Page 102 - InterloopAnnualReport2021

NOTES TO THE

FINANCIAL STATEMENTS

For the year ended June 30, 2021

1. LEGAL STATUS AND OPERATIONS
Interloop Limited (the Company) was incorporated in Pakistan on 25th April, 1992 as a private limited company
under Repealed Companies Ordinance, 1984 (now Companies Act, 2017). On 18th July 2008, the Company was
converted into public limited company and subsequently, on 5th April 2019, it was publicly listed on Pakistan
Stock Exchange. The Company is engaged in the business of manufacturing and sale of socks, leggies, denim and
yarn, and to generate electricity for its own use.

The geographical locations and addresses of the Company’s business units, including production facilities are as
under:

– Registered office: Al-Sadiq Plaza, P-157, Railway Road, Faisalabad.
– Corporate office & Plant 1: 1-KM, Khurrianwala – Jaranwala Road, Khurrianwala, Faisalabad-Pakistan.
– Plant 2, Plant 4 & Spinning unit: 7-KM, Khurrianwala – Jaranwala Road, Khurrianwala, Faisalabad-Pakistan.
– Plant 5: 6-KM, Khurrianwala – Jaranwala Road, Khurrianwala, Faisalabad-Pakistan.
– Plant 3 & Denim: 8-KM, Manga- Raiwind Road, Raiwind, Dist. Kasur, Lahore-Pakistan.
– Apparel unit: 117-J.B, Millat Road Dhanola, Faisalabad-Pakistan. (Rented)

2. AMALGAMATION OF IL APPAREL (PRIVATE) LIMITED
The Board of Directors of the Company in their meeting held on October 28, 2020 approved the amalgamation
of IL Apparel (Private) Limited (“ILA”), a wholly owned subsidiary of Interloop Limited (“the Company”) with and
into the Company, in accordance with the terms of Scheme of Amalgamation prepared under the provisions of
section 284 read with all other enabling provisions of the Companies Act, 2017. In pursuance of the scheme of
amalgamation approved by the Board as above, the Securities and Exchange Commission of Pakistan approved
the scheme on January 25, 2021 and sanctioned the effective date of the amalgamation i.e. January 31, 2021.
Pursuant to the scheme, the entire undertaking and business of ILA with all the property, assets, rights, liabilities
and obligations of every description stand amalgamated into the Company while the shares of ILA held by the
Company stood cancelled.

As the above amalgamation represents a transaction between commonly controlled entities, the said transaction
is outside the scope of IFRS-3 ‘Business Combinations’ and therefore is accounted for as a common control
transaction and predecessor accounting has been applied as of the date of amalgamation. Accordingly, the
assets and liabilities of ILA have been amalgamated in the financial statements of the Company at their net
carrying amount as recorded in ILA separate financial statements as at January 31, 2021. The difference in value
of the net assets and cost of investment in ILA in the long-term investments of the Company has been included
in equity under the head unappropriated profit. All inter-company balances stand eliminated as at January
31, 2021 without any fund movement. The ILA stand dissolved without winding up. The statement of financial
position of ILA is merged prospectively from the date of amalgamation. Detail of the net assets transferred upon
amalgamation is disclosed in note. 44 to the financial statements.

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 Standards) issued by the International Accounting
Standards Board (IASB) as notified under the Companies Act, 2017,

– Provisions of and directives issued under the Companies Act, 2017.

Where the 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.

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