First Grindlays Modaraba (FGM) has played a
pioneering role in the introduction of financial products compliant with
the Shariah. Established in 1987 it has over the years developed a
diverse range of products — leasing, murabaha, musharika, consumer
leasing and most recently a liability product, Certificates of Musharika.
FGM's primary focus has been leasing of assets —
plant & machinery, motor vehicles, generators and office equipment
which includes computers, photo copiers and fax machines. Its customers
comprise of local corporates, public sector entities, international
companies and corporate employees. A quick glance at FGM's portfolio mix
will reveal that the modaraba is involved in all the sectors that
contribute to the economic activity in Pakistan. Thus one will find
exposures to the Textile Industry: Spinning, Weaving, Composite,
Synthetics; Sugar, Cement, Pharmaceuticals, Chemicals, Fuel & Energy
and Financial Institutions.
In terms of assets the portfolio mix maintains an
equal balance between plant & machinery and motor vehicles. For
motor vehicle leases the focus is on corporates who acquire vehicles for
their executives and sales staff. FGM also offers motor vehicle leases
to individuals, primarily to employees of corporate institutions.
Motor vehicles leased by FGM include both commercial
as well as non-commercial cars. Commercial cars are generally leased for
distribution purposes or to fulfill the transport needs of companies.
Commercial vehicles include vans, pick up trucks and large containerized
trucks. Vehicles can be imported as well as locally manufactured. With
the increase in manufacturing activity in Pakistan, we find that the
proportion of locally assembled vehicles is higher than imported
vehicles. FGM allows leasing of used cars as well as new cars as long as
the vehicle is in a good condition and its value can be established by a
professional valuation agency.
Plant and machinery leases are generally offered for
new projects where the machinery is being imported or for normal BMR and
expansions that a manufacturing concern is involved in from time to
time. By offering plant & machinery leases FGM continues to support
the economic activity in the industrial sector of Pakistan. FGM's
contribution to the economic development of Pakistan can be gauged by
the quantum of disbursement made in the past 15 years. This figure now
exceeds Rs10 billion.
On the liability side FGM has for the past two years
offered an investment product to individuals who are looking for an
avenue to invest their funds in an Islamic manner. The launch of
Certificates of Musharika or COMs was a pioneering effort on the part of
FGM. COMs have been well received in the market and to date FGM has
raised over Rs430 million.
First Grindlays Modaraba (FGM) was established by ANZ
Grindlays Bank (now Standard Chartered Bank) as a standalone leasing
vehicle providing a tax efficient medium to long term financing product
and Shariah compliant solutions. It attracted substantial investments
from local as well as overseas investors, primarily from the Middle
East. Listed on the Karachi and Lahore Stock Exchanges, FGM is now one
of the largest modarabas in Pakistan. It is managed by Grindlays
Services of Pakistan (Pvt) Ltd (GSP), a wholly owned subsidiary of
Standard Chartered Bank.
Standard Chartered Group in Pakistan comprises of
Standard Chartered Bank and First Grindlays Modaraba. Standard Chartered
has been providing banking services in this region for over 140 years.
It is the world's leading emerging markets bank with presence in the
Asia Pacific Region, South Asia, the Middle East, Africa, United Kingdom
and the Americas. The bank serves both Consumer and Wholesale banking
customers. With nearly 150 years in the emerging markets the bank has
unmatched knowledge and understanding of its customers in its markets.
Over the past decade and a half, FGM has paid out
handsome dividends to its certificate holders which touched 40% in 2002.
Total dividend pay out since 1987 has exceeded Rs900 million. Its share
price has increased by over 90% since June 2001 and has earned a place
in the KSE Top 50 index. Most recently it was short-listed for a
Corporate Excellence Award by the Management Association of Pakistan.
This makes FGM one of the most successful and respected names in the
leasing industry. As recognition of this success story, it has been
assigned ratings of AA+ (Double A Plus) and A1+ (Single A1 Plus) for
long term and short term respectively, by the Pakistan Credit Rating
Agency. This signifies low expectation of credit risk and very strong
capacity for timely payment of financial commitment. This is the highest
entity rating in the entire Modaraba and Leasing Sector.
The demand for motor vehicle leasing is increasing
due to large choices available to individuals both in terms of make of
vehicle and number of financing institutions. FGM has proved itself
capable to meeting the challenges faced by numerous new entrants in the
leasing business. It continues to support economic activity in the
country by providing lease finance and Islamic financing solutions when
required to individuals, industry leaders and entrepreneurs. It has been
rewarded for this dedication by remaining preferred financier for most