. .



 Profile

 MATEEN SIDDIQUI

 Column

 FOR THE RECORD

 Society

 URBAN SALINITY AND DAMAGE OF BUILDINGS

 Company Profile  (1) FIRST GRIND LAYS MODARABA
 (2) ASKAIR LEASING LIMITED

A

Company Profile

First Grindlays Modaraba

Consistent and strong all round financial performance is evident in growth in revenues and dividend payout. First Grindlays Modaraba (FGM) since inception is testimony of the high quality professional team managing the business and strong support of the sponsor company. FGM has maintained its leadership position and continues to be a pioneer in introducing new products and concepts for development of the modaraba sector for the benefit of its shareholders.

Dec 10 - 16 , 2001

FGM is managed by Grindlays Services of Pakistan (Private) Limited (GSP) which is a wholly owned subsidiary of Standard Chartered Grindlays Bank Limited. In Pakistan, the Standard Chartered Group, in addition to FGM, comprises of Standard Chartered Bank (SCB) and Standard Chartered Grindlays Bank (SCGB).

The Management Company (GSP) holds 10% of the equity and Standard Chartered Grindlays Bank holds another 10%. The balance 80% is held by the general public, out of which more than 40% are individual shareholders. The board of directors of the modaraba management company comprises three nominees of Standard Chartered Group.

FGM is primarily engaged in leasing of plant & machinery, motor vehicles (both private and commercial) and office/computer equipment and operates from offices in Karachi, Lahore and Islamabad. Today with equity of Rs. 673 million, and gross leased assets of over Rs.3.4 billion, it is by far the largest modaraba in the country and ranks amongst the largest and most profitable leasing entities.

FGM's success story has been made possible through efficient utilisation of resources and operational practices applied within the Standard Chartered Group. This standard of performance is reflected in the individual rating of A2 assigned to FGM by Pakistan Credit Rating Agency. This represents the highest rating in the entire modaraba sector and represents " a modaraba in outstanding financial condition with a consistent record of above average performance".

The last audited financial year ended June 30, 2001 reflected another year of sound performance and achievements. During the said year an award was received from Modaraba Association of Pakistan for highest dividend pay-out (30%) in the entire modaraba sector, for the year ended June 30, 2000. This pay-out was bettered in June 30, 2001 with a dividend of 33%. The year ended June 30, 2001 was also a record year in terms of highest lease disbursement of Rs.966 million, operating income exceeding Rs. 1 billion and net leased assests portfolio crossing Rs.2 billion mark. (Table 1 summarizes key financial / performance indicators for FGM for the last 5 years.)

TABLE 1
FIVE YEARS AT A GLANCE

 

1997

1998

1999

2000

2001

Key Financial figures (Rs. in millions)

Assets leased out

1,436

1,563

1,811

1,922

2,096

Paid-up Capital

346

374

374

374

374

Total Equity

570

592

624

647

673

Lease disbursements

676

687

769

715

966

Operating Income

676

673

755

860

1,000

Net Profit 95    105 114 135 149

Key Performance Indicators (Rs.)

Dividend per certificate

2.20

2.20

2.20

3.00

3.30

Earnings per certificate

2.75

2.81

3.05

3.61

3.98

Break-up value per certificate

16.47

15.83

16.68

17.30

17.99

Price-Earnings Ratio

4.18

3.92

4.02

4.04

4.80

FINANCIAL HIGHLIGHTS

FGM's profitability ratios of return on assets of 7% and return on equity of 22%, for the year ended June 30, 2001, continue to remain, by far, the highest amongst all leasing entities in the country.

During 2001 FGM launched a website at www.grindlaysmodaraba.com. The website features, inter-alia, useful information on FGM, various aspects of Islamic finance, leasing and modarabas, a comprehensive Islamic finance terminology page and links to other sites on leasing and Islamic finance.

However, one of the biggest achievements of the year was the introduction of a pioneering Islamic investment scheme called Certificates of Musharika (COM), formulated within parameters laid down by the Religious Board and approved by Securities and Exchange Commission of Pakistan. Through this instrument FGM provides secure and rewarding investment opportunities for individuals and companies alike. For FGM, money raised under this scheme, provides matched funds (FGM leases assets for 3 to 5 years) as these certificates are issued for periods up to 5 years. (Table 2 summarises the major features of this investment scheme.) Investment in COMs can be done directly from FGM or across 21 SCB and SCGB branches without opening a bank account.

FGM continues to focus on enhancing shareholder value through optimizing funding mix and booking of quality risk assets. FGM has demonstrated the ability to maintain its leading position as reflected by outstanding and consistent performance, good asset quality and well conceived growth strategy taking cognizance of the prevailing operating environment.

Standard Chartered Group

In Pakistan, Standard Chartered Group comprises of Standard Chartered Bank, Standard Chartered Grindlays Bank and First Grindlays Modaraba.

Standard Chartered has 6 branches in Pakistan; 3 in Karachi, 2 in Lahore and 1 in Faisalabad, and offers Consumer Banking, Corporate & Institutional Banking (incl. Cash Management products & services), Treasury, and Custodial Services to its customers. Standard Chartered has been providing banking services in this region for over 137 years. Standard Chartered Grindlays has 15 branches in Pakistan; 7 in Karachi, 3 in Lahore, 1 in Islamabad, 1 in Rawalpindi, 1 in Quetta and 1 in Peshawar and 1 in Sialkot, and offers Consumer Banking (including Credit Cards), Corporate Banking, Investment Banking, Treasury and Custodial Services to its customers. Standard Chartered Grindlays has been providing banking services in this region for over 140 years.

Standard Chartered is a London based, international bank focused on the emerging markets of Asia, the Middle East, Africa and Latin America. It has significant operations in Hong Kong, Singapore, Malaysia, Thailand, India, Bangladesh, the United Arab Emirates and in sub-Saharan Africa. Key businesses are Consumer Banking, primarily credit cards, mortgages, personal loans and wealth management, and Wholesale Banking, where the Bank specialises in the provision of cash management, trade finance, treasury and custody services. The Group has a network of over 600 offices in more than 56 countries. With a presence in Asia and Africa that goes back nearly 150 years, Standard Chartered has an in-depth understanding of, and a long-term commitment to, the emerging markets.

TABLE 2
Certificates of Musharika (COMs)
Major features of the COM Scheme are given below:

Registered

A unique registration number shall be assigned to each certificate upon issue.

Maturity

Available in tenors of three months, six months, one year, two years, three years, four years and five years.

Currency

Pakistan Rupees only.

Denominations

Minimum denominations of Rs. 5,000

Investment Limit

A minimum investment of Rs. 10,000

Expected returns*

3 months 7.00% per annum
6 months 8.00% per annum
1 year 9.00% per annum
2 years 10.50% per annum
3 years 11.00% per annum
4 years 11.50% per annum
5 years 12.00% per annum

* subject to change.

Profit payments are made on a quarterly bases.

Profit Calculation

Profit rates to be computed on a 365 days basis and paid for the actual number of days the certificate remains outstanding within the relevant profit payment quarter.

Premature Encashment

Permitted at any time. A redemption reserve fund equal to 5% of the face value of COMs outstanding has to be maintained by FGM to cater to premature encashments.

Penalty

1% of encashment value.

Transferable

Yes.

Taxation/Zakat/Stamp duty

Subject to 2.5% Zakat and withholding tax 10% wherever applicable. Stamp duty 0.15% of face value on issue and 0.10% on transfers.

Profit Payment Mode

By crossed cheque/ direct account transfer for SCGB/SCB account holders.