NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 28th Annual General Meeting of Shareholders of
FATEH INDUSTRIES LIMITED will be held on Thursday, 31st October, 2013 at 9:30
a.m. at the registered office of the Company at Mirpurkhas Road, Hyderabad to
transact the following business:

1. To confirm the minutes of the last Annual General Meeting held on 31st
October, 2012.

2. To receive, consider and adopt the Audited Accounts of the Company and the
th
Directors' and Auditors' Reports thereon for the year ended 30 June, 2013.

3. To appoint Auditors and to fix their remuneration.

4. To transact any other business with the permission of the Chair.

By order of the Board

for FATEH INDUSTRIES LIMITED

Hyderabad. Ghous Muhammad Khan

th
9 October, 2013 Company Secretary

NOTES :

1. The share transfer books of the Company will remain closed for 7 days from
25th to 31st October, 2013 (both days inclusive).
2. Any member of the Company who is entitled to attend and vote may appoint
any other member of the Company as his/her Proxy to attend and vote in
his/her stead.
3. Proxies in order to be effective must be received by the Company at the
Registered Office not later than 48 hours before the time of holding the
meeting.

4. Shareholders are required to notify the change of their address if any,

immediately.
immediately

5. CDC account holders will further have to follow the guidelines as laid down in
Circular No.1, dated January 26, 2000 issued by the Securities & Exchange
Commission of Pakistan.
 COMPANY PROFILE

BOARD OF DIRECTORS
CHIEF EXECUTIVE
Mr. Saeed Alam

DIRECTORS
Mr. Rauf Alam
Mr. Aftab Alam
Mr. Faraz Alam
Mr. Ashhar Alam
Mr. Jamal Alam
Mr. Aneek Alam

COMPANY SECRETARY
Mr. Ghous Muhammad Khan

CHIEF FINANCIAL OFFICER

Mr. Muhammad Ishaque Essani

AUDIT COMMITTEE
Mr. Rauf Alam
Mr. Aftab Alam
Mr. Faraz Alam

HR&R COMMITTEE
Mr. Faraz Alam
Mr. Ashhar Alam
Mr. Jamal Alam

AUDITORS
M/s. Tanwir Arif & Co.
Chartered Accountants

SHARE REGISTRAR
M/s. F.D. Registrar Services (SMC-Pvt) Ltd.
Saima Trade Tower-A, Karachi.

BANKERS
Askari Bank Limited
Bank AL-Habib Limited
Habib Bank Limited

REGISTERED OFFICE / PLANT

442-Mirpurkhas Road,
Hyderabad.
Tel: (92-22) 3886263-67
Fax: (92-22) 3886268
Email: fswl@fateh1.com
Web: www.fatehindustriesgroup.com
 DIRECTORS’ REPORT
For the year ended June 30, 2013

The Board of Directors present their report and financial statements of the Company alongwith Auditors’
Report for the year ended June 30, 2013
The business activities have already been started and the management of the Company is very hopeful
to achive further export orders in forthcoming days despite of tough competition in International Market.
The management of the company is committed to continue its financial support for the running of
business activities and putting all efforts to make the business profitable within its limited resources. The
management will also continue its efforts for recovery of stuck up funds from the Russian Government.

The Company has achieved sales of Rs. 17.34 million during the year under review. The Gross Profit is
realized at Rs.2.53 million. Company has earned profit on account of exchange gain on trade debts is
Rs.4.42 million. Loss before taxation is Rs.111.84 million due to provision of Trade Debts whereas loss
after provision of taxation is Rs.112.09 million. Net loss carried forward to balance sheet is Rs. 111.90
million. Loss per share is Rs. 56.04.
The accounts of the company are prepared on going concern basis as the management of the company
is already financially supporting the Company. The management has paid Rs. 0.850 million to its old
creditors from their own resources.
The State Bank of Pakistan (SBP) has reverted their order dated 31.03.2011 in respect of non-
repatriation of Export Bills (E-Forms) which were earlier linked up with realization of Company's claims
receivable from Russian Federation. SBP asked the management to adjust the pending E-Forms from
their own resources. The management is complying with the order of Adjudication Court of SBP.
Compliance with the Code of Corporate Governance (CCG):
The requirements of Code of Corporate Governance set out by Karachi Stock Exchange in their listing
rules, relevant for the year ended June 30, 2013, have been duly complied with, except for those
disclosed in statement of compliance with CCG. The Directors confirm the compliance of Corporate
Governance, statement to this effect is annexed.
Statement on Corporate and Financial Reporting Framework
The financial statements, prepared by the management of the Company, presents fairly its state
of affairs, cash flows and changes in equity;
Proper books of accounts have been maintained by the Company;
Appropriate accounting policies have been consistently applied in preparation of financial
statements and accounting estimates are based on reasonable and prudent judgment;
The International Accounting Standards, as applicable in Pakistan, have been followed in
preparation of financial statements and any departure there from has been adequately disclosed;
The System on internal control is sound in design;
There are no significant doubts upon the company’s ability to continue as a going concern;
There has been no material departure from the best practices of corporate governance, as
detailed in the listing regulations;
Operating and financial data for the last six years is as under; (000)
Description 2007 2008 2009 2010 2011 2012 2013
Sales 0 0 0 0 0 8,490 17,342
Gross Profit / (Loss) 0 0 0 0 0 1,171 2,531
Selling & Administration Expenses 6,709 6,187 6,401 35,475 3,653 3,624 5,088
Profit/(Loss) before Taxation (2,070) 1,120 5,733 (31,499) (3,314) 5,582 (111,848)
Profit/(Loss) after Taxation (2,070) 1,120 5,733 (31,499) (3,314) 5,497 (112,089)
Authorized Capital 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Paid up Capital 20,000 20,000 20,000 20,000 20,000 20,000 20,000
Shareholder's equity (169,869) (168,669) (162,980) (194,463) (197,776) (192,270) (304,171)
Fixed Assets 40,547 36,845 33,514 30,517 27,821 25,395 23,212
Total Assets 155,371 158,824 168,160 138,416 136,301 144,447 42,322

No trading of shares have been carried out by the Chief Executive, Directors, Chief Financial
Officer, Company Secretary, their spouses and minor children;
 During the year four (04) meetings of the Board of Directors were held. The attendance of each
Director is as follows:
S.NO. NAME OF DIRECTOR MEETING ATTENDED
1. Mr. Rauf Alam 04
2. Mr. Aftab Alam 04
3. Mr. Saeed Alam 04
4. Mr. Faraz Alam 04
5. Mr. Ashhar Alam 04
6. Mr. Jamal Alam (Not attended due to High Court Order) Nil
7. Mr. Aneek Alam (Not attended due to High Court Order) Nil

Pattern of Shareholding required under section 236 of the Companies Ordinance, 1984 is annexed;
Outstanding taxes and levies are given in the relevant notes to the audited financial statements;and
No material changes and commitments affecting the financial position of the Company have
occurred between the end of the financial year to which these financial statements relate and the
date of directors’ report.
Auditors’ Observation
1. On the issue of going concern, as such the management of the Company has already started the
business activities during preceding year and will continue its efforts for recovery of stuck up funds
receivable from Russian Federation. The Government of Pakistan and Russian Government are
discussing the matter for settlement of the claims of the Pakistani exporters toward sea freight
compensation operation.The Government of Pakistan has frozen the account of the Russian
Government maintained with NBP, Karachi till the settlement of the claims of the Pakistani
exporters in accordance with the order of Honorable High Court of Sindh. A draft protocol has
been finalized which is likely to be signed within due course of time.

The Company has also filed suit before the Honorable High Court of Sindh against the Pakistan
Government and Russian Government for recovery of stuckup funds for sea freight compensation
of USD 19,377,337.34 plus USD 21,599,457.00 (towards interest from 01.01.992 to 31.03.2005)
as confirmed and agreed by Russian Federation to be paid with further interest at the time of
payment. The Court vide garnishee order dated 12.07.2006 to National Bank of Pakistan has
ordered NBP not to release amount to the extent of the amount claimed by the Company.

In the light of the current development for the recovery of stuck up funds from Russian
Government, the management is hopeful to receive the long outstanding foreign receivable
shortly. Further the management has started its business activities and have no plan to liquidate
the assets. The financial statement, are therefore, prepared on going concern assumption.

Auditors
The present Auditors M/s. Tanwir Arif & Co., Chartered Accountants has completed five years' tenure
and they will be retired on the date of Annual General Meeting. The Audit Committee and Board of
Directors has proposed and recommended for the appointment of M/s. Hafizullah & Co., Chartered
Accountants, as Auditors of the Company for the year ending June 30, 2014.

For and on behalf of the Board

Place: Hyderabad SAEED ALAM

Dated: 23rd September, 2013 Chief Executive
 STATEMENT OF COMPLIANCE
For the year ended June 30, 2013

This statement is being presented to comply with the Code of Corporate Governance contained in
Regulation No. 35 of listing regulations of Karachi Stock Exchange (Guarantee) Limited for the purpose
of establishing a framework of good governance, whereby a listed company is managed in compliance
with the best practices of corporate governance.
The company has applied the principles contained in the CCG in the following manner:
1. The company encourages representation of independent non-executive directors and directors
representing minority interests on its board of directors. At present the board includes:

Category Name
Independent Directors Nil
Executive Directors M/s. Rauf Alam and Saeed Alam
Non-Executive Directors M/s. Aftab Alam, Faraz Alam, Ashhar Alam,
Jamal Alam and Aneek Alam

The condition of clause i (b) of the CCG in relation to independent director will be applicable after
election of next board of directors of the company in June-2014.
2. The directors have confirmed that none of them is serving as a director on more than seven
listed companies, including this company (excluding the listed subsidiaries of listed holding
companies where applicable).
3. All the resident directors of the company are registered as taxpayers and none of them has
defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of
a stock exchange, has been declared as a defaulter by that stock exchange.
4. No casual vacancy occurred in the Board till June 30, 2013.
5. The company has prepared a “Code of Conduct” and has ensured that appropriate steps have
been taken to disseminate it throughout the company along with its supporting policies and
procedures.
6. The board has developed a vision/mission statement, overall corporate strategy and significant
policies of the company. A complete record of particulars of significant policies along with the
dates on which they were approved or amended has been maintained.

7. All the powers of the board have been duly exercised and decisions on material transactions,
including appointment and determination of remuneration and terms and conditions of
employment of the CEO, other executive and non-executive directors, have been taken by the
board/shareholders.

8. The meetings of the board were presided over by the Chief Executive Officer and the board met
at least once in every quarter. Written notices of the board meetings, along with agenda and
working papers, were circulated at least seven days before the meetings. The minutes of the
meetings were appropriately recorded and circulated.
9. In accordance with the criteria specified on clause (xi) of CCG, three directors of the company
are exempted from the requirement of director's training program and rest of the directors to be
trained within specified time.
10. The board had already assigned the additional responsibilities of CFO and Company Secretary
of Finishers Limited in Group Companies including terms and conditions of employment.
11. The directors’ report for this year has been prepared in compliance with the requirements of the
CCG and fully describes the salient matters required to be disclosed.

12. The financial statements of the company were duly endorsed by CEO and CFO before approval
of the board.
13. The directors, CEO and executives do not hold any interest in the shares of the company other
than that disclosed in the pattern of shareholding.

14. The company has complied with all the corporate and financial reporting requirements of the
CCG.
15. The board has formed an Audit Committee. It comprises 03 members at present two of whom
are non executive directors and Chairman is an executive director. The condition of clause i (b)
of the CCG in relation to independent director will be applicable after election of next board of
directors of the company.

16. The meetings of the audit committee were held at least once every quarter prior to approval of
interim and final results of the company and as required by the CCG. The terms of reference of
the committee have been formed and advised to the committee for compliance.

17. The board has formed an HR and Remuneration Committee. It comprises three member all non-
executive directors and the chairman of the Committee is also a non-executive director.

18. The board has set up an effective internal audit function who are considered suitably qualified
and experienced for the purpose and are conversant with the policies and procedures of the
company.
19. The statutory auditors of the company have confirmed that they have been given a satisfactory
rating under the quality control review program of the ICAP, that they or any of the partners of the
firm, their spouses and minor children do not hold shares of the company and that the firm and
all its partners are in compliance with International Federation of Accountants (IFAC) guidelines
on code of ethics as adopted by the ICAP.
20. The statutory auditors or the persons associated with them have not been appointed to provide
other services except in accordance with the listing regulations and the auditors have confirmed
that they have observed IFAC guidelines in this regard.

21. The ‘closed period’, prior to the announcement of interim/final results, and business decisions,
which may materially affect the market price of company’s securities, was determined and
intimated to directors, employees and stock exchange.

22. Material/price sensitive information has been disseminated among all market participants at once
through stock exchange.

23. We confirm that all other material principles enshrined in the CCG have been complied with
except for the following, towards which reasonable progress is being made by the Company to
seek compliance by the end of next accounting year.

SAEED ALAM
Dated: 23rd September, 2013 Chief Executive
 AUDITORS’ REPORT
For the year ended June 30, 2013

We have audited the annexed Balance Sheet of Fateh Industries Limited as at 30th
June, 2013 and the related Profit and Loss account, Cash Flow Statement and
Statement of Changes in Equity together with notes forming part thereof, for the year
then ended 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 purpose of our
audit.
It is the responsibility of the company’s management to establish and maintain a
system of internal control, and prepare and present the above said statements in
conformity with the approved accounting standards and the requirements of the
Companies Ordinance, 1984. Our responsibility is to express an opinion on these
statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in
Pakistan. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the above said statements are free of any
material misstatement. An audit includes examining, on test basis, evidence supporting
the amounts and disclosures in the above said statements. An audit also includes
assessing the accounting policies and significant estimates made by management, as
well as, evaluating the overall presentation of the above said statements. We believe
that our audit provides a reasonable basis for our opinion and, after due verification,
we report that:
1. As discussed in note 1.2 to the financial statements, the company has been
incurring continuous losses since last few years and has accumulated losses of
Rs. 324.48 million including loss of Rs. 112.09 million incurred during the current
year. The negative equity of the company on the balance sheet date stands at Rs.
304.17 million. The current liabilities exceed current assets by Rs. 327.71 million
thereby leaving an adverse current ratio of 0.05. These factors indicate the
existence of material uncertainty, cast significant doubt about the company’s
ability to continue as a going concern and therefore may be unable to realize its
assets and discharge its liabilities in the normal course of business. Inspite of
these factors the financial statements have been prepared on going concern
assumption although adjustments relating to recoverability and reclassification of
recorded assets and liabilities appear to be necessary.

a) in our opinion, except for the effect of the matters referred to in para 1
above, proper books of account have been kept by the company as
required by the Companies Ordinance, 1984;
b) in our opinion, except for the effect of the matters referred to in para 1 above:
 i) the Balance Sheet and Profit and Loss Account together with the notes
thereon have been drawn up in conformity with the Companies
Ordinance, 1984, and are in agreement with the books of account and
are further in accordance with accounting policies consistently applied;

ii) the expenditure incurred during the year was for the purpose of the
company’s business; and
iii) the business conducted, investments made and the expenditure incurred
during the year were in accordance with the objects of the Company.
c) Except for para 1 above and the adjustment that may be required, in our
opinion and to the best of our information and according to the explanations
given to us, the Balance Sheet, Profit and Loss Account, Cash Flow
Statement and Statement of Changes in Equity together with the notes
forming part thereof conform with approved accounting standards as
applicable in Pakistan, and, give the information required by the Companies
Ordinance, 1984, in the manner so required, and respectively give a true and
fair view of the state of the Company’s affairs as at June 30, 2013 and of the
loss, its cash flows and changes in equity for the year then ended; and

d) in our opinion, no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980 (XVIII) of 1980.

TANWIR ARIF & CO.

CHARTERED ACCOUNTANTS

Hyderabad: September 23, 2013

 AUDITORS’ REVIEW REPORT
For the year ended June 30, 2013

REVIEW REPORT TO THE MEMBERS ON

STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF
CODE OF CORPORATE GOVERNANCE
We have reviewed the statement of compliance with the best practices contained in the Code of
Corporate Governance prepared by the Board of Directors of M/s. Fateh Industries Limited (‘the
Company’) as at June 30, 2013 to comply with the listing regulation No. 35 Chapter XI of the Karachi
Stock Exchange, where the Company is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board of
Directors of the Company. Our responsibility is to review, to the extent where such compliance can be
objectively verified, whether the Statement of Compliance reflects the status of the Company’s
compliance with the provisions of the Code of Corporate Governance and reports if it does not. A review
is limited primarily to inquiries of the company personnel and review of various documents prepared by
the Company to comply with the Code.

As part of our audit of financial statements we are required to obtain an understanding of the accounting
and internal control systems sufficient to plan the audit and to develop an effective audit approach. We
are not required to consider whether the Board’s 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.

Further, Regulation 35 (x) of the Listing Regulations requires the company to place before the board of
directors for their consideration and approval to related party transactions distinguishing between
transactions carried out on terms equivalent to those that prevail in arm’s length transactions and
transactions which are not executed at arm’s length price recording proper justification for using such
alternate pricing mechanism. Further, all such transactions are also required to be separately placed
before the audit committee. We are only required and have ensured compliance of requirement to the
extent of approval of related party transaction by the board of directors and placement of such
transaction before the audit committee. We have not carried out any procedures to determine 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 best practices contained in the Code of Corporate Governance as applicable to the company for the
year ended June 30, 2013.

TANWIR ARIF & CO.

Dated: 23rd September, 2013 CHARTERED ACCOUNTANTS
 BALANCE SHEET AS AT 30-JUNE-2013

NOTE 30-06-2013 30-06-2012

NO RUPEES RUPEES
CAPITAL AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized Capital
10,000,000 ordinary shares of Rs. 10/- each 100,000,000 100,000,000

Issued, subscribed and paid up share capital 3 20,000,000 20,000,000

Investment revaluation reserve 306,518 118,664
Accumulated loss (324,477,168) (212,388,503)
(304,170,650) (192,269,839)
CURRENT LIABILITIES
Trade and other payables 4 115,328,650 106,557,297
Short term borrowings 5 231,160,083 230,160,083
Provisio for taxation 6 4,436 0
Contingencies and Commitments 7 0 0
346,493,169 336,717,380
42,322,519 144,447,541

PROPERTY AND ASSETS

TANGIBLE FIXED ASSETS
Operating fixed assets 8 23,212,377 25,395,266
LONG TERM INVESTMENTS 9 324,084 136,230
CURRENT ASSETS
Stores, spare parts and loose tools 10 0 0
Stock-in-trade 11 6,892,381 0
Trade debts 12 6,462,402 114,423,754
Advances, deposits and prepayments 13 579,528 271,243
Other receivables 14 4,161,818 4,161,818
Cash and bank balances 15 689,929 59,230
Contingent assets 16 0 0

18,786,058 118,916,045

42,322,519 144,447,541

Notes :
1. The annexed notes form an integral part of these accounts.
2. Auditors' report is attached

SAEED ALAM RAUF ALAM

Dated: 23rd September, 2013 Chief Executive Director
 Profit and Loss Account
for the year ended June 30, 2013

NOTE 30-06-2013 30-06-2012

NO RUPEES RUPEES

Sales 17 17,341,822 8,490,258

Cost of Sale 18 14,810,736 7,319,318
Gross Profit 2,531,086 1,170,940

Administration Expenses 19 3,888,453 2,632,378

Selling Expenses 20 1,199,264 991,941
5,087,717 3,624,319
Operating Loss (2,556,631) (2,453,379)
Other Income 21 8,611 4,512
Exchange Gain 4,421,276 8,265,280
1,873,256 5,816,413
Financial Expenses 22 84,140 143,798
Other Charges 23 113,636,941 91,000
113,721,081 234,798
(Loss) / Profit before taxation (111,847,825) 5,581,615
Taxation 240,840 84,672
(Loss) / Profit after taxation (112,088,665) 5,496,943

Other comprehensive income for the year

Unrealized gain on revaluation of
investment - available for sale 187,854 9,719
Total comprehensive (Loss)/Profit for the year (111,900,811) 5,506,662

(Loss)/Profit per share (56.04) 2.75

Note: The annexed notes form an integral part of these accounts.

SAEED ALAM RAUF ALAM

Dated: 23rd September, 2013 Chief Executive Director
 CASH FLOW STATEMENT
For the year ended June 30, 2013

Cash Flow Statement NOTE 30-06-2013 30-06-2012

NO RUPEES RUPEES
Cash flow from operating activities
Profit/(Loss) before taxation (111,847,825) 5,581,615
Depreciation 8 2,182,889 2,425,965
Provision for bad and doubtful debts 23 113,433,441 0
Other income 21 (8,611) (4,512)
Exchange gain (4,421,276) (8,265,280)
111,186,443 (5,843,827)
Operating (loss) before working capital changes (661,382) (262,212)
(Increase) / Decrease in current assets
Stock in trade (6,892,381) 0
Trade debtors (5,472,089) (10,476,511)
Advances, deposits and pre-payments (240,372) (9,795)

(Decrease) / Increase in current liabilities

Trade and other payables 8,771,353 2,640,278
(3,833,489) (7,846,028)
Cash(used in) / generated from operations (4,494,871) (8,108,240)

Income tax paid (304,317) (131,475)

Exchange gain 4,421,276 8,265,280
4,116,959 8,133,805
Net cash flow from operating activities (377,912) 25,565

Cash flow from investing activities

Dividend received 21 8,611 4,512
Net cash flow from investing activities 8,611 4,512

Cash flow from financing activities

Short term borrowings 1,000,000 0
Net cash flow from financing activities 1,000,000 0

Net Increase/(Decrease) cash and cash equivalents 630,699 30,077

Cash and cash equivalents at the beginning of the year 15 59,230 29,153
Cash and cash equivalents at the end of the year 15 689,929 59,230

SAEED ALAM RAUF ALAM

Dated: 23rd September, 2013 Chief Executive Director
 STATEMENT OF CHANGES IN EQUITY
For the year ended June 30, 2013

Surplus on
Share Revaluation Accumulated
Capital of Investment (Loss) Total

Balance as at June 30, 2011 20,000,000 108,945 (217,885,446) (197,776,501)

Profit for the year 0 0 5,496,943 5,496,943

Unrealized gain on revaluation of investment 0 9,719 0 9,719

Balance as at June 30, 2012 20,000,000 118,664 (212,388,503) (192,269,839)

Loss for the year 0 0 (112,088,665) (112,088,665)

Unrealized gain on revaluation of investment 0 187,854 0 187,854

Balance as at June 30, 2013 20,000,000 306,518 (324,477,168) (304,170,650)

SAEED ALAM RAUF ALAM

Dated: 23rd September, 2013 Chief Executive Director
 NOTES TO THE ACCOUNTS
For the year ended June 30, 2013

1. THE COMPANY AND ITS OPERATIONS

1.1. Fateh Industries Limited is incorporated in Pakistan as a public limited company and is listed on the
Karachi Stock Exchange.

The Company is engaged mainly in the manufacturing and sale of footwear of all kinds, however,
manufacturing was suspended since 1999-2000. The Company had started trading activities from last
year. During the year manufacturing activities are started partially.

1.2 Going Concern

These financial statements have been prepared on going concern basis, despite the fact that:

- the operations of the company were closed since the year 2000. The core reason for non-
producation and losses is due to funds blocked with Russia that rendered the Company in the financial
distress.The manufacturing activities could not be profitably carried out with scarce financial
resources, hence to mitigate the operational cost and administration expenses, operations were
closed.
- there are accumulated losses amounting to Rs.324,477,168/-;
- the financial ratios are adverse;
- the company is unable to settle its debts; and
- the company had started trading activities from last year and partially started production;

The Government of Pakistan and Russian Government are discussing the matter for settlement of the
claims of the Pakistani exporters. The Government of Pakistan has frozen the account of the Russian
Government maintained with NBP, Karachi till the settlement of the claims of the Pakistani exporters in
accordance with the order of Honorable High Court of Sindh. A draft protocol has been finalized which
is likely to be signed within due course of time.
In these circumstances, the management is expecting recovery of stuck up funds and plans to restart
its operations viably anew. This shows the genuineness of claims of the company and strong
possibility of receipts of funds from abroad. Company has also filed suit before the Honorable High
Court of Sindh against the Russian Government for recovery of stuckup funds of USD 40.98 million
including interest of USD 21.60 million upto March 31, 2005.
The management of the company has no plan to liquidate its assets other than under normal course
of business. The ability of the company to continue as a going concern currently is based on the
followings:

i) Continued financial support from directors/related parties;

ii) Revival of the manufacturing activities after receipts of stuck up funds from Russia;
iii) There is a need to keep the entity in existence when a huge claim of the Company is expected to
be materialized under the present circumstances where two Governments are negotiating the
settlement of Pakistani exporters' receivables and the matter is subjudice with the Honorable High
Court of Sindh.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Accounting Convention

These financial statements have been prepared under the "historical cost" convention except as
otherwise disclosed in the accounting policies below.

2.2 Basis of Preparation

These financial statements have been prepared in accordance with the approved accounting
standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984 (the
Ordinance). Approved accounting standards comprise of such International Accounting Standards
(IAS) as notified under the provisions of the Ordinance. Wherever the requirements of the Ordinance
or directives issued by the Securities & Exchange Commission of Pakistan (SECP) differ with the
requirements of these standards, the requirements of the Ordinance or the requirement of the said
directives would take precedence.

2.3 Fixed Assets and Depreciation

Fixed assets are stated at cost less depreciation. Depreciation is charged on pro- rata basis under
reducing balance method at the rates mentioned in note no. 8. Normal repair and maintenance is
charged to expense as and when incurred. However, major repair and improvements are capitalized.
Gain or loss on disposal of operating fixed assets is recognized in current year's income.

2.4 Long Term Investment

The management determines the appropriate classification of its investments in accordance with the
requirements of International Accounting Standard (IAS) 39; 'Financial Instruments: Recognition and
Measurement' at the time of purchase and classify these investments as either available for sale or
held for trading.

Investments are initially recorded at cost being the fair value of the consideration given. Investments
other then Term Finance Certificates are accounted for on trade date basis, which is the date that an
enterprise commits to purchase or sell an asset.

Available for sale

These are investments that do not fall under held for trading and are stated at fair value with, any
resultant gain or loss recognized as separate component of equity until investments are sold, disposed
off or until the investment is determined to be impaired, at which time the accumulated gain or loss
previously reported in equity is included in profit and loss account.

Held for trading

Held for trading investments are those which are either acquired for generating a profit from short term
fluctuation in prices or dealers margin. Subsequently held for trading investments are re-measured at
fair value with any resultant gain or loss recognized in the profit and loss account.
2.5 Stores, Spares and Loose Tools
These are valued at lower of moving average cost or net realizable value except items in transit which
are stated at cost accumulated up to the date of balance sheet.

2.6 Stock in Trade

These are valued at lower of cost and net realizable value, cost is calculated on the following basis:

Raw materials At moving average cost.

Goods in transit At cost accumulated upto balance sheet date.
Goods in process At manufacturing cost.
Finished goods At average manufacturing cost.
Net realizable value signifies the estimated selling price prevailing in the market less estimated selling
expenses incidental to sales.

2.7 Trade Debts

TradTrade receivables are recognized and carried at original invoice amount. Bad debts are adjusted
against provisions for doubtful debts or written off against the profit of the company during the year in
which these are deemed to be irrecoverable. Provision is made for debts which are considered
doubtful of recovery.

2.8 Foreign Currency Transactions

Transactions in foreign currencies are accounted for in Pak Rupee at exchange rate
approximating those prevailing on the date of transactions. Monetary assets and liabilities
denominated in foreign currencies are translated into Pak Rupee at the rates of exchange which
approximate those prevalent at the balance sheet date except for liabilities covered under forward
exchange contract which are translated at the contracted rates. Exchange gain and losses are
included in the income statement currently.

2.9 Borrowing Cost

Borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalized as a part of the cost of that asset. All other borrowing costs are charged to
income.

2.10 Provision for Gratuity

The Company operates an unfunded gratuity scheme for its all eligible employees and provision is
made annually to cover the obligations under the scheme. Provision for gratuity has not been made in
the accounts as there was no staff employed in the company to whom gratuity is to be paid.
2.11 Taxation
Charge for current taxation is based on taxable income at current tax rates after considering the
rebates and tax credits available, if any.
The company records deferred tax liability and assets on all temporary differences. However, the
management is of the opinion that timing difference relating to deferred tax will not be materially
reverse in foreseeable future, as the company's income is covered under presumptive tax regime.
2.12 Revenue Recognition
Sales are recorded on dispatch of goods. Income other than sales are recorded on accrual basis.

2.13 Sales
Sales include rebates on export sales.

2.14 Offsetting of Financial Assets and Financial Liabilities

A financial asset and a financial liability is offset and the net amount is reported in the balance sheet if
the company has the legal enforceable right to set off the transaction and also tends either to settle on
a net basis or to realize the asset and settle the liability simultaneously.

2.15 Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset has
been impaired. If any such indication exists, the company estimates the recoverable amount of the
asset. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying
amount of the asset is reduced to its recoverable amount and is recognized as an expense in the
income statement.

2.16 Cash and its Equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of cash flow
statement it comprises cash in hand and demand deposits, short term highly liquid investments that
are readily convertible to known amount of cash and which are not subject of significant change in
value.

2.17 Related Party Transactions

Transactions between the company and related parties are made at arm's length prices determined in
accordance with the comparable uncontrolled price method which sets the price by reference to
comparable goods sold in an economically comparable market to a buyer unrelated to seller.

2.18 Financial Assets and Liabilities

All financial assets and liabilities are initially recognized at cost which is fair value for the consideration
received or given. These financial assets and liabilities are subsequently measured at fair value.

2.19 Provisions

Provisions are recognized when the Company has a present (legal or constructive) obligation as a
result of past events, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate of the obligation can be made.
 30-06-2013 30-06-2012
RUPEES RUPEES
3. ISSUED, SUBSCRIBED AND
PAID-UP SHARE CAPITAL

2,000,000 (2012:2,000,000) fully paid

Ordinary shares of Rs. 10 each issued for cash 20,000,000 20,000,000

4. TRADE AND OTHER PAYABLES

Creditors 10,123,874 10,815,778
Accrued expenses 1,281,814 1,169,314
Advances from customers 26,630,999 18,039,599
Due to associated undertakings 71,235,334 70,478,107
Others 4.1 6,056,629 6,054,499
115,328,650 106,557,297

4.1 This includes an amount of Rs. 4.34 million payable to Fateh Jeans Limited, that was appearing under the
head Due to associated undertakings last year.

5. SHORT TERM BORROWINGS

From Directors and their family members (unsecured) 5.1 231,160,083 230,160,083

5.1 Consequent to the settlement agreement with pettioners who had filed petition for liquidation of the company under section 305
of the Companies Ordinance, 1984 in the Honorable High Court of Sindh, the company agreed to transfer two houses measuring
600 sq. yd. each and agriculture land measuring 5 acres against their borrowings to company amounting to Rs. 82.69 million. This
amount is included in the above balance. (Reference Note No. 8.1).

5.2 The rest of the loan is unsecured and interest free, repayable on demand (when deem fit by the directors)

6. PROVISION FOR TAXATION

Opening Balance 0 0
Provided during the year 240,840 0
Less: Advance Income Tax paid during the year and adjusted (236,404) 0
4,436 0
7. CONTINGENCIES AND COMMITMENTS

During the year the cases of realization of export proceeds are reopened and show cause notices are issued by Foreign Exhange
Adjudication Court, State Bank of Pakistan, Banking Services Corporation, Karachi. Subsequent to balance sheet date orders were issued
by the honourable Foreign Exhange Adjudication Court, State Bank of Pakistan, Banking Services Corporation for realization of export
proceeds to the tune of US $ 799,190/-. In case the export proceeds are not realized penalty equivalent to five times of the outstanding E
forms will be imposed. The amount of penalty amounts to US $ 3,995,950/-. The mangement of the company is arranging to settle the
cases of foreign exchange proceeds realization.
8. OPERATING FIXED ASSETS
COST Accumulated DEPRECIATION Accumulated Book Book
depreciation Charged depreciation Value Value
PARTICULARS
As on Addition/ As on as at for the Rate as at as at as at
01-Jul-12 (Deletion) 30-Jun-13 01-Jul-12 year (%) 30-Jun-13 30-Jun-13 30-Jun-12

1 2 3 4 5 6 7 8 9

Land on free hold 3,585,601 - 3,585,601 - - -- - 3,585,601 3,585,601

Factory Building on free hold 30,908,554 - 30,908,554 27,613,205 329,535 10 27,942,740 2,965,814 3,295,349

Other Building on lease hold 1,943,657 - 1,943,657 1,644,079 29,958 10 1,674,037 269,620 299,578

Plant & Machinery 107,376,913 - 107,376,913 93,538,789 1,383,812 10 94,922,601 12,454,312 13,838,124

Air Conditioning Plant 2,033,634 - 2,033,634 1,774,078 25,956 10 1,800,034 233,600 259,556

Tools & Equipments 14,702,529 - 14,702,529 12,099,050 260,348 10 12,359,398 2,343,131 2,603,479

Furniture & Fixture 3,885,509 - 3,885,509 3,340,632 54,488 10 3,395,120 490,389 544,877

Office Equipment & Computers 1,616,825 - 1,616,825 1,371,834 24,499 10 1,396,333 220,492 244,991

Electric Fittings 5,028,629 - 5,028,629 4,338,307 69,032 10 4,407,339 621,290 690,322

Vehicles 1,524,250 - 1,524,250 1,505,036 3,843 20 1,508,879 15,371 19,214

Arms 143,550 - 143,550 129,375 1,418 10 130,793 12,757 14,175

172,749,651 - 172,749,651 147,354,385 2,182,889 149,537,274 23,212,377 25,395,266

30-06-2012 172,749,651 - 172,749,651 144,928,420 2,425,965 147,354,385

NOTE:
8.1 Piece of land measuring 5 acres and two houses grouped under other building are to be transferred in settlement of short term
borrowings from directors and family members as disclosed in note no. 5.1.
8.2 Depreciation for the year is allocated as under: 30-Jun-13 30-Jun-12

(a) Cost of Sales 589,883 655425

(b) Administration Expenses 1,593,006 1,770,540

2,182,889 2,425,965

30-06-2013 30-06-2012
RUPEES RUPEES
9. LONG TERM INVESTMENTS

Available for sales 9.1 324,084 136,230

9.1 These are fully paid ordinary shares of Rs. 10/- each.

2013 2012 2013 2012

No. of shares Market/fair value

LEATHER AND TANNERIES

160 160 Bata Pakistan Ltd. 286,240 112,171
145 145 Service Industries Ltd. 37,844 24,058
324,084 136,230

10. STORES, SPARE PARTS AND LOOSE TOOLS

Stores 465,584 465,584

Spare parts and loose tools. 7,692,546 7,692,546
8,158,130 8,158,130
Less: Provision for obsolesce 8,158,130 8,158,130
0 0
11. STOCK-IN-TRADE

Raw and packing material 6,892,381 0

Finished goods 0 0
6,892,381 0
12. TRADE DEBTS - Unsecured

Export debts 6,458,262 114,423,754

Local Debts 4,140 0
Total considered goods 6,462,402 114,423,754
Considered doubtful 12.1 113,860,208 426,767
12.2 120,322,610 114,850,521
Less: Provision for bad and doubtful debts
-Opening balance (426,767) (426,767)
- Provided during the year 23 (113,433,441) 0
(113,860,208) (426,767)
6,462,402 114,423,754

12.1 Export trade debts were considered good since the Foreign Exchange Adjudication Court, Karachi vide its Judgement Order dated 31.03.2011 had linked
the settlement of E forms with the realization of Export proceeds and claims of Pakistani Exporters from the Russian Federation Accounts in the name of
Vnesheconombank with NBP. During the year the cases of realization of export proceeds are reopened and show cause notices are issued by Foreign
Exhange Adjudication Court, State Bank of Pakistan, Banking Services Corporation, Karachi and subsequent to balance sheet date orders were issued by the
honourable Foreign Exhange Adjudication Court, State Bank of Pakistan, Banking Services Corporation for realization of export proceeds. The export
debtors are, therefore, considered doubtful of recovery and according provided for.

12.2 The aging of trade debts is under:

upto 1 year and above 322,323 538,320
upto 5 years and above 120,000,287 114,312,201
120,322,610 114,850,521

13. ADVANCES, DEPOSITS AND PREPAYMENTS

Considered good 579,528 271,243

Considered doubtful 123,062 123,062
702,590 394,305
Less: Provision of bad and doubtful (123,062) (123,062)
579,528 271,243
14. OTHER RECEIVABLES

Export rebate - considered goods 4,161,818 4,161,818

15. CASH AND BANK BALANCES

Cash in hand 169,628 281

With Banks on current account 520,301 58,949
689,929 59,230
16. CONTINGENT ASSETS
The Government of Pakistan and Russian Government are discussing the matter for settlement of the claims of the Pakistani exporters toward sea freight
compensation operation.The Government of Pakistan has frozen the account of the Russian Government maintained with NBP, Karachi till the settlement of
the claims of the Pakistani exporters in accordance with the order of Honorable High Court of Sindh. A draft protocol has been finalized which is likely to be
signed within due course of time.

The Company has also filed suit before the Honorable High Court of Sindh against the Pakistan Government and Russian Government for recovery of
stuckup funds for sea freight compensation of USD 19,377,337.34 plus USD 21,599,457.00 (towards interest from 01.01.992 to 31.03.2005) as confirmed
and agreed by Russian Federation to be paid with further interest at the time of payment. The Court vide garnishee order dated 12.07.2006 to National
Bank of Pakistan has ordered NBP not to release amount to the extent of the amount claimed by the Company.

30-06-2013 30-06-2012
RUPEES RUPEES
17. SALES
Exports Sales 16,454,525 8,490,258
Local Sales 910,663 0
Less: Export sales Commission 0 0
Less: Sales Tax (23,366) 0
17,341,822 8,490,258
18. COST OF SALES
Raw and packing material consumed 11,507,446 5,293,740
Store, spare parts consumed 263,523 69,969
Finishing charges 1,117,756 508,804
Other manufacturing expenses 1,332,128 791,380
Depreciation 589,883 655,425
14,810,736 7,319,318
18.1 RAW AND PACKING MATERIAL CONSUMED

Opening inventory 0 0
Add: Purchases 18,399,827 5,293,740
18,399,827 5,293,740
Less: Closing Inventory 6,892,381 0
11,507,446 5,293,740
19. ADMINISTRATION EXPENSES
Traveling, conveyance and entertainment 1,525,547 444,926
Rent, rates, taxes and fee 131,708 144,395
Property tax 73,290 73,290
Printing and stationery 26,712 665
Utility expenses 115,403 115,297
Other charges 422,787 83,265
Depreciation 1,593,006 1,770,540
3,888,453 2,632,378
20. SELLING EXPENSES
Freight on export 912,201 335,384
Clearing and forwarding charges 286,354 206,327
Advertisement expenses 0 447,255
Export development surcharge 709 2,975
1,199,264 991,941
21. OTHER INCOME
Dividend income 8,611 4,512
8,611 4,512

22. FINANCIAL EXPENSES

Interest and other charges :

Bank charges and commission 84,140 143,798
84,140 143,798
 30-06-2013 30-06-2012
RUPEES RUPEES
23. OTHER CHARGES
Auditors' remuneration
Audit fee 187,500 75,000
Half yearly review 16,000 16,000
Provision for bad and doubtful debts 113,433,441 0
113,636,941 91,000

24. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS

AND OTHER EXECUTIVES

Remuneration and meeting fees were forgone by the Directors and Chief Executive as such no remuneration
and perquisites were paid to them during the year.
There were no loans or advances granted to the Directors during the year.

25. AGGREGATE OF TRANSACTIONS

WITH ASSOCIATED UNDERTAKINGS

i) Purchase of goods & services 0 0

ii) Sale of goods & services 0 0

iii) Brokerage, discount and commission 0 0

iv) Interest on loans

a) charged to associated companies 0 0

b) charged by associated companies 0 0

v) Loan and advances

a) advances provided 0 0

b) advances received from

M/s. Finishers Limited 757,227 955,416

vi) Any other transaction 0 0

26. Related Parties Disclosure.

Name of Directors Also Director in the following Associated Companies

Mr. Rauf Alam Fateh Sports Wear Ltd. Finishers Limited Trends Limited

Mr. Aftab Alam Fateh Sports Wear Ltd. Finishers Limited --

Mr. Saeed Alam Fateh Sports Wear Ltd. Finishers Limited Trends Limited

Mr. Faraz Alam Fateh Sports Wear Ltd. -- --

Mr. Ashhar Alam Fateh Sports Wear Ltd. -- --

Mr. Aneek Alam Fateh Sports Wear Ltd. -- --

Mr. Jamal Alam Fateh Sports Wear Ltd. -- --

27. Financial Instruments and Related Disclosures
2013
27.1 Financial Assets and Liabilities
Interest / Markup bearing Non-Interest / Markup bearing
Effective yield Maturity upto Maturity after Total Maturity upto Maturity after Total
Markup rate one year one year Rupees one year one year Rupees

Financial Assets
Trade debts 0 0 0 6,462,402 0 6,462,402
Other receivables 0 0 0 4,741,346 0 4,741,346
Cash & Bank Balances 0 0 0 689,929 0 689,929
0 0 0 11,893,677 0 11,893,677

Financial Liabilities
Short term borrowings 0 0 0 231,160,083 0 231,160,083
Trade and other payables 0 0 0 115,328,650 0 115,328,650
0 0 0 346,488,733 0 346,488,733

2012
Financial Assets and Liabilities
Interest / Markup bearing Non-Interest / Markup bearing
Effective yield Maturity upto Maturity after Total Maturity upto Maturity after Total
Markup rate one year one year Rupees one year one year Rupees
Financial Assets
Trade debts 0 0 0 114,423,754 0 114,423,754
Other receivables 0 0 0 4,433,060 0 4,433,060
Cash & Bank Balances 0 0 0 59,230 0 59,230
0 0 0 118,916,044 0 118,916,044

Financial Liabilities
Short term borrowings 0 0 0 230,160,083 0 230,160,083
Trade and other payables 0 0 0 106,557,297 0 106,557,297
0 0 0 336,717,380 0 336,717,380

27. 2 Risk Management

Overall, risks arising from the Company's financial assets and liabilities are limited.

a) Interest rate risk management.

The following rate liabilities comprise short term finance.

b) Foreign Exchange rate risk management.

No foreign currency loan is repayable except advances from the customers amounting to Rs.26,630,999/-

c) Credit Risk Management.

The company is exposed to a concentration of credit risk on its trade debts amounting to Rs. 113,443,441/- by
virtue of all of its customers being foreigners and only Rs. 430,907/- trade debts related to business in
Pakistan. The company do not have any limits on its customers.

27. 3 Fair value of Financial assets and liabilities

The carrying value of all financial assets and liabilities reflected in the financial statements approximate their fair
values.
28. Production Capacity
Due to nature of company's business, production capacity of the plant is not determinable.

29. Earning per Share

There is no dilutive effect on the basic earning per share of the Company, which is based on :.

2013 2012
(Loss) / Profit after tax for the year Rs. (112,088,665) 5,496,943
Number of Ordinary Shares 2,000,000 2,000,000

(Loss) / Profit per share Rs. (56.04) 2.75

30. Number of Employees

There are 3 number of employees as at June 30, 2013 (June 30, 2012 - Nil)

31. Date of Authorization of Issue

These financial statements were authorized for issue on 23rd September, 2013 by the Board of Directors of the
Company.

32. Figures
Figures have been rounded off to the nearest rupee.

SAEED ALAM RAUF ALAM

Dated: 23rd September, 2013 Chief Executive Director
 Pattern of holding of the shares held
by the shareholders of Fateh Industries Limited
as at 30th June, 2013
NO. OF TOTAL SHARES
SHAREHOLDING
SHAREHOLDERS HELD
46 From 1 To 100 2,526
23 From 101 To 500 6,575
7 From 501 To 1,000 5,246
8 From 1,001 To 5,000 17,429
5 From 15,001 To 20,000 82,963
1 From 20,001 To 25,000 23,118
1 From 30,001 To 35,000 32,437
1 From 120,001 To 125,000 121,967
1 From 165,001 To 170,000 169,333
1 From 170,001 To 175,000 172,803
1 From 210,001 To 215,000 214,811
1 From 235,001 To 240,000 236,025
1 From 260,001 To 265,000 264,000
1 From 290,001 To 295,000 294,406
1 From 355,001 To 360,000 356,361
99 TOTAL 2,000,000

S. CATEGORIES OF SHARES
NUMBERS PERCENTAGE
NO. SHAREHOLDERS HELD

1. Individuals 91 1,953,217 97.66%

2. Mutual Funds 2 38,253 1.91%
3. Investment Company 1 346 0.02%
4. Joint Stock Companies 3 3,241 0.16%
5. Financial Institutions 1 4,900 0.25%
6. Others 1 43 0.00%

TOTAL 99 2,000,000 100.00%

 Categories of Shareholders
S.No. Name No. of Shares

1. Associated companies

Fateh Sports Wear Limited 518

Total > 518

2. NIT / ICP (Name wise details)

Investment Corporation of Pakistan 346

National Bank of Pakistan - Trustee Department 38,253
Total > 38,599

3. Directors, CEO and their spouse and minor children

1 Mr. Rauf Alam 264,000

2 Mr. Aftab Alam 294,406
3 Mr. Saeed Alam 356,361
4 Mr. Faraz Alam 32,437
5 Mr. Ashhar Alam 15,422
6 Mr. Aneek Alam 18,392
7 Mr. Jamal Alam 15,372
8 Mr. Anhar Alam 18,642
9 Mrs. Seema Rauf 214,811
10 Mrs. Shabana Aftab 236,025
11 Mrs. Rana Saeed 172,803

Total > 1,638,671

4. Executive Nil

5. Public Sector Companies & Corporation Nil

6. Banks,DFIs, NBFIs, Modarbas, Insurance Companies

Mutual Funds & Others
1 The Bank of Punjab 4,900
2 Pakistan Industrial Credit & Investment Corporation 1,700
3 Fateh Textile Mills Limited 1,023
4 Abandoned Properties 43
Total > 7,666
 PROXY FORM

Folio No. ____________________________ No of Shares held ______________________________ I/we

___________________________________ of ________________________________________ being a

member(s) of Fateh Industries Limited, Hyderabad, entitled to Vote(s) hereby appoint

_____________________________________________________________________________________o

f ___________________________________________ as my / our proxy to vote for me/us and on my/our

behalf at the 28th Annual General Meeting of the Company to be held on Thursday 31 st October, 2013 at

09.30 a.m. at the registered office of the Company at Mirpurkhas Road, Hyderabad, and at any

adjournment thereof.

As witness my/our hand this ___________________________ day of ________________________ 2013

Signature:

Witness:
Revenue Stamp
Signature:

Address:

N.B. The Proxy Form duly stamped, signed and witnessed should reach the Company's
Registered Office atleast 48 hours before the time of the meeting. Signature must be as per
specimen signature registered with the Company.