Rs. reported in the Annual Report 2002, the prices of Polyester Staple Fiber in the country are expected to be under pressure due to enormous increase in the local production capacity of fiber. On the other hand, the prices of PTA and MEG, the two basic raw materials of fiber industry have shown an upward adjustment and their prices have increased by approximately US$ 100 per ton in February 2003. Consequently, the raw material cost has increased by Rs. 8.50 per kg. of fiber . However, in the second half of February 2003, there was a further increase in the prices of PTA and MEG by US$ 170 per ton and US$80 per ton respectively of their supply for the month of March 2003. The impact of further increase in prices of PTA and MEG on fiber manufacturing cost would be around Rs. 12/- per kg.

The sale price of Polyester Staple Fiber was marginally increased by Rs.. 3/- per kg. w.e.f. 1 February 2003. However, to reduce the impact of substational increase in the raw material cost, the sale price of Polyester Staple Fiber was again increased by Rs.. 7/- per Kg. w.e.f. 16 February 2003. There is still a gap of approximately Rs.. 10/- per kg. due to the increase of the raw material cost of PTA and MEG vis-a-vis increase in the sale price of Polyester Staple Fiber.

The downstream industry will be able to absorb the substantial increase in the raw material cost. If Company is not able to pass on the 100% cost push of raw material to the sale price of Polyester Staple Fiber in the coming months, your directors are not hopeful for encouraging results.

ACKNOWLEDGEMENT

Management - Employees relations remained cordial throughout the period under review. The Management places on record their appreciation of the dedication and hard work of the employees, which enabled the company to achieve satisfactory results in the first half of the current year.

For and on behalf of the Board of Directors,

UMER HAJI KARIM

Chief Executive

Karachi: 17 February, 2003