| Al-Zamin Leasing Modaraba |
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| Annual
Report 2000 |
|
|
|
|
| CORPORATE
INFORMATION |
|
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Basheer A. Chowdry- Chief Executive |
|
| Mr.
C. Ahsanul Haq - Chairman |
|
| Mr.
S.M. Farooq |
|
| Mr.
Ansar Husain |
|
| Mr.
Manzoor Hussain Shah Kazmi |
|
| Brig.
(Retd) Luqman Mahmood |
|
| Dr.
Hasan Abbas Zaheer |
|
| Syed
Ghazanfar Ali [Nominee of Pak Libya Holding Co. (Pvt) Ltd.] |
|
|
| COMPANY
SECRETARY |
|
| Mr.
M. Moizul Haque |
|
|
| MODARABA COMPANY |
|
| Al-Zamin
Modaraba Management (Private) Limited |
|
|
| AUDITORS
OF THE MODARABA |
|
| M.
Yousuf Adil Saleem & Company, Chartered Accountants |
|
|
| AUDITORS
OF THE MODARABA COMPANY |
|
| Jalis
Ahmed & Company, Chartered Accountants |
|
|
| BANKERS |
|
| Allied Bank of Pakistan Limited |
|
| Askari Commercial Bank
Limited |
|
| First
Women Bank Limited |
|
| Gulf
Commercial Bank Limited |
|
| Habib
Bank Limited |
|
| National
Bank of Pakistan |
|
| National
Development Finance Corporation |
|
| Pakistan
Industrial Credit & Investment Corporation |
|
| Soneri
Bank Limited |
|
|
| LEGAL
ADVISORS |
|
| Sharif
& Company, Advocates |
|
|
|
| OFFICES |
|
|
|
| REGISTERED
OFFICE & SHARES DEPARTMENT |
|
| 104-106,
Kassam Court, |
|
| BC-9,
Block 5, Clifton, |
|
| Karachi-75600 |
|
| Tel
: 5876651,5876652,571725 |
|
| 587
3373, 586 7102, 574474 |
|
| Fax
: 587 0408 |
|
| E-mail:
alzamin @cyber.net. pk |
|
|
| ISLAMABAD
OFFICE |
|
| 10,
59th Street, F-7/4, Islamabad |
|
| Tel
: 2270588,9203703 |
|
| Fax : 823729 |
|
|
| LAHORE
OFFICE |
|
| Suite
No. F-05, 1st Floor, Rehman Business Centre, |
|
| 32
B-lit, Gulberg III, Lahore |
|
| Tel
: 571 5583,571 5584 |
|
| Fax
: 571 5585 |
|
|
|
| CONTENTS |
|
|
| Directors'
Report |
|
| Summary
of Performance |
|
| Asset
and Sector-wise Analysis of Leases |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes to the Accounts |
|
| Pattern
of Certificate Holding |
|
|
|
| DIRECTORS'
REPORT |
|
| FOR
THE YEAR 1999-2000 |
|
|
| The
Board of Directors of AI-Zamin Modaraba Management (Private) Limited takes
pleasure in |
|
| presenting
the Eighth Annual Report of AI-Zamin Leasing Modaraba together with audited |
|
| accounts
for the year ended 30th June 2000. |
|
|
| Operating
Results |
|
| The
business environment during the year was marked with multifarious
difficulties. Lack of |
|
| demand
by good quality clients, intense competition in the market place and
fluctuating |
|
| markup
rates made it difficult for the financial sector to maintain the previous
rate of growth. |
|
| The
current Government has inherited an economy riddled with diverse problems and
is |
|
| struggling
to steer the country out of the mismanagement left by the previous
governments. |
|
| Various
steps taken by the Government have, at least, checked the continuing
deterioration in |
|
| the
fiscal and social factors of the country. Their efforts to build a
self-reliant nation will naturally |
|
| take
some time to produce any tangible results but a direction for the recovery of
the ailing |
|
| economy
has been clearly set. |
|
|
| In
this environment, your Modaraba successfully maintained the size of its
business and |
|
| balance
sheet inspite of all the difficulties faced by the financial sector. The
total assets |
|
| increased
to Rs. 411.127 million and net investment in leases to Rs. 307.657 million.
This was |
|
| made
possible due to further utilization of credit lines and financing facilities
from the banks |
|
| and
DFIs. Overall revenues of Modaraba also increased to Rs. 59.041 million,
indicating a |
|
| healthy
growth in the profit stream. The Modaraba successfully controlled its
operating |
|
| expenses
to the level of the previous year. Financial charges, however, increased due
to the |
|
| enhanced
utilization of the credit lines which, inter alia, generated increased
revenues. |
|
|
| Your
Modaraba provided an allowance of Rs. 10.125 million for the potential lease
losses in |
|
| line
with the general situation of the entire financial sector. The major portion
of this allocation |
|
| was
for Mohib Textile Mills Ltd. to whom most of the banks, leasing companies and
modarabas |
|
| are
exposed. Recently an offer made by a potential buyer for the group has been
accepted by |
|
| the
Hon'ble High Court which includes a payment of Rs. 130 million to the leasing
companies |
|
| and
modarabas over a period of four years. This would ensure that a major
set-back experienced |
|
| by
many members of the financial sector on account of Mohib group is
successfully resolved. |
|
| Your
management has provided for the potential loss, in accordance with the
prudential |
|
| guidelines,
to ensure that the results of the future years are not depleted due to the
colossal |
|
| loss
suffered by the banking and leasing sector on account of the group. |
|
|
| After
making requisite provisioning for the current and deferred taxation in line
with the regulatory |
|
| guidelines
and making necessary transfer to the special reserve, an un-appropriated
profit of |
|
| Rs.
3.007 million is left. Since making any disbursement to the certificate
holders out of the |
|
| aforesaid
amount would neither be material nor economical, it is being carried forward
to the |
|
| next year. |
|
|
| The
operating results for the year reflect, on the one hand, the diligent steps
taken by your |
|
| management
to maintain the business level and profitability of your Modaraba and, on the |
|
| other,
provide prudent level of provisions to protect the balance sheet from any
further |
|
| deterioration. |
|
|
| Acquisition
of Ghandhara Leasing Co. Ltd, |
|
| A
significant achievement of the year is that your Modaraba acquired, in
collaboration with its |
|
| associates
and M/s Zahidjee Brothers (Pvt) Limited, the majority shareholding and
management |
|
| control
of Ghandhara Leasing Co. Ltd. in May 2000. |
|
|
| Ghandhara
Leasing Company, established in 1992, was run by a competent professional |
|
| team,
and its assets reached a level of Rs. 63'1 million in dune 1997. Due to the
difficulties |
|
| experienced
in the other business concerns of their majority shareholders, Ghandhara
could |
|
| not
avail further resources and its business started to shrink. Your Modaraba
negotiated the |
|
| acquisition
In line with its policy to expand its operations In the leasing sector.
Ghandhara has |
|
| a
shareholder's equity of over Rs. 94. million with balance sheet footings of
Rs. 242 million at |
|
| the
moment. Five nominees of your Modaraba have replaced the directors of the
outgoing |
|
| group
on the Board of Ghandhara and their operations have been shifted to the
offices of the |
|
| Modaraba
In order to achieve integration of operations and economy of expenses.
Ghandhara |
|
| has
the strength of a committed team and loyalty of their good clientele which,
with the |
|
| professional
support and motivation of AI-Zamin, shall ensure that their business Js put
back: |
|
| on
the path of growth and profitability. |
|
|
| With
the addition of Ghandhara Leasing Company, the capability of handling leasing
business |
|
| of
AI-Zamin group .has been substantially enhanced. While participating actively
In the |
|
| management
and the business operations of Ghandhara, it is intended to maintain separate |
|
| entities
of both the organisations for some time while the modalities of a possible
merger in |
|
| the
future are being examined. The regulators are demanding increase of minimum
capital of |
|
| leasing
companies to Rs. 2OO million and a merger of both the companies In due course
will |
|
| provide
the requisite capital adequacy for the group. |
|
|
| Future
Prospects |
|
| As
explained in our last half-yearly report, the future prospects of the
business depend on the |
|
| overall
economic turn around for which the current government is striving hard. The
general |
|
| climate
at the moment is of uncertainties and expectations. Instances of delays and
defaults |
|
| in
recovery of lease rentals still persist due to the overall depression but
have certainly been |
|
| reduced
due to effective handling by the current regime of the major defaulters. Your
Modaraba |
|
| shall
continue striving to enhance its business on the principle of prudence,
diversity and |
|
| profitability.
It is undoubtedly a hard task and your management team is well equipped and |
|
| motivated
to maintain the expected momentum of growth and success. |
|
|
| Credit
Rating |
|
| The
Credit Rating awarded by the DCR-VIS Credit Rating Co. Ltd. during the
previous year |
|
| was
reaffirmed for the year under review as well. Your modaraba enjoys a
respectable medium |
|
| to
long term entity rating of B-3 which reflects "Good credit quality,
sound financial condition; |
|
| protection
factors are adequate". The rating qualifies the Modaraba for investment
grade. |
|
|
| Year
2000 Compliance |
|
| The
Board is happy to report that your Modaraba has successfully handled Y2K
problem and |
|
| is
now fully compliant having a properly tested software. |
|
|
| Pattern
of Certificate Holding |
|
| The
pattern of Certificate Holding is given at the end of the audited accounts. |
|
|
| Acknowledgments |
|
| The
Directors are pleased to put on record their appreciation of the devoted
efforts made by |
|
| the
staff for the successful operations of the Modaraba and valuable guidance
provided by the |
|
| Registrar
Modaraba and Securities & Exchange Commission of Pakistan. |
|
| For
and on behalf of the Board of Directors |
|
|
| Karachi: |
|
Basheer A. Chowdry |
|
| 14th
November, 2000 |
|
Chief Executive |
|
|
|
| FIVE
YEARS SUMMARY OF PERFORMANCE |
|
|
|
(Rupees in Million) |
|
|
| PARTICULARS |
|
JUNE 2000 |
JUNE 1999 |
JUNE 1998 |
JUNE 1997 |
JUNE 1996 |
|
| Capital
and Reserves |
|
| 1
Before Distribution |
|
155.475 |
168.903 |
158.052 |
164.553 |
147.854 |
|
| 2
Capital and Reserves |
|
155.475 |
153.090 |
158.052 |
143.048 |
147.854 |
|
| 3
Current Liabilities |
|
171.404 |
185.610 |
77.098 |
85.555 |
68.094 |
|
| 4
Long Term Liabilities |
|
84.248 |
69.791 |
54.028 |
42.380 |
27.688 |
|
| 5
Net Investment in Lease |
|
307.657 |
300.979 |
218.542 |
206.991 |
189.917 |
|
| 6
Current Assets |
|
212.919 |
219.465 |
156.384 |
125.346 |
113.558 |
|
| 7
Total Assets |
|
411.127 |
408.491 |
289.178 |
270.983 |
243.636 |
|
| 8
Total Earning |
|
59.041 |
55.500 |
50.826 |
46.402 |
39.006 |
|
| 9
Operating Expenses |
|
14.869 |
14.226 |
13.275 |
11.043 |
8.838 |
|
| 10
Financial Charges |
|
29.191 |
24.273 |
13.953 |
12.904 |
8.855 |
|
| 11
Profit before taxation |
|
4.335 |
11.092 |
17.776 |
18.199 |
17.743 |
|
| 12
Operating Profit |
|
2.385 |
10.851 |
15.004 |
16.699 |
17.176 |
|
|
|
|
|
| PROFITABILITY
RATIOS |
|
| i)
Percentage of total |
|
| earnings
to Capital |
|
46.67% |
43.87% |
40.18% |
36.68% |
30.83% |
|
| ii)
Operating profit |
|
| To
Equity (ROE) |
|
1.87% |
7.09% |
9.49% |
11.67% |
11.62% |
|
| iii)
Return on Operating |
|
0.60% |
2.74% |
5.54% |
7.68% |
7.65% |
|
| Assets
(ROA) |
|
| iv)
Distributions |
|
-- |
12.50% |
-- |
17.00% |
-- |
|
|
|
|
|
|
|
|
| CAPITAL
ADEQUACY |
|
| i)
Equity to total Assets |
|
37.82% |
37.48% |
54.66% |
52.79% |
60.69% |
|
| ii)
Total Debt to Equity |
|
154.88% |
150.16% |
80.02% |
71.20% |
62.37% |
|
| iii)
Long Term Debt to Equity |
52.90% |
44.94% |
33.55% |
22.65% |
18.73% |
|
| iv)
Current Ratio(prudential) |
0.58 |
0.73 |
1.26 |
0.86 |
2.74 |
|
| v)
Current Ratio |
|
1.24 |
1.18 |
1.96 |
1.46 |
1.67 |
|
| BREAK
UP VALUE OF SHARE |
12.29 |
12.10 |
12.49 |
11.31 |
11.69 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet as at June 30, 2000 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, 2000 of AI-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 account 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 are |
|
| further
in accordance with accounting policies consistently applied; |
|
|
| 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, 2000 and the profit and the changes in the |
|
| financial
position for the year ended on that date; |
|
|
| ii.
Zakat deductible at source under the zakat and 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 the expenditure incurred by the |
|
| Modaraba
are in accordance with objects, terms and conditions of the Modaraba. |
|
|
| Karachi: |
|
M. Yousuf Adil Saleem
& Co. |
|
| 14th
November, 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 2000 |
|
|
|
|
|
2000 |
1999 |
|
|
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 |
28,975,268 |
26,590,040 |
|
|
|
----------- |
----------- |
|
|
|
155,475,268 |
153,090,040 |
|
| LONG
TERM FINANCES |
|
5 |
36,155,359 |
25,615,367 |
|
| LONG
TERM SECURITY DEPOSITS |
|
|
|
|
| ON
LEASE CONTRACTS |
|
6 |
47,092,415 |
43,176,280 |
|
|
|
|
|
| DEFERRED
TAXATION |
|
|
1,000,000 |
1,000,000 |
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
portion of long term finances |
|
5 |
38,460,008 |
35,893,718 |
|
| Current
portion of long term security |
|
|
|
|
| deposits
on lease contracts |
|
6 |
9,440,931 |
10,811,099 |
|
|
|
|
|
| Short
term finances |
|
7 |
110,654,945 |
113,393,249 |
|
| Advance
lease rent/security deposits |
|
|
3,287,663 |
2,603,414 |
|
| Accrued
and other liabilities |
|
8 |
6,210,220 |
6,300,687 |
|
| Taxation |
|
|
1,950,000 |
-- |
|
| Dividend |
|
9 |
1,400,483 |
16,607,555 |
|
|
|
----------- |
----------- |
|
|
171,404,250 |
185,609,722 |
|
|
----------- |
----------- |
|
|
411,127,292 |
408,491,409 |
|
|
|
|
|
========== |
========== |
|
| FIXED
ASSETS - TANGIBLE |
|
10 |
4,518,489 |
5,671,574 |
|
|
|
|
| LONG
TERM INVESTMENTS |
|
11 |
19,914,242 |
851,032 |
|
|
| NET
INVESTMENT IN LEASE |
|
| FINANCE |
|
| Net
Investment |
|
12 |
307,656,596 |
300,979,162 |
|
| Current
portion |
|
(134,330,395) |
(118,475,648) |
|
|
------------ |
------------ |
|
|
173,326,201 |
182,503,514 |
|
| LONG
TERM DEPOSITS |
|
448,900 |
340,900 |
|
|
| CURRENT
ASSETS |
|
| Current
portion of net Investment |
|
| in
lease finance |
|
12 |
134,330,395 |
118,475,648 |
|
| Musharaka
finances |
|
13 |
52,326,275 |
61,261,944 |
|
| Short
term Investments |
|
14 |
611,158 |
483,717 |
|
| Advances,
deposits and |
|
|
|
| prepayments |
|
15 |
3,183,402 |
1,107,662 |
|
|
|
|
| Other
receivables |
|
16 |
5,410,830 |
4,875,359 |
|
| Cash
and bank balances |
|
17 |
17,057,400 |
32,920,059 |
|
|
|
------------ |
------------ |
|
|
212,919,460 |
219,124,389 |
|
|
|
|
|
|
------------ |
------------ |
|
|
411,127,292 |
408,491,409 |
|
|
========== |
========== |
|
| The
annexed notes from 1 to 29 form |
|
| an
integral part of these accounts. |
|
|
|
Basheer A. Chowdry |
|
C. Ahsanul Haq |
|
M.H.S Kazmi |
|
|
Chief Executive |
|
Chairman |
|
Director |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
|
Note |
Rupees |
Rupees |
|
| REVENUE |
|
| Income
from leasing operations |
|
47,958,259 |
44,832,817 |
|
| Profit
on Musharaka transactions |
|
8,393,948 |
9,705,744 |
|
| Profit
on sale of investment |
|
128,710 |
-- |
|
| Profit
on PLS deposit accounts |
|
2,157,885 |
726,345 |
|
| Other
income |
|
18 |
402,684 |
234,675 |
|
|
------------ |
------------ |
|
|
59,041,486 |
55,499,581 |
|
|
| OPERATING
AND FINANCIAL COSTS |
|
| Operating
expenses |
|
19 |
14,869,471 |
14,226,482 |
|
| Financial
charges |
|
20 |
29,191,191 |
24,273,066 |
|
|
------------ |
------------ |
|
|
(44,060,662) |
(38,499,548) |
|
|
------------ |
------------ |
|
|
14,980,824 |
17,000,033 |
|
| OTHER
(INCOME), CHARGES AND |
|
| PROVISIONS |
|
| Income
from associate |
|
21 |
(230,829) |
-- |
|
| Reversal
for diminution in value of investments |
|
(641,362) |
(182,952) |
|
| Allowance
for potential lease losses |
|
10,124,601 |
4,599,183 |
|
| Balances
written off |
|
-- |
382,496 |
|
| Other
Provision |
|
911,494 |
-- |
|
|
------------ |
------------ |
|
|
10,163,904 |
4,798,727 |
|
|
------------ |
------------ |
|
| Profit
before charging management fee |
|
4,816,920 |
12,201,306 |
|
| Modaraba
Company's management fee |
|
(481,692) |
(1,109,210) |
|
|
------------ |
------------ |
|
| Profit
before taxation |
|
4,335,228 |
11,092,096 |
|
| Taxation |
|
| Current |
|
1,950,000 |
-- |
|
| Prior year |
|
-- |
241,535 |
|
|
------------ |
------------ |
|
|
1,950,000 |
241,535 |
|
|
------------ |
------------ |
|
| Profit
after taxation |
|
2,385,228 |
10,850,561 |
|
| Unappropriated
profit brought forward |
|
2,360,479 |
11,892,530 |
|
|
------------ |
------------ |
