Annual Report 2010 =National Foods Limited (NFL), founded in 1970, is Pakistan's leading multi-category Food Company today with over 250 different products in 12 categories. NFL holds ISO 9001, SO 22000, and HACCP certifications alang with SAP business technology to drive the company's strong commitment to quality and management. excellence. NFL is an international brand sold in over 35 countries and it aims to be a Rs. 50 billion company under its Vision 20/20 plan. NFL is dedicated to improving the ‘well-being of society through continuous development of innovative food products and through a wide-ranging corporate social responsibility program.|| FOUNDERS'PHILOSOPHY | ANNUAL REPORT 2010 Fovrders? Vhilasephy National Foods Limited must focus on customers’ needs and serve them with quality products at affordable prices at their doorstep. (Our products must be pure, conforming to international standards. Our research must produce continuously new, adventurous products that are scientifically tested and hygienically wrapped in safe and attractive packages. We must create an environment in our offices and factories where talents are groomed and our people have every opportunity to advance in their careers. We must prove ourselves good corporate citizens, support good causes and charity and bear our fair share of taxes, Reserves must be built, new factories created, sound profit made and fair dividends paid to our stock holders. Through building a reliable brand, National Foods Limited must get itself recognized as a leader in Pakistan and abroad. With the help of Almighty God, the Company can achieve its targets in time to come. Me.Contents Vision 03 Core Values 04 Company information a oe — — os Notice of Meeting oF Marketing Endeavours 08 CSR @ National Foods 10 ‘Human Resources 13 Directors’ Report to the Shareholders oe oe 15 Value Addition 19 Operating and Financial Highlights oe oe 49 Key Financial Ratios 21 Pattern of Shareholding 22 Statement of Compliane with the Code of Corporate Governance 24 Auditors Review Report on Compliance with Best Practices of Code oe 26 of Corporate Goverance Auditors’ Report on Financial Statements 27 Financial ieeeiielie 29 Form of Proxy a /Vision Our vision is to be a Rs. 50 billion food company by the year 2020 in the convenience food segment by launching products and services in the domestic and international markets that enhance lifestyle and create value for our customers through management excellence at all levels.We act with intense posi to We don'trun aur business at the cast of human or ethical take risks. We challenge ourselves continuously, we're values. do, and we take pride in energy andare notafra good at what w We say. We do. W pectand strive for nothing by ning We t thre ards their development. We put our people actively contribute tow sat them the best. Execution is the key to We see the world through the eyes of our customers. W ee. We act. We take full responsibility for aur actions do everything possible that makes them happy. and results. We don't blame others for our mistakes; we analyze them and correct them. We are part 0 @ problem, We act like owners and have a positive influence on athers. f the solution, never Our roles are defined, not o in going the extra mile to accomph coach and support each other to ensure everyone wins, We have a “WE versus I" mindset i nn yA hAl »ay Jefomation BOARD OF DIRECTORS. Mr. Abdul Majeed Mr Abrar Hasan ~ MrWagar Hasan Mr. Khawaja Munir Mashoogullah ~ Mr Zahid Majeed -- Mr. Ebrahim Qassim Mr iqbal Alimohamed ~ --Chairman - Managing Director Chief Executive AUDIT COMMITTEE Mir. Ebrahim Qassim -~ + Chairman Mr Wagar Hasan - Member Mr Zahid Majeed -- ‘COMPANY SECRETARY AND SECRETARY AUDIT COMMITTEE Mr Fayyaz Abdul Ghaffar CHIEF FINANCIAL OFFICER, Mr, Muhammad Kashif Iqbal INTERNAL AUDITORS. Messrs. Ernst & Young Ford Rhodes Sidat Hyder & Co. --Chartered Accountants COMPANY MANAGEMENT Mr. Absrar Hasan ------=+->~ Mr Shakalb Arif—--——-—-——- Mr. Kamran Khan Mr. Wagas Abrar Khan ~~ --Managing Director Chief Executive ——Chief Operating Officer --Chief Commercial Officer General Manager Human ResourceAUDITORS. A.F. Ferguson & Co. - -- Chartered Accountants State Life Building, 1-C, Li Chundrigar Road, Karachi SHARE REGISTRATION OFFICE Noble Computer Services (Pvt) Limited ~ ‘Mezzanine Floor, House of Habib Bullding Siddiqsons Tower), 3-Hinnah CH. Society, ‘Main Shahrah-e-Falsal, Karachl-75350, PABX: (92-21) 3432582-87 Fax: (92-21) 34325442 PRINCIPAL BANKERS Bank Al-Hablb Limited LM. Chundrigar Road Branch, Karachi SITE. Branch, Karachi New Garden Town Branch, Lahore Royal Bank of Scotland (RBS) ~ (Formerly ABN AMRO Bank) 16, Abdullah Haroon Road, Karachi MCB Bank Limited -- Shaheen Complex Branch, Karachi United Bank Limited ---~ 1 Chundrigar Road, Karachi Bank AlFalah Limited - {Islamic Banking Group) Port Qasim Authority Branch, Karachi Barclays Bank Plc, Pakistan --- Dawood Centre, JT. Khan Road, Karachi ‘Meezan Bank Limted -~ ‘MT. Khan Road, Karachi Bank Islami Pakistan Limited ~ SITE. Branch, Karachi Habib Bank Limited ~ SUITE. Branch, Karachi Habib Metropolitan Bank Limited --~ ~ Main Branch, Karachi REGISTERED OFFICE 12/CL-6 Claremont Read, Civil Lines, Karachi 75530 PO, Box No. 15509 Phone: (92-21) 35662687, 35670540, 35670585, 35670793 & 35672268 Faxc (92-21) 35684870Nolice of Meding Notice is hereby given that the 39th annual general meeting of National Foods Limited will be held at the registered office situated st 12/CL-6, Claremont Road, Civil Lines Karachi, on Friday, October 15, 2010 at 4:00 num. to transact the following business: ‘Ordinary Business: 1, To camfirm the minutes of the 32th annual general meeting held on October 31, 2009, 2. Torecelve, consider and approve the audited accounts for the year ended June 30, 2010. 3, To approve final dividend on the ordinary shares of the company. The directors have recommended dividend of 12% (or Rs 1.20 per share) on the ordinary shares held. 4. Toappoint auditors for the year 2010-201 1 and to foxtheir remuneration. By Order ofthe Board of Directors am pe A.Majeed Chairman Karachi, September 23, 2010 Notes: 1, The share transfer baoks ef the Company will remain closed from October 07, 2010 to Octaber 15, 2010 (both days Inclusive}. 2. All members are entitled to attend and vote at the meeting. A member may appoint a praxy to attend, speak and vote for hirvher. A proxy must be a member of the Company, 3. In order to be valid, an instrument proxy and the power of attomey or cther authority under which ft is signed, or a notarially certified copy of such power of authority, must be deposited at the registered office of the Company not less ‘than 4B hours before the time of the meeting. 4, Any change af address of Members should be notified immediately ta the Company's Share Registrar, Nable Computer ‘Services (Pvt) Lid, Mezzanine Floor, House of Habib Building (Siddlqsons Tower), -linnah Cooperative Housing Society, ‘Main Shahvah--Falsal, Karachi, Pakistan, 5.A member who has deposited his/her shares into Central Depository Company of Pakistan Limited, 2, im case of individuals, must bring his/her participant's ID number and account/sub-accaunt number alongwith original Computerised National Identity Card or original Passport at the time of attending the meeting. by in case of corporate entity, the Board of Directars' 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. 6, Members whe have not yet submitted photacapy of their Computerised National Identity Cards to the Company are requested to send the same atthe earliestVictory tn Brand, Elections 2010 ‘The annual Brand Elections are the truest gauge of which names rule the hearts of Pakistani consumers. Brand Elections 2010 were conducted across an electorate of 10,000 voters in 50 cities of Pakistan, and National Foods Limited emerged as the firtn favorite in 5 food categories; Recipes; Jams, Jellies, and Marmalades; Pickles; Spices and Ketchup. ‘Overall National Foods Limited won Ist place in Food/Household brands, and was tstrunner up in the general Elections, competing against a total of 3500 brands. Furthermore, an evaluation of voter profiles lead to an even prouder achievement as National Foods Limited emerged as, the favorite brand of female voters. With women being the heart of the Pakistani household, we are honored to be the brand women trust the most. —s WEWCET National Jams, Jellies, and Marmalades are a staple on breakfast tables across Pakistan, pleasing the eye and appetite with their bright color, good fruit flavor, and Uniform, soft consistency that makes them easy to spread. National Foods Limited products won the Jams, Jellies, and Marmalades category at the Brand Elections 2010, surpassing Shezan and Mitchells, and proved to be the preferred choice of women seeking healthy breakfast and light meal aptions for their families.