SAUDI PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY LIMITED
	NOTES TO THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010
	1.	LEGAL STATUS AND OPERATIONS
		Saudi Pak Industrial and Agricultural Investment Company Limited ("the Company") is a public limited company incorporated in Pakistan jointly sponsored by the Kingdom of Saudi Arabia and the Government of Islamic Republic of Pakistan. The principal activity of the Company is to invest in the industrial and agro-based industrial projects in Pakistan on commercial basis and market their products in Pakistan and abroad.
	2.	STATEMENT OF COMPLIANCE
		These financial statements have been prepared in accordance with the directives issued by the State Bank of Pakistan, the requirments of the Banking Companies Ordinance, 1962, Companies Ordinance, 1984 and the approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and interpretations issued by Standing Interpretations Committee of the IASC, as adopted in Pakistan.
	3.	SUMMARY OF SIGNIFICANT POLICIES
		The accounting policies adopted in the preparation of these financial statements are the same as those applied in the preparation of the financial statements of the company for the year ended December 31, 2009.
	4.	INVESTMENTS
									Held by		Given as		Total
									bank		collateral
		As on March 31, 2010							7,082,907,527		965,841,442		8,048,748,969
		As on December 31, 2009							6,633,953,010		769,333,516		7,403,286,526
											March 31,		December 31,
											2010		2009
											------------------------(Rupees)-----------------------
	4.1	INVESTMENTS BY TYPE
		Held-for-trading securities									262,245,698		138,271,278
		Available-for-sale securities									5,311,088,179		4,813,245,649
		Held-to-maturity securities									2,549,613,922		2,617,016,095
											8,122,947,799		7,568,533,022
		Subsidiaries/Associates									1,301,676,075		1,301,676,075
											9,424,623,874		8,870,209,097
		Revaluation on quoted securities									(55,260,140)		(43,384,730)
		Impairment loss on quoted securities									(800,625,553)		(888,060,580)
		Impairment loss on mutual funds									(27,880,473)		(43,368,522)
		Provision for diminution in value of investments									(178,785,701)		(178,785,701)
		Provision against subsidiaries									(288,338,038)		(288,338,038)
		Provision against held-to-maturity securities									(24,985,000)		(24,985,000)
											(1,375,874,905)		(1,466,922,571)
		Investments (Net of Provisions)									8,048,748,969		7,403,286,526
	SAUDI PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY LIMITED
	NOTES TO THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010
											March 31,		December 31,
											2010		2009
											------------------------(Rupees)-----------------------
	5.	ADVANCES
		Loans, cash, credits, running finances, etc.
		In Pakistan									7,776,381,428		7,342,195,547
		Outside Pakistan									-		-
											7,776,381,428		7,342,195,547
		Net investment in finance lease
		In Pakistan									233,110,649		252,734,639
		Outside Pakistan									-		-
											233,110,649		252,734,639
											8,009,492,077		7,594,930,186
		Provision for non-performing advances					5.1				1,983,060,286		1,985,405,826
											6,026,431,791		5,609,524,360
	5.1	Advances include Rs.2,666.029 million which have been placed under non-performing status as details below:-
											Provision		Provision
		Category of Classification			Domestic		Overseas		Total		Required		Held
					(Rupees in Million)
		Substandard			96.389		-		96.389		25.495		25.495
		Doubtful			400.536		-		400.536		123.504		123.504
		Loss			2,169.104		-		2,169.104		1,834.061		1,834.061
					2,666.029		-		2,666.029		1,983.060		1,983.060
											March 31,		December 31,
											2010		2009
											------------------------(Rupees)-----------------------
	6.	CONTINGENCIES AND COMMITMENTS
		(a)	Contingent liabilities
			Inland standby letter of credit								208,825,000		208,825,000
			Letter of comfort / Guarantees								261,800,000		11,800,000
											470,625,000		220,625,000
		(b)	Commitments
			Undisbursed sanctioned financial commitments								989,281,000		1,110,632,000
			Letter of credits (LCs)								14,859,000		19,468,000
			Underwritting								25,000,000		35,000,000
			Commitments for fixed capital expenditure								1,747,044		1,850,400
			Foreign exchange contracts (USD 55.700 million)								4,875,469,000		4,883,092,580
											5,906,356,044		6,050,042,980
	SAUDI PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY LIMITED
	NOTES TO THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010
		Assessment Orders Under Income Tax Ordinance, 2001
		The assessment orders have been issued to the Company under section 122 of the Income Tax Ordinance, 2001 in respect of tax year 2004, 2005, 2006, 2008 and 2009. According to these assessment orders, tax payable/ (Refundable) by the Company/ (to the Company) has been assessed at Rs. 58,695,308, Rs. 10,944,182, Rs. 51,189,233, Rs. 290,999,882 and Rs. 650,036,145 respectively as against declared tax refund of Rs. 24,722,322, Rs. 30,461,951, Rs. 46,439,285, Rs. 47,644,660 and Rs. 37,866,861. The difference between declared refund and assessed tax liability is attributable to additions made in the declared income mainly on account of 'Provision for Non-Performing Loans/Advances‘ and ‘Apportionment of expenses between exempt/ presumptive income and  normal income’. The company has filed appeals against these assessment orders which are pending for adjudication before the Commissioner Inland Revenue (Appeals) (Tax Year 2008 & 2009) and the Appellate Tribunal of Inland Revenue (Tax Year 2004, 2005 & 2006 ). The Company has made payment of Rs 63.842 million for tax years 2004, 2005 & 2006 and Rs 400.000 million on account of tax year 2008 and 2009 U/s 137(2) of Income Tax Ordinance, 2001. It is likely that the appeals will be decided in favor of the Company. The tax impact of Provision for Non-Performing Loans for tax year 2010 amounts to Rs. 177,461,590.
		Stahlco Domestic Products (Private) Limited
		This suit of damages was filed by Stahlco against Saudi Pak in the banking court-III, Lahore on 04.02.2009 claiming damages of Rs. 43.093 million on account of alleged overpayments and loss of business etc. In fact, Stahlco defaulted in repayment of finances availed from Saudi Pak, as a result, Saudi Pak filed a recovery suit of Rs. 43.929 million against Stahlco and its directors/guarantors in the Banking Court-IV, Lahore. Therefore, the suit of damages filed by Stahlco against Saudi Pak appears to be a counter-blast to the recovery proceedings initiated by Saudi Pak. This suit is at preliminary stage of hearing and is being defended aggressively.
		Ceco Tyre (Private) Limited
		This suit of damages was filed by Ceco Tyre in Lahore High court Lahore on 27.7.2009 claiming damages of Rs. 202 million from Saudi Pak on account of alleged losses due to withdrawal of a finance facility sanctioned by Saudi Pak in favor of Ceco Tyre. The finance facility was withdrawn by Saudi Pak due to bad CIB reported to SBP by Bank of Punjab on account of default in repayments. In this alleged damages suit, Bank of Punjab has been made a proforma party. It is at preliminary stage of hearing and is being contested by Saudi Pak aggressively.
		Ceco Tyre (Private) Limited
		This suit of damages was filed by Ceco Tyres in Lahore High Court, Lahore on 01.06.2009 mainly claiming damages of Rs. 584 million from Bank of Punjab on account of losses and contractual violations etc. In this suit, Saudi Pak has also been made a proforma party. It is also at preliminary stage of hearing but is being contested by Saudi Pak to avoid any consequential adverse impact on Saudi Pak's defence.
		Crescent Sugar Mills Limited
		This suit of damages was filed by Crescent Sugar Mills Ltd during October, 2008 against Saudi Pak for a sum of Rs. 102.622 million on account of alleged losses/breach of commitments etc. It was filed in the former Islamabad High Court at Islamabad as a counter blast to a recovery suit already by filed by Saudi Pak in the Lahore High court, Lahore. Saudi Pak's suit has been decreed by the court against Crescent Sugar Mills Ltd and is now under execution with the said court. In this alleged damages suit. evidence has been recorded by both parties and is now pending for final arguments before Lahore High Court, Rawalpindi Bench as Islamabd High Court is no more functional.
	SAUDI PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY LIMITED
	NOTES TO THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010
	7.	RELATED PARTY TRANSACTIONS
		Related parties comprise directors, key management personnel and entities over which directors are able to exercise significant  influence and employee funds. Following are related parties of the company:
		Saudi Pak Leasing Company Limited
		Saudi Pak Insurance Company  Limited
		Saudi Pak Real Estate Limited
		Employee Provident Fund
											March 31,		March 31,
											2010		2009
											------------------------(Rupees)-----------------------
		Following are the transactions with related parties:
		Placement against COIs					Saudi Pak Leasing Co. Ltd				103,525,000		-
		Clean/Letter-based Placements					Saudi Pak Leasing Co. Ltd				-		150,000,000
		Loan and advances					Saudi Pak Leasing Co. Ltd				-		187,208,501
		Subordinated loan					Saudi Pak Leasing Co. Ltd				333,208,501		-
		Interest income					Saudi Pak Leasing Co. Ltd				458,441		11,891,519
		Interest expensed					Saudi Pak Leasing Co. Ltd				-		264,385
		Claims received					Saudi Pak Insurance Co. Ltd				1,800		-
		Premium paid					Saudi Pak Insurance Co. Ltd				43,181		493,927
		Contribution to the employees provident fund					Employee Provident Fund				863,382		804,187
		Deposit against COIs					Employee Provident Fund				11,620,000		-
		Interest expensed					Employee Provident Fund				82,849		-
	8.	GENERAL
	8.1	Corresponding figures have been rearranged, wherever necessary, for the purpose of comparison.
	8.2	Figures in these accounts have been rounded off to the nearest rupee.
		__________________________								_______________
		General Manager/Chief Executive				Director				Director			Chairman
	_________________________								_________________________
	Chief Financial Officer								General Manager/Chief Executive