|
|
|
|
|
|
|
|
|
|
|
|
| Modaraba
Al-Tijarah |
|
| Annual
Report 1996 |
|
|
|
| Managed
by |
|
| Al-Mal
Corporation Ltd. |
|
| (Formerly
Modaraba Al-Mal Corporation Ltd.) |
|
|
|
| CONTENTS |
|
Pages |
|
| Corporate Information |
|
2 |
|
| Directors'
Report |
|
3 |
|
| Auditors'
Report |
|
5 |
|
| Balance
Sheet |
|
6 |
|
| Profit
and Loss Account |
|
8 |
|
| Statement
of Changes in financial Position |
|
9 |
|
| Notes
of the Accounts |
|
10 |
|
| Pattern
of Certificate Holdings |
|
20 |
|
|
| Corporate
Information |
|
|
| BOARD
OF DIRECTORS: |
|
| Mr.
Syed Iradat Hussain |
|
Chairman |
|
| Mr.
Maqbool Hussain |
|
Vice Chairman |
|
| Mr.
Zafar H. Naqvi |
|
Managing Director &
Chief Executive |
|
| Mr.
Nazir A. Shaikh |
|
Director |
|
| Mr.
Mohammad Kamil |
|
Director |
|
| Mr.
Ashraf Kalam |
|
Director |
|
| Mr.
Ahmad H. I. Dada |
|
Director |
|
| Mr.
Naushad Hussain |
|
Director |
|
|
| COMPANY
SECRETARY: |
|
| Mr.
D. V. Karia |
|
|
| MODARABA
MANAGEMENT COMMITTEE: |
|
| Mr.
Syed Iradat Husain |
|
| Mr.
Maqbool Hussain |
|
| Mr.
Zafar H. Naqvi |
|
|
| AUDITORS: |
|
| Ford
Rhodes Robson Morrow |
|
| Chartered
Accountants |
|
| Finlay
House |
|
| I.
I. Chundrigar Road, |
|
| Karachi. |
|
|
| BANKERS: |
|
| Muslim
Commercial Bank Limited |
|
| Metropolitan
Bank Limited |
|
|
| REGISTERED
OFFICE: |
|
| 10th
Floor, Progressive Square, |
|
| opposite
Nursery, Sharea Faisal, Karachi. |
|
| Phones:
4547521-4 Fax: (92-21) 4547526 |
|
|
| DIRECTORS'
REPORT |
|
| The
Board of Directors of Al-Mal Corporation Limited have pleasure in presenting
Fifth Annual Report of Modaraba AL- |
| Tijarah
together with Audited Accounts for the year ended 30th June, 1996. |
|
|
| 1.
OPERATING RESULTS: |
|
| Operating
results, for the year ended June 30, 1996 are presented below in a summarized
form: |
|
|
|
Rs. in '000' |
|
|
1996 |
1995 |
|
|
|
|
| Operating
(Loss)/income |
|
(9,889) |
14,274 |
|
|
========= |
========= |
|
|
| (Loss)/profit
for the year |
|
(22,591) |
2,542 |
|
| Less:
Management fee |
|
-- |
231 |
|
|
--------- |
--------- |
|
|
|
|
|
(22,591) |
2,311 |
|
| Provision
for taxes |
|
25 |
700 |
|
|
--------- |
--------- |
|
|
(22,616) |
1,611 |
|
| Unappropriated
profit b/f |
|
2,886 |
1,597 |
|
|
--------- |
--------- |
|
|
(19,730) |
3,208 |
|
| Appropriations: |
|
|
|
| Transfer
to statutory reserve |
|
-- |
322 |
|
|
--------- |
--------- |
|
| Unappropriated
(Loss)/profit c/f |
|
(19,730) |
2,886 |
|
|
========= |
========= |
|
|
| 2.
BUSINESS OPERATIONS: |
|
| The
modaraba has incurred a loss of Rs. 22.6 million during the year ended June
30, 1996. |
|
| Letters
of credit were established for import of a shipload of 19,936 tonnes of
cement in January, 1995. It was |
|
| expected
that the consignment would reach Karachi in April 1995 and reasonable profits
would be realized on |
|
| this
transaction as per market intelligence reports. However, the ship developed
engine trouble in-transit and it |
|
| reached
the destination in July, 1995. Before the arrival of the consignment, the
customs duty was increased in |
|
| the
budget from 15% to 25% by the Government of Pakistan. We had no alternative
but to pay the duties at the |
|
| enhanced
rate in accordance with the legal opinion obtained by us. Furthermore, the
customs duty was charged |
|
| at
the much higher assumed landed cost as against the actual cost despite our
strong protests and representa- |
|
| tions.
In the meantime demand curve declined in Karachi coupled with increased
supply of local production of |
|
| cement.
Creating glut and the resultant competition was intense and the Modaraba was
forced to sell cement at |
|
| low
prices ending up in losses of Rs. 11.2 million on this consignment. |
|
|
| Due
to frequent disruptions caused by deteriorating law and order situation,
garment export business also |
|
|
| suffered,
and only break-even situation could be achieved. The loss was further
increased because of the |
|
| following: |
|
|
| Amortization
of |
|
| deferred
expenditure |
|
Rs. 4.4 million |
|
|
| Financial
charges |
|
Rs. 2.4 million |
|
|
| -
Provision for bad debts on musharaka |
|
| and
morabaha transactions entered |
|
| in
the preceding years |
|
Rs. 1.9 million |
|
|
| -
Provision for diminution in value of |
|
| marketable
securities |
|
Rs. 1.1 million |
|
|
| 3.
FUTURE PROSPECTS: |
|
| From
preceding paragraph it shall be appreciated that a major portion of the loss
incurred by the modaraba has |
|
| been
due to reasons wholly beyond our control. The management is trying to
diversify its activities and develop |
|
| fee
& commission based business to enhance its revenue. Moreover, having
built-up reasonably strong market- |
|
| ing
base for export of garments, your modaraba is focusing more attention to the
development of this line of |
|
| business
on a regular and systematic basis. The orders received during the current
year are encouraging. A |
|
| boost
to stock exchange operations is also expected to contribute to the
improvement in the overall performance |
|
| as
soon as the stock market turns around. |
|
|
| In
view of the above, we are hopeful that the modaraba will be able to show
improved position in the next year's |
|
| results. |
|
|
| 4.
AUDITORS: |
|
| The
present auditors, Messrs Ford, Rhodes, Robson, Morrow, Chartered Accountants,
are due for retirement, |
|
| and
being eligible, offer themselves for re-appointment for the year 1996-97. |
|
|
| 5.
PATTERN OF CERTIFICATE - HOLDING: |
|
| The statement of pattern of
certificate-holding is attached. |
|
|
| 6.
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 the Members of
Management and staff |
|
| for
their dedication and hard work. |
|
|
| On
behalf of the Board, |
|
|
| SYED
IRADAT HUSAIN |
|
| Chairman |
|
|
| Karachi
· December 9, 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 statement |
|
| of
changes in financial position together with the notes to the accounts for the
year ended June 30, 1996 of MODARABA |
| AL-TIJARAH
which are modaraba company's (AI-Mal Corporation 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 Modaraba AI- |
|
| Tijarah
as required by the Modaraba Companies and Modarabas (Floatation and Control)
Ordinance, 1980, and |
|
| Modaraba
Companies and Modarabas 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 Modarabas
(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 statement of
changes in financial position, |
|
| 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 loss and the changes in the financial position for the |
|
| year ended on that date; |
|
|
| (ii)
zakat deductible at source, if any, under the Zakat and Ushr Ordinance, 1980,
was deducted by the |
|
| Modaraba
and deposited in the Central Zakat Fund established under section 7 of that
Ordinance; and |
|
|
| the
business conducted, investment made and expenditure incurred by the Modaraba
are in accordance |
|
| with
the objects, terms and conditions of the Modaraba. |
|
|
| (d)
Without qualifying our opinion we draw attention to note 4.1 whereby the
Modaraba has waived its right to claim |
|
| refund
of provisional profit paid to the Musharaka partner. |
|
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
|
| Karachi
:- December 9, 1996 |
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1996 |
|
|
|
1996 |
1995 |
|
|
Note |
Rupees |
Rupees |
|
|
| CAPITAL
AND RESERVES |
|
|
|
| Certificate
Capital |
|
| Authorised' |
|
| 10,000,000
modaraba certificates |
|
|
100,000,000 |
100,000,000 |
|
|
=========== |
=========== |
|
|
| Issued,
subscribed and paid-up |
|
3 |
75,778,150 |
75,778,150 |
|
| Statutory
reserve |
|
322,244 |
322,244 |
|
| Revenue
reserve |
|
| Accumulated
(Loss)/profit |
|
(19,729,961) |
2,885,865 |
|
|
----------- |
----------- |
|
|
56,370,433 |
78,986,259 |
|
| DEFERRED
LIABILITIES |
|
| Staff
Gratuity |
|
-- |
40,078 |
|
|
| CURRENT
LIABILITIES |
|
| Short
term Musharaka |
|
4 |
25,517,400 |
25,000,000 |
|
| Payable
to bank against letter |
|
| of
credit |
|
-- |
15,137,700 |
|
| Creditors,
accrued and other liabilities |
5 |
2,345,283 |
3,971,238 |
|
| Dividend
Payable |
|
432,778 |
555,894 |
|
|
----------- |
----------- |
|
|
28,295,461 |
44,664,832 |
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
6 |
|
|
----------- |
----------- |
|
|
84,665,894 |
123,691,169 |
|
|
=========== |
=========== |
|
|
|
|
1996 |
1995 |
|
|
Note |
Rupees |
Rupees |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
| Operating
fixed assets - (at cost |
|
| less
accumulated depreciation) |
|
7 |
707,208 |
898,908 |
|
|
| CAPITAL
WORK IN PROGRESS |
|
8 |
2,103,783 |
-- |
|
|
|
| LONG
TERM INVESTMENTS [Market value |
|
| Rs.
11,1 36,948 see note 2(d)] |
|
9 |
25,592,843 |
24,241,716 |
|
|
| DEFERRED
EXPENDITURE |
|
10 |
3,100,383 |
7,158,541 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
| Stock
in trade |
|
11 |
34,372,531 |
43,382,049 |
|
| Marketable
securities |
|
12 |
2,674,840 |
1,881,142 |
|
| Trade
debts |
|
13 |
3,453,829 |
8,232,704 |
|
| Shod
term musharaka |
|
14 |
3,483,906 |
17',616,7'90 |
|
| Short
term morabaha |
|
15 |
1,330,262 |
9,590,443 |
|
| Advances,
deposits, prepayments and |
|
| other
receivables |
|
16 |
7,011,157 |
9,180,343 |
|
| Cash
and bank balances |
|
17 |
835,152 |
1,508,533 |
|
|
----------- |
----------- |
|
|
53,161,677 |
91,392,004 |
|
|
|
----------- |
----------- |
|
|
84,665,894 |
123,691,169 |
|
|
=========== |
=========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report is annexed hereto. |
|
|
| PROFITAND
LOSSACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1996 |
|
|
|
1996 |
1995 |
|
|
Note |
Rupees |
Rupees |
|
|
| OPERATING
INCOME |
|
| (Loss)/income
from trading |
|
18 |
(11,253,757) |
10,391,248 |
|
| Income
from musharaka (other than trading) |
|
14,000 |
233,318 |
|
| Income
from morabaha |
|
511,271 |
1,774,477 |
|
| Commission
income |
|
105,761 |
402,147 |
|
| Dividend
income |
|
19 |
499,001 |
1,150,921 |
|
| Gain
on sale of investments |
|
5,332 |
322,659 |
|
| Gain
on sale of export quota |
|
201,000 |
-- |
|
| Others |
|
28,026 |
-- |
|
|
----------- |
----------- |
|
|
(9,889,366) |
14,274,770 |
|
|
| OPERATING
COST |
|
20 |
10,303,779 |
11,750,228 |
|
|
----------- |
----------- |
|
| 0PERATING (Loss)/Profit |
|
(20,193,145) |
2,524,542 |
|
|
| FINANCIAL
CHARGES |
|
| Musharaka
profit |
|
(2,441,288) |
-- |
|
| OTHER
INCOME |
|
21 |
43,557 |
17,802 |
|
|
----------- |
----------- |
|
| (Loss)/profit
before management fee |
|
(22,590,876) |
2,542,344 |
|
| Modaraba
company's management fee |
|
-- |
231,122 |
|
|
----------- |
----------- |
|
| (Loss)/profit
before taxation |
|
(22,590,876) |
2,311,222 |
|
| Less:
Taxation |
|
24,950 |
700,000 |
|
|
----------- |
----------- |
|
|
(22,615,826) |
1,611,222 |
|
| Unappropriated
profit brought forward |
|
2,885,865 |
1,596,887 |
|
|
----------- |
----------- |
|
| (Loss)/profit
available for appropriation |
|
(19,729,961) |
3,208,109 |
|
|
| APPROPRIATICNS
: |
|
|
| Transfer
to statutory reserve (20% of profit) |
|
| as
per SBP's Prudential Regulations |
|
- |
322,244 |
|
|
----------- |
----------- |
|
| Balance
carried forward |
|
(19,729,961) |
2,885,865 |
|
|
=========== |
=========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1996 |
|
|
1996 |
1995 |
|
|
Rupees |
Rupees |
|
| SOURCES
OF FUNDS |
|
| Net
profit before management fee and taxation |
|
(22,590,876) |
2,542,344 |
|
| Adjustment
for: |
|
|
|
| Depreciation
- on fixed assets |
|
191,700 |
190,059 |
|
| Amortisation
of deferred expenditure |
|
4,398,958 |
4,285,356 |
|
| Provision
for gratuity |
|
(40,078) |
22,782 |
|
| Loss
on sale of long term investments |
|
160,986 |
-- |
|
| Financial
charges |
|
2,441,288 |
-- |
|
| Dividend
income |
|
(499,001) |
(1,150,921) |
|
|
------------ |
------------ |
|
| Cash
generated from operations |
|
6,653,853 |
3,347,276 |
|
| Operating
profit before changes in operating |
|
|
|
|
------------ |
------------ |
|
| assets/liabilities |
|
(15,937,023) |
5,889,620 |
|
|
|
|
|
| (Increase)/decrease
is operating assets |
|
|
|
| Stock-in-trade |
|
9,009,518 |
149,457,390 |
|
| Marketable
securities |
|
(793,698) |
9,703,489 |
|
| Trade
debts |
|
4,778,875 |
(3,648,794) |
|
| Short
term musharaka |
|
14,132,884 |
(8,872,929) |
|
| Short
term morabaha |
|
8,260,181 |
13,609,723 |
|
| Advances,
prepayments and other receivables |
|
3,553,665 |
(4,345,337) |
|
|
------------ |
------------ |
|
|
38,941,425 |
155,903,542 |
|
| Increase/(decrease)
in operating liabilities |
|
|
| Short
term musharaka |
|
517,400 |
10,500,000 |
|
| Payable
to bank against letter of credit |
|
(15,137,700) |
(141,614,857) |
|
| Creditors
accrued and other liabilities |
|
(1,556,229) |
(4,835,701) |
|
|
------------ |
------------ |
|
|
(16,176,529) |
(135,950,558) |
|
|
|
|
|
------------ |
------------ |
|
|
6,827,873 |
25,842,604 |
|
| Financial
charges paid |
|
(2,441,288) |
-- |
|
| Income
tax paid |
|
(2,227,726) |
(1,374,608) |
|
| Management
fee paid |
|
(124,455) |
(680,000) |
|
|
------------ |
------------ |
|
| Net
cash from operating activities |
|
2,034,404 |
23,787,996 |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Purchase
of fixed assets |
|
(2,103,783) |
(79,076) |
|
| Purchase
of long term investments |
|
(2,760,631) |
(14,921,478) |
|
| Proceeds
from sale of long term investments |
|
1,248,518 |
-- |
|
| Profit
received on bank deposits |
|
95,794 |
551,261 |
|
| Dividend
received |
|
1,276,233 |
1,138,901 |
|
|
------------ |
------------ |
|
| NET
CASH FROM INVESTING ACTIVITIES |
|
(2,243,869) |
(13,310,392) |
|
|
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
| Increase
in certificate capital |
|
- |
4,498,150 |
|
| Dividend
paid |
|
(123,116) |
(16,226,439) |
|
| Deferred
expenditure paid |
|
(340,800) |
(8,619,549) |
|
|
------------ |
------------ |
|
| Net
cash from financing activities |
|
(463,916 |
(20,347,838) |
|
|
|
|
|
------------ |
------------ |
|
| Net
increase/(decrease)in cash and cash equivalents |
(673,381) |
(9,870,234) |
|
| Cash
and cash Equivalents at beginning of the period |
1,508,533 |
11,378,767 |
|
|
------------ |
------------ |
|
| Cash
and Cash Equivalents at end of the period |
|
835,152 |
1,508,533 |
|
|
============ |
============ |
|
|
| NOTES
TO THEACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1996 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
|
| Modaraba
Al-Tijarah is a multipurpose, perpetual Modaraba formed under the Modaraba
Companies and Modarabas |
|
| (Floatation
and Control) Ordinance, 1980 and is managed by AI-Mal Corporation Limited. It
is engaged in the |
|
| business
of trading and manufacturing on its own account, providing musharaka,
morabaha finances, purchase |
|
| and
sale of securities and other related business. It is listed on the Karachi,
Lahore & Islamabad Stock Exchanges. |
|
|
| SIGNIFICANT
ACCOUNTING POLICIES |
|
| (a)
Cost convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| (b)
Staff Gratuity |
|
| The
Modaraba operates a funded gratuity scheme for all its employees. Provision
is made annually to |
|
| cover
obligations under the scheme. |
|
|
| (c)
Fixed assets |
|
| These
are stated at cost less accumulated depreciation. Depreciation is charged to
income applying the |
|
| straight
line method and the rates used are stated in note 7 to the accounts. In
respect of additions and |
|
| disposals
during the year, depreciation is charged proportionately to the period of
use. Profit or loss on |
|
| disposal
of assets is included in income currently. |
|
|
| (d)
Long term investments |
|
| These
are stated at moving average cost. Provision for diminution in value of
investments is made on |
|
| aggregate
basis, if considered permanent. |
|
|
| (e)
Deferred expenditure |
|
| Expenses
incurred in connection with the floatation of Modaraba are being written-off
over a period of five |
|
| years
from the date of incurrence and the expenses on purchase of export quota are
amodised over three |
|
| years
effective from the year of its utilization. |
|
|
| (f)
Stock-in-trade: |
|
| (a)
Stock-in-trade is valued at the lower of cost and net realisable value. |
|
| (b)
Cost signifies in relation to: |
|
| Trading
stock |
|
weighted average cost. |
|
| Stock-in-transit |
|
actual cost comprising
invoice value plus other charges thereon. |
|
|
| (g)
Marketable securities: |
|
| These
are stated at moving average cost less provision for diminution in value of
investments which is |
|
| made
on aggregate basis. Gain or loss on sale of investments is accounted for in
the year in which it |
|
| arises. |
|
|
| (h)
Foreign currency transactions |
|
| Assets
and liabilities in foreign currencies are translated into rupees at the rates
of exchange approximating |
|
| to
those prevalent on the balance sheet date. Exchange gains and losses are
taken t0 income currently. |
|
|
| (i)
Revenue recognition |
|
|
| i)
Profit generated from morabaha transactions is recognised as income at the
time of sale. |
|
| ii)
Return on short term investments is recognised as income on an accrual basis. |
|
| iii)
Dividend income is recognised at the time of closure of share transfer books
of the company |
|
| declaring
dividend. |
|
| iv)
Sales are recorded on dispatch of goods. |
|
|
1996 |
1995 |
|
|
Rupees |
Rupees |
|
| 3.
ISSUED, SUBSCRIBEDAND PAID-UP CAPITAL |
|
| 6,449,815
Modaraba Certificates of |
|
| Rs.
10 each fully paid in cash |
|
64,498,150 |
64,498,150 |
|
|
| 1,128,000
Modaraba Certificates of |
|
| Rs.
10 each fully paid bonus certificates |
|
11,280,000 |
11,280,000 |
|
|
------------ |
------------ |
|
|
75,778,150 |
75,778,150 |
|
|
============ |
============ |
|
| 4.
SHORT TERM MUSHARAKA |
|
| Secured |
|
(note 4.1 ) |
|
25,517,400 |
25,000,000 |
|
|
============ |
============ |
|
|
|
|
| 4.1
The Modaraba has entered into a Musharaka agreement with an associated
modaraba. The facility is |
|
| secured
against hypothecation of stock in trade. The profit is shared between the two
parties in an agreed |
|
| ratio.
In case of loss an option is available to the Modaraba to claim refund of
profit paid provisionally. |
|
| However,
this option was not exercised by the Modaraba. Consequently Rs. 4,317,400
(see note 23) has |
|
| been
charged to these accounts. |
|
|
| 5.
CREDITORS,ACCRUEDAND OTHER LIABILITIES |
|
| Creditors |
|
747,174 |
1,685,029 |
|
| Profit
payable to secured musharaka partner |
|
685,278 |
1,526,484 |
|
| Accrued
liabilities |
|
289,168 |
66,336 |
|
| Management
fee payable |
|
-- |
124,455 |
|
| Others |
|
(note 5.1 ) |
|
623,663 |
568,934 |
|
|
------------ |
------------ |
|
|
2,345,283 |
3,971,238 |
|
|
============ |
============ |
|
|
| 5.1
This represents the profit accrued on PLS accounts (1995: Rs. 568,934).
Pursuant to the Board's decision |
|
| profit
on PLS accounts is being suspended with effect from January 1, 1994, pending
Religious Board's |
|
