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Kissan Commodity Mutual Fund Final Presentation For First Round

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Presented at Synergies Business Plan Competition 2009. Contact for detailed report or discussion at jawadiqbalkhan86@yahoo.com

Presented at Synergies Business Plan Competition 2009. Contact for detailed report or discussion at jawadiqbalkhan86@yahoo.com


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  • http://www.thebanker.com/news/fullstory.php/aid/6123/Top_500_Islamic_Financial_Institutions.html?current_page=NO_PAGE
  • Transcript

    • 1. KISSAN Commodity Mutual Fund Team Members Jawad Iqbal Zara Malik Aliya Usmani Urfa Niazi Sohaib Anwar Raza Advisors Shoaib A.Qureshi (Former Director, SECP) Ather Hameed Butt (Lead Consultant- Accedo Consulting) Kaavish-Synergies 2009 Team I.D SYN-09-016
    • 2. Outline
      • The Need
      • Solution
      • Competitors
      • SWOT
      • Risks Involved
      • Operational Model
      • Target Market
      • Marketing P’s
      • Fund Distribution Forecast
      • Projected Return
      • Financial Statements
      • Question and Answers
    • 3. The Need
      • Clients- Investors
      • $639.1bn total in SCAs is compared with the $90,256bn amassed by The Banker ’s Top 1000 World Bank.
      • Market Share is 4.1 percent in four years, targeting 12 percent by 2012.
      • NPL Ratio is significantly lower than Conventional Banks.
      • Supreme court ruling banning the use of interest in Pakistan.
      • 50 percent of the Islamic Banking clients are new to the financial system (State Bank Report-2006).
      • Customers- Farmers
      • Agriculture is highly cash-strapped sector.
      • Cash purchase and sales represent 10.7 per cent and 8.4 per cent of total transactions.
      • Around 80 per cent farmers participate in the credit market.
      • The State Bank report on rural financing (2002) admitted that 70 per cent of the agriculture credit requirements are met by informal credit providers who charge high interest rates. (Handbook of Best Practices of Agri Rural Finance).
      • Agriculture grew at an annual average rate of 4.5 percent.
      • 50% of the Farmers are served (2 Million out of 6 Million).
    • 4. Solution
      • KISSAN Commodity Mutual Fund
      • “ to cater and serve the need of the farmer through a Shariah compliant business.”
        • 3.5 Billion Fund Size ( based as 1 percent of National Wheat Production for past three years)
        • Based of Shariah principles , Investing in Commodities and farm equipment in Punjab, Pakistan
        • Providing support to farmer having land between 12.5-30 Acres primarily, by buying the crop at the time of seeding.
    • 5.  
    • 6. Competitors S.No Company Product Rate of Return Cost of Funding Competition Type Collateral Requirements 1 Zarai Tariqiati Bank Limited ZTBL Farm Loans ZTBL agriculture financing 9-11 percent 5-6 percent Direct Yes 2 United Bank Limited UBL Farm Loans 16-18 percent 9-11 percent Direct Yes 3 Askari Bank Limited Askari Bank Kissan Financing Program 16-18 percent 9-11 percent Direct Yes 4 Local Money Lenders (Zamindar) Local Financing 40-60 percent 2-3 percent Direct No
    • 7. Porter's Five Forces
    • 8.
      • Lack of resources
      • Highly dependant upon weather and natural conditions.
      • There are no prior return risk values
      • difficult for investors to understand and recognize all the risks involved in dealing in commodities.
      • Product Extension
      • Crop Extension
      • Value Chain Development
      • Government Support
      • Foreign Interest
      • Individual Interests
      • New entrants.
      • Competition from commercial banks.
      • Weather.
      • Unstable political
      • Economic conditions
      • Changes in the SBP regulations
      • Government supported sector,
      • Inadequate irrigation and infrastructure.
      • No collateral
      • First of its kind
      • Supply Chain Development
      • Salam Market
      • Trained workforce
      • Community promotion
      • Inflation Protection
    • 9. Risks Involved
      • For Clients-Investors
      • Market Risk
      • Commodities Risk
      • Sector Focus Risk
      • Non Diversification Risk
      • Counter party risk
      • For Business
      • Direct dealing in the commodities
      • Weather , Water and Policy Risk
      • Liquidity Crunch
      • Human Resource Scarcity
      • Compliance with Shariah, SECP, NBFC Regulations
    • 10. On Field !!
    • 11. Islamic Finance Model
    • 12. Fund Details
    • 13. Target Market
    • 14. Marketing P’s
    • 15. Marketing P’s
    • 16. Operational Model [i] Key: H=Harvesting, F= Fertilizers, S=Seeds, R=Revenue (Rice Machinery), E=Expenses, L=Lease Income, W=Wheat Machinery Year Yearly Calendar of Expenses and Revenue Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Wheat Wheat Rice Wheat F - F H H - - - - - S S - - - R R - - - - - - - Rice - - - - S S F - F H H - R R Machinery W W/R R R W/R W L L L L L L Income R+L R+L R+L R+L R+L R+L Expenses E E E/E E/E E E E E E/E E
    • 17. Fund Distribution Forecast Fund Distribution Forecast @ 10 percent growth rate per annum Fund Allocation Allocation Return Year 1 Year 2 Year 3 Year 4 Year 5 Wheat 30% 15% 1,050,000,000 1,155,000,000 1,270,500,000 1,397,550,000 1,537,305,000 Rice 30% 20% 1,050,000,000 1,155,000,000 1,270,500,000 1,397,550,000 1,537,305,000 Machinery 30% 17% 1,050,000,000 1,155,000,000 1,270,500,000 1,397,550,000 1,537,305,000 Cash and Bank Balances 10% 6% 350,000,000 385,000,000 423,500,000 465,850,000 512,435,000 100 16.05% 3,500,000,000 3,850,000,000 4,235,000,000 4,658,500,000 5,124,350,000
    • 18. Where and Why need funding
    • 19. Initial Costs Minimum Equity Requirements In Rupees Leasing 700,000,000.00 Asset Management Company 200,000,000.00 Asset Management Company Registration Fee 1,000,000.00 License Subscription Fee 250,000.00 per type of license Renewal Fee 250,000.00 Monitoring Fee 250,000.00 Annual SECP fee 0.010% Annual NAV Auditor's Fee 428,000.00 Shariah Advisor Fee 250,000.00 Remuneration of Trustee (CDC) 1,688,000.00 Floatation Costs 1.00% Pre IPO Investment
    • 20. Projected Return Year Year 1 Year 2 Year 3 Year 4 Year 5 Return 12.28% 12.44% 12.58% 12.71% 12.83%
    • 21. Cash Flow Statement Cash Flow Statement Year 1 Year 2 Year 3 Year 4 Year 5 Net Income 429,781,500 478,827,450 532,777,995 592,123,594 657,403,754 Adjustment for non Cash Items Add: Non cash Exp 52,500,000 52,500,000 52,500,000 52,500,000 52,500,000 Less: Non cash incomes 0 0 0 0 0 Cash Generated from operation 482,281,500 531,327,450 585,277,995 644,623,594 709,903,754 Cash in/out flow from Investing Activities -3,179,000,000 -307,750,000 -347,736,505 -383,423,651 -421,766,015 Cash In/out flow from Financing Activities 3,070,218,500 -128,827,450 -147,777,995 -168,623,594 -191,553,754 Net Cash inflow 373,500,000 94,750,000 89,763,495 92,576,349 96,583,985
    • 22. Projected Income Statement Income Statement Year 1 Year 2 Year 3 Year 4 Year 5 Income from Operations 561,750,000 617,925,000 679,717,500 747,689,250 822,458,175 Less: Remuneration to KISSAN Asset Management Company 16,852,500 18,537,750 20,391,525 22,430,678 24,673,745 Remuneration to Trustee-Central Depository Company of Pakistan 1,688,000 1,856,800 2,042,480 2,246,728 2,471,401 Depreciation 52,500,000 52,500,000 52,500,000 52,500,000 52,500,000 Annual Fee to Security and Exchange Commission of Pakistan 500,000 500,000 500,000 500,000 500,000 Remuneration to Shariah Advisor 250,000 275,000 302,500 332,750 366,025 Remuneration to Auditor 428,000 428,000 428,000 428,000 428,000 Subscription Fees Amortization of Preliminary Expenses and Floatation Costs 7,250,000 7,250,000 7,250,000 7,250,000 7,250,000 Legal and Professional Charges Takaful Contribution 52,500,000 57,750,000 63,525,000 69,877,500 76,865,250 Other Expenses Total Expenses 131,968,500 139,097,550 146,939,505 155,565,656 165,054,421 Net Income 429,781,500 478,827,450 532,777,995 592,123,594 657,403,754 Less: Distribution of Income for the year 429,781,500 478,827,450 532,777,995 592,123,594 657,403,754
    • 23. Projected Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5 Balance Sheet Balance with Banks 350,000,000 385,000,000 423,500,000 465,850,000 512,435,000 Investments (Salam Contracts) 2,100,000,000 2,310,000,000 2,541,000,000 2,795,100,000 3,074,610,000 Preliminary Expenses & Floatation Costs (Capitalized) 29,000,000 21,750,000 14,500,000 7,250,000 0 Machinery on Ijarah 1,050,000,000 1,155,000,000 1,270,500,000 1,397,550,000 1,537,305,000 Total Assets 3,529,000,000 3,871,750,000 4,257,986,505 4,683,760,156 5,152,111,171 Liabilities towards unit holders 2,600,000,000 2,950,000,000 3,335,000,000 3,758,500,000 4,224,350,000 Payable to KISSAN Asset Management Company 16,852,500 18,537,750 20,391,525 22,430,678 24,673,745 Payable to Trustee 1,688,000 1,856,800 2,042,480 2,246,728 2,471,401 Payable to SECP 250,000 250,000 250,000 250,000 250,000 Payable to Shariah Advisor 250,000 275,000 302,500 332,750 366,025 other Payables 9,959,500 830,450 Total Liabilities 2,629,000,000 2,971,750,000 3,357,986,505 3,783,760,156 4,252,111,171 Issued, Subscribed, Paid Up Capital 900,000,000 900,000,000 900,000,000 900,000,000 900,000,000 Unappropraited Income 0 0 0 0 0 Total Equity 900,000,000 900,000,000 900,000,000 900,000,000 900,000,000 Equity and Liabilities 3,529,000,000 3,871,750,000 4,257,986,505 4,683,760,156 5,152,111,171
    • 24. Ownership Dilution in 5 years Year 1 Year 2 Year 3 Year 4 Year 5 Total Fund Size 3,500,000,000 3850000000 4235000000 4658500000 5124350000 Sponsors 900,000,000 900,000,000 900,000,000 900,000,000 900,000,000 26% 23% 21% 19% 18%
    • 25. Exit Strategy
    • 26. Question and Answers
      • Thankyou!
    • 27. Wheat Per Acre Production Calculations Wheat Target 22 Million Tonnes       Punjab Our Target 1% 0.22 Million Tonnes   Seed Usage 50 Kg/Acre     Timing 1st November 15th December     Type Pasban 90 Ufaq 90 Inqilaab 91 Uqbab 2000 Bhakar 2001 Medicines of Seeds Usage 2gram/Kg 2 Ml/kg 1.50 gram/kg     Timing At the time of of seed     Type Topson M Derosil Raxil 2DS   Fertilizer Usage 1.25 Bag 1.25 Bag 1 Bag 0.5 Bag     Timing At the time of seed At the time of seed At the time of seed At first water     Type DAP Urea Pottasium Urea       Total Price 23.125 Rs/Kg     Yield per acre 200 Rs/kg     Average Price 17.5 Rs/Kg     Area 1 Acre     Income 4,625.00     Target Farmer 12.5 15 Acres     Production 57,812.50 69,375.00 Rs    
    • 28. Rice Per Acre Production Calculations Rice Target 5.5 Million Ton 2.5 Million Ton   Punjab Rice Basmati rice   Seed Usage 6kg/acre     Timing 1st June 20th June     Type Basmati 385 Basmati 6129 Super Basmati Medicines of Seeds Usage 7kg/acre     Timing 3-5 days after     Type Seatren 10 G   Fertilizer Usage 58 kg/acre 41kg/acre     Timing At the time of seed At the time of seed     Type Nitrogen Phosphorous       Total Price 62 Rs/Kg     Yield per acre 1200 Rs/kg     Average Price 50 Rs/Kg     Area 1 Acre     Target Farmer 12.5 15 Acres   Production 930,000.00 1,116,000.00 Rs.
    • 29.  
    • 30.  

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