|
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1996 |
|
| B.R.R.
Capital Modaraba |
|
|
|
| Managed
by B.R.R. Investments (Private) Ltd. |
|
|
|
| Corporate
Information |
|
|
|
| Modaraba
Company |
|
| B.R.R.
Investments (Private) Limited |
|
|
| Chairman |
|
| Mr.
Siddique Dawood |
|
|
| Chief
Executive |
|
| Mr.
Safdar Rashid |
|
|
| Directors |
|
| Mr.
S. Ghulam Abbas |
|
| Mr.
Mansoorul Arfin |
|
|
| Auditors |
|
| A.F.
Ferguson & Co. |
|
| Chartered
Accountants |
|
|
| Bankers |
|
| AI-Faysal
Investment Bank Ltd. |
|
| ANZ
Grindlays Bank plc |
|
| American
Express Bank Limited |
|
| First
International Investment Bank Limited |
|
| Faysal
Bank Ltd. |
|
| Habib
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| National
Bank of Pakistan |
|
| Oman
International Bank Ltd. |
|
| Pak
Libya Holding Co. (Pvt) Ltd. |
|
| Saudi
Pak Industrial & Agricultural |
|
| Investment
Co. (Pvt) Limited |
|
| Standard
Chartered Bank |
|
|
| Registrars |
|
| Gangjees
Investment & Finance Consultants |
|
| 513
Clifton Centre, |
|
| Khayaban-e-Roomi, |
|
| Kehkeshan,
Block 5, |
|
| Clifton,
Karachi. |
|
|
| Registered
Office |
|
| Dean
Arcade, Block-8, Kehkeshan, Clifton, Karachi. |
|
|
|
|
| Report
of the Director |
|
|
|
| The
Board of Directors of B.R.R. Investments (Private) Limited takes pleasure in
presenting the twelfth |
| report
of B.R.R. Capital Modaraba together with the audited accounts for the year
ended June 30, 1996. |
|
|
| FINANCIAL
RESULTS |
|
| The
financial results of your Modaraba for the year under review are summarised
as follows: |
|
|
|
|
1996 |
1995 |
|
|
|
Year ended |
6 months |
|
|
June 30, |
ended |
|
|
|
1996 |
June 30, |
|
|
|
1995 |
|
|
|
Rupees |
Rupees |
|
|
| New
leases executed at prime cost |
249,261,626 |
205,087,056 |
|
|
|
|
------------ |
------------ |
|
| Gross
rentals received |
|
475,173,559 |
263,372,057 |
|
|
|
|
------------ |
------------ |
|
| Profit
before management fee |
38,431,971 |
24,493,823 |
|
| Modaraba
Company's Management fee |
3,493,816 |
2,226,711 |
|
|
|
|
------------ |
------------ |
|
| Profit
before taxation |
|
34,938,155 |
22,267,112 |
|
|
|
|
|
|
| Taxation: |
|
|
| Current |
|
|
12,650,000 |
-- |
|
| Prior
years |
|
8,016,625 |
-- |
|
|
|
|
------------ |
------------ |
|
|
|
|
20,666,625 |
-- |
|
|
|
|
|
|
|
|
|
|
------------ |
------------ |
|
| Profit
after taxation |
|
14,271,530 |
22,267,112 |
|
| Unappropriated
profit brought forward |
10,726,328 |
1,912,638 |
|
|
|
|
------------ |
------------ |
|
| Profit
available for appropriation |
24,997,858 |
24,179,750 |
|
|
|
|
|
|
| Appropriations: |
|
|
| Cash
profit distribution |
|
20,281,722 |
-- |
|
| Transfer
to statutory reserve |
2,854,306 |
4,453,422 |
|
| Transfer
to general reserve |
|
-- |
9,000,000 |
|
|
|
|
------------ |
------------ |
|
|
|
|
23,136,028 |
13,453,422 |
|
|
|
|
------------ |
------------ |
|
| Unappropriated
profit carried forward |
1,861,830 |
10,726,328 |
|
|
|
|
------------ |
------------ |
|
|
|
|
|
|
| The
Board is pleased to declare a profit distribution in cash of Rs. 1.00 per
Modaraba Certificate aggregating |
| Rs.
20.28 Million. With the transfer to reserve the break-up value of your
Modaraba Certificate now |
|
| stands
at Rs. 13.43 against a face value of Rs. 10.00 (1995: Rs. 13.72). |
|
|
| OPERATIONS |
|
| We
are pleased to report that during the year under review, your Modaraba
completed 10 years of business |
| operations.
The total number of leases executed since inception to 30 June 96 were 6,926
with a total |
|
| value
of Rs. 3.26 billion. |
|
|
| As
at 30 June 96, we had a total of 1,355 "live" leases with a prime
cost of Rs. 1.38 billion. |
|
|
| New
leases executed during the year toalled 244 leases, with a prime cost of Rs.
249.26 million. The |
|
| average
size of leases written during the year works out to around Rs. 1 million. |
|
|
| Report
of the Directors continued |
|
|
| Approximately
two thirds of these in numbers were vehicle leases which accounted for 27% in
value. |
|
| Plant
and machinery leases totalled 20% in numbers and 68°/~ in value of the total
disbursement during |
|
| the year. |
|
|
| A
provision for taxation of Rs. 20.66 million has been provided in the accounts
in respect of the current |
| and
prior years. Due to the provision, the profit available for distribution was
reduced. |
|
|
| Property |
|
| During
the year the property acquired earlier in Karachi was sold as it was not
possible to commercialise |
| it
for use as office space. Office space was acquired in Islamabad for the use
of the Modaraba which |
|
| will
enable it to shift from the existing rented premises. |
|
|
| -Security
Vault |
|
| In
order to cope with the increased volume of business, an additional floor was
added during the year. |
|
| To
cope with future expansion of business, negotiations commenced during the
year for acquisition of |
|
| an
adjacent plot. |
|
|
| Income
Notes |
|
| We
are pleased to report that during the year under review, the International
Finance Corporation |
|
| subscribed
to USS 10 million (Rs. ;351..87 million) of Income Notes issued by your
Modaraba. The funds |
|
| were
received around the middle of May 96 and Rs. 69 million were deployed in
leasing activities in |
|
| the
period to ;30 ,June 96. |
|
|
| Recoveries |
|
| In
view of the general business slowdown, continuous efforts will continue to be
made to recover outstanding |
| rental
payments. |
|
|
| Prudential
Regulations for Non banking Financial Institutions |
|
| The
State Bank of Pakistan made it mandatory for Non banking Financial
Institutions (N.B.F.Is) to maintain |
| a
cash reserve of 1% of their liabilities in a non-profit bearing account with
the State Bank of Pakistan. |
| In
addition, under the Prudential Regulations issued by the State Bank of
Pakistan for N.B.F.Is, your |
|
| Modaraba
was required to maintain 15% liquidity against certain liabilities, in the
form of investments |
| in
government securities/shares. Subsequent to the year end, the State Bank
decided that with effect |
|
| from
31 December 96, all NBFIs will require to maintain liquidity ratio of 19%.
The transfer to the Statutory |
| Reserve
during the year under review was Rs. 2.85 million, bringing the balance in
the Statutory Reserve |
| as
at 30 June 96 to Rs. 36.55 million. |
|
|
| Central
Excise Duty |
|
| The
Government imposed central excise duty vide SRO 456 (1)/96 with effect from
15 dune 1996 at |
|
| the
rate of 1/12 of 1% on the amount of each Lease/Musharaka outstanding on the
last working day |
|
| of
each calendar month. Members of the Leasing Association and Modaraba
Association have challenged |
|
| the
imposition of such duty in the High Courts of Sind and Punjab. |
|
|
| Future |
|
| Political
uncertainties and general business slowdown which plagued the economy during
1995-96 continue |
| into
the current financial year. The issues have been identified, and it is hoped
that consistent policies |
| are
implemented by the government to revive business confidence. |
|
|
| Auditors |
|
| The
present auditors Messrs A.F. Ferguson & Co., Chartered Accountants are
due for retirement and |
|
| have
offered themselves for reappointment for the year ending June 30, 1997. Their
appointment has |
|
| been
confirmed by the Board subject to the approval of the Registrar, Modaraba
Companies & Modarabas. |
|
|
| Acknowledgment |
|
| The
Board expresses its appreciation for the hard work and positive efforts made
by the staff and thanks |
| them
for their dedication. |
|
|
| FOR
AND ON BEHALF OF BOARD OF DIRECTORS |
|
|
| Auditors'
Report to the Certificate Holders |
|
| We
have audited the annexed Balance Sheet as at June 30, 1996 and the related
Profit and Loss Account |
|
| and
Cash Flow Statement together with the Notes to the Accounts for the year then
ended of B.R.R. |
|
| Capital
Modaraba which are Modaraba Company's (B.R.R. Investments (Private) Limited)
representation |
|
| and
we state that we have obtained all the information and explanations which we
required and, after |
|
| due
verification thereof, we report that: |
|
|
| (a)
In our opinion proper books of account have been kept by the Modaraba Company
in respect |
|
| of
B.R.R. Capital Modaraba as required by the Modaraba Companies and Modaraba
(Floatation |
|
| and
Control) Ordinance, 1980; and Modaraba Companies and Modaraba Rules, 1981; |
|
|
| (b)
In our opinion, the Balance Sheet and the Profit and Loss Account have been
drawn up in conformity |
|
| with
the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980;
and |
|
| Modaraba
Companies and Modaraba Rules, 1981; and |
|
|
| (c)
In our opinion and to the best of our information and according to the
explanations given to us; |
|
|
| (i)
the Balance Sheet and the related Profit and Loss Account and Cash Flow
Statement, which |
|
| are
in agreement with the books of account, exhibit respectively a true and fair
view of |
|
| the
state of the Modaraba's affairs as at June 30, 1996; and the profit and the
cash flows |
|
| for
the year ended on that date; |
|
|
| (ii)
in our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980; and |
|
|
| (iii)
the business conducted, investments made and expenditure incurred by the
Modaraba are |
|
| in
accordance with the objects, terms and conditions of the Modaraba. |
|
|
| A.F.
FERGUSON & CO. |
|
| CHARTERED
ACCOUNTANTS |
|
|
| KARACHI:
December 30, 1996 |
|
|
| Balance
Sheet as at June 30, 1996 |
|
|
|
|
1996 |
1995 |
|
|
|
Note |
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
|
|
|
|
| Certificate
capital |
|
|
|
Authorised |
|
|
| 50,000,000
Modaraba Certificates |
|
| of
Rs. 10 each |
|
500,000,000 |
500,000,000 |
|
|
|
============ |
============ |
|
|
|
|
| Issued,
subscribed & paid up |
3 |
202,817,220 |
202,817,220 |
|
|
|
|
| Reserves
- capital |
|
4.1 |
36,733,447 |
33,879,141 |
|
| - general |
|
4.2 |
31,000,000 |
31,000,000 |
|
|
|
|
| Unappropriated
profit |
|
1,861,830 |
10,726,328 |
|
|
|
------------ |
------------ |
|
|
|
272,412,497 |
278,422,689 |
|
| LONG-TERM
MUSHARAKAS, MORABAHA AND |
|
|
| FINANCE
UNDER MARK-UP ARRANGEMENTS |
5 |
78,332,291 |
67,045,001 |
|
|
|
|
| REDEEMABLE
CAPITAL |
|
6 |
351,877,500 |
-- |
|
|
|
|
|
|
|
| DEFERRED
LIABILITY AND INCOME |
|
| Customers'
security deposits |
|
108,813,191 |
117,696,136 |
|
| Deferred
income |
|
|
204,710 |
340,056 |
|
|
|
------------ |
------------ |
|
|
|
109,017,901 |
118,036,192 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
| Current
maturity of long-term Musharakas, |
|
| Morabaha
and Finance under mark-up |
|
| arrangements |
|
5 |
69,162,946 |
74,921,276 |
|
|
|
|
|
|
| Current
maturity of Customers' |
|
|
|
| security deposits |
|
|
22,401,974 |
18,107,037 |
|
|
|
|
|
|
|
| Short-term profit and |
|
|
|
|
| loss
sharing loan |
|
7 |
2,596,343 |
12,310,447 |
|
|
|
|
|
|
|
| Short-term
Morabaha Musaraka & Working |
|
| capital
finance under |
|
|
| mark-up arrangements |
|
8 |
307,304,439 |
387,899,747 |
|
|
|
|
|
| Creditors, accrued and |
|
|
|
|
| other
liabilities |
|
9 |
29,066,513 |
42,087,078 |
|
|
|
|
|
|
|
| Taxation |
|
|
|
20,001,699 |
1,047,540 |
|
|
|
|
|
|
| Unclaimed
profit distribution |
|
393,254 |
630,073 |
|
|
|
|
|
|
| Profit
payable |
|
|
-- |
35,493,014 |
|
|
|
|
|
|
|
| Proposed
profit distribution |
|
20,281,722 |
-- |
|
|
|
|
|
------------- |
------------- |
|
|
|
|
471,208,890 |
572,496,212 |
|
|
|
|
|
|
| COMMITMENTS |
|
10 |
|
|
|
|
|
------------- |
------------- |
|
|
|
|
1,282,849,079 |
1,036,000,094 |
|
|
|
|
============= |
============= |
|
|
|
|
|
1996 |
1995 |
|
|
|
Note |
Rupees |
Rupees |
|
| FIXED
ASSETS - tangible |
|
|
|
|
|
| Assets
leased out |
|
11.1 |
749,728,937 |
870,005,462 |
|
| Work-in-progress
of assets to be |
|
|
leased out |
|
|
11,500,000 |
2,444,460 |
|
|
|
|
|
------------- |
------------- |
|
|
|
|
761,228,937 |
872,449,922 |
|
|
|
|
| Assets
in own use |
|
11.2 |
60,247,590 |
88,061,604 |
|
| Workon-progress
of assets in own use |
|
6,198,736 |
1,602,911 |
|
|
|
|
|
------------- |
------------- |
|
|
|
|
827,675,263 |
962,114,437 |
|
|
|
|
|
|
| DEFERRED
EXPENDITURE |
|
12 |
2,237,590 |
3,053,026 |
|
|
|
|
|
|
|
| LONG-TERM
DEPOSITS AND PREPAYMENTS |
13 |
91,162 |
266,178 |
|
|
|
|
|
|
|
| LONG-TERM
RECEIVABLES |
|
|
1,862,298 |
-- |
|
|
|
|
|
|
|
| INVESTMENIS |
|
14 |
364,125,200 |
11,172,379 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
| Trade
debts |
|
15 |
65,434,761 |
28,030,426 |
|
| Current
portion of long-term |
|
|
receivables |
|
|
406,518 |
5,251,546 |
|
| Advances
and prepayments |
|
16 |
6,523,314 |
5,910,911 |
|
| Other
receivables |
|
17 |
7,611,231 |
2,459,146 |
|
| Cash
and bank balances |
|
18 |
6,881,742 |
1,774,204.50 |
|
|
|
|
|
------------- |
------------- |
|
|
|
|
86,857,566 |
59,394,074 |
|
|
|
|
|
|
------------- |
------------- |
|
|
|
|
1,282,849,079 |
1,036,000,094 |
|
|
|
|
============== |
============== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts |
|
|
| Profit
and Loss Account for the Year ended June 30, 1996 |
|
|
|
Year |
Six months |
|
|
|
|
ended |
ended |
|
|
|
|
June 30, |
June 30, |
|
|
|
|
1996 |
1995 |
|
|
|
Note |
Rupees |
Rupees |
|
|
| Lease
rentals |
|
|
475,173,559 |
263,372,057 |
|
| Operating
expenses |
|
19 |
365,533,297 |
196,311,036 |
|
| Financial
charges |
|
20 |
92,900,394 |
52,041,364 |
|
|
|
|
|
------------- |
------------- |
|
|
|
|
458,433,691 |
248,352,400 |
|
|
|
|
|
|
|
|
|
|
------------- |
------------- |
|
|
|
|
16,739,868 |
15,019,657 |
|
|
|
|
|
|
| Other
income |
|
21 |
21,692,103 |
9,474,166 |
|
|
|
|
|
------------- |
------------- |
|
|
|
|
38,431,971 |
24,493,823 |
|
|
|
|
|
|
| Modaraba
company's management fee |
|
3,493,816 |
2,226,711 |
|
|
|
|
|
------------- |
------------- |
|
| Profit
before taxation |
|
|
34,938,155 |
22,267,112 |
|
|
|
|
|
|
| Taxation |
|
| Current |
|
|
12,650,000 |
-- |
|
| Prior
years |
|
|
8,016,625 |
-- |
|
|
|
|
|
------------- |
------------- |
|
|
|
20,666,625 |
-- |
|
|
|
|
|
|
------------- |
------------- |
|
| Profit
after taxation |
|
|
14,271,530 |
22,267,112 |
|
| Unappropriated
profit brought forward |
|
10,726,328 |
1,912,638 |
|
|
|
|
|
------------- |
------------- |
|
| Profit
available for appropriation |
|
24,997,858 |
24,179,750 |
|
|
|
|
|
|
| Appropriations: |
|
|
| Final
profit distribution @ 10% (1995 Nil) |
20,281,722 |
-- |
|
| Transfer
to statutory reserve |
4 |
2,854,306 |
4,453,422 |
|
| Transfer
to general reserve |
|
|
-- |
9,000,000 |
|
|
|
|
|
------------- |
------------- |
|
|
|
|
23,136,028 |
13,453,422 |
|
|
|
|
|
|
|
|
|
|
------------- |
------------- |
|
| Unappropriated
profit carried forward |
|
1,861,830 |
10,726,328 |
|
|
|
|
============= |
============= |
|
|
| The
annexed notes from an integral part of these accounts. |
|
|
| Cash
Flow Statement for the Year ended June 30, 1996 |
|
|
|
|
Year ended |
Six months |
|
|
|
ended |
|
|
|
June 30, |
June 30, |
|
|
|
1996 |
1995 |
|
|
|
Note |
Rupees |
Rupees |
|
|
| Cash
flow from operating activities |
|
| Cash
generated from operations |
24 |
382,593,955 |
231,625,809 |
|
| Profit
paid on Musharaka, Morabaha |
|
| and
Finance under mark up arrangements |
|
(95,161,563) |
(48,114,709) |
|
| Taxes
paid |
|
|
|
(1,712,466) |
(70,997) |
|
| Long-term
deposits and prepayments |
|
175,016 |
(203,678) |
|
| Security
deposits from leases |
|
(4,588,008) |
8,200,799 |
|
| Long-term
receivables |
|
|
2,982,730 |
2,201,488 |
|
|
|
|
|
------------- |
------------- |
|
| Net
cash inflow from operating activities |
284,289,664 |
193,638,712 |
|
|
|
|
|
|
| Cash
flow from investing activities |
|
|
|
| Fixed
capital expenditure |
|
|
(268,921,172) |
(201,382,495) |
|
| Proceeds/assignment
price on disposal |
|
|
|
| of
assets given on lease |
|
|
65,495,397 |
15,733,575 |
|
| Proceeds
on disposal of assets in own use |
30,657,000 |
14,500 |
|
| Investments
made |
|
|
|
(354,461,202) |
(6,100,800) |
|
| Proceeds
on disposal of investment in |
|
|
|
| property |
|
|
|
40,000 |
30,000 |
|
| Dividend
received |
|
|
|
422,811 |
633,973 |
|
| Mark-up/profit
received on deposit |
|
|
|
| and
PLS savings accounts |
|
|
249,984 |
2,111,429 |
|
|
|
|
|
------------- |
------------- |
|
| Net
cash outflow from investing activities |
(526,517,182) |
(188,959,818) |
|
|
|
|
|
| Cash
flow from financing activities |
|
| Redeemable
capital |
|
|
351,877,500 |
-- |
|
| Long-term
Musharaka, Morabaha and |
|
|
| Finance
under mark-up arrangements |
|
5,528,960 |
(57,311,625) |
|
| Short-term
profit and loss sharing loan |
|
(9,714,104) |
(18,598,573) |
|
| Short-term
Musharaka, Morabaha and |
|
|
|
| Working
capital finance under mark-up |
|
|
|
| arrangements |
|
(80,595,308) |
69,504,437 |
|
| Profits
paid |
|
|
(35,729,833) |
(42,494) |
|
|
|
|
|
------------- |
------------- |
|
| Net
cash inflow/outflow from financing activities |
231,367,215 |
(6,448,255) |
|
|
|
|
|
|
|
|
|
|
------------- |
------------- |
|
| Net
(decrease)/increase in cash and cash equivalents |
(10,860,303) |
(1,769,361) |
|
|
| Cash
and bank balances at the beginning |
|
| of
the year/period |
|
|
17,742,045 |
19,511,406 |
|
|
|
|
|
------------- |
------------- |
|
| Cash
and bank balances at the end of the year/period |
6,881,742 |
17,742,045 |
|
|
============== |
============== |
|
|
| Notes
to the Accounts for the Year ended June 30, 1996 |
|
|
| 1.
LEGAL STATUS AND NATURE OF THE BUSINESS |
|
| B.R.R.
Capital Modaraba is a multipurpose, perpetual Modaraba floated under the
Modaraba |
|
| Companies
and Modarabas (Floatation and Control) Ordinance, 1980 and the Rules framed |
|
| thereunder
and is managed by B.R.R. Investments (Private) Limited a company incorporated
in |
|
| Pakistan.
The Modaraba is listed on the Karachi and Lahore Stock Exchanges. The
Modaraba's |
|
| principal
activity is leasing of assets. |
|
|
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
| (a)
Overall valuation policy |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| (b)
Fixed Assets |
|
|
| (i)
Assets leased out and amortisation |
|
| Leased
assets are stated at cost less accumulated amortisation. Amortisation is
charged |
|
| to
income applying the straight-line method whereby the cost of an asset is
written |
|
