Running Musharka

1. 1
Committed to you
RUNNING MUSHARKA

2. 2
Committed to you
• The Bank and the Customer will enter into Musharakah, based on Shirkat-ul-Aqd
wherein (a) the Bank and the Customer will invest in the identified primary Operating
Activities (or any identifiable segment thereof) of the Customer’s business and (b)
participate in the profits/(loss) generated by the Musharakah in proportion to their
respective Investment ratio.
Concept

3. 3
Committed to you
1- Profit Sharing Ratio (PSR) will be decided at time of Facility Offer.
2- Loss will be divided as per Ratio of investment
Essentials

4. 4
Committed to you
• Their will be two tier of PSR
– Upto SMBL profit requirement which will be as per ratio of Investment
– Over and above SMBL desired profit which may be :
• SMBL : 0.1%
• Customer : 99.9%
• SMBL will accrue provisional profit on monthly basis and recover on quarterly basis
from customers account.
Profit Sharing Ratio

5. 5
Committed to you
• SMBL enter into Running Musharka with a customer where SMBL allows Limit of
Rs.500(M)
• After three quarter customer utilize from SMBL share come up with average of :
– M/o January 300(M)
– M/o February 350(M)
– M/o March 450(M)
• Where SMBL desired profit rate is 10% p.a
Scenario

6. 6
Committed to you
Formula for Adjusted COGS
• Actual Financial of Customer
• Message in last for quarterly review

7. 7
Committed to you
Utilized Amount FPR No of Days Provisional Amt
M/o January 300,000,000 10% 31 2,547,945
M/o February 350,000,000 10% 29 2,780,822
M/o March 450,000,000 10% 31 3,821,918
SMBL Investment 366,666,666 Total Profit 9,150,685
• Customer account will be debited with Rs. 9.15(M) on 5th April, after which SMBL will
remain in follow-up for quarterly financial
Accrual calculated based on monthly utilization of SMBL
share

8. 8
Committed to you
Sample P&L statement of customer

9. 9
Committed to you
On receiving of Financials
Sales 1,935,132,014
Adjusted COGS (1,739,498,851)
Adjusted Gross Profit 195,633,163
Bad. Debts -
Capital Gain -
Sales of waster stock -
Ins / Takaful Claims -
Musharka Profit 195,633,163
Formula :
Adjusted COGS = Cost of Goods sold – Repair and maintenance – Fix
Asset Depreciation Exp – Estimated Insurance Exp etc.
Adjusted GP = Sales – Adjusted COGS

10. 10
Committed to you
Total Musharka Investment* 3,027,790,870.81
SMBL Investment 366,666,666.67 (12.11%)
Customer 2,661,124,204.15 (87.89%)
Profit Ceiling 74,657,857
Formulas :
COGS (Receivable Turn Over + Inventory Turnover) = Total Musharka Investment
Musharka Tenor
Profit Ceiling = Total Musharka Investment x Desired Rate x Musharka Tenor / 365
Musharka Investment & Profit Ceiling
*(Detailed working on Musharka Investment available on next slide)

11. 11
Committed to you
Working for Musharka Investment
Heading Working Description
COGS 1,739,498,851 From P&L
Receivable Turn Over 135.86 Receivable from P&L / Sales X 365
Inventory Turn Over 20.79 Inventory from P&L / COGS X 365
Musharka TurnOver 90
272,501,178,373 COGS x (Recv TurnOver + Inv TurnOver)
Total Musharka Inv. 3,027,790,871 Above figure / Musharka TurnOver

12. 12
Committed to you
Tier 1 Profit (as per ratio of investment)
SMBL (Profit x 12.11%) 9,041,095.89
Customer (Profit x 87.89%) 65,616,761.20
Tier 2 Profit SMBL received 0.1%
(Profit Ceiling – Musharka Profit) 120,975,305.91
SMBL (12.975(M) x 0.1%) 120,975.31
Customer (12.975(M) x 99.9%) 120,854,330.61
Total SMBL Profit 9,162,071.20
Difference from Provisional Profit 11,386.26 (Additional Profit)
Final Calculation (As per ratio of investment)

13. 13
Committed to you
• Above briefed practice will remain for every quarter
• Quarterly statement from customer should be authentic & time submitted.
Conclusion

14. 14
Committed to you