Notes to the financial statements for the year ended

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Notes to the Financial Statements for the year ended 30 June 2013
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47 Rupees in thousand 2013 2012 38.1.2 Cash at Bank A-1+ 19,310 28,524 A2 380 172 A1+ 26,293 19,279 A-1+ 36,941 12,169 A1+ 3 2,066 A-1+ 9,848 7,303 Cheques in hand 33,226 28,632 126,001 98,145 38.2 Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its commitments associated with financial liabilities when they fall due. Liquidity requirements are monitored regularly and management ensures that sufficient liquid funds are available to meet any commitments as they arise. Financial liabilities are analysed below, with regard to their remaining contractual maturities. 2013 Maturity Upto Maturity After One Year One Year Total Rupees in thousand Liabilities against assets subject to finance lease Short term borrowings 154,948 154,948 Trade and other payables 438,005 438,005 Mark up accrued on short term borrowings 5,988 5,988 Total Financial liabilities 598,941 598,941 2012 Maturity Upto Maturity After One Year One Year Total Rupees in thousand Liabilities against assets subject to finance lease 14,463 14,463 Short term borrowings 296,656 296,656 Trade and other payables 461,893 461,893 Mark up accrued on short term borrowings 9,220 9,220 Total Financial liabilities 782,232 782,232 38.3 Market Risk 38.3.1 Currency Risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the export of its products and import of some chemicals. The Company does not view hedging as financially viable considering the materiality of transactions. Notes to the Financial Statements for the year ended 30 June 2013
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48 Sensitivity analysis With all other variables remain constant, a 1 % change in the rupee dollar parity existed at 30 June 2013 would have affect the profit and loss account and liabilities and equity by Rs. (thousands) 499 (2012: Rs. (thousands) 177). 38.3.2 Interest Rate Risk Interest rate risk arises from the possibility that changes in interest rate will affect the value of financial instruments. The Company is exposed to interest rate risk for short term borrowings obtained from the financial institutions, liabilities against assets subject to finance lease and bank deposits, which have been disclosed in the relevant note to the financial statements. Sensitivity analysis If interest rates at the year end, fluctuate by 100 basis points higher/ lower, profit for the year would have been Rs. (thousand) 1,549 (2012: Rs. (thousand) 508) higher/ lower. This analysis is prepared assuming that all other variables held constant and the amounts of liabilities outstanding at the balance sheet dates were outstanding for the whole year. 38.4 Capital Management The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholders’ value. The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions. Capital includes ordinary share capital and reserves.
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