Askari Leasing-Management

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INTRODUCTION OF LEASING
Askari Leasing Ltd.
Internship Report
On
Askari Leasing Limited Multan
Presented to: Mr. G. M. MALIK
Presented by:
ABDUL RAUF
Roll # 32
M. COM. (Final)
Session 2000-2002
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In the name of Allah the most Merciful & Beneficent, I am very much
thankful to GOD who enabled me to complete this practical work. This was a
good learning experience for me and with the help of the coordination of the
branch manager at Askari Leasing Limited Multan and all other staff I
completed my practical learning in time. I am very much thankful to the
following kind and cooperative personnel who helped me a lot during whole
period of internship.
My special thanks to the
1. Mr.Aftab Ali Malik / AVP,Chief Manager
2. M. Usman Adil / Marketing Officer
3. Humaira Ali / Operations Officer
4. Ishaq Bhutta / Operations Officer
5. Mohammad Shahzad Hussain / Operations Officer
6. Mohammad Arshad Raza / Operations Officer
7. Abdul Karim / Operations Officer
8. Farjaz Saleem / Marketing Officer
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9. Imran Baig / Marketing Officer
Thanks,
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Practical learning of bookish knowledge is very important for business graduates
to perform their duties well during their career. It is an essential part of M.Com.
Program in Department of Commerce, B.Z.U. Multan. So as part of this training
program I was assigned to do my internship training at Askari Leasing Limited
Multan branch for 8 weeks. Askari is well-reputed financial institution in the
leasing sector. It is among the top leasing companies of Pakistan and moving
steadily towards the path of continuous growth and success.
During my training I learned the working of the following departments in depth.
1. Operations Department
2. Marketing Department
3. MIS department
4. COI’s Department
5. Administration Department.
During my learning I found the whole staff very cooperative and the working
environment very congenial.
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“Allah hath permitted trade and forbidden
usury (interest), those who desist, shall be
pardoned.”
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Part 1
Introduction of Leasing
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Leasing Defined
“A Process by which a firm can obtain the use of certain fixed assets for
which it makes the series of contractual, periodic, Tax deductible
payments”
Actually leasing is a type of mutual agreement where one party enjoys the
benefits of certain fixed asset by making contractual payments as rentals
against that asset to the other party. In this way lease is a contract in which
lessor gives the lessee the right to use an asset for specified period of time in
exchange for periodic rent and payments. . In the leasing agreement, lessor
agrees to provide equipment or finances to buy the equipment needed by the
lessee. The main characteristic of leasing is that it segregates the ownership
and possession from use. That is, the lessor keeps legal ownership of the
equipment, whereas the lessee keeps the usage and physical possession of the
leased asset.
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Definition by Law
Lease is a transfer of right to enjoy such property made for in consideration
of a price paid or promised or money, share of groups, service or any other
thing of value to be rendered periodically or on specified occasions to
transfer, by the transferee who accept the transfer on such terms. While the
hire-purchase means, a system by which a hired article becomes the property
of the hirer after a stipulated number of payments.
Lease payments
Leasing
Lessor Lessee
Asset
Need of Lease
Need of lease may arise due to one or many of the following important
reasons. Actually these are some those critical factors which are
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multidimensional and which must be properly tackled if one wants to get the
advantage of the leasing.
Ø Economic Slump
Ø Improving the “Quality of Life”
Ø Cheaper Alternatives
Ø Avoiding “Restrictive Covenants”
Ø No Risk Of Obsolescence
Ø 100% Financing Mode
Ø Increases the liquidity of the Lessee
Leasing remains one of the most controversial subjects in the financial fields
following several years of agreement among businessmen, economists, tax
officials and leasing companies. Advocates have claimed that leasing provides
many advantages including the risk of owning equipment subject to
technological obsolescence is avoided through short-term or cancelable leases
and stipulations that new equipment must be provided without large cash
outlays which preserves working capital, elimination of down-payment
provides for complete financing, lease charges are tax deductible and may
permit a faster and more complete write-off equipment values, lessor may be
able to pass on their economics of purchasing to the lessee which can improve
the appearance of Balance Sheet and certain financial ratios by elimination of
liabilities associated with acquiring equipment.
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Leasing in the Context of Pakistan
Lessee Point of View
• The Upward trend in Cost of Consumer Durable and the decreased
Purchasing Power of the People.
• Tax Benefit to the customers.
• Islamic Mode of Financing.
Lessor Point of View - Some Facts
• Less investment options for the Lessors.
• Vehicles industry registered a growth of 24.5% and 19.5% in 2000-2001
respectively.
• Success of Lease concept - 40% of the total manufactured vehicles was
leased in 2000.
Tax Deductible Facility

Since lease appears as an expense in the income statement after which the tax
is deducted from the net income. In this way the leasing arrangement acts as
tax hedge for lessee.
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Leasing Evolution in Pakistan
• 1985- Establishment of the first Leasing Company.
• From 1985-1997, 32 Leasing companies are established.
• From 1992-95, 20 Leasing companies are established.
• In Mid-Nineties, the Growth rate of leasing companies was 30-35%.
• In 1998 the paid up capital was RS. 4.35 Billion.
• The Net capitalization was RS. 34 Billion And the Total stock value of
leasing industry were 1.5% of the total value of Karachi Stock Exchange.
Provisions of a Standard Lease Contract

The standard lease contract has the following essentials:
• Terms and Conditions of Lease
• Use of vehicles
• Insurance
• Registration and Title
• Return of Vehicles
• Limitation of Liability
• Default and termination
• Assignment of Lease
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• Security
• Selection of Vehicle
• Revival Letter
• Insurance Details
• Repossession & Authorization
• Amortization Schedule
• Promissory Note
• Acceptance receipt
Types of Lease
Following two are the main types of lease:
1. Operating Lease
2. Financial Lease
Financial Lease:
Under this form of lease the service and other maintenance costs are borne by
the lessee. These kinds of leases usually involve a term that corresponds more
closely to the productive life of the asset. Automobile leases are example of
such financial leases. Other important features of the financial lease involve
the following two important points:
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1. Non-cancelable; and
2. Period of lease usually more than five years.
Operating Lease
Operating leases are characterized by the fact that the maintenance and
service of the leased equipment are provided by the lessor; like the cost of
maintenance and service cost are incorporated into the lease agreement or
stated in a separate service contract.
Following are the distinguishing features of the operating lease:
• Cancelable lease; and
• Lease period comprises of one or two years.
Capital Lease Concept

• Transfer of ownership to the lessee at the end of the period
• Bargaining Purchase Option (BPO)
• Lease term is more than 75% of the value of the asset
• Lease payments are equal to or more than 90% of the price of the asset.
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Forms of Lease Financing

Following are some important forms of lease financing, these forms are
varied with respect to the process, time period and other terms and
conditions upon which the lease contract is finalized;
1. Sale & Lease Back
2. Direct Lease
3. Leveraged Lease
4. Conditional sale lease
Sale and Lease Back

This form lease involves an arrangement where a party sells an asset and
again it is taken on lease back to the vendor. The rental and the sales price
are usually interdependent and sold at market value. The firm receives the
sale price in cash and the economic use of the asset during the basic lease
period. In turn promise to pay periodic lease payments and gives up title of
the asset to the lessor. As a result, the lessor realizes any residual value at the
end of lease term.
Direct Leasing
Under direct leasing, a company acquires the use of an asset it did not own
previously. A firm may lease an asset from the manufacturer, e.g. IBM leases
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computers, and Xerox leases copiers and Honda Breeze leases cars. Indeed
capital goods are abundantly available today on a lease. In certain cases, a
lessor may achieve economies of scale and may pass it to the lessee in form of
lower lease payments.
Initial direct costs are usually charged to income at the inception of lease
because they are mainly related to earning the dealer’s or manufacturer’s
profit.
Leveraged Leasing
In recent years a new type of lease, the leveraged lease, has come into
widespread use. There are three persons involved in leveraged leasing
namely lessor, lessee, and lender. From the lessee point of view, there is no
difference between a leveraged and other lease. However, the lessor arranges
to borrow part of the required funds, generally giving the lender a first
mortgage on plant and equipment being leased. The lessor is also called the
equity participant by investing 20% in leased asset. The lessor still receives
the tax shelter associated with accelerated depreciation. However, the lessor
now has a riskier position, because he is junior to that of the lender, who has
first mortgage on plant or equipment and future lease rentals. Typically, a
leveraged lease provides the lessor with a higher expected NPV per dollar of
invested capital than non-leveraged lease because the interest component
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would represent another tax deduction, while the loan repayment would
constitute additional cash outlays. The initial cost would be reduced by the
amount of loan.
Conditional sale Lease

If any of the conditions just involved in leasing are violated in lease
arrangements, then the lease becomes a conditional lease. A conditional sale
lease is one in which simply you can say that lessee has purchased the lease
rather than properly involving into a proper lease agreement, the lessor is
viewed as having financed this purchase via a loan. For tax purpose the lessee
treats the property as owned and claims the depreciation. Lease payments
are treated as loan payments.
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ASKARI LEASING LIMITED
Part 2
Askari Leasing Limited
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Introduction:
Askari Leasing Limited (“the company) was incorporated in Pakistan as a
Public limited company on August 1, 1993 and was granted Certificate of
Commencement of Business on November 3, 1993. Presently the Company is
listed on the Karachi, Lahore and Islamabad Stock Exchanges and
principally carries on the business of leasing. Askari leasing Limited, since its
inception, continues on the path of steady progress. It is subsidiary body of
Army welfare Trust. AWT came into existence in 1971 with the total assets of
Rs. 0.7 million. Its credentials became impressive in the background of its
recent emergence on Pakistan’s business scene. Working as a fairly small-
scale operation for raising money for the welfare of ex-army personnel, AWT
has grown to become a large commercial conglomerate. A true conglomerate,
the earning base of AWT is diversified because of its presence in business
such as cement, sugar, agricultural farms, travel services, restaurants, real
estate development, insurance and financial services. The trust further
intends to consolidate its position in financial services by establishing Askari
Investment Bank.
The Board of Directors, from the beginning had a clear-cut mandate and an
objective to place the Company among the leading leasing companies in
Pakistan. The Board is very clear on a professional approach for the
Company given their experience with Askari Commercial Bank Limited.

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They hired and gave due authority and responsibility to the professional
managers to run day-to-day operations. Since its inception, the Board
recognized the importance of human resources in service oriented financial
sector. This has been a major contribution to the successful operations of the
Company and its ability to be counted amongst the leading leasing companies
in all over the country.
Askari Leasing Limited over a period of eight years has achieved the top
position in the leasing companies of Pakistan both in term of business and
assets holding. It plays a vital role in the leasing industry of Pakistan and has
become an important part of the credit delivery system.
The company contributes substantially in the economic activities of the
country besides being a profitable concern of Army Welfare Trust. Having
taken off successfully and setting for future course, it has added new products
to the existing line. To exploit a highly lucrative market segment in the
country, Askari Leasing has introduced consumer auto leasing product
namely: "as Kar". It has received a highly encouraging response by the
Public and the market as well.
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Objectives of Askari Leasing
There were certain crucial objectives, targeting them the company was
established like;
1. To facilitate all leasing services to get the maximum market share in the
leasing sector.
2. To open and maintain Company’s accounts with banks and financial
institutions and to draw, make, endorse, accept, discount, execute and
issue promissory notes, bills of exchange, bill of lading, warrants,
participation term certificates, term finance certificate and other
negotiable or transferable instruments concerning this company.
3. To deal in all types of lease financing like both individual and corporate
and also to deal in equipment, commercial & non commercial vehicles,
machinery etc. so as to have a broad product portfolio and broad
spectrum for future.
Financial criteria/policy of ALL.
Following are the important points of Askari Leasing financial policy and
these are strictly followed without any relaxation to anyone. These include:
• The time period of leasing will be from 3 to 5 years maximum.
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• Company will follow the rules or credit criteria approved by or prepared
under the CBR regulations and SBP Prudential laws.
• There will be no relaxation or any favor by distinguishing between army
and civil officers.
• The company at any time can change the financing terms and conditions
keeping in view the maximum benefits of the company.
These are some broad perspectives upon which the whole set up of the
organization is based. As for as their implementation is concerned it is make
sure to every body in the firm, there will be no deviation from the defined
rules and every body is committed to these objectives and will try his/her level
best to equally apply for these policies. So due to proper implementation of
these policies the company is leading among the top leasing companies of
Pakistan.
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Branch Hierarchy of ALL Multan
The branch hierarchy of Askari Leasing Limited (Multan) is as follows:
Branch Manager
Assistant Manager
Operations Manager Marketing Manager
ALL Officers AGL Officers
Ops. Officer MOs
Credit officer VOS
Rental officer
Inst. officer
Inv. Officer
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Part 3
Departmentalization of Askari
Leasing Limited (Multan)
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Since Askari Leasing Limited is oriented towards proper client satisfaction
and this can be achieved only when there is proper integration of various
sections and there is proper division of labor in the organization. Since all
these are the factors that are the key points for a firm to move towards the
stage of steady growth. Since ALL has a good repute and no one in the leasing
sector so it is observed that departmentalization and division of work force is
with respect to their nature of job a nature of their mental orientation of the
employees.
There is proper departmentalization in the branch and there are experienced,
dedicated, self-motivated and highly responsible officer’s handles every
department. All the departmental heads or supervisors are business
administrative qualified.
Broadly speaking following are the main departments of the branch:
1. Operations Department
• Processing Department
• Credit Appraisal department
• Insurance department
• Rental Recovery department
2. Investment Department
3. Marketing Department
4. MIS Department
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All these departments are involved in the progress of the branch and working
with full dedication, hard work, and commitment to excellence.
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Operations Department
Since operations section/department is quite broad so comprehensively
divided into the other sub-section/departments so a detailed functioning and
working of every department is given below for proper under standing of the
nature of work at every level in the branch.
1. Processing Department
This is a crucial department, performing the critical activities for the
organization and for the prompt delivery to the client and towards the
ultimate satisfaction of the client.
Processing department performs the following main functions:
1. Case punching
2. Issuance of Verification letter
3. Down payment receiving
4. Rental cheques receiving
5. Taking personal guarantees and specimen signatures
6. Getting signed legal documents
7. Getting credit approval from the branch manager
8. Sending soft copy to head office
9. Preparing sale order form
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10. Printing purchase order
11. Issuance of purchase order to Authorized dealers after approval from
head office.
Ø Processing Procedure
The procedure of the processing is as given below in detail;
Case Punching
Upon receipt of the complete application form from the applicant it is feeded
into computer. Since application includes copy of national identity card, one
passport size photograph and copy of driving license along with 1000 rupees
that is verification charges.
The system is designed in such a way that the whole application form is
copied into it. And it is ensured that all the information is correctly added
into the system.
Broadly speaking following important information is added to the system;
• Deposit slip number & Date
• N.I.C Number
• References and their addresses
The system does not accept any application without this information.
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In certain cases the options for a particular item are limited; these are built in
the system and can be changed by striking the space bar. For example,
“Marital status” has the pre-defined options of single, married, widow and
divorcee.
If any number other than zero is entered into the system in the head of
“Number of children” then the system automatically opens up a screen asking
for “Name of institutions, class name, and name of the children” etc. Only
school going children information is added.
With respect to the vehicle information to be fed into the system it is make
sure that following fields are properly entered.
• Make of vehicle
• Model of vehicle
• Name of vehicle
• Engine Capacity
• Cost of vehicle
This information is very crucial in a sense that it appears on the legal
documents signed by the client.
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Tax Exemption Issue
In many cases dealer likes to have a cheque issued in favor of the supplier and
remaining amount paid to him, if the supplier is tax exempted then in the
option “Y” is entered and also date of expiry of the tax is mentioned.
Suppose if the vehicle cost is Rs.450, 000 then amount 450,000 will be entering
in the exempted Amount. This facilitates the payment because then Rs.450,
000 will be paid to the supplier and remaining to dealer after deducting
withholding tax. Finally the record is saved and at this time the system
generates a number for the record, this number is proposal identification
number and is written on the top of the application form in the space labeled
“NO”
Printing the Verification Letter
Verification letter is printed after making the data first move, first move
meaning that now no more changes can be made into the personal data
feeded into the computer. The system generates the verification letter after
confirming the proposal number of the client, his lease amount and vehicle.
This letter is then handed over to the verification staff for verification
purpose.
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Information to be verified
Verification letter extracts the following information need for the verification
by verification officers;
• Personal and business addresses of the applicant
• Personal and business addresses of the references
• Children information
Verification section
Verification section consists of verification officers, having intelligence
background and long experience. Since they are quite experienced persons so
it is ensured that what so information they are going to verify is without any
biases any without any impulse to the customer that he is being verified.
The verification officers adopt following procedure;
1. On receiving the verification letter from the incharge, he makes a
movement plan keeping in mind the addresses of the applicant and his
references.
2. Ideally all the addresses are verified by physical ground check, however
due to time constraints following priority is observed by the V.O
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Physical check –Must
• Corporate business address and individual business and personal
addresses.
Telephonic or Physical Check-Optional
• Location and names of schools of customer’s children.
Others
• Information regarding the applicant is taken from the neighbors
and other shops in the vicinity.
• Information regarding the children is taken by following the bus or
any other connivance taking the children to the school.
• Personal information is verified from the other persons mentioned
in the form as references, and it is ensured that they all are willing
to give the guarantee of the applicant or any other necessary
information regarding the client can be taken from them.
• A handwritten brief on the social status of the client, his repute and
other crucial information is put on plan paper and is attached with
the verification letter.
This form and report now goes to the credit appraisal department for
necessary remarks regarding his position and finalizing his financing terms.
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Finalizing of Processing
The processing department ends its working when after the approval
following jobs are done
1. Taking post dated cheques from the client
2. Taking down payment form the client
3. Taking signs on the legal document from the customer
4. Taking any other required thing may be some document, or some
personnel guarantee.
5. Printing the legal documents
6. Printing the credit proposal
7. Printing the purchase order
8. Printing the cheques
9. Taking credit approval
10. Marking final of the case
11. Sending the hard/soft copy of the case to the head office by mail and email.
All these are very essential functions of the department
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2. Credit Appraisal Department
This is very important department in a way that here the client profile is
evaluated against the information he provided into the application form. So
that any discrepancy if there can be picked up and can be evaluated. In this
way the appraisal officer for final approval puts remarks on his report from
the manager.
The essential remarks can be regarding
• Increase in down payment
• Taking some personal guarantee
• Some advance rentals.
Actually this department is for the pre refining and analysis of the whole case
so that when it is going to be finally remarked by the managers, every thing
briefly is described on the back of the verification report. In this way
comments will be finalized by the manager.
Since the verification report is the main document upon which the client is to
be valued so that is why it is very much necessary that this report should be
kept secret and confidential. Only appraisal officer having in-depth
knowledge regarding the credit criteria is authorized to read and comment on
it. It is very necessary so that the final decision should be made without any
biases and should be as it should be.
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3. Rental Recovery Department

This department is quite crucial in its own way. Since rentals are the inflows
and source of liquidity for the firm, so any firm prompt in collecting the
rentals is considered as a good and flourishing firm.
Rental Calculation
Client is informed about his rental at the time when he comes for his lease
booking, there is a proper system designed that automatically calculates the
rental by incorporating the initial payment made by the customer. This initial
participation is called equity participation from the client. In this equity
participation his first rental, his advance insurance for the first year, and
documentation and verification charges are also included. Then system
generates the rent per month. This rent also includes the insurance portion.
Categories of Rentals
Rental recovery department deals for the following categories of rentals
1. ACBL Rentals
2. ALL Rentals
3. CORP. Rentals
These categories are further dealt by individual officers so that maximum
concentration can be put on the recovery process and control the inflows.
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Rental collection
Rental collection is a long drawn process and dealt carefully, for this purpose
the customer is coached and is provided with psychological handling and
treatment, so that he could realize the obligation and importance of honoring
his commitment which not only reduces his financial burden but leaves a
good impression about him as a good customer who can be helped and
assisted during his financial crunch.
Procedure of rental collection

Rental collection requires a smooth and uniform procedure for effective
implementation and reporting. The two main procedures are followed
regarding rental recovery
1. Through Head Office
2. Through Branch
Through Head Office
The rental cheques of the client booked in the name of Askari Commercial
Bank are presented by the Head Office itself and aging is monitored at H.O
level. These cheques are presented to the respective bank. But when the
cheques get bounced these are sent back to the branch and now it is the
responsibility of the branch to remind the clients and get recover the rentals.
In this way ACBL rentals are monitored both at H.O and branch level with
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full concentration. Aging reports from Head office are received weekly or
monthly and updated accordingly.
Through Branch
For the rentals of vehicles booked in the name of Askari Leasing Limited
following procedure is followed;
Step 1
Between 20th and 25th of every month computer generated letter are
dispatched by the operation department to the concerned branches for
further delivery individually to their Asker clients reminding them of their
rentals falling due on 1st of next month and their obligation to ensure
availability of necessary funds for the clearance of their cheques issued by
them.
Step 2
Before the 1st of every month (around the 25th of previous month) each
branch receives a list of cheques from operations department of head office
along with the cheques and payment slips, which are due for the payment of
1st of next month.
Step 3
After receiving the cheques and list of these cheques, branches present these
cheques to respective banks, as response these cheques either go to

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• Clear
• Hold
• Bounced
Step 4
Bank statement of Asker accounts are sent by each branch to Head Office
along with the copy of the list of cheques received earlier giving status of each
cheque and action in hand.
Treatment of Bounced Cheques

When a cheque is bounced after presenting it, two times the following action
is taken;
1. A report is sent to the respective branch having the client’s name, address,
phone number, and lease rentals.
2. On confirmation of a bounced cheque a warning letter is issued to the
customer directly informing him about the status of his payment and the
company right of repossession.
3. Rs. 500 as penalty from each customer against the bounced cheque is
taken from the customer.
4. In case the client does not cooperate with the company with respect to
payment of rentals, the company is obliged to repossess the vehicle with
the help of Askari Guards.
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Repossession of Vehicle
Repossession capability contributes a lot in making the product “asKar” a
success. Askari Leasing Limited has a strong and effective repossession
capability.
This capability can b e termed as a key factor in handling default cases and
this makes the product a profitable proposition. The success of the product
depends upon this capability.
The strength of repossession besides injecting more confidence in the team
prompts them to be more aggressive in selling the product than being so
conservative and limited in selling the product. On the other hand it conveys
a message on the behalf of Askari Leasing Limited that it will not allow any
deviation from the rental payment by the customer.
Procedure for Repossession
If any client has is irregular in his payments behavior or in case if he defaults
than following steps are taken for the repossession of his vehicle;
Step 1
For repossession relevant details are provided to the repossession agency
regarding the vehicle and the customer by the branch manager.
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Step 2
An authority letter by the branch manager for repossession of vehicle on
behalf of ALL is issued to the repossession agency.
Step 3
A letter to the concerned police station is issued informing them of the
customer having defaulted from the agreement and the action being taken for
repossession provided by the agreement.
Step 4
A letter is handed over to the client or the one using the vehicle at the time of
repossession informing the lessee that the vehicle has been repossessed by
ALL and that he should contact at a given address in case he needs further
clarification. The letter is accompanied with an inspection report showing list
of contents and condition of the vehicle duly signed by one or two witness
depending upon availability.
Step 5
The police station if earlier informed of the intentions to repossess the vehicle
is informed when the vehicle has been repossessed.
If the case is steeled through negotiation after repossession, the client is
charged either a fixed amount or twice the actual payment made to agency
for recovery as repossession charges besides the recovery of outstanding dues
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and the fine if any. Repossession charges are however recovered from the
client whenever a vehicle is repossessed irrespective of the fact that how cases
finally settled.
Termination of Lease
Termination of lease is made on completion of all formalities or requirements
having adjusted against all outstanding dues against the customer.
Lease termination may be
1. After repossession
2. Voluntary Termination
If the termination of lease is warranted, the first choice is of the lessee to pay
for the outstanding dues and get the vehicle back on ownership.
Next option is the auction of vehicle in open market. For this an
advertisement to the effect is given in the desired print media, having
recovered own dues from the proceeds of auction, the principal amount paid
by the lessee is reimbursed out of the balance and lease is terminated.
Voluntary Termination
In case a lessee decides to discontinue the lease voluntarily, his lease is
terminated using the following options;
• When lessee wants to retain the vehicle
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When lessee pays the balance principal and the termination charges. Transfer
of ownership and registration is the responsibility of the lessee.
• When the lessee does not want to retain the vheicle
The vehicle is auctioned, from the proceeds Askari leasing retains his dues
along with the termination charges, the principal paid by customer is
reimbursed to him.
4.Insurance Department
According to the terms and conditions for taking a vehicle on lease the
insurance is mandatory for the client, it is because the vehicle is in the name
of the company so it is better for the company to have it fully insured so that
in any case, damages and losses can be recovered from the insurance
company.
Types of Insurance
Insurance can be of the following types;
1. 4%
2. 4.5%
3. 5%
Due to difference with respect to the applicability of different clauses
insurance claims may vary so a brief detail of ever type is given below;
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4% insurance
If client wants to have insurance at 4% then in the case of accident or any
other loss that may be of any kind there will be certain deductions and certain
depreciation charges as well. Depreciation is most of the time 20% annual.
4.5% insurance
Insurance in this type, covers every type of loss but only depreciation will
have to be born by the customers.
5% insurance
Insurance of this category is called comprehensive insurance. It means there
will be no deductible and no depreciation charges. What ever the claim may
be it will be fully recoverable.
Deductibles
Deductible amount for different cc cars is as:
CC Amount
800 2000
1000 3000
1300 5000
1600 7500
2000 10,000 and so on .
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Procedure of Insurance
For the insurance of vehicle following procedure is adopted in the branch;
• when the company books the lease an case is processed at head office level.
After approving at head office, purchase order is issued to the dealer.
• Dealer purchase the vehicle and manufacturer delivers the vehicle invoice
to the dealer.
• After receiving the invoice of vehicle client himself or the dealer on behalf
of the client brings the invoice to Askari Leasing.
• Askari Leasing provides the client F form for the registration of Vehicle
which is signed and stamped.
• Client goes to the excise and taxation for the registration of vehicle
• Client then presents the copy of this registration to ALL and delivery
order is issued along with the insurance covering letter, and authority letter.
• After this procedure insurance policy is issued and it is handed over to the
customer.
Insurance Claims
In case of accident the client is provided with full coverage. In case of any
accident, the client informs the Askari Leasing about the accident.
The insurance company then appoints a surveyor who take the details of the
accident and damages of the vehicle.
38
The surveyor notes down the damages occurred in the accident an makes a
report containing the assured, policy number, period, vehicle make ,engine no
, chassis no, license number etc.
This report is given to the office of Multan in case of efu general insurance an
then it is sent to the head office at karachi.
From the head office of the insurance company it is sent to the Askari Leasing
head office. Then at the end the payment cheques regarding these claims
come to the branch and according to the conditions client gets the claim.
39
40
41
Marketing Department
Marketing department is the backbone of the organization. This department
is very crucial with respect to the working of organization and its
performance. This department is supervised by highly motivated and
enthusiastic officers called Marketing Officers.
It is their job to market their product with in the premises and outside the
premises as well. Whenever the client enters into the premises of the
organization he is fully informed and detailed about the product and its
features and all other terms and conditions.
Product Portfolio
The company product portfolio is as given below;
1. Cars (asKar)
2. COI’s ( Certificate of Investment)
3. Medical equipment
4. Industrial equipment
5. CNG Stations (under process)
6. Consumer Goods Lease Facility to Elite Class Customers
The major is asKar, to make it more attractive there are two supportive
slogans
• asKar and get one
• No eligibility
42
The first one reflect the case of transaction an the second one highlights the
fact that everyone is qualified to apply for schemes. These characteristics are
extensively publicized through the media.
Main features of asKar
Following are the main features of asKar,
• Lease any new car up to Rs.10 Million cost
• Down payment 25% of the cost in regular packages
• Insurance is mandatory
• Facility ranging 3 to 5 years
• No documentation
• Processing time 24 hours
• Earliest delivery
Classification in asKar Departments

Client categories in asKar is as follows;
• asKar Individuals
• asKar Corporate
AsKar Individuals
asKar offers the most convenient and affordable vehicle-financing scheme
providing an opportunity to won a brand new car of customer’s own choice.
43
Documents Required
1. Photocopy of NIC
2. Copy of driving license
3. One passport size photograph
4. Verification charges deposit slip
Salient features of asKar Individual
• New vehicle of any brand valuing up to Rs.100,0000.
• The financing period is 36,48,60 months.
• Insurance through the company is mandatory and first year insurance is
taken up front.
• Documentation charges of Rs.3000 inclusive in down payment and non-
refundable 1000 verification charges.
Terms and conditions
• Registration cost, capital value tax (CVT) and all other costs are born by
the customer.
• All rentals should be paid in advance and should be on the first day of
every month.
• Customer will give 35,47,59 post dated cheques at the commencement of
financing facility each having a value of monthly rental.
44
• Disbursement will be made after the completion of all legal documents,
comprising of either lease or Morabaha agreement.
• Company reserves the right to disapprove the case with out giving any
reasons to the client.
• Down payment shall not be received in cash, it will be either trough
demand draft or cheque or pay order.
Essentials for case processing
Following are the essentials of case processing,
• Application form should be properly filled
• One blood relative and one friend reference is required.
• Application form should be signed by the client
• Verification charges deposit slip should be properly attached
asKar Individual financing

Vehicle is financed in this way in asKar individual financing
1. Scheme vehicles
2. Regular vehicles
3. Commercial vehicles
Regular vehicle Financing
For regular vehicle financing following essentials are there to be fulfilled;

45
• 25% down payment
• Rs.1000/= verification charges are must
• Ist year advance insurance is inclusive
• No rental off.
Commercial vehicle financing
• The vehicles are used for commercial/business purpose
• The vehicles include of Toyota Hilux, Hyundai Shehzore, Hino Bus, and
Mazda etc.
Scheme vehicle financing
Following are the schemes running in financing vehicles, the schemes are
basically of two types
1. With up front insurance
2. With No Up front insurance
Insurance up Front
It means that first year insurance is include in the down payment; hence
following schemes fall in this category;
1. Shehzore scheme
2. Kia Classic Petrol
46
Shehzore Scheme
Following are the main features of Shehzore scheme
• No processing charges
• Last 4,3,2 rentals off for 5,4,3 years respectively.
Kia Classic Petrol
Following are the main features of Kia Classic Petrol vehicle
• No processing charges
• Rentals waiver is as follows
Period Rentals off
3 years 23,35
4 years 23,35,47
5 years 23,35,47,59
No Up front Insurance
In this case advance insurance is not included in down payment, following
schemes are included in this category;
1. Kia NGV
2. Santro
47
Kia NGV
Following are the main features of KIA NGV
• No verification charges
• Rentals waiver is 5,4,3 off for 5,4,3 years respectively
• No advance insurance
Santro
Following are the main features of Santro scheme
• 7.5% down payment
• No verification charges
• Rentals waiver is 5,4,3 for 5,4,3 years respectively.
• No advance insurance
asKar corporate financing

Askari leasing offers handsome package for corporate financing, with respect
to the suitability of the vehicle to their business, they can have a car of their
own choice. There is no restriction upon the clients with respect to their
concerns, any type of business can be financed.
Every company partnership, sole proprietor ship, clubs, societies, or any
other business concern falling on the financing criteria can get a vehicle
through Askari leasing limited. Leasing is very attractive for corporate clients
48
to enjoy the tax benefits. Compliance of prudential regulations is a statuary
requirement for all the customers willing to avail corporate lease financing.
Salient features of asKar Corporate
• New vehicle of any brand
• Financing period for non commercial vehicle can be 36,48,60 months.
• Financing period for commercial vehicle can be 72,84 months
• Insurance of vehicle is necessary
• Documentation charges are Rs.3000/=
Terms & Conditions
• Registration, CVT and all other costs will be born by the customer.
• All rentals will be paid in advance and on the first day of every month.
• Post-dated cheques will be provided by the customer at the time of
commencement of lease.
• Disbursement will be made after the completion of all legal documents.
• Personal guarantee of directors, partners are required.
• Due compliance of prudential regulations by the customer availing
corporate asKar facility.
• Total facilities to a customer from NBFI/ banks must not exceed of times
of the customers’ capital and reserves.
• Current ratio must be 1:1

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• Debt equity ratio must not exceed 60:40
• Clear CIB report from SBP
The customer must provide his accounts in the following manner
1. Where the exposure does not exceeds Rs.2000,000/= accounts should be
duly signed by the borrower.
2. Where the exposure exceeds Rs.2000,000/= but not 10,000,000. Then
accounts should be duly signed by the borrower and also by a charter
accountant.
3. Where the exposure exceeds Rs.10,000,000. Then accounts should be
properly audited.
Types of Corporate Lease Financing

Corporate where askar deals can be of following types;
• Sole proprietorship
• Partnership
• Public/ private ltd. Companies.
Documents Required For Sole proprietorship

• Photo copy of NIC
• Last three years income statement
• Last three years balance sheet
• Last three years income tax returns
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• PG. of Proprietors
• Verification charges of Rs.1000.
Documents required for Partnership
• NIC copies of partners
• Partnership deed
• Last 3 years income statement
• Last 3 years balance sheet
• Last 3 years income tax returns
• PGs of Partners( two partners)
• Verification charges, 1000.
Documents required for public /private limited companies

• NIC copies of directors
• Memorandum and article of association.
• Certificate of incorporation
• PGs of directors
• Last 3 years, income statement, balance sheet & tax returns.
• Verification charges Rs.1000 through pay order or cross cheque or cash.
Reference required for sole proprietor ship

• Two friends and two blood relatives
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• Tow customers/bankers/suppliers.
Reference required for Pvt./public Limited companies

Following references are required for this category
• Two directors/ two partners
Preferred Market
The ideal markets for the Askari Leasing limited are following;
1. Professionals
2. Bankers
3. Women
4. Doctors
5. Govt. servants.
6. Textile sector
7. Export oriented business
So these categories are very much important and preferred so far as the
leasing market is concerned because it is usually considered that this market
has a good credit ranking and their credit behavior regarding rental
payments is quite satisfactory.
Negative Market
Following categories are negative markets for the Askari Leasing Limited;
52
1. Politicians
2. Lawyers
3. Policeman
4. Generalist
5. Land lord
These negative segments can be offset by enhancing lease key money and
personal guarantee, mostly guarantee of grade 18 officer is required. Some
times advance rentals are also taken as guarantee that are adjusted at the
end of the lease period or whenever the client comes for lease termination.
Reasons for rejection of case

The case may be rejected on the following bases;
1. If the financial position of the client is not satisfactory
2. Farad case
3. Fake information
4. Area limitations
5. Untraceable address
6. If relatives, friends and other references are not agree to give the
guarantee.
7. If there is no source of income of the client.
53
Calculation of rental
It is very important to know how the rent is being calculated for a vehicle,
like how lease key money is generated and how the insurance and other
information regarding rental is calculated.
For understanding we take a hypothetical case o vehicle worth of Rs.
450,000/=to be leased.
There are two ways of doing the calculation.
1. Calculate Rent
2. Eligibility calculation
Calculate Rent
The marketing officer enters the cost of vehicle in the desired lease period, the
system automatically take the minimum lease key money requirement and
provide M.O with the following numbers.
Example
Cost of Vehicle Rs.450,000/=
Duration 3Years
Equity Participation 30%,135,000(system generated)
Rental 12269(system generated)
Insurance Rental Rs.711 (system generated)
Net Rental Rs. 12980(system generated)

54
First year Insuarance Rs.18,000(system generated)
Total Down payment Rs.165,980(system generated)
Total down payment is the addition of net rental, equity participation and
first year insurance. The marketing officers have to add Rs.2000
documentation charges to it.
Modifications can be made in cost of vehicle, duration an equity participation
according to the needs of the client.
Eligibility Calculations
This option is designed from the viewpoint of availability of funds with the
customers. For example lets suppose the customer informs the marketing
officer that he has only Rs.200, 000 and he wants to lease a car worth of or
Rs.450,000.
Then this amount is put into the equity participation column, in case if the
figure does not matches with the minimum down payment required than
system generates error.
Example
Cost of Vehicle Rs.450,000 (input)
Down Payment Rs.200,000(input)
Verification charges Rs.1000(system generated)
Documentation charges Rs.2000(system generated)
55
First year insurance Rs.18000(system generated)
So in this way all calculation are done based upon the customer requirements
and his specifications. It is tried that customer must be satisfied and treated
at high level of his satisfaction.
56
57
Customer Service Department

In order to facilitate the customers, there is a proper department dealing with
customer inquiries and their problems related to their lease financing.
This department actually works under the supervision of marketing
department so at the same time act as a Tele marketing section of the firm.
Customers inquires are properly handled and information regarding the
leasing information and about the rentals etc is properly and immediately
conveyed to the customers. Since Askari Leasing Limited Multan is working
in a very friendly and congenial environment so when ever a walking
customer comes in, he is highly prioritized and it is tried to give him
maximum attention and not let him go away unsatisfied.
Basic functions of the department
• Dealing with customer inquiries
• Performing Tele Marketing
• Dealing walk in customers
• Follow up to the existing clients
• Hunting new customers
• Sending appreciation & letter of thanks to the customers.
58
59
COI’s Department
Askari Leasing Limited is involved in the process of investment of the money
of the clients as well and it is done in the form of the certificate of investment.
Actually this thing for the purpose of resource mobilization and benefiting
the clients by offering them higher profits as compared to other saving
institutions.
COI’s are dealt in the following categories;
1. Individual
2. Corporate
Types of Certificates
Each category deals with the following types of categories
• Anza Diamond
• Anza Gold
• Anza Platinum
• Anza Special
Anza Diamond Certificate
In this category deposit is fixed for years and profit is given at the time of
maturity of that period. In this capital is almost doubled in 5 years. The
minimum amount in this case is Rs.10,000. And it can be invested with no
60
maximum limit. Fund can be withdrawn at any time before maturity and
profit will be paid accordingly to Anza Platinum certificate along with a
penalty.
In case of individuals following payments are expected to be made upon
maturity of certificates.
Amount of Certificate Payment upon Maturity
50,000 96,271
100,000 192,541
1000,000 1925,414
Anza Gold Certificate
Anza Gold certificate offers high rate of return on maturity basis at different
maturity periods. Monthly profit on investment is paid on the 1st day of each
month for the entire period of investment with first payment due in the
following month.
Minimum amount is of Rs.10,000 that can be invested with no maximum
limit.
All the investment made after the 15th of every month is not to be paid profit
on the first of next month but investment before 15th of the month is paid
profit on the first of next month on the bases of their days of investment.
61
Premature en casement is permissible where profit is paid according to Anza
platinum along with a penalty.
These certificates are best suited for housewives, pensioners, widows, and
persons who are in need of regular monthly income.
The following table gives the expected monthly profit on investment of
Rs.100,000
Deposit Period Monthly Profit
5 years 1166
4 years 1125
3 years 1083
Anza Platinum Certificate
This type of certificate deals with various maturity periods, under this scheme
client deposits money for different periods and earns higher profit for each
category of deposits. The deposit can be minimum period of 3 months and for
a maximum period of 5 years. The expected rates of profit for each category
is as follows;
Deposit Period Expected Rate of Return
3 Months 10.5%
6 Months 11%
1 year 11.5%
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2 year 12%
4 year 13.5%
Corporate rates are different from individual rates.
Profits on investment for 3,6 and one year are paid at maturity while profit
on investment more than 2 years and above are paid on half yearly basis.
Minimum amount of investment or Rs.25,000 can be invested with no
maximum limit.
Premature encashment is permissible but the profit is paid in multiple of 3
months terms, whereas no profit is paid before completion of 3 months.
A penalty is also levied on premature encashment.
Anza Special
This type of certificate is for army people and is mostly dealt at head office
level.
Additional benefits
Following are the additional benefits for getting these investments
• Loan facility up to 80% of investment
• Free accidental death insurance
• No charges on premature encashment
• Investment can be made in multiple of 10,000.
63
In this way this department is also dealing in the best way for generating
funds for the organization.
64
65
Swot Analysis of Askari Leasing Limited Multan

A company’s performance can be judge only when there are clear cut
difference exists between this and other firms operating in the same sector.
For this purpose a proper analysis of the firm is given in the forms of its
strengths, weakness, opportunities and threats, the company presently facing
or can be forecasted for the future.
Strength of Askari Leasing Limited
• Virtual Monopoly Position at Multan & SB’s
• Diffusion of Leasing Concept in Market
• Market Development and Enlargement
• Commitment, Devotion, Professionalism, Hard work, Motivation, Right
direction, and responsive behavior to Market and Clients Needs.
• Low Ratio of Defaults
• Strong Repossession Muscle
• Minimum Problems to HO
• Sound Business Practices and Cordial Relations with Dealers.
• Effective penetration and Control Lease Network
• Congenial and Friendly Working Environment Leads to Greater
Productivity, Work Efficiency and Professional Learning
• Verification Procedure
66
• Innovative and Trend Setter
• High Growth
• Market Leader in Terms of Market Share
• Army Sponsored - Strong Image
Weaknesses
• Inexperienced Though Professional and Energetic Fresh inducted
personnel and Branch Structure at Formatting Stage.
• Predominately Agrarian Economy.
• Lack and Vacume of New Products Meeting Marketing Needs.
• Lengthy/ Delayed asKar Cases Processes Time At H.O
• Low AGL Sales Package and Dealers Commission/ Incentives
• Service Features/ Insurance, Claims, Lease Termination/ Refund are
delayed
• Change of Assets on Existing Leases
• Lack of Training Facility and Operational manuals.
• Lack Of Promotional Material
• Heavy Dependence on H.O for Information Required By Clients
• Discrepancy in asKar Cases
67
• Lower Level Perception and importance given in Lease Investment to This
Region Vis-a-Vis Larger Industries and Commercial Cities in Over all
Corporate Strategy and Planning
• Non Existence of Own Office Premises at SB’s
• Lack of PC’s and Equipment at SB’s
Have Large Customers Database Contrivance for any Diversification or
Launch of New Consumer Lease Products following measures should take
• Employees Training.
• Better Sales Employees Package with Sense of Belongingness and Security.
• Lower LKM for Repeat Leases/ Existing Clients.
Opportunities
• Franchise for Consumers Durables.
• Attractive Compensation Package.
• New Products for Agriculturists
• Lease Financing for Medical Equipments, PC, Notebooks, and Office
Equipments.
• Prestigious asKar Club
• Establishment of Training Department at HRD
• More Decentralization with Equipped Capabilities.
• Formation of regional Setups.
68
• CNG Vehicles to be Capitalized
• CNG Kits Financing to Existing Clients
• Dealers Reps Training Courses and Get together and Incentives to
Dealers.
• Improve Service Side
• Have Marketing Department Gimmicks Like asKar Rallies and Cross-
Country Races.
Threats
• Entry of New Competitors
• Saturation and Maturity in Product Life Cycle
• Crop Failures in Absence of Agri Insurance
• Better Products and Services by Competitors
• Failure's of New Brand of Vehicles
• Dwindling and Mergers
• Adverse Economic Situation in Paying Capacity of Market and Clients
• Downward Price Trend in Second Hand Car Market
• Dealers Suiting Loyalty to Competitors
• Slow Processing of Cases Especially ACBL
• No Eligibility- Copy
• Lower IRR and LKM by Competitors
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• Lower Demand of Diesel Vehicles.
70

Askari Leasing-Management

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Askari Leasing Ltd.

Askari Leasing Limited Multan

Presented to: Mr. G. M. MALIK

completed my practical learning in time. I am very much thankful to the

My special thanks to the

1. Mr.Aftab Ali Malik / AVP,Chief Manager

2. M. Usman Adil / Marketing Officer

3. Humaira Ali / Operations Officer

4. Ishaq Bhutta / Operations Officer

5. Mohammad Shahzad Hussain / Operations Officer

6. Mohammad Arshad Raza / Operations Officer

7. Abdul Karim / Operations Officer

8. Farjaz Saleem / Marketing Officer

9. Imran Baig / Marketing Officer

Practical learning of bookish knowledge is very important for business graduates

Program in Department of Commerce, B.Z.U. Multan. So as part of this training

program I was assigned to do my internship training at Askari Leasing Limited

Multan branch for 8 weeks. Askari is well-reputed financial institution in the

steadily towards the path of continuous growth and success.

During my training I learned the working of the following departments in depth.

environment very congenial.

“Allah hath permitted trade and forbidden

usury (interest), those who desist, shall be

which it makes the series of contractual, periodic, Tax deductible

benefits of certain fixed asset by making contractual payments as rentals

agrees to provide equipment or finances to buy the equipment needed by the

lessee. The main characteristic of leasing is that it segregates the ownership

Lease is a transfer of right to enjoy such property made for in consideration

of a price paid or promised or money, share of groups, service or any other

thing of value to be rendered periodically or on specified occasions to

hire-purchase means, a system by which a hired article becomes the property

of the hirer after a stipulated number of payments.

advantage of the leasing.

Ø Improving the “Quality of Life”

Ø Avoiding “Restrictive Covenants”

Ø 100% Financing Mode

Ø Increases the liquidity of the Lessee

following several years of agreement among businessmen, economists, tax

many advantages including the risk of owning equipment subject to

technological obsolescence is avoided through short-term or cancelable leases

outlays which preserves working capital, elimination of down-payment

the appearance of Balance Sheet and certain financial ratios by elimination of

liabilities associated with acquiring equipment.

Leasing in the Context of Pakistan

Lessee Point of View

• The Upward trend in Cost of Consumer Durable and the decreased

Purchasing Power of the People.

• Tax Benefit to the customers.

• Islamic Mode of Financing.

Lessor Point of View - Some Facts

• Less investment options for the Lessors.

• Vehicles industry registered a growth of 24.5% and 19.5% in 2000-2001

• Success of Lease concept - 40% of the total manufactured vehicles was

Tax Deductible Facility

tax hedge for lessee.

Leasing Evolution in Pakistan

• 1985- Establishment of the first Leasing Company.

• From 1985-1997, 32 Leasing companies are established.

• From 1992-95, 20 Leasing companies are established.

• In Mid-Nineties, the Growth rate of leasing companies was 30-35%.