Karachi: The management company of First Fidelity Leasing Modaraba, Fidelity Capital Management (Private) Limited, announced a substantial loss in its 33rd Annual Report for the fiscal year ending June 30, 2024. The detailed financial statements and auditor's report revealed a continued downward trend, exacerbating the financial instability faced by the Modaraba.
First Fidelity Leasing Modaraba recorded a loss of Rs. 22.75 million this year, a significant increase from last year's Rs. 2.405 million. The loss per certificate escalated to Rs. 0.86 from the previous Rs. 0.09. According to information available from the Pakistan Stock Exchange (PSX), this downturn reflects the unsuccessful recovery efforts concerning its major investments in the corporate tower project managed by Enplan (Pvt) Limited.
The financial results show a drastic drop in total income to Rs. 809,000 from Rs. 19.73 million in 2023, with operating losses amounting to Rs. 15.33 million. The company's financial distress is primarily due to the high provisions set aside this year, totaling Rs. 7.28 million.
Legal issues have compounded the financial woes of Modaraba. Two significant legal cases are underway concerning the recovery of investments. The first, lodged with the Modaraba Tribunal, secured a favorable decree for the recovery of Rs. 43.772 million, which remains pending due to procedural delays in court. A second appeal is also in process at the Lahore High Court, with a critical hearing scheduled for November 11, 2024.
Despite these challenges, the company maintains a robust compliance posture as per the Code of Corporate Governance. The board has reported proper maintenance of financial records and adherence to international accounting standards, which substantiate the financial disclosures.
No dividends have been distributed, reflecting the strained financial position. The management remains focused on recovering its major investments to redirect funds into profitable avenues. The future strategy centers on leveraging the potential returns from current real estate projects to stabilize income streams.
The Board of Directors has been re-elected for a new three-year term, demonstrating continuity in leadership amid these challenging times. The acknowledgment section of the report reflects gratitude towards the Modaraba's regulators and a commendation for the dedicated efforts of its staff and management in navigating through the financial turbulence.