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.................................................................................................................. 3
2. ALLIED RENTAL MODARABA ............................................................................................................ 3
MODARABA ..................................................................................................................... 4
INTRODUCTION ................................................................................................................. 4
FEATURES OF MODARABA ..................................................................................................................... 5
REGISTRATION OF MODARABA COMPANIES ........................................................................................ 5
TYPES OF MODARABA ............................................................................................................................. 6
FIRST HABIB MODARABA .......................................................................................... 7
INTRODUCTION ............................................................................................................................ 7
OWNERSHIP STRUCTURE.............................................................................................................. 9
BOARD OF DIRECTORS................................................................................................................. 9
FORMATION OF COMPANY......................................................................................................... 10
LINES OF BUSINESS .................................................................................................................... 10
FINANCING................................................................................................................................. 10
INVESTMENT .............................................................................................................................. 18
COMPETITORS ............................................................................................................................ 19
SHARES OUTSTANDING ............................................................................................................. 19
TOTAL MARKET CAPITALIZATION ............................................................................................ 19
BOOK VALUE PER SHARE ........................................................................................................... 20
M/B RATIO ................................................................................................................................ 20
FISCAL YEAR.............................................................................................................................. 20
CAPITAL STRUCTURE ................................................................................................................. 21
DIVIDEND POLICY ...................................................................................................................... 21
ALLIED RENTAL MODARABA ................................................................................. 21
INTRODUCTION .......................................................................................................................... 21
OWNERSHIP STRUCTURE............................................................................................................ 22
BOARD OF DIRECTORS............................................................................................................... 23
FORMATION OF COMPANY......................................................................................................... 23
LINES OF BUSINESS .................................................................................................................... 23
COMPETITORS ............................................................................................................................ 24
SHARES OUTSTANDING ............................................................................................................. 24
TOTAL MARKET CAPITALIZATION ............................................................................................ 24
BOOK VALUE PER SHARE ........................................................................................................... 24
M/B RATIO ................................................................................................................................ 25
FISCAL YEAR.............................................................................................................................. 26
CAPITAL 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 of
Modarib the profits earned on investments are distributed among the
subscribers.

In simple words, Modaraba means a business in which a subscriber

participates 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 finance
through which one partner or more participate with the funds and another
with 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 widespread
acceptance 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 will
play 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 is
combined with the knowledge and skill is technically called modaraba.

Modaraba means: a business in which the subscriber participates with his

money and another (manager madaraba) with his efforts and skills and shall
include unit trusts and mutual funds by whatever name called. The profit
earned during the year is distributed among the financiers and the
entrepreneurs according to the agreed ration. In case of loss, it is shared
among 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 to
him. 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 modaraba
company. 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 money

should be handed over by the Rab-ul-Mall to the Modarab and he
should 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 Modaraba
rules, 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 the
expiry 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 for

eligibility 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, convicted

of 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 modaraba

There 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 today’s 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 and
deliver up to the entire satisfaction of its stakeholders.

The Habib Group with vast experience in the industrial, financial and
commercial sectors floated FHM in 1985. The basic aim of the FHM was to
make contribution towards the transformation of our mercantile as well as
financial system and dealings in line with principles elaborated in Sharia

FHM commenced its business operation in March 1985, with initial capital
of Rs.25.0 million only. Continuing with solid, dynamic and prudent
approach 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 Financial

Services like Ijara, Morabaha, Diminishing Musharakah, Salam, Istisna and
various other Islamic Financial Products.

The Management of FHM has always given emphasis on building-up quality

lease portfolio. The efficacy of FHM’s business strategy and prudent risk
management policies has supported the management to maintain outstanding
assets quality while ensuring sustainability of performance, despite the
increasingly competitive operating environment in Pakistan’s financial
market.

Efficient customer services and high client value has always been FHM’s
objective. The fast pace of changes in the Islamic financial service industry
needs more innovations in order to meet customer’s demand.

So far the FHM has achieved considerable growth in size while maintaining
solid assets portfolio, sound capital base and handsome return to
stakeholders.

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FHM draw its success by complying with highest ethical and moral
standards and always try to make efforts to enhance superior professional
competencies.

The management always believes in steady growth and not the policy of
aggressive employment of Modaraba fund. Efforts have always been made
to 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 investor’s funds.

Through judicious administration of funds and sound investment policies,

the FHM has assembled a very lucrative assets portfolio that has
consistently yielded very attractive returns.

The sustainable success is most likely to be achieved by only those

institutions that take the broadest view of their responsibilities. In pursuit of
creation of higher and higher value for stakeholders, FHM
have remained absolutely and totally committed to Good Corporate
Governance and Best Business Practices.

FHM is firmly committed to its well-defined and focused strategy. All

success 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 this
would convince that “Stability of Operation” and “Sustainability of Growth”
are 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 Sheet
Footing and sound Profitability with stronger management talent and vibrant
Human Resource.

The management of FHM is confident that they will keep embarking their
ambitious target with high level of customer satisfaction. FHM will continue
to keep its growth momentum with dedication and deep sense of
commitment while maintaining financial discipline, adhering to professional
and moral codes.

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Ownership structure

Sr No Category of owners % Ownership

1 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 on
senior 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 of
Excellence who are academic partner of University of Marathon and
Pakistan Institute of Banking Studies, Pakistan. He has also completed his
Post Graduate Diploma in Islamic Banking from Centre of Islamic
Economics (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 of
the 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 on
various senior positions in Pakistan and abroad. He worked with various
multinational 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 of
institute of banker of Pakistan.

Mr. Abbas Ali Muhammad - Director

Mr. Abbas has started his career with bank and also worked with various
companies 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 capital
of 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 of
time or Ijarah period. During the period the Ownership of the assets remains
with 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 another
person 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 the
purchaser, 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, is
transferred 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 agreed
consideration.
2. The subject of Ijarah must have a valuable use. Therefore, things
having no usufruct at all cannot be given on Ijarah.

3. It is necessary for a valid contract of Ijarah that the corpus of the

Ijarah property remains in the ownership of the seller, and only its
usufruct 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 they
are consumed. If anything of this nature is given on Ijarahd basis , it
will be deemed to be a loan and all the rules concerning the
transaction 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 the
lessor, 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 purpose
it 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 in
express terms.

7. The lessee is liable to compensate the lessor for every harm to the
Ijarah asset caused by any misuse or negligence on the part of the
lessee.
8. The Ijarah asset shall remain in the risk of the lessor throughout the
Ijarah 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 on
Ijarah basis, and the rental shall be distributed between all the joint
owners according to the proportion of their respective shares in the
property.
10.A joint owner of an Asset can given on Ijarah basis his proportionate
share 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 way
of 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 to
the 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 in
the 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 deferred
in 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 expressly

mentions 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, either

in lump sum or through an agreed ratio of profit to be charged over
the cost.

3. All the expenses incurred by the seller in acquiring the commodity

like freight, custom duty etc. shall be included in the cost price and
the 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 these
expenses.

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

ascertained. If the exact cost cannot be ascertained, the commodity
cannot 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 commodity
in 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 murabahah
sale is valid.

Example (2) A purchased a ready - made suit with a pair of shoes in a single
transaction, for a lump sum price of Rs. 500/-. A can sell the suit including
shoes 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 the
shoes 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 be

a 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 your
choice 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 offering
a 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 its
broker/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 are
sold 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 with
Lien 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 of
proceeds.

• 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 margin
call 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 settlement
of full Morabaha Price

Musharka

Musharakah is one of the two ideal modes of Islamic financing. The other
one being Mudarabah. Musharakah is a contractual relationship formed
through mutual consent of the parties for sharing of profits and losses in a
joint venture. Assets in the venture are jointly owned in proportion to each
partner’s contribution. The profits are shared in a pre-agreed ratio. Losses,
however, are incurred in proportion to each partner’s investment. FHM
representing share of its depositors invests funds in the joint venture
alongside 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. The
contract specifies the kind, the amount to be contributed by each of the
partners, the partnership period, and the basis for profit distribution. The
conditions for Al-Musharakah are the following:

• Specification of the capital amount of Al-Musharkah.

• Determination of the value of paid up shares for each partner

particularly if they are commodity shares.

• Specification of the ways and means of profit distribution among

partners. It is usually a percentage proportional to the value of shares
paid 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/or
who 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 a
specified quantity of goods on a specified date.

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A Salam is primarily a deferred delivery sale contract usually used for
commodity finance. It is similar to a forward contract where delivery is in
the future in exchange for spot payment. To mitigate the asset risk, a
financier can enter into a parallel salam.

The followings are the conditions governing the conduct of an Al-Salam

contract:

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

(b) The sold commodity must be known by detailed specifications of

quantity 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 known
place 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 the
market 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 what
they like with regard to the finance allocation. It is also observed that the
commodity repayments are usually done from the harvest of the crops
financed

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 “ a

contract on a commodity on liability with the provision of work.” A more
complete and precise definition by Mustafa Ahmed Zarqa” a contract of
selling a manufacturability thing with an undertaking by the seller to present
it 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 who
ordered its manufacture

Steps of Istisna’a Transaction:

based on the order from the customer

undertakes to have manufactured or otherwise acquire the subject matter

(Al-Masnoo) of
the contract

according to specifications stipulated by the customer and

sells it to the customer for an agreed upon price and method of settlement
whether that be
in advance, by installments or deferred to a specific future date.

Parallel Istisna’a

Parallel istisna’a is the second sale contract entered into by the FHM with
the subcontractor in order to fulfill its contractual obligations in the first
contract to the customer. It is assumed that the FHM will always enter into a
parallel istisna’a contract in order to satisfy its contractual obligations
towards the Istisna’a agreement with the customer. The subcontractor (seller
or Al-Sani) in the parallel Istisna’a contract has no direct legal relationship
with the FHM’s customer in the Istisna’a contract. Parallel Istisna’a is not a
contingent transaction on the first Istisna’a 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) and
promises best possible returns to investors with complete security.

Tenure

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COM is available in various tenures with flexible profit payment plans to
meet 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 for
their investment i.e. to get best returns with maximum security and that's
why we provide unmatched protection with flexibility and profitability.

Eligibility:

COM can be purchased by individuals as well as corporate and other

concerns.

Competitors
Shares Outstanding

201,600,000 share of Rs. 5 each

Total Market Capitalization

The total value of all outstanding shares of a publicly-traded company. The

market capitalization is calculated by multiplying the shares outstanding by
the price per share. 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 a
more valuable company

June
30,2009

Number of Share Market Market capitalization

Outstanding price
201600000 5.77 1163232000

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Book value per share

The expression of the value of a company or fund per share. In the case of a
mutual 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 is

calculated 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 Method
No inventory method is being used at FHM

Allied Rental Modaraba

Introduction

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

2007 with equity of Rs 300 million. The primary business of Allied Rental
Modaraba is to engage in the Rental business by managing the rental fleet of
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equipments comprising Power Generation Equipment, Material Handling
Equipments and Construction related machinery. Modaraba provides rental
services across Pakistan through the facilities of its sponsors located in
Karachi , Lahore , Islamabad , Multan , Faisalabad , Peshawar and Quetta .
Modaraba has commenced its business with a vast clientele network that it
has inherited from its sponsor’s already established Rental business.

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

terminology, 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-servicing
to make it ready for next deployment.. The Modaraba is primarily catering to
the customer’s short to medium term needs for the use of the equipment
without any capital commitments.
The main business of the Modaraba is to sell equipment utilization and
associated 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 excellence.
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 Rehman

Chairman

2. Mr. Murtaza Ahmed Ali

Chief Executive

3. Mr. Shams Ghani

Director finance & Company secretary

4. Syed Faisal Ali

Director

5. Mr. Rasees A. Khan

Director

6. Mr. Ali Akbar

Director

7. Mr. Tajdar A Shah

Director

Formation of Company
The Modaraba has commenced its business operations on January 10 th, 2007 with equity
of 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 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-servicing
to make it ready for next deployment. The Modaraba is primarily catering to
the customer’s 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 with
professional excellence.

Competitors

Shares Outstanding

30000000 shares of Rs 10 each

Total Market Capitalization

The total value of all outstanding shares of a publicly-traded company. The

market capitalization is calculated by multiplying the shares outstanding by
the price per share. 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 a
more valuable company

June
30,2009

Number of Share Market Market capitalization

Outstanding price
30000000 13.50 405000000

Book value per share

The expression of the value of a company or fund per share. In the case of a
mutual 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.

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December 30,2009

Total Assets-
Total
Total Number of Share Liabilities/share
Total assets liabilities Outstanding outstanding

10.59324
1330875323 1013078009 30000000

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 latest
quarter's

Calculated as:

December 31, 2009

Stock price Total Assets Total liabilities M/B ratio

1330875323 1013078009 4.5626

14.50

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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 Pakistan

www.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

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