The Company's policy of focusing on small ticket leasing has
yielded encouraging results
Nov 15 - 21,1999
Despite the recessionary economic situation in the country, Paramount
Leasing disbursed leases worth Rs 288 million for the year ending June 30, 1999. The major
part of the business came as repeat business from existing clients depicting customer
satisfaction. The Company's policy of focusing on small ticket leasing has yielded
encouraging results. New business comprised 72 per cent plant and machinery, 14 per cent
vehicles and 14 per cent equipment.
Based on the performance of the Company for the year ending June 30,
1998 both the rating agencies operating in Pakistan maintained the previous ratings with
positive assertions. Based on subsequent to June 30, 1998 performance, DCR-VIS enhanced
the entity rating from BBB+ (Triple B plus) to A- (A minus) for long-term and maintained
the short-term rating of D1- (D one minus). This improved rating is not only a source of
great confidence for the stakeholders, but it will also help the Company in negotiating
credit facilities including Term Finance Certificates which the company intends to issue
at competitive terms.
During the year, Paramount Leasing improved its financial and operating
results. It posted net profit of Rs 35.27 million which was marginally higher than the
profit posted for the preceding year. The Company made Rs 21.25 million provision against
deferred tax liability.
Paramount has completed 4 years of business operation. It received
certificate of the commencement of business on 7th June 1995. It was incorporated in
December 1992 and twenty two financial institutions hold over 77 per cent of its share
capital. The nominees of two financial institutions and a commercial bank are represented
on its Board of Directors. These financial institutions are Al-Towfeek Investment Bank
Limited, The Bank of Khyber, Pak Libya Holding Company (Pvt) Limited.
The company started with a large capital base of Rs 250 million which
has not been increased so far. The Company is listed at all the three stock exchange of
the country. At present, the share of the company is trading around Rs 5.50 at 45%
discount to its par value of Rs 10. The highest price of its share was quoted at Rs 15 in
1995. Since 1998 the share price has remained below par. The lowest price quoted was
around Rs 4.50 in 1998.
The company has excellent dividend payment track record. It has never
omitted profit distribution to its shareholders. During the financial year under review
the company paid cash dividend of 12.5 per cent. The rate has been maintained over the
last two years. while in 1996 the Company paid 10 per cent cash dividend. Since
commencement of business the total payout works out to nearly 48 per cent.
The mission statement of the company explains its conscious efforts and
long-term policy. The mission statement has been documented in the latest Annual Report.
The statement says, "We are committed to carving a leading position in the Leasing
Industry of Pakistan by creating value and optimizing profits for our shareholders,
providing most efficient service to our clients promoting good business practices and
encouraging environment friendly projects."
Despite current economic conditions, the Company's financial and
operating results exhibit more than satisfactory performance.
During the year under review, gross income was Rs 121.25 million and
the net investment in lease finance at Rs 635 million. Profit before tax at Rs 57.12
million posted increased by about per cent.
Provision against potential lease losses was low at Rs 1.7 million as
compared to the preceding year's Rs 7.36 million. The company posted net profit at Rs
35.27 million which was marginally higher than the net profit at Rs 34.53 million posted
in the preceding year.
Although Security and Exchange Commission of Pakistan has not announced
the date for conforming to the requirement of International Accounting Standard, the
Company had taken the lead at its own last year, by making a provision of Rs 16.2 million
for the deferred tax liability. The liability is not likely to materialize in the
foreseeable future. This year also the Company has made even higher provision of Rs 21.3
million for the deferred tax liability.