Directors’ Report

OPERATING RESULTS

	General reserves	200,000
	Amount carried forward	4,463 _______
		204,463

The Company achieved a strong growth of 20% in sales from Rs.5,567 million to Rs.6,666 million.
However profitability of the Company has suffered due to impact of imposition of definitive anti-dumping duty @ 13.1% on bed linen exports to the European Union and higher cotton prices.

BONUS SHARES

Your Directors are pleased to recommend issue of 12.5% bonus shares, i.e. in the ratio of one share for every eight shares held. These bonus shares will be issued out of the capital reserves of the Company.

FUTURE PROSPECTS

Quota free trade will result in an increasingly competitive environment. Your Company’s commitment to providng top quality products, superior service and on time delivery will enable it to sustain the onslaught of fierce competition.

Imposition of 12% duty under the GSP in addition to the existing 13.1% anti-dumping duty will be another challenge the Company will face. We are however hopeful of the outcome of the review of anti-dumping duty being currently carried out by the European Commission.

While decrease in the cotton price will no doubt be helpful but the advantage will be partially offset by increase in fuel prices and rapidly rising interest rates.

Overall business outlook is neutral.

CORPORATE GOVERNANCE

We are pleased to report that your Company has taken necessary steps to comply with the provisions of the Code of Corporate Governance as incorporated in the Listing Rules of the Stock Exchanges.

• The financial statements, prepared by the management of the company, present fairly its state of affairs, the result of its operation, cash flows and changes in equity.
  
• Proper books of account of the company have been maintained.
  
• Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimate are based on reasonable and prudent judgment.
  
• International Financial Reporting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and departure, if any, has been adequately disclosed.
  
• The system of internal control is sound in design and has been effectively implemented and monitored. The process of review will continue and any weaknesses in controls will be removed.
  
• There are no significant doubts upon the Company’s ability to continue as a going concern.
  
• There has been no material departure from the best practices of corporate governance, as detailed in the listing regulation.
  
• The key operating and financial data for the last six years, in a summarized from, is annexed.
  
• During the year four board meetings were held and the attendance by each Director is included in the annual report.

PATTERN OF SHAREHOLDING

A statement showing the pattern of shareholding in the Company as at September 30, 2004 is included in the annual report.

AUDITORS

The present auditors Hyder Bhimji & Co., Chartered Accountants retire and have not offered themselves for reappointment due to the application of the provisions of Code of Corporate Governance. The Board wishes to place on record its appreciation of Hyder Bhimji & Co., Chartered Accountants for the valuable services rendered to the Company.

The Board proposes to appoint Gardezi & Co., Chartered Accountants as auditors of the Company for the period ending June 30, 2005 at a fee to be mutually agreed.

CHANGE OF FINANCIAL YEAR

In accordance with the SRO No. 684(1)/2004 dated August 10, 2004 of Central Board of Revenue, Government of Pakistan and Circular No.29 of 2004 dated November 5, 2004 of the Securities and Exchange Commission of Pakistan, the accounting year of the Company is being changed from October – September to July – June. Accordingly the next annual accounts after the change of the accounting year will be for the nine months ending June 30, 2005. Subsequently the accounting year shall be from the July to June.

CONSOLIDATED ACCOUNTS

Consolidated accounts for the year ended September 30, 2004 of the Company and its subsidiaries Gul Ahmed International Limited (FZC) and GTM (Europe) Limited are attached.

ACKNOWLEDGMENT

Your Directors are pleased to record their appreciation for the continued dedication, commitment and loyalty of the employees of the Company. We also appreciate the assistance and continued support of the various Government Departments and Bankers.