The Modaraba has relatively small capital base but it is a leader in the market price of its stock. The Modaraba's financial has remained robust and can be foreseen that it would have sustained strength in the financial health in the near term also.
The Modaraba's sales turnover and profit remained highest of its career. According to the directors of its management company the main reason for such an outstanding performance was increase in sales volume. The directors emphasized that they would continue to explore new and profitable product lines.
The other plus point for the certificate holders is that its management continues to follow positive approach towards profit distribution which is based on attractive dividend pay out rate and not skipping any year's dividend As regards resource mobilization the Modaraba has Soneri Bank's Morabaha finance line of Rs 60 million which has been secured against pledge of stock in trade of the Modaraba.
The Modaraba's receivable turnover for 35 days (5 weeks) shows its management's close monitoring of the same. First Imrooz Modaraba was formed on September 27, 1993 under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance 1980. It was listed on the Karachi Stock Exchange in 1994 and started commercial operations in the same year. Its management company is AR Management Services (Private) Limited and it is a multipurpose, perpetual Modaraba but mainly engaged in domestic and international trading activities.
The Modaraba's paid-up capital (fund) amounts to Rs 30 million which has remained constant since its inception. However, with the increasing statutory reserve and surplus amounts, its certificate holders equity has increased to Rs 86.68 million which translates into break up value per certificate at Rs 28.89 which is nearly three times of the par value.
According to the pattern of shareholding dated 30-06-2007, its management company owned 20% and management company's directors and members of their family held 35% of its stock. Remaining stock was owned by individual as well as institutional investors.
Imrooz Modaraba's 10 rupee certificate is being traded at the stock market at high market value invariably. During the last 52 weeks, the price of the certificate ranged between Rs 35 and Rs 45 per certificate. On April 16, 2007, the closed price of the share at Rs 35.05 was quoted which is substantially high price considering that in the 37 member Modaraba Sector only seven Modarabas quote prices above par values. The Modaraba is a leader in the market value while the second highest market value of Rs 14 was recorded for Standard Chartered Modaraba carrying 40% premium over the par value. However in terms of 2nd higher premium carrying Modaraba certificate it is First Habib Modaraba at Rs 10.30 per five-rupee certificate.
One of the main reasons of quoted high market value by investors is its gratifying record of regular announcements of cash dividend at very high dividend payout rates. During the last five years the dividend rate per year ranged between 32.5% and 52% and the highest rate of 52% was announced for the year under review FY06 (FY05: @47%).
The performance of the Modaraba during FY06 showed remarkable improvement. The turnover of the Modaraba in FY06 increased by Rs 116.53 million and gross profit improved by Rs 14.95 million as compared FY05, the previous year.
According to the Modaraba Company's directors this improvement was mainly due to focus on new products which helped to increase sales volume. They reaffirmed that the Modaraba would continue its strategy of exploring new profitable product lines in the forthcoming year also. On the other hand, "other income" of the Modaraba showed an improvement due to sale of NIT units. However, the Modaraba recorded diminution on re-measurement of investments which is due to depressed share market in the last quarter of FY06.
In FY06, the Modaraba earned After Tax Profit of Rs 20.62 million (FY05: Rs 15.31 million) which is a record in its career as evidenced from financial statistics published in its Annual Report 2006. The financial health of the Modaraba continues to be robust as evidenced from the financial ratios. The directors stated that the trading income of the Modaraba is taxed under presumptive tax regime. Due to this, the tax incidence in Modaraba's income is much higher than normal tax.
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Performance Statistics (Million Rupees)
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30th June 2006 2005
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Certificate Capital-Paid-up: 30.00 30.00
Reserves: 56.68 50.16
Certificate Holders' Equity: 86.68 80.16
Staff Gratuity 3.17 2.56
Current Liabilities: 93.37 83.20
Tangible Fixed Assets: 5.80 5.57
Intangible Assets: 0.02 0.22
Current Assets: 177.40 160.13
Total Assets: 183.22 165.92
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Sales Profit & Payout
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Sales: 427.01 310.48
Gross Profit: 60.23 45.28
Operating (Expenses): 20.64 14.39
Operating Profit: 39.60 30.89
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(Diminution)/Unrealized
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Appreciation Re-measurement
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Investments: (0.50) 0.83
Other Income: 3.73 3.10
(Depreciation): (2.20) 2.50
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Modaraba Company
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Management (Fee): (3.00) (2.44)
Profit Before Taxation: 39.82 32.39
Profit After Taxation: 20.62 15.31
Earnings Per Certificate (Rs): 6.87 5.10
(Dividend) Cash (%): 52.00 47.00
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Certificate's Market
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Price (Rs) on 16-04-07: 35.05 -
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Financial Ratios:
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Price/Earning Ratio: 5.10 -
Book Value Per Certificate: 28.89 26.72
Price/Book Value Ratio: 1.21 -
Debt/Equity Ratio: 0:100 0:100
Current Ratio: 1.90 1.92
Asset Turn Over Ratio: 2.33 1.87
Days Receivables: 35 29
Days Inventory: 108 167
Gross Profit Margin (%): 14.10 14.58
Net Profit Margin (%): 4.82 4.93
R.O.E. (%): 23.79 19.10
R.O.A. (%): 11.25 9.23
R.O.C.E. (%): 22.94 18.50
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COMPANY INFORMATION: : Modaraba Management Company: AR Management Services (Pvt) Ltd; Chief Executive: Naveed Riaz; Directors: Ameed Riaz; Saadat Ikram; Chief Financial Officer: Abbas Kerani; Company Secretary: Shabbir Ahmed Jamsa; Principal Place of Business: 119-120 Qamar House, M.A. Jinnah Road, Karachi. Registered Office of Modaraba Company: 33-C, Behind Mall Mansion Shahrah-e-Quaid-e-Azam, The Mall Lahore. Share Registration Office: Progressive Management Service (Pvt) Ltd 10th Floor, Mehdi Tower, A-115, SMCHS, Shahrah-e-Faisal, Karachi.
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