Rafhan AR 2012

10
Years at a Glance
Net Sales Rs. Million Cost of Sales Rs. Million Gross Prot Rs. Million %age of Sales Prot After Tax Rs. Million Capital Expenditure Rs. Million Dividend Amount Rs. Million Dividend Percentage Earnings per Share
(Rupees)
2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 19,531 18,271 13,913 11,428 10,747 7,578 6,127 5,194 4,534 4,031 15,557 14,471 10,615 8,993 8,006 5,480 4,556 3,997 3,259 3,001 3,975 3,800 3,298 2,435 2,741 2,098 1,571 1,198 1,275 1,030 20 21 24 21 26 28 26 23 28 26 2,040 2,034 1,838 1,297 1,492 1,089 809 615 670 521 1,185 1,122 582 848 606 114 122 302 448 415 1,062 1,062 924 831 924 831 647 323 286 259 1,150 1,150 1,000 900 1,000 900 700 350 310 280 161.57 117.92 87.62 66.57 72.51 56.43 220.86 220.20 198.99 140.43
for the year ended December 31, 2012
Annual Report
In the name of Allah The Most Merciful, The Compassionate
02 Company Information
03 Organogram 04 Notice of Meeting 08 Chief Executives Review 18 Directors Prole 20 Major Events 2012 22 Horizontal Analysis - P&L and B / S 23 Vertical Analysis - P&L and B / S 24 Directors Report 30 Forward Looking Statements 32 Stakeholders Information 33 Summary of Cash Flow Statements 34 Comments on Analysis Results 34 Statement of Value Added & its Distribution 35 Review Report 36 Statement of Compliance 37 Auditors Report 38 Balance Sheet 40 Prot and Loss Account 41 Statement of Comprehensive Income 42 Cash Flow Statement 43 Statement of Changes in Equity 44 Notes to the Financial Statements 69 Pattern of Shareholding Proxy Form
Company Information
Mehran Plant Board of Directors Chairman Jorgen Kokke Vice Chairman Rashid Ali - Non-Executive Legal Advisor M. Ali Seena C/o Surridge & Beecheno, Karachi Shares Registrar - - - - - - - - Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Independent Executive FAMCO Associates (Pvt.) Ltd. 1st Floor, State Life Building, 1-A I.I. Chundrigar Road, Karachi - 74000: Tel: (92-21) 32427012 - 32425467 Fax: (92-21) 32426752 - 32428310 Registerd Ofce 1st Floor, Finlay House, I.I. Chundrigar Road, Karachi - 74000: Ph: (92-21) 32442516 - 32410848 Fax: (92-21) 32428651 Head Ofce & Shares Department Rakh Canal East Road, Faisalabad, Pakistan Ph: (92-41) 8540121 - 22 - 23 Fax: (92-41) 8711016 - 8502197 Website: www.rafhanmaize.com Email: corporate@rafhanmaize.com Plants: Rakh Canal Plant: Rakh Canal East Road, Faisalabad Ph: (92-41) 8540121 - 22 - 23 Fax: (92-41) 8711016 - 8502197 Cornwala Plant: 5-KM Jaranwala-Khurrianwala Road, Jaranwala - Faisalabad Ph: (92-41) 4316121 - 26 Fax: (92-41) 4315100 Mehran Plant: K.B. Feeder Road, Kotri Jamshoro, Sindh. Ph: (92-223) 870894 - 98 Fax: (92-223) 870893 - Non-Executive Auditors KPMG Taseer Hadi & Co. Chartered Accountants Lahore - Karachi
Chief Executive & Managing Director Ansar Yahya Directors Cheryl K. Beebe Mary A. Hynes James P. Zallie Zulkar Mannoo Mian M. Adil Mannoo Wisal A. Mannoo Sh. Gulzar Hussain Dr. Abid Ali Chief Financial Ofcer Dr. Abid Ali Secretary M. Yasin Anwar Audit Committee Sh. Gulzar Hussain Cheryl K. Beebe Rashid Ali Zulkar Mannoo - - - - Chairman Member Member Member - Executive
Human Resource & Remuneration Committee Jorgen Kokke Cheryl K. Beebe Rashid Ali Ansar Yahya - - - - Chairman Member Member Member
Shares Transfer Committee Rashid Ali Ansar Yahya Dr. Abid Ali Bankers Citibank N.A. Habib Bank Ltd. Meezan Bank Ltd. MCB Bank Ltd. National Bank of Pakistan Standard Chartered Bank (Pakistan) Ltd. - - - Chairman Member Member
Annual Report
Organogram
Board of Directors
Chief Executive & Managing Director
Chief Financial Ofcer
Deputy Director Operations, Safety & Environment
Director Marketing & Business Development
Senior Procurement Manager (Agri-Produces & General Materials)
Deputy Director HR & Admin
Company Secretary & Compliance Ofcer
Head of Internal Audit
Manager Maize Production
Senior Manager Customer Services & Logistics (South Region)
Manager Warehouse & Stores
Quality Assurance Manager
Notice of Meeting
Notes: 1. The Share Transfer Book of the Company will remain closed from 15th to 22nd March, 2013 (both days inclusive) and no transfer will be accepted for registration during this period. 2. A member entitled to attend, speak and vote at the meeting shall be entitled to appoint another person as his/her proxy to attend, speak and vote instead of him/her, and a proxy so appointed shall have such rights with respect to attending, speaking and voting at the meeting as are available to a member. Proxies in order to be effective must be received by the Company not less than 48 hours before the meeting. A proxy need not be a member of the Company. Form of proxy is attached. 3. Shareholders are requested to notify change of address, if any, to Companys Shares Registrar immediately. 4. CDC shareholders desiring to attend the meeting are requested to bring their original Computerized National Identity Cards, Account and Participants ID numbers, for identication purpose, and in case of proxy, to enclose an attested copy of his/her CNIC. IMPORTANT - DIVIDEND MANDATE & CNIC NO. In accordance with SECPs directives, all shareholders, who have not yet opted for dividend mandate, are requested to authorize the company to directly credit all future cash dividends to their bank account by conveying following particulars to our Shares Registrars M/s FAMCO Associates (Pvt.) Ltd., State Life Building No. 1-A, 1st Floor, I.I. Chundrigar Road, Karachi > Title of Bank Account > Bank Account No. > Bank Name > Branch Name and Address > Cell / Landline Number of Shareholder > CNIC No. CDC shareholders will reply to their respective Stock Exchange Broker. Pursuant to the directives of the SECP, CNIC number is mandatorily required to be mentioned on dividend warrants. In case of non-receipt of the copy of valid CNIC, the Company would be unable to comply with SRO 831(1)/2012 dated 5 July 2012 of SECP and therefore may be constrained under Section 251(2)(a) of the Companies Ordinance, 1984 to withhold dispatch of dividend warrants of such shareholders in future. Please submit a copy of your valid CNIC (only Physical Shareholders), if not already provided to the Shares Registrar of the Company. Please also submit National Tax Number, if not yet submitted.
Notice is hereby given that the 121st General Meeting (Annual Ordinary) of the shareholders of Rafhan Maize Products Co. Ltd. will be held on Friday, March 22, 2013 at 10:30 a.m. at the Overseas Investors Chamber of Commerce and Industrys Hall, Talpur Road, Karachi to transact the following business: 1. To conrm minutes of the last General Meeting (Extraordinary) of the shareholders of the Company held on Friday, September 7, 2012 at Karachi. 2. To receive, consider and adopt the Audited Accounts of the Company for the year ended December 31, 2012 together with the Directors and Auditors Reports thereon. 3. To approve nal cash dividend @750% for the year ended December 31, 2012 as recommended by the Board of Directors. 4. To appoint auditors and x their remuneration. The present auditors Messrs KPMG Taseer Hadi & Co., Chartered Accountants, retire and being eligible, offer themselves for re-appointment. The Board of Directors, on recommendations of the Audit Committee, has proposed appointment of Messrs KPMG Taseer Hadi & Co., Chartered Accountants for the year 2013. By order of the Board Karachi March 1, 2013 M. Yasin Anwar Company Secretary & Compliance Ofcer
CSR A c ti vi ti es
Treatment Expenses for Poor Patients at Liver Center
Eye Camp at Girls High School
SOS Children Village
Beds for ICU - Allied Hospital
Vision
To be the Premier Provider of Rened Agriculturally Based Products and Ingredients in the Region.
Mission Statement
To grow business consistently through positive relationship with customers to attain full customer satisfaction and to bring continual improvement by adopting only those business practices which add value to our customers, employees and shareholders.
Annual Report
Our Core Values
01 03 05
Nothing is more important Our goal: Zero accidents
Safety
02 04 06
Of the products we make, the services we provide, the relationships we build
Quality
Honesty & trust are the foundation of our business We will maintain the highest standards of conduct
Integrity
Respect
We promote openness, teamwork, trust and mutual cooperation
Excellence
We will relentlessly pursue excellence in all that we do and give employees the resources they need to excel
Innovation
Continue to find new customer solutions and share those breakthroughs around the Ingredion World
Chief Executives Review
Ansar Yahya
Chief Executive & Managing Director
It is my pleasure to present the Annual Report and review of the performance of your Company for the fiscal year ended Dec 31, 2012. Despite difficult economic conditions and a challenging business environment, your Company, by the grace of Almighty Allah, was able to remain on its growth track by achieving 7% higher net sales than last year and net income of Rs.2.04 billion.
Economic Environment
The year 2012 was yet another challenging year for the economy of Pakistan. The widening demand and supply gap of energy and depletion of natural gas reserves adversely impacted the cost of production in the manufacturing sector. The energy shortfall and resultant demand recession, decline in foreign and local investment, high scal decit and overall economic slowdown restricted GDP growth to 3.7% against a desired growth rate of 6-7%. The agriculture sectors performance was less than expected with a repeat of oods which inundated a signicant part of agricultural land in the southern region. Imbalances on the external front and absence of investment inows pushed the value of Rupee to a record low level. A high rate of unemployment resulted in deterioration of disposable income and a rise in cost of living. As such, many of our consuming industries experienced an exceptionally high rise in raw material and energy costs affecting their sales volumes, revenue and protability.
During the year 2012, prices of corn showed a mixed trend and the gross corn prices kept uctuating. The biggest challenge in 2012 from a manufacturing standpoint has been managing spiraling variable costs owing to increased dependence on alternative fuels as a result of the worsening gas and electricity supply situation. Ongoing cost management and controlling initiatives were taken to partially offset the negative impact of escalating input costs but high energy costs radically eroded the margins. Consequently, the net income remained almost at par with the last year. This sustainable performance conrms the effectiveness of Companys long term business strategy and rm commitment to meet its objectives to create value for all the stakeholders.
Business Review
During the last six decades, your Company had been able to build trust with your customers as supplier of ingredients to meet their changing needs. In 2012, we were able to build on growing our volumes, ensuring quality and timely
Operating Results
Year ended December 31 Net Sales Net Income After Tax Earnings Per Share Rs. (Million) Rs. (Million) Rupees 2012 2011 19,531 2,040 220.86 18,271 2,034 220.20
deliverance across the country. Our long-term relationship with our customer is an asset. We provide our customers with sustainable solutions to their needs. Our history of reliable operations, building relationships and delivering on commitment helped us to combat the diverse challenges. Our ingredients and solutions add functionality to products being consumed in diverse consuming industries. The diverse and balanced range of sectors we serve is an important part of our strength and success. The Company believes that customer satisfaction is the driving force behind our spirit to meet those challenges and achieve excellence in whatever we do. Everything starts with our Values Safety, Quality, Integrity, Respect, Excellence and Innovation. We believe that clear and consistent commitment to these values is vital for sustainable business success. Our product portfolio spans a broad range
The nancial results look quite appreciable when reviewed in the context of the overall business and economic conditions during the year 2012 and the energy crisis which impacted Companys operating performance. This achievement is the result of implementing strategic management practices, building operational efciencies and better economies of scale as well as effective product mix management, strong innovation and focused investment.
Annual Report
Industries We Serve...
of product categories including Industrial, Food and Animal Nutrition & Health Ingredients to serve multifarious consuming segments in the Textiles, Confectionery & Bakery, Paper & Corrugation, Pharmaceuticals, Chemicals & Allied, Livestock feeds and many others.
Food Business
The food business offers a wide spectrum of products, services and solutions to diversied customers including confectionery & baking, desserts, beverages, savory products, ice cream and processed foods. Our product-line covers a wide range of products including Globe & Snowake starches, Rafhan Liquid Glucose, Cerelose Dextrose Monohydrate, Rafhan Liquid Caramel and Golden Syrup to meet different functionalities in food products. Your Company continued to remain a trusted and preferred
Industrial Business
Your Company is one of the premier providers of quality integrated solutions for different industrial applications in more than 50 types of industries. A difcult business environment persisted for the textile industry, which is a major consumer of starches. The downstream textile industry in general was badly affected by the energy crisis but the composite textile mill sector performed comparatively well. The Company offers a diversied portfolio of solutions and products to Textile sector and the sale of those products remained depressed. Paper and paperboard demand in Pakistan has shown growth in line with the overall improvement in education and packaging. The paper industry showed mixed performance. The small scale units faced tough competition from cheaper imports, high cost of inputs and energy shortfall. However, the large scale units operated normally and are bringing structural changes to increase domestic capacities of quality paper and paperboard to meet the growing demand which may create better demand for specialty starches. Corrugation and paper converting units operated normally to meet demand for industrial, electronics, fruits & vegetables, cement and food packaging. We serve the pharmaceutical business with a strong portfolio of leading and innovative brands Snowake, Farmal and Flo-SweetTM. The focus continues to be on developing new products and establishing new applications for existing and new ingredients.
supplier of raw materials to enhance customer base in food segment. Innovative solutions provided to the food sector have opened the door for business expansion. We consider growth as the key to success in the present competitive environment and are very much focused on taking appropriate actions to grow our business in the food sector.
Animal Nutrition and Health Business

Almost all the consuming segments of Poultry, Dairy Cattle and Aquaculture in livestock feeding continued to show growth in business. The poultry sector is the largest consumer of our ANI business. The poultry industry is making investments for mechanization, integrated farming systems, improving biosecurity, processing and value addition. Similarly, development of dairy farming and evolution of cattle feed rationing and growing areas for aquaculture contributed positively to the demand for ANI products. However, the energy crisis impacted our supply line and we could not fully meet the demand from our customers.
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Exports
The Company, in line with its vision, is on track to pursue new growth opportunities in export markets. The emphasis is on continually improving our export business by focusing on innovation and optimizing our Company portfolio. for the countries like Pakistan. Your Company is working for the last several years to enhance the production and yield of maize crop to meet the growing needs of industrial, food and feed segments. We are vigilant of crucial challenges the agriculture sector might face in the coming years and the role that maize crop may play in maintaining sustainable grain supply chain. We stand committed to the farming community with the support of our talented workforce and robust research & development platform. We also feel proud to have helped the farming community to create success in their lives through innovative farming approaches. We are assisting the corn growers to nd ways and means not only to produce more but also better through the adoption of efcient post-harvest handling measures. We are making efforts to strategically increase the cultivation of maize crop in Sindh and Khyber PK provinces. In KPK, most of the farmers still work without access to the modern agronomic practices and technologies. This is due to barriers such as small holdings, poor infrastructure and traditional farming. We have made arrangements to better train the local farmers about the benets of advanced farm management Your Company maintained a long term outlook and achieved positive growth in export volumes. We believe that there are opportunities in the international market and we can explore those opportunities. During the year, export performance was good despite the economic recession in the regional markets. However, the ever-growing increase in cost of production on account of utilities and other factors remained the major constraint to expand business in the global markets where other countries are heavily subsidizing their exports. Your Companys focus will be to pursue long-term sustainable growth by offering premium quality, superior services and innovative products. Your Company is determined to explore new export markets for maximum capacity utilization and earn valuable foreign exchange for the country. practices. In Sindh, we are focusing to work alongside farmers and societies to add a new crop in the form of maize to their existing cropping pattern. Commercial contract farming has started to ensure improved access to assured local markets, farm advisory services and in time payback. Our Maize Production Department is strongly committed to the development of maize farming in Pakistan and we place great importance on the training and development of the farmers. This agricultural extension program helps to raise the income of farmers, contributes to foods security and is benecial to all involved. Our team of agronomists regularly conducts farmer gatherings, where the latest information about good farming practices is given to help farmers and to improve farm economics as well as provide necessary information to improve their yields and ensure quality.
Raw Materials
Maize, being the highest yielding crop in the world, is important
Investments
We continue to target long term production growth with a balanced, diverse and resilient portfolio. Our focus remains to concentrate on our resources and investment in areas that will support our objective of delivering long-term growth. In 2012, we progressed further on our journey of growth and commenced commercial production at our new Mehran Plant at Kotri (Jamshoro) in the province of Sindh. The new plant will enhance our geographical reach capabilities. A number of projects were also undertaken at our existing production facilities to bring manufacturing optimization as a part of continuous improvement program.
Annual Report
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Cornwala Plant
We will continue to pursue capital projects for diversication and expansion in capacities in order to meet the changing and broadening needs of our valuable customers.
the environment and work for continual improvements in Health, Safety, Environment and Quality (HSEQ) systems. We recognize employees inputs towards quality by emphasizing skills development and professionalism.
Operations
Our manufacturing teams remain a key driver behind the sustained growth of our Company. As our business grows, our investment in plants and production infrastructure continues to steward premium quality for our customers. Moving forward, we are working to streamline operations and improve service levels by leveraging overall business synergies to ensure greater efciency and faster delivery. The Company remained engaged in efforts to improve process and administrative efciency through various activities of process re-engineering and review to further improve its product quality and simultaneously boost production efciencies and eliminate non-value added activities. This year, we have taken several steps to save energy and to keep our plants running to meet the demand from our customers. However, these alternate energy arrangements are quite expensive and add signicantly to the costs. The worsening energy crisis in Pakistan is our biggest challenge and we are planning to meet this challenge through strategic investments and improvements. We always strive to meet and exceed customers expectations by delivering the best products and technical services to our valued customers. Your Company continued to focus on reassessing the changing needs of its customers by investing in product quality and capacities. These changes along with inherent strength of its diverse portfolio have helped the Company to attain its overall growth objective. Our commitment
Integrated Quality and Environmental System

Quality Assurance is a top priority at all levels of the organization. Your Company is committed to provide the best quality products in the market, endeavors to protect
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to deliver Top Quality and Quantity was strengthened in 2012 through customer satisfaction survey and the result showed high satisfaction level. During the year, your Company has undergone successful surveillance audits of its Quality Management System ISO 9001:2008, ISO-14001:2004 EMS and OHSAS 18001: 2007 re-certication without any non-conformity and we endeavor to maintain this record in the future. We also obtained HALAL certication in respect of maintaining plant operations and management system in compliance with food standards. Implementation of ISO-22000:2005 FSMS has been completed this year and certication is achieved. Quality is assured through systematic and effective adoption, implementation, monitoring and continuous enhancement of quality control systems using latest methods of analysis. We have been extremely focused on meeting international standards. We initiated Lean Six Sigma to enhance competencies, improve efciency and creating values. Systematic training program has been kicked off to impart Lean Six Sigma training to a group of employees for Yellow, Green, Black and Master Black belt certications. This may help us to determine the current and future state of our processes in identied projects that can be used to improve our ways of working further. Our production facilities are ably supported by our research and development team to meet the tailor-made requirements of our customers. R&D capability is one of the principal reasons of the Companys strong business relationship with our valued customers. Our R&D expertise allows us to have a strong role in business development and makes us capable of identifying and enhancing the product portfolio to remain a partner of choice for all types of our customers.
Information Technology
Induction of world class business processes driven via Information Technology (IT) continues to be a key focus. IT at your Company offers a variety of services within the core functions of Process Management, Information Security, Customer Relationship Management and Enterprise Resource Planning (SAP) as well as IT Infrastructure and Operational services to support business strategies.
Product Development
Knowing our customers and their needs is the key to our business success. We strive to enhance our product range through product development. Your Company has come a long way from its beginnings to achieve excellence and consistent growth in its business. A major key to our success has been continuous development of innovative ingredients and keeping our products relevant, vibrant and valuable for all kinds of customers to meet different functionalities. Your Company has proved itself as an industry leader when it comes to the introduction of new processes and products, and in providing technical sales services and product application support for the advantage of our customers. Your Company has always been committed to innovation. We use market research to understand the customers needs. We use this insight to drive our own product development to differentiate ourselves from our competitors and importantly to give our customers an advantage from working with Rafhan Maize. Over the years, we have come up with tremendous innovations in our product-line which have contributed and added value to products for different consuming sectors. The implementation of SAP at all plants is a milestone achievement and will enable processes in line with best business practices, delivering values, efciency and effective controls, leading to successful business operations. The IT Team wholeheartedly participated in training and development of their peers that will help to support the growing needs of the Company in a cost effective manner. Your Company recognizes IT as an essential tool for maintaining the current business status and future progress. The production facilities and our ofces in different locations are connected through dedicated communication channels. As a strategic contributor, the IT team plays a vital role in the execution of business strategy and in the simplication of business operations, thereby bringing in efciency, improvement and standardization. The IT Department also spearheaded a string of changes focusing on induction and integration of cost effective and operationally efcient systems into the existing IT portfolio.
SAP Certicates Distribution Ceremony
Annual Report
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Health Safety and Environment (HSE)

Safety is one of our top priorities and we base our policies on the belief that all accidents are preventable. We have individual safety plans for all employees at all locations and in 2012 we made improvements in our safety management and control arrangements. The workplaces are made safer by a proactive approach, everybodys participation and use of work permit procedures. Accident reporting and analysis mechanism is dened and follow-up for corrective and preventive measures is being undertaken to avoid recurrence of incidents. The training sessions on OHSE are regularly conducted for employees to enhance the awareness of safety. We continue to improve the Companys environmental, health and safety processes to reach our goal of Zero Accident. Your Company has come a long way to embed a culture of safety within the organization and has achieved zero recordable incidents and lost time case during 2012. Rafhan has achieved 26.59 million man hours for the Company and contractors employees at Rakh Canal Plant and 20.34 million man hours at Cornwala Plant without any lost workday accident. Your Company places Safety, Health and Environment (SHE) at the heart of its business agenda. November was celebrated as a month of Safety with enthusiasm across the organization and excellent participation from all employees. Sites came up with interesting and innovative activities to reiterate the importance of safety and the priority it deserves. Your Company is continually working to promote a quality conscious and environment friendly culture. For the consecutive fourth time, your Company won the Best Practices Award on OHSE and Environment Excellence Award 2012 on account of its excellent safety culture and environmental initiatives and
successful implementation of environmental management system.
HR Management and Employees Relations

Human resources management plays a key role in recruiting, promoting and retaining the best employees. We put in place a targeted recruitment strategy for hiring people with the core skills, expertise and values to ensure that we deploy the right people for right positions. We believe in our people and strive to enable them to adhere to our values every day in every interaction. The Company strongly believes that its employees are the core assets and has remained focused on providing the most conducive environment through strong HR practices. The Company considers its workers as partners in continued success of Rafhan Maize and provides subsidized food at its canteen, subsidized grocery on monthly basis, entertainment facilities and annual awards for good performance and long
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ANNUAL BUSI NE S S M E E T I NG 2012
service awards to its employees. During 2012, scholarships were awarded to 100 children of employees at different levels. This support enabled our employees to get quality education for their children. Annual Sports Day is a regular feature at our Company. The Company provides all kind of opportunities to its employees to keep them physically and mentally t. A large number of employees take part in different games every year and this year about 300 employees participated. We aim to drive higher quality talent decisions by ensuring that opportunity for growth and challenging varied career experiences are provided to all employees. Our prime focus is to nurture a wining culture based on a high level of engagement, awless execution of HR processes, talent development and retention while ensuring ownership and accountability at all levels. The Company is committed to build a strong organization culture that is shaped by empowered and motivated employees.
and development plays a vital role in modeling employees for current as well as future organizational requirements. Since we consider our human resources as a prime resource, we continuously endeavour to ensure appropriate and systematic enhancement of technical and managerial competence through well rounded training and development, formulated on the basis of training needs assessment, staff career plans, succession plan and other organizational requirements. Training programs are developed and delivered by trainers from within the Company as well as local and international experts. During the year, 50 training programs were conducted by focusing on technical & other skills. More than 250 professionals beneted from these programs. Marketing and Lean Six Sigma. These programs included courses on subjects such as HSE, IT, PM,
Employee Training & Management Development

Your Company considers its human resource as the most valuable asset and remains committed to ensure that all employees are treated with equality, dignity and respect. Training
Social Responsibilities and Sustainability

Corporate social responsibility has become an integral part of the business today. The Company has a long history of carrying out its obligations as a responsible corporate citizen with respect to protection of interest of its customers, employees, shareholders, communities and environment.
Annual Report
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LEAN SIX SIGMA CHAMPIONS TRAINING
With a strong sense of corporate social responsibility, we believe in making a difference in the lives of society towards uplifting the economic well-being of the people. Your Company is contributing to society through a structured social investment program that aims to integrate the economic, social and environmental needs of the local communities. We are working with healthcare partners to provide information, advice and support to employees on health matters and share best practices across the Company. The Company allocates appropriate amount for education, health and social development sectors in the form of donations from time to time. During the period under review, your Company sponsored an Eye Camp for 1,700 girls students at a high school, provided nancial assistance to Harmans SOS Children Village, borne annual educational expenses of 10 girls students at college level, donated 3 beds for ICU in a local hospital and shared treatment expenses for poor patients at distinctive hospitals in the community. Internships were offered to 33 students from various academic institutions and 26 students are undergoing apprenticeship training under our ongoing program for the development of youth scheme. We have provided sites to a local bank and a post ofce to facilitate general public. Your Company also maintains a primary school in our locations to impart quality education to children of the locality. Fully equipped dispensaries are maintained to cope with emergencies and provide general health care to the employees. The Company does not employ any child labor and is an equal opportunity employer. Extensive tree plantation and development of green areas inside and outside the plants shows Companys commitment to the environment. 1,100 plants were planted in the premises of our plants and 8,606 square feet green area was developed at Mehran Plant to promote healthy environment. We seek to operate in a way that is environmentally sustainable as practical, while working continuously to reduce our
environmental impact. We believe that the highest standards of corporate behavior are essential to our long term success. We recognize that we cannot have a healthy and growing business unless the communities we serve are healthy and sustainable.
Business Risks, Challenges and Future Prospects

Keeping in view the importance of energy and its role in the economic growth, the Company is on track to continuously explore new opportunities and meeting new challenges through its vision, commitment and management practices. The business outlook for 2013 is prone to various types of risks and to a high degree of dependency on the development in the economic, political and security situation of the country. The energy shortfall is the biggest challenge for the Pakistan economy. Growth revival will depend on expedited implementation of structural reforms and scal improvements. Considering the fact that margins are under pressure due to currency devaluation, rising input costs and the need to use costlier alternate fuels to maintain smooth operations, the Company will focus on increasing volumes, tight cost control, process optimization and efcient working capital management. We shall continue to embark upon various initiatives to withstand business challenges.
Corporate Distinctions and Awards

Your Companys Annual Report for the year 2011was selected by the Joint Committee of the Institute of Chartered Accountants of Pakistan (ICAP) and Institute of Cost and Management Accountants of Pakistan (ICMAP) for the nomination of Best Corporate & Sustainbility Report Award
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and was ranked rst in the Food & Allied category to secure Best Corporate Report Award. Your Company was also awarded the CSR National Excellence Award. The award was given in appreciation and recognition of services and overall performance in corporate social sector. The Corporate Excellence Awards given by ICMAP & MAP were other achievements to acknowledge policies, practices, processes and products from all sectors of business in the country. Employers Federation of Pakistan in coordination with ILO recognized our Practices in the eld of Occupational Health, Safety and Environment. Your Company was also awarded Merit Trophy by the Federation of Pakistan Chambers of Commerce and Industry for the export promotion of non-traditional items. The Board of Investment in Sindh also recognized your Company by awarding Global Food Safety Award. Global HR Excellence Award was received from Global Media Links in the category of performance management.
Acknowledgment
We take this opportunity to thank our valued customers and consumers who have trust in our products and continue to provide support in ensuring the progress of your Company. We also acknowledge the support and cooperation received from our esteemed suppliers, dealers, bankers and other stakeholders which are helping and contributing towards the continued growth of the Company. We are also thankful for the excellent support and guidance provided to us by our parent Company, Ingredion Incorporated and the trust reposed by the shareholders on the management and the Board of Directors. I offer my sincere thanks to the employees of the Company for their hard work and relentless efforts. Your Company is immensely proud of its employees since without their dedicated efforts, it would not have been possible to achieve those results and performance in various areas. I would like to place on record my sincere appreciation and gratitude to our Board of Directors for their precious guidance and support in steering the Company to build and grow. May Allah give us the courage and wisdom to face the challenges ahead. Ameen!
Board of Directors
During the year 2012, the number of Directors was increased from 10 to 11 to induct an Independent Director in compliance with the Code of Corporate Governance. We welcome Sh. Gulzar Hussain who joined the Board of Directors as an Independent Director on September 07, 2012. Sh. Gulzar Hussain has a long association with Rafhan Maize and the Company will benet from his foresightedness and thoughtful observations in the current challenging business environment. On behalf of the Board
February 12, 2013
Ansar Yahya Chief Executive & Managing Director
Annual Report
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Board & Chief Executives Performance Review

Boards Performance
The Board is constituent of professionals of high caliber and diversely experienced. They are fully abreast of the regulations of the Code of Corporate Governance and associated corporate laws as applicable in Pakistan. To meet the requirements of the Code of Corporate Governance, three Directors, Mr. Rashid Ali (Vice Chairman), Dr. Abid Ali (Executive Director and CFO) and Mr. Zulkar Mannoo (Minority Representative), have qualied as Certied Directors from the Pakistan Institute of Corporate Governance. The Board members individually and collectively have been guiding and, when required, complementing management efforts on implementation of corporate strategy and Company policies. Their contribution to the development and adherence to Statement of Ethics, Business Practices, Vision, Mission Statement, the evaluation of internal controls and the recruitment of top ranking executives has been excellent. The Board has been proactive in setting up of its Committees with specic jurisdictions, dening specic roles of Chairman and Chief Executive, conducting periodic meetings at least quarterly; and extending due consideration to signicant business issues.
Chief Executives Performance Review

Chief Executive holds the ofce for three years. The Chief Executive acts and performs subservient to the Responsibilities and Powers prescribed by the Board of Directors. Comprehensive business plans have been developed by the Chief Executive and presented to the Board for its approval and endorsement. The parent Company, Ingredion Incorporated, USA, has a well-structured performance evaluation and review system for periodic review of Chief Executives performance. The performance is measured across all functions with foremost attention to nancial metrics in addition to OHSE, Business, Agility and Relationships.
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Directors Prole
JORGEN KOKKE
Chairman
Non-Executive Director
RASHID ALI
Vice Chairman
ANSAR YAHYA
Executive Director
Chief Executive & Managing Director He joined the Board in 2001. Presently he is holding the position of Chief Executive of the Company. He is also member of the Boards HR & Remuneration Committee and Shares Transfer Committee.
He joined the Board in 2011. Presently, he is Chairman of the Board. He is also Chairman of the Boards HR & Remuneration Committee. He is representing Ingredion Incorporated, the parent company on the Board. At Ingredion, he is VP & GM EMEA. He holds Masters Degree in Economics from University of Amsterdam.
He joined the Board in 1985. Presently he is the Vice Chairman of the Board. He is Ph.D and has Masters Degree in Chemistry and Business Administration. His business experience spans over 51 years. He is also member of Boards Audit Committee, HR & Remuneration Committee and Chairman of Shares Transfer Committee. He was director on the Board of Faisalabad Electric Supply Company for 10 years and Chairman of its Audit Committee.
CHERYL K. BEEBE
MARY A. HYNES
JAMES P. ZALLIE
She joined the Board in 2008. She is member of the Boards Audit Committee and HR & Remuneration Committee. She is representing Ingredion Incorporated, the parent company, on the Board. At Ingredion, she is Chief Financial Ofcer since October 1, 2010. She holds a Bachelor of Science degree in Accounting from Rutgers University and a Masters of Business Administration degree from Fairleigh Dickinson University.
She joined the Board in 2008. She is representing Ingredion Incorporated, the parent company, on the Board. At Ingredion, she is Senior Vice President, Counsel to the Chairman and Chief Compliance Ofcer. She holds a Bachelor of Political Science and Mathematics Degrees from Loyola University, Juris Doctor and Master of Laws - Taxation degrees from The John Marshall Law School and an Executive Masters of Business Administration degree from the Lake Forest Graduate School of Business in Chicago.
He joined the Board in 2011. He is representing Ingredion Incorporated, the parent company, on the Board. At Ingredion, he is Executive Vice President and President, Global Ingredient Solutions since October 1, 2010. He holds Masters degrees in Food Science and Business Administration from Rutgers University and a Bachelor of Science degree in Food Science from Pennsylvania State University.
Annual Report
19
DR. ABID ALI

Executive Director
ZULFIKAR MANNOO
MIAN M. ADIL MANNOO

He joined the Board in 2012. He is Ph.D and FCMA with over 20 years of experience in diversied business disciplines. Presently he is holding the position of Chief Financial Ofcer of the Company. He is also member of the Boards Shares Transfer Committee.
He joined the Board in 1990. He is alumni of The Wharton School, University of Pennsylvania and Aitchison College, Lahore. He is member of the Boards Audit Committee and is representing minority shareholders on the Board. He also holds directorship of Unilever Pakistan Foods Ltd.
He joined the Board in 1985. He is graduate and alumni of Aitchison College, Lahore. He is engaged in textile business for the last 20 years. He is representing minority shareholders on the Board. He also holds directorship of Unilever Pakistan Foods Ltd.
WISAL A. MANNOO
SH. GULZAR HUSSAIN

Independent Director
He joined the Board in 2006. He is engaged in textile business for the last 20 years. He is representing minority shareholders on the Board. He is also Member, Executive Committee of All Pakistan Textile Mills Association (APTMA).
Sh. Gulzar Hussain, a Business Executive, is a graduate from Punjab University and has passed Intermediate Examination of the Institute of Cost and Management Accounts, UK. He served Rafhan Maize from 1965 to 1998 in different high prole positions. His last title was Deputy Managing Director.
He has been on Rafhan Board on several terms, the latest one as Independent Director from September 2012. He also remained as member of parent Companys Board in Yugoslavia from 1987-2001.
20
Rafhan Calendar of Major Events - 2012

January 02 January 14 January 17 Annual Managers Meeting at Rakh Canal Plant. Annual Business Meeting at Cornwala Plant. Safety & Environment Training Program for Employees & Contractors was conducted at Mehran Plant. February 09 March 10 March 25 Corn Growers Meeting held at Cornwala Plant in collaboration with Packages Ltd., Lahore. Maize Production Department Meeting at Research Area, Chiniot. Participated in 4th Badin Hari Melo 2012 arranged by Sindh Bank/National Bank under the supervision of State Bank of Pakistan, Hyderabad. March 26-28 March 28 Mr. Jorgen Kokke visited Rakh Canal, Cornwala and Mehran Plants. Declared winner of 6th CSR National Excellence Awards-2011 by Help International Welfare Trust, Karachi. March 28 Received CSR Business Excellence Award 2011 in a competition arranged by National Forum of Environment & Health, Lahore. March 31 March 31 Pillars Values & Business Conduct Workshop held at Conrwala Plant. Earth Hour was observed at Rakh Canal, Cornwala and Mehran Plants from 08:30 pm to 09:30 pm. April 10 Awarded 28th Corporate Excellence Award in the Food Producers Sector arranged by Management Association of Pakistan. April 27 First Prize Winner of 7th EFP Award in the category of Food, FMCG and Pharmaceutical sector by Employers Federation of Pakistan. May 02 May 17 May 22 Hajj Draw for 16 employees held at Rakh Canal Plant. Maize Buying Agents Meeting at Rakh Canal Plant. Received frist truck at Mehran Plant carrying 33 tons corn grain from Hyderabad elds under Contract Farming Program with yield of 2.5 tons corn per acre. June 05 June 21 June 26 July 10 July 12 Maize Agronomists Meeting held at Rakh Canal Plant. Pillars Values & Business Conduct Workshop at Cornwala Plant. Safety & Environment Training Program for Employees and Contractors at Cornwala Plant. Global Food Safety Award 2012 from Board of Investment and Pakistan Food Association. 9th Annual Environment Excellence Award 2012 from National Forum for Environment and Health, Karachi. August 08 August 08 September 01 September 06 September 08 September 22 October 01 October 08 Election for Collective Bargaining Agent at Rakh Canal Plant. SAP Certicate Distribution at Rakh Canal Plant. Dengue Awareness Session at Rakh Canal Plant. Meeting with South Region dealers at Karachi. Dengue Awareness Session held at Cornwala Plant. Pillars Values & Business Conduct Workshop held at Cornwala Plant. Start-up of Mehran Plant. Best Corporate & Sustainability Report Awards-2011 from Institute of Chartered Accountants of Pakistan and Institute of Cost and Management Accountants of Pakistan.
Annual Report
21
Rafhan Calendar of Major Events - 2012

October 17 3rd Global HR Excellence Award 2012 by Global Media Links and Better Forum Pakistan at Karachi. October 23 October 24 November 2012 November 05 November 09 Safety & Environment Training Program for Employees & Contractors at Cornwala Plant. Plantation Ceremony at Government Girls Primary School, Madina Town, Faisalabad. November 2012 was observed as Safety Month at all locations. Meeting with Maize Agents at Rakh Canal Plant. Corporate Excellence Award from Institute of Cost and Management Accountants of Pakistan at Lahore. November 21 Arranged Free Eye Camp at Government Public Girls High School, Dhudiwala, Faisalabad - a CSR Project - Saving Sight of Kids. November 27 November 28 November 28-30 December 06 December 11 December 14 December 18 Lean Six Sigma Training Session at Rakh Canal Plant. Mock Exercise - Evacuation & Fire Fighting Drill by Safety Department at Rakh Canal Plant. Indoor Games Tournament amongst the teams of Rakh Canal and Cornwala Plants. Safety & Environment Training Program for Employees and Contractors at Mehran Plant. RCP & CWP: ISO 22000:2005 FSMS Surveillance-1 Audit, 2012 by BVC Lean Six Sigma Leadership Champions Training at Rakh Canal Plant. Special Merit Export Award from the Federation of Pakistan Chamber of Commerce & Industry on Export of Corn (Maize) derived products. December 21 December 23 December 29 December 29-31 Agreement with CBA concluded. Ofcers/Staff Picnic at Kallar Kahar/Khewra. Pillars Values & Business Conduct Workshop held at Cornwala Plant. Cricket Tournament amongst the teams of Rakh Canal and Cornwala Plants.
22
Horizontal Analysis of Prot and Loss Account

Sales Cost of sales Gross prot Distribution cost Administrative expenses Operating prot Other operating income Finance cost Other operating expenses Prot before taxation Taxation Prot after taxation 2012 2011 2010 2009 2008 2007 7% 31% 22% 6% 42% 24% 8% 36% 18% 12% 46% 20% 5% 15% 35% -11% 31% 34% 152% 11% 13% -27% -16% 79% 19% 20% 13% 13% 8% 7% -3% 15% 39% -12% 38% 33% -5% 28% 5% -13% 45% 41% -3% 83% -35% 35% 206% -42% -3% 12% 38% -12% 37% 35% -3% 15% 39% -12% 37% 34% -8% 23% 35% -11% 36% 34% 0% 11% 42% -13% 37% 35%
Horizontal Analysis of Balance Sheet

2012 2011 2010 2009 2008 2007 NON CURRENT ASSETS Property, plant and equipment 64% 5% 23% 14% 3% 12% Intangible assets -11% -20% - - - Capital work-in-progress -28% 86% -2% 96% 466% -67% EMPLOYEES RETIREMENT BENEFITS 16% -33% 311% -78% -25% 190% LONG TERM LOANS 88% -27% -18% 351% -46% -42% CURRENT ASSETS Stores and spares 20% 18% 12% -1% 28% 25% Stock in trade 3% -4% 168% -52% 77% 17% Trade debts 38% 43% 20% -8% 5% 23% Loans and advances 260% -43% 955% -52% 43% 97% Trade deposits and prepayments 104% 155% 15% -15% 23% -16% Other receivables 86% -30% 91% 19% 35% 4% Cash and bank balances 704% 59% -94% 4805% -96% 29% TOTAL ASSETS 25% 14% 38% 0% 33% 12% CURRENT LIABILITIES Trade and other payables 92% 22% 51% -4% 30% 7% Mark up accrued on short term running nances -2% 38% -4% 1% 13870% -97% Short term running nances - secured -100% -37% - -100% - Provision for taxation 10% 28% -14% 60% 88% 43% NON CURRENT LIABILITIES Deferred taxation 50% 6% 35% 11% -7% 33% SHARE CAPITAL AND RESERVES Share capital 0% 0% 0% 0% 0% 0% Reserves 17% 19% 24% 12% 19% 11% TOTAL LIABILITIES 25% 14% 38% 0% 33% 12% Note: No percentage has been worked out where there were no gures in current or corresponding year.
Annual Report
23
Vertical Analysis of Prot and Loss Account

Sales Cost of sales Gross prot Distribution cost Administrative expenses Operating prot Other operating income Finance cost Other operating expenses Prot before taxation Taxation Prot after taxation 2012 2011 2010 2009 2008 2007 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 79.7% 79.2% 76.3% 78.7% 74.5% 72.3% 20.3% 20.8% 23.7% 21.3% 25.5% 27.7% 1.9% 0.8% 0.9% 1.0% 1.5% 2.5% 1.5% 1.4% 1.5% 1.6% 1.5% 2.0% 16.9% 18.6% 21.2% 18.6% 22.5% 23.2% 0.5% 0.6% 0.6% 0.7% 0.8% 0.8% 0.3% 0.3% 0.2% 0.4% 0.3% 0.2% 1.2% 1.3% 1.5% 1.3% 1.6% 1.6% 16.0% 17.6% 20.1% 17.6% 21.4% 22.2% 5.5% 6.5% 6.9% 6.3% 7.5% 7.8% 10.4% 11.1% 13.2% 11.3% 13.9% 14.4%
Vertical Analysis of Balance Sheet

NON CURRENT ASSETS Property, plant and equipment Intangible assets Capital work-in-progress EMPLOYEES RETIREMENT BENEFITS LONG TERM LOANS CURRENT ASSETS Stores and spares Stock in trade Trade debts Loans and advances Trade deposits and prepayments Other receivables Cash and bank balances TOTAL ASSETS 2012 2011 2010 2009 2008 2007
36.3% 0.2% 12.7%
27.6% 0.3% 21.9%
29.9% 0.4% 13.4%
33.7% 18.8%
29.7% 9.6%
38.1% 2.3%
0.5% 0.5% 0.9% 0.3% 1.4% 2.4% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0%
4.2% 4.4% 4.3% 5.3% 5.4% 5.5% 30.0% 36.3% 43.1% 22.2% 46.0% 34.5% 7.2% 6.5% 5.2% 6.0% 6.6% 8.3% 2.5% 0.9% 1.7% 0.2% 0.5% 0.4% 1.3% 0.8% 0.4% 0.4% 0.5% 0.5% 0.2% 0.1% 0.2% 0.1% 0.1% 0.1% 4.9% 0.8% 0.5% 12.8% 0.3% 7.7% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
CURRENT LIABILITIES Trade and other payables 25.2% 16.4% 15.3% 14.0% 14.6% 14.8% Mark up accrued on short term running nances 0.1% 0.1% 0.1% 0.2% 0.2% 0.0% Short term running nances - secured 0.0% 4.8% 8.7% 0.0% 9.4% 0.0% Provision for taxation 2.8% 3.1% 2.8% 4.5% 2.8% 2.0% NON CURRENT LIABILITIES Deferred taxation 5.4% 4.5% 4.8% 5.0% 4.5% 6.4% SHARE CAPITAL AND RESERVES Share capital 0.9% 1.1% 1.3% 1.8% 1.8% 2.3% Reserves 65.6% 69.9% 67.0% 74.6% 66.7% 74.4% TOTAL LIABILITIES 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Note: No percentage has been worked out where there were no gures in current or corresponding year.
24
Directors Report
The Directors of your Company feel pleasure in presenting the annual audited accounts along with auditors report thereon for the year ended December 31, 2012.
Financial Results
Prot and Appropriations

Year ended December 31
Prot after taxation Actuarial gains/(losses) of employees retirement benets Un-appropriated prot brought forward Appropriations Final Dividend 2011 @650% (2010: @550%) (2011: @350%) (2011: @250%)
2012 2011 (Rupees in Thousands) 2,039,930 4,527 5,751,132 7,795,589 600,367 230,911 230,911 1,062,189 6,733,400 220.86 2,033,828 (43,934) 4,823,427 6,813,321 508,003 323,275 230,911 1,062,189 5,751,132 220.20
1st Interim Dividend 2012 @250%
2nd Interim Dividend 2012 @250%
Un-appropriated Prot Earnings per Share (Rupees)

The Directors of the Company endorse the contents of the Chief Executives Review which covers your Companys business review, salient activities in different fields of operations, outlook, investment plans for strategic growth and disclosures under corporate social responsibilities.
Distribution of Sales
(Percentage)
Corporate Governance
Your Company is committed to congregate the improved standards of corporate governance without any exception. The Directors are pleased to state that your Company is compliant with the provisions of the Code of Corporate Governance 2012 as required by SECP and formed as part of stock exchanges listing regulations. The statement of compliance with Code of Corporate Governance is annexed.
Material & Services Taxation Dividend & Retention Employee Cost Finance Cost Society Welfare
77.79% 6.70% 10.44% 4.76% 0.29% 0.01%
Annual Report
25
Sales
2012 2011 2010 2009 2008 2007
0
(Rs. in million)
19,531 18,271 13,913 11,428 10,747 7,578 5,000 10,000 15,000 20,000
Profit after Tax

(Rs. in million) 2012 2011 2010 2009 2008 2007
0 500 1,089 1,000 1,500 2,000 2,500 1,297 1,492 1,838 2,040 2,034
Disclosures under Code of Corporate Governance Corporate and Financial Reporting Framework
(a) The nancial statements, prepared by the management of the listed company, present its state of affairs fairly, the result of its operations, cash ows and changes in equity. (b) Proper books of accounts of the listed company have been maintained. (c) Appropriate accounting policies have been consistently applied in preparation of nancial statements and accounting estimates are based on reasonable and prudent judgment. (d) International Financial Reporting Standards, as applicable in Pakistan, have been followed in preparation of nancial statements and any departure there from has been adequately disclosed and explained. (e) The system of internal control is sound in design and has been effectively implemented and monitored; and (f) There are no signicant doubts upon the listed Companys ability to continue as a going concern.
26
Directors Report
Key operating and nancial data of last six years are as follows:
Net Sales Cost of Sales Gross Prot Operating Prot Prot Before Tax Prot After Tax Earnings per Share Dividend Amount Capital Expenditure Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million Rupees Rs. Million Rs. Million 2012 19,531 15,557 3,975 20 3,304 17 3,123 2,040 220.86 1,062 1,150 1,185 2011 2010 2009 2008 2007 18,271 14,471 3,800 21 3,400 19 3,216 2,034 220.20 1,062 1,150 1,122 13,913 10,615 3,298 24 2,955 21 2,800 1,838 198.99 924 1,000 582 11,428 8,993 2,435 21 2,131 19 2,012 1,297 140.43 831 900 848 10,747 8,006 2,741 26 2,415 22 2,299 1,492 161.57 924 1,000 606 7,578 5,480 2,098 28 1,755 23 1,681 1,089 117.92 831 900 114
% of Sales % of Sales
Dividend Percentage
Ten Years Performance showing key indicators has been given on the inside cover sheet of this report.
Earnings per Share

(Rupees) 2012 2011 2010 2009 2008 2007
0 50 100 117.92 150 200 250 140.43 161.57 198.99 220.86 220.20
Capital Expenditure
(Rs. in Million) 2012 2011 2010 2009 2008 2007
0 114 200 400 600 800 1,000 1,200 606 582 848 1,122 1,185
Annual Report
27
Value of investments of employees retirement funds:

2012 Rs. Million 2011
Provident Fund Gratuity Fund Superannuation Fund
as at June 30 as at December 31 as at December 31
737.537 610.088 414.664
694.684 569.684 355.787
Board of Directors
The Board consists of eleven members which includes nine non-executive and two executive directors. Out of nine non-executive directors, one is independent non-executive director and three directors represent minority shareholders. The current members of the Board of Directors have been listed in the Company Information. During the year under review, one casual vacancy occurred on the Board which was lled up within 30 days thereof. Election of directors was held in September, 2012 after completion of its tenure of three years. The number of Directors for new term has been increased from ten to eleven. During the year, two Directors have obtained certication under The Board Development Series program offered by Pakistan Institute of Corporate Governance.
Total certied Directors now become three.
Attendance at Board Meetings

During the year ended December 31, 2012, ve meetings of the Board of Directors were held and attended as follows:
Name of Director Meetings attended in person Meetings attended by Alternate Director
Jorgen Kokke Rashid Ali Ansar Yahya James P. Zallie Cheryl K. Beebe Mary A. Hynes Zulfikar Mannoo Mian M. Adil Mannoo Wisal A. Mannoo Anis A. Khan* Dr. Abid Ali Sh. Gulzar Hussain*
2 5 5 1 2 2 5 4 5 1 4 2
2 2 2
*Mr. Anis A. Khan was replaced by Dr. Abid Ali in April, 2012. Sh. Gulzar Hussain joined the Board in September as eleventh member of the Board.
Transactions in Companys Shares

CEO, Directors, CFO, Company Secretary and their spouses and minor children have made no transactions in the Companys shares during the year.
Parent Company
Ingredion Incorporated (formerly Corn Products International, Inc.), USA is holding majority shares of the Company. During the year, name of the parent company was changed from Corn Products International to Ingredion Incorporated.
28
Directors Report
Human Resource & Remuneration Committee
The Board of Directors has established a Human Resource & Remuneration Committee comprising following four Board members: Jorgen Kokke Cheryl K. Beebe Rashid Ali Ansar Yahya Chairman Member Member Member Non Executive Director Non Executive Director Non Executive Director Executive Director
The Committee is responsible for i) recommending human resource management policies to the board ii) recommending to the board the selection, evaluation, compensation (including retirement benets) and succession planning of the CEO iii) recommending to the board the selection, evaluation, compensation (including retirement benets) of CFO, Company Secretary and Head of Internal Audit; and iv) consideration and approval on recommendations of CEO on such matters for key management positions who report directly to CEO.
Auditors
The retiring auditors, Messrs KPMG Taseer Hadi & Co., Chartered Accountants, being eligible, offer themselves for re-appointment. The Board of Directors, on recommendations of Audit Committee, has proposed appointment of Messrs KPMG Taseer Hadi & Co., Chartered Accountants for the year 2013.
Shares Transfer Committee

The Board of Directors has established a Shares Transfer Committee comprising three Board members. Ten meetings of the Shares Transfer Committee were held and attended during the year as under
Audit Committee
The Board of Directors has established an Audit Committee in compliance with the Code of Corporate Governance comprising four Board members. Four meetings of the Audit Committee were held during the year and attended as under: No. of Meetings Attended Sh. Gulzar Hussanin Cheryl K. Beebe Rashid Ali Zulfikar Mannoo Chairman Member Member Member Indepedent Director Non Executive Director Non Executive Director Non Executive Director 1 4 4
No. of Meetings Attended
Rashid Ali Chairman 7 Ansar Yahya Member 10 Anis A. Khan* Member 2 Dr. Abid Ali Member 7 The Committee met from time to time to consider and approve valid transfers and transmissions of shares or any business related thereto. *Mr. Anis A. Khan was replaced by Dr. Abid Ali in April, 2012.
Pattern of Shareholding
Pattern of Shareholding as on December 31, 2012 according to requirements of Code of Corporate Governance and a statement reecting distribution of shareholding appears at the end of this report.
The Audit Committee reviewed the quarterly, half yearly and annual nancial statements before submission to the Board and their publication. CFO, Head of Internal Audit and a representative of external auditors attended all the meetings where issues relating to accounts and audit were discussed. The Audit Committee also reviewed internal audit ndings and held separate meetings with internal and external auditors as required under the Code of Corporate Governance. The Audit Committee also discussed with the external auditors their letter to the management. Related Parties Transactions were also placed before the Audit Committee. The Audit Committee has fully adopted the terms of reference as specied in Code of Corporate Governance 2012.
Contribution to National Exchequer

Your Company has contributed Rs.2,267 million (2011: Rs.2,518 million) during the year 2012 to the national exchequer on payments towards sales tax, income tax, import duties and statutory levies. An amount of Rs.290 million (2011: Rs.200 million) was also paid as withholding income tax deducted by the Company from shareholders, employees, suppliers and contractors.
Annual Report
29
Corporate Social Responsibility & Sustainability

Your Company has a strong belief in and endeavors to be a responsible corporate citizen in the community without any political afliation. The management is well aware of its social obligations and has used a proactive approach to achieve the goodwill and respect for the Company within the areas of its operations. The Company focuses on community development through sustained investment in education, health, environment, infrastructural development and disaster relief initiatives. Our major contribution towards community activities include but are not limited to: Donations amounting to Rs.2.5 million were made to the following organizations / institutions to support the noble causes under Corporate Social Responsibility Policy of the Company: > The Kidney Center Karachi through the American Business Council of Pakistan. > SOS Children Village, Faisalabad in our neighborhood to provide family based care and education to abandoned, destitute and orphaned children. > Sindh Institute of Urology and Transplantation (SIUT), Karachi, a welfare organization to provide free of cost medicines. > Liver Foundation Trust, Faisalabad for the treatment of patients suffering from Hepatitis. > Allied Hospital Patient Welfare Society to provide beds in the ICU Ward. > District Anti Tuberculosis (T.B.) Association treatment of needy and poor patients. for
32 students of different professional institutions were provided internship training in different departments of the Company. Extended 77 Scholarships to talented students for the facilitation and promotion of higher education. Contributed towards the uplift of economy by providing free agricultural advisory services to the farmers of various provinces. The Company celebrates with great fervor various internationally commemorative days like Earth Day, World Health Day and Earth Hour, World No Tobacco Day, World Environment Day and World Heart Day for creating awareness among employees. Apprenticeship training is provided to the young aspiring students for 2-3 years. Employees participation in community welfare and development activities is encouraged. Two Days Eye Camp was sponsored for the students of Govt. Public Girls High School, Faisalabad. 1700 students were examined by the Eye Specialist doctor out of whom 500 students were given treatment. 279 students have been prescribed eye glasses to be sponsored by the Company.
Dividend
The Company has already paid two interim dividends of 250% each. The Directors now propose a nal dividend of 750% making the total 1250% for the year. On behalf of the Board
> Fatima Jinnah Degree College for Women, Faisalabad to meet the Educational expenses of needy students. > For establishing a Playground adjacent to Cornwala Plant. Your Company is recognized as an equal opportunity employer with reasonable compensation, benets and working conditions. Your Company is financing and facilitating a public primary school and a post ofce built at its premises for the benet of surrounding community. A fully equipped dispensary is also available to meet emergency and general health care of the employees and their dependents.
February 12, 2013
30
Forward Looking Statements

This Annual Report contains or may contain forward-looking statements. The Company intends these forward-looking statements to be covered by the safe harbor provisions for such statements. These statements include, among other things, any predictions regarding the Companys prospects or future nancial condition, earnings, revenues, tax rates, capital expenditures, expenses or other nancial items, any statements concerning the Companys prospects or future operations, including managements plans or strategies and objectives therefor and any assumptions, expectations or beliefs underlying the foregoing. These statements can sometimes be identied by the use of forward looking words such as may, will, should, anticipate, believe, plan, project, estimate, expect, intend, continue, pro forma, forecast or other similar expressions or the negative thereof. All statements other than statements of historical facts in this report or referred to in or incorporated by reference into this report are forward-looking statements. These statements are based on current expectations, but are subject to certain inherent risks and uncertainties, many of which are difcult to predict and are beyond our control. Although we believe our expectations reected in these forward-looking statements are based on reasonable assumptions, stockholders are cautioned that no assurance can be given that our expectations will prove correct. Actual results and developments may differ materially from the expectations expressed in or implied by these statements, based on various factors, including energy availability and costs; the effects of global economic conditions and their impact on our sales volumes and pricing of our products, our ability to collect our receivables from customers and our ability to raise funds at reasonable rates; uctuations in worldwide markets for corn and other commodities, and the associated risks of hedging against such uctuations; uctuations in the markets and prices for our co-products, particularly corn oil; uctuations in aggregate industry supply and market demand; the behavior of nancial markets, including foreign currency uctuations and uctuations in interest and exchange rates; continued volatility and turmoil in the capital markets; the commercial and consumer credit environment; general political, economic, business, market and weather conditions in the countries in which we sell our products; future nancial performance of major industries which we serve, including, without limitation, the textile, food and beverage, pharmaceuticals, paper, corrugated and brewing industries; freight and shipping costs, and changes in regulatory controls regarding quotas, tariffs, duties, taxes and income tax rates; operating difculties; boiler reliability; labor disputes; genetic and biotechnology issues; changing consumption preferences and trends; increased competitive and/or customer pressure in the corn-rening industry; and the outbreak or continuation of serious communicable disease or hostilities including acts of terrorism. Our forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reect events or circumstances after the date of the statement as a result of new information or future events or developments. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections.
Annual Report
31
32
Stakeholders Information
Performance Indicators for Six Years

Prot and Loss Account Net turnover Rs. Million 19,531.40 18,270.99 13,912.77 11,428.10 10,746.83 7,578.34 Gross prot Rs. Million 3,974.51 3,799.82 3,297.74 2,435.36 2,741.25 2,098.17 Operating prot Rs. Million 3,304.12 3,399.87 2,954.88 2,130.94 2,415.17 1,754.64 Prot before tax Rs. Million 3,122.80 3,216.19 2,799.99 2,011.86 2,299.07 1,681.10 Prot after tax Rs. Million 2,039.93 2,033.83 1,837.94 1,297.08 1,492.37 1,089.18 Earnings before interest, taxes, depreciation Rs. Million and amortization (EBITDA) 3,398.56 3,453.23 2,989.07 2,211.54 2,475.27 1,829.73 Balance Sheet Share capital Reserves Shareholders funds Property, plant and equipment Net current assets / (liabilities) Long term / deferred liabilities Total assets Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million 92.36 6,771.49 6,863.86 3,749.57 2,289.13 562.06 10,320.26 92.36 5,789.23 5,881.59 2,283.49 2,091.54 373.68 8,280.18 92.36 4,861.52 4,953.89 2,174.15 2,061.37 351.75 7,259.95 92.36 3,915.37 4,007.73 1,765.37 1,495.49 260.32 5,245.91 92.36 3,486.08 3,578.44 1,553.16 1,684.25 235.27 5,228.76 92.36 2,933.33 3,025.70 1,501.74 1,589.41 252.34 3,945.61
2012 2011 2010 2009 2008 2007

Protability Ratios Gross prot ratio Percentage 20.35 20.80 23.70 21.31 25.51 27.69 Net prot to sales Percentage 10.44 11.13 13.21 11.35 13.89 14.37 EBITDA margin to sales Percentage 17.40 18.90 21.48 19.35 23.03 24.14 Operating leverage Percentage (0.41) 0.48 1.78 (1.86) 0.90 1.39 Return on equity Percentage 32.01 37.54 41.02 34.20 45.20 37.87 Return on capital employed Percentage 27.47 32.51 34.64 30.39 39.13 33.23 Liquidity Ratios Current ratio Times 1.79 2.03 2.05 2.53 2.19 3.38 Quick/ Acid test ratio Times 0.57 0.37 0.30 1.05 0.29 1.01 Cash to current liabilities Times 0.17 0.03 0.02 0.69 0.01 0.46 Cash ow from operations to sales Times 0.16 0.13 0.02 0.25 0.07 0.13 Activity / Turnover Ratios Inventory turnover ratio Times 4.41 4.29 3.09 6.23 2.98 3.47 No. of days in inventory Days 82.77 85.08 118.12 58.59 122.48 105.19 Debtors turnover ratio Times 26.31 33.97 36.91 36.24 31.28 23.08 No. of days in receivables Days 13.87 10.74 9.89 10.07 11.67 15.81 Creditors turnover ratio Times 5.99 10.68 9.58 12.25 10.45 9.30 No. of days in payables Days 60.93 34.18 38.10 29.80 34.93 39.25 Total assets turnover ratio Times 1.89 2.21 1.92 2.18 2.06 1.92 Fixed assets turnover ratio Times 5.21 8.00 6.40 6.47 6.92 5.05 Operating cycle Days 46.57 63.92 61.31 63.89 77.78 73.43 Investment / Market Ratios Earnings per share Rupees 220.86 220.20 198.99 140.43 161.57 117.92 Price earning ratio Times 18.10 11.41 10.60 10.57 14.74 19.12 Dividend yield ratio Percentage 3.00 5.00 5.00 6.00 4.00 4.00 Dividend payout ratio Percentage 52.07 52.23 50.25 64.09 61.89 76.32 Dividend cover ratio Times 1.92 1.91 1.99 1.56 1.62 1.31 Cash dividend per share Rupees 115.00 115.00 100.00 90.00 100.00 90.00 Stock Dividend (Bonus) per share Percentage - - - - - Market value per share at the end of the year Rupees 3,998.38 2,513.28 2,109.87 1,485.00 2,381.42 2,255.00 Market value per share during the year (High) Rupees 4,625.00 3,016.00 2,298.00 2,262.35 2,940.00 2,415.00 Market value per share during the year (Low) Rupees 2,405.00 2,010.00 1,100.00 1,286.87 2,300.00 945.00 Break-up value per share - Refer note below - Without surplus on revaluation of xed assets Rupees 743.13 636.78 536.34 433.91 387.43 327.58 - Including the effect of surplus on revaluation of xed assets Rupees 743.13 636.78 536.34 433.91 387.43 327.58 Capital Structure Ratios Financial leverage ratio Times - 0.07 0.13 Weighted average cost of debt Percentage 11.87 13.88 13.35 Debt : Equity ratio Times - - - Interest cover Times 56.67 56.70 89.75 Note: The Company has not carried out any revaluation, hence there is no surplus on revaluation of xed assets. - 13.73 - 42.26 0.14 12.66 - 64.65 8.91 143.38
Annual Report
33
Summary of Cash Flow Statement

2012 2011 2010 2009 2008 2007
(Rupees in Thousands)
Cash ow from operating activities Cash ow from investing activities Cash ow from nancing activities Opening cash and cash equivalents Effect of exchange rate uctuations Closing cash and cash equivalents
3,088,555
2,440,132
232,457 2,830,047 (577,499) (846,392)
741,549 1,011,781 (604,368) (111,239) (429,291) (831,423) (292,110) 305,420 420 13,730 69,119 236,295 6 305,420
(1,180,865) (1,116,204) (1,459,253) (1,298,041) 448,437 63,026 (4,943) 506,520 25,887 39,741 (2,602) 63,026
(288,480) (1,324,451) (633,522) 673,409 (146) 39,741 659,204 13,730 475 673,409
Cash Flow Statement - Direct Method

Cash ows from operating activities Cash received from customers Cash paid to suppliers and employees Finance cost paid Interest income received Taxes paid Net cash ows from operating activities Cash ows from investing activities Property, plant and equipment Sale proceeds of property, plant and equipment Disbursement of long term loans Repayment from long term loans Net cash ows from investing activities Cash ows from nancing activities Dividend paid Increase / (Decrease) in short term running nances Net cash ows from nancing activities Net increase / (Decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate uctuations Cash and cash equivalents at the end of the year 448,437 63,026 (4,943) 506,520 25,887 39,741 (2,602) 63,026 (633,522) 673,409 (146) 39,741 659,204 13,730 475 673,409 (292,110) 305,420 420 13,730 69,119 236,295 6 305,420 (1,061,351) (1,061,483) (922,940) (830,742) (923,000) (831,423) (397,902) (1,459,253) (236,558) (1,298,041) 634,460 (288,480) (493,709) (1,324,451) 493,709 (429,291) 0 (831,423) (1,184,502) 6,186 (4,746) 2,197 (1,180,865) (1,122,352) 5,411 (2,943) 3,680 (1,116,204) (581,897) 3,587 (1,500) 2,311 (577,499) (847,507) 4,822 (4,826) 1,119 (846,392) (606,325) 707 (230) 1,480 (604,368) (114,255) 1,402 (948) 2,562 (111,239) 19,326,826 18,110,107 13,851,211 11,456,343 10,731,611 (15,236,202) (14,484,335) (12,653,053) 2,083 (870,388) 3,088,555 3,614 (1,095,675) 2,440,132 6,685 (919,784) 232,457 7,516,737 (7,964,546) (9,231,427) (5,983,517) 4,303 (581,908) 2,830,047 25,420 (746,430) 741,549 22,005 (528,402) 1,011,781 2012 2011 2010 2009 2008 2007 (Rupees in thousands)
(133,764) (93,579) (52,602) (84,145) (37,625) (15,042)
34
Comments on Analysis Results

Protability Ratios Despite increase in fuel prices and usage of costly alternate energy, the company succeeded in maintaining 2011 Gross Prot and After Tax Net Income Ratios. However EBITDA Margin to Sales slightly decreased (1.50%) mainly due to increase in certain incremental manufacturing overheads. Operating Leverage Ratio, Return on equity ratio and Return on Capital Employed are on the decrease owing to heavy investment in new Greeneld plant at Kotri, Sindh. Liquidity Ratios The company is maintaining good Current Ratio (1.79 times) with slight improvement in Quick / Acid Test Ratio over the last year. Companys cash to current liabilities ratio increased by 0.14 Times in 2012 over last year because of the increase in Cash ow from operations (by 0.03 Times) during the year under review thus depicting efciencies of the operations. Activity / Turnover Ratios The company has very healthy Inventory Turnover Ratio (4.41 times) with days cover of approximately 83. During 2012, the company secured supply order from Kenya on 60 day deferred payment terms which slightly decreased trade debts turnover ratio, however, decrease in creditor turnover ratio has compensated enough to maintain optimum level of working capital. Investment in new Green eld plant not only led to decrease xed assets turnover ratio but also Total Asset turnover Ratio. Investment / Market Ratios EPS of the company has been slightly improved over last year and posted healthy increase (58%) in P/E ratio over 2011. Market price of share has sharply increased during past one year which resulted in decrease in Dividend Yield Ratio (reduced to 2%) whereas Cash Dividend Per Share, Dividend Payout Ratio and Dividend Cover Ratio of the company are consistent with the last year. Capital Structure Ratios The company is fully operating on equity capital, no long term debt hence Debt to Equity ratio is Zero.
Statement of Value Added and its Distribution

2012 2011 (Rupees in thousands) VALUE ADDED Net sales Material and services Other income
19,531,398 (15,074,994) 100,769 4,557,173
18,270,994 (13,919,975) 106,011 4,457,030 %
DISTRIBUTION EMPLOYEES AS REMUNERATION Salaries, wages and amenities FINANCIAL CHARGES TO PROVIDERS OF FINANCE Finance Cost GOVERNMENT AS TAXES Tax Workers prot participation fund Workers welfare fund SHAREHOLDERS AS DIVIDEND Cash dividend SOCIETY WELFARE Donations RETAINED WITHIN THE BUSINESS Depreciation/amortization Retained prot 930,237 56,099 1,082,874 167,633 58,357 1,308,864 1,062,189 2,390 219,653 977,741 1,197,394 4,557,173
20.4 1.2 23.7 3.7 1.3 28.7 23.3 0.1 4.8 21.5 26.3 100
769,347 57,740 1,182,362 172,411 59,540 1,414,313 1,062,189 2,500 179,302 971,639 1,150,941 4,457,030
17.3 1.3 26.5 3.9 1.3 31.7 23.8 0.1 4.0 21.8 25.8 100
Annual Report
35
Review Report to the Members
on Statement of Compliance with the 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 Rafhan Maize Products Co. Ltd (the Company) to comply with the Listing Regulations of Karachi and Lahore Stock Exchanges. 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 veried, whether the Statement of Compliance reects the status of the Companys compliance with the provisions of the Code of Corporate Governance and report 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 nancial statements we are required to obtain an understanding of the accounting and internal control systems sufcient to plan the audit and develop an effective audit approach. We have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Boards statement on internal control covers all controls and the effectiveness of such internal controls. Further, Sub-Regulation (xiii a) of Listing Regulation No. 35 (previously Regulation No. 37) notied by The Karachi Stock Exchange (Guarantee) Limited vide circular KSE/N-269 dated 19 January 2009 requires the Company to place before the Board of Directors for their consideration and approval of related party transactions distinguishing between transactions
carried out on terms equivalent to those that prevail in arms length transactions and transactions which are not executed at arms length price recording proper justication 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 transactions by the Board of Directors and placement of such transactions before the audit committee. We have not carried out any procedures to determine whether the related party transactions were under-taken at arms length price. Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reect the Companys 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 31 December 2012.
Lahore: Date: February 12, 2013
KPMG Taseer Hadi & Co. Chartered Accountants (Bilal Ali)
36
Statement of Compliance
with the Code of Corporate Governance - Year Ended December 31, 2012
This statement is being presented to comply with the Code of Corporate Governance contained in Listing Regulation No.35 of Karachi Stock Exchange (Guarantee) Limited and Chapter XI of Lahore 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 Independent Director Executive Directors Non-Executive Directors Names Sh. Gulzar Hussain Mr. Ansar Yahya Dr. Abid Ali Mr. Jorgen Kokke Mr. Rashid Ali Ms. Cheryl K. Beebe Ms. Mary A. Hynes Mr. James P. Zallie Mr. Zulkar Mannoo Mian M. Adil Mannoo Mr. Wisal A. Mannoo 9. The Directors of the Board were apprised of their duties and responsibilities from time to time during Board meetings. In accordance with mandatory requirement of SECP and Stock Exchanges, two Directors got certication under The Board Development Series program offered by Pakistan Institute of Corporate Governance during the year. Total certied Directors now become three. 10. The board has approved/ratied appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment after implementation of CCG 2012. 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 nancial 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 nancial reporting requirements of the CCG. 15. The board has formed an Audit Committee. It comprises four members. All are non-executive directors and the chairman of the committee is an independent director. 16. The meetings of the audit committee were held at least once every quarter prior to approval of interim and nal 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 four members, of whom three are non-executive directors. The chairman of the committee is a non-executive director. 18. The board has set up an effective internal audit function. The Internal Auditor is considered suitably qualied and experienced for the purpose and is conversant with the policies and procedures of the company. 19. The statutory auditors of the company have conrmed 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 rm, their spouses and minor children do not hold shares of the company and that the rm 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 conrmed that they have observed IFAC guidelines in this regard. 21. The closed period, prior to the announcement of interim/nal results, and business decisions, which may materially affect the market price of companys securities, was determined and intimated to directors, employees and stock exchanges. 22. Material/price sensitive information has been disseminated among all market participants at once through stock exchanges. 23. We conrm that all other material principles enshrined in the CCG have been complied with.
The independent director meets the criteria of independence under clause i (b) of the CCG.
2. The directors have conrmed 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. One casual vacancy, occurred on the Board during the year under review, was lled up within 30 days. Election of directors was held in September, 2012 after completion of its tenure of three years. Number of Directors has been increased from ten to eleven. 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 signicant policies of the company. A complete record of particulars of signicant 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 Chairman and, in his absence, by the Vice Chairman and in their absence, by a director elected by the board for this purpose 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.
February 12, 2013
Annual Report
37
Auditors Report to the Members

We have audited the annexed balance sheet of Rafhan Maize Products Co. Ltd. (the company) as at 31 December 2012 and the related prot and loss account, statement of comprehensive income, cash ow statement and statement of changes in equity, together with the 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 purposes of our audit. It is the responsibility of the Companys 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 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 a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and signicant 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 verication, we report that:
c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, prot and loss account, statement of comprehensive income, cash ow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as
a) in our opinion, proper books of account have been kept by the Company as required by the Companies Ordinance, 1984; b) in our opinion: i) the balance sheet and prot 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 Companys business; and iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Company;

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 Companys affairs as at 31 December 2012 and of the prot, its comprehensive income, its cash ows and changes in equity for the year then ended; and d) in our opinion 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.

Lahore
KPMG Taseer Hadi & Co. Chartered Accountants (Bilal Ali)
February 12, 2013
38
Balance Sheet

As at 31 December 2012
Note 2012 2011
(Rupees in thousands)
NON CURRENT ASSETS Property, plant and equipment Intangible assets Capital work in progress Employees retirement benets Long term loans - secured 5 6 7 8 9 3,749,062 20,799 1,312,568 50,328 4,032 5,136,789 437,899 3,093,207 742,382 255,025 132,767 15,860 506,520 5,183,660 2,596,483 11,199 - 286,852 2,894,534 2,289,126 7,425,915 2,283,486 23,415 1,811,331 43,362 2,139 4,163,733 365,115 3,005,990 537,810 70,878 65,095 8,531 63,026 4,116,445 1,355,244 11,458 397,902 260,302 2,024,906 2,091,539 6,255,272
Current assets Stores and spares Stock in trade Trade debts Loans and advances Trade deposits and short term prepayments Other receivables Cash and bank balances 10 11 12 13 14 15 16
Current liabilities Trade and other payables Short term running nances - secured Taxation - net 17 18 Mark up accrued on short term running nances
Working capital Total capital employed NON CURRENT LIABILITIES NET CAPITAL EMPLOYED The annexed notes 1 to 39 form an integral part of these nancial statements. Deferred taxation 19
562,057
373,682
6,863,858
5,881,590
Dr. Abid Ali Director
Zulfikar Mannoo Director
Annual Report
39
Note 2012
2011
Represented by: Share capital and reserves Share capital Reserves Contingencies and commitments 22 20 21 92,364 6,771,494 92,364 5,789,226
6,863,858
5,881,590
40
Prot and Loss Account

for the year ended 31 December 2012
Note 2012 2011 (Rupees in thousands)
Sales - net Cost of sales Distribution expenses Administrative expenses Operating prot Other operating income
23 24
19,531,398 (15,556,892) 3,974,506 (368,192) (302,190) (670,382) 3,304,124 100,769 3,404,893 (56,099) (225,990) (282,089) 3,122,804 (1,082,874) 2,039,930
18,270,994 (14,471,176) 3,799,818 (146,109) (253,839) (399,948) 3,399,870 106,011 3,505,881 (57,740) (231,951) (289,691) 3,216,190 (1,182,362) 2,033,828
Gross prot 25 26 27
Finance cost Other operating expenses 28 29
Prot before taxation Taxation 30 Prot after taxation
Earnings per share - basic and diluted (Rupees) 31 220.86 220.20
The annexed notes 1 to 39 form an integral part of these nancial statements.
Annual Report
41
Statement of Comprehensive Income

2012 2011 (Rupees in thousands)
Prot for the year Other comprehensive income Total comprehensive income for the year The annexed notes 1 to 39 form an integral part of these nancial statements. Actuarial gain / (loss) of retirement benets recognized directly in equity Deferred tax on actuarial (gain) / loss recognized directly in equity
2,039,930
2,033,828
6,966 (2,439)
(51,438) 7,504
2,044,457
1,989,894
42
Cash Flow Statement


Note 2012 2011
Cash ows from operating activities Prot before tax 3,122,804 3,216,190 Adjustment for non-cash charges and other items: Depreciation 213,369 173,325 Amortization of intangible asset 6,284 5,977 Provision for employees retirement benets 53,177 26,944 Provision for doubtful debts 2,156 4,372 Provision for slow moving and obsolete items 425 4,314 Prot on sale of property, plant and equipment (5,534) (4,040) Interest income (2,083) (3,614) Finance cost 56,099 57,740 Gain on foreign exchange transactions 4,943 2,602 Markup capitalized 77,406 38,999 Operating prot before working capital changes 3,529,046 3,522,809 (Increase) / decrease in current assets: Stores and spares (73,209) (58,908) Stock in trade (87,217) 119,756 Trade debts (206,728) (165,259) Loans and advances (183,491) 54,132 Trade deposits and short term prepayments (67,672) (39,573) Other receivables (6,498) 3,723 (624,815) (86,129) Increase in current liabilities: Trade and other payables 1,240,401 246,035 Net decrease / (increase) in working capital 615,586 159,906 Cash generated from operations 4,144,632 3,682,715 Taxes paid (870,388) (1,095,675) Employees retirement benets paid (53,177) (56,944) Interest received 1,252 3,614 Finance cost paid (133,764) (93,579) (1,056,077) (1,242,584) Net cash generated from operating activities 3,088,555 2,440,131 Cash ows from investment activities Capital expenditure incurred (1,184,502) (1,122,352) Proceeds from sale of property, plant and equipment 6,186 5,412 Long term loans disbursed (4,746) (2,943) Repayment from long term loans 2,197 3,680 Net cash used in investing activities (1,180,865) (1,116,203) Cash ows from nancing activities Dividend paid (1,061,351) (1,061,483) Short term running nances - secured (397,902) (236,558) Net cash used in nancing activities (1,459,253) (1,298,041) Net increase in cash and cash equivalents 448,437 25,887 Cash and cash equivalents at the beginning of the year 63,026 39,741 Effect of exchange rate uctuations on cash and cash equivalents (4,943) (2,602) Cash and cash equivalents at the end of the year 16 506,520 63,026 The annexed notes 1 to 39 form an integral part of these nancial statements.
Annual Report
43
Statement of Changes in Equity


Share Capital Reserves Revenue Reserves Unappropriated Total
Share
capital premium Other
General prot
( Rupees in thousands)
Balance as at 31 December 2010 Total comprehensive income for the year Transactions with owners of the Company, recognized directly in equity Final dividend 2010 @ Rs. 55 per share Ist interim dividend @ Rs. 35 per share 2nd interim dividend @ Rs. 25 per share Balance as at 31 December 2011 Total comprehensive income for the year Transactions with owners of the Company, recognized directly in equity Final dividend 2011 @ Rs. 65 per share Ist interim dividend @ Rs. 25 per share 2nd interim dividend @ Rs. 25 per share Balance as at 31 December 2012
92,364 - 92,364
36,946 - 36,946
941 - 941
207 - 207
4,823,427 1,989,894 6,813,321
4,953,885 1,989,894 6,943,779
- - - - 92,364 - 92,364
- - - - 36,946 - 36,946
- - - - 941 - 941
- - - 207 - 207
(508,003) (323,275) (230,911) 5,751,132 2,044,457 7,795,589
(508,003) (323,275) (230,911) (1,062,189) 5,881,590 2,044,457 7,926,047
- (1,062,189)
- - - - 92,364
- - - - 36,946
- - - - 941
- - - 207
(600,367) (230,911) (230,911) 6,733,400
(600,367) (230,911) (230,911) (1,062,189) 6,863,858
- (1,062,189)
The annexed notes 1 to 39 form an integral part of these nancial statements.
44
Notes to the Financial Statements

1 The Company and its operations Rafhan Maize Products Company Limited (the Company) is incorporated in Pakistan and is listed on the Karachi and Lahore Stock Exchanges. Ingredion Inc. (formerly Corn Products International Inc.) Chicago, U.S.A., holds majority shares of the Company. The registered ofce of the Company is located at Finlay House, I.I. Chundrigar Road, Karachi. The Company uses maize as the basic raw material to manufacture and sell a number of industrial products, principal ones being industrial starches, liquid glucose, dextrose, dextrin and gluten meals. Basis of preparation 2.1 Statement of compliance
These nancial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of Companies Ordinance, 1984. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standard Board and Islamic Financial Reporting Standards (IFASs) issued by the Institute of Chartered Accountants of Pakistan as are notied under the provisions of the Companies Ordinance, 1984. Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of Companies Ordinance, 1984 or the requirements of the said directives shall prevail.
Standards and amendments to published approved International Financial Reporting Standards not yet effective 2.2 - IAS 19 Employee Benets (amended 2011) - (effective for annual periods beginning on or after 1 January 2013). The amended IAS 19 includes the amendments that require actuarial gains and losses to be recognized immediately in other comprehensive income; this change will remove the corridor method and eliminate the ability for entities to recognize all changes in the dened benet obligation and in plan assets in prot or loss, which currently is allowed under IAS 19; and that the expected return on plan assets recognized in prot or loss is calculated based on the rate used to discount the dened benet obligation. The Companys policy for recognition of actuarial gains and losses is already in compliance with the amendment. IAS 27 Separate Financial Statements (2011) - (effective for annual periods beginning on or after 1 January 2013). IAS 27 (2011) supersedes IAS 27 (2008). Three new standards IFRS 10 - Consolidated Financial Statements, IFRS 11- Joint Arrangements and IFRS 12- Disclosure of Interest in Other Entities dealing with IAS 27 would be applicable effective 1 January 2013. IAS 27 (2011) carries forward the existing accounting and disclosure requirements for separate nancial statements, with some minor clarications. The amendments have no impact on nancial statements of the Company. IAS 28 Investments in Associates and Joint Ventures (2011) - (effective for annual periods beginning on or after 1 January 2013). IAS 28 (2011) supersedes IAS 28 (2008). IAS 28 (2011) makes the amendments to apply IFRS 5 to an investment, or a portion of an investment, in an associate or a joint venture that meets the criteria to be classied as held for sale; and on cessation of signicant inuence or joint control, even if an investment in an associate becomes an investment in a joint venture. The amendments have no impact on nancial statements of the Company. Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) (effective for annual periods beginning on or after 1 January 2014). The amendments address inconsistencies in current practice when applying the offsetting criteria in IAS 32 Financial Instruments: Presentation. The amendments clarify the meaning of currently has a legally enforceable right of set-off; and that some gross settlement systems may be considered equivalent to net settlement. Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) (effective for annual periods beginning on or after 1 January 2013). The amendments to IFRS 7 contain new disclosure requirements for nancial assets and liabilities that are offset in the statement of nancial position or subject to master netting agreement or similar arrangement. The following standards, amendments and interpretations of approved accounting standards will be effective for accounting periods beginning on or after 01 January 2013:
Annual Improvements 20092011 (effective for annual periods beginning on or after 1 January 2013). The new cycle of improvements contains amendments to the following ve standards, with consequential amendments to other standards and interpretations:
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- IAS 1 Presentation of Financial Statements is amended to clarify that only one comparative period which is the preceding period is required for a complete set of nancial statements. If an entity presents additional comparative information, then that additional information need not be in the form of a complete set of nancial statements. However, such information should be accompanied by related notes and should be in accordance with IFRS. Furthermore, it claries that the third statement of nancial position, when required, is only required if the effect of restatement is material to statement of nancial position.
- IAS 16 Property, Plant and Equipment is amended to clarify the accounting of spare parts, stand-by equipment and servicing equipment. The denition of property, plant and equipment in IAS 16 is now considered in determining whether these items should be accounted for under that standard. If these items do not meet the denition, then they are accounted for using IAS 2 Inventories. IAS 32 Financial Instruments: Presentation - is amended to clarify that IAS 12 Income Taxes applies to the accounting for income taxes relating to distributions to holders of an equity instrument and transaction costs of an equity transaction. The amendment removes a perceived inconsistency between IAS 32 and IAS 12. IAS 34 Interim Financial Reporting is amended to align the disclosure requirements for segment assets and segment liabilities in interim nancial reports with those in IFRS 8 Operating Segments. IAS 34 now requires the disclosure of a measure of total assets and liabilities for a particular reportable segment. In addition, such disclosure is only required when the amount is regularly provided to the chief operating decision maker and there has been a material change from the amount disclosed in the last annual nancial statements for that reportable segment. The amendments have no impact on nancial statements of the company. IFRIC 20 - Stripping cost in the production phase of a surface mining (effective for annual periods beginning on or after 1 January 2013). The interpretation requires production stripping cost in a surface mine to be capitalized if certain criteria are met. The amendments have no impact on nancial statements of the Company.
Basis of measurement These nancial statements have been prepared under the historical cost convention, except for recognition of certain employees retirement benets at present value. Summary of signicant accounting policies 4.1 4.2 Trade debts Trade debts are carried at original invoice amount less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are written off when identied. Revenue recognition Sale of goods Revenue represents the fair value of the consideration received or receivable for goods sold, net of discounts and sales tax. Revenue is recognized when it is probable that the economic benets associated with the transaction will ow to the Company and the amount of revenue, and the associated cost incurred, or to be incurred, can be measured reliably. Revenue from sales is recognized upon transfer of signicant risks and rewards of ownership of the goods to buyers i.e. dispatch of goods to customers.
Interest Income from bank deposits and loans is recognized on accrual basis. 4.3 Taxation Income tax expense comprises current and deferred tax. Income tax is recognized in prot and loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
46

Current Provision of current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the prot for the year if enacted after taking into account tax credits, rebates and exemptions, if any. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years.
Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the nancial statements and the corresponding tax bases used in the computation of the taxable prot. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable prots will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. Deferred tax assets and liabilities are calculated at the rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except in the case of items credited or charged to equity in which case it is included in equity. Earning per share The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the prot or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the prot or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. Operating segments The nancial statements have been prepared on the basis of a single reportable segment. 96.51% (2011: 96.83%) out of total sales of the Company relates to customers in Pakistan. All non current assets of the Company as at 31 December 2012 are located in Pakistan. Property, plant and equipment Property, plant and equipment except freehold land are stated at cost less accumulated depreciation and any identied impairment loss. Freehold land is stated at cost less any identied impairment loss. Cost in relation to certain property, plant and equipment signies historical cost and borrowing costs as referred to in note 4.16. Depreciation on property, plant and equipment is provided on a straight-line-basis. Rates of depreciation, which are disclosed in note 5, are designed to write off the cost over the estimated useful lives of the assets. Depreciation methods, residual values and useful lives of the assets are reviewed at least at each nancial year end and adjusted if impact on depreciation is signicant. Depreciation on additions to property, plant and equipment is charged from the month in which the asset is acquired or capitalized, while no depreciation is charged for the month in which the asset is disposed off. The Company assesses at each balance sheet date whether there is any indication that property, plant and equipment may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss is recognized in income currently. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. Where an impairment loss is recognized, the depreciation charge is adjusted in the future periods to allocate the assets revised carrying amount over its estimated useful life. Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benets associated with the item will ow to the company and the cost of the item can be measured reliably. All other repair and maintenance costs are charged to income during the period in which they are incurred.
4.4
4.5 4.6
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4.7 The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset and is recognized as an income or expense. Intangible assets The Company reviews the rate of amortization and value of intangible assets for possible impairment on an annual basis. Any change in the estimates in future years might affect the carrying amounts of intangible assets with a corresponding affect on the amortization charge and impairment. Amortization on intangible assets is provided on a straight-line-basis on rates disclosed in note 6. Capital work-in-progress Capital work in progress and stores held for capital expenditure are stated at cost less any identied impairment loss and represents expenditure incurred on property, plant and equipment during the construction and installation. Cost also includes applicable borrowing costs. Transfers are made to relevant property, plant and equipment category as and when assets are available for use. Retirement and termination benets Dened contributions scheme The Company operates a dened contribution approved provident fund for all its eligible employees, in which the Company and the employees make equal monthly contributions at the rate of 14% of basic salary including dearness allowance of employees. Dened benets schemes The Company also maintains an approved gratuity fund for all its employees and an approved pension fund for ofcers and above-grade employees, having a service period of minimum 10 years. The contributions are made to pension and gratuity funds in accordance with the actuarys recommendations based on the actuarial valuation of these funds as at 31 December 2012. The future contribution rates of these funds include allowances for decit and surplus. Projected unit credit method is used for valuation of these funds based on the following signicant assumptions: Gratuity Fund 2012 2011 12.00% 11.50% 10% - 12.00% 13.50% 13.00% 8% - 13.50% Pension Fund 2012 2011 12.00% 11.50% 30% 3% 12.00% 13.50% 13.00% 13% 5% 13.50%
4.8
4.9
Annual discount rate Expected return on plan assets Contribution rates (% of basic salaries) Annual increase in pension rate Expected rate of growth per annum in future salaries
The actuarial gains and losses are recognized in the period in which they occur directly in shareholders equity and presented in the statement of comprehensive income.
4.10 Compensated absences The Company accounts for compensated absences on the basis of unavailed earned leave balance of each employee at the end of the year.
4.11 Stores and spares
These are valued at lower of cost, which is calculated according to moving average method, and net realizable value. Stores in transit are valued at invoice value including other charges, if any, incurred thereon.
4.12 Stocks in trade
Stocks in trade have been valued at the lower of cost and net realizable value. Net realizable value signies the estimated selling price in the ordinary course of the business less estimated costs to complete and to make the sale.
48

4.13 Cost has been determined as follows: Raw materials Work in process Finished goods Moving average cost Moving average cost Moving average cost
Research and development cost
Research and development costs are charged to prot and loss account in the year in which these are incurred. 4.14 Foreign currencies All monetary assets and liabilities in foreign currencies are translated into rupees at exchange rates prevailing at the balance sheet date. Transactions in foreign currencies are translated into rupees at exchange rates prevailing at the date of transaction. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated into rupees at exchange rates prevailing at the date of transaction. Non-monetary assets and liabilities denominated in foreign currency that are stated at fair value are translated into rupees at exchange rates prevailing at the date when fair values are determined. Exchange gains and losses are included in the income currently.
4.15 Cash and cash equivalents For the purpose of cash ow statement, cash and cash equivalents comprise of cheques in hand, cash and bank balances.
4.16 Borrowing costs Borrowing costs incurred on related property, plant and equipment are capitalized till the date of commissioning. All other borrowing costs are included in the prot and loss of the period on an accrual basis.
4.17 Provisions Provisions are recognized when the Company has a legal or constructive obligation as a result of past events and it is probable that an outow of resources embodying economic benets will be required to settle the obligation and a reliable estimate of the amount can be made. However, provisions are reviewed at each balance sheet date and adjusted to reect current best estimate.
4.18 Financial assets and liabilities Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. All nancial assets and liabilities are initially measured at cost, which is the fair value of the consideration given and received respectively. These nancial assets and liabilities are subsequently measured at fair value, amortized cost or cost, as the case may be. The particular measurement methods adopted are disclosed in the individual policy statements associated with each item.
4.19 Off-setting of nancial assets and nancial liabilities A nancial asset and a nancial liability is offset and the net amount is reported in the balance sheet if the Company has a legally enforceable right to set-off the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
4.20 Trade and other payables Financial liabilities are initially recognized at fair value plus directly attributable cost, if any, and subsequently at amortized cost using effective interest rate method. Other amounts payable are carried at cost which is the fair value of the consideration to be paid in future for goods and services.
4.21 Impairment losses
Financial assets A nancial asset is considered to be impaired if objective evidence indicate that one or more events had a negative effect on the estimated future cash ow of that asset.
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An impairment loss in respect of a nancial asset measured at amortized cost is calculated as a difference between its carrying amount and the present value of the estimated future cash ows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale nancial asset is calculated by reference to its current fair value. Individually signicant nancial assets are tested for impairment on a individual basis. The remaining nancial assets are assessed collectively in groups that share similar credit risk characteristics. Non nancial assets The carrying amounts of the Companys non-nancial assets, other than biological assets, investment property, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the assets recoverable amount is estimated. For goodwill and intangible assets that have indenite lives or that are not yet available for use, recoverable amount is estimated at each reporting date. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identiable asset group that generates cash ows that largely are independent from other assets and groups. Impairment losses are recognized in prot and loss. Impairment losses recognized in respect of cash-generating units are allocated rst to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets of the unit on a pro-rata basis.
4.22 Derivative nancial instruments These are initially recorded at fair value on the date a derivative contract is entered into and are re-measured to fair value at subsequent reporting dates. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain derivatives as cash ow hedges. The Company documents at the inception of the transaction the relationship between the hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash ow of hedged items. Derivatives are carried as assets when fair value is positive and liabilities when the fair value is negative. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash ow hedges are recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in the prot and loss account. Amounts accumulated in equity are recognized in prot and loss account in the periods when the hedging items will effect prot or loss. However, when the forecast hedged transaction results in the recognition of a non-nancial asset or a liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability. Any gain or loss from change in fair value of derivatives that do not qualify for hedge accounting are taken directly to prot and loss account.
4.23 Related party transactions Transactions with related parties are priced at comparable uncontrolled market price except for the assets sold to employees under the employees car scheme as approved by the board of directors. Parties are said to be related if they are able to inuence the operating and nancial decisions of the Company and vice versa.
4.24 Dividends Dividend distribution to the shareholders is recognized as a liability in the period in which it is approved by the shareholders.
50

5 Property, plant and equipment

COST DEPRECIATION Book value As at As at As at As at As at 01 January 31 December 01 January On Charge for 31 December 31 December 2012 Additions Disposals 2012 2012 disposals the year 2012 2012 Rate (Rupees in thousands) %
Free-hold land Factory building on free-hold land Plant, machinery and equipment Furniture, xture and ofce equipment Automobiles

352,187 778,045
- 612,883
- (5,998) (253) (7,865) (14,116)
352,187
- 503,136
- - (5,850) (253) (7,361) (13,464)
- 71,416
- 352,187 574,552 816,376 10 5 20 20
- 1,390,928
3,008,219 1,020,615 65,886 96,772 20,994 25,105
4,022,836 1,408,735 86,627 114,012 45,638 60,114
119,572 1,522,457 2,500,379 7,813 14,568 53,198 67,321 33,429 46,691
2012
4,301,109 1,679,597
COST
5,966,590 2,017,623
213,369 2,217,528 3,749,062

Book value
DEPRECIATION
As at As at As at As at As at 01 January 31 December 01 January On Charge for 31 December 31 December 2011 Additions Disposals 2011 2011 disposals the year 2011 2011 Rate (Rupees in thousands) %
Free-hold land Factory building on free-hold land Plant, machinery and equipment Furniture, xture and ofce equipment Automobiles 2011
352,187 747,294 2,782,836 59,459 85,564 4,027,340
- 30,751 225,383 7,566 20,338 284,038
- -
352,187 778,045
- 449,340
- - - (1,048) (7,849) (8,897)
- 53,796
- 352,187 503,136 274,909 10 5 20 20
- 3,008,219 1,308,994 (1,139) (9,130) (10,269) 65,886 96,772 40,554 54,307
99,741 1,408,735 1,599,484 6,132 13,656 45,638 60,114 20,248 36,658
4,301,109 1,853,195
173,325 2,017,623 2,283,486
5.1 The cost of fully depreciated assets which are still in use is Rs. (thousands) 800,263 (2011: Rs. (thousands) 774,109).
5.2
Depreciation charge for the year has been allocated as follows: Cost of sales Distribution cost Administrative expenses 24 25 26 199,538 5,259 8,572 213,369 161,098 5,631 6,596 173,325
5.3 Disposal of property, plant and equipment
Description Sold to Cost
Book Sale value Proceeds Gain Mode of disposal (Rupees in thousands)
Automobile Anis Ahmad Khan H. No. P-245, Khayaban Colony No 2, Faisalabad. Ansar Yahya H. No. 207, Street No. 6, Garden Colony Faisalabad. Idrees Sons Ofce No. 205, 2nd Floor S.P. Chamber Karachi. Other assets with book value less than Rs. (thousand) 50. Miscellaneous 2012 2011
1,518
177
304
127 Company policy
1,518
152
304
152 Company policy
2,100
175
2,100
1,925 Agreement
8,980 148 3,478 3,330 Tender and negotiations 14,116 652 6,186 5,534 10,269 1,372 5,412 4,040
Annual Report
51

Intangible assets
SAP computer software and implementation
Cost
As at 01 January Additions As at 31 December Amortization As at 01 January Charge for the year 26 As at 31 December Book value as at 31December Rate of amortization
29,899 3,668 33,567
29,899 29,899
6,484 6,284 12,768 20,799 20%
507 5,977 6,484 23,415 20%
7 Capital work in progress

Cornwala/ Plant Mehran expansion projects projects Others

(Rupees in thousands )
2012
2011
Civil works and buildings Plant and machinery Advance for land - note 7.2 2012 2011 7.1
533,129 772,625 1,305,754 1,781,229
23,288
6,814 6,814 6,814
533,129 772,625 6,814 1,312,568
738,433 1,066,084 6,814 1,811,331
Cornwala/Mehran projects includes markup amounting to Rs. (thousands) 77,406 (2011: Rs. (thousands) 38,999) capitalized during the year at the rate ranging from 9.6% to 13.6% per annum (2011: 12.42% to 15.15%).
7.2 This represents full payment of Rs. (thousands) 1,814 (2011: Rs. (thousands) 1,814) and legal cost incurred Rs. (thousands) 5,000 (2011: Rs. (thousands) 5,000) for the Companys factory land in Faisalabad which was acquired from the government in 1953 but registration of title is still pending in the name of Company.
Note 2012 2011
Employees retirement benets Gratuity Pension 8.1 8.1 63,291 (12,963) 50,328 78,098 (34,736) 43,362
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8.1

Movements in the net assets/(liabilities) recognized in the balance sheet are as follows: Gratuity 2012 2011 Pension 2012 2011
8.2
Net assets/(liabilities) at the beginning of the year Expenses recognized Contribution paid during the year Actuarial (loss) / gain recognized Net assets/(liabilities) at the end of the year The amounts recognized in the prot and loss account are as follows:
78,098 (17,407) 17,407 (14,807) 63,291
92,030 (13,077) 13,077 (13,932) 78,098
(34,736) (35,770) 35,770 21,773 (12,963)
(27,230) (13,867) 43,867 (37,506) (34,736)
Current service cost Interest cost Expected return on plan assets Impact of special contribution paid by employer 8.3 The amounts recognized in the balance sheet are as follows: 8.4 8.6 8.5 Present value of the obligation Fair value of plan assets Net asset/(liability) Movement in present value of dened benet obligation
24,506 64,634 (71,733) - 17,407
20,803 59,982 (67,708) - 13,077
9,727 51,833 (45,790) 20,000 35,770
7,435 46,251 (39,819) 13,867
(546,797) 610,088 63,291
(491,586) 569,684 78,098
(427,627) 414,664 (12,963)
(390,523) 355,787 (34,736)
Present value of dened benet obligation as at the beginning of the year 491,586 Current service cost 24,506 Interest cost 64,634 Actual benets paid during the year (43,659) Actuarial loss / (gain) on obligation. 9,730 Present value of dened benet obligation as at the end of the year 546,797 Movement in fair value of plan assets Fair value of plan asset as at the beginning of the year Expected return on plan assets Actual benets paid during the year Actual contribution by the employer- normal Actual contribution by the employer- special Actuarial (loss) / gain on plan assets Fair value of plan asset as at the end of the year Actual return on plan assets 569,684 71,733 (43,659) 17,407 - (5,077) 610,088
415,553 20,803 59,982 (14,428) 9,676 491,586
390,523 9,727 51,833 (24,075) (381) 427,627
325,703 7,435 46,251 (21,681) 32,815 390,523
507,583 67,708 (14,428) 13,077 - (4,256) 569,684
355,787 45,790 (24,075) 15,770 20,000 1,392 414,664
298,473 39,819 (21,681) 43,867 (4,691) 355,787
Expected return on plan assets Actuarial (loss) / gain on plan assets
71,733 67,708 45,790 39,819 (5,077) (4,256) 1,392 (4,691) 66,656 63,452 47,182 35,128
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8.7 Plan assets consist of the following Debt instruments Cash and other deposits Mutual funds 8.8 Historical information-gratuity 8.9

Gratuity Pension (Percentage) (Percentage) 2012 2011 2012 2011 83% 2% 15% 99% 1% 1% 85% 12% 3% 98% 2% 2%
2012 2011 2010 2009 2008 (Rupees in thousands)
Present value of dened benet obligation Fair value of plan assets Surplus in the plan Experience adjustment arising on plan liabilities loss / (gain) Experience adjustment arising on plan assets loss. Historical information-pension Present value of dened benet obligation Fair value of plan assets Decit in the plan Experience adjustment arising on plan liabilities loss / (gain) Experience adjustment arising on plan assets gain / (loss)
(546,797) 610,088 63,291
(491,586) 569,684 78,098
(415,553) 507,583 92,030
(380,565) 464,553 83,988
(492,403) 582,149 89,746
9,730
9,676
(9,281)
2,489
37,155
(5,077)
(4,256)
(1,239)
(3,269)
36,638
(427,627) 414,664 (12,963)
(390,523) 355,787 (34,736)
(325,703) 298,473 (27,230)
(339,240) 271,036 (68,204)
(260,636) 242,847 (17,789)
(381)
32,815
(43,885)
43,879
33,073
1,392
(4,691)
(2,911)
(6,536)
9,010
2011
Note 2012
Long term loans - secured considered good Staff loans outstanding: Executives 9.1 3,600 2,682 6,282 2,250 4,032 2,149 2,700 (1,249) 3,600 2,149 1,584 3,733 1,594 2,139 3,000 2,100 (2,951) 2,149 Other employees Less: Current maturity 9.1 Loans to executives Opening balance Disbursement during the year Recoveries during the year Closing balance 13
9.2
Maximum aggregate balance during the year, at the end of any month, of loans to executives was Rs. (thousands) 4,306 (2011: Rs. (thousands) 5,654).
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9.3 9.4 No loans were granted to the directors and chief executive of the Company. Loans to other employees represent house building loans provided to employees in accordance with Companys policy and are repayable over a period of ve years. These loans are secured against the employees provident fund. Loans to employees carry interest at the rate of approximately 8% per annum (2011: 8 % per annum). These loans have not been discounted to their present value as the nancial impact thereof is not material.
Note 2012 2011
9.5

10 Stores and spares Stores Spares Less: Provision for slow moving and obsolete items 10.1 Stores in transit 10.1 Provision for slow moving and obsolete items Opening balance Provision for the year Closing balance 11 Stock in trade Raw materials - corn & cobs Work in process Finished goods 11.1 11.1
359,244 118,051 477,295 (47,547) 429,748 8,151 437,899
287,758 118,051 405,809 (47,122) 358,687 6,428 365,115
47,122 425 47,547
42,808 4,314 47,122
1,949,558 66,065 1,077,584 3,093,207
2,010,467 68,178 927,345 3,005,990
This includes imported nished goods amounting to Rs. (thousands) 37,733 (2011: Rs. (thousands) Nil) out of which goods in transit amounts to Rs. (thousand) 11,524 (2011: Rs. (thousands) Nil).
Note 2012 2011
12
Trade debts 418,376 241,474 82,532 324,006 19,531 343,537 (19,531) 324,006 742,382 416,682 63,119 58,009 121,128 18,271 139,399 (18,271) 121,128 537,810
Secured - against security deposits and bank guarantees Unsecured - considered good Related parties Others Considered doubtful Less: Provision for doubtful balances 12.1 12.1 Provision for doubtful balances Opening balance Provision for the year 25 Bad debts written off during the year Closing balance
18,271 2,156 (896) 19,531
13,899 4,372 18,271
Annual Report
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13
Loans and advances 247,575 5,200 2,250 255,025 65,353 3,931 1,594 70,878
Loans and advances - considered good Suppliers of goods and services Employees 13.1 Current maturity of long term loans 9

13.1
No advances were given to executives, directors and chief executive of the Company during the year.
14 15
Trade deposits and short term prepayments Security Deposits Prepayments L/C margin Other receivables 5,574 1,675 7,249 (1,675) 5,574 - 4,560 5,726 15,860 3,569 1,675 5,244 (1,675) 3,569 1,753 3,189 20 8,531 34,603 98,025 139 132,767 22,648 42,447 65,095
Other receivables - Farmers balances Considered good Considered doubtful Less: Provision for doubtful balances 15.1 Due from related parties Workers prot participation fund 15.2 Others 15.1 Provision for doubtful balances Opening balance Provision for the year Closing balance 15.2 Workers profit participation fund Opening balance Provision for the year 29 Payment to the fund Closing balance 16 Cash and bank balances
1,675 - 1,675
1,675 1,675
3,189 (167,440) 168,811 4,560
(198) (172,411) 175,798 3,189
Cash at banks - current accounts - saving accounts 16.1 Cash in hand - local currency - foreign currency Cheque in hand 16.1
106,505 374,750 481,255
568 424 992
3,845 3,349 849 1,092 4,694 4,441 20,571 57,593 506,520 63,026
These carry prot at rates ranging from 5% to 8.25% per annum (2011: 5% to 8.25% per annum).
56

17
Trade and other payables 1,456,983 93,085 434,207 949 529,211 63,894 6,686 5,389 174 5,905 2,596,483 362,098 153,469 417,195 977 331,746 65,795 6,410 4,947 7,540 5,067 1,355,244
Creditors 17.1 Advances from customers Security deposits from dealers and contractors 17.2 Other deposits 17.3 Accrued liabilities Workers welfare fund 17.4 Employees provident fund With holding tax payable Sales tax payable Unclaimed dividend
17.1
17.2
This includes Murabaha payable amounting to Rs. (thousands) 1,028,640 (2011: Rs. (thousands) Nil) secured against ranking charge over current assets of the Company. As per the terms of agreement between dealers and contractors, the Company can utilize these deposits in the normal course of business.
17.3
These represent deposits held against tenders for the sale of scrap.
17.4
Workers welfare fund Opening balance Provision for the year 29 Payment to the fund 65,795 58,550 (60,451) 63,894 57,075 59,540 (50,820) 65,795
18
Closing balance Short term running nance - secured
18.1
18.2
The aggregate nancing facility available from commercial banks is Rs. (thousands) 3,000,000 (2011: Rs. (thousands) 3,000,000). The rate of markup ranges from 9.60% to 13.60% per annum (2011: 12.42% to 15.12% per annum). These facilities are secured by joint pari passu hypothecation charge on current assets of the Company and are subject to repricing on monthly/quarterly basis. The unutilized facility for letters of credit as on 31 December 2012 amounts to Rs. (thousands) 529,752 (2011: Rs. (thousands) 567,557).
18.3 19

Deferred taxation The details of the tax effect of taxable and deductible temporary differences are as follows:
Taxable temporary difference on: Accelerated tax depreciation Employees retirement benets Deductible temporary difference on: Others (84,459) 562,057 (24,218) 373,682 628,901 17,615 646,516 382,724 15,176 397,900
Annual Report
57

2012 Charged to
Charged to Other Opening Prot and comprehensive loss income
Closing

19.1 Taxable temporary difference Accelerated tax depreciation Employees retirement benets Deductible temporary difference Others (24,218) 373,682 382,724 15,176
246,177 (60,241) 185,936
2,439 2,439
628,901 17,615 (84,459) 562,057
Charged to Other Opening Prot and comprehensive loss income
2011 Charged to
Closing

Taxable temporary difference Accelerated tax depreciation Employees retirement benets Deductible temporary difference Others (21,721) 351,754 350,795 22,680
31,929 (2,497) 29,432
(7,504) (7,504)
382,724 15,176 (24,218) 373,682
20 Authorized, issued, subscribed and paid up capital Authorized share capital Ordinary shares of Rs.10 each
2012 2011 2012 2011 (Number of shares) (Rupees in thousands)
20,000,000
20,000,000
200,000
200,000
20.1
Issued, subscribed and paid up capital fully paid up for cash Issued other than cash - plant and machinery Issued as bonus shares 36,294 7,341,143 9,236,428 36,294 7,341,143 9,236,428 363 73,411 92,364 363 73,411 92,364 1,858,991 1,858,991 18,590 18,590
Ordinary shares of Rs. 10 each
20.2
Ingredion Inc. (formerly Corn Products International Inc.) Chicago, U.S.A., holds 6,494,243 (2011: 6,494,243) ordinary shares of Rs. 10 each as at 31 December 2012.
58

21 Reserves Capital Share premium Other 21.1 21.2 36,946 941 37,887 36,946 941 37,887
Revenue General reserve Unappropriated Prot
207 6,733,400 6,733,607 6,771,494
207 5,751,132 5,751,339 5,789,226
22 21.2 21.1
This reserve can be utilized in accordance with the provision of section 83(2) of the Companies Ordinance, 1984. This reserve was created under section 15BB of the Income Tax Act, 1922 to avail the tax exemption in prior years.
Contingencies and commitments 22.1 The Income Tax Department has charged tax of Rs. (thousands) 81,078 for the assessment year 2001-2002 (nancial year ended 30 September 2000) under section 12(9A) of the Income Tax Ordinance, 1979 (Repealed) on the allegation that the dividend distribution by the Company was less than 40% of its after tax prots. Against this levy, the Company led an appeal with the Commissioner of Income Tax (Appeals), which was rejected. The Company preferred an appeal with the Income Tax Appellate Tribunal (ITAT) against the order of CIT (Appeals). The ITAT vide order dated 21 April 2006 decided the case in favor of the Company and conrmed that levy of tax under section 12(9A) was against the provisions of the law and directed the assessing ofcer for decision in accordance with the provisions of amended clause 59 of Part IV, Second Schedule to the repealed Income Tax Ordinance, 1979. The Income Tax Department has moved to Lahore High Court on 17 October 2006, against the orders of ITAT. The case has not been xed for hearing so far.
No provision has been made in these nancial statements as according to the management of the Company, it is probable that this case will be decided in favor of the Company. The legal advisors of the Company have concurred with the managements view. 22.2 Certain labour cases are pending before the labour courts and their nancial effect cannot be reasonably determined due to their nature and uncertainty surrounding them. The possibility of any outow for settlement of these claims is considered remote. 22.3 22.4 Land registration fee as per Note 7.2. Commitments in respect of capital expenditure contracted but not provided amounts to Rs. (thousands) 236,530 (2011: Rs. (thousands) 709,703). 22.5 Commitments in respect of purchase of corn amounts to Rs. (thousands) 4,377,404 (2011: Rs. (thousands) 3,813,776). 22.6 Commitments in respect of counter guarantees given to banks in consideration of their guarantees in the normal course of business amount to Rs. (thousands) 122,400 (2011: Rs. (thousands) 141,950).
Annual Report
59

23
Sales - net Domestic Export Less: Sales tax Special excise duty Trade discount and commission 20,018,652 684,641 20,703,293 1,159,019 - 12,876 1,171,895 19,531,398 18,903,859 619,591 19,523,450 1,183,807 54,880 13,769 1,252,456 18,270,994
24 Cost of sales
Raw material consumed: Corn 9,926,306 10,304,970 Others (Purchased products) 70,594 883 Stores 338,752 259,004 Packing material 339,416 309,075 10,675,068 10,873,932 Factory expenses: Salaries, wages and amenities 24.1 676,280 545,957 Spares consumed 156,019 142,214 Fuel and power 3,462,346 2,515,123 Rent, rates and taxes 7,561 5,668 Repairs and maintenance 17,743 39,174 Depreciation 5.2 199,538 161,098 Insurance 8,990 7,809 Factory general expenses 463,740 383,933 4,992,217 3,800,976 15,667,285 14,674,908 Add: Opening work in process stock 68,178 51,816 15,735,463 14,726,724 Less: Closing work in process stock 11 (66,065) (68,178) Cost of production 15,669,398 14,658,546 Add: Opening nished goods stock 927,345 739,975 16,596,743 15,398,521 Less: Closing nished goods stock (1,039,851) (927,345) 15,556,892 14,471,176 24.1 Salaries, wages and amenities include Rs. (thousands) 25,847 (2011: Rs. (thousands) 14,339) in respect of contribution to pension and gratuity fund and Rs. (thousands) 14,474 (2011: Rs. (thousands) 13,004) in respect of contributions to provident fund.
60

25
Distribution expenses
Salaries and amenities 25.1 59,543 50,993 Traveling and automobile expenses 9,606 9,307 Technical support fee 25.2 170,113 Freight and distribution 113,047 68,719 Insurance 2,103 1,887 Rent, rates and taxes 1,822 1,167 Repair and maintenance 33 84 Electricity charges 753 574 Printing and stationery 212 324 Telephone and postage 1,697 1,585 Advertising and sales promotion 910 638 Depreciation 5.2 5,259 5,631 Market research and development 46 79 Provision for doubtful debts 12.1 2,156 4,372 Miscellaneous expenses 892 749 368,192 146,109 25.1 Salaries and amenities include Rs. (thousands) 6,306 (2011: Rs. (thousands) 3,061) in respect of contribution to
pension and gratuity fund and Rs. (thousands) 2,110 (2011: Rs. (thousands) 1,911) in respect of contributions to provident fund. During the year the Board of Directors in their meeting held on February 14, 2012 had approved to account for technical support fee computed on the basis of 1% of net sales payable to Ingredion Incorporated USA.
25.2
26
Administrative expenses
Salaries and amenities 26.1 Traveling and automobile expenses Insurance Rent, rates and taxes IT, networking and data communication Repair and maintenance Electricity charges Printing and stationery Telephone and postage Legal and professional charges Depreciation 5.2 Amortization of intangible assets 6 Auditors remuneration 26.2 Miscellaneous expenses Donation and charity 26.3
26.1
194,414 21,049 1,189 1,809 47,290 301 1,588 1,523 4,347 5,754 8,572 6,284 2,321 3,359 2,390 302,190
172,397 17,008 721 1,547 28,903 430 1,357 1,455 3,738 5,926 6,596 5,977 2,054 3,230 2,500 253,839
Salaries and amenities include Rs. (thousands) 21,025 (2011: Rs. (thousands) 9,545) in respect of contribution to pension and gratuity fund and Rs. (thousands) 6,866 (2011: Rs. (thousands) 6,931) in respect of contributions to provident fund.
Annual Report
61

26.2 Auditors remuneration Statutory audit fee 900 800 Review of half yearly accounts 300 275 Services in connection with review and reporting of accounts to Ingredion Inc. (formerly CPI Inc.) 825 750 Audit of gratuity and pension funds 100 96 Inspection of Share records for CDC 50 Miscellaneous certication 36 33 Out of pocket expenses reimbursed 110 100 2,321 2,054

26.3
This represents donation to different associations and trusts. None of the Directors has any interest in the donee.
Note 2012 2011
27
Other operating income 2,083 65,888 5,534 18,577 4,943 3,744 100,769 3,614 74,600 4,040 13,188 2,602 7,967 106,011
Mark up on staff loans and prot on bank deposits Prot on sale of scrap Prot on sale of property, plant and equipment Prot on sale of pesticides and seeds Foreign exchange gain Miscellaneous income 28 29 Finance cost Mark up on short term running nances Bank charges and commission Other operating expenses Workers prot participation fund Workers welfare fund 15.2 17.4
47,613 8,486 56,099
48,567 9,173 57,740
167,440 58,550 225,990
172,411 59,540 231,951
30 Taxation Current Deferred 19.1 896,938 185,936 1,082,874 1,152,930 29,432 1,182,362
2012 2011 Percentage
30.1
Numberical reconciliation between average effective tax rate and applicable tax rate: 35.00 0.19 (0.34) (0.17) 34.68 35.00 0.94 (0.29) 1.11 36.76
Applicable tax rate Tax effect of inadmissible expenses Tax effect of admissible expenses Effect of presumptive tax regime and others Average effective tax rate (tax expense divided by prot before tax)
62

2012 2011
31
Earnings per share - basic and diluted 31.1 Earning per share - basic Prot attributable to ordinary shareholders Weighted average number of ordinary shares Earnings per share - basic (Rupees in thousands) (Numbers) (Rupees) 2,039,930 9,236,428 220.86 2,033,828 9,236,428 220.20
31.2
Earning per share - diluted There is no dilution effect on basic earnings per share as the Company has no such commitments.
32
Financial instruments The Companys nancial liabilities mainly comprise trade and other payables and short term running nances. The main purpose of nancial liabilities is to raise nance for the Companys nancial assets which comprise long term loan, trade debts, Loans and advances, trade deposits, other receivables and Cash and bank balances.
The company has exposure to the following risks from its use of nancial instruments: - Credit risk - Liquidity risk - Market risk The Board of Directors has overall responsibility for the establishment and oversight of Companys risk management framework. The Board is also responsible for developing and monitoring the Companys risk management policies. 32.1 Credit risk Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties fail completely to perform as contracted and arise principally from long term loans, trade debts, loans and advances, trade deposits, other receivables and cash and bank balances. Out of the total nancial assets of Rs. 1,306,426 thousand (2011: Rs. 636,490 thousand) nancial assets which are subject to credit risk amount to Rs. 1,301,732 thousand (2011: Rs. 632,049 thousand). To manage exposure to credit risk in respect of trade receivables, management performs credit reviews taking into account the customers nancial position, past experience and other factors. Where considered necessary, advance payments are obtained from certain parties. Sales made to major customers are secured through security deposits, bank guarantees and letters of credit. To manage exposure to credit risk, the company applies credit limits to its customer and obtains advances from certain customers. All investing transactions are settled / paid for upon delivery. The Companys policy is to enter into nancial instrument contract by following internal guidelines such as approving counterparties and approving credits. Concentration of credit risk arises when a number of counter parties are engaged in similar business activities or have similar economic features that would cause their abilities to meet contractual obligation to be similarly effected by the changes in economic, political or other conditions. The Company believes that it is not exposed to major concentration of credit risk. The carrying amount of nancial assets represents the maximum credit exposure before any credit enhancements. The maximum exposure to credit risk at the reporting date is:
Annual Report
63

Long term loans 6,282 3,733 Trade debts 742,382 537,810 Loans and advances 5,200 3,931 Trade deposits 34,742 22,648 Other receivables 11,300 5,342 Cash and bank balances 501,826 58,585 1,301,732 632,049 Secured 424,658 420,415 Unsecured 877,074 211,634 1,301,732 632,049 The company has placed its funds with banks which are rated A1+ and P1 by PACRA, JCR VIS and Moodys. The maximum exposure to credit risk for trade debts as at 31 December 2012 by geographic regions was: Domestic Foreign 579,465 182,448 761,913 491,754 64,327 556,081
The aging of trade receivables at the reporting date is:

Gross debtors
2012 2011
Provision Net debtors Gross debtors Provision Net debtors (Rupees in thousands)
Past due 0 - 30 days Past due 31 - 60 days Past due 61 - 90 days Past due 91 - 365 days Past due 366 & above
747,349 11,243 - 2,796 525 761,913
4,967 11,243 - 2,796 525 19,531
742,382 - - - - 742,382
544,257 4,423 5,980 - 1,421 556,081
6,447 4,423 5,980 - 1,421 18,271
537,810 537,810
32.2 Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its nancial obligations as they fall due. The Companys approach to managing liquidity is to ensure as far as possible to always have sufcient liquidity to meet its liabilities when due. The Company is not materially exposed to liquidity risk as substantially all obligations / commitments of the Company are short term in nature and are restricted to the extent of available liquidity. In addition, the Company has obtained overdraft facilities from various commercial banks to meet any decit, if required to meet the short term liquidity commitments.
The table below summarizes the maturity prole of the Companys nancial liabilities as at reporting date:
64

31 December 2012
Carrying Contractual Less than 6 Between 6 More than amount cash ows months months to 1 year 12 months ( Rupees in thousands)
Financial Liabilities 2,433,941 2,433,941 2,398,647 11,199 11,199 11,199 - - - 2,445,140 2,445,140 2,409,846 31 December 2011 35,294 - - 35,294 -
Trade and other payables Mark up accrued on short term running nances Short term running nances - secured
Carrying Contractual Less than 6 Between 6 More than amount cash ows months months to 1 year 12 months ( Rupees in thousands)
Financial Liabilities 1,123,493 1,123,493 639,526 11,458 11,458 11,458 397,902 397,902 397,902 1,532,853 1,532,853 1,048,886 483,967 - - 483,967 -
Trade and other payables Mark up accrued on short term running nances Short term running nances - secured 32.3 Market risk
Market risk is the risk that changes in market price, such as foreign exchange rates, interest rates and equity prices will effect the Companys income or the value of its holdings of nancial instruments. 32.3.1 Currency risk of goods mainly denominated in US dollars and on foreign currency cash and bank balances. The Companys exposure to foreign currency risk for US Dollars is as follows:
The Company is exposed to currency risk on import of project related and stores and spares items and export
USD USD 2012 2011
Foreign debtors Foreign currency cash and bank balance Gross nancial assets exposure Trade and other payables Net exposure The following signicant exchange rates have been applied:
1,878,245 8,740 1,886,985 (2,127) 1,884,858
715,105 12,139 727,244 (105) 727,139
USD to PKR
2012 2011 Average rate for the year 93.4182 86.25
2012 2011 Reporting date rate 97.1375 89.96
Sensitivity analysis At reporting date, if the PKR had strengthened by 10% against the foreign currencies with all other variables held constant, before tax prot for the year would have been lower by the amount shown below, mainly as a result of net foreign exchange gain on translation of foreign debtors, foreign currency bank account and trade and other payables.
Annual Report
65

Effect on prot and loss US Dollar 18,309 6,541 18,309 6,541 The weakening of the PKR against foreign currencies would have had an equal but opposite impact on the post tax loss. The sensitivity analysis prepared is not necessarily indicative of the effects on prot for the year and assets / liabilities of the Company.
32.3.2 Interest rate risk At the reporting date the interest rate prole of the Companys signicant interest bearing nancial instruments was as follows: 2012 2011 2012 2011 Effective rate Carrying amount
(In Percentage) (Rupees in thousands)
Financial assets Fixed rate instruments: Long term loans Variable rate instruments: Cash and bank balances - saving Financial liabilities Variable rate instruments: Short term borrowings 9.60 to 13.60 12.42 to 15.12 - 397,902 8 5 to 8.25 8 5 to 8.25 6,282 374,750 3,733 424
Fair value sensitivity analysis for xed rate instruments The Company does not account for any xed rate nancial assets and liabilities at fair value through prot and loss. Therefore a change in interest rates at the reporting date would not affect prot and loss account. Cash ow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have (decreased) / increased prot for the year by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2011.
Prot and loss 100 bps Increase Decrease (Rupees in thousands)
As at 31 December 2012 As at 31 December 2011
476 486
(476) (486)
The sensitivity analysis prepared is not necessarily indicative of the effects on prot for the year and assets / liabilities of the Company.
32.3.3 Other price risk Other price risk is the risk that the fair value or future cash ows of a nancial instrument will uctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). The company is not exposed to any price risk as there are no nancial instruments at the reporting date that are sensitive to price uctuations.
66

32.3.4 Fair value of nancial instruments The carrying values of the nancial assets and nancial liabilities approximate their fair values. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arms length transaction. 32.3.5 Capital risk management The Boards policy is to maintain an efcient capital base so as to maintain investor, creditor and market condence and to sustain the future development of its business. The Board of Directors monitors the return on capital employed, which the Company denes as operating income divided by capital employed. The Board of Directors also monitors the level of dividends to ordinary shareholders. The Companys objectives when managing capital are: (i) to safeguard the entitys ability to continue as a going concern, so that it can continue to provide returns for shareholders and benets for other stakeholders, and (ii) to provide an adequate return to shareholders. The Company manages the capital structure in the context of economic conditions and risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may, for example, adjust the amount of dividends paid to shareholders and issue new shares. For working capital requirement and capital expenditure, the Company primarily relies substantially on short term borrowings.
33

Remuneration of Chief Executive, paid Directors and Executives

Chief Executive & MD Executive Director Non Executive Director Executives
2012 2011 2012 2011 2012 2011 2012 2011 (Rupees in thousands)
Managerial remuneration Rent, medical and other allowances Bonus and leave encashment Retirement benets Club subscription
10,893 1,997 12,890 7,791 4,423 34 25,138
8,993 1,648 10,641 6,023 4,438 34 21,136
3,283 3,071 6,354 5,915 1,333 13 13,615
4,191 3,918 8,109 3,268 2,069 33 13,479 1
- - - - - - - -
- 59,636 - 61,063 - 25,070 - 24,215 - 22
50,493 51,534 25,093 24,920 33
- 120,699 102,027
Number
- 170,006 152,073 - 69 58
1 1 1
33.1
Meeting fees aggregating to Rs. (thousands) 3 (2011: Rs (thousands) 6) were paid to 4 (2011: 4) non-executive directors for attending board meetings. In addition Chief Executive and Managing Director, full time working director and some executives are also provided with Company maintained car.
34
Transactions with related parties and associates
The related parties comprise parent company, related group companies, local associated company, directors of the company, key management personnel and staff retirement funds. Details of transactions with related parties, other than those disclosed else where in these nancial statements are as follows:
Annual Report
67

2012 2011 Total value of Closing
Name of parties
Nature of relationship
Nature and description of related party transaction
Total value of transaction Closing
balance transaction balance (Rupees in thousands)

Unilever Pakistan Food Limited Associate Sales Services received Technical support fee Export Sales Export sales Export sales Export sales Export sales Export sales Imports Imports Imports Imports Contribution to funds 1,009,628 29,340 170,113 22,697 61,437 224,782 - 108 1,580 - 555 29,605 47,500 76,627 70,080 - 170,113 - - 171,395 - - - - (68) (2,048) (6,762) 43,642 976,273 21,128 - - 62,699 - 57,524 - - 21,214 - 2 6,207 48,790 28,114 (5,447) 34,384 36,952 Ingredion Inc. (formerly Corn Products International Inc.) Chicago, U.S.A. Holding company Ingredion Inc. (formerly Corn Products International Inc.) Chicago, U.S.A. Holding company Corn Products Thailand Co. Ltd Corn Products Kenya Ltd. Ingredion Holding LLC Kenya Corn Products Malaysia CP Ingredion India Pvt. Ltd. Corn Products Malaysia Chili National Starches Germany National Starches Thailand National Starches Singapore Employees benets Associate Associate Associate Associate Associate Associate Associate Associate Associate Other related parties
National Starches Specialities China Associate
The transactions were carried out at an arms length basis, in accordance with the accounting policy as stated in Note 4.23. No buying and selling commission has been paid to any associated undertaking.
2012 2011 Metric tons
35
Plant capacity and production Average grind capacity per day Grind capacity for 350 working days Actual days worked Actual grind The reduction in grind days was attributable to acute energy crisis in the country. 1,616 565,600 288 461,743 1,516 530,600 303 458,409
36 Dividends The Board of Directors have proposed a nal dividend for the year ended 31 December 2012 of Rs. 75 per share, amounting to Rs. (thousands) 692,732 at their meeting held on 12 February 2013, for approval of the members at the Annual General Meeting to be held on 22 March 2013 (2011: Rs. 65 per share amounting to Rs. (thousands) 600,367). 37 38 Use of estimates and judgments The preparation of nancial statements in conformity with approved accounting standards requires management to make judgments, estimates and assumptions that effect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions and judgments are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making the judgment about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Date of authorization of issue These nancial statements were authorized for issue on 12 February 2013 by the Board of Directors of the Company.
68

The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognized in the period in which the estimate is revised if the revision effects only that period, or in the period of revision and future periods if revision affects both current and future periods. The areas where various assumptions and estimates are signicant to Companys nancial statements or where judgments were exercised in application of accounting policies are as follows: 39 General - - Figures in these nancial statements have been rounded off to the nearest thousands of rupees. Comparative gures have been reclassied and re arranged where necessary in order to facilitate comparison. - - - - - Taxation- (note 4.3 & 30) Useful life of depreciable assets- (note 4.6 & 5) Useful life of intangible assets- (note 4.7 & 6) Employees retirement benets- (note 4.9 & 8) Provision and contingencies- (note 4.17 & 22)
Annual Report
69
As at 31 December 2012
Number of Shareholding - - - - - - - - - - - - - - - - - - - - - - 100 500 1,000 5,000 10,000 20,000 35,000 45,000 55,000 60,000 65,000 70,000 90,000 105,000 115,000 145,000 155,000 170,000 205,000 240,000 305,000 6,495,000 Total Shares Held 33,895 34,396 35,473 116,899 21,962 20,000 66,874 127,079 108,217 58,252 63,822 133,508 89,989 100,131 226,265 283,066 152,139 332,964 200,085 236,578 300,595 6,494,239
Shareholders 699 143 45 46 3 1 2 3 2 1 1 2 1 1 2 2 1 2 1 1 1 1 1 101 501 1,001 5,001 15,001 30,001 40,001 50,001 55,001 60,001 65,001 85,001 100,001 110,001 140,001 150,001 165,001 200,001 235,001 300,001 6,490,001
961 9,236,428

Sr.
Categories of Shareholders Directors, Chief Executive Ofcer and their Spouse and minor Children Associated Companies, undertakings and related parties. NIT and ICP Banks, Development Finance Institutions, Non Banking Financial Institutions. Insurance Companies Modarabas and Mutual Funds General Public: a. Local 921 - 18 961 1,941,386 - 4,306 9,236,428 21.02 0.05 100.00 b. Foregin Others 1 3 6 5,967 113,322 89,858 0.06 1.23 0.97 1 - 6,494,239 - 70.31 11 587,350 6.36 Number of Shareholders Shares Held Percentage
No. 1 2 3 4
5 6 7
Total:
The above two statements include 380 shareholders holding 408,105 shares through Central Depository Company of Pakistan Limited.
70

As at 31 December 2012 as required under Code of Corporate Governance

Shareholders category Number of Shareholders Shares Held
i. Associated Companies, Undertakings and Related Parties (name wise details) Ingredion Incorporated ii. Total :
1 1 1 1 1 1 1 5
6,494,239 6,494,239 516 1,213 872 43,600 40,339 86,540
Mutual Funds (name wise details) CDC - Trustee AKD Index Tracker Fund CDC - Trustee JS Islamic Pension Savings Fund-Equity Account CDC - Trustee JS Pension Savings Fund - Equity Account JS Value Fund Limited MC FSL - Trustee JS Growth Fund Total :
iii. Directors, their Spouse(s) and minor children (name wise details) Directors: Mr. Jorgen Kokke Mr. Rashid Ali Mr. Ansar Yahya Ms. Cheryl K. Beebe Ms. Mary A. Hynes Mr. James P. Zallie Mr. Zulkar Mannoo Mian Muhammad Adil Mannoo Mr. Wisal A. Mannoo Sh. Gulzar Hussain Directors Spouse(s) Mrs. Sarwat Zulkar W/O Mr. Zulkar Mannoo Directors Minor Children - Total : iv.
1 1 1 1 1 1 1 1 1 1
1 865 82 1 1 1 238,263 155,994 177,198 5,574
9,370
- 11
- 587,350 1,712 1,712 58,252 58,252
Executives 3 Total : 3
v.
Public Sector Companies and Corporations 1 Total : 1
vi.
Banks, Development Finance Institutions, Non-Banking Finance Companies, Insurance Companies, Takaful, Modaraba and Pension Funds 4 4
64,355 64,355
Total : vii. Shareholders holding ve percent or more voting rights in the listed company (name wise details) Ingredion Incorporated Total :
1 1
6,494,239 6,494,239
Annual Report
71
Proxy Form
121st General Meeting (Annual Ordinary)

The Company Secretary, Rafhan Maize Products Co. Ltd., Rakh Canal East Road, Faisalabad.
I / We of being shareholder(s) of Rafhan Maize Products Company Limited hereby appoint of or failing him as my/our proxy to vote for me /us and on my/our behalf at the 121st General Meeting (Annual Ordinary) of the Company to be held at Karachi on Friday, March 22, 2013 at 10:30 a.m. and/or at any adjournment thereof.
Dated this
day of
2013.
(Signature of Proxy)
Afx Revenue Stamp of Rs. 5/-
Witness Place No. of Shares held
Signature of Shareholder Folio No. / CDC No.
Notes: a) This Form of Proxy, duly completed and signed across a revenue stamp, must be deposited at the Companys Registered Ofce not less than 48 hours before the time of holding the meeting. A proxy need not be a member of the Company.
b)
72
AFFIX CORRECT POSTAGE
The Company Secretary,
Rafhan Maize Products Co. Ltd;

Rakh Canal East Road, P. O. Box 62, Faisalabad.
Best Corporate & Sustainability Report Award ICAP/ICMAP
Export Trophy Award FPCCI
Corporate Excellence Award MAP

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10

for the year ended December 31, 2012

In the name of Allah The Most Merciful, The Compassionate

for the year ended December 31, 2012

Chief Executive & Managing Director

Chief Financial Ofcer

Deputy Director Operations, Safety & Environment

Director Marketing & Business Development

Senior Procurement Manager (Agri-Produces & General Materials)

Deputy Director HR & Admin

Company Secretary & Compliance Ofcer

Head of Internal Audit

Manager Maize Production

Senior Manager Customer Services & Logistics (South Region)

Manager Warehouse & Stores

Quality Assurance Manager

Treatment Expenses for Poor Patients at Liver Center

Eye Camp at Girls High School

SOS Children Village

Beds for ICU - Allied Hospital

for the year ended December 31, 2012

Our Core Values

Nothing is more important Our goal: Zero accidents

Of the products we make, the services we provide, the relationships we build

We promote openness, teamwork, trust and mutual cooperation

Chief Executives Review

for the year ended December 31, 2012

Animal Nutrition and Health Business

Chief Executives Review

for the year ended December 31, 2012

Integrated Quality and Environmental System

Chief Executives Review

for the year ended December 31, 2012

Health Safety and Environment (HSE)

successful implementation of environmental management system.

HR Management and Employees Relations

Chief Executives Review

Employee Training & Management Development

Social Responsibilities and Sustainability

for the year ended December 31, 2012

LEAN SIX SIGMA CHAMPIONS TRAINING

Business Risks, Challenges and Future Prospects

Corporate Distinctions and Awards

Chief Executives Review

February 12, 2013

Ansar Yahya Chief Executive & Managing Director

for the year ended December 31, 2012

Board & Chief Executives Performance Review

Chief Executives Performance Review

for the year ended December 31, 2012

DR. ABID ALI

MIAN M. ADIL MANNOO

SH. GULZAR HUSSAIN

Rafhan Calendar of Major Events - 2012

for the year ended December 31, 2012

Rafhan Calendar of Major Events - 2012

Horizontal Analysis of Prot and Loss Account

Horizontal Analysis of Balance Sheet

for the year ended December 31, 2012

Vertical Analysis of Prot and Loss Account

Vertical Analysis of Balance Sheet

36.3% 0.2% 12.7%

27.6% 0.3% 21.9%

29.9% 0.4% 13.4%