| GHANDHARA LEASING COMPANY LTD |
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| (ANNUAL
REPORT 1997) |
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| CONTENTS |
|
| Company
Information |
|
| Notice
of Annual General Meeting |
|
| Financial
Highlights |
|
| Graphic
Presentation |
|
| Chairman's
Review |
|
| Directors'
Report |
|
| Pattern
of Shareholding |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Form
of Proxy |
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Salahuddin Qureshi |
Chairman |
|
Nominee of NIT |
|
| Mr.
Raza Kuli Khan Khattak |
|
Nominee
of GNL * |
|
| Mr.
Ahmed Kuli Khan Khattak |
|
Nominee of GNL |
|
| Begum
Tehmina Habibullah Khan |
|
Nominee of GNL |
|
| Mr.
Humayaun Sultan Mufti |
|
Nominee of GNL |
|
| Dr.
Adil Sultan Mufti |
|
Nominee of GNL |
|
| Mr.
Shahid Ghaffar |
|
Nominee of NIT |
|
| Mr.
Mushtaq Ahmed Khan |
|
Nominee of GNL |
|
| Mr.
Kazunori Namekata (Alternate Mr. M. Tanaka) |
Nominee of Marubeni |
|
| Mr.
Haroon A. Zuberi |
Chief Executive |
|
Nominee of GNL |
|
| * GNL: Ghandhara Nissan Limited |
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|
| COMPANY
SECRETARY |
|
| Mr.
Muhammad Shabbir Kasbati |
|
LEGAl ADVISORS |
|
|
Shaukat Law Associates, |
|
|
217, Central Hotel
Annexe, |
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| REGISTERED
OFFICE |
|
Abdullah Haroon Road, |
|
| 2nd
Floor, State Life Building, |
|
Karachi. |
|
| 34,The Mail, Peshawar Cantt. |
|
Ph: 5681495, 5686223 |
|
|
| HEAD
OFFICE |
|
SHARE REGISTRARS |
|
| l-D,
3rd Floor, Sunset Tower, |
|
THK Associates (Pvt) Ltd. |
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| Sunset
Boulevard, Karachi. |
|
Ground Floor, |
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| Ph:
5890751-5 |
|
Shaikh Sultan Trust, |
|
| Fax:
5888513, 5880687 |
|
Building No. 2, |
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|
Beaumont Road, |
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|
Karachi-75530 |
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| BANKERS
TO THE COMPANY |
|
Ph: 5686658, 5685687 |
|
| American
Express Bank Ltd. |
|
| Allied
Bank of Pakistan Ltd. |
|
| National
Bank of Pakistan Ltd. |
|
| Societe
Generale, The French & International Bank |
|
| Standard
Chartered Bank |
|
| The
Bank of Tokyo |
|
|
| AUDITORS |
|
| Taseer
Hadi Khalid & Co. |
|
| Chartered
Accountants, |
|
| 1st
Floor, Shaikh Sultan Trust, |
|
| Building
No. 2, Beaumont Road, |
|
| Karachi-75530 |
|
| Ph:
5681912, 5671761-63 |
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|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the Sixth Annual General Meeting of the Company will be
held on Monday, 29th day of |
|
| December,
1997 at Hotel Pearl Continental, Peshawar Cantt., Peshawar at 11.00 a.m. to
transact the following |
|
| business: |
|
|
| ORDINARY
BUSINESS |
|
| - receive, consider and adopt the audited
accounts together with the Directors' and Auditors' Report for the |
|
| year
ended 30 June, 1997. |
|
|
| -
To appoint Auditors and fix their remuneration. The present Auditors Messrs.
Taseer Hadi Khalid & Co., |
|
| Chartered
Accountants, retire and being eligible offer themselves for re-appointment. |
|
|
| OTHER
BUSINESS |
|
| To
transact any other business as may be placed before the meeting with the
permission of the Chairman. |
|
|
|
By order of the Board |
|
|
|
|
|
M.Shabbir
Kasbati |
|
|
Company Secretary |
|
| Karachi:
3 December, 1997 |
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|
| NOTES: |
|
|
| 1.
The Register of members of the company will remain closed from 24 December,
1997 to 29 December, 1997 |
|
| (both
days inclusive). |
|
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/her proxy to attend |
|
| the
meeting and vote on his behalf. No person shall act as proxy who is not a
member of the company. |
|
| Proxies
in order to be effective must be received by the Company not less than 48
hours before the meeting. |
|
|
| 3.
Shareholders are requested to immediately notify the Company of any change in
their addresses. |
|
|
| FINANCIAL
HIGHLIGHTS |
|
|
|
|
30 June |
30 June |
31 Dec |
31 Dec |
31 Dec |
|
|
1997 |
1996 |
1994 |
1993 |
1992 |
|
|
|
|
| Balance
sheet (Rupees in million) |
|
| Net
investment in leases |
|
519.82 |
496.88 |
339,581 |
191.29 |
55.52 |
|
| Total
equity |
|
172.53 |
160.77 |
72.87 |
66.55 |
55.16 |
|
| Total
assets |
|
631,294 |
581.05 |
438.00 |
259.03 |
126.18 |
|
| Break-up
value (Amount in rupees) |
20.89 |
19.46 |
14.57 |
13.31 |
11.03 |
|
| Income
statement (Rupees in million) |
|
| Gross
income |
|
99.83 |
137.60 |
66.42 |
30.09 |
8.97 |
|
| Financial
charges |
|
67.34 |
87.67 |
37.51 |
11.71 |
0.36 |
|
| Other
expenses |
|
16.13 |
26.31 |
12.09 |
6.85 |
3.44 |
|
| Net profit |
|
11,759 |
22.93 |
16.32 |
11.39 |
5.16 |
|
| Lease
portfolio (Percentage) |
|
| Plant
& machinery |
|
73.10 |
66.33 |
77.00 |
78.60 |
74.00 |
|
| Equipments |
|
10.31 |
923 |
11.50 |
9.20 |
10.80 |
|
| Private
vehicles |
|
7.05 |
9.67 |
11.00 |
9.40 |
8.10 |
|
| Commercial
vehicles |
|
9.54 |
14.77 |
0.50 |
2.80 |
7.10 |
|
|
|
|
|
|
|
| CHAIRMAN'S
REVIEW |
|
| It
gives me great pleasure in presenting to you the 6th Annual Report of the
company together with the |
|
| audited
accounts for the year ended on 30 June 1997, |
|
|
| An
Overview |
|
|
| The
year under review followed the same pattern of stagnation as of previous
year. The major reason was |
|
| political
instability during the year. The overall economic activities witnessed the
negative growth as the |
|
| GDP
declined to 3.1% from 4.6%. The financial sector also suffered from this
decline, specially, due to |
|
| retarded
growth rate in manufacturing sector, which reduced to 1.8% from 4.4%.
Particularly, large scale |
|
| manufacturing
sector, which declined by 1.4%. Further, the public sector enterprises as
well as large business |
|
| houses
faced cash-flow problems due to depressed economic conditions. having chain
effect on the industry. |
|
| However,
with the change in government, upliftment of economic activities was expected
but it has not yet |
|
| come
upto the mark. |
|
|
| In
the budget for the year 1996-97, government also imposed 1% per annum Central
Excise Duty on lease |
|
| rentals,
which affected the leasing industry. However, this levy was withdrawn in the
current budget for |
|
| 1997-98. |
|
|
| During
the year under review, State Bank of Pakistan (SBP) also revised its discount
rate from 17% to |
|
| 20%.
This resulted in higher lending rates by the banks. On top of increasing the
discount rate, government |
|
| borrowed
excessive funds against STFBs at the rate as high as 17.50% per annum, which
created a liquidity |
|
| crunch
in the market. However, subsequently, SBP has readjusted the discount rate
from 20% to 19% in |
|
| June
1997 and from 19% to 18% in July 1997. |
|
|
| Review
of Operations |
|
| I
am pleased to inform that despite the difficult economic conditions, your
company performed satisfactorily |
|
| during
the year. Once again, the main emphasis remained on building of quality and
well diversified lease |
|
| portfolio
in order to avoid credit risk. The company also placed special emphasis on
leasing of commercial |
|
| vehicles
and developed it as niche market. |
|
|
| The
lease portfolio composition constituted 73.10% Plant & Machinery, 10.31%
Equipments, 7.05% Private |
|
| Vehicles
and 9.54% Commercial Vehicles, where as the disbursement during the year
followed the pattern |
|
| of
68.63% Plant & Machinery, 14.32% Equipments, 5.13% Private Vehicles and
11.92% Commercial Vehicles. |
|
|
| The
company's revenues amounted to Rs. 99.83 million, with a net profit of Rs.
1l.76 million. The major |
|
| portion
of expenses comprised of financial charges, which amounted to Rs. 67.34
million. As I have already |
|
| mentioned
that SBP had increased its discount rate, and higher returns on STFBs,
causing increase in lending |
|
| rates
by banks and DFI's which resulted in sharp increase of financial charges. To
take care of any future |
|
| lease
losses, the company has made a provision of Rs. 4.10 million, these are Rs.
3.11 million in excess |
|
| of
what is required by the leasing regulations. The company continued to
maintain its Contingency and |
|
| Statutory
reserves. Contingency reserve is 2% of net investment in lease, whereas
Statutory reserve is |
|
| 20%
of net profit. These reserves amounted to Rs. 10.51 million and Rs. 13.52
million respectively as on |
|
| 30
June 1997. |
|
|
| During
the year under review, the company also changed its name from 'Ghemni Leasing
Company Limited' |
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| to
'Ghandhara Leasing Company Limited'. |
|
|
| Fundings |
|
| Your
company has been approved for participation in 'Financial Sector
Intermediation Loan' of US $100 |
|
| million
extended by Asian Development Bank. The company has also been successful in
arranging three |
|
| additional
Rupee funding lines from investment banks and DFIs for the period of two to
three years. |
|
|
| Future
Prospects |
|
| Since
past couple of years, the overall economic activities are facing a stand
still situation, which has resulted |
|
| in
a stiff competition among leasing companies. With the change in government,
economic activities are |
|
| expected
to revive, which may result in setting up of new industries and expansion of
established ones |
|
| and
more business for the teasing sector. With the reduction in discount rate and
other steps taken by |
|
| SBP,
mark-up rates have also shown downward trend and we expect it to reduce
further, which will have a |
|
| positive
impact on the earnings of the leasing companies. |
|
|
| Staff |
|
| I
would like to congratulate the Management and all company employees for their
dedication and hard work |
|
| in
maintaining the company's efficiency during a challenging year. |
|
|
| Acknowledgment |
|
| I
would also like to thank Regulatory Authorities, DFIs, banks and investment
banks for extending their full |
|
| co-operation
and guidance to the company in achieving the results. |
|
|
|
|
|
| DIRECTOR'S
REPORT |
|
|
|
| The
Directors have pleasure in presenting the Sixth Annual Report together with
Audited Accounts and the |
|
| Auditors'
Report thereon for year ended 30 June, 1997. |
|
|
| Financial
Results |
|
|
|
Year ended |
|
Eighteen months |
|
|
30 June |
|
period ended |
|
|
1997 |
|
1996 |
|
|
| Total
income |
|
99,826,211 |
|
137.602,549 |
|
| Expenses |
|
87,567,614 |
|
113,982,542 |
|
| Net
profit before tax |
|
12,258,597 |
|
23,620,007 |
|
| Taxation
- current |
|
499,131 |
|
688,012 |
|
| Profit
after taxation |
|
11,759,466 |
|
22,931,995 |
|
| Profit
brought forward |
|
8,146,868 |
|
9,492,254 |
|
| Profit
available for appropriation |
19,906,334 |
|
32,424,249 |
|
| Appropriations |
|
| Transfer
to statutory reserve |
2,351,893 |
|
4,586,399 |
|
| Transfer
to contigency reserve |
540,759 |
|
3,171,582 |
|
| Interim cash dividend - Nil |
- |
|
8,259,700 |
|
| (1995-96'10%) |
|
|
|
|
|
| Final cash dividend - Nil |
- |
|
8,259,700 |
|
| (1995-96
· 10%) |
|
|
2,892,652 |
|
24,277,381 |
|
|
----------- |
|
----------- |
|
|
|
|
| Unappropriated profit carried |
17,013,682 |
|
8,146,868 |
|
| forward |
|
=========== |
|
=========== |
|
|
|
|
| Auditors |
|
| The
present Auditors Messrs. Taseer Hadi Khalid & Co., Chartered Accountants,
retire and being eligible |
|
| offer
themselves for re-appointment. |
|
|
| Pattern
of Shareholding |
|
| The
pattern of shareholding is annexed. |
|
|
| Staff |
|
| The
Directors would like to place on record their appreciation of the hard work
and dedication of staff members |
|
| in
achieving the results being presented. |
|
|
|
| PATTERN
OF SHAREHOLDING |
|
|
|
| As
at 30 June 1997 |
|
| No.
of Shareholders |
|
Shareholding |
|
Total |
|
|
From |
|
to |
shares held |
|
|
| 83 |
|
1 |
|
100 |
8,300 |
|
| 393 |
|
101 |
|
500 |
172,400 |
|
| 156 |
|
501 |
|
1,000 |
152,900 |
|
| 66 |
|
1,001 |
|
5,000 |
153,000 |
|
| 21 |
|
5,001 |
|
10,000 |
165,100 |
|
| 8 |
|
10,001 |
|
15,000 |
96,000 |
|
| 3 |
|
15,001 |
|
20,000 |
59,000 |
|
| 1 |
|
25,001 |
|
30,000 |
28,000 |
|
| 2 |
|
30,001 |
|
35,000 |
64,500 |
|
| 2 |
|
50,001 |
|
55,000 |
105,800 |
|
| 1 |
|
125,001 |
|
130,000 |
125,500 |
|
| 1 |
|
295,001 |
|
300,000 |
300,000 |
|
| 1 |
|
335,001 |
|
430,000 |
337,700 |
|
| 1 |
|
495,001 |
|
500,000 |
500,000 |
|
| 1 |
|
1,245,001 |
|
1,250,000 |
1,250,000 |
|
| 1 |
|
1,840,001 |
|
1,845,000 |
1,841,500 |
|
| 1 |
|
2,895,001 |
|
2,900,000 |
2,900,000 |
|
| --------- |
|
|
|
|
--------- |
|
| 742 |
|
Total |
8,259,700 |
|
| ========= |
|
========= |
|
|
|
|
|
| CATEGORIES
OF SHAREHOLDERS |
|
|
|
|
| As
at 30 June 1997 |
|
|
| Categories |
|
|
No. of |
Share held |
Percentage |
|
|
Shareholders |
|
|
| Individuals |
|
728 |
865,200 |
10.48 |
|
| Insurance
Companies |
|
1 |
337,700 |
4.09 |
|
| Joint
Stock Companies |
|
6 |
4,257,800 |
51.55 |
|
| Financial
Institutions |
|
6 |
2,229,000 |
2,783 |
|
| Foreign
Companies |
|
1 |
500,000 |
6.05 |
|
|
----------- |
----------- |
----------- |
|
|
742 |
8,259,700 |
100.00 |
|
|
============= |
============= |
============= |
|
|
|
|
| AUDITOR'S
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of Ghandhara Leasing Company Limited
(Formerly Ghemni Leasing |
|
| Company
Limited) as at 30 June 1997 and the related profit and loss account and
statement of changes in |
|
| financial
position, 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 and, after due verification thereof, we report
that: |
|
| (a)
in our opinion, proper books of account 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, profit and loss account and the statement of changes in financial
position, together |
|
| with
the notes forming part thereof, 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 ot the Company's |
|
| affairs
as at 30 June 1997 and of the profit and the changes in financial position
for the year then |
|
| ended; and |
|
|
| (d)
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. |
|
|
|
| Karachi'
2 December 1997 |
|
Taseer Hadi Khalid &
Co. |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET |
|
| As
at 30 June 1997 |
|
|
|
|
|
30 June |
30 June |
|
|
Note |
1997 |
1996 |
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
| Fixed assets - at cost less |
3 |
6,673,072 |
4,822,120 |
|
| accumulated
depreciation |
|
|
|
|
|
| Net
investment in leases |
|
4 |
326,698,202 |
324,069,532 |
|
| Long
term investments |
|
5 |
11,935,759 |
11,935,759 |
|
| Deferred
cost |
|
6 |
1,422,701 |
2,234,526 |
|
| CURRENT
ASSETS |
|
|
|
|
|
| Current
maturity of net investment |
|
193,124,341 |
172,811,582 |
|
| in
leases including overdue rentals |
|
|
|
|
| Investments |
|
|
50,000 |
50,000 |
|
| Advances against lease
commitments |
|
7,019,470 |
6,005,659 |
|
| - unsecured |
|
|
|
|
|
| Advances,
deposits, prepayments |
|
|
|
|
| and
other receivables |
|
7 |
23,083,060 |
9,400,670 |
|
| Cash
and bank balances |
|
8 |
61,288,308 |
49,721,694 |
|
|
|
|
|
|
|
|
284,565,179 |
237,989,605 |
|
|
|
---------- |
---------- |
|
|
Rupees |
631,294,913 |
581,051,542 |
|
|
|
=========== |
=========== |
|
|
|
|
|
|
| SHAREHOLDERS'
EQUITY AND LIABILITIES |
|
|
|
|
|
| Share
capital |
|
9 |
82,597,000 |
82,597,000 |
|
| Share
premium |
|
|
48,895,500 |
48,895,500 |
|
| Reserves |
|
10 |
24,024,713 |
21,132,061 |
|
| Unappropriated
profit |
|
|
17,013,682 |
8,146,868 |
|
| Shareholders'
equity |
|
|
172,530,895 |
160,771,429 |
|
| Long
term financing - secured |
11 |
141,946,301 |
192,148,535 |
|
| Certificates
of investment |
12 |
40,200,000 |
- |
|
| Long
term deposits |
|
13 |
56,580,431 |
55,925,877 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturity of long financing, |
|
|
| long
term deposited and lease |
|
|
| facility |
|
14 |
133,709,158 |
18,147,213 |
|
|
|
|
|
|
| Finance under mark-up
arrangements |
|
|
| -secured |
|
15 |
46,415,458 |
126,200,001 |
|
| Certificates
of Investment |
12 |
25,325,000 |
- |
|
| Accrued expenses and other |
|
|
| liabilities |
|
16 |
13,311,616 |
15 095,574~ |
|
| Provision
for taxation |
|
|
707,954 |
769,798 |
|
| Dividend
payable |
|
|
508,040 |
11,993,115 |
|
|
|
|
|
|
219,277,226 |
172,205,701 |
|
| CONTINGENCIES
AND COMMITMENTS |
17 |
-- |
-- |
|
|
|
---------- |
---------- |
|
|
Rupees |
631,294,913 |
581,051,524 |
|
|
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
|
|
| For
the year ended 30 June 1997 |
|
|
|
|
|
Year ended |
Eighteen months |
|
|
|
30 June |
period ended |
|
|
Note |
1997 |
30 June 1996 |
|
|
|
|
| REVENUE |
|
|
|
|
|
|
| Income from leasing |
|
18 |
97,361,040 |
134,962,810 |
|
| operations |
|
|
|
|
| Income
on investments |
|
19 |
1,205,433 |
929,997 |
|
| Other
income |
|
20 |
1,259,738 |
1,709,742 |
|
|
|
----------- |
----------- |
|
|
|
99,826,211 |
137,602,549 |
|
| EXPENDITURE |
|
|
|
| Administrative and |
|
21 |
15,315,630 |
19,276,008 |
|
| operating
expenses |
|
|
|
|
|
|
811,825 |
1,487,012 |
|
| Amortisation of |
|
22 |
67,343,628 |
87,670,306 |
|
| deferred
cost |
|
|
|
|
|
|
83,471,083 |
108,433,326 |
|
|
|
----------- |
----------- |
|
| Profit
before provisions |
|
|
16,355,128 |
29,169,223 |
|
|
|
|
| Provision for diminution in
the |
|
- |
4,270,593 |
|
| value
of investments |
|
|
|
|
|
| Provision for doubtful |
|
23 |
4,096,531 |
1,278,623 |
|
| bets |
|
|
|
|
|
|
4,096,531 |
5,549,216 |
|
|
|
----------- |
----------- |
|
| Profit
before taxation |
|
|
12,258,597 |
23,620,007 |
|
|
|
|
| TAXATION |
|
|
|
|
|
|
| Current |
|
|
499,131 |
688,012 |
|
|
|
----------- |
----------- |
|
| Profit
after taxation |
|
|
11,759,466 |
22,931,995 |
|
| Unappropriated
profit brought forward |
|
8,146,868 |
9,492,254 |
|
|
|
----------- |
----------- |
|
| Profit
available for appropriation |
|
19,906,334 |
32,424,249 |
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
|
|
|
| Statutory |
reserve @20% of profit |
|
2,351,893 |
4,586,399 |
|
| Contingency reserve @2% of
lease |
|
540,759 |
