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INTERASIA LEASING COMPANY LIMITED
Annual Reports 2002
Contents
Company Information
Notice of Meeting
Directors' Report and Chairmar
Auditors' Report to the Memb(
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Statement of Changes in Equit
Notes to the Accounts
Pattern of Shareholding
Company Information
Board of Directors as on June 30, 2002
1. Muhammad Younas Khan		Chairman / Chief Executive
2. Majid Ahmed Jhumra		Director
3. Saiyed Hashim Ishaque		Director
4. Abdus Samad Khan		(Nominee of Saudi Pak Industrial & Agricultural
		Investment Co. (Pvt) Ltd.)
5. Muhammad Azam Khan		Director
6. Ahmed Mohiuddin Khan		Director
7. Jameel ur Rehman		Director
Company Secretary
Fazal Ahmad
Bankers
Gulf Commercial Bank Ltd.
The Bank of Khyber
Emirates Bank International
Legal Advisors
Ahmer Bilal Soofi, Advocates & Solicitors
Auditors
M/s Husain Rahman, Chartered Accountants
Registrar and Share Transfer Office
Universal Management Services (Pvt) Ltd.
Room No. 205, 2nd Floor, Central Hotel Building,
Civil Lines, Karachi.
Phone: 5654037
Registered Office
101, 82-East, Fazal ul Haq Road, Blue Area,
Islamabad-44000.
Phone: (92-51) 2206731-2206272
Fax: (92-51)2201380
Head Office
B-601-602, 6th Floor, Lakson Square Building # 03,
Sarwar Shaheed Road, Karachi.
Phone: (92-21)5654795-98
Fax: (92-21) 55688534
Notice of the Meeting
Notice is hereby given that 10th Annual General Meeting of INTERASIA LEASING COMPANY LIMITED will be held at Institu
of Chartered Accountants of Pakistan Clifton, Karachi at 11.00 am. on Tuesday the December 10,2002 to transact the followif
business.
ORDINARY BUSINESS
1.    To confirm the Minutes of 9th Annual General Meeting held on December 29, 2002.
2.    To receive, consider and adopt the audited Accounts of the Company for the year ended June 30, 2002 together wi
the Directors' and Auditor's report thereon.
3.    To appoint Auditors for the financial year 2002-2003 and fix their remuneration. The present auditors M/s. Husain Rahm;
Chartered Accountants reconstitute as Anjum Asim Shahid Rahman & Co. retire and being eligible offer themselves f
reappointment.
4.     To transact any other business with the permission of the Chair.
By order of the Board
Karachi:
September 28, 2002
Notes:
1.    The Register of Members of the Company will remain closed from December 03, 2002 to December 09, 2002
(both days inclusive).
2.    A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote for him/her. A proxy
need not be a member of the Company,
3.    An instrument of proxy and the power of Attorney or other authority (if any) under which it is signed, or a notarially
certified copy of such power of attorney in order to be valid must be deposited at the registered office at the Company
not less than 48 hours before the time of the meeting.
4.    Members are advised to lodge shares for transfer at the office of Company Registrar, Universal Management Services
(Pvt) Ltd., Room No. 205, 2nd Floor, Central Hotel Building, Civil Lines, Karachi. Phone No. 5654037.
5.     CDC shareholders desiring to attend the Meeting are requested to bring their original National Identity Cards, account
and participant's ID number, for identification purpose, and in case of proxy, to enclose an attested copy of his/her
National Identity Card.
6.    Members are requested to notify any change in their address immediately.
Directors' Report and Review by the Chairman
The Tenth Annual Report on audited Accounts of InterAsia Leasing Company Limited for the year ended June 30, 2002 is
presented hereunder.
The attached financial statements present a fair view of the affairs, cash flows and changes in equity of the Company as a
result of its operations. The books of accounts are properly maintained, and the financial statements are based on appropriate
accounting policies, which have been consistently followed. The accounting estimates are based on reasonable and prudent
judgment. Due care has been taken to ensure that the system of internal control is sound in design and is being effectively
implemented and monitored throughout the year. Current liquidity position of the Company is somewhat weak but there is no
doubt about the Company's ability to continue as a going concern. The Board is pleased to state that there has been no material
departure from the best practices of corporate governance, as detailed in the listing regulations.
General Review
Simmering tensions between India and Pakistan came to a boiling point with real threat of nuclear war during the recent months.
The danger of potential conflict with India, post September 11th scenario, unfortunate suicide attack on the French technicians
in Karachi have severely impacted the investment climate. The worsening law and order situation showed no sign of improvement,
casting its shadow over the country's business activity in general, and of Karachi in particular. The real estate sector has been
sluggish, low demand for credit has continued whilst large-scale output growth remained weak.
The stagnation of exports due to slowdown of international demand has not helped the matters either. The countrywide drop
in rainfall precipitated the water crises. Luckily it did not hamper the crops yield as was being apprehended.
Though Pakistan has gained tremendously on the external account due to increase in remittances, official transfers and SBP
buying US dollars to maintain the US dollar rupee parity. State Bank of Pakistan pursued a monetary policy to stimulate the
economic growth, however it failed to yield the desired results.
The onslaught of commercial banks on the leasing industry's turf, continues to make it more difficult for the survival of small
leasing companies. The answer lies in more consolidation. Therefore, there will be a shrinkage in the number of leasing companies,
in the coming years and industry will portray a consolidated position.
Operating Performance
Acute liquidity problem was faced by the Company throughout the year under review. The Company's current financial position,
its past association with BEL and its inability to attract fresh funds from financial institutions, contributed to the shortage of
working capital necessary to write fresh leases. As a result, the company was unable to transact new business, which adversely
affected its financial results. The annual income from lease financing declined by 45% from Rs. 28.4 million to Rs. 15.4 million.
Major factors attributable to the above decline were reduction of leases, suspension of income of non-performing leases to the
tune of Rs. 1.8 million, and a provision of Rs. 40.17 million made on the Receivables from lessees. During the year 51 leases
reached their maturity.
The above provision included a sum of Rs. 25.27 million provided against a single lessee NICL - Nimir Industrial Chemical
Limited - (formerly, Ravi Alkalis Limited). NICL was provided a syndicate lease financing during the year 1995. The Consortium
comprised of 10 leasing Companies, 2 Modarabas, and I Commercial Bank. InterAsia Leasing Company also joined the syndicate
by providing a lease finance of Rs. 23.68 million. However, the client could not perform, and the lease was restructured four
times between 1995 - 1999. This resulted in capitalization of accrued income to the principal amount. NIMIR was then taken
over by a new management in the year 2000. The Consortium of lenders entered into a Memorandum of Understanding with
NIMIR's new management whereby it was agreed to waive-off a substantial portion of the balance receivable. The share of
InterAsia in the total waiver came to Rs. 25.27 million.
The overall operating expenses were kept under control and were lower than last year by Rs. 9.1 million, due to the reduced
admin, financial and other costs. However, net loss for the year increased substantially due to large provisions made against
potential lease losses and doubtful receivables. The management is consistently pursuing the defaulters for recovery of the
long overdue balances.
Financial Results as on 30, June
		2002	2001	2000	1999	1998	1997	1996
		Rupees	Rupees	Rupees	Rupees	Rupees	Rupees	Rupees
Net Investment in Lease		46,124,018	79,905,658	165,561,002	291,858,700	333,989,222	313,765,045	231,360,004
Revenue		15,933,189	28,934,071	33,433,047	53,671,702	60,772,034	60,696,286	38,382,935
Expenditure		28,017,343	37,222,203	39,651,178	45,919,031	45,775,197	44,076,571	25,302,570
Provision for diminution in value
of investment		(1,919,053)	4,686,320	3,666,240	17,158,201	-	1,453,497	-
Provision for potential lease losses and
against doubtful lease losses		40,196,139	28,085,643	(17,580,903)	37,714,190	463,881	599,517	2,478,639
Provision for Taxation deferred
and current		3,624,320	4,678,560	7,788,240	9,378,582	313,448	277,202	177,295
Profit/(Loss) after Tax		(53,985,360)	(17,653,012)	(12,270,585)	(56,498,302)	14,219,508	14,289,499	10,206,722
Dividend
The Company's lack of profitability being in a loss situation and the Reserves in the negative, it is not possible to declare any
dividend or issue bonus shares to the shareholders.
Provident Fund, and Gratuity
The Company has a registered contributory provident fund for all its permanent employees, and has a non funded gratuity
scheme. The value of the investments as per un-audited account of Provident Fund as on June 30, 2002 was Rs. 1,156,307/=
Board Meetings
During the year the Board of Directors met four times. The following directors attended the meeting as indicated below:
1. Mr. M. Younas Khan (All Board meetings)
2. Mr. Majid A. Jhumra (All Board meetings)
3. Mr. Abdus Samad Khan (Last three meetings)
4. Mr. Azam Khan (Last two meetings)
5. Sayed Hashim Ishaque (First two meetings)
6. Mr. Ahmad Mohiuddin (First meeting only)
7. Mr. Jameel ur Rehman (No meeting atttended)
Statement of Compliance
The Board of Directors hereby certify that InterAsia Leasing Company Limited is compliant with the provisions of best practices
of corporate Governance as applicable on June 30, 2002. The Board will confirm to all other requirements of the code in the
current year.
There has been no material payment outstanding on account of taxes, duties, levies and charges.
Future Out Look
As mentioned earlier, the company's business could not pick-up due to lack of the necessary working capital. The only hope
for survival of the company and its future growth lies in its merger with some other financial institution. Our application for the
company's merger with First Interfund Modaraba is at an advanced stage, and negotiations for a merger with another leasing
company are in progress.
These mergers will have an effect of increasing the size of our Balance Sheet, reducing the expenditure and achieving some
synergies. The process is expected to be completed as soon as the necessary legal formalities are met.
A little more patience is therefore solicited from the shareholders.
Auditors
M/s. Husain Rahman & Co. Chartered Accountants reconstituted asAnjumAsim Shahid Rahman & Co. retire and being eligible
offer themselves for reappointment.
The Board appreciates the efforts of the management and staff for their continued dedication and hard work. We also thank
the Securities and Exchange Commission of Pakistan for their support and guidance.
Pattern of Shareholding
The pattern of shareholding as at June 30, 2002 is given on page 29.
On behalf of the Board
Karachi:
September 28, 2002
MUHAMMAD YOUNAS KHAN
Chairman
Auditors' Report to the Members
We have audited the annexed balance sheet of InterAsia Leasing Company Limited as at June 30, 2002 and the related
profit and loss account, cash flow statement and statement of changes in equity together with the notes forming part thereof,
for the year then ended and we state that we have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purposes of our audit.
It is the responsibility of the company's management to establish and maintain a system of internal control, and prepare and
present the above said statements in conformity with the approved accounting standards and the requirements of the Companies
Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we
plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above
said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as
well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis
for our opinion and, after due verification thereof, we report that:
a)    in our opinion, proper books of accounts have been kept by the Company as required by the Companies Ordinance,
1984;
b)     in our opinion:
(i)    the balance sheet and profit and loss account together with the notes thereon have been drawn up in
conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and
are further in accordance with accounting policies consistently applied;
(ii)    the expenditure incurred during the year was for the purpose of the Company's business; and
(iii)   the business conducted, investments made and the expenditure incurred during the year were in accordance
with the objects of the company;
c)    in our opinion and to the best of our information and according to the explanations given to us the balance sheet,
the profit and loss account, cash flow statement and statement of changes in equity together with the notes
forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information
required by the Companies Ordinance, 1984, in the manner so required and respectively give true and fair view
of the state of the Company's affairs as at June 30, 2002 and of the loss and cash flows and changes in equity
for the year then ended; and
d)    in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
e)    Without qualifying our opinion, we draw attention to note 1.2 to the financial statement which indicates that
minimum paid up share capital of the company is less than rupees two hundred million as required by the Leasing
Companies (Establishment and Regulation) Rules, 2000.
Karachi: September 28, 2002
HUSAIN RAHMAN
Chartered Accountants
Balance Sheet As at June 30,2002
				2002	2001
			NOTE	RUPEES	RUPEES
SHARE CAPITAL AND RESERVES
Authorised Capital
20,000,000 ordinary shares of
Rs. 10 each				200,000,000	200,000,000
Issued, subscribed and paid up capital
10,000,000 ordinary shares of
Rs. 10 each fully paid up in cash				100,000,000	100,000,000
Reserves
Capital				39,779,385	38,342,065
Revenue				(123,709,179)	(69,723,819)
				(83,929,794)	(31,381,754)
				16,070,206	68,618,246
Certificates of investment			4	2,950,000	6,275,000
Liability against asset subject to finance lease			5	280,850	1,664,405
Deferred liability gratuity				1,388,963	529,091
Long term deposits			6	3,968,913	8,379,544
				8,588,726	16,848,040
CURRENT LIABILITIES
Redeemable capital - Musharika arrangement			7	27,360,293	27,536,211
Current portion of long term liabilities			8	63,575,828	81,770,666
Finance under mark-up arrangements			9	5,000,000	17,400,000
Current portion of liabilities against
assets subject to finance lease			5	525,806	785,143
Accrued and other liabilities			10	35,161,875	28,831,669
Taxation				253,531	-
				131,877,333	156,323,689
CONTINGENCIES			11
				156,536,265	241,789,975
The annexed Notes form an integral part of these Financial Statements
CHIEF EXECUTIVE
				2002	2001
			NOTE	RUPEES	RUPEES
ASSETS
Fixed assets			12	5,040,824	7,333,582
Net investment in leases			13	38,306,043	42,857,102
Long term investments			14	3,341,905	16,032,100
Long term deposits				703,570	1,079,670
				47,392,342	67,302,454
CURRENT ASSETS
Current portion of net investment in leases			15	48,436,914	94,148,892
Current portion of long term deposits				209,800	-
Advances to employees - Considered good				1,096,639	892,025
Prepayments				248,547	1,212,529
Short term investments			16	-	1,607,250
Other receivables			17	56,162,906	72,586,250
Taxation				-	1,845,760
Cash and bank balances			18	2,989,117	2,194,815
				109,143,923	174,487,521
				156,536,265	241,789,975
Prof it and LOSS ACCOUnt For the year ended June 30, 2002
				2002	2001
			NOTE	RUPEES	RUPEES
Income from lease operation			19	15,470,046	28,465,617
Other income			20	463,143	468,454
				15,933,189	28,934,071
Administrative and operating expenses			21	17,262,963	19,137,198
Financial and other charges			22	10,754,180	17,848,222
Amortization of deferred cost				-	236,783
				28,017,143	37,222,203
Loss before provisions				(12,083,954)	(8,288,132)
(Provision for)/Reversal of
potential lease losses				(14,921,222)	-
diminution in value of investments				1,919,053	(4,686,320)
other receivables				(25,274,917)	-
				(38,277,086)	(4,686,320)
Loss before taxation				(50,361,040)	(12,974,452)
Taxation			23	(3,624,320)	(4,678,560)
Loss after taxation				(53,985,360)	(17,653,012)
Earnings per share - basic and diluted			24	(5)	(2)
The annexed notes form an integral part of these financial statements.
CHIEF EXECUTIVE                                                DIRECTOR
Cash FlOW Statement For the year ended June 30,2002
				2002	2001
				RUPEES	RUPEES
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before taxation and extraordinary item				(50,361,040)	(12,974,452)
Adjustments for:
Depreciation				1,202,208	1,396,205
Deferred cost				—	236,783
Financial charges				9,977,198	14,681,973
(Reversal of/provision for
Diminution in the value of investment				(1,919,053)	4,686,320
Potential lease losses				14,921,222	-
other receivable				25,274,917	—
(Gain)/loss on sale of fixed assets				(151,256)	55,992
Loss/(gain) on share transactions				776,982	(25,014)
Provision for gratuity				358,127	303,228
				50,440,345	21,335,487
Operating loss before working capital changes				79,305	8,361,035
Increase in advances, prepayments and
other receivable				(6,817,205)	(49,544,253)
Increase in accrued and other liabilities				1,391,842	4,754,015
				(5,425,363)	(44,790,238)
Cash used in operations				(5,346,058)	(36,429,203)
Income tax				(87,709)	(188,276)
Dividends					(96,336)
Financial charges				(5,038,834)	(14,681,973)
Gratuity				501,745	(213,758)
Net cash used in operating activities				(9,970,856)	(51,609,546)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets				(95,016)	(5,121,843)
Proceeds from sale of fixed assets				1,336,822	1,404,900
Long term security deposits				166,300	(193,000)
Investment in lease finance				(2,387,500)	(10,112,400)
Lease finances settled / terminated				36,454,316	95,767,744
Investments				15,439,516	(5,901,966)
Net cash generated from in investing activities				50,914,438	75,843,435
CASH FLOW FROM FINANCING ACTIVITIES
Long term loans				(1,906,401)	(3,746,000)
Musharika/running finances				(175,918)	—
Musharika/running finance				(12,400,000)	(13,400,000)
Certificate of investments				(12,472,358)	1,652,215
Security deposit on lease				827,850	2,447,170
Security deposit on lease settled/terminated				(12,379,561)	(15,150,251)
Payments for lease obligations				(1,642,892)	(344,724)
Net cash used in financing activities				(40,149,280)	(28,541,490)
Net increase/(decrease) in cash and cash equivalents				794,302	(4,307,601)
Cash and cash equivalents at the beginning of the year				2,194,815	6,502,416
Cash and cash equivalents at the end of the year				2,989,117	2,194,815
Statement of Changes in Equity
For the year ended June 30,2002
			CAPITAL RESERVES				REVENUE RESERVES
		Share	Reserve for	Reserve for	Statutory	Sub	General	Accumula	Sub-	Total
		Capital	Cotingencies	Deferred Tax	Reserve	Total	Reserve	ted	Total
				Liability				Loss
		Rupees	Rupees	Rupees	Rupees	Rupees	Rupees	Rupees	Rupees	Rupees
Balance as on July 01, 2000		100,000,000	3,339,892	16,706,481	13,759,493	33,805,866	10,000,000	(62,070,807)	(52,070,807)	81,735,059
Net profit/(loss) for the year		-	-	-	-	-	-	(13,116,813)	(13,116,813)	(13,116,813)
Transfer to reserve for
deferred tax		-	-	4,536,199	-	4,536,199	-	(4,536,199)	(4,536,199)	-
As at June 30, 2001		100,000,000	3,339,892	21,242,680	13,759,493	38,342,065	10,000,000	(79,723,819)	(69,723,819)	68,618,246
Loss for the year		-	-	-	-	-	-	(52,548,040)	(52,548,040)	(52,548,040)
Transfer to reserve for deferred tax		-	-	1,437,320	-	1,437,320	-	(1,437,320)	(1,437,320)	-
Tax liability		-	-	4,536,199	-	4,536,199	-	(4,536,199)	(4,536,199)	-
As at June 30, 2002		100,000,000	3,339,892	22,680,000	13,759,493	39,779,385	10,000,000	(13,709,179)	(123,709,179)	16,070,206
Reserve for contingencies represents a reserve created to meet any contingencies that may arise on the lease rental receivable.
Reserve for deferred tax liability represents the liability as at June 30,1998 that has been transferred to capital reserve as per Securities and Exchange Commission of Pakistan
Circular No. 16 of 1999 dated September 09, 1999.
The annexed notes from an integral part of financial statements.
Notes to the Financial Statements For the year ended June 30,2002
1.   LEGAL STATUS AND NATURE OF THE BUSINESS
1.1   The Company was incorporated in Pakistan November 30, 1992, as a public limited company and is listed on
the Karachi and Islamabad Stock Exchanges. The license to carry on leasing business was granted on April 26,
1993 and the certificate of commencement of business was obtained on May 02, 1993. The main business
activity of the company is leasing. It is classified as Non-Banking Financial Institution (NBFI) under the provisions
of Leasing Companies (Establishment and Regulation) Rules, 2000.
1.2   Rule 5 of the Leasing Companies (Establishment and regulation) Rules 2000 requires that leasing companies
granted license before the commencement of the Rules, need to raise the paid up capital to Rs. two hundred
million by June 30, 2001. In order to comply with the requirement, the company is in the process of negotiating
merger/acquisition plans with other leasing companies/undertakings.
2.   SIGNIFICANT ACCOUNTING POLICIES
2.1   Accounting convention
These financial statements have been prepared under the historical cost convention except for the revaluation
of investments available for sale that are carried at fair value.
2.2   Basis of preparation
These financial statements have been prepared in accordance with the requirements of Companies Ordinance,
1984. International Accounting Standards and interpretations issued by Standing Interpretation Committee of
IASC as applicable in Pakistan.
2.3   Adoption of "International Accounting Standards"
In the current year, the company has adopted IAS 39 (r2000) "Financial Instrument: Recognition and Measurement".
IAs 39 (r2000) has introduced a comprehensive frame work for accounting for all financial instruments. The
principal effect of the adoption of IAS 39 (r2000) have been that all investments held by the company are now
carried at fair value. Since carrying amount of the investment on adoption of IAS 39 (r2000) equals to its fair
value, therefore, no gain/loss have resulted due to the change in policy.
2.4   Financial Instruments
2.4.1 Recognition
Financial instruments are recognised when the company becomes a party to the contractual provisions
of the instrument.
2.4.2 Off-setting
A financial asset and a financial liability is set-off and the net amount is reported in the balance sheet if
the company has a legal right to set-off the transactions and also intends either to settle on a net basis
or to realize the asset and settle the liability simultaneously.
2.5   Fixed assets and depreciation
2.5.1 Owned Assets
Operating assets are stated at cost less accumulated depreciation. Depreciation is charges to income
applying the straight line method. In respect of additions and deletions of assets during the year, depreciation
is charged proportionately from/to the month of acquisition and deletion respectively.
Maintenance and normal repairs are charged to income as and when incurred. Major renewals and
improvements are capitalized and the assets so replaced, if any, are retired.
Gains and losses on disposal of fixed assets are included in income currently.
2.5.2 Assets subject to finance lease
The company accounts for fixed assets acquired under finance leases by recording the assets and the
related liability. These amounts are determined at the inception of lease, on the basis of the lower of the
fair value and the present value of minimum lease payments. Financial charges are allocated to the
accounting period in a manner so as to provide a constant rate of charge on the outstanding liability.
Depreciation is charged to income applying the same basis as for owned assets.
2.6   Investments
Investments in securities are recognised on a trade date basis and are initially measured at cost.
At subsequent reporting dates, debt securities investments that the company has intention and ability to hold
(held to maturity) are measured at amortized cost less any impairment loss recognized to reflect irrecoverable
amounts.
Investments are classified as either held for trading or available-for-sale and are measured at subsequent reporting
dates at fair value, based on quoted market prices at the balance sheet date. The difference between carrying
value and fair value of balance sheet date is taken to profit and loss account.
Gain and losses on disposal of investments are recognized in income currently.
2.7   Taxation
2.7.1 Current
Provision is made on taxable income at the prevailing rates of taxation after taking into account tax
credits and rebates available, if any, or the provision of section SOD of Income Tax Ordinance, 1979
whichever is higher.
2.7.2 Deferred
The company accounts for deferred taxation using the liability method on timing differences likely to
reverse in the foreseeable future.
2.8   Revenue Recognition
2.8.1 Lease
The company follows the "financing method" for recognition of lease income. Accordingly, at the commencement
of lease, the total unearned lease finance income consists of the excess of aggregate lease rental receivables
plus any residual value over the cost of the leased assets. This finance income is allocated over the lease
term on a pattern reflecting a constant periodic return on the company's net investment outstanding in
respect of the lease.
Front end fee, commitment fee and other commissions are taken to income when realized.
2.8.2 Dividend
Dividend income is recognized when the right to receive payment is established.
2.8.3 Other
Other income is recognized when earned.
2.9   Staff retirement benefits
Provident fund
The company operates a contributory provident fund under a separate trust for all its permanent employees and
contributions are recorded monthly in accordance with fund rules.
Gratuity fund
The company also operates unfunded gratuity scheme for its permanent employees under the terms of their
appointments. Provision to cover this obligation is made annually and is calculated on the basis of last drawn
gross salary and length of service of the employee.
2.10 Allowance for potential lease losses
The allowance for potential lease losses is made in accordance with prudential guidelines for provisioning for
non-performing assets given in the Leasing Rules, 2000.
3. LONG TERM LOANS
				2002	2001
			NOTE	RUPEES	RUPEES
Bankers Equity Ltd.					1,906,400
Less: Current portion				-	1,906,400
				-	-
				2002	2001
			NOTE	RUPEES	RUPEES
4. CERTIFICATES OF INVESTMENT
Certificates of investment				65,065,000	77,537,358
Less: Current portions shown under current liabilities			8	62,115,000	71,262,358
				2,950,000	6,275,000
4.1   The Company has a scheme of Registered PLS Certificates of Investment (COI) for raising funds directly from
local resources. These certificates have been issued for maturity periods of three months to five years with the
facility of pre-mature encashment after minimum three months. The return on these certificates is ranging from
12 percent to 26 percent per annum depending upon the period of maturity.
4.2   Securities and Exchange Commission of Pakistan (SECP) has vide its letter No. SC/LES-ED(SC)/296/2001 dated
May 18, 2001 suspended the license of the company to issue COI with immediate effect. It further states that
unless the company obtains an investment grade credit rating the company is advised neither to issue any new
COI's nor roll over the existing COI's deposits upon maturity.
4.3   Subsequent to the suspension of license for issue of COI, the company has issued a COI to an individual.
However, the COI is interest free and issued as collateral against lease facility disbursed to the individual.
5.   LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASES
The aggregate future minimum lease payments to which the company is committed under the various lease agreements
and the periods, in which they will become due, are as follow;
		2002			2001
		Minimum			Minimum
		lease	Financial		lease	Financial
		payment	charges	Principal	payment	charges	Principal
Due not later than one year		592,928	67,122	525,806	1,119,660	334,517	785,143
Due later than one year but
not later than five years		301,798	20,948	280,850	1,893,355	228,950	664,405
		894,726	88,070	806,656	3,013,015	563,467	' 2,449,548
5.1   The company has acquired vehicles under lease agreements from Orix Leasing. The installments are payable
monthly commenced on various dates. Financing rates ranging from 19 to 22 percent per annum have been used
to arrive at constant periodic financial charge over the term of leases.
				2002	2001
			Notes	Rupees	Rupees
6. LONG TERM DEPOSITS
Security deposits				5,429,741	16,981,452
Less: Current portion shown under
current liabilities			8	1,460,828	8,601,908
				3,968,913	8,379,544
6.1    This represent the interest free security deposits received against lease contracts and are adjustable at the
expiry/termination of the respective leases.
7.    REDEEMABLE CAPITAL - Musharika arrangement
(Non participatory - Unsecured)
This represents following overdue musharika investments:
		2002	2001	Rate of	Mode of
		Rupees	Rupees	markup	payment
				%
Financial Institutions		22,336,211	22,336,211	21	Half yearly
Others		5,024,082	5,200,000	14	Maturity
		27,360,293	27,536,211
				2002	2001
			NOTE	RUPEES	RUPEES
8. CURRENT PORTION OF LONG TERM LIABILITIES
Long term loans			3	-	1,906,400
Certificates of investment			4	62,115,000	71,262,358
Long term deposits			6	1,460,828	8,601,908
				63,575,828	81,770,666
				2002	2001
			NOTE	RUPEES	RUPEES
9. FINANCE UNDER MARK-UP ARRANGEMENTS
Running finance
Bank of Khyber				2,500,000	5,000,000
English Leasing Limited				2,500,000	2,500,000
Trust Investment Bank Limited				-	9,900,000
				5,000,000	17,400,000
9.1    These represent various fully utilized finance facilities from financial institutions under mark-up arrangements.
These facilities carry markup ranging from 16% to 21% and are secured by way of hypothecation of leased
assets valuing Rupees 6.3 million. The finance from Bank of Khyber is payable in equal quarterly installment upto
October 31, 2002. However, the facility from English Leasing Limited matured on April 2000.
10. ACCRUED AND OTHER LIABILITIES
Accrued expenses				1,379,408	521,606
Due to LTV Capital Modaraba				117,625	-
Accrued financial charges
- Secured				11,468,696	11,693,946
- Unsecured				17,426,633	12,263,019
Tax deducted at source				773,199	795,217
Payable to provident fund				1,037,538	225,174
Payable to lessees				312,194	681,206
Unclaimed dividend				400,946	400,946
Others				2,245,636	2,250,555
				35,161,875	28,831,669
11.   CONTINGENCIES
The Deputy Commission of Income Tax has levied tax on account of non deduction of withholding tax amounting to
Rs, 586,114, Rs. 2,954,938 and Rs. 1,517,136 for the assessments years 1994-96 and 1996-97 respectively and imposed
additional tax of Rs. 407,501, Rs. 1,391,411 and Rs. 486,814 for non deductions for the said years respectively. The
management has filed appeals with Appellate Authority who, on production of evidence of deduction of withholding tax,
has set aside the appeal, pending outcome of the matters, no provision has been made in these financial statement
for the demand raised as the management is confident that the outcome of the case will be in favour of the company.
12.  TANGIBLE FIXED ASSETS
		COST			DEPRECIATION
		As at	Additions/	As at	As at	on	For the	As at	Written down	Depreciation
		July 01,	(deletions)	June 30,	July 01,	disposals	year	June 30,	value as at	rate per
		2001	during	2002	2001			2002	June 30,	annum
			the year						2002	%
OWNED
Leashold improvements		2,654,425	52,606	2,707,031	498,432		266,758	765,190	1,941,841	10
Electric and gas fittings		122,286		122,286	62,714		12,228	74,942	47,344	10
Equipment		3,117,536	26,010	3,135,046	2,318,689	(1,700)	340,968	2,657,957	477,089	20
			(8,500)
Furniture and fixtures		773,067	16,400	789,467	442,474	-	78,537	521,011	268,456	10
Vehicles		3,380,867	(578,000)	2,802,867	1,962,306	(496,100)	46,550	1,512,756	1,290,111	20
		10,048,181	95,016	9,556,697	5,284,615	(497,800)	745,041	5,531,856	4,024,841
			(586,500)
LEASED
Vehicles		2,961,000	(1,252,000)	1,709,000	390,984	(155,134)	457,167	693,017	1,015,983	20
		2,961,000	(1,252,000)	1,709,000	390,984	(155,134)	457,167	693,017	1,015,583
2002		13,009,181	95,016	11,265,697	5,675,599	(652,934)	1,202,208	6,224,873	5,040,824
			(1,838,500)
2001		7,523,838	7,021,843	13,009,181	4,355,002	(75,608)	1,396,205	5,675,599	7,333,582
			(1,536,500)
12.   DISPOSAL OF FIXED ASSETS
			Accumulated	Book	Sale
Particulars		Cost	depreciation	value	proceeds	Proflt(loss)	Mode	Particulars of buyer
Suzuki Mehran		273,000	191,100	81,900	230,000	148,100	Auction	Mr. Akhtar Saleem
Toyota Corolla		685,000	22,834	662,166	623,122	(39,044)	Auction	Mr. Altaf Malik
Toyota Coure		305,000	305,000	-	30,500	30,500	Negotiation	Mr. Dabeer Ahmad (Employee)
Mobile Phone		8,500	1,700	6,800	3,200	(3,600)	Negotiation	Mr. Kashif Ali
Suzuki Cultus		567,000	132,300	434,700	450,000	15,300	Auction	Mumtaz Enterprises (Pvt) Ltd.
		1,838,500	652,934	1,185,566	1,336,822	151,256
				2002	2001
			NOTE	RUPEES	RUPEES
13. NET INVESTMENT IN LEASES
Minimum lease rentals receivable				62,759,562	81,440,364
Add: Residual value of leased assets				5,259,245	16,526,171
Gross investment in lease				68,018,807	97,966,535
Less: Unearned finance income				21,894,789	18,060,877
Net investment in leases (note 13.1)				46,124,018	79,805,658
Less: Current portion of net investment in leases				7,817,975	37,048,556
				38,306,043	42,857,102
13.1  Net Investment in leases
		2002				2001
		Not later	Later than	Later	Total	Not later	Later than	Later	Total
		than one	one year	than five		than one	one year	than five
		year	and less	years		year	and less	years
			than five				than five
			year				year
Leases rentals receivable		13,401,200	44,327,672	5,030,690	62,759,562	40,055,104	41,385,260	-	81,440,364
Add: Residual value of leased
assets		1,460,828	2,517,439	1,280,978	5,259,245	8,673,508	7,852,663	-	16,526,171
Gross Investment in lease		14,862,028	46,845,111	6,311,668	68,018,807	48,728,612	49,237,923	-	97,966,535
Less: Unearned lease income		7,044,053	14,547,285	303,451	21,894,789	11,680,056	6,380,821	-	18,060,877
Net investment in lease		7,817,975	32,297,826	6,008,217	46,124,018	37,048,556	42,857,102	-	79,905,658
13.2 The Company's exposure to Syed Bhais Lighting Limited exceeds 20% of its net investment in leases which is
in contradicition to the requirement of the Leasing Companies (Establishment & Regulation) Rules, 2000. However
over-run in exposure was due to subsequent re-seheduling including overdue interest of lease facility.
				2002	2001
			NOTE	RUPEES	RUPEES
14. LONG TERM INVESTMENTS
- Available for Sale
Government securities				-	2,000,000
Investment in shares				3,341,905	14,032,100
				3,341,905	16,032,100
				2002	2001
14.1 Shares of listed companies			NOTE	RUPEES	RUPEES
Bankers Equity Limited
810,810 ordinary shares of Rupees 10 each				15,152,602	15,152,602
Nimir Industrial Chemicals Limited
1,578,520 ordinary shares of Rs. 10 each
Issued at a discount of 60%				6,314,080	6,314,080
Medi Glass Company Limited
115,612 (2001:117,562) ordinary shares
of Rupees 10 each				739,917	752,397
				22,206,599	22,219,079
Associated undertakings
Modaraba certificates - listed
Long Term Venture Capital Modaraba
(Managed by National Technology
Development Corporation Limited)
444,451 (2001:445,237) certificates of Rupees 5 each				5,059,447	5,068,395
Shares unlisted companies
Asian Housing Finance Limited
(Formerly LTV Housing Finance Limited)
2002: Nil (2001 : 1,250,000 ordinary shares of Rupees
10 each) (Chief Executive: Mr. Junaid Khan Khakwani)				-	12,500,000
[Shares in equity of the investee company is 2002 : Nil
(2001 : 27%)]
Cost				27,266,046	39,787,474
Less:
- Net adjustment to reflect adoption of IAS 39				23,924,141	-
(r2000)
- Provision for diminution in value of investments				-	25,755,347
Fair value				3,341,905	14,032,100
14.2.1  The aggregate market value of listed companies at the end of financial year amounted to Rs. 3,097,457
(2001:Rs307,902).
14.2.2 The aggregate market value of listed modaraba certificates at the end of financial year is Rs. 244,448
(2001 : Rs 222,619).
14.2.3 The aggregate break-up value of unlisted investment at the end of financial year is Rs. Nil (2001 :
Rs 7,187,500).
				2002	2001
			NOTE	RUPEES	RUPEES
14.3 Fair value computation
On July 01, 2001
- As originally stated at cost				39,787,474
- Adjustment to reflect adoption of IAS 39 (r2000)				(25,755,374)
As restated to reflect fair value as at July 01, 2001				14,032,100
Disposed off during the period				(7,187,500)
Decrease in fair value				(3,502,695)
				3,341,905
15. CURRENT PORTION OF NET INVESTMENT IN LEASES
				2002	2001
			NOTE	RUPEES	RUPEES
Current portion of net investment in leases				7,817,975	37,048,556
Overdue portion of net investment in leases				83,985,974	85,185,979
Less : Allowance for potential lease losses				(43,367,035)	(28,085,643)
				40,618,939	57,100,336
				48,436,914	94,148,892
16. SHORT TERM INVESTMENTS
- Held for trading
Shares in quoted companies
ICI Limited
50,000 ordinary shares of Rs. 10 each				-	508,750
Japan Power Limited
80,000 ordinary shares of Rs. 10 each				-	352,000
Muslim Commercial Bank Limited
35,000 ordinary shares of Rs. 10 each				-	855,750
				-	1,716,500
Less : Provision for diminution in value of investments				-	109,250
				-	1,607,250
The aggregate market value of listed companies at the end of financial year amounted to Rs Nil (2001 : Rs 1,607,250)
				2002	2001
			NOTE	RUPEES	RUPEES
17. OTHER RECEIVABLES
Due from associated undertakings			17.1	1,811,593	822,752
Profit accrued on leases				1,527,335	2,234,481
Receivable from Bankers Equity Limited			17.2	24,097,470	23,862,562
Receivable from Nimir Industries Chemicals Limited			17.3	49,899,829	42,556,855
Excise duty receivable				2,469,961	2,480,293
Other				1,631,635	629,307
				81,437,823	72,586,250
Less : Provision for doubtful debts				25,274,917
				56,162,906	72,586,250
17.1  This represents receivable from the following associated undertakings.
Receivable from Asian Housing Finance Limited
(formerly - LTV Housing Finance Limited )				1,515,499	-
LTV Capital Modaraba			17.1.1	-	722,752
First Interfund Modaraba			17.1.1	269,094	100,000
				1,811,593	822,752
The aggregate maximum balance due from associated undertakings at the end of any month during the year
ended June 30, 2002 was Rs 2.813 million ( 2001 : Rs 0.8 million).
17.1.1 This represents receivables on account of share of common expenses.
17.2 The balance is net of certain inter company transactions and adjustments as agreed in principle in a
meeting of the company's management with BEL's Executives on May 20, 2000.
17.3 This represents amount receivable from Nimir Industries Chemicals Limited against lease finance as per
MOD between Nimir and syndicate members.
18. CASH AND BANK BALANCE
Cash in hand				10,000	5,342
Cash with banks
on current accounts with :
• State Bank of Pakistan			18.1	-	494,000
- commercial banks				2,368,314	185,563
on deposit accounts				610,803	1,509,910
				2,989,117	2,194,815
18.1  This includes two accounts freezed by tax authorities aggregating to Rs. 67,963.
				2002	2001
			NOTE	RUPEES	RUPEES
19. INCOME FROM LEASE OPERATION
Lease income				13,957,617	26,107,336
Front end and documentation fee				1,512,429	2,358,281
				15,470,046	28,465,617
20. OTHER INCOME
Income from government securities				158,329	102,776
Income from investments in shares / certificates				52,781	25,014
Return on bank deposits				42,451	316,472
Gain on disposal of fixed assets				151,256	-
Other income				58,326	24,192
				463,143	468,454
21. ADMINISTRATIVE AND OPERATING EXPENSES
Salaries, allowance and other benefits				7,410,883	8,720,589
Rent, rates and taxes				2,569,820	2,652,011
Travelling and conveyance				1,246,358	1,553,068
Electricity, gas and water				552,018	351,547
Advertisement				167,794	67,654
Printing, stationery and supplies				343,787	602,191
Postage and courier				78,325	62,731
Telephone and fax				906,926	420,680
Newspapers, books and magazines				18,345	17,565
Fees and subscriptions				637,928	1,009,305
Entertainment				71,587	203,481
Depreciation				1,202,208	1,396,205
Insurance				744,870	872,525
Repair and maintenance				444,533	248,730
Legal and professional				626,584	725,113
Auditor's remuneration			21.1	143,950	157,600
Miscellaneous				97,047	76,203
				17,262,963	19,137,198
				2002	2001
			NOTE	RUPEES	RUPEES
21.1 Auditors'remuneration
Statutory Audit fee				60,000	50,000
Special Audit fee				50,000	-
Other services				-	75,000
Out of pocket				33,950	32,600
				143,950	157,600
22. FINANCIAL AND OTHER CHARGES
Financial charges
Mark-up on long term loans				2,132,968	3,084,003
Return on certificates of investment				1,471,511	2,720,883
Lease financial charges				274,554	161,873
Mark-up on short term finances				6,023,491	8,651,954
Bank charges				74,674	63,260
				9,977,198	14,681,973
Other charges
Receivables written off					3,110,257
Loss on disposal of investments				776,982	-
Loss on disposal of fixed assets				-	55,992
				10,754,180	17,848,222
23. PROVISION FOR TAXATION
Current
- for the year				112,000	142,361
- for prior years				2,075,000	-
Deferred				1,437,320	4,678,560
				3,624,320	4,678,560
23.1  Provision for current year taxation for the year represents minimum tax at half percent on turnover of the company.
23.2 The deferred debit balance of Rs 22,560,309 (2001 : Rs 2,647,860 credit balance) not accounted for as it is
unlikely to reversal in foreseeable future. However, in accordance with the Circular No. 16 issued by Securities
and Exchange Commission of Pakistan, an amount of Rs 1,437,320 being remaining balance (2001: Rs. 4,536,199)
has been transferred to capital reserve under "Reserve for deferred tax liability}.
				2002	2001
			NOTE	RUPEES	RUPEES
24. EARNING PER SHARE -Basic and diluted
Loss after taxation (Rupees)				(53,985,360)	(17,653,012)
Number of shares outstanding during the year				10,000,000	10,000,000
Earnings per share basic and diluted (Rupees)				(5)	(2)
25.  CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES REMUNERATION
The aggregate amount charged in the account for the year for remuneration, including all benefits to the chief executive,
director and executives of the company is as follows:
	CHIEF EXECUTIVE		DIRECTOR		EXECUTIVES
	2002	2001	2002	2001	2002	2001
Remuneration	1,299,359	1,145,306	640,416	693,954	1,936,530	1,254,585
Leave passage	85,620	359,435	55,968	42,120	99,828	78,895
Perquisites	418,692	343,696	204,792	236,094	298,600	385,909
Retirement
benefits fund	93,984	91,524	53,772	124,303	187,893	204,780
Rupees	1,897,655	1,939,961	954,948	1,096,471	2,522,851	1,924,169
Number	1	1	1	1	4	5
25.1   In addition, the chairman/chief executive, one director has also been provided free use of company's vehicles.
25.2  No amount is paid to director during the year for attending meetings of Board of Directors (2001 : Rs. 15,000
for 2 directors)
26.   CREDIT RISK AND CONCENTRATION OF CREDIT RISK
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party
to incur a financial loss. The company attempts to control credit risk by monitoring credit exposures, limiting transaction
with specific counter parties and continuously assessing the credit worthiness of counter parties.
The company follows two sets of guidelines, internally, it has its own operating policy duly approved by the Board of
Directors whereas externally it adheres to the rules and regulations issued by State Bank of Pakistan and Securities
and Exchange Commission of Pakistan.
Concentration of credit risk rises when number counterparties are engaged in similar business activities, or have similai
economic feature that would cause their ability to meet contractual obligation as a result of changes in economic con
ditions.
Detailed industrial sector wise analysis of lease portfolio is given below :
			EXPOSURE
			Amount in	Percentage
			Rupees
SECTOR
Textile			738,511	1.6
Electrical, engineering and allied			34,866,882	76
Chemical and pharmaceuticals			188,613	0.4
Food and allied			2,271,346	5
Others			8,058,666	17
			46,142,018	100
27.  FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the amount at which an asset could be exchanged or liability settled between knowledgeable willing parties
in an arms length transaction. The carrying value of financial assets and liabilities approximates their fair values as
reflected in respective notes to accounts.
28.  INTEREST/MARKUP RATE RISK MANAGEMENT
a)    The company manages this risk by matching the repricing of assets and liabilities. The company's interest /
markup rate sensitivity position, based on the earlier of contractual repricing or maturity dates, is as follows :
		Mark-up bearing			Non-markup bearing
		Maturity	Maturity	Sub-Total	Maturity	Maturity	Sub-Total	Total
		upto one	Aftr one		upto one	Aftr one
		year	year		year	year
Financial assets
Net investment in leases		48,436,914	38,306,043	86,742,957			—	86,742,957
Long term investments		-	-	-	-	3,341,905	3,341,905	3,341,905
Long term deposits		-	-	-	-	637,570	637,570	637,570
Advance to employees		-	-•	-	1,096,639	-	1,096,639	1,096,639
Other receivables					53,692,945		53,692,945	53,692,945
Cash and bank balances		610,803	-	610,803	2,378,314	-	2,378,314	2,989,117
		49,047,717	38,306,043	87,353,760	57,167,898	3,979,475	61,147,373	148,501,133
Financial liabilities
Certificate of
investment		62,115,000	2,950,000	65,065,000	-	-	-	65,065,000
Obligation under
finance leases		525,806	280,850	806,656	-	-	-	806,656
Redeemable capital
under markup		27,360,293	-	27,360,293	-	-	-	27,360,293
Running finance		5,000,000	-	5,000,000	-	-	-	5,000,000
Accrued and other
liabilities		-	-	-	32,835,640	-	32,835,640	32,835,640
		95,001,099	3,230,850	98,231,949	32,835,640	-	32,835,640	131,064,000
On balance sheet
gap (a)		(45,953,382)	35,075,193	(10,878,189)	24,332,258	3,979,475	28,311,733	17,433,544
Cumulative interest
rate sensitivity gap,
2002 Rupees		(45,953,382)	35,075,193	(10,878,189)
b) The effective interest / mark-up rate for financial assets and labilities are as follows:
				2002	2001
				%	%
FINANCIAL ASSETS
Net investment in leases				14-44	14-45.82
Long term investments				-	14
Cash with bank				8-12.5	8-12.5
FINANCIAL LIABILITIES
Certificates of investments				12-26	12-26.18
Long term loans				-	21.5-23.5
Liabilities against assets subject to finance lease				19-22	19-22
Finance under mark up arrangements				16-21	16-21
29. TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS
				2002	2001
				Rupees	Rupees
Expenses charged by/(to) ILCL (Rupees)				1,857,581	(685,344)
30.  NUMBER OF EMPLOYEES
The average number of employees during the year were 18 (2001 : 20).
31.  GENERAL
The corresponding figures have been re-arranged/re-classified whereever necessary for the purpose of comparison.
Particulars				No. of	Share holding
				Shareholders
Associated Companies
First Interfund Modaraba				1	178,900
Long Term Venture Capital Modaraba				1	2,125,200
Asian Housing Finance Ltd. (Formerly LTV housing Finance Ltd.)				1	292,500
NIT AND ICP
Investment Corporation of Pakistan				1	5,600
Directors, CEO and their Spouse
Abdus Samad Khan
Nominee - Saudi Pak Industrial & Agricultural Inv. Co. Ltd.				1	1,000,000
Muhammad Younus Khan				1	500
Major (Retd.) Azam Khan				1	500
Saiyed Hashim Ishaq				1	500
Jameel-ur-Rehman				1	500
Abdul Quddus Siddiquie				1	500
Mohammad Majid Ahmad Jhumra				1	500
Banks, DFIs, NBFIs, Insurance, Modaraba etc.
Bank				1	50,000
Financial Institutions				9	2,072,200
Individuals				309	1,615,900
Insurance Companies				3	56,000
Joint Stock Companies				4	2,106,200
Modaraba Companies				4	494,500
Total				341	10,000,000
Shareholders holding ten percent or more voting interest
Particulars				%age	Shares
Long Term Venture Capital Modaraba				21.25%	2,125,200
Bankers Equity Ltd.				17.86%	1,786,100
Saudi Pak Industrial & Agricultural Investment Company Ltd.				10.00%	100,000

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