Note 2020 2019

(Rupees in ‘000)
Net sales 21 48,081,937 57,484,354

Cost of sales 22 (43,869,080) (51,035,302)
Gross profit 4,212,857 6,449,052
Selling and distribution expenses 23 (894,334) (701,827)

Administrative expenses 24 (262,811) (284,404)
(1,157,145) (986,231)
Finance cost 25 (2,314,807) (1,289,315)

Other operating charges 26 (334,257) (533,801)
(2,649,064) (1,823,116)
Other income 27 35,523 39,413

Profit before taxation 442,171 3,679,118
Taxation 28 52,680 (1,014,745)

Profit after taxation for the year 494,851 2,664,373
(Rupees)
Earnings per share - basic and diluted 29 1.14 6.12

109
Annual Report 2020
Statement of Comprehensive Income

2020 2019
(Rupees in ‘000)
Profit for the year 494,851 2,664,373
Other comprehensive income
Items that will not be subsequently reclassified to statement of profit or loss

Remeasurements of net defined benefit liability 7,316 (28,386)
Revaluation of property, plant and equipment - 449,987
Related tax (2,122) (75,212)
Other comprehensive income for the year - net of tax 5,194 346,389
Total comprehensive income for the year 500,045 3,010,762

110
Statement of Cash Flows

Note 2020 2019

(Rupees in ‘000)
CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments for:
Depreciation of property, plant and equipment 4.2 & 5.2 1,410,639 1,077,059
Amortization of Intangible assets 6 1,539 1,390
Loss on disposal of property, plant and equipment 27 12,729 29,610
Provision for obsolescence against stores and spares 22 38,583 15,278
Provision for staff gratuity 31 23,696 19,148
Provision for compensated absences 8,275 7,214
Income on bank deposits-conventional 27 (5,444) (1,848)
Finance cost 25 2,314,807 1,289,315
Government grant 27 (718) -
3,804,106 2,437,166
Changes in working capital 30 951,638 (389,725)
Cash generated from operations 5,197,915 5,726,559
Finance cost paid (2,395,026) (1,141,097)

Income on bank deposits received 5,444 1,849
Staff gratuity paid 31 (23,617) (47,534)
Compensated absences paid (9,027) (6,905)
Income tax paid 11 (807,473) (1,046,761)
(3,229,699) (2,240,448)
Net cash generated from operating activities 1,968,216 3,486,111
CASH FLOWS FROM INVESTING ACTIVITIES

Payment for acquisition of property, plant and equipment 4 (2,209,723) (2,278,452)
Right-of-use assets 5 (67,865) -
Payment for acquisition of intangible assets 6 - (1,561)
Proceeds from disposal of property, plant and equipment 28,791 22,078
Net cash used in investing activities (2,248,797) (2,257,935)
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term finance 713,876 600,000
Repayment of long term finance (1,461,144) (1,292,876)
(Repayment) of / proceeds from short term borrowings - net (710,781) 269,437
Lease liabilities 54,853 -
Dividend paid (652,905) (1,961,119)
Net cash used in from financing activities (2,056,101) (2,384,558)
Net decrease in cash and cash equivalents (2,336,682) (1,156,382)
Cash and cash equivalents at beginning of the year (6,232,042) (5,075,660)

Cash and cash equivalents at end of the year (8,568,724) (6,232,042)
CASH AND CASH EQUIVALENTS COMPRISE OF:

Cash and bank balances 12 106,196 402,912
Short term borrowings - running finance (secured) 19 (8,674,920) (6,634,954)
(8,568,724) (6,232,042)

111
Annual Report 2020
Statement of Changes in Equity

Issued, Revenue Capital

subscribed & reserve - reserve -
paid-up capital Unappropriated Revaluation
profit surplus on Total
property, plant
and equipment
-------------------------- (Rupees in ‘000) --------------------------
Balance as at 01 July 2018 4,350,000 6,532,704 942,304 11,825,008
Profit for the year - 2,664,373 - 2,664,373

Other comprehensive income for the year - (20,154) 366,543 346,389
Total comprehensive income for the year - 2,644,219 366,543 3,010,762
Transactions with owners recorded directly

in equity - distributions
Dividend:
- Final dividend @ 30% (Re. 3.00 per share)
for the year ended 30 June 2018 - (1,305,000) - (1,305,000)
- Interim dividend @ 15% (Rs. 1.50 per share)
for the period ended 31 December 2019 - (652,500) - (652,500)
Total transactions with owners of the Company - distributions - (1,957,500) - (1,957,500)
Transferred from revaluation surplus on property, plant

and equipment on account of incremental depreciation - 20,717 (20,717) -
- net of tax
Balance as at 30 June 2019 4,350,000 7,240,140 1,288,130 12,878,270
Balance as at 01 July 2019 4,350,000 7,240,140 1,288,130 12,878,270
Profit for the year - 494,851 - 494,851

Other comprehensive income for the year - 5,194 - 5,194
Total comprehensive income for the year - 500,045 - 500,045
Transactions with owners recorded directly

in equity - distributions
Dividend:
- Final dividend @ 15% (Rs. 1.50 per share)
for the year ended 30 June 2019 - (652,500) - (652,500)
Total transactions with owners of the Company - distributions - (652,500) - (652,500)
Transferred from revaluation surplus on property, plant

and equipment on account of incremental depreciation
- net of tax - 33,922 (33,922) -
Balance as at 30 June 2020 4,350,000 7,121,607 1,254,208 12,725,815

112
Notes to the Financial Statements

1. STATUS AND NATURE OF BUSINESS
International Steels Limited (the Company) was incorporated on 03 September 2007 as a public unlisted
company limited by shares under the repealed Companies Ordinance, 1984 (now Companies Act, 2017)
and is domiciled in the province of Sindh. The Company was listed on the Pakistan Stock Exchange
Limited on 01 June 2011. The Company is subsidiary of International Industries Limited (the Holding
Company) which holds 245,055,543 (2019: 245,055,543) shares of the Company as at 30 June 2020
representing 56.3% (2019: 56.3%) of the shareholding of the Company.
The net assets of the Steel Project Undertaking of International Industries Limited (the Holding Company),
amounting to Rs. 4,177.167 million determined as at 23 August 2010 (day immediately preceding the
completion date) in accordance with the Scheme of Arrangement, were transferred to the Company
on 24 August 2010. In consideration of transferring to and vesting the Steel Project Undertaking in the
Company, 417,716,700 fully paid-up ordinary shares were issued at par value to the Holding Company.
The primary activity of the Company is the business of manufacturing of cold rolled, galvanized and
colour coated steel coils and sheets. The Company commenced commercial operations on 01 January
2011. The registered office of the Company is situated at 101, Beaumont Plaza, 10 Beaumont Road, Civil
Lines, Karachi - 75530.
The manufacturing facilities of the Company are situated at 399-405, Rehri Road, Landhi Industrial Area,
and Plot No. LE-73-79,102-103, 112-118, 125-129, Survey # NC.98, near Arabian Country Club, NIP,
Bin Qasim Industrial Park, Karachi.
The Company has sales offices at following locations:
- Chinoy House, 6-Bank Square, Lahore.

- Office no. 303-A 3rd Floor Evacuee Trust Complex Sector F-5/1 Agha Khan Road, Islamabad.
- Office no. 708-A, United Mall, Abdali Road, Multan.
1.1 As in the rest of the world, COVID-19 adversely affected lifestyles and business operations in Pakistan.
The Company complied with the Standard Operating Procedures (SOPs) prescribed by Federal and
Provincial Governments. Sales and production activities were affected during lockdowns, however, the
factory reopened after necessary permissions to produce orders for exports and essential services. The
Company remained up to date in all its financial commitments. The Management believes that the going
concern assumption of the Company remains valid.
The Company availed refinance facility for payment of salaries and wages under SBP’s Infrastructure,
Housing & SME Finance Department (IH&SMEFD) Circular No. 7 of 2020 dated 10 April 2020.
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 as applicable in Pakistan
comprise:
- International Financial Reporting Standards (IFRS Standards) issued by the International Accounting
Standards Board (IASB) as notified under the Companies Act, 2017; and
- Provisions of and directives issued under the Companies Act, 2017.

Where the provisions of and directives issued under the Companies Act, 2017 differ from IFRS Standards,
113
Annual Report 2020

the provisions of and directives issued under the Companies Act, 2017 have been followed.
2.2 Basis of measurement
These financial statements have been prepared under the historical cost convention except for the
Company’s liability under defined benefit plan (gratuity) that is determined based on the present value of
defined benefit obligation less fair value of plan assets, freehold land and buildings thereon that are stated
at fair values determined by an independent valuer and derivative financial instruments which are stated
at fair value.
2.3 Functional and presentation currency
These financial statements are presented in Pakistan Rupees, which is the Company’s functional currency.
All amounts have been rounded to the nearest thousand, unless otherwise indicated.
2.4 Use of significant estimates and judgments
The preparation of financial statements in conformity with accounting and reporting standards, as
applicable in Pakistan, requires management to make judgments, estimates and assumptions that affect
the application of the accounting policies and the reported amounts of assets, liabilities, income and
expenses. The estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the results of which form the
basis of making the judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates.
The estimates underlying the assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current and future
periods. Information about the judgments made by the management in the application of the accounting
policies, that have the most significant effect on the amount recognized in these financial statements,
assumptions and estimation uncertainties with significant risk of material adjustment to the carrying
amount of assets and liabilities in the next year are described in the following notes:
- Property, plant and equipment and intangible assets (notes 3.2 and 3.3)
- Trade debts, advances and other receivables (notes 3.4.2.1)
- Derivative financial instruments (notes 3.4.4 and 3.4.5)
- Stores and spares (notes 3.5)
- Stock-in-trade (notes 3.6)
- Taxation (notes 3.7)
- Staff retirement benefits (notes 3.8)
- Impairment (notes 3.12)
- Provisions (notes 3.13)
- Contingent liabilities (notes 3.14)

2.5 New or amendments / interpretations to existing standards, interpretations and forthcoming
requirements
There are new and amended standards and interpretations that are mandatory for accounting periods
beginning 01 July 2019 other than those disclosed in note 3.1. These are considered not to be relevant
or do not have any significant effect on the Company’s financial statements and are therefore not stated
in these financial statements.
114

2.5.1 Standards, interpretations and amendments to published approved accounting standards that
are not yet effective
The following International Financial Reporting Standards (IFRS Standards) as notified under the
Companies Act, 2017 and the amendments and interpretations thereto will be effective for accounting
periods beginning on or after 01 January 2020:
- Amendment to IFRS 3 ‘Business Combinations’ – Definition of a Business (effective for business

combinations for which the acquisition date is on or after the beginning of annual period beginning on
or after 01 January 2020). The IASB has issued amendments aiming to resolve the difficulties that arise
when an entity determines whether it has acquired a business or a group of assets. The amendments
clarify that to be considered a business, an acquired set of activities and assets must include, at
a minimum, an input and a substantive process that together significantly contribute to the ability
to create outputs. The amendments include an election to use a concentration test. The standard
is effective for transactions in the future and therefore would not have an impact on past financial
statements.
- Amendments to IAS 1 ‘Presentation of Financial Statements’ and IAS 8 ‘Accounting Policies, Changes
in Accounting Estimates and Errors’ (effective for annual periods beginning on or after 01 January
2020). The amendments are intended to make the definition of material in IAS 1 easier to understand
and are not intended to alter the underlying concept of materiality in IFRS Standards. In addition, the
IASB has also issued guidance on how to make materiality judgments when preparing their general
purpose financial statements in accordance with IFRS Standards.
- On 29 March 2018, the International Accounting Standards Board (the IASB) has issued a revised
Conceptual Framework for Financial Reporting which is applicable immediately and contains changes
that will set a new direction for IFRS in the future. The Conceptual Framework primarily serves as a
tool for the IASB to develop standards and to assist the IFRS Interpretations Committee in interpreting
them. It does not override the requirements of individual IFRSs and any inconsistencies with the revised
Framework will be subject to the usual due process – this means that the overall impact on standard
setting may take some time to crystallize. The companies may use the Framework as a reference
for selecting their accounting policies in the absence of specific IFRS requirements. In these cases,
companies should review those policies and apply the new guidance retrospectively as of 01 January
2020, unless the new guidance contains specific scope outs.
- Interest Rate Benchmark Reform which amended IFRS 9, IAS 39 and IFRS 7 is applicable for annual
financial periods beginning on or after 1 January 2020. The G20 asked the Financial Stability Board
(FSB) to undertake a fundamental review of major interest rate benchmarks. Following the review, the
FSB published a report setting out its recommended reforms of some major interest rate benchmarks
such as IBORs. Public authorities in many jurisdictions have since taken steps to implement those
recommendations. This has in turn led to uncertainty about the long-term viability of some interest rate
benchmarks. In these amendments, the term interest rate benchmark reform’ refers to the market-
wide reform of an interest rate benchmark including its replacement with an alternative benchmark
rate, such as that resulting from the FSB’s recommendations set out in its July 2014 report ‘Reforming
Major Interest Rate Benchmarks’ (the reform). The amendments made provide relief from the potential
effects of the uncertainty caused by the reform. A company shall apply the exceptions to all hedging
relationships directly affected by interest rate benchmark reform. The amendments are not likely to
affect the financial statements of the Company.
- Classification of liabilities as current or non-current (Amendments to IAS 1) effective for the annual period
beginning on or after 1 January 2022. These amendments in the standards have been added to further
clarify when a liability is classified as current. The standard also amends the aspect of classification of
liability as non-current by requiring the assessment of the entity’s right at the end of the reporting period
to defer the settlement of liability for at least twelve months after the reporting period. An entity shall
apply those amendments retrospectively in accordance with IAS 8.
115
Annual Report 2020

- Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) effective for the annual
period beginning on or after 01 January 2022 amends IAS 1 by mainly adding paragraphs which
clarifies what comprise the cost of fulfilling a contract, Cost of fulfilling a contract is relevant when
determining whether a contract is onerous. An entity is required to apply the amendments to contracts
for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which
it first applies the amendments (the date of initial application). Restatement of comparative information
is not required, instead the amendments require an entity to recognize the cumulative effect of initially
applying the amendments as an adjustment to the opening balance of retained earnings or other
component of equity, as appropriate, at the date of initial application.
- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) effective for
the annual period beginning on or after 1 January 2022. Clarifies that sales proceeds and cost of
items produced while bringing an item of property, plant and equipment to the location and condition
necessary for it to be capable of operating in the manner intended by management e.g. when testing
etc, are recognized in profit or loss in accordance with applicable Standards. The entity measures
the cost of those items applying the measurement requirements of IAS 2. The standard also removes
the requirement of deducting the net sales proceeds from cost of testing. An entity shall apply those
amendments retrospectively, but only to items of property, plant and equipment that are brought to
the location and condition necessary for them to be capable of operating in the manner intended by
management on or after the beginning of the earliest period presented in the financial statements in
which the entity first applies the amendments. The entity shall recognize the cumulative effect of initially
applying the amendments as an adjustment to the opening balance of retained earnings (or other
component of equity, as appropriate) at the beginning of that earliest period presented.

2.5.2 Annual improvements to IFRS standards 2018-2020 cycle
The following annual improvements to IFRS standards 2018-2020 are effective for annual reporting
periods beginning on or after 1 January 2022.
- IFRS 9 – The amendment clarifies that an entity includes only fees paid or received between the entity
(the borrower) and the lender, including fees paid or received by either the entity or the lender on the
other’s behalf, when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether
to derecognize a financial liability.
- IFRS 16 – The amendment partially amends Illustrative Example 13 accompanying IFRS 16 by
excluding the illustration of reimbursement of leasehold improvements by the lessor. The objective of
the amendment is to resolve any potential confusion that might arise in lease incentives.
- IAS 41 – The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude
taxation cash flows when measuring the fair value of a biological asset using a present value technique.

The above improvements to standards are not likely to have material / significant impact on Company’s
financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
Except as described below in note 3.1, the significant accounting policies are consistently applied in the
preparation of these financial statements as those applied in earlier periods presented.
3.1 IFRS 16 ‘Leases’
The Company has adopted IFRS 16 ‘Leases’ from 01 July 2019. The standard introduces a single,
on-balance sheet accounting model for leases. As a result, the Company as a lessee has recognised
right-of-use assets representing its right to use the underlying assets and lease liabilities representing its
obligations to make lease payments.
116

The Company has applied IFRS 16 using the modified retrospective approach and has not restated the
comparative information presented for 2019, as permitted under the specific transitional provisions in the
standard.
The Company has various lease agreements for head office, warehouses and sales offices which
were previously classified by the company based on its assessment of whether the lease transferred
substantially all of the risks and rewards of ownership. Under IFRS 16, the Company recognises right-of-
use assets and lease liabilities for all the leases - i.e. these leases are on statement of financial position.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date.
The lease liabilities are measured at the present value of remaining lease payments, discounted using
the lessee’s incremental borrowing rate as of 01 July 2019. The weighted average lessee’s incremental
borrowing rate applied to the lease liabilities on 01 July 2019 is 14%
Lease liabilities include the net present value of the following lease payments:
- Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
- Variable lease payment that are based on an index or a rate;
- Amounts expected to be payable by the lessee under residual value guarantees;
- The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
- Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that
option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to
pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
- The amount of the initial measurement of lease liability;

- Any lease payments made at or before the commencement date less any lease incentives received;
- Any initial direct costs; and
- Restoration costs.

The company has not elected to recognise right-of-use assets and lease liabilities for short-term leases
of properties that have a lease term of 12 months or less and leases of low-value assets. The Company
recognises the lease payments associated with these leases as an expense on a straight-line basis over
the lease term.
The impact of adoption of IFRS 16 on the statement of financial position as at 30 June 2020 is as follows:
30 June 01 July
2020 2019
(Rupees in ‘000)
Right-of-use assets 49,377 152,996

Lease liabilities 54,853 152,996
Deferred tax liability 12,947 -
117
Annual Report 2020

3.2 Property, plant and equipment
3.2.1 Operating assets and depreciation
Initial recognition
The cost of an item of property, plant and equipment is recognised as an asset if it is probable that
future economic benefits associated with the item will flow to the entity and the cost of such item can be
measured reliably.
Recognition of the cost in the carrying amount of an item of property, plant and equipment ceases when
the item is in the location and condition necessary for it to be capable of operating in the manner intended
by the management.
Measurement
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses,
if any. Freehold land are stated at revalued amounts and buildings on freehold land are stated at revalued
amounts less accumulated depreciation and accumulated impairment, if any. The costs of property, plant
and equipment include:
(a) its purchase price including import duties, non-refundable purchase taxes after deducting trade
discounts and rebates;
(b) any other costs directly attributable to bringing the asset to the location and condition necessary for
it to be capable of operating in the manner intended by management; and
(c) Borrowing costs, if any.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for
as separate items (major components) of property, plant and equipment.
Subsequent expenditure
Expenditure incurred to replace a significant component of an item of property, plant and equipment is
capitalised and the asset so replaced is retired. Other subsequent expenditure is capitalised only when it
is probable that future economic benefits associated with the item will flow to the Company and the cost
of the items can be measured reliably. All other expenditure (including repairs and normal maintenance)
is recognised in the statement of profit or loss as an expense when it is incurred.
Depreciation
Depreciation on all items except for freehold land is charged on straight line method at the rates specified
in respective note to the financial statements and is recognised in statement of profit or loss.
Depreciation on addition is charged from the month the asset is available for use up to the month prior
to disposal.
Depreciation methods, useful lives and residual values of each part of property, plant and equipment that
is significant in relation to the total cost of the asset are reviewed, and adjusted if appropriate, at each
reporting date.
Revaluation surplus
Revaluation of freehold land and buildings on freehold land is carried out with sufficient regularity to
118

ensure that the carrying amount of assets does not differ materially from the fair value. Any revaluation
increase in the carrying amount of freehold land and buildings on freehold land is recognized, net of
tax, in other comprehensive income and presented as a separate component of equity as ‘Revaluation
surplus on property, plant and equipment’ except to the extent that it reverses a revaluation decrease /
deficit for the same asset previously recognised in statement of profit or loss, in which case the increase
is first recognized in statement of profit or loss to the extent of the decrease previously charged. Any
decreases that reverse previous increases of the same asset are first recognized in other comprehensive
income to the extent of the remaining surplus attributable to the asset, all other decreases are charged
to statement of profit or loss. The revaluation reserve is not available for distribution to the Company’s
shareholders. Each year, the difference between depreciation based on the revalued carrying amount of
the asset charged to statement of profit or loss and depreciation based on the asset’s original cost, net
of tax, is reclassified from revaluation surplus to retained earnings.
Gains and losses on disposal
Gains and losses on disposal of assets are taken to the statement of profit or loss, and the related surplus
on revaluation of property, plant and equipment, if any, is transferred directly to retained earnings.
3.2.2 Capital work-in-progress
Capital work-in-progress is stated at cost less impairment loss, if any and consists of expenditure incurred
(including any borrowing cost, if applicable) and advances made in the course of their construction and
installation. Transfers are made to relevant asset category as and when assets are available for intended
use.
Advances paid to suppliers for acquisition of property, plant and equipment including land and building is
also classified under capital work-in-progress.
3.3 Intangible assets
An intangible asset is recognised as an asset if it is probable that future economic benefits attributable to
the asset will flow to the entity and the cost of such asset can be measured reliably.
Costs directly associated with identifiable software that will have probable economic benefits exceeding,
beyond one year, are recognised as an intangible asset.
Indefinite Intangible
These are stated at cost less impairment, if any.
Definite Intangible
a) These are stated at cost less accumulated amortisation and impairment, if any.
b) Intangible assets are amortised on straight line basis over its estimated useful life(s) (refer note 6).
c) Amortisation on additions during the financial year is charged from month in which the asset is
intended to use, whereas no amortisation is charged from the month the asset is disposed-off.
3.4 Financial instruments
3.4.1 Initial measurement of financial asset
The Company classifies its financial assets into following three categories:

119
Annual Report 2020

- fair value through other comprehensive income (FVOCI);

- fair value through profit or loss (FVTPL); and
-
measured at amortised cost.
A financial asset is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are
directly attributable to its acquisition.
Subsequent measurement
Debt Investments at FVOCI These assets are subsequently measured at fair value. Interest /
markup income calculated using the effective interest method, foreign
exchange gains and losses and impairment are recognised in the
statement of profit or loss. Other net gains and losses are recognised
in other comprehensive income. On de-recognition, gains and losses
accumulated in other comprehensive income are reclassified to the
statement of profit or loss.
Equity Investments at FVOCI These assets are subsequently measured at fair value. Dividends
are recognised as income in the statement of profit or loss unless
the dividend clearly represents a recovery of part of the cost of the
investment. Other net gains and losses are recognised in other
comprehensive income and are never reclassified to the statement
of profit or loss.
Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains
and losses, including any interest / markup or dividend income, are
recognised in statement of profit or loss.
Financial assets measured at These assets are subsequently measured at amortised cost using
amortised cost the effective interest method. The amortised cost is reduced by
impairment losses. Interest / markup income, foreign exchange gains
and losses and impairment are recognised in the statement of profit
or loss.

3.4.2 Non-derivative financial assets

All non-derivative financial assets are initially recognised on trade date i.e. date on which the Company
becomes party to the respective contractual provisions. Non-derivative financial assets comprise loans
and receivables that are financial assets with fixed or determinable payments that are not quoted in
active markets and includes trade debts, advances, other receivables and cash and cash equivalents.
The Company derecognises the financial assets when the contractual rights to the cash flows from the
asset expires or it transfers the rights to receive the contractual cash flows in a transaction in which
substantially all of the risk and rewards of ownership of the financial assets are transferred or it neither
transfers nor retains substantially all of the risks and rewards of ownership and does not retain control
over the transferred asset.
3.4.2.1 Trade debts, advances and other receivables
These are classified at amortised cost and are initially recognised when they are originated and measured
at fair value of consideration receivable. These assets are written off when there is no reasonable
expectation of recovery. Actual credit loss experience over past years is used to base the calculation of
expected credit loss.
120

3.4.2.2 Cash and cash equivalents
For the purpose of presentation in statement of cash flows, cash and cash equivalents includes cash in
hand, balances with banks and short term borrowings availed by the Company, which are repayable on
demand and form an integral part of the Company’s cash management.
3.4.3 Financial liabilities
Financial liabilities are initially recognised on trade date i.e. date on which the Company becomes party to
the respective contractual provisions. Financial liabilities include mark-up bearing borrowings and trade
and other payables. The Company derecognises the financial liabilities when contractual obligations
are discharged or cancelled or expire. Financial liabilities other than at fair value through profit or loss
are initially measured at fair value less any directly attributable transaction cost. Subsequent to initial
recognition, these liabilities are measured at amortised cost using effective interest rate method.
3.4.3.1 Mark-up bearing borrowings and borrowing costs
Mark-up bearing borrowings are recognised initially at fair value, less attributable transaction costs.
Subsequent to initial recognition, mark-up bearing borrowings are stated at amortised cost, while the
difference between the cost (reduced for periodic payments) and redemption value is recognised in the
statement of profit or loss over the period of the borrowings using the effective interest rate method.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalised as part of the cost of the relevant asset.
3.4.3.2 Trade and other payables
Trade and other payables are recognised initially at fair value plus directly attributable costs, if any, and
subsequently measured at amortised costs.
3.4.4 Derivative financial instruments - other than hedging
Derivatives that do not qualify for hedge accounting are recognised in the statement of financial position
at estimated fair value with corresponding effect to statement of profit or loss. Derivative financial
instruments are carried as assets when fair value is positive and liabilities when fair value is negative.
3.4.5 Derivative financial instruments - cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in fair
value of the derivative is recognised in other comprehensive income and accumulated in hedging reserve.
Any ineffective portion of changes in fair value of derivative is recognised immediately in statement of
profit or loss. The amount accumulated in equity is removed therefrom and included in the initial carrying
amount of non-financial asset upon recognition of non-financial asset.
The fair value of forward exchange contracts is estimated using appropriate valuation techniques. These
are carried as assets when the fair value is positive and liabilities when the fair value is negative.
3.4.6 Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount is reported in the financial statements
only when the Company has currently legally enforceable right to set-off the recognised amounts and
the Company intends either to settle on a net basis or to realise the assets and to settle the liabilities
simultaneously. The legally enforceable right must not be contingent on future events and must be
enforceable in normal course of business and in the event of default, insolvency or winding up of the
Company or the counter parties.
121
Annual Report 2020

3.5 Stores and spares
Stores and spares are stated at lower of weighted average cost and net realisable value, less provision for
impairment, if any. Items in transit are valued at cost comprising invoice value plus other charges incurred
thereon.
Provision is made for obsolete and slow moving stores and spares older than one year and is recognised
in the statement of profit or loss.
3.6 Stock-in-trade
These are valued at lower of cost and net realisable value. Cost is determined under the weighted
average basis. Cost comprises all costs of purchase, conversion and other costs incurred in bringing the
inventories to their present location and condition. Net realisable value signifies the estimated selling price
in the ordinary course of the business less net estimated cost of completion and selling expenses. Scrap
and by-product is valued at estimated realisable value.
3.7 Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the
statement of profit or loss, except to the extent that it relates to items recognised directly in equity
or in other comprehensive income, in which case it is recognised in equity or in other comprehensive
income respectively. In making the estimates for income taxes currently payable by the Company, the
management considers the current income tax law and the decisions of appellate authorities on certain
issues in the past.
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using
tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or
receivable in respect of previous years.
Provisions for current taxation is based on taxability of certain income streams of the Company under
presumptive / final tax regime at the applicable tax rates and remaining income streams chargeable at
current rate of taxation under the normal tax regime and / or minimum tax liability or alternate corporate
tax as applicable, after taking into account tax credits and tax rebates available, if any.
Deferred tax
Deferred tax is recognised using balance sheet liability method, providing for temporary difference
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities, using the tax rates enacted or
substantively enacted at the reporting date.
The Company recognises a deferred tax asset to the extent that it is probable that taxable profits for
the foreseeable future will be available against which the assets can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
3.8 Staff retirement benefits

3.8.1 Defined benefit plan

The Company provides gratuity benefits to all its permanent employees who have completed their
minimum qualifying period of service i.e. three year (except in case of workers where minimum qualifying
122

period of service is six months). For executives and officers having total service of over twenty years,
the benefit is available at one month’s basic salary (eligible salary) for each completed year of service.
For executives and officers having total service of less than twenty years, the benefit is available at half
month’s basic salary (eligible salary) for each completed year of service. For workers, the benefit is
available at one month’s gross salary less conditional allowances (eligible salary) for each completed
year of service. The Company’s obligation is determined through actuarial valuations carried out under
the ‘Projected Unit Credit Method’. Remeasurements which comprise actuarial gains and losses and the
return on plan assets (excluding interest) are recognized immediately in other comprehensive income.
The Company determines the net interest expense (income) on the net defined benefit liability (asset) for
the period by applying the discount rate used to measure the defined benefit obligation at the beginning
of the annual period to the then-net defined benefit liability (asset), taking into account any changes in
the net defined benefit liability (asset) during the period as a result of contribution and benefit payments.
Net interest expense and current service cost are recognised in statement of profit or loss. The latest
actuarial valuation was conducted at the reporting date by a qualified professional firm of actuaries.
3.8.2 Defined contribution plan
The Company provides provident fund benefits to all its officers. Equal contributions are made, both by
the Company and the employees, at the rate of 8.33% of basic salary and cost of living allowance and
the same is charged to the statement of profit or loss.
3.8.3 Compensated absences
The liability for accumulated compensated absences of employees is recognised in the period in which
employees render service that increases their entitlement to future compensated absences.
3.9 Foreign currency translation
Transactions in foreign currencies are translated into Pak Rupees at the rates of exchange approximating
those prevailing on the date of transactions. Monetary assets and liabilities in foreign currencies are
translated into Pak Rupees at the rates of exchange ruling on the reporting date. Exchange differences
are included in the statement of profit or loss.
3.10 Revenue recognition
- Domestic sales are recognised as revenue when invoiced with the transfer of control of goods, which
coincides with delivery.
- Export sales are recognised as revenue when invoiced with the transfer of control of goods, which
coincides either with the date of bill of lading or upon delivery to customer or its representative, based
on terms of arrangement.
- Revenue from power generation plant on account of sales of surplus electricity is recognised on
transmission of electricity to K-Electric Limited.
- Toll manufacturing / partial manufacturing income is recognised when related services are rendered.

3.11 Income on bank deposits and finance cost

The Company’s finance income and finance cost includes income on bank deposits and finance cost.
Income or expense is recognised using the effective interest rate method.
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Annual Report 2020

3.12 Impairment

3.12.1
Financial assets

The Company recognises loss allowances for Expected Credit Losses (ECLs) in respect of financial
assets measured at amortised cost.
The Company measures loss allowances at an amount equal to lifetime ECLs, except for the following,
which are measured at 12-month ECLs:
- debt securities that are determined to have low credit risk at the reporting date; and
- other debt securities and bank balance for which credit risk (i.e. the risk of default occuring over the
expected life of the financial instrument) has not increased significantly since initial recognition.
Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs.

When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Company considers reasonable and supportable information
that is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on the Company’s historical experience and informed credit assessment
and including forward-looking information.
The Company assumes that the credit risk on a financial asset has increased significantly if it is more than
past due for a reasonable period of time. Lifetime ECLs are the ECLs that result from all possible default
events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result
from default events that are possible within the 12 months after the reporting date (or a shorter period
if the expected life of the instrument is less than 12 months). The maximum period considered when
estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets.
The gross carrying amount of a financial asset is written off when the Company has no reasonable
expectations of recovering of a financial asset in its entirety or a portion thereof. The Company individually
makes an assessment with respect to the timing and amount of write-off based on whether there is a
reasonable expectation of recovery. The Company expects no significant recovery from the amount
written off. However, financial assets that are written off could still be subject to enforcement activities in
order to comply with the Company’s procedures for recovery of amounts due.
The adoption of the expected loss approach has not resulted in any material change in impairment
provision for any financial asset.
3.12.2 Non-financial assets
The carrying amounts of the Company’s non-financial assets, other than deferred tax assets and inventories
are reviewed at each reporting date to determine whether there is any indication of impairment. If such
indication exists, the asset’s recoverable amount, being higher of value in use and fair value less costs
to sell, is estimated. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot
be tested individually are grouped together into the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows of other assets or groups of assets.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable
amount. Impairment losses are recognised in the statement of profit or loss.
124

3.13 Provisions
A provision is recognised in the statement of financial position when the Company has a legal or
constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation and a reliable estimate can be made of the amount of obligation.
Provisions are measured at the present value of expected expenditure, discounted at a pre-tax rate
reflecting current market assessment of the time value of money and the risk specific to the obligation.
However, provisions are reviewed at each reporting date and adjusted to reflect current best estimate.
3.14 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 the obligation
cannot be measured with sufficient reliability.
3.15 Segment reporting
Segment results that are reported to the Company’s Chief Executive Officer (CEO) - the chief operating
decision maker include items directly attributable to a segment as well as those that can be allocated on
a reasonable basis. Unallocated items, if any, comprise mainly corporate assets, head office expenses,
and tax assets and liabilities. Management has determined that the Company has a single reportable
segment and therefore it has only presented entity wide disclosures.
3.16
Dividend and appropriations

Dividend distribution to the Company’s shareholders and appropriations to / from reserves are recognised
in the period in which these are approved.

3.17
Government grants

Government grants are transfers of resources to an entity by a government entity in return for compliance
with certain past or future conditions related to the entity’s operating activities - e.g. a government subsidy.
The definition of “government” refers to governments, government agencies and similar bodies, whether
local, national or international.

The Company recognizes government grants when there is reasonable assurance that grants will be
received and the Company will be able to comply with conditions associated with grants.
Government grants are recognized at fair value, as deferred income, when there is reasonable assurance
that the grants will be received and the Company will be able to comply with the conditions associated
with the grants.
Grants that compensate the Company for expenses incurred, are recognized on a systematic basis in the
income for the year in which the related expenses are recognized. Grants that compensate for the cost
of an asset are recognized in income on a systematic basis over the expected useful life of the related
asset.
A loan is initially recognized and subsequently measured in accordance with IFRS 9. IFRS 9 requires loans
at below-market rates to be initially measured at their fair value - e.g. the present value of the expected
future cash flows discounted at a market-related interest rate. The benefit that is the government grant
is measured as the difference between the fair value of the loan on initial recognition and the amount
received, which is accounted for according to the nature of the grant.
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Annual Report 2020

4. PROPERTY, PLANT AND EQUIPMENT Note 2020 2019

(Rupees in ‘000)
Operating assets 4.1 20,531,016 19,199,273

Capital work-in-progress 4.6 107,338 663,029
20,638,354 19,862,302
4.1 Operating assets

2020
Cost / Revaluation Depreciation
Net book
As at As at As at As at value as at
Additions / Revaluation For the Revaluation Rate
01 July (Disposals) 30 June 01 July (Disposals) 30 June 30 June
Transfers surplus year surplus %
2019 2020 2019 2020 2020
----------------------------------------------------------------- (Rupees in ‘000) -----------------------------------------------------------------
Freehold land 1,622,500 618,941 - - 2,241,441 - - - - - 2,241,441 -
Buildings on
freehold land 2,427,972 922,539 - (4,573) 3,345,938 - 155,733 - (3,074) 152,659 3,193,279 3% - 5%
Plant and machinery* 19,762,845 1,162,399 - (60,909) 20,864,335 4,754,522 1,192,785 - (33,083) 5,914,224 14,950,111 3% - 33%
Furniture, fixture,
computer and
10% -
office equipment 104,738 17,584 - - 122,322 55,771 13,655 - - 69,426 52,896
33%
Vehicles 140,489 43,951 - (23,355) 161,085 48,978 29,978 - (11,160) 67,796 93,289 20%
24,058,544 2,765,414 - (88,837) 26,735,121 4,859,271 1,392,151 - (47,317) 6,204,105 20,531,016
2019
Cost / Revaluation Depreciation
Net book
As at As at As at As at value as at
Additions/ Revaluation For the Revaluation Rate
01 July (Disposals) 30 June 01 July (Disposals) 30 June 30 June
Transfers surplus year surplus %
2018 2019 2018 2019 2019
----------------------------------------------------------------------- (Rupees in ‘000) -----------------------------------------------------------------------
Free hold land 1,460,250 - 162,250 - 1,622,500 - - - - - 1,622,500 -
Buildings on
freehold land 1,473,571 925,558 28,843 - 2,427,972 169,714 89,180 (258,894) - - 2,427,972 3% - 5%
Plant and machinery * 15,653,943 4,165,950 - (57,048) 19,762,845 3,816,377 953,817 - (15,672) 4,754,522 15,008,323 3% - 33%
Furniture, fixture,
computer and
office equipment 83,929 21,101 - (292) 104,738 46,850 9,128 - (207) 55,771 48,967 10% - 33%
Vehicles 113,262 54,143 - (26,916) 140,489 40,733 24,934 - (16,689) 48,978 91,511 20%
18,784,955 5,166,752 191,093 (84,256) 24,058,544 4,073,674 1,077,059 (258,894) (32,568) 4,859,271 19,199,273
* Includes capital spares having cost of Rs. 722 million (2019: Rs. 522 million) and net book value of Rs. 639 million (2019: Rs 449
million).
4.1.1 Additions to plant and machinery include interest and other charges capitalized on loan obtained for
service centre amounting to Rs. 24.3 million (2019: Rs. 238.2 million). Rate of mark-up capitalisation is
6% (2019: 6.56% to 11.36%) per annum.
4.2 The depreciation charge for the year has been allocated as
Note 2020 2019
follows:
(Rupees in ‘000)
Cost of sales 22 1,263,259 965,322

Selling and distribution expenses 23 9,383 7,815
Administrative expenses 24 9,397 6,659
Income from power generation 27.1 110,112 97,263
1,392,151 1,077,059
126

4.3 The revaluation of freehold land and buildings thereon was carried out as of 30 June 2019 by MYK
Associates (Private) Limited (an independent valuer who is located in Karachi) on the basis of their
professional assessment of present market values based on enquiries made about the cost of land of
similar nature, size and location including consideration of current cost of acquisition or construction net
of diminution owing to depreciation, keeping in view the current condition. The revaluation resulted in a
surplus on revaluation amounting to Rs. 450 million which was incorporated in the books of the Company
as at 30 June 2019.
The Company commissioned independent valuation of freehold land and buildings thereon during the
years / periods ended 30 June 2013, 30 June 2016 and 30 June 2019.
The carrying amount of the aforementioned assets as at 30 June 2020, if the said assets had been
carried at historical cost, would have been as follows:
Accumulated Net book

Cost depreciation value
--------------- (Rupees in ‘000) ---------------
Freehold land 1,455,541 - 1,455,541

Buildings on freehold land 3,083,288 543,472 2,539,816
As at 30 June 2020 4,538,829 543,472 3,995,357
As at 30 June 2019 3,001,921 438,591 2,563,330
4.4 Particulars of immovable property (i.e. land and building) in the name of the Company are as follows:
Particulars Location Total Area
Manufacturing plant 399-405, Deh Sharabi, Landhi Town, City 157,058 Sq. Yd
District Government, Karachi
Plot No. LE-73-79,102-103, 112-118, 125-129 653,400 Sq. Ft

Survey # NC.98, near Arabian Country Club,
NIP, Bin Qasim Industrial Park, Karachi
Office premises Office No. 203, 2nd Floor, Beaumont Plaza, 1,794 Sq. Ft
10 Beaumont Road, Karachi
Multan plot Khewat No.(B) 38, 114, 302, Khatooni No. 127, 365,904 Sq. Ft
475, 1114, Mouza Laar Bahawalpur Road,
Multan
127
Annual Report 2020

4.5 Details of property, plant and equipment disposed off, having net book value in excess of
Rs. 500,000 each are as follows:
Original Accumulated Book Sale Gain / (loss) Mode of Particulars of Relationship
cost depreciation value proceeds on disposal disposal buyer with
buyer
------------------------- (Rupees in ‘000) -------------------------
Vehicles
Toyota Corolla 2,049 205 1,844 2,225 381 Negotiation Ittehad Motors Third Party
Toyota Corolla 2,029 710 1,319 2,410 1,091 Negotiation Ittehad Motors Third Party
Suzuki Cultus 1,440 168 1,272 1,305 33 Negotiation Farhat Khan Third Party
Honda City 1,563 599 964 1,800 836 Negotiation Ittehad Motors Third Party
Suzuki Cultus 1,250 354 896 1,150 254 Negotiation Farhat Khan Third Party
Toyota Corolla 1,864 1,025 839 2,000 1,161 As per Policy Mustafa Khan Employee
Toyota Corolla 2,383 1,707 675 - (675) As per Policy Kemal Shoaib Ex-Chairman BOD
Suzuki Mehran 795 133 663 690 28 As per Policy Jamal Hassan Employee
Suzuki Mehran 860 215 645 790 145 Negotiation Yaseen Motors Third Party
Suzuki Mehran 795 172 623 680 57 As per Policy Rafiq Ahmed Employee
15,028 5,288 9,740 13,050 3,311
Plant and
machinery
Inner Shell 21,200 5,744 15,456 1,205 (14,251) Negotiation Saifullah Brothers Third Party
GP-II Equipments 23,196 11,909 11,287 1,648 (9,639) Negotiation Rahim Shah Third Party
44,396 17,653 26,743 2,853 (23,890)
Building
Metal Roof 4,573 3,074 1,499 3,749 2,250 Negotiation Al-Faris Corporation Third Party
4,573 3,074 1,499 3,749 2,250
Total 63,997 26,017 37,982 19,652 (18,329)
4.6 Capital work-in-progress

2020 2019
Cost Cost
As at As at
As at (Transfers) / As at (Transfers) /
Additions 30 June Additions 30 June
01 July Adjustments 01 July Adjustments
2020 2019
2019 2018
------------------------------------------------------- (Rupees in ‘000) -------------------------------------------------------
Land 463,830 155,111 (618,941) - 61,250 463,830 (61,250) 463,830
Building 51,446 938,958 (990,404) - 696,439 280,565 (925,558) 51,446
Plant and machinery 123,861 1,033,924 (1,082,630) 75,155 2,782,039 1,391,653 (4,049,831) 123,861
Furniture, fixture, computer

and office equipment 23,892 20,269 (17,584) 26,577 8,148 36,845 (21,101) 23,892
Vehicles - 49,557 (43,951) 5,606 3,453 50,690 (54,143) -
663,029 2,197,819 (2,753,510) 107,338 3,551,329 2,223,583 (5,111,883) 663,029
128

5 LEASES 2020
Note (Rupees in ‘000)
5.1 Right-of-use assets
As at 01 July 2019 152,996

Additions -
Disposals (85,131)
Depreciation expense 5.2 (18,488)
As at 30 June 2020 49,377
As at 30 June 2019 -
5.2 The depreciation charge on right-of-use assets for the year has been allocated as follows:
Cost of sales -
Selling and distribution expenses 13,492
Administrative expenses 4,996
18,488
5.3 Lease liabilities
Rental contracts are made for a fixed period subject to renewal upon mutual consent of Company and
lessor. Wherever practicable, the Company seeks to include extension option to provide operational
flexibility. Lease terms are negotiated on an individual basis and contain a wide range of different terms
and conditions. Management exercises significant judgement in determining whether these extension
and termination options are reasonably certain to be exercised. The future lease payments have been
discounted using average borrowing rate as at 01 July 2019.
Set out below the carrying amount of lease liabilities and the movements during the year:
As at 01 July 2019 152,996

Additions -
Disposals (85,131)
Interest expense 8,071
Payments (21,083)
As at 30 June 2020 54,853
Current 16,755
Non - current 38,098
54,853
Lease liabilities are payable as follows:

Minimum Interest Present value
lease of minimum
payments lease
payments
(Rupees in ‘000)
Less than one year 22,979 6,224 16,755
Between one and five years 45,498 7,400 38,098
More than five years - - -
129
Annual Report 2020

6. INTANGIBLE ASSETS
2020
Cost Amortisation Net book
As at As at As at As at value as
For the at Rate%
01 July Additions 30 June 01 July 30 June 30 June
year
2019 2020 2019 2020 2020
------------------------------ (Rupees in ‘000) -------------------------------
20% -
Computer software 23,267 - 23,267 20,531 1,539 22,070 1,197 33.33%
2019
Cost Amortisation Net book
As at As at As at As at value as
For the at Rate%
01 July Additions 30 June 01 July 30 June 30 June
year
2018 2019 2018 2019 2019
----------------------------- (Rupees in ‘000) -----------------------------
20% -
Computer software 21,706 1,561 23,267 19,141 1,390 20,531 2,736 33.33%
6.1 Total amount of amortisation has been charged to cost of sales in these financial statements.
7. STORES AND SPARES Note 2020 2019

(Rupees in ‘000)
Stores 192,999 218,599

Spares 540,904 419,434
Loose tools 8,471 7,772
742,374 645,805
Less: Provision for obsolescence against stores and spares (73,414) (34,831)
668,960 610,974
8. STOCK-IN-TRADE
Raw material - in hand 6,655,805 1,919,579

Raw material - in transit 432,047 4,811,283
Work-in-process 2,532,031 1,942,101
Finished goods 5,290,148 5,850,831
Scrap material 211,509 118,741
By-products 10,666 5,424
15,132,206 14,647,959
9. TRADE DEBTS - considered good
- Secured 9.1 385,099 151,932

- Unsecured 630,645 716,103
1,015,744 868,035
9.1 This represents trade debts arising on account of export sales of Rs. 358.61 million (2019: Rs. 68.93
million) which are secured by way of Export Letters of Credit and Rs. 26.48 million (2019: Rs. 83 million)
arising on account of domestic sales which are secured by way of Inland Letters of Credit.
9.2 Trade debts includes receivable from IIL Australia PTY Limited - a related party amounting to Rs. 29.64
million (2019:Rs.19.12 million) and Sumitomo Corporation - an associated company amounting to
Rs.94.67 million (2019: Rs. Nil ) which is not past due as at year end.
9.2.1 The maximum aggregate amount due from the related parties at the end of any month during the year
is Rs. 374.2 million (2019: Rs. 682.8 million).

130

10. ADVANCES, TRADE DEPOSITS AND PREPAYMENTS Note 2020 2019

(Rupees in ‘000)
Advances to suppliers - considered good 79,246 64,594

Trade deposits 15,036 14,617
Margin against shipping guarantee 6,807 16,255
Prepayments 34,515 13,522
135,604 108,988
10.1 These advances and trade deposits are non-interest bearing.
11. TAXATION - net
Tax receivable as at 01 July 906,326 427,137

Tax payments / adjustments made during the year 807,473 1,046,761
1,713,799 1,473,898
Less: Provision for tax - current year 28 (680,615) (567,572)
Tax receivable as at 30 June 1,033,184 906,326
12. CASH AND BANK BALANCES
Cash in hand 269 -

Cash at bank - in current accounts in local currency 91,641 56,292
Cash at bank - in deposit accounts in foreign currency 14,286 346,620
106,196 402,912
12.1 Mark-up rate on bank accounts ranges from 6.50% to 11.25% (2019: 4.75% to 10.25%) per annum. The
deposits account are placed with bank under conventional banking arrangements.
12.2 Cash at bank represents 100% balance deposited in conventional bank accounts (2019: 100%).
13. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
2020 2019 2020 2019

(Number of shares) (Rupees in ‘000)
30,000 30,000 Fully paid ordinary shares of Rs. 10

each issued for cash 300 300
417,716,700 417,716,700 Fully paid ordinary shares of 4,177,167 4,177,167

Rs. 10 each issued against
transfer of net assets
17,253,300 17,253,300 Fully paid ordinary shares of 172,533 172,533

Rs. 10 each issued as right
shares
435,000,000 435,000,000 4,350,000 4,350,000
13.1 As at 30 June 2020, the Holding Company and Sumitomo Corporation (an associated company) held
245,055,543 (2019: 245,055,543) and 39,477,657 (2019: 39,477,657) ordinary shares respectively of
Rs. 10 each.
131
Annual Report 2020

14. REVALUATION SURPLUS ON PROPERTY, PLANT AND EQUIPMENT
Note 2020 2019

Freehold land (Rupees in ‘000)
Balance as at 01 July 785,901 623,651

Revaluation during the year - 162,250
Balance as at 30 June 785,901 785,901
Buildings on freehold land

Revaluation during the year - 287,737
Transferred to retained earnings in respect of incremental
depreciation charged during the year (47,778) (29,179)
Balance as at 30 June 659,588 707,366
Related deferred tax liability 14.2 (191,281) (205,137)
Balance as at 30 June - net of deferred tax 1,254,208 1,288,130
14.1 The revaluation surplus on property, plant and equipment is a capital reserve and is not available for
distribution to the shareholders of the Company in accordance with section 241 of the Companies Act,
2017.
14.2 Movement in related deferred tax liability Note 2020 2019

(Rupees in ‘000)

Effect of revaluation - 83,444
Tax effect on incremental depreciation transferred to
retained earnings (13,856) (8,462)
Deferred tax liability as at 30 June 191,281 205,137
15. LONG TERM FINANCE - secured
CONVENTIONAL
Long Term Finance Facility 1,205,940 1,460,418
Long term finance - 266,666
ISLAMIC
Long Term Finance Facility 545,908 -
Long term finance 4,759,598 5,550,000
Deferred Income - Government Grant 15.2 18,370 -
6,529,816 7,277,084
Current portion of long term finances shown under current liabilities
CONVENTIONAL
Long Term Finance Facility (250,024) (237,721)
Long term finance - (222,222)
ISLAMIC
Long Term Finance Facility (36,614) -
Long term finance (1,189,921) (450,000)
Deferred Income - Government Grant 15.2 (11,075) -
(1,487,634) (909,943)
5,042,182 6,367,141
132

15.1 Long term finances utilised under mark-up arrangements

Sale Purchase Number of Date of Rate of 2020 2019
price price installments and maturity / mark-up (Rupees in '000)
(Rupees in ‘000) commencement repayment per annum
date
Conventional
i) Long Term Finance Facility
(LTFF) - Local currency
Bank Al Habib
Assistance for plant and 1,000,000 4,675,000 32 quarterly 01 June 2026 1.00% over 615,440 740,441
machinery installments SBP
16 October 2016 Refinance rate
United Bank Limited

Assistance for plant and 1,000,000 2,501,562 16 half yearly 28 November 1.00% over 590,500 719,977
machinery installments 2026 SBP
12 December 2016 Refinance rate
Islamic
i) Long Term Finance Facility
(LTFF) - Local currency
Meezan Bank Limited 700,000 36 quarterly 02 June 2030 3.00% over 545,908 -
Assistance for plant and installments SBP
machinery 17 October 2020 Refinance rate
Conventional
i) Long Term Finance - Local
currency
MCB Bank Limited
Assistance for plant and 800,000 1,112,512 18 quarterly 07 January 2020 0.15% over - 266,666
machinery installments 06 months
30 June 2016 KIBOR
Islamic
i) Long Term Finance (SBP
Payroll Refinance) - Local
currency
Faysal Bank Limited 200,000 167,968 8 quarterly 01 January 2023 1.00% over 167,968 -
Payroll finance facility installments SBP
01 April 2021 Refinance rate
ii) Long Term Finance - Local
currency
Meezan Bank Limited 1,000,000 1,743,300 01 half yearly & 24 June 2020 0.20% over - 250,000
Assistance for plant and 14 quarterly 03 months
machinery installments KIBOR
26 December 2016
Habib Bank Limited

Assistance for plant and 5,000,000 5,625,000 10 half yearly 05 December 0.10% over 4,410,000 4,900,000
machinery installments 2024 06 months
05 Jun 2020 KIBOR
Bank Al Habib Limited

Assistance for plant and 500,000 575,512 30 equal monthly 28 June 2021 0.15% over 200,000 400,000
machinery installments 03 months
28 December 2018 KIBOR
6,529,816 7,277,084
15.1.1 The above loans are secured against joint pari passu charge over fixed assets of the Company (such as
land, building, plant and machinery etc.) with aggregate carrying amount of Rs. 13,577 million.
15.1.2 In relation to above borrowings, the Company needs to observe certain financial covenants (such as
debt servicing ratio, current ratio, debt equity ratio etc.) and other non financial covenants as specified
in the agreement with respective lenders which are complied with as of the reporting date.

15.1.3 During the year, mark-up paid on conventional long term finance is Rs. 103.13 million (2019: Rs. 124.26
million) whereas mark-up paid on Islamic long term finance is Rs. 824.27 million (2019: Rs. 215.41
million).
133
Annual Report 2020

15.2 The Company has also obtained long term loans of Rs. 167.967 million for financing its salaries and
wages under SBP Refinance Scheme for payment of wages and salaries, earmarked from running
finance limit, which is secured against first Joint Pari Passu Hypothecation charge over stock and book
debts. The rate of markup on these loans are at 1% per annum. These loans are for two and half years
and are repayable in eight equal quarterly installments of Rs.20.995 million commencing from 31 March
2021. The facility available under the above arrangement amounted to Rs. 200 million of which the
amount remained unutilized as at 30 June 2020 was Rs. 32.03 million (2019: Nil).

Due to the effects of pandemic, State Bank of Pakistan took various steps to support the economy.
SBP introduced a refinance scheme for payment of salaries and wages at subsidized rate of borrowing.
The company has obtained the said borrowing from Faysal Bank Limited (FBL) at subsidized rate in
three tranches on 20 May 2020, 04 June 2020 and 25 June 2020 at 1% concessional interest rate
which is repayable by January 2023 in 8 quarterly installments to FBL under the SBP scheme.
Government grant amounting to Rs. 18.37 million has been recorded during the year ended 30 June
2020 and Rs. 0.718 million has been amortised during the year. In accordance with the terms of the
grant, the company is prohibited to lay-off the employees atleast for three months from the period April
2020 to June 2020 of the grant.

16. DEFERRED TAXATION

Deferred tax liability comprises (deductible) / taxable temporary differences in respect of the following:
2020 2019
(Rupees in ‘000)
Taxable temporary difference
Accelerated tax depreciation 2,074,572 2,257,816
Revaluation surplus on buildings 14 191,281 205,137
Deductible temporary differences

Provision for compensated absences (2,711) (3,293)
Unrealised exchange losses (17,070) (17,517)
Provision for infrastructure cess and government levies (244,210) (207,413)
Provision for obsolescence against stores and spares (17,329) (4,112)
Provision for lease liabilities (12,947) -
Difference of corporate tax and minimum tax (472,140) -
1,499,446 2,230,618
17. TRADE AND OTHER PAYABLES
Trade creditors 17.1 5,183,883 2,525,391

Payable to provident fund 17.2 - -
Accrued expenses 2,231,861 1,742,862
Provision for infrastructure cess 17.3 1,320,075 1,058,166
Provision for government levies 17.4 2,047 329
Short term compensated absences 11,485 12,237
Workers’ Profit Participation Fund 17.5 1,290 17,024
Workers’ Welfare Fund 149,278 219,266
Others 21,360 37,020
8,921,279 5,612,295
134

17.1 Trade creditors includes Rs. 2,614 million (2019: Rs.Nil ) payable to a related party.
17.2 The investments out of provident fund have been made in accordance with the provisions of Section 218
of the Companies Act, 2017 and the conditions specified thereunder.
17.3 This represents provision against fifty percent amount guaranteed to Excise and Taxation Officer (refer
note 20.1.1).
2020 2019
(Rupees in ‘000)
Opening balance 1,058,166 774,813

Provided during the year 261,909 283,353
Closing balance 1,320,075 1,058,166
17.4 Provision for government levies
Opening balance 329 230

Provided during the year 6,951 350
Payment during the year (5,233) (251)
Closing balance 2,047 329
17.5 Workers’ Profit Participation Fund
Opening balance 17,024 24,171

Allocation for the year 26 22,064 197,024
Interest on workers’ profit participation fund 471 1,053
Payment during the year (38,269) (205,224)
Closing balance 1,290 17,024
18. CONTRACT LIABILITIES
Sales commission payable 5,865 50,183

Advances from customers - unsecured 18.1 1,371,531 1,208,828
1,377,396 1,259,011
18.1 Advance from customers includes Rs. Nil (2019: Rs. 0.17 million) received from a related party for supply
of finished goods.

19. SHORT TERM BORROWINGS - secured
Conventional
Short term finance under mark-up arrangement 19.1 164,222 5,881,084
Short-term borrowing under Money Market scheme
Maturing after three months 750,000 -
Maturing within three months 6,100,000 500,000
19.1 6,850,000 500,000
Short term finance under Export Refinance Scheme 19.2 1,175,628 1,984,265
Islamic
Short term finance under Running Musharakah 19.3 2,410,698 253,870
Short term finance under Islamic Export Refinance Scheme 19.4 919,856 -
Short term finance under Term Murabaha 19.5 - 1,572,000
11,520,404 10,191,219
135
Annual Report 2020

19.1 The facilities for short term finance available from various commercial banks are for the purpose of
meeting working capital requirements. The rates of mark-up on these finances range from 7.87% to
11.72% (2019: 7.12% to 13.90%) per annum.
19.2 The Company has short term running finance facility under Export Refinance Scheme of the State Bank
of Pakistan from a commercial bank. The rate of mark-up on this facility is 3% (2019: 2.1% to 3%) per
annum.
19.3 The Company has obtained facilities for short term finance under Running Musharakah. The rate of
profit is 8.46% to 11.84% (2019: 7.12% to 13.10%) per annum. This facility matures within twelve
months and is renewable.
19.4 The Company has availed this year short term running finance facility under Islamic Export Refinance
Scheme of the State Bank of Pakistan from a commercial bank. The rate of mark-up on this facility is
3% per annum.
19.5 The Company has obtained facilities under short term finance under Term Murabaha from Standard
Chartered Bank Pakistan Limited amounting to Rs.Nil (2019: 1,572 million) for meeting working capital
requirements. The tenure of the loan is six months from 20 June 2019 to 19 December 2019 at 13.25%
(2019: 13.25%) per annum.
19.6 As at 30 June 2020, the unavailed facilities from the above borrowings amounted to Rs. 7,879.59
million (2019: Rs. 11,459 million).
19.7 During the year, mark-up paid on conventional short term borrowings is Rs. 1,035.7 million (2019: Rs.
641.74 million) whereas mark-up paid on Islamic short term borrowings is Rs. 291.79 million (2019: Rs.
143.24 million).
19.8 The above facilities are secured by way of joint pari passu charge and ranking over current and future
moveable assets of the Company having aggregate charge amounting to Rs. 26,650 million.
20. CONTINGENCIES AND COMMITMENTS
20.1 Contingencies
Description of the factual basis of the Name of the Principal Date

proceedings and relief sought court parties instituted
20.1.1 The Sindh Finance Act, 1994 prescribed an Sindh High I.S.L. v/s 15-May-12
infrastructure fee at the rate of 1% of the C&F value Court Secretary Excise
of all goods entering or leaving the province of Sindh and Taxation /
via sea or air. The Sindh High Court on petition filed Federation of
by the petitioner, passed an interim order directing Pakistan
that every company subsequent to 27 December
2006 is required to clear the goods on paying
50% of the fee amount involved and furnishing a
guarantee / security for the balance amount. Bank
guarantees issued as per the above mentioned
interim order amount to Rs.1,330.5 million (30 June
2019: Rs. 1,111.5 million), have been provided to
the Department. However, a provision to the extent
of amount utilized from the limit of guarantee has
also been provided for by the Company on prudent
basis (Note 17.3). Subsequently through Sindh
Finance Act 2015 and 2016, the legislation has
136


doubled the rate of Sindh infrastructure cess. The
Company has obtained stay against these and the
ultimate dispute has been linked with the previous
infrastructure cess case.
20.1.2 The Federal Government issued Gas Infrastructure Sindh High I.S.L. v/s OGRA 8-Jan-12
Development Cess (GIDC) Acts in the years 2011, Court / SSGC /
2014 and 2015. All GIDC Acts have been subject Federation of
of thorough debate and consideration at honorable Pakistan
High Courts of the Country as well as the Supreme
Court of Pakistan.
On 12 August 2020, the Supreme Court of Pakistan
issued its verdict and held that “the levy imposed
under Gas Infrastructure Development Cess Act,
2015 is in accordance with the provisions of the
Constitution”. The Supreme Court has also held that
“the provisions of Section 8 of the Act, which give
retrospective effect to the charge and recovery of
‘Cess’ levied from the year 2011 are also declared
to be valid being within the legislative competence of
the Parliament.”
The Management has reviewed adequacy of the
provisions made in financial statements for the
periods up to the year ended 30 June 2020 and
recorded the entire liability under the GIDC Act
2015.
Further, the Company has not recognized GIDC
amounting to Rs. 737 million (2019: Rs. 935 million)
pertaining to period from 01 July 2011 to 30 June
2020 with respect to its captive power plant from
which power generation is supplied to K-Electric
Limited. Management considers that, in the event
such levy is imposed, it shall recover GIDC from
K-Electric Limited through fuel adjustments after
getting requisite approval from National Electric
Power Regulatory Authority (NEPRA).
20.1.3 Oil and Gas Regulatory Authority (OGRA) revised Sindh High I.S.L vs 19-Jan-17
the gas tariff to Rs. 600 Per MMBTU vide its Court OGRA / SSGC
notification dated 30 December 2016, increasing / Federation of
the rate by Rs. 112 per MMBTU disregarding the Pakistan
protocol laid down in OGRA Ordinance, 2002. The
Company filed a suit before the Sindh High Court
(the Court) challenging the increase in gas tariff.
The Court granted a stay, subject to submission
of security for the differential amount with the Nazir
of the court. The Company has issued cheques
amounting to Rs. 424.8 million (30 June 2019: Rs.
137
Annual Report 2020


424.8 million) in favour of the Nazir of the Court
upto September 2018. The Company, on prudent
basis, has also accrued this amount in these
financial statements. OGRA has further revised the
gas tariff to Rs. 780 per MMBTU vide its notification
dated 04 October 2018, further increasing the rate
by Rs. 180 per MMBTU. The Company has filed a
petition before the court challenging such further
revision and the matter is partially heard. Pending
the decision on the matter, the Company is settling
the bills at the revised rate which has further been
revised to Rs. 1,021 from 01 July 2019.
20.1.4 The Company filed a constitutional petition in the Sindh High I.S.L vs Sindh 6-Sep-17
Sindh High Court against notice to the Company Court Revenue Board
for payment of Sindh Workers Welfare Fund under / Government of
the Sindh Workers Welfare Fund Act, 2014. Stay Sindh/ Federation
was obtained on the ground that the Company is a of Pakistan /
trans-provincial establishment operating industrial Governing body
and commercial activities across Pakistan and is of the Workers
liable to pay Workers Welfare Fund under Federal Welfare Fund /
Workers Welfare Fund Ordinance, 1971. Federal Board of
Revenue
20.1.5 A petition was filed before the Sindh High Court Sindh High I.S.L vs Federation 4-Nov-19
seeking order for the issuance of quota for Court of Pakistan/
concessionary import under SRO 565; release of Director IOCO
85,000 tons of HRC arrived at the Port in November / The Chief
2019 and for future shipments. Collector (South)
SHC granted release of 85,000 tons of HRC
against submission of bank guarantee for the
differential amount of duty & taxes amounting
to Rs. 1,651 million. In a seperate order SHC
instructed the authorities to allow provisional quota
subject to submission of bank guarantee for the
difference of duty & taxes. As ordered, the Input-
Output Co-efficient Organisation (IOCO) is issuing
quota equivalent to ordered/shipped quantity of
raw material on case to case basis.
20.1.6 Guarantees issued in favour of Sui Southern Gas Company Limited by the bank amounted to Rs.
404.67 million (2019: Rs. 404.67 million) as a security for supply of gas.
20.1.7 Guarantees issued in favour of Pakistan State Oil Company Limited issued by bank on behalf of the
Company amounted to Rs.24 million (2019: Rs. 53 million).
20.1.8 Guarantees issued in favour of K-Electric Limited issued by bank on behalf of the Company amounted
to Rs. 8.67 million (2019: Rs. 8.67 million).
20.1.9 Guarantees issued in favour of Wah Industries issued by bank on behalf of the Company amounted to
Rs. Nil (2019: Rs. 59.11 million).
138

20.1.10 Guarantees issued in favour of Collector of Customs issued by bank on behalf of the Company amounted
to Rs.3,394.41 million (2019: Rs. 4.39 million).

20.2 Commitments
20.2.1 Capital expenditure commitments outstanding as at 30 June 2020 amounted to Rs. 78.46 million
(2019: Rs. 446.22 million).
20.2.2 Commitments under Letters of Credit for raw materials and spares as at 30 June 2020 amounted to
Rs.8,418.94 million (2019: Rs. 11,843 million).
20.2.3 The unavailed facilities for opening Letters of Credit and Guarantees from banks as at 30 June 2020
amounted to Rs.17,052.60 million (2019: Rs.10,822 million) and Rs.229.14 million (2019: Rs.1,206
million) respectively.
2020 2019
21. NET SALES (Rupees in ‘000)
Local 46,634,706 63,384,497

Export 8,993,458 3,973,179
55,628,164 67,357,676
Sales tax (6,661,868) (9,130,525)

Trade discounts (391,963) (84,915)
Sales commission (492,396) (657,882)
(7,546,227) (9,873,322)
48,081,937 57,484,354
21.1 DISAGGREGATION OF REVENUE
As required for the financial statements, the Company disaggregated revenue recognised from contracts
with customers into categories that depict how the nature, amount, timing and uncertainty of revenue
and cash flows are affected by economic factors.
In the following table, revenue is disaggregated by primary geographical markets and major product
lines:
2020 2019
(Rupees in ‘000)
Primary geographical markets
Local 39,088,479 53,511,176
Asia 3,900,336 1,835,632
Europe 15,668 3,258
Australia 114,397 108,995
Americas 3,631,696 1,578,786
Africa 1,331,361 446,507
48,081,937 57,484,354
Major product lines
Cold rolled 18,657,935 21,066,956
Galvanized product 27,642,405 33,395,353
By-product 1,781,597 3,022,045
48,081,937 57,484,354
139
Annual Report 2020

2020 2019
(Rupees in ‘000)
22. COST OF SALES
Opening stock of raw material 1,919,579 5,930,245

Purchases 44,749,219 47,915,850
46,668,798 53,846,095
Closing stock of raw material 8 (6,655,805) (1,919,579)

40,012,993 51,926,516
Manufacturing overheads
Salaries, wages and benefits 22.1 572,704 546,146
Electricity, gas and water 1,709,862 1,351,254
Insurance 28,505 27,628
Security and janitorial 31,773 28,397
Depreciation 4.2 1,263,259 965,322
Amortisation 6.1 1,539 1,390
Stores and spares consumed 139,676 123,545
Provision for obsolescence against stores and spares 38,583 15,278
Repairs and maintenance 94,994 103,401
Postage, telephone and stationery 7,346 8,252
Vehicle, travel and conveyance 33,203 37,672
Internal material handling 12,580 39,260
Environment controlling expense 3,099 2,225
Computer stationery and software support fees 11,063 8,566
Partial manufacturing expense 6,286 -
Sundries 28,872 19,020
3,983,344 3,277,356
43,996,337 55,203,872
Work-in-process
Opening stock 1,942,101 1,187,243
Closing stock 8 (2,532,031) (1,942,101)
(589,930) (754,858)
Cost of goods manufactured 43,406,407 54,449,014
Finished goods, scrap material and by-products:

Opening stock 5,974,996 2,561,284
Closing stock 8 (5,512,323) (5,974,996)
462,673 (3,413,712)
43,869,080 51,035,302
22.1 Salaries, wages and benefits include Rs. 30.69 million (2019: Rs. 21.65 million) in respect of staff
retirement benefits.
140

23. SELLING AND DISTRIBUTION EXPENSES 2020 2019

(Rupees in ‘000)

Rent, rates and taxes 37,170 32,465
Insurance 2,107 1,490
Depreciation 4.2 9,383 7,815
Depreciation on right-of-use asset 5.2 13,492 -
Postage, telephone and stationery 4,660 3,709
Freight and forwarding charges 634,473 420,180
Sales promotion 69,616 102,497
Others 12,814 11,255
894,334 701,827
23.1 Salaries, wages and benefits include Rs. 5.43 million (2019: Rs. 5.33 million) in respect of staff retirement
benefits.
2020 2019
(Rupees in ‘000)
24. ADMINISTRATIVE EXPENSES

Rent, rates and taxes 347 4,738
Insurance 2,409 2,661
Depreciation 4.2 9,397 6,659
Depreciation on right-of-use asset 5.2 4,996 -
Security and janitorial services 669 681
Printing and stationery 2,601 4,716
Computer stationery and software support fees 365 229
Postage and communication 1,253 1,158
Legal and professional charges 60,683 84,501
Certification and registration charges 6,886 3,217
Directors’ fee 7,525 5,625
Others 9,316 8,719
262,811 284,404
24.1 Salaries, wages and benefits include Rs. 7.93 million (2019: Rs. 10.12 million) in respect of staff retirement
benefits.
141
Annual Report 2020

25. FINANCE COST 2020 2019

(Rupees in ‘000)
Conventional
- Interest on long term finance 92,651 123,455
- Interest on short term borrowings 1,060,467 650,317
1,153,118 773,772
Islamic
- Mark-up on running musharkah 197,431 110,979
- Mark-up on Islamic Export Refinance 6,069 -
- Mark-up on term musharkah - 102,652
- Mark-up on diminishing musharkah 689,513 279,445
- Mark-up on murhabaha 104,014 6,277
997,027 499,353
Bank charges 34,475 15,137

Interest on Workers’ Profit Participation Fund 471 1,053
Exchange Loss on FE 121,645 -
Interest on lease liabilities 8,071 -
2,314,807 1,289,315
26. OTHER OPERATING CHARGES
Auditors’ remuneration 26.1 2,547 2,786

Donations 26.2 19,200 45,477
Workers’ Profit Participation Fund 17.5 22,064 197,024
Workers’ Welfare Fund (22,947) 63,287
Exchange loss - net 313,393 225,227
334,257 533,801
26.1 Auditors’ remuneration
Audit fee 1,629 1,629

Half yearly review 443 443
Other services including certifications 234 583
Out of pocket expenses 241 131
2,547 2,786
26.2 Donations
26.2.1 Donations to following Organizations and Trusts exceed 10% of total amount of donations made or Rs.1
million whichever is higher:
2020 2019
(Rupees in ‘000)
Sindh Institute of Urology and Transplantation - 10,000

SINA Health Education and Welfare Trust - 6,000
Amir Sultan Chinoy Foundation 6,000
The Citizens Foundation 5,600 5,200
Indus Valley School of Art and Architecture - 5,000
Karachi Relief Trust (for COVID-19) 10,000 -
15,600 32,200
142

26.2.2 Donations in which directors are interested are as follows:
Name of Director Interest Name and address of the Amount donated

in Donee Donee 2020 2019
(Rupees in ‘000)
Mr. Samir M. Chinoy Chairman Amir Sultan Chinoy Foundation
101, Beaumont Plaza, Beaumont Road, Karachi - 6,000
Mr. Kamran Y. Mirza Trustee Karwan-e-Hayat Plot # SC-54, Darusalam Housing

- 2,200
Society, Sector 31-F, Korangi, Karachi
Mr. Riyaz T. Chinoy Director The Citizens Foundation Plot No. 20, Sector # 14,
Near Brookes Chowrangi, Korangi Industrial Area, - 5,200
Karachi.
Mr. Zakaullah Khan Trustee Al-Rehmat Benevolent Trust Mohallah Kakey

1,000 -
Zaieyan, Pasrur, Sialkot.
Mr. Towfiq H. Chinoy Chairman Karachi Relief Trust 101, Beaumont Piaza, 10
10,000 -
Beaumont Road Karachi
Syed Salim Raza Trustee Layton Rehmatullah Benevolent Trust 37-C, Sunset
Lane No. 4 Phase II Extension, 24th Commercial - 1,000
Street D.H.A, Karachi
11,000 14,400
27. OTHER INCOME Note 2020 2019

(Rupees in ‘000)
Income from non-financial assets
Income from power generation 27.1 20,515 20,828
Loss on sale of property, plant and equipment (12,729) (29,610)
Rental income 2,526 1,948
Others 19,049 44,399
29,361 37,565
Income / return on financial assets
- Income on bank deposit - conventional 5,444 1,848

- Government grant 718 -
6,162 1,848
35,523 39,413
27.1 Income from power generation
Net sales 601,071 407,031
Cost of electricity produced:

Salaries, wages and benefits 27.1.1 22,563 21,190
Electricity, gas and water 1,339,509 1,003,530
Depreciation 4.2 110,112 97,263
Stores and spares consumed 20,983 24,930
Repairs and maintenance 63,406 49,834
Sundries 1,393 4,107
1,557,966 1,200,854
Less: Self consumption (977,410) (814,651)

580,556 386,203
Income from power generation 20,515 20,828
27.1.1 Salaries, wages and benefits include Rs. 1.50 million (2019: Rs. 0.83 million) in respect of staff retirement
benefits.
143
Annual Report 2020

27.1.2 The Company has electricity power generation facility at its premises. The Company has generated
electricity in excess of its requirements which is supplied to K-Electric Limited under an agreement. The
agreement is valid for period up to 20 years w.e.f. 31 August 2007.

2020 2019
28. TAXATION Note (Rupees in ‘000)
Current - for the year 680,615 567,572

- for prior years - -
11 680,615 567,572
Deferred (733,295) 447,173

(52,680) 1,014,745
28.1 Relationship between income tax expense 2020 2019 2020 2019
and accounting profit (Effective tax rate %) (Rupees in ‘000)
Tax at the enacted tax rate 29.00 29.00 128,230 1,066,944

Effect on income under final tax regime (39.65) (2.04) (175,342) (75,130)
Effect of adjustments on account of change in - 5.50 - 202,426
rates and proportionate etc.
Effect of super tax - 1.38 - 50,914
Effect of tax credit (1.26) (6.02) (5,568) (221,485)
Others - (0.24) - (8,924)
(11.91) 27.58 (52,680) 1,014,745
29. EARNINGS PER SHARE - BASIC AND DILUTED 2020 2019

(Rupees in ‘000)
Profit after taxation for the year 494,851 2,664,373
(Number)
Weighted average number of ordinary shares in issue
during the year 435,000,000 435,000,000
(Rupees)
Earnings per share 1.14 6.12
29.1 There is no dilutive impact on earnings per share.
30. CHANGES IN WORKING CAPITAL 2020 2019

(Rupees in ‘000)
(Increase) / decrease in current assets

Stores and spares (96,569) (187,255)
Stock-in-trade (484,247) (515,217)
Trade debts (147,709) (223,245)
Receivable from K-Electric Limited (KE) (396) (6,334)
Advances, trade deposits and prepayments (26,616) (43,227)
Sales tax receivable (1,720,946) (827,311)
(2,476,483) (1,802,589)
Increase / (decrease ) in current liabilities
Trade and other payables 3,428,121 1,412,864
951,638 (389,725)
144

31. STAFF RETIREMENT BENEFITS
The actuarial valuation of gratuity was carried out during the year by an independent actuary under
projected unit credit method.
The following significant assumptions has been used:

2020 2019
Financial assumptions
Rate of discount 9.25% 14.25%
Expected rate of salary increase 8.25% 13.25%
Demographic assumptions
Mortality rate SLIC 2001-2005 SLIC 2001-2005
Rates of employee turnover Moderate Moderate
Retirement assumption Age 60 years Age 60 years
The amounts recognised in statement of financial position are as follows:

(Rupees in ‘000)
Present value of defined benefit obligation 185,614 149,405

Fair value of plan assets (192,852) (149,405)
Asset as at 30 June (7,238) -
Movements in the present value of defined benefit obligation

Present value of defined benefit obligation - beginning of the year 149,405 125,399
Current service cost 25,379 20,384
Interest cost 20,974 11,725
Remeasurements: Actuarial losses on obligation (5,702) 8,191
Benefits paid (4,442) (16,294)
Present value of defined benefit obligation 185,614 149,405
Movements in the fair value of plan assets

Fair value of plan assets - beginning of the year 149,405 125,399
Interest income on plan assets 22,657 12,961
Return on plan assets, excluding interest income 1,614 (20,195)
Benefits paid (4,442) (16,294)
Contribution to fund 23,618 47,534
Fair value of plan assets 192,852 149,405
Movement in net defined benefit liability - -

Opening balance
Re-measurements recognised in other comprehensive income
during the year (7,316) 28,386
Expense chargeable to statement of profit or loss 23,696 19,148
Contribution paid during the year (23,618) (47,534)
Closing balance (7,238) -
Amount recognised in total comprehensive income
The following amounts have been charged in respect of these benefits to statement of profit or loss and
other comprehensive income:

145
Annual Report 2020

2020 2019
(Rupees in '000)
Component of defined benefit costs

recognized in statement of profit or loss
Net interest cost
- Interest cost on defined benefit obligation 20,974 11,725
- Return on plan assets (22,657) (12,961)
23,696 19,148
Component of defined benefit costs (re-measurement)
recognised in other comprehensive income
Re-measurements: Actuarial (gain) / loss on obligation
- Loss due to change in experience adjustments (5,702) 8,191
- Return on plan assets (1,614) 20,195
Net re-measurement recognised in other comprehensive income (7,316) 28,386
Total defined benefit cost recognised in statement of

profit or loss and other comprehensive income 16,380 47,534
Components of defined benefit cost for the next year

Interest expense on defined benefit obligation 16,649 20,588

Return on plan assets (18,411) (22,349)
Net interest cost (1,762) (1,761)
Cost for the next year to be recognised in statement of profit or loss 24,902 23,618
Composition of fair value of plan assets
2020 2019
Fair value Percentage Fair value Percentage
(Rupees in ‘000) (Rupees in ‘000)
Government securities 163,342 85% 89,045 60%

Shares - Listed 28,153 15% 35,675 24%
Bank deposits 1,357 0% 24,685 16%
Fair value of plan assets 192,852 100% 149,405 100%
Sensitivity analysis on significant actuarial assumptions: 2020 2019

(Rupees in ‘000)
Actuarial liability
Discount rate + 100 basis points 165,510 133,914
Discount rate - 100 basis points 209,618 167,787
Salary increases + 100 basis points 209,973 168,074
Salary increases - 100 basis points 164,854 133,406
(Number in years)
Weighted average duration of the Defined Benefit Obligation 12 11
The sensitivity analysis prepared presented above may not be representative of the actual change in the defined
benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some
of the assumptions may be correlated.
146

32. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
Chief Executive Directors Executives

2020 2019 2020 2019 2020 2019
------------------- (Rupees in ‘000) -------------------
Managerial remuneration 27,146 25,376 14,800 31,000 131,252 110,777

Bonus 9,048 8,459 3,600 3,000 36,919 28,976
Retirement benefits 3,392 3,171 1,350 1,125 13,888 10,858
Rent,utilities, leave
encashment etc. 13,573 12,688 7,289 15,500 65,626 55,834
Directors’ fees - - 7,525 5,625 - -
53,159 49,694 34,564 56,250 247,685 206,445
Number of persons 1 1 10* 10* 42 36
*From 01 July 2019 to 25 September 2019, there were 2 Executive Directors and 8 Non-Executive
Directors. From 25 September 2019 to 30 June 2020, there was 1 Executive Director and 9 Non-
Executive Directors.

32.1 In addition to the above, Chief Executive, Directors and certain Executives are provided with free use of
Company maintained vehicles in accordance with the Company’s policy.
32.2 Fee paid to non-executive directors is Rs.7.52 million (2019: Rs. 5.62 million) on account of meetings
attended by them.
32.3 Reimbursement of chariman’s expenses was Rs. 2.46 million (2019: Rs. 1.12 million).
33. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Financial risk management
The Board of Directors of the Company has overall responsibility for the establishment and oversight of
the Company’s risk management framework. The Company has exposure to the following risks from its
use of financial instruments:
- Credit risk
- Liquidity risk
- Market risk
Risk management framework

The Board meets frequently throughout the year for developing and monitoring the Company’s risk
management policies. The Company’s risk management policies are established to identify and analyse
the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in
market conditions and the Company’s activities. The Company, through its standards and procedures,
aims to develop a disciplined and constructive control environment in which all employees understand
their roles and obligations.
The Board Audit Committee oversees how management monitors compliance with the Company’s risk
management policies and procedures, and reviews the adequacy of the risk management framework in
relation to the risks faced by the Company.
147
Annual Report 2020

Exposure to credit risk

The carrying amounts of financial assets as disclosed in note 34 represent the maximum credit
exposure.

The Company’s principal credit risk arises from trade debts, receivable from K-Electric Limited (KE),
deposits, margin against shipping guarantee and bank balances. The maximum exposure to credit risk
at the end of the reporting period is the carrying amount of each class of financial asset reported in
these financial statements. Receivable from K-Electric Limited (KE) is monitored on an on-going basis
in accordance with a settlement agreement. The Company does not expect to incur loss there against.
The Company’s exposure to credit risk arising from trade debtors is mainly influenced by the individual
characteristics of each customer. Majority of the Company’s sales are made against receipts in advance
from customers. The Company has no major concentration of credit risk with any single customer.
The majority of the trade customers have been transacting with the Company for several years. The
Company establishes an allowance for impairment where it considers recoveries are not probable.
33.1.1 Trade debts and receivable from K-Electric Limited (KE) amounting to Rs. 98.06 million (2019: Rs.
122.9 million) at the reporting date belong only to domestic region whereas trade debts amounting to
Rs. 957.07 million (2019: Rs. 784 million) belong to foreign customers.
33.1.2
Impairment losses

The aging of trade debtors and receivable from K-Electric Limited (KE) at the reporting date was:
2020 2019
Gross Impairment Gross Impairment
------------------------ (Rupees in ‘000) ------------------------
Not past due 692,079 - 905,848 -

Past due 1-60 days 277,984 - 671 -
Past due 61 + days 85,074 - 513 -
Total 1,055,137 - 907,032 -
33.1.3 Management believes that the unimpaired balances that are past due are still collectible in full, based on
historical payment behaviour and review of financial strength of respective customers. Further, certain
trade debtors are secured by way of Export Letter of Credit and Inland Letter of Credit which can be
called upon if the counter party is in default under the terms of the agreement.
33.1.4 Cash is held only with reputable banks with high quality external credit rating assessed by external
rating agencies. Following are the credit ratings of banks with which balances are held or credit lines
available:
Bank Rating Rating

Agency Short term Long term
Habib Bank Limited JCR-VIS A1+ AAA

United Bank Limited JCR A1+ AAA
Faysal Bank Limited PACRA A1+ AA
VIS A1+ AA
Bank Al Habib Limited PACRA A1+ AA+
MCB Bank Limited PACRA A1+ AAA
MCB Islamic Bank Limited PACRA A1 A
Standard Chartered Bank (Pakistan) Limited PACRA A1+ AAA
Meezan Bank Limited VIS A1+ AA+
Bank Al Falah Limited PACRA AA+ A1+
JCR AA+ A1+
Dubai Islamic Bank Limited VIS A1+ AA
Habib Metropolitan Bank Limited PACRA A1+ AA+
Allied Bank Limited PACRA A1+ AAA
Samba Bank Limited VIS A1 AA
Industrial and Commercial Bank of China S&P - A
148

Concentration of credit risk
Concentrations arise when a number of counterparties are engaged in similar business activities, or
activities in the same geographical region, or have economic features that would cause their ability to
meet contractual obligations to be similarly affected by changes in economic, political or other conditions.
Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting
a particular industry. In order to avoid excessive concentrations of risk, management focuses on
the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and
managed accordingly. Management does not consider that it has any concentration of credit risk at the
reporting date.
33.2
Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated
with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk arises
because of the possibility that the Company could be required to pay its liabilities earlier than expected
or there is difficulty in raising funds to meet commitments associated with financial liabilities as they fall
due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Company’s reputation. The Company
ensures that it has sufficient cash to meet expected working capital requirements by having credit lines
available. The following are the contractual maturities of financial liabilities, including interest payments
and excluding the impact of netting agreements:
2020
Carrying Contractual Six months Six to One to More than
amount cash flows or less twelve five years five years
months
----------------------------------- (Rupees in ‘000) -----------------------------------
Non-derivative financial liabilities

Long term financing 6,529,816 (7,786,656) (956,214) (981,121) (5,527,538) (321,783)
Short-term borrowings 11,520,404 (11,520,404) (11,520,404) - - -
Accrued mark-up 223,770 (223,770) (223,770) - - -
Trade and other payables 5,205,243 (5,205,243) (5,205,243) - - -
Contract liabilities 5,865 (5,865) (5,865) - - -
Unpaid dividend - - - - - -
Unclaimed dividend 8,433 (8,433) (8,433) - - -
23,493,531 (24,750,371) (17,919,929) (981,121) (5,527,538) (321,783)
2019
Carrying Contractual Six months Six to One to More than
amount cash flows or less twelve five years five years
months
----------------------------------- (Rupees in ‘000) -----------------------------------
Non-derivative financial liabilities

Long term financing 7,277,084 (9,436,108) (801,396) (777,885) (6,623,429) (1,233,399)
Short-term borrowings 10,191,219 (10,191,219) (10,191,219) - - -
Accrued mark-up 304,707 (304,707) (304,707) - - -
Trade and other payables 2,562,411 (2,562,411) (2,562,411) - - -
Contract liabilities 50,183 (50,183) (50,183) - - -
Unpaid dividend 2,385 (2,385) (2,385) - - -
Unclaimed dividend 6,453 (6,453) (6,453) - - -
20,394,442 (22,553,466) (13,918,754) (777,885) (6,623,429) (1,233,399)
149
Annual Report 2020

33.1 Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instru-
ment fails to meet its contractual obligations without considering the fair value of the collateral available
there against.
33.2.1 The contractual cash flows relating to the above financial liabilities have been determined on the basis
of mark-up rate effective as at 30 June. The rate of mark-up has been disclosed in respective notes to
these financial statements.
33.2.2 Long term finance from various banks contains certain loan covenants. A breach of covenant, in future,
may require the Company to repay the respective loans earlier than as directed in the above table.
33.3 Market risk
Market risk is the risk which arises due to changes in market prices, such as foreign exchange rates,
interest rates and equity prices, that will affect the Company’s income or the value of its holdings of
financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return. The Company is exposed to
currency risk and interest rate risk only.
33.3.1
Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
Exposure to currency risk
The Company is exposed to currency risk on trade debts, bank balances and trade creditors that are
denominated in a currency other than the respective functional currency of the Company, primarily U.S.
Dollar. The Company’s exposure to foreign currency risk is as follows:
2020 2019
Rupees US Dollars Rupees US Dollars
--------------------- (Amounts in ‘000) ---------------------
Bank Balance 14,286 85 346,620 2,128

Trade debts 957,076 5,698 784,049 4,814
Trade creditors (4,918,629) (29,217) (2,307,880) (14,138)
Balance sheet exposure (3,947,267) (23,434) (1,177,211) (7,196)
The following significant exchange rates applied during the year:
Average rates Reporting date rate

2020 2019 2020 2019
---------------------------- (Rupees) ----------------------------
US Dollars to PKR 158.45 136.25 168.35 163.24
Sensitivity analysis
A 10 percent strengthening / (weakening) of the Pak Rupee against the US Dollar at 30 June 2020
would have (decreased) / increased the profit by Rs.441.75 million (2019: Rs. 85.3 million). This analysis
assumes that all other variables, in particular interest rates, remain constant and the analysis is performed
on the same basis as done in prior year.
150

33.3.2 Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Interest rate exposure arises from short and long term
borrowings from banks.
a) Cash flow sensitivity analysis for variable rate instruments
The Company holds various variable rate financial instruments amounting to Rs.16,298 million
(2019: Rs. 16,008 million) exposing the Company to cash flow interest rate risk. A change of 100
basis points as at 30 June 2020 would have increased / (decreased) profit after tax and equity
for the year by Rs.115.72 million (2019: Rs. 113.66 million). This analysis assumes that all other
variables, in particular foreign currency rates, remain constant.
b) Cash flow sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through
profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or
loss.
Management assessed that the fair values of cash and cash equivalents and short-term deposits,
receivable from K-Electric Limited, trade debts, trade payables, short term borrowings and other
current liabilities approximate their carrying amounts largely due to short-term maturities of these
instruments. For long term deposit assets and long term liabilities, management considers that
their carrying values approximates fair value owing to credit standing of counterparties and interest
payable on borrowings is at market rate.
33.4 Reconciliation of movements of liabilities to cash flows arising from financing activities
2020
Short term
borrowings Other
Long term Unappropriated
used for cash short term Total
finance profit
management borrowings
purpose
------------------------------- (Rupees in ‘000) --------------------------------
Balance as at 01 July 2019 6,634,954 3,672,543 7,465,513 7,240,140 25,013,150
Changes from financing cash flows

Repayment of loan - - (1,461,144) - (1,461,144)
Proceeds from long term loan - - 713,876 - 713,876
Payments / (repayments) - net - (710,781) - - (710,781)
Dividend paid - - - (652,905) (652,905)
Total changes from financing activities - (710,781) (747,268) (652,905) (2,110,954)
Other changes - interest cost

Interest expense - 1,532,643 782,164 - 2,314,807
Interest paid - (1,493,360) (901,666) - (2,395,026)
Changes in running finance (3,560,034) - - - (3,560,034)
Total loan related other changes (3,560,034) 39,283 (119,502) - (3,640,253)
Total equity related other changes - - - 534,372 534,372
Balance as at 30 June 2020 3,074,920 3,001,045 6,598,743 7,121,607 19,796,315
151
Annual Report 2020

2019
Short term
borrowings Other
Long term Unappropriated
used for cash short term Total
finance profit
management borrowings
purpose
------------------------------- (Rupees in ‘000) --------------------------------
Balance as at 01 July 2018 5,175,482 3,329,218 8,084,059 6,532,704 23,121,463
Changes from financing cash flows

Repayment of loan - - (1,292,876) - (1,292,876)
Proceeds from long term loan - - 600,000 - 600,000
Payments / (repayments) - net - 269,437 - - 269,437
Dividend paid - - - (1,961,119) (1,961,119)
Total changes from financing activities - 269,437 (692,876) (1,961,119) (2,384,558)
Other changes - interest cost

Interest expense - 886,415 402,900 - 1,289,315
Interest paid - (812,527) (328,570) - (1,141,097)
Changes in running finance 1,459,472 - - - 1,459,472
Total loan related other changes 1,459,472 73,888 74,330 - 1,607,690
Total equity related other changes - - - 2,668,555 2,668,555
Balance as at 30 June 2019 6,634,954 3,672,543 7,465,513 7,240,140 25,013,150
During the year Rs. 24.3 million (2019: Rs. 238.2 million) has been capitalized as borrowing cost as disclosed in note 4.1.1 to
these financial statements and the related amount is not yet due for payment.
34. MEASUREMENT OF FAIR VALUES
Management engages an independent external expert / valuer to carry out valuation of its non-financial
assets (i.e. Land and Building) and obtains rate from financial institution to value derivative financial
instruments. Involvement of external valuers is decided by management. Selection criteria include
market knowledge, reputation, independence and whether professional standards are maintained.
When measuring the fair value of an asset or a liability, the Company uses valuation techniques that
are appropriate in the circumstances and uses observable market data as far as possible. Fair values
are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
For assets and liabilities that are recognised in the financial statements at fair value on a recurring
basis, the management recognises transfers between levels of the fair value hierarchy at the end of
the reporting period during which the change has occurred. There were no transfers between different
levels of fair values mentioned above.

152

2020
Carrying amount Fair value
Amortised Liabilities Other Level 1 Level 2 Level 3
Cost at fair value financial
through liabilities
profit or loss
------------------------------- (Rupees in ‘000) --------------------------------
Financial assets not

measured at fair value
Trade debts 1,015,744 - - - - -

Receivable from K-Electric Limited (KE) 39,393 - - - - -
Trade deposits and Margin against
shipping guarantee 21,843 - - - - -
Cash and bank balances 106,196 - - - - -
Total financial assets 1,183,176 - - - - -
Financial liabilities not

Long term finance - - 5,042,182 - - -

Current maturity of long term finance - - 1,487,634 - - -
Trade and other payables - - 5,205,243 - - -
Short term borrowings - - 11,520,404 - - -
Contract liabilities - - 5,865 - - -
Unpaid dividend - - - - - -
Unclaimed dividend - - 8,433 - - -
Accrued mark-up - - 223,770 - - -
Total financial liabilities - - 23,493,531 - - -
2019
Carrying amount Fair value
Amortised Liabilities Other Level 1 Level 2 Level 3
Cost at fair value financial
through liabilities
profit or loss
------------------------------- (Rupees in ‘000) --------------------------------
Financial assets not
Trade debts 868,035 - - - - -

Receivable from K-Electric Limited (KE) 38,997 - - - - -
Trade deposits and Margin against
shipping guarantee 30,872 - - - - -
Cash and bank balances 402,912 - - - - -
Total financial assets 1,340,816 - - - - -
Financial liabilities not

Long term finance - - 6,367,141 - - -

Current maturity of long term finance - - 909,943 - - -
Trade and other payables - - 2,562,411 - - -
Short term borrowings - - 10,191,219 - - -
Contract liabilities - - 50,183 - - -
Unpaid dividend - - 2,385 - - -
Unclaimed dividend - - 6,453 - - -
Accrued mark-up - - 304,707 - - -
Total financial liabilities - - 20,394,442 - - -
The fair value of land and building on freehold land are determined by an independent valuer based on price per square meter and current
replacement cost method adjusted for depreciation factor for existing assets in use. The resulting fair value is a level 3 fair value measurement.
153
Annual Report 2020

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities
measured at fair value:

Assets measured Date of Valuation approach and inputs used Inter-relationship between
at fair value valuation significant unobservable
inputs and fair value
measurement
Revalued property, plant
and equipment
- Land and Building 30 June 2019 The valuation model is based on price per The fair value are subject to
square meter and current replacement cost change owing to changes in input.
method adjusted for depreciation factor for However, management does not
the existing assets in use. In determining expect material sensitivity to the
the valuations for land and buildings, the fair values arising from the non-
valuer refers to current market conditions, observable inputs.
structure, current replacement cost,
sale prices of comparable land in similar
location adjusted for differences in key
attributes such as land size and inquires
with numerous independent local estate
agents / realtors in the vicinity to establish
the present market value. The fair valuation
of land and building is considered to
represent a level 3 valuation based on
significant non-observable inputs being the
location and condition of the assets.
The fair value of land and buildings is a level 3 recurring fair value measurement. A reconciliation of the
opening and closing fair value is provided below:
(Rupees In ‘000)
Opening net book value 4,050,472
Additions during the year 1,541,480
Depreciation for the year (155,733)
Revaluation during the year -
Closing net book value 5,436,219
35. CAPITAL MANAGEMENT

The objective of the Company when managing capital is to safeguard its ability to continue as a going
concern so that it can continue to provide returns for shareholders and benefits for other stakeholders
and to maintain a strong capital base to support the sustained development of its businesses. The
Company intends to manage its capital structure by monitoring return on capital, as well as the level of
dividends to ordinary shareholders.
36. TRANSACTIONS WITH RELATED PARTIES
The related parties comprise the Holding Company, associated undertakings, directors of the Company,
key management personnel and staff retirement funds. The Company continues to have a policy
whereby transactions with related parties are entered into at commercial terms, approved policy and
at rate agreed under a contract/arrangement/agreement. The contribution to defined contribution plan
(provident fund) are made as per the terms of employment and contribution to the defined benefit plan
(gratuity fund) are made on the basis of latest actuarial advice. Remuneration of key management
personnel are in accordance with their terms of contractual engagements.
Key management personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the Company. The Company considers its Chief Executive Officer, Chief
Financial Officer, Company Secretary, Non-Executive Directors and departmental heads to be its key
management personnel. There are no transactions with key management personnel other than their
terms of employment / entitlement.
154

36.1 Transactions with related parties Note 2020 2019

(Rupees in ‘000)
Holding Company
Sales 1,572,505 9,484,967
Purchases 210,249 47,772
Rent expense 47,265 27,080
Shared resources cost 65,178 52,615
Reimbursement of expenses 5,072 8,320
Partial manufacturing - Sales 6,431 54
Corporate, legal, marketing & IT services 20,165 25,396
Dividend paid 367,583 1,102,750
Other related parties

Sales 953,922 460,029
Purchases 21,552,257 35,784,829
Dividend paid 59,216 177,649
Rental income 36.4 2,525 1,948
Reimbursement of expenses 3,913 3,067
Services 133,760 57,784
Key management personnel

Remuneration 230,493 244,682
Staff retirement funds

Contribution paid 50,222 47,257
Non-executive directors
Directors’ fee 7,525 5,625
Reimbursement of Chairman’s expenses 2,459 1,117
36.2 The following are the related parties with whom the Company had entered into transaction or have
arrangement / agreement in place:
Name of the Related Party Relationship and percentage of Shareholding
International Industries Limited Holding Company holds 56.3% (2019: 56.3%)

Sumitomo Corporation (incorporated in Japan) Associated Company holds 9% (2019:9%)
Pakistan Cables Limited Associated Company due to common directorship
German Pakistan Chamber of Commerce And Industry Associated Company due to common directorship
Intermark (Private) Limited Associated Company due to common directorship
Standard Chartered Bank (Pakistan) Limited Associated Company due to common directorship
Faysal Bank Limited Associated Company due to common directorship
Jubilee Life Insurance Company Limited Associated Company due to common directorship
Jubilee General Insurance Company Limited Associated Company due to common directorship
Beaumont Plaza Owners / Occupants Welfare Association Associated Company due to common directorship
IIL Australia PTY Limited (incorporated in Australia) Associated Company due to common directorship

36.3 Outstanding balances with related parties have been separately disclosed in trade debts, trade and
other payables and contract liabilities respectively. These are settled in ordinary course of business.
36.4 Rental income is recognized on straight line basis over the term of the respective lease agreement.
155
Annual Report 2020

37. ANNUAL PRODUCTION CAPACITY 2020 2019

(Metric Tonnes)
The production capacity at the year end was as follows:

Galvanising 462,000 462,000
Cold rolled steel strip 1,000,000 1,000,000
Colour coated 84,000 84,000
The actual production for the year was:

Galvanising 230,023 330,350
Cold rolled steel strip 424,355 584,408
Colour coated 21,166 15,789
The name-plate capacities of the plants are determined based on a certain product mix. The actual
production mix is different. Actual production was as per market demand.

38. OPERATING SEGMENT

38.1 These financial statements have been prepared on the basis of a single reportable segment.
38.2 Revenue from sales of steel products represents 99% (2019: 99%) of total revenue whereas remaining
represent revenue from sale of surplus electricity to K-Electric Limited (KE). The Company does not
consider sale of electricity to KE as separate reportable segment as the power plant of the Company
is installed primarily to supply power to its Galvanizing plant and Cold Rolling plant and currently any
excess electricity is sold to KE.
38.3 All non-current assets of the Company as at 30 June 2020 are located in Pakistan.
38.4 83.83% (2019: 93.88%) of sales of steel are domestic sales whereas 16.17% (2019: 6.12%) of sales
are export / foreign sales.
38.5 Geographic Information 2020 2019

(Rupees in ‘000)
Domestic Sales 46,634,706 60,962,022

Export Sales 8,993,458 3,973,179
55,628,164 64,935,201
38.6 Management considers that revenue from its ordinary activities are shariah compliant.
39. NUMBER OF EMPLOYEES
The detail of number of employees are as follows:

2020 2019
(Number of employees)
Total employees of the Company at the year end 692 724

Average employees of the Company during the year 702 708
156

40. GENERAL

40.1 Non-adjusting events after reporting date
The Board of Directors of the Company in their meeting held on 25 August 2020 has not proposed any
dividend for the year ended 30 June 2020 (2019: Rs. 1.5 per share amounting to Rs. 652.5 million).
41. DATE OF AUTHORISATION FOR ISSUE
These financial statements were authorised for issue on 25 August 2020 by the Board of Directors of
the Company.

157
Stakeholders
Information
Annual Report 2020
Ownership
On June 30, 2020 there were 5878 members on the record of the Company.
FINANCIAL CALENDAR
RESULTS
Year ended June 30, 2020 Approved on August 25, 2020
Announced on August 26, 2020
Third quarter ended March 31, 2020 Approved on April 14, 2020
Announced on April 15, 2020
Half year ended December 31, 2019 Approved & Announced on January 27, 2020
First quarter ended September 30, 2019 Approved & Announced on October 15, 2019
DIVIDEND
Final – Cash (2019) Approved on August 19, 2019

Entitlement date Sept. 17, 2019
Statutory limit upto which payable October 15, 2019
Paid on October 14, 2019
LATEST ANNUAL REPORT ISSUED ON September 7, 2020
13TH ANNUAL GENERAL MEETING September 29, 2020
TENTATIVE DATES OF FINANCIAL RESULTS 2020-21

To be Announced on
For the Period
1st Quarter 19/10/2020

2nd Quarter 28/01/2021
3rd Quarter 20/04/2021
Annual Accounts 24/08/2021
160
Pattern of Shareholding
As at June 30, 2020
NO. OF HAVING SHARES

SHARES HELD PERCENTAGE
SHAREHOLDERS FROM TO
537 1 100 27,034 0.0062

1400 101 500 618,372 0.1422
1048 501 1,000 999,483 0.2298
1652 1,001 5,000 4,701,910 1.0809
485 5,001 10,000 3,896,307 0.8957
179 10,001 15,000 2,330,028 0.5356
104 15,001 20,000 1,914,979 0.4402
73 20,001 25,000 1,730,157 0.3977
42 25,001 30,000 1,210,212 0.2782
55 30,001 40,000 1,977,876 0.4547
55 40,001 50,000 2,578,025 0.5926
30 50,001 60,000 1,698,616 0.3905
31 60,001 80,000 2,154,232 0.4952
35 80,001 100,000 3,271,273 0.7520
13 100,001 120,000 1,474,200 0.3389
13 120,001 140,000 1,683,000 0.3869
11 140,001 160,000 1,652,700 0.3799
10 160,001 180,000 1,709,775 0.3931
17 180,001 200,000 3,286,500 0.7555
19 200,001 300,000 5,009,179 1.1515
14 300,001 400,000 4,796,511 1.1026
7 400,001 500,000 3,461,000 0.7956
4 500,001 600,000 2,217,846 0.5098
5 600,001 700,000 3,233,662 0.7434
3 700,001 800,000 2,231,600 0.5130
6 800,001 900,000 5,190,900 1.1933
1 900,001 1,000,000 958,930 0.2204
5 1,000,001 1,200,000 5,606,200 1.2888
1 1,200,001 1,400,000 1,348,400 0.3100
3 1,400,001 1,600,000 4,578,700 1.0526
3 1,600,001 1,800,000 5,084,500 1.1689
2 1,800,001 2,000,000 3,753,100 0.8628
2 2,000,001 2,200,000 4,220,149 0.9701
1 2,200,001 2,600,000 2,582,700 0.5937
1 2,600,001 2,900,000 2,655,600 0.6105
1 2,900,001 3,000,000 2,983,344 0.6858
1 3,000,001 3,200,000 3,161,500 0.7268
1 3,200,001 4,300,000 3,295,500 0.7576
2 4,300,001 4,400,000 8,698,000 1.9995
1 4,400,001 4,600,000 4,600,000 1.0575
1 4,600,001 5,600,000 5,537,800 1.2731
1 5,600,001 20,000,000 5,720,500 1.3151
1 20,000,001 39,000,000 20,626,500 4.7417
1 39,000,001 40,000,000 39,477,657 9.0753
1 40,000,001 250,000,000 245,055,543 56.3346
5878 Company Total 435,000,000 100.0000
161
Annual Report 2020
Categories of Shareholders
As at June 30, 2020
No. of No. of
Particulars Percentage
Shareholders Shares held
Sponsor / Holding Company 1 245,055,543 56.335

Directors & Spouses and other Family members 18 18,015,493 4.141
Associated Company 1 39,477,657 9.075
Govt. Financial Institutions 1 1,053,000 0.242
Banks, DFI & NBFI 11 11,139,200 2.561
Insurance Company 7 6,384,700 1.468
Mutual Funds 41 17,499,413 4.023
Public & Other Companies 142 12,856,378 2.955
Retirement Funds & Charitable Trusts 22 2,006,819 0.461
Strategic Investor 1 20,626,500 4.742
Foreign Companies 5 1,927,405 0.443
Modarabas & Others 6 59,000 0.014
General Public / Individuals - Local 5,244 52,651,694 12.104
General Public / Individuals - Foreign 378 6,247,198 1.436
Total 5,878 435,000,000 100.000
Key Shareholding
As at June 30, 2020
Information on shareholding required under reporting framework is as follows:
No. of No. of
%
Shareholder Shares
Sponsor / Holding Company
International Industries Ltd. 1 245,055,543 56.3346
Directors & spouses 12 11,722,344 2.6948
Sponsoring Family Members 6 6,293,149 1.4467
Associated Company
Sumitomo Corporation 1 39,477,657 9.0753
Government Financial Institutions

CDC - Trustee National Investment (Unit) Trust 1 1,053,000 0.2421
Foreign Corporate Investors

JFE Steel Corporation 1 20,626,500 4.7417
Others 5 1,927,405 0.4431
22,553,905 5.1848
Executives 4 59,563 0.0137
Members having 5% or more of voting rights

Name of Shareholder Shares Held Percentage
INTERNATIONAL INDUSTRIES LIMITED 245,055,543 56.3346
SUMITOMO CORPORATION 39,477,657 9.0753
Shares Trading by Directors / Executives

5,840,500 shares were traded by Directors, Executives or their private owned companies during the financial year
July 1, 2019 to June 30, 2020.
162
Shareholders Composition
0.48
June-2020 56.33 4.14 9.08 4.74 11.04 14.18
0.62
June-2019 56.33 3.72 9.08 4.74 12.13 13.38
0.38
June-2018 56.33 3.69 9.08 4.74 15.37 10.41
0.32
June-2017 56.33 3.60 9.08 4.74 16.06 9.86
0.35
June-2016 56.33 3.73 9.08 4.65 4.74 10.43 10.69
0 20 40 60 80 100
IIL Directors & their Family Members

Sumitomo Corp. IFC
JFE Steel Govt. Fin. Institution
Other Companies Individuals
ISL SHARE PRICES-TREND V/S VOLUME TRADED

FY 2019-20
420 14100000
400 13600000
380 13100000
12600000
HIGH & CLOSING PRICE / SHARE
360 12100000
340 11600000
320 11100000
10600000
300 10100000
280 9600000
260 9100000
8600000
240 8100000
220 7600000
200 7100000
6600000
180 6100000
160 5600000
140 5100000
120 4600000
4100000
100 3600000
80 3100000
60 2600000
2100000
40 1600000
20 1100000
0 600000
100000
Volume MAXIMUM CLOSING
163
Annual Report 2020
Notice of Annual General Meeting

For the year ended June 30, 2020
Notice is hereby given to the members that the 13th Annual General Meeting of the Company will be held on
September 29, 2020 at 11.00 a.m. at Karachi to transact the following business. Due to the need of required
social distancing to avoid the spread of COVID-19 pandemic, shareholders are requested to attend the meeting
through video conference facility arranged by the Company as per the instructions given in the notes section.
Ordinary Business
1. To receive, consider and adopt the audited accounts of the Company for the year ended June 30, 2020
and the Directors’ Report and Auditors’ Report thereon.
As required under Section 223 (6) of the Companies Act 2017, Financial Statements of the Company have
been uploaded on website of the Company which can be downloaded from the following link:
http://www.isl.com.pk/investors/financials/financial-results-and-accounts
2. To appoint statutory auditors of the Company for the year ending June 30, 2021 and fix their remuneration.
The present auditors, KPMG Taseer Hadi & Co., Chartered Accountants, are retiring at the conclusion
of the 13th AGM of the Company. The Board Audit Committee and the Board of Directors recommends
that A. F. Ferguson & Co., Chartered Accountants (a member firm of the PwC network), be appointed as
statutory auditors of the Company for the year ending June 30, 2021 at a fee to be mutually agreed and
reimbursements of out of pocket expenses at actuals.
Special Business
3. To consider and if thought fit to approve the holding of “office of profit” by Mr. Samir M. Chinoy, an elected
Director of the International Steels Limited as the Chief Operating Officer of the Company and that for this
purpose the following resolution be passed as and by way of ordinary resolution:
“RESOLVED THAT approval be and is hereby granted to Mr. Samir M. Chinoy, an elected Director of the
International Steels Limited, who is in full time employment with the Company, for holding an office of
profit as Chief Operating Officer, as an executive of the Company and the payment of remuneration to him
for his period of service in accordance with his contract of service and the applicable service rules of the
Company (including without limitation salary, bonuses, incentives, perquisites, allowances and retirement
benefits)”.
4. To transact with the permission of the Chair any other business which may be transacted at an Annual
General Meeting.
By Order of the Board
M. Irfan Bhatti
Company Secretary & Head of Legal Affairs
Karachi: September 7, 2020
Notes
1. Participation in the AGM proceeding via the video conference facility:

Due to current COVID-19 situation, the AGM proceedings shall be held via video conference facility only.
Shareholders interested to participate in the meeting are requested to email their Name, Folio Number, Cell
Number, and Number of shares held in their name with subject “Registration for International Steels Limited
AGM” along with valid copy of both sides of Computerized National Identity Card (CNIC) at investors@isl.
com.pk. Video link and login credentials will be shared with only those members whose emails, containing
all the required particulars, are received at least 48 hours before the time of AGM.
Shareholders can also provide their comments and questions for the agenda items of the AGM at the email
164
address [email protected]
2. The Share Transfer Books of the Company shall remain closed from September 20, 2020 to September
29, 2020 both days inclusive) to establish the right to attend annual general meeting.
3. A Member entitled to attend, speak and vote at the Annual General Meeting is entitled to appoint another
member as his/her proxy to attend, speak and vote on his/her behalf.
4. An instrument appointing proxy and the power of attorney or other authority under which it is signed
or a notarized certified copy of the power or authority must be deposited at the registered office of the
Company at least 48 hours before the time of the meeting. Form of Proxy is enclosed. CDC Account
Holders will further have to follow the under-mentioned guidelines as laid down in Circular 1 dated 26
January 2000 issued by the Securities and Exchange Commission of Pakistan:
a) For Attending AGM

i) In case of individuals, the account holder or sub-account holder whose securities and their registration
details are uploaded as per the Regulations, shall produce proof of his / her identity by showing original
Computerized National Identity Card (CNIC) at the time of attending the meeting.
ii) In case of corporate entity, the Board of Directors’ resolution / power of attorney with specimen
signature of the nominee shall be produced (unless it has been provided earlier) at the time of the
meeting.
b) For Appointing Proxy

i) In case of individuals, the account holder or sub-account holder whose registration details are
uploaded as per the CDC regulations shall submit the proxy form as per the above requirement.
ii) Attested copies of CNIC of the beneficial owners and the proxy shall be furnished with the proxy
form. The proxy shall produce his original CNIC at the time of the meeting.
For CNIC / IBAN & Zakat

5. Members are requested to provide their International Banking Account Number (IBAN) together with a
copy of the Computerized National Identity Card (CNIC) to update our records.
6. Members are requested to submit declaration (CZ-50) as per Zakat & Ushr Ordinance 1980 for zakat
exemption to advise change in address, if any.
Statement of Material Facts

U/s 134(3) of the Companies Act, 2017
Item-3 - Approval of the holding of Office of Profit by Mr. Samir M. Chinoy
Statement as required by the Section 134(3) of the Companies Act, 2017 in respect of the Special Business to
be considered at the Annual General meeting is appended below;
In accordance with Section 171(1)( c ) (i) of the Companies Act, 2017, approval of the shareholders is requested
for Mr. Samir M. Chinoy, an elected Director of the International Steels Limited and who is in full time employment
with the Company, for holding an office of profit as Chief Operating Officer, as an executive of the Company and
the payment of remuneration to him for his period of service in accordance with his contract of service and the
applicable service rules of the Company (including without limitation salary, bonuses, incentives, perquisites,
allowances and retirement benefits).
Video Conferencing
Pursuant to Section 132(3) of the Companies Act, 2017, if the Company receives consent from members,
holding in aggregate 10% or more shareholding residing in a geographical location different from the town
where the registered office is situated, to participate in the meeting through video conference at least 7 days
165
Annual Report 2020
prior to the date of Annual General Meeting, the Company will arrange video conference facility subject to
availability of such facility in that city.
To avail this facility please send a written request, which must include the following information, to the Company
Secretary and the Share Registrar of the Company i.e. M/s. THK Associates (Pvt) Ltd., 40-C, Block-6, PECHS,
Shahrah-e-Faisal, Karachi at their respective email addresses [email protected] and [email protected].
pk not later than 7 days before the date of 13th annual general meeting.
Request to Avail Video Conferencing Facility
1. Folio No. / CDC Investors A/c No./ Sub-A/c No. ______________________________

2. Name of Shareholder : ______________________________
3. No. of Shares held at the 1st day of the
Book Closure to establish the right to attend AGM: ______________________________
4. Name of City where Video facility is required: ______________________________
____________________
Signature of the member
Unclaimed Dividends & Bonus Shares
Shareholders, who by any reason, could not claim their dividend are advised to contact our Shares Registrar
M/s THK Associates (Pvt) Ltd. to collect / enquire about their unclaimed dividends, if any.
Electronic Dividend Mandate

As per Section 242 of the Companies Act, 2017, in case of a Public listed company, any dividend payable in
cash shall only be remitted through electronic mode directly into the bank account designated by the entitled
shareholders. Therefore, through this notice, all shareholders are requested to update their bank account No.
(IBAN) & details in the Central Depository System through respective participants. In case of physical shares,
to provide bank account details to our Share Registrar, M/s THK Associates (Pvt) Ltd. Please ensure an early
update of your particulars to avoid any inconvenience in future. E-Dividend mandate form is enclosed.
Electronic voting:
Members can exercise their right to demand a poll subject to meeting requirements of Section 143 -145 of the
Companies Act, 2017 and applicable clauses of the Companies (Postal Ballot) Regulations, 2018.
Notice of Meeting & Annual Accounts Through Email

With reference to SRO 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 on prescribed format to our Shares Registrar, M/s THK
Associates (Pvt) Ltd. at 40-C, Block-6, P.E.C.H.S., Karachi to update our record if they wish to receive Annual
Audited Financial Statement and Notice of Annual General Meeting through email. However, if a shareholder, in
addition, request for hard copy of Audited Financial Statements the same shall be provided free of cost within
seven days of receipt of such request.
Filer And Non Filer Status
i) The Government of Pakistan through Finance Act, 2020 has amended in Section 150 of the Income Tax
Ordinance, 2001 whereby following rates are prescribed for deduction of withholding tax on the amount
of dividend paid by the companies. These tax rates are as under:
a) For filers of income tax returns – 15%

b) For non-filers of income tax returns – 30%
Members whose names are not entered into the Active Tax payers List (ATL) provided on the website of FBR,
despite the fact that they are filers, are advised to make sure that their names are entered into ATL to avoid
higher tax deductions against any future dividend.
166
ii) For any query / problem / information, the investors may contact the Share Registrar at the following
phone Numbers, email address:
THK Associates (Pvt) Ltd.

40-C, Block-6, PECHS,
Off: Shahrah-e-Faisal,
Karachi.
021-111-000-322
[email protected]
iii) The corporate shareholders having CDC accounts are required to have their National Tax Number (NTN)
updated with their respective participants, whereas corporate physical shareholders should send a copy of
their NTN certificate to the Share Registrar i.e. THK Associates (Pvt) Ltd. The shareholders while sending
NTN or NTN certificates, as the case may be, must quote company name and their respective folio
number
167
Annual Report 2020
168
169
Annual Report 2020
170
171
Annual Report 2020
172
September 7, 2020
173
(6)
http://www.isl.com.pk/investors/financials/financial-results-and-accounts
174 International Steels Limited

Consent for Annual Report Shaping Tomorrow
Through Emails
Dear Shareholder(s)
The Securities & Exchange Commission of Pakistan (SECP) through its Notification (SRO 787(I) 2014 dated
September 8, 2014, has allowed the circulation of the Company’s annual balance sheet and profit and loss account,
auditor’s report and directors’ report etc. (Audited Annual Financial Statements) to shareholders along with notice
of Annual General Meeting (AGM) through e-mail.
Therefore, if you wish to receive the Company’s (Audited Annual Financial Statements) along with notice (AGM)
via - email, you are requested to provide this letter duly filled & signed and sent to us or our Share Registrar at their
below address:
E-Mail Address: THK Associated (Pvt) Ltd. _____________________________
CNIC Number:
FOLIO / CDS ACCOUNT # _____________________________
______________________
Signature of Shareholder
Address:
THK Associates (Pvt) Ltd.
40-C, Block – 6, P.E.C.H.S,
Off Shahrah-e-Faisal, Karachi
Phone: +92 21 111 000 322
Fax: +92 21 3416827
Email: [email protected]
Yours sincerely,
FOR INTERNATIONAL STEELS LTD.,
M. Irfan Bhatti
Company Secretary
Annual Report 2017 175

Shaping Tomorrow
E-Dividend Mandate Form Shaping Tomorrow
Date:_____________
Subject: Bank Account Details For Payment Of Dividend Through Electronic Mode
Dear Sir,
I/We/Messrs.,____________________________ being a/the shareholder(s) of International Steels Limited [the

“Company”], hereby, authorize the Company, to directly credit cash dividends declared by it, in my bank account
as detailed below:
(i) Shareholder’s details:

Name of the Shareholder
CDC Participant ID & Sub-Account No. /CDC IAS
CNIC/NICOP/Passport/NTN No. (please attach copy)
Shareholder’s Address
Contact Number (Landline & Cell Nos.)
Email
(ii) Shareholder’s Bank account details:
Title of Bank Account
IBAN (See Note 1 below)
Bank’s Name
Branch Name & Code No.
Branch Address
It is stated that the above particulars given by me are correct and I shall keep the Company, informed in case of
any changes in the said particulars in future.
Yours sincerely
Signature of Shareholder
(Please affix company stamp in case of a corporate entity)
Notes:
1. Please provide complete IBAN, after checking with your concerned branch to enable electronic credit directly
into your bank account
2. This letter must be sent to shareholder’s participant/CDC Investor Account Services which maintains his/
her CDC account for incorporation of bank account details for direct credit of cash dividend declared by the
Company from time to time.
Shaping Tomorrow
Proxy Form Shaping Tomorrow
I / We
of
being a member of INTERNATIONAL STEELS LIMITED and holder of
ordinary shares as per Share Register Folio No. and / or CDC Participant I.D.
No. and Sub Account No. hereby appoint
of
or failing him
of
as my proxy to vote for me and on my behalf at the annual general meeting of the Company to be held on
September 29, 2020 and at any adjournment thereof.

Signed this day of 2020

WITNESS:

1
Signature

Name

Address

NIC or Passport No.

Revenue
Signature
Stamp
2
Signature

Name
(Signature should agree with the

Address specimen signature registered with
the Company)
NIC or Passport No.

Note: Proxies in order to be effective must be received by the Company not less than 48 hours before the meeting.
A proxy must a member of the Company.

CDC Shareholders and their proxies are each requested to attach an attested photocopy of their National
Identity Card or Passport with this proxy form before submission to the Company.

2020 29
180 International Steels Limited

Glossary
AGM Annual General Meeting IFRS International Financial Reporting Standards

ATIR Appellate Tribunal Inland Revenue IIL International Industries Limited
ATL Active Tax Payer List IPO Initial Public Offering
BCP Business Continuity Planning ISL International Steels Limited
CBA Collective Bargaining Agreement ISO International Standards Organization
CCG Code of Corporate Governance IT Information Technology
CDC Central Depository Company ITAT Income Tax Appellate Tribunal
CIR Commissioner Inland Revenue ITRA Income Tax Reference Application
CIT Commissioner Income Tax JV Joint Ventures
CPEC China Pakistan Economic Corridor KIBOR Karachi Interbank Offer Rate
CRC Cold Rolled Coil LIBOR London Interbank Offered Rate
CSR Corporate Social Responsibility LSM Large Scale Manufacturing
CTAC Citizens Trust Against Crime LTC Lost Time Case
CWIP Capital Work in Progress LTIFR Lost Time Injury Frequency Rate
EBIT Earnings before Interest and Taxation LTU Large Taxpayers Unit
EBITDA Earnings before Interest, Taxation M&A Memorandum and Articles
Depreciation and Amortization
MAP Management Association of Pakistan
EFP Employees Federation of Pakistan
MFN Most Favourable Nation
EPS Earning Per Share
MoC Ministry of Commerce
ETP Effluent Treatment Plant
MT Metric Ton(s)
FBR Federal Board of Revenue
NBV Net Book Value
FTA Free-Trade Agreement
NEPRA National Electric Power Regulatory Authority
FTO Federal Tax Ombudsman
NFEH National Forum for Environment and Health
FTR Final Tax Regime
NOC No Objection Certificate
GDP Gross Domestic Product
NRV Net Realizable Value
GIDC Gas Infrastructure Development Cess
NTC National Tariff Commission
GoP Government of Pakistan
OHSAS Occupational Health and Safety
HR Human Resource Assessment Specification
HRC Hot Rolled Coil OPEC Organization of the Petroleum Exporting
Countries
HRRC Human Resource Remuneration Committee
PACRA Pakistan Credit Rating Agency
HSE Health, Safety and Environment
PAT Profit after tax
IAS International Accounting Standards
PCL Pakistan Cables Limited
ICAP Institute of Chartered Accountants of Pakistan
PICG Pakistan Institute of Corporate Governance
ICMAP Institute of Cost and Management
Accountants of Pakistan PSX Pakistan Stock Exchange
IFAC International Federation of Accountants SECP Securities and Exchange Commission of
Pakistan
IFC International Finance Corporation
SHC Sindh High Court
IFRIC International Financial Reporting Interpretation
Committee

Creating Value: Annual Report 2020

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CREATING

Board Committees 76 Financial Statements

Chairman (Non-Executive) Registered Office

Director & Chief Executive Officer Multan Office

External Auditors Website

Legal Advisor(s) Bankers

To be the premium manufacturer of

We incorporate the following core values in our organization culture:

Respect for People

Creating Shared Value

Investing in Human Capital

Calendar of Major Events

Cold Rolled Steel

Hot Dip Galvanized Steel

Color Coated Steel

Regional Office ISLAMABAD

LAHORE Regional Office

MULTAN Regional Office

Head Office, Factory &

Procurement Sales & Marketing

Mechanism for Providing Information

Formal Reporting Line

The financial results for the year reflect a negative trend.

Effected by economic slow-down and COVID-19 Implementation of focused safety programs,

Our Relationship with the Society and

Cognizant of the importance of business continuity and

The company benchmarks itself against global quality

Who We Serve? Our Stakeholders

Maximize Shareholder value and uphold highest standards

Provide employment opportunities to a wide spectrum of people

Provide world class products at fair and transparent prices to

Contribute to the government revenue collection, promote

Promote welfare for society through real value creation, address

Stakeholder Frequency Activities Value Creation

Employee Ongoing · Employee feedbacks · Career Growth

Customers Ongoing · Customer Visits · Quality product

Name of Agency ISL

Pakistan Environmental Agency √

Sindh & Punjab Environment Protection Agencies √

ISL is driven by the Group’s code of conduct that

Safety Record Personal Safety

Safety Awareness Fire Drills

Total Amount of Donations in FY 2019-20 Rs. 19.2 Million

The Amir Sultan Chinoy Foundation  Vocational Training

Environment Conservation and Awareness

“Take a Pledge for Environment” Activity at CAP Family

Board of Directors’ Profile

Mr. Kamal A. Chinoy Nausheen Ahmad oversees the Legal, Company

TOWFIQ H. CHINOY International Steels Limited

MUSTAPHA A. CHINOY International Steels Limited

KAMAL A. CHINOY International Steels Limited

FUAD A. HASHIMI International Steels Limited

DR. AMJAD WAHEED International Steels Limited

NAUSHEEN AHMAD International Steels Limited

Name Business occupation and directorship (if any)

NIHAL CASSIM International Steels Limited

KOJI FUKUSHIMA International Steels Limited

SAMIR M. CHINOY International Steels Limited

YOUSUF H. MIRZA International Steels Limited

The Amir Sultan Chinoy Foundation Vocational Training