| Ghandhara Leasing Company Limited |
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| Annual Report 1999 |
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| CONTENTS |
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| Company Information |
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| Notice of Annual General
Meeting |
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| Financial Highlights |
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| Graphic Presentation |
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| Pattern of Shareholding |
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| Chairman's Review |
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| Directors' Report |
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| Auditors' Report to the
Members |
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| Balance Sheet |
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| Profit & Loss Account |
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| Cash Flow Statement |
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| Notes to the Accounts |
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| COMPANY
INFORMATION |
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| BOARD OF DIRECTORS |
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| Mr. Raza Kuli Khan Khattak |
|
Chairman |
Nominee of GNL* |
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| Lt.
Gen (Retd) Ali Kuli Khan Khattak |
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|
Nominee of GNL |
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| Mr. Ahmed Kuli Khan Khattak |
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Nominee of GNL |
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| Mr. Jamil Ahmed Shah |
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Nominee of GNL |
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| Mr. Mushtaq Ahmed Khan |
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Nominee of Bibojee |
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| Mr. K.U. Rahman |
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Nominee of Bibojee |
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| Mr. Nasim Beg |
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Nominee of NIT |
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| Ms. Aaliya Khadijeh Dossa |
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Nominee of NIT |
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| Mr. Michio Kuwahara |
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Nominee of Marubeni |
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| (Alternate Mr. Toshio Higaki) |
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| Mr. Haroon A. Zuberi |
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|
Chief Executive |
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| * GNL Ghandhara Nisan Limited |
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| Acting Company Secretary |
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|
Legal Advisors |
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| Mr. Naeem-uI-Hasan |
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|
Shaukat Law Associates, |
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|
217, Central Hotel
Annexe, |
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| Registered Office |
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|
Abdullah Haroon Road, |
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| 2nd Floor, State Life
Building |
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|
Karachi. |
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| 34,The Mall, Peshawar Cantt. |
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Phone: 5681495, 5686223 |
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| Karachi Office |
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|
Share Registrars |
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| F-35/I I, Block-4 |
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|
THK Associates (Pvt.)
Ltd. |
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| Clifton, Karachi-75600 |
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|
Ground Floor, |
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| Ph: 5838303-4 |
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|
Shaikh Sultan Trust, |
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| Fax: 5837304 |
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|
Building No. 2, |
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|
Beaumont Road, |
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| Bankers to the Company |
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|
Karachi-75530 |
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| American Express Bank Ltd. |
|
|
Ph: 5686658, 5685687 |
|
| Allied Bank of Pakistan Ltd. |
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| National Bank of Pakistan
Ltd. |
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| Standard Chartered Bank |
|
| The Bank-of Tokyo |
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| The Bank of Khyber |
|
| The Bank of Punjab |
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| Auditors |
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| Taseer Hadi Khalid & Co. |
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| Chartered Accountants, |
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| I st Floor, Shaikh Sultan
Trust, |
|
| Building No. 2. Beaumont
Road, |
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| Karachi-75530 |
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| Ph:
5681912, 5682290, 5680934. 5671761-63 |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 8th Annual General Meeting of the Company will be
held on 29~h |
|
| December,
1999 at 2nd Floor, State Life Building, 34. The Mall, Peshawar Cantt.
Peshawar at 12.30 |
|
| noon
to transact the following business: |
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| ORDINARY BUSINESS |
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| To
receive, consider and adopt the Audited Accounts of the company for the year
ended |
|
| June
30th 1999, together with the Chairman's review, Directors' Report and
Auditors' |
|
| Report thereon. |
|
|
|
| To
appoint Auditors and fix their remuneration. The present Auditors Messrs.
Taseer Hadi |
|
| Khalid
& Co., Chartered Accountants, retire and being eligible, offer themselves
for re- |
|
| appointment. |
|
|
|
| OTHER BUSINESS |
|
|
| To
transact any other business as may be placed before the meeting with the
permission of the |
|
| Chairman. |
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|
|
|
By Order of the Board |
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|
|
|
Haroon A. Zuberi |
|
| Karachi: 6th December, 1999 |
|
Chief Executive |
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|
| NOTES: |
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| 1.
The share transfer book of the company will remain closed from 22nd December,
1999 to |
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| 28th
December 1999 (both days inclusive). |
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|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/ |
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| her
proxy to attend the meeting and vote for him/hen No person shall act as a
proxy who |
|
| is
not a member of the company. Proxies in order to be effective must be
received by the |
|
| company
not less than 48 hours before the meeting. |
|
|
| 3.
Shareholders are requested to immediately notify the company of any change in
their |
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| addresses. |
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| FINANCIAL HIGHLIGHTS |
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|
|
31 Dec |
31-Dec |
31-Dec |
30-Jun |
30-Jun |
30 June |
30 June |
|
|
1992 |
1993 |
1994 |
1996 |
1997 |
1998 |
1999 |
|
|
(18 Months) |
|
|
| Balance sheet (Rupees in
Million) |
|
| Net Investment in Leases |
55.52 |
191.29 |
339.58 |
496.88 |
519.82 |
538.56 |
352.01 |
|
| Total Equity |
55.16 |
66.55 |
72.89 |
160.77 |
172.53 |
147.94 |
109.38 |
|
| Total Assets |
126.18 |
259.03 |
438.00 |
581.05 |
631.29 |
612.67 |
401.98 |
|
| Break-up value (amount in
rupees) |
11.03 |
13.31 |
14.57 |
19.46 |
20.89 |
17.91 |
13.24 |
|
|
| Income
Statement (Rupees in Million) |
|
| Gross Income |
8.97 |
30.09 |
66.416 |
137.603 |
99.826 |
92.169 |
65.22 |
|
| Financial charges |
0.36 |
11.71 |
37.51 |
87.67 |
67.34 |
72.71 |
58.236 |
|
| Other expenses/Provisions |
3.440 |
6.850 |
12.087 |
26.31 |
16.13 |
41.30 |
44.176 |
|
| Net Profit/(Loss) |
5.16 |
I 1.390 |
16.32 |
22.93 |
11.759 |
(24.588) |
(38.56 I) |
|
|
| Lease portfolio (Percentage) |
|
| Plant & Machinery |
74.00 |
78.60 |
77.00 |
66.33 |
73.10 |
56.96 |
69.38 |
|
| Equipments |
10.80 |
9.20 |
11.50 |
9.23 |
10.31 |
9.20 |
5.65 |
|
| Private vehicles |
8.10 |
9.40 |
11.00 |
9.67 |
7.05 |
8.79 |
6.12 |
|
| Commercial vehicles |
7.10 |
2.80 |
0.50 |
14.77 |
9.54 |
25.05 |
18.85 |
|
|
|
|
|
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|
|
| PATTERN OF SHAREHOLDING |
|
|
| No. of |
Shareholding |
Total |
|
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| Shareholders |
From |
to |
Shares held |
|
|
|
| 58 |
1 |
100 |
5,800 |
|
|
| 340 |
101 |
500 |
151,700 |
|
|
| 145 |
501 |
1000 |
142,400 |
|
|
| 53 |
1001 |
5000 |
121,600 |
|
|
| 21 |
5001 |
10000 |
168,600 |
|
|
| 5 |
10001 |
15000 |
60,700 |
|
|
| 3 |
15001 |
20000 |
59,000 |
|
|
| 1 |
25001 |
30000 |
28,000 |
|
|
| 1 |
30001 |
35000 |
33,500 |
|
|
| 2 |
50001 |
55000 |
105,800 |
|
|
| 1 |
295001 |
300000 |
300,000 |
|
|
| 1 |
335001 |
340000 |
337,700 |
|
|
| 1 |
495001 |
500000 |
500,000 |
|
|
| 1 |
785001 |
790000 |
786,400 |
|
|
| 1 |
1245001 |
1250000 |
1,250,000 |
|
|
| 1 |
1305001 |
1310000 |
1,308,500 |
|
|
| 1 |
2895001 |
2900000 |
2,900,000 |
|
|
| ------------------- |
------------------- |
------------------- |
------------------- |
|
|
| 636 |
|
|
8,259,700 |
|
|
| =========== |
=========== |
=========== |
=========== |
|
|
|
| Categories of Shareholders |
|
| As at 30 June 1999 |
|
|
| Categories |
No. of |
Shares held |
Percentage |
|
|
Share holders |
|
|
|
| Individuals |
620 |
734,300 |
8.8902 |
|
| Insurance Companies |
1 |
337,700 |
4.0885 |
|
| Joint Stock Companies |
6 |
4,257,800 |
51.5491 |
|
| Financial Institutions |
6 |
1,642,500 |
19.8857 |
|
| Modaraba Companies |
1 |
1,000 |
0.0121 |
|
| Foreign Companies |
1 |
500,000 |
6.0535 |
|
| Central Depository Co. of Pak |
1 |
786,400 |
9.5209 |
|
|
------------------- |
------------------- |
------------------- |
|
|
636 |
8,259,700 |
100.000 |
|
|
=========== |
=========== |
=========== |
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| CHAIRMAN'S REVIEW |
|
|
|
| I
am pleased to present before you the 8th Annual Report of the company
together with the |
|
| Audited
Accounts for the year ended 30th June, 1999. |
|
|
| AN OVERVIEW |
|
|
| Although
the economy of Pakistan is passing through a stagnation phase for the last
few years, but |
|
| the
financial year 1989-99 was the most difficult one in the economic history of
Pakistan. It wit- |
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| nessed
the full impact of sanctions imposed by international community due to
nuclear detonation. |
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| The
overall economic situation was further depressed due to continuation of
global economic |
|
| recession.
Therefore, the economic indicators, that started showing some signs of
improvement in |
|
| 1997-98
again got depressed during the year under review. The investors' confidence
was further |
|
| distressed
due to political situation and bleak economic position of the country. |
|
|
| Bears
also dominated the stock market in the first half of 1998-99, but they
started to fade away |
|
| with
the arrival of the bulls and the index crossed the 1300 level in the last
quarter of 1998-99, |
|
| which
had stood at 766 point at the end of July 1998. However, the stock market and
overall |
|
| economic
activities which after the set back of sanctions was on the road of recovery
again suf- |
|
| fered
a blow due to conflicts at Kargil Sector and internal political position of
the country. |
|
|
| Our
economy has become weak after a number of consecutive years of poor
performance and |
|
| may
not be able to sustain any sanctions and blows in the future. Although the
new government |
|
| soon
after assuming the office has taken steps for the revival of economy.
However, the path of |
|
| recovery may be long and
painful. |
|
|
| REVIEW OF OPERATIONS |
|
|
| Like
the economy of Pakistan, the year under review was most difficult one for
your company. |
|
| Lenders
became very cautious while providing fresh facilities to all sectors of the
economy. As a |
|
| result,
they were reluctant to extend financing facilities to the company due to
losses. Some of |
|
| them
even demanded immediate repayment of existing facilities. Therefore, your
company suffered |
|
| a
setback and was unable to make any substantial disbursement during the year.
Further, the old |
|
| leases
started to mature over the year and no new leases were there as replacement,
resulting in |
|
| shrinkage
of lease portfolio and a decrease in lease income. |
|
|
| The
outstanding exposure of the company stood at Rs. 352.01 million. The maximum
outstanding |
|
| exposure
is in the cement sector, which is Rs. 51.16 million or 14.53%, followed by
Transport & |
|
| Communication,
which amounts to Rs.47.217 million or 13.41% and Energy, Oil & Gas, which
is Rs. |
|
| 38.383 million or 10.90%. |
|
|
| In
assets portfolio, maximum outstanding exposure is in Machinery, followed by
Commercial Ve- |
|
| hicles,
Equipment and Private Vehicles, amounting to Rs. 244.238 million, Rs. 66.345
million, Rs. |
|
| 19.879
million and Rs. 21.549 million or 69.38%, 18.85%, 5.65% and 6.12%
respectively. |
|
|
| Again
recovery remained one of the most crucial issue for the entire financial
sector as well as your |
|
| company.
Your company concentrated all its efforts towards the recovery during the
year under |
|
| review
and achieved a good recovery rate. During the year under review, total
receivables amounted |
|
| to
Rs. 249.69 million out of which Rs.211.58 million was recovered. Total
receivables also includes |
|
| Rs.
31.99 million from chronic defaulters of cement and textile sectors, and if
we ignore the receiv- |
|
| ables
from these chronic clients, then the recovery ratio stood at 97. I% for the
year. However, due |
|
| to
overall slump in the economy, some of the clients delayed their rental
payments and your |
|
| company
filed cases against such clients in order to expedite the recovery. |
|
|
| During
the year ended 30th June, 1999 your company incurred a loss of Rs. 38.56
million against a |
|
| loss
of Rs. 24.58 million during the previous year. The loss is primarily caused
by heavy provisions |
|
| made
on account of doubtful debts, which amounted to Rs. 30.53 million income
suspense on |
|
| doubtful
debts of Rs. 5.85 million and mark-up incurred on doubtful debt. Further, as
mentioned |
|
| above
that no substantial lease disbursements were made during the year, therefore,
the lease |
|
| income
was reduced with the maturity of old lease during the year. |
|
|
| The
major heads of expenses incurred during the year remained the same as that of
last year, i.e. |
|
| financial
charges, and administrative & operating expenses. Financial charges
amounted to Rs. 58.24 |
|
| million
for the year as against Rs. 72.71 million of the previous year. Your
company's management |
|
| made
intentional efforts to reduce the Administrative & Operating expenses,
which stood at Rs. |
|
| 16.82
million during the year as against Rs. 20.98 million last year. However, the
legal expenses |
|
| increased
to Rs. 2.21 million from Rs. 1.20 million due to cases filed against lessees
for recovery. |
|
|
| FUTURE PROSPECTS |
|
|
| Future
looks difficult for your company, as now it will have to regain its lost
image. Further, the |
|
| overall
economic position of the country also requires concrete steps by the
government for its |
|
| revival.
The survival of entire leasing sector is dependent upon the economic
upliftment of the |
|
| country
as there is scarcity of good clients at the moment and most of the companies
have de- |
|
| ferred their expansion plans. |
|
|
| YEAR 2000 COMPLIANCE |
|
|
| Your
company has taken all the necessary measures to ensure compliance of Y2K
issue. |
|
|
| STAFF |
|
|
| I
would like to bring on record the sincere efforts of the staff that they have
put in for the survival |
|
| and
operations of the company despite such difficult and uncertain time. |
|
|
| ACKNOWLEDGMENT |
|
|
| I
would also like to thank and extend my sincere gratitude towards financial
institutions, banks, |
|
| investment
banks, DFIs etc., for their support and accommodating us in such difficult
times, and |
|
| Regulatory
Authorities for its guidance. |
|
|
On behalf of the Board |
|
|
|
| Chief Executive |
Director |
|
|
|
| DIRECTORS' REPORT |
|
|
| The
Directors have pleasure in presenting the 8th Annual Report together with
Audited Accounts, |
|
| the
Auditors' Report thereon for year ended 30 June, 1999 and the Chairman's
Review. |
|
|
| FINANCIAL RESULTS |
|
Rupees |
Rupees |
|
|
|
30 June |
30 June |
|
|
|
1999 |
1998 |
|
|
| Total Income |
|
65,217,859 |
92,169,383 |
|
| Expenses |
|
102,412,236 |
114,006,075 |
|
|
|
----------------- |
----------------- |
|
| Loss before taxation |
|
(37, 194,377) |
(21,836,692) |
|
| Taxation |
|
1,366,377 |
2,751,715 |
|
|
|
----------------- |
----------------- |
|
| Loss after taxation |
|
(38,560,754) |
(24,588,407) |
|
| Accumulated
(Loss)/unappropriated profit brought forward |
(7,552,954) |
17,013,682 |
|
|
|
----------------- |
----------------- |
|
|
|
(46,113,708) |
(7,574,725) |
|
| Appropriations |
|
|
|
| Statutory reserve |
|
- |
- |
|
| Contingency reserve |
|
4,471,365 |
21,771 |
|
| Dividend - Nil |
|
- |
- |
|
|
|
----------------- |
----------------- |
|
|
|
4,471,365 |
21,771 |
|
|
|
----------------- |
----------------- |
|
| Accumulated loss carried
forward |
|
(41,642,343) |
(7,552,954) |
|
|
|
========== |
========== |
|
|
| The
loss per share of the company is Rs. 4.67 (I 998:Rs.2.98) due to losses for
the year ended 30th |
|
| June, 1999. |
|
|
| AUDITORS |
|
| The
present Auditors Messrs. Taseer Hadi Khalid & Co., Chartered Accountants
retire and being |
|
| eligible
offer themselves for re-appointment. |
|
|
| PATTERN
OF SHARE HOLDING |
|
| The
pattern of shareholding is annexed. |
|
|
| STAFF |
|
| The
Director would like to place on record their appreciation of the hard wore
and dedication of |
|
| staff
members that the), have extended towards the company despite such difficult
times. |
|
|
| Chairman's
Review forms an integral part of Directors' Report. |
|
|
| For and on behalf of the
Board |
|
|
| Chief Executive |
Director |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annex balance sheet of Ghandhara Leasing Company Limited as
at 30 |
|
| June
1999 and the related profit and loss account and the cash flow statement,
together with the |
|
| notes
forming part thereof for the year then ended, and we state that we have
obtained all the |
|
| information
and explanations which to the best of our knowledge and belief were necessary
for |
|
| the
purposes of our audit and after due verification thereof, we report that: |
|
|
| a)
in our opinion, proper books of account have been kept by the company as
required by the |
|
| Companies Ordinance, 1984. |
|
|
|
| b) in our pinion: |
|
|
|
| i)
the balance sheet and profit and loss account together with the notes thereon
have |
|
| been
drawn up in conformity with the Companies Ordinance, 1984 and are in agree- |
|
| ment
with the books of account and are further in accordance with accounting poli- |
|
| cies consistently applied: |
|
|
|
|
| ii)
the expenditure incurred during the year was for the purpose of the company's
busi- |
|
| ness; and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred during
the |
|
| year were in accordance with the objects of
the company; |
|
|
| c)
in our opinion and to the best of our information and according to the
explanations given |
|
| to
us, the balance sheet, profit and loss account and the cash flow statement,
together with |
|
| the
notes forming part thereof, give the information required by the Companies
Ordi- |
|
| nance,
1984 in the manner so required and respectively give a true and fair view of
the |
|
| state
of the company's affairs as at 30 June 1999 and of the loss and the cash flow
for the |
|
| year then ended; and |
|
|
|
| d)
in our opinion, no zakat was deductible at source under the Zakat and Ushr
ordinance, |
|
| 1980. |
|
|
|
|
Taseer Hadi Khalid &
Co. |
|
| Karachi: December 07, 1999 |
Chartered Accountants |
|
|
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
| ASSETS |
|
|
| OPERATING
FIXED ASSETS -At cost less accumulated depreciation |
3 |
5,889,840 |
7, 122,415 |
|
| LONG TERM DEPOSITS |
|
|
307,322 |
230,922 |
|
| LONG TERM INVESTMENTS |
|
4 |
3,951,187 |
4, 176,036 |
|
| NET
INVESTMENT IN LEASE FINANCE - Secured |
5 |
124,117,091 |
231,342,815 |
|
| ADVANCE
AGAINST LEASE COMMITMENTS-Unsecured |
|
- |
7,529,750 |
|
| DEFERRED COST |
|
6 |
474,227 |
948,461 |
|
|
|
|
| CURRENT ASSETS |
|
|
| Current
maturity of net investment in lease finance and |
|
| overdue lease rentals |
|
7 |
227,894,346 |
307,216,378 |
|
| Federal Investment Bond |
|
8 |
50,000 |
50,000 |
|
| Short term advances - Secured |
|
9 |
30,056,780 |
41,162,413 |
|
| Advances,
deposits, prepayments and other receivables |
10 |
8,772,519 |
12,469,915 |
|
| Cash and bank balances |
|
11 |
468,352 |
422,628 |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
267,241,997 |
361,321,334 |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
Rupees |
401,981,664 |
612,671,733 |
|
|
|
|
========== |
========== |
|
| EQUITY AND LIABILITIES |
|
|
| SHARE CAPITAL |
|
12 |
82,597,000 |
82,597,000 |
|
| SHARE PREMIUM |
|
|
|
48,895,500 |
48,895,500 |
|
| RESERVES |
|
14 |
19,531,577 |
24,002,942 |
|
| ACCUMULATED LOSS |
|
|
(41,642,343) |
(7,552,954) |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
109,381,734 |
147,942,488 |
|
| LONG
TERM FINANCES- Secured |
|
15 |
9,744,859 |
22,126,865 |
|
| CERTIFICATES
OF INVESTMENT |
|
16 |
12, 196,991 |
24,815,250 |
|
| LONG TERM DEPOSITS |
|
17 |
43,780,052 |
52,747,235 |
|
|
|
|
| CURRENT LIABILITIES |
|
|
| Current maturity and
installments |
|
|
| due of long term finances |
|
18 |
29,442,415 |
39,719,723 |
|
| Current
maturity of long term deposits |
|
|
17,941,253 |
25,257,752 |
|
| Certificates of Investment |
|
16 & 19 |
47,875,029 |
141,531,740 |
|
| Short term finances - Secured |
|
20 |
113,811,212 |
111,925,098 |
|
| Short term finances -
Unsecured |
|
21 |
-- |
23,000,000 |
|
| Accrued
expenses and other liabilities |
|
22 |
12,859,773 |
19,683,038 |
|
| Provision for taxation |
|
|
4,476,046 |
3,459,669 |
|
| Unclaimed dividend |
|
|
472,300 |
462,875 |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
226,878,028 |
365,039,895 |
|
| COMMITMENTS |
|
23 |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
Rupees |
401,981,664 |
612,671,733 |
|
|
========== |
========== |
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
| Chief Executive |
|
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| For the year ended 30 June
1999 |
|
|
|
Note |
1999 |
1998 |
|
|
| REVENUE |
|
| Lease revenue |
|
24 |
64,587,893 |
85,931,823 |
|
| Markup on short term advances |
|
|
798,851 |
5,609,147 |
|
| Other (charges)/income |
|
25 |
(168,885) |
628,413 |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
65,217,859 |
92,169,383 |
|
| EXPENDITURE |
|
|
|
| Administrative expenses |
|
26 |
16,816,706 |
20,977,324 |
|
| Financial charges |
|
27 |
58,235,786 |
72,709,293 |
|
| Amortisation of deferred cost |
|
|
474,234 |
474,240 |
|
| Loss
on sale of/provision against repossessed asset |
|
195,825 |
1,566,616 |
|
| Provision
for diminution in value of investments |
|
|
224,849 |
7,759,723 |
|
| Provision
for potential lease losses |
|
|
30,533,736 |
5,819,979 |
|
| (Reversal
of)/provision for separation benefits |
|
|
(4,068,900) |
4,698,900 |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
102,412,236 |
114,006,075 |
|
|
|
|
----------------- |
----------------- |
|
| LOSS BEFORE TAXATION |
|
|
(37,194,377) |
(21,836,692) |
|
|
|
|
| TAXATION |
|
|
| Current |
|
|
1,161,876 |
1,440,007 |
|
| Prior |
|
|
204,501 |
1,311,708 |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
1,366,377 |
2,751,715 |
|
|
|
|
----------------- |
----------------- |
|
| LOSS AFTER TAXATION |
|
|
(38,560,754) |
(24,588,407) |
|
|
|
----------------- |
----------------- |
|
| (ACCUMULATED
Loss)/UNAPPROPRIATED PROFIT |
|
|
|
| BROUGHT FORWARD |
|
|
(7,552,954) |
17,013,682 |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
(46,113,708) |
(7,574,725) |
|
| APPROPRIATIONS |
|
|
| Statutory reserve |
|
|
- |
- |
|
|
| Contingency reserve |
|
4,471,365 |
21,771 |
|
|
|
----------------- |
----------------- |
|
|
|
|
4,471,365 |
21,771 |
|
|
|
|
----------------- |
----------------- |
|
| ACCUMULATED
LOSS CARRIED FORWARD |
|
Rupees |
(41,642,343) |
(7,552,954) |
|
|
|
|
========== |
========== |
|
| LOSS
PER SHARE - BASIC AND DILUTED |
|
30 |
(4.67) |
(2.98) |
|
|
|
|
========== |
========== |
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
| Chief Executive |
Director |
· |
|
|
|
| CASH
FLOW STATEMENT |
|
| For
the year ended 30 June 1999 |
|
|
|
1999 |
1998 |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Loss before taxation |
|
|
(37, 194,377) |
(21,836,692) |
|
| Adjustment for: |
|
|
|
|
| Depreciation |
|
|
1,045,655 |
1,723,782 |
|
| Amortisation of deferred cost |
|
|
474,234 |
474,240 |
|
| Accrued mark-up |
|
|
58,095,991 |
71,621,896 |
|
| Provision
for potential lease losses |
|
30,533,736 |
5,819,979 |
|
| Provision
for diminution in the value of investments |
|
224,849 |
7,759,723 |
|
| .Provision for gratuity |
|
|
633,179 |
1,056,171 |
|
| (Reversal
of)/provision for separation benefit |
|
(4,068,900) |
4,698,900 |
|
| Income on investments |
|
|
(209,264) |
(411,037) |
|
| Loss/(gain) on sale of fixed
assets |
|
|
609,919 |
(76,700) |
|
|
|
----------------- |
----------------- |
|
|
|
50, 145,022 |
70,830,262 |
|
| Changes
in operating assets and liabilities |
|
|
| (Increase)/Decrease
in long term deposits |
|
(76,400) |
17,000 |
|
| Decrease/(Increase)
in investment in lease finance |
|
223,568,249 |
(6,911,441) |
|
| (Increase) in overdue lease
rentals |
|
|
(67,554,229) |
(10,547,827) |
|
| Decrease/(Increase)
in advance against lease commitments |
|
7,529,750 |
(510,280) |
|
| Decrease/(Increase)
in short term advances |
|
11,105,633 |
(41,162,413) |
|
| Decrease in advances,
deposits, |
|
|
|
| prepayments
and other receivables |
|
5,893,813 |
5,464,166 |
|
| (Decrease)/Increase
in long term deposits |
|
(16,283,682) |
5,546,012 |
|
| (Decrease)
in accrued expenses and other liabilities |
|
(1,530,842) |
(1,532,262) |
|
|
|
----------------- |
----------------- |
|
|
|
162,652,292 |
(49,637,045) |
|
|
|
----------------- |
----------------- |
|
|
|
212,797,3 14 |
21,193,217 |
|
| Separation benefits paid |
|
|
(630,000) |
-- |
|
| Mark-up paid |
|
|
(59,322,693) |
(69,473,283) |
|
| Taxes paid |
|
|
(2,546,417) |
(2,196,304) |
|
|
|
----------------- |
----------------- |
|
| Net
cash generated/(used) in operating activities |
|
150,298,204 |
(50,476,370) |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Additions to fixed assets |
|
(455,000) |
(3,775,817) |
|
| Mark-up
on Federal Investment Bonds |
|
142,500 |
142,500 |
|
| Income from deposits accounts |
|
9,880 |
35,334 |
|
| Dividend income - net |
|
56,884 |
233,203 |
|
| Proceeds from sale of fixed
assets |
|
32,001 |
1,679,392 |
|
|
|
----------------- |
----------------- |
|
| Net
cash used in investing activities |
|
(213,735) |
(1 ,685,388) |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Long term finances |
|
((22,659,314) |
(149,589,657) |
|
| Certificates of investment |
|
|
106,274,970) |
100,761,990 |
|
| Short term finances |
|
|
(21,113,886) |
40,168,910 |
|
| Dividend paid |
|
|
9,425 |
(45,165) |
|
|
----------------- |
----------------- |
|
| Net
Cash used in financing activities |
|
(150,038,745) |
(8,703,922) |
|
|
|
----------------- |
----------------- |
|
| Net
Increase/(decrease) in cash and bank balances |
|
45,724 |
(60,865,680) |
|
| Cash
and bank balances at beginning of the year |
|
422,628 |
61,288,308 |
|
|
|
----------------- |
----------------- |
|
| Cash
and bank balances at end of the year |
|
Rupees |
468,352 |
422,628 |
|
|
========== |
========== |
|
| Chief Executive |
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| for
the year ended 30 June, 1999 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| The
Ghandhara Leasing Company Limited was incorporated on 12 May 1991 as a public |
|
| limited
company under the Companies Ordinance, 1984 and was listed on all the Stock |
|
| Exchanges
in Pakistan. During the year ended 30th June 1997, the name of the company |
|
| was
changed from Ghemni Leasing Company Limited to Ghandhara Leasing Company |
|
| Limited. |
|
|
|
|
|
| Its
principal activity is leasing of machineries, equipments and vehicles. Other
activities are |
|
| short
term advancing and investment in securities. |
|
|
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1 Basis for Preparation |
|
|
|
| These
accounts have been prepared in accordance with the International |
|
| Accounting
Standards as applicable in Pakistan. |
|
|
| 2.2 Accounting convention |
|
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.3
Operating fixed assets and depreciation |
|
| The
cost of operating fixed assets is depreciated over the useful life of related |
|
| assets
under the declining balance method. A full year's depreciation is charged on |
|
| assets
acquired during the year, whereas no depreciation is charged in the year of |
|
| disposal.
Gains and losses on disposal of assets are included in income currently. |
|
| Normal
repairs and maintenance are charged to income as and when incurred. |
|
|
|
|
| 2.4 Investments |
|
|
| Long
term investments are stated ac cost less provision for diminution in value to |
|
| recognise
a decline other than temporary. Short term investments are valued at |
|
| lower
of cost and market value determined on an aggregate portfolio basis. Cost is |
|
| determined
on moving average basis and the market values are taken from closing |
|
| rates
of the Karachi Stock Exchange (Guarantee) Limited on the last working day |
|
| of the income year. |
|
|
|
|
|
|
| 2.5 Deferred cost |
|
|
| This
is amortised over a period of five years. |
|
|
| 2.6
Net investments in lease finance |
|
| This
is stated at cost less specific provision. Specific provision is made in
accor- |
|
| dance
with the requirements of Non Bank Financial Institution, Regulations issued |
|
| by the State Bank of
Pakistan. |
|
|
|
| 2. Revenue recognition |
|
|
| Lease revenue |
|
|
| The
company follows the finance method in accounting for lease income. Under |
|
| this
method, the unearned lease income (excess of the sum of total lease rentals |
|
| and
estimated residual value over the cost of leased assets) is deferred and
taken |
|
| to
income over the term of lease so as to produce a constant periodic rate of |
|
| return
on the outstanding net cash investment in lease. |
|
|
|
|
| Unrealised
lease income is suspended, where necessary, in accordance with the |
|
| requirements
of Non Bank Financial Institutions, Regulations issued by the State |
|
| bank of Pakistan. |
|
|
|
|
|
| Commitment
charges, gains on termination of lease contracts, documentation |
|
| charges,
late payment surcharge and other lease income are recognised as income |
|
| when they are realised. |
|
|
|
| Markup income |
|
|
| This
is recognise on a time proportion basis. |
|
|
| Dividend income |
|
|
| This
is recognised at the time of closure of share transfer book of the company |
|
| declaring the dividend. |
|
|
| Capital gains and losses |
|
|
| These
are recorded on the date of sale of investment. |
|
|
| 2.8 Foreign currencies |
|
|
| Foreign
currency transactions are translated into Pak Rupees at exchange rates |
|
| prevailing
on the date of the transaction. Assets and liabilities in foreign currencies |
|
| at
the year end are translated into Pak Rupees at the rates of change prevailing
at |
|
| the
balance sheet date. Exchange gains and losses are included in the profit and |
|
| loss account currently. |
|
|
|
| 2.9 Taxation |
|
|
| Current |
|
|
| The
charge for current taxation is based on taxable income at the current rates
of |
|
| taxation
after taking into account tax credits and tax rebates, if any. Income for the |
|
| purposes
of computing current taxation is determined under the provisions of the |
|
| tax
laws whereby lease rentals received or receivable are deemed to be income. |
|
|
| Deferred |
|
|
| The
company accounts for deferred taxation using the liability method on all ma- |
|
| jor
timing differences. However, deferred tax debits are not accounted for. |
|
|
| 2. 10 Staff retirement
benefits |
|
|
| Defined contribution plan |
|
| The
company operates an approved provident fund scheme for all its eligible em- |
|
| ployees.
Equal monthly contributions are made, both by the company and its em- |
|
| ployees,
to the fund at the rate of 7.5 percent of basic salary. |
|
|
| Defined benefit plan |
|
| The
company operates an approved gratuity fund scheme for all its eligible
employ- |
|
| ees.
No separate fund account has been maintained, however, provision is made for |
|
| all
eligible employees to meet company's obligation under the plan as approved by |
|
| the Board of Directors. |
|
|
| 3.
OPERATING FIXED ASSETS -At cost less accumulated depreciation |
|
|
|
COST |
|
DEPRECIATION |
|
|
As at 01 |
Additions |
(Disposals) |
As at 30 |
Rate |
As at 01 |
For
the |
(Disposals) |
As at 30 |
Written down |
|
July 1998 |
|
|
June 1999 |
|
July 1998 |
year |
|
June 1999 |
value as at 30 |
|
|
June 1999 |
|
| Furniture and fixtures |
1,227,468 |
-- |
-- |
1,227,468 |
10 % |
551,411 |
67,606 |
-- |
619,017 |
608,451 |
| Office equipments |
4,066,588 |
108,500 |
-- |
4,175,088 |
10 % |
1,436,700 |
273,839 |
-- |
1,710,539 |
2,464,549 |
| Vehicles |
5,971,881 |
346,500 |
(813,500) |
5,504,881 |
20% |
2,155,411 |
704,210 |
(171,580) |
2,688,041 |
2,816,840 |
|
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
| 1999 Rupees |
11,265,937 |
455,000 |
(813,500) |
10,907,437 |
|
4,143,522 |
1,045,655 |
(171,580) |
5,017,597 |
5,889,840 |
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
| 1998 Rupees |
10,474,609 |
3,775,817 |
(2,984,489) |
11,265,937 |
|
3,801,537 |
1,723,782 |
(1,381,797) |
4,143,522 |
7,122,415 |
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
| 3.1 Disposal of fixed assets |
|
|
|
|
Accumulated |
|
Sales |
Particulars of |
Particular of |
|
| Mode of disposal |
Cost |
depreciation |
Book value |
proceeds |
buyers |
assets sold |
|
|
| In consideration for service
rendered |
758,000 |
(151,600) |
606,400 |
1 |
Mr. Salahuddin Qureshi |
Nissan Sunny |
|
|
|
(Ex. Chairman) |
|
| Negotiation |
55,500 |
(19,980) |
35,520 |
32,000 |
Mr. Asif Rasheed |
Suzuki Samuri |
|
|
----------------- |
----------------- |
----------------- |
----------------- |
(Accounts Officer) |
|
| 1999 Rupees |
813,500 |
(171,580) |
641,920 |
32,001 |
|
|
========== |
========== |
========== |
========== |
|
|
| 4. LONG TERM INVESTMENTS |
|
1999 |
1998 |
|
|
|
|
|
| Federal Investment Bonds |
|
4.1 |
950,000 |
950,000 |
|
| Listed securities |
|
4.2 |
3,001,187 |
3,226,036 |
|
|
|
|
----------------- |
----------------- |
|
|
Rupees |
3,951,187 |
4,176,036 |
|
|
|
========== |
========== |
|
|
| 4.1
This investment has been made to meet the liquidity requirement under the Non
Bank |
|
| Financial Institutions Regulations issued
by the State Bank of Pakistan. The bonds are |
|
| maturing from December 2001 to April 2005
and carries markup rate of 15 per cent per |
|
| annum payable on half yearly basis. The
face value of these bonds is Rs. 950,000. |
|
|
| 4.2 Number of |
|
| shares/certificate |
|
Name of investee |
|
Cost |
|
|
| 1999 |
1998 |
|
1999 |
1998 |
|
|
Mutual funds |
|
| 14, 100 |
14,100 |
19th ICP Mutual Fund |
238,290 |
238,290 |
|
|
Modarabas |
|
| 32,500 |
32,500 |
I st Elite Capital
Modaraba |
152,750 |
152,750 |
|
| 51,020 |
51,020 |
I st Punjab Modaraba |
471,935 |
471,935 |
|
| 36,500 |
36,500 |
I st Mehran Modaraba |
178,850 |
178,850 |
|
| 1,070 |
1,070 |
I st HBL Modaraba |
7,223 |
7,223 |
|
|
Leasing companies |
|
| 29,200 |
29,200 |
Natover Motor Lease
Limited |
292,000 |
292,000 |
|
| 5,500 |
5,500 |
Saudi Pak Leasing Company
Limited |
103,251 |
103,251 |
|
|
Investment
companies/Banks |
|
| 3,681 |
3,681 |
Al-Faysal Investment Bank
Limited |
113,383 |
113,383 |
|
| 30,500 |
30,500 |
AI-Towfeek Investment
Bank Limited |
800,625 |
800,625 |
|
| 25,047 |
18,975 |
Bank Al-Habib Limited |
588,750 |
588,750 |
|
| 2,509 |
2,145 |
Crescent Investment Bank
Limited |
83,655 |
83,655 |
|
| 36,500 |
36,500 |
Pakistan Industrial
Credit and |
|
|
Investment Corporation
Limited |
958,125 |
958,125 |
|
| 15,208 |
15,208 |
Prime Commercial Bank
Limited |
324,875 |
324,875 |
|
|
Textile spinning |
|
| 5,000 |
5,000 |
Faisal Spinning Mills
Limited |
76,250 |
76,250 |
|
| 4,536 |
4,536 |
Saif Textile Mills
Limited |
10,305 |
10,305 |
|
|
Textile composite |
|
| 69 |
69 |
Kohinoor Textile Mills
Limited |
966 |
966 |
|
|
Sugar and allied |
|
| 1,710 |
1,710 |
Sanghar Sugar Mills
Limited |
36,604 |
36,604 |
|
| 2,156 |
2,156 |
Shahmurad Sugar Mills
Limited |
27,000 |
27,000 |
|
|
Cement |
|
| 52,625 |
52,625 |
Cherat Cement Company
Limited |
3,104,875 |
3,104,875 |
|
| 17,460 |
17,460 |
D.G. Khan Cement Company
Limited |
744,072 |
744,072 |
|
| 17,787 |
17,787 |
Essa Cement Industries
Limited |
433,400 |
433,400 |
|
|
Chemical and
pharmaceutical |
|
| 15,000 |
15,000 |
Baifo Industries Limited |
157,500 |
157,500 |
|
| 5,000 |
5,000 |
Wah Noble Chemicals
Limited |
230,000 |
230,000 |
|
|
Paper and board |
|
| 29,040 |
26,400 |
Century Paper and Board
Mills Limited |
907,500 |
907,500 |
|
|
Energy |
|
| 45,017 |
39,146 |
Sui Northern Gas
Pipelines Limited |
943,575 |
943,575 |
|
|
|
----------------- |
----------------- |
|
|
10,985,759 |
10,985,759 |
|
|
Provision for diminution
in value |
(7,984,572) |
(7,759,723) |
|
|
----------------- |
----------------- |
|
|
Rupees |
3,001,187 |
3,226,036 |
|
|
========== |
========== |
|
|
| 4.3
All the holdings are in modaraba certificate and ordinary shares of Rs. 10
each. |
|
|
| 4.4
The aggregate market value of investments in listed securities as at 30 June
1999 amounted to |
|
| Rs. 3,337,207 (1998: Rs. 3,226,036). |
|
|
| 5.
NET INVESTMENT IN LEASE FINANCE |
|
|
1999 |
1998 |
|
|
| Lease rentals receivable |
|
|
282, 188, 139 |
521,547,361 |
|
| Estimated
Residual value of lease Assets |
|
|
67,640,594 |
78,004,987 |
|
|
|
----------------- |
----------------- |
|
| Minimum lease payments |
|
|
349,828,733 |
599,552,348 |
|
| Unearned income |
|
|
(48,827,844) |
(111,456,141) |
|
|
|
|
----------------- |
----------------- |
|
| Present
value of minimum lease payments |
|
301,000,889 |
488,096,207 |
|
| Current maturity |
|
|
(134,694,929) |
(245,098,259) |
|
| Provision
for potential lease losses |
|
(42, 188,869) |
(11,655, 133) |
|
|
|
----------------- |
----------------- |
|
|
|
Rupees |
124, 111,091 |
231,342,815 |
|
|
========== |
========== |
|
| 5.
I In terms of the requirements of Rule 7(I)(ii) of the Leasing Companies
(Establishment |
|
| and Regulations) Rules, 1996, the company's
aggregate exposure under lease financ- |
|
| ing exceeding 20 per cent of the paid up
capital and free reserves in respect of a pub- |
|
| lic limited company and private limited Co.
amounted to Rs. 43,894, 182 (1998: two |
|
| public limited companies Rs. 76,405,814). |
|
|
| 6. DEFERRED COST |
|
|
| Right Share issue expenses |
|
|
|
2,371,170 |
2,371,170 |
|
| Amortised to date |
|
|
|
(1 ,896,943) |
(1,422,709) |
|
|
|
|
|
----------------- |
----------------- |
|
|
|
Rupees |
474,227 |
948,461 |
|
|
========== |
========== |
|
| 7.
CURRENT MATURITY OF NET INVESTMENT IN |
|
| LEASE
FINANCE AND OVERDUE LEASE RENTALS |
|
| Current
maturity of net investment in lease finance |
|
|
134,694,929 |
245,098,259 |
|
| Over due Lease rentals |
|
|
|
93, 199,417 |
62, 118, 119 |
|
|
|
|
|
----------------- |
----------------- |
|
|
|
Rupees |
227,894,346 |
307,216,378 |
|
|
|
|
========== |
========== |
|
| 8.
FEDERAL INVESTMENT BONDS |
|
| This
bond has matured on 14th July 1995 |
|
|
| SHORT
TERM ADVANCES - Secured |
|
| These
include financing given to Faisal Consultants (private) limited amounting to
Rs.30,000,000. |
|
| During
the year, the liability for this advance was assumed by National Motors
limited (an |
|
| associated
company) at a markup rate of 22% per annum payable at maturity in March |
|
| 2000.The
advance is secured by equitable mortgage on a plot of land owned by National |
|
| Motors limited. |
|
|
|
| These
also include financing amounting to Rs. 28,274 given to a private limited
company |
|
| and
to an individual amounting to Rs. 28,506 for three months and carry markup at
rates |
|
| ranging
from 21% to 25% per annum payable at maturity. These advances are secured by |
|
| equitable
mortgage on constructed office and lien on certificates of investment issued |
|
| by the company itself. |
|
|
|
|
|
|
|
|
| ADVANCES,
DEPOSITS, PREPAYMENTS AND |
|
|
| OTHER RECEIVABLES |
|
|
1999 |
1998 |
|
| Advances |
|
|
| Staff |
|
116,703 |
128,500 |
|
| Taxation |
|
6,779,358 |
4,582,941 |
|
| Others |
|
111,400 |
120,710 |
|
| Deposits |
|
129,600 |
328,000 |
|
| Prepayments |
|
458,051 |
1,373,803 |
|
| Accrued
mark-up on advance against lease commitments |
|
- |
127,850 |
|
| Accrued
mark-up on short term advances |
|
6,257 |
2,109,660 |
|
| Repossessed asset held for
sale |
|
- |
3,500,000 |
|
| Receivable
against sale of reposed asset |
|
954, 175 |
- |
|
| Others |
|
216,975 |
198,451 |
|
|
----------------- |
----------------- |
|
|
|
Rupees |
8,772,519 |
12,469,915 |
|
|
|
========== |
========== |
|
| 11.
CASH AND BANK BALANCES |
|
| Cash with State Bank of
Pakistan |
|
11.1 |
220,000 |
100,000 |
|
| Cash
with commercial banks in current accounts |
|
|
208, 172 |
284, 199 |
|
| Cash
with commercial bank in saving account |
|
|
276 |
|
|
| Cash
with commercial banks in deposit accounts |
|
|
39,904 |
34,518 |
|
| Cash in hand |
|
|
|
- |
3,911 |
|
|
|
|
|
----------------- |
----------------- |
|
|
|
Rupees |
468,351 |
422,628 |
|
|
|
|
========== |
========== |
|
|
| 11.1
This has been kept to meet the liquidity requirements under the Non Bank
Financial |
|
| Institutions Regulations issued by the
State Bank of Pakistan. |
|
|
| I 2. SHARE CAPITAL |
|
| Authorised |
|
|
| 20,000,000
ordinary shares of Rs. 10 each |
|
200,000,000 |
200,000,000 |
|
|
|
========== |
========== |
|
| Issued, subscribed and paid
up |
|
|
| 8,259,700
ordinary shares of Rs. 10 each |
|
|
| fully paid in cash |
|
|
82,597,000 |
82,597,000 |
|
|
|
========== |
========== |
|
|
|
|
| 13.
STATEMENT OF CHANGES IN EQUITY |
|
|
|
|
Unappropriated |
|
|
|
Share |
Share |
Statutory |
Contingency |
profit/ |
Total |
|
|
Capital |
Premium |
Reserve |
Reserve |
(Accumulated |
|
|
|
|
Losses) |
|
|
|
| Balance as at 30 June 1997 |
82,597,000 |
48,895,500 |
13,511,559 |
10,513,154 |
17,013,682 |
172,530,895 |
|
|
|
| (Loss) for the year 1997-98 |
-- |
-- |
-- |
-- |
(24,588,407) |
(24,588,407) |
|
|
|
| Transferred |
-- |
-- |
-- |
(21,771) |
21,771 |
-- |
|
|
|
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
|
|
| Balance as at 30 June 1998 |
82,597,000 |
48,895,500 |
13,511,559 |
10,491,383 |
(7,552,954) |
147,942,488 |
|
|
|
| (Loss) for the year 1998-99 |
-- |
-- |
-- |
-- |
(38,560,754) |
(38,560,754) |
|
|
|
| Transferred |
-- |
-- |
-- |
(4,471,365) |
4,471,365 |
-- |
|
|
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
|
| Balance as at 30 June 1999 |
82,597,000 |
48,895,500 |
13,511,559 |
6,020,018 |
(41,642,343) |
109,381,734 |
|
|
========== |
========== |
========== |
========== |
========== |
========== |
|
|
| 14. RESERVES |
|
1999 |
1998 |
|
|
|
|
| Statutory reserve |
|
14.1 |
13,511,559 |
13,511,559 |
|
| Contingency reserve |
|
14.2 |
6,020,018 |
10,491,383 |
|
|
|
Rupees |
19,53 1,577 |
24,002,942 |
|
|
| 14.1
In accordance with the Non Bank Financial Institutions Regulations issued by
the |
|
| State Bank of Pakistan, company is required
to transfer 20 per cent of its after tax |
|
| profit to statutory reserve until the
reserve equals its paid up share capital. Thereaf- |
|
| ter, 5 per cent of profit after tax is
required to be transferred to reserve. |
|
|
| 14.2 Contingency reserve |
|
|
| As at 01 July |
|
|
10,491,383 |
10,513,154 |
|
| Transferred
(to) profit and loss account |
|
|
(4,471,365) |
(21,771) |
|
|
|
|
----------------- |
----------------- |
|
| As at 30 June |
|
Rupees |
6,020,018 |
10,491,383 |
|
|
========== |
========== |
|
| This
is being maintained at the rate of 2 per cent of the present value of minimum
lease |
|
| payments
as an appropriation from profit available for appropriation for potential
lease |
|
| losses
which can reasonably be anticipated. |
|
|
| 15.
LONG TERM FINANCES - SECURED |
|
|
| Finance A |
|
- |
6,543,693 |
|
|
| Finance B |
|
|
15.1 |
12,299,537 |
18,302,895 |
|
|
|
| Finance C |
|
|
|
- |
10,000,000 |
|
|
|
| Finance D |
|
|
|
- |
7,500,000 |
|
|
| Finance E |
|
|
15.2 |
4,750,000 |
9,500,000 |
|
|
|
| Finance F |
|
|
15.3 |
7,292, 147 |
10,000,000 |
|
|
|
| Finance G |
|
|
15.4 |
6,505,771 |
- |
|
|
|
|
|
|
|
----------------- |
----------------- |
|
|
|
|
|
|
|
30,847,455 |
61,846,588 |
|
|
|
| Current maturity |
|
18 |
(21,102,596) |
(39,719,723) |
|
|
|
|
|
|
----------------- |
----------------- |
|
|
|
|
|
|
Rupees |
9,744,859 |
22, 126,865 |
|
|
|
|
========== |
========== |
|
|
|
|
| 15.1
This represents a funding line obtained from a development financial
institution and |
|
| carries markup at a rate of 21% per annum.
The principal and markup is payable in |
|
| twelve equal quarterly installments of Rs.
2,860,545 from September 1997 to June |
|
| 2000. The funding line is secured by
hypothecation of leased assets, irrevocable assign- |
|
| ment of rentals receivable under lease
contracts and floating charge on current assets |
|
| of the company. |
|
|
| 15.2
This represents a morabaha financing obtained from an investment bank. The
markup |
|
| is payable on quarterly basis and mark up
rate for next two quarters is reviewed on |
|
| half yearly basis by adding 1% to the
prevailing discounting rate of the State Bank of |
|
| Pakistan with the floor of 19.5% per annum.
The principal is payable in four equal half |
|
| yearly installments of Rs. 2,375,000 from
December 1998 to June 2000. The morabaha |
|
| financing is secured by first charge
ranking parri passu over leased assets of the com- |
|
| pany. |
|
|
| 15.3
The represents a credit facility obtained from a development financial
institution and |
|
| carries markup at a rate of 20% per annum.
The principal and markup is payable in |
|
| twelve equal quarterly installments of Rs.
1,128,254 from July 1998 co April 2001. The |
|
| facility is secured by first charge ranking
pari passu on the leased assets of the com- |
|
| pany. |
|
|
| 15.4
This represents a credit facility obtained from a development financial
institution for |
|
| three years, which carries markup at a rate
of 20.5% per annum. The principal and |
|
| markup is payable in twelve equal quarterly
installment of Rs. 1,136,222 from February |
|
| 1999 to November 2001. The facility is
secured by pari passu charge on leased assets |
|
| of the company. |
|
|
| 16.
CERTIFICATES OF INVESTMENT |
|
|
| These
represent the mobilization of funds under the scheme of certificates of
investment |
|
| introduced
with the permission of Corporate Law Authority (now Securities and Exchange |
|
| Commission
of Pakistan). The certificates are for terms ranging from three months to
five |
|
| years
and carry profit ranging from 16% to 19% per annum. These include
certificates of |
|
| investment
of Rs. 10,000,000 (1998: Rs. 20,000,000) issued to various financial
institutions. |
|
|
| 17. LONG TERM DEPOSIT |
|
1999 |
1998 |
|
|
| Lease key money |
|
17.1 |
61,721,305 |
78,004,987 |
|
| Current maturity |
|
|
(17,941,253) |
(25,257,752) |
|
|
|
|
------------------- |
------------------- |
|
|
|
Rupees |
43,780,052 |
52,747,235 |
|
|
=========== |
=========== |
|
|
| 17.1
This represents interest free security deposits received from lessees against
lease contracts |
|
| and are adjustable at the
expiry/termination of the respective leases. |
|
|
| 18.
CURRENT MATURITY AND INSTALLMENTS DUE |
|
| OF LONG TERM FINANCES |
|
|
|
| Current
maturity of long term finances |
|
21,102,596 |
39,719,723 |
|
| Installments
due of long term finances |
|
18.1 |
8,339,819 |
- |
|
|
|
------------------- |
------------------- |
|
|
|
Rupees |
29,442,415 |
39,719,723 |
|
|
=========== |
=========== |
|
| 18.1
This includes Rs. 6,128,000 which was rolled over in July 1999 and the
remaining |
|
| amount was settled in September 1999. |
|
|
| 19.
CERTIFICATES OF INVESTMENT |
|
| These
include certificates of investment of Rs. 47,563,504 (1998: Rs. 140,000,000)
issued |
|
| to various financial
institutions. |
|
|
| 20.
SHORT TERM FINANCES - Secured |
|
|
| Finance A |
|
20.1 |
9,298,029 |
29,584,368 |
|
| Finance B |
|
20.2 |
603,328 |
4,000,000 |
|
| Finance C |
|
20.3 |
6,956,908 |
-- |
|
| Finance D |
|
20.4 |
46,452,947 |
48,340,730 |
|
| Finance E |
|
20.5 |
20,000,000 |
20,000,000 |
|
| Finance F |
|
|
-- |
10,000,000 |
|
| Finance G |
|
20.6 |
23,500,000 |
-- |
|
| Finance H |
|
20.7 |
7,000,000 |
-- |
|
|
------------------- |
------------------- |
|
|
|
Rupees |
113,811,212 |
111,925,098 |
|
|
|
=========== |
=========== |
|
|
| 20.1
This represents a running finance facility obtained from a commercial bank
and car- |
|
| ries
markup at a rate of 18.5% per annum payable on quarterly basis. The facility
is |
|
| repayable
by February 2000.The facility is secured by hypothecation of leased assets |
|
| of the company. |
|
|
|
|
| 20.2
This represents a demand finance obtained from a commercial bank and carries |
|
| markup
at a rate of 2 I% per annum payable on quarterly basis. The demand finance |
|
| is
for one year and matured in June 1999. The demand finance is secured by first |
|
| charge
ranking pari passu over leased assets and rentals receivable under lease con- |
|
| tracts of the company |
|
|
|
| 20.3
This represents a running finance facility of Rs. 7,500,000 obtained from a
commer- |
|
| cial
bank which carries markup at a rate of 18.5% per annum payable quarterly. The |
|
| facility
was repayable by June 1999 . The facility is secured by first pari passu
charge |
|
| over
leased assets and rentals receivables. |
|
|
| 20.4
This represents a running finance facility of Rs. 50,000,000 obtained from a
commer- |
|
| cial bank and carries markup at a rate of
18% per annum payable on half yearly basis. |
|
| The facility is repayable by December 1999.
The facility is secured by hypothecation |
|
| of leased assets, irrevocable assignment of
rentals receivable under lease contracts |
|
| and floating charge on current assets of
the company. |
|
|
| 20.5
This represents a promissory note discounting facility obtained from an
investment |
|
| bank
and carries markup at a rate of 19.5% per annum payable on quarterly basis. |
|
| The
principal was repayable in five equal quarterly installments of Rs. 2,000,000
by |
|
| September
1998. The discounting facility is secured by first charge ranking parri |
|
| passu
over leased assets and rentals receivable under lease contracts of the com- |
|
| pany. |
|
|
|
| 20.6
This represents a placement made by a development financial institution which
car- |
|
| ries
markup at a rate of 22% per annum. The placement will mature in August 1999. |
|
|
| 20.7
This represent a placement made by a development financial institution
carrying a |
|
| markup
at a rate of 22% per annum. The placement will mature in September 1999. |
|
|
|
|
|
1 999 |
1998 |
|
| 21.
SHORT-TERM FINANCES - Unsecured |
|
|
|
|
| Finance A |
|
|
- |
15,000,000 |
|
| Finance B |
|
|
- |
5,000,000 |
|
| Finance C |
|
|
- |
3,000,000 |
|
|
|
|
------------------- |
------------------- |
|
|
Rupees |
- |
23,000,000 |
|
|
=========== |
=========== |
|
|
|
|
| 22. ACCRUED EXPENSES |
|
|
| AND OTHER LIABILITIES |
|
| Accrued
markup on long term finances |
|
1,256, 187 |
622, 119 |
|
| Accrued
markup on short term finances |
|
3,883, 192 |
2,415,933 |
|
| Accrued
markup on certificates of investment |
|
3,840,388 |
7, 168,417 |
|
| Advance lease rentals |
|
|
1,455,468 |
2,336,991 |
|
| Auditors' remuneration |
|
|
100,000 |
50,000 |
|
| Tax deducted at source |
|
|
- |
358,168 |
|
| Excise duty on lease rentals |
|
|
65,545 |
158,891 |
|
| Unearned front end fee |
|
|
95,000 |
392,023 |
|
| Payable to gratuity fund |
|
|
1,689,350 |
1,056,171 |
|
| Provision for separation
benefits |
|
22.1 |
- |
4,698,900 |
|
| Others |
|
|
|
474,643 |
425,425 |
|
|
|
|
------------------- |
------------------- |
|
|
|
Rupees |
12,859,773 |
19,683,038 |
|
|
=========== |
=========== |
|
|
| 22.
I In the light of Securities and Exchange Commission of Pakistan's
observation the |
|
| Board of Directors subsequently decided to
reverse separation benefit of Chief |
|
| Executive with this consent. |
|
|
| 23. COMMITMENTS |
|
|
------------------- |
------------------- |
|
| Commitments
for lease disbursements |
|
Rupees |
- |
10,130,000 |
|
|
=========== |
=========== |
|
|
| 24. LEASE REVENUE |
|
| Lease income |
|
|
61,710,933 |
84,215,567 |
|
| Commitment charges |
|
|
-- |
450,000 |
|
| Markup
on advance against leases commitments |
|
668,156 |
126,658 |
|
| Gain
on cancellation of lease contracts |
|
90,168 |
4,224 |
|
| Documentation charges |
|
|
15,300 |
112,000 |
|
| Late payment surcharge |
|
|
2,059,789 |
1,008,441 |
|
| Other lease income |
|
|
43,547 |
14,933 |
|
|
|
|
------------------- |
------------------- |
|
|
Rupees |
64,587,893 |
85,931,823 |
|
|
=========== |
=========== |
|
|
|
|
| 25.
OTHER (CHARGES)/INCOME |
|
| Mark-up
on Federal Investment Bonds |
|
142,500 |
142,500 |
|
| Profit on deposit accounts |
|
|
9,604 |
35,334 |
|
| Profit on Saving account |
|
|
276 |
276 |
|
| Dividend income |
|
|
56,884 |
233,203 |
|
| (Loss)/gain
on disposals of fixed assets. |
|
(609,919) |
76,700 |
|
| Others |
|
|
231,770 |
140,676 |
|
|
|
|
------------------- |
------------------- |
|
|
Rupees |
(168,885) |
628,413 |
|
|
=========== |
=========== |
|
| 26.
ADMINISTRATIVE EXPENSES |
|
| Salaries and other benefits |
|
|
5,990,764 |
6,371,198 |
|
| Contribution
to employees' provident Fund |
|
218,585 |
227,358 |
|
| Staff gratuity |
|
|
633,179 |
1,056,171 |
|
| Staff welfare and training |
|
|
573,186 |
486,513 |
|
| Rent, rates and taxes |
|
|
1,578,845 |
1,610,333 |
|
| Travelling and conveyance |
|
|
1,411,080 |
1,609,137 |
|
| Legal and professional |
|
|
2,211,587 |
1,199,732 |
|
| Telephone, telex and postage |
|
|
468,420 |
631,488 |
|
| Printing and stationery |
|
|
317,939 |
668,309 |
|
| Depreciation |
|
|
1,045,655 |
1,723,782 |
|
| Fees and subscription |
|
|
207,825 |
301,151 |
|
| Utilities |
|
|
294,038 |
590,384 |
|
| Advertisement |
|
|
40,347 |
1,146,524 |
|
| Auditor's remuneration |
|
|
26.1 |
141,429 |
81,980 |
|
| Repairs and maintenance |
|
|
569,120 |
772,561 |
|
| Entertainment |
|
|
263,971 |
341,067 |
|
| Insurance |
|
|
581,633 |
724,000 |
|
| General expenses |
|
|
269,103 |
806,321 |
|
| Zakat |
|
|
-- |
629,315 |
|
|
|
|
------------------- |
------------------- |
|
|
Rupees |
16,816,706 |
20,977,324 |
|
|
|
=========== |
=========== |
|
| 26.1 Auditor's remuneration |
|
|
|
|
| Statutory audit fee |
|
|
|
50,000 |
50,000 |
|
| Out of pocket expenses |
|
|
|
41,429 |
31,980 |
|
| Special audit fee |
|
|
|
50,000 |
- |
|
|
|
|
|
------------------- |
------------------- |
|
|
|
Rupees |
141,429 |
81,980 |
|
|
|
=========== |
=========== |
|
|
|
|
| 27. FINANCIAL CHARGES |
|
|
|
|
| Mark up on |
|
|
|
|
| Long term finances |
|
|
10,772,059 |
26,382,449 |
|
| Short term finances |
|
|
23,206,045 |
16,170,670 |
|
| Certificates of investment |
|
|
23,782,746 |
29,068,777 |
|
| Bank charges |
|
|
139,795 |
1,087,397 |
|
| Other financial charges |
|
|
335, 141 |
- |
|
|
|
|
------------------- |
------------------- |
|
|
Rupees |
582,331,786 |
72,709,293 |
|
|
|
=========== |
=========== |
|
|
|
|
|
| 28. TAXATION |
|
| The
income tax assessments of the company have been finalised upto and including
assess- |
|
| ment
year 1997-1998 (income year ended 30 June 1997). An appeal before Income Tax |
|
| Appellate
Tribunal against certain disallowances relating to assessment year 1993-94 is
pending. |
|
| Further,
income tax assessment for the assessment year 1997-98 has been set aside by |
|
| appellate
authorities. An additional tax liability of Rs. 1,254,701 could arise which
has not |
|
| been
provided in these accounts as management expects a favourable outcome. |
|
|
| In
view of tax loss for the current year, minimum tax at the rate of 0.5% of
turnover under |
|
| section
80(D) of the Inome Tax Ordinance, 1979 has been provided. |
|
| As
on 30 June 1999, net deductible temporary differences (resulting in deferred
tax debits) |
|
| amounted
to approximately Rs. 34,041,828. |
|
|
| 29.
TRANSACTIONS WITH ASSOCIATED COMPANIES |
|
|
| Lease income |
|
|
Rupees |
- |
23,108 |
|
|
|
|
|
=========== |
=========== |
|
| Insurance premium |
|
Rupees |
629,971 |
585,916 |
|
|
|
=========== |
=========== |
|
|
|
|
|
| 30.
LOSS PER SHARE - BASIC AND DILUTED |
|
| Net loss for the year |
|
|
(38,560,754) |
'(24,588,407) |
|
|
=========== |
=========== |
|
| Weighted
average number of outstanding Ordinary Share |
|
8,259,700 |
8,259,700 |
|
|
|
=========== |
=========== |
|
| Loss per share |
|
(4.67) |
(2.98) |
|
|
|
=========== |
=========== |
|
|
|
|
|
| 31.
REMUNERATION OF CHIEF EXECUTIVE AND EXECUTIVES |
|
|
|
CHIEF EXECUTIVE |
EXECUTIVES |
|
|
1999 |
1998 |
1999 |
1998 |
|
|
|
|
| Managerial remuneration |
|
828,000 |
828,000 |
1,254,990 |
1,664,222 |
|
| House rent |
|
372,000 |
372,000 |
553,794 |
733,643 |
|
| Provident fund |
|
62,100 |
62,100 |
92,514 |
122,360 |
|
| Utilities |
|
82,800 |
82,800 |
123,342 |
163,125 |
|
| Medical |
|
82,800 |
82,800 |
90,318 |
89,842 |
|
| Others |
|
582,900 |
316,100 |
164,580 |
6,000 |
|
| Separation benefit |
|
-- |
4,068,900* |
-- |
-- |
|
| Gratuity |
|
552,000 |
759,000 |
68,820 |
261,430 |
|
|
------------------- |
------------------- |
------------------- |
------------------- |
|
|
Rupees |
2,562,600 |
6,571,700 |
2,348,358 |
3,040,622 |
|
|
=========== |
=========== |
=========== |
=========== |
|
| Number of persons |
|
1 |
1 |
6 |
9 |
|
|
| *
Liability relating to separation benefits of Chief Executive has been
reversed during the year ended |
|
| 30 June, 1999 |
|
|
| The
chief executive and executives were also entitled to free use of company
maintained |
|
| cars.
The aggregate amount of fee paid to nine non salaried directors was Rs. 9,000
(1998: |
|
| Rs.
12,000). Medical insurance cover was also provided to all executives. |
|
|
| 32.
CREDIT RISK AND CONCENTRATIONS OF CREDIT RISK |
|
| Credit
risk is the risk that one party to a financial instrument will fail to
discharge an obliga- |
|
| tion
and cause the other party to incur a financial loss. The company attempts to
control |
|
| credit
risk by monitoring credit exposures, limiting transactions with specific
counter par- |
|
| ties
and continuously assessing the credit worthiness of counter parties. A
sectorwise break |
|
| down
of lease portfolio and short term advances as at 30 June 1999 is as follows: |
|
|
| Sectors |
|
| Cement |
|
|
77,460,364 |
18.26% |
|
| Chemical and pharmaceutical |
|
|
24,598, 100 |
5.80% |
|
| Engineering, Steel and auto |
|
|
65,399, 187 |
15.41% |
|
| Healthcare |
|
|
2,286,362 |
0.54% |
|
| Sugar |
|
|
17,305,394 |
4.08% |
|
| Food and allied |
|
|
27,239,243 |
6.42% |
|
| Textile spinning |
|
|
12,496, 150 |
2.95% |
|
| Textile weaving |
|
|
29,013, 144 |
6.84% |
|
| Textile composite |
|
|
5,755,325 |
1.35% |
|
| Synthetic and rayon |
|
|
9, 106,028 |
2.15% |
|
| Fuel and energy |
|
|
38,395, II 2 |
9.05% |
|
| Transport and communication |
|
|
49,275,041 |
11.61% |
|
| Paper and board |
|
|
28,658,364 |
6.75% |
|
| Vanaspati and allied |
|
|
1,852,742 |
0.44% |
|
| Others |
|
|
35,416,530 |
8.35% |
|
|
|
------------------- |
------------------- |
|
|
|
Rupees |
424,257,086 |
100.00% |
|
|
=========== |
=========== |
|
| Present
value of minimum lease payment |
|
|
301,000,889 |
|
| Overdue lease rentals |
|
|
|
93, 199,417 |
|
| Short term advances |
|
|
|
30,056,780 |
|
|
|
|
------------------- |
|
|
|
Rupees |
424,257,086 |
|
|
=========== |
|
|
|
|
| 33.
FAIRVALUE OF FINANCIAL INSTRUMENTS |
|
| The
fair value of all financial instruments is estimated to approximate their
carrying value. |
|
|
| 34.
INTEREST RATE CASH FLOW RISK |
|
|
|
|
| The
information about the exposure of company to interest rate case flow risk as
at 30 June 1999 |
|
| based
on contractual reprising or maturity dates, whichever is earlier, is as
follows: |
|
|
|
|
|
|
Non interest |
Total |
|
|
Interest bearing |
|
|
bearing |
|
|
|
|
|
More than |
More than |
|
|
|
Less than one |
one month |
three months |
Over |
|
|
month |
but less than |
but less than |
One year |
|
|
|
three months |
one year |
|
|
|
| Long term deposits |
-- |
-- |
-- |
-- |
307,322 |
307,322 |
|
|
| Long term investments |
-- |
-- |
-- |
950,000 |
3,001,187 |
3,951,187 |
|
|
| Net investment in lease |
|
|
|
| finance |
9,866,993 |
4,786,084 |
66,196,838 |
220,150,974 |
-- |
301,000,889 |
|
|
| Over due lease rentals |
-- |
-- |
-- |
-- |
113,553,521 |
113,553,521 |
|
|
| Federal Investment Bonds |
-- |
-- |
-- |
-- |
50,000 |
50,000 |
|
|
| Short term advances |
-- |
56,780 |
-- |
-- |
30,000,000 |
30,056,780 |
|
|
| Deposits and other |
|
| receivables |
-- |
-- |
-- |
-- |
1,405,510 |
1,405,510 |
|
|
| Cash and bank balances |
40,180 |
-- |
-- |
-- |
428,172 |
468,352 |
|
|
|
------------------- |
------------------- |
------------------- |
------------------- |
------------------- |
------------------- |
|
|
|
9,907,173 |
4,842,864 |
66,196,838 |
221,100,974 |
148,745,712 |
450,793,561 |
|
|
|
|
|
|
| Long term finances |
(8,339,819) |
(7,500,021) |
(16,392,601) |
(6,954,833) |
-- |
(39,187,274) |
|
|
| Certificates of investment |
(300,000) |
(3,169,329) |
(44,405,700) |
(12,196,991) |
-- |
(60,072,020) |
|
|
| Deposits |
-- |
-- |
-- |
-- |
(61,721,305) |
(61,721,305) |
|
| Short term finances |
(7,560,236) |
(30,500,000) |
(75,750,976) |
-- |
-- |
(113,811,212) |
|
| Accrued expenses and |
|
|
| other liabilities |
-- |
-- |
-- |
-- |
(11,243,760) |
(11,243,760) |
|
|
| Unclaimed dividend |
-- |
-- |
-- |
-- |
(472.300) |
(472,300) |
|
|
|
------------------- |
------------------- |
------------------- |
------------------- |
------------------- |
------------------- |
|
|
|
(16,200,055) |
(41,169,350) |
(136,549,277) |
(19,151,824) |
(73,437,365) |
(286,507,871) |
|
|
|
------------------- |
------------------- |
------------------- |
------------------- |
------------------- |
------------------- |
|
| On balance sheet gap |
(6,292,882) |
(36,326,486) |
(70,352,439) |
201,949,150 |
75,308,347 |
164,285,690 |
|
|
|
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
|
| Interest rate cash flow risk
gap |
|
| Rupees |
'(6,292,882) |
(36,326,486) |
(70,352,439) |
201,949,150 |
|
|
|
=========== |
=========== |
=========== |
=========== |
|
|
| The
effective interest rates as at 30 June 1999 for financial instruments are as
follows: |
|
| Assets |
|
| Net investment in lease
finance |
|
22.70% |
|
| Long terms Investments |
|
15.00% |
|
| Short term advances |
|
22.50% |
|
| Cash and bank balance |
|
17.00% |
|
| Liabilities |
|
|
| Long term finances |
|
20.43% |
|
| Certificates of investment |
|
20.15% |
|
| Short term finances |
|
19.42% |
|
|
| 35. GENERAL |
|
|
| 35.1
Total number of employees as at 30 June 1999 is 24 (1998:25). |
|
| 35.2
Figures of the previous year have been rearranged, wherever necessary, to |
|
| facilitate comparison. |
|
| 35.3
Figures have been rounded off to the nearest rupee. |
|
|
| Chief Executive |
Director |
|
|
|
|
|
|
|
|
|
|
|
|
