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ORIX INVESTMENT BANK PAKISTAN LIMITED.
Contents
Company Information
Notice Of Meeting
Report of the Directo's & Chairman's Review
Auditor's Report to the Members
Statement Of Commpliance
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Statement of changes in Equity
Notes to the Accounts
Pattern of Shareholding
Company Information
Board of Directors
Mr. Kunwar idris		Chairman
Mr.Yoshio Ono
Mr.Nagaaki Esaki
Mr. Benjamin Lee
Mr.Humayun Murad
Mr. Muhammad Rashid Zahir
Mr.Fahim Ahmed
Mr. Nairn Farooqui		Managing  Director & Chief Executive
Company Secretary
Mr.lntisar H.AIvi
Bankers
American Express Bank Limited
Habib Bank Limited
Mashreq Bankpsc
Muslim Commercial Bank Limited
Oman International Bank S.A.O.G .
Prime Commercial Bank Limited
Standard Chartered Bank
Standard Chartered Grindlays Bank Limited
The Bank of Tokyo - Mitsubishi Limited
Auditors
Sidat Hyder Qamar & Co., Chartered Accountants
Legal Advisors
Mohsin Tayebaly & Co.
Mandviwalla &Zafar
Registrar and Share Transfer Office
Noble Computer Services (Pvt) Limited,
14, BangloreTown Housing Society,
Shahrae Faisal, Karachi.
Tel: (021)4546978
Fax:(021)4314962
Registered Office
Overseas Investors Chamber of Commerce Building,
Talpur Road, Karachi - 74000, Pakistan.
Tel: (021) 2426020-9, UAN: 111 -24-24-24, Fax: (021') 2425897
Head Office
2nd Floor, Islamic Chamber of Commerce Building,
ST 2/A, Block # 9, Clifton, Karachi - 75600, Pakistan.
Tel: (021) 5861266 Fax: (021) 5868862
Audit Committee
Mr. Kunwar Idris
Mr.Humayun Murad
Mr.Fahim Ahmed
Mr. Nairn Farooqui
Notice of Meeting
Notice is hereby given that the Seventh Annual General Meeting of the shareholders of ORIX INVESTMENT BANK
PAKISTAN LIMITED will be held at 10:00 a.m. on Wednesday, 23 October, 2002 at Overseas Investors Chamber of
Commerce Building, Talpur Road, Karachi, to transact the following business:
Ordinary Business:
1. To receive, consider and adopt the audited financial statements together with the Directors' and Auditors'
reports for the year ended 30 June, 2002.
2. To approve the payment of cash dividend to the shareholders at the rate of Rs. 1.50 per share of Rs. 10/-each
for the year ended 30 June, 2002.
3. To appoint auditors and fix their remuneration for the year ending 30 June, 2002. The present Auditors,
Sidat Hyder Qamar & Co., Chartered Accountants, retire and being eligble, offer themselves for re-appointment.
4. To elect 8 Directors of the Company as fixed by the Board of Directors for a period of three years under section
178 of the Companies Ordinance, 1984.
The present Directors who will be retiring are :
1. Mr. Kunwar Idris
2. Mr.YoshioOno
3. Mr.Nagaaki Esaki
4. Mr. Benjamin Lee
5. Mr.Humayun Murad
6. Mr. Muhammad Rashid Zahir
7. Mr. Fahim Ahmed
8. Mr. Nairn Farooqui
Special Business:
1. To approve increase in Authorised Capital of the Company to Rs.500 million.
2. To consider any other business with the premission of the Chair.
By Order of the Board
Karachi: 26 September, 2002
Intisar H.AIvi
Company Secretary
NOTES:
1. The Members' Register will remain closed form 16 October, 2002 to 23 October, 2002 (both days inclusive).
Transfers received in order at the office of the share registrar of the Company by the close of business on
15 October, 2002 will be treated in time for the entitlement of dividend payment and issue of right shares.
2. A Member entitled to attend and vote at the General Meeting of Members is entitled to appoint a proxy to
attend and vote on his/her behalf. A proxy need not be a Member of the Company.
3. The instrument appointing a proxy and the power of attorney of other authority, under which it is signed or a
notarially certified copy of the power of attorney must be deposited at the office of Share Registrar of the
Company, Noble Computer Services (Pvt) Ltd., 14,BangloreTown Housing Society, Main Shahrae Faisal, Karachi
at least 48 hours before the meeting. A form of proxy is enclosed.
Notice of Meeting
4. Any individual Beneficial Owner of the Central Depository Company, entitled to vote at this meeting must
bring his/her National Identity Card with him/her as proof of his/her identity, and in case of proxy, must enclose
an attested copy of his/her National Identity Card. Representative of the corporate members should bring the
usual documents required for such purposes.
5. -Shareholders are requested to notify any change in their addresses immediately.
Statement pertaining to Special Business and Related Draft Resolution
Under Section 160 (1) (b) of the Companies Ordinance, 1984:
Increase in Authorised Capital and amendment in Memorandum and Articles of Association:
The shareholders'approval is required for the increase in Authorised Capital and amendment in Memorandum and
Articles of Association of the Company, as recommended by the Directors, and in this regard to pass the following
Special Resolution:
" Resolved that the authorised capital of the Company be and is hereby
increased from Rs. 300,000,000 (Rupees three hundred million only) divided
into 30,000,000 (thirty million) ordinary shares of Rs. 10/- (Rupees ten) each
to Rs. 500,000,000 (Rupees five hundred million only) divided into 50,000,000
(fifty million) ordinary shares of Rs. 10/- (Rupees ten) each and in that
connection the figures "Rupees 300,000,000 (Rupees three hundred million
only) divided into 30,000,000 (thirty million) shares" be substituted for the
figures "Rs. 500,000,000 (Rupees five hundred million only) divided into
50,000,000 (fifty million) shares" respectively appearing in clause VI of the
Memorandum and Articles of Association of the Company"
Report of the Directors'& Chairman's Review
The Directors are pleased to present the Seventh Annual Report together with the audited accounts of the bank
for the fiscal year ended June 30,2002.
Financial Highlights		Rupees
Gross Revenue		459,016,367
Profit for the year after expenses and allowances for potential losses		71,998,946
Less: Taxation		25,078,939
Profit after taxation		46,920,007
Total Assets		1,848,838,637
Earnings Per Share	Rs.	2.35
Dividend
The Directors propose a dividend of 15% for the year ended June 30,2002.
Business Environment
The year under review presented new opportunities with matching challenges. The national economic
indicators witnessed a substantial improvement. The GDP growth was 3.5%, exceeding the revised target of
3.3% and just 2.6% in the previous year. Pakistan's economic credibility rose with the successful completion of
an IMF assistance programme, increased remittances and other capital inflows, low inflation, strengthening of
the rupee and an expansionary monetary policy. Thus, on the back of consistent government policies and
overall improvement in the fundamentals, the outlook for Pakistan's economy appears promising.
Company Performance
The Bank has been able to significantly increase its profit over last year by following a risk averse approach. All
the budgeted targets were exceeded by the painstaking efforts of the staff.
The Bank completed a number of advisory assignments relating to syndications and capital market
transactions.The trusteeship fee earned on TFC issues also generated income.The Bank during the year started
the Money Market and Foreign Exchange Brokerage Business on a promising note.
The pre-tax profit went up to Rs. 72 million from the previous years' Rs. 41.49 million and after tax profit to
Rs.46.92 million from Rs. 28.19 million in 2000-2001.The gross revenues increased to Rs. 459 million from Rs.322
million, an increase of 43%. Despite enhanced liquidity in the market because of 5% decline in the SBP discount
rate the Bank managed to marginally increase its income from finance provided. The total assets increased by
15% from Rs. 1,601 million in 2000-2001 to Rs. 1,849 million. Following a conservative lending approach the
provision for loan losses was increased by 115% to Rs. 28.07 million (Rs. 13.07 million in 2000-2001). The
administrative expenses though increasing from the previous year have declined as a percentage of total
expenditure from 13% in 2000-2001 to 11%.The decline in the administrative cost as a percentage of total
expenses with corresponding increase in the revenues and profit figures shows the management's firm grip on
routine expenses.
Auditors'Observation
The management consistently followed the practice of netting off Repo and Reverse Repo transactions for
balance sheet presentation purposes. The market practice varies for the treatment of these transactions as
some companies show these transactions at their gross values. To avoid major aberration and in order to be
consistent in its policies, the management feels it appropriate to follow the past practice.
Rights Issue
The State Bank of Pakistan (SBP) has directed all Investment Banks to increase their capital to Rs. 300 million. In
view of this requirement and further to strengthen the capital base of the Bank the directors are pleased to
announce a Rights Issue of 50% i.e. One share for every Two shares held at par value of Rs. 10/- each.
Authorised Capital
To accommodate future capital increases, the Directors recommend an increase in the Authorised Capital from
Rs. 300 million to Rs. 500 million.
Report of the Directors' & Chairman's Review
Future Outlook
With the macro economic indicators and Pakistan's investment rating improving, the year ahead is expected to
bring larger business and profit to the bank.
Compliance with Code of Corporate Governance
As required under the Code of Corporate Governance, the Board of Directors states that:
• The Financial Statements present fairly the state of affairs of the Company, the results of its operations. Cash
Flow Statement and Statement of Changes in Equity.
• Proper books of accounts of the company have been maintained.
• Accounting policies as stated in the notes to the accounts have been consistently applied in the preparation
of financial statements, and accounting estimates are based on reasonable and prudent judgment.
• International Accounting Standards, as applicable in Pakistan and as stated in the notes attached with the
accounts, have been followed in the preparation of the financial statements.
" The system of internal control is sound in design and has been effectively implemented and monitored. '
• The Company is financially sound and is a going concern.
• There has been no material departure from the best practices of corporate governance, as detailed in the
listing regulations.
Board Meetings
Three Board meetings were held during 2001-2002.The overseas Directors were unable to attend the meetings
but constantly followed the progress of the Bank and the Board proceedings:
Name of Director			Meetings attended
I.Mr.Kunwar Idris			3
2.Mr.YoshioOno*			0
3. Mr. Nagaaki Esaki*			0
4. Mr. Benjamin Lee*			0
5. Mr. Humayun Murad			3
6. Mr. Muhammad Rashid Zahir (Appointed in February 2002)			1
7. Mr. Fahim Ahmed			3
8. Mr. Nairn Farooqui			3
* Foreign Residents
Summarised Operating and Financial Data for the last six years
			Year Ended 30 June
	2002	2001	2000	1999	1998	1997
					Rupees in million
Gross Revenue	459	322	288	256	183	91
Profit Before Tax	72	41	44	32	12	11
Profit After Tax	47	28	28	20	8	7
Total Assets	1,849	1,601	1,466	1,497	1,524	1,106
Earnings Per Share	Rs. 2.35	Rs.1.41	Rs. 1.39	Rs.1.00	Rs.0.40	Rs.0.33
Report of the Directors' & Chairman's Review
Statement of Investments of Provident Fund
The company operates a contributory provident fund scheme covering all regular employees.The investment
balances are as follows:
			30 June 2002	30 June 2001
			Un audited	Audited
Amount of Investments of Provident Fund		Rupees	5,859,842	5,618,553
Credit Rating
Based on the results and financial position for the year ended June 30,2001 the Pakistan Credit Rating Agency
(PACRA) maintained the Bank's rating as A - for long-term debt and A 2 for short-term debt.
Directors
During the year Mr. Muhammad Rashid Zahir representing Saudi Pak Industrial and Agricultural Investment
Company (Pvt) Limited was reappointed as director on the Board.
Staff
The Board wishes to record its appreciation for the hard work put in by the staff members leading to new
business avenues and higher profits.
Auditors
The auditors Sidat Hyder Qamar & Co., Chartered Accountants, retire and being eligible, offer themselves for
reappointment.
Pattern of Shareholding
The pattern of shareholding as on June 30,2002 is shown on page 30.
On Behalf of The Board
Auditors' Report to the Member
We have audited the annexed balance sheet of ORIX INVESTMENT BANK PAKISTAN LIMITED as at 30 June, 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 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 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 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 the 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, we
report that: ,
a) as more fully explained in note 2.7 to the financial statements, the Company has accounted for Repo and
Reverse repo transactions as sale and purchase of securities respectively instead of treating them as
financing transactions.
b) in our opinion, proper books of account have been kept by the Company as required by the Companies
Ordinance, 1984;
c) 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 furhter in accordance with accounting policies consistently applied;
ii) the expenditure incurred during the year was for the purpose of the Comnpany'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;
d) except for the effects of such adjustments which would have been necessary in view of paragraph (a)
above in our opinion, and to the best of our information and according to the explanations given to us, the
balance sheet, 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 a true and fair view of the state of the Company's affairs as at 30 June, 2002 and of
the profit, its cash flows and changes in equity for the year then ended; and
e) in our opinion, zakat deductible at source under the Zakat and Ushr Ordinance, 1980 was deducted by the
Company and deposited in the Central Zakat Fund established under Section 7 of that Ordinance.
Without further qualifying our report we draw your attention to the matter relating to compliance of
minimum capital requirement specified by State Bank of Pakistan as described in note 1.2 to the financial
statements.
Karachi:		Sidat Hyder Qamar & Co.
26 September, 2002 Sidat Hyder Qamar & Co.		Sidat Hyder Qamar & Co.
with the Code of Corporate Governance
The Company is in the process of implementing the requirements of the Code of Corporate Governance issued by
the Securities and Exchange Commision of Pakistan and adopted by the Stock Exchanges. The provisions of the
code, relevant for the year ended 30 June, 2002 have been duly complied with by the Company.'
Karachi:
17 September, 2002
Nairn Farooqui
Managing Director & Chief Executive
on behalf of Board of Directors
Review Report to the Members on Statement of Compliance with best Practices of Code of Corporate
Governance
We have reviewed the Statement of Compliance as at 30 June, 2002 with the best practices contained in the Code
of Corporate Governance prepared by the Board of Directors of ORIX Investment Bank Pakistan Limited to comply
with the Listing Regulation No. 37 of the Karachi Stock Exchange and chapter XIII of the Lahore Stock Exchange
where the Company is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the
Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether
the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Code of
Corporate Governance and report if it does not. A review is limited primarily to inquiries of the Company personnel
and review of various documents prepared by the Company to comply with the Code.
As part of our audit of financial statements we are required to obtain an understanding of the accounting and
internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried
out any special review of the internal control system to enable us to express an opinion as to whether the Board's
statement on internal control covers all controls and the effectiveness of such internal controls.
Based on our review, nothing has come to our attention which causes us to believe that the Statement of
Compliance does not appropriately reflect the Company's compliance, in all material respects, with the best
practices contained in the Code of Corporate Governance, as applicable to the Company during the period under
review.
Karachi;