On behalf of the Board of Directors, I am pleased to present Statements of Accounts of your Company for the half year ended September 30, 2005 duly reviewed by the auditors.

THE ECONOMY

Pakistan economy improved significantly during the fiscal year 2004-2005 achieving a 8.4% GDP growth due to continuity of sound macro-economic policies, financial discipline, political and regional stability. GDP growth has been projected 7.0% for the year 2005-2006. It is expected that the growth would be around 6.5% due to adverse impact of the devastating October 8 earthquake. During the first three months of the fiscal year, the current account deficit of the country widened to over US$ 1.4 billion as against last full year deficit of around US$ 1.5 billion. The same is attributed to high prices of crude oil coupled with accelerated pressure on the import of machinery and raw material on account of higher growth last year. Foreign exchange reserves of the country reduced from US$ 13.0 billion to US$ 11.7 billion in November 2005. Inflation rose to 8.55% as against full year target of 8.0%.

THE INDUSTRY

The capacity utilization of battery industry in the organized sector improved considerably on account of improved economy and 28% growth in automobile sector. Car demand has increased exponentially in the last two years due to good macro economic management and sharp decrease in interest rates. The prices of major raw materials used by the battery industry have almost doubled since January 2004. During the six months under review the selling prices of batteries were increased by 5%. These price increases are still insufficient to cover the total impact of increase in input cost and has adversely affected the gross margin of the industry. The un-organized sector comprising of replaters, smugglers and importers at under invoiced value are still enjoying sizeable share in the total battery market posing a threat to the organized sector and loss to national exchequer.

OPERATING RESULTS

Net sales revenue for the half year under review went up by 14% to Rs. 681.4 million from Rs.596.7 million on account of price and volume increase. As against 14% increase in net sales revenue, cost of sales increased by 18% due to significant increase in imported raw material items. Consequently, gross profit margin reduced to Rs.103.3 million as compared with Rs.108.4 million achieved during the corresponding period of the last year. Financial charges increased from Rs.6.9 million to Rs. 15.3 million due to combined effect of higher utilization of running finance facility and interest rates.

Profit before tax for the period was Rs30.6 million as compared to Rs.42.5 million attained in the corresponding period of the last year. Earnings per share works out to Rs 3.21 as compared to Rs.4.30 in the same period of the last year.

FUTURE PROSPECTS

It is hoped that indigenous organized battery industry will continue to perform satisfactorily, but the profitability will remain under pressure on account of increase in raw material prices, mark up rates and market competition. Your management is determined to avail full use of the opportunities by continued focus on quality, productivity, cost control and after sale service to improve its competitiveness.

ARIF HASHWANI
Chairman

Karachi : November 28, 2005