Leasing is an Islamic mode of financing and is being
widely practiced throughout the world. This sector has experienced
enormous growth during the 90s. Presently there are - 29 leasing
companies in Pakistan with a paid up capital of Rs. 4,966 M. The assets
are close to Rs. 45,222 M and an investment of Rs. 36,680 M. Companies
have been mostly extending short and medium term credit facilities to
industries and consumers, but still there is room for improvement, since
many sectors of the economy remain unexplored and neglected.
Lease finance by all means is the most suitable
financing arrangement for developing countries and especially Pakistan.
Despite the fact that most banks of the country are facing surplus
liquidity crises and have unutilised funds, they are still not catering
to the needs of micro enterprises in an effective and efficient manner.
Askari Leasing Limited (ALL), a subsidiary of Army
Welfare Trust (AWT), was incorporated in August, 1993 with an authorized
share capital of Rs. 500 million and is listed on all three Stock
Exchanges of the country. The company has generated enough resources to
adequately fiance its leasing operations, mainly by securing funds
through Certificates of Investment, which is reflective of the
confidence of COI holders reposed in the company's management and its
business potential. The company's operations are based on sound
appraisal criteria and standards and are focused on quality lease
business. Major areas of financing include consumer auto leasing and big
ticket leasing to large local and multinational companies. Askar, our
auto lease package has firmly placed the company in auto finance market.
The security and collateral requirements at ALL are
much softer than other leasing companies and banks. An application for
loan might take days or even months in case of a bank, whereas at ALL an
application for lease can be processed within twenty-four hours, with
minimum documentation requirements. The lease rentals are also tax
deductible, since the asset remains the property of leasing company
until its maturity.
At ALL, we disbursed Rs.2.6 billion during the year
in lease transactions — with a major investment in Askar, our auto
financing product. Net investment in lease as at June 30, 2002 is Rs.6.7
billion compared to Rs.6.3 billion last year. The leases have primarily
been financed through certificates of investment, which stood at Rs.5.9
billion as at June 30, 2002. Total revenue during the year was Rs.1.2
billion which was slightly higher than the previous year. Lease revenue
contributed Rs.929 million and Rs. 180 million was contributed by
short-term/treasury investments. Finance charge was Rs.951 million
compared to Rs.938 million for the previous year. Allowance for
potential lease losses is Rs.68 million while Rs.25 million has been
provided for the impairment of receivables, resulted from restructuring
of lease transactions. The current provisions enhanced the total
allowance for losses to Rs.291 million while Rs.105 million has been set
aside in reserves for contingencies.
Assets wise lease analysis shows investment in well
diversified portfolio. We have a good geographic distribution of assets
in the all major cities of Pakistan. Sector wise significant exposure
besides consumer, includes textiles, oil and gas and services.
The Pakistan Credit Rating Agency (PACRA) has
maintained Askari Leasing's entity rating of "A Plus" for long
term and "Al" for short term obligations based on the results
of June 30, 2001.
The funds have been deployed in a well diversified
lease portfolio. Askari Leasing has been leasing out large scale
equipment and machinery. We have been adequately catering to the needs
of large scale industry, and we are in the midst of fulfilling the needs
of Small and Medium Enterprises. In addition to that we are also on the
verge of introducing consumer financing.
Due to untiring effort of the work force and timely
decision making by the management, ALL has made tremendous progress over
the years and has already become the largest leasing company of