| Modaraba Al-Mali |
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| Annual
Report 1998 |
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| Contents |
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| Corporate
Information |
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| Directors'
Report |
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| Auditors'
Report |
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| Balance
Sheet |
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| Profit
and Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
|
| Pattern
of Certificate Holdings |
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| 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 |
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| COMPANY
SECRETARY |
|
|
| Mr.
D.V. Karia |
|
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| MODARABA
MANAGEMENT COMMITTEE |
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|
| Mr.
Zafar H. Naqvi |
|
| Mr.
Ashfaq Ali Quettawala |
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| Mr.
S. Shakeel-ur-Rehman |
|
| Mr.
S. Masood Akhter |
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|
| AUDITORS |
|
|
| Ford,
Rhodes, Robson, Morrow |
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| Chartered
Accountants |
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| Finlay
House |
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| I.I.
Chundrigar Road |
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| Karachi. |
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|
| BANKERS |
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| Muslim
Commercial Bank Limited |
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| Askari
Bank Limited |
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| Metropolitan
Bank Limited |
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| REGISTERED
OFFICE |
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| 10th
Floor, Progressive Square |
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| Opposite
Nursery, Sharea Faisal |
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| Karachi. |
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| Phones
:4547521-4 |
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| Fax : (92-21) 4547526 |
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| DIRECTORS'
REPORT |
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|
| The
Board of Directors of AI-Mal Corporation Limited have pleasure in presenting
the 12th Report of Modaraba AI- |
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| Mali
together with Audited Accounts for the year ended June 30,1998. |
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| 1.
Operating Results: |
|
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| The
summarized results for the period under report are as under: |
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|
(Rs. in "000") |
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|
1998 |
1997 |
|
|
|
|
| *
Totaloperating income |
|
108,140 |
115,111 |
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|
========= |
========= |
|
| *
Net Profit before management fee & taxation |
|
5,260 |
19,881 |
|
| *
Less: Management Fee |
|
478 |
1,807 |
|
|
--------- |
--------- |
|
| *
Less: Provision for taxation |
|
4,782 |
18,074 |
|
|
4,361 |
6,855 |
|
|
--------- |
--------- |
|
| *
Net Profit for the year |
|
421 |
11,219 |
|
| *
Add: Unappropriated profit b/f |
|
37 |
2,016 |
|
|
--------- |
--------- |
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| *
Profit available for appropriation |
|
458 |
13,325 |
|
| *
Appropriations: |
|
|
|
|
--------- |
--------- |
|
| -
Statutory reserves |
|
84 |
2,244 |
|
| -
Cash dividend Nil (1997: 6%) |
|
- |
10, 954 |
|
|
|
|
|
84 |
13,198 |
|
|
--------- |
--------- |
|
| *
Unappropriated profit carried forward |
|
374 |
37 |
|
|
========== |
========== |
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| 2.
Statutory Reserves |
|
|
| In
compliance with SBP Prudential Regulations, Directors have decided to
appropriate 20% of the year's profits |
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| to
Statutory Reserves until it equals the Certificate Capital of the Modaraba. |
|
|
| 3.
Business Operations |
|
|
| The
economic situation did not show any significant improvement. The leasing
sector witnessed immense |
|
| competition
.However, we were able to negotiate new leases amounting to Rs. 119.59
million in 1997-98 as |
|
| compared
to Rs. 75.21 million during the year 1996 -97. Inflationary trend continued
to persist, but through |
|
| effective
cost control policies, the management was able to restrict the operating cost
to previous year's level. |
|
| Through
strenuous recovery efforts, the Provision for doutful debts was written back
by Rs. 1.78 million. In view |
|
| of
the continuous decline in the prices of equity investments over an extended
time frame, the management |
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| considered
it prudent to make provisions for diminution in value of long term
investments in order to reflect the |
|
| long
term trend. Provision of Rs. 18.29 million and Rs. 4.36 million were made
against diminution in value of long |
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| term
and short term investments respectively. As a result, profit after tax
amounted to Rs. 0.42 million as |
|
| compared
to Rs. 11.22 million last year. |
|
|
| 4.
Future Prospects |
|
|
| With
the favourable prospects of revival of I.M.F. assistance, the economic
activity is expected to gain momentum. |
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| It
is hoped that the pace of industrialization will, therefore, improve
resulting in increase in leasing business .The |
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| tax
exemption granted to the Modarabas through Finance Act 1998 will greatly
facilitate in revival of the Modaraba |
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| sector.
The pattern of recovery is encouraging and quantum of doubtful/classified
debts is expected to remain |
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| within
permissible limits. Accordingly, the management is confident of achieving
profitable level of operations. |
|
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| 5.
Auditors: |
|
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| The
present auditors, Messrs. Ford, Rhodes, Robson, Morrow, Chartered Accountants
are due for retirement, |
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| and
being eligible, offer themselves for re-appointment for the year 1998-99. |
|
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| 6.
Pattern of Certificate holding: |
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| The pattern of certificate holding is
attached. |
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| 7.
Acknowledgment |
|
|
| 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, |
|
|
| S.
IRADAT HUSAIN |
|
| Chairman |
|
|
| Karachi:
Dated 7th December, 1998 |
|
|
|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
|
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| We
have audited the annexed balance sheet as at June 30, 1998 and the related
profit and loss account and cash |
|
| flow
statement together with the notes to the accounts for the year ended June 30,
1998 of MODARABA AL-MALI |
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| which
are modaraba company's (AI-Mal Corporation Limited) representation and we
state that we have obtained all |
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| 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-Mali
as required by the Modaraba Companies and Modaraba (Floatation and Control)
Ordinance, 1980, |
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| 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 |
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| 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, 1998 and the profit and the cash flows for the year
ended on that |
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| date; |
|
|
| ii)
zakat deductible at source under the Zakat and Ushr Ordinance, 1980, has been
deducted by the |
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| 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 7, 1998. |
|
Ford, Rhodes, Robson,
Morrow |
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|
Chartered Accountants |
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|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
June 30 |
June 30 |
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
| CAPITAL
AND RESERVES |
|
|
| Certificate
Capital |
|
|
| Authorised |
|
|
| 20,000,000
(1997 · 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 |
14,455,639 |
14,371,305 |
|
| Revenue
Reserve |
|
|
| Unappropriated
profit |
|
373,934 |
36,599 |
|
|
---------- |
---------- |
|
|
14,829,573 |
14,407,904 |
|
|
---------- |
---------- |
|
|
197,403,573 |
196,981,904 |
|
|
| LONG
TERM MORABAHA FINANCES |
|
5 |
6,350,000 |
11,518,847 |
|
| DEFERRED
LIABILITY |
|
| Customers'
security deposits |
|
23,257,207 |
20,210,560 |
|
| CURRENT
LIABILITIES |
|
| Current
maturity of morabaha finances |
5 |
4,368,052 |
3,589,635 |
|
| Current
maturity of customers' security |
|
|
| deposits |
|
|
13,743,515 |
14,143,793 |
|
| Creditors,
accrued and other liabilities |
6 |
12,624,888 |
5,682,882 |
|
| Rentals
received in advance |
|
|
4,791,988 |
3,169,273 |
|
| Provision
for taxation |
|
|
- |
2,784,269 |
|
| Unclaimed
dividend |
|
|
1,214,572 |
1,129,111 |
|
| Proposed
dividend |
|
|
- |
10,954,440 |
|
|
|
---------- |
---------- |
|
|
|
36,743,015 |
41,453,403 |
|
| CONTINGENCIES |
|
7 |
---------- |
---------- |
|
|
263,753,795 |
270,164,714 |
|
|
========== |
========== |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
8 |
|
| Assets
given on lease - net cost |
8.10 |
203,366,058 |
172,921,146 |
|
| Assets
in own use - net cost |
8.20 |
11,823,816 |
12,964,762 |
|
|
|
215,189,874 |
185,885,908 |
|
| LONG
TERM INVESTMENTS |
|
9 |
5,066,267 |
23,393,733 |
|
| DEFERRED
EXPENDITURE |
|
10 |
129,545 |
233,477 |
|
| CURRENT
ASSETS |
|
|
| Short
term musharaka finance - secured |
11 |
5,940,000 |
15,358,000 |
|
| Short
term morabaha finances - secured |
12 |
13,338,440 |
10,895,025 |
|
| Short
term investments |
|
13 |
4,527,011 |
5,386,535 |
|
| Lease
rentals receivable |
|
14 |
9,206,920 |
13,924,225 |
|
| Advances,
deposits, prepayments and |
|
|
| other
receivables |
|
15 |
7,170,922 |
5,780,526 |
|
| Cash
and bank balances |
|
16 |
3,184,816 |
9,307,285 |
|
|
---------- |
---------- |
|
|
43,368,109 |
60,651,596 |
|
|
---------- |
---------- |
|
|
263,753,795 |
270,164,714 |
|
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report is annexed hereto. |
|
|
| Managing
Director/ |
Director |
|
Director |
|
| Chief
Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| for
the year ended June 30, 1998 |
|
|
|
June 30 |
June 30 |
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Operating
income |
|
17 |
108,139,830 |
115,110,504 |
|
| Operating
costs |
|
18 |
81,364,499 |
83,460,570 |
|
| Profit
distribution on borrowings |
19 |
2,726,425 |
3,653,198 |
|
|
|
---------- |
---------- |
|
|
|
84,090,924 |
87,113,768 |
|
|
|
---------- |
---------- |
|
|
|
24,048,906 |
27,996,736 |
|
| Other
income |
|
20 |
2,078,553 |
2,175,132 |
|
|
|
---------- |
---------- |
|
|
|
26,127,459 |
30,171,868 |
|
| Less:
Provision for doubtful/classified debts |
|
(1,783,780) |
9,769,293 |
|
| Provision
for diminution in value of short term investments |
4,362,009 |
520,827 |
|
| Provision
for diminution in value of long term investments |
18,288,119 |
- |
|
| Modaraba
company's management fee |
|
478,283 |
1,807,432 |
|
|
---------- |
---------- |
|
|
21,344,631 |
12,097,552 |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
4,782,828 |
18,074,316 |
|
|
|
|
| Taxation
- Current |
|
4,000,000 |
6,000,000 |
|
| -
Prior years |
|
361,159 |
855,100 |
|
|
---------- |
---------- |
|
|
4,361,159 |
6,855,100 |
|
|
---------- |
---------- |
|
|
421,669 |
11,219,216 |
|
| Unappropriated
profit brought forward |
|
36,599 |
2,015,666 |
|
|
---------- |
---------- |
|
| Available
for appropriation |
|
458,268 |
13,234,882 |
|
|
| Appropriations: |
|
| Proposed
dividend |
|
- |
10,954,440 |
|
| Transfer
to statutory reserve |
|
84,334 |
2,243,843 |
|
|
---------- |
---------- |
|
|
84,334 |
13,198,283 |
|
|
---------- |
---------- |
|
| Balance
carried forward |
|
373,934 |
36,599 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| Managing
Director/ |
Director |
|
Director |
|
| Chief
Executive |
|
|
|
| CASH
FLOW STATEMENT |
|
| for
the year ended June 30, 1998 |
|
|
|
June 30 |
June 30 |
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
| Net
Profit before management fee and taxation |
|
5,261,111 |
19,881,748 |
|
| Adjustments
of non cash and other items |
|
|
|
| Depreciation
- Leased assets |
|
66,420,654 |
68,773,711 |
|
| -
Owned assets |
|
1,361,996 |
1,1 65,599 |
|
| Amortisation
of deferred expenditure |
|
103,932 |
237,929 |
|
| Provision
for bad debts |
|
(1,783,780) |
9,759,293 |
|
| Provision
for long term investments |
|
18,288,119 |
- |
|
| Provision
for short term investments |
|
4,362,009 |
520,827 |
|
| Gain
on disposal of leased/owned assets |
|
(206,703) |
(308,196) |
|
| Gain
on investments |
|
(6,473) |
(28,634) |
|
| Financial
charges |
|
2,726,425 |
3,653,198 |
|
| Dividend
Income |
|
(891,339) |
(931,772) |
|
|
---------- |
---------- |
|
|
95,635,951 |
102,733,703 |
|
| Changes
in working capital |
|
| Decrease
in trade and other receivables |
|
17,262,515 |
10,737,830 |
|
| (Increase)
in short term investments |
|
(3,502,485) |
(527,399) |
|
| Increase/(Decrease)
in trade payables |
|
5,942,144 |
(2,426,786) |
|
|
---------- |
---------- |
|
|
115,338,125 |
110,517,348 |
|
| Financial
charges paid |
|
(2,844,257) |
(4,340,896) |
|
| Income
taxes paid |
|
(9,364,679) |
(11,392,072) |
|
| Management
fee paid |
|
(2,005,000) |
(1,730,000) |
|
| Profit
received from bank |
|
1,304,339 |
832,265 |
|
|
---------- |
---------- |
|
| Net
cash from operating activities |
|
102,428,528 |
93,886,645 |
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
| Purchase
of - Leased out assets |
|
(119,590,822) |
(75,211,239) |
|
|
- Owned assets |
|
(221,050) |
(2,795,157) |
|
| Purchase
of long term investments |
|
(190,000) |
(236,855) |
|
| Proceeds
from sale of fixed assets - Leased out |
22,931,959 |
10,239,163 |
|
|
- Owned |
|
- |
511,225 |
|
| Proceeds
from sale of long term investments |
|
235,820 |
993,568 |
|
| Dividend
received |
|
896,137 |
809,860 |
|
| Customers'
security deposits received - net |
|
2,646,369 |
3,291,506 |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(93,291,587) |
(62,397,929 |
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Repayment
of long term borrowings |
|
(4,390,430) |
(5,373,150) |
|
| Dividend
paid |
|
(10,868,980) |
(19,656,801) |
|
|
---------- |
---------- |
|
| Net
cash used in financing activities |
|
(15,259,410) |
(25,029,951) |
|
|
---------- |
---------- |
|
| NET
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS |
(6,122,469) |
6,458,765 |
|
| CASH
AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR |
9,307,285 |
2,848,520 |
|
|
---------- |
---------- |
|
| CASH
AND CASH EQUIVALENTS AT END OF THE YEAR |
|
3,184,816 |
9,307,285 |
|
|
=========== |
=========== |
|
|
| Managing
Director/ |
Director |
|
Director |
|
| Chief
Executive |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 1998 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
|
| Modaraba
Al-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 Corpora- |
|
| tion
Limited. It is listed on the Karachi, Lahore and Islamabad Stock Exchanges.
It is engaged in the business of |
|
| leasing,
morabaha and musharaka financing and other related business. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| (a)
Overall valuation policy |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| (b)
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 based on actuarial valuation using
the 'projected unit credit |
|
| method'. |
|
|
| (c)
Fixed assets |
|
| (i)
Assets given out on lease and amortization |
|
|
| All
lease transactions 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 proportion- |
|
| ately
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. |
|
|
| (d)
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 incurrence. |
|
|
| (e)
Investments |
|
|
| Short-term
investments are carried at lower of moving average cost and market value
determined on an |
|
| 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. |
|
|
| (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)
Taxation |
|
|
| Provision
for current taxation is based on taxable income at the current rates of
taxation after taking into |
|
| account
tax credits available. |
|
|
| (h)
Bad and doubtful debts |
|
|
| Debts
considered doubtful are provided for. |
|
|
June 30 |
June 30 |
|
|
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
| 3.
ISSUED, SUBSCRIBED AND PAID-UP CAPITAL |
|
|
|
| 13,569,000
(1997:13,569,000) Modaraba Certificates |
135,690,000 |
135,690,000 |
|
| of
Rs. 10/- each fully paid in cash |
|
|
|
| 4,688,400
(1997: 4,688,400) Modaraba Certificates |
46,884,000 |
46,884,000 |
|
| of
Rs.10/- each fully paid bonus certificates |
|
|
---------- |
---------- |
|
|
182,574,000 |
182,574,000 |
|
|
========== |
========== |
|
| 4.
STATUTORY RESERVE |
|
| The
statutory reserve represents profits set aside as required under the State
Bank of Pakistan's Prudential |
|
| Regulations
for Non-Banking Financial Institutions. |
|
|
| 5.
LONG TERM MORABAHA FINANCES- Secured |
|
| Morabaha
from financial institutions (note 5.1 ) |
10,718,052 |
15,108,482 |
|
| Less:
Current maturities shown under current |
|
| liabilities |
|
4,368,052 |
3,589,635 |
|
|
---------- |
---------- |
|
|
6,350,000 |
11,51 8,847 |
|
|
========== |
========== |
|
| 5.1
Morabahas from financial institutions |
|
|
|
|
|
Outstanding balance |
|
Profit |
|
|
|
Purchase |
margin |
Repayment |
|
|
1997 |
1998 |
Sale price |
price |
per annum |
from |
instalments |
|
