| INTERASIA LEASING COMPANY LIMITED |
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| Annual Reports 2002 |
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| Contents |
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| Company
Information |
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| Notice
of Meeting |
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| Directors' Report and Chairmar |
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| Auditors' Report to the Memb( |
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| Balance
Sheet |
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| Profit and Loss Account |
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| Cash
Flow Statement |
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| Statement of Changes in Equit |
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| Notes to the Accounts |
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| Pattern of Shareholding |
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| Company Information |
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| Board of Directors as on June 30, 2002 |
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| 1.
Muhammad Younas Khan |
Chairman / Chief
Executive |
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| 2. Majid Ahmed Jhumra |
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Director |
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| 3.
Saiyed Hashim Ishaque |
Director |
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| 4. Abdus Samad Khan |
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(Nominee of Saudi Pak
Industrial & Agricultural |
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| |
Investment Co. (Pvt)
Ltd.) |
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| 5.
Muhammad Azam Khan |
Director |
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| 6.
Ahmed Mohiuddin Khan |
Director |
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| 7. Jameel ur Rehman |
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Director |
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| Company
Secretary |
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| Fazal Ahmad |
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| |
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| Bankers |
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| Gulf Commercial Bank Ltd. |
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| The
Bank of Khyber |
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| Emirates
Bank International |
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| Legal
Advisors |
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| Ahmer
Bilal Soofi, Advocates & Solicitors |
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| Auditors |
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| M/s
Husain Rahman, Chartered Accountants |
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| Registrar
and Share Transfer Office |
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| Universal Management
Services (Pvt) Ltd. |
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| Room No. 205, 2nd
Floor, Central Hotel Building, |
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| Civil Lines, Karachi. |
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| Phone: 5654037 |
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| Registered Office |
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| 101,
82-East, Fazal ul Haq Road, Blue Area, |
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| Islamabad-44000. |
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| Phone:
(92-51) 2206731-2206272 |
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| Fax: (92-51)2201380 |
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| |
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| Head Office |
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| B-601-602, 6th
Floor, Lakson Square Building # 03, |
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| Sarwar Shaheed Road, Karachi. |
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| Phone: (92-21)5654795-98 |
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| Fax: (92-21) 55688534 |
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| Notice of the Meeting |
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| Notice
is hereby given that 10th Annual General Meeting of INTERASIA LEASING COMPANY
LIMITED will be held at Institu |
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| of
Chartered Accountants of Pakistan Clifton, Karachi at 11.00 am. on Tuesday
the December 10,2002 to transact the followif |
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| business. |
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| ORDINARY
BUSINESS |
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| 1. To confirm the Minutes of 9th Annual
General Meeting held on December 29, 2002. |
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| 2. To receive, consider and adopt the
audited Accounts of the Company for the year ended June 30, 2002 together wi |
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| the
Directors' and Auditor's report thereon. |
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| 3. To appoint Auditors for the financial
year 2002-2003 and fix their remuneration. The present auditors M/s. Husain
Rahm; |
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| |
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| Chartered
Accountants reconstitute as Anjum Asim Shahid Rahman & Co. retire and
being eligible offer themselves f |
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| reappointment. |
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| 4. To transact any other business with the
permission of the Chair. |
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| By order of the Board |
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| Karachi: |
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| September 28, 2002 |
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| Notes: |
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| 1. The Register of Members of the Company
will remain closed from December 03, 2002 to December 09, 2002 |
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| (both days inclusive). |
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| |
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| 2. A member entitled to attend and vote at
the meeting is entitled to appoint a proxy to attend and vote for him/her. A
proxy |
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| need
not be a member of the Company, |
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| |
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| 3. An instrument of proxy and the power of
Attorney or other authority (if any) under which it is signed, or a
notarially |
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| certified
copy of such power of attorney in order to be valid must be deposited at the
registered office at the Company |
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| not
less than 48 hours before the time of the meeting. |
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| |
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| 4. Members are advised to lodge shares for
transfer at the office of Company Registrar, Universal Management
Services |
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| (Pvt)
Ltd., Room No. 205, 2nd Floor, Central Hotel Building, Civil Lines, Karachi.
Phone No. 5654037. |
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| |
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| 5. CDC shareholders desiring to attend the
Meeting are requested to bring their original National Identity Cards,
account |
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| and
participant's ID number, for identification purpose, and in case of proxy, to
enclose an attested copy of his/her |
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| National Identity Card. |
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| |
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| 6. Members are requested to notify any
change in their address immediately. |
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| Directors'
Report and Review by the Chairman |
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| The
Tenth Annual Report on audited Accounts of InterAsia Leasing Company Limited
for the year ended June 30, 2002 is |
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| presented hereunder. |
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| |
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| The
attached financial statements present a fair view of the affairs, cash flows
and changes in equity of the Company as a |
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| result
of its operations. The books of accounts are properly maintained, and the
financial statements are based on appropriate |
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| accounting
policies, which have been consistently followed. The accounting estimates are
based on reasonable and prudent |
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| judgment.
Due care has been taken to ensure that the system of internal control is
sound in design and is being effectively |
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| implemented
and monitored throughout the year. Current liquidity position of the Company
is somewhat weak but there is no |
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| doubt
about the Company's ability to continue as a going concern. The Board is
pleased to state that there has been no material |
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| departure
from the best practices of corporate governance, as detailed in the listing
regulations. |
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| General Review |
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| Simmering
tensions between India and Pakistan came to a boiling point with real threat
of nuclear war during the recent months. |
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| The
danger of potential conflict with India, post September 11th scenario,
unfortunate suicide attack on the French technicians |
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| in
Karachi have severely impacted the investment climate. The worsening law and
order situation showed no sign of improvement, |
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| casting
its shadow over the country's business activity in general, and of Karachi in
particular. The real estate sector has been |
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| sluggish,
low demand for credit has continued whilst large-scale output growth remained
weak. |
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| |
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| The
stagnation of exports due to slowdown of international demand has not helped
the matters either. The countrywide drop |
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| in
rainfall precipitated the water crises. Luckily it did not hamper the crops
yield as was being apprehended. |
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| |
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| Though
Pakistan has gained tremendously on the external account due to increase in
remittances, official transfers and SBP |
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| buying
US dollars to maintain the US dollar rupee parity. State Bank of Pakistan
pursued a monetary policy to stimulate the |
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| economic
growth, however it failed to yield the desired results. |
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| |
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| The
onslaught of commercial banks on the leasing industry's turf, continues to
make it more difficult for the survival of small |
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| leasing
companies. The answer lies in more consolidation. Therefore, there will be a
shrinkage in the number of leasing companies, |
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| in
the coming years and industry will portray a consolidated position. |
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| Operating
Performance |
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| Acute
liquidity problem was faced by the Company throughout the year under review.
The Company's current financial position, |
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| its
past association with BEL and its inability to attract fresh funds from
financial institutions, contributed to the shortage of |
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| working
capital necessary to write fresh leases. As a result, the company was unable
to transact new business, which adversely |
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| affected
its financial results. The annual income from lease financing declined by 45%
from Rs. 28.4 million to Rs. 15.4 million. |
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| Major
factors attributable to the above decline were reduction of leases,
suspension of income of non-performing leases to the |
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| tune
of Rs. 1.8 million, and a provision of Rs. 40.17 million made on the
Receivables from lessees. During the year 51 leases |
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| reached their maturity. |
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| |
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| The
above provision included a sum of Rs. 25.27 million provided against a single
lessee NICL - Nimir Industrial Chemical |
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| Limited
- (formerly, Ravi Alkalis Limited). NICL was provided a syndicate lease
financing during the year 1995. The Consortium |
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| comprised
of 10 leasing Companies, 2 Modarabas, and I Commercial Bank. InterAsia
Leasing Company also joined the syndicate |
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| by
providing a lease finance of Rs. 23.68 million. However, the client could not
perform, and the lease was restructured four |
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| times
between 1995 - 1999. This resulted in capitalization of accrued income to the
principal amount. NIMIR was then taken |
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| over
by a new management in the year 2000. The Consortium of lenders entered into
a Memorandum of Understanding with |
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| |
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| NIMIR's
new management whereby it was agreed to waive-off a substantial portion of
the balance receivable. The share of |
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| |
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| InterAsia
in the total waiver came to Rs. 25.27 million. |
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| The
overall operating expenses were kept under control and were lower than last
year by Rs. 9.1 million, due to the reduced |
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| admin,
financial and other costs. However, net loss for the year increased
substantially due to large provisions made against |
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| potential
lease losses and doubtful receivables. The management is consistently
pursuing the defaulters for recovery of the |
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| long overdue balances. |
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| |
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| Financial
Results as on 30, June |
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| |
2002 |
2001 |
2000 |
1999 |
1998 |
1997 |
1996 |
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| |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
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| |
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| Net
Investment in Lease |
46,124,018 |
79,905,658 |
165,561,002 |
291,858,700 |
333,989,222 |
313,765,045 |
231,360,004 |
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| Revenue |
|
15,933,189 |
28,934,071 |
33,433,047 |
53,671,702 |
60,772,034 |
60,696,286 |
38,382,935 |
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| Expenditure |
|
28,017,343 |
37,222,203 |
39,651,178 |
45,919,031 |
45,775,197 |
44,076,571 |
25,302,570 |
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| Provision
for diminution in value |
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| of investment |
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(1,919,053) |
4,686,320 |
3,666,240 |
17,158,201 |
- |
1,453,497 |
- |
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| Provision
for potential lease losses and |
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| against
doubtful lease losses |
40,196,139 |
28,085,643 |
(17,580,903) |
37,714,190 |
463,881 |
599,517 |
2,478,639 |
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| Provision
for Taxation deferred |
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| and current |
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3,624,320 |
4,678,560 |
7,788,240 |
9,378,582 |
313,448 |
277,202 |
177,295 |
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| Profit/(Loss) after Tax |
|
(53,985,360) |
(17,653,012) |
(12,270,585) |
(56,498,302) |
14,219,508 |
14,289,499 |
10,206,722 |
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| |
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| Dividend |
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| The
Company's lack of profitability being in a loss situation and the Reserves in
the negative, it is not possible to declare any |
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| dividend
or issue bonus shares to the shareholders. |
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| |
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| Provident
Fund, and Gratuity |
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| |
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| The
Company has a registered contributory provident fund for all its permanent
employees, and has a non funded gratuity |
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| scheme.
The value of the investments as per un-audited account of Provident Fund as
on June 30, 2002 was Rs. 1,156,307/= |
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| |
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| Board Meetings |
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| During
the year the Board of Directors met four times. The following directors
attended the meeting as indicated below: |
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| |
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| 1.
Mr. M. Younas Khan (All Board meetings) |
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| 2.
Mr. Majid A. Jhumra (All Board meetings) |
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| 3.
Mr. Abdus Samad Khan (Last three meetings) |
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| 4.
Mr. Azam Khan (Last two meetings) |
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| 5.
Sayed Hashim Ishaque (First two meetings) |
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| 6.
Mr. Ahmad Mohiuddin (First meeting only) |
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| 7.
Mr. Jameel ur Rehman (No meeting atttended) |
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| |
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| Statement
of Compliance |
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| The
Board of Directors hereby certify that InterAsia Leasing Company Limited is
compliant with the provisions of best practices |
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| of
corporate Governance as applicable on June 30, 2002. The Board will confirm
to all other requirements of the code in the |
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| current year. |
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| |
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| There
has been no material payment outstanding on account of taxes, duties, levies
and charges. |
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| Future Out Look |
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| As
mentioned earlier, the company's business could not pick-up due to lack of
the necessary working capital. The only hope |
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| for
survival of the company and its future growth lies in its merger with some
other financial institution. Our application for the |
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| company's
merger with First Interfund Modaraba is at an advanced stage, and
negotiations for a merger with another leasing |
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| company
are in progress. |
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| |
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| These
mergers will have an effect of increasing the size of our Balance Sheet,
reducing the expenditure and achieving some |
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| synergies.
The process is expected to be completed as soon as the necessary legal
formalities are met. |
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| |
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| A
little more patience is therefore solicited from the shareholders. |
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| |
| Auditors |
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| M/s.
Husain Rahman & Co. Chartered Accountants reconstituted asAnjumAsim
Shahid Rahman & Co. retire and being eligible |
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| offer
themselves for reappointment. |
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| |
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| The
Board appreciates the efforts of the management and staff for their continued
dedication and hard work. We also thank |
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| the
Securities and Exchange Commission of Pakistan for their support and
guidance. |
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| |
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| Pattern
of Shareholding |
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| The
pattern of shareholding as at June 30, 2002 is given on page 29. |
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| |
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| On behalf of the Board |
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| |
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| Karachi: |
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| September 28, 2002 |
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| |
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| MUHAMMAD YOUNAS KHAN |
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| Chairman |
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| |
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| Auditors'
Report to the Members |
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| We
have audited the annexed balance sheet of InterAsia Leasing Company Limited
as at June 30, 2002 and the related |
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| |
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| profit
and loss account, cash flow statement and statement of changes in equity
together with the notes forming part thereof, |
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| for
the year then ended and we state that we have obtained all the information
and explanations which to the best of our |
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| knowledge
and belief were necessary for the purposes of our audit. |
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| |
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| It
is the responsibility of the company's management to establish and maintain a
system of internal control, and prepare and |
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| present
the above said statements in conformity with the approved accounting
standards and the requirements of the Companies |
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| Ordinance,
1984. Our responsibility is to express an opinion on these statements based
on our audit. |
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| |
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| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These standards require that we |
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| plan
and perform the audit to obtain reasonable assurance about whether the above
said statements are free of any material |
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| misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the above |
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| said
statements. An audit also includes assessing the accounting policies and
significant estimates made by management, as |
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| well
as, evaluating the overall presentation of the above said statements. We
believe that our audit provides a reasonable basis |
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| for
our opinion and, after due verification thereof, we report that: |
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| |
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| a) in our opinion, proper books of accounts
have been kept by the Company as required by the Companies Ordinance, |
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| 1984; |
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| |
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| b) in our opinion: |
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| |
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| (i) the balance sheet and profit and loss
account together with the notes thereon have been drawn up in |
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| conformity
with the Companies Ordinance, 1984, and are in agreement with the books of
account and |
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| are
further in accordance with accounting policies consistently applied; |
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| |
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| (ii) the expenditure incurred during the year
was for the purpose of the Company's business; and |
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| |
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| (iii) the business conducted, investments made
and the expenditure incurred during the year were in accordance |
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| with
the objects of the company; |
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| |
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| c) in our opinion and to the best of our
information and according to the explanations given to us the balance
sheet, |
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| the
profit and loss account, cash flow statement and statement of changes in
equity together with the notes |
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| forming
part thereof conform with approved accounting standards as applicable in
Pakistan, and, give the information |
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| required
by the Companies Ordinance, 1984, in the manner so required and respectively
give true and fair view |
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| of
the state of the Company's affairs as at June 30, 2002 and of the loss and
cash flows and changes in equity |
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| for
the year then ended; and |
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| |
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| d) in our opinion, no Zakat was deductible
at source under the Zakat and Ushr Ordinance, 1980. |
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| |
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| e) Without qualifying our opinion, we draw
attention to note 1.2 to the financial statement which indicates that |
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| minimum
paid up share capital of the company is less than rupees two hundred million
as required by the Leasing |
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| Companies
(Establishment and Regulation) Rules, 2000. |
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| |
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| Karachi:
September 28, 2002 |
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| |
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| HUSAIN RAHMAN |
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| Chartered Accountants |
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| |
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| Balance
Sheet As at June 30,2002 |
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| |
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2002 |
2001 |
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| |
NOTE |
RUPEES |
RUPEES |
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| SHARE
CAPITAL AND RESERVES |
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|
| Authorised Capital |
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| 20,000,000
ordinary shares of |
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|
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| Rs. 10 each |
|
200,000,000 |
200,000,000 |
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| Issued,
subscribed and paid up capital |
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| 10,000,000
ordinary shares of |
|
|
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| Rs.
10 each fully paid up in cash |
|
100,000,000 |
100,000,000 |
|
| Reserves |
|
|
|
| Capital |
|
39,779,385 |
38,342,065 |
|
| Revenue |
|
(123,709,179) |
(69,723,819) |
|
| |
(83,929,794) |
(31,381,754) |
|
| |
16,070,206 |
68,618,246 |
|
| Certificates
of investment |
|
4 |
2,950,000 |
6,275,000 |
|
| Liability
against asset subject to finance lease |
|
5 |
280,850 |
1,664,405 |
|
| Deferred
liability gratuity |
|
1,388,963 |
529,091 |
|
| Long term deposits |
|
6 |
3,968,913 |
8,379,544 |
|
| |
8,588,726 |
16,848,040 |
|
| CURRENT
LIABILITIES |
|
|
|
| Redeemable
capital - Musharika arrangement |
|
7 |
27,360,293 |
27,536,211 |
|
| Current
portion of long term liabilities |
|
8 |
63,575,828 |
81,770,666 |
|
| Finance
under mark-up arrangements |
|
9 |
5,000,000 |
17,400,000 |
|
| Current
portion of liabilities against |
|
|
|
| assets
subject to finance lease |
|
5 |
525,806 |
785,143 |
|
| Accrued
and other liabilities |
|
10 |
35,161,875 |
28,831,669 |
|
| Taxation |
|
253,531 |
- |
|
| |
131,877,333 |
156,323,689 |
|
| CONTINGENCIES |
|
11 |
|
|
| |
156,536,265 |
241,789,975 |
|
| |
|
|
|
| The
annexed Notes form an integral part of these Financial Statements |
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| |
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| CHIEF EXECUTIVE |
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| |
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| |
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2002 |
2001 |
|
| |
NOTE |
RUPEES |
RUPEES |
|
| ASSETS |
|
|
|
| Fixed assets |
|
12 |
5,040,824 |
7,333,582 |
|
| Net
investment in leases |
|
13 |
38,306,043 |
42,857,102 |
|
| Long term investments |
|
14 |
3,341,905 |
16,032,100 |
|
| Long term deposits |
|
703,570 |
1,079,670 |
|
| |
47,392,342 |
67,302,454 |
|
| CURRENT ASSETS |
|
|
|
| Current
portion of net investment in leases |
|
15 |
48,436,914 |
94,148,892 |
|
| Current
portion of long term deposits |
|
209,800 |
- |
|
| Advances
to employees - Considered good |
|
1,096,639 |
892,025 |
|
| Prepayments |
|
248,547 |
1,212,529 |
|
| Short term investments |
|
16 |
- |
1,607,250 |
|
| Other receivables |
|
17 |
56,162,906 |
72,586,250 |
|
| Taxation |
|
- |
1,845,760 |
|
| Cash
and bank balances |
|
18 |
2,989,117 |
2,194,815 |
|
| |
109,143,923 |
174,487,521 |
|
| |
|
|
| |
156,536,265 |
241,789,975 |
|
| |
|
|
|
| Prof
it and LOSS ACCOUnt For the year ended June 30, 2002 |
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| |
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| |
|
2002 |
2001 |
|
| |
NOTE |
RUPEES |
RUPEES |
|
| |
|
|
| Income
from lease operation |
|
19 |
15,470,046 |
28,465,617 |
|
| Other income |
|
20 |
463,143 |
468,454 |
|
| |
15,933,189 |
28,934,071 |
|
| Administrative
and operating expenses |
|
21 |
17,262,963 |
19,137,198 |
|
| Financial
and other charges |
|
22 |
|
