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NATIONAL ASSET LEASING CORPORATION LIMITED
ANNUAL REPORTS 2003
Contents
Company Information
Notice of Annual General Meeting
Report of the Director's
Six Year's Key Financial & Operating Ratios
Pattern of Shareholding
Statement of Compliance with best Practices of Corporate Governance
Auditor's Review Report to the Members on Statement of Compliance With best practices of Code of Corporate Governance
Auditor's Report
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Financial Statements
Company Information
Board of Directors Mr. Shamim 1. Junejo Chairman
Dr. Khalid Iqbal Director
Mr. M.A. Rehmani Director
Syed Naveed Zaidi Director
Mr. Azhar Tariq Khan Director
Mr. Sohail All Director
Mr. Rana M. Abu Obaida Chief Executive Officer
Audit Committee Mr. Shamim 1. Junejo Chairman
Mr. Azhar Tariq Khan Member
Mr. M.A. Rehmani Member
Company Secretary Syed Haider Zaidi
Bankers Allied Bank of Pakistan Limited
Habib Bank Limited
National Bank of Pakistan
Auditors M/s. M. Yousuf Adil Saleem & Co.
Chartered Accountants
Cavish Court, A-35, Block 7/8
KCHSU, Shahrah-e-Faisal
Karachi
Legal Advisor M/s. Mansoor Ahmed Khan & Co.
Advocates & Solicitors
F-2/3, Block 8, Kehkashan
KDA Scheme 5, Clifton
Karachi
Share Registrar M/s. Noble Computer Services (Pvt) Ltd.
14, Banglore Town Housing Society
Shahrah-e-Faisal, Karachi
Registered Office 301-302, Mohammad Gulistan Khan House
82-East, Fazal-ul-Haq Road
Blue Area, Islamabad
Head Office 309, Anum Empire
Block 7/8, KCHSU
Shahrah-e-Faisal, Karachi
Ph: 4527246, 4529224 & 4529225
Fax: (92-21) 4527232
E-mail: natlease@fascom.com
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Thirteenth Annual General Meeting of National Asset Leasing Corporation
Limited will be held, on Wednesday October 29, 2003 at 11.30 A.M. at its registered office 301-302,
Mohammad Gulistan Khan House, Fazal-ul-Haq Road, Blue Area, Islamabad to transact the following
business:
ORDINARY BUSINESS
1.   To confirm the Minutes of Twelfth Annual General Meeting held on October21,2002.
2.   To receive, consider and adopt the Audited Accounts for the year ended June 30,2003 together with
Directors' and Auditors' Report thereon.
3.  ToappointAuditorsandtofixtheirremunerationfortheyear July01,2003 to June30,2004.The present
Auditors, M/s. M.Yousuf Adil Saleem & Co., Chartered Accountants, retire and being eligible, offer
themselves for reappointment.
4.   To transact any other business with the permission of the Chair.
By Order of the Board
Islamabad: October 06, 2003
Syed HaiderZaidi
Company Secretary
Notes:
1.   The Register of Members of the Company will remain closed from 21th October 2003 to 28th October
2003 (both days inclusive) and no transfer of shares will be made during the period the register is closed.
2.   A member entitled to attend and vote at the General Meeting is entitled to appoint another member as
his/her proxy to attend and vote on his/her behalf.
3.    Instrument appointing proxy and the Power of Attorney or other authority under which it is signed or a
notarially certified copy of the Power or authority must be deposited at the Registered Office of the
Company at least 48 hours before the time of the meeting.
4.   CDC Shareholders entitled to attend and vote atthis meeting, must bring with them their National Identity
Cards/Passports in original along with Participants ID Numbers and their Account Number to prove
his/her identity, and in case of proxy, must enclose an attested copy of his/her NIC or Passport,
representatives of Corporate members should bring the usual documents required for such purpose.
5.   Shareholders are requested to notify any change in address immediately.
IN THE NAME OF ALLAH, MOST GRACIOUS, MOST MERCIFUL
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED JUNE 30, 2003
The Board of Directors is pleased to present its 13th Annual Report together with the audited financial
statements for the year ended June 30, 2003. The financial statements annexed to this report, present fairly
its state of affairs, the result of its operations, cash flows and changes in equity. Proper books of account have
been maintained. Appropriate accounting policies have been consistently applied in preparation of financial
statements and accounting estimates are based /on reasonable and prudent judgement. International
Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements
and any departure therefrom has been adequately disclosed.
FINANCIAL RESULTS & REVIEW OF OPERATIONS
As informed earlier the Company ceased to operate as a leasing company following suspension / cancellation
of leasing license by the Securities & Exchange Commission of Pakistan due to our failure to raise the capital
of the company to Rs200.0 million as required under Leasing Rules. As a result, the management reduced its
expenses substantially and made all efforts to settle the debts through assignment of receivables. Your
directors are pleased to confirm that the lenders to the company, considering the serious financial problems of
the company, granted substantial concession and remission in the form of waivment of fee, mark-up etc.,
which helped your company to convert the operational losses into a profit of RsO.73 million, despite the fact
that a large amount of loss was incurred due to settlement of leases for assignment of rentals to the lenders.
We are pleased to confirm that the outstanding liabilities of a Commercial Bank and a NBFC were fully repaid
during the year under review. No new business was undertaken during the year under review. Since the most
of the leases have matured hence the gross revenue decreased to Rs.0.84 million from Rs.1.23 million as
compared to last year, but the same was covered by reducing the administrative expenses from Rs.5.32
million of last year to Rs.4.47 million during the fiscal year 2003.
The operating results for the year under review are given below:
Gross revenue RsO. 84 million
Administrative charges Rs4.47 million
Financial charges Rs2.47 million
Reversal of mark-up etc. as per settlement of
liabilities less loss caused due to settlement
of lease for assignment of rentals to the
lenders Rs7. 38 million
Net Profit forthe year* RsO. 73 million
*  unrealised gain on remeasurement of investments
amounting to Rs.3.5 million has not been included above
The Comparative statement for last 6 Years of key financial and operating data is annexed.
As stated above, the Company could not declare any dividend / bonus for the year under review.
During the year, six meetings of the Board of Directors were held and all the Directors except Mr. Sohail Ali
attended the meeting. Mr. Sohail Ali remained out of country throughout the year.
FUTURE OUTLOOK
We are making all efforts for the merger of your leasing company with a financially solvent leasing company
and hopefully the matter will be finalized soon. We also discussed our plan with the Executive Director of
Securities & Exchange Commission of Pakistan, who advised to pursue investors for the investment in
the Equity of the Company in order to consider the restoration of licence and accordingly investors have
been approached and hopefully a revival plan for increasing the equity through merger and injection of
fresh funds will be submitted to SECP very soon.
CODE OF CORPORATE GOVERNANCE
Your Directors have implemented the code as required and there has been no material departure from it. The
Audit Committee and Executive Committee have also been established.
\
GOING CONCERN ASSUMPTION & FUTURE PROSPECT
The Company has earned a net profit of Rs.0.73 million during the year (2002: Loss of Rs.0.91 million) and its
accumulated losses up to June 30, 2003 amounted to Rs.91.37 million (2002: Rs.91.96 million) and after
including the unrealised gain on the remeasurement of investments amounting to Rs2.91 million, the net
equity of the Company has increased to Rs. 16.87 million (2002: Rs. 12.66 million). The Company has not paid
the overdue amounts to financial institutions as specified in notes 5.2,6.1,6.3,10.4,17.1 & 17.2 to the financial
statements. The Management negotiating with a Leasing Company and Potential Investors for merger and
enhancement of equity. As regards the deposits of Rs43.98 million placed with an associated investment
bank, the management of the investment bank has successfully negotiated with Army Welfare Trust (AWT-
Askari Bank) and Habib Bank Limited to participate in the enhancement of capital of the bank. NALC will also
convert their entire deposit plus profit into equity jointly with AWT and HBL subject to approval by Securities &
Exchange Commission of Pakistan (SECP). Necessary approvals of the Directors and members have
already been obtained in the last AGM of NALC. In view of above, the stuck up amounts now seems to be
recoverable in the form of shares of AIBL. The Company has repaid / settled loans of Rs.10.82 million during
the year under review through the sale of TFCs and rentals received by them. Furthermore, the management
is in trie process of negotiating the settlement of remaining above-mentioned overdue loans.
Auditors have qualified their Audit Report due to non-provisioning in respect of the following items:
a)         Deposits with Asset Investment Bank Limited
B)         Amount receivable from various lessees.
c)         Reversal of accrued mark-up and non accrual of mark-up on loans.
Management considers that in view of the negotiation with various lenders and borrowers and process of
restructuring / rescheduling of Company's assets as well as liabilities, substantial amount of such provision
will not be required. Further in view of significant progress made in restructuring of associated undertaking i.e.
Asset Investment Bank Limited with Habib Bank Limited and Army Welfare Trust (AWT) in the participation of
enhancement of Capital of Investment Bank. Based on that, management consider that at this stage there is
no need to make any provision against above assets. However in the interest of transparency and full
disclosure, management has given all significant facts in respect of Assets and Liabilities and related
uncertainly.
SYSTEM OF INTERNAL CONTROLS
The Board has established a system of Internal Controls that is considered sound in view of the Company's
nature of business and its size. The Board has also established mechanisms for on going monitoring of the
Internal Control to ensure its effective implementation. Further, due to difficulties in the financial position of the
Company, there is no appropriate segregation of duties, however such factors has'been overcome by direct
supervision of a full time Director.
AUDITORS' REPORT
As regard the auditors' remarks/qualification regarding inadequate provision and unrealised finance income,
we feel that the amounts mentioned therein are recoverable and in case of our failure in recovery, the amount
will be fully covered through provisions. The company has suspended all the accruals of profit as required
under Leasinq Companies Rules.
The reservation of the Auditors in respect of the investment of funds with Asset Investment Bank Limited,
an associated company of National Asset Leasing Corporation Limited, have already been explained
above.
The reversals of profit in all the cases are justified as per corresponds/agreements signed between your
company and the lenders.
PATTERN OF SHAREHOLDING
The pattern of shareholding as at June 30,2003 is annexed to this report.
There was no trading in shares by any Director, Chief Executive Officer, Chief Financial Officer, Company
Secretary and their spouses and minor children.
AUDITORS
The auditors M/s. M. Yousuf Adil Saleem & Co., Chartered Accountants retire and offer themselves for re-
appointment.
ACKOWLEDGEMENT
The Board likes to place on record their deep appreciation of the efforts put and dedication shown by all
personnel of the company.
Your Directors express their gratitude to lenders and regulatory bodies for their support.
For and on behalf of
NATIONAL ASSET LEASING CORPORATION LTD.
Islamabad: October06,2003                                                                                RANA M. ABU OBAIDA
Chief Executive
KEY FINANCIAL AND OPERATING DATA
Description 2003 2002 2001 2000 1999 1998 1997
Revenue 840,472 1,238.37 2.985,396 36.467,017 32.949,413 43,578,370 42,200,174
Expenditure 6,949,589 22.083,559 28.208.594 31,419,137 21,599,858 37.064,553 39.792,525
Profit/(Loss) before provisions -6,109,117 -20,845,192 -25,223,198 5,047,880 11,349,555 6.513,817 2,407,649
Provisions -7,376,572 -19,944,046 37,842,693 26,583,560 24,575,792 500,000 3,461,412
Profit/(Loss) for the year before taxation 1,267,455 -901.146 -63,065,891 -21,535,680 -13,226,237 6,013,817 -1,053,763
Taxation reversal/fcharged) -535,904 -10,000 -5,425,475 -5,852,475 300,000 1,110,693 500,000
Net Profit/(loss) for the year after taxation 731,551 -911,146 -57,640,416 -27,388,155 -13,526,237 4,903,124 -1,553,763
Unappropriated Profit/(loss) brought forward -91,961,078 -91,049,932 -30,809,516 -3,421,361 10,104,876 6,182,377 7,736,140
Appropriations -146,310 - - - - 11,085,501 6,182,377
Deficit on Remeasurement of Financial 1
Intruments 2,909,142 -578,951 - - - -
Transfer to reserve fund - - - - 980,625 -
Unappropriated Profit/(loss) carried forward -91,375,837 -92,540,029 -88,449,932 -30,809,516 -3,421,361 10,104,876 6,182,377
COMBINED PATTERN OF CDC & PHYSICAL SHARE HOLDINGS
AS AT 30-06-2003
CATEGORY CATEGORIES OF NUMBER OF CATEGORY WISE NO.OF CATEGORY WISE PERCENTAGE
NO. SHARE HOLDERS SHARES HELD FOLIOS/CDS ACCOUNTS SHARES HELD" %
1 INDIVIDUALS 657 3.514,000 36.85
2 INVESTMENT COMPANIES 1 1,500 0.02
3 JOINT STOCK COMPANIES 29 1,332,100 13.97
4 DIRECTORS. CHIEF EXECUTIVE OFFICER . .   •   9 1,487,700 15.6
AND THEIR SPOUSE AND MINOR CHILDREN
MR. SHAMIM I. JUNEJO 45,100
MR. RANA M. ABU OBAIDA 160,000
MR. AZHAR TARIQ KHAN 260,000
MR. M.A. REHMANI 160,000
MR. SOHAIL All 216,500
DR. KHALID IQBAL 220,000
SYEDNAVEEDZAIDI 161,600
MRS. ZOHRA W/0 MR. SHAMIM I. JUNEJO 30,100
MRS. NAYYOR RASOOL W/0. MR. M.A.REHMANI 234,400
5 EXECUTIVES
6 NIT/ICP 3 818,600 8.58
NATIONAL BANK OF PAKISTAN, TRUSTEE DEPTT. 810,000
INVESTMENT CORPORATION OF PAKISTAN 8,600
7 ASSOCIATED COMPANIES, UNDERTAKINGS AND 2 1,200,000 12.58
RELATED PARTIES
NATIONAL INDUSTRIAL MANAGEMENT LIMITED 400,000
ASSET INVESTMENT BANK LIMITED 800,000
8 PUBLIC SECTOR COMPANIES AND
CORPORATIONS
9 BANKS, DFIs, NBFIs, INSURANCE COMPANIES, 12 1,182,800 12.4
MODARABAS & MUTUAL FUNDS
10 FOREIGN INVESTORS
11 CO-OPERATIVE SOCIETIES
12 CHARITABLE TRUSTS
13 OTHERS 1 100 0
TOTALS 714' 9,536,800 , 100
TOTAL
COMBINED PATTERN OF CDC & NORMAL SHARE HOLDINGS AS AT 30-6-2003
NUMBER  OF SHAREHOLDERS SHARE            HOLDINGS TOTAL SHARES HELD
46 1 - 100 4,600
204 101 - 500 83,300
171 501 - 1000 163,500
178 1001 - 5000 538,800
43 5001 - 10000 349,900
15 10001 - 15000 186,700
14 15001 - 20000 274,700
6 20001 - 25000 141,300
1 25001 - 30000 30,000
6 30001 - 35000 183,800
1 35001 - 40000 40,000
1 40001 - 45000 40,500
4 45001 - 50000 195,100
2 55001 - 60000 116,500
3 65001 - 70000 206,500
1 75001 - 80000 76,500
2 155001 - 160000 320,000
1 160001 - 165000 161,600
1 195001 - 200000 197,600
1 200001 - 205000 201,400
2 215001 - 220000 436,500
2 230001 - 235000 467,700
1 255001 - 260000 260,000
3 345001 - 350000 1,045,300
1 395001 - 400000 400,000
1 795001 - 800000 800,000
1 805001 - 810000 810,000
1 850001 - 855000 855,000
1 945001 - 950000 950,000
714 9,536,800
CATEGORIES OF NUMBER OF SHARES PERCENTAGE
SHAREHOLDERS SHAREHOLDERS HELD %
1- INDIVIDUALS 666 5,001,700 52.446
2- INVESTMENT COMPANIES 5 813,100 8.526
3- INSURANCE COMPANIES
4- JOINT STOCK COMPANIES 31 1,733,100 18.173
5- FINANCIAL INSTITUTIONS 4 1,083,400 11.36
6- MODARABA COMPANIES 7 905,400 9.494
7- FOREIGNERS
8- CO-OPERATIVE SOCIETIES
9- CHARITABLE TRUST
10-OTHERS 1 100 0.001
TOTALS 714 9,536,800 100
STATEMENT OF COMPLIANCE WITH THE
CODE OF CORPORATE GOVERNANCE
This statement is being presented to comply with the Code of Corporate Governance contained in regulation
No.37 (Chapter XI) of listing regulations of Karachi Stock Exchange (Guarantee) Limited, Clause 40 (Chapter
XIII) of the listing regulation of the Lahore Stock Exchange (Guarantee) Limited and Section 36 (Chapter XI)
of the listing regulations of the Islamabad Stock Exchange (Guarantee)Limited respectively, for the purpose
of establishing a framework of good governance, whereby a listed Company is managed in compliance with
the best practices of corporate governance.
The company has applied the principles contained in the Code in the following manner.
1)       The Company encourages representation of independent non-executive directors on its Board of
Directors. At present the Board consists of Chairman and seven Directors. Directors are nominated/ elected
by the shareholders. Presently all the Directors are non-executive except for one who is the Chief Executive of
the Company and his terms and conditions are determined by the Board of Directors.
2)      All the directors,except two have confirmed that none of them is serving as a director in more than ten
listed Companies, including this Company.
3)      All the resident Directors of the Company are registered as taxpayers and all except two have confirmed
that they have not been convicted by a court of competent jurisdiction as defaulter in payment of any loans to a
banking Company, a Development Financial Institution or a Non-Banking Financial Institution or, being a
member of stock exchange, has been declared as a defaulter by that stock exchange.
4)      No casual vacancy occurred in the Board during FY 2003
5)     The Company has prepared its statement of ethics and business practices, which has been approved by
the Board of Directors in its meeting dated October 6, 2003 and will be signed by all the directors and
employees of the Company.
6)     The Board has developed a vision/mission statement, overall corporate strategy and significant policies
of the Company and has approved in its meeting dated October 6, 2003. A complete record of particulars of
significant policies along with the dates on which these were approved or amended is currently being
developed.
7)   • All the powers of the Board have been duly exercised and decisions on material transactions, including
appointment and determination of remuneration and terms and conditions of employment of the CEO have
taken by the Board.
8)      The meetings of the Board held during FY 2003 were presided over by the Chairman, and the Board met
at least once in every quarter. Written notices of the Board meetings, along with the agenda and working
papers, were circulated at least seven days before the meetings. The minutes of the'meetings were
appropriately recorded and circulated.
9)     In compliance with the clause regarding orientation course, the directors thoroughly reviewed and
discussed the Code of Corporate Governance in its meeting held during the year to apprise them of their
duties and responsibilities.
10)   The Board has approved appointment of CFO, Company Secretary and Head of Internal audit, including
their remuneration and terms and conditions of employment, as determined by the CEO, in its meeting dated
October 6,2003.
11)   The Director's report for this year has been prepared in compliance with the requirement of the code and
fully describes the salient matters required to be disclosed.
12)   The Financial Statements of the Company were duly endorsed by CEO and CFO before approval of the
Board.
13)   The Directors, CEO and executives do not hold any interest in the shares of the Company other than that
disclosed in the pattern of shareholding.
14)   The Company has complied with all the corporate and financial reporting requirements of the Code.
15)   The Board has formed an audit committee comprising three non-executive directors including the
chairman of the committee.
16)     The meetings of the audit committee were held at least once every quarter prior to approval of interim
and final results of the Company, and as required by the Code of Corporate Governance. The terms of
reference of the committee have been formed and approved by the Board of Directors in its meeting dated
Octobers, 2003 and will be advised to the Committee for compliance.
17)    The Company is in the process of forming an effective internal audit function, which will carry out audit
on a continuing basis.
18)     The statutory auditors of the Company have confirmed that they have been given a satisfactory rating
under the quality control review programme of the Institute of Chartered Accountants of Pakistan, that they or
any of partners of the firm, their spouses and minor children do not hold shares of the Company and that the
firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on
the code of ethics as adopted by Institute of Chartered Accountants of Pakistan.
19)    The statutory auditors or the persons associated with them have not been appointed to provide other
services except in accordance with the listing regulations and the auditors have confirmed that they have
observed IFAC guidelines in this regard.
20)     We confirm that all other material principles contained in the Code have been complied with as stated
above, except for serial Nos. 2,3,5,6,10,16 & 17 above, towards whicTi reasonable progress is being made
by the Company to seek compliance by the end of next accounting year.
RANAM.ABUOBAIDA
Chief Executive
Islamabad: Octobers, 2003
Auditor's Review Report to the Members on Statement of compliance
with Best Practices of Code of Corporate Governance.
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate
Governance prepared by the Board of Directors of National Asset Leasing Corporation Limited to comply
with the Listing Regulations Nos. 30,37 and 40 of the Islamabad, Lahore & Karachi Stock Exchanges
respectively 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 is 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 systems to enable us to expressan opinion as to whether
the Board's statement on internal control covers all controls and effectiveness of such controls.
The Company did not comply with certain requirements of the Code that are disclosed in paragraph 20 of the
statement of compliance.
Based on our review, except for the non-compliance referred in the preceding paragraph, 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, which the best practices contained in the Code of
Corporate Governance.
M.YousufAdilSaleem &Co.
Chartered Accountants,
Karach: October 06,2003.
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of National Asset Leasing Corporation Limited (the Company)
as at June 30, 2003 and the related profit and loss account, statement of changes in equity and cash flow
statement together with the notes forming part thereof, for the year then ended and except for the matter
stated in paragraph 'e' belowwe 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.
Except for the matter stated in paragraph 'e' below 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 basisforouropinion and, afterdue verification, we reportthat:
a)  Provision for doubtful debts in respect of other receivables reflected in note 16 to the financial statements
.isinadequate to the extent ofRs.6.97 million, which we consider are doubtful. Further, the Company has
not suspended the unrealized finance income of Rs. 15.74 million on classified lease finance in accordance
with the "Non-Banking Finance Companies Establishment and Regulation Rules, 2003 (the NBFC
Rules)". Consequently, other receivables and net investment in  finance  lease are  overstated and
accumulated loss is understated by these amounts respectively.
b)  As described in note 17.2 of the financial statements, the Company has not made any provision against its
deposit with an associated investment bank of Rs.43.98 million, which has remained outstanding for
severalyearsonthebasisthatthesamewillbeconvertedintoequityuponfinalizationof arrangements to
Revive the investment bank as described  in the note. Due to the adverse financial position of this
investment bank, the recoyerability of this amount is considered doubtful. No provision has been made
against this doubtful deposit.
c)  Uptill June 30, 2002, the Company had charged mark-up at the rate of 20.50% on the outstanding
liability payable to a" Development Financial Institution (DPI) (which is currently under liquidation) based
on the original agreement executed in theyear 1995. However, an amount of Rs.12.55 million was
reversed in 2002 based on rescheduling arrangement finalized in  the year 1998. The Company could
notmeet the payments as per such rescheduling arrangement. As against the liability reflected in the
financial statements of Rs.42.20 million, the liquidator of the DPI has filed a suit claiming Rs.54.48 million
from the Company. Accordingly, this liability to DPI is understated by Rs. 12.28 million as described in Note
5.2 and Note 10.4.
d) The Company has note accrued the mark-up of Rs.5.19 million for the year ended June 30,2003 on a long-
term finance obtained from a bank as described in note 6.1. We were not provided any appropriate basis
for not accruing the mark-up. Further an amount of Rsl.O million remains unreconciled with the books of
account of the Bank.
e) As described in note 17.1 of the financial statements, an amount of Rs.6.92 million held in a current account
with Muslim Commercial Bank Limited, is in dispute and under litigation. We have also not received
confirmation from the bank. Consequently, we were unable to verify the recoverability of this amount.
In our opinion, except for the effects of matters stated in paragraphs'a'to'e'above, proper books of account
have been kept by the Company as required by the Companies Ordinance, 1984;
In our opinion, except for the effects of matter stated in paragraphs 'a' to 'e' above, 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.
Inouropinion;
i)  the expenditure incurred during the year was forthe purpose of the Company's business; and
ii) the business conducted, investments made and the expenditure incurred during the  year were in
accordance with the objects of the Company,
In our opinion, except for the matters stated in the paragraphs 'a' to 'e' above 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. Due to the impact of the matters stated in paragraphs
'a' to 'e' above, in our opinion the above referred statements respectively do not give a true and fair view of the
state of the Company's affairs as at June 30,2003 and of the profit, its cash flows and changes in equity forthe
year then ended; and
Inouropinion, no Zakatwas deductible at source undertheZakat and UshrOrdinance, 1980.
We draw attention to note 2.3.1 to the financial statements which describes that the Company's accumulated
Losses upto June 30, 2003 amounted to Rs.91.38 million which had reduced its net equity to Rs.16.88 million
and the Company has not paid the overdue amounts to financial institutions. Further, the Securities and
Exchange Commission of Pakistan has cancelled the leasing license of the Company through its letter dated
April 4, 2002 due to its failure to enhance its capital to Rs.200 million as required under Rule 7(3) of the
Leasing Companies (Establishment and Regulation) Rules, 2000. These factors raise substantial doubt that
the Company will be able to continue as a going concern.
Sd/
M. YOUSUF ADIL SALEEM & CO.,
Chartered Accountants
Karachi
Date: October 06,2003
BALANCE SHEET
2003 2002
Note Rupees Rupees
Share Capital
Authorized
10,000,000 ordinary shares of Rs.10 each 100,000.00 100.000.000
Issued, subscribed and paid-up
9,536,800 fully paid ordinary shares
of Rs. 10 each against cash 4 95,368,000 95,368,000
RESERVES
Statutory reserve 9,975,150 9,828,840
Unrealised gain / (loss) on remeasurement 2,909,142 -578,951
Accumulated loss -91,375,837 -91,961,078
. -78,491,545 -82,711,189
16,876,455 12,656,811
REDEEMABLE CAPITAL 5 _ 7,753,500
LONG-TERM FINANCES 6 - -
LEASE KEY MONEY 7 29,000 142,713
CERTIFICATES OF INVESTMENT 8 230,000 230,000
CURRENT LIABILITIES
Current portion of redeemable capital 5 44,426,881 36,4/2,171
Current portion of long-term finances 6 30,943,685 32,996,035
Current portion of lease key money 7 2,034,331 7,147,328
Certificates of investment 8 2,835,921 3,325,921
Accrued and other liabilities 9 51,937,120 49,730,601
132,177,938 129,672,056
CONTINGENT LIABILITIES 10
149,313,393 150,455,080
The annexed notes form an integral part of these financial statements.
These financial statements were authorised for issue in the Board of  Directors   meeting held on
October 06,2003.
AS AT JUNE 30, 2003
2003 2002
Note Rupees Rupees
TANGIBLE FIXED ASSETS 11 1,876,423 2,226,584
NET INVESTMENT IN
LEASE FINANCE 12 49,746,674 59,981,065
Current portion -49,627,142 -59,552,962
119,532 428,103
INVESTMENTS 13 25,396,798 13,192,700
LONG TERM RECEIVABLES 14 742,180 8,419,390
CURRENT ASSETS
Current portion of net investment
in lease finance 12 49,627,142 59,552,962
Current portion of Long Term
receivables 14 9,191,910 6,337,500
Investment 15 - 253,900
Advances, deposits, prepayments
and other receivables 16 9,365,326 8,110,185
Cash and bank balances 17 52,994,082 51,933,756
121,178,460 126,188,303
149,313,393 150,455,080
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2003
2003 2002
Note Rupees Rupees
REVENUE
Income from leasing operations 18 101,846 1,005,781
Income from Government securities - 57,541
Dividend income 40,859 41,045
Income from bank deposits 8,057 -
Profit on disposal of fixed assets - 134,000
Other income 689,710 •
840,472 1,238,367
EXPENDITURE
Return and financial charges 19 2,476,853 15,773,538
Loss on lease disposal - 983,929
Administrative and operating expenses 20 4,472,736 5,326,092
6,949,589 22,083,559
(Loss) before provisions / (reversals)and other adjustments -6,109,117 -20,845,192
PROVISIONS/ (REVERSALS) AND
OTHER ADJUSTMENTS
Provision / (Reversal) for doubtful debts
Net investment in lease finance -3,267,253 -
Advances, deposits, prepayments
and other receivables -118,218 117,827
Diminution in value of TFCs 543,894 -
Reversal of suspense and provision -877,688 -
Settlement of liabilities and a lease 21 -3,581,016 -20,245,983
(Gain) / deficit on remeasurement of financial instruments 22 -76,291 184,110
-7,376,572 -19,944,046
Profit / (Loss) before Taxation 1,267,455 -901,146
Provision for Taxation 23 -535,904 -10,000
Profit / (Loss) after taxation 731,551 -911,146
APPROPRIATIONS
Transfer to statutory reserve -146,310 -
ACCUMULATED (LOSS) BROUGHT FORWARD -91,961,078 -88,449,932
DEFICIT ON REMEASUREMENT OF INVESTMENTS - -2,600,000
-91,961,078 (91 ,049,932)
ACCUMULATED (LOSS) CARRIED FORWARD (91 ,375,837) -91,961,078
EARNINGS / (LOSS) PER SHARE 31 0.08 -0.1
The annexed notes form an integral part of these financial statements.
CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2003
2003 2002
. CASH FLOWS FROM OPERATING ACTIVITIES Rupees Rupees
Net profit / (loss) for the year before tax   •
Adjustments for : 1,267,455 -901,146
Depreciation on fixed assets
(Gain) on sale of fixed assets 367,701 616,580
Provision / (reversals) for doubtful debts against: - (134,000) ,
Net investment in lease finance
Advances, deposits, prepayments -3,267,253 -
and other receivables
Suspended income -118,218 117,827
Diminution in value of TFCs -877,688 -
(Reversal) of provision for diminution in value of investment 543,894 -
Reversal/(Provision) for taxation -634,000
(Gain) on remeasurement of financial asset and financial liability -535,904 (10, 000,0)
Financial charges on borrowings -76,291 -
2,476,853 15,773,538
Cash inflow from operating activities -1,486,906 15,729,945
before changes in operating Assets and Liabilities
Decrease in investment in lease finance -219,451 14,828,799
(Increase) in advances, deposits, 10,753,371 33,736,469
prepayments and other receivables
Decrease / (increase) in receivables -1,136,923 -993,230
(Increase) / decrease in investment 4,822,800 -14,756,890
Increase / (decrease) in accrued and other -5,580,038 934,000
liabilities
Decrease in long- term deposits 2,206,519 -13,591,226
(Decrease) in certificates of investment - 157,200
(Decrease) in lease key money -490,000 -249,900
-5,226,710 -1,942,829
Payment of Return and Financial Charges 5,349,019 3,293,594
Income tax paid -2,476,853 -18,233,506
- -65,956
Net cash generated from operating activities 2,872,166 15,005,868
2,652,715 -177,069
2003 2002
6.  CASH FLOWS FROM INVESTING ACTIVITIES Rupees Rupees
Purchase of fixed assets
Encashment of WAPDA Bond -17,540 -39,000
Sale of fixed assets - 500,000
Proceeds from long-term investment - 445,000
Net cash generated from investing activities 200,000 460,000
C. CASH FLOWS FROM FINANCING ACTIVITIES 182,460 1,366,000
Increase/ (decrease) in redeemable capital
(Decease) in long-term finance 277,501 -1,559,300
(Decrease) in obligation under -2,052,350 -5,297,650
finance leases
Net cash (outflow) from financing activities - -321,544
Net increase / (decrease) in cash and cash -1,774,849 -7,178,494
equivalents
Cash and Bank balances at beginning of the year 1,060,326 -5,989,563
Cash and Bank balances at the end of the year 51,933,756 57,923,319
52,994,082 51,933,756
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2003
Is sued
Subsc ribed Unrealised gain / (loss)
and pa id-up Statutory Accumulated on remeasurement
capit al reserve * (loss) of investment Total
Balance at July 1, 2001 95,368 ,000 9,828,840 -88,449,932 - 16,746,908
Unrealised loss on remeasurement
of investments -  - -2,600,000 - -2,600,000
Restated balance as at July 1 , 2001 95,368 ,000 9,828,840 -91,049,932 - 14,146,908
(Loss) for the year ended June 30, 2002 -  - -911,146 - -911,146
Unrealised loss on remeasurement
of investments -  - - -578,951 -578,951
Balance at July 1 , 2002 95,368 ,000 9,828,840 -91,961,078 -578,951 12,656,811
Profit for the year ended June 30, 2003 -  - 731,551 - 731,551
Transferred to statutory reserve -  146,310 -146,310 - -
Unrealised gain on remeasurement of
Investments -  - - 3,488,093 3,488,093
Balance at June 30, 2003 95.368 ,000 9,975,150 -91,375,837 2,909,142 16,876,455
*       The statutory reserve was created by transferring not less than 20% after tax profit for the year under the Leasing Companies
(Establishment and Regulation) Rules, 2000 now substituted by Non-Banking Finance Companies Establishment and Regulation
Rules, 2003 (the NBFC Rules) issued by the Securities and Exchange Commission of Pakistan (SECP).
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2003
1.      STATUS AND NATURE OF BUSINESS
1.1 National Asset Leasing Corporation Limited (the Company) was incorporated on August 26, 1990
as a public limited company and was engaged in the business of leasing under the Leasing
Companies (Establishment and Regulation) Rules, 2000 (the Leasing Rules) substituted by Non-
Banking Finance Companies Establishment and Regulation Rules, 2003 (the NBFC Rules) issued
by the Securities and   Exchange Commission of Pakistan (SECP). The Company is listed on
Karachi, Lahore and Islamabad stock exchanges. As described in note 2.3.2 below, on April 4,
2002 the license of the Company for carrying on leasing business was cancelled and since
then, the Company has ceased its leasing operations.
2.      BASIS OF MEASUREMENT AND STATEMENT OF COMPLIANCE
2.1 These financial statements have been prepared under the historical cost convention as modified
to comply with the requirements of International Accounting Standard (IAS)-39 "Financial
Instruments: Recognition and Measurement", wherever applicable.
2.2  These financial   statements   have   been   prepared in accordance with the requirements of the
Companies Ordinance, 1984, the NBFC Rules and approved accounting standards as applicable in.
Pakistan. Approved accounting standards comprise such International Accounting Standards as
notified under the provisions of the Companies Ordinance, 1984. Where the requirements of the
Companies Ordinance, 1984 or NBFC Rules or directives issued by the SECP differ with the
requirements of  these standards, the   requirements of  the   Companies Ordinance, 1984, the
NBFC Rules or the requirements of the said directives take precedence.
2.3  Going Concern Assumption
2.3.1The Company's accumulated losses upto June 30, 2003, amounted to Rs. 91.38 million (2002:
Rs.91.96 million) which had reduced its net equity to Rs.16.88 million (2002: Rs.12.66 million). The
Company has not paid the overdue amounts to financial institutions as specified in notes 5.3, 6.3,
8.1 and 9.1 to the financial statements. Due to the non-compliance of the Rule 7(3) of the Leasing
Rules relating to the enhancement of the paid-up capital to two hundred million rupees by June 30,
2001, the SECP cancelled the leasing license of the Company on April 4, 2002. Due to these
Conditions, there are doubts that the company will be able to continue its operations as a going
concern in the foreseeable future.
2.3.2ln order to revive the company's viability as a leasing company and for restoration of its leasing
license, management has taken a number of steps, including negotiations with various lenders for
appropriate restructuring and settlement of its liabilities. Management is also negotiating with a
leasing company and investors for the merger and enhancement of its equity. As regards the
deposit of Rs 43.98 million placed with an associated investment bank, management of the
investment bank has successfully negotiated with Army Welfare Trust (AWT) and Habib Bank
Limited (HBL) to participate in the enhancement of capital of the investment bank. The Company
will also convert its deposit plus profit into equity jointly with AWT and HBL subject to approval
by SECP. Necessary approvals of the Directors and members have already been obtained in the
last Annual General Meeting of the Company. As a result of the proposed restructuring of the
investment   bank,   the likelyhood   and extent of  recovery   of   this stuck up deposit  through
conversion   into   shares   of   the   investment   bank  will    increase   significantly.    Further,   the
Company has repaid / settled loans of Rs.10.82 million during   the year  through the sale   of
TFCs and rentals received, and it is in the process of negotiating the Settlement of remaining
overdue amounts with various lenders.
In view of the arrangements described in the preceding paragraph, management is confident that
after the finalization of such arrangements, the Company's license will be restored and its
normal operations, as a leasing Company will be revived. Accordingly, these financial
statements have been prepared on a going concern basis.
3. SIGNIFICANT ACCOUNTING POLICIES
3.1   Tangible fixed assets and depreciation
Owned
These are stated at cost less accumulated depreciation. Depreciation is charged to income
applying the straight line method whereby the cost of the asset less estimated residual value is
allocated over its estimated useful life. Depreciation on fixed assets is charged proportionately
from the month of acquisition (full month's depreciation being charged in the month of
acquisition ) upto the month prior to deletion.
3.2   Employee benefits
(a)   Provident fund
The Company operated a contributory provident fund (the Fund) for all its permanent
employees and equal contributions were made, both by the Company and by the
employees to the Fund upto June 30, 2002. The Fund has been temporarily discontinued
from Julyl, 2002 due to financial constraints and liquidity crunch. The scheme will be
re-started after the restoration of the license of the Company and revival of its normal
operations.
•  (b)      Compensated absences
The Company provides for unavailed compensated absences to the extent of 30 days per
annum for all its permanent employees. Provision for liabilities towards vested compensated
absences is made on the basis of last drawn basic pay.
3.3       Investments
3.3.1    The investments of the Company are classified as securities held to maturity and available for
sale.
3.3.2   Initial recognition
Investments in securities are recognised on a trade-date basis and are initially measured at
cost.
3.3.3   Subsequent measurement
(a)      Held to maturity
These are securities with fixed or determinable payments and fixed maturity that the.Company
Has the positive intent and ability to hold to maturity and are measured at amortised cost, less
any impairment loss recognised to reflect irrecoverable amounts.
(b)    Available for Sale
These are investments that do not fall under held to maturity and held for trading.
Available for sale investments are measured at subsequent reporting dates at fair value. Surplus /
deficit arising from re-measurement are taken to equity.
Fair value of quoted marketable securities is determined by reference to the stock exchange rates
ruling on the balance sheet date. In the case of unquoted securities, the net asset value based on
latest available financial statements is taken as the fair value.
3.4     Financial Instruments
The Company's principal financial assets are net investment in lease finance net of related
deposits, investments, receivables, advances, deposits and other receivable and cash and bank
balance. Net investment in lease finance are stated at their nominal value as reduced by
appropriate allowance for estimated irrecoverable amounts, while other financial assets are stated
at fair value, amortized cost or cost.
The Company's financial liabilities are classified according to the substance of their contractual
arrangements. Significant financial liabilities include redeemable capital, long - term finances,
certificates of investment, accrued and other liabilities.
3.5      Long-term finances and redeemable capital
All long-term finances and redeemable capital are initially recognised at cost being the fair value
of the consideration received together with the associated transaction costs. Subsequently, these
are recognised at amortised cost using effective interest rate method.
3.6     Provisions
In respect of provisions for lease losses the Company maintains provision for doubtful debts at a
' level that can be reasonably anticipated keeping in view the nature of the overall business
activities and regulatory requirements.
Other known bad debts are written off and provision is made for debts considered doubtful.
3.7    Offsetting
Asset and liability is off-set and the net amount reported in the balance sheet if the Company has
a legal enforceable 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. Corresponding income on the asset
and charge on the liability is also off setted.
3.8     Revenue recognition
The Company follows the "financing method" in recognizing income on lease contracts. Under this
method the unearned income i.e. the excess of aggregate lease rentals and the estimated
residual value over the cost of the leased asset is deferred and then amortized over the term of
the lease, so as to produce a constant rate of return on net investment in the lease.
Dividend income from quoted entities is recognized at the time of closure of share transfer books
of the company declaring the dividend.
Income on Government securities is recognized by pro-rata accruals of the differential in cost and
maturity values and/or the coupon rate applicable.
Project examination, consultancy, commitment and other charges are taken to income when
realized.
3.9     Taxation
Current
The charge for current taxation is based on taxable income which is computed as if all leases are
accounted for as operating leases.
Deferred
The Company accounts for deferred taxation using the liability method on all significant temporary
differences.
4.         ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
This include 800,000 ordinary shares held by Asset Investment Bank Limited and 400,000 ordinary
shares held by National Industrial Management Limited, associated companies.
2003 2002
Rupees Rupees
5.         REDEEMABLE CAPITAL • SECURED
Musharika funds 5.1 18,064,131 17,862,921
Finance under Term Finance Certificates 5.2 26,362,750 26,362,750
44,426,881 44,225,671
Less: current portion 5.3 -44,426,881 -36,472,171
- 7,753,500
5.1      This includes
(a) Rs.13 million Musharika funds obtained from a Modaraba, which the company could not pay
when due. The Company had negotiated an arrangement of full and final settlement with the
Modaraba in August, 2002 by assigning its receivables amounting to Rs.14 millions against
principal and accrued mark-up which were falling due till September 2003. As a result, an
amount of Rs 6.19 million of accrued markup were reversed during the year ended June 30,
2002. The assignment of receivable agreement is still in the process of being finalised. In terms of
this arrangement, the Company paid its first installment of Rs.1 million in January, 2003 but has
not paid its second installment of Rs.4 million which was due on March 31, 2003. The facility is
secured by charge on leased assets and personal guarantee of directors.
(b) . Rs.6.42 million Musharika funds obtained from a commercial bank (the Bank), which the
company could not pay when due. The Bank had filed a suit against the Company for recovery of
Rs. 10.11 million in October 2002 as described in Note 10.3. In June 2003 the .Company
negotiated an arrangement of full and final settlement with the Bank as per which it assigned its
Term Finance Certificates (TFC's) amounting to Rs.7.57 million as described in Note 13.1.4. The
company has made a down payment of 1 million to the Bank subsequent to the balance sheet
date. A short fall of liability of Rs2.15 millions resulting from this arrangement has been
recognised as mark-up during the year. This facility was secured by a mortgage and charge on
present and future book debts of the Company and hypothecation of plant and machinery and
personal guarantees of all directors
5.2    This represents credit line obtained from a Development Financial Institution (DPI). The finance
was repayable in four half-yearly and eleven quarterly installments and carried mark-up of 20.5%
per annum. The installments   commenced from October 1, 1998. During the year  2002, the
Company had reversed an  amount of  Rs 12.55 million out of total   liability   based on   the
rescheduling in the year 1998. The DPI has filed a recovery suit in the Banking court amounting to
Rs. 54.48 million (as described in Note 10.4). The facility was secured by way of assignment of
lease rentals and personal guarantees of the directors.
5.3    This includes Rs. 35.79 million (2002: Rs 32.48 million) as overdue amount not paid.
2003 2002
Rupees Rupees
6.       LONG-TERM FINANCES - SECURED
From :   .
A commercial bank 6.1 29,643,685 29,643,685
A modaraba 6.2 1,300,000 3,352,350
30,943,685 32,996,035
Less: current portion 6.3 -30,943,685 -32,996,035
6.1    This represents balance of two term finance facilities of Rs.20 million each obtained from a
commercial bank (the bank), carrying mark-up rate of Rs.0.48 per Rs. 1,000 per day. The two lines
were repayable in four and twelve quarterly installments, which commenced from September 30,
1998 and September 30, 1999 respectively. These facilities were secured by registered deed of
assignment of lease rentals of specific leases. The Company has not accrued mark-up for the year
ended June 30, 2003 amounting to Rs. 5.19 million. Further, the bank has also filed a recovery suit
in the banking court amounting to Rs.62.12 million as described in Note 10.2.
6.2     This represents Morabaha finance facility of Rs.20 million obtained from   a   Modaraba. The
Company entered into an agreement dated August 19,2002 with the Modaraba whereby the
Company had agreed to assign its receivables amounting to Rs.3.40 million as full and final
settlement against the liability of Rs.13.40 million. Consequently, an amount of Rs 2.70 millions of
principal and an amount of Rs. 7.30 million of accrued markup had been reversed during the year
2002. Subsequent to the balance sheet date, the Company has settled its outstanding liability of
Rs.2.049 million as full and final settlement through a payment of Rs. 1.3 million. Accordingly, the
balance amount of Rs. 0.749 million has been reversed during the year. The facility was secured
by deed of assignment of lease rentals of specific leases and personal guarantees of directors of
the Company which have been released subsequently.
6.3     This is an aggregate amount of installments, which include an amount of Rs. 29.64 million (2002:
Rs 29.64 million) which is overdue.
7. LEASE KEY MONEY
2003 2002
Lease key money Rupees Rupees
Less: current portion 2,063,331 7,290,041
-2,034,331 -7,147,328
29,000 142,713
2003 ,   2002
Rupees Rupees
8.   CERTIFICATES OF INVESTMENT
These are issued for maturity periods of three months to five years. The return on certificates ranaes
From 12% to 18.5%.
Certificates of investment 3,065,921 3,555,921
Less: current portion 8.1 -2,835,921 -3,325,921
230,000 230,000
8.1   This represents overdue amount.
9.  ACCRUED AND OTHER LIABILITIES
Accrued return/mark-up on secured
redeemable capital and long-term finances 9.1 49,207,501.00 47,001,152
Accrued return on Certificates of investment 1,416,714 1,304,914
Accrued operating expenses 603,443 742,855
Unclaimed dividend 116,558 116,558
Provision for taxation 592,904 437,000
Other liabilities - 128,122
51,937,120 49,730,601
9.1 This represents overdue mark-up payable to various financial institutions.
10. CONTINGENT LIABILITIES
10.1 Contingent liability in respect of suit filed in the Banking Court by a bank amounting to Rs.7.32
million. Management is confident that  the matter is likely  to be  decided   in favour of the
Company and no liability will arise (refer note 17.1).
10.2 A suit has been filed by a bank in the Banking Court for the recovery of amount of Rs.62.12
million. However,   amounts of  Rs. 29.64 million and   Rs. 30.21 million   have  already been
incorporated in the long-term finance (refer note 6.1) and mark-up (refer note 9) respectively.
Management is confident that the matter is likely to be decided in the favour of the Company and
no additional liability will arise. Accordingly, a provision of liability of balance amount Rs.2.27
million has not been made in these financial statements.
10.3 A suit has been filed by a bank in Banking Court for the recovery of amount Rs. 10.11 million
against the recorded liability of redeemable capital of Rs.6.42 million. Management contends that
the matter is likely to be settled at the recorded liability and no provision has been made for the
difference between the suit amount and the recorded liability (refer note 5.1 b ).
10.4 A suit has been filed by a DPI in the Banking Court for the recovery of amount of Rs.54.48
million against the recorded amount redeemable capital of Rs 42.2 million (including principal and
mark up - see note 5.2 and 9). Management is confident that the matter is likely to be decided in
favour of the Company and no additional liability will arise. Accordingly, a provision of the
additional liability of Rs. 12.28 million has not been made.
11. FIXED ASSETS - TANGIBLE
Cost at Additions/ Cost as at Accumulated Depreciation/ Accumulated Written down Depreciation
Particulars July 01, (deletions) June-30 depreciationas (adjustment) depreciation as value as at rate
2002 during the 2003 at July 01, 2002 for the year at June 30, 2003 June 30, 2003 %
Year
OWNED
Office equipment 2,212,615 6,600 2,219,215 1,535,912 78,869 1,614,781 604,434 20
Furniture & fixture 1,117,747 10,940 1,128,687 823,947 54,512 878,459 250,228 10
Office renovation 2,150,641 - 2,150,641 2,150,641 - 2,150,641 - 33.33
Vehicles 3,831,035 - 3,831,035 2,574,954 234,320 2,809,274 1,021,761 20
9,312,038 17,540 9,329,578 7,085,454 367,701 7,453,155 1,876,423
2003 9,312,038 17,540 9,329,578 7,085,454 367,701 7,453,155 1,876,423
2002 10,213,038 1,611,000 9,312,038 7,097,874 616,580 7,085,454 2,226,584
-2,512,000 -629,000
2003 2002
. Rupees Rupees
12. NET INVESTMENT IN LEASE FINANCE
Minimum lease payments receivable 12.1 96,018,109 146,104,499
Add: Residual value 7,465,131 11,313,643
103,483,240 157,418,142
Less: Unearned finance income -36,688,977 -54,495,322
Net investment in lease finance 66,794,263 102,922,820
Less: Provision for doubtful debts -17,047,589 -42,941,755
12.2 49,746,674 59,981,065
12.1 During the year an amount of Rs.5.62 million has been reclassified as investment in Term Finance
Certificates (TFCs) as per the scheme of arrangement described in note 13.1
72.2 Net investment in lease finance
Less than one year 49,627,142 59,552,962
Mose than one year and less than five year 119,532 428,103
49,746,674 59,981,065
2003 2002
Rupees Rupees
i3./WEsr/WE/vrs
Held to maturity 13.1 8,662,106 -
Available for sale
Associated companies 13.2 3,941,000 1,490,000
Other companies 13.3 12,793,692 11,702,700
25,396,798 13,192,700
13.1   Investment in unquoted Term Finance Certificates (TFCs)
Face Value
Name of Company June 30,
2003
Rupees
Pakland Cement Ltd (Series A) 5,214,759
Pakland Cement Ltd (Series B) 3,447,347
(See notes 13. 1.1 to 13. 1.5) 8,662,106
8,662,106
13.1.1  In 2002 a "Scheme of Arrangement" was agreed between Pakland Cement Limited (PCL)   and its
creditors. According to the scheme PCL has issued TFCs in substitution for the existing lease
obligations and other debts. Under this scheme the Company has received TFCs amounting to
Rs.9.2 million against its receivables.
13.1.2 TFCs; have been issued by PCL in two series. TFCs series "A" represent the principal amount and
carries a yield of'16% per annum repayable semi-annually. TFCs series "B"   issued for the
accrued profit carry no yield.
13.1.3 These TFCs are freely tradeable amongst the TFC holders except that for sale/transfer to a party
other than a creditor, prior consent of PCL would be required.
13.1.4 The Company has transferred all the rights, titles and interests of TFCs amounting to Rs. 7.57
million in favour of a commercial bank, described in Note 5.1 (b). Accordingly, to the extent of
subsequent settlement the company has reversed a provision of Rs. 2.34 million.
13.1.5 An installment due on June 30, 2003 against the TFCs of series "A" has not been received.
Negotiation with both the companies for further rescheduling is in process. The consortium of TFC
holders / creditors through their respective   association are   pursuing the   matter of obtaining
exemption from SECP for keeping the status quo as regards the classification of TFC's and
provisioning.
2003 2002
Rupees Rupees
13.2 Investment in associated companies
Unquoted
National Industrial Management Limited
250,000 ordinary shares of Rs.10 each 13.2.1 476,000 747,500
Quoted
Asset Investment Bank Limited
990,000 (2002:990,000 ) ordinary
shares of Rs.10 each 3,465,000 742,500
3,941,000 1,490,000
3,941,000 1,490,000
13.2.1 Percentage of equity held in the investee company is 25% of its capital. The Chief Executive of the
associated company is Mr. Azhar Tariq Khan. As audit for the year ended June 30, 2003 of this
company is in progress, the current year's break-up value is not available. The break up value as
per latest audited financial statement for the year ended June 30, 2002 was Rs.1.9 per share.
2003 2002
13.3 Investment in other companies Rupees Rupees
Quoted
Caravan East Fabrics Limited
650,000(2002: 650,000) ordinary
shares of Rs.10 each 3,900,000 3,900,000
First Hajveri Modaraba
193,286 (2002: 193,286) modaraba
Certificates of Rs.10 each 550,541 309,259
Sui Northern Gas Pipeline Limited
19,004 (2002: 16,478) ordinary
shares of Rs.10 each 629,033 227,396
First International Investment
Bank Limited 111 (2002:111)
ordinary shares of Rs.10 each 1,369 950
Pakistan Industrial Leasing Corporation Limited.
6,000 (2002: 6,000) ordinary
shares of Rs.10 each 42,900 30,000
Nayab Spinning & Weaving Mills Limited.
750,000 (2002: 750,000) ordinary
shares of Rs.10 each . 6,587,500 6,890,000
Pakistan Telecommunication Corporation Limited.
1700(2002:1700) vouchers of Rs.10 each 48,365 29,155
Industrial Capital Modaraba
574,436 (2002: 574,436) modaraba
certificates of Rs.10 each 1,033,984 315,940
12,793,692 11,702,700
12,793,692 11,702,700
2003 2002
Rupees Rupees
14.    RECEIVABLES
»
Held to maturity 9,934,090 14,756,890
Less: current portion -9,191,910 -6,337,500
742,180 8,419,390
15. INVESTMENT
Unquoted
Safa Rice Mills Limited
115,000 (2002: 115,000) ordinary shares 15.1 - 253,900
of Rs.10 each
t
- 253,900
15.1 Percentage of equity held in investee company was 12.28% of its capital. The name of chief
executive of the investee company is Mr. Parvez Aslam. As per latest available audited financial
statements for the year ended August 31, 2001 the company had a negative equity.
16. ADVANCES, DEPOSITS, PREPAYMENTS
AND OTHER RECEIVABLES
Advance
to employees 1,583 619,322
for expenses 893,683 108,307
Deposits