cf project report

8/8/2019 Cf Project Report

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COMSATS Institute of Information Technology

Corporate Finance

Project Report

Submitted To:

Sir Khalid Sohail

Submitted by:

Masood Anwer (SP09-MBA-205)


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TABLE OF CONTENT

ASSIGNED COMPANIES ............................................................................................... 3

1. FIRST HABIB MODARABA.................................................................................................................. 32. ALLIED RENTAL MODARABA ............................................................................................................ 3

MODARABA ..................................................................................................................... 4

INTRODUCTION................................................................................................................. 4FEATURES OF MODARABA ..................................................................................................................... 5REGISTRATION OF MODARABA COMPANIES ........................................................................................ 5TYPES OF MODARABA ............................................................................................................................. 6

FIRST HABIB MODARABA .......................................................................................... 7

INTRODUCTION ............................................................................................................................ 7OWNERSHIP STRUCTURE.............................................................................................................. 9

BOARD OF DIRECTORS................................................................................................................. 9FORMATION OF COMPANY......................................................................................................... 10LINES OF BUSINESS .................................................................................................................... 10FINANCING................................................................................................................................. 10INVESTMENT.............................................................................................................................. 18

COMPETITORS............................................................................................................................ 19SHARES OUTSTANDING ............................................................................................................. 19TOTAL MARKET CAPITALIZATION ............................................................................................ 19BOOK VALUE PER SHARE ........................................................................................................... 20M/BRATIO ................................................................................................................................ 20

FISCAL YEAR.............................................................................................................................. 20CAPITAL STRUCTURE ................................................................................................................. 21DIVIDEND POLICY ...................................................................................................................... 21

ALLIED RENTAL MODARABA ................................................................................. 21

INTRODUCTION .......................................................................................................................... 21OWNERSHIP STRUCTURE............................................................................................................ 22

BOARD OF DIRECTORS............................................................................................................... 23FORMATION OF COMPANY......................................................................................................... 23

LINES OF BUSINESS .................................................................................................................... 23COMPETITORS............................................................................................................................ 24SHARES OUTSTANDING ............................................................................................................. 24

TOTAL MARKET CAPITALIZATION ............................................................................................ 24BOOK VALUE PER SHARE ........................................................................................................... 24

M/BRATIO ................................................................................................................................ 25FISCAL YEAR.............................................................................................................................. 26CAPITAL STRUCTURE ................................................................................................................. 26

DIVIDEND POLICY ...................................................................................................................... 26

REFERENCES ................................................................................................................ 27


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Assigned Companies

1. First Habib Modaraba

2. Allied Rental Modaraba


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Modaraba

Introduction

Modaraba is a form of contract a subscriber participates with his money and

the manager with his efforts and skills, after setting aside the agreed share ofModarib the profits earned on investments are distributed among the

subscribers.

In simple words, Modaraba means a business in which a subscriberparticipates with his money and the manager participates with his knowledge

and skill, and profits on investment made out of the Modaraba funds are

distributed among the subscribers. Thus, it is a concept of Islamic financethrough which one partner or more participate with the funds and anotherwith his skill and efforts in some trade, business and industry permitted by

Islam. They who participate with their efforts assume the role of manager,while the provider of funds becomes the beneficial owner. In modern

terminology, a "modaraba' is akin to the concept of mutual funds minus its

unIslamic features. The concept of mutual funds has gained widespreadacceptance in the country as is evident by the success of N.I.T. units and

I.C.P. mutual funds.

In view of this back ground, it appears that the institutions of modaraba willplay a vital role in mobilizing savings in the society and diverting them into

productive channels of investments in the economy.

In an Islamic country there is no place for the capital to be given on interest.Capital is to be combined with the skill and both are to work on profit and

loss sharing basis. This arrangement in Halal business wherein capital iscombined with the knowledge and skill is technically called modaraba.

Modaraba means: a business in which the subscriber participates with hismoney and another (manager madaraba) with his efforts and skills and shallinclude unit trusts and mutual funds by whatever name called. The profitearned during the year is distributed among the financiers and the

entrepreneurs according to the agreed ration. In case of loss, it is sharedamong the financiers in proportion to the capital invested in the business.


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If losses occur due to negligence of modarab (managing trustee) or there is a

breech of the terms of agreement by him, then the losses will be borne tohim. Modaraba is an effective device for rising of large amount of resources

for productive purpose in place of joint stock companies. A modaraba is a

legal person. It can sue and be sued in its name through the modarabacompany. The government of Pakistan promulgated the modaraba

companies and modaraba (floatation and control) Ordinance in 1980.

Features of Modaraba

1. It is an important feature of this kind of business that the moneyshould be handed over by the Rab-ul-Mall to the Modarab and heshould not control the money.

2. Modaraba must be incorporate and register under Modaraba(Floatation and control) ordinance, 1980.

3. Its activities are controlled by the Modaraba companies and Modarabarules, 1981.

4. The certificates issued by Modaraba are transferable.5. The Modaraba has right to receive at least 10% share in Modaraba

business.6. The profit of Modaraba business is distributed among the partners

according to the agreement, and one partner cannot enjoy entire profit

of the business.7. The money of Modaraba cannot be contributed to another person

without the prior consent of Rab-ul-Mall.

8. It may be formed for specific period and it will be dissolved by theexpiry of that time.

9. It may be formed for single purpose or for multiple purposes.10.The Modaraba will be dissolved by the death of any partner

Registration of modaraba companies

A company is registered as Modaraba Company. The main conditions foreligibility for registration as Modaraba Company are as under:

1) It should be a company (private or public sector) registered under

companies ordinance or any other law in force.


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2) If a company undertakes floatation and management of Modaraba,

then its paid up capital should not be less than five million rupees.

3) The promoters of the company should have knowledge and skill for

carrying on the business.

4) The office bearers of the company should not be insolvent, convictedof fraud by court or involved in beach of trust.

According to the modabara ordinance 1980, the registrar can cancel the

registration of any company by the following procedure stated below:Where the registrar is of the opinion that the modabara company has

contravened or has failed to comply with any provision of the ordinance,or the rules or with any direction or given there under, he may, if he

considers necessary in the public interest so to do, by order in writing.

Types of modarabaThere are mainly two types of madaraba a) multipurpose, b) specific

purpose

a) A multipurpose modabara is that which has more than one objective or

specific purpose.

b) Special modabara as the name signifies is that which is established for a specific

purpose.


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First Habib Modaraba

Introduction

In todays business environment when customized financial solutions and personalized services make a big difference, the First Habib Modaraba

(FHM) by virtue of its expertise and experience leads from the front anddeliver up to the entire satisfaction of its stakeholders.

The Habib Group with vast experience in the industrial, financial andcommercial sectors floated FHM in 1985. The basic aim of the FHM was to

make contribution towards the transformation of our mercantile as well asfinancial system and dealings in line with principles elaborated in Sharia

FHM commenced its business operation in March 1985, with initial capitalof Rs.25.0 million only. Continuing with solid, dynamic and prudentapproach now Allhamdolliah, the FHM has a total equity base of over

Rs.2.60 billion and an asset size of approximately of Rs.3.2 billion.

FHM is a multipurpose Modaraba involved in various Islamic FinancialServices like Ijara, Morabaha, Diminishing Musharakah, Salam, Istisna and

various other Islamic Financial Products.

The Management of FHM has always given emphasis on building-up qualitylease portfolio. The efficacy of FHMs business strategy and prudent risk

management policies has supported the management to maintain outstandingassets quality while ensuring sustainability of performance, despite the

increasingly competitive operating environment in Pakistans financialmarket.

Efficient customer services and high client value has always been FHMsobjective. The fast pace of changes in the Islamic financial service industryneeds more innovations in order to meet customers demand.

So far the FHM has achieved considerable growth in size while maintainingsolid assets portfolio, sound capital base and handsome return tostakeholders.


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FHM draw its success by complying with highest ethical and moralstandards and always try to make efforts to enhance superior professionalcompetencies.

The management always believes in steady growth and not the policy of

aggressive employment of Modaraba fund. Efforts have always been madeto enlarge the area of business in a prudent manner and execute funding

transactions judiciously on selective basis with in-depth assessment of client.Business transactions have always been done on economic considerations,keeping in view the safety of investors funds.

Through judicious administration of funds and sound investment policies,the FHM has assembled a very lucrative assets portfolio that hasconsistently yielded very attractive returns.

The sustainable success is most likely to be achieved by only thoseinstitutions that take the broadest view of their responsibilities. In pursuit of

creation of higher and higher value for stakeholders, FHMhave remained absolutely and totally committed to Good CorporateGovernance and Best Business Practices.

FHM is firmly committed to its well-defined and focused strategy. Allsuccess stem from one common root, i.e. the skills and expertise of team,

which fuelled by sheer commitment, dedication and hard work.

It can be judged with the performance of FHM of over two decades and thiswould convince that Stability of Operation and Sustainability of Growthare well achieved in every year. It can be observed that FHM is much

stronger today in terms of the Healthy size of Equity, strong Balance SheetFooting and sound Profitability with stronger management talent and vibrantHuman Resource.

The management of FHM is confident that they will keep embarking theirambitious target with high level of customer satisfaction. FHM will continue

to keep its growth momentum with dedication and deep sense ofcommitment while maintaining financial discipline, adhering to professional

and moral codes.


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Ownership structure

Sr No Category of owners % Ownership1 Individuals 28.09%

2 Investment companies 0.07%

3 Joint stocks companies 2.61%

4 Directors and management 0.03%

5 NIT/ICP 1.60%

6 Associated companies 49.40%

7 Financial institutions 6.13%8 Foreign investors 2.33%

9 Corporate societies 8.11%

10 Charitable trusts 0.57%

11 Others 1.06%

Board of Directors

Mr. Wazir Mumtaz Ahmed - Chairman

Mr. Wazir Mumtaz Ahmed is seasoned banker, his banking career spans

over more than 46 years (1961-2007), he carries a experience of working onsenior positions in Pakistan and abroad. After completion of his Masters in

Economics he got international Certificate in Commercial Law &Economics from London chamber of commerce.

Mr. Muhammad Shoaib - Managing Director& CEO

Mr. Shoaib did his Masters of Business Administration (MBA) in Finance.

He is also Certified Islamic Banker from Professional's Institute ofExcellence who are academic partner of University of Marathon and

Pakistan Institute of Banking Studies, Pakistan. He has also completed hisPost Graduate Diploma in Islamic Banking from Centre of IslamicEconomics (A division of Jamia Darul Uloom) Karachi, Pakistan.


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His work experience of more than 20 years in Modaraba makes him one ofthe senior most people within the Sector.

Mr. Wazir Husain Jafree - Director

Mr. Wazir Husain Jafree is seasoned banker, his banking career spans over

more than 45 years; he carries a diversified experience of working onvarious senior positions in Pakistan and abroad. He worked with variousmultinational and local banks.

Sheikh Ehsanuddin Director

Mr. Sheikh Ehsanuddin is a very seasoned banker his banking career spans

over a period of 46 years splited between Habib Bank Limited and BCCI.He remained on various senior positions and held many foreign positions for

more than twenty six years. He possesses great wealth of knowledge &experience of financial sector. He has also been awarded fellowship ofinstitute of banker of Pakistan.

Mr. Abbas Ali Muhammad - Director

Mr. Abbas has started his career with bank and also worked with variouscompanies of Habib Group. He has over 50 years of experience in financial

management.

Formation of Company

FHM commenced its business operation in March 1985, with initial capitalof Rs.25.0 million only

Lines of business

Financing

Ijarah

This financing is based on the principle of Al-ljarah. By definition, Al-ljarah

is a contract where the benefits/use of an asset is transferred by the owner


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(lessor) to the lessee at an agreed price/rental amount for an agreed period oftime or Ijarah period. During the period the Ownership of the assets remainswith FHM.

The rules of Ijarah, in the sense of leasing, are very much analogous to the

rules of sale, because in both cases something is transferred to anotherperson for a valuable consideration. The only difference between Ijarah and

sale is that in the latter case the corpus of the property is transferred to thepurchaser, while in the case of Ijarah, the corpus of the property remains in

the ownership of the transferor, but only its usufruct i.e. the right to use it, istransferred to the lessee.

Basic Rules of Ijarah/Leasing

1. Ijarah/Leasing is a contract whereby the owner of something transfers

its usufruct to another person for an agreed period, at an agreedconsideration.

2. The subject of Ijarah must have a valuable use. Therefore, thingshaving no usufruct at all cannot be given on Ijarah.

3. It is necessary for a valid contract of Ijarah that the corpus of theIjarah property remains in the ownership of the seller, and only itsusufruct is transferred to the lessee. Thus, anything which cannot be

used without consuming cannot be given on Ijarah basis. Therefore,

the Ijarah facility cannot be affected in respect of money, eatables,fuel and ammunition etc. because their use is not possible unless theyare consumed. If anything of this nature is given on Ijarahd basis , it

will be deemed to be a loan and all the rules concerning thetransaction of loan shall accordingly apply. Any rent charged on this

invalid Ijarah transaction shall be an interest charged on a loan.

4. As the corpus of the Ijarah Assets remains in the ownership of thelessor, all the liabilities emerging from the ownership shall be borne

by the lessor, but the liabilities referable to the use of the property

shall be borne by the lessee.

5. The period of Ijarah must be determined in clear terms.

6. Lessees cannot use the Ijarahd asset for any purpose other than the purpose specified in the Ijarah agreement. If no such purpose is


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specified in the agreement, the lessee can use it for whatever purposeit is used in the normal course. However if he wishes to use it for an

abnormal purpose, he cannot do so unless the lessor allows him inexpress terms.

7. The lessee is liable to compensate the lessor for every harm to theIjarah asset caused by any misuse or negligence on the part of thelessee.

8. The Ijarah asset shall remain in the risk of the lessor throughout theIjarah period in the sense that any harm or loss caused by the factors

beyond the control of the lessee shall be borne by the lessor.

9. A property jointly owned by two or more persons can be given onIjarah basis, and the rental shall be distributed between all the jointowners according to the proportion of their respective shares in the

property.

10.A joint owner of an Asset can given on Ijarah basis his proportionateshare to his co-sharer only, and not to any other person.

11.It is necessary for a valid Ijarah that the Ijarah asset is fully identified

FHM will provides customers with short to medium term financing by wayof Ijarah/leasing and finally acquiring items such as:

Plant and machinery Property

Computers and information technology equipment Motor vehicles and heavy machinery Other fixed assets.

Murabaha

Murabaha is a non-participatory mode of Islamic financing where the FHM

sells the asset required by its client to the client on cost-plus profit basis. The

asset is purchased by the FHM and carries the risk of any loss or damage tothe asset as long as the asset remains under its ownership. Upon sale of the


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asset, the FHM is obligated to inform the client of the exact cost incurred inthe purchase of the asset and the margin of profit incorporated in the sale

price. Payment against the purchase of assets by the client may be deferredin which case it would become Muajjal. The selling price once agreed

cannot be changed even when the client fails to pay on the agreed date.

BASIC RULES AND PRINCIPLES

1. Murabahah is a particular kind of sale where the seller expresslymentions the cost of the sold commodity he has incurred, and sells it

to another person by adding some profit or mark-up thereon.

2. The profit in Murabahah can be determined by mutual consent, eitherin lump sum or through an agreed ratio of profit to be charged overthe cost.

3. All the expenses incurred by the seller in acquiring the commoditylike freight, custom duty etc. shall be included in the cost price andthe mark-up can be applied on the aggregate cost. However, recurring

expenses of the business like salaries of the staff, the rent of the

premises etc. cannot be included in the cost of an individual

transaction. In fact, the profit claimed over the cost takes care of theseexpenses.

4. Murabahah is valid only where the exact cost of a commodity can be

ascertained. If the exact cost cannot be ascertained, the commoditycannot be sold on murabahah basis. In this case the commodity must

be sold on musawamah (bargaining) basis i.e. without any reference to

the cost or to the ratio of profit / mark-up. The price of the commodityin such cases shall be determined in lump sum by mutual consent.

Example (1) A purchased a pair of shoes for Rs. 100/-. He wants to sell it on

murabahah with 10% mark-up. The exact cost is known. The murabahahsale is valid.

Example (2) A purchased a ready - made suit with a pair of shoes in a singletransaction, for a lump sum price of Rs. 500/-. A can sell the suit includingshoes on murabahah. But he cannot sell the shoes separately on Murabahah,

because the individual cost of the shoes is unknown. If he wants to sell theshoes separately, he must sell it at a lump sum price without reference to the

cost or to the mark-up.


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Diminishing Musharaka

In Arabic it is called Shirkat-ul-Mutanaqisa. Diminishing Musharaka is just

a Musharaka with an additional feature of decreasing ownership of one

party. This differs from normal Musharaka, Where ownership ratio does not

change. The closest term in conventional finance is redeemable capital.

Basic Steps

Creation of partnership

Implementing the relevant rules Musharaka

Redemption of one partner shares by another

Basic Conditions

It can be either Shirkat-ul-Aqd or Shirkat-ul-Milk but there should bea real partnership.

Every partner should enjoy the benefits and bear the responsibilities.

The promise to sell/buy should be obtained through separate

documents.

Preferably, redemption of share should be done on market place, or on

N.A.V basis not on any pre-agreed price Proper preparation and execution of transaction documentation.

The arrangement is composed of the following key activities

1. To create joinownershipin property.

2. Giving share of the FHM to client on rent.

3. Promise of client to purchase units/share of the FHM.

4. Purchase of the FHM's units.

5. Adjustment of rental according to share of the FHM in property.

Car-Nama

The steady rise in the cost of vehicles has made buying the car of yourchoice a difficult reality. Now we bring a package which reduces your


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worries for your huge investment in the car of your choice. FHM is offeringa very flexible and affordable car lease-financing scheme for corporate

employees and self-employed persons who fulfill required criteria of FHM.

Islamic CFS Murabaha

Mechanism

FHM evaluate the credit worthiness of client/investor

Assign revolving funded credit limit to the client through Master

Murabaha agreement.

Client will request the FHM to purchase the script through itsbroker/investment agent

Client will deposit its agreed margin at the time of purchase of script

to the broker /investment agent

Client will buy the script as an agent of FHM through the broker

/investment agent.

After settlement and offer & acceptance from the client the share aresold to client at pre-determined agreed price on deferred payment

basis at cost plus profit and signed Murabaha transaction documents.

Broker will transfer the shares to CDC in the client account along withLien Mark instruction from FHM or FHM account with CDC. This

also applicable on Margin shares

The sale proceed will be paid by client on at lump sum or in

installment and FHM will release the script after realization ofproceeds.

If the client is unable to settle the deferred payment timely, then client

will contribute in charity through FHM.

FHM will maintain margin requirement on daily basis. If margin is

decline the client will have to deposit the differential immediately on

1st call of FHM otherwise in case, the client is unable to meet margincall obligation the FHM has right to sell the script at market price

immediately without referring to the client.


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Client is authorized to sell the shares at any time, subject to settlementof full Morabaha Price

Musharka

Musharakah is one of the two ideal modes of Islamic financing. The otherone being Mudarabah. Musharakah is a contractual relationship formed

through mutual consent of the parties for sharing of profits and losses in ajoint venture. Assets in the venture are jointly owned in proportion to each

partners contribution. The profits are shared in a pre-agreed ratio. Losses,

however, are incurred in proportion to each partners investment. FHM

representing share of its depositors invests funds in the joint venturealongside other investor(s).

In this method of financing two or more partners agree through a Musharkah

contract to carry out a specified joint-venture economic activity. Thecontract specifies the kind, the amount to be contributed by each of the

partners, the partnership period, and the basis for profit distribution. Theconditions for Al-Musharakah are the following:

Specification of the capital amount of Al-Musharkah.

Determination of the value of paid up shares for each partnerparticularly if they are commodity shares.

Specification of the ways and means of profit distribution amongpartners. It is usually a percentage proportional to the value of sharespaid by each partner.

The partners might delegate one of them to act on behalf of the others

for the sake of the group as a whole.

It is acceptable for a partner who works more than the others and/orwho enjoys more experience to stipulate to take a percentage in lieu of

his extra labor and expertise.

Salam

A Salam, (sometimes referred to as Salaf) is a short-term agreement in

which a financial institution makes full prepayments for future delivery of aspecified quantity of goods on a specified date.


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A Salam is primarily a deferred delivery sale contract usually used forcommodity finance. It is similar to a forward contract where delivery is in

the future in exchange for spot payment. To mitigate the asset risk, afinancier can enter into a parallel salam.

The followings are the conditions governing the conduct of an Al-Salamcontract:

(a) The price for the commodity that will be delivered as a repayment mustbe identified and known.

(b) The sold commodity must be known by detailed specifications ofquantity and quality.

(c) Repayments must be in commodity and not in cash. The cash repayment

is prohibited except for the exact original loan without any added profit.

(d) The repayment must be postponed to a specified future date and a knownplace of delivery.

(e) The borrower is free with regard to the source of the commodity for

repayment, whether from his own farm production or bought from themarket as long as it is typical to the specified descriptions.

This method of financing is found to be more flexible and preferred by the

farmers because it enables them to get cash lending and be free to do whatthey like with regard to the finance allocation. It is also observed that thecommodity repayments are usually done from the harvest of the cropsfinanced

Istisna

Istisna is a sale contract between the FHM as Al-Sani (the seller) and the

customer as Al-Mustasni (the ultimate purchaser) whereby the FHM.

It is defined as a contract with a manufacturer to make something or acontract on a commodity on liability with the provision of work. A morecomplete and precise definition by Mustafa Ahmed Zarqa a contract of

selling a manufacturability thing with an undertaking by the seller to presentit manufactured from his own material with specified description at a

determined price.


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The person who manufactured the thing is called Soni and the person whoordered its manufacture

Steps of Istisnaa Transaction:

based on the order from the customer

undertakes to have manufactured or otherwise acquire the subject matter(Al-Masnoo) ofthe contract

according to specifications stipulated by the customer and

sells it to the customer for an agreed upon price and method of settlementwhether that be

in advance, by installments or deferred to a specific future date.

Parallel Istisnaa

Parallel istisnaa is the second sale contract entered into by the FHM with

the subcontractor in order to fulfill its contractual obligations in the firstcontract to the customer. It is assumed that the FHM will always enter into a

parallel istisnaa contract in order to satisfy its contractual obligationstowards the Istisnaa agreement with the customer. The subcontractor (seller

or Al-Sani) in the parallel Istisnaa contract has no direct legal relationshipwith the FHMs customer in the Istisnaa contract. Parallel Istisnaa is not a

contingent transaction on the first Istisnaa contract.

Investment

Certificate of Musharaka

It is on the basis of this expertise and know-how that FHM presents a prime

investment opportunity in the form of Certificate of Musharaka (COM) andpromises best possible returns to investors with complete security.

Tenure


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COM is available in various tenures with flexible profit payment plans tomeet your requirements.

Attraction:

We offer best possible return on COM for different tenures, Our competent

and experienced fund managers are fully aware of investor's concern fortheir investment i.e. to get best returns with maximum security and that'swhy we provide unmatched protection with flexibility and profitability.

Eligibility:

COM can be purchased by individuals as well as corporate and otherconcerns.

Competitors

Shares Outstanding

201,600,000 share of Rs. 5 each

Total Market Capitalization

The total value of all outstanding shares of apublicly-traded company. The

market capitalization is calculated by multiplying the shares outstanding bytheprice pershare. Market capitalization is one of the basic measures of a

publicly-traded company; it is a way of determining the rough value of acompany. Generally speaking, a higher market capitalization indicates a

more valuable company

June

30,2009

Number of ShareOutstanding

Marketprice

Market capitalization

201600000 5.77 1163232000
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Book value per share

The expression of the value of a company orfund per share. In the case of amutual fund, this is the per share prorated value of the securities underlying

the fund. It is calculated once per day at the end of the trading day and

functions as the share price of the mutual fund for the next trading day.

According to the annual report of June 30 2009 the book value per

share is Rs 9.78

M/B Ratio

A ratio used to compare a stock's market value to its book value. It iscalculated by dividing the current closing price of the stock by the latest

quarter's

June 30, 2009

Stock price Total Assets Total liabilities M/B ratio

5.77 32812031131 663053886 1.762048

Fiscal year

The fiscal year ends on 30, June of every year
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Capital structure

FHM is using a high equity base capital structure it is rated as AA+ in credit rating. 80%

equity and 20% debt

Dividend policy

Dividend is paid in form of cash and stock

Method of Depreciation

FHM is using straight-line method to depreciate it assets

Inventory MethodNo inventory method is being used at FHM

Allied Rental ModarabaIntroduction

The Modaraba has commenced its business operations on January 10 th,

2007 with equity of Rs 300 million. The primary business of Allied RentalModaraba is to engage in the Rental business by managing the rental fleet of


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equipments comprising Power Generation Equipment, Material HandlingEquipments and Construction related machinery. Modaraba provides rental

services across Pakistan through the facilities of its sponsors located inKarachi , Lahore , Islamabad , Multan , Faisalabad , Peshawar and Quetta .

Modaraba has commenced its business with a vast clientele network that it

has inherited from its sponsors already established Rental business.

The business model of Allied Rental Modaraba is of pure Ijarah in Islamicterminology, where the equipment is given on rent for any period ranging

from days, weeks or months and all the costs related of installation,

operation and maintenance (except Fuel) is totally borne by the Modaraba.

The equipment given on rent returns back to the Modaraba for re-servicingto make it ready for next deployment.. The Modaraba is primarily catering to

the customers short to medium term needs for the use of the equipmentwithout any capital commitments.

The main business of the Modaraba is to sell equipment utilization andassociated services rather than the equipment itself.

Another ancillary business line of the Modaraba is to provide outsourcing

solution to the customers for operating and maintaining their Power plants by providing the required skilled manpower for 24/7 operation with

professional Allied Rental Modaraba comprise of team of experienced professionals

committed to deliver value for its certificate holders by continuing to be a

market leader in its business segment.

Ownership structure

Sr No Category of owners % Ownership

1 Individuals 4.28%

2 Investment companies 0.02%

3 Joint stocks companies 74.17%

4 Management companies 20.00%

5 Others 1.54%


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Board of Directors

1. Mr. Khawaja Asif RehmanChairman

2. Mr. Murtaza Ahmed AliChief Executive

3. Mr. Shams GhaniDirector finance & Company secretary

4. Syed Faisal AliDirector

5. Mr. Rasees A. KhanDirector

6. Mr. Ali AkbarDirector

7. Mr. Tajdar A ShahDirector

Formation of Company

The Modaraba has commenced its business operations on January 10 th, 2007 with equityof Rs 300 million

Lines of business

Rental Equipment

The business model of Allied Rental Modaraba is of pure Ijarah in Islamic

terminology, where the equipment is given on rent for any period rangingfrom days, weeks or months and all the costs related of installation,

operation and maintenance (except Fuel) is totally borne by the Modaraba.The equipment given on rent returns back to the Modaraba for re-servicing

to make it ready for next deployment. The Modaraba is primarily catering tothe customers short to medium term needs for the use of the equipment

without any capital commitments.


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Man Power

Another ancillary business line of the Modaraba is to provide outsourcing

solution to the customers for operating and maintaining their Power plants

by providing the required skilled manpower for 24/7 operation withprofessional excellence.

Competitors

Shares Outstanding

30000000 shares of Rs 10 each

Total Market Capitalization

The total value of all outstanding shares of apublicly-traded company. Themarket capitalization is calculated by multiplying the shares outstanding by

theprice pershare. Market capitalization is one of the basic measures of a publicly-traded company; it is a way of determining the rough value of a

company. Generally speaking, a higher market capitalization indicates amore valuable company

June

30,2009

Number of Share

Outstanding

Market

price

Market capitalization

30000000 13.50 405000000

Book value per share

The expression of the value of a company orfund per share. In the case of amutual fund, this is the per share prorated value of the securities underlyingthe fund. It is calculated once per day at the end of the trading day and

functions as the share price of the mutual fund for the next trading day.
http://financial-dictionary.thefreedictionary.com/valuehttp://financial-dictionary.thefreedictionary.com/Outstanding+Shareshttp://financial-dictionary.thefreedictionary.com/Publicly-Traded+Companyhttp://financial-dictionary.thefreedictionary.com/Pricehttp://financial-dictionary.thefreedictionary.com/Sharehttp://financial-dictionary.thefreedictionary.com/valuehttp://financial-dictionary.thefreedictionary.com/valuehttp://financial-dictionary.thefreedictionary.com/Fundhttp://financial-dictionary.thefreedictionary.com/Mutual+Fundhttp://financial-dictionary.thefreedictionary.com/Securitieshttp://financial-dictionary.thefreedictionary.com/Securitieshttp://financial-dictionary.thefreedictionary.com/Mutual+Fundhttp://financial-dictionary.thefreedictionary.com/Fundhttp://financial-dictionary.thefreedictionary.com/valuehttp://financial-dictionary.thefreedictionary.com/valuehttp://financial-dictionary.thefreedictionary.com/Sharehttp://financial-dictionary.thefreedictionary.com/Pricehttp://financial-dictionary.thefreedictionary.com/Publicly-Traded+Companyhttp://financial-dictionary.thefreedictionary.com/Outstanding+Shareshttp://financial-dictionary.thefreedictionary.com/value


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December 30,2009

Total assets

Total

liabilities

Number of Share

Outstanding

Total Assets-

Total

Liabilities/share

outstanding

1330875323 1013078009 3000000010.59324

M/B Ratio

A ratio used to compare a stock's market value to its book value. It is

calculated by dividing the current closing price of the stock by the latestquarter's

Calculated as:

December 31, 2009

Stock price Total Assets Total liabilities M/B ratio

14.501330875323 1013078009 4.5626


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Fiscal year

The fiscal year ends on 30, June of every year

Capital structure

76% equity 24% debt

Dividend policy

Dividend is paid in form of cash and stock

Method of Depreciation

Straight line method is used at allied rental


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References

Official website of Karachi stock exchange www.kse.com.

Pakistan credit rating agency www.pacra.com

Official website of Modaraba Association of Pakistanwww.modarabas.com.pk

Official web site of First Habib modaraba www.habibmodaraba.com

Official web site if Allied rental Modaraba www.arm.com.pk

Annual report of First Habib Modaraba of year 2009

Official website of state bank for risk free rates www.sbp.org.pk

Annual report of Allied rental Modaraba 2009

www.corporateinforamation.com
http://www.kse.com/http://www.kse.com/http://www.pacra.com/http://www.pacra.com/http://www.modarabas.com.pk/http://www.modarabas.com.pk/http://www.habibmodaraba.com/http://www.habibmodaraba.com/http://www.arm.com.pk/http://www.arm.com.pk/http://www.sbp.org.pk/http://www.sbp.org.pk/http://www.sbp.org.pk/http://www.arm.com.pk/http://www.habibmodaraba.com/http://www.modarabas.com.pk/http://www.pacra.com/http://www.kse.com/

cf project report

Documents