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| IBL |
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| First
IBL Modaraba |
|
| Annual
Report 1996 |
|
|
| TABLE
OF CONTENTS |
|
|
Page # |
|
| Corporate
Information |
|
2 |
|
| Director's
Report |
|
3 |
|
| Auditors'
Report to the Certificate Holders |
5 |
|
| Balance
Sheet |
|
6 |
|
| Profit
and Loss Account |
|
8 |
|
| Cash
Flow Statement |
|
9 |
|
| Notes
to the Accounts |
|
11 |
|
| Pattern
of Certificate Holding |
|
23 |
|
|
| CORPORATE
INFORMATION |
|
|
| Modaraba
Company |
|
| IBL
Modaraba Management (Private) Limited. |
|
|
| Board
of Directors |
|
|
| Chief
Executive |
|
| Inayat
Ismail |
|
|
| Director |
|
| Chishty
Mujahid |
|
| Arshad
Abdulla |
|
|
| Company
Secretary |
|
| Masood
Anwer Khan |
|
|
| Auditors |
|
| Daudally,
Lalani & Co. |
|
| Chartered
Accountants |
|
|
| Bankers |
|
| Muslim
Commercial Bank Ltd. |
|
| Citi
Bank N.A. |
|
| United
Bank Ltd. |
|
|
| Registrar |
|
| Khalid
Majid Hussain Rehman |
|
| Chartered
Accountants |
|
| 16-K,
Block-6, RE.C.H.S., |
|
| Near
Chanesiar Halt Station, |
|
| Off
Shahra-e-Faisal, Karachi. |
|
|
| Registered
Office |
|
| First
floor N.I.C. Building |
|
| Abbasi
Shaheed Road, |
|
| Karachi. |
|
|
| DIRECTORS'
REPORT |
|
|
| The
Board of Directors of IBL Modaraba Management (Private) Limited has pleasure
in present- |
|
| ing
Sixth Annual Report of First IBL Modaraba together with audited accounts for
the period of 18 |
|
| months
ended 30th June, 1996. Pursuant to an amendment made in Income Tax Ordinance,
1979, through |
|
| Finance
Act 1995, the accounting year of the Modaraba has been changed from December
to June. As |
|
| a
consequence, the present report covers a period of 18 months upto 30 June,
1996. |
|
|
| FINANCIALS: |
|
| Following
are the summarised results for the period under report: |
|
|
|
Rs. '000' |
|
|
| - |
Profit for the period |
|
11,175 |
|
| - |
Unappropriated profits
brought forward |
|
457 |
|
|
|
--------- |
|
|
|
11,632 |
|
| - |
Transfer to statutory
reserve |
|
2,235 |
|
|
|
--------- |
|
| - |
Unappropriated profits
carded forward |
|
9,397 |
|
|
|
========= |
|
|
| REVIEW
OF OPERATIONS: |
|
| The
Modaraba's principal activity remained equity market operations throughout
the period under report. |
|
| Acute
bearish conditions continued to prevail on the stock markets owing to
destabilising economic and |
|
| political
situation in the country. In the circumstances, the profitability of your
Modaraba, under this head, |
|
| has
suffered in line with other entities in the similar business. Nevertheless,
the Modaraba could earn |
|
| around
Rs. 5.0 million from the share business after providing Rs.7.9 million being
the full provision for |
|
| diminution
in the value of investments carded on the closing date. |
|
|
| The
Modaraba's other activities constituted "morabahas" and
"musharakas" which performed well |
|
| yielding
over Rs. 13.0 million gross. Whereas "micro-leasing" activity,
started lately by the management |
|
| of
your Modaraba is, however, moving with slow pace owing to funding
constraints. |
|
|
| FUTURE
PROSPECTS: |
|
| On
account of long bearish spell in the past and future unpredictable conditions
perceived about the |
|
| share
market, the management has decided to systematically reduce the Modaraba's
exposure in the |
|
| equity
market. In this connection, the investment portfolio was brought down from
Rs. 128.0 million to |
|
| Rs.
12.3 million net of provisions around the close of year. The funds realised
are being gradually deployed |
|
| into
trading, morabahas, musharakas and micro-leasing activities with a view to
ensuring steady and progressive |
|
| earning
streams for the Modaraba. Decision to also pursue trading alongwith other
activities of the Modaraba is |
|
| based
on the Group's strength in the field of distribution and trading business. |
|
|
| Strategic
decision of the management as to reducing the exposure in volatile business
of shares, and building of |
|
| those
activities which afford stable and progressive income streams, as delineated
above, is expected to steadily |
|
| improve
the Modaraba's profitability in the years to come. We however, wish to sound
caution because the |
|
| Modaraba
sector continues to suffer from adverse sentiments and negative perception
which is coming in the way |
|
| of
mobilising resources required for sustained growth. |
|
|
| AUDITORS: |
|
| The
present auditors, Messrs. Daudally Lalani & Co., Chartered Accountants
being due for retirement, have |
|
| offered
themselves for re-appointment for the year ending June 30, 1997. Their
appointment has been confirmed by |
|
| the
Board of Directors, subject to the approval of Registrar of Modaraba
Companies and' Modarabas. |
|
|
| ACKNOWLEDGEMENT: |
|
| The
directors wish to place on record their appreciation and thanks to
certificate- holders for their continued |
|
| confidence
in the Modaraba, to the authorities for their guidance and to all the members
of management and staff |
|
| for
their dedication and hard work. |
|
|
| On
behalf of the Board |
|
|
| Sd/- |
|
| Inayat
Ismail |
|
| Chief
Executive |
|
|
| Karachi
November 24, 1996. |
|
|
| 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 period from January
1,1995 to June 30, 1996 of |
|
| FIRST
IBL MODARABA which are Modaraba Company's [ IBL Modaraba Management (Private)
Limited ] repre- |
|
| sentation
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 First |
|
| IBL
Modaraba as required by the Modaraba Companies and Modaraba (Floatation and
Control)Or |
|
| dinance,
1980; and Modaraba Companies and Modaraba Rules, 1981; and |
|
|
| b)
In our opinion, the Balance Sheet and the Profit and Loss Account have been
drawn up in con |
|
| formity
with the Modaraba Companies and Modaraba (Floatation and Control) Ordinance,
1980 and |
|
| Modaraba
Companies and Modaraba Rules, 1981 and are further in accordance with
accounting policies |
|
| consistently
applied; 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 Cash Flow
for the period |
|
| from
January 1,1995 to June 30,1996; |
|
|
| (ii)
Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 has been
deducted |
|
| by
the Modaraba and subsequently deposited in the Central Zakat Fund established
under section |
|
| 7
of that Ordinance; and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred by the
Modaraba |
|
| are
in accordance with the objects, terms and conditions of the Modaraba. |
|
|
| Sd/- |
|
| DAUDALLY,
LALANI & CO. |
|
| Chartered
Accountants |
|
|
| BALANCE
SHEET AS AT JUNE 30, 1996 |
|
|
|
June 30, |
December 31, |
|
|
|
1996 |
1994 |
|
|
Note |
Rupees |
Rupees |
|
|
| CAPITAL
AND RESERVES |
|
| CAPITAL |
|
| Authorised |
|
| 20,000,000
Modaraba Certificates of |
|
| Rs.
10/- each |
|
200,000,000 |
200,000,000 |
|
|
============ |
============ |
|
|
| Issued,
subscribed and paid-up fund |
|
| 11,687,500
Modaraba |
|
| Certificates
of Rs. 10/- each issued as |
|
| fully
paid |
|
3 |
116,875,000 |
116,875,000 |
|
| Statutory
reserve |
|
4 |
9,202,752 |
6,967,785 |
|
| Unappropriated
profit |
|
9,397,273 |
457,407 |
|
|
------------ |
------------ |
|
|
135,475,025 |
124,300,192 |
|
|
|
|
| OBLIGATION
UNDER FINANCE LEASE |
|
5 |
92,023 |
281,125 |
|
| SECURITY
DEPOSITS |
|
1,022,550 |
-- |
|
| CURRENT
LIABILITIES |
|
| Due
to associated companies |
|
6 |
8,092,282 |
270,273 |
|
| Creditors,
Accrued and other liabilities |
|
7 |
8,902,266 |
488,256 |
|
| Short
term Musharika Finance |
|
8 |
46,000,000 |
-- |
|
| Modaraba
Management fee payable |
|
1,289,474 |
1,687,393 |
|
| Unclaimed
dividend |
|
647,535 |
524,064 |
|
| Profit
distribution payable |
|
-- |
13,440,625 |
|
| Provision
for taxation |
|
1,719,904 |
1,679,328 |
|
|
------------ |
------------ |
|
|
66,651,461 |
18,089,939 |
|
|
|
|
|
------------ |
------------ |
|
|
203,241,059 |
142,671,256 |
|
|
============ |
============ |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
June 30, |
December 31, |
|
|
|
1996 |
1994 |
|
|
Note |
Rupees |
Rupees |
|
|
| FIXED
ASSETS - Tangible at book value |
|
| Assets
in own use |
|
9 |
1,166,206 |
435,828 |
|
| Assets
leased out |
|
10 |
5,442,516 |
- |
|
|
| LONG
TERM DEPOSITS & DEFERRED COST |
|
11 |
231,245 |
189,483 |
|
| LONG
TERM MORABAHA |
|
12 |
101,731 |
- |
|
| CURRENT
ASSETS |
|
| Stock-
in- trade |
|
52,760,886 |
- |
|
| Trade
debtors |
|
13 |
69,410,864 |
4,052,500 |
|
| Marketable
securities of quoted |
|
| companies
and modaraba |
|
14 |
12,344,253 |
55,450,454 |
|
| Morabaha
finance |
|
15 |
46,269,663 |
70,900,000 |
|
| Short
term Musharika arrangement |
|
16 |
975,000 |
- |
|
| Accrued
Profit |
|
17 |
3,186,607 |
3,495,068 |
|
| Advances,
deposits and |
|
| per-payments |
|
18 |
992,374 |
283,241 |
|
| Other
receivables |
|
1,229,534 |
53,690 |
|
| Cash
and bank balances |
|
19 |
9,130,180 |
7,810,992 |
|
|
------------ |
------------ |
|
|
196,299,361 |
142,045,945 |
|
|
|
------------ |
------------ |
|
|
203,241,059 |
142,671,256 |
|
|
============ |
============ |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE PERIOD FROM JANUARY 1, 1995 TO JUNE 30, 1996 |
|
|
Period from |
Year ended |
|
|
Jan. 1,1995 |
December 31, |
|
|
to June 30, |
1994 |
|
|
1996 |
|
|
Note |
Rupees |
Rupees |
|
| OPERATING
INCOME |
|
| Trading
income |
|
20 |
- |
702,345 |
|
| Morabaha
Profit |
|
12,761,742 |
15,278,814 |
|
| Gain
on sale of investments |
|
11,878,060 |
4,554,154 |
|
| Dividend
income |
|
21 |
1,092,123 |
1,063,951 |
|
| Musharika
profit |
|
298,267 |
- |
|
| Lease
Rentals |
|
883,168 |
- |
|
| Other
income |
|
22 |
2,189,987 |
9,364 |
|
|
------------ |
------------ |
|
|
29,103,347 |
21,608,628 |
|
|
|
|
| OPERATING
EXPENSES |
|
| Administrative |
|
23 |
5,324,122 |
1,359,530 |
|
| Financial
charges |
|
24 |
1,104,275 |
8,451 |
|
| Amortization
of leased assets |
|
546,548 |
- |
|
|
------------ |
------------ |
|
|
6,974,945 |
1,367,981 |
|
|
|
------------ |
------------ |
|
| Operating
Profit |
|
22,128,402 |
20,240,647 |
|
| Provision
for diminution in the Value of investments |
|
7,944,191 |
- |
|
|
------------ |
------------ |
|
|
14,184,211 |
20,240,647 |
|
|
|
|
| Modaraba
Management fee |
|
1,289,474 |
1,687,393 |
|
|
------------ |
------------ |
|
|
12,894,737 |
18,553,254 |
|
| Taxation |
|
1,719,904 |
1,679,328 |
|
|
------------ |
------------ |
|
| Profit
after tax |
|
11,174,833 |
16,873,926 |
|
|
| Unappropriated
profit brought forward |
|
457,407 |
398,891 |
|
|
------------ |
------------ |
|
|
11,632,240 |
17,272,817 |
|
| APPROPRIATION |
|
| Profit
distribution: Nil (1994: @ Rs. 1.15 Per certificate) |
- |
13,440,625 |
|
| Transfer
to Statutory reserve |
|
2,234,967 |
3,374,785 |
|
|
|
------------ |
------------ |
|
| Unappropriated
profit carried forward |
|
9,397,273 |
457,407 |
|
|
============ |
============ |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE PERIOD FROM JANUARY 1, 1995 TO JUNE 30, 1996 |
|
|
Period from |
Year ended |
|
|
Jan. 1,1995 |
December 31, |
|
|
to June 30, |
1994 |
|
|
1996 |
|
|
|
Rupees |
Rupees |
|
|
| Cash
flow from operating activities |
|
| Cash
received from customers |
|
- |
29,311,666 |
|
| Cash
payment to suppliers and employees |
|
(4,562,315) |
(8,401,938) |
|
| Morabaha
Profit received |
|
14,779,517 |
11,953,122 |
|
| Musharika
Profit received |
|
220,664 |
- |
|
| Lease
Rentals |
|
883,168 |
- |
|
| Proceeds
from sales of investments |
|
381,260,985 |
142,379,028 |
|
| Purchase
of investments |
|
(399,579,279) |
(171,358,625) |
|
| Dividend
income |
|
1,092,123 |
1,063,951 |
|
| Other
income |
|
558,276 |
- |
|
| Modaraba
Management fee paid |
|
(1,687,393) |
(1,796,047) |
|
|
------------ |
------------ |
|
| Cash
generated from operations before income tax |
|
(7,034,254) |
3,151,157 |
|
| Income
tax paid |
|
(1,679,328) |
(1,946,105) |
|
|
------------ |
------------ |
|
| Cash
from operations after income tax but before |
|
|
|
| changes
in operating assets |
|
(8,713,582) |
1,205,052 |
|
|
|
|
| (Increase)
/ Decrease in operating assets |
|
|
|
| Stock
in trade |
|
(52,760,886) |
- |
|
| Motababa
finance |
|
24,630,337 |
13,008,927 |
|
| Musharika
Arrangement |
|
(975,000) |
- |
|
| Advances,
deposits and prepayments |
|
(709,133) |
1,30 1,999 |
|
| Other
receivables |
|
(1,175,844) |
466,180 |
|
|
------------ |
------------ |
|
|
(30,990,526) |
14,777,106 |
|
|
|
|
| Increase/(Decrease)
in operating liabilities |
|
|
|
| Due
to associated companies |
|
7,822,009 |
270,273 |
|
| Accrued
and other Liabilities |
|
7,375,613 |
369,861 |
|
| Short
term Musharika Finance |
|
46,000,000 |
- |
|
|
------------ |
------------ |
|
|
61,197,622 |
640,134 |
|
|
|
|
|
------------ |
------------ |
|
| Net
cash from operating activities |
|
21,493,514 |
16,622,292 |
|
|
============ |
============ |
|
|
|
|
| Cash
flow from Investing activities |
|
| Sale
proceeds of fixed assets |
|
- |
124,000 |
|
| purchase
of fixed assets |
|
(7,265,941 ) |
(544,785) |
|
| Security
Deposits |
|
1,022,550 |
- |
|
| Long
term Morabaha |
|
(101,731) |
- |
|
|
------------ |
------------ |
|
| Net
cash from investing activities |
|
(6,345,122) |
(420,785) |
|
|
|
|
|
| Cash
flow from financing activities |
|
| Deferred
cost on printing of new Modaraba |
|
| Certificates |
|
(266,080) |
(224,375) |
|
| Dividend
paid |
|
(13,317,154) |
(13,926,569) |
|
| Obligation
under finance lease |
|
- |
399,000 |
|
| Repayment
of obligation under finance lease |
|
(245,970) |
(27,330) |
|
|
------------ |
------------ |
|
| Net
cash from financing activities |
|
(13,829,204) |
(13,779,274) |
|
|
|
|
|
|
------------ |
------------ |
|
| Net
increase in cash and cash equivalents |
|
1,319,188 |
2,422,233 |
|
| Cash
and cash equivalents at begining of period |
|
7,810,992 |
5,388,759 |
|
|
------------ |
------------ |
|
| Cash
and cash equivalent at end of period |
|
9,130,180 |
7,810,992 |
|
|
============ |
============ |
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE PERIOD FROM JANUARY 1, 1995 TO JUNE 30, 1996 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| First
IBL Modaraba is registered under the Modaraba Companies and Modaraba
(Floatation and Control) |
|
| Ordinance,
1980 and the Rules framed thereunder and is managed by IBL Modaraba
Management (Private) |
|
| Limited.
The Modaraba is perpetual and multi-purpose engaged in the business of
Morabaha, Operating |
|
| Lease,
Musharika, Trading, Investment in marketable securities and other related
businesses. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| a)
Overall valuation policy |
|
| The
accounts have been prepared under the historical cost convention. |
|
|
| b)
Fixed assets and depreciation. |
|
|
|
| (i)
Assets in own use and depreciation. |
|
| Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
charged to |
|
| income
applying the straight line method whereby the cost of an asset is written off
over |
|
| its
estimated useful life. Full year's depreciation is charged on additions while
no |
|
| depreciation
is charged on assets disposed off during the year. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. |
|
| Gains
and losses on disposal of fixed assets are included in income currently. |
|
|
| (ii)
Assets leased out and amortization |
|
| Leased
assets are stated at cost less accumulated amortization. Amortization is
charged to |
|
| income
applying the annuity method whereby the depreciable value of assets is
amortized |
|
| over
the lease period. |
|
|
| Profit
or loss on disposal of leased assets is included in income currently. |
|
|
| c)
Leased Assets |
|
|
|
| Assets
held under finance lease are included in operating assets at cost. |
|
| Financial
charges are calculated at the markup rate implicit in the lease and charged
to |
|
| profit
and loss account. |
|
|
| Depreciation
is charged at the same rate as Modaraba's owned assets. |
|
|
| d)
Deferred cost |
|
|
| Deferred
cost is amortized in three years from the date of its incurrence. |
|
|
| e)
Rates of exchange |
|
|
| Transactions
in foreign currencies are converted into rupees at the rates of exchange
ruling on the date of |
|
| transactions.
Assets and liabilities in foreign currencies are translated into rupees: |
|
|
| In
case of bills payable against imports covered - at the contracted rates by
forward exchange |
|
| contracts |
|
- at the rate of exchange |
|
|
ruling at the balance sheet |
|
|
date. |
|
|
| Other
exchange gains and losses are included in income currently. |
|
|
| f)
Trading stock |
|
|
| These
are stated at cost determined on the moving average basis except for
goods-in-transit which are |
|
| stated
at invoice value plus other charges paid thereon. |
|
|
| g)
Investment |
|
|
| i.
Long term investments are valued at cost. |
|
|
| ii.
Marketable securities are valued at lower of average cost or market value on
an |
|
| aggregate
portfolio basis. |
|
|
| iii.
Profit or loss on sale of investments is accounted for in the year in which
it |
|
| arises. |
|
|
| iv.
Full provision is made against permanent diminution in the value of long term |
|
| investments. |
|
|
| h)
Revenue recognition |
|
|
| i.
Profit on sale of goods is recognized on dispatch of goods to customers. |
|
|
| ii.
Dividend income is recognized when right is established which usually |
|
| coincide
with the date of book closure of the company declaring the dividends. |
|
|
| iii.
Profit on Morabaha finances are recorded on accrual basis, calculated on
number |
|
| of
days funds were utilized. |
|
|
| iv.
Profit on Musharika receivable is recognized on accrual basis, based on time |
|
| proportion. |
|
|
| v.
Rental income is recognized as and when rentals become due on a systematic |
|
| basis
over the lease period. |
|
|
| i)
Taxation |
|
|
| Current |
|
| Provision
for current taxation is based on taxable income at the current rate of
taxation |
|
| after
taking into account tax credit if any. |
|
|
| Deferred |
|
| The
Modaraba accounts for deferred taxation using the liability method on all
major |
|
| timing
differences. However, it does not account for deferred tax debits. |
|
|
|
June 30, |
December 31, |
|
|
1996 |
1994 |
|
|
Rupees |
Rupees |
|
|
| 3.
ISSUED, SUBSCRIBED AND PAID-UP FUND |
|
| 10,000,000
Modaraba Certificates of Rs. 10/- |
|
| each
fully paid in cash |
|
100,000,000 |
100,000,000 |
|
|
| 1,687,500
Modaraba Certificates of Rs. 10/- |
|
| each
issued as fully paid bonus certificates |
|
16,875,000 |
16,875,000 |
|
|
------------ |
------------ |
|
|
116,875,000 |
116,875,000 |
|
|
============ |
============ |
|
|
