YOUR TRUSTED

PARTNER IN
ISLAMIC FINANCE
SOLUTIONS

www.olpmodaraba.com ANNUAL REPORT

2024
 37
www.olpmodaraba.com

OF EXCELLENCE

02

Modaraba

2004
First Grindlays
Modaraba

1987
2016
2023

ANNUAL REPORT 2024

03
Landmarks

1987 1989 1990 1991

1). Agreement between Modaraba Appointment of M/s 1). First Right Issue of 5 First Branch office
Management Company and Famco Associates & Million Share Certificate in Lahore
Grindlays Bank PLC. Co as Share Registrar
for Modaraba 2). First Modaraba in the
2). Musharika Agreement with sector to have Crossed
Grindlays Bank Plc of PKR 21.8 the PKR 1 Billion
Million for Modaraba to use the Landmark of net
funds in its business. cumilative leases written

3). Floatation of Share subcription

form of First Grindlays Modaraba
managed by(Grindlays Services of
Pakistan (Pvt) Limited)

2011 2009 2006

2012
Registration of Adoption of Islamic Increase in
Modaraba in Sindh Financial Standard-2 Authorised Capital of
Revenue Board (IFAS-2) of SECP Modaraba to 50
Million Modaraba
Total Assets crossed Certificate
PKR 6 Billion.

2013
Registration of
Modaraba in Sindh
Revenue Board
2014 2015 2016
Registration of 1). MOU between ORIX Leasing Change of name
Modaraba in Federal Pakistan Limited and Standard from Standard
Sales Tax with FBR Chartered Bank (Pakistan) Chartered Modaraba
limited for the divestment of to ORIX Modaraba
shareholding in Modaraba.

2). Profit After Tax crossed PKR

195 Million for the year.

3). Migration from LMS software

to AIB software
1992 1993 1994 1995
1). Second Right Issue of Second Bonus Issue Third Bonus Issue of
3.15 Million Modaraba 1). Approval for the
13.5 Million Modaraba of 1.5 Million Issuance of
Certificate Modaraba Certificate
Certificate of
Certificate Musharika by
2). First Bonus Issue of 1.5 Registrar of
Million Modaraba Modaraba Companies
Certificate and Modarabas.

2). Change of Financial

Year from December
to June

2004 2000 1997 1996

1). First time highest 1). Branch office in Forth Bonus Issue of Registration of
Rating of A1+ in short Islamabad 2.77 Modaraba Modaraba in Income
term and AA+ in Long Certificate Tax
term in the Modaraba 2). First Annual Review
and Leasing Sector Meeting of Modaraba

2). Change of name from 3.) Launch of COMs to

First Grindlays general public
Modaraba to Standard
Chartered Modaraba

2019 2020 2022 2023

Appointment of Implemetation of State 1). Re-branding of Change in the
First Female of the Art IT name from ORIX Registered Address
Director Infrastructure to Modaraba to OLP of Management
Virtually manage the Modaraba Company
operation for
uninterepted service to 2). New Website
the clients in Covid-19.
 Earnings per
www.olpmodaraba.com

Certificate
4.50
4.31
4.00 3.81
4.00
06
3.48
3.36
3.50

2.83 2.78 2.81 2.84

2.65
3.00
2.46

2.50

2.00
3.48
1.50

1.00
2024
0.50

-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Market Value per

Certificate
35.00
30.00

30.00
25.00

23.33
22.25
25.00

16.61 18.00
17.50
13.62
20.00
15.50 16.00

15.00
13.62
2024
11.30

10.00

-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Group
Profile

ANNUAL REPORT 2024

07

ORIX Corporation (ORIX) was established in April 1964 with leasing

operations in Japan. Since then, ORIX has set up a number of
specialized leasing companies to tap new market potential by
providing a wide range of innovative financial products and
services to clients in Japan. ORIX Group is a diversified
multinational financial group operate around 30 different
countries/regions in the world in leasing, financing,
private equity investment, asset management,
renewable energy investment and operations and
more. ORIX’s expertise and breadth of businesses
continue to grow as the Corporation answer
client needs and respond to changes in the
economic environment. The Corporation has
expanded from original leasing business into
an enterprise active in operations and
investing in a diverse array of areas around
the world, delivering a wide variety of
products and services to corporate and
individual clients, communities, and in
infrastructure.

This has also enabled ORIX to maintain a

strong reputation with continuous
profit. The ORIX is listed on Tokyo and
New York Stock Exchanges. ORIX
Shareholders equity as on March 31, 2024
was Yen 3.5 Trillion. It employee 34,000
employees and has over 2000 business
locations across the globe.
www.olpmodaraba.com

ORIX Corporation, Japan – Financial 2024 2023 2022 2021 2020

Highlights:
Years Ended March 31 (Yen in Billion)

08
Total revenue 2,814.36 2,666.37 2,520.36 2,292.70 2,280.33
Total expense 2,453.65 2,352.38 2,218.28 2,033.89 2,010.65
"Income before income taxes, discountinues
operation and extraordinary gain" 392.18 470.00 504.87 287.56 412.56

Net Income attributable to

ORIX Corporation shareolders 290.34 346.13 312.13 192.38 302.70
ORIX Corporation Shareholder equity 3,543.61 3,941.47 3,261.41 3,028.46 2,993.61
Total assets 15,289.39 16,322.10 14,270.67 13,563.08 13,067.53
ROE (in percentage) 8.50 9.2 9.90 6.40 10.30
ROA (in percentage) 1.96 2.19 2.24 1.44 2.40
ORIX Corporation shareholder equity per share (Yen) 2,868.13 3,422.94 2,732.88 2,487.77 2,386.35
Cash Dividend (Yen) 98.60 85.60 85.00 78.00 76.00
Number of employees 34,000 34,000 32,235 33,000 31,233

OLP Modaraba (OLPM) started its operations in 1987 as OLP Financial Services Pakistan Limited and OLP
the First Grindlays Modaraba (FGM). The Modaraba, Services Pakistan (Pvt) Limited (formerly ORIX Services
since then, continues growing its clientele and financial Pakistan (Pvt) Limited) each own ten percent
footing. In the year 2000, Standard Chartered Bank shareholding in OLPM and hence are the associated
acquired the ANZ Grindlays Bank Asia operations. With companies of OLPM. The OLP Modaraba is a member of
this acquisition, FGM became a part of the global NBFI & Modaraba Association of Pakistan and operates
banking Standard Chartered Group PLC conglomerate. from offices in Karachi, Lahore and Islamabad.
During these years, Standard Chartered Modaraba
(SCM) became a pioneering Islamic Financial Institution
in Pakistan. In 2016, ORIX Group of Japan acquired the
SCB shareholding in SCM. This was a landmark
transaction where one of the world’s largest rental and
asset management conglomerates entered into
specialized Islamic finance space, acquiring an entity
that is undoubtedly a thought leader in the Pakistani
Islamic Financial Market.
Our Geographical
Presences

ANNUAL REPORT 2024

09
Branch Office

Islamabad

Lahore
Branch Office

Karachi Head Office

 Awards
2024
www.olpmodaraba.com

1) Collaboration & Partnership (CSR Event & Fund Raising)

10
Corporate Social Responsibility Summit & Awards

2) Business Practices (Employee Volunteer Programme)

Corporate Social Responsibility Summit & Awards

3) Support for Healthcare Organizations

International Award on Environmental, Health & Safety

 ANNUAL REPORT 2024
11
4) Best Corporate Excellence Award in Modaraba Sector

Management Association of Pakistan

5) FPCCI Achievements Award – Silver Category

www.olpmodaraba.com Annual Report 2023 11

12
www.olpmodaraba.com
13

ANNUAL REPORT 2024

Credit Rating
By Pacra

Long Term Short Term

 Business
Model

ANNUAL REPORT 2024

In Islamic Jurisprudence Modaraba is a kind of partnership, wherein one partner provides finance to the other
partner for the purpose of carrying on business. The partner who provides the finance, is called the “Rabb-ul-Mal”,
whereas the other party who puts its management skills for the Modaraba is called the “Modarib” (working partner).
The operations of Modaraba is being supervised by Registrar Modaraba SECP and also supervised by Shariah 15
Advisor OLPM under the Shariah Governance Mechanism issued by SECP.

Modarib (Manager) Rabul-Mal

Management Company (Investor) Certificate
act as Modarib Holders are
Rabbul Mal

Registrar
Modaraba’s/Shariah
Advisor

Modaraba Venture

Key Inputs Key Outputs

• Rich background of Group ; • Good market reputation ;
• Experienced Management ; • Stable credit rating;
• Shariah Compliant financial services ; • Return on investment ; and
• Strong credit controls protocols ; and • Consistent profitability.
• Effective controls mechanism.

During the year there has been no change in the business model of Modaraba.
 Contents
www.olpmodaraba.com

16

Introductory Sustainability and Corporate

21 Social Responsibility

119
The Board

35 Stakeholders Relationship
and Engagement
Organizational Overview &
External Environment 129
47 Future Outlook

Strategy and Resource 135

Allocation

59 Performance and Position

139
Risk and Opportunities

63 Striving for excellence in

Corporate Reporting and
Specific Disclosures
to the Financial Statements
Governance

67 153
16 Annual Report 2023 www.olpmodaraba.com
About the
Report

ANNUAL REPORT 2024

Dear Reader, OLP Modaraba has always been systematic view of financial information linked
transparent in its practices of value creation for directly to business activities and non-financial
its investors of financial capital. We remain information, and provide explanations 17

committed to strong corporate governance and accordingly. Such reports help to increase
leadership as well as transparency in our investors’ confidence in the corporate practices
disclosures. The Report is organized to assist our adopted by the organization.
readers in assessing our business by providing
information about the capitals of the Modaraba. This report covers the period from July 01, 2023 to
We have followed the Best Corporate Reporting June 30, 2024.
Criteria issued by ICAP for the year ended June
30, 2024 to design this Annual Report to give
readers an insight into the strategic thinking that
drives OLP Modaraba forward, encompassing our
strategy, governance, performance and
prospects in the context of global environment.

This report integrates the following sections:

• Organizational overview and external

environment
• Risks and opportunities
• Strategy and resource allocation
• Governance
• Stakeholder’s relationship and engagement
• Future Outlook
• Sustainability
• Corporate social responsibility
• Excellence in corporate reporting

We will continue to review our reporting approach

to ensure it meet best practice reporting
standards and the expectations of our
stakeholders to provide visibility on how we
create sustainable value for the community we
serve. To ensure that readers are able to correctly
understand these activities, we must take a
 Modaraba
Information
www.olpmodaraba.com

Modaraba Company
OLP Services Pakistan (Pvt) Limited

18 Directors of Modaraba Company

Mr. Naveed Kamran Baloch Chairman

Mr. Raheel Qamar Ahmad Managing Director / Chief Executive Officer

Mr. Ramon Alfrey Director

Mr. Nausherwan Adil Independent Director

Mian Faysal Riaz Director

Mr. Nadim D. Khan Director

Ms. Naila Hasan Female Independent Director

Company Secretary

Mr. Muhammad Siddique

Audit Committee

Mr. Nausherwan Adil Chairman

Mr. Ramon Alfrey Member

Mian Faysal Riaz Member

Human Resource and Remuneration (HR&R) Committee

Ms. Naila Hasan Chairperson

Mr. Ramon Alfrey Member

Mr. Raheel Qamar Ahmad Member

Risk Committee

Mian Faysal Riaz Chairman

Mr. Nausherwan Adil Member

Mr. Raheel Qamar Ahmad Member

 ANNUAL REPORT 2024
Shariah Advisor Islamabad Branch:

Mufti Faisal Ahmed Ground Floor, Phase 1, State Life Building No. 5,
Nazimuddin Road, Blue Area, Islamabad. 19
Auditors
Registrars & Share Registration Office:
KPMG & Co. Chartered Accountants
Famco Share Registration Service (Private) Limited
Bankers/ Financial Institutions 8-F, Next to Hotel Faran, Nursery,
Block 6, P.E.C.H.S., Shahra-e-Faisal, Karachi.
Standard Chartered Bank (Pakistan) Limited (Saadiq) Tel: (92-21) 34380101-5
Meezan Bank Limited Fax: (92-21) 34380106
United Bank Limited (UBL Ameen) Email: [email protected]
Bank Alfalah Limited (Islamic banking)
Allied Bank Limited (Islamic banking)
Bank Al Habib Limited (Islamic banking)
Habib Bank Limited (Islamic banking)
Al - Barka Bank (Pakistan) Limited
Pakistan Mortgage Refinance Company Limited

Legal Advisors

Haider Ali Khan

Advocate High Court , Partner,
Fazle Ghani Advocates

Modaraba Company Registered Office

OLP Building, Plot no. 16, Sector no. 24,

Korangi Industrial Area Karachi.

Modaraba Head Office:

Office No. 601, 6th Floor,

Syedna Tahir Saifuddin Memorial Foundation
Building, Beaumont Road, Civil Lines, Karachi.
Phone: (021) 38341168
Email:[email protected]

Lahore Branch:

Office No-08, 1St floor,

Park Lane Tower (Mall Of Lahore)
172-Tufail Road, Lahore Cantt.
Phone: (042) 38017006
www.olpmodaraba.com

Introductory The Board

20
21
Introductory

ANNUAL REPORT 2024

 OLP Modaraba (OLPM) Notice Of Distribution
www.olpmodaraba.com

Of Profit, Transfer Book Closure And Twenty

Fifth Annual Review Meeting
At the meeting held on September 14, 2024, the requested to get themselves registered by sending
22
Board of Directors of the OLP Services Pakistan their particulars at the designated email address
(Private) Limited; Management Company of OLP ([email protected]), mentioning their
Modaraba (OLPM) was pleased to announce a net names, CNIC number, Folio number, cell phone number
profit for OLP Modaraba of PKR 157.737 million for the and email address. The webinar link would be provided
year ended June 30, 2024. The Board also approved a only to the registered certificate holders who have
cash dividend @ 20 % (PKR 2.00 per certificate of PKR provided all the requested information at the above
10/ each) for the year ended June 30, 2024. designated email address. Members will be registered,
after necessary verification as per the above
Twenty Fifth Annual Review Meeting (ARM) of requirement and will be provided a video-link by the
certificate-holders of OLPM will be held on Monday, Modaraba via email. Only those members will be
October 28, 2024 at 11:00 a.m. at (Iqbal Auditorium of accepted at the ARM via video-conferencing whose
National Institute of Banking and Finance, Pakistan), names match the details shared with the Modaraba
located at Maulvi Tamizuddin Khan Road (M.T. Khan for registration.
Road) Karachi both in person as well as electronically
through video link arrangement, to review the Annual Report
performance of the Modaraba for the year ended June
30, 2024. In terms of Section 223 (6) and (7) of the Companies
Act 2017 and pursuant to S.R.O. 389(I)/2023 dated
Closure of Certificate Transfer March 21,2023, the Annual Report of OLP Modaraba
for the year ended 2024 have been uploaded on the
Books Modaraba’s website at below link:
For the purpose of ascertaining entitlement of the
aforementioned dividend and to attend Annual
WEB LINK QR Code
Review Meeting, the certificate transfer books will
remain closed from Monday, October 21, 2024 to https://www.olpmodaraba.com/wp-co
Monday, October 28, 2024 (both days inclusive). ntent/uploads/2024/09/OLP-Modarab
a-Annual-Report-June-2024.pdf
Transfers received in order at the office of our
Registrar, FAMCO Share Registration Service (Pvt.)
Ltd. 8-F, Next to Hotel Faran, Nursery, Block-6,
Notwithstanding the above, the Modaraba will
P.E.C.H.S., Shahra-e-Faisal, Karachi, before the close
provide hard copies of the audited financial
of business hours on Friday, October 18, 2024 will be
statements, to any Member on their request, at their
treated as in time for the purpose of entitlement to
registered address, free of cost, within one (1) week
dividend and to attend Annual Review Meeting
of receiving such request.
respectively.

On Behalf of the Board

Participation in Annual Review
Meeting
Certificate holders who are interested to attend the
ARM through online platform and whose names Muhammad Siddique
appeared in the book of the Modaraba by the close of Company Secretary
business (5:00 PM) on October 18, 2024 are October 07, 2024
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

Notes: act in accordance with the be treated separately as Filer or
provisions of law, for withholding Non-Filer and tax will be deducted
the amount of dividend which may on the gross dividend amount
Electronic Transfer of be payable by the Modaraba. CDC determined by bifurcating the
Dividend certificate-holders are requested certificate holding of each
to submit their Dividend Mandate joint-holder on equal proportions, 23
As per SECP directives, the and CNIC directly to their broker except where certificate holding
dividend of Certificate holders (participant)/CDC. proportion of joint-holders is
whose CNIC/SNIC are not available pre-defined as per the records of
with the Shares Registrar could be You can find the Electronic Credit Modaraba’s Certificate Registrar
withheld. Certificate holders are Mandate Form on Notices and and thus tax rates will be applied in
therefore, requested to submit a Announcements Section at OLPM line with respective proportions.
copy of their valid CNIC (if not website www.olpmodaraba.com. Those certificate holders, who are
already provided) to the Further, the same is also available holding certificates jointly, are
Modaraba’s Shares Registrar, on website of FAMCO Share requested to update/ notify the
FAMCO Share Registration Service Registration Service (Private) certificate holding proportions of
(Pvt.) Ltd. 8-F, Near Hotel Faran, Limited http://www.famco.com.pk. Principal and Joint-holder(s) in
Block-6, P.E.C.H.S., You may contact us at writing to our certificate Registrar
Shahra-e-Faisal, Karachi. In the [email protected] for this latest by 18 October 2024 at their
absence of a Member’s valid purpose. above referred office address.
CNIC/SNIC, the Modaraba will be
constrained to withhold payment With Holding Tax on In this regard, all certificate
of dividend to such Members. holders, whose names are not
Dividend:
entered into the ATL despite the
Please also note that in fact that they are filers, are
Tax Requirements: The dividend
accordance with the provisions of advised to make sure that: (i) their
income on certificates is liable to
Section 242 of the Companies Act, names appear into the ATL before
deduction of withholding tax
2017, it is mandatory for a start of closed period (referred
under Section 150 of the Income
Modaraba to pay cash dividend to above), otherwise they will be
Tax Ordinance, 2001 and pursuant
certificate holders only through treated as non-filers for tax
to the provisions of Finance Act,
electronic mode directly into the deduction purpose, and (ii) a copy
2023, the ‘Filer’ and ‘Non-Filer’
bank account designated by the of their National Tax Number is
certificate holders will pay tax on
entitled certificate holders. In submitted to their relevant
dividend income @ 15% and 30%
order to receive your dividend Participant / CDC Investor Account
respectively. The Filer status of
directly into your bank account, Services or to our Share Registrar
certificate holders will only be
please complete the particulars as (in case of physical certificate
determined on the basis of latest
mentioned in Electronic Credit holding only) at their above
available Active Taxpayers List
Mandate Form and return the referred office address.
(ATL) uploaded by the Federal
same duly signed along with a
Board of Revenue (FBR) on their
copy of your CNIC to our Registrar. Corporate certificate holders are
website http://www.fbr.gov.pk.
requested to provide of a copy of
In case of non-communication of valid Income Tax Exemption
In case a Folio / CDS Account is
bank account details, the Certificate issued by the
jointly held, each joint-holder will
Modaraba would be constrained to concerned authority to your
www.olpmodaraba.com

institution which is compulsorily into book entry form. of the Modaraba, are requested to
required to claim tax exemption in Members having physical make a claim for such
terms of clarification issued by shareholding are encouraged to unpaid/unclaimed dividends and/or
FBR vide their letter C.No.1 (43) DG open CDC sub - account with any of certificates with the Modaraba.
(WHT)/ 2008-Vol.11-66417-R the brokers or Investor Account Claims can be lodged by members on
dated 12 May 2015. In case you are directly with the CDC to convert claim forms as are available on the
subject to any special tax rate, their physical shares into scrip less Modaraba's website. Claim forms
24 please also provide a copy of form. This will facilitate them in must be submitted to the
relevant certificate issued by the many ways, including safe custody Modaraba's Share Registrar, M/s.
concerned authority. Relevant and sale of shares any time they Famco Share Registration Service
copies should reach our Share want, as the trading of physical (Pvt) Limited. for receipt of dividend
Registrar at their above shares is not permitted as per / certificates.
mentioned office address existing regulations of the
Pakistan Stock Exchange.
Conversion of
Physical Shares into Unclaimed
the Book Entry Form Certificates and
dividends
The SECP through its letter No.
CSD/ED/Misc/2016- 639-640 The members who have not yet
dated March 26, 2021 has advised claimed their certificates and cash
listed companies to adhere to dividends, which are either kept
provisions of Section 72 of the with the members themselves or
Companies Act, 2017 by replacing returned as undelivered to the
physical shares issued by them Share Registrar and Transfer Agent
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

25
26
www.olpmodaraba.com
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

27

https://www.olpmodaraba.com/wp-co
ntent/uploads/2024/09/OLP-Modarab
a-Annual-Report-June-2024.pdf

07
 Vision
www.olpmodaraba.com

OLPM vision is to be the leading

Shariah compliant financial services
entity by constantly anticipating
market needs with the aim to create
value for stakeholders.

28

Mission
Our mission is to meet the client needs by
ensuring service quality, care for the
environment, providing growth
opportunities to our employees and
creating value for our certificate holders
Core
Values

ANNUAL REPORT 2024

Integrity
We promote honesty and fairness 29
in all our actions.

Clients Focus
We are because of our client and
our success lies in their satisfaction.

Teamwork
We work together to create
synergies.

Innovation
We seek continuous improvement
and encourage creativity.

Respect
We respect each other’s feelings
and opinions.

Ownership
We protect the interest of the
Modaraba as if it is our own Business.
 Forward
Looking
www.olpmodaraba.com

The new government has placed a strong emphasis on economic stability and growth. The current
account posted a surplus of $75 million in August 2024, turning around from a $152 million deficit
30 reported in August 2023. The inflation reading has also comeback into a single digit figure after three
years Progressing through the ‘year of disinflation’, the State Bank of Pakistan has also downgraded
the key policy rate by reducing it by 200bps to bringing it down to 17.5%. The government has also
successfully negotiated a new IMF program and secured a long-term IMF agreement: a 36-month
Extended Fund Facility worth approximately USD 7 billion. The new 37-month IMF deal approval
promises to bring stability in the short term and if coupled with strategic reforms will create
sustainability in the country’s economic outlook. Additionally, it opens opportunities for further
borrowing from other international lenders and friendly nations, thereby enhancing financial
flexibility.

Our strategy remains maintaining growth momentum and asset quality, increasing profitability and
refining the product mix. We aim to target profitable new market segments and plan to enhance our
exposure in high and mid-tier SME under Diminishing Musharika structure and consumer market under
an assurance based model or with High Net Worth individuals. We understand that adapting to the
change is the way forward.
 ANNUAL REPORT 2024
In line with the same, OLPM has set up a Principals Committee and Strategic Initiatives Unit to
synchronize with the ever changing operating environment. Amongst other things, OLPM focuses on
IT and system’s transactional capability reach and user friendly efficient processes ensuring client’s 31
satisfaction by reducing turnaround time without compromising on the control environment.

As the focus is to grow, acquiring and retaining the right quality of human resource will be critical.
Accordingly, OLPM will continue to invest in learning and development of its staff i.e. on-the-job
learning, learning from others and formal trainings.

We believe that Islamic financing has a bright future in Pakistan. We intend to contribute a fair share to
the growth of Islamic financing in the country. We will also look to maintain our thought leader status
in the sector and to grow to be largest and most profitable Modaraba in Pakistan.
 Major
Events
www.olpmodaraba.com

2023 2023 2023

August September October
32

• Shariah Training on • Announcement of • 5th Corporate

OLPM Products 20% Cash Dividend Briefing Session

• 268th Board • Annual Review

Meeting Meeting

• 92th Board Audit • 269th Board

Committee Meeting Meeting

• 12th Board Human • 93th Board Audit

Resource & Committee Meeting
Remuneration
Committee Meeting

• 5th Board Risk

Committee Meeting

2024 2024 2024

April May June

• 271st Board Meeting • 96th Board Audit • 272nd Board

Committee Meeting Meeting
• 95th Board Audit
Committee Meeting
 ANNUAL REPORT 2024
2023 2024 2024
November February March
33

• Distribution of 20% • 270th Board • Training of staff for

Cash Dividend to Meeting business are spot
Certificate Holders checks.
• 94th Board Audit
• Re-Structuring of Committee Meeting
staff loan and the
staff benefit policy

• Training to staff on
control sample
testing risk register
and heat map
www.olpmodaraba.com

Organization
Overview &
Introductory The Board External
34 Environment
 The Board
35

ANNUAL REPORT 2024

 Get To Know Your
www.olpmodaraba.com

Board Of Director
36

Mr. Naveed Kamran Baloch

Chairman

Mr. Naveed Kamran Baloch is a distinguished individual holding a master's

degree from the prestigious London School of Economics. Additionally,
he is also a certified Board Director of the Pakistan Institute of
Corporate Governance, showcasing his expertise in governance
matters.

Mr. Naveed has held pertinent positions in the Pakistani

Civil Service, attaining the esteemed BPS-22 grade.

Notably, he was promoted to the rank of Federal

Secretary in October 2017, serving in key
bureaucratic offices as the Cabinet Secretary
and Finance Secretary of Pakistan.

After retirement from the Civil Service as

one of the senior-most federal secretaries
in the country, Mr. Naveed was appointed
as the executive director to the World
Bank.

Mr. Naveed has completed his Bachelors

from Brown University in Providence,
Rhode Island in Economics, and I.R.
Furthermore, he pursued his MBA in
Accounting from Boston University.

Throughout his career, Mr. Naveed has

exemplified leadership, dedication, and
expertise in governance, economics, and
finance, making him a valuable asset to our
organization.
 ANNUAL REPORT 2024
37

Mr. Raheel Qamar Ahmad

Managing Director/ CEO

Mr. Raheel Qamar Ahmad is the CEO of OLPM. He has over 30 years
of varied Corporate, Investment Banking and Islamic Finance
experience during his various roles with multinational
banks, large local banks, and development finance
institutions in various geographies. He has also acted
as a sell side advisor for entities in the Government
of Pakistan privatization programme. He holds the
distinction of providing key feedback to various
apex regulators on legislation and regulations
and representing the country in AML
discussions. He holds a Masters in Business
Administration from the Illinois Institute
of Technology, Chicago (IIT) and a
Bachelor of Science in Engineering
from the University of Engineering and
Technology, Lahore (UET). He is
currently an independent Director on
the board of AWT Investments Ltd.
and an executive committee member
of the Public Interest Law
Association of Pakistan and the
Patients’ Behbud Society, Agha Khan
University Hospital. Mr. Ahmad also
been featured amongst the top 100
CEOs of Pakistan.
www.olpmodaraba.com

38

Mr. Nausherwan Adil Mr. Ramon Alfrey Mian Faysal Riaz

Independent Director Director Director

Mr. Nausherwan Adil is an MBA from Mr. Ramon Alfrey joined the board of Mian Faysal Riaz has been appointed as
Fairleigh Dickinson University OLP Services Pakistan (Pvt) Limited a member of the Board of Directors in
New-Jersey, USA. He has over 30 years (OSPL) in 2016. Since 1990, He has also May 2020. He is currently serving as
of prolific banking experience and has served the parent entity of OSPL i.e, the Chief Operating Officer in OLP Financial
held various senior positions. He has OLP Financial Services Pakistan Services Pakistan Limited (Formerly
twice served as Group Chief Operations Limited-OLP in various senior capacities ORIX Leasing Pakistan Limited) (OLPL).
National Bank of Pakistan. During his in Pakistan and UAE. His more recent Having thirty (30) years of diverse
tenure with NBP, he has also served as appointments at OLP include Company experience, having worked in all front
Senior Executive Vice President & Secretary, Chief Financial Officer and line revenue generating business
Regional Chief Executive - Europe Group General Manager Planning and segments of the leasing industry which
Region where he was responsible for Strategy. In April 2020, he assumed the include Corporate, Commercial Vehicle
NBP Europe Operations in France and responsibility of Deputy Chief Division, Auto Lease/Financing,
Germany. He contributed materially to Executive Officer.. Mr. Alfrey is a fellow Operating and Micro Finance. Mr. Riaz
overall institutional policy debate and member of the Institute of Chartered has served in various capacities at
strategy formulation. Accountants of Pakistan. OLPL’s including postings as Zonal Head
and Country Head Marketing. Mr. Riaz
has attended various seminars and
courses in Pakistan and abroad to
enhance his professional abilities,
these include High Impact Leadership
Program and Building a Brighter Future
which was held under ORIX
Corporation’s Global Leaders
programme Japan.
 ANNUAL REPORT 2024
39

Ms. Naila Hasan Mr. Nadim D. Khan

Female Independent Director Director

Ms. Naila Hasan has over thirty years Nadim D. Khan has over 30 years of
experience of working in leading MNC’s diversified senior financial
at both local and international level. management experience along with a
She specializes in General wealth of knowledge in strategic
Management, Marketing, Business planning, preparation of corporate
Development, Commercial Operations, plan, business retention &
Market Access, Distributor development, conducting market due
Management and Compliance. She was diligence, risk management,
Business Manager, Pakistan at compliance, human resource
AstraZeneca from 2013-2023. management, etc. His depth of
Previously she was Therapy Area experience comes from working with
Director at GlaxoSmithKline (GSK), Standard Chartered Bank, ING Barings
Middle East & Africa, based in Dubai. Securities, Elixir Securities Pakistan,
Prior to relocating to Dubai, she worked AMZ Asset Management Limited, KASB
at GlaxoSmithKline, Pakistan and held Securities and BenchMatrix. He did his
various positions, the last one being BBA from Grand Valley State
that of Marketing Director. She started University, Michigan and MBA from San
her career at Pfizer Pakistan. She has an Francisco State University, California,
MBA degree from Institute of Business USA. He is also an Associate from the
Administration (IBA) Karachi. Ms. Hasan Institute of Bankers, Pakistan.
has completed her director certification
from the Pakistan Institute of
Corporate Governance and currently
serves on the Board of a Listed Textile
Company.
 Get To Know Your
Management
www.olpmodaraba.com

40
Mr. Raheel Qamar Ahmad
Managing Director/ CEO

Muhammad Siddique Salwat Ahmed Nadir Shah

CFO & Company Secretary Director - Client Relationships Director - Employee Finance
Pakistan & Head HR
Muhammad Siddique joined OLPM on July Salwat joined OLPM for his second tenure Currently working as Director Employee
01, 2009 as CFO and Company Secretary. with the Modaraba on October 02, 2017. Finance and Head of Human Resource.
He also holds the positions of Head He was with OLPM from April 2008 till He joined OLPM as Head of Human
Wealth Management in OLPM. Prior to May 2013, as Head of Client Resource and House Finance Diminishing
this assignment, he was Head of Finance Relationships – Central and North. Salwat Musharakah in July 2012. Nadir has also
– Islamic Banking Division, SCBPL. He was moved from Modaraba to Standard worked as Project Manager with Dolmen
associated with Standard Chartered Chartered Bank (Pakistan) Limited Group from 1991-2001. He joined SCBPL
Group since 2004 before the successful (SCBPL) and worked as Unit Head, Central IT in 2001 for SCB and ANZ Grindlays
transfer of Modaraba and Modaraba for SME Business for one year before integration project. He moved to SCBPL
Management Company ownership from moving to Aseel Finance & Abu Dhabi HR in 2005. He was working as HR
SCBPL to OLPL in June 2016. He is a fellow National Islamic Finance (ADNIF), FAB Relationship manager before he joined
member of the Institute of Chartered Group. During his four years’ stay at OLPM. Mr. Nadir holds a Bachelor degree
Accountants of Pakistan and has over 20 Aseel, he worked on various senior in IT.
years’ experience in various financial assignments in Credit Risk, Credit for
institutions and audit firms. He is a UAE, Compliance and Islamic Subsidiaries.
former member of the Executive He has over 27 years of work experience
Committee of NBFI & Modaraba in various Leasing/ Finance Companies
Association of Pakistan. and Commercial Bank including SCBPL,
OLP Financial Services Pakistan Limited,
PILCORP, PICL, and OLPM. Salwat is an
MBA from Arkansas State University,
USA and M Sc. Statistics from Punjab
University, Lahore, Pakistan. He is also a
charter holder from Association of
Certified Anti Money Laundering
Specialists (ACAMS)
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

41

Mohammad Arif Daya Muhammad Asim Javed Muhammad Azhar

Head of Technology Director - Risk Management Waseem
and Operations Head of Internal Audit
Mohammad Arif Daya has been Asim has over 25 years of corporate Muhammad Azhar Waseem is an
associated with OLPM since 1991. banking, relationship building / Associate member of ICMAP, having
Currently working as Head managing & risk management more than 18 years of experience in
Operations & Technology. experience. Structuring, the field of audit, accounts, finance
Previously, he was the Head of negotiating financial transactions & and credit control & administration,
Credit Risk Control Department in finding appropriate solutions for in distinct industries including
OLPM since July 2010. Prior to his corporate clients have been his banking, public and private sector.
role as Head CRC, he served as core competencies. He has been Prior being the Head of Internal
Manager Finance. He is post part of renowned financial Audit of OLP Modaraba, Azhar has
graduate from Govt. College of institutions like Faysal Bank well demonstrated his proficiency
Commerce & Economics and has Limited and SCM (Standard on the position of Manager of Credit
over 31 years’ experience in various Chartered Group). He has extensive Risk Control and Operations, where
financial institutions and audit ‘Relationship Management’ he spearheaded strategic credit risk
firms. experience having dealt with assessment initiatives and
corporate clients belonging to streamlined operational processes,
various industry sectors & significantly contributing to the
business-segments. Currently, organization's financial stability and
serving as Director - Risk growth trajectory.
Management at OLP Modaraba, he
is responsible for Enterprise wide
risk appetite, input, assessment &
monitoring. Moreover, this role also
encompasses management of
Special Assets and the overdue
recovery drive for the entity. He is
also the Vice Chairman for OLP
Modaraba’s Principal Committee, a
senior level internal committee
focusing on deciding on the entity’s
direction and goal settings. Islamic
lending/ financing products have
been the focus and he has also been
involved in development of various
Islamic products.
 www.olpmodaraba.com

42
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

43

Our Staff
 OLPM
Organogram
www.olpmodaraba.com

44
Board of Directors

HUMAN RESOURCE &

RISK COMMITTEE
REMUNERATION COMMITTEE

Corporate
Human Credit Risk Information
Real Estate
Resource Control Technology
Services

Compliance Special
Credit Risk Wealth
& Operational Projects,
Management Management
Risk & Syndication

Special
Company
Finance Assets
Secretariat
Managment
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

45

AUDIT
CEO
COMMITTEE

Client Employee
Relationships Finance

Internal
Audit
www.olpmodaraba.com

Organization
Strategy
The Board Overview & and Resource
46 External Allocation
Environment
Organization

ANNUAL REPORT 2024

Overview &
External Environment
47
 Modaraba at a
Glance
www.olpmodaraba.com

OLP Modaraba - OLPM is widely regarded as the thought leader in the sector. Its strategy is to grow to
be the largest and most profitable Modaraba in Pakistan.

48
OLPM offers Ijarah, Diminishing Musharika (DM), and House Finance under DM structure, Sukuk,
Murabaha, and Salam to Corporates, SME, High network individuals and employees of selected
Corporate Clients under Assurance Model. The funds to finance the assets comes from a mix of
Certificate of Musharakah, bank financing, equity and operational inflows. Our total assets balance is
PKR 7.738 billion as at June 30, 2024.

OLPM is managed by OLP Services Pakistan (Pvt) Limited which owns 10% certificates capital in OLPM.
OLP Financial Services Pakistan Limited holds another 10% stake in OLPM. The rest 80% is held by the
general public. OLPM is regulated by Securities and Exchange Commission of Pakistan and has branch
offices in Lahore and Islamabad with the Head office in Karachi.

Disclosure of Beneficial Owner

No Natural Person directly or indirectly hold more than 25% of OLPM Shares. Details of Modaraba's
Certificateholders is disclosed in the pattern of Shareholding in the report. Flowchart of group
shareholding and relationship with subsidiary companies is available in the ‘Start of the Report

Key Performance Indicators 2024 Performance made in 2023

1). Modaraba’s gross revenue increased by 28.28% 1). Modaraba’s gross revenue increased by 62.91%
from PKR 1280.97 million to PKR 1643.25 million from PKR 786.28 million to PKR 1280.97 million
compared to last year. compared to last year.

2). Due to pro-active approach, we have subjectively 2). Due to strong recovery efforts reversal of net
downgrade some of our clients resulting in a net provision amounting to PKR 6.50 million.
provision / impairment of PKR 14.87 million.
3). Profit before management company’s
3). Profit before management company’s remuneration increased by 21.67% from PKR
remuneration increased by 20.49% from PKR 179.42 million to PKR 218.29 million compared to
218.79 million to PKR 263.02 million compared to last year.
last year.
4). Whereas profit before taxation increased by 21.99%
4). Whereas profit before taxation increased by 22.64% from PKR 152.83 million to PKR 186.43 million
from PKR 186.43 million to PKR 228.63 million compared to last year.
compared to last year.
5). During the year OLPM booked fresh disbursement of
5). During the year OLPM booked fresh disbursement of PKR 2.782 Million.
PKR 3.198 Million.
6). Total assets increased by 1.75% from PKR 6,707
6). Total assets increased by 13.39% from PKR 6,825 million to PKR 6.825 million.
million to PKR 7.738 million.
7). The Portfolio of Ijarah increase, short term Sukuk
7). The Portfolio of Ijarah, short term Sukuk investment investment & Diminishing musharaka stord at PKR
& Diminishing musharaka stord at PKR 6.909 million 6.021 million compare to PKR 5.574 million showry
compare to PKR 6.021 million showry increase of increase of 8.02.
14.75%.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Financial
Highlights

ANNUAL REPORT 2024

49

Profit After Tax PKR in Million Earnings PKR

2024 157.737 2024 3.48

2023 128.784 2023 2.84

Cash Dividend PKR in Million Total Assets PKR in Billion

2024 90.77 2024 7.738

2023 90.77 2023 6.824

Total Disbursements PKR in Million Break-up value Per Certificate PKR

2024 3.198 2024 27.40

2023 2.782 2023 25.93

Our Human
Capital Total Headcount
53
22.64% Head Office
Female
Percentage

Locations HEAD OFFICE ISLAMABAD LAHORE TOTAL

FTE 31 02 07 40

Contractual 09 01 03 13
 OLPM
Products
www.olpmodaraba.com

OLP Modaraba - OLPM offers both Consumer and Wholesale Shariah compliant products. These include; Ijarah/
Leasing, Diminishing Musharakah, House Finance Diminishing Musharakah, Murabaha, Salam, Istisna and
Certificates of Musharakah. OLPM also offers Syndicate Financing Facility to the clients that require large amount
50 of financing.

Certificate Of Musharakah

OLPM’s Certificate of Musharakah is a profit and loss-sharing instrument whereby

investors have an Opportunities to earn low-risk income. It offers the most secure and
rewarding return to its investors given OLPM’s AA Rating assigned by Pakistan Credit
Rating Agency Limited (PACRA). This strong credit rating assigned to OLPM indicates
low expectation of credit risk and strong capacity for timely payment of financial
commitments. Launched in the year 2000, this Shariah compliant Deposit Scheme has
been formulated under the guidelines issued by SECP Religious Board formed under the
Modaraba Ordinance. OLPM’s Certificate of Musharakah is an Islamic investment avenue
available to Individuals, Corporates, Provident Funds, Gratuity Funds, Mutual Funds, and
high Net Worth Individuals. OLPM has tailor-made this product keeping in consideration
Islamic Principles and its valued clients’ convenience.

MURABAHA FINANCE

OLP also offers Murabaha (selling a commodity as per the purchasing price with an
agreed profit). Murabaha refers to the sale of commodity on pre-defined price and
profit. Murabaha is completed in two stages. In the first stage, the OLPM purchases a
commodity that the client is desirous of acquiring. In the second stage, the client agrees
to a payment schedule for repurchasing the goods.

IJARAH

OLPM OFFERS ITS CLIENTS SHARIAH-COMPLIANT INTEGRATED FINANCIAL

LEASING SERVICES.

At OLPM, we pride ourselves on our Shariah-based values in offering asset rental

solutions with ownership promise that is Ijarah Financing. Ijarah is the best solution as it
fulfils the needs and aspirations of all clients, in a flexible timeframe that perfectly fits
clients’ needs. We offer financing services to our clients in a way that answers their
needs and goes hand in hand with their expectations.

One of the most important fields of work at OLPM is the leasing of assets which includes
Plant & Machinery, Motor Vehicles, Office and Computer Equipment. We are proud to say
that we have experienced team and an in-depth knowledge in this field in Pakistan; our
specialization in the field has allowed us to present the best in terms of financial leasing
services.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Diminishing Musharakah (Dm)

ANNUAL REPORT 2024

DM arrangements allow equity participation and sharing of profits on a pro-rata basis. Under
this product, possession of the asset is with the client. The financing is made by OLPM and
the client jointly in accordance with an agreed share. The share of the Modaraba in an asset
reduces with every periodical payment, ultimately transferring ownership of the asset to
the client. The client also pays rent for the use of Modaraba’s share in the asset.

The clients may approach OLPM for the acquisition of Plant and Machinery, Motor Vehicles,
Office and Computer Equipment using DM financing. The asset remains under the charge of
OLPM until settlement. 51

House Finance Diminishing Musharakah (Hfdm)

HFDM is based on the concept of mortgage. The clients can avail HFDM facility for the
acquisition, construction and renovation of property of their choice. Under this product,
ownership and possession of the property is with the client. The financing is done by OLPM
and the client jointly in accordance with an agreed percentage. The property remains
mortgaged in favor of OLPM and original property documents are held by us till the contract
is matured or terminated and settled. Currently, it is being offered to employees of selected
corperate clients under Assurance Model.

Salam

Salam or Bai-Al Salam, is a contract of sale where the Seller undertakes to supply some specific
commodity to the Buyer at a future date in exchange for a price fully paid in advance. Hence, the
price is paid in cash whereas delivery of the purchased Goods is deferred.

Client may approach OLPM for this product to manage its working capital requirements. This may
include both core and overheads expenses pertaining to business operations of our esteemed
clients.

Istisna

The word Istisna is a derivative from the root word ‘Sa na’a, which means to manufacture or to
construct something. Istisna is a contract of sale of specified items to be manufactured or
constructed with an obligation on the part of the seller to deliver them to the purchaser upon
completion.

A client who intends to purchase certain assets to be manufactured or constructed may

approach the Modaraba. At this point, Modaraba acting as a seller and the client as purchaser
would execute an Istisna contract. Once the asset is complete and in useable condition, the
Modaraba would deliver the assets to the client on agreed delivery schedule. The Client
would make the payment to the Modaraba pursuant to the terms agreed upon in the Istisna
contract either in various instalments or, as the case may be, at the delivery of the asset.

Syndicate Financing

OLPM also arranges Syndicate Financing facilities for clients (clients that can be Large Corporates,
Local Corporates, Medium Enterprises or SMEs).

A traditional syndicated facility, is a facility arranged / offered by a group of Financial Institutions

- referred to as a syndicate - who work together to provide funds for a single client.

Such a facility is suitable for clients that are looking for a single contact point solution for their
relatively larger financial facility requirements.

OLPM can arrange the following types of facilities for its clients:

- Syndicated Ijarah Facility (Direct and sale & lease back Ijarah).
- Syndicated Diminishing Musharakah Facility (For new & existing assets).
 Code Of
Conduct
www.olpmodaraba.com

Do the right thing comfortable with at work. This Treat clients fairly
helps to maintain a culture of
52
Our values are integral to the way strong ethics, integrity and A focus on building long-term
we work every day. The Code is transparency. relationships helps to increase our
important because it outlines how business by improving our
we can make sure that the Comply with laws, reputation. This includes having
decisions we make are the right regulations and well-designed products and
ones. standards services, which:

Act responsibly and Staff are individually responsible • are clearly sold based on

within authority for complying with the spirit, not suitable advice
just the letter, of laws, regulations • perform as expected

Be disciplined, responsible and and our standards. • give clients choice

take accountability for the risks

Staff take and make sure they are Combat financial Manage conflicts of
appropriate to his/her business or crime interest
activity. Staff must keep to their
limits and policies and not make It is critically important to protect Staff are responsible for
decisions that are beyond their the worldwide financial system. identifying, assessing and
delegated authority. Staff must comply with laws, managing conflicts of interest
regulations and standards on (whether actual or issues which
Use good judgment anti-money laundering (including could be viewed as conflicts) that
those on tax evasion), preventing arise in your daily working life.
Recognise when there are financing for terrorism, fraud or
situations without simple sanctions. Do not engage in or
solutions. Use the Code’s decision support insider
making framework to help make Reject bribery and dealing
decisions well, appropriately and corruption
with care. The misuse of inside information
Bribery is illegal, dishonest and undermines the financial system
Speaking Up damages the communities where it and unfairly disadvantages others
takes place. Staff must not give or in the market.
Staff have a responsibility to Speak accept bribes nor take part in any
Up when they see behaviour, a form of corruption.
process or system they are not
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

Protect confidential information

Building trust is a basic part of all our relationships with clients. Staff must not release confidential information
unless authorised to do so.

Compete fairly in the market place

53

Staff must understand and comply with the laws which affect how you compete in their markets both locally and
abroad.

Treat colleagues fairly and with respect

All staff are entitled to a safe working environment that is inclusive and free from discrimination, bullying and
harassment. Treating your colleagues as partners helps our people to deliver on the brand promise, resulting in a
positive effect on our business results.

Be open and co-operate with regulators

Deal with regulators in a responsive, open and co-operative way and give regulators information they would
reasonably expect to be told about.

Respect our communities and the environment

To contribute to economic stability in our markets, we all have a responsibility to reduce our effect on the
environment and give back to our communities.
 Pestle
Analysis
www.olpmodaraba.com

Description Factors Response

Political
54 • Global decline in demand, trade activity • OLPM has embedded Environmental and
and continuous devaluation of currency; Social Risk Assessment in products and
• Political uncertainty and inconsistent services that are offered to the clients.
Cultural and policies can have adverse impacts; • Modaraba remains focused on enhancing
demographic trends of • Terrorism and geostrategic its policies and procedures while working
society. Social norms considerations; closely with all regulators.
and pressures are key to • Environmental laws; • Updating internal documents in line with
determining consumer • Fiscal policies; Modaraba's regulations, as and when
behavior. • Labour Law; and required.
• Trade restrictions.

Description Factors Response

Economic
• Financial mismanagement and distress • Considering the overall financial stress
could be expected to worsen considering that the economy has been subjected to
govt policies and procedures. for the last five to six years, OLPM
Various aspects of the • Increased Labour cost; continues to assess, evaluate and
economy, and how the • Inflation and its adverse effect on accordingly strategize w.r.t. smooth
outlook on each area disposable income of businesses and operations as well as control over
could impact your clients; delinquencies.
business. • Low economic growth; and • Reduce cost through cost containment
• Exchange rate fluctuations. initiatives; and
• Periodic Profit rate adjustments.

Description Factors Response

Social
• Safe & healthy environment; • OLPM has formed multiple committees
• CSR responsibilities factors; related to ESG, Health and Safety,
• Charity and donations; Resource Utilization and welfare of the
Cultural and • Assistance in providing educational society as a whole;
demographic trends of facilities; • OLPM continues to provide financial
society. Social norms • Organizational Reputation; and assistance to various charitable and
and pressures are key to • Fair practices. non-profit organizations.
determining consumer • Social impacts of natural disasters in • Staff has been trained on use of internet
behavior. Pakistan; and is aware of responsibilities w.r.t
organizational reputation and
confidentiality.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

Description Factors Response

Technological
• Businesses have to keep pace with • Monitored and “Business need based 55
emerging technology; download” to prevent malicious software
• Level of innovation; and automation. or viruses; and
Innovation in the industry • Data Security; • Managers are responsible to promote
and the overall economy. • Technological awareness & readiness; awareness of information security to
Not being up to date to protect Modaraba’s information from
the latest trends of a unauthorized access, modification &
particular industry can deletion.
have adverse impact on • OLPM has a reporting process where any
the business actual or suspected incidents are reported
without delay to prevent loss or theft of
assets or information;

Description Factors Response

Environmental
• Climate changes; • OLPM has shifted its internal processes to
• Carbon Foot print; paperless environment and has greatly
• Environmental protection; reduced the use of paper.
Ecological impacts on • Recycling standards. • OLPM continues its support towards
business. Importance of environmental protection, conservation
Corporate Sustainability and reduction of carbon emission;
Responsibility (CSR) • OLPM’s commitment towards clean
initiatives. environment is also extended to its clients.
We have embedded Environmental and
Social Risk Assessment in our products and
services we offer to our client; and

Description Factors Response

Legal
• Corporate & personal Taxes (Tax & Tariffs); • Modaraba considers the above factors
• Anti-Bribery and Corruption code while making decisions to enter or not to
adherence; enter certain industries, to launch or not to
Ecological impacts on • Employment and Discrimination laws; and launch certain products;
business. Importance of • Data protection law. • OLPM strictly adheres client
Corporate Sustainability confidentiality protection measures;
Responsibility (CSR) • Adherence to policy on Anti Bribery and
initiatives. Corruption (ABC), for which the employees
are periodically trained;
• Restricted disclosure of information on a
“need basis”; and
• A closed process complying with all
applicable laws & regulations, including
Shariah governance, ensure the highest
level of governance.
 Swot
Analysis
www.olpmodaraba.com

56

STRENGTHS

• Experience of Financial Industry

• Highest credit rating
• Footprint in country's major cities

WEAKNESSES

• Highly regulated industry

S
• Tax on income
• Limited resource mobilization products

W • Banks Competitive edge

O OPPORTUNITIES

T • Growing economic activities

• Acceptability in public for Islamic financing
• Potential for growth in Islamic Financing

THREATS

• Political instability
• Inflation and PKR devaluation
• Increasing Taxes and Tariffs Sudden move of discounted
• Higher working capital requirement
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

The legislative and regulatory the Modarba has achieve manage and monitors risk
environment in which the numerous accolades from various exposure very prudently both at
organization operates prestigious national and the time of granting the facility and
international bodies. The on regular interval to access the
Currently Modarabas operating in Modaraba has its presence in major repayment ability of customer.
Pakistan are governed under cities of Pakistan with registered 57
several laws and regulations such headoffice in Karachi and branches Details of significant events
as Modaraba Ordinance, Modaraba in Islamabad and Lahore. This vast occurred during the year and
Rules and Modaraba Regulations network of OLPM is providing after the reporting period
2021 etc. OLP Modaraba is Islamic Financial Services to
operating under the supervision of prospective corporate and The significant events which
Securities & Exchange Commission consumer clients. occurred during the year ended
of Pakistan, as Non-Bank Islamic June 30, 2024 are reported in the
Financial Institution and contribute The political environment ‘Calendar of major events’ and
as a key player in bringing where the organization ‘Landmarks’ sections of this report.
awarness of Islamic financial operates and other countries
system in the Country. For that may affect the ability of Position of the reporting
Modaraba structure refer Business the organization to implement organization within the value
Model on page no. 15 of the report. its strategy chain showing connection with
other businesses in the
The legitimate needs, interests The political environment has a upstream and downstream
of key stakeholders and significant impact on the ability of value chain
industry trends any organization to implement its
strategy. Political uncertainties OLPM manages its liquidity
OLP Modaraba takes specific leads toward negative affects on position and funding profile
measures to understand the needs consumers, businesses investors, through Asset Liability Committee
and interests of all its financial markets and economic (ALCO) chaired by the Chief
stakeholders, This involves policymakers. In the case of Executive. It meets on a monthly
understanding the needs of the Pakistan, the Chronic political basis and is represented by CFO
communities through client visits instability has hampered the and Business Heads. It reviews
and interactions. The Modaraba Country economic growth the monthly and quarterly cash flow
disseminates its periodic financial most. Currently after the election projections. The approach to
statements together with the new government is focused in manage liquidity ensures that it
directors’ review report on bringing economic stability by will always have adequate liquidity
performance and future outlook.It prioritizing exports nd investment. to meet its commitments under
also holds investors’ briefing Considering the current normal and stressed conditions.
sessions on a annual basis besides circumstances and to safeguard
Annual Review Meeting in which the modaraba stakeholder A general review of the
address all the queries of the interest, the OLP Modaraba remain performance of the company,
analysts and certificateholders. focused on enhancing its policies including its subsidiaries,
The Modaraba designs its CSR and procedures with close associates, divisions etc., for
activities to have maximum impact interaction with Regulators. the year and major
on the communities particularly to Further, the business has been improvements from last year.
Health, education and driven mainly by deepening
environmental protection. relationships with selective A detailed review of Modaraba’s
clientele and initiating performance with comparison
Competitive landscape and relationships with good names. from last year is provided on page
market positioning The asset portfolio has a good mix 48.
of multi-nationals, large and
The Modaraba holds highest credit medium sized local corporate and
rating by PACRA i.e. AA in long term selective SME relationships.
and A1+ in short term distinct Besides smart strategy of asset
position. Apart from credit rating portfolio, the modaraba also
www.olpmodaraba.com

Organization Strategy
Overview & Risk &
External and Resource Uncertainties
58 Environment Allocation
Strategy

ANNUAL REPORT 2024

and Resource 59

Allocation
 Short, medium and long-term governance and to follow best Committee Composition: To ensure
strategic objectives and business Practices. that each of the Board and
strategies in place to achieve management Committees are
www.olpmodaraba.com

these objectives: d) Social and Relationship appropriately structured to

Capital effectively achieve its underlying
Our strategy is geared towards Our social ‘license to operate’ is goals and objectives, and its key
generating growth over the next few due to our reputation and the functions are also clear and well
years. We will continue with our trust of key stakeholders. Our defined.
strength in Corporates, high end most valuable stakeholder
SMEs, and HNW individuals. We will relationships are with our The capabilities and resources of the
also expand into midtier SME and investors, our community, company to provide sustainable
employees of selected Corporate employees, Clients as well as competitive advantage: OLPM has a
60
Clients under Assurance Model. The government and regulators. multitude of strengths that has
cornerstones of our strategy are: contributed to our success in the past
Critical Performance Indicators and will also set us apart from our
1). Expanding our Diminishing competitors in future. These include:
Musharika portfolio Critical performance indicators that
2). New business with are in place to appraise OLPM • Strong evaluation of client’s
High-Net-Worth customers and performance include: credit profile including
target employees of selected repayment ability.
blue-chip entities Strategic Direction: To ensure that • Post disbursement monitoring of
3). Synergy within OLP group with the management is involved in risk exposure.
two-way referrals, syndication, setting and devising key strategies • Experienced management team.
use of common resources and that provide the Modaraba with • Efficient IT systems that support
profiling including utilize existing correct futuristic direction, and all of core competencies and improves
OLPL branch network for the management proposals, overall efficiency and
mobilization of Islamic funds and challenges, assumptions and responsiveness to market
new products; and alternatives are duly considered prior development.
4). Advisory transactions where risk to deciding such strategy. • Continuous re-engineering of
reward parameters are met. policies, procedures, SOPs, SLAs
Management Financial Performance: and TATs, ensuring operational
Resource allocation plans to To ensure that the management’s efficiencies through effective
implement the strategy performance in terms of revenue, management of key resources
profitability and cost control and its without any compromise on
Every element of our business model progress towards achieving its set control environment.
is unique to our Modaraba and has a targets is periodically monitored by • Strong customer loyalty,
role to play in our future long-term the Board members of Modaraba supported by the OLP premium
success Management Company. brand.

a) Financial Capital: Internal Controls: To oversee and • Differentiated product suite

All the financial resources of the ensure that appropriately designed including the Pioneer Modaraba
OLPM are utilized effectively and internal control framework is in place offering Shariah compliant house
efficiently under Shariah and is routinely tested to address top finance facility to Individual.
guidelines and policies and risks.
procedures framed by the Board Board’s statement on the
of Directors. These resources are Compliance: To ensure that there is significant plans and decisions
greatly support for smooth an active compliance function at the such as corporate restructuring,
business operations of the entity. Modaraba, and to monitor its business expansion, major
compliance with external laws & capital expenditure or
b) Human Capital regulations (including anti money discontinuance of operations
Our people bring talent and laundering requirements) and
strong capabilities relevant to all internal policies, and to monitoring of OLPM is on its way to achieve the
aspects of our business, from controls through Control Sample overall objectives set by its Board of
community and customer Testing (CST). Directors. There are no significant
relations to the innovative changes in objectives & strategies of
thinking necessary to drive value Understanding of Corporate OLPM as compared to last year.
growth and efficiency. Governance and Code of Conduct: To Furthermore, there are no significant
ensure that the management fully plans and decisions including
c) Intellectual Capital understand the Code of Corporate corporate restructuring, business
Through capacity building, Governance and Ethics. expansion and discontinuance of
develop intellectual capital for operations, etc., in the light of OLPM’s
best corporate culture, good existing objectives & strategies.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Information about defaults in Liquidity Strategy Lahore. Also, the modaraba has
payment of any debts with successfully maintained its rating of
reasons OLPM-ALCO holds the ownership of AA (long term) and A1+ (short term)

ANNUAL REPORT 2024

Liquidity Contingency Plan which from psst many years. This vast
Over the period of 37 Years, OLP ensures that all financial liabilities network and stable rating helps
Modaraba has never failed to settle that are falling due are either modaraba in attaining competitive
its obligation timely. This is mainly re-invested or re-financed with other advantage in providing Islamic
because, OLPM manages its liquidity feasible sources. financial Services to prospective
position and funding profile through The main source of fund to OLPM for corporate and consumer clients.
Asset Liability Committee (ALCO). extending Islamic financings is
The Committee meets on a monthly issuance of Certificate of Musharaka Effects of the given factors on
basis and is represented by CFO, (COMs). Since COMs are the most the modaraba strategy and
61
Business Heads and chaired by CEO. It economical source of funds available resource allocation:
reviews monthly and quarterly cash to Modaraba, OLPM focused on COMs
flow projections. This approach to to manage its financial cost a) Technological Changes;
manage liquidity helps to ensures efficiently. Though on-going changes and
that the Modaraba will always have revolutionizing new
adequate liquidity to meet its OLPM effectively markets the COMs technological advancements
commitments under normal and in a way that maturing COMs are pose a continuing challenge to all
stressed conditions. replenished with new issue of COMs. business segments requiring
each business to review and
Board strategy to overcome Considering frequent changes in upgrade its business capabilities.
liquidity problem and its plan to discount rate, COM clients these days We at OLPM take pride in being
manage repayment of debts and are being encouraged to invest for a the clear thought leader within
meet operational losses period over 1 year due to high profit the sector hence also keeping a
rate being offered. Although there is vigilant eye on places and
OLPM manages its liquidity position substantial contractual maturity situations where there is need of
and funding profile primarily through mismatch, however there is nominal adopting new technologies.
Asset Liability Committee (ALCO) behaviour maturity mismatch as
represented by CEO, CFO and key most of the CoMs were re-invested Currently OLPM is evaluating a
personnel from Business, Operations after maturity. new hi-tech TP system to bring
and Wealth management (WM). its IT platforms to the required
On the asset side, OLPM portfolio levels.
ALCO regularly reviews upcoming includes Ijarah and Diminishing
monthly and quarterly cash flow Musharaka products with maturity b) Sustainability reporting and
projections with respect to period of minimum three (03) years. challenges;
disbursements in pipeline, COMs OLPM has always been
portfolio proceeding towards OLPM avails long term finance advocating the need for enhance
maturity considering respective facilities from Islamic banks and sustainability and ESG related
reinvestment probabilities, bank Islamic windows of conventional initiatives. Since decades, we
financings repayments, available banks to reduce contractual maturity have only been doing business
drawing limits of banking lines, status mismatch and holds substantial with clients that come up to the
of processing of new banking lines unutilized financing facilities from required high standards of
and other major operational cash Islamic Banks with the help of which OLPMs ESRAT checklist.
flows falling due. In addition, ALCO OLPM manages the remaining Furthermore recently, OLPM has
sets guidelines for Maximum mismatch. formed a senior level
Cumulative Outflows (MCO), and management committee to
Medium Term Funding Ratio (MTFR). The capabilities and resources of solely take care the ESG and
The same is monitored regularly. the modaraba that provide sustainability initiatives. Besides
Accordingly, Balance Sheet position, sustainable competitive that a Board level “ ESG
Assets-liabilities gap/maturity advantage, resulting in value committee “ has/ is also being
mismatch and funding profile are creation by the modaraba. formed.
operationally managed in ensuring
that liquidity remains adequate and OLP Modaraba being the Pakistan’s c) Resource shortages
Balance sheet continues to be well Premier Islamic financial institution OLPM has always believed in
funded with focus on the targets and has a strong legacy of over 37 years investing in resource-saving
guidelines set under Board's for offering Islamic financial solutions technology and training its
approved Annual Financial Plan as to corporate, high and mid-tier SME’s employees to bridge the skill gap
overall financial strategy. and consumer market. The modaraba for efficient and productive
has its presence in major cities of working styles
Pakistan like Karachi, Islamabad and
www.olpmodaraba.com

Strategy Risk &

and Resource Governance
62 Allocation Opportunities
Risk &

ANNUAL REPORT 2024

Opportunities 63
 1 Key risks and opportunities Primarily non availability of funds shall result in initially
(internal and external) effecting reduction and ultimately of business and market share. Funds
www.olpmodaraba.com

availability, quality and being used for business development shall be priced at a level
affordability of Capitals. where OLP Modaraba can make enough spread over and
above which delivers value and benefit for Modaraba
certificate holders.

OLPMs overall liabilities include substantial long term bank

borrowing lines and an ever-increasing pool of a Certificate of
64 Musharika depositors. Alongside the equity base, the
long-term bank lines and continuous inflow of COMs ensures
availability of high quality and affordable capital.

2 A Statement from Board for OLPM maintains a high level of risk management policies and
determining the Company's level procedures. There is a detailed Risk Management Framework
of risk tolerance by establishing approved by the Board of Directors which governs all business
risk management policies. areas ensuring each activity being carried out in the Modaraba
remains covered in terms of all risks.

There is a multiple layered risk handling capability which

delivers smooth business operations, including various
committees like Board Risk Committee (BRC) MANCO, Country
Operation Risk Committee (CORC).

3 The company has carried out a At OLPM a continuous assessment covering all possible areas
robust assessment of the principal of risks just to give an example few are described below:
risks facing the company,
including those that would Availability of funds: A monthly senior level ALCO is carried
threaten the business model, out wherein threadbare analysis and discussion takes place
future performance and solvency ensuring that affordable long-term funds are available as
or liquidity. required for timely disbursements.

Default risk: Being a Financial Institutions involved in lending

business, timely recovery of all repayments from all clients is of
prime importance. To ensure that there are minimal overdues/
defaults early alert and SAM Committees on a monthly basis,
discuss and evaluate all situation where there are overdues or
other reasons which could result in a default.

Overdue meetings with business teams from all regions are

carried out 1-2 times a week where every client, even delayed
by 2-3 days is discussed in detail and senior team members
from client relationships and risk management take follow
ups and updates on the previously agreed recovery related
actual action plans as well as provide a continuing guidance as
to how various different client with different situations
should be handled.

The above measure has thus far resulted in OLPM maintaining

an excellent recovery rate and very low NPLs.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Human capital risk: We continuously add relevant and

experienced human resource to our teams and provide them

ANNUAL REPORT 2024

with excellent opportunities to learns and grow. this
alongside a very attrition rate are a testament to OLPMs vision
of retaining its teams and keeping the human capital risk at a
minimum.

Government policies: Though this aspect remains a

challenge, however, continuous monitoring of the overall
fiscal environment through senior level committees such as 65
MANCO, Principals committee etc OLPM ensures that there
are no or minimum possibilities of exposure to risk due to
government policies.

4 Risk Management Framework A full-fledged risk management framework has been

covering principal risk and approved by the BOD which covers all areas pertaining to
uncertainties facing the company Regulatory risk, Credit risk, Operational risk, Liquidity risk,
risk methodology, risk appetite Human capital risk, Technology risk etc.
and risk reporting

5 Specific steps being taken to OLPM continuously gauges possibilities where a rate
mitigate or manage key risks or to negotiation with a client could be used for increasing our
create value from key spreads, considering any regulatory or other change in the
opportunities by identifying the environment. an example could be when banks stop financing
associated strategic objectives, imported vehicles of greater than PKR 2.5 Million OLPM using
strategies, plans, policies, targets this as an Opportunities booked substantial business at
and KPIs. higher rates.

6 Disclosure of a risk of supply chain Due to robust risk management frameworks and ongoing
disruption due to an ESG incident senior level committee interactions, thus far no such
and company's strategy. disruption related incident has occurred.
www.olpmodaraba.com

Risk &
Opportunities
Governance Sustainability
66
 Governance

ANNUAL REPORT 2024

67
 Review Mr. Naveed

Report
www.olpmodaraba.com

Kamran Baloch
Chairman

It gives me immense pleasure to

present this review report on the
overall performance of OLP Modaraba
(OLPM) and the effectiveness of the
Board in attaining its business
68 objectives for the year 2023-24. As
the new Chairman of the Board, my
basic endeavor will be to ensure
adherence to the Corporate
Governance Regulatory framework
and to lead the Board of Directors in
effectively managing the Modaraba’s
strategic direction, whilst
safeguarding the interests of its
stakeholders.

Year 2023-2024 for Pakistan:

Following the implementation of the

IMF $3 billion Standby Arrangement
(SBA), the economy has started to
stabilize. Support from other
multilateral and bilateral sources
played a crucial role in increasing the
SBP official reserves from a level of
$4.4bn to $9. 4bn. Currently, a staff
level agreement has been reached on
a $7 billion bailout package under the
IMF’s Extended Fund Facility (EFF)
program. This progress follows the
Federal Government's agreement on
all prerequisites, including electricity
tariff hikes, budgetary adjustments,
and the broadening of taxation.

GDP growth rate stood at 2.3%.

Agriculture emerged as the main
driver of economic growth, registering
a growth of 6.3%. The agriculture
sector's recovery is mainly attributed
to government initiatives through
improved input supply and increased
credit disbursement to farmers. Large
Scale Manufacturing (LSM) growth
became moderately positive mainly
due to import restriction. Going
forward, the Government has set a
GDP growth target of 3.5% for FY25.

The average inflation for FY24 clocked

in at 23.9%, down from 29% in the
previous year. Notably, the average
 ANNUAL REPORT 2024
monthly CPI decreased to of Pakistan, Certificates of Credit Rating:
approximately 0.5% in the second half Achievement in categories of
of FY24, compared to around 2% in ‘Collaboration & Partnership’ and The Pakistan Credit Rating Agency
the first half. This resulted in the SBP ‘Business Practices’ at the Corporate Limited (PACRA) has maintained the
beginning a monetary easing cycle Social Responsibility Awards and the ratings of OLP Modaraba as AA (Double
with 150 basis points reduction in the FPCCI’s “Annual Environment A) and A1+ (A one plus) for long-term
policy rate in its meeting held in June Excellence Award” are some of the and short- term respectively. These
2024. Further monetary easing is awards won by OLPM this year. ratings reflect a very high credit
expected going forward to keep The Review of Board and its Functions: quality and a very low expectation of 69
inflationary expectations I would like to report that the Board of credit risk. It indicates a very strong
well-anchored and to support the Directors has performed its duties and capacity for timely payment of
sustainable economic recovery in responsibilities diligently and has financial commitments. This capacity
FY2025 made positive contributions in guiding is not significantly vulnerable to
the Modaraba in its strategic affairs. In foreseeable events in the long-term
Year 2023-2024 for OLP today’s volatile macroeconomic rating and the highest capacity for
Modaraba (OLPM): environment, it has focused on major timely repayment for the short-term
risk areas and remained involved in the rating.
Our performance has shown strategic planning process of the
sustainable growth creating value for Modaraba. The Board recognizes that Acknowledgement:
certificate holders in terms of well defined corporate governance
profitability and dividend distribution processes are important to preserve Finally, I would like to thank all our
during the year ended June 30, 2024. and enhance stakeholder value. All Board Members for their commitment
OLPM’s team has performed Directors, including Independent and contribution in the overall
exceptionally well in key business Directors, fully participated and performance of Modaraba and to the
segments. Total disbursement during contributed to the decision-making certificate holders for their trust in the
the year touched PKR. 3.198 billion process of the Board. The Board also Board and the management.
which is 14.95 % higher than last year. carried out its annual self-evaluation I would also like to thank the SECP for
The size of balance sheet has also in line with the requirements of the its valued guidance and support during
reached PKR. 7,738 billion as Code of Corporate Governance. last year.
compared to last year PKR. 6.825
billion which reflects a growth of New Board Members I would also like to thank our
13.39%. Profit before taxation employees for their hard work in the
increased by 22.85% from PKR 182.22 Mr. Nadim D. Khan was appointed as a year ended June 30, 2024 and I look
million last year to PKR 223.86 million Director on December 06, 2023. He forward to continue working with
in the current year and the Net profit replaced Ms. Aseya Qasim who them to attain success in 2025.
for the year increased by 22.48% from resigned from her position. On behalf
PKR 128.78 million to PKR 157.74 of the Board, I would like to thank Ms.
million. I take special pride in Aseya Qasim for her valuable
communicating that the Modaraba this contribution and extend a warm
year achieved the highest ever welcome to Mr. Nadim D. Khan on Naveed Kamran Baloch
balance/ amount of total assets, profit joining the board. Chairman
before taxation and Certificate of
Musharika Portfolio. On August 06, 2024, I was appointed Karachi September 14, 2024
as a member of the Board replacing Mr.
Awards and Recognition: Shaheen Amin who served the board
of Modaraba Management Company
It is a great source of satisfaction that since the acquisition of the entity by
the OLPM’s team constant the ORIX group in June 2016. On behalf
commitment to corporate excellence of the Board, I would like to thank Mr.
has not only established OLPM as the Amin and appreciate his valuable
clear thought leader in the Modaraba contribution towards the success of
sector but has also earned the the Modaraba. During his leadership of
Modaraba recognition at both national the board, Modaraba went from
and international level. The “Corporate strength to strength and achieved all
Excellence Award” in the Modaraba its corporate goals.
Sector from Management Association
70
www.olpmodaraba.com
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

71
 Forty-First Report of the Directors of
Modaraba Company
www.olpmodaraba.com

For the year ended June 30, 2024

1. Economy Progressing through the ‘year of disinflation’ on

favourable base effect from last year’s, the Monetary
72 Pakistan's economy started FY2025 with positive Policy Committee of the State Bank of Pakistan has
developments, setting a positive tone for the months released its most aggressive cut in the key policy rate
ahead. The current account posted a surplus of $75 by reducing it by 200bps to bringing it down to 17.5%
million in August 2024, turning around from a $152 amid slowing inflation and declining international oil
million deficit reported in August 2023. This prices.
improvement is primarily attributed to an increase in
remittances, which surged by 40% year-on-year to The outstanding issues with IMF for reaching the staff
$2.9 billion in August. This surge helped diminish the level agreement with IMF on a 37- month Extended
current account deficit for the first two months of Fund Facility Arrangement (EFF) for $7 billion have
fiscal year 2025 (2MFY25) to $171 million, an 81% also been resolved. The new 37-month IMF deal
decrease from the $893 million deficit recorded during approval promises to bring stability in the short term
the same period in the previous year. The Exports also and if coupled with strategic reforms will create
reached $6.12 billion over 2MFY25, while imports sustainability in the country’s economic outlook.
stood at $11.26 billion in the same period.

Pakistan’s Sep-2024 CPI is also expected to clock in

close to 7.5% - lowest in almost 4 years (since
Jan-2021), despite a slight MoM uptick. The inflation
reading has also comeback into a single digit figure
after three years. The country’s foreign exchange
reserves have approximately doubled since June 2023,
though they still fall short of what is needed to meet its
external financing requirements.

The Board of Directors of

OLP Services Pakistan
(Private) Limited (OSPL), the
Management Company of
OLP Modaraba (OLPM), is
pleased to present the
forty-first Directors' report
of OLPM, together with
audited financial statements
and auditors’ report thereon
for the year ended June 30,
2024.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

2. Operating Results and Business Overview

ANNUAL REPORT 2024

June 30, June 30,
2024 2023
---------------- (Rupees) ---------------
Balance Sheet

Certificate capital 453,835 453,835

Total equity 1,243,593 1,176,623
Investment in Ijarah finance and Ijarah Assets 1,273,938 1,627,562 73
Investments in Diminishing Musharika 5,284,579 4,269,916
Redeemable capital 4,287,535 2,896,605
Total assets 7,738,335 6,824,579

Profit and Loss

Revenue (net of Ijarah assets depreciation) 1,643,245 1,280,969

Financial charges 1,090,503 825,518
(Provisions/ impairment) / reversal of
provisions/ impairment-net (14,869) 6,496
Operating expenses 274,851 243,657
Profit before management fee 263,022 218,291
Profit before levy and taxation 228,634 186,434
Net profit 157,737 128,784

Appropriations

Net profit for the year 157,737 128,784

Add: Unappropriated profit brought forward 53,132 21,554
Profit available for appropriation 210,869 150,338

Profit distribution @ 20% (2023 @ 20%) 90,767 90,767

Statutory reserve - 6,439
90,767 97,206
Unappropriated profit carried forward 120,102 53,132
Earnings per certificate 3.48 2.84
 By the Grace of Allah, your part of their benefits and OLP Modaraba manages and
Modaraba’s performance during the compensation package instead of monitors risk exposure very
year under review continued to be the previous practice of financing at prudently. The evaluation of
www.olpmodaraba.com

very strong. The gross revenue (net Market rates and subsidy borrower’s credit profile including
of Ijarah assets depreciation and allowances being paid. repayment ability is made at the
including other income) increased time of grant of facility and regular
by 28.28% from PKR 1,280.97 The portfolio of Ijarah finance, short oversight thereon. Further, there
million to PKR 1,643.25 million term investments and diminishing are Portfolio Management and Early
compared to the corresponding last Musharika finances stood at PKR Alert committees which are
year. The main reason behind this 6,909.44 million compared to PKR responsible to ensure portfolio
was the increase in the benchmark 6,021.34 million as at June 30, 2023, monitoring and timely alerts for
74
rate and increased amount of new showing an increase of 14.75%. possible untoward scenarios.
financing compared on a Total assets increased by 13.39%
year-on-year basis. Our challenge from PKR 6,824.58 million to PKR. 3. Sustainability
during this period was the rapid and 7,738.34 million compared to last
large movement of the KIBOR rate year. During last year, the Modaraba Sustainability is at the core of all of
which promoted immediate also booked fresh disbursements to our operations and business plans.
increase in deposit rates and the tune of PKR 3,198 million Ensuring that the certificate holders
financial charges but which compared to last year’s get risk adjusted returns on their
translated into asset repricing with disbursements of PKR 2,782 million. investments, the Modaraba remains
a lag. Financial charges increased by resilient and with long term
32.10% from PKR 825.52 million to On the liability side the Certificates profitability, going beyond the
PKR 1,090.50 million compared to of Musharika (COMs) have increased minimum legal requirements to
the corresponding period last year. by 48.02% from PKR 2,897 million reduce environment footprint and
Despite the risk of increase in to PKR 4,288 million whereas bank understanding the company’s
infection due to the high discount financing decreased by 25.34% impact on nature and society, taking
rate, there is only a net from PKR 1,650 million to PKR 1,232 care of our employees and making
provision/impairment of PKR 14.87 million as compared to the last year. investment and resource allocation
million primarily due to pro-actively Although the majority of the COMs decisions which preserve and create
managing the portfolio. Some are maturing within the next 12 value for the company, are major
stressed clients were subjectively months, their behavioral maturity is factors in the way we operate. We
downgraded, where it was thought more than 12 months as majority of are committed to reducing our
prudent to provide against. High our COMs customers reinvest their carbon footprint and ensuring that
the clients we finance do not have
inflation rate during the year funds after maturity.
an adverse impact on the
prompted an increase in
environment. In addition to this we
administrative and operating This year your Modaraba has
are also involved in supporting both
expenses which increased by achieved three land marks. Its total
health care and education, specially
12.80% from PKR 243.66 million to assets, profit before taxation and
for the differently abled segments
PKR. 274.85 million. Profit before balance of COMs (total COMs as well
of society.
management company’s as retail COMs) have recorded
remuneration however increased highest ever balance/amount since
by 20.49% from PKR 218.29 million inception of the Modaraba (37 years
to PKR 263.02 million. Profit before of history). This was mainly due to
levy and taxation also increased by your confidence in your Modaraba
22.64% from PKR 186.43 million to and its management team and
PKR 228.63 million as compared to guidance and support of the Board
last year. Resultantly, net profit for of directors and regulators.
the year increased by 22.48% from
PKR 128.78 million to PKR 157.74 The business has been driven
million. mainly by deepening relationships
with selective clientele and
During the period under review, the initiating relationships with good
Modaraba also changed its policies names. The asset portfolio has a
related to staff finances to show a good mix of multi-nationals, large
realistic employee cost. Staff are and medium sized local corporate
now financed at subsidized rates a and selective SME relationships.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

4. Pattern of Shareholding

The Modaraba certificates are

ANNUAL REPORT 2024

traded on the Pakistan Stock
Exchange Limited. The certificate
holding information as of June 30,
2024 is provided in the relevant
section of the annual report. The
Directors, CEO, CFO/ Company
Secretary, Head of Internal Audit
and their spouses/ minor children
75
did not carry out any transaction in
the certificates of Modaraba during
the year, except already disclosed to
the regulatory bodies and included
in the pattern of shareholding.

5. Profit Distribution

The Board in its meeting held on

September 14, 2024 has approved
the distribution of profit of PKR.
2.00 (20%) per certificate of Rs.10
each, subject to deduction of zakat
and tax at source where applicable,
for the year ended June 30, 2024.

6. Corporate and Financial

Reporting Framework

• The financial statements,

prepared by the
management of the
Modaraba, present fairly its
state of affairs, the result of
its operations, cash flows and
changes in equity.

• Proper books of accounts of

the Modaraba have been
maintained.

• Appropriate accounting
policies have been
consistently applied in
preparation of financial
statements, Accounting
estimates used are based on
reasonable and prudent
judgment.
 • International Financial Reporting Standards, as applicable to Modarabas in Pakistan, have been followed in
preparation of financial statements and any departures there from have been adequately disclosed.
www.olpmodaraba.com

• The system of internal control, which is in place is sound in design and has been effectively implemented
and monitored.

• There is no doubt upon the Modaraba’s ability to continue as a going concern.

• There has been no material departure from the best practices of corporate governance, as detailed in the
listing regulations.

76 • Key operating and financial data for the last six years in summarized form is included in this annual report.

• There are no statutory payments on account of taxes, duties, levies and charges which are outstanding as
on June 30, 2024, except for those disclosed in the financial statements.

7. The Board of Directors’ Meetings and Attendance

During the year, five (05) meetings of the Board of Directors were held. No Board meeting was held outside
Pakistan. Attendance by each director was as follows:

No. of Meetings
Name of Director
Attended

Shaheen Amin 04
Raheel Qamar Ahmad 05
Ramon Alfrey 05
Mian Faysal Riaz 05
Nausherwan Adil 05
Nadim D. Khan 02
Aseya Qasim 03
Naila Hasa 05

During the year, five (05) meetings of the Audit Committee were held. Attendance by each member was as
follows:

No. of Meetings
Name of Member
Attended

Mr. Nausherwan Adil - Chairman 05

Mian Faysal Riaz 05
Mr. Ramon Alfrey 05

During the year two (02) meetings were held by Human Resource and Remuneration Committee to finalize the
revision in staff benefits and recommendation for the yearly staff compensation amounts which was attended
by all members at that time.

Name of Member No. of Meetings Attended

Ms. Naila Hasan - Chairperson 02
Mr. Shaheen Amin 02
Mr. Raheel Qamar Ahmad 02
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

During the year, one meeting was held by Board Risk Committee which was attended by all members at that time

Name of Member No. of Meetings Attended

ANNUAL REPORT 2024

Mian Faysal Riaz - Chairman 01
Mr. Raheel Qamar Ahmad 01
Mr. Nausherwan Adil 01

8. Current Structure of Board and its Committees

The total number of directors are 07 as per the following, -

a. Male: 06 77

b. Female: 01

The composition of the board and its committees are as follows:

Names of Board Member in Category

Members Committees

Mr. Naveed Kamran Baloch* Chairman

Independent Directors
Mr. Nausherwan Adil Chairman Audit and Member Risk
Committee

Ms. Naila Hasan Chairperson HR&R Committee Female Independent

Directors

Mr. Raheel Q. Ahmad Member Risk, HR&R Committee Executive Director

Mr. Ramon Alfrey** Member Audit Committee and Member

HR&R Committee
Non-Executive Directors
Mian Faysal Riaz Chairman Risk Committee and Member
Audit Committee

Mr. Nadim D. Khan***

* Subsequent to year end on August 06, 2024, Mr. Shaheen Amin resigned as a member and chairman of the Board of
directors. Mr. Naveed Kamran Baloch was appointed as director of the company subject to regulatory approval. The
Registrar Modaraba approved his appointment through SECP letter dated September 11, 2024. The Board wishes to
place on record its appreciation and gratitude for the valuable contributions made by Mr. Amin and extends a warm
welcome and cooperation to the newly appointed director in performing his fiduciary responsibility.

** Mr. Ramon Alfrey was appointed as member of HR&R Committee on September 3, 2024 after resignation of Mr.
Shaheen Amin.

*** On December 06, 2023, Mr. Nadim D. Khan joined the board in place of Ms. Aseya Qasim. The Board wishes to place
on record its appreciation and gratitude for the valuable contributions made to the outgoing director and extends a
warm welcome and cooperation to the newly appointed director in performing his fiduciary responsibility.

In accordance with the Regulation 7 of Listed Companies Code of Corporate Governance 2019, Ms. Naila Hasan was
appointed as the female director.
 The remuneration of the Executive OLP Modaraba also focuses on its extended its support to following
Directors and Independent employee’s wellbeing and safety. charitable and non-profit
Directors were paid by Modaraba As a result, it organizes various organizations during the year
www.olpmodaraba.com

management Company. activities throughout the year ended June 30, 2024:
including sessions on breast cancer
All seven directors have completed awareness, medical camps, a blood • The Patients' Behbud Society
their training under the Director donation drive, and a wellness for AKUH;
Training Program. week. Visits to museums and • Layton Rahmatulla
national monuments are also Benevolent Trust Hospital
9. Management Committee organized during the year. (LRBT);
• Behbud Association Karachi;
78
The Management Committee OLP Modaraba’s volunteering • Professional Education
comprises of Seven (07) senior activities include tree plantation, Network; and
members and the Managing beach cleaning, and visits to • Family Educational Services
Director, who meet and discuss differently abled schools. Foundation (FESF).
major business plans, issues and
progress updates of their This year our staff volunteered at;
respective functions. Major matters
are then put forth to the Board for • Deaf reach school and college;
consideration and approvals. and
• Layton Rahmatulla
10. Social Responsibility Benevolent Trust Hospital
(LRBT).
OLPM is committed for conducting
business responsibly and investing OLPM maintains its dedication to
in communities for their environmental protection, 11. Our People
sustainable development. conservation, and carbon emissions
Corporate Social Responsibility is, reduction. In alignment with this People at OLP Modaraba are crucial
therefore, an integral part of commitment, OLPM observes one to the delivery of its sustainable
OLPM’s ways of working. At OLPM, hour of Earth time across all its business model. In our continuous
we believe in building long-term offices to promote energy drive to make OLPM a great place to
relationships with neighboring conservation. Notable efforts work, focus is on attracting the best
communities, stakeholders and towards a paperless environment talent across our footprint and
embrace transparency in all work and the use of appropriate employee engagement. At OLP
processes. Detailed policies and technologies have led to reduced Modaraba we believe high
procedures are in place to enable us carbon emissions and increased performance is not just about
to meet the legal, ethical, cost efficiency. We have embedded generating high profits; it is about
commercial and public expectations Environmental and Social Risk living our values. This year an
of the communities in which we Assessment in our products and In-house wellness week was
operate. services we offer to our clients. All arranged for the staff to promotes a
activities of clients must comply healthier work-life balance and
At OLPM we have multiple with our environmental and social improve their emotional, mental or
committees on different initiatives risk policies and an Environmental physical wellbeing. The course of
related to Corporate Social and Social Risk Assessment is the week comprises of Nutritional
Responsibility, Health and Safety, performed for all our corporate Hour, Literacy Hour, Meditation
Resource Utilization and welfare of clients. Session, Environmental & Social
the staff and the society as a whole. Hour and Physical Hour.
These committees include OLPM continues to provide financial
Corporate Social Responsibility and assistance to various charitable and The Board places on record its
Environment Committee, Carbon non-profit organizations. We appreciation of the services
Reduction Initiative, Volunteering supported a range of fund-raising rendered by the staff members
Committee, Well-Being Committee, events and projects, which focused responsible for Modaraba affairs.
and Support/ Initiative Committee primarily on children’s health and Modaraba’s record of achievements
for Social Welfare. education in under privileged would not have been possible
members of society. OLPM without the efforts of every
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

employee. It is indeed the in our practices. In order to protect disclosure of such information
dedication and hard work of each an environment which is a global within and outside of the
one of them that has brought OLPM cause, we have formed a “Carbon Modaraba. All disclosures of any

ANNUAL REPORT 2024

to where it stands now. We will Footprint Reduction Committee”. information comply with all
continue to invest in our Human We through our carbon committee applicable laws & regulations,
Resources. continuously strive and find new including Shariah governance,
ways to reduce carbon emissions ensure the highest level of
and to implement that business governance.
practices which are
environmentally friendly. The 15. External Annual Audit
79
Modaraba strongly discourages
un-necessary or wasteful use of The financial statements of OLPM
resources and encourages have been audited along with the
re-cycling for internal office use. review of Statement of
Compliance with the requirements
12. Equal Opportunities of Listed Companies Code of
Employer Corporate Governance 2019,
without any qualification by the
OLPM is an equal Opportunities auditors namely M/s A. F. Ferguson
employer and does not & Co., Chartered Accountants.
discriminate on the basis of
gender, language, race, religion
and disability. In compliance with
all legal requirements OLPM
appoints special persons. The 14. Consumer Protection and
responsibility of HR is to ensure Anti-Corruption Measures
transparency in its recruitment
and compensation on the basis of Business ethics, anti-corruption
merit, experience and and customer confidentiality 16. Auditors
qualification. protection measures are taken
seriously at OLPM as we believe, On the recommendation of Audit
We specially encourage minorities, that ethics of employees play a Committee, the Board has
ladies and differently abled vital role in the development of approved the appointment of the
individuals to apply for each role in institutional reputation and Messrs. KPMG Taseer Hadi & Co.,
our recruitment process. Through sustainability. On one hand our Chartered Accountants, as
this OLPM aligns with the country's relationship with customers relies auditors for the year ending June
emphasis on gender equality and on mutual trust, and to retain this 30, 2025 at a fee mutually agreed
women's empowerment. trust we set out customer’s with the auditors and subject to
interest first, while ensuring to approval by the Registrar of
provide highest standard of Modaraba Companies and
service, treating all customers Modarabas.
fairly with transparency and
responsibility. Whilst on the other
hand our processes are such that
ensure that trust is not violated.
Adherence to a policy on Anti
Bribery and Corruption (ABC), for
13. Environmental Protection which the employees are trained
Measures regularly and provision of
information is granted on
At OLPM, it is our resolve to ensure need-to-know basis only, with
sustainability in our portfolio and adequate procedures for further
 17. Awards 21. Acknowledgment
www.olpmodaraba.com

During the period from last annual The Board would like to thank the
Directors’ Report, your Modaraba SECP for its continued guidance
has been rewarded with: and support.

• Best Corporate Excellence The Board would also like to thank

Award” in Modaraba Sector its valued customers and investors
from Management 19. Value of Investment of for their continued trust and
Association of Pakistan in its Provident, Gratuity Funds support.
80
38th Corporate Excellence
Award Ceremony; The Modaraba maintains
• Best Business Practices and retirement benefit plans for its
Karachi: September 14, 2024
Best Sustainability Initiatives employees. These funds are
award presented by mainly invested in Collective
professional network and Investment Schemes of renowned
• Annual Environment Asset management Companies.
Excellence Award received Currently, we have invested PKR
Raheel Qamar Ahmad Ramon Alfrey
from FPCCI. 25 million and PKR 20 million each Managing Director/ CEO Director
from Provident and Gratuity fund
respectively. The bank balance
and investment value of staff
retirement benefit funds based on
their respective un-audited
accounts as at June 30, 2024 are as
follows:

Provident Fund
PKR 59.393 million
.
Gratuity Fund
PKR 58.178 million
18. Entity Ratings

The Pakistan Credit Rating Agency

Limited (PACRA) has maintained
the ratings of OLP Modaraba as AA
(Double A) and A1+ (A one plus) for
long-term and short-term
respectively. These ratings
indicate low expectation of credit
risk and exceptionally strong 20. Subsequent Events
capacity for timely payment of
financial commitments. No material changes or
commitments affecting the
financial position of the company
have occurred between the end of
the financial year of the company
and the date of this report.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

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Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

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 www.olpmodaraba.com

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Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

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 www.olpmodaraba.com

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Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

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Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

The Chairman and

CEO Role

ANNUAL REPORT 2024

Chairman:

The principal role of the Chairman of the Board is to manage and to provide leadership to the Board of
Directors of the Modaraba. He is responsible for the management of the Board in all respects in the most
89
efficient and competent manner. This involves (but not limited to) the responsibility to

• Responsible for the composition and capability of the Board;

• Responsible for the effective leadership and governance of the Board;
• Ensures Board and Committee meetings are used effectively by focusing on key areas and promoting a
culture of openness and healthy debate;
• Maintains regular contact with the Chief Executive providing advice, counsel and support to the Chief
Executive as and when appropriate;
• Works with the Chief Executive and Company Secretary to establish the Board’s 12-month rolling
agenda; and
• Leads assessment of the effectiveness of the Board and each Director.

Chief Executive:

The CEO is responsible for putting the strategy defined by the Board into practice and managing the
Modaraba’s operations. He is the ultimate responsible for all day-to-day management decisions and for
implementing the Modaraba’s long and short term goals and plans. The main responsibilities are as follows:

• Responsible for providing effective leadership to the Modaraba Team;

• Identification and analysis of strategic options

for growth in shareholder value;

• Implementation of operating plans and budgets

required to deliver the agreed strategy;

A clear division of responsibilities is

important for the effective working of the
Board and to ensure that no one
individual has unfettered power of
decision. The Chairman and Chief
Executive work together to provide
effective and complementary
stewardship. The Chief Executive
operates within clearly defined limits of
authority delegated by the Board and any
matters outside these limits are referred
to the Board for consideration.
 • Works closely with the Chief Financial Officer to ensure that the Modaraba has in place an appropriate
capital structure, risk management and internal control processes;
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• Review and implementation of HR Policies and Succession Planning of the Modaraba Staff to enable it to
achieve the approved strategy;

• Represent the industry as thought leader at different fora with the regulators i.e. SECP on a regular
basis;

• Setting the ethical tone in providing ethical leadership and creating an ethical environment;
90

• Works closely with the Modaraba Team to ensure that the Modaraba maintains effective relationships
and communications with stakeholders of the Modaraba; and

• Responsible for delivery of ongoing operational performance against targets and continuous
improvement in performance on safety and sustainability.

Composition of Board Committees

The Board of Directors comprises of seven (07) Directors out of which six (06) are Non-Executive including
two (02) are Independent Directors. The Chairman of the Board is a Non-Executive Director. The roles of
Chairman and the CEO have been segregated and responsibilities have been clearly defined. The CEO is
responsible for operations of the Modaraba, whereas the Board, under the Chairman, performs oversight.

The Board has established following committees:

1) Board Audit Committee ;

2) Human Resource & Remuneration (HR&R) Committee ; and
3) Board Risk Committee.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Board Audit Committee

ANNUAL REPORT 2024

1. The responsibilities of the Audit Commitee are to review, monitor and recommend for approval the
statutory accounts of the Company, published financial statements of Modaraba for issuance to its
certificate holders and other stakeholders including Stock Exchange and regulatory authorities,
including appropriateness and completeness of significant financial reporting judgements contained in
them. In particular:

(a) to consider the quality, application and acceptability of the accounting policies and practices, the
adequacy of accounting records and financial and governance reporting disclosures and changes
91
thereto;

(b) to consider recommendations of management in respect of provisions for bad and doubtful debts
and for any other provisions for losses and charges;

(c) significant adjustments resulting from the audit;

(d) going concern assumption;

(e) any changes in accounting policies and practices;

(f) compliance with applicable accounting standards;

(g) compliance with these regulations and other statutory and regulatory requirements; and

(h) all related party transactions;

2. to keep under review the appropriateness of the accounting policies and to consider changes to these;

3. to review the preliminary announcements of results prior to external communication and publication;

4. to ascertain that the internal control systems including financial and operational controls, accounting
systems for timely and appropriate recording of purchases and sales, receipts and payments, assets and
liabilities and the reporting structure are adequate and effective;

5. to review of the company's statement on internal control systems prior to endorsement by the board of
directors and internal audit reports;

6. to institute special projects, value for money studies or other investigations on any matter specified by
the board of directors, in consultation with the chief executive officer and to consider remittance of any
matter to the external auditors or to any other external body;

7. to review of arrangement for staff and management to report to audit committee in confidence,
concerns, if any, about actual or potential improprieties in financial and other matters and recommend
instituting remedial and mitigating measures;

8. to review details of all related party transactions (than those involving Directors which will be placed
before Board of Directors) and recommend the same to Board of Directors for review and approval.

9. in relation to the accounting and financial reporting function:

(a) to ensure that the accounting and financial reporting function is adequately resourced; and
 (b) to review the qualifications and experience of reporting accountants appointed and their training
programmes and budget;
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10. in relation to the internal audit function:

(a) to review the scope and extent of internal audit, audit plan, reporting framework and procedures
and ensuring that the internal audit function has adequate resources and is appropriately placed;

(b) to review and monitor management’s responsiveness to the internal auditor’s findings and
recommendations;
92

(c) to monitor and assess the role and effectiveness of the internal audit function and to receive
reports from the Head of Internal Audit on these matters;

(d) to consider major findings of internal investigations of activities characterized by fraud, corruption
and abuse of power and management's response thereto; and

(e) to consider the appointment, resignation or removal of the Head of Internal Audit;

11. in relation to the external auditors:

(a) to consider and make recommendations to the Board, on their appointment, re-appointment,
resignation or removal which will be put to shareholders for approval in general meeting and in the
case of Modaraba, for approval in the meeting of the Board;

(b) to approve the terms of engagement or delegate the same for approval by the CEO, nature and
scope of their audit and the effectiveness of the audit process;

(c) to review any representation letter(s) requested by the external auditor before they are signed by
management or delegate this matter to the CEO;

(d) to review the management letter and management’s response to the auditor’s findings and
recommendations;

(e) to review the independence and objectivity of the external auditors and to develop and implement
policy on the engagement of the external auditor to supply non-audit services, taking into account
relevant ethical guidance regarding the provision of non-audit services by the external audit firm;

(f) agree the adequacy of the employment with Modaraba of former employees of the external
auditor;

(g) to ensure coordination between the internal and external auditors;

(h) to review the findings of their audit including any major issues that arose during the course of the
audit that have subsequently been resolved and any unresolved audit issues. To consider key
accounting and audit judgements, the level of errors identified during the audit, obtain
explanations from management and, where necessary, the external auditors as to why audit
differences remain unadjusted; and

(i) to review and monitor the cost effectiveness of the audit taking into consideration relevant
professional and regulatory requirements and to recommend the approval of audit fee and the
provision of any service permissible to be rendered to the Modaraba by the external auditors in
addition to audit of its financial statements, measures for redressal and rectification of
non-compliances with the Regulations;
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

12. to consider the adequacy of disclosures in the annual report including:

ANNUAL REPORT 2024

(a) the role of the Committee, its activities and how it has discharged its responsibilities, membership
of the Committee, number of Committee meetings, attendance over the course of the year and
whether or not external advice was taken and its source;

(b) the explanation in the annual report on how auditors’ independence and objectivity has been
safeguarded in the event of the external auditors providing non-audit services, if required under
the local laws;

93
(c) any findings and other matters arising from the external auditors’ half yearly and final audits;

13. to consider the annual report and discuss any findings and other matters arising from the external
auditors’ interim and final audits;

14. to determine appropriate measures to safeguard the company’s assets;

15. to review arrangements by which staff may, in confidence, raise concerns about possible improprieties
in matters of financial reporting or other matters. The Committee shall ensure that arrangements are in
place for the proportionate and independent investigation of such matters and for appropriate
follow-up action;

16. to consider reports, review and approve impairment provisioning on a case to case basis;

17. to review reports from the Head of Compliance and Assurance on the arrangements established by
management for ensuring adherence to internal compliance policies, procedures and codes and
relevant regulatory and legal requirements and identification of significant violations thereof;

18. to report to the Board on its consideration of the above matters, identifying those areas where action or
improvement is needed, and making recommendations as appropriate;

19. generally to consider and examine such other matters as the Board requires, the Committee considers
appropriate, or which are brought to its attention, and to make recommendations or reports to the
Board as appropriate;

20. to report any unresolved issues between the Committee and the Board as part of its disclosure on its
responsibilities in the annual report;

21. for the Chairman of the Committee to attend the Annual Review Meeting of Modaraba and answer any
questions, through the Chairman of the Board, on the Committee’s activities and its responsibilities;

22. to give due consideration to laws, regulations and the requirements of the Code of Corporate
Governance and Listing Rules as appropriate;

23. to review these Terms of Reference once in three years and recommend any changes to it.

Human Resource & Remuneration (HR&R) Committee:

The Committee shall maintain high levels of good governance on all remuneration related matters, in line
with prevailing international best practice (such as the Financial Stability Board principles on
compensation), as well as any specific regulatory directives in Pakistan.
 The Committee shall:
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1. Recommend Human Resources related policies to the OSPL Board, to the extent required.

2. Recommend to the board for consideration and approval a policy framework for determining
remuneration of directors (both executive and non-executive directors and members of senior
management).

3. Make recommendations to the OSPL Board on the selection, evaluation and compensation (including
salary, performance award and end of service benefits) of, Chief Financial Officer, Head of Internal
94
Audit, and Company Secretary.

4. Review and recommend selection, evaluation, compensation (including performance ratings, pay,
performance awards and end of service benefits) and succession planning of the CEO recommended by
his / her line manager.

5. Ensure that Committee members do not participate in discussions or be a part of approvals pertaining to
their own remuneration.

6. Review the ongoing appropriateness and relevance of remuneration related policies, ensuring that they
are consistent with effective risk management.

7. Review the terms of reference of the Committee at least every three years and propose any changes it
considers necessary to the OSPL Board for approval.

8. Make recommendations to the OSPL Board on appointment of a new committee member in case a
member resigns from the committee. However, it will be sole discretion of the Board to appoint any new
member.

9. Where human resource and remuneration consultants are appointed, their credentials shall be known
by the committee and a statement shall be made by them as to whether they have any other connection
with the OSPL.

10. Undertake annually a formal process of evaluation of performance of the board as a whole and its
committees either directly or by engaging external independent consultant and if so appointed, a
statement to that effect shall be made in the directors’ report disclosing name, qualifications and major
terms of appointment.

Reporting Responsibilities

1. Report formally to the OSPL Board on its proceedings after each meeting on all matters within its duties
and responsibilities.

2. Ensure that the names of the members of the committee shall be disclosed in each Annual Report.

Board Risk Committee:

The responsibilities of the BRC shall be:

1. Set the risk appetite of the Modaraba.

2. Ensure the design and implementation of appropriate risk management and internal control systems
that identify the risks facing the Modaraba and enable the Board to make a robust assessment of the
principal risks.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

3. Determine the nature and extent of principal risks faced by the OLPM and those risks which the
Modaraba is willing to take in the achievement of its strategic objectives.

ANNUAL REPORT 2024

4. Ensure that necessary steps are taken to foster an enterprise-wide culture that supports appropriate
risk awareness, behaviors and judgments about risk and that ensures that risk-taking beyond the
Modaraba’s determined risk appetite is recognized and appropriately escalated and timely addressed.

5. Determine how the principal risks should be managed or mitigated to reduce the likelihood of their
occurrence or their impact.

95
6. Ensure that the risk management policies and procedures designed and implemented by the OLPM are
consistent with the Modaraba’s strategy and risk appetite.

7. Ensure that risk management policies and procedures are functioning as directed, by monitoring the
Modaraba’s risk management and internal control systems and the management’s process of monitoring
and reviewing, and ensure that these are functioning effectively and that corrective action is being
taken where necessary.

8. Ensure the existence of sound internal and external information and communication processes.

9. Ensure that emerging and inter-related risks are also considered in the risk management process by
Management.

10. At least on annual basis, perform an overall review of business risks to ensure that Management
maintains a sound system of risk identification, risk management and related systemic and internal
controls to safeguard assets, resources, reputation and interest of the Modaraba and certificate
holders.

11. Periodically assess the Board’s risk oversight processes to ensure that these enable the Board to
achieve its risk oversight objectives.

12. Ensure appropriate disclosure of the Modaraba’s risk framework and internal control system in the
Directors Report.

13. Ensure that risk mitigation measures are robust and integrity of financial information is ensured.

14. Monitor and review all material controls (financial, operational, compliance);

15. The Committee shall review its terms of reference every three year and recommend any necessary
changes to the Board.

16. The Committee shall report on an annual basis to the Board on its activities by comparing the Committee
performance with its duties.

17. The Committee shall report on its roles and responsibilities and the actions it has taken to discharge
those responsibilities for inclusion in the annual report and accounts. The report may be in the form of
an oral report made at any regularly scheduled Board meeting.
 Independent Auditor’s
Review Report
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To the certificate holders of OLP Modaraba

Review Report on the Statement of Compliance contained in Listed Companies

96
(Code of Corporate Governance) Regulations, 2019

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate
Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of OLP Services Pakistan
(Private) Limited, the Management Company of OLP Modaraba (the Modaraba) for the year ended June 30, 2024
in accordance with the requirements of regulation 36 of the Regulations.

The responsibility for compliance with the Regulations is that of the Board of Directors of the Management
Company. Our responsibility is to review whether the Statement of Compliance reflects the status of the
Modaraba’s compliance with the provisions of the Regulations and report if it does not and to highlight any
non-compliance with the requirements of the Regulations. A review is limited primarily to inquiries of the
Modaraba’s and the Management Company’s personnel and review of various documents prepared by the
Management Company to comply with the Regulations.

As a part of our audit of the financial statements we are required to obtain an understanding of the accounting
and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not
required to consider whether the Board of Directors’ statement on internal control covers all risks and controls or
to form an opinion on the effectiveness of such internal controls, the Management Company’s corporate
governance procedures and risks.

The Regulations require the Management Company to place before the Audit Committee, and upon
recommendation of the Audit Committee, place before the Board of Directors for their review and approval, its
related party transactions. We are only required and have ensured compliance of this requirement to the extent
of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit
Committee.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of
Compliance does not appropriately reflect the Management Company’s compliance, for and on behalf of the
Modaraba, in all material respects, with the requirements contained in the Regulations as applicable to the
Modaraba for the year ended June 30, 2024.

A.F. Ferguson & Co.

Chartered Accountants
Karachi
Dated: October 4, 2024
UDIN: CR202410611x8j6VFLTI
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Statement of Compliance with Listed Companies (Code of

Corporate Governance) Regulations, 2019

ANNUAL REPORT 2024

OLP SERVICES PAKISTAN (PRIVATE) LIMITED
Year ended June 30, 2024

This statement is being presented to comply with the Listed Companies (Code of Corporate Governance)
Regulations 2019 (the Code). Regardless of the fact that OLP Services Pakistan (Private) Limited, the
Management Company of OLP Modaraba (OLPM) (the Modaraba), is a private limited company, the Board of 97
Directors of the Management Company are pleased to confirm that the Code is being complied with in all material
respects (pertaining to the operations of the Modaraba).

The Management Company has complied with the requirements of the Regulations in the following manner:-

1. The total number of directors are 07 as per the following

a. Male: 06
b. Female: 01

2. The composition of the Board is as follows:

Category Names
Independent Director Mr. Nausherwan Adil
Ms. Naila Hasan
Non-Executive Director Mr. Shaheen Amin*
Mr. Ramon Alfrey
Mian Faysal Riaz
Mr. Nadim D. Khan
Executive Director Mr. Raheel Qamar Ahmad
Female Director Ms. Naila Hasan

* Subsequent to year end on August 06, 2024, Mr. Shaheen Amin resigned as a member and chairman of
the Board of directors. Mr. Naveed Kamran Baloch was appointed as director of the company subject to
regulatory approval. The Registrar Modaraba approved his appointment through SECP letter dated
September 11, 2024. The Board wishes to place on record its appreciation and gratitude for the valuable
contributions made to the Mr. Amin and extends a warm welcome and cooperation to the newly
appointed director in performing his fiduciary responsibility.

3. The directors have confirmed that none of them is serving as a director on more than seven listed
companies, including this company;

4. The Management Company has prepared a code of conduct and has ensured that appropriate steps have
been taken to disseminate it throughout the Management Company as well as the Modaraba along with
its supporting policies and procedures;

5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies
of the Management Company. The Board has ensured that complete record of particulars of the
significant policies along with their date of approval or updating is maintained by the company;

6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken
by the Board the of Management Company/ certificate holders of the Modaraba (where applicable) as
empowered by the relevant provisions of the Act and these Regulations; (TORS)
 7. The meetings of the Board were presided over by the Chairman. The Board has complied with the
requirements of Act and the Regulations with respect to frequency, recording and circulating minutes of
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meeting of the Board.

8. The Board have a formal policy and transparent procedures for remuneration of directors in accordance
with the Act and these Regulations;

9. Majority of the Directors along with the Company Secretary have either completed the Director’s
Certification from authorized institutions or have the prescribed qualification and experience pursuant to
Regulation 19 of the CCG. All of the Directors are highly qualified and possess the requisite experience
98 and knowledge required to perform their duties.

10. All directors have completed their director’s training under the directors training programme.

11. The Board has approved the appointment of chief financial officer, company secretary and head of
internal audit, including their remuneration and terms and conditions of employment and complied with
relevant requirements of the Regulations;

12. The Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements before
approval of the Board.

13. The Board has formed following committees comprising of members named below. -

a) Audit Committee
1). Mr. Nausherwan Adil- Chairman
2). Mr. Ramon Alfrey- Member
3). Mian Faysal Riaz- Member

b) Human Resource and Remuneration Committee

1). Ms. Naila Hasan – Chairperson
2). Mr. Shaheen Amin- Member
3). Mr. Raheel Qamar Ahmad - Member

C) Risk Committee
1). Mian Faysal Riaz - Chairman
2). Mr. Nausherwan Adil- Member
3). Mr. Raheel Qamar Ahmad- Member

14. The terms of reference of the aforesaid committees have been formed, documented and advised to the
committee for compliance;

15. The frequency of meetings (quarterly/ half yearly/ yearly) of the committee were as per following, -

Audit Committee Quarterly

Risk Committee Yearly
Human Resource and Remuneration Committee Yearly

16. The Board has set up an effective internal audit function consisting of a suitably qualified and
experienced team which is conversant with the policies and procedures of the Company.

17. The statutory auditors of the Modaraba have confirmed that they have been given a satisfactory rating
under the Quality Control Review program of the Institute of Chartered Accountants of Pakistan and
registered with Audit Oversight Board of Pakistan, that they and all their partners are in compliance with
International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of
Chartered Accountants of Pakistan and that they and the partners of the firm involved in the audit are not
a close relative (spouse, parent, dependent and non-dependent children) of the chief executive officer,
chief financial officer, head of internal audit, company secretary or director of the Management Company;
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

18. The statutory auditors or the persons associated with them have not been appointed to provide other
services except in accordance with the Act, these Regulations or any other regulatory requirement and

ANNUAL REPORT 2024

the auditors have confirmed that they have observed IFAC guidelines in this regard;

19. We confirm that all requirements of regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have been
complied with;

20. In accordance with the contents of Regulation 6 of the Listed Companies (Code of Corporate Governance)
Regulations, 2019 (“the 2019 Code”) at least two or one third members of the Board, whichever is higher,
should be independent directors. If any fraction contained in such one-third number which is not rounded
up as one, reason should be explained in the compliance report. 99

The Management Company of OLPM has appointed two independent directors out of total seven
directors. Other than CEO and Independent directors all directors are representatives of OLP Financial
Services Pakistan Limited (OLPFS); a Multinational Non-banking finance company, operating in Pakistan
since 1986 and part of ORIX Group Japan. Rationale behind appointing maximum possible Directors from
OLPFS was to align the organization with the ORIX Group and its Policies. Also, that it is difficult to find
independent directors from this industry with relevant experience. Current independent directors have
banking experience which is a complement to the other directors having non-banking experience
especially in SME sector. OLP is the leading company in its industry and Modaraba’s line of business is
identical to that of OLPFS. Directors appointed on the Board of the Modaraba carry vast experience in the
fields of Client Relationships, SMEs, Finance, Credit, Funds management and Risk Management. These
directors from OLPFS are in a position to provide valuable input to OLPM while making decisions in various
fields due to their experience in the relevant field.

21. Explanation for as to impediment in its compliance with requirements, other than 3, 6, 7, 8, 27, 32, 33 and
36 of the Regulation are given below:

a. Sustainability Committee (Regulation 10a)

According to clause 10(4)(XIV) of Listed Companies Code of Corporate Governance for the
development of sustainability policy and pursuant to regulation 10a of the Securities and Exchange
Commission Pakistan’s (SECP) notification (S.R.O. (1)/2024) dated June 12, 2024 for the formation of
sustainability committee. Though the Company does not have a formal Environmental, Social, and
Governance (ESG) policy and committee, however, it recognizes the importance of these principles
in business operations. Currently, the Company has voluntarily undertaken various ESG-related
activities. These activities have been shared as part of our ESG initiatives this year and demonstrate
the Company's ongoing commitment to integrating ESG considerations into its business practices, in
alignment with the spirit of the Code. The company is well aware of its ESG risks and operations and
investment policies carry a guideline on how to mitigate those risk as well initiatives to take the ESG
agenda forward

b. Trainings for Head of Departments (Regulation 19)

The Company has planned to arrange training for the head of departments in the next financial year
for those who are yet to complete the directors training programme.

c. Nomination Committee (Regulation 29)

The functions of the Nomination Committee are being performed by the HR & Remuneration
Committee. Therefore, separate committee for Nomination is not required.

Naveed Kamran Baloch

Chairman

Dated: September 14, 2024

 Report of the
Board
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Audit
Committee
Chairman’s Introduction
100
On behalf of the Board Audit
Committee, I am pleased to present
the Audit Committee’s report for the
year ended June 30, 2024. This
report explains the Committee’s role
and its work during the year.

The Audit Committee is responsible

for monitoring the integrity of the
OLPM’s financial statements,
reviewing significant financial
reporting issues, reviewing the
effectiveness of the compliance,
internal control, and risk
management systems, and
overseeing the relationship with the
external auditors (including advising
on their appointment, agreeing
audit fees, and reviewing the audit
findings). The Committee also
reviews the provision of any
non-audit services by the external
statutory auditor.

Throughout the year, the Audit

Committee has regularly reviewed
and applied the guidance issued by
Securities and Exchange
Commission of Pakistan (SECP) and
other regulatory bodies. In doing so,
the Committee has focused its
review across a broad range of
areas. These include:

• Compliance with all relevant

regulatory statutes including
but not limited to The Modaraba
Regulations 2021;

• Regular updates on the OLPM

finances and business portfolio
including updates on
repayments by clients including
those highlighted by External
Auditors in their covering letter;
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

• Review of significant changes Membership and meetings the management in managing day
in KIBOR rates and its impact on to day affairs of the Modaraba
overall financial statements of During the year, the Committee

ANNUAL REPORT 2024

the Modaraba; comprised of the following Audit Committee’s
independent and non-executive performance evaluation
• Review of provision of income directors:
tax on income of modaraba for The performance of the Audit
the year; Committee Members Committee was assessed annually
as a component of the Board
• Review of application of IFRS-9 Nausherwan Adil Chairman evaluation process. In alignment
in respect of provisioning Ramon Alfrey Member with the Modaraba's annual 101
against financing; Mian Faysal Riaz Member compliance with the Code, an
internal evaluation was performed,
• Update on the measures taken The Committee members meeting and there is a strong consensus
by the business to safeguard attendance table is shown on page among the members of the Board
employee and client welfare; 76 of the OLPM Annual Report Audit Committee’s overall
2024. operations are robust, adhering to
• Review of internal audit corporate governance standards,
reports on the effectiveness of The Committee’s wide range of and demonstrating both
the overall internal control financial and commercial skills and effectiveness and efficiency.
environment issued by Internal experience serves to provide the
Audit Department as per necessary knowledge and ability to Role of the Committee
approved audit plan; and work as an effective committee and
to robustly challenge the Board and The Committee focuses on ensuring
• Review of all other key senior management as and when the integrity of the financial
judgements and estimates appropriate. Mr. Ramon Alfrey, reporting and audit processes and
applied by management in member Board Audit Committee, a the maintenance of sound internal
preparing the financial Chartered Accountant, possesses control systems in order to
statements. The Committee recent and relevant financial safeguard certificate holder
also enquires as to the experience and the Committee interests. It focuses on monitoring
appropriateness of these continues to have competence and/ or reviewing the following:
judgements considering the relevant to the sector.
principal risks, the wider • Financial reporting – this area of
economic conditions in which Further details of the directors’ responsibility includes
the business operates and the skills, experience and qualifications monitoring the integrity and
need to ensure the financial can be found in the biographies on compliance of the Modaraba’s
statements are fair, balanced, pages 36 to 39 of the OLPM Annual financial statements and any
and understandable. Report 2024. formal announcements or
publications relating to the
We have also discussed the key Audit Committee and Modaraba’s financial
matters as identified by the Attendance performance as well as
external auditor, A. F. Ferguson and reviewing significant financial
Co., Chartered Accountants in During the year, the Committee held reporting issues and
relation to annual audit of OLPM for four scheduled meetings. The judgements made in
the year ended June 30, 2024 in Chairman and all members attended connection with them.
accordance with the requirement of all the meetings. The Committee
SECP Listed Companies (Code of meets with Head of internal audit in • Compliance – this area includes
corporate governance) Regulations, the absence of management on a reviewing the Modaraba’s
2019. regular basis and the external compliance policies and
auditor as necessary and at least procedures to ensure that it
annually. The Executive director is complies with all relevant
also invited to attend Committee regulatory and legal
meetings regularly in order to requirements including the
Nausherwan Adil reinforce a strong culture of risk arrangements in place for the
Chairman of the Audit Committee management and to keep the reporting and investigation of
September 14, 2024 Committee up to date with key concerns identified.
business decisions/ action taken by
 • Internal audit – This domain Committee activities during • OPLM Annual Report and
encompasses the oversight of 2023/24: Accounts for the year ended
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the Internal Audit function's June 30, 2024 are drafted by

role and efficacy, which Review of financial statements the appropriate senior
includes the approval of the management with overall
annual internal audit work plan The Committee reviewed the coordination by the
aligned with the three-year financial statements and assessed Secretariat/ Finance team to
audit plan sanctioned by the whether suitable accounting ensure consistency;
Committee in the previous policies have been adopted and
year. Additionally, it involves whether management has made • comprehensive reviews of the
102 monitoring the reports appropriate estimates and drafts Accounts are
generated from internal audits judgements. The Committee undertaken by management
and tracking the progress of monitored provision of income tax and the Audit Committee; and
actions taken in response, as on income of the modaraba for the
well as the appointment or year ended June 30, 2024 and • formal recommendation of
removal of the Head of Internal considered the appropriateness of Annual Accounts is given by
Audit the provision against finances Audit Committee for approval
provided in the financial statements by the Board.
• Whistleblowing – reviewing in accordance with the requirement
arrangements by which staff of IFRS-9 and the Modaraba Following areas continued to
may in confidence raise Regulations 2021. remain significant throughout the
concerns about possible year, therefore, were properly
improprieties regarding The Audit Committee also discussed and addressed with our
financial reporting and other recognized the importance of the external auditor throughout the
matters. views of the external auditor in external audit process. The key
respect of robust challenges and matters of focus were:
• Internal controls – this area audit procedures performed by
includes reviewing the them in relation to key matters 1. IFRS-9 – Financial Instruments;
effectiveness of the during the course of the audit. 2. Outstanding exposure against
Modaraba’s system of internal There were no differences between selected clients; and
controls and ensuring timely management and the external 3. Provision of taxation for the
action is taken by management auditors which were reported to the year.
to address matters arising from Committee.
the risk and internal audit The Committee concluded that the
assessments. Having reviewed management’s Financial Statements, taken as
papers and considered the whole, were fair, balanced, and
• External audit – this area procedures and findings of the understandable and provided the
includes considering and external auditor, the Committee is information necessary for
making recommendations to satisfied that the judgements are stakeholders to assess the OLPM’s
the Board on the appointment reasonable, and that suitable business model, strategy, and
of the external auditors accounting policies have been performance. The Committee has
(including approving the adopted and disclosed in the continued its monitoring of the
remuneration and terms of accounts. financial reporting process and its
appointment) as well as integrity, risk management systems
reviewing the external and Assurance.
auditors’ annual audit report Fair, balanced, and
and the results therefrom, understandable Internal audit
reviewing the quality and
effectiveness of the audit and In order to confirm to the Board that The Audit Committee monitored
reviewing and confirming the the Annual Accounts, taken as and reviewed the scope, extent,
policy on non-audit services whole is fair, balanced, and and effectiveness of OLPM’s
carried out by the external understandable, there has been a internal audit function. At the end of
auditors and auditor thorough verification and approval the third quarter, the Head of
independence. process, as outlined below: internal audit resigned from his
position, prompting the audit
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

committee to appoint a new Head of based on the Audit Universe which External auditor appointment
internal audit, this appointment was sets out all auditable areas of the and rendering
carried out in accordance with business and assigns each area a The Committee concluded that A. F.

ANNUAL REPORT 2024

established procedures and in risk level and recommended audit Ferguson & Co. Chartered
compliance with the requirement of frequency. The internal audit plan is Accountants (PwC Pakistan) have
SECP Listed Companies (Code of aligned to the OLPMs principal risks. demonstrated appropriate
corporate governance) Regulations, qualification and expertise and have
2019. Areas highlighted for audit on the remained independent of the OLP
current plan include a greater focus group in conducting the audit for
Regular presentations and updates on operational risks in areas of the year ended June 30, 2024. They
were given to the Committee by the compliance with the requirement of have already completed five years 103
Head of Internal Audit. The the Modaraba Regulations, 2021, tenure as external auditor of OLP
Committee has approved the Anti-Money Laundering and Modaraba, therefore, in compliance
internal audit terms of reference, Countering Financing of Terrorism of Listed Companies (Code of
which sets out the role, including compliance with the Corporate Governance)
accountability, authority, requirements of SECP (Anti Money Regulations, 2019, OLPM is required
independence, and objectivity of Laundering and Countering to change its external auditors
the function. Financing of Terrorism) going forward. Accordingly, the
Regulations, 2020, and Committee has recommended to
Risk Management and Internal amendments to SECP AML/CFT the Board that KPMG Taseer Hadi &
Control Review Regulations 2020 dated 21th Co. Chartered Accountants be
September 2023. appointment as the Modaraba’s
The Internal Audit function provides auditors for the year ending June 30,
independent assurance through The overall approach remains the 2025.
reviewing the risk management same and the underlying audit
processes and internal controls methodology and processes are a. Independence and
established by management. The unchanged, with audits fully objectivity
Committee considers matters raised compliant with best practice and A. F. Ferguson & Co. Chartered
through audit reports and the internal audit standards. The Accountants conducted its fifth
adequacy of management’s Committee is thus satisfied that the audit of OLPM’s financial
response to them, including the internal audit function has statements for the year ended June
time taken to resolve any such continued to perform effectively 30, 2024. Mr. Junaid Mesia
matters. The focus areas for during the year. concluded this year’s annual audit
internal audit during the year on the behalf of A. F. Ferguson & Co.
included review of Business Delegation by the Board Chartered Accountants.
operations and related back-office
controls to mitigate key risks Review of TORs of Board and A. F. Ferguson & Co. Chartered
associated with OLPM business. Management level Committees Accountants has reported to the
Internal Audit also reviews Special Committee, under the Committee that, in its professional
processes supporting OLPM’s authority granted by the Board of judgement, it is independent within
compliance and operational risk, Directors, conducted a thorough the meaning of regulatory and
Anti-Money Laundering and review of the Terms of Reference professional requirements and the
Countering Financing of Terrorism (TORs) of all Board level committees objectivity of the audit engagement
and compliance with overall constituted under the board and partner and audit staff is not
Operational Risk Framework. management committees being impaired.
chaired by MD/ CEO OLPM. This
The scope of activity of internal process included a detailed analysis The Audit Committee has assessed
audit is monitored and reviewed at and assessment of compliance for the independence of the auditor,
each Audit Committee meeting. An all committees' TORs. The findings and concurs with this statement.
annual plan was agreed by the were carefully compiled and When assessing the independence
Committee in Sep 2023 which submitted to the board for approval. of the auditor, the Committee
covered the activities to be Previously, most of the TORs were considers, amongst other things,
performed till Sep 2024. The reviewed in April 2021. the length of tenure of the audit
internal audit plan is determined firm and the audit partner, the value
 of non-audit fees provided by the technology to support the possible improprieties on a
external auditor and the conduct of the audit; confidential basis. Concerns can be
www.olpmodaraba.com

relationship with the auditor as a raised by telephone or online to an

whole. • the level and quality of independently provided service.
challenge received from the During the year, the Committee
Non-audit work carried out by External auditor; received updates at every meeting
the external auditor of reported issues, if any.
In order to ensure the continued • a good knowledge of
independence and objectivity of the accounting standards, Other matters
OLPM’s external auditor, the governance requirements and
104 Committee reviews audit and the infrastructure market; Other matters reviewed by the
non-audit fees once a year. The Committee during the year were:
Committee’s approval is also • the robust and perceptive
required in advance for the handling of the key accounting • Transactions with Related
provision of any non-audit services and audit judgements; Parties and recommendation to
by the external auditor. The OLPM’S the Board of Directors for its
external auditor is prohibited from • the support received by the approval;
providing any services that would External auditor from the
conflict with their statutory External auditor’s technical • The Modaraba’s Shariah
responsibilities or which would team; compliance with its regulatory
otherwise compromise their requirements with particular
objectivity or independence. • the continuity of the audit focus on the review of Shariah
team was predominantly Advisor annual report and
Further details on audit fee and retained from the previous Shariah Internal Audit quarterly
non-audit fees are provided in Note year; and reports;
23.3 to the financial statements.
• the final report was presented • Preliminary announcements of
Effectiveness and based on a good understanding results for the year end and all
reappointment of the Modaraba’s business. quarterly results prior to
communication to Pakistan
It is the Committee’s responsibility Based on these reviews, the Stock Exchange and
to assess the effectiveness of the Committee concluded that A. F. publication of Announcement
external audit. Ferguson & Co. Chartered on OLPM website. The
Accountants had applied Committee reported to the
The Committee kept under review appropriately robust challenge and Board on how it has discharged
the effectiveness of the external skepticism throughout the audit, its responsibilities and the key
audit throughout the year. It did this that it possessed the skills and matters arising at each
through: experience required to fulfil its meeting. All recommendations
duties effectively and efficiently, were accepted by the Board;
• Considering the areas in which and that the audit was effective.
A. F. Ferguson & Co. Chartered In conclusion, I would like to thank
Accountants had challenged Having reviewed the incoming the management team at OLPM and
management’s assumptions in auditor’s independence and the all Committee members for their
key areas of judgement and the effectiveness of its audit, the valuable contribution and support
number and nature of the Committee has recommended that to the audit committee throughout
accounting and control KPMG be appointed as external the year
observations raised by the auditor for the year ending June 30,
auditor; 25.

• the high level of engagement Whistleblowing

from the audit partner The Modaraba’s whistleblowing
throughout the audit process; procedures ensure that employees,
clients and other third parties are
• the use of sophisticated able to raise concerns about
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Governance

ANNUAL REPORT 2024

The Board

The Board as a whole continues to take ownership of effective leadership and the long-term success of the
Modaraba. The management and governance framework, which the Board has implemented to support the
Modaraba’s long-term growth objectives, is set out on page 72. The diverse range of skills and leadership experience
offered by the Non-Executive Directors means that they are well qualified to scrutinize performance, assess the
Modaraba’s risk management and control processes, provide constructive challenge and to support the Chief
Executive. Details for each of the Directors together with their Board responsibilities are set out on page 77. 105

The Board has four (04) scheduled meetings during the year; additional meetings are arranged, if required. The
Board committee meetings are scheduled around the regular Board meetings.

Composition of the Board

Category Number
Independent Directors 03
Executive Director 01
Non-Executive Directors 03
Female Director 01

The independent Directors have provided the annual declaration of their independence as required by Listed
Companies (Code of Corporate Governance) Regulations, 2019. The declaration states that:

1). They are not serving as a director on more than seven listed companies.

2). They does not hold any interest in the certificates/ shares of OLP Modaraba other than that disclosed in the
pattern of shareholding

3). Neither they nor any of their spouse I minor children have not (sold, bought or transacted), whether directly
or indirectly, in certificates of OLP Modaraba.

4). They have not, directly or indirectly, dealt in the certificates of the Modaraba in any manner during the
closed period.

5). They have not defaulted in payment of any loan to a banking company, a DFI or a NBFI. Further, They are not
a broker of a stock exchange.

Decision taken by Board or delegated to management

Directors are required to attend each Board meeting and meetings of any Committee of which they are a member. In
addition, members of the management team and the External Auditors may, by invitation, attend meetings to address
specific agenda items. There is a formal schedule of matters reserved for the Board, which is reviewed regularly to
ensure that it remains current. Matters reserved for the Board include the items summarized below:

• The Board is responsible for exercising its powers with diligence and responsibility, following careful
deliberation as dictated by the Companies Act 2017, Listed Companies (Code of Corporate Governance) 2019
and Company Articles of Association.
• overseeing and evaluating governance practices;
• guiding and supervising the Modaraba's strategic direction;
• deciding upon appointments, dismissals, salaries, contract renewals for key management roles;
• review of terms of references for and membership of the Board committees;
• reviewing recommendations made by Board committees;
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• issues flagged by Chief Executive Officer may be brought before board or its sub-committees;
• investments in new ventures;
• establishing internal control frameworks that promote effective risk management strategies as well as
mechanisms addressing ethical matters, affirmation of risk management strategies and risk appetite;
• to approve business plans including cash flow forecasts and strategic plans;
• approval of financial statements including dividends using inputs provided through audit observations
regarding the overall control environment
106 • assessing reports from internal audits together with reviews of external auditors’ letters and
• responsible for managing related party transactions;

Matter Delegated to the Management

The Board and management have predefined, explicit roles. The MD&CEO is responsible for conducting routine
business operations in a compliant, ethical manner.

The Board has greenlit a range of objectives and plans, which include annual benchmarks for output, revenue
generation, expenditure management and financial gains. Additionally, the Board aims to explore fresh businessd
avenues while maintaining adherence with legal stipulations and regulatory demands.

It is the duty of management to identify and manage critical risks, take advantage of opportunities, maintain internal
controls, and prepare financial statements that adhere to approved accounting standards. This must be done in
accordance with applicable regulations such as Companies Act 2017 and other rules determined by Securities and
Exchange Commission of Pakistan.

Governance practice addition to Legal requirements:

In addition to the compliance with listed companies Code of corporate governance, the Modaraba has developed
various committees such as Carbon Reduction Committee, Customer Experience Forum etc. The objective of
these committees are as follows:

Carbon Reduction committee:

To highlight the importance of Carbon Footprint Reduction as how it can have a healthy impact on our
surroundings.

Customer Experience Forum:

To analyze, discuss and find solutions to issues that might impact, or have impacted, the client during the Client
Life Cycle.

Principals Committee

A select group of leaders who analyze effects of all decision making across the Modaraba.

Country Operation Risk Committee- CORC

To ensure the effective management of Operational Risk throughout OLPM in support of entity's strategy and in
accordance with the Risk Management Framework and related Operational Risk Policies and Procedures.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

Portfolio Management Comittee - PMC

To manage and direct as appropriate the management of the credit portfolio in OLPM to ensure that systems and
controls are in place and operating effectively such that earnings from the portfolio meet expectations.

Board performance Evaluation:

The Board of Directors sets the Modaraba’s strategic direction and ensures that the organization stays true to 107
this direction - enabling it to achieve its long-term objectives while ensuring regulatory compliance. To discharge
its fiduciary responsibility of safeguarding the stakeholders’ interests, and to remain compliant with all the
requirements set out in the Companies Act, 2017 and the Listed Companies (Code of Corporate Governance)
Regulations, 2019 with respect to the composition, procedures and meetings of the Board of Directors and its
committees, the Board of Directors has developed criteria for its performance evaluation which reflect the
Modaraba’s overall performance.

The Board of Directors discusses strategic objectives, budgetary expenses and projected national and
international macroeconomic indicators to ensure that the Modaraba’s business strategy stays aligned with the
macroeconomic indicators. The Board of Directors and its sub-committees are competent and experienced,
representing diversified educational and vocational backgrounds which are invaluable in determining the overall
direction of the organization.

The Board of Directors is keen to ensure that it reviews the effectiveness of its performance periodically. To that
end, all individual Board members answer a comprehensive questionnaire focused on evaluating, from various
angles, whether the Board has discharged its duties diligently and with foresight. Company secretary is
designated to collate individual responses and present them to the Board for deliberation and discussion.

This exercise in critical self-assessment allows the Board to evaluate its performance and overall effectiveness
in setting strategies, devising control processes, reading market trends by monitoring micro and macroeconomic
factors, and responding to adverse unforeseen situations to further the cause of a learning organization. This
process also ensures that the Board is constantly growing intellectually and the responsibility of steering the
Modaraba to new heights of success is discharged effectively and efficiently.

Details of formal orientation courses for directors.

Directors are provided with a comprehensive information pack on joining the Modaraba and are advised of their
legal and other duties and obligations as a director of a listed company. Induction Pack provide detailed
information on operations and activities of the Modaraba, the role of the Board and the Modaraba’s corporate
governance procedures. The Directors are also encouraged to update their skills and knowledge regularly,
including in relation to environmental, sustainability and governance matters, and where necessary, the
Company Secretary is notified by Directors of their requirements in this respect. In pursuit of best practice, the
Board reviews presentations on compliance with governance and regulatory matters.

Directors’ Training Program (DTP)

All Directors of the Modaraba has acquired the prescribed certification under the Director training program
offered by Pakistan Institute of Corporate Governance and Institute of Chartered Accountants Pakistan.
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Description of external oversight of various functions like systems audit or internal audit by an
external specialist and other measures taken to enhance credibility of internal controls and
systems.

We have three audits in a year. Internal audit, external audit (PWC) and Shariah Audit.

Related Party Transactions:

108
The Board of Directors have approved a Policy for Related Party Transactions, which require that the
Modaraba Shall carry out transactions with its related parties on an arm’s length basis in the normal course of
business. The Term ‘arm’s length’ entails conducting business on the same terms and conditions as the
business between two Unrelated / un-concerned persons. The policy specifies that all transactions entered
into with related parties shall require Board’s approval on the recommendation of the Board’s Audit
Committee, which is presided by an independent director of the Modaraba.

The Modaraba has made detailed disclosures about related party transactions in its financial statements
annexed with this annual report. Such disclosure is in line with the requirements of the 4th Schedule to the
Companies Act, 2017 and applicable International Financial Reporting Standards. Further, The Modaraba also
maintains a full record of all such transactions, along with the terms and conditions. Refer note 33 of
Financial for details.

Diversity

The Board of Directors of OLP Modaraba continues to have a firm commitment to policies promoting
diversity, equal Opportunities and talent development at every level throughout the Modaraba, including at
Board and management level and is constantly seeking to attract and recruit highly qualified candidates for
all positions in its business. We believes that diversity at the Board level acts as a key driver of Board
effectiveness, helps to ensure that the Modaraba can achieve its overall business goals. The Board of
Directors also firmly believes that the diverse mix of gender, knowledge, expertise and skill sets of the
members enhances the effectiveness of the Board.

In this regard, OLPM’s Board ensures that a diverse mix of directors are elected on the Board, which represent
the interests of all stakeholders. The Board composition will meet the minimum requirement of the
applicable laws. The Board will have adequate female representation The Board will have such directors who
bring along with themselves diverse skill sets pertaining to Islamic financial matters, legal and human
resources etc.

Disclosure of director’s interest in significant contracts and arrangements.

In order to avoid any known or perceived conflict of interest, formal disclosure of vested interests is
encouraged under the Code of Business Ethics and the Policy for Conflict of Interest relating to Board of
Directors, approved by the Board. The Code and the Policy comprises of not only the principles provided
under the regulatory requirements but encompasses global best practices as well. The board members are
responsible for appropriate self-disclosure in a transparent manner and in the case of doubtful situation, are
advised to discuss it with the chair of the meeting for guidance. Board members’ suggestions and comments
during their proceedings are accordingly recorded for evaluation, in addition to description and
quantification of any foreseen conflict of interest prior to finalization of the proceedings’ agenda.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

Policy for Remuneration to Non-Executive Directors:

The Board of Directors has approved a ‘Remuneration Policy for Directors’; the salient features of which
are:

• The Modaraba will not pay any remuneration to its nonexecutive directors except as meeting fee for
attending the Board and its Committee meetings as approved by the Board.
109
• The Modaraba will not pay any remuneration to the Chief Executive and other Directors for attending
the meeting, who work whole time on remuneration for the company.

• The Remuneration of an Independent Director for performing additional responsibilities shall be

determined by the Board.

Retention of board fee by the executive director earned by him against his services as
non-executive director in other companies.

The executive directors is authorized to retain board

fee earned by them against provision of their services
as non-executive directors in other companies. To be
discuss with MS.

Foreign Directors

The Modaraba as a matter of policy has a practice that a

person qualifying the Fit & Proper criteria of SECP shall
be appointed as director of Modaraba. Moreover in case
of appointment of any foreign director, the
appointment is based on the clearance from Ministry of
Interior of Pakistan.

Board meetings held outside Pakistan

During the year 05 Board meetings were held and no

meeting was held outside the Country.

Human Resource Management Policies

HR management policies are essential for sustaining

viable businesses. HR policies assist organizations in
establishing & maintaining consistent practices in the
workplace, it is the way of communication with
employees and managers in regard of desired
performance and behavior. OLPM have the following
HR management policies;

• Day Care Policy

• Education Assistance Policy
• Employee Discipline Policy
• Employee Equal Opportunities, Diversity & Dignity
at Work Policy
• Employee Grievance Policy
www.olpmodaraba.com

• Employee Responsibility Policy

• Hospitalization & LifeTakaful Policy
• Leave Policy
• Local Relocation Policy
• Management Responsibility Policy
• Performance Management and Promotion Policy
• Reward Policy
110 • Sexual Harassment Policy
• Speak Up Policy
• Spot Award Policy
• Staff Finance Policy

Succession Plan

Succession planning ensures smooth replacement of critical positions at management and technical level in
OLP Modaraba OLPM. The purpose of succession planning is to identify and prepare candidates to take over key
positions at all levels that becomes vacant due to resignation, retirement or death of an employee. OLPM conduct
succession planning meeting every year for critical resources where as for non critical resources meeting is held
once in three years. This helps in Identifying successors for all roles. In this way, it provides continuity to
leadership and can avoid extended and costly vacancies for key position. Sourcing of successors is first
performed within OLPM and in the event no potential candidate is available an external recruitment effort is
conducted. Successors which are identified in the session is equipped with all necessary trainings and
assignments to make him/ her to take over the role.

Social and environmental responsibility

The OLP Modaraba has formulated an efficient policy for Social and Environmental responsibilities which lays down
the Modaraba ’s commitment towards creating a more equitable and inclusive society by supporting processes which
lead to sustainable transformation and social integration. Our primary focus of social responsibility is to craft business
policies that are ethical, equitable, environmentally conscious, gender sensitive and also takes care of the
differently-abled. The Modaraba ensures that all social and environmental dimensions are considered when
developing its strategies, policies, practices and procedures. for details of social and environmental initiative taken by
Modaraba refer the section.

Communication with stakeholders.

OLP Modaraba is fully committed to develop effective working relationships with all our stakeholders. Throughout all
its business dealings, The Modaraba has provided stakeholders with opportunities to provide meaningful input into
management decision-making. The Modaraba endeavors to provide full and fair disclosure of all material information
to its stakeholders besides providing a wide range of information about strategy and financial information through its
Annual Report and website for all stakeholders.

Investor Grievance Handling

At OLP Modaraba we value our relationships the most and believe in nurturing the bonds formed at all levels. We have
earned the trust of our investors and are fully committed to sustain it. The Board is committed to ensure that we
continue to engage effectively with our investors. The potential investors and certificate holders of OLPM have full
access to obtain information relating to Modaraba's operations in addition to the queries raised specifically relating to
their investment, dividend distribution and circulation of statutory notices and reports. The Modaraba endeavors for
prompt resolution of the queries and provision of required information in accordance with provisions of the law.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

Employee health, safety and protection

OLPM has always taken necessary precautions to ensure health and safety of its staff and to offer sustained and
persistent services to our customers with a safe environment. In this regard, each year the Modaraba took various
initiative relating to employee health i.e. Medical Camp, Health and life insurance policy for all employee etc. For detail
refer sustainability section of the report.

Whistle blowing policy including mechanism to receive and handle complains in a fair and transparent 111
manner and providing protection to the complainant against victimization and reporting in Audit
Committee’s report

In view of our commitment to create an atmosphere where people can freely communicate their concerns or raise an
alert against possibility of occupational fraud, non-compliance with Modaraba's policies, Code of Conduct and
regulatory framework, an effective Whistle Blowing Mechanism has been implemented. This policy is designed to
enable all officers and employees of the Modaraba to raise complaints at designated platform. The Modaraba is
committed to achieving and maintaining the highest standards of openness, integrity, ethical values and
accountability. Hence it expects all of its employees to do the same. In the interest of the Modaraba, it is the
responsibility of every employee to ensure that any inappropriate event does not occur and if occurred, the same is
reported at relevant forum in the Modaraba.

All those who come in the ambit of Whistle Blowing Policy are encouraged to participate without fear of reprisal or
repercussions, in confidentiality, under defined reporting channels. Such communications are investigated
independently and reported at the highest level.

An inappropriate event could be any behavior, action or incident that compromises the interests of shareholders,
investors, client or any other stakeholder. It is also mission-critical to maintain a good corporate image, thus raising
standards of corporate governance.

Safety of records of the Modaraba

The Modaraba encourage paperless environment and documents are archived electronically to safeguard the records
as well optimizing storage spaces. However, the Modaraba has also established process for safety of records extends
beyond the regulatory requirements and the Modaraba makes a conscious effort for the safety of all its records. The
records include books of accounts, documentation pertaining to secretarial, legal, contractual, taxation and other
matters. The process for Safety of Records consists of the following points:

1). To ensure and maintain digital back-up of all the relevant Legal, Administrative, Operational and other
documents, intellectual property and records.

2). Maintenance of a fire-proof vault for the safekeeping of legal documents and conduct trainings to deal with fire
hazards.

3). Real-time back up of data at on and off-site locations.

www.olpmodaraba.com

Board review statement of the organization’s business continuity plan or disaster recovery plan

The Board of Directors ensures that the Company has an updated Business Continuity and Disaster Recovery plan In
place for the continuity of Company’s business and operations in case of any extra ordinary circumstances. The
Comprehensive plan is designed to ensure the protection of overall company’s operations and assets along with
Regular archival and system-backups at remote sites. The Board has ensured that management has put in place
adequate systems of IT Security, real-time data backup, off-site storage of data backup, establishment of disaster
112 recovery facility (alternate Data Centre) and identification of critical persons for disaster recovery. It has also ensured
that the disaster recovery plan is regularly tested to ensure the readiness of the IT systems in case of any disaster.

Statement on the Management's responsibility towards the preparation and presentation of the
financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with
Approved Accounting Standards as applicable in Pakistan which include keeping proper books of account of the
Modaraba as required by Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of
1980), and the Modaraba Companies and Modaraba Rules, 1981. The balance sheet, profit and loss account and the
statement of comprehensive income together with the notes thereon of the Modaraba have been drawn up in
conformity with the requirements of Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980
(XXXI of 1980), and the Modaraba Companies and Modaraba Rules, 1981.

Disclosure of Board’s Policy on Governance of risk and internal controls

OLP Modaraba’s risk management framework is designed to assess and mitigate risks in order to minimize their
potential impact and support the achievement of Modaraba’s long term purpose and business strategy. Risk
assessment is performed regularly to create a good understanding of the Modaraba’s key risks, to allocate ownership
to drive specific actions around them and take any relevant steps to address them. Due to their critical importance, our
material issues and principal risks are integrated into our business planning processes and monitored on a regular
basis by our Board of Directors. Strategic, Operational, Financial and Compliance risks are ranked based on their impact
on Modaraba and probability of occurrence. Upon identification of risks, mitigating strategies and action plans are
developed, implemented and monitored.

Compliance with the Best Practices of Code of Corporate Governance (No marks in case of any
non-compliance).

Living up to its standard, the Board of Directors has throughout the financial year 2023-24, complied with the
requirements for Code of Corporate Governance, the listing regulations of the Pakistan Stock Exchange and the
requirements for Financial Reporting framework of Securities & Exchange Commission of Pakistan (SECP). Report of
the Board’s Audit Committee on adherence to the Code of Corporate Governance, statement of compliance with the
Code of Corporate Governance by the Chief Executive Officer of the Company, besides review report by the
Modaraba’s Auditors are included in this Report.

Presence of the chairman of the Audit Committee at the AGM to answer questions on the Audit
Committee’s activities / matters that are within the scope of the Audit Committee’s responsibilities.

In the Annual Review Meeting for the financial year ended June 30, 2023, The Chairman of Board Audit Committee
attended the meeting wherein he was available to answer any question pertaining to the Board Audit Committee’s
activities.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Gender Pay Gap

Statement

ANNUAL REPORT 2024

OLP Modaraba
Gender Pay Gap statement under Securities and Exchange Commission of Pakistan (SECP) Circular 10 of 2024 113

Following is gender pay gap calculated for the year ended June 30, 2024:

(i) Mean Gender Pay Gap: 58.90%

(ii) Median Gender Pay Gap: 49.01%

(iii) The above ratios reflect the overall employee gender pay gap across the organization. The modaraba
ensures equitable compensation for the female members in their respective role based on experience,
qualification and performance.

For and on behalf of the

Board of Directors

RAHEEL QAMAR AHMAD

Date: September 14, 2024
Chief Executive Officer
 IT Governance and
Cybersecurity
www.olpmodaraba.com

The Board responsibility Disclosures about how

statement on the cybersecurity fits into
evaluation and the board’s risk
enforcement of legal and oversight function and
114
regulatory implications how the board is
of cyber risks and the engaging with
responsibilities of the management on this
board in case of any issue. Disclosure about
breaches. Company’s controls and
The Board’s audit committee procedures about an
The OLPM IT governance is based while performing risk oversight
“early warning system”
on internal policies that are function also reviews and
evaluates the IT risks. The that enables the
developed in line with the
Regulatory requirements that are budgets and capex for Network company to identify,
monitored by IT Steering upgradation and strengthening assess, address, make
Committee and Board of security firewalls are approved by timely disclosures and
Directors. These policies helps in the Board, after detailed timely communications
monitoring the IT risks related to presentation by the management. to the board about
operations hence ensuring Internal Audit department
cybersecurity risks and
smooth business. in addition, The regularly and IT auditors on
annual basis review the IT incidents.
Modaraba has also taken
sufficient measures to ensure its structure and network security
audits, the results of which are The Modaraba has aligned itself to
network security and has
presented to the Board’s Audit efficient use of Information
implemented stringent controls
Committee. Technology resources in
to protect its data privacy.
achieving its operational and
strategic objectives while
Disclosure related to IT Disclosure that at least
increasing certificate holders’
governance and one board-level value. OLPM governs its
cybersecurity programs, committee is charged information and systems using
policies and procedures with oversight of IT the measures set out below:
and industry specific governance and
cybersecurity matters Risk management
requirements for
Business ownership of risk
cybersecurity and and how the board
Access control
strategy in place. administers its IT risk Use of information and systems
oversight function Classification of information
We have at OLPM comprehensive related to these risks. Physical protection of information
Information & Cyber Security Personnel management
policies and procedures in place. The IT Steering Committee is Monitoring of usage and
Information security is holistically responsible for reviewing, Appropriate use.
practiced and IT strategy plan is recommending IT infrastructure
revised every three year. and strategies to the Board.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

Disclosure of policy Disclosure of Disclosure about
related to independent advancement in digital education and training
comprehensive security transformation on how efforts of the Company
assessment of the organization has to mitigate
115
technology leveraged 4.0 Industrial cybersecurity risks.
environment, including revolution (RPA, Block
third party risks and Chain, AI, Cloud At OLPM, we believe that a
well-informed and educated
when last such review Computing etc.) to
workforce is one of our strongest
was carried out. improve transparency, defences against cybersecurity
reporting and risks. We are committed to
In addition to the internal audit governance. maintaining the highest
review, each year an IT statuory standards of cybersecurity
audit was also carried out to to As part of our digital education and training to protect
ensure that adequate controls transformation, we have fortified our assets and the trust of our
are in place to address the cyber our cybersecurity measures to stakeholders. We have security
security risks and to evaluate the protect sensitive data and controls in place and also we
overall company readiness maintain the highest standards educate our staff how to remain
regarding security incidents. of data governance. This ensures secure in a digital world.
the safety and privacy of our
Disclosure about stakeholders' information.
resilient contingency
and disaster recovery Additionally, Our commitment to
plan in terms of dealing transparency extends to our
communication with
with a possible IT failure
stakeholders. We have
or cyber breach and implemented user-friendly
details about company’s digital platforms that provide
cyber insurance. real-time access to reports and
key performance indicators,
The Modaraba has an updated fostering a culture of openness
Disaster Recovery plan in place and accountability.
for the continuity of Company’s
business and operations in case By leveraging these Industry 4.0
of any extra ordinary technologies, we have not only
circumstances. The improved our internal processes
comprehensive plan is designed but have also fortified our
to ensure the protection of relationships with regulators,
overall company’s operations and investors, customers, and
assets along with regular archival employees. We are dedicated to
and system-backups at remote continuously embracing
site. The Disaster Recovery Plan emerging technologies and
is regularly tested to ensure the setting new benchmarks in
readiness of the IT systems in transparency, reporting, and
case of any disaster governance
 Shariah
Mechanism
www.olpmodaraba.com

A fundamental requirement of an
Islamic financial institution is that
its whole business practices and
operations are based on Shariah
rules and principles. Islamic
116
finance derives its value
proposition from the application
of Shariah contracts in financial
transactions that provide for
different risks and return profile.
Adherence to Shariah principles
under such distinct contract
preserves the validity and
sanctity of any Islamic financial Shariah Advisor Profile
transactions.
Mufti Faisal Ahmed is the Shariah
In order to uphold these advisor of OLP Modaraba. He has
principles, OLPM has devised a experience as a teacher and
proper mechanism for Shariah visiting faculty at different
Governance. This mainly includes Universities. He is a regular guest
appointment of a Shariah Advisor speaker on Islamic topics
who reviews and ensure that the including Riba Free Banking,
business conducted, the Zakat, etc. at different fora. In
transactions carried out and the addition to his primary
investment made by OLPM are in responsibility of being a teacher
accordance with Shariah at Jamiatur-Rasheed since 2003,
principles and are in line with its he is also assigned responsibility
prospectus duly approved by of Administration, Consultancy
Religious Board of SECP. and delivering Fatawa at Shariah
Moreover, OLPM has developed Consultancy for trade and finance
product program of each of its under supervision of Dar-Ul-Ifta
product offered, which are duly Jamiat-ur-Rasheed.
reviewed and signed by the
Shariah Advisor. All process flows
of products are also approved by
the Shariah Advisor. In addition,
OLPM has a Shariah Internal
Auditor who reviews the
transactions on a regular basis to
validate OLPM’s compliance with
Islamic principles.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Shariah
Advisor's Report

ANNUAL REPORT 2024

I have conducted the Shariah review to adhering to Islamic principles ix. The existing portfolio of staff
of OLP Modaraba [managed by OLP and values. Our team held financings were restructured in
Services Pakistan (Private) Limited, consultation sessions with their order to reflect the new policy
Modaraba Management Company for Shariah advisors of various approved by the Board. The
the year ended June 30, 2024 in banks. The purpose of the open restructuring process was closely
accordance with the requirements of discussion was to share supervised to ensure strict 117
the Shariah Compliance and Shariah knowledge, and the resolution of compliance with Shariah
Audit Mechanism for Modarabas and complex Shariah-related queries. principles. Going forward, the
report that except the observations as We worked together to find new financing offered to staff will
reported hereunder, in my opinion: innovative solutions that uphold be in line with the revise process
Islamic ethics while meeting the flow duly reviewed and verified
i. The Modaraba has a mechanism Banks business objectives. from shariah prospectives.
which has strengthened the
Shariah compliance, in letter and v. The agreements entered into by Recommendation
spirit and the systems, the Modaraba are Shariah
procedures and policies adopted compliant and the financing It is again recommended to convert
by the Modaraba are in line with agreements have been executed more OLPM clients to Islamic Insurance
the Shariah principles. The senior on the formats as approved by i.e. Takaful as soon as possible.
management and staff are well the Religious Board and the
intentioned and cooperative in related conditions have been Conclusion:
observing Shariah compliance in met.
its true spirit. In my opinion and best of my
vi. To the best of my information knowledge and information provided
ii. During the year, OLPM arranged and according to the by the Modaraba management with
inhouse Shariah Compliance explanations given to me, the relevant explanation, I am of the view
Training for its staff across three business transactions that during the period overall business
different offices via video undertaken by the Modaraba and operations of the Modaraba are
conference call. The purpose of other matters incidental thereto Shariah Compliant.
the training was to highlight the are in conformity with the
Shariah Compliance Shariah requirements as well as And Allah Taala knows Better &
requirements related to product the requirements of the Perfect.
and services being offered by the Prospectus, Islamic Financial
OLPM. The target audience was Accounting Standards as
new joiners. applicable in Pakistan and the
Shariah Compliance and Shariah
iii. OLPM continues to hold Audit Regulations for Modarabas. Mufti Faisal Ahmed
interactive inhouse sessions in Shariah Advisor
which Shariah Advisor provide vii. Profit sharing ratios conform to
guidance on Shariah compliance the basis and principles of Dated: Safar 30, 1446 AH /
in Modaraba’s process flows and scheme approved by SECP September 03, 2024
other product related religious board.
documentations to Senior
Management Personnel. These viii. During the period, no earnings
initiatives were designed to were realized from the sources or
enhance their understanding of by means prohibited by Shariah
Shariah compliance, fostering a and funds credited to charity
culture of awareness within the account were recovered from the
organization clients as late payments charges
and paid to Board approved
iv. OLPM continued to strengthen charitable institutions
its relationship with country’s accordingly.
Islamic Banks, a vital partner in
the financial industry committed
www.olpmodaraba.com

Governance Sustainability Stakeholders

118
 Sustainability

ANNUAL REPORT 2024

119
 Sustainability
www.olpmodaraba.com

OLP Modaraba Environmental and Social Risk Management Framework articulates the Modaraba approach to
environmental and social risk management and outlines the key elements of our Environment and Social
Strategy. It is designed to incorporate procedures for evaluation and management of environmental, climate and
120
social change risks of current as well as future financing/investments in credit risk management procedures.
These procedures enable the Modaraba to minimize our exposures of foreseeable E&S risk and at the same time
provide adequate protection against unforeseeable risks. Understanding our clients’ environmental and social
(E&S) performance is an important element of how we assess and manage risk since the way our
clients/investees manage impacts of their operations may pose some level of environmental and social risks. If
left unmanaged, these risks can impact our reputation, our clients’ operations and long-term economic viability,
and the communities and environment in which we and our clients operate. This procedure applies to all
employees of OLP Modaraba and third-party entities such as contractors or loan recipients
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Success
Story

ANNUAL REPORT 2024

Digital Paperless Initiatives Being a responsible organization

OLP Modaraba advocate strategies to reduce carbon OLP Modaraba is cognizant of its obligations towards
emissions and engage employees to contribute in conducting its business operations in a sustainable 121

reduction. OLP Modaraba encourage paper usage and socially responsible way. OLP Modaraba foremost
reduction and have set sights on becoming a duty is to create a platform which reflects its values.
carbon-neutral Modaraba in near future. The The Modaraba has “Corporate Social Responsibility
transition to paperless work environment (CSR) Strategy”, It envisions the strategic guidelines
underscores our commitment to carbon reduction of incorporating CSR into the very core of all our
while bolstering cost-efficiency. business practices across the Modaraba. The OLP
Modaraba CSR activities are centrally monitored
throughout to ensure that the OLP Modaraba invests
in the right causes that magnify the goodwill of the
Modaraba and our community at large.

Modaraba CSR goals are aligned with its operations for

the betterment of all stakeholders. The aim of the
Modaraba is to be well versed in CSR by being a
sustainable organization.
Being a responsible organization
OLP Modaraba is cognizant of its obligations towards
conducting its business operations in a sustainable
 Corporate Social Responsibility and
Community Cooperation.
www.olpmodaraba.com

OLP Modaraba is keen to support causes that work towards the social welfare of the country. This includes
extending support to underprivileged segments of the society so they may have access to the basic necessities
of life, i.e. food, education and health, leading towards a better standard of living. OLP Modaraba Donated PKR1
million to the community.
122
Social Welfare

Family Educational Services Foundation Family Educational Services Foundation (FESF) is a charitable
organization committed to education and social impact in Pakistan. They focus on the empowerment of
disadvantaged deaf children and youth through a holistic approach to deaf education. There are over 1 million
deaf children in Pakistan, the majority of whom hail from slum areas living on the edge of poverty, and facing the
dire threats that come with poverty and a high risk of being abused and exploited. Deaf Reach has created a safe
haven for these children, and spent the past 3 decades in providing education, vocational training and job
placement for Deaf youth nationwide. OLP Modaraba Donated PKR1 million to the community.

AKUH - The Patients' Behbud Society, The Patients Behbud Society

has been providing high-quality care to children with multiple
diseases often complicated ones. Majority of the treatment
includes but not limited to cardiopulmonary, oncology,
neurosciences and child development, gastroenterology, nutrition,
endocrinology, nephrology, genetics, neonatal and infectious
diseases. Mainly, these patients come to The Patients Behbud
Society after being denied access to quality medical care elsewhere
due to a lack of funds or lack of capacity to handle complex cases in
other medical institutions. The Patients Behbud Society often
becomes their saviour and last hope. On the request of The Patients
Behbud Society for AKUH, OLP Modaraba donated PKR 2 million to
the hospital.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

Beach Cleaning

Across scientific literature, there is increasing support

for the use of pro-environmental volunteering as a
way to overcome these ecological and public health 123
challenges, as it can simultaneously improve
environmental quality and human health and
well-being.

Beach Cleaning Activity, Cricket Match and various

Team Building activities was held in Karachi for
employees to make a positive difference to a cause
they feel passionately about and leaves them feeling
informed about the impacts of plastic pollution.

Community Awareness Campaign at LRBT

LRBT is committed to creating a better Pakistan by preventing the suffering caused by blindness and other eye
ailments. To this end it will provide state of the art comprehensive free eye-care in keeping with its tradition of
excellence, efficiency and compassion for all.

OLPM arranged volunteer service for employees from Karachi & Lahore Offices. A very educational excursion for
employees were arranged to see the large sector of Non-profit organization. State of the Art , large sector of eye
hospital with a network of 20 fully-equipped hospitals, 56 primary eye care, and outreach clinics are under scored with
The Layton Rahmatulla Benevolent Trust (LRBT). OLP Modaraba donated PKR 2 Million to NPO.
 Community
Health & Wellness
www.olpmodaraba.com

Medical Camp

OLPM collaborated with "Chughtai Lab and Indus

Hospital" to organize a "Medical Camp" at office
124
premises. The camp provided employees with
complimentary basic tests, discounted rates for other
medical tests, and free medical consultations with
General Physicians.

Blood Donation Drive

In line with our aim to become a responsible and giving

member of our community, OLP Modaraba hosted with
Indus Hospital a blood donation drive in collaboration
with UBL Funds & Oraan at Head Office.

Blood donation drive is the reinforcement for a noble

cause, save lives, and our collective efforts can
contribute to the well-being of our community. We
encourage all staff members to participate and make
this event a success.

Pinktober

OLP Modaraba aiming to educate employees about

breast cancer prevention, organized an awareness
session with Oncologist from Chughtai Lab, who
briefed breast cancer risk factors and the importance
of regular screenings. The session fostered proactive
healthcare practices and underscored OLPM
commitment to community well-being.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Good Health &

Well-being

ANNUAL REPORT 2024

Wellness Week:

Development employee wellbeing is good for people and the organisation. Promoting wellbeing can help prevent stress and
create positive working environments where individuals and organisations can thrive. Good health and wellbeing can be a core
enabler of employee engagement and organisational performance.
125
This factsheet focuses on wellbeing in the workplace, explaining why it matters. We outline the domains of our wellbeing model,
and look at the role of different stakeholders in cultivating a healthy workplace.

In-house wellness week was arranged for Pan Pakistan Employees; and all were encouraged to focus on having the freedom on
activities that promotes a healthier work-life balance and improve their emotional, mental or physical wellbeing. The course of the
week comprises appended below;

1. Nutritional Hour: Fruit festivals raise awareness of eating fruits for health benefits.

2. Literacy Hour: Session on Financial Crime Compliance Risk and Its Impact by External Trainer, Mr. Usman Ali Khan, highly
experienced and accomplished Compliance professional in the field of training and development.

3. Meditation Session-On Resilience & Emotional Well-being. Regular meditation practice strengthens the brain's
resilience centers and improve emotional regulation. It can also enhance self-awareness, reduce stress, and promote a
greater sense of calm and well-being. The session was demonstrated by In-house employee Ms. Asma Farooque, Manager –
Corporate Real Estate Services, she is a meditation practicer and a Reiki Master.

4. Earth Hour: Turned off of non-essential lights for one hour. Earth Hour is a celebration of the planet so it is important to
enjoy the moment in a safe environment.

5. Wall of Gratitude: A gratitude wall in workplace was designated where employees can share what they are thankful for.
“Gratitude is an attitude which can take you to latitude”.

6. Physical Hour: Corporate Team Building Communication & Fun Games were arranged for employees In-house
demonstrated by Ms. Asma Farooque, Manager – Corporate Real Estate Services.
 Employee
Empowerment
www.olpmodaraba.com

International Women’s Day

We prioritize gender equality and women’s empowerment. On International Women’s Day, OLPM celebrates
female employees by distributing special giveaways OLPM aligns with the country's emphasis on gender equality
126 and women's empowerment. These efforts contribute to a more inclusive society where women are empowered
to take on leadership roles and actively participate in various sectors of the economy.

Strengthening Community Bonds and Cultural

Appreciation

An epic transformation of education and information

for the employee’s provided a wealth of information on
art, history, science, and culture. An educational
experience that goes beyond textbooks, allowing
employees to learn in a visually engaging and
interactive environment. Independence Day was
celebrated throughout Pan Pakistan, visit of SBP
museum was part of the day for Head Office
Employees.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Continous
Learning

ANNUAL REPORT 2024

OLPM values employee development. Our instructive
and constructive programs includes diversity through
learning; OLPM value week celebration was held
127
employees showcased the demonstation how they
embody core values in their daily business activities.

Management witnessed incredible creativity,

collaboration, and commitment from all participating
teams. Each group brought unique perspectives and
showcased presentation on values led by each
Management Committee Members.

To honor their achievement MD & CEO presented “The

certificate of Excellence” to the winning team on their
outstanding showcasing of the presentation on one of
the value “Teamwork” demonstrated exceptional
understanding and practical application, setting a
remarkable example for all.
www.olpmodaraba.com

128
Performance and
Sustainability Stakeholders
Position
 Stakeholders

ANNUAL REPORT 2024

129
 Stakeholders Relationship and
Engagement
www.olpmodaraba.com

The main philosophy followed by the OLPM, has been to create value for all stakeholders through fair
business practices. This translates into policies approved by the Board of Directors that ensures that
systems and controls are in place so that Clients are treated fairly and full regard is taken of their interests
as required by the entity’s regulators.

130 OLPM maintains sound collaborative relationships with its stakeholders through engagement and provides
a medium for clear, effective and consistent communication with all its stakeholders.

This helps to promote the reputation of the Modaraba and its management. Dialogues with investors,
analysts and other stakeholders are also encouraged. Frequency of engagements is based on specific
corporate requirements under the Code of Corporate Governance and with the objective to establish,
promote and enhance the image of OLPM and its practices.

The table below acts as our statement by setting out the key stakeholder groups, their interests and how
OLPM has engaged with them over the reporting period. However, given the importance of stakeholder
focus, long-term strategy and reputation, these themes are also discussed throughout this Annual Report.
Stakeholder

Our Employees Our suppliers Our investors Our Clients Regulatory Community and
bodies Environment
Training, Workers’ rights Comprehensive Timely and Compliance with Sustainability
development and review of financial informative end to regulations
career prospects Supplier engagement performance of the end service Human Rights
and management to business Worker pay and
Health and Safety prevent Ease of access to conditions Energy usage
Business information
Working conditions Fair trading and sustainability Health and Safety Recycling
Their interests

payment terms Legal expertise

Diversity and High standards of Brand reputation Waste Management
Inclusion Sustainability and governance Timeliness
environmental impact Waste and Community outreach
Human Rights Collaboration Success of the Safety environment and CSR
business
Fair pay, employee Long-term Data security Insurance
benefits partnerships Ethical behaviour

Awareness of
long-term strategy
and direction

Workforce posters Initial meetings and Regular reports and Client support Modaraba website Philanthropy
and communications negotiations analysis for investors service
and Certificate Stock exchange Oversight of
Ongoing training and KPIs and Feedback holders Modaraba reports announcements corporate
development responsibility plans
opportunities Internal approval on Annual Report Marketing and Annual Report
How we engage

significant changes to communications CSR initiative

Speakup procedures suppliers Modaraba website Direct contact with
Client feedback regulators Workplace recycling
Employee benefits Direct engagement ARM policies and
packages between suppliers Annual Report Compliance updates processes
and specified Stock exchange at Board Meetings
Staff intranet Modaraba contact announcements ARM
Consistent risk
Dedicated investor Modaraba Website review
relations resource for
Certificate holder
liaison
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Issues raised at last ARM Annual Review Meetings. It SRO is also placed on the website.

ANNUAL REPORT 2024

circulates the notice of review
meetings well within regulatory
The Chairman started the Annual Summary of the
Review Meeting by welcoming all timeframe. Moreover,
advertisement is published in analyst briefing, if
the certificate holders of the
Modaraba. Mr. Nausherwan Adil Urdu and English newspapers. any, taken place
Chairman Audit Committee also during the year
joined the meeting to answers The Modaraba timely updates its 131
certificate holders questions on website with respect to all On 26 October 2023, a Corporate
the Audit Committee’s activities / notices of Annual Review Meeting Briefing Session was organized by
Matters that are within the scope / Board Meetings / other OLPM for its stakeholders,
of the Audit Committee Regulatory Compliances. analysts. The detail of which can
responsibilities. The MD/ CEO be viewed from OLPM website
briefed the holders about the Investor Relations www.olpmodaraba.com
Modaraba’s performance for the Section on Website
last financial year and also Highlights about
provided updates on how the We are continuously exploring redressal of investors'
management is working to new opportunities to create
safeguard the interests of the
complaints.
further value for our certificate
certificate holders and maximize holders and investors to give The management of the
their value creation. In addition to them a better return on their Modaraba is committed to provide
brief financial performance investments. The website of equal and fair treatment to all
overview, the queries and OLPM (www.olpmodaraba.com) is investors/certificate holders
concerns of certificate holders one such medium to generate through transparent investor
were also addressed awareness and provide reliable relations, increased awareness,
appropriately in a question and information to the investors. effective communication, and
answer session. The certificate Detailed Modaraba information is prompt resolution of investors’/
holders appreciated the provided on the website which certificate holders’ complaints. In
performance of the Modaraba. includes but not limited to order to promote investor
The Meeting was attended by the financial reports, investors relations and facilitate access to
CEO, Directors, CFO, Company notices/announcements, pattern the Modaraba for grievance /
Secretary, Head of CRC, Head of of certificate holding, dividend other query registration, a
Compliance and Legal, Head of declarations etc. The investor specific ‘investors’ relations’
internal Audit & Head of HR. relations section is section is also maintained for the
External Audit representatives comprehensively covered on the purpose on the Modaraba ‘s
also attended the meeting. website of OLPM which is website, During the year under
regularly updated. review no formal complaints was
Encouragement of lodged by any certificate holder of
Minority Certificate The Modaraba is also in full the Modaraba.
compliance with the SRO
holders to Attend the
634(I)/2014 dated July 10, 2014
Annual Review issued by SECP regarding
Meetings maintenance of functional
website by listed companies. A
The Modaraba encourages its Compliance Certificate by the
Certificate holders to attend the Chief Executive under the said
 Steps board has taken to solicit and understand the views of stakeholders
www.olpmodaraba.com

through corporate briefing sessions;

Modaraba’s certificate holders comprise of a vast section of investors, which include, mutual funds,
investment companies, insurance companies, foreign shareholders, pension funds, high net worth
individuals, housewives, professionals and individuals of varied requirements. The Modaraba regularly
interacts with all categories of certificate holders, through its Annual, Half-yearly and Quarterly reports,
Annual Review Meeting, Intimation of Material information through PSX PUCAR’s portal as well as press
132 release and publication on OLPM website. etc. The Chief Executive Officer and the Chief Financial Officer
remain available to respond to any certificate holder / investor’s query in person or on telephone as well as our
dedicated email ID i.e. [email protected]. The Chief Executive Officer regularly updates the non-executive
members of the views of the major certificate holders about the Modaraba.

OLP Modaraba continues to maintain a healthy relationship with the Investor community by holding Corporate
Briefings annually, whereby the Modaraba apprises the Local & Foreign Investor base about the entity’s business
environment as well as the economic indicators of the country. The Modaraba also takes this as an Opportunities to
brief analysts regarding its performance, investment decisions, and challenges along with business outlook.
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Pattern of holding of certificates by the certificate-holders as at June 30, 2024

Number of Total

ANNUAL REPORT 2024

Certificate Certificate holding Certificates
holders From To held

1 ,494 1 50 27,971
603 51 100 43,944
3 ,501 101 500 1,047,805
1 ,012 501 1,000 789,324
1 ,124 1 ,001 5,000 2,571,602
187 5 ,001 10,000 1,382,508 133
334 10,001 375,000,000 39,520,376
8,255 45,383,530

Certificate-holders Number of Number of

Category Certificate-holders Certificate Held Percentage %

INDIVIDUALS 8,172 23,855,614 52.56

FINANCIAL INSTITUTIONS** 11 8,227,729 18.13
INSURANCE COMPANIES 11 5,568,922 12.27
MODARABAS / MODARABA MANAGEMENT COMPANIES* 7 4,571,201 10.07
JOINT STOCK COMPANIES 31 2,070,686 4.56
OTHERS 23 1,089,378 2.40
8,255 45,383,530 100.00

* Includes OLP Services of Pakistan (Private) Limited ( 4,538,353 certificates)

** Includes OLP Financial Services Pakistan Limited ( 4,538,353 certificates)

OLP MODARABA
Additional Information as at June 30, 2024

Categories of Certificate-holders Number Certificates held Percentage

Associated Companies, Undertakings and Related Parties

OLP FINANCIAL SERVICES PAKISTAN LIMITED 4,538,353 10.00

OLP SERVICES PAKISTAN (PVT.) LIMITED 4,538,353 10.00
2 9,076,706 20.00
Mutual funds
CDC - TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 1 3,677,560 8.10

Directors, CEO & their Spouse and Minor Children

MR. SHAHEEN AMIN 1 100,000 0.22
MR. NADIM D. KHAN 1 6,049 0.01

Executives - - -

Public Sector Companies and Corporations 4 4,114,975 9.07

Banks, Development Finance Institutions,

Non-Banking Finance Institutions, Insurance
Companies, Modarabas 21 1,498,865 3.30

Certificate-holders holding five percent

or more certificates in the Modaraba - - -
(other than those reported above)
www.olpmodaraba.com

Performance and
134 Stakeholders Future Outlook Position
 Outlook
Future

ANNUAL REPORT 2024

135
 Future
Outlook
www.olpmodaraba.com

Forward-looking and system’s transactional direction, honed and amended

statement in narrative capability and reach and easy to from time to time, over three
use efficient processes ensuring decades of profitable operations
and quantitative form
client’s satisfaction by reducing are geared towards obtaining this
including projections or turnaround time without objective.
136
forecasts about known compromising on the control
trends and uncertainties environment. As the focus is to Explanation as to how
that could affect the grow, acquiring and retaining the the performance of the
company’s resources, right quality of human resource
company meets the
revenues and operations will be critical. Accordingly, OLPM
will also continue to invest in forward-looking
in the short, medium and disclosures.
learning and development of its
long term. staff i.e., on the job learning,
learning from others and formal OLP Modaraba manages and
Pakistan’s economy appears to training. We believe that Islamic monitors risk exposure very
have stabilized in the short term, financing has a bright future in prudently. We have re-evaluated
after the IMF financing Pakistan. We continue to our entire portfolio to ascertain
arrangement, with inflation contribute a fair share to the risks associated with our existing
heading towards single digit and growth of Islamic financing in the customers and adjusted risk
the discount rate expected to country specifically targeting the classification of those customers
reduce significantly. This may SME sector. accordingly. Credit policies have
pose a risk on the revenue side been further tuned accordingly to
however since our resources are The outlook and Forecasts based evaluate customers that are to be
well deployed and based on on projections and plans for the on-boarded in future. Stricter
spreads, we see this as an future in this report are based on monitoring and data gathering is
Opportunities rather than a threat. management’s beliefs and also in place for existing clients.
OLPM strategy remains assumptions drawn from current While reviewing credit policies,
maintaining the growth expectations, estimates, due weightage is given to various
momentum, asset quality, forecasts and projections. These geographies, business sectors and
increasing profitability and expectations, estimates, their ability to sustain any future
product mix. We aim to target new forecasts and projections are business disruptions. Our sensible
market niches and plan to enhance gleaned from research, historical and proactive risk management
our exposure in high and mid-tier trend analysis and the approach has always helped us to
SME under the Diminishing management believes that we maintain a leading position in the
Musharika structure and consumer have the necessary wherewithal Modaraba sector. We have also
market under an assurance-based to adapt should risks and performed a thorough review of all
model Given the circumstances, uncertainties arise that may cause departments’ process flows to
we understand that we need to actual results to differ materially simplify them, enhancing efficient
both agile and liquid and our from those indicated in any use of technology, reducing use of
processes need to be robust and forward-looking statement. paper, providing appropriate
effective to avoid any untoward training to staff, and maintaining
risk taking. In line with the same, In the long term our aim is to high corporate governance
OLPM has a Principals Committee ensure sustainability of earnings standards.
to assess and plan our behavior to and creation of sustainable value
the ever-changing operating for our stakeholders and In addition to above the board of
environment. Amongst other employees. Our plans and directors has thoroughly reviewed
things, OLPM also focuses on IT the Term of References (TORs) of
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

the Board and its Committees in
order to remain effective in
discharging their duties in line
with the Listed Companies Code of
Corporate Governance 2019. 137

Sources of information
and assumptions used
for projections /
forecasts in the
forward-looking
statement and
assistance taken by any
external consultant.

The future projections and

forecasts are made by making
certain assumptions, keeping in
mind the macroeconomic
conditions, historical trends, and
prospective developments, as well
as other factors that might impact
the Financial Sector in which we
operate. The external information,
such as macroeconomic factors,
market dynamics, etc. is obtained
through various research
publications and forums, such as
IMF, World Bank, Asian
Development Bank, SBP, ICAP,
APCMA, PBC, etc. On the other
hand, internal information is
obtained through a collaborative
effort of various departments
within the Modaraba. To make
future projections, the
management makes use of their
best judgment and estimates.
Whereas, the Board critically
analyzes the budgets and
forecasts while finalizing strategic
objectives and way forward for the
Modaraba.
www.olpmodaraba.com

138
Performance and Financial
Future Outlook
Position Statement
 Performance

ANNUAL REPORT 2024

139
 OLP
Modaraba
www.olpmodaraba.com

June 30, June 30, June 30, June 30, June 30, June 30,
2024 2023 2022 2021 2020 2019

KEY FINANCIAL DATA (Rupees in Million)

Total assets 7,738 6,825 6,707 6,750 7,246 6,966

140 Portfolio 6,909 6,021 5,574 5,570 5,863 6,225
Total disbursements 3,197 2,782 2,693 2,419 2,199 2,682
Current assets 2,620 2,111 2,351 2,504 2,363 1,790
Total liabilities 6,495 5,648 5,569 5,592 6,072 5,806
Current liabilities 5,459 4,638 3,690 3,902 4,937 4,207
Financing from financial institutions 1,232 1,650 1,587 1,398 1,240 1,934
Redeemable capital and deposits 4,688 3,393 3,487 3,827 4,449 3,435
Certificate-holders' fund (cum dividend) 665 598 566 592 615 608
Reserves 579 579 572 567 559 553
Certificate-holders' equity 1,244 1,177 1,138 1,159 1,174 1,161
Revenues from operations (net off depreciation) 1,643 1,281 786 749 932 742
Financial charges 1,091 826 420 348 599 448
Impairment loss / (reversal) against doubtful debts 15 (6) (7) 38 10 (4)
Net Profit 158 129 112 153 127 126
Dividend including Bonus certificates 91 91 91 132 113 113

SUMMARY OF CASH FLOW

Cash and cash equivalents at beginning of the year 400 514 769 1,038 433 409
Net cash generated from /(used in) operating activities (1,034) (22) (93) 271 272 158
Net cash generated from/(used in) investing activities 84 53 16 37 52 18
Net cash generated from / (used in) financing activities 880 (145) (178) (577) 281 (152)
Net Increase / (decrease) in cash and cash equivalents (70) (114) (255) (269) 605 24
Cash and cash equivalents at end year 330 400 514 769 1,038 433

Profitability Ratios
Profit before tax ratio 14.30 15.17 20.74 22.52 14.70 18.85
Gross Yield on Earning Assets 26.01 21.53 12.96 11.21 14.06 11.13
Gross Spread ratio 68.23 67.18 57.02 51.35 69.09 66.92
Cost/Income ratio 51.10 52.75 51.86 51.78 54.51 51.33
Return on Equity 13.03 11.12 9.71 13.07 10.92 10.92
Return on Capital employed 2.53 2.25 1.93 2.52 2.10 2.14

Liquidity Ratios
Advances to deposits ratio 1.53 2.04 1.85 1.71 1.51 2.23
Current / Quick ratio 0.48 0.46 0.64 0.64 0.48 0.43
Cash to Current Liabilities 6.04 8.63 13.93 19.71 21.03 10.28
Investment /Market Ratios
Dividend Yield ratio 14.68 17.70 12.50 16.57 13.89 16.13
Dividend Payout ratio 57.54 70.48 81.37 86.29 89.02 90.01
Cash Dividend per certificate 20.00 20.00 20.00 29.00 25.00 25.00
Cash Dividend per certificate 2.00 2.00 2.00 2.90 2.50 2.50
Earnings per Certificate (EPC) basic and diluted 3.48 2.84 2.46 3.36 2.81 2.78
Break-up Value per share 27.40 25.93 25.09 25.53 25.88 25.57
Market value per certificate at the end of the year and
high/low during the year 13.62 11.30 16.00 17.50 18.00 15.50
Market value per certificate - low 13.70 11.00 14.99 16.01 14.00 14.65
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

ANNUAL REPORT 2024

June 30, June 30, June 30, June 30, June 30, June 30,
2024 2023 2022 2021 2020 2019

KEY FINANCIAL DATA (Rupees in Million)

Market value per certificate - high 14.50 17.18 19.28 21.50 18.50 20.25
Dividend Cover ratio 1.74 1.42 1.23 1.16 1.12 1.11
Price Earnings ratio 3.92 3.98 6.51 5.21 6.41 5.58
Price to Book ratio 0.50 0.44 0.64 0.69 0.70 0.61 141

Capital Structure Ratios

Earning assets to total assets ratio 93.55 94.10 90.78 93.91 95.24 95.56
Weighted Average cost of deposit 20.09 14.53 7.87 5.95 10.96 8.57
Net assets per share 27.40 25.93 25.09 25.53 25.88 25.57
Financial leverage ratio 4.44 3.86 4.04 4.01 4.35 4.07
Weighted average cost of debt 21.67 18.05 9.09 7.13 12.18 9.44
Debt to Equity ratio 1.35 1.71 1.79 1.52 1.11 1.71
Financial Charges Cover ratio 1.21 1.23 1.36 1.44 1.21 1.28

Revenue from Ijarah transaction is calculted on the basis

rental income net off related depreciation for above ratios

Non performing portfolio

Ijarah 99.68 40.10 53.55 66.81 164.20 29.34
Diminishing Musharaka 171.15 96.61 183.08 125.36 331.11 25.37
Housing Finance 3.69 - - 2.12 -
Sukuks - - 57.70 57.70 57.70 57.70
Total 274.52 136.71 294.33 249.87 555.13 112.42

GRAPHS

ASSETS EQUITY & LIABILITIES

6,495

6,072
7,738

5,806
5,648

5,592
5,569
7,246

5,459
6,966
6,909

6,825

6,750
6,707

4,937
4,688
6,225

4,638
6,021

4,449
5,863
5,574

4,207
5,570

3,902

3,827
3,690

3,487

3,435
3,393
3,197

2,782

2,693

2,682
2,620

1,934
2,504
2,419

2,363
2,351

1,650
2,199
2,111

1,398
1,587
1,790

1,244

1,240
1,232

1,174
1,159
1,177

1,161
1,138

JUN - 24 JUN - 23 JUN - 22 JUN - 21 JUN - 20 J U N - 19 JUN - 24 JUN - 23 JUN - 22 JUN - 21 JUN - 20 J U N - 19

Total assets Portfolio Total disbursements Current assets Total liabilities Current liabilities
Financing from financial institutions Redeemable capital and deposits
Certificate-holders' equity
 GRAPHS
www.olpmodaraba.com

PROFITABILITY RATIOS PROFIT & LOSS

69.09
68.23

67.18

66.92
57.02

1,643
54.51
52.75

51.86

51.78

51.33
51.35
51.10

1,281
1,091

932
142

826
26.01

786

749

742
22.52
21.53

20.74

18.85

599
15.17

14.70
14.30

448
14.06

420
13.03

12.96

13.07

10.92

10.92

348
11.21

11.13
11.12

9.71

113
113
158

153
38
129

126
132
112

127
91

91

10
91
2.53

2.52

(4)
2.25

2.14
2.10
1.93

15

(7)
(6)
J U N-24 J U N-23 J U N-22 J U N-21 J U N-20 J U N-19
J U N-24 J U N-23 J U N-22 J U N-21 J U N-20 J U N-19

Revenues from operations (net off depreciation)

Profit before tax ratio % Gross Yield on Earning Assets %
Financial charges
Gross Spread ratio % Cost/Income ratio % Impairment loss / (reversal) against doubtful debts
Return on Equity % Return on Capital employed % Net Profit

LIQUIDITY RATIOS CASH FLOW

1,000
21.03

880
19.71

84 281
500 272 158
271
16
13.93

53 37 52 18
Axis Title

-
10.28
8.63

(22) (93) (577) (152)

6.04

(500)
(145) (178)
2.23
1.85

1.71
2.04
1.53

1.51
0.64
0.48

0.48

(1,000)
0.46

0.43
0.64

(1,034)
(1,500)
J U N-2 4 J U N-2 3 J U N-2 2 J U N-2 1 J U N-2 0 J U N-19 J U N-2 4 J U N-2 3 J U N-2 2 J U N-2 1 J U N-2 0 J U N-19

Advances to deposits ratio Current / Quick ratio Cash to Current Liabilities

Axis Title
Net cash generated from /(used in) operating activities
Net cash generated from/(used in) investing activities
Net cash generated from / (used in) financing activities

CAPITAL STRUCTURE RATIO

95.56
95.24
94.10

93.91
93.55

90.78
27.40

21.67
20.09

25.88
25.93

25.53

25.57
25.09
18.05
14.53

12.18
10.96
4.44

9.44
9.09

8.57
1.35

7.87
1.21

7.13
5.95
4.04

4.35

4.07
4.01
3.86

1.79

1.44
1.71

1.71
1.36

1.28
1.52
1.23

1.21
1.11

J U N-2 4 J U N-2 3 J U N-2 2 J U N-2 1 J U N-20 J U N-19

Earning assets to total assets ratio Weighted Average cost of deposit Net assets per share
Financial leverage ratio Weighted average cost of debt Debt to Equity ratio
Financial Charges Cover ratio
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Comments on Key Ratios compared to last year

The financial year (FY) 2023-2024 faced several downturns, such as the significant enhancement of KIBOR and inflation, which caused the economy

ANNUAL REPORT 2024

to downfall, but Modaraba has still managed to maintain its position in the market.

Profitability Ratios
KIBOR rate remained higher throughout the year and started to decline only after May 2024. Consequently, profit before tax has been increased
resulting in an increase in gross yield on earning assets. However, due to higher inflation, an increase in administrative and operating expenses and
provision for income taxes as compared to last year, the profit before tax ratio has declined from 15.17% to 14.30%. The gross spread ratio has
increased due to an increase in financial charges. These have increased due to the upward movement of KIBOR as stated above. The movement of
KIBOR impacts financial liabilities rapidly. However, it took almost six months to translate this substantial increase in KIBOR into profit on earning
assets, as almost all our portfolio is on floating rate basis with majority of them repriced on a quarterly and half-yearly basis.
143
Liquidity Ratios
Advance to Deposit has been declined mainly due to a substantial increase in COMs portfolio and a reduction in term musharakah finance due to
quarterly repayments. In Financial Services Modarabas, the current ratio is always on the lower side as Ijarah's finances have been classified as fixed
assets due to the implication of IFAS-2. Cash to current liabilities has reduced further due to an increase in COMs portfolio most of which is of short-term
maturity. OLPM continues to maintain a substantial amount of cash and bank balance to meet the liquidity challenges and to meet the financing targets
throughout the year. Both Return on Equity and Return on Capital Employed has improved over the year.

Investment/ Market Ratios

The decline in the Dividend Yield ratio represents that OLPM investors are more confident in the Modaraba's overall historic performance and view it as
a better long-term investment and expect higher returns in the form of capital appreciation over the years which can offset a lower dividend yield in
short-term. Dividend payout ratio has declined, although EPS has increased as OLPM continues to pay constant dividends per share to its Certificate
holders.

There is an increase in the following ratios mainly due to an increase in net profit during the current year compared to last year, as these ratios are
directly related to the net profit.

Earnings per Certificate (EPC) basic and diluted;

Break-up Value per share; and
Dividend cover ratio.

The price earnings ratio has reduced which reflects that OLPM certificates GRAPHS
are undervalued due to uncertainty in the stock markets arising from
political instability and economic challenges faced by the country during
the year ended June 30, 2024. INVESTMENT/ MARKET RATIOS
Capital Structure Ratios
6.51

6.41
Earning assets to total assets ratio has slightly declined due to the

5.58
5.21

reclassification of staff loans from financing assets to prepayments in

accordance with the requirement of International Financial Reporting
3.98
3.92

Standards. Weighted Average cost of deposit and debt has increased due
to a significant increase in the KIBOR Rate throughout the current FY. Debt
to Debt-to-equity ratio has decreased due to a decline in Bank financings
1.74

on the balance sheet date as compared to last year.

1.42

1.11
1.16
1.23

1.12

0.11

0.18
0.12
0.11

0.11

Non-performing portfolio
0.10

During the current year, we managed to fully recover long outstanding

dues from one of the NPL clients. However, despite robust recovery
efforts, non-performing portfolio has increased from PKR 136.71 million to J U N-2 4 J U N-2 3 J U N-2 2 J U N-2 1 J U N- 2 0 J U N-1 9

PKR 274.52 million, mainly due to delayed payments from selected clients. Dividend Cover ratio Price Earnings ratio Price to Book ratio
OLPM continues to closely monitor its financing portfolio and has managed
to subsequently reduce its NPL portfolio.

INVESTMENT/ MARKET RATIOS INVESTMENT/ MARKET RATIOS

27.40

25.93

25.88
25.09

25.53

25.57
89.02

90.01
86.29
81.37

18.00
70.48

16.00

17.50
13.62

15.50
11.30
57.54

3.48

3.36
2.46
2.84

2.81
2.00

2.00

2.00

2.90

2.78
2.50

2.50
29.00

25.00

25.00
14.68

13.89
17.70

16.57

16.13
20.00

20.00

20.00
12.50

J U N-2 4 J U N-2 3 J U N-2 2 J U N-2 1 J U N-2 0 J U N-1 9

Cash Dividend per certificate

Earnings per Certificate (EPC) basic and diluted
J U N-2 4 J U N-2 3 J U N-2 2 J U N-2 1 J U N-2 0 J U N-1 9 Break-up Value per share
Market value per certificate at the end of the year and high/low during the year
Dividend Yield ratio Dividend Payout ratio Cash Dividend per certificate
 Horizontal
Analysis
www.olpmodaraba.com

Balance Sheet (%) June 30, June 30, June 30, June 30, June 30, June 30,
2024 2023 2022 2021 2020 2019
ASSETS

Current assets
Cash and bank balances (17.65) (22.15) (33.14) (25.92) 140.13 5.67
Loans and receivable - Term deposit receipts - - - - - -
144 Ijarah rentals receivable (46.47) (16.83) 9.92 (36.95) 69.45 4.34
Advances, deposits, prepayments and other receivables 149.67 (60.77) 45.95 88.50 (19.36) 107.80
Current portion of investment in Sukuk certificates 183.32 100.00 - - - -
Current portion of Diminishing Musharika 12.00 1.71 (2.10) 34.76 (6.75) 87.10
Current portion of net investment in Ijarah finance - (100.00) - - - -
Taxation recoverable - - (100.00) 13.94 10.15 0.02
Total current assets 24.09 (10.19) (6.10) 5.95 32.03 52.45

Non - current assets

Loans and advances to employees - - - - - -
Long-term portion of investment in Sukuk certificates - - - - - -
Long-term portion of Diminishing Musharika 29.04 19.68 23.25 (11.01) 10.72 5.13
Long-term portion of net investment in Ijarah finance - - - - - -
Ijarah assets (21.73) (10.13) (19.29) (14.74) (16.17) (18.09)
Deferred Taxation (81.67) 88.15 100.00 - - -
Fixed assets in own use (3.85) 1.23 348.01 (26.65) (31.71) (51.13)
Total non-current assets 8.59 8.19 2.58 (13.04) (5.66) (10.44)

TOTAL ASSETS 13.39 1.75 (0.64) (6.85) 4.02 0.18

LIABILITIES AND EQUITY

Current liabilities
Musharika finance - - - - - -
Murabaha finance - - - - - -
Current maturity of security deposits (22.92) 5.75 (33.93) 20.02 7.16 12.28
Current maturity of Musharika term finance
Creditors, accrued and other liabilities 10.43 11.87 23.58 (0.52) (12.54) 50.98
Advance Ijarah rentals received 180.89 (51.78) (62.71) (60.47) (36.09) (11.80)
Current portion of redeemable capital 52.56 4.58 (10.63) (24.14) 39.46 (11.89)
Taxation payable (57.98) 112.22 100.00 - - -
Unclaimed profit distribution (2.85) 0.88 2.37 (1.21) 4.25 10.34
Total current liabilities 17.70 25.70 (5.44) (20.96) 17.36 0.01

Non - current liabilities

Long-term portion of security deposits (17.44) 4.33 (6.26) (10.94) (18.53) (16.87)
Long-term portion of Musharika term finance 23.83 (56.19) 13.62 40.41 (34.52) 6.11
Long-term portion of redeemable capital (20.67) (56.82) 21.04 778.39 3.58 360.37
Total non - current liabilities 2.57 (46.25) 11.20 48.86 (29.01) (0.03)

TOTAL LIABILITIES 14.99 1.43 (0.41) (7.91) 4.59 (0.00)

CERTIFICATE HOLDERS' EQUITY

Authorised certificate capital

50,000,000 (2010: 50,000,000) certificates of Rs 10 each - - - - - -
Certificate capital
Issued, subscribed and paid-up certificate capital
28,500,000 (2010: 28,500,000) certificates of Rs. 10 each
issued as fully paid in cash - - - - - -
16,883,530 (2010: 16,883,530) certificates of Rs. 10 each
issued as fully paid bonus certificates - - - - - -
- - - - - -

Reserves - 1.12 0.98 1.36 1.15 1.15

Unappropriated profit 46.54 28.11 (18.59) (14.52) 4.96 4.27
5.69 3.34 (1.73) (1.35) 1.21 1.10

TOTAL LIABILITIES AND EQUITY 13.39 1.75 (0.64) (6.85) 4.02 0.18
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Vertical
Analysis

ANNUAL REPORT 2024

Balance Sheet (%) June 30, June 30, June 30, June 30, June 30, June 30,
2024 2023 2022 2021 2020 2019
ASSETS

Current assets
Cash and bank balances 4.26 5.86 7.67 11.39 14.33 6.21
Loans and receivable - Term deposit receipts - - - - - -
145
Ijarah rentals receivable 0.72 1.52 1.86 1.68 2.48 1.53
Advances, deposits, prepayments and other receivables 5.21 2.37 6.14 4.18 2.07 2.67
Current portion of investment in Sukuk certificates 4.53 1.81 - - - -
Current portion of Diminishing Musharika 19.13 19.37 19.38 19.66 13.59 15.16
Current portion of net investment in Ijarah finance - - 0.01 0.01 0.01 0.01
Taxation recoverable - - - 0.16 0.13 0.13
Total current assets 33.86 30.94 35.05 37.09 32.61 25.69

Non - current assets

Loans and advances to employees - - - - - -
Long-term portion of investment in Sukuk certificates - - - - - -
Long-term portion of Diminishing Musharika 49.16 43.20 36.73 29.61 30.99 29.12
Long-term portion of net investment in Ijarah finance - - - - - -
Ijarah assets 16.46 23.85 27.00 33.24 36.32 45.07
Deferred Taxation 0.28 1.73 0.94 - - -
Fixed assets in own use 0.24 0.28 0.28 0.06 0.08 0.12
Total non-current assets 66.14 69.06 64.95 62.91 67.39 74.31

TOTAL ASSETS 100.00 100.00 100.00 100.00 100.00 100.00

LIABILITIES AND EQUITY

Current liabilities
Musharika finance - - - - - -
Murabaha finance - - - - - -
Current maturity of security deposits 1.69 2.48 2.39 3.59 2.79 2.71
Current maturity of Musharika term finance
Creditors, accrued and other liabilities 5.93 6.08 5.53 4.45 4.17 4.96
Advance Ijarah rentals received 0.06 0.02 0.05 0.14 0.32 0.52
Current portion of redeemable capital 53.57 39.81 38.74 43.07 52.89 39.45
Taxation payable 0.70 1.89 0.91 - - -
Unclaimed profit distribution 0.74 0.87 0.88 0.85 0.80 0.80
Total current liabilities 70.54 67.96 55.01 57.81 68.13 60.39

Non - current liabilities

Long-term portion of security deposits 3.49 4.79 4.67 4.95 5.18 6.61
Long-term portion of Musharika term finance 8.06 7.38 17.15 14.99 9.95 15.80
Long-term portion of redeemable capital 1.84 2.63 6.20 5.09 0.54 0.54
Total non - current liabilities 13.39 14.80 28.01 25.03 15.66 22.95

TOTAL LIABILITIES 83.93 82.76 83.02 82.84 83.79 83.34

CERTIFICATE HOLDERS' EQUITY

Authorised certificate capital

50,000,000 (2010: 50,000,000) certificates of Rs 10 each 6.46 7.33 7.45 7.41 6.90 7.18
Certificate capital
Issued, subscribed and paid-up certificate capital
28,500,000 (2010: 28,500,000) certificates of Rs. 10 each
issued as fully paid in cash 3.68 4.18 4.25 4.22 3.93 4.09
16,883,530 (2010: 16,883,530) certificates of Rs. 10 each - - - - - -
issued as fully paid bonus certificates 2.18 2.47 2.52 2.50 2.33 2.42
5.86 6.65 6.77 6.72 6.26 6.51

Reserves 7.48 8.48 8.53 8.40 7.72 7.94

Unappropriated profit 2.72 2.11 1.67 2.04 2.23 2.21
16.07 17.24 16.98 17.16 16.21 16.66

TOTAL LIABILITIES AND EQUITY 100.00 100.00 100.00 100.00 100.00 100.00
 Horizontal
Analysis
www.olpmodaraba.com

Profit and Loss June 30, June 30, June 30, June 30, June 30, June 30,
2024 2023 2022 2021 2020 2019

Ijarah finance income - - - - - -

Ijarah rentals earned (14.32) (7.83) (18.86) (13.00) (10.06) (7.51)
146 Profit on Mutual Funds 13.42 100.00 - - - -
Income on Diminishing Musharika arrangements 37.60 90.57 22.37 (22.11) 35.10 149.19
Income on deposits with bank 62.12 72.16 (9.13) (30.48) 189.51 47.26
11.31 23.89 (10.00) (15.56) (0.59) 3.76

Financial charges 32.10 96.42 20.83 (41.93) 33.83 81.98

Depreciation on assets under Ijarah arrangements (23.20) (15.87) (22.45) (10.80) (15.47) (10.75)
Impairment against ijarah assets 100.00 (100.00) (444.09) (100.00) - (100.00)
29.26 25.58 (2.19) 22.53 21.08 19.36

Reversal of provision in respect of Ijarah finances - net 104.03 (540.26) (73.30) 100.00 (100.00) (36.08)
Provision in respect of Diminishing Musharika (53.88) (2,185.13) (97.91) 381.33 (794.99) (200.00)
Reversal / (Provision) in respect of other receivables (118.34) (493.13) (66.51) (100.00) - -
20.31 26.69 10.84 13.26 14.36 19.94

Other income (13.94) 5.99 (31.66) 11.33 (10.97) (19.47)

Administrative and operating expenses 12.80 26.08 2.58 7.21 14.88 9.48
20.49 21.67 2.26 19.66 1.11 4.79
Management Company's remuneration 20.49 21.67 2.26 19.66 1.11 4.79
Provision for services sales tax on Management Company's remuneration 20.49 21.67 2.26 19.66 1.11
4.79
Provision for workers' welfare fund (35.10) 13.87 102.86 19.66 1.11 4.79
Profit before taxation 22.64 21.99 0.20 19.66 1.11 4.79

Taxation 22.98 39.64 (100.00) - - -

Profit after taxation 22.48 15.45 (26.86) 19.66 1.11 4.79

Other comprehensive income for the year - - - - - -

Total comprehensive income for the year 22.48 15.45 (26.86) 19.66 1.11 4.79
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Vertical
Analysis

ANNUAL REPORT 2024

Profit and Loss June 30, June 30, June 30, June 30, June 30, June 30,
2024 2023 2022 2021 2020 2019

Ijarah finance income - - - - - -

Ijarah rentals earned 39.62 51.48 69.19 76.75 74.49 82.33
Profit on Mutual Funds 1.51 1.48 - - - - 147
Income on Diminishing Musharika arrangements 54.14 43.80 28.47 20.94 22.70 16.70
Income on deposits with bank 4.72 3.24 2.33 2.31 2.81 0.96
100.00 100.00 100.00 100.00 100.00 100.00

Financial charges (51.65) (43.52) (27.45) (20.44) (29.73) (22.08)

Depreciation on assets under Ijarah arrangements (24.30) (35.22) (51.86) (60.18) (56.97) (67.00)
Impairment against ijarah assets 0.64 - 0.29 (0.07) - -
24.69 21.26 20.97 19.30 13.30 10.92

Reversal of provision in respect of Ijarah finances - net (1.78) (0.97) 0.27 0.92 - 0.12
Provision in respect of Diminishing Musharika 0.47 1.14 (0.07) (2.92) (0.51) 0.07
Reversal / (Provision) in respect of other receivables (0.03) 0.18 (0.06) (0.15) - -
23.35 21.60 21.12 17.15 12.79 11.11

Other income 2.13 2.75 3.22 4.24 3.21 3.59

Administrative and operating expenses (13.02) (12.85) (12.62) (11.07) (8.72) (7.55)
12.46 11.51 11.72 10.31 7.28 7.16
Management Company's remuneration (1.25) (1.15) (1.17) (1.03) (0.73) (0.72)
Provision for services sales tax on Management Company's remuneration (0.16) (0.15) (0.15) (0.13) (0.09)
(0.09)
Provision for workers' welfare fund (0.22) (0.38) (0.41) (0.18) (0.13) (0.13)
Profit before taxation 10.83 9.83 9.98 8.96 6.33 6.22

Taxation (3.36) (3.04) (2.70) - - -

Profit after taxation 7.47 6.79 7.29 8.96 6.33 6.22

Other comprehensive income for the year - - - - - -

Total comprehensive income for the year 7.47 6.79 7.29 8.96 6.33 6.22
 Cash
Flow
www.olpmodaraba.com

June 30, June 30,

For the year ended June 30, 2024 (By Direct Method)
2024 2023
------------------ (Rupees) -----------------

Ijarah Rental Collection 795,054,079 924,787,794

Diminishing Musharaka's repayment proceeds 1,627,473,623 1,476,561,784
148
Diminishing Musharaka's profit receipts 1,135,292,883 795,291,842
Ijarah Disbursements (net off security deposits) (574,649,993) (443,497,318)
Diminishing Musharaka disbursements (2,610,707,793) (1,789,583,379)
Net proceeds from Ijarah assets disposals 100,644,486 107,304,660
Financial charges paid (1,006,836,279) (723,895,323)
Management remuneration to management company (12,521,234) (27,249,727)
Salaries & staff benefits (178,220,239) (173,936,634)
Documentation fee & others from customers 41,164,894 29,536,976
Payments for operating expenses (101,934,662) (55,517,066)
Taxes, duties, levies, charity & advance payments (49,108,183) (42,299,526)
Investments (200,000,000) (100,000,000)
Net cash used in operating activities (1,034,348,418) (22,495,917)

Net cash generated from investing activities 83,365,172 53,247,332

Net cash generated from financing activities 880,356,625 (144,645,840)

Net Cash generated (70,626,621) (113,894,425)

Cash & cash Equivalent at beginning of the year 400,254,200 514,148,625

Cash & cash Equivalent at end of the year 329,627,579 400,254,200

June 30, June 30,

2024 2023
------------------ (Rupees) -----------------

Free cashflows
Net cashflow used in operating activities 1,034,348,418 (22,495,917)
Net funds from bank financing 418,113,756 62,905,711
Net movement in deposits 1,390,930,000 (117,300,000)
Fixed capital expenditure 9,806,678 (10,563,298)
71,338,852 (87,453,504)
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Segment
Information

ANNUAL REPORT 2024

2024

Investment in
Finance Finances Operating subsidiaries, Micro
Total
lease and loans lease associates & Finance
others
----------------------------------------------------- (Rupees) ----------------------------------------------------- 149

Segment revenues - 1,175,281,471 849,388,585 131,673,873 - 2,156,343,929

Finance cost - 779,949,560 223,171,456 87,382,454 - 1,090,503,471
Administrative and general expenses - 217,835,982 62,330,663 24,405,479 - 304,572,125
Direct cost - - 513,098,534 - - 513,098,534
(Reversal) / Provision-net - (9,974,874) 24,234,190 - - 14,259,316
Other provision /(reversals) - net - - 610,000 - 610,000
Segment results - 187,470,802 26,553,741 19,275,940 - 233,300,483

Provision for Workers' Welfare Fund - (3,749,416) (531,075) (385,519) (4,666,010)

Provision for taxation - (56,970,183) (8,069,371) (5,857,732) (70,897,287)
Profit for the period 134,250,035 19,015,445 13,803,726 157,737,186

Other information
Segment assets - 5,284,579,457 1,329,475,749 488,570,341 - 7,102,625,547

Unallocated assets - - - - 635,709,658

Total assets 7,738,335,205

Segment liabilities - 4,215,881,478 1,465,517,360 379,666,690 - 6,061,065,528

Unallocated liabilities 433,676,980

Total liabilities 6,494,742,508

Capital expenditure - 4,540,659 1,299,245 508,717 - 6,348,622

Depreciation - 7,540,001 2,157,464 844,752 - 10,542,217

Unallocated Capital expenditure - - - - - -

Additions made to intangible assets - 2,473,270 707,691 277,095 - 3,458,056

Unallocated depreciation and amortisation - - - - - -

www.olpmodaraba.com

Dupont Analysis

Revenue

PKR 1,629
1. Ijarah income (net off
depreciation & Provisioning)
2. Diminishing Mush. Income

Millions
3. Income from bank deposits Asset Trunover
150 4. Fee on Financing arrangements = Revenue/ Total Assets

Total Assets
PKR 7,738

(Average) 22.38%
Millions

Net Profit margin Return on Equity

= (Revenue - Cost) / Revenue (RoE)

Cost
PKR 1,471

1. Financial Charges 14.09% 18.96%

2. Management Co. remuneration
(with sales tax)
Millions

3. Administrative, operating Equity Multiplier

expenses & WWF = Total Assets/Equity
4. Taxation
PKR 1,210

6.02 times
Equity
(Average)
Millions

Statement of Charity Account

Description 2023 - 2024

--- Rupees ---

Names of Non- Profit Organisation

The Patients Behbud Society for AKU (Health Care) 2,000,000

Layton Rehmatulla Benevolent Trust (Health Care) 2,000,000
Professional Education Foundation 1,000,000
Family Education Services Foundation 1,000,000
Behbud Association 500,000
6,500,000
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

Statement of
Value added

ANNUAL REPORT 2024

2024 2023
% %
Rupees Rupees

Revenue from operations (net of depreciation of Ijarah assets) 1,598,315,388 1,228,762,563

151
Other Income/ charges/reversal of povision for WWF 30,060,691 58,702,712
1,628,376,079 1,287,465,275

Operating expenses 71,675,996 61,363,664

Other charges 43,111,692 46,324,055
Provision for services sales tax on management
company's remuneration 3,419,286 2,837,777

Value Added 1,510,169,105 100.00 1,176,939,779 100.00

Distributed as follows:

To Employees
As remuneration 192,632,429 12.76 172,136,634 14.63

To finance providers
As profit on redeemable capital 721,694,359 47.79 429,514,180 36.49
As financial charges on Murabaha/Musharika 325,697,420 21.57 349,679,362 29.71

To Modarib
As management company's remuneration 26,302,197 1.74 21,829,056 1.85

To Certificate-holders
As profit on certificates 90,767,060 6.01 90,767,060 7.71

To Revenue Authorities
As workers' welfare fund 4,666,010 0.31 7,189,975 0.61
As Taxation 70,897,287 4.69 57,649,344 4.90

Retained in Business
As depreciation 10,542,217 0.70 10,156,821 0.86
As capital reserves and retained earning 66,970,126 4.43 38,017,347 3.23
1,510,169,105 100.00 1,176,939,779 100.00
 2024
0.31%
www.olpmodaraba.com

0.70% 4.43%
12.76%
6.01%

1.74%

152

21.57%

47.79%

As remuneration to employees As profit on redeemable capital

As financial charges on Murabaha/Musharika As management company's remuneration
As profit on certificates As workers' welfare fund
As depreciation As capital reserves and retained earning

2023
0.86%
0.61% 3.23%
7.71% 14.63%
1.85%

29.71%

36.49%

As remuneration to employees As profit on redeemable capital

As financial charges on Murabaha/Musharika As management company's remuneration
As profit on certificates As workers' welfare fund
As depreciation As capital reserves and retained earning
Financial Statement

ANNUAL REPORT 2024

153
Specific Disclosures
Performance and
to the Financial
Position
Statement
 INDEPENDENT AUDITOR’S REPORT TO THE
CERTIFICATE HOLDERS OF THE
www.olpmodaraba.com

OLP MODARABA
We have audited the annexed financial statements of OLP Modaraba (the “Modaraba”), which comprise the
statement of financial position as at June 30, 2024, and the statement of profit and loss and other
comprehensive income, the statement of changes in equity, the statement of cash flows for the year then
ended, and notes to the financial statements, including material accounting policy information and other
explanatory information, and we state that we have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purposes of audit.
154

In our opinion and to the best of our information and according to the explanations given to us, the statement of
financial position, statement of profit and loss and other comprehensive income, the statement of changes in
equity and the statement of cash flows together with the notes forming part thereof conform with the
accounting and reporting standards as applicable in Pakistan and give the information required by the Modaraba
Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980), in the manner so required
and respectively give a true and fair view of the state of the Modaraba’s affairs as at June 30, 2024 and of the
profit and other comprehensive income, the changes in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Financial Statements section of our report. We are independent of the Modaraba and Modaraba Company
[OLP Services Pakistan (Private) Limited] in accordance with the International Ethics Standards Board for
Accountants ‘Code of Ethics for Professional Accountants’ as adopted by the Institute of Chartered Accountants
of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current year. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.

Following is the Key audit matter:

S.No. Key audit matter How the matter was addressed in our audit

1 Provision in respect of Ijarah finance and

diminishing musharika

(Refer notes 4.2.1.3, 6 and 9 of the financial

statements)

The Modaraba records provision for Ijarah finance Our audit procedures to assess adequacy and
and diminishing musharika under the requirements determination of provision for ijarah financing and
of Prudential regulation issued by SECP and IFRS 9. diminishing musharika balances included, amongst
'The Modaraba applies the IFRS 9 general approach others, the following:
to measure Expected Credit Losses (ECL) for ijarah
finance and diminishing musharika. A lifetime ECL is  Obtained an understanding of the design and
recorded on Ijarah finance and diminishing
tested the operating effectiveness of the
musharika in which there has been Significant
relevant controls established by the Modaraba
Increase in Credit Risk (SICR) from the date of initial
to identify loss events and for determining the
recognition and which are credit impaired as on the
reporting date. A 12 months ECL is recorded for extent of provisioning required against ijarah
financing and diminishing musharika balances;
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

S.No. Key audit matter How the matter was addressed in our audit

ijarah finance and diminishing musharika which do Evaluated the key decisions made by the

ANNUAL REPORT 2024


not meet the criteria for SICR or "credit impaired" as Modaraba’s management with respect to
at the reporting date. To assess whether there is a accounting policies, estimates and judgments
significant increase in credit risk the Modaraba in relation to computation of provision for
compares the risk of a default occurring on the asset ijarah financing and diminishing musharika and
as at the reporting date with the risk of default as at assessed the appropriateness based on our
the date of initial recognition. The Modaraba also understanding of the Modaraba’s business and
considers reasonable and supportive forward operations;
looking information in determination of ECL. The
allowance is increased by provisions charged to 155
 Assessed the reasonableness and accuracy of
statement of profit and loss and other the data used for provision computation based
comprehensive income and is decreased by
on the accounting records and information
charge-offs, net of recoveries.
system of the Modaraba as well as the related
external sources used for this purpose;
In evaluating the adequacy of ECL, the management
considers various factors, including the nature and
characteristics of the obligor, current economic  Assessed the ECL model used by the
conditions, credit concentrations or deterioration in management to calculate provision against
collateral, historical loss experience and ijarah financing and diminishing musharika
delinquencies. balances of the Modaraba for appropriateness
of the assumptions used and the methodology
The Modaraba Regulations, 2021 specifies a criteria applied. We also tested the mathematical
for classification and provisioning of impaired accuracy of the model;
assets. The Modaraba while recognising provision
for impaired assets has considered the amount  Assessed the reasonableness of the
which is higher of (on a facility basis): forward-looking factors used by the
management in preparing ECL model; and
 the provision required under the Modaraba
Regulations, 2021; and  Assessed the relevant disclosures made in the
financial statements to determine whether
 the provision required under IFRS 9 using the they are complied with the accounting and
Expected Credit Loss (ECL) model. reporting standards as applicable in Pakistan.
The Modaraba has determined a provision on ijarah
financing and reversal of provision against
diminishing musharika balances and has recognised
a net charge of Rs. 23.37 million and a net reversal of
Rs. 9.98 million in respect of ijarah financing and
diminishing musharika respectively in the
statement of profit and loss and other
comprehensive income during the year ended June
30, 2024. As at June 30, 2024, the Modaraba
maintained a provision of Rs. 54.16 million and Rs.
57.59 million for ijarah financing and diminishing
musharika respectively.

The determination of provision in respect ijarah

financing and diminishing musharika as per the
requirements of prudential regulations and IFRS 9
remains a significant area of judgment and
estimation. Because of the significance of the
impact of these judgments / estimations and the
materiality of ijarah financing and diminishing
musharika balances relative to the overall financial
statements of the Modaraba, we considered the
area of provision for ijarah financing and diminishing
musharika as a key audit matter.
 Information other than the financial statements and Auditor’s Report thereon

Management is responsible for the other information. The other information comprises the information included
www.olpmodaraba.com

in the annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
156 have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.

Responsibilities of management and Board of Directors of the modaraba company for the financial
statements

Management of the Modaraba Company is responsible for the preparation and fair presentation of the financial
statements in accordance with the accounting and reporting standards as applicable in Pakistan and the
requirements of Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980)
and for such internal control as management of the Modaraba Company determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management of the Modaraba Company is responsible for assessing the
Modaraba’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management of the Modaraba Company either intends to
liquidate the Modaraba or to cease operations, or has no realistic alternative but to do so.

Board of directors of the Modaraba Company are responsible for overseeing the Modaraba’s financial reporting
process.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurances about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control;

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Modaraba’s internal control;

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management of the Modaraba Company;
Introductory The Board Organizational Overview & Strategy and Risk and Governance Sustainability Stakeholders Future Performance and Financial
External Environment Resource Allocation Opportunities Outlook Position Statement

• Conclude on the appropriateness of the management of the Modaraba Company’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Modaraba’s ability to continue as a

ANNUAL REPORT 2024

going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Modaraba to cease to continue as a
going concern; and

• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation. 157

We communicate with the board of directors of the Modaraba Company regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.

We also provide the board of directors of the Modaraba Company with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.

From the matters communicated with the board of directors of the Modaraba Company, we determine those
matters that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

Based on our audit, we further report that in our opinion:

(a) Proper books of account have been kept by the Modaraba Company in respect of the Modaraba as required
by the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980);

(b) the statement of financial position, the statement of profit and loss and other comprehensive income, the
statement of changes in equity and the statement of cash flows together with the notes thereon have been
drawn up in conformity with the Modaraba Companies and Modaraba (Floatation and Control) Ordinance,
1980 (XXXI of 1980) and are in agreement with the books of account;

(c) business conducted, investments made, expenditure incurred and guarantees extended during the year by
the Modaraba were in accordance with the objects, terms and conditions of the Modaraba; and

(d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the
Modaraba and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

The engagement partner on the audit resulting in this independent auditor’s report is Junaid Mesia.

A. F. Ferguson & Co.

Chartered Accountants
Karachi
Dated: October 4, 2024
UDIN: AR202410611smqcyvWgS
 Statement Of Financial
Position
www.olpmodaraba.com

As at June 30, 2024 June 30, June 30,

Note 2024 2023
(Rupees)
ASSETS
Current assets
Cash and bank balances 5 329,627,579 400,254,200
Ijarah rentals receivable 6 69,821,374 103,759,046
Advances, deposits, prepayments and other receivables 7 403,523,986 161,625,207
Investments 8 350,918,237 123,858,681
Current portion of diminishing musharika 9.4 1,476,958,150 1,321,802,595
158 Total current assets 2,630,849,326 2,111,299,729

Non-current assets
Long-term portion of diminishing musharika 9.4 3,807,621,307 2,948,113,326
Ijarah assets 10 1,259,654,374 1,627,562,155
Tangible assets 11 14,746,223 17,061,707
Intangible assets 12 3,768,937 2,194,932
Deferred taxation - net 13 21,695,041 118,347,633
Total non-current assets 5,107,485,882 4,713,279,753

TOTAL ASSETS 7,738,335,208 6,824,579,482

LIABILITIES AND EQUITY

Current liabilities
Current portion of term finance arrangements 14 625,117,384 1,146,247,638
Current portion of security deposits 15 130,535,992 169,344,276
Creditors, accrued and other liabilities 16 458,553,890 415,240,194
Advance Ijarah rentals received 4,645,531 1,653,873
Current portion of redeemable capital 17 4,145,135,000 2,717,105,000
Unclaimed profit distribution 57,602,615 59,295,174
Taxation payable - net 54,254,047 129,117,535
Total current liabilities 5,475,844,459 4,638,003,690

Non-current liabilities
Long-term portion of term finance arrangements 14 606,778,716 503,762,218
Long-term portion of security deposits 15 269,719,334 326,691,002
Long-term portion of redeemable capital 17 142,400,000 179,500,000
Total non-current liabilities 1,018,898,050 1,009,953,220

TOTAL LIABILITIES 6,494,742,509 5,647,956,910

CERTIFICATE HOLDERS' EQUITY

Certificate capital
Authorised certificate capital
50,000,000 (2023: 50,000,000) certificates of Rs. 10 each amounting to Rs 500,000,000
(2023: Rs. 500,000,000)

Issued, subscribed, called-up and paid-up certificate capital

28,500,000 (2023: 28,500,000) certificates of Rs. 10 each fully paid in cash 285,000,000 285,000,000
16,883,530 (2023: 16,883,530) bonus certificates of Rs. 10 each 168,835,300 168,835,300
18 453,835,300 453,835,300
Revenue reserve 210,869,362 143,899,235
Capital reserves 578,888,037 578,888,037
1,243,592,699 1,176,622,572

TOTAL LIABILITIES AND EQUITY 7,738,335,208 6,824,579,482

CONTINGENCIES AND COMMITMENTS 19

The annexed notes from 1 to 38 form an integral part of these financial statements.

For OLP Services Pakistan (Private) Limited

Management Company

SD SD SD SD
Chief Executive Director Director Chief Financial Officer
Statement Of Profit And Loss And Other
Comprehensive Income Restated

ANNUAL REPORT 2024

For The Year Ended June 30, 2024 June 30, June 30,
Note 2024 2023
(Rupees)

Ijarah rentals earned 836,635,253 976,425,361

Income on diminishing musharika arrangements 1,143,196,859 830,825,293
Dividend income 31,834,774 28,069,036
Income on deposits with banks 99,747,038 61,525,261
2,111,413,924 1,896,844,951 159

Financial and other charges 20 (1,090,503,471) (825,517,597)

Depreciation on assets under Ijarah arrangements 10.1 (513,098,534) (668,082,386)
Impairment on assets under Ijarah arrangements - net 10.1 (859,715) -
(1,604,461,720) (1,493,599,983)

506,952,204 403,244,968

(Provision) in respect of Ijarah finances - net 6.1 (23,374,475) (18,457,714)

Reversal of provision in respect of diminishing musharika - net 9.3 9,974,874 21,628,044
(Provision) / reversal in respect of other receivables 7.6 (610,000) 3,326,028
(14,009,601) 6,496,358

492,942,603 409,741,326
Other income 21 44,930,007 52,206,355
Administrative and operating expenses 22 (274,850,643) (243,657,119)

263,021,967 218,290,562
Management company's remuneration 23 (26,302,197) (21,829,056)
Provision for services sales tax on the management company's remuneration 24 (3,419,286) (2,837,777)
Provision for workers' welfare fund - net 16.3 (4,666,010) (7,189,975)

Profit before taxation and levy 228,634,474 186,433,754

Levy 25 (4,775,216) (4,210,355)

Profit before taxation 223,859,258 182,223,399

Taxation 25 (66,122,071) (53,438,989)

Profit for the year after taxation 157,737,187 128,784,410

Other comprehensive income for the year - -

Total comprehensive income for the year 157,737,187 128,784,410

Earnings per certificate - basic and diluted 26 3.48 2.84

The annexed notes from 1 to 38 form an integral part of these financial statements.

For OLP Services Pakistan (Private) Limited

Management Company

SD SD SD SD
Chief Executive Director Director Chief Financial Officer
 Statement Of
Cash Flows June 30,
Restated
June 30,
www.olpmodaraba.com

For The Year Ended June 30, 2024 Note 2024 2023
(Rupees)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year before taxation 223,859,258 182,223,399

Adjustments for non-cash and other items:

Depreciation 22 8,658,167 9,498,506
Amortisation 22 1,884,051 658,315
Depreciation on Ijarah assets 10.1 513,098,534 668,082,386
Gain on disposal of Ijarah assets 21 (3,673,052) (19,245,417)
160 Gain on disposal of tangible assets 21 (92,061) (3,444,437)
Loss on disposal of intangible assets 21 - 20,475
Reversal of impairment on assets under Ijarah arrangements 10.1 859,715 -
Provision / (reversal of provision) in respect of Ijarah rentals receivable - net 6.1 23,374,475 18,457,714
Provision / (reversal of provision) in respect of other receivables 7.6 610,000 (3,326,028)
(Reversal of provision) / provision in respect of diminishing musharika - net 9.3 (9,974,874) (21,628,044)
Write-off in respect of net investment in Ijarah finance - 370,000
Income on bank deposits (99,747,038) (61,525,261)
Levy 4,775,216 4,210,355
Financial charges on:
- Redeemable capital 20 721,694,359 429,514,180
- Term finance arrangements 20 292,451,443 324,746,184
Provision for services sales tax on the Management Company's remuneration 3,419,286 2,837,777
Provision for Workers' Welfare Fund - net 4,666,010 7,189,975
1,462,004,231 1,356,416,680
1,685,863,489 1,538,640,079
(Increase) / decrease in assets
Advances, deposits, prepayments and other receivables (235,835,591) 254,985,615
Ijarah rentals receivable 10,563,197 2,538,634
Investments (227,059,556) (123,858,681)
Diminishing musharika (1,004,688,662) (485,402,675)
Purchase of assets under Ijarah arrangements 10.1 (354,420,624) (726,045,483)
Proceeds from disposal of assets under Ijarah arrangements 212,043,208 260,700,613
(1,599,398,028) (817,081,977)
Increase / (decrease) in liabilities
Creditors, accrued and other liabilities 14,503,913 (17,593,765)
Advance Ijarah rentals received 2,991,658 (1,775,936)
Security deposits (95,779,952) 22,780,335
(78,284,381) 3,410,634
8,181,080 724,968,736
Profit paid on
- Redeemable capital (678,714,448) (436,645,128)
- Term finance arrangements (312,707,665) (262,907,325)
(991,422,113) (699,552,453)
Payment against Workers' Welfare Fund (1,999,202) (3,092,428)
Taxes and levy paid (49,108,183) (44,819,772)
Net cash used in operating activities (1,034,348,418) (22,495,917)

CASH FLOWS FROM INVESTING ACTIVITIES

Payment for tangible assets (6,348,622) (8,523,510)
Payment for intangible assets (3,458,056) (2,039,788)
Proceeds from disposal of fixed asset in own use 98,000 3,596,600
Income received on bank deposits 93,073,850 60,214,030
Net cash generated from investing activities 83,365,172 53,247,332

CASH FLOWS FROM FINANCING ACTIVITIES

Redeemable capital less repayments 34.1 1,390,930,000 (117,300,000)
Term finance less repayments 34.1 (418,113,756) 62,905,711
Profit paid to certificate holders 34.1 (92,459,619) (90,251,551)
Net cash generated from / (used in) financing activities 880,356,625 (144,645,840)

Net decrease in cash and cash equivalents during the year (70,626,621) (113,894,425)
Cash and cash equivalents at the beginning of the year 400,254,200 514,148,625

Cash and cash equivalents at the end of the year 34 329,627,579 400,254,200

The annexed notes from 1 to 38 form an integral part of these financial statements.

For OLP Services Pakistan (Private) Limited

Management Company

SD SD SD SD
Chief Executive Director Director Chief Financial Officer
Statement Of Changes In
Equity

ANNUAL REPORT 2024

For The Year Ended June 30, 2024
Revenue
Issued, Capital reserve reserve
subscribed
Premium on Sub-total Total
and paid-up Statutory Unappropria-
issue of
certificate reserve Sub-total
modaraba ted profit
capital (note 19)
certificates
------------------------------------------------------------ (Rupees) ------------------------------------------------------------
Balance as at June 30, 2022 453,835,300 55,384,700 517,064,116 572,448,816 112,321,106 684,769,922 1,138,605,222 161

Total comprehensive income for the year

- Profit for the year ended June 30, 2023 - - - - 128,784,410 128,784,410 128,784,410
- Other comprehensive income for the year - - - - - - -
- - - - 128,784,410 128,784,410 128,784,410
Transactions with owners
Profit distribution for the year ended
June 30, 2022 @ Rs 2.00 per certificate
declared subsequent to the year end - - - - (90,767,060) (90,767,060) (90,767,060)

Transfer to statutory reserve - - 6,439,221 6,439,221 (6,439,221) - -

Balance as at June 30, 2023 453,835,300 55,384,700 523,503,337 578,888,037 143,899,235 722,787,272 1,176,622,572

Total comprehensive income for the year

- Profit for the year ended June 30, 2024 - - - - 157,737,187 157,737,187 157,737,187
- Other comprehensive income for the year - - - - - - -
- - - - 157,737,187 157,737,187 157,737,187
Transactions with owners
Profit distribution for the year ended
June 30, 2023 @ Rs 2.00 per certificate
declared subsequent to the year end - - - - (90,767,060) (90,767,060) (90,767,060)

Transfer to statutory reserve - - - - - - -

Balance as at June 30, 2024 453,835,300 55,384,700 523,503,337 578,888,037 210,869,362 789,757,399 1,243,592,699

The annexed notes from 1 to 38 form an integral part of these financial statements.

For OLP Services Pakistan (Private) Limited

Management Company

SD SD SD SD
Chief Executive Director Director Chief Financial Officer
 Notes To And Forming Part Of The
Financial Statements
www.olpmodaraba.com

For The Year Ended June 30, 2024

1 STATUS AND NATURE OF BUSINESS

OLP Modaraba ('the Modaraba') was formed under the Modaraba Companies and Modaraba (Floatation and
Control) Ordinance, 1980 and the Rules framed thereunder and is managed by OLP Services Pakistan
(Private) Limited ('the Management Company'). The Management Company is a wholly owned subsidiary of
OLP Financial Services Pakistan Limited.
162

The registered office of Management Company is situated at OLP Building, Plot No. 16, Sector No. 24,
Korangi Industrial Area, Karachi.

The Modaraba is operated through a head office in Karachi which is situated at 6th Floor, Syedna Tahir
Saifuddin Trust Building, Beaumont Road, Civil Lines and two branches which are located in Lahore and
Islamabad. The Lahore branch office is situated at office no. 08, Park Lane Tower, 172-Tufail road, Lahore
Cantonment. The Islamabad branch is situated at Ground Floor, Phase 1, State Life Building No. 5,
Nazimuddin Road, Blue Area, Islamabad.

The Modaraba is a perpetual Modaraba and is primarily engaged in financing of plant and machinery, motor
vehicles (both commercial and private), computer equipment and housing under the modes of Ijarah
(Islamic leasing) and Diminishing Musharika. The Modaraba may also invest in commercial and industrial
ventures suitable for the Modaraba. The Modaraba is listed on the Pakistan Stock Exchange Limited.

The Pakistan Credit Rating Agency Limited (PACRA) has assigned long term rating of AA (2023: AA) and
short term rating of A1+ (2023: A1+) to the Modaraba on March 01, 2024 (2023: March 03, 2023).

2 BASIS OF PREPARATION

2.1 Statement of compliance

These financial statements have been prepared in accordance with the accounting and reporting
standards as applicable in Pakistan. The accounting and reporting standards as applicable in Pakistan
comprise of:

- International Financial Reporting Standards (IFRS) issued by the International Accounting

Standards Board (IASB) as are notified under the Companies Act, 2017;

- Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of
Pakistan as are notified under the Companies Act, 2017;

- Requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance,
1980, Modaraba Companies and Modaraba Rules, 1981 and Modaraba Regulations 2021; and

- Provisions of and directives issued by the Securities and Exchange Commission of Pakistan (SECP)
under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 and the
Companies Act, 2017.
 Wherever the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance,

ANNUAL REPORT 2024

1980, Modaraba Companies and Modaraba Rules, 1981, Modaraba Regulations 2021, IFAS, the Companies
Act, 2017 and provisions of and directives issued by the Securities and Exchange Commission of Pakistan
(SECP) under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 and the
Companies Act, 2017 differ from IFRS, the requirements of the Modaraba Companies and Modaraba
(Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981, Modaraba
Regulations 2021, IFAS and provisions of and directives issued by the Securities and Exchange Commission
of Pakistan (SECP) under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980
and the Companies Act, 2017 have been followed.
163

2.2 Islamic Financial Accounting Standard (IFAS) 2 'Ijarah' issued by the Institute of Chartered Accountants of
Pakistan was adopted by the SECP vide SRO 431(1)/ 2007 dated May 22, 2007. Under IFAS 2, the Ijarah
transactions are accounted for in the following manner:

- Mustajir (lessors) presents the assets subject to Ijarah in their statement of financial position
according to the nature of the asset. The Mustajir is required to distinguish these Ijarah assets from
the assets in own use.

- Costs, including depreciation on the assets given on Ijarah, incurred in earning the Ijarah income are
recognised as expenses.

- Ijarah income is recognised in income on an accrual basis as and when the rental becomes due,
unless another systematic basis is more representative of the time pattern in which the benefit of
the use derived from the leased asset is diminished.

The SECP, vide its letter No. SC/ M/ RW/ SCM /2009 dated March 9, 2009, allowed that in case of
Modarabas, IFAS 2 shall be applied for Ijarah transactions executed on or after July 1, 2008. Accordingly, the
Modaraba has accounted for Ijarah transactions executed before July 01, 2008 as finance leases and has
treated the Ijarah transactions executed on or after July 01, 2008 in accordance with the requirements of
IFAS 2.

2.3 Accounting convention

These financial statements have been prepared under the historical cost, convention except otherwise
stated.

2.4 Critical accounting estimates and judgments

2.4.1 Use of estimates and judgments

The preparation of the financial statements in conformity with the accounting and reporting standards as
applicable in Pakistan requires the management to make estimates, judgments and assumptions that
affect the reported amounts of assets and liabilities, income and expenses. It also requires the
management to exercise judgments in application of the Modaraba's accounting policies. The estimates,
judgments and associated assumptions are based on the management's experience and various other
factors that are believed to be reasonable under the circumstances. These estimates and assumptions are
reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period of revision and future periods if
the revision affects both the current and future periods. The areas where various assumptions and
estimates are significant to the Modaraba's financial statements or where judgments were exercised in the
application of accounting policies are as follows:
 i) estimates of residual values, useful lives, depreciation and amortization methods of tangible
www.olpmodaraba.com

assets, intangible assets and Ijarah assets (notes 4.5, 4.6, 10, 11 and 12);
ii) classification, valuation and impairment of financial asset (notes 4.2.1.1, 4.2.1.2 and 4.2.1.3);
iii) provision for Workers' Welfare Fund (note 16.3);
iv) provision for sales tax on the Management Company's remuneration (note 24);
v) provision for taxation - levy and income tax (notes 4.7 and 25); and
vi) impairment of non financial asset (note 4.4)

The accounting policies and accounting estimates adopted and the methods of computation of balances
164
used in the preparation of these annual financial statements are the same as those applied in the
preparation of the annual published audited financial statements of the Modaraba for the year ended June
30, 2023, except for those mentioned in the note 2.4.2.

2.4.2 Change in accounting estimate

During the current year, the estimated useful lives of certain assets under the catergory of leasehold
improvements, furniture and fittings and motor vehicles have been reviewed and based on the
management experience, the estimated useful lives have been revised from 5, 3 and 3 years to 3, 6.67, and
4 to 5 years for different class of assets. Furthermore, residual value of motor vehicles has also been
revised from 0% to 40% to 45%. This change has been accounted for as change in accounting estimate in
accordance with the requirements of International Accounting Standard (IAS) 8 'Accounting policies,
changes in accounting estimates and errors' whereby the effect of the change has been recognised
prospectively by including the same in the statement of profit and loss with effect from July 1, 2023 (i.e. the
date of change in estimate). The impacts of change in accounting estimate (before tax) are given as
follows:

2024
Rupees
STATEMENT OF FINANCIAL POSTION
Increase in the tangible assets 1,852,923

STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME (Note 2.4.3)
Decrease in depreciation expense 1,852,923
Increase in earnings per certificate 0.04

STATEMENT OF CHANGES IN EQUITY

Increase in unappropriated profit 1,852,923

STATEMENT OF CASH FLOWS

Decrease in depreciation expense 1,852,923

2.4.3 The impact of change in accounting estimate on the Management Company's remuneration, related
provision for services sales tax and provision for Sindh Workers' Welfare Fund has not been incorporated in
the impacts shown in note 2.4.2 as there impact is not material.
2.5 Change in accounting policy

ANNUAL REPORT 2024

During the year, the Institute of Chartered Accountants of Pakistan (ICAP) has withdrawn Technical
Release 27 'IAS 12, Income Taxes (Revised 2012)' and issued the 'IAS 12 Application Guidance on
Accounting for Minimum Taxes and Final Taxes' (the Guidance). In accordance with the Guidance where an
entity expects that the minimum tax paid by it may not be recoupable in the future tax years, the same shall
be classified as a levy under IAS 37 “Provision, Contingent Liabilities and Contingent Assets” (IAS 37) and
IFRIC 21 “Levies” (IFRIC 21) instead of being recognised as a tax under IAS 12 “Income taxes” (IAS 12).
Further the said guidance also concluded that final tax deducted at source (except for dividend earned
165
from subsidiary, associates and joint ventures) under the Income Tax Ordinance, 2001 (ITO) shall also be
classified as a levy.

Accordingly, effective from July 1, 2023 the Modaraba has changed its accounting policy to recognise such
taxes as 'levies' which were previously being recognised as 'Income Tax'. This change has been accounted
for retrospectively in line with the requirements of IAS 8 "Accounting Policies, Changes in Accounting
Estimates and Errors" and the corresponding figures in the statement of profit and loss and other
comprehensive income has been restated. The related changes on account of the change in accounting
policy has been made in the statement of cash flows. However this change had no impact on the
Modaraba's cashflow from operating, investing and financing activities. The change has no impact on profit
after tax or earnings per certificate of the Modaraba.

After
Had there been Impact
incorporating
no change in of change in
effects of change
the accounting accounting
in accounting
policy policy
EFFECT ON THE STATEMENT OF PROFIT AND LOSS
policy
AND OTHER COMPREHENSIVE INCOME

For the year ended June 30, 2024

Final tax - (4,775,216) (4,775,216)
Profit before tax 228,634,474 (4,775,216) 223,859,258
Income tax 70,897,287 4,775,216 66,122,071

EFFECT ON THE STATEMENT OF PROFIT AND LOSS

AND OTHER COMPREHENSIVE INCOME

For the year ended June 30, 2023

Final tax - (4,210,355) (4,210,355)
Profit before tax 186,433,754 (4,210,355) 182,223,399
Income tax 57,649,344 4,210,355 53,438,989

3 STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED ACCOUNTING AND

REPORTING STANDARDS

3.1 Standards, interpretations and amendments to published accounting and reporting standards
that are effective in the current year

There are certain amendments to published accounting and reporting standards that are mandatory
for the Modaraba's accounting period beginning on July 1, 2023, but are considered not to be relevant
or do not have any significant impact on the Modaraba's operations and are, therefore, not detailed in
these financial statements except the following:
 Amendment to IAS 1 "Presentation of financial statements" (IAS 1) and IFRS Practice Statement
2:
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This recent amendment provide guidance and examples to help entities apply materiality judgements
in order to determine accounting policy information which should be disclosed. This amendment aims
to help entities in providing accounting policy disclosures that are more useful by replacing the
requirement for entities to disclose their ‘significant’ accounting policies with a requirement to
disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of
materiality in making decisions about the accounting policy disclosures. This amendment only had an
166 impact on the Modaraba’s disclosures of accounting policies, but not on the measurement, recognition
or presentation of any item in these financial statements.

3.2 Standards, interpretations and amendments to published accounting and reporting standards
that are not yet effective

3.2.1 There are certain other interpretations and amendments that are mandatory for the Modaraba's
accounting periods beginning on or after July 1, 2024 but are considered not to be relevant or will not
have any significant effect on the Modaraba's operations and are, therefore, not detailed in these
financial statements.

4 MATERIAL ACCOUNTING POLICY INFORMATION

The material accounting polices applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the years presented.

4.1 Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at amortised cost. For the
purpose of statement of cash flows, cash and cash equivalents comprise cash and bank balances and
other short-term highly liquid investments with original maturities of three months or less, which are
readily convertible into known amounts of cash and which are subject to an insignificant risk of change
in value.

4.2 Financial instruments

4.2.1 Financial assets

4.2.1.1Classification

The Modaraba classifies its financial assets in the following measurement categories:

- at amortised cost;
- at fair value through other comprehensive income (FVOCI); and
- at fair value through profit or loss (FVPL).

The classification requirements for debt instruments are described below:

Based on the business model assessment of the entity and the cash flow characteristics of the asset.
 a) At amortised cost:

ANNUAL REPORT 2024

Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest (SPPI), and that are not designated at FVPL, are
measured at amortised cost. The carrying amount of these assets is adjusted by any expected
credit loss allowance recognised and measured as described in note 4.2.1.3.

b) Fair value through other comprehensive income (FVOCI):

Financial assets that are held for collection of contractual cash flows and for selling the assets, 167
where the assets’ cash flows represent solely payments of principal and interest, and that are
not designated at FVPL, are measured at fair value through other comprehensive income
(FVOCI). Movements in the carrying amount are taken through other comprehensive income
(OCI), except for the recognition of impairment losses or reversals, recognised and measured as
described in note 4.2.1.3, interest revenue and foreign exchange gains and losses on the
instrument’s amortised cost which are recognised in the statement of profit and loss. When the
financial asset is derecognised, the cumulative gain or loss previously recognised in other
comprehensive income is reclassified from equity to the statement of profit and loss.

c) Fair value through profit or loss (FVPL):

Assets that do not meet the criteria for classification at amortised cost or FVOCI are measured
at fair value through profit or loss. A gain or loss on a debt instrument that is subsequently
measured at fair value and is not part of a hedging relationship is recognised in the statement
of profit and loss in the period in which it arises.

4.2.1.2 Subsequent measurement

Subsequent to initial recognition, financial assets are valued as follows:

a) Financial assets at fair value

Financial assets ‘at fair value through profit or loss’ are marked to market using the closing
market rates and are carried on the statement of financial position at fair value. Net gains and
losses arising on changes in fair values of these financial assets are taken to the statement of
profit or loss in the year in which these arise.

Financial assets at fair value through ‘Other Comprehensive Income’ are marked to market
using the closing market rates and are carried on the statement of financial position at fair
value. Net gains and losses arising on changes in fair values of these financial assets are
recognised in other comprehensive income.

b) Financial assets held at amortised cost

These are subsequently measured at amortised cost.

4.2.1.3 Impairment

The Modaraba assesses on a forward-looking basis the Expected Credit Losses (ECL) associated with
its debt instruments carried at amortised cost and FVOCI. The Modaraba recognises a loss allowance
for such losses at each reporting date. The measurement of ECL reflects:
 - An unbiased and probability-weighted amount that is determined by evaluating a range of
possible outcomes;
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- The time value of money; and

- Reasonable and supportable information that is available without undue cost or effort at the
reporting date about past events, current conditions and forecasts of future economic
conditions.

168 A default on a financial asset is when the counterparty fails to make contractual payments within 90
days of when they fall due.

The Modaraba applies the IFRS 9 general approach to measure Expected Credit Losses (ECL) for ijarah
finance and diminishing musharika. A lifetime ECL is recorded on Ijarah finance and diminishing
musharika in which there has been Significant Increase in Credit Risk (SICR) from the date of initial
recognition and which are credit impaired as on the reporting date. A 12 months ECL is recorded for
ijarah finance and diminishing musharika which do not meet the criteria for SICR or "credit impaired" as
at the reporting date. To assess whether there is a significant increase in credit risk the Modaraba
compares the risk of a default occurring on the asset as at the reporting date with the risk of default as
at the date of initial recognition. The Modaraba also considers reasonable and supportive forward
looking information in determination of ECL. The allowance is increased by provisions charged to
statement of profit and loss and is decreased by charge-offs, net of recoveries.

In evaluating the adequacy of ECL, the management considers various factors, including the nature
and characteristics of the obligor, current economic conditions, credit concentrations or deterioration
in collateral, historical loss experience and delinquencies.

The Modaraba Regulations, 2021 specifies a criteria for classification and provisioning of impaired
assets. The Modaraba while recognising provision for impaired assets has considered the amount
which is higher of (on a facility basis) in accordance with the guidance provided by Accounting
Standard Board (ASB):
- the provision required under the Modaraba Regulations, 2021; and
- the provision required under IFRS 9 using the Expected Credit Loss (ECL) model.

4.2.1.4 Derecognition

Financial assets, or a portion thereof, are derecognised when the contractual rights to receive the
cash flows from the assets have expired, or when they have been transferred and either:

(i) the Modaraba transfers substantially all the risks and rewards of ownership; or

(ii) the Modaraba neither transfers nor retains substantially all the risks and rewards of ownership
and the Modaraba has not retained control.

The Modaraba enters into transactions whereby it transfers assets recognised in its statement of
financial position, but retains either all or substantially all of the risks and rewards of the transferred
assets. In these cases, the transferred assets are not derecognised.

4.2.1.5 Regular way contracts

All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date on
which the Modaraba commits to purchase or sell the asset.
4.2.2 Financial liabilities

ANNUAL REPORT 2024

All financial liabilities are recognised at the time when the Modaraba becomes a party to the
contractual provisions of the instrument.

Financial liabilities are classified as subsequently measured at amortised cost except for:

- Financial liabilities at fair value through profit or loss; and

- Financial liabilities arising from the transfer of financial assets which did not qualify for 169
derecognition, whereby a financial liability is recognised for the consideration received for the
transfer.

4.2.2.1 Derecognition

Financial liabilities are derecognised at the time when these are extinguished i.e. when the obligation
specified in the contract is discharged, cancelled or expired. Any gain or loss on derecognition of
financial assets and financial liabilities is taken to the statement of profit and loss.

4.2.3 Initial recognition

Financial assets and financial liabilities are recognised at the time when the Modaraba becomes a party
to the contractual provisions of the instrument. These are initially recognised at fair value plus
transaction costs except for financial assets carried at fair value through profit or loss. Financial assets
carried at fair value through profit or loss are initially recognised at fair value and transaction costs
associated with these financial assets are taken directly to the statement of profit and loss.

4.2.4 Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount is reported in the financial
statements when there is a legally enforceable right to set off the recognised amounts and there is an
intention to settle on a net basis, or realise the assets and settle the liabilities simultaneously.

4.2.5 Write-offs

The gross carrying amount of a financial asset is written off when the Modaraba has no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof. Against each
customer's outstanding exposure which stands as impaired, Modaraba makes an assessment with
respect to the timing and amount of write-off based on the expectation of recovery. However,
financial assets that are written off remain subject to legal enforcement activities for recovery of
amounts due.

4.2.6 Diminishing musharika

It is a form of partnership in which the Modaraba and the customer create co-ownership in the asset by
purchasing it jointly. The Modaraba then rents out its share of the asset to customers. Besides the
payment of rentals, customer also purchases the asset from the Modaraba in installments. Hence at
the end of the tenure, customer becomes sole owner of the asset.
 4.3 Redeemable capital
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The Modaraba offers only one deposit product, “Certificates of Musharika (COM)” under a scheme duly
approved by the SECP vide its letter no. 7(04) Reg-Mod/95-449 dated April 4, 1995. The scheme of
COM has been formulated under the parameters laid down for this purpose by the SECP in its
“Guidelines for Issue of Certificates of Musharika for Modarabas” (the Guidelines) issued on September
7, 1994.

As per requirements of the Guidelines, the scheme of COM is based on the concept of “Musharika”,
170 hence it is classified as Redeemable Capital. The salient features of the COM are as follows:

- This is a return based certificate wherein a deposit is placed with the Modaraba for a definite
period of time.

- Total profits after charging all expenses, provisions / impairments and the Management
Company's remuneration of the Modaraba are shared by the COM holders and the Modaraba in
accordance with ratio declared by the Modaraba and accepted by the COM holders. In the
absence of such declaration, the total profits shall be shared between the COM holders and the
Modaraba in proportion to their contribution in the Modaraba.

- The amount of profit allocated to the COM holders shall be shared between different category /
tiers of the COM holders on the basis of predetermined weightages announced by the
Modaraba at the beginning of each quarter.

- In the event of loss, such loss shall be shared between the COM holders and the Modaraba in
proportion to their fund.

4.4 Impairment of non-financial assets

The carrying amounts of assets are reviewed at each reporting date to determine whether there is any
indication of impairment of any asset or a group of assets. If any such indication exists, the recoverable
amount of that asset is estimated and impairment losses are recognised in the statement of profit and
loss and other comprehensive income. An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that would have been determined if no
impairment loss had been recognised.

4.5 Ijarah assets

Assets leased out under Ijarah arrangements are recorded as Ijarah assets and are stated at cost less
accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Modaraba and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to the statement of profit or loss as
and when incurred. The residual values, useful lives and depreciation method are reviewed and
adjusted, if appropriate, at each reporting date.
 Depreciation is charged to the statement of profit and loss applying the straight line method whereby

ANNUAL REPORT 2024

the cost of an asset less residual value is depreciated over the estimated useful life of the asset.
Depreciation is charged on pro rate basis from the date the asset is available for use till date of
maturity / termination. In respect of additions and disposals during the year, depreciation is charged
proportionately from the date of delivery of assets to the date of its maturity / termination.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
are included in the statement of profit and loss, in the year in which these arise.
171
4.6 Fixed assets

4.6.1 Tangible fixed assets

Owned assets

These are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent
costs are included in the assets' carrying amounts or recognised as separate assets, as appropriate,
only when it is probable that future economic benefits associated with the items will flow to the
Modaraba and the cost of the items can be measured reliably. All other repairs and maintenance
expenses are charged to the statement of profit and loss as and when incurred.

Depreciation is charged to the statement of profit and loss on a straight line basis in accordance with
the rates specified in note 11 to these financial statements and after taking into account residual
values, if significant. The residual values, useful lives and depreciation methods are reviewed and
adjusted, if appropriate, at each reporting date. Depreciation is charged on additions from the month
the asset is available for use and on disposals upto the month preceding the month of disposal.

Gains and losses on disposals are determined by comparing the sale proceeds with the carrying
amounts. These are recorded in the statement of profit and loss in the period in which these arise.

4.6.2 Intangible assets

Intangible assets having a finite useful life are stated at cost less accumulated amortisation and
accumulated impairment losses, if any. Subsequent costs are included in the assets' carrying amounts
or recognised as separate assets, as appropriate, only when it is probable that the future economic
benefits associated with the assets will flow to the Modaraba and the cost of the items can be
measured reliably. Amortisation is charged to the statement of profit and loss using the straight line
method in accordance with the rates specified in note 12 to these financial statements. The useful
lives and amortisation method are reviewed and adjusted, as appropriate, at each reporting date.
Amortisation is charged from the month the asset is available for use while in the case of assets
disposed of, it is charged till the month preceding the month of disposal.

Intangible assets having an indefinite useful life are stated at cost less accumulated impairment
losses, if any.
 Gains or losses on disposal of intangible assets, if any, are taken to the statement of profit and loss in
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the period in which these arise.

4.6.3 Capital work-in-progress

Capital work-in-progress is stated at cost less accumulated impairment losses, if any, and represents
expenditure on fixed assets in the course of construction and installation and advances for capital
expenditure. Transfers are made to the relevant category of tangible / intangible assets as and when
172 the assets are available for intended use.

4.7 Taxation - Levy and Income tax

Current

The charge for current taxation is based on taxable income at the current rates of taxation after taking
into account available tax credit and rebates, if any. Income for the purpose of computing current
taxation is determined under the provisions of tax laws.

Deferred

Deferred tax is accounted for using the statement of financial position liability method in respect of all
temporary timing differences arising from difference between the carrying amount of the assets and
liabilities in the financial statements and corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax
assets are recognised for all deductible temporary differences to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, unused tax losses
and tax credits can be utilised.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences
reverse based on tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is charged or credited in the profit and loss account, except where deferred tax arises on
the items credited or charged to equity in which case it is included in equity or when they relate to
items recognised in other comprehensive income in which case it is recognised in the other
comprehensive income.

Levy

In accordance with Income Tax Ordinance, 2001 (Ordinance), computation of final taxes is not based on
taxable income. Therefore, as per IAS 12 Application Guidance on Accounting for Minimum Taxes and
Final Taxes issued by the Institute of Chartered Accountants of Pakistan (ICAP), these fall within the
scope of IFRIC 21 / IAS 37 and accordingly have been classified as levy in these financial statements.

4.8 Provisions and contingent assets and liabilities

Provisions are recognised when the Modaraba has a present, legal or constructive obligation as a result
of past event, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate of the amount of obligation can be made. Provisions are
reviewed at each reporting date and adjusted to reflect the current best estimates.
 Contingent assets are not recognised and are disclosed unless an inflow of economic benefits is

ANNUAL REPORT 2024

virtually certain. Contingent liabilities are not recognised and are disclosed unless the probability of an
outflow of resources embodying economic benefits is remote.

4.9 Staff retirement benefits

The Modaraba operates:

i) a recognised provident fund for all eligible employees; and 173

ii) an approved defined contribution gratuity scheme for all permanent employees.

Gratuity is payable to employees on completion of the prescribed qualifying period of service under
the scheme. Contributions to the provident fund and gratuity fund are made at the rate of 10% and
8.33% respectively, of the basic salaries of employees. Obligation for contribution to defined
contribution plans are recognised as an employee benefit expense in the profit and loss account when
these are due.

Investments out of the aforementioned funds have been made in accordance with the provisions of
section 218 of the Companies Act, 2017 and the conditions specified thereunder.

4.10 Revenue and other income recognition

- The Modaraba follows the finance method for recognising income on Ijarah arrangements
commencing on or after July 1, 2008 Ijarah rentals are recognised as income on accrual basis, as
and when rentals become due. In case of Ijarah arrangements with staggered rentals, the
income is recognised on a straight line basis over the Ijarah term.

- Unearned income in respect of non-remunerative security deposits is recognised on a straight

line basis.

- Gains / losses on termination of Ijarah contracts are recognised as income as the difference
between the proceeds realised from the customers on sale of Ijarah assets and the net book
value at which such assets are carried at the time of termination.

- Income in respect of non-performing Ijarah finance is held in suspense account, where

necessary, in accordance with the requirements of the Modaraba Regulations, 2021 issued by
the SECP.

- Documentation charges, front end fees and other Ijarah related income are taken to the
statement of profit and loss on an accrual basis.

- Profit on Diminishing Musharika arrangements is recognised under the effective profit rate
method based on the amount outstanding.

- Dividend income is recognised when the Modaraba's right to receive dividend is established.

- Profit / return on deposits / investments is recognised on effective profit rate.

 - Income from Shariah non-compliant avenues is not recognised in the statement of profit and
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loss and is classified as charity payable.

- Income recoverable on classified ijarah finance and diminishing musharika arrangements is

recognised on a receipt basis.

- Gains / losses on disposal of tangible assets are recognised as income as the difference
between the proceeds realised from the customers on sale of tangible assets and the net book
174 value at which such assets are carried at the time of disposal.

4.11 Proposed profit distribution to Modaraba certificate holders and transfers between reserves

Proposed profit distribution and transfers between reserves made subsequent to the reporting date
are considered as non-adjusting events and are recognised in the financial statements in the period in
which such dividends are declared / transfers are made.

4.12 Earnings per certificate

Basic earnings per certificate is calculated by dividing the profit after taxation for the year by the
weighted average number of certificates outstanding during the year. Diluted earnings per certificate
is determined by adjusting the profit or loss attributable to ordinary certificate holders by taking into
account the conversion of any dilutive potential ordinary certificates.

Ordinary certificates are classified as equity and are recorded at their face value. Incremental costs
directly attributable to the issue of new certificates or options are shown in equity as a deduction, net
of tax, from the proceeds.

4.13 Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic
environment in which the Modaraba operates. The financial statements are presented in Pakistani
rupees, which is the Modaraba's functional and presentation currency.

4.14 Segment reporting

As per IFRS 8: "Operating Segments", segments are reported in a manner consistent with the internal
reporting used by the chief operating decision-maker. The Chief Executive Officer has been identified
as the chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments.

The Chief Executive Officer is responsible for the Modaraba’s entire product portfolio and considers
the business to have a single operating segment. The Modaraba’s asset allocation decisions are based
on a single integrated investment strategy and the Modaraba’s performance is evaluated on an overall
basis.

4.15 Commitments

Commitments are disclosed in the financial statements at committed amounts.

 June 30, June 30,

ANNUAL REPORT 2024

5 CASH AND BANK BALANCES Note 2024 2023
------------------ (Rupees) -----------------
Balances with banks
- in current accounts 2,182,067 15,693,606
- in deposit accounts 5.1 327,267,470 384,285,213
Balance with the State Bank of Pakistan 68,342 190,881
Cash in hand 109,700 84,500
329,627,579 400,254,200 175

5.1 These carry profit at the rates ranging between 10.82% to 20.50% (2023: 10.04% to 19.50%) per annum.

5.2 The balances held with banks in deposit accounts have been kept in order to comply with the requirement
of the Modaraba Regulations, 2021 issued by the SECP with respect to the maintenance of the prescribed
liquidity against the Certificates of Musharika issued by the Modaraba.

June 30, June 30,

Note 2024 2023
6 IJARAH RENTALS RECEIVABLE ------------------ (Rupees) -----------------

Ijarah rentals receivable - considered good - secured 70,438,166 103,759,046

Ijarah rentals receivable - considered bad or doubtful 69,827,777 48,454,351
Less: allowance for potential Ijarah losses 6.1 (54,159,836) (30,785,361)
Less: profit held in suspense 6.2 (16,284,733) (17,668,990)
69,821,374 103,759,046

6.1 Allowance for potential Ijarah losses

Opening balance 30,785,361 12,327,647

Provision for the year - net 23,374,475 18,457,714
Closing balance 54,159,836 30,785,361

6.2 Profit held in suspense

Opening balance 17,668,990 15,241,422

Reversal of income suspended during the year (9,659,786) -
Suspended income during the year 8,275,529 2,427,568
Closing balance 16,284,733 17,668,990

6.3 Ijarah includes Rs 99.680 million (2023: Rs 40.095 million) which have been placed under non-performing
status. The details of category of classification of these assets are given in note 28.3.2 to these financial
statements.

6.4 During the year the Modaraba has not availed the benefit of forced sale value of assets held as collateral
against non-performing Ijarah as allowed under the Modaraba Regulations, 2021 issued by the SECP.
 June 30, June 30,
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7 ADVANCES, DEPOSITS, PREPAYMENTS AND Note 2024 2023

OTHER RECEIVABLES ------------------ (Rupees) -----------------

Considered good

Advances
Advances against assets under Ijarah arrangements 7.1 92,013,134 12,394,884
176 Advances against assets under diminishing
musharika arrangements 7.1 106,002,498 51,990,763

Deposits 1,063,000 1,060,000

Prepayments
Prepaid commission for the sale of Certificates of
Musharika (COM) 7.2 19,603,067 11,826,046
Prepayment related to staff loan 7.3 80,993,115 -
Other prepayments 3,511,665 2,793,425

Other receivables
Accrued profit on deposit accounts 11,843,071 5,169,883
Accrued profit on diminishing musharika 7.4 & 7.5 87,421,726 75,182,778
Others 1,072,710 1,207,428

Considered doubtful
Others 816,200 206,200
Provision for impairment loss against doubtful recoveries 7.6 (816,200) (206,200)
403,523,986 161,625,207

7.1 These represent amounts disbursed to various vendors for the supply or construction of assets against the
financing to be extended by the Modaraba to its customers under Ijarah and diminishing musharika
arrangements.

7.2 Commission in respect of the sale of COMs is being amortised over the maturity period.

7.3 The prepayment related to staff loan is amortised on a straight line basis over the term of the loan.

7.4 This includes accrued profit from diminishing musharika related to key management personnel amounting
to Rs. 0.105 million (2023: Rs. 0.605 million).

June 30, June 30,

2024 2023
7.5 Accrued profit on diminishing musharika is as follows: ------------------ (Rupees) -----------------

Accrued profit on diminishing musharika 111,935,026 92,095,740

Less: profit held in suspense (24,513,300) (16,912,962)
Closing balance 87,421,726 75,182,778
 June 30, June 30,

ANNUAL REPORT 2024

Note 2024 2023
7.6 Movement in provision during the year is as follows:
------------------ (Rupees) -----------------

Opening balance 206,200 3,532,228

Provision / (reversal) for the year 610,000 (3,326,028)
Closing balance 816,200 206,200

177
8 INVESTMENTS

At amortised cost
Investment in sukuk certificates 8.1 - 57,701,835
Less: provision in respect of sukuk certificates - -
Less: Write off made during the year - (57,701,835)
- -
At fair value through profit or loss
Investment in mutual funds 350,918,237 123,858,681
350,918,237 123,858,681

8.1 Movement in provision against Sukuk certificates

Opening balance - 57,701,835

Provision for the year - -
Amount written off during the year - (57,701,835)
Closing balance - -

9 DIMINISHING MUSHARIKA

Staff - considered good

- Housing finance 27,194,267 93,264,073
- Motor vehicles 25,574,735 42,155,284
- Others 2,318,307 3,408,044
9.1 & 9.2 55,087,309 138,827,401

Others - considered good

- Housing finance 344,597,081 359,313,371
- Motor vehicles 2,168,128,409 1,578,611,124
- Plant, machinery and equipment 2,599,509,352 2,164,116,759
5,112,234,842 4,102,041,254
Others - considered bad or doubtful
- Housing finance 3,693,976 3,683,790
- Motor vehicles 16,267,635 23,267,047
- Plant, machinery and equipment 154,882,338 69,657,946
174,843,949 96,608,783

Less: provision in respect of diminishing musharika 9.3 (57,586,643) (67,561,517)

5,229,492,148 4,131,088,520

5,284,579,457 4,269,915,921
 9.1 These represent finance provided to employees, officers and key management personnel of the Modaraba
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under Diminishing Musharaka arrangement for renovation, construction and purchase of house, purchase
of vehicles and other consumer durables. These carry profit at the effective rates ranging from 0% to
21.94% (2023: 18.32% to 25.17%) per annum and are repayable on monthly basis over a maximum period
of 20 years (2023: 20 years). The maximum aggregate amount due from officers and employees at any
time during the period calculated by reference to month-end balance is Rs. 135.555 million (2023: Rs.
145.127 million).

178 During the year, the Modaraba has revised its staff compensation policy. As per the revised policy, the rate
of housing finance for facilities that existed prior to November 1, 2023 is charged at the rate of 3% per
annum, personal finance at 2% per annum and auto finance is charged within a range of 0% to 3% per
annum (for different cadres) based on pre-defined limits.

For the new facilities availed after November 1, 2023, the housing finance is made available at the
Modaraba's cost of funding minus 15% with floor of 5% and cap of 15% to be repriced on a half yearly basis
whereas personal financing is made available based on cost of fund of the Modaraba.

As a result of the revised policy, the management has recorded a prepaid amount of Rs. 87.6 million against
the staff loan (based on fair value of financing), which is being amortised on a straight-line basis over the
financing term. The total amount of prepaid amortised during the year is Rs. 6.61 million whereas the
additional notional income recognised based on the effective rate adjustment is Rs. 8.4 million, which have
been recognised by the Modaraba in these financial statements.

9.1.1 This includes diminishing musharika facility availed by key management personnel as per employment
terms, with respect to housing finance, motor vehicles and personal finance amounting to Rs. 9.029 million
(2023: Rs. 25.608 million), Rs. 9.204 million (2023: Rs 18.164 million) and Rs. 0.249 million (2023: Rs. 0.601
million) respectively. These are secured against diminishing musharika assets.

June 30, June 30,

2024 2023
------------------ (Rupees) -----------------
9.2 Reconciliation of carrying amounts of finance provided
to employees and officers under
Diminishing Musharika arrangement

Opening balance 138,827,401 89,329,682

Disbursements during the year 16,037,007 88,075,914
Amount transfer to prepaid (87,600,898) -
Unwinding of Staff Loan 8,414,369 -
Transfer of resigned staff (7,741,450) -
Receipts during the year (12,849,120) (38,578,195)
Closing balance 55,087,309 138,827,401

9.3 Movement in provision against Diminishing Musharika

Opening balance 67,561,517 89,189,561

Reversal during the year - net (9,974,874) (21,628,044)
Closing balance 57,586,643 67,561,517
 June 30, June 30,

ANNUAL REPORT 2024

2024 2023
9.4 Break-up of diminishing Musharika between
------------------ (Rupees) -----------------
long-term and current portion is as follows:

Current portion of diminishing musharika 1,520,573,850 1,385,236,732

Less: provision held (43,615,700) (63,434,137)
1,476,958,150 1,321,802,595
179
Long-term portion of diminishing musharika 3,821,592,250 2,952,240,706
Less: provision held (13,970,943) (4,127,380)
3,807,621,307 2,948,113,326

9.5 During the year, the Modaraba has not availed the benefit of forced sale value of assets held as collateral
against non-performing diminishing musharika as allowed under the Modaraba Regulations, 2021 issued
by the SECP.

9.6 Diminishing musharika includes Rs 174.844 million (2023: Rs 96.609 million) which have been placed under
non-performing status. The details of category of classification of these assets are given in note 28.3.2 to
these financial statements.

9.7 Diminishing musharika carries profit at the rate ranging between 21.07% to 27.49% (2023: 18.13% to
28.09%) per annum.

9.8 The following table sets out information about the Expected Credit Losses (ECL) provision of diminishing
musharika financing:
June 30, 2024 June 30, 2023
Rs. In '000 Rs. In '000
Amount Expected Credit Amount Expected Credit
DIMINISHING MUSHARIKA Outstanding Loss Allowance Outstanding Loss Allowance

Stage 1 4,808,765,939 3,283,926 4,085,099,662 6,970,140

Stage 2 432,551,940 5,929,517 155,768,993 1,785,700
Stage 3 100,848,221 48,373,200 96,608,783 58,805,677
5,342,166,100 57,586,643 4,337,477,438 67,561,517

9.9 An analysis of change in ECL provision in relation to diminishing musharaka financing is, as follows:

June 30, 2024

-------------------- (Rupees) --------------------
Stage 1 Stage 2 Stage 3 Total

Opening Balance 6,970,140 1,785,700 58,805,677 67,561,517

(Reversal) / charge for the year (3,686,214) 4,143,817 (10,432,477) (9,974,874)
Closing Balance 3,283,926 5,929,517 48,373,200 57,586,643
 June 30, 2024
www.olpmodaraba.com

-------------------- (Rupees) --------------------

Stage 1 Stage 2 Stage 3 Total

Opening Balance 2,467,502 2,677,034 84,045,026 89,189,562

Charge / (reversal) for the year 4,502,638 (891,334) (25,239,349) (21,628,045)
Closing Balance 6,970,140 1,785,700 58,805,677 67,561,517

180 9.10 The provision as per the Modaraba Regulation 2021 which includes classification into various categories
based on objective and subjective evaluation of borrowers is shown in the table below.

June 30, 2024 June 30, 2023

Rs. In '000 Rs. In '000
Amount Expected Credit Amount Expected Credit
Aging of diminishing musharaka Outstanding Loss Allowance Outstanding Loss Allowance

Classification
Considered good 5,167,322,151 - 4,240,868,655 -

Portfolio Classified as non performing:

Other asset especially mentioned (OAEM) 127,680,056 - - -
Substandard - - 47,209,947 11,802,485
Doubtful - - 4,791,289 2,395,645
Loss 47,163,893 47,163,893 44,607,547 44,607,547
174,843,949 47,163,893 96,608,783 58,805,677

5,342,166,100 47,163,893 4,337,477,438 58,805,677

June 30, June 30,

Note
2024 2023
10 IJARAH ASSETS
------------------ (Rupees) -----------------

Ijarah contracts - accounted for under IFAS 2 10.1 & 10.2 1,259,654,374 1,627,562,155

10.1 Assets under Ijarah arrangements

The following is a statement of Ijarah assets: June 30, 2024

Ijarah assets
Plant, machinery Motor Total
and equipment vehicles
------------------------------ (Rupees) ------------------------------
At July 1, 2023
Cost 2,930,953,896 320,512,750 3,251,466,646
Accumulated depreciation (1,418,872,518) (191,607,733) (1,610,480,251)
Impairment against Ijarah assets (12,949,261) (474,979) (13,424,240)
Net book value 1,499,132,117 128,430,038 1,627,562,155

Additions 354,420,624 - 354,420,624

 June 30, 2024

ANNUAL REPORT 2024

Ijarah assets
Plant, machinery Motor Total
and equipment vehicles
------------------------------ (Rupees) ------------------------------
Disposals
Cost (885,318,081) (148,477,300) (1,033,795,381)
Depreciation 700,597,104 124,828,121 825,425,225
(184,720,977) (23,649,179) (208,370,156) 181
Depreciation charge for the year (485,462,617) (27,635,917) (513,098,534)
Impairment during the year - net (411,979) (447,736) (859,715)
Closing net book value 1,182,957,168 76,697,206 1,259,654,374

At June 30, 2024

Cost 2,400,056,439 172,035,450 2,572,091,889
Accumulated depreciation (1,203,738,031) (94,415,529) (1,298,153,560)
Impairment against Ijarah assets (13,361,240) (922,715) (14,283,955)
Net book value 1,182,957,168 76,697,206 1,259,654,374

Depreciation rate (% per annum) 16.67% to 50% 16.67% to 50%

June 30, 2023

Ijarah assets
Plant, machinery Motor
Total
and equipment vehicles
------------------------------ (Rupees) ------------------------------
At July 1, 2022
Cost 3,175,125,394 603,845,539 3,778,970,933
Accumulated depreciation (1,591,342,336) (363,150,103) (1,954,492,439)
Impairment against Ijarah assets (12,949,261) (474,979) (13,424,240)
Net book value 1,570,833,797 240,220,457 1,811,054,254

Additions 718,645,483 7,400,000 726,045,483

Disposals
Cost (962,816,981) (290,732,789) (1,253,549,770)
Depreciation 780,794,390 231,300,184 1,012,094,574
(182,022,591) (59,432,605) (241,455,196)
Depreciation charge for the year (608,324,572) (59,757,814) (668,082,386)
Impairment during the year - - -
Closing net book value 1,499,132,117 128,430,038 1,627,562,155

At June 30, 2023

Cost 2,930,953,896 320,512,750 3,251,466,646
Accumulated depreciation (1,418,872,518) (191,607,733) (1,610,480,251)
Impairment against Ijarah assets (12,949,261) (474,979) (13,424,240)
Net book value 1,499,132,117 128,430,038 1,627,562,155

Depreciation rate (% per annum) 16.67% to 50% 16.67% to 50%

 10.2 The Modaraba has entered into various Ijarah agreements for periods ranging from 3 to 5 years (2023: 2 to
www.olpmodaraba.com

6 years). Security deposits ranging between 10% to 30% (2023: 0% to 55%) are obtained at the time of
disbursement. The rate of profit implicit in Ijarah finance ranges between 20.25% to 28.95% (2023:
19.29% to 27.28%) per annum.

10.3 Contractual rentals receivable

June 30, 2024 June 30, 2023
Later than one Later Later than one Later
Not later than Not later than
182 year and less than Total year and less than five Total
one year one year
than five years five years than five years
-------------------------------------------------------------- (Rupees) --------------------------------------------------------------
Rentals receivable 709,600,101 837,500,024 - 1,547,100,125 837,658,994 1,066,123,629 - 1,903,782,623

Residual value 133,687,998 266,352,552 - 400,040,550 170,077,902 326,843,473 - 496,921,375

Total future Ijarah

payments receivable 843,288,099 1,103,852,576 - 1,947,140,675 1,007,736,896 1,392,967,102 - 2,400,703,998

10.4 Ijarah includes Rs 99.680 million (2023: Rs 40.095 million) which have been placed under non-performing
status. The details of category of classification of these assets are given in note 28.3.2 to these financial
statements.

10.5 During the year the Modaraba has not availed the benefit of forced sale value of assets held as collateral
against non-performing Ijarah as allowed under the Modaraba Regulations, 2021 issued by the SECP.

June 30, June 30,

Note 2024 2023
11 TANGIBLE ASSETS
------------------ (Rupees) -----------------

Tangible assets in own use 11.1 14,746,223 17,061,707

11.1 The following is a statement of tangible assets in own use:

June 30, 2024

Tangible assets
Office
Furniture equipment, Total
Lease hold and appliances Motor
improvements fittings and computer vehicles
systems
------------------------------------- (Rupees) -------------------------------------
At July 1, 2023
Cost 12,198,211 8,279,748 38,494,154 6,520,400 65,492,513
Accumulated depreciation (11,607,562) (7,551,394) (27,440,745) (1,831,105) (48,430,806)
Net book value 590,649 728,354 11,053,409 4,689,295 17,061,707

Additions 660,906 487,658 5,200,058 - 6,348,622

Disposals
Cost - - (871,974) - (871,974)
Depreciation - - 866,035 - 866,035
- - (5,939) - (5,939)
Depreciation charge for the year (737,522) (203,436) (7,283,564) (433,645) (8,658,167)
Closing net book value 514,033 1,012,576 8,963,964 4,255,650 14,746,223

At June 30, 2024

Cost 12,859,117 8,767,406 42,822,238 6,520,400 70,969,161
Accumulated depreciation (12,345,084) (7,754,830) (33,858,274) (2,264,750) (56,222,938)
Net book value 514,033 1,012,576 8,963,964 4,255,650 14,746,223

Depreciation rate (% per annum) 33.33% 15.00% 20% - 33.33% 20% - 25%
 June 30, 2023

ANNUAL REPORT 2024

Tangible assets
Office
Furniture equipment,
Lease hold and appliances Motor
improvements vehicles Total
fittings and computer
systems
------------------------------------- (Rupees) -------------------------------------
At July 1, 2022
Cost 12,198,211 8,279,748 36,719,739 2,594,300 59,791,998
Accumulated depreciation (11,409,910) (6,835,618) (20,763,304) (2,594,300) (41,603,132)
Net book value 788,301 1,444,130 15,956,435 - 18,188,866 183

Additions - - 2,054,010 6,469,500 8,523,510

Disposals
Cost - - (279,595) (2,543,400) (2,822,995)
Depreciation - - 127,432 2,543,400 2,670,832
- - (152,163) - (152,163)
Depreciation charge for the year (197,652) (715,776) (6,804,873) (1,780,205) (9,498,506)
Closing net book value 590,649 728,354 11,053,409 4,689,295 17,061,707

At June 30, 2023

Cost 12,198,211 8,279,748 38,494,154 6,520,400 65,492,513
Accumulated depreciation (11,607,562) (7,551,394) (27,440,745) (1,831,105) (48,430,806)
Net book value 590,649 728,354 11,053,409 4,689,295 17,061,707

Depreciation rate (% per annum) 20% 33.33% 20% - 33.33% 33.33%

11.2 Included in the cost of tangible assets use are fully depreciated items which are still in use aggregating to
Rs. 38.293 million (2023: Rs. 35.323 million).

11.3 Details of disposal of tangible assets are as follows:

Cost of Carrying Sales Gain / Mode of

Particulars Accumulated Purchaser
assets value proceeds (loss) on disposal
---------------------------- (Rupees) ----------------------------
Office equipment, appliances
and computer systems 298,771 298,771 - 46,000 46,000 Negotiation Fida Cleaning & General Services
51,000 47,600 3,400 17,000 13,600 Negotiation Fida Cleaning & General Services
203,374 200,835 2,539 10,000 7,461 Negotiation Al Hamd Computer
318,829 318,829 - 25,000 25,000 Negotiation Al Hamd Computer

2024 871,974 866,035 5,939 98,000 92,061

2023 2,822,995 2,670,832 152,163 3,596,600 3,444,437

June 30, June 30,

Note 2024 2023
12 INTANGIBLE ASSETS
------------------ (Rupees) -----------------

Software 12.1 3,768,937 2,194,932

 June 30, June 30,
www.olpmodaraba.com

Note 2024 2023

12.1 Opening balance
------------------ (Rupees) -----------------

Cost 33,785,274 31,770,056

Accumulated amortisation (31,590,342) (30,936,122)
Net book value 2,194,932 833,934

Additions during the year 3,458,056 2,039,788

184

Disposals
Cost - (24,570)
Accumulated amortisation - 4,095
- (20,475)
Amortisation charge for the year (1,884,051) (658,315)
Closing net book value 3,768,937 2,194,932

Rate of amortisation 33.33% 33.33%

Closing balance
Cost 37,243,330 33,785,274
Accumulated amortisation (33,474,393) (31,590,342)
Net book value 3,768,937 2,194,932

12.2 Included in the cost of intangible assets use are fully amortised items which are still in use aggregating to
Rs. 30.887 million (2023: Rs. 30.887 million).

June 30, June 30,

2024 2023
13 DEFERRED TAXATION - NET
------------------ (Rupees) -----------------

Deductible temporary differences:

- Ijarah assets 8,325,845 99,740,516
- Tangible assets 3,393,680 5,086,633
- Intangible assets 3,404,369 13,520,484
- Provision in respect of Ijarah financing and
- diminishing musharakah 421,030 -
- Provision for WWF 4,072,987 -
- Provision for SST on Management Company remuneration 2,619,105 -

Taxable temporary differences:

- Staff loans (541,976) -
21,695,041 118,347,633

13.1 Reconciliation of deferred tax asset

Deferred tax asset - opening balance 118,347,633 62,900,127

Current year recognised through the profit and loss account (25,130,940) 55,447,506
Prior year recognised through the profit and loss account (71,521,652) -
Deferred tax asset - closing balance 21,695,041 118,347,633
 June 30, June 30,

ANNUAL REPORT 2024

14 TERM FINANCE ARRANGEMENTS Note 2024 2023
------------------ (Rupees) -----------------
Musharika / wakala finance 14.1, 14.2
& 14.3 1,231,896,100 1,650,009,856
Less: current portion of term finance arrangements (625,117,384) (1,146,247,638)
Long-term portion of term finance arrangements 606,778,716 503,762,218

14.1 Musharika / Wakala Finance

185
Profit rate (per rupee one
Facility limit Frequency Tenor Balance outstanding
thousand per day)
Name of bank of profit
June 30, June 30, June 30, June 30,
payment
2024 2023 2024 2023 2024 2023 2024 2023
(Rupees) (Rupees)

Bank Alfalah Limited - 87,500,000 0.6345-0.6345 0.4458-0.6159 Quarterly 3 years 3 years - 87,500,000

Allied Bank Limited 500,000,000 800,000,000 0.6016-0.6411 0.4458-0.6159 Quarterly 3-5 years 3-5 years 489,683,204 516,361,991

Pakistan Mortgage Refinance

Company Limited 185,962,896 246,147,865 0.5214-0.5962 0.3658-0.5633 Quarterly 5 years 5 years 185,962,896 246,147,865

Meezan Bank Limited 500,000,000 500,000,000 0.6238-0.6334 0.4405-0.6219 Quarterly 5 years 1 year 406,250,000 500,000,000

United Bank Limited 300,000,000 300,000,000 0.5797-0.6471 0.4436-0.6178 Quarterly 3 years 3 years 150,000,000 300,000,000

1,231,896,100 1,650,009,856

14.2 The aforementioned facilities are secured against exclusive hypothecation over specific movable Ijarah
and diminishing musharika assets and the rentals / installments receivable in respect of such assets.

14.3 These carry profit at the rates ranging between 19.03% to 23.62% (2023: 20.56% to 22.70%) per annum.

15 SECURITY DEPOSITS
June 30, 2024 June 30, 2023
Finance Finance
Ijarah assets Total Ijarah assets Total
lease lease
----------------------------------------------------------- (Rupees) -----------------------------------------------------

Security deposits (note 15.1) - 308,813,232 308,813,232 - 388,269,302 388,269,302

Add: Unearned income (note 15.2) - 91,442,094 91,442,094 - 107,765,976 107,765,976
Less: repayable / adjustable after one year - 269,719,334 269,719,334 - 326,691,002 326,691,002

Current portion - 130,535,992 130,535,992 - 169,344,276 169,344,276

15.1 These represent amounts received under Ijarah finance repayable / adjustable at the expiry of the lease
period. These are initially recorded at fair value (level 3) and subsequently measured at amortised cost.

15.2 The unearned revenue is amortised on a straight line basis over the term of the lease.
 June 30, June 30,
www.olpmodaraba.com

Note 2024 2023

16 CREDITORS, ACCRUED AND OTHER LIABILITIES ------------------ (Rupees) -----------------

Remuneration payable to the Management Company 16.1 26,302,197 12,521,234

Profit payable on:
- Redeemable capital 16.2 121,016,639 78,036,728
- Term finance arrangements 57,379,249 77,635,471
186 Accrued expenses 23,363,358 21,105,031
Amounts refundable to lessees 136,733,576 136,452,862
Commission payable on certificates of musharika 8,093,400 5,597,200
Provision for Workers' Welfare Fund 16.3 30,279,702 27,612,894
Provision for services sales tax on the
Management Company's remuneration 24 30,018,678 26,599,392
Charity payable 16.4 3,378,515 681,637
Others 21,988,576 28,997,745
458,553,890 415,240,194

16.1 Amounts due to OLP Services Pakistan (Private) Limited as at June 30, 2024 aggregated to Rs. 26.302
million (2023: Rs. 12.521 million).

16.2 This includes profit payable to key management personnel amounting to Rs. 7.985 million (2023: Rs. 2.661
million).

16.3 As a consequence of the 18th amendment to the Constitution of Pakistan, in May 2015 the Sindh Workers’
Welfare Fund Act, 2014 (SWWF Act) had been passed by the Government of Sindh as a result of which
every industrial establishment located in the Province of Sindh, the total income of which in any
accounting year is not less than Rs 0.50 million, is required to pay Sindh Workers’ Welfare Fund (SWWF) in
respect of that year a sum equal to two percent of such income.

The Sindh Revenue Board (SRB) vide letter no. SRB/DC-A(W)/2017/Rep/4760 dated January 16, 2017 had
advised the Modaraba to pay off all its liabilities falling due under the SWWF Act. The management
considered that the SWWF Act is limited only to the province of Sindh and till the time there is any
mechanism available for apportionment of total income relevant to province of Sindh, no SWWF liability to
SRB can be paid out. On these grounds, foreseeing the expected WWF demand and penal actions from SRB,
the Modaraba had filed a Constitutional Petition (CP) No. CP.D.3879/2017 with the Honorable Sindh High
Court. On March 16, 2020, an interim order was issued by the Honorable Sindh High Court whereby the
Modaraba was instructed to deposit the SWWF liability either with SRB or Nazir as appointed by the Court.
During the year, the Modaraba has deposited the SWWF amounting to Rs 1.999 million (2023: Rs 3.092
million) with SRB, calculated on a proportionate basis and as advised by its legal counsel and consistent
with the grounds adopted by the Modaraba in its petition. The management has provided for SWWF liability
for the period from January 1, 2014 to June 30, 2024 in these financial statements on a prudent basis.

16.4 During the current year, donations paid out of the charity payable account include donation to Layton
Rahmatulla Benevolent Trust Hospital amounting to Rs. 2 million (2023: Rs. 1 million) and an amount of Rs.
2 million (2023: Rs. 1 million) was donated to The Patients' Behbud Society for AKU. Furthermore, Rs. 1
million donation was paid to Professional Education Foundation and Family Educational Services
Foundation each and Rs. 0.5 million donated to Behbud Association Karachi during the year ended June 30,
2024.
 June 30, June 30,

ANNUAL REPORT 2024

Note 2024 2023
17 REDEEMABLE CAPITAL - PARTICIPATORY AND UNSECURED ------------------ (Rupees) -----------------

Certificates of musharika (COM) 17.1 & 17.1.1 4,287,535,000 2,896,605,000

Less: current portion of redeemable capital 17.2 (4,145,135,000) (2,717,105,000)
142,400,000 179,500,000

17.1 These carry estimated share of profit ranging between Re. 0.5479 to Re. 0.6025 per thousand per day 187
(20.0% to 21.99% per annum) (2023: Re 0.3425 to Re. 0.5784 per thousand per day (12.5% to 21.11%
per annum) and are due to mature latest by April 05, 2029 (2023: December 23, 2027).

17.1.1 This includes COM issued to key management personnel amounting to Rs. 42.250 million (2023: Rs. 28.450
million) at the rate ranging from 20.25% to 21.05% (2023: 18.00% to 19.05%) per annum.

June 30, June 30,

Note 2024 2023
17.2 Current portion of redeemable capital ------------------ (Rupees) -----------------

Current portion of certificates of musharika 4,023,030,000 2,455,900,000

Payable to holders of matured certificates of musharika 17.2.1 122,105,000 261,205,000
4,145,135,000 2,717,105,000

17.2.1 These represent amounts with respect to already matured certificates against which respective
customer's request for encashment along with original certificates are pending.

18 CERTIFICATE CAPITAL

June 30, June 30, June 30, June 30,

2024 2023 2024 2023
(Number of certificates) ------------------ (Rupees) -----------------
Authorised certificate capital

50,000,000 50,000,000 Modaraba certificates of Rs. 10 each 500,000,000 500,000,000

Issued, subscribed, called-up

and paid-up capital

Modaraba certificates of Rs. 10 each

28,500,000 28,500,000 fully paid in cash 285,000,000 285,000,000
16,883,530 16,883,530 Issued as fully paid bonus certificates 168,835,300 168,835,300

45,383,530 45,383,530 453,835,300 453,835,300

 18.1 Ordinary shares of the Modaraba held by related parties as at year end are as follows:
www.olpmodaraba.com

2024 2023
(Percentage (Number (Percentage (Number
of holding) of certificates) of holding) of certificates)

OLP Services Pakistan (Private) Limited

(the Management Company) 10.00% 4,538,353 10.00% 4,538,353
188
OLP Financial Services Pakistan Limited
(the Holding Company) 10.00% 4,538,353 10.00% 4,538,353

Mr. Shaheen Amin

(the Chairman of the Board of the
Management Company) 0.22% 100,000 0.22% 100,000

Mr. Nadim D. Khan

(a director of the Management
Company) 0.01% 6,049 - -

18.2 There are no agreements with certificate holders for voting rights, board selection, rights of first refusal,
and block voting.

19 CONTINGENCIES AND COMMITMENTS

19.1 There were no contingencies outstanding as at June 30, 2024 and June 30, 2023.

19.2 Commitments

The Modaraba has issued letter of comfort to United Bank Limited on behalf of M/s. Bulk Flexibles Pakistan
(Private) Limited as at year end amounting to Rs. 58.517 million (June 2023: Rs. 83.80 million) for
guaranteeing the payment against import of plant and machinery which will ultimately be given by the
Modaraba to the client against diminishing musharika or Ijarah arrangements.

June 30, June 30,

2024 2023
20 FINANCIAL AND OTHER CHARGES
------------------ (Rupees) -----------------

Profit on redeemable capital 721,694,359 429,514,180

Profit on term finance arrangements 292,451,443 324,746,184
Commission 32,550,217 24,002,146
Unwinding of security deposits 43,111,692 46,324,055
Bank charges 695,760 931,032
1,090,503,471 825,517,597

21 OTHER INCOME

Gain on disposal of Ijarah assets 3,673,052 19,245,417

Documentation fee 41,164,894 29,536,976
Gain on disposal of tangible assets 92,061 3,444,437
Loss on disposal of intangible assets - (20,475)
44,930,007 52,206,355
 June 30, June 30,

ANNUAL REPORT 2024

Note 2024 2023
22 ADMINISTRATIVE AND OPERATING EXPENSES
------------------ (Rupees) -----------------

Salaries and other staff benefits 22.1 & 27 192,632,429 172,136,634

Depreciation 11.1 8,658,167 9,498,506
Amortisation 12.1 1,884,051 658,315
Rent 12,749,139 10,153,288
Advertising, travelling and entertainment 2,197,820 2,617,379 189
Postage 320,908 1,721,220
Telecommunication 3,172,313 4,301,690
Printing and stationery 3,854,700 3,917,176
Legal and professional 5,924,496 5,464,244
Repairs and maintenance 23,788,518 15,685,284
Charges by holding company 22.2 750,844 612,428
Subscriptions 1,707,174 2,320,683
Auditors' remuneration 22.3 3,113,413 2,470,744
Certificate of Musharika trustee fee 969,044 749,690
Insurance - own assets 344,999 514,327
Sundry expenses 12,782,628 10,835,511
274,850,643 243,657,119

22.1 Salaries and other staff benefits include Rs. 6.725 million and Rs. 5.602 million (2023: Rs. 5.894 million and
Rs. 4.910 million) on account of the Modaraba's contribution to the staff provident fund and staff gratuity
fund respectively.

22.2 This represents expense allocated by OLP Financial Services Pakistan Limited (OLPL) (Holding Company) on
account of usage of OLPL's space, furniture, fixtures and office equipment in Islamabad by the Modaraba.

June 30, June 30,

2024 2023
22.3 Auditors’ remuneration
------------------ (Rupees) -----------------

Statutory audit fee 960,500 800,416

Half yearly review fee 274,430 228,690
Fee for review of compliance with the Code of Corporate Governance 104,900 87,410
Fee for other certifications and assistance in application of IFRS 9 1,200,000 1,029,000
Out of pocket expenses 342,960 142,210
2,882,790 2,287,726
Sindh sales tax on services 230,623 183,018
3,113,413 2,470,744

23 MANAGEMENT COMPANY'S REMUNERATION

The Modaraba Management Company is entitled to a remuneration for services rendered to the Modaraba
under the provisions of the Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980
upto a maximum of 10% per annum of the net annual profits of the Modaraba. The remuneration for the
year ended June 30, 2024 has been recognised at 10% (2023: 10%) of the profit for the year before
charging such remuneration.
 24 PROVISION FOR SERVICES SALES TAX ON THE MANAGEMENT COMPANY'S REMUNERATION
www.olpmodaraba.com

During 2013, the Sindh Revenue Board (SRB) levied Sindh sales tax on management remuneration, which is
paid by the Modaraba to its Management Company under the provisions of the Modaraba Companies and
Modaraba (Floatation and Control) Ordinance, 1980, treating it as a fee and chargeable under the Sindh
Sales Tax Act, 2011. The Modaraba, however, considers that the management remuneration is an
allocation of profit under the Shariah principle of “Modaraba” and therefore does not qualify to be treated
as a fee and hence, does not attract any services sales tax.
190
Pursuant to Order number SRB-COM-I/AC-V/Mgt/SCSOP/5878/2012 of the SRB dated April 22, 2013 issued
to the Management Company, the Modaraba has recorded a provision in respect of Sindh Sales Tax on the
Management Company's remuneration at applicable rates with effect from November 1, 2011. The
Management Company had filed an appeal before the Appellate Tribunal SRB against this order. The
Appellate Tribunal SRB through its order dated February 19, 2016 allowed the appeal and set aside the
order-in-original and order-in-appeal and remanded back the case to the assessing officer for
re-assessment. Thereafter, on April 8, 2016, the assessing officer issued a fresh notice to the Management
Company contending that sales tax on the Management Company's remuneration is applicable. Against the
notice, the Management Company has filed an appeal before the Honorable Sindh High Court. As an interim
relief, the Court vide its Order dated October 13, 2016 has stopped the assessing authorities to pass any
final order till the culmination of its proceedings. The interim relief was reconfirmed by the Court in its Order
dated November 5, 2018. The case is pending to date. However, the Modaraba has continued to recognise
the provision for services sales tax on the Management Company's remuneration.

June 30, June 30,

Note 2024 2023
(Restated)
25 LEVY AND TAXATION
------------------ (Rupees) -----------------

Levy 25.1 ( 4,775,216) (4,210,355)

Taxation
Current
- For the year 50,501,765 108,886,495
- Prior year (81,032,286) -

Deferred
- For the year 25,130,940 (55,447,506)
- Prior year 71,521,652 -
70,897,287 57,649,344

25.1 This represents final taxes paid under sections 150 of Income Tax Ordinance, 2001, representing levy in
terms of requirements of IFRIC 21 and IAS 37.
June 30, June 30,
2024 2023
(Restated)
25.2 Relationship between tax expense and accounting profit ------------------ (Rupees) -----------------

Profit before taxation 223,859,258 182,223,399

Enacted tax rate 29% 29%

 June 30, June 30,

ANNUAL REPORT 2024

2024 2023
(Restated)
------------------ (Rupees) -----------------

Tax calculated at enacted rate 64,919,185 52,844,786

- Impact of super tax 2,238,593 7,288,936
- Change in rate of tax 2,297,865 -
- Prior period (9,510,634) -
191
- Permanent differences 10,952,278 (2,484,378)
70,897,287 57,649,344

26 EARNINGS PER CERTIFICATE - BASIC AND DILUTED

Basic

Profit for the year after taxation 157,737,187 128,784,410

----------------- (Number) ----------------

Weighted average number of certificates outstanding during the year 45,383,530 45,383,530
------------------ (Rupees) -----------------

Earnings per certificate 3.48 2.84

Diluted

Diluted earnings per certificate has not been presented as the Modaraba does not have any convertible
instruments in issue as at June 30, 2024 and June 30, 2023 which would have any effect on the earnings per
certificate if the option to convert is exercised.
June 30, June 30,
Note 2024 2023
------------------ (Rupees) -----------------
27 REMUNERATION OF OFFICERS AND EXECUTIVES

Remuneration and staff retirement benefits 187,435,995 167,729,824

Other benefits 5,196,434 4,406,810
Staff loan expense - -
27.1 & 27.2 192,632,429 172,136,634
----------------- (Number) ----------------
Number of employees at the end of the year

- Permanent 41 42
- On contractual basis 11 11
52 53

Average number of employees* 42 42

* Represents the average number of employees at the end of each month in the year.

27.1 It includes remuneration paid to all employees other than the Chief Executive Officer, who is an employee
of the Management Company of the Modaraba. Remuneration to the Chief Executive Officer is recognised
in the financial statements of the Management Company of the Modaraba.
 June 30, June 30,
www.olpmodaraba.com

2024 2023
27.2 The remuneration paid to the executives is as follows: ------------------ (Rupees) -----------------

Basic salary 53,142,048 35,812,425

House rent allowance 21,256,819 14,324,970
Medical allowance 5,314,205 3,581,243
Other allowances 33,117,170 42,686,137
192 Bonus 11,098,200 9,763,000
Contribution to provident fund 4,876,526 3,581,243
Contribution to gratuity fund 4,062,112 2,983,164
132,867,080 112,732,182

----------------- (Number) ----------------

Number of executives at the end of the year 22 15

27.3 Executives denote employees, other than the Chief Executive and Executive Directors, whose basic salary
exceeds twelve hundred thousand rupees in a financial year.

28 RISK MANAGEMENT

28.1 FINANCIAL RISK MANAGEMENT

Risk management framework

The Modaraba’s objective in managing risk is the creation and protection of certificate holders’ value. Risk is
inherent in the Modaraba’s activities, but it is managed through monitoring and controlling activities which
are primarily set up based on limits established by the Management Company, the Modaraba’s constitutive
documents and the regulations and directives of the SECP. These limits reflect the business strategy and
market environment of the Modaraba as well as the level of the risk that the Modaraba is willing to accept.
The Board of Directors of the Management Company has overall responsibility for the establishment and
oversight of the Modaraba’s risk management framework.

The activities of the Modaraba expose it to a variety of financial risks: market risk, credit risk and liquidity
risk.

28.2 Market risk

Market risk is the risk that the fair values or future cash flows of a financial instrument will fluctuate
because of the changes in market prices. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return on risk. Market
risk comprise of three types of risks: currency risk, profit rate risk and price risk.

Management of market risks

The Management Company manages market risk by monitoring its financial instruments as per the internal
risk management policies and investment guidelines approved by the Board of Directors of the
Management Company.

The Modaraba is exposed to profit and price risk.

28.2.1 Currency risk

ANNUAL REPORT 2024

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a
result of changes in foreign currency exchange rates. At present, the Modaraba is not exposed to currency
risk as all the transactions are carried out in Pakistani Rupees.

28.2.2 Profit rate risk

Profit rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate 193
because of changes in market profit rates. At the reporting date, the profit rate profile of the Modaraba’s
profit bearing financial instruments and the periods in which these will mature are as follows (based on the
earlier of repricing and contractual maturity):

June 30, 2024

Exposed to yield / profit rate risk
Effective yield / Not exposed to
profit rate Total Over one Over three yield / profit
Upto one Over one year to Over five
% month to three months to one rate risk
month five years years
months year

---------------------------------------------------------------- (Rupees) ----------------------------------------------------------

On-statement of financial position
financial instruments

Financial assets
Cash and bank balances 10.82% - 20.5% 329,627,579 327,267,470 - - - - 2,360,109
Ijarah rentals receivable - 69,821,374 - - - - - 69,821,374
Advances, deposits and other receivables - 101,400,507 - - - - - 101,400,507
Investments - 350,918,237 - - - - - 350,918,237
Diminishing Musharika 21.07% - 27.49% 5,284,579,457 1,175,440,263 3,056,836,957 974,991,289 15,590,262 18,566,376 43,154,310
6,136,347,154 1,502,707,733 3,056,836,957 974,991,289 15,590,262 18,566,376 567,654,537
Financial liabilities
Term finance arrangements 19.03% - 23.62% 1,231,896,100 406,250,000 825,646,100 - - - -
Security deposits - 308,813,232 - - - - - 308,813,232
Creditors, accrued and other liabilities - 398,255,510 - - - - - 398,255,510
Advance Ijarah rentals received - 4,645,531 - - - - - 4,645,531
Redeemable capital 20.00% - 21.99% 4,287,535,000 327,105,000 837,300,000 2,980,730,000 142,400,000 - -
Unclaimed profit distribution - 57,602,615 - - - - - 57,602,615
6,288,747,988 733,355,000 1,662,946,100 2,980,730,000 142,400,000 - 769,316,888

On-statement of financial position gap (a) (152,400,834) 769,352,733 1,393,890,857 (2,005,738,711) (126,809,738) 18,566,376 (201,662,351)
Off-statement of financial position financial instrument

Commitments - - - - - 58,516,500

Off-statement of financial position financial

instrument gap (b) - - - - - (58,516,500)

Total interest rate sensitivity gap (a+b) 769,352,733 1,393,890,857 (2,005,738,711) (126,809,738) 18,566,376

Cumulative interest rate sensitivity gap 769,352,733 2,163,243,590 157,504,879 30,695,141 49,261,517
www.olpmodaraba.com

June 30, 2023

Exposed to yield / profit rate risk
Effective yield / Not exposed to
profit rate Total Over one Over three yield / profit
Upto one Over one year to Over five
% month to three months to one rate risk
month five years years
months year

---------------------------------------------------------------- (Rupees) ----------------------------------------------------------

On-statement of financial position
financial instruments

Financial assets
194 Cash and bank balances 10.04% - 19.5% 400,254,200 384,285,213 - - - - 15,968,987
Ijarah rentals receivable - 103,759,046 - - - - - 103,759,046
Advances, deposits and other receivables - 82,620,089 - - - - - 82,620,089
Investments - 123,858,681 - - - - - 123,858,681
Diminishing Musharika 18.13% - 28.09% 4,269,915,921 764,326,341 2,282,521,799 743,242,257 - - 479,825,524
4,980,407,937 1,148,611,554 2,282,521,799 743,242,257 - - 806,032,327
Financial liabilities
Term finance arrangements 20.56% - 22.70% 1,650,009,856 623,232,493 168,848,481 492,129,560 365,799,322 - -
Security deposits - 388,269,302 - - - - - 388,269,302
Creditors, accrued and other liabilities - 361,027,908 - - - - - 361,027,908
Advance Ijarah rentals received - 1,653,873 - - - - - 1,653,873
Redeemable capital 12.5% - 21.11% 2,896,605,000 354,500,000 979,550,000 1,121,850,000 179,500,000 - 261,205,000
Unclaimed profit distribution - 59,295,174 - - - - - 59,295,174
5,356,861,113 977,732,493 1,148,398,481 1,613,979,560 545,299,322 - 1,071,451,257

On-statement of financial position gap (a) (376,453,176) 170,879,061 1,134,123,318 (870,737,303) (545,299,322) - (265,418,930)
Off-statement of financial position financial instrument

Commitments - - - - - 83,800,262

Off-statement of financial position financial

instrument gap (b) - - - - - (83,800,262)

Total interest rate sensitivity gap (a+b) 170,879,061 1,134,123,318 (870,737,303) (545,299,322) -

Cumulative interest rate sensitivity gap 170,879,061 1,305,002,379 434,265,076 (111,034,246) (111,034,246)

Sensitivity analysis for variable rate instrument

As at reporting date, variable rate instruments of the Modaraba represent cash and bank balances,
Diminishing Musharika and Ijarah financing, term finance arrangements and redeemable capital. In case of
100 basis points increase / decrease in profit rates on the last repricing date of variable rate instruments
with all other variables held constant, the following will be the impact on the statement of profit and loss
and the equity of the Modaraba:
June 30, 2024 June 30, 2023
Increase of 100 Decrease of 100 Increase of 100 Decrease of 100
basis points basis points basis points basis points
----------------------------------- (Rupees) -----------------------------------

Variable rate financial assets 56,118,469 (56,118,469) 46,542,011 (46,542,011)

Variable rate financial liabilities (55,194,311) 55,194,311 (45,466,149) 45,466,149
Net effect on profit and loss 924,158 (924,158) 1,075,863 (1,075,863)
 Sensitivity analysis for fixed rate instrument

ANNUAL REPORT 2024

There are no fixed rate financial instruments as at June 30, 2024 and June 30, 2023.

The composition of the Modaraba's portfolio of financial instruments and profit rates are expected to
change over time. Therefore, the sensitivity analysis prepared as of June 30, 2024 is not necessarily
indicative of the effect on the Modaraba's profit and loss and reserves due to changes in profit rates.

28.2.3 Price risk 195

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result
of changes in market prices (other than those arising from profit rate risk or currency risk) whether those
changes are caused by factors specific to the individual financial instrument or its issuer, or factors
affecting all similar financial instruments traded in the market. The fair value and average cost of units of
mutual fund as at June 30, 2024 is Rs. 350.918 million (June 30, 2023: Rs. 123.859 million).

28.3 Credit risk

Credit risk represents the risk of a loss if counterparties fail to perform as contracted. The risk is generally
limited to principal amounts and accrued interest thereon, if any. The Modaraba's policy is to enter into
financial contracts in accordance with the internal risk management policies and the requirements of the
Modaraba rules and regulations. The carrying amount of financial assets represents the maximum credit
exposure at the reporting date.
June 30, June 30,
2024 2023
------------------ (Rupees) -----------------
Financial Assets
Cash and bank balances 329,517,879 400,169,700
Ijarah rentals receivable 69,821,374 103,759,046
Advances, deposits and other receivables 101,400,507 82,620,089
Investments 350,918,237 123,858,681
Diminishing Musharika 5,284,579,457 4,269,915,921
6,136,237,454 4,980,323,437

As at June 30, 2024 and June 30, 2023, Ijarah rental receivables are pledged as collateral against musharika
/ wakala term finance.

28.3.1 Management of credit risk

The Modaraba's policy is to enter into financial contracts in accordance with the internal risk management
polices and the requirements of the Modaraba Regulations, 2021 issued by the SECP. The Modaraba seeks
to manage its credit risk exposure through diversification of its Ijarah and diminishing musharika
arrangements to avoid undue concentration of risks with individuals or groups of customers in specific
locations or businesses.

The outstanding amount of Modaraba's Ijarah finance are secured against leased assets. In few cases,
additional collateral is also obtained in the form of mortgage of property. The Modaraba is entitled to
repossess and sell these assets in case of default by the customers. During the current year, the Modaraba
has not repossessed any assets.
 Credit risk ratings
www.olpmodaraba.com

The Modaraba maintains balances with banks and mutual funds (i.e daily dividend income funds) having
reasonably high credit ratings which are summarized as follows:

June 30, June 30,

2024 2023
------------------ (Rupees) -----------------
Bank and mutul funds balances
196
AAA 329,311,305 399,930,186
AA+ 222,981,117 15,969,571
AA 127,879,380 107,804,753
A+ 39,600 -
AA- 156,373 132,990
The State Bank of Pakistan 68,341 190,881
680,436,116 524,028,381

28.3.2 An analysis of the portfolio of the Modaraba that is classified as non-performing as per the requirements of
the Modaraba Regulations, 2021 issued by the SECP is as follows:

June 30, 2024

Other Assets
Especially Substandard Doubtful Loss Total
Mentioned
------------------------------------- (Rupees) -------------------------------------
Ijarah rentals receivable (being
principal outstanding) - - 63,705,872 35,974,063 99,679,935
Diminishing Musharika 127,680,056 - - 47,163,893 174,843,949
127,680,056 - 63,705,872 83,137,956 274,523,884

June 30, 2023

Other Assets
Especially Substandard Doubtful Loss Total
Mentioned
------------------------------------- (Rupees) -------------------------------------
Ijarah rentals receivable (being
principal outstanding) - - - 40,095,460 40,095,460
Diminishing Musharika - 47,209,947 4,791,289 44,607,547 96,608,783
- 47,209,947 4,791,289 84,703,007 136,704,243

Impairment is recognised by the Modaraba based on the provisioning requirements as disclosed in note
4.2.1.3 to these financial statements. The Modaraba also performs a subjective evaluation of performing
and non-performing advances / loans / lease portfolio based on past experience, repayment patterns and
consideration of financial positions of counter parties and has the option to downgrade the category of
classification determined on the basis of the Modaraba Regulations, 2021.

28.3.3 Concentration of credit risk

Concentration of credit risk exists when changes in economic or industry factors similarly affect the groups
of counterparties whose aggregate credit exposure is significant in relation to the Modaraba's total credit
exposure.
The Modaraba manages credit risks and its concentration through diversification of activities to avoid

ANNUAL REPORT 2024

undue concentration of risk with individuals, groups or specific industry segments. For this purpose, the
Modaraba has established exposure limits for individuals and industrial sectors.

Details of the sector wise analysis of gross ijarah assets, sukuk certificates and diminishing musharika are
as follows:

June 30, 2024 June 30, 2023

Sectors (Rupees) % (Rupees) % 197

Confectionery 39,273,192 0.63% 84,585,690 1.54%

Fast Moving Consumer Goods
(FMCGs) / Food and Allied 317,549,254 5.11% 362,792,999 6.62%
Services 277,732,815 4.47% 269,247,659 4.91%
Chemicals 100,567,693 1.62% 81,435,884 1.49%
Sugar 430,468,194 6.93% 399,530,684 7.29%
Textile 1,240,274,559 19.95% 1,038,695,911 18.95%
Travel, transport, storage 197,974,464 3.18% 357,234,508 6.52%
Printing, publishing and packages 361,101,968 5.81% 371,288,801 6.77%
Individuals 1,246,420,159 20.05% 848,266,325 15.47%
Automobile 111,744,647 1.80% 177,873,829 3.24%
Financial institutions 6,779,778 0.11% 8,865,882 0.16%
Power, energy, water 40,587,234 0.65% 54,484,392 0.99%
Gas 12,139,342 0.20% 43,807,704 0.80%
Pharmaceuticals 235,016,755 3.78% 125,634,837 2.29%
Steel 293,470,460 4.72% 317,392,800 5.79%
Engineering 144,838,986 2.33% 204,363,166 3.73%
Plastic 243,674,800 3.92% 70,411,972 1.28%
Distribution 55,589,497 0.89% 6,605,913 0.12%
Dairy, farming and allied 19,800,000 0.32% 11,833,125 0.22%
Leather / tyre and rubber 142,572,060 2.29% 109,405,028 2.00%
Poultry / poultry feeds 245,205,415 3.94% 232,294,906 4.23%
Others 453,067,831 7.29% 306,376,540 5.59%
6,215,849,103 100.00% 5,482,428,555 100.00%

Reconciliation of the sector wise analysis of gross ijarah assets, sukuk certificates and diminishing
musharika with the notes to the financial statements is as follows:
 June 30, June 30,
www.olpmodaraba.com

Note 2024 2023

------------------ (Rupees) -----------------

Investment in Ijarah finance / assets under Ijarah arrangements 10 1,259,654,374 1,627,562,155

Less: security deposits held 15 (400,255,326) (496,035,278)
Add: impairment against Ijarah assets 10.1 14,283,955 13,424,240
Add: allowance for potential Ijarah losses - -
198 Add: mark-up held in suspense - -
873,683,003 1,144,951,117

Investment in Sukuk certificates 8 - -

Add: provision in respect of sukuk certificates 8 - -
- -

Investment in diminishing musharika 9 5,284,579,457 4,269,915,921

Add: provision in respect of diminishing musharika 9 57,586,643 67,561,517
5,342,166,100 4,337,477,438

6,215,849,103 5,482,428,555

The Modaraba controls the credit quality of receivables through diversification of activities to avoid undue
concentration of risks with individuals, groups or specific industry segments. For such purpose, the
Modaraba has established exposure limits for single lessees and industrial sectors. The Modaraba has an
effective rental monitoring system which allows it to evaluate customers’ credit worthiness and identify
potential problem accounts. An allowance for potential lease, instalment and other loan losses is
maintained at a level which, in the judgment of management, is adequate to provide for potential losses on
lease and other loan portfolios that can be reasonably anticipated. The credit quality of receivables can be
assessed with reference to their historical performance with no or some defaults in recent history.

The carrying value of non performing receivables is as follows:

June 30, 2024

Ijarah Diminishing
Financing Musharika Total

------------------------ (Rupees) ------------------------

Within 90 days - 3,684,328 3,684,328

91 - 180 days - 123,995,728 123,995,728
181 - 365 days 63,705,872 - 63,705,872
Over 1 year 35,974,063 47,163,893 83,137,956
99,679,935 174,843,949 274,523,884
Less: Specific provision / ECL 54,159,836 57,586,643 111,746,479
Net of provision 45,520,099 117,257,306 162,777,405

Coverage ratio 54.33% 32.94% 40.71%

 June 30, 2023

ANNUAL REPORT 2024

Ijarah Diminishing
Financing Musharika Total

------------------------ (Rupees) ------------------------

Within 90 days - - -
91 - 180 days - 47,209,947 47,209,947
181 - 365 days - 5,928,919 5,928,919
Over 1 year 40,095,460 43,469,917 83,565,377 199
40,095,460 96,608,783 136,704,243
Less: Specific provision / ECL 30,785,361 67,561,517 98,346,878
Net of provision 9,310,099 29,047,266 38,357,365

Coverage ratio 76.78% 69.93% 71.94%

28.3.4 The Modaraba applies the IFRS 9 general approach to measure Expected Credit Losses (ECL) for Ijarah
Finance and diminishing musharika. To measure the expected credit losses, such financial assets have been
grouped based on days past due. On that basis, the loss allowance as at June 30, 2024 and June 30, 2023
was determined as follows:
Sectors
Ijarah Finance and Diminishing Musharika
June 30, 2024
Expected Gross carrying
Loss allowance
loss rate amount
------------------------ (Rupees) ------------------------

Not yet due 0.05% 5,400,303,378 2,800,911

1-30 days 0.20% 483,697,094 957,112
31-60 days 1.39% 277,685,555 3,865,829
61-90 days 4.04% 198,454,178 8,012,305
91-180 days 9.95% 58,271,448 5,796,426
181-365 days 52.83% 73,599,724 38,879,505
More than 365 days 102.78% 103,640,301 106,516,379
Total 166,828,467

Ijarah Finance and Diminishing Musharika

June 30, 2023
Expected Gross carrying
Loss allowance
loss rate amount
------------------------ (Rupees) ------------------------

Not yet due 0.12% 3,443,989,689 4,170,853

1-30 days 0.24% 1,976,085,134 4,679,775
31-60 days 1.08% 123,573,870 1,338,746
61-90 days 2.15% 124,908,679 2,680,609
91-180 days 29.49% 22,649,847 6,678,963
181-365 days 33.51% 38,854,024 13,021,804
More than 365 days 100.00% 113,782,323 113,782,320
Total 146,353,070
 For ijarah finance and diminishing musharika, a life time ECL is recorded in which there has been Significant
www.olpmodaraba.com

Increase in Credit Risk (SICR) from the date of initial recognition and for financial assets which are credit
impaired as on reporting date. A 12 months ECL is recorded for all other financial assets which do not meet
the criteria for SICR or "credit impaired" as at reporting date. To assess whether there is a significant
increase in credit risk the Modaraba compares the risk of a default occurring on the asset as at the reporting
date with the risk of default as at the date of initial recognition. The Modaraba also considers reasonable
and supportive forward-looking information in determination of ECL.

200 28.4 Liquidity risk

Liquidity risk is the risk that the Modaraba will encounter difficulty in meeting its financial obligations as
they fall due. Liquidity risk arises because of the possibility that the Modaraba will be required to pay /
settle its liabilities earlier than expected or will face difficulty in raising funds to meet commitments
associated with financial liabilities as they fall due. The Modaraba's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Modaraba's reputation.

The following are the contractual maturities of financial liabilities:

June 30, 2024

Over 1 Over 3 Over 1
Carrying Contractual Up to 1 Over 5
month to months year to
Amount cash flows month years
3 months to 1 year 5 years
---------------------------------------------------------- (Rupees) ----------------------------------------------------------
Financial liabilities

Term finance arrangements 1,231,896,100 (1,231,896,100) (151,433,622) - (473,683,762) (606,778,716) -

Security deposits 308,813,232 (400,255,326) (59,671,560) (18,127,925) (52,951,286) (269,504,555) -
Creditors, accrued and other liabilities 398,255,510 (398,255,510) (398,255,510) - - - -
Advance Ijarah rentals received 4,645,531 (4,645,531) (4,645,531) - - - -
Redeemable capital 4,287,535,000 (4,287,535,000) (327,105,000) (837,300,000) (2,980,730,000) (142,400,000) -
Unclaimed profit distribution 57,602,615 (57,873,114) (57,873,114) - - - -
6,288,747,988 (6,380,460,581) (998,984,337) (855,427,925) (3,507,365,048) (1,018,683,271) -

June 30, 2023

Over 1 Over 3 Over 1
Carrying Contractual Up to 1 Over 5
month to months year to
Amount cash flows month years
3 months to 1 year 5 years
---------------------------------------------------------- (Rupees) ----------------------------------------------------------
Financial liabilities

Term finance arrangements 1,650,009,856 (1,650,009,856) (623,232,493) (168,848,481) (354,166,664) (503,762,218) -

Security deposits 388,269,302 (388,269,302) (71,269,694) (32,442,525) (62,517,196) (218,618,155) (3,421,732)
Creditors, accrued and other liabilities 361,027,908 (361,027,908) (361,027,908) - - - -
Advance Ijarah rentals received 1,653,873 (1,653,873) (1,653,873) - - - -
Redeemable capital 2,896,605,000 (2,896,605,000) (615,705,000) (979,550,000) (1,121,850,000) (179,500,000) -
Unclaimed profit distribution 59,295,174 (59,295,174) (59,295,174) - - - -
5,356,861,113 (5,356,861,113) (1,732,184,142) (1,180,841,006) (1,538,533,860) (901,880,373) (3,421,732)

28.5 Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the
processes, technology and infrastructure supporting the Modaraba’s operations either internally within
the Modaraba or externally at the Modaraba’s service providers, and from external factors other than credit,
market and liquidity risks such as those arising from legal and regulatory requirements and generally
accepted standards of investment management behavior. Operational risks arise from all of the Modaraba’s
activities.
 The Modaraba’s objective is to manage operational risk so as to balance limiting of financial losses and

ANNUAL REPORT 2024

damage to its reputation with achieving its objective of generating returns for certificate holders.

The primary responsibility for the development and implementation of controls over operational risk rests
with the Board of Directors of the Management Company. This responsibility encompasses the controls in
the following areas:

- requirements for appropriate segregation of duties between various functions, roles and
responsibilities; 201

- requirements for the reconciliation and monitoring of transactions;

- compliance with regulatory and other legal requirements;

- documentation of controls and procedures;

- requirements for the periodic assessment of operational risks faced, and the adequacy of controls
and procedures to address the risks identified;

- ethical and business standards;

- risk mitigation, including insurance where this is effective.

29 FINANCIAL INSTRUMENTS BY CATEGORY

June 30, 2024
At fair value At fair value
At amortised through other through Total
cost comprehensive profit or loss
income
---------------------------------- (Rupees) ----------------------------------
FINANCIAL ASSETS

Cash and bank balances 329,627,579 - - 329,627,579

Ijarah rentals receivable 69,821,374 - - 69,821,374
Advances, deposits and other receivables 101,400,507 - - 101,400,507
Investments - - 350,918,237 350,918,237
Diminishing musharika 5,284,579,457 - - 5,284,579,457
5,785,428,917 - 350,918,237 6,136,347,154

June 30, 2024

At fair
At amortised
value through Total
cost
profit or loss
----------------------- (Rupees) -----------------------
FINANCIAL LIABILITIES

Term finance arrangements - 1,231,896,100 1,231,896,100

Security deposits - 308,813,232 308,813,232
Creditors, accrued and other liabilities - 398,255,510 398,255,510
Advance Ijarah rentals received - 4,645,531 4,645,531
Redeemable capital - 4,287,535,000 4,287,535,000
Unclaimed profit distribution - 57,602,615 57,602,615
- 6,288,747,988 6,288,747,988
 June 30, 2023
www.olpmodaraba.com

At fair value At fair value

At amortised through other through Total
cost comprehensive profit or loss
income
---------------------------------- (Rupees) ----------------------------------
FINANCIAL ASSETS

Cash and bank balances 400,254,200 - - 400,254,200

202 Ijarah rentals receivable 103,759,046 - - 103,759,046
Advances, deposits and other receivables 82,620,089 - - 82,620,089
Investments - - 123,858,681 123,858,681
Diminishing musharika 4,269,915,921 - - 4,269,915,921
Net investment in Ijarah finance - - - -
4,856,549,256 - 123,858,681 4,980,407,937

June 30, 2023

At fair
At amortised
value through Total
cost
profit or loss
----------------------- (Rupees) -----------------------
FINANCIAL LIABILITIES

Term finance arrangements - 1,650,009,856 1,650,009,856

Security deposits - 388,269,302 388,269,302
Creditors, accrued and other liabilities - 361,027,908 361,027,908
Advance Ijarah rentals received - 1,653,873 1,653,873
Redeemable capital - 2,896,605,000 2,896,605,000
Unclaimed profit distribution - 59,295,174 59,295,174
- 5,356,861,113 5,356,861,113

30 FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Consequently, differences can arise
between carrying values and the fair value estimates.

Underlying the definition of fair value is the presumption that the Modaraba is a going concern without any
intention or requirement to curtail materially the scale of its operations or to undertake a transaction on
adverse terms.

30.1 Fair value hierarchy

International Financial Reporting Standard 13, 'Fair Value Measurement' requires the Modaraba to classify
assets using a fair value hierarchy that reflects the significance of the inputs used in making the
measurements. The fair value hierarchy has the following levels:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (i.e. unobservable

ANNUAL REPORT 2024

inputs).

The following table shows the carrying amounts and fair values of all financial assets and financial
liabilities, including their levels in the fair value hierarchy.

June 30, 2024

Carrying value Fair value

Fair value Fair value amortised 203

through profit through OCI cost Total Level 1 Level 2 Level 3 Total
or loss

Financial assets measured at fair value ---------------------------------------- (Rupees) ---------------------------------------

Investments 350,918,237 - - 350,918,237 - 350,918,237 - 350,918,237
350,918,237 - - 350,918,237 - 350,918,237 - 350,918,237
Financial assets not measured at fair value
Cash and bank balances - - 329,627,579 329,627,579 - - - -
Ijarah rentals receivable - - 69,821,374 69,821,374 - - - -
Advances, deposits and other receivables - - 101,400,507 101,400,507 - - - -
Diminishing musharika - - 5,284,579,457 5,284,579,457 - - - -
- - 5,785,428,917 5,785,428,917 - - - -

Total 350,918,237 - 5,785,428,917 6,136,347,154 - 350,918,237 - 350,918,237

Financial liabilities not measured at fair value

Term finance arrangements - - 1,231,896,100 1,231,896,100 - - - -
Security deposits - - 308,813,232 308,813,232 - - - -
Creditors, accrued and other liabilities - - 398,255,510 398,255,510 - - - -
Advance ijarah rentals received - - 4,645,531 4,645,531 - - - -
Redeemable capital - - 4,287,535,000 4,287,535,000 - - - -
Unclaimed profit distribution - - 57,602,615 57,602,615 - - - -
Total - - 6,288,747,988 6,288,747,988 - - - -

June 30, 2023

Carrying value Fair value

Fair value Fair value amortised

through profit through OCI cost Total Level 1 Level 2 Level 3 Total
or loss

Financial assets measured at fair value ---------------------------------------- (Rupees) ---------------------------------------

Investments 123,858,681 - - 123,858,681 - 123,858,681 - 123,858,681
123,858,681 - - 123,858,681 - 123,858,681 - 123,858,681
Financial assets not measured at fair value
Cash and bank balances - - 400,254,200 400,254,200 - - - -
Ijarah rentals receivable - - 103,759,046 103,759,046 - - - -
Advances, deposits and other receivables - - 82,620,089 82,620,089 - - - -
Diminishing musharika - - 4,269,915,921 4,269,915,921 - - - -
Net investment in Ijarah finance - - - - - - - -
- - 4,856,549,256 4,856,549,256 - - - -

Total 123,858,681 - 4,856,549,256 4,980,407,937 - 123,858,681 - 123,858,681

Financial liabilities not measured at fair value

Term finance arrangements - - 1,650,009,856 1,650,009,856 - - - -
Security deposits - - 388,269,302 388,269,302 - - - -
Creditors, accrued and other liabilities - - 361,027,908 361,027,908 - - - -
Advance ijarah rentals received - - 1,653,873 1,653,873 - - - -
Redeemable capital - - 2,896,605,000 2,896,605,000 - - - -
Unclaimed profit distribution - - 59,295,174 59,295,174 - - - -
Total - - 5,356,861,113 5,356,861,113 - - - -
 Valuation techniques used in determination of fair values:
www.olpmodaraba.com

Item Valuation approach and input used

The valuation has been determined based on Net asset values declared by Mutual Funds
Mutual Funds
Association of Pakistan (MUFAP).

204
30.1.1 The majority of these financial assets and liabilities are for short term or repriced over short term.
Therefore, their carrying amounts are reasonable approximation of fair value.

31 CAPITAL RISK MANAGEMENT

The Modaraba's prime objective when managing capital is to safeguard its ability to continue as a going
concern in order to provide adequate returns for certificate holders and benefits for other stakeholders and
to maintain an optimal capital structure so as to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Modaraba may adjust the amount of profits /
distributions paid to certificate holders, issue new certificates or sell assets to reduce debt.

Consistent with others in the industry, the Modaraba monitors capital on the basis of the gearing ratio. This
ratio is calculated as net debt divided by total capital. Net debt is calculated as total Certificates of
Musharika, Musharika Finance and borrowings less cash and bank balances. Total capital is calculated as
equity as shown in the statement of financial position plus net debt.

June 30, June 30,

2024 2023
------------------ (Rupees) -----------------

Total borrowings 5,519,431,100 4,546,614,856

Less: Cash and bank balances 329,627,579 400,254,200
Net debt 5,189,803,521 4,146,360,656

Total equity 1,243,592,699 1,176,622,572

Total capital 6,433,396,220 5,322,983,228

Gearing ratio 80.67% 77.90%

As required under the Modaraba Regulations, 2021, every Modaraba issuing Certificate of Musharika shall
maintain a capital adequacy ratio of 8% for the first two years after the amendment coming into force and
thereafter at the rate of 10%. The Modaraba has maintained and complied with the minimum capital
adequacy ratio and minimum equity requirement during the current year.

32 SEGMENT INFORMATION

As per IFRS 8, "Operating Segments", operating segments are reported in a manner consistent with the
internal reporting used by the chief operating decision-maker. The Chief Executive Officer of the
Management Company has been identified as the chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating segments.
 The Chief Executive Officer is responsible for the Modaraba's entire product portfolio and considers the

ANNUAL REPORT 2024

business to have a single operating segment. The Modaraba's asset allocation decisions are based on a
single integrated investment strategy and the Modaraba's performance is evaluated on an overall basis.

The internal reporting provided to the Chief Executive Officer for the Modaraba’s assets, liabilities and
performance is prepared on a consistent basis with the measurement and recognition principles of the
accounting and reporting standards as applicable in Pakistan.

The Modaraba is domiciled in Pakistan. All of the Modaraba’s income is from investments in entities 205
incorporated in Pakistan.

The Modaraba also has a diversified certificate holder population. As at June 30, 2024, there were only two
(2023: two) certificate holders who individually hold equal to or more than 10% of the Modaraba’s
certificate capital. Their holdings were 10% and 10% (2023: 10% and 10%) respectively.

33 RELATED PARTY TRANSACTIONS

33.1 Details of related parties of the Modaraba

Name of related party Nature of relationship Basis of relationship

OLP Financial Services Pakistan Limited Holding Company Common Management

of Management Company and Control

OLP Services Pakistan (Private) Limited Associate Management Company

of the Modaraba

OLP Modaraba Staff Provident Fund Associate Common Management

OLP Modaraba Staff Gratuity Fund Associate Common Management

Layton Rehmatullah Benevolent Trust

Free Eye Hospital Associate Trustee of Associate Undertaking

The Patients' Behbud Society for AKU Associate Common Directorship

33.2 Transactions with related parties other than those which have been specifically disclosed elsewhere in
these financial statements and remuneration and benefits to key management personnel (which are
employed by the management company) under the terms of their employment are as follows:
www.olpmodaraba.com

Nature of Basis of 30 June 30 June

Name Nature of transaction
relationship relationship 2024 2023
--------- (Rupees) ---------
OLP Financial Services Holding Company of 100% Holding in Dividend 9,076,706 9,076,706
Pakistan Limited the Management the Management Allocated cost to the Modaraba for
Company Company, Islamabad Office 750,844 612,428
10% Holding in the
Modaraba

206 OLP Services Pakistan Management 10% Holding in the Management Company's remuneration 26,302,197 21,829,056
(Private) Limited Company Modaraba Dividend 9,076,706 9,076,706
Rent expense 10,261,156 7,916,823
Rent payable - 7,916,823
Rent paid 18,177,979 -

The Patients' Behbud Associated Common Donation paid by the Modaraba 2,000,000 1,000,000
Society for AKU Undertaking directorship

Layton Rahmatulla Associated Trustee of Donation paid by the Modaraba 2,000,000 1,000,000
Benevolent Undertaking associate
Trust Hospital undertaking

OLP Modaraba - Staff Retirement Employees Contribution made by the Modaraba 6,724,956 5,894,494
Provident Fund benefit fund benefit fund

OLP Modaraba - Staff Retirement Employees Contribution made by the Modaraba 5,601,790 4,910,102
Gratuity Fund benefit fund benefit fund Refund received by the Modaraba 728,877 1,547,358

Mr. Shaheen Amin Chairman of the Chairman of the Dividend paid 200,000 200,000
Board of Directors Board of Directors
of the Management of the Management
Company Company

Mr. Nadeem D Khan Director of the Director of the Dividend paid 12,098 12,098
Management Management
Company Company

Key management Employees Members of the Salaries and benefits 62,268,796 62,048,638
personnel Management Contributions to the staff provident fund 2,344,647 2,191,235
Committee Contributions to the staff gratuity fund 1,953,087 1,825,293
Refund received by the Modaraba - 936,242
Income earned on diminishing
musharika finances 7,017,161 8,754,488
Deposit against Certificates of Musharika 31,250,000 30,950,000
Reedemption of Certificates of Musharika 17,450,000 25,050,000
Financial charges on redeemable capital 8,546,836 3,929,211
Number of persons as at June 30 7 7

The Modaraba enters into transactions with related parties for lease of assets and other general services.
These transactions are based on a transfer pricing policy under which all transactions are carried out on
agreed terms. The balances with related parties have been disclosed in the respective notes.

33.3 Details of the diminishing musharika finances given and receivables (as disclosed under current assets)
from key management personnel are as follows:
 Balances at June 30, 2024

ANNUAL REPORT 2024

Accrued Profit / Maximum
Diminishing Markup Aggregate
Total
Musharika Receivable from Balance during
(1+2)
Finance Diminishing the year
(1) Musharika
Finance (2)
Name of key management personnel ------------------------------- (Rupees) -------------------------------

Muhammad Siddique - - - 2,363,884

207
Nadir Shah 4,068,718 53,355 4,122,073 7,738,447
Salwat Ahmad 11,782,886 28,486 11,811,372 20,005,226
Nabeil Rabbani 1,955,775 15,048 1,970,823 3,825,000
Muhammad Azhar Waseem 674,918 8,143 683,061 4,677,348
18,482,297 105,032 18,587,328
Balances at June 30, 2023

Accrued Profit / Maximum

Diminishing Markup Aggregate
Total
Musharika Receivable from Balance during
(1+2)
Finance Diminishing the year
(1) Musharika Finance
(2)
Name of key management personnel ------------------------------- (Rupees) -------------------------------

Muhammad Siddique 2,424,119 16,852 2,440,971 3,033,201

Mohammad Arif Daya 1,834,457 28,133 1,862,590 3,643,887
Nadir Shah 7,978,889 143,969 8,122,858 8,837,784
Salwat Ahmad 20,387,776 322,777 20,710,553 21,787,440
Ahsan Ilyas 11,749,265 93,610 11,842,875 12,332,688
44,374,506 605,341 44,979,847

33.3.1 Under diminishing musharika arrangements, housing, motor vehicle and personal finances are provided to
key management personnel. Tenure of maximum twenty years are offered for housing finance whereas
for motor vehicles and personal finances the tenure offered is five years under the approved human
resource policies. The limit for housing finance is lower of eighty-five multiples of monthly basic salary or
Rs. 20 million whereas for personal finance the same is granted as lower of three multiples of monthly basic
salaries or Rs. 0.5 million. The limits of motor vehicle financings has been revised during the year.

During the year, the Modaraba has revised its staff compensation policy. As per the revised policy, the rate
of housing finance for facilities that existed prior to November 1, 2023 is charged at the rate of 3% per
annum, personal finance at 2% per annum and auto finance is charged within a range of 0% to 3% per
annum (for different cadres) based on pre-defined limits.

For the new facilities availed after November 1, 2023, the housing finance is made available at the
Modaraba’s cost of funding minus 15% with floor of 5% and cap of 15% to be repriced on a half yearly basis
whereas personal financing is made available based on cost of fund of the Modaraba. The impact of this
change is disclosed in the note 9 to these financial statements under current assets.

Profit receivable represents profit on diminishing musharika finances accrued from the respective last paid
installments till the the statement of financial position date and is disclosed under note 7 to these financial
statements under current assets.
 34 CASH AND CASH EQUIVALENTS
www.olpmodaraba.com

Cash and cash equivalents included in the statement of cash flows comprise of the following amounts
appearing on the statement of financial position:

June 30, June 30,

2024 2023
------------------ (Rupees) -----------------
208
Cash and bank balances 329,627,579 400,254,200

34.1 Reconciliation of movements of liabilities to cash flows arising from financing activities

Balances at June 30, 2024

Term Finance Redeemable Unclaimed profit

Total
arrangement Capital distribution

----------------------------------- (Rupees) -----------------------------------

Opening balance as at July 1, 2023 1,650,009,856 2,896,605,000 59,295,174 4,605,910,030

Dividend declared - - 90,767,060 90,767,060

- - 90,767,060 90,767,060

Proceeds from term finance 321,883,866 - - 321,883,866

Repayment of term finance (739,997,622) - - (739,997,622)
Proceeds from issuance of redeemable capital - 6,903,430,000 - 6,903,430,000
Repayment of redeemable capital - (5,512,500,000) - (5,512,500,000)
Dividend paid - - (92,459,619) (92,459,619)
(418,113,756) 1,390,930,000 (92,459,619) 880,356,625

Closing balance as at June 30, 2024 1,231,896,100 4,287,535,000 57,602,615 5,577,033,715

Balances at June 30, 2023

Term Finance Redeemable Unclaimed profit

Total
arrangement Capital distribution

----------------------------------- (Rupees) -----------------------------------

Opening balance as at July 1, 2022 1,587,104,145 3,013,905,000 58,779,665 4,659,788,810

Dividend declared - - 90,767,060 90,767,060

- - 90,767,060 90,767,060

Proceeds from term finance 500,000,000 - - 500,000,000

Repayment of term finance (437,094,289) - - (437,094,289)
Proceeds from issuance of redeemable capital - 4,863,900,000 - 4,863,900,000
Repayment of redeemable capital - (4,981,200,000) - (4,981,200,000)
Dividend paid - - (90,251,551) (90,251,551)
62,905,711 (117,300,000) (90,251,551) (144,645,840)

Closing balance as at June 30, 2023 1,650,009,856 2,896,605,000 59,295,174 4,605,910,030

35 CORRESPONDING FIGURES

ANNUAL REPORT 2024

Corresponding figures have been rearranged and reclassified, wherever necessary, for the purposes of
comparison and better presentation. No significant rearrangements or reclassifications have been made in
these financial statements during the current year.

36 NON-ADJUSTING EVENT AFTER THE REPORTING PERIOD

The Board of Directors of the Management Company in their meeting held on September 14, 2024 209
approved a cash distribution of Rs. 2.00 (2023: Rs. 2.00) per certificate. The financial statements of the
Modaraba for the year ended June 30, 2024 do not include the effect of this distribution which will be
accounted for in the financial statements of the Modaraba for the year ending June 30, 2025.

37 GENERAL

37.1 Figures have been rounded off to the nearest rupee unless otherwise stated.

37.2 The Modaraba has set up provident fund for its permanent employees and the contributions are made by
the Modaraba to the fund. The total contribution made to the provident fund for the year ended June 30,
2024 was Rs. 6.725 million (2023: Rs. 5.894 million). The audit of the provident fund for the year ended
June 30, 2024 is in progress. The total assets of the provident fund, based on the unaudited financial
statements as at June 30, 2024 amounted to Rs. 60.374 million (2023: Rs. 64.093 million), out of which
58.97% (2023: 45.61%) was invested in different financial instruments categories while 41.03% (2023:
54.08%) as deposits with Banks in remunerative accounts. The fair value as at June 30, 2024 of
investments of the provident fund amounted to Rs. 59.393 million (2023: Rs. 63.498 million). The
investments out of provident fund have been made in accordance with the requirements of section 218 of
the Companies Act, 2017 and the rules formulated for this purpose.

37.3 The Modaraba has set up gratuity fund for its permanent employees and the contributions are made by the
Modaraba to the fund. The total contribution made to the gratuity fund for the year ended June 30, 2024
was Rs. 5.602 million (2023: Rs. 4.910 million). The audit of the gratuity fund for the year ended June 30,
2024 is in progress. The total assets of the gratuity fund, based on the unaudited financial statements as at
June 30, 2024 amounted to Rs. 58.535 million (2023: Rs. 52.612 million), out of which 48.35% (2023:
44.63%) was invested in different financial instruments categories while 51.65% (2023: 55.37%) as
deposits with Banks in remunerative accounts. The fair value as at June 30, 2024 of investments of the
gratuity fund amounted to Rs. 58.178 million (2023: Rs. 52.329 million). The investments out of gratuity
fund have been made in accordance with the requirements of section 218 of the Companies Act, 2017 and
the rules formulated for this purpose.

38 DATE OF AUTHORISATION FOR ISSUE

These financial statements were authorised for issue on September 14, 2024 by the Board of Directors of
the Management Company.

For OLP Services Pakistan (Private) Limited

Management Company

SD SD SD SD
Chief Executive Director Director Chief Financial Officer
OLP Modaraba Lahore Office: Islamabad Office:
(Formerly ORIX Modaraba)

Office No. 601, 6th Floor, Office No-08, 1st Floor, Ground Floor, Phase 1,
Syedna Tahir Saifuddin Foundation Building, Park Lane Tower (Mall of Lahore) State Life Building, No. 5,
Beaumont Road, Civil Lines, Karachi. 172-Tufail Road, Lahore Cantt. Nazimuddin Road, Blue Area,
Phone: (021) 38341168 Phone: (042) 38017006 Islamabad.
Email: [email protected]