Plan of Activities

INTRODUCTION

This feasibility is premeditated to outline the benefits Leasing Association of Pakistan and Modaraba Association of Pakistan is expected to reap through the formation of a new combined association and thereafter ceasing to exist individually as separate associations.

A brief description of the legal stature and nature of operations of both associations is as follows

Leasing Association of Pakistan was established as an Association of Persons (AOP) and was granted License No.139 under section 3 of the Trade Organizations Ordinance, 1961 by Ministry of Commerce, Government of Pakistan onMarch 28, 1995 and thereafter granted Certificate of Incorporation under section 32 & 42 of the Companies Ordinance, 1984 by SECP with effect fromJune 22, 1995.

The prime objects of the association, interalia includes

  • To serve as a forum of the leasing companies to confer on all issues of common interest and to formulate joint strategies;
  • To represent the member companies collectively before all Government authorities and or agencies on matters relating to the leasing business inPakistan;
  • To coordinate the activities and to promote, safeguard and protect the interests of the members in exercise of their leasing business;

Modaraba Association of Pakistan was incorporated as a company limited by guarantee under the Companies Ordinance, 1984 on17 April, 1994.

The prime objects of the association, interalia includes

  • Promotion of the Islamic way of business through the provision of riba-free financing in accordance with the Sharia
  • To promote the establishment and operation of modaraba through the mass media a
  • To encourage public awareness of the role of modarabas in the provisions of Islamic modes of financing.
  • Promotion, safeguard and protection of the interests of the members of the Association in their conduct of Islamic modes of business and finance.

The Director General, Trade Organization (DGTO) via its letter dated  June 25, 2008, has advised both associations to merge and apply for a fresh registration and license under the new Trade Ordinance, 2007 (TOO 2007). However, members of both associations have unanimously decided to form a new association with same members and thereafter cease to exist individually. The two associations have also invited Investment Banks to become members of the proposed association.

ASSOCIATION INFORMATION

Responsive Table Example
  1. Structure
Secretary General

Mr. Muhammad Samiullah

Sponsors
Number Name Organisation
1 Mr. Humayun Murad ORIX Leasing Pakistan Limited
2 Mr. Mohammed Khalid Ali Security Leasing Corporation Limited
3 Mr. Rafique Dawood First Dawood Investment Bank Limited
4 Mr. Siyyid Tahir Nawazish First Fidelity Leasing Modaraba
5 Mr. Farrukh S. Ansari Saudi Pak Leasing Company Limited
6 Mr. Jalaluddin Ahmed First Al-Noor Modaraba
7 Syed Anvaar Rasool First Habib Bank Modaraba
8 Mr. Amir Iftikhar Khan First Elite Capital Modaraba
9 Mrs. Hamida Aqeel Al-Zaamin InvestBank
10 Mr. Shams Ghani Allied Rental Modaraba

  1. Governing body

The governing body will be the executive committee which shall comprise of members of both LAP and MAP. The requirement for minimum number of members of the committee will be 10 and maximum 30.

  1. Membership structure

Proposed Association shall have the following membership structure:
Modarabas

27

Leasing Companies

10

Investment Banks

03

Total

40


  1. Objectives

The proposed association will pursue following objectives:
  1. To promote, safeguard & protect the interest of the members of the Association in the conduct of their modaraba , leasing business , investment finance services , housing finance , investment advisory service , discounting service , venture capital and such other business as permitted to be conducted by the members of the Association
  1. Serve as a forum of the members of the Association to confer on all issues of common interest and to formulate joint strategies.
  1. Encourage cooperation and unanimity amongst the members of the Association on all matters connected with their common goal.
  1. To promote Islamic way of business through the provision of riba-free financing in accordance with the Sharia.
  1. To promote the business of leasing and leasing operations of all kinds.
  1. To act as an organ of communication for and to represent members of the Association in all or any of their relationships with any Government , Federal or Provincial , local , municipal , and other public authorities & trade associations.
  1. Work actively for the eradication of unethical business practice and to promote honorable business practice in the conduct of their business by the members of the Association.

FINANCIAL FEASIBILITY

  2010 2011 2012
Initial Contribution 2,000,000
Preliminary Expenses (400,000)
Receipts 5,675,000 5,875,000 6,000,000
Expenses 4,708,649 5,224,286 5,725,239
Surplus over expenditure 966,351 650,714 274,761
Accumulated reserves 966,351 1,617,065 1,891,826
  2010 2011 2012
Annual Subscription by members
Total 4,875,000 4,875,000 4,875,000
Miscellaneous income
Total 800,000 1,000,000 1,125,000
Total 5,675,000 5,875,000 6,000,000
  2010 2011 2012
Salaries and other benefits 2,870,329 3,159,966 3,487,919
Office rent 613,000 717,000 771,000
Fees and subscriptions 230,000 250,000 275,000
Insurance 30,000 32,000 34,000
Traveling and conveyance 100,000 110,000 120,000
Printing and stationery 70,000 80,000 90,000
Telephone and telefax 90,000 100,000 110,000
Electricity 100,000 110,000 120,000
Postage and courier 25,000 28,000 31,000
Office maintenance 60,000 65,000 70,000
Entertainment 50,000 55,000 60,000
Auditors’ remuneration 50,000 55,000 60,000
Books and periodicals 20,000 22,000 24,000
Legal and professional 50,000 55,000 60,000
Bank charges 10,000 15,000 20,000
Meeting expenses 100,000 110,000 120,000
Building maintenance 70,320 75,320 72,320
Vehicle running and maintenance 120,000 130,000 140,000
Miscellaneous 50,000 55,000 60,000
TOTAL 4,708,649 5,224,286 5,725,239
     
* Details of miscellaneous
Income and related expenditure are as follows
Activities Printing of Year Book Newsletter Seminars & Workshops
2010 2011 2012 2010 2011 2012 2010 2011 2012
Expected Income 550,000 625,000 680,000 84,000 94,000 104,000 216,000 295,000 340,000
 

NOTES TO THE FINANCIAL INFORMATION

Accounting Policies 

The accounting policies and method of computation adopted for the preparation of this financial information are the same as those applied in the preparation of the preceding annual financial statements of the Associations for the year endedJune 30, 2009.

4.2. Assumptions for the forecast

The forecast have been based on the following assumptions.

  1. a.     Revenue
  • Initial contribution of Rs.1,000,000 each will be made by both LAP and MAP in the new association.
  • There will be forty members making an annual contribution approximately of Rs.122,000 each, in lieu of subscription fee. 

(Based on the assumption that no change in the number of members and annual subscription would take place in the years under consideration).

  • Miscellaneous income is expected to grow at the rate of 12.5% to 20%. Prime sources of other income being

ü  Seminars and workshops.

ü  Investment income on surplus funds with banks.

b.    Expenditure

  • Salaries and other benefits are expected to increase at the rate of 10%.
  • Office rent will increase annually at the rate of 7.5%.
  • Other expenses are having an effect of inflation, increase from 8% to 15% per annum.

c.    General

  • The situation remains cordial to trade and commerce.
  • No changes in Trade Organization Ordinance that may invalidate the legal position of the proposed association subsequently.
  • The interest rate scenario remains within predictable range.

CONCLUSION

NBFI and Modaraba Association of Pakistan (Proposed) formation is projected to be financially and operationally viable on the following grounds.

a)     Despite the trend of thinning margins between expected expenses and proposed revenues of the association in next three years, the forecast does not depict losses. Hence, the undertaking appears to be financially feasible especially with the option open for marginally increasing the annual contribution.

b)    The executive committee comprises of experienced personnel in their respective domains and hence can greatly contribute to the successful functioning of the proposed association.