| Atlas Lease Limited |
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| Annual
Report 2000 |
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| MISSION
STATEMENT |
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| Lead
the industry by providing quality |
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| service
to customers, ensure continuous |
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| growth
in the shareholders' value and |
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| contribute
towards the economic |
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| development
of the country through a |
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| youthful
goal oriented, well rewarded team. |
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| CONTENTS |
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| Company
Information |
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| Notice
of Meeting |
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| Ten
Years at a Glance |
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| Directors'
Report |
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| Chairman's
Review |
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| Auditors'
Report |
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| Balance
Sheet |
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| Profit
and Loss Account |
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| Cash
Flow Statement |
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| Statement
of Changes in Equity |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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| COMPANY
INFORMATION |
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BOARD OF DIRECTORS |
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| Chairman |
|
Yusuf H. Shirazi |
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| Chief
Executive |
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Khaleeq-ur-Rahman Khan |
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| Directors |
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Dr. Amjad Waheed |
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|
Katsuaki Endo |
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|
Muhammad Shaft |
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|
Sanaullah Qureshi |
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|
Saquib H. Shirazi |
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|
Sherali Mundrawala |
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|
Talat Mahmood |
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| Company
Secretary |
|
Farooq Saleem |
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GROUP EXECUTIVE COMMITTEE |
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| Chairman |
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Yusuf H. Shirazi |
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| Members |
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Jawaid Iqbal Ahmed |
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|
Frahim Ali Khan |
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|
Iftikhar H. Shirazi |
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|
Aamir H. Shirazi |
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|
Saquib H. Shirazi |
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| Secretary |
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Amjad Hussain |
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GROUP PERSONNEL COMMITTEE |
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| Chairman |
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Yusuf H. Shirazi |
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GROUP AUDIT COMMITTEE |
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| Chairman |
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Sanaullah Qureshi |
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MANAGEMENT COMMITTEE |
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| Chairman |
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Khaleeq-ur-Rahman Khan |
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EXECUTIVE CREDIT
COMMITTEE |
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| Chairman |
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Frahim Ali Khan |
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| Auditors |
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Ford, Rhodes, Robson,
Morrow. |
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Chartered Accountants |
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| Legal
Advisors |
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Mohsin Tayebaly & Co. |
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| Bankers |
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ABN AMRO Bank |
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|
Allied Bank of Pakistan
Limited |
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|
Askari Commercial Bank
Limited |
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Faysal Bank Limited |
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|
Habib Bank AG Zurich |
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Habib Bank Limited |
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Muslim Commercial Bank
Limited |
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The Bank of
Tokyo-Mitsubishi, Limited |
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The Hongkong and Shanghai |
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Banking Corporation
Limited |
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| Lending
Institutions |
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Asian Development Bank
(ADB) |
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Commonwealth Development
Corporation (CDC) |
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German Investment and
Development Co. (DEG) |
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International Finance
Corporation (IFC) |
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Netherlands Development
Finance Co. (FMO) |
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|
Pakistan Kuwait
Investment Co., (Pvt.) Limited |
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| Registered
Office & Head Office |
Federation House, Sharae
Firdousi, |
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|
Clifton, Karachi - 75600 |
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Tel: (92-21) 5866817 -
20, 5866919 - 20 |
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Fax: (92-21) 5870543 |
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E-mail:
allkhi@allkhi.atlasgrouppk.com |
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Web Site: www.
atlasgrouppk.com/all |
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| Branch
Offices |
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Lahore Office: |
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3rd Floor, Ajmal House, |
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27-Egerton Road, Lahore. |
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Tel: (92-42) 6366170 -74,
6364941, 6305439, 6305449 |
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Fax: (92-42) 6365058 |
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|
E-mail: alllhr@alllhr.
atlasgrouppk.com |
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|
Islamabad Office: |
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30, Mezzanine Floor,
Beverly Centre, |
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|
Blue Area, Islamabad. |
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Tel: (92-51) 2824906,
824909 |
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Fax: (92-51) 2821377 |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the Thirteenth Annual General Meeting of the members of
ATLAS LEASE LIMITED will |
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| be
held at 11.00 a.m. on Tuesday, December 26, 2000 at Registered Office of the
Company at Federation House, |
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| Sharae
Firdousi, Clifton, Karachi to transact the following business: |
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| ORDINARY
BUSINESS: |
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| 1.
To confirm the Minutes of the Twelfth Annual General Meeting held on December
22, 1999. |
|
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| 2.
To elect eight (8) Directors on the Board of the Company under section 178
read with section 180 of the |
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| Companies
Ordinance, 1984 for a period of three years commencing from December 29, 2000
in place of |
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| the
eight (8) retiring Directors, namely: |
|
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| 1.
Mr. Yusuf H. Shirazi |
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5. Mr. Sanaullah Qureshi |
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| 2.
Dr. Amjad Waheed |
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6. Mr. Saquib H. Shirazi |
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| 3.
Mr. Katsuaki Endo |
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7. Mr. Sherali Mundrawala |
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| 4.
Mr. Mohammad Shaft |
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8. Mr. Talat Mahmood |
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| The
Board of Directors has 'fixed number of Directors to be elected at the
ensuing Annual General Meeting |
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| as
eight. All retiring directors are eligible to offer themselves for
re-election. |
|
|
| 3.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended June 30, 2000 |
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| together
with the Directors' and Auditors' Report thereon. |
|
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| 4.
To appoint Auditors and fix their remuneration for the year ending June 30,
2001. The present Auditors M/s. Ford, |
|
| Rhodes,
Robson, Morrow, Chartered Accountants, retire and being eligible, offer
themselves for reappointment. |
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| SPECIAL
BUSINESS: |
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| 5.
To approve the issue of Bonus Shares ~ 16% for the year ended June 30, 2000
as recommended by the Board |
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| of Directors. |
|
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| 6.
To approve increase in Authorized Capital of the Company from Rs.200 million
to Rs.300 million. |
|
|
| 7.
To approve the remuneration of the Chief Executive of the Company as
recommended by the Board of Directors. |
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| OTHER
BUSINESS: |
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| 8.
To transact any other business as may be placed before the meeting with the
permission of the Chair. |
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| A
statement under section 160 (1) (b) of the Companies Ordinance, 1984
pertaining to the Special Business |
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| referred
to above is annexed to this Notice of Meeting. |
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|
By Order of the Board |
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| Karachi:
November 24, 2000 |
|
FAROOQ SALEEM |
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|
Company Secretary |
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| NOTES: |
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| i)
The Register of Members of the Company will remain closed from 19/12/2000 to
26/12/2000 (both days |
|
| inclusive).
Transfers received in order at the Registered Office of the Company at the
close of business on |
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| December
18, 2000 will be treated in time for the purpose of entitlement of Bonus
Shares. |
|
|
| ii)
A member entitled to attend and vote at this meeting may appoint another
member as his / her proxy to |
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| attend
& vote on his / her behalf. The instrument appointing a Proxy and the
power of attorney or other authority |
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| under
which it is signed or a notarially certified copy of the power of attorney
must be received at the |
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| Registered
Office of the Company duly stamped, signed and witnessed not later than 48
hours before the meeting. |
|
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| iii)
Nomination from members for the office of director must be received at least
14 days before the time of the |
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| meeting
at the Registered Office of the Company. |
|
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| iv)
Shareholders whose shares are deposited with Central Depository System (CDS)
are requested to bring their |
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| National
Identity Card (NIC) alongwith their Account Number in CDS for verification.
In case of corporate |
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| entity,
the Board of Director's resolution/power of attorney with specimen signatures
of the nominee shall |
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| be
produced (unless it has be provided earlier) at the time of meeting. |
|
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| v)
Members are requested to notify any change in their addresses immediately. |
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|
| STATEMENT
UNDER SECTION 160(1)(b) OF THE COMPANIES ORDINANCE, 1984 |
|
| This
statement sets out the material facts concerning the Special Business to be
transacted at the Thirteenth Annual |
|
| General
Meeting of Atlas Lease Limited to be held on December 26, 2000. |
|
|
| 1.
The Directors are of the view that the Company's financial position justifies
the capitalization of |
|
| Rs.
27,770,320 from reserves of the Company to enable a Bonus issue in proportion
of four (4) shares |
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| for
every twenty five (25) shares held. For this purpose, following resolution is
proposed to be passed as an |
|
| Ordinary
Resolution, namely: |
|
| |
|
| RESOLVED |
|
| "that
a sum of Rs. 27,770,320 (Rupees Twenty Seven Million Seven Hundred Seventy
Thousand Three Hundred |
|
| Twenty
Only) out of the free reserves of the Company be capitalized and applied to
the issue of 2,777,032 fully |
|
| paid
ordinary shares of Rs. 10/- each as Bonus Shares in the proportion of four
(4) new shares for every twenty |
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| five
(25) existing shares held to those members whose names appear in the register
of members as at the close |
|
| of
business on December 18, 2000 and that the shares so issued shall be treated
for all purposes as an increase |
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| in
the paid-up capital of the Company." |
|
|
| FURTHER
RESOLVED |
|
| "that
the Bonus Shares so issued shall rank pari-passu in all respects with the
existing ordinary shares of the |
|
| Company" |
|
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| FURTHER
RESOLVED |
|
| "that
members entitled to a fraction of a share shall be given the sale proceeds of
their respective fractional |
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| entitlement,
for which purpose the Directors be and are hereby authorized to consolidate
the fractions into whole |
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| shares
and sell the shares in the stock market." |
|
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| FURTHER
RESOLVED |
|
| "that
the Directors be and are hereby authorized and empowered to give effect to
this resolution and to do or |
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| cause
to be done all acts, deeds and things that may be necessary or required for
the issue, allotment and distribution |
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| of
2,777,032 shares." |
|
|
| 2.
The Authorized Capital of the Company is being proposed to be increased from
Rs. 200,000,000/- |
|
| (Rupees
Two Hundred Million) to Rs. 300,000,000/- (Rupees Three Hundred Million) in
order to enable |
|
| the
Directors to issue further share capital when deemed necessary. For this
purpose, following resolution is |
|
| proposed
to be passed as a Special Resolution: |
|
|
| RESOLVED |
|
| "that
Authorized Capital of the Company be and is hereby increased from Rs.
200,000,000/- (Rupees Two Hundred |
|
| Million)
divided into 20,000,000 (Twenty Million) ordinary shares of Rs. 10/- each to
Rs. 300,000,000/- (Rupees |
|
| Three
Hundred Million) divided into 30,000,000 (Thirty Million) ordinary shares of
Rs. 10/- each." |
|
|
| FURTHER
RESOLVED |
|
| "that
Clause V of the Memorandum of Association and Article 5 of the Articles of
Association of the Company |
|
| be
and are hereby amended to the extent of reflecting therein the increase in
Authorized Capital as aforesaid." |
|
|
| 3.
Approval of the shareholders will be sought for the remuneration payable to
the Chief Executive of |
|
| the
Company in accordance with the terms and conditions of his service, as
recommended by the Board |
|
| of
Directors of the Company. For this purpose, it is intended to propose the
following Resolution to |
|
| be
passed as an Ordinary Resolution: |
|
|
| RESOLVED |
|
| "that
the Company hereby authorizes the holding of office of profit and payment of
remuneration (inclusive of |
|
| allowances)
to Mr. Khaleeq-ur-Rahman Khan, Chief Executive, not exceeding in the
aggregate Rs 3.20 million |
|
| per
annum for the year ending June 30, 2001 in addition to perquisites and other
benefits to which he is entitled |
|
| as
per Company policy." |
|
|
| The
Chief Executive is interested in the business to the extent of his
remuneration. |
|
|
|
|
|
| TEN
YEARS AT A GLANCE |
|
|
|
(Rupees in million) |
|
2000 |
1999 |
1998 |
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
| Paid-up
Capital |
173.56 |
105.19 |
105.19 |
105.19 |
105.19 |
66.55 |
60.50 |
55.00 |
50.00 |
50.00 |
| Reserves
& Surplus |
143.31 |
137.83 |
112.51 |
108.58 |
90.86 |
59.08 |
39.58 |
26.90 |
19.20 |
9.82 |
| Shareholders'
Equity |
316.87 |
243.02 |
217.70 |
213.77 |
196.05 |
125.63 |
100.08 |
81.90 |
69.20 |
59.82 |
| Profit
Before Taxation |
28.66 |
23.74 |
34.36 |
24.63 |
43.18 |
33.38 |
26.34 |
20.78 |
14.39 |
8.58 |
| Profit
After Taxation |
21.27 |
25.31 |
19.71 |
17.72 |
41.73 |
32.21 |
24.23 |
18.20 |
14.39 |
8.58 |
| Cash
Dividend |
|
15.00% |
|
15.00% |
10.00% |
10.00% |
10.00% |
10.00% |
|
| Stock
Dividend |
16.00% |
15.00% |
|
10.00% |
10.00% |
10.00% |
|
| Right Issue |
|
50.00% |
|
50.00% |
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors have pleasure in submitting Annual Report of the Company together
with the Audited Accounts and |
|
| the
Auditors' Report thereon for the year ended June 30, 2000. |
|
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
| Financial
Results: |
|
| Profit
for the year before taxation |
|
28,661,582 |
23,735,666 |
|
| Taxation: |
|
|
|
| Current |
|
6,027,984 |
3,924,436 |
|
| Prior |
|
1,366,072 |
-- |
|
| Deferred |
|
-- |
(5,500,000) |
|
|
------------ |
------------ |
|
|
7,394,056 |
(1,575,564) |
|
|
------------ |
------------ |
|
| Net
profit for the year after taxation |
|
21,267,526 |
25,311,230 |
|
| Previous
profit brought forward |
|
797,761 |
205,691 |
|
|
------------ |
------------ |
|
| Profit
available for appropriation |
|
22,065,287 |
25,516,921 |
|
|
| Appropriations: |
|
| Transfer
to statutory reserve |
|
4,253,505 |
5,062,246 |
|
| Transfer
from general reserve |
|
(42,510,320) |
(14,740,000) |
|
| Transfer
to capital reserve for deferred taxation |
|
32,500,000 |
24,440,000 |
|
| Transfer
to reserve for issue of bonus shares |
|
27,770,320 |
9,956,914 |
|
|
------------ |
------------ |
|
|
22,013,505 |
24,719,160 |
|
|
------------ |
------------ |
|
| Un-appropriated
profit carried forward. |
|
51,782 |
797,761 |
|
|
------------ |
------------ |
|
|
|
|
| Dividend: |
|
| The
directors are pleased to recommend a stock dividend/issuance of bonus shares
in proportion of four (4) shares |
|
| for
every twenty five (25) shares held, i.e. 16% out of the general reserve of
the Company. |
|
|
| Chairman's
Review: |
|
| The
accompanying Chairman's Review deals with the performance of the Company
during the year and future outlook. |
|
| The
Directors of the Company endorse the contents of the review. |
|
|
| Pattern
of Shareholding: |
|
| The
pattern of shareholding of the Company is annexed. |
|
|
| Auditors: |
|
| The
present Auditors Messrs. Ford, Rhodes, Robson, Morrow, Chartered Accountants
retire and being eligible offer |
|
| themselves
for reappointment. |
|
|
|
for and on behalf of |
|
|
BOARD OF DIRECTORS |
|
|
|
SANAULLAH QURESHI |
|
KHALEEQ-UR-RAHMAN KHAN |
|
YUSUF H. SHIRAZI |
|
|
|
Director |
|
Chief Executive |
|
Chairman |
|
|
| Karachi:
November 24, 2000 |
|
|
|
| CHAIRMAN'S
REVIEW |
|
|
| I
am pleased to present the Thirteenth Annual Report of your Company for the
year ended June 30, 2000. |
|
|
| THE
ECONOMY |
|
| The
year ending June 30, 2000 remained under the shadow of the international and
domestic political and economic |
|
| situation
prevailing in the year 1999. Nuclear detonation, Kargil issue and ultimately
army take over have had its |
|
| impact
on the political, economic and social fabric of the country. Good cotton,
rice and wheat crops, however |
|
| did
help in raising the GDP growth but inept pricing and other policy measures
could not yield the desired socio- |
|
| economic
benefits at the grass roots so as to uplift the economy on the whole. It was
against this background |
|
| that
the National Budget for the year 2000-2001 was presented as a part of 3 years
Perspective Plan aimed at |
|
| achieving
a 6% GDP growth and budgetary deficit below 5% by the year ending 2003. |
|
|
| The
GDP growth for the year 1999-2000 was 4.8%, agriculture being highest at
7.2%, manufacturing the |
|
| lowest
at 1.1% and service sector at 4.5%. Inflation was claimed to be 3.6% which
was the lowest in the past |
|
| decade.
The GDP growth target set for the year 2000-2001 vis-a-vis 1999-2000 is at
5%, up 0.2% from the |
|
| previous
year. Agriculture growth is projected at 3.9%, services at 5.2% and the
manufacturing at 5.9%. The |
|
| target
growth rates are an encouraging sign. The inflation for the year 2000-2001 is
estimated at 4.5%, 0.9% higher |
|
| than
last year. Despite government's emphasis on agriculture sector, a projection
of lower growth as |
|
| compared
to last year seems reasonably cautious keeping in view the current water
shortage and vagaries of the |
|
| weather.
In the present circumstances, the growth in manufacturing at 5.9% seems to be
optimistic but |
|
| achievable!
Similarly, the budgetary deficit target set at 4.6% of GDP vis-a-vis 6.5% of
last year and 6.6% average |
|
| of
the last 4 years seems to be somewhat realistic though with a lot of focus on
the rough edges of the economy. |
|
| The
revenue target hinges on collection of an extra Rs. 100 billion. It is
essential that all these targets are met in the |
|
| wake
of prevailing economic situation particularly the IMF conditionalities &
the overall external pressures, which are |
|
| becoming
increasingly arduous for the borrowing nations with Pakistan the most hard
hit at the present time. |
|
|
| On
the other hand, in July 2000 the State Bank of Pakistan chose to remove the
restrictions on the inter bank market |
|
| and
freed the rupee-dollar parity which caused the rupee to fall from Rs.52.36 to
Rs.59.30 a dollar in early October |
|
| 2000,
13.3% devaluation within a period of 10 weeks. In the kerb market, the rupee
went as low as Rs.63 to a |
|
| dollar
- resulting in cost-push pressures in the long run. This was stated to meet
one of the IMF conditionalities |
|
| -
before any settlement with them in sight. There is thus no alternative but to
come out of the vicious circle of |
|
| ever
rising debts, falling rupee, debt servicing and costlier imports,
consequently rendering exports incompetitive |
|
| due
to rising internal costs. This can only be done by a better business
environment, which promotes greater |
|
| investment
and savings. The devaluation has indeed made everything costlier without a
corresponding increase |
|
| in
investment and production productivity, value addition and volume growth.
Full utilization of capacity needs to |
|
| be
the focus, which alone will bring the cost down and result in export
competitiveness. |
|
|
| In
order to revive the economy, the world financing agencies prescription may be
just marginal. It has hardly |
|
| helped
any developing country so far. A recommendation in this connection to phase
out seven main industries in |
|
| Pakistan
- steel, fertilizer, sugar, oil refineries, chemicals, pharmaceuticals and
automobile, constituting over 50% |
|
| of
the economy, being not competitive by world standards, will further damage
the economy as a whole. What will |
|
| then
remain for achieving self-reliance, a view the Government does espouse.
Unemployment is becoming |
|
| a
bigger concern and challenge day by day. Similarly, a report that
localization programmes will be done away |
|
| will
only discourage investment. Equally important is the competitive advantage of
the local industry being |
|
| eroded
without which localization is effected. Imagine the rate of custom duty is
being reduced from 35% to |
|
| 25%,
without a corresponding reduction in raw material duty which remains at 10%.
Since the automobile |
|
| engineering
industry clearly does not come under the world financing institutions and
other regulatory agencies |
|
| -
WTO - there is no reason to succumb to any pressure from any other
international agency. Otherwise such |
|
| policies
will suspend investment with its repercussion on all financial institutions
and particularly leasing, |
|
| production
and export - and above all, any entrepreneurial initiatives in these
industries, to say the least, unless the |
|
| situation
is rectified or clarified in bold letters: |
|
|
| (The
state secrets are the preservatives of the statesmen) |
|
|
| MONETARY
DEVELOPMENTS |
|
| During
the period under review, the money market generally remained liquid. Lack of
economic activity can |
|
| be
termed as one of the major reasons of the excessive liquidity. The government
in a bid to boost economy, |
|
| asked
financial institutions to cut down the lending rates. To facilitate this
reduction, profits on national saving |
|
| schemes
were cut down by 2%. The State Bank of Pakistan also reduced the discount
rate from 13% to 11%. The |
|
| leading
commercial banks followed suit and reduced markup rates upto 2% in the second
half of the financial |
|
| year
under review. However, despite excess liquidity in the market and reduced
lending rates the economic activity |
|
| failed
to pick up, indicating lack of investors response. Removal of trading band in
the inter bank market put |
|
| rupee
under immense pressure against dollar. In order to stabilize the declining
rupee, the State Bank of Pakistan |
|
| carried
out a major operation in October 2000 and sucked liquidity from the market to
put dollarization to a hold. |
|
|
| In
a span of 2-3 weeks, the State Bank of Pakistan increased discount rate by 2%
i.e. from 11% to 13%. |
|
| Cut-off
rates on T-bills were also increased by more than 3%. Reserves requirement of
the commercial banks was |
|
| increased
from 5% to 7%. All these measures sucked liquidity from the market and
controlled further decline |
|
| of
rupee against dollar with rupee-dollar parity improving to Rs. 56.15 per
dollar and Rs. 61.05 per dollar in the |
|
| inter-bank
and curb market respectively in the second week of November 2000. To control
imports, commercial |
|
| banks
also imposed 30% margin requirement against letter of credit, subsequently
reduced to 15% and |
|
| eventually
removed as the market eased out and rupee gained strength. The subject
measures did manage to |
|
| stabilize
the rupee but at the cost of increased lending |
|
| rates
in the money market by 3% to 4%. |
|
|
| Expectation
of the deregulation of energy sector, excess liquidity in the money market
and reduction in profit |
|
| rates
of the national saving schemes led the KSE-100 index to reach the 28-month
high of 2,054 points on |
|
| March
22, 2000. However, the 4th quarter of the fiscal 2000 witnessed a sharp
reversal in the stock market, as |
|
| certain
speculative operators in the LSE could not fulfill their settlement
obligations. As a result of these defaults |
|
| trading
at all the three stock exchanges remained suspended on May 30, 2000, first
time in the history of |
|
| Pakistan.
These events led to a sharp decline in the stock prices taking the index down
to 1,520.74 on June 30, |
|
| 2000
and to 1,386.31 points on November 20, 2000 since the much awaited settlement
between GOP, WAPDA and |
|
| a
private IPP is still pending affecting fresh dozes of investment -
particularly foreign! |
|
|
| THE
LEASING INDUSTRY |
|
| The
leasing industry started developing in Pakistan in mid eighties with the
establishment of first leasing |
|
| company
in 1984 with paid-up capital of Rs. 20 million. Since then the number of
leasing companies has increased |
|
| to
32 and the equity to Rs.7,871 million till 1999. In addition there are 8
modaraba companies doing leasing |
|
| business
with an equity of Rs.3,009 million. |
|
|
| The
performance of leasing companies in the last five years show a mixed trend.
The equity grew from Rs.4,670 |
|
| million
in 1995 to Rs.7,871 million in 1999. The net investment in lease finance
increased by more than three |
|
| times,
i.e. from Rs.9,404 million in 1995 to Rs.29,039 million in 1999. |
|
|
| The
revenues also doubled from Rs. 2,522 million to Rs.5,528 million during the
same period, but the net profit |
|
| could
not keep pace with the growth. After reaching the peak at Rs. 922 million in
1996, it declined to Rs. 451 |
|
| million
in 1999, as against Rs. 517 million in 1995. This shows the last few years
not having been vibrant for the |
|
| industry
- primarily due to low level of investment activity, higher financial cost
and operating expenses, which on |
|
| cumulative
basis increased from Rs. 1,448 million in 1995 to Rs. 4,928 million in 1999. |
|
|
| During
the period under review, excess liquidity in the market coupled with limited
investment opportunity |
|
| created
an environment of severe competitions in the market bringing down the mark-up
rates and squeezing |
|
| the
spreads to bare minimum. |
|
|
|
|
| In
the Finance Ordinance 2000-2001, availability of initial depreciation
allowance, which was expiring on |
|
| June
30, 2000, was not renewed. On the other hand, industrial sector has been
given the incentive of Tax |
|
| Credit
in addition to the First Year Allowance. Leasing companies are however,
excluded from these allowances |
|
| despite
being acquirer and owners of industrial machinery. This sudden removal of
initial depreciation allowance |
|
| will
seriously hamper the growth of the entire leasing industry. This is a matter
of serious concern for the leasing |
|
| industry.
Accordingly, LAP has taken up this issue with the Ministry of Finance and
Central Board of Revenue |
|
| requesting
that either initial depreciation allowance be renewed for a further period of
five years or leasing |
|
| companies
be also allowed to avail First Year Allowance and Tax Credit. |
|
|
| Positive
development in the Finance Ordinance 2000-2001 was with respect to exclusion
of finance lease from |
|
| the
definition of Supply under the Sales Tax Act. With this amendment the sale
and lease back transaction will |
|
| not
be subject to imposition of sales tax, indeed a right approach in avoiding
duplication of taxes. Furthermore, |
|
| CBR
has also issued a clarification with respect to lease key money, which was
being taxed in some cases. This |
|
| will
no longer be treated as part of lease income and as such will not be
subjected to tax. |
|
|
| The
new Leasing Companies Rules 2000 were finally implemented with effect from
September 25, 2000. Time |
|
| limit
for raising paid-up capital to Rs. 200 million has been extended to June 30,
2001. Current stock market |
|
| conditions
make the subject deadline highly unrealistic. Leasing Association of Pakistan
(LAP) has taken up the |
|
| matter
with the SECP to review the deadline. |
|
|
| For
financing of BMR requirements, small and medium size enterprises will be the
main targets for the leasing |
|
| industry.
Despite the current economic scenario, the leasing business has the potential
for substantial growth, |
|
| which
will unleash in the years to come with the economic and political stability
in the country. |
|
|
|
| THE
COMPANY'S RESULTS |
|
| During
the period under review, lease disbursement of Rs. 738.03 million was made,
up 19.74% from last year. |
|
|
| Net
Investment in Lease Finance as on June 30, 2000 amounted to Rs.1,873,30
million compared to Rs. |
|
| 1,910.08
million last year. |
|
|
|
|
| The
lease portfolio comprised of 65.61% in machinery, 29.91% in vehicles and
4.48% in office equipment. |
|
|
| The
sectoral exposure as on June 30, 2000, was fairly diversified and comprised
of 12.09% in Cement followed |
|
| by
11.67% in Textile Spinning, 11.09% in Services, 8.93% in Chemicals,
Fertilizers & Pharmaceuticals, 8.02% |
|
| in
Steel, Engineering & |
