| MODARABA AL-MALI |
|
|
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
| CONTENTS |
|
|
| Corporate
Information |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Certificate Holdings |
|
|
|
|
| Corporate
Information |
|
| BOARD
OF DIRECTORS |
|
| Mr.
Syed Iradat Husain |
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.
Zafar H. Naqvi |
|
|
|
| Mr.
Ashfaq Ali Quettawala |
|
|
| Mr.
S. Shakeel-ur-Rehman |
|
|
| Mr.
S. Masood Akhter |
|
|
|
|
| AUDITORS |
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
| Finlay
House |
|
| I.I.
Chundrigar Road |
|
| Karachi. |
|
|
| BANKERS |
|
| Muslim
Commercial Bank Limited |
|
| Askari
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
the 11th Report of Modaraba Al- |
|
| Mali
together with Audited Accounts for the year ended June 30, 1997. |
|
|
| 1.
Operating Results: |
|
| Summarised
results for the year under report are as under: |
|
|
|
(Rs. in "000") |
|
|
|
|
|
1997 |
1996 |
|
|
|
|
|
|
|
|
| *
Total operating income |
|
|
115,111 |
114,583 |
|
|
|
|
|
========== |
========== |
|
|
| *
Net profit before management fee & taxation |
|
19,881 |
26,008 |
|
|
| *
Less: Management fee |
|
|
1,807 |
2,364 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
18,074 |
23,644 |
|
|
| *
Less: Provision for taxation |
|
|
6,855 |
7,188 |
|
|
|
|
|
---------- |
---------- |
|
|
| *
Net profit for the year |
|
|
11,219 |
16,456 |
|
|
| *
Add: Unappropriated profit b/f |
|
|
2,016 |
8,934 |
|
|
|
|
|
---------- |
---------- |
|
|
| *
Profit available for appropriation |
|
|
13,235 |
25,390 |
|
|
| *
Appropriations: |
|
|
|
|
---------- |
---------- |
|
| -
Statutory Reserve |
|
|
2,244 |
3,291 |
|
| -
Cash dividend 6% (1996: 11% ) |
|
|
10,954 |
20,083 |
|
|
---------- |
---------- |
|
|
|
|
13,198 |
23,374 |
|
|
|
|
---------- |
---------- |
|
| *
Unappropriated profit carried forward |
|
37 |
2,016 |
|
|
========== |
========== |
|
| 2.
Profit Distribution: |
|
| Directors
take pleasure in announcing distribution of cash dividend @ 6% i.e. Rs.0.60/-
per certificate. |
|
|
| 3.
Statutory Reserves: |
|
| In
compliance with SBP Prudential Regulations, the Board of Directors has
decided to appropriate 20% of the |
|
| profits
earned during the year towards Statutory Reserves until it equals the paid up
capital of the Modaraba. |
|
|
| 4.
Business Operations: |
|
| Due
to the introduction of tight fiscal measures, devaluation of the rupee and
increase in overall operating |
|
| expenses,
the performance of almost all sectors of the economy remained depressed.
Consequently further new |
|
| capital
investments were at a low level and also affected recovery of rentals because
of the general slowdown |
|
| in
the level of business activity in the country. Excise duty on leasing imposed
in the Budget for the financial year |
|
| 1996-97
resulted in discouragement for the prospective lessees. Inflationary trend
continued to persist, however |
|
| through
continuous efforts, the management was able to restrict the increase in
operating costs to the minimum |
|
| level.
During the year, new leases amounting to Rs. 75.2 million were negotiated as
compared to Rs. 84.8 million |
|
| during
the preceding year. We were able to earn pretax profit of Rs. 28.0 million
for the year as compared to |
|
| Rs.
30.5 million during the year ended June 30, 1996. An amount of Rs. 9.8
million had to be provided for bad |
|
| and
doubtful debts. This provision was made in compliance with the Prudential
Regulations although the Court |
|
| decisions
in our favour have decreed for recovery of a substantial portion of the above
amount. |
|
|
| Profit
after tax amounted to Rs. 11.2 million i.e. Rs. 0.61 per certificate as
compared to Rs. 0.90 last year. |
|
|
| 5.
Future Prospects |
|
| The
business friendly policies introduced by the Government during the year were
expected to improve the |
|
| depressed
economy. However, the recent political crises have again adversely affected
the economic activity. |
|
| It
is expected that a period of continuity and stability would provide the right
environment for leasing business |
|
| to
improve. its performance and play significant role in the new creation of
capital assets. Withdrawal of Central |
|
| Excise
Duty is also expected to provide impetus to the leasing sector. |
|
|
| The
Modaraba will continue its efforts to increase its profitability within the
parameters of prudent portfolio risk |
|
| management.
With the improvement in the recovery position, the management is optimistic
of better performance |
|
| in
the future. |
|
|
| 6. 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 ending June
1998. |
|
|
| 7.
Pattern of Certificate holding |
|
| The
pattern of certificate holding is attached. |
|
| 8.
Acknowledgment |
|
| The
Directors 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. |
|
|
|
|
|
|
|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
|
| We
have audited the annexed balance sheet as at June 30, 1997 and the related
profit and loss account and cash |
|
| flow
statement together with the notes to the accounts for the year ended June 30,
1997 of MODARABA AL-MALI |
|
| 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 Al- |
|
| Mall
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, 1997 and the profit and the cash flows for the year ended on that
date; |
|
|
| (ii)
Zakat deductible at source, under the Zakat & Ushr Ordinance, 1980, has
been deducted by the modaraba |
|
| and
deposited in the Central Zakat Fund established under section 7 of that
ordinance; 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. |
|
|
| Karachi:
December 8, 1997 |
|
Ford, Rhodes, Robson,
Morrow |
|
|
Chartered Accountants |
|
|
|
|
|
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1997 |
|
|
|
|
June 30 |
June 30 |
|
|
|
|
1997 |
1996 |
|
|
|
Note |
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
|
|
| Certificate
capital |
|
|
|
| Authorised |
|
|
|
|
|
| 20,000,000
(1996 · 20,000,000) |
|
|
|
| Modaraba
Certificates of Rs. 10/-each |
|
|
200,000,000 |
200,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
3 |
182,574,000 |
182,574,000 |
|
|
|
|
| Capital
Reserve |
|
|
|
|
|
|
---------- |
---------- |
|
| Statutory
reserve |
|
4 |
14,371,305 |
12,127,462 |
|
|
|
|
| Revenue
reserve |
|
|
|
|
|
|
---------- |
---------- |
|
| Unappropriated
profit |
|
|
|
36,599 |
2,015,666 |
|
|
|
14,407,904 |
14,143,128 |
|
|
|
---------- |
---------- |
|
|
|
196,981,904 |
196,717,128 |
|
| LONG
TERM MORABAHA, MUSHARAKA |
|
| AND
TERM FINANCES - Secured |
|
5 |
11,518,847 |
16,194,401 |
|
|
|
|
| DEFERRED
LIABILITY |
|
|
|
|
|
|
| Customers'
security deposits |
|
|
20,210,560 |
16,868,584 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
---------- |
---------- |
|
| Current
maturity of morabaha, musharaka and term finances |
5 |
3,589,635 |
4,287,231 |
|
| Current
maturity of customers' security deposits |
|
|
14,143,793 |
14,194,263 |
|
| Creditors,
accrued and other liabilities |
|
6 |
5,682,882 |
7,887,669 |
|
| Rentals
received in advance |
|
|
3,169,273 |
1,968,890 |
|
| Provision
for taxation |
|
|
|
2,784,269 |
7,321,241 |
|
| Unclaimed
dividend |
|
|
|
1,129,111 |
702,772 |
|
| Proposed
dividend |
|
|
|
10,954,440 |
20,083,140 |
|
|
|
|
---------- |
---------- |
|
|
|
|
41,453,403 |
56,445,206 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
7 |
---------- |
---------- |
|
|
|
|
270,164,714 |
286,225,319 |
|
|
========== |
========== |
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Assets
given on lease - net cost |
|
8 |
172,921,146 |
176,707,894 |
|
| Assets
in own use - net cost |
|
8.1 |
12,964,762 |
2,240,577 |
|
| Capital
Work-in-progress |
|
8.2 |
- |
9.312,543 |
|
|
|
|
---------- |
---------- |
|
|
|
|
185,885,908 |
188,261,014 |
|
|
|
|
| LONG
TERM INVESTMENTS [Market Value Rs.9.32 |
|
9 |
23,393,733 |
24,121,812 |
|
| million
(1996:11.78 million)] |
|
|
|
|
|
|
|
|
|
|
| DEFERRED
EXPENDITURE |
|
10 |
233,477 |
471,406 |
|
| CURRENT
ASSETS |
|
|
---------- |
---------- |
|
| Short
term musharaka finances - secured |
|
11 |
15,358,000 |
25,517,400 |
|
| Short
term morabaha finances - secured |
|
12 |
10,895,025 |
15,234,909 |
|
| Short
term investments |
|
13 |
5,386,535 |
5,379,963 |
|
| Lease
rentals receivable |
|
14 |
13,924,225 |
19,405,193 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
15 |
5,780,526 |
4,985,102 |
|
| Cash
and bank balances |
|
16 |
9,307,285 |
2,848,520 |
|
|
|
|
---------- |
---------- |
|
|
|
|
60,651,596 |
73,371,087 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
270,164,714 |
286,225,319 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report is annexed hereto. |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| for
the year ended June 30, 1997 |
|
|
|
|
|
June 30, |
June 30, |
|
|
|
|
1997 |
1996 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
|
| Operating
income |
|
17 |
115,110,504 |
114,583,236 |
|
|
|
|
---------- |
---------- |
|
| Operating
costs |
|
18 |
83,460,570 |
82,247,275 |
|
| Profit
distribution on borrowings |
|
19 |
3,653,198 |
1,806,091 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
87,113,768 |
84,053,366 |
|
|
|
|
---------- |
---------- |
|
|
|
|
27,996,736 |
30,529,870 |
|
| Other
income |
|
20 |
2,175,132 |
2,399,749 |
|
|
|
|
---------- |
---------- |
|
|
|
30,171,868 |
32,929,619 |
|
|
|
---------- |
---------- |
|
| Less
- Provision for doubtful/classified debts |
|
9,769,293 |
4,758,152 |
|
| Provision
for diminution in value of investments |
|
520,827 |
2,163,068 |
|
| Modaraba
company's management fee |
|
|
1,807,432 |
2,364,402 |
|
|
|
|
12,097,552 |
9,285,622 |
|
|
|
|
---------- |
---------- |
|
|
|
18,074,316 |
23,643,997 |
|
|
|
---------- |
---------- |
|
| Provision
for taxation- Current |
|
6,000,000 |
5,300,000 |
|
|
- Prior years |
|
855,100 |
1,887,973 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
6,855,100 |
7,187,973 |
|
|
|
|
|
---------- |
---------- |
|
| Profit
after tax |
|
|
11,219,216 |
16,456,024 |
|
| Unappropriated
profit brought forward |
|
2,015,666 |
8,933,992 |
|
|
|
|
|
---------- |
---------- |
|
| Available
for appropriation |
|
13,234,882 |
25,390,016 |
|
| Appropriations |
|
|
|
---------- |
---------- |
|
| Proposed
dividend Rs. O.60 (1996:1.10) per certificate |
|
10,954,440 |
I 20,083,140I |
|
| Transfer
to statutory reserve |
|
2,243,843 |
3,291,210 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
13,198,283 |
23,374,350 |
|
|
|
|
|
|
---------- |
---------- |
|
| Balance
carried forward |
|
|
|
|
36,599 |
2,015,666 |
|
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
| CASH
FLOW STATEMENT |
|
| for
the year ended June 30, 1997 |
|
|
|
|
|
|
June 30, |
June 30, |
|
|
|
|
|
1997 |
1996 |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
Rupees |
Rupees |
|
|
|
---------- |
---------- |
|
| Net
Profit before management fee and taxation |
|
|
19,881,748 |
26,008,399 |
|
| Adjustment
for non cash items and other items |
|
|
|
|
| Depreciation |
- Leased assets |
|
|
|
68,773,711 |
69,505,783 |
|
| -
Own assets |
|
|
|
1,165,599 |
831,079 |
|
| Amortisation
of deferred expenditure |
|
|
|
237,929 |
274,234 |
|
| Provision
for gratuity/(written back) |
|
|
|
- |
(390,949) |
|
| Provision
for doubtful debts |
|
|
|
9,769,293 |
4,758,152 |
|
| Provision
for diminution in value of investments |
|
|
520,827 |
2,163,068 |
|
| Gain
on disposal of leased/own assets |
|
|
|
(308,196) |
(143,164) |
|
| Loss/(gain)
on investments |
|
|
|
(28,634) |
35,815 |
|
| Financial
charges |
|
|
|
3,653,198 |
1,806,091 |
|
| Dividend
income |
|
|
|
(931,772) |
(557,993) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
102,733,703 |
104,290,515 |
|
| Changes
in working capital |
|
|
|
| Decrease
in trade and other receivables |
|
|
10,737,830 |
774,130 |
|
| (Increase)
in short term investments |
|
|
|
(527,399) |
(1,954,786) |
|
| Increase/(decrease)
in trade payables |
|
|
|
(2,426,786) |
2,315,554 |
|
|
|
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
|
|
110,517,348 |
105,425,413 |
|
| Financial
charges paid |
|
|
|
(4,340,896) |
(1,922,376) |
|
| Income
taxes paid |
|
|
|
(11,392,072) |
(3,113,016) |
|
| Management
fee paid |
|
|
|
(1,730,000) |
(2,610,000) |
|
| Profit
received from bank |
|
|
|
832,265 |
597,023 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash from operating activities |
|
|
|
93,886,645 |
98,377,044 |
|
|
|
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
---------- |
---------- |
|
| Purchase of |
- Leased assets |
|
|
|
(75211239) |
(84,828,969) |
|
| -
Own assets |
|
|
|
(2,795,157) |
(10,621,755) |
|
| Purchase
of long term investments |
|
|
|
(236,855) |
(5,620,453) |
|
| Proceeds
from sale of fixed assets - Leased |
|
|
10,239,163 |
. 7,139,055 |
|
| - Own |
|
|
|
511,225 |
258,000 |
|
| Proceeds
from sale of long term investments |
|
|
993,568 |
254,495 |
|
| Dividend
received |
|
|
|
809,860 |
705,250 |
|
| Customers'
security deposits received - net |
|
|
3,291,506 |
1,446,855 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
|
|
(62,397,929) |
(91,267,522) |
|
|
|
|
|
---------- |
---------- |
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
| Repayment
of long term borrowings |
|
|
|
(5,373,150) |
(4,217,104) |
|
| Proceeds
from long-term borrowings |
|
|
|
- |
17,000,000 |
|
| Dividend
paid |
|
|
|
(19,656,801) |
(27,245,977) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash used in financing activities |
|
|
|
(25,029,951) |
(14,463,081) |
|
|
|
|
|
---------- |
---------- |
|
| NET
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |
|
6,458,765 |
(7,353,559) |
|
| CASH
AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR |
|
2,848,520 |
10,202,079 |
|
|
|
|
|
---------- |
---------- |
|
| CASH
AND CASH EQUIVALENTS AT END OF THE YEAR |
|
|
9,307,285 |
2,848,520 |
|
|
|
========== |
========== |
|
|
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 1997 |
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
|
| Modaraba
AI-Mali is a multipurpose, perpetual Modaraba formed under the Modaraba
Companies and |
|
| Modarabas
(Floatation and control) Ordinance, 1980, and the rules framed thereunder and
is managed by AI- |
|
| Mal
Corporation Limited. It is engaged in the business of leasing, morabaha and
musharaka financing and other |
|
| related
business. It is listed on the Karachi, Lahore and Islamabad Stock Exchanges. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| (a)
Overall valuation policy |
|
| These
accounts have been prepared under the historical cost convention. |
|
| (b)
Fixed assets |
|
|
| (i)
Assets given out on lease and amortization |
|
|
| All
lease agreements are accounted for as operating leases. |
|
|
| Leased
assets are stated at cost to the Modaraba less accumulated amortization. |
|
| Amortization
is charged to income applying the annuity method whereby the amortizable
value of assets |
|
| is
amortized over the lease period. |
|
|
| (ii)
Assets in own use and depreciation |
|
|
| Assets
in own use are stated at cost less accumulated depreciation. Depreciation is
charged to income |
|
| applying
the straight line method whereby the cost of asset is written off over its
estimated useful life. |
|
| In
respect of additions and disposals during the year depreciation is charged
proportionately to the period |
|
| of
use. Capital work-in-progress is stated at cost. |
|
|
| (iii)
Gain or loss on disposal of assets is included in income currently. |
|
|
| (c)
Deferred Expenditure |
|
|
| Deferred
expenditure incurred in connection with the floatation of Modaraba and
right/bonus issue are being |
|
| written
off over a period of five years from the date of incurrance. |
|
|
| (d)
Investments |
|
|
| Short
term investments are carried at lower of moving average cost and market value
determined on |
|
| aggregate
portfolio basis. In case of long-term investments the effect of permanent
diminution, if any, in the |
|
| value
of investments is charged to profit and loss account. |
|
|
| (e)
Taxation |
|
|
| Provision
for current taxation is based on taxable income at the current rates of
taxation after taking into |
|
| account
tax credits available. |
|
|
| The
modaraba accounts for deferred taxation on all significant timing differences
using the liability method, |
|
| excluding
the tax effects of those timing differences which are not likely to reverse
in the foreseeable future. |
|
| As
a measure of prudence deferred tax debits are not accounted for. |
|
|
| (f)
Revenue recognition |
|
|
| (i)
Lease rentals are recognised as income when due on a systematic basis over
the lease period. Income |
|
| pertaining
to the periods falling between the due dates and the period end is recognised
on an accrual |
|
| basis. |
|
|
| (ii)
Dividend income from quoted companies is recorded at the time of closure of
share transfer books of |
|
| the
company declaring dividend. |
|
|
| (iii)
Income from morabaha and musharaka transactions is recognised on accrual
basis taking into account |
|
| the
duration of placement of funds and the estimated profit receivable. |
|
|
| (g)
Staff gratuity |
|
|
| The
modaraba operates a funded scheme for all its employees, who have completed
minimum qualifying |
|
| period
of service. Contributions to the fund are raised on actuarial evaluation
using the "projected unit credit |
|
| method". |
|
|
|
June 30 |
June 30 |
|
|
|
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
