Waqar Ajmal Chaudhry is the Managing Director of
First Grindlays Modaraba and Chairman of Modaraba Association of
Pakistan. He has 13 years of diversified experience in corporate and
retail banking sector within the country and aboard. In his career he
has held key positions in Standard Chartered Group. Following are the
excerpts from his interview.
please give us a brief background of FGM and comment on its performance
for the year ended June 30, 2002?
FGM was formed in 1987
and is managed entirely by the Standard Chartered Group. FGM is
primarily engaged in leasing of plant, machinery, motor vehicles ( both
commercial and private), computer equipment, etc. FGM is listed on the
Karachi and Lahore Stock exchanges.
Since its inception, FGM has written assets of over
Rs. 9 billion to diversified sectors. Approximately 61% of such assets
were plant & machinery and equipment.
FGM is one of the top 5 leasing entities in terms of
assets leased out. However, it is the most profitable leasing entity
based on the June 30, 2002 results and its profitability ratios of
'return on assets' and 'return on equity' continue to remain , by far,
the highest amongst all leasing entities in the country.
During the year ended June 30, 2002 we recorded new
business of Rs.1.2 billion resulting in an operating income of Rs.1.1
billion and net profit of Rs.172 million. Operating costs were down by
4.5% compared to the previous year and Rs.19 million was recovered from
the non-performing portfolio.
The aforementioned resulted in a dividend declaration
of 40% for 2002 which is the highest ever cash distribution by FGM.
FGM's Earning per certificate for the year ended June 30, 2002 was
Rs.4.61; 16% higher than last year's earnings resulting in a Return on
Equity of 24.80%.
economic environment, in general, was not conducive to business yet FGM
has had a record year in terms of profitability which is the highest in
the entire leasing and modaraba sectors and has resulted in a dividend
of 40%. Can you please comment on this?
The economic and
business environment, has indeed, been extremely challenging. We have
achieved the aforesaid results by increased customer focus and have
relied on the prudent business practices of the Standard Chartered
At FGM our vision is "to be the preferred provider of
Islamic financial products in the market". Our entire focus is on
building sustainable relationships with our customers and other
partners. Our mission is to create exceptional value for our clients,
investors and staff by being market leaders in providing innovative
Shariah compliant products and solutions.
This standard of performance is also reflected in the
financial strength rating of A2 assigned by Pakistan Credit Rating
Agency. This is 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 distinction of being the only Modaraba to have issued an Islamic
commercial paper by the name of Certificates of Musharika. Can you
briefly tell us about this product and its success so far? What other
initiatives are you taking as far as product development is concerned?
FGM's Certificates of
Musharika (COM) scheme for general public, which was launched in
January' 2001 has provided opportunity to small investors to share in
FGM's profitability and at the same time provided FGM with matched funds
for its future growth.The pioneering Islamic instrument had attracted
investments worth around Rs.375 million as at June 30, 2002.
Certificates of Musharika are easy to buy. For only
Rs.10,000 you can buy them across 21 Standard Chartered or Standard
Chartered Grindlays Bank branches without even opening an account. These
certificates have maturities ranging from 3 months to 5 years. Profits
are paid quarterly and the investors can encash the certificates at any
time. Complete information, including the present expected profit rates,
can be obtained on our web site at www.grindlaysmodaraba.com.
Apart from internal research work on Islamic finance,
we at FGM are working closely with SCB's Malaysian operation in
developing Shariah compliant products. A senior delegation from FGM
visited Malaysia, earlier this year, to share our knowledge of operating
leases and help the Malaysian operation in business development.
any other issue / area you would like to touch upon with respect to FGM?
Some other factors
which continue to help FGM maintain its leadership position are
investment in human resources and technology. We take pride in the
quality of our staff who are well trained and experienced. We have also
intensified our training program for staff which, inter-alia, is now
more focused on Islamic finance.
We also maintain a state of the art computer
environment. During the year ended June 30, 2002, FGM replaced
substantially all of its computer hardware and software inorder to keep
pace with technology advancement.
Performance, at FGM, is also measured in terms of
contribution to society. It may therefore not be out of place to mention
here that FGM is conscious of the significance of social, ethical and
environmental matters to its business. FGM continues to contribute both
in cash and kind, to some deserving social and environmental causes.
During the year ended June 30, 2002 all personal computers replaced by
FGM were donated for such causes.