| Al-Zamin Leasing Modaraba (Management)
Private Limited |
|
|
|
|
| Annual
Report 1999 |
|
|
|
| CORPORATE
INFORMATION |
|
|
| BOARD
Of DIRECTORS |
|
| Mr.
C. Ahsanul Haq - Chairman |
|
| Mr.
Basheer A. Chowdry - Chief Executive |
|
| Mr. S.M. Farooq |
|
| Mr.
Ansar Husain |
|
| Mr.
Manzoor Hussain Shah Kazmi |
|
| Brig.
(Retd) Luqman Mahmood |
|
| Dr.
Hasan Abbas Zaheer |
|
| Syed
Ghazanfar Ali [Nominee of Pak Libya Holding Co. (Pvt) Ltd.] |
|
|
| COMPANY
SECRETARY |
|
| Mr.
M. Moizul Haque |
|
|
| AUDITORS
OF THE MODARABA |
|
| M.
Yousuf Adil Saleem & Company, Chartered Accountants |
|
|
| AUDITORS
OF THE MODARABA COMPANY |
|
| Jalis
Ahmed & Company, Chartered Accountants |
|
|
| BANKERS |
|
| Allied
Bank of Pakistan Limited |
|
| Askari
Commercial Bank Limited |
|
| First
Women Bank Limited |
|
| Gulf
Commercial Bank Limited |
|
| Habib
Bank Limited |
|
| National
Bank of Pakistan |
|
| National
Development Finance Corporation |
|
| Pakistan
Industrial Credit & Investment Corporation |
|
| Soneri
Bank Limited |
|
|
| LEGAL
ADVISORS |
|
| Sharif
& Company, Advocates |
|
| Mansoor
Ahmed Khan & Company, Advocates |
|
|
| MODARABA
COMPANY |
|
| Al-Zamin
Modaraba Management (Private) Limited |
|
|
| REGISTERED
OFFICE & SHARES DEPARTMENT |
|
| 104-106,
Kassam Court, |
|
| BC-9,
Block 5, Clifton, |
|
| Karachi-75600 |
|
| Tel:
587 6651, 587 6652, 571725, |
|
| 587 3373, 586 7102, 574474. |
|
| Fax: 587 0408 |
|
| E-mail:
alzamin@zoooom.net |
|
|
| LAHORE
OFFICE |
|
| Suit
No. F-05, 1st Floor, Rehman Business Centre, |
|
| 32
B-III, Gulberg III, Lahore |
|
| Tel:
571 5583, 571 5584 |
|
| Fax: 571 5585 |
|
|
| CONTENTS |
|
|
| Directors'
Report |
|
| Asset
and Sector-wise Analysis of Leases |
|
| Auditors' Report |
|
| Balance Sheet |
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Certificate Holding |
|
|
|
| DIRECTORS'
REPORT |
|
| FOR
THE YEAR 1998-99 |
|
|
| The
Board of Directors of Al-Zamin Modaraba Management (Private) Limited takes |
|
| pleasure
in presenting the Seventh Annual Report of Al-Zamin Leasing Modaraba, |
|
| together
with audited Accounts for the year ended 30th June 1999. |
|
|
| OPERATING
RESULTS |
|
|
| The
Modaraba achieved an unprecedented growth of 41.25% in the Balance Sheet |
|
| footings
during the year inspite of difficult market conditions. Consequently, total |
|
| assets
of the Modaraba increased from Rs 289.2 million to Rs 408.5 million, with a |
|
| growth
of 37.75% in net investment in leases from Rs 218.5 million to Rs 301 |
|
| million. |
|
|
| This
growth was made possible due to availability of further resources and credit |
|
| lines
which clearly indicates a continued confidence of the financial institutions
in |
|
| the
quality and strength of your Modaraba. While the short-term and term finances |
|
| from
the financial institutions and Musharaka investors increased from an overall |
|
| figure
of Rs 91.8 million to Rs 174.9 million, the investments in lease finances |
|
| increased
by over Rs 82 million and Musharaka finance investment by Rs 21 |
|
| million.
Along with a healthy and balanced growth achieved on both sides of the |
|
| balance
sheet, your Modaraba maintains enough liquidity to continue its planned |
|
| expansion.
The Board is happy to report that further credit lines have also been |
|
| approved
by financial institutions for your Modaraba, the utilization of which will |
|
| achieve
further enhancement in its size and profitability. |
|
|
| While
the capital market of the country is expanding through the introduction of |
|
| TFCs
and other debt-instruments of the financial and corporate sector, the need to |
|
| evolve
and introduce a suitable debt-instrument complying fully with the
requirements |
|
| of
Sharia is being felt by the Modaraba sector as well. Careful research and |
|
| development
work is being carried by those who are genuinely interested in promoting |
|
| the
Islamic mode of financing and it is hoped that some tangible results may be |
|
| achieved
in this regard before long. |
|
|
| Utilization
of fresh credit lines naturally resulted in the increase of financial charges |
|
| to
Rs 24.2 million which, inter-alia, generated enhanced earnings in the leasing |
|
| and
Musharaka transactions. In view of the current problems being faced by the |
|
| commercial
and industrial sectors, delays and defaults are being experienced by |
|
| the
leasing sector in lease rental recovery. Consequently, the entire sector is
faced |
|
| with
the problem of provisioning for the overdues and potential losses. Your |
|
| Modaraba
also made sufficient provisions in accordance with prudential guidelines |
|
| in
order to strengthen the balance sheet. The Board had approved setting up of a |
|
| Contingency
Reserve last year as a matter of prudence in view of the current |
|
| economic
climate to which further allocations have been made this year as well. |
|
| Specific
guidelines have been provided by the Securities & Exchange Commission |
|
| for
dealing with the deferred taxation and your Modaraba has made requisite |
|
| provisioning
to comply with the regulations. |
|
|
| After
making a transfer to Special Reserve under the statutory requirements, and |
|
| accounting
for the provisioning made, it is proposed to pay a cash dividend of |
|
| 12.5%
to the certificate holders of the Modaraba and to carry an unappropriated |
|
| profit
of Rs. 2.36 million to the next year. |
|
|
| The
operating results for the year reflect adequately the diligent and consistent |
|
| efforts
of your Management to maintain a constant growth of Modaraba inspite of |
|
| the
visible decline in the fresh investments and reduced output of the
manufacturing |
|
| sector
of the country. Various steps taken in creating suitable reserves and
provisions |
|
| conform
to the professional prudence, for building enough cushion in the balance |
|
| sheet
to take care of any effect of the declining economy on the future results of |
|
| your
Modaraba. The proposed distribution to the Certificate-holders re-affirms the |
|
| policy
of the Modaraba to share its gains with the investors and should be
maintained |
|
| in
the future as well. |
|
|
|
|
|
|
| FUTURE
PROSPECTS |
|
|
|
| Our
economy is still going through an unprecedented period of uncertainties. |
|
| Inspite
of concerted efforts being made by the government, no significant improvement |
|
| has
been seen in the balance of payment, industrial output and GDP growth. The |
|
| steps
to revive the economy would, hopefully, produce positive results in due |
|
| course
but it will take some time for the economy to feel any real impact thereof. |
|
| Consequently,
instances of delays and defaults by the clients are increasing in the |
|
| financial
sector and leasing sector in not immune to the situation. |
|
|
|
|
|
| While
your Modaraba has mobilised arrangements for substantial resources, it is |
|
| getting
difficult to find good lessees for the expansion of the leasing portfolio at
the |
|
| rates
which could sustain a sound profit stream. Those players in the market who |
|
| have
access to cheaper funds are taking away the quality business. Consequently, |
|
| medium
sized lessors have to make exceptional efforts to capture a due portion of |
|
| good
leasing business at acceptable rates of return. Nevertheless, your Board has |
|
| decided
to exercise extreme caution in handling fresh business to ensure that the |
|
| overall
quality of the portfolio is not reduced by the pressures to maintain the |
|
| business
growth. A fine balance of energetic efforts and professional prudence is |
|
| needed
to be maintained of which your Management is fully aware of and capable to |
|
| achieve.
Extra efforts are being made to minimise the effect of the overdue rentals |
|
| on
your profit stream while pursuing the default cases vigorously. |
|
|
|
| YEAR
2000 PROBLEM |
|
|
|
| The
Board is happy to report that your Modaraba has successfully handled Y2K |
|
| problem
and is now fully complaint having a properly tested software. |
|
|
|
|
| CREDIT
RATING |
|
|
|
| The
credit rating awarded by the DCR-VIS Credit Rating Company Limited during |
|
| the
previous year was re-confirmed for the year under review as well. Your
Modaraba |
|
| enjoys
a respectable medium to long term entity rating of Triple B Minus which |
|
| reflects
"adequate credit quality with reasonably sufficient prudence factors..
Short |
|
| term
entity rating of D-3 indicates satisfactory liquidity and other prudence
factors, |
|
| qualifying
the Modaraba for the investment grade. |
|
|
|
|
|
| ACKNOWLEDGMENTS |
|
|
|
| The
Directors are pleased to put on record their appreciation of the devoted
efforts |
|
| made
by the staff for the successful operation of the Modaraba and valuable |
|
| guidance
provided by the Registrar Modaraba and Securities & Exchange Commission |
|
| of Pakistan. |
|
|
|
|
|
|
|
For and on behalf of the Board of Directors |
|
|
|
|
|
| Karachi: |
|
|
Basheer A. Chowdry |
|
| 30th
October, 1999 |
|
Chief Executive |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
|
|
|
| We
have audited the annexed balance sheet as at June 30, 1999, and the related
profit |
|
| and
loss account and statement of changes in financial position (cash flow
statement), |
|
| together
with the notes to the accounts for the year ended June 30, 1999 of Al-Zamin |
|
| Leasing
Modaraba, which are Modaraba Company's (Al-Zamin Modaraba Management |
|
| (Private
Limited) representation and we state that we have obtained all the
information |
|
| and,
explanation which we required and after due verification thereof, we report
that: |
|
|
|
|
| a.
in our opinion, proper books of account have been kept by the Modaraba
Company |
|
| in
respect of Al-Zamin Leasing Modaraba as required by the Modaraba Companies |
|
| and
Modaraba (Floatation and Control) Ordinance, 1980 and Modaraba Companies |
|
| and
Modaraba Rules, 1981. |
|
|
|
|
|
|
| b.
in our opinion, the balance sheet and profit and loss account have been drawn
up |
|
| in
conformity with the Modaraba Companies and Modaraba (Floatation and Control) |
|
| Ordinance,
1980, and Modaraba Companies and Modaraba Rules, 1981, and are |
|
| further
in accordance with accounting policies consistently applied. |
|
|
|
|
|
| c.
in our opinion and to the best of our information and according to the
explanations |
|
| given to us; |
|
|
|
|
|
|
| i)
the balance sheet and the related profit and loss account and statement of |
|
| changes
in financial position (cash flow statement), which are in agreement |
|
| with
the books of account, exhibit respectively a true and fair view of the |
|
| state
of the Modaraba's affairs as at June 30, 1999 and the profit and the |
|
| changes
in the financial position for the year ended on that date; |
|
|
|
|
|
| ii)
in our opinion, no Zakat was deductible at source under the Zakat and |
|
| Ushr
Ordinance, 1980. |
|
|
|
|
|
|
| iii)
the business conducted, investments made and the expenditure incurred |
|
| by
the Modaraba are in accordance with objects, terms and conditions of |
|
| the Modaraba. |
|
|
|
|
|
|
| Karachi: |
|
|
M. Yousuf Adil Saleem & Co. |
|
| Date:
30th October 1999 |
|
|
Chartered Accountants |
|
|
|
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1999 |
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
|
|
| Certificate
Capital |
|
|
|
| Authorised |
|
|
|
| 20,000,000
Modaraba |
|
|
|
| Certificates of Rs. 10 each |
|
|
|
200,000,000 |
200,000,000 |
|
|
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
|
3 |
126,500,000 |
126,500,000 |
|
| Reserves
and unappropriated profit |
|
4 |
26,590,040 |
31,551,979 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
153,090,040 |
158,051,979 |
|
|
|
|
|
|
| LONG
TERM FINANCES |
|
|
5 |
25,615,367 |
27,491,612 |
|
|
|
|
|
|
|
| LONG
TERM SECURITY DEPOSITS |
|
|
|
| ON LEASE CONTRACTS |
|
|
6 |
43,176,280 |
25,536,300 |
|
| DEFERRED TAXATION |
|
|
|
1,000,000 |
1,000,000 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
portion of long term finances |
|
|
35,893,718 |
20,971,033 |
|
| Current
portion of long term security |
|
|
|
|
| deposits
on lease contracts |
|
|
|
10,811,099 |
5,340,489 |
|
| Short term finances |
|
|
7 |
113,393,249 |
43,299,330 |
|
| Advance
lease rent/security deposits |
|
|
2,603,414 |
1,670,427 |
|
| Accrued and other liabilities |
|
|
8 |
6,300,687 |
2,155,338 |
|
| Taxation |
|
|
|
|
-- |
2,831,707 |
|
| Dividend |
|
|
|
9 |
16,607,555 |
829,764 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
185,609,722 |
77,098,088 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
408,491,409 |
289,177,979 |
|
|
|
|
========== |
========== |
|
|
|
|
| FIXED ASSETS - TANGIBLE |
|
|
10 |
5,671,574 |
5,292,511 |
|
| LONG TERM INVESTMENTS |
|
|
11 |
851,032 |
729,296 |
|
|
|
|
|
|
|
| NET
INVESTMENT IN LEASE |
|
|
|
| FINANCE |
|
|
|
| Net Investment |
|
|
12 |
300,979,162 |
218,542,065 |
|
| Current portion |
|
|
|
(118,475,648) |
(91,769,515) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
182,503,514 |
126,772,550 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Current
portion of net Investment |
|
|
|
| in lease finance |
|
|
|
118,475,648 |
917,695,151 |
|
| Musharaka finance |
|
|
13 |
61,261,944 |
39,991,096 |
|
| Short term Investments |
|
|
14 |
483,717 |
422,501 |
|
| Advances,
deposits and |
|
|
|
|
| prepayments |
|
|
15 |
1,445,562 |
2,152,765 |
|
| Other receivables |
|
|
16 |
4,875,359 |
3,483,835 |
|
| Cash and bank balances |
|
|
17 |
32,920,059 |
18,563,910 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
219,465,289 |
156,383,622 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
408,491,409 |
289,177,979 |
|
|
|
|
========== |
========== |
|
|
| The annexed notes from 1 to 27
form |
|
| an
integral. part of these accounts. |
|
|
|
Basheer A. Chowdry |
|
C. Ahsanul Haq |
|
M.H.S Kazmi |
|
|
Chief Executive |
|
Chairman |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
| REVENUE |
|
|
|
| Income from leasing operations |
|
|
44,832,817 |
42,365,678 |
|
| Profit
on Musharaka transactions |
|
|
9,705,744 |
7,473,280 |
|
| Profit
on investment in securities |
|
|
-- |
175,015 |
|
| Profit on PLS deposit
accounts |
|
|
726,345 |
566,666 |
|
| Other
income |
|
|
18 |
234,675 |
245,559 |
|
|
|
|
------------------ |
------------------ |
|
|
|
55,499,581 |
50,826,198 |
|
| OPERATING
AND FINANCIAL COSTS |
|
|
|
|
| Operating
expenses |
|
19 |
14,226,482 |
13,275,479 |
|
| Financial charges |
|
20 |
24,273,066 |
13,953,046 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(38,499,548) |
(27,228,525) |
|
|
|
|
------------------ |
------------------ |
|
|
|
17,000,033 |
23,597,673 |
|
| OTHER
CHARGES |
|
|
| (Reversal)/Provision
for diminution |
|
|
| in
value of investments |
|
|
(182,952) |
4,019,360 |
|
| Allowance
for potential lease losses |
|
|
4,599,183 |
24,438 |
|
| Balances written off |
|
|
382,496 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(4,798,727) |
(4,043,798) |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
12,201,306 |
19,553,875 |
|
| Modaraba
Company's Management Fee |
|
|
(1,109,210) |
(1,777,625) |
|
|
|
|
------------------ |
------------------ |
|
| Profit for the year |
|
|
11,092,096 |
17,776,250 |
|
| Taxation |
|
|
|
|
|
| Current |
|
|
|
-- |
2,000,000 |
|
| Prior year |
|
|
|
241,535 |
272,144 |
|
| Deferred |
|
|
|
|
-- |
500,000 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
(241,535) |
(2,772,144) |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
|
10,850,561 |
15,004,106 |
|
| Unappropriated
profit brought forward |
|
|
11,892,530 |
889,245 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
|
|
22,743,091 |
15,893,351 |
|
|
|
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
| Dividend
@ Re. 1.25 per Certificate (1998-Nil) |
|
|
158,125,000 |
-- |
|
| Transferred
to special reserve |
|
|
|
2,170,112 |
3,000,821 |
|
| Transferred
to contingency reserve |
|
|
1,000,000 |
1,000,000 |
|
| Transferred
to reserve for deferred taxation |
|
|
1,400,000 |
-- |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
(20,382,612) |
(4,000,821) |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
|
2,360,479 |
11,892,530 |
|
|
|
|
|
|
========== |
========== |
|
| Earning
per Certificate |
|
|
26 |
0.86 |
1.19 |
|
|
|
|
|
|
|
|
|
| The
annexed notes from 1 to 27 form |
|
| an
integral part of these accounts. |
|
|
|
|
|
Basheer A. Chowdry |
|
C. Ahsanul Haq |
|
M.H.S Kazmi |
|
|
Chief Executive |
|
Chairman |
|
Director |
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| A.
CASH FLOW FROM OPERATING ACTIVITIES |
|
| Profit
after taxation |
|
|
|
10,850,561 |
15,004,106 |
|
| Adjustments |
|
|
|
|
|
|
| Financial charges |
|
|
|
24,273,066 |
13,953,046 |
|
| Depreciation |
|
|
|
|
1,397,672 |
1,173,813 |
|
| Provision
for diminution |
|
|
|
|
|
| in
value of investments |
|
|
|
(182,952) |
4,019,360 |
|
| Provision
for deferred tax |
|
|
|
-- |
500,000 |
|
| Allowance for potential
lease losses |
|
|
4,599,183 |
24,438 |
|
| Gain
on sale of fixed assets |
|
|
|
(49,170) |
(16,300) |
|
| Gain
on sale of investments |
|
|
|
-- |
(175,015) |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Operating profit
before working capital changes |
|
|
40,888,360 |
34,483,448 |
|
|
|
|
|
|
|
|
| (Increase)/decrease
in current assets |
|
|
|
|
| Advances,
deposits and prepayments |
|
|
704,203 |
(795,616) |
|
| Other
receivables |
|
|
|
(1,391,524) |
(1,446,496) |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
(687,321) |
(2,242,112) |
|
|
|
|
|
|
|
|
| Increase/(decrease)
in current liabilities |
|
|
| Advance
lease rent/security deposits |
|
|
932,987 |
69,006 |
|
| Accrued
and other liabilities |
|
|
|
677,399 |
(415,756) |
|
| Taxation |
|
|
|
|
(2,831,707) |
1,264,480 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
(1,221,321) |
917,730 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
|
|
38,979,718 |
33,159,066 |
|
| Financial charges paid |
|
|
|
(20,805,116) |
(13,999,076) |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Net
cash from operating activities |
|
|
|
18,174,602 |
19,159,990 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| B.
CASH FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
(1,835,315) |
(1,322,742) |
|
| Investment
in listed securities |
|
|
-- |
(516,750) |
|
| Net
investment in leased assets |
|
|
(87,036,280) |
(5,301,621) |
|
| Proceeds
from sale of investments |
|
|
-- |
1,351,640 |
|
| Musharaka
financing |
|
|
(21,270,848) |
(4,250,014) |
|
| Proceeds
from disposal of fixed assets |
|
107,750 |
325,000 |
|
|
|
------------------ |
------------------ |
|
| Net
cash used in investing activities |
|
(110,034,693) |
(9,714,487) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
| C.
CASH FLOW FROM FINANCING ACTIVITIES |
|
|
| Long
term Musharaka finance obtained |
|
|
45,000,000 |
30,000,000 |
|
| Security
deposits on lease contracts |
|
|
23,110,590 |
2,251,659 |
|
| Increase
in short term Musharaka finance |
|
|
70,093,919 |
9,147,136 |
|
| Repayment
of long term Musharaka finance |
|
|
(31,953,560) |
(18,538,596) |
|
| Dividend |
|
|
(34,709) |
(21,040,885) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash from financing activities |
|
|
106,216,240 |
1,819,314 |
|
|
|
|
------------------ |
------------------ |
|
| Net
increase in cash and cash equivalents |
|
|
14,356,149 |
11,264,817 |
|
| Cash
and bank balances at the beginning of the year |
|
18,563,910 |
7,299,093< |
