| 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) |
|
|
