FIRST EQUITY MODARABA

Consistent profit distribution despite turbulent business conditions

By SHABBIR H. KAZMI
Jan 26 - Feb 01, 2004

First Equity Modaraba (FEM) was floated in 1991 as a multipurpose and perpetual closed-end fund with a paid up capital of Rs 200 million. Crescent Group is the main sponsor of the FEM. The Group has diversified business interest, in more than 25 sectors in Pakistan. Over the years, total equity has increased to nearly Rs 397 million, comprising of Rs 262.2 million capital and Rs 134.39 million reserves. The FEM's consistent profitability, despite adverse regulatory and taxation regimes, is evident from regular distribution of dividend among the certificate holders.

The FEM enjoys a unique distinction among the Modarabas operating in Pakistan. Cognizant of the growing competition, it ventured into equities brokerage business. It acquired membership card at the three stock exchanges operating in the country. The regulators also endorsed this stewardship by allowing FEM to invest in capital markets up to 30% of its equity as against 20% laid down in the Prudential Regulations. In August 2002, the Securities and Exchange Commission of Pakistan granted FEM the requisite license to operate as broker. On September 17, 2002 the FEM made the first trial entry at the Karachi Stock Exchange. The FEM's timely entry in equities market proved to be ideal as the KSE-100 index broke all the previous high records. The FEM is well positioned to cater to the requirements of its clients and add value to its certificate holders.

Adil A. Ghaffar is the Chief Executive of First Equity Modaraba and First Equity Modaraba Brokerage Services. He is also Chairman of Modaraba Association of Pakistan (MAP). At the MAP, he has been instrumental in taking initiatives for improving image of the sector. He is a Chartered Accountant and Associate member of the Institute of Corporate Secretaries with experience in financial and fund management, capital market operations and public accounting.

The FEM has posted Rs 76.46 millin profit after tax for the year ending June 30, 2003 as compared to Rs 46.41 million for year 2002. Goss income showed a significant improvement by 59% over the last year. Expenses increased by 75% over the last year but this mainly was due to amortization of intangible assets that contributed 28% in total expenses. The earning per certificate for the year 2003 was Rs 2.92 as against Rs 1.77 for the previous year.

EQUITY

(Rs in million)

YEAR

AMOUNT

1999

322.44

2000

330.39

2001

335.69

2002

350.32

2003

396.59

BALANCE SHEET FOOTING

(Rs in million)

YEAR

AMOUNT

1999

376.45

2000

389.15

2001

393.62

2002

410.85

2003

492.88

TOTAL INCOME

(Rs in million)

YEAR

AMOUNT

1999

61.99

2000

72.28

2001

66.07

2002

58.49

2003

93.14

PROFIT AFTER TAX

(Rs in million)

YEAR

AMOUNT

1999

49.98

2000

49.91

2001

44.62

2002

46.41

2003

76.46

 


 

BOARD OF DIRECTORS

MR. MAQBUL AHMED

Director

MR. MOHAMMAD ARSHAD

Director

MR. ZAHID BASHIR

Director

MR. NADEEM MAQBOOL

Director

MR. SHAUKAT SHAFI

Director

MR. ADIL A. GHAFFAR

Director & CEO