| Modaraba Al-Tijarah |
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
|
| CONTENTS |
|
|
|
| Corporate
Information |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
& 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 |
|
| 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
Seventh Annual Report of |
|
| Modaraba
AI-Tijarah, together with Audited Accounts for the year ended 30th June,
1998. |
|
|
| 1.
OPERATING RESULTS: |
|
| Operating
results, for the year ended June 39, 1998 are presented below in a summarized
form · |
|
|
|
( Rs. in "000"
) |
|
|
1998 |
1997 |
|
|
| *Operating
profit/(loss) |
|
2,866 |
(3,356) |
|
| *Financial
charges |
|
(8) |
(3,621) |
|
|
---------- |
---------- |
|
|
2,858 |
(6,977) |
|
| *Other
income |
|
539 |
37 |
|
|
---------- |
---------- |
|
|
3,397 |
(6,940) |
|
| *Provision
for doubtful debts |
|
407 |
2,605 |
|
| *Provision
for diminution in value of |
|
|
|
| Long
term investments |
|
18,217 |
-- |
|
| Marketable
securities |
|
205 |
(223) |
|
|
---------- |
---------- |
|
| *Loss
before taxation |
|
(15,432) |
(9,322) |
|
| *Taxation |
|
(196) |
(4,794) |
|
|
---------- |
---------- |
|
| Loss
after taxation |
|
(15,628) |
(14,116) |
|
| *Loss
brought forward |
|
(33,846) |
(19,730) |
|
|
---------- |
---------- |
|
| *Loss
carried to the balance sheet |
|
(49,474) |
(33,846) |
|
|
========== |
========== |
|
| 2.
BUSINESS OPERATIONS: |
|
|
| The
Modaraba earned operating profit of Rs. 2.866 million during the year ended
June 30, 1998. However, |
|
| in
view of the continuous decline in the prices of equity investment, the
management considered it prudent |
|
| to
make provision for diminution in value of long term investments amounting to
Rs. 18.217 million. |
|
| Consequently
net loss after tax amounted to Rs. 15.628 million. |
|
|
| In
view of volatile business conditions the management followed a cautious
approach. We remained highly |
|
| selective
in approving any new business proposal. The Modaraba earned a nominal trading
profit of Rs. 462 |
|
| thousand.
Because of reduced quantum of business. export quota purchased in previous
year remained |
|
| unutilised
and was sold. A profit of Rs. 2.913 million was earned on sale of quota.
Besides, commission income |
|
| of
Rs. 720 thousand was also earned. |
|
|
| Through
strenous cost control measures the administrative expenses were reduced to
Rs. 2.10 million as |
|
| compared
to Rs. 4.64 million during the previous year. |
|
|
| 3.
FUTURE OUTLOOK: |
|
|
| After
a series of events resulting in extreme uncertainties the economy appears to
be showing signs of recovery. |
|
| Various
economic indicators reveal mixed trends. Foreign exchange reserves have
declined to a considerable |
|
| extent.
There is heavy short fall in revenue collection, and rate of general sales
tax has also been revised |
|
| upwards.
However, trade deficit has been reduced owing to lower imports. Government
has resisted the |
|
| pressure
to further devalue Pak rupee. Prices of electricity and gas have remained
stable. The international |
|
| financing
agencies are also inclined to resume their assistance program. These are
positive developments |
|
| indicating
revival of economy. |
|
|
| Since
the close of the year, we have finalised certain business transactions
involving imports, exports and |
|
| supplies.
Few other import and export consignments are under process. During the
current year also we plan |
|
| to
undertake business with good profit margins and minimum risk. If present rate
of turn-around continues |
|
| for
the remaining part of the year reasonable profits are expected to be earned. |
|
|
| 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 1998-99. |
|
|
| 5.
PATTERN OF CERTIFICATE - HOLDINGS |
|
|
| The
statement of pattern of certificate-holdings is attached. |
|
|
| 6.
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 the Members of
Management and staff |
|
| for
their dedication and hard work. |
|
|
| On
behalf of the Board, |
|
|
| SYED
IRADAT HUSSAIN |
|
| Chairman |
|
|
| Karachi:
December 07, 1998 |
|
|
|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
|
|
| We
have audited the annexed balance sheet as at June 30, 1998 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, 1998 of MODARABA AL-TIJARAH which are Modaraba Company's (AI-Mal
Corporation 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 Modaraba |
|
| Al-Tijarah
as required by the Modaraba Companies and Modaraba (Floatation and Control)
Ordinance, 1980; |
|
| and
Modaraba Companies and Modarabas 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 Modarabas (Floatation and Control) Ordinance, 1980, and
Modaraba Companies |
|
| and
Modarabas 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 account, exhibit
respectively a true and |
|
| fair
view of the state of the Modaraba's affairs as at June 30, 1998 and the loss
and the changes in the |
|
| financial
position (cash flow statement) 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 expenditure incurred by the
Modaraba are in accordance' |
|
| with
the objects, terms and conditions of the Modaraba. |
|
|
| Karachi:
December 07, 1998 |
|
Ford, Rhodes Robson,
Morrow |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
| CAPITAL
& RESERVES |
|
| Certificate
Capital |
|
|
| Authorised |
|
| 10,000,000
modaraba certificates |
|
| of
Rs. 10 each |
|
100,000,000 |
100,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
3 |
75,778,150 |
75,778,150 |
|
| Reserves |
|
|
|
| Statutory |
|
322,244 |
322,244 |
|
| Revenue |
|
|
|
| Accumulated
loss |
|
(49,474,501) |
(33,846,071) |
|
|
---------- |
---------- |
|
|
26,625,893 |
42,254,323 |
|
| CURRENT
LIABILITIES |
|
|
| Short
term Musharaka - |
|
4 |
5,940,000 |
15,746,400 |
|
| Creditors,
accrued and other |
|
| liabilities |
|
5 |
5,731,220 |
2,271,040 |
|
| Dividend
Payable |
|
419,559 |
424,391 |
|
| Provision
for taxation |
|
-- |
1,621,103 |
|
|
---------- |
---------- |
|
|
12,090,779 |
20,062,934 |
|
| CONTINGENCIES |
|
6 |
|
|
---------- |
---------- |
|
|
38,716,672 |
62,317,257 |
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
7 |
4,199,097 |
4,268,436 |
|
| LONG
TERM INVESTMENTS |
|
8 |
5,440,064 |
24,962,315 |
|
| DEFERRED
EXPENDITURE |
|
9 |
-- |
267,200 |
|
| CURRENT
ASSETS |
|
|
|
| Stock-in-trade |
|
10 |
15,233,746 |
19,628,277 |
|
| Marketable
Securities |
|
11 |
1,520,280 |
1,495,262 |
|
| Trade Debts |
|
12 |
1,923,245 |
3,480,005 |
|
| Short-term
Musharaka |
|
13 |
3,453,522 |
2,094,121 |
|
| Short-term
Morabaha |
|
14 |
400,799 |
923,640 |
|
| Advances,
deposits, prepayments and |
|
|
| other
receivables |
|
15 |
4,091,642 |
4,296,208 |
|
|
|
|
| Cash
and bank balances |
|
16 |
2,454,277 |
901,793 |
|
|
|
---------- |
---------- |
|
|
29,077,511 |
32,819,306 |
|
|
---------- |
---------- |
|
|
38,716,672 |
62,317,257 |
|
|
========== |
========== |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
| OPERATING
INCOME |
|
|
| Income
from trading |
|
17 |
462,117 |
269,487 |
|
| Income
from musharaka (other than trading) |
28,013 |
28,939 |
|
| Income
from morabaha |
|
-- |
15,000 |
|
| Commission
income |
|
720,743 |
-- |
|
| Dividend |
|
18 |
778,229 |
1,181,610 |
|
| Gain
on sale of investments |
|
74,056 |
149,887 |
|
| Gain/(Ioss)
on sale of export quota |
|
2,913,380 |
(355,407) |
|
|
--------- |
--------- |
|
|
4,976,538 |
1,289,516 |
|
| ADMINISTRATIVE
COST |
|
19 |
2,109,944 |
4,645,680 |
|
|
|
--------- |
--------- |
|
| OPERATING
PROFIT/(LOSS) |
|
2,866,594 |
(3,356,164) |
|
| FINANCIAL
CHARGES |
|
|
|
|
| Musharaka
profit |
|
|
(8,303) |
(3,620,654) |
|
|
|
--------- |
--------- |
|
|
|
2,858,291 |
(6,976,818) |
|
| OTHER
INCOME |
|
20 |
538,727 |
36,701 |
|
|
|
|
--------- |
--------- |
|
|
|
3,397,018 |
(6,940,117) |
|
| Provision for
doubtful/classified |
|
406,509 |
2,605,314 |
|
| debts - net |
|
|
|
|
| Provision
for diminution in value |
|
|
|
| of
investments |
|
|
|
|
| Long-term
investments |
|
8 |
18,217,030 |
-- |
|
| Marketable
securities |
|
11.1 |
205,462 |
(223,257) |
|
|
|
--------- |
--------- |
|
|
|
18,422,492 |
(223,257) |
|
|
|
--------- |
--------- |
|
| Loss
before taxation |
|
|
(15,431,983) |
(9,322,174) |
|
| TAXATION |
|
21 |
( 196,447) |
( 4,793,936) |
|
|
|
--------- |
--------- |
|
| Loss
after taxation |
|
|
(15,628,430) |
(14,116,110) |
|
| Loss
brought forward |
|
(33,846,071) |
(19,729,961) |
|
|
--------- |
--------- |
|
| Loss
carried to the balance sheet |
|
(49,474,501) |
(33,846,071) |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| Managing
Director & |
|
Director |
|
Director |
|
| Chief
Executive |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1998 |
|
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Net
loss before taxation |
|
(15,431,983) |
(9,322,174) |
|
| Adjustments
for · |
|
|
|
| Depreciation |
|
516,528 |
382,390 |
|
| Amortisation
of deferred expenditure |
|
-- |
1,258,772 |
|
| Gain
on sale of fixed assets |
|
(283,271) |
(32,191) |
|
| Loss
on sale of long-term investments |
|
166,901 |
100.40 |
|
| Provision
for diminution in value of long-term investments |
18,217,030 |
-- |
|
| (Profit)/Ioss
on sale of export quota |
|
(2,913,380) |
355.41 |
|
| Financial
charges |
|
8,303 |
3,620,654 |
|
| Dividend |
|
(778,229) |
(1,181,610) |
|
|
--------- |
--------- |
|
| Cash
generated from operations |
|
14,933,882 |
4,503,826 |
|
|
--------- |
--------- |
|
| Operating
loss before changes in operating assets/liabilities |
(498,101) |
(4,818,348) |
|
| (Increase)/decrease
in operating assets |
|
| Stock-'in-trade |
|
4,394,531 |
14,744,254 |
|
| Marketable
securities |
|
(25,018) |
1,179,578 |
|
| Trade Debts |
|
1,556,760 |
(26,176) |
|
| Short-term
Musharaka |
|
(1,359,401) |
1 389,785 |
|
| Short-term
Morabaha |
|
522,841 |
406,622 |
|
| Advances, pre-payments and
other |
|
| receivables
excluding |
|
|
|
| advance
tax and dividend |
|
800,872 |
(200,147) |
|
|
---------- |
---------- |
|
|
5,890,585 |
17,493,916 |
|
| increase(decrease)
in operating liabilities |
|
|
| Short-term
Musharaka |
|
(9,806,400) |
(9,771,000) |
|
| Creditors,
accrued and other liabilities |
|
3,430,776 |
(184,384) |
|
|
---------- |
---------- |
|
|
(6,375,624) |
(9,955,384) |
|
|
---------- |
---------- |
|
| Cash
(outflow)/inflow from operating activities |
(983,140) |
2,720,184 |
|
| Financial
charges paid |
|
(8,303) |
(3,592,033) |
|
| Income
tax paid |
|
(2,353,849) |
(263,938) |
|
|
---------- |
---------- |
|
| Net
cash outflow from operating activities |
(3,345,292) |
(1,135,787) |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Purchase
of fixed assets |
|
(823,918) |
(1,901,019) |
|
| Long-term
investments |
|
-- |
(98,250) |
|
| Proceeds
from sale of fixed assets |
|
660,000 |
93,375 |
|
| Proceeds
from sale of long-term investments |
1,138,320 |
628,374 |
|
| Proceeds
from sale of export quota |
|
3,180,580 |
1,449,404 |
|
| Profit
received on bank deposits |
|
29,404 |
81,520 |
|
| Dividend
received |
|
718,222 |
1,187,811 |
|
|
---------- |
---------- |
|
| Net
cash inflow from investing activities |
4,902,608 |
1,441,215 |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Dividend
paid |
|
(4,832) |
(8,387) |
|
| Deferred
expenditure paid |
|
-- |
(230,400) |
|
|
---------- |
---------- |
|
| Net
cash outflow from financing activities |
(4,832) |
(238,787) |
|
|
---------- |
---------- |
|
| NET
INCREASE IN CASH AND CASH EQUIVALENTS |
1,552,484 |
66,641 |
|
| CASH AND CASH EQUIVALENTS
AT BEGINNING OF |
|
| THE YEAR |
|
901,793 |
835,152 |
|
| CASH
AND CASH EQUIVALENTS AT THE END OF |
|
---------- |
---------- |
|
| THE YEAR |
|
2,454,277 |
901,793 |
|
|
========== |
========== |
|
| 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-Tijarah is a multipurpose, perpetual Modaraba formed in July, 1991 under
the Modaraba |
|
| Companies
and Modarabas (Floatation and Control) Ordinance, 1980 and is managed by
Al-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 |
|
| 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 |
|
|
| (a)
Staff gratuity |
|
| The
Modaraba operates a funded gratuity scheme for all its employees. Provision
is made annually |
|
| to
cover obligations under the scheme. |
|
|
| (b)
Provident fund |
|
| The
Modaraba operates an approved provident fund for all its employees.
Contributions in respect |
|
| thereof
are made in accordance with terms of the scheme. |
|
|
| 2.3.
Tangible 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 |
|
| disposal
during the year, depreciation is charged proportionately to the period of
use. Profit or loss on |
|
| disposal
of assets is included in income currently. |
|
|
| 2.4.
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. |
|
|
| 2.5
Deferred expenditure |
|
|
| Expenses
incurred in connection with 'the purchase of export quota are amortised over
three years |
|
| effective
from the year of its utilization. |
|
|
| 2.6.
Stock-in trade |
|
| 2.6.1
Stock-in-trade is valued at the lower of cost and net realisable value. |
|
| 2.6.2
Cost signifies in relation to |
|
|
| -Trading Stock |
- weighted average cost |
|
| -Stock-in-transit |
- actual cost comprising
invoice value plus other charges thereon. |
|
|
| 2.7.
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. |
|
|
| 2.8.
Foreign currency transactions |
|
|
| Assets
and liabilities in foreign currencies are translated into Rupee at the rates
of exchange approximat- |
|
| ing
to those prevalent on the balance sheet date. Exchange gains or losses are
taken to income currently. |
|
|
| 2.9.
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. Debit balance on deferred tax account is not set-up as an asset. |
|
|
| 2.10
Revenue recognition |
|
|
| 2.10.1
Profit generated from morabaha transactions is recognised as income at the
time of sale. |
|
| 2.10.2
Return on short-term investments is recognised as income on an accrual basis. |
|
| 2.10.3
Dividend income is recognised at the time of closure of share transfer books
of the company |
|
| declaring
dividend. |
|
| 2.10.4
Sales are recorded on despatch of goods, |
|
|
|
|
1998 |
1997 |
|
| 3.
ISSUED, SUBSCRIBED AND PAID UP CAPITAL |
Rupees |
Rupees |
|
|
| 6,449,815
(1997: 6,449,815) Modaraba Certificates |
|
| of
Rs. 10 each fully paid in cash |
|
64,498,150 |
64,498,150 |
|
| 1,128,000
(1997: 1,128,000) Modaraba Certificates |
|
| of
Rs. 10 each allotted as bonus certificates |
11,280,000 |
11,280,000 |
|
|
--------- |
--------- |
|
|
75,778,150 |
75,778,150 |
|
|
========= |
========= |
|
| 4.
SHORT-TERM MUSHARAKA- SECURED |
|
|
| with
Modaraba- Secured (note 4.1) |
|
5,940,000 |
15,358,000 |
|
| with
Bank - Secured |
|
-- |
388,400 |
|
|
--------- |
--------- |
|
|
5,940,000 |
15,746,400 |
|
|
========= |
========= |
|
|
|
|
| 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 the current year Modaraba has not paid any profit due to Musharaka
Partner. |
|
|
| 5.
CREDITORS, ACCRUED AND OTHER LIABILITIES |
|
| Creditors |
|
113,459 |
1,299,931 |
|
| Advances
from customers/others |
|
4,812,028 |
-- |
|
| Accrued
liabilities |
|
71,146 |
237,305 |
|
| Profit
payable on musharaka finance |
|
-- |
28,621 |
|
| Others
net of zakat- note 5.1 |
|
734,587 |
705,183 |
|
|
--------- |
--------- |
|
|
5,731,220 |
2,271,040 |
|
|
========= |
========= |
|
| 5.1
This represents the profit realised on PLS accounts. Pursuant to the
Board"s decision profit on PLS |
|
| accounts
is being suspended with effect from January 1, 1994, pending Religious
Board's opinion. |
|
|
| 6.
CONTINGENCIES |
|
| Letters
of credit |
|
1,877,963 |
-- |
|
