Karachi: The Directors of EMAN Management (Pvt.) Limited, the managing company of Orient Rental Modaraba, have reported a notable decline in the Modaraba's profitability for the fiscal year ending June 30, 2026. The annual report, dated October 6, 2026, outlines the financial challenges faced by the company amid a backdrop of rising operational costs and increased tax obligations.
For the fiscal year 2026, Orient Rental Modaraba reported a revenue of Rs. 2.49 billion, a slight increase from Rs. 2.46 billion in the previous year. Despite this marginal revenue growth, the company's gross profit fell by 18.6% to Rs. 497.9 million, down from Rs. 611.9 million in the prior year. This decline in gross profit is attributed to a significant rise in operating expenses, which increased by 7.7% to Rs. 1.99 billion, driven by inflationary pressures and rising staff-related costs.
According to information available from the Pakistan Stock Exchange (PSX), Orient Rental Modaraba's profit after taxation saw a substantial decline, falling to Rs. 106.7 million from Rs. 213.9 million in the previous year. This represents a big move in profitability, largely due to an increase in the effective tax rate to 68%, as compared to the normal tax rate of 29%. The rise in withholding tax rates on rental income and operation and maintenance services contributed to this elevated tax burden.
The report highlights a concerning trend in the company's cash flow and long-term financial sustainability, exacerbated by the shrinking profitability and escalating tax responsibilities. Furthermore, administrative expenses rose to Rs. 72.9 million from Rs. 61.2 million, while other income experienced a decrease to Rs. 29.4 million from Rs. 33.1 million, primarily due to reduced gains from the disposal of assets.
Despite these financial challenges, the Board of Directors has announced a cash dividend of 12%, equivalent to Rs. 1.2 per certificate, maintaining the same level as the previous year. The company's commitment to sustainability and diversity remains steadfast, with a focus on embedding sustainable practices and fostering an inclusive workplace.
The economic review included in the report projects moderate GDP growth for Pakistan, ranging from 3.5% to 4.5% for Fiscal Year 2027. The State Bank of Pakistan’s monetary policy adjustments and the government's fiscal discipline signal an effort to stabilize the economy amidst geopolitical tensions and external sector vulnerabilities.
Overall, the report suggests that while Orient Rental Modaraba faces immediate financial pressures, its strategic focus on sustainability and operational efficiency may help navigate the challenging economic landscape.