Transmission of Annual Report for the Year Ended June 30, 2024

IDREES

TEXTILE MILLS LIMITED

Annual Report 2024

ADMIRAL

BRAND

SPLICED

USTER IZED

YARN CLEARING TO MEASURE

IDREES

TEXTILE MILLS LIMITED

6-C, Ismail Centre, 1st Floor, Central Commercial Area,

Bahadurabad Karachi - 74800 (Pakistan)

Phones: 34940026 to 30 Fax: (92-21) 34945306 & 34931558

COMPANY INFORMATION

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NOTICE OF THE MEETING

03:00 Embassy Inn, 100-B, SMCHS Nursery Main Shahrah-e- Faisal, Karachi

November 04, 2024

November 19, 2024 to November 27 2024

November 21, 2024.

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NOTICE OF THE MEETING

02:50

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DIRECTORS' REPORT

The Directors are pleased to present the audited financial statements of your Company for the year ended June 30, 2024.

FINANCIAL AND OPERATIONAL OVERVIEW

The principal activity of the Company is manufacturing, processing and sale of all kinds of yarn. The Company is also engaged in the business of home textile. During the year under review, there has not been any material change in the Company's business activities.

During the financial year under review, the Company's turnover amounted to Rs. 6,450 million as compared to Rs. 4,200 million in the previous year. Gross profit amounted to Rs.618.586 million compared to Rs.420.146 million for the last year. During the year under review, the Company's revenue increased by Rs. 2,249 million and the gross profit has increased by Rs. 198.44 million. Loss for the year amounted to Rs. 194.389 million in FY24 as compared to loss of Rs. 12.494 million in the corresponding period. Finance cost has increased by Rs.272.849 million (88.92 percent) in FY24 to Rs. 579.714 million (FY23: Rs. 306.864 million). Export of yarn amounted to Rs. 1,682.073 million (FY23: Rs. 814.716 million). The Company's home textile exports have increased to Rs. 321.585 million in FY24 against Rs. 84.480 million in FY23 which is promising for the future.

Expansion in the mills production capacity contributed to a sizeable growth in revenue of the Company in FY24. Negative bottom-line for the year is attributable to historically high interest rates, which enormously increased the finance cost. Moreover, costly energy tariff, after withdrawal of Regionally Competitive Energy Tariff (RCET), and non-availability of good quality local raw material also increased the cost of production. All these unfavorable factors have led to a downturn in textile sector's profitability. In FY24, Pakistan's textile industry remained under severe pressure due to high cost of doing business. The on-going Russia-Ukraine war and Gaza conflict have also impacted businesses around the world and Pakistan is no exception. Political uncertainty remains a key risk to sustainability, structural reforms and stabilization measures.

Positive developments in the economy include increase in country's exports and workers' remittances. These inflows eased the pressure on foreign exchange reserves and also resulted in decline of current account deficit. As the inflationary pressure started to subside, the Monetary Policy Committee (MPC) of SBP, has finally commenced gradual reduction in the policy rate which is a favourable development for the Company in terms of reduction in the cost of borrowing in the ensuing year.

(LOSS) /EARNING PER SHARE

The (Loss) per share for the year under review worked out to Rs.(9.79) as compared to loss Re.(0.63) for the corresponding year.

DIVIDEND

In view of loss for the year, the Board of Directors in its meeting held on November 04, 2024, has decided not to recommend any dividend this year.

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DIRECTORS' REPORT

STATEMENT ON CORPORATE AND FINANCIAL REPORTING FRAME WORK

Idrees Textile Mills Ltd is committed to maintain the standards of corporate governance. The Directors are pleased to state that the company is compliant with the provisions of the Companies (Code of Corporate Governance) Regulation 2019, as required by SECP. The review report of Auditors on statement of compliance with the code of corporate Governance is annexed with this report.

We are pleased to report that:

1. The financial statements, prepared by the management of the Company, present fairly its state of affairs the result of its operations, cash flows and changes in equity.
2. Proper books of account of the Company have been maintained.
3. Appropriate accounting policies have been consistently applied in preparation of the financial statements and accounting estimates are based on reasonable and prudent judgment.
4. International Financial Reporting Standards (IFRS), as applicable in Pakistan, have been followed in preparation of the financial statements and any departure there from has been adequately disclosed.
5. The Board understands its responsibility to ensure that adequate and effective internal financial controls are in place. The internal audit department continuously reviews the design and effectiveness of the controls and corrective action is taken to address the weakness, if found. We believe that the system of internal control is sound in design and has been effectively implemented.
6. There are no significant doubts upon the Company's ability to continue as a going concern.
7. There has been no material departure from the best practices of corporate governance, as detailed in the Companies (Code of Corporate Governance) regulation 2019.
8. The book value of investments made by the Employees' Provident Fund, being operated for head office employees, only, as per audited financial statements of the Fund as at June 30, 2024 was Rs. 49,809,900/- (2023 Rs. 37,582,012/-)

Mills employees are entitled to gratuity as per law and appropriate provision has been made in the financial statements.

1. As required by the Code, we have included the following information in this report:
2. • Statement of Pattern of Shareholding.
   • Statement of Shares held by associated undertaking and related parties.
   • Key operating and financial statistics for last six years.

1. During the year under review, four Board of Directors, four Audit Committee and one Human Resource & Remuneration Committee (HR & RC) meetings were held and attended as follows:

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DIRECTORS' REPORT

1. During the year under review, there has been no trading in shares of the Company by CEO, Directors and their Spouses & minor children.
2. We have an audit committee the members of which are from the board of directors and the chairman is a non- executive director.
3. We have prepared and circulated a statement of ethics and business strategy amongst directors and employees.
4. The board has adopted a mission statement and a statement of overall corporate strategy.

BOARD OF DIRECTORS

The board comprises of seven directors. The composition of the board throughout the year is as follows:

1. Ms.Aamnah Mansoor
2. Mr. Muhammad Zubair

1. Mr. Omair Idrees Allawala
   There was no change in the directors during the year ended June 30, 2024

BOARD COMMITTEES

The Board of Directors has formed the Audit Committee and Human Resource and Remuneration Committee in line with the requirements of the Code of Corporate Governance.

The members of Audit Committee is as follows:

The members of Human Resource and Remuneration Committee is as follows:

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DIRECTORS' REPORT

BOARD EVALUATION

The Company carries out annual evaluation of the Board, members of the Board and its Committees as part of the Code of Corporate Governance. For that purpose, Board has developed a mechanism for evaluation of Board's own performance, members of the Board and its Committees. Based on the evaluation, overall performance of the Board, its members and Committees of the Board for the year under review is satisfactory. Improvement is an ongoing process keeping in view the global best practices.

DIRECTORS' REMUNERATION:

The company does not pay remuneration to its non-executive directors including independent directors except for meeting fee. Aggregate amount of remuneration paid to executive and non- executive directors have been disclosed in note no. 37 of the annexed financial statements.

SUBSIDARY COMPANY

The Company's wholly owned subsidiary ORA Home LLC (ORA), is located in New Jersey, USA. One of the Directors of the Company is the member manager of ORA. The principal business activity of ORA is to deal in home textiles.

CODE OF ETHICS & BUSINESS PRINCIPLES

The Board has adopted the Statement of Ethics and Business Principles, which is signed and acknowledged by all the Directors and employees of the Company who are required to abide by the Code.

ENVIRONMENT HEALTH AND SAFITY

The Company ensure adherence to the prevailing standard and guidelines for safety of its workforce. Awareness sessions and safety drills are regularly conducted in order to minimize the risk of hazards to the people, property and environment.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Idrees Textile Mills Ltd. being a good corporate citizen contributing for the welfare of the people in our society and fulfillment of its corporate social responsibility. During the year under review the Company contributed Rs.3,923,000/- to various organizations serving the mankind in the health and education sectors.

PRINCIPAL RISKS AND UNCERTAINTIES

The Board of Directors has overall responsibility for oversight over the risks and uncertainties faced by the Company. To assist the Board in discharging its responsibility, management has been made responsible for identifying, monitoring and managing the Company's risk exposures. Following is a description of the risks and uncertainties:

Control over cost of production amid high energy tariff.

Remaining competitive in the domestic as well as in the international market in terms of cost effectiveness and pricing of goods.

Managing finance cost in the wake of steep rise in interest rate.

Variations in demand of goods due to economic situation.

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