MS AR 2018 (1)

NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2018
1. COMPANY AND ITS OPERATIONS
Mughal Iron & Steel Industries Limited (the Company) was incorporated as a public limited company on February
16, 2010 under the Companies Ordinance, 1984 (now the Companies Act, 2017). Currently, its shares are quoted
on Pakistan Stock Exchange Limited (PSX). The principle activity of the Company is manufacturing and sale of
mild steel products. The Company is domiciled in Lahore, with its registered office located at 31-A Shadman-I,
Lahore. The manufacturing facilities of the Company are located at 17-KM Sheikhupura Road, Lahore.
2. SUMMARY OF SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING THE COMPANY’S FINANCIAL
POSITION AND PERFORMANCE
a) The Company incurred major capital expenditure as part of its expansion plan. This is reflected in
property, plant and equipment note 7;
b) The Company enhanced its grid station load capacity from 19.99 MW to 79.99 MW and sanctioned gas
load from 2.80 MMCFD to 6.30 MMCFD;
c) The Company successfully commenced commercial operations of new engines for its power plant;
d) The exchange rate of USD to PKR increased from Rs. 105 as at June 30, 2017 to Rs. 121.6 as at June
30, 2018; and
e) All other significant transactions and events that have affected the Company’s statement of financial
position and performance during the year have been adequately disclosed in the notes to these financial
statements and/or in the Directors’ report.
3. BASIS OF PREPARATION
3.1 Statement of compliance
These financial statements have been prepared in accordance with the accounting and reporting standards as
applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of International
Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as notified
under the Companies Act, 2017; and provisions of and directives issued under the Companies Act, 2017. Where
provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards, the provisions
of and directives issued under the Companies Act, 2017 have been followed.
3.2 Basis of measurement
These financial statements have been prepared under the historical cost convention, except as otherwise stated
in relevant notes.
3.3 Functional and presentation currency
These financial statements are presented in Pakistani Rupees (Rs.), which is the functional currency of the
Company.
4. CRITICAL ACCOUNTING ESTIMATES & JUDGEMENTS
The preparation of financial statements in conformity with approved accounting standards, requires management
to use certain accounting estimates and exercise judgements in the process of applying the Company’s
accounting policies. Estimates and judgements are regularly evaluated and are based on historical experience
and various other factors that are believed to be reasonable under the circumstances. Actual results may differ
from these estimates. Revisions to accounting estimates are recognized in the period in which the estimate is
revised, if the revision affects only that period, or in the period of revision and future periods, if the revision affects
both current and future periods. The areas involving significant estimates or judgements are:
94 MUGHAL IRON & STEEL INDUSTRIES LIMITED