| AL-ZAMIN LEASING MODARABA |
|
|
|
|
|
|
|
| FIFTH
ANNUAL REPORT 1997 |
|
|
|
| MANAGED BY: |
|
| Al-Zamin
Modaraba Management (Private) Limited |
|
| 104
-106, Kassam Court, BC-9, Block 5, Clifton, Karachi-75600 |
|
| Tel:
586 7102, 587 3373, 574474, 571725 Fax: 587 0408 |
|
|
|
| CORPORATE
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Hasan Zaheer - Chairman & Chief Executive |
|
| Mr.
Abid Aziz [Nominee of Pak Libya Holding Co. (Pvt) Ltd.] |
|
| Mr.
S.M. Farooq |
|
| Mr.
C. Ahsanul Haq |
|
| Mr.
Ansar Husain |
|
| Mr.
Manzoor Hussain Shah Kazmi |
|
| Brig.
(Retd) Luqman Mahmood |
|
|
| AUDITORS
OF THE MODARABA |
|
|
|
| M.
Yousuf Adil & Company, Chartered Accountants |
|
|
| AUDITORS
OF THE MODARABA COMPANY |
|
| Jails
Ahmed & Company, Chartered Accountants · |
|
|
| BANKERS |
|
| Allied
Bank of Pakistan Limited |
|
| First
Women Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| National
Bank of Pakistan |
|
| National
Development Finance Corporation |
|
| Pakistan
Industrial Credit & Investment Corporation |
|
| Prime
Commercial Bank Limited |
|
| Schon
Bank Limited |
|
| Soneri
Bank Limited |
|
|
| LEGAL
ADVISORS |
|
| Sharif
& Company, Advocates |
|
| Walker
Martineau Saleem, Advocates |
|
|
| MODARABA
COMPANY |
|
| AI-Zamin
Modaraba Management (Private) Limited |
|
|
| REGISTERED
OFFICE & SHARES DEPARTMENT |
|
| 104-106,
Kassam Court, |
|
| BC-9,
Block 5, Clifton, |
|
| P.O.Box
No. 13819, |
|
| Karachi-75600 |
|
| Tel
586 71o2, 587 3373, 571725 574474 |
|
| Fax:
587 0408 |
|
|
| ISLAMABAD
OFFICE |
|
|
| 10,
59th Street, F-7/4, Islamabad |
|
| Tel
: 270588, 920 3703 |
|
| Fax: 823729 |
|
|
| LAHORE
OFFICE |
|
| 2nd
Floor, 43-L, M.M. Alam Road, |
|
| Mini
Market, Gulberg II, Lahore |
|
| Tel:575
1324, 874291 |
|
| Fax:
575 1325 |
|
|
| CONTENTS |
|
| Directors' Report |
|
| Auditors' Report |
|
| Balance Sheet |
|
| Profit and Loss Account |
|
| Statement of Changes in
Financial Position |
|
| Notes to the Accounts |
|
| Asset and Sector-wise
Analysis of Leases |
|
| Pattern of Certificate
Holding |
|
|
| DIRECTORS'
REPORT |
|
| FOR
THE YEAR 1996-97 |
|
|
|
| The
year 1996-97 witnessed significant developments in the history of the
country. |
|
| The
huge public mandate enjoyed by the Government enabled it to take hard |
|
| decisions,
and introduce basic, but overdue, reforms in the economy. The financial |
|
| and
banking sectors have been brought under effective discipline by new
prudential |
|
| regulations
as a result of these policy initiatives. No dramatic results can, of course, |
|
| be
expected, in the short run. The distortions are deep and many more hard |
|
| decisions
and sustained commitment by the Government, and time would be |
|
| required
before the expected results start showing themselves. The main point, |
|
| however,
is that a viable and hopeful direction has been set for the economy which, |
|
| if
honestly followed, would lead to desired goal. In this process of
restructuring and |
|
| revamping
all of us will have to contribute to make it a success. |
|
| The
decline in the growth of the gross domestic product, and dismal performance |
|
| of
the manufacturing sector in the country, during the year, posed a challenge
to |
|
| AI-Zamin
Leasing Modaraba to maintain its record of uninterrupted growth and |
|
| profitability
since its inception. The problems were twofold. First, the decline in |
|
| investment
restricted new leases, because sound and reputable parties were not |
|
| available,
and second, the recession affected the servicing of existing lease |
|
| rentals,
including by two large industrial groups of the country to whom a large |
|
| number
of banks and leasing companies were exposed. |
|
| Your
Board of Directors is happy to report that, in spite of all these adverse
trends |
|
| in
the economy, accentuated in the modaraba sector because of inherent |
|
| constraints
on its operation, the total balance sheet footings of AI-Zamin Leasing |
|
| Modaraba,
in 1996-97, increased from Rs 243.64 million to Rs 270.98 million and |
|
| certificate-holders'
fund and reserves from Rs 147.85 million to Rs 164.55 million, |
|
| before
distribution. During the year, the Modaraba was able to write fresh leases of |
|
| over
Rs 90.00 million, thereby increasing the leasing portfolio to Rs 207.00
million. |
|
| Total
income of the Modaraba increased from Rs 39.00 million to Rs 46.40 million |
|
| during
the year, the major income emanating from lease contracts. The financial |
|
| charges
registered an increase from Rs 8.90 million to Rs 12.90 million due to |
|
| enhanced
utilisation of credit lines for the expansion of business. The operating |
|
| expenses
also increased by Rs 2.20 million mainly due to increase in the salaries, |
|
| rent
and legal expenses. |
|
| Provision
has been made for potential leasing losses in accordance with the |
|
| Prudential
Guidelines of the State Bank of Pakistan. It may be mentioned that about |
|
| 50
per cent of the provisions for losses made in 1995-96 were written back to
the |
|
| profit
account as the Modaraba was successful in recovering the outstandings from
the |
|
| defaulters.
The extreme caution and care exercised by the Modaraba management, |
|
| from
its inception, in the selection of its clients is borne by the fact that the
provisions |
|
| required
for overdue cases amount to only 1.18 per cent of the total lease
receivables. |
|
|
| As
a result of these operations, the Modaraba earned a profit of Rs 19.87
million |
|
| before
taxation, as against the comparable figure of Rs 19.46 million in the |
|
| previous
year. After the payment of management company fees and making |
|
| allowance
for taxation, the net profit for the year comes to Rs 16.70 million. |
|
| Added
to the unappropriated profit of Rs 14.03 million brought forward from the |
|
| previous
year, a total of Rs 30.73 million profit is available for appropriation. |
|
| The
Board of Directors has decided to transfer, out of the total profit, a sum of |
|
| Rs
3.34 million to the Special Reserve in accordance with the Prudential |
|
| Guidelines,
and also to build a General Reserve of Rs 8.00 million to strengthen |
|
| the
operating base of the Modaraba. From the balance of Rs 22.39 million your |
|
| Board
has decided to distribute a cash dividend of 17 per cent to the |
|
| certificate-holders,
and carry forward the balance to the next year. |
|
| Mention
may be made of some qualitative changes in the operations since the |
|
| last
half yearly report, as at 31 st December 1996, was published. Short term and |
|
| long
term investment in stock market have been reduced from Rs.18.68 million |
|
| to
Rs.5.83 million, and the overdue lease rentals have been reduced from |
|
| Rs.12.66
million to Rs.6.27 million. The Modaraba has been able to mobilise |
|
| fresh
credit lines and musharaka finance to supplement previous facilities and to |
|
| improve
upon the maturity matching profile. The branch offices at Islamabad and |
|
| Lahore
have now established their firm presence and are contributing to the |
|
| diversification
of business. |
|
| The
Board look forward with hope and confidence to the coming years and |
|
| assure
the certificate-holder that the Modaraba will continue to exercise its best |
|
| judgement,
carefully balancing the risks and returns on its investments. |
|
| The
Board of Directors feel proud in acknowledging that the AI-Zamin Leasing |
|
| Modaraba
belongs to that very select group of quoted companies which not only |
|
| has
consistently shown growth in business and earnings, but has also shared its |
|
| profits
with its certificate-holders. We propose to continue with this policy. |
|
| The
Board places on record its appreciation of the hard work and devoted efforts |
|
| contributed
by the staff to the successful operations of the Modaraba. |
|
| The
Board also places on record its acknowledgment of the valuable guidance |
|
| and
assistance extended by the Registrar Modaraba and the State Bank of |
|
| Pakistan. |
|
|
| 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 statement of changes in financial position (cash flow |
|
| statement),
together with the notes to the accounts for the year ended June 30, |
|
| 1997
of Al-Zamin Leasing Modaraba, which are Modaraba Company's [AI-Zamin |
|
| Modaraba
Management (Private) Limited] representation and we state that we |
|
| have
obtained all the information and, explanation which we required and, after |
|
| due
verification thereof, we report that: |
|
| a)
in our opinion, proper books of accounts have been kept by the Modaraba |
|
| Company
in respect of AI-Zamin Leasing 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 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 |
|
| statement
of changes in financial position (cash flow statement), |
|
| which
are in agreement with the books of accounts, 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 changes in the financial |
|
| position
for the year ended on that date; |
|
| ii)
no Zakat was deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980; and |
|
| iii)
the business conducted, investments made and the expenditure |
|
| incurred
by the Modaraba are in accordance with objects, terms and |
|
| conditions
of the Modaraba. |
|
|
| Karachi:
1st September, 1997 |
|
M. Yousuf Adil & Co. |
|
|
Chartered Accountants |
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1997 |
|
|
|
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
| Certificate
capital |
|
| Authorised |
|
| 20,000,000
Modaraba |
|
| certificates of
Rs. 10 each |
200,000,000 |
200,000,000 |
|
|
========== |
========== |
|
| Issued, subscribed and
paid-up |
3 |
126,500,000 |
126,500,000 |
|
| Reserves and unappropriated
profit |
4 |
16,547,873 |
21,354,246 |
|
|
---------- |
---------- |
|
|
143,047,873 |
147,854,246 |
|
| LONG TERM FINANCES |
|
5 |
20,962,645 |
8,280,651 |
|
| LONG
TERM SECURITY DEPOSITS |
|
| ON LEASE CONTRACTS |
|
6 |
20,917,289 |
19,407,033 |
|
| DEFERRED
TAXATION |
|
500,000 |
- |
|
| CURRENT
LIABILITIES |
|
| Current
portion of long term |
|
| finances |
16,038,596 |
19,494,479 |
|
| Current
portion of long term security |
|
| deposits on
lease contracts |
7,707,841 |
7,222,895 |
|
| Short term
finances |
7 |
34,152,194 |
37,816,808 |
|
| Advance lease
rent/security deposits |
1,601,421 |
1,069,518 |
|
| Accrued and other
liabilities |
8 |
2,617,124 |
1,421,503 |
|
| Taxation |
1,567,227 |
567,227 |
|
| Dividend |
9 |
21,870,649 |
501,210 |
|
|
---------- |
---------- |
|
|
85,555,052 |
68,093,640 |
|
|
---------- |
---------- |
|
|
270,982,859 |
243,635,570 |
|
|
========== |
========== |
|
|
|
|
|
Note |
1997 |
1996 |
|
|
Rupees |
Rupees |
|
| FIXED
ASSETS-TANGIBLE
|
10 |
5,452,282 |
4,057,160 |
|
| LONG TERM
INVESTMENTS |
11 |
4,892,710 |
8,577,660 |
|
| NET
INVESTMENT IN LEASE FINANCE |
|
| Net investment |
12 |
206,991,292 |
189,917,230 |
|
| Current
portion |
|
(71,699,550) |
(73,451,843) |
|
|
---------- |
---------- |
|
|
135,291,742 |
116,465,387 |
|
| DEFERRED COST |
13 |
- |
976,900 |
|
| CURRENT
ASSETS |
|
| Current
portion of net investment |
|
| in lease
finance |
71,699,550 |
73,451,843 |
|
| Musharaka finance |
14 |
35,741,082 |
32,097,259 |
|
| Short term
investments |
15 |
938,322 |
920,415 |
|
| Lease rent
receivable |
16 |
6,273,590 |
3,083,645 |
|
| Advances,
deposits and |
|
| prepayments |
|
17 |
1,357,149 |
330,002 |
|
| Other receivables |
18 |
2,037,339 |
1,302,431 |
|
| Cash and bank
balances |
19 |
7,299,093 |
2,372,868 |
|
|
---------- |
---------- |
|
|
125,346,125 |
113,558,463 |
|
|
---------- |
---------- |
|
|
270,982,859 |
243,635,570 |
|
|
========== |
========== |
|
| The
annexed notes from 1 to 25 form |
|
| an
integral part of these accounts. |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
Note |
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
|
| REVENUE |
|
| Income from leasing
operations |
|
38,766,201 |
30,635,772 |
|
| Profit on
Musharaka transactions |
6,722,243 |
7,077,014 |
|
| (Loss)/Profit
on investments in securities |
(575,962) |
56,180 |
|
| Profit on PLS
deposit accounts |
444,879 |
683,665 |
|
| Commission and other
income |
20 |
1,044,934 |
552,932 |
|
|
---------- |
---------- |
|
|
46,402,295 |
39,005,563 |
|
| OPERATING
AND FINANCIAL COSTS |
|
| Operating expenses |
21 |
11,042,509 |
8,838,138 |
|
| Financial charges |
22 |
12,903,646 |
8,855,356 |
|
|
|
|
---------- |
---------- |
|
|
(23,946,155) |
(17,693,494) |
|
|
---------- |
---------- |
|
|
22,456,140 |
21,312,069 |
|
|
---------- |
---------- |
|
| Amortization
of deferred cost |
976,900 |
976,900 |
|
| Diminution in value of
investments |
|
(25,407) |
56,395 |
|
| Allowance for
potential lease losses |
1,636,157 |
817,599 |
|
|
---------- |
---------- |
|
|
(2,587,650) |
(1,850,894) |
|
|
---------- |
---------- |
|
| Profit before
taxation |
19,868,490 |
19,461,175 |
|
| Taxation |
|
---------- |
---------- |
|
| Current |
1,000,000 |
(567,227) |
|
| Deferred |
500,000 |
- |
|
|
---------- |
---------- |
|
|
(1,500,000) |
(567,227) |
|
|
---------- |
---------- |
|
| Profit after
taxation |
18,368,490 |
18,893,948 |
|
| Modaraba Company's
Management fee |
|
(1,669,863) |
(1,717,632) |
|
|
---------- |
---------- |
|
| NET PROFIT FOR THE
YEAR |
|
16,698,627 |
17,176,316 |
|
| Unappropriated
profit brought forward |
14,035,343 |
294,290 |
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
30,733,970 |
17,470,606 |
|
| APPROPRIATION |
|
---------- |
---------- |
|
| Dividend @ 17%
(1996-Nil) |
|
21,505,000 |
- |
|
| Transfer to
general reserve |
5,000,000 |
- |
|
| Transfer to
special reserve |
3,339,725 |
3,435,263 |
|
|
---------- |
---------- |
|
|
(29,844,725) |
(3,435,263) |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
889,245 |
14,035,343 |
|
|
========== |
========== |
|
| The
annexed notes from 1 to 25 form |
|
| an
integral part of these accounts. |
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1997 |
|
|
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
| A.
CASH FLOW FROM OPERATING ACTIVITIES |
|
| Profit after
taxation |
|
16,698,627 |
17,176,316 |
|
| Adjustments |
|
| Financial charges |
|
12,903,646 |
8,855,356 |
|
| Depreciation |
|
1,119,369 |
912,184 |
|
| Provision for
diminution in value of investments |
(25,407) |
56,395 |
|
| Allowance for
potential lease losses |
|
1,636,157 |
817,599 |
|
| Gain on sale of
fixed assets |
(718,800) |
(228,558) |
|
| Loss/(Gain) on
sale of investments |
575,962 |
(56,180) |
|
| Amortization of
deferred cost |
976,900 |
976,900 |
|
|
---------- |
---------- |
|
| Operating profit
before working capital changes |
33,166,454 |
28,510,012 |
|
|
| (Increase)/decrease
in current assets |
|
| Lease rent receivable |
|
(4,826,102) |
(1,746,928) |
|
| Advances, deposits and
prepayments |
|
(1,027,147) |
(5,181) |
|
| Other
receivables |
|
(734,908) |
1,087,749 |
|
|
---------- |
---------- |
|
|
(6,588,157) |
(664,360) |
|
| Increase/(decrease)
in current liabilities |
|
| Advance lease
rent/security deposits |
531,903 |
(378,382) |
|
| Accrued and
other liabilities |
813,931 |
162,226 |
|
| Taxation |
|
1,500,000 |
567,227 |
|
|
---------- |
---------- |
|
|
2,845,834 |
351,071 |
|
|
---------- |
---------- |
|
| Cash generated from
operations |
|
29,424,131 |
28,196,723 |
|
| Financial charges paid |
|
(12,521,956) |
(8,799,306) |
|
|
---------- |
---------- |
|
| Net
cash from operating activities |
|
16,902,175 |
19,397,417 |
|
|
========== |
========== |
|
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
| B.
CASH FLOW FROM INVESTING ACTIVITIES |
|
| Fixed capital
expenditure |
|
(3,231,690) |
(2,935,878) |
|
| Investment in
listed securities |
(9,645,400) |
(4,795,295) |
|
| Investment in leased
assets |
|
(17,074,062) |
(21,647,626) |
|
| Proceeds from sale
of investments |
|
12,761,887 |
483,280 |
|
| Musharaka
financing |
|
(3,643,823) |
9,621,059 |
|
| Proceeds from
disposal of fixed assets |
1,436,000 |
395,000 |
|
|
---------- |
---------- |
|
| Net cash used in
investing activities |
(19,397,088) |
(18,879,460) |
|
|
|
|
| C.
CASH FLOW FROM FINANCING ACTIVITIES |
|
| Long term Musharaka
finance obtained |
|
30,000,000 |
15,000,000 |
|
| Security deposits
on lease contracts |
1,995,202 |
3,146,512 |
|
| Increase in short
term Musharaka finance |
|
(3,664,614) |
11,515,296 |
|
| Repayment of long term
Musharaka finance |
|
(20,773,889) |
(13,779,343) |
|
| Dividend |
|
(135,561) |
(15,311,290) |
|
|
---------- |
---------- |
|
| Net cash from
financing activities |
7,421,138 |
571,175 |
|
| Net
increase in cash and |
|
---------- |
---------- |
|
| cash equivalents |
|
4,926,225 |
1,089,132 |
|
| Cash
and cash equivalents |
|
|
|
| at the beginning of
the year |
|
2,372,868 |
1,283,736 |
|
| Cash
and cash equivalents |
|
---------- |
---------- |
|
| at the end of the
year |
|
7,299,093 |
2,372,868 |
|
|
========== |
========== |
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| AI-Zamin
Leasing Modaraba has been formed under the Modaraba |
|
| Companies
and Modaraba (Floatation and Control) Ordinance, 1980 and the |
|
| Rules
framed thereunder. It is managed by AI-Zamin Modaraba |
|
| Management
(Private) Limited, a company incorporated in Pakistan under |
|
| the
Companies Ordinance, 1984 and registered with the Registrar of |
|
| Modaraba
Companies and Modarabas under the Modaraba Companies and |
|
| Modarabas
(Floatation and Control) Ordinance, 1980. |
|
| It
is a perpetual multipurpose Modaraba authorised to undertake various |
|
| business
transactions under the Islamic Modes of Financing. |
|
| The
Modaraba is listed on the Karachi, Lahore and Islamabad Stock |
|
| Exchanges. |
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the 'historical cost |
|
| convention'. |
|
| 2.2
Staff retirement benefits |
|
| Modaraba
operates a contributory provident fund scheme for it's |
|
| employees
eligible under the scheme. Equal monthly contributions are |
|
| made
by the Modaraba and the employees in accordance with the |
|
| rules. |
|
| 2.3
Taxation |
|
| Current |
|
| Provision
for current taxation is based on taxable income at current tax |
|
| rates
after taking into account tax rebates and tax credits available, if any. |
|
| Deferred |
|
| Deferred
tax is accounted for by using the liability method on all major |
|
| timing
differences excluding tax effect on 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. |
|
| 2.4
Fixed assets and depreciation |
|
| Fixed
assets are stated at cost less accumulated depreciation. |
|
| Depreciation
is charged to income applying the straight line method. |
|
| Depreciation
on additions/disposals during the year is charged |
|
| proportionately
for the period of use. |
|
| Gain
or loss on disposal of assets is accounted for in the year in which |
|
| it arises. |
|
| 2.5
Investments |
|
| a)
Long term investments in quoted shares are stated at cost. Provision |
|
| is
made for the decline, other than temporary in the value of |
|
| investment. |
|
| b)
Short term investments in quoted shares are stated at lower of cost |
|
| and
market value determined on an aggregate portfolio basis. |
|
| 2.6
Deferred cost |
|
| Deferred
cost is written off over a maximum period of five years from |
