Report on Orix Leasing Pakistan

LEASING
Leasing:
Lease is a contract whereby the owner of an asset (the lesser) gives the other party (the
lessee) the right to use the asset for a specified period of time, in return for the payment
of rent.
Leasing As An Innovative Mode Of Financing
Leasing adds a new dimension to modern financial management. The basic concept of
leasing is that profits are earned through use, not ownership of equipment. The ownership
of equipment is vested in the leasing company (lesser) and in return for rental payment;
the lessee has virtually unrestricted use of the equipment.
Leasing is a medium to long-term hire of assets. It takes care of companys fixed assets,
requirements and effectively allows the company to utilize its capital and other sources of
funds for more profitable use.
Types of Lease:
There are two types or leases:
1. Operating lease
2. Financial lease
Operating lease:
In this type economic life of assets is longer than lease term. It is short term often
cancelable usually with a pre determine penalty for cancellation. At the end of lease
period asset is return to the lesser.

Financial Lease:
It is long term than operating lease often non-cancelable. Lease term is more than 75
percent of the economic life of the asset. At the end of the lease period the ownership of
the asset is transferred to the lessee.
Forms of Leasing:
There are three forms of leasing.
1. Sale and Lease Back
2. Leveraged Lease
3. Direct Leasing
Direct Leasing:
In this the lesser owns the asset leased to the lessee.
Sale and Lease Back:
In this case the lessee sold the existing asset to lesser and then leased it back.
Leveraged Lease:
Under a leveraged lease the lesser acts as an equity participant, supplying about 20
percent of the cost of asset, and a lender supplies the balance.
Prudential Regulations
Not less than three years lease term (except for computers)
Must invest at least 70 percent of its asset in leasing business.
Internal control procedure for transaction exceeding Rs one million.
Exposure to a single group cannot exceed 30 percent of the net investment.
Credit Information Bureau
It is a department of state bank of Pakistan maintaining information of borrowers. It is
mandatory for the leasing companies to obtain CIB information prior to approval of
credit to any client.
General Set Up of Leasing Companies in Pakistan
Public limited companies established under Companies Ordinance 1984.
Leasing Industry started to develop in mid eighties.
The first leasing company established in 1985
From 1985 to 1999, 32 leasing companies were incorporated.
Securities and Exchange Corporation of Pakistan regulates leasing companies.
Leasing Association of Pakistan
Mandatory for the leasing companies to be the member of the Association.
Develops a common code of conduct and professional interaction.
Identifies and deals with the strategic issued and policy development.
Maintains a liaison with the global and regional leasing Association.
A plate form to deal with regulatory agencies like SEC & SBP.
Scope and Trends of Leasing in Pakistan
Islamic mode of financing.
Evolving from a pure tax efficient funding to the value added lease product.
Need of small to medium size companies to have large equity base.
Focus on BMR requirements of the industry as well as financing small ticket
consumer leases.
Advantages of Leasing
Leasing is acceptable within the Islamic modes of financing as fixed rental payments
are made and interest is not involved
Lease rentals are allowable as deductible expanses for tax purposes.
Access to substantial amount of funds.
Can be tailored according to clients cash flow.
Re lease facility after the completion of lease period.
Equal installments through the lease period.
Benefits from the services of the asset without increasing the asset or liabilities on
the balance sheet.
Increases in liquidity by converting the existing asset into cash, which can be used as
working capital.
Leasing provides long term funding at fixed rates, such funding is scarce in the
countrys present economic scenario.
Less restrictive covenant as compared to long-term loan.
Leasing also guards against equipment obsolescence, changes in market conditions,
and situations where the future is uncertain.
Leasing arrangements are very flexible and can be designed on the basis of three,
four or five years. Lease rentals can also be structured in accordance with the
lessees cash flow requirements.
Leasing is a hedge against inflation. In later years, in a leasing deal you are paying
in yesterdays currency units for yesterdays purchases.
Disadvantages of Leasing
Slightly higher mark up.
Payment despite the obsolescence over the lease period.
No improvement on the asset without the approval of the lesser.
Smaller capital base of leasing companies.
Fixed rates all over the lease period.

ORIX CORPORATION.
ORIX Corporation is Japans largest diversified financial services institution with assets
in excess of US $ 50 billion. Incorporated in 1964, ORIX is a pioneer of the leasing
industry in Japan. While leasing remains its core business, ORIX has expanded the
financial services and products it offers to installment loans, real estate, insurance,
securities, venture capital, trust banking and commodity funds. The company enjoys a
global presence and has established ORIX Group companies in 20 countries. ORIX
Corporations shares are listed in Japan and on the New York Stock Exchange.
BUSI NESS OPERATI ONS
In Japan ORIX provide a wide array of office equipment, industrial machinery and
transport equipment under finance and operating leases. ORIXs leasing and loan
operations have established a strong and unique nationwide customer base with a solid
core of small and medium sized companies. ORIX has effectively used this base for cross
selling (the marketing of various additional financial products to existing customers). To
further strengthen its customer services, the Company is proactively developing e-
business by utilizing IT for direct provision of services to customers as well as
distribution and settlement activities and auction markets.
ORIX is amongst the leading automobile leasing companies in Japan with approximately
261,000 vehicles under lease. The Company owns and maintains a fleet of Airbus aircraft
and Boeing 737s, which are given on operating lease to airlines around the world.
During the current year, ORIX entered into strategic alliances with the American
International Group (AIG) by forming a joint venture to handle casualty insurance: and
with Enron Corporation for investment in companies which market electricity from wind
power generating facilities.
International Activities
Since entering the Hong Kong market in 1971, ORIX has expanded its leasing operations
and other business overseas through the establishment of wholly owned subsidiaries and
joint ventures. The ORIX Groups international presence is represented by 43 companies
in 20 countries. The wide geographical spread of the ORIX Group has diversified
revenue streams and Group companies benefit from a deep pool of experience and
technological advances available to them due to a worldwide presence.

ORIXS PRINCIPAL ACTIVITIES
Direct Financial Leases
Aircraft and Marine Vessels
Automobile
Industrial Equipment
Information related and Office Equipment
Operating Leases
Aircraft
Marine Vessels
Measuring Analytical Equipment
Information-related Equipment
Automobiles
I nstallment Loans
Corporate Finance
Housing Loans
Card Loans
Other Operations
Investment Banking
Life Insurance
Trust and Banking
Securities Brokerage
Securities Investment
Real Estate and Development Brokering
Venture Capital Investment
Future and Options Trading
Commodities Funds
Computer Software Development
Insurance Agency Services
Ship Management
Environmental Services
Commercial Mortgage Servicing
Range Of Operations
At the same time that ORIX offers creative proposals to its clients, it is actively
promoting more specialized activities in its core businesses to strengthen its
competitiveness. Some of these are described below:
Direct Financing Leases
As one of ORIXs core business, direct financing leases are used to finance computers,
office automation (OA) equipment, and other information-related items as well as
industrial, commercial services, and transportation equipment. These leases allow users
to replace obsolescent facilities and reduce the clerical burden associated with arranging
for insurance, maintenance, taxes, and other aspects of equipment purchase and
maintenance.
In particular, in the field of small-ticket leases for OA and other equipment, the Company
has introduced the ORIX Quick Lease (OQL) system to speed up credit analysis and
approvals. OQL has enabled ORIX to conduct its marketing activities to provide
enhanced convenience for customers.
ORIX is also able to offer leaseback arrangements for customer assets and package leases
of buildings built on land under term leases.

Automobile Leasing
Automobile leasing services offered by ORIX Auto Leasing Corporation (OAL) relieve
customers of such time-consuming activities as negotiations with dealers, maintenance,
payment of taxes, and arranging for insurance. ORIX has the largest service network in
the industry and is able to provide high-quality maintenance services throughout the
country.
To further upgrade automobile maintenance capabilities, OAL supplies ORIX brand low
cost, high quality automobile replacement parts to cooperating vehicle repair facilities
throughout Japan. In addition, ORIX has concluded a tie-up with three oil refining and
distribution companies and, in 1998, began issuing an Auto Management Service (AMS)
card that can be used anywhere in the country to allow customers to monitor fuel costs on
a centralized basis and obtain other data services. Moreover, to deal with legal, labor-
related, accident, and other types of risks, management services and assist customers,
from a variety of perspectives, in effectively managing and controlling costs related to
automobile usage.
ORIX has actively promoted leaseback schemes to customers interested in the
outsourcing of vehicle maintenance. This has resulted in growth in the number of vehicle
under contract in its automobile fleet business, which involves companies that have 10 or
more vehicles.
Real Estate Operations
Beginning with housing loans and other financing services, ORIX has worked to expand
the range of its real estate operations to include such activities as rental and residential
property development and sales business. At present, the Company undertakes the rental
and lease of company dormitories, office building, and apartments; the planning,
development, and sale of condominiums and unit houses; and the management of hotels
and golf courses.
Aiming to utilize management resources more efficiently, ORIX divided its former Real
Estate Business Headquarters into two organizational entities in March 1999. The
operations of departments responsible for responsible for real estate related finance were
reorganized within the new Real Estate Finance Headquarters. Real Estate development,
leasing and rental business, and other real estate related operations of the former Real
Estate Business Headquarters and various Group companies were consolidated in the
form of a newly established subsidiary, ORIX Real Estate Corporation. Responding to
the February 1999 implementation of the Special Measure Law Concerning Credit
Management and Collection Business, the Company established ORIX Asset
Management Loan Services Corporation to undertake service operations.
Measuring Equipment Rentals
ORIX pioneered the development of the equipment rental business in Japan, first offering
rentals of measuring equipment for R&D use through ORIX Rentec Corporation. At
present, ORIX is expanding and diversifying the types of equipment available for rentals
and is going beyond the rental framework to provide technical support, including
measuring services. Moreover, such activities are being expanded to include closely
related engineering services, including computer systems integration.
ORIXs Tokyo and Kobe technical centers provide high-quality equipment and
sophisticated management techniques and were the first to receive ISO 9002 quality
assurance certification among domestic rental companies. In addition, ORIX has
developed a computer network distribution management system that allows rental
equipment to be retrieved from the warehouse in only 26 seconds after a customer places
an order. This system has been highly appraised by rental customers. ORIX also develops
strong resale channels for the disposal of items, including sales via the internet and
equipment auctions. These channels allow for the sale of used equipment on favorable
terms.
Environment-Related Business
ORIX Eco Services Corporation, a wholly owned subsidiary, was established in April
1998 to assist ORIXs clients to deal with their waste management problems. Its activities
include organizing a network of waste disposal companies, introducing them to ORIX
customers, and acting as an intermediary between these companies.
Retail Financial services market
The retail financial services market, which appears to have strong growth potential,
ORIX has developed and supplied life insurance as well as financial and investment
products that elicit a high level of customer satisfaction. To further develop such
business, the Company has adopted unique approaches that emphasize efficiency. ORIX
plans to continue to offer services carefully tailored to customers needs and will to
establish a strong base in the field of financial services for individual.
Life I nsurance
ORIX Life Insurance Corporations ORIX Direct, which commenced in September
1997, is Japans first range of whole life, endowment, and term life insurance products
offered through direct channels. As this insurance is sold via newspaper advertisements
the Internet, and other direct channels, such administration expenses as agent fees and
marketing office expenses have been reduced. As a consequence, ORIX is able to offer
this insurance at a lower cost than its competitors.
Trust and Banking
ORIX Trust and Banking Corporation became a member of the ORIX Group in fiscal
1998 and, in March 1999, began to market Direct Deposits, which are also offered via
direct channels. Operating costs have been restrained by marketing these deposits through
newspaper advertisements and other media, making it possible to offer more attractive
deposit rated than other financial institutions. These services have been highly evaluated
by the Companys customers.
Personal Financial Services (PFS)
In July 1997, the PFS Department began to offer Life Insurance Diagnostic Services,
which are of strong interest to consumers as they address issues relevant to everyday life.
The objective of these services is to provide detailed advice to customers regarding the
type of insurance most suited to their individual lifetime financial plans. In addition,
based on the data gathered while providing these services, the PFS Department makes
proposals for insurance products that are tailored to individual customers.
The PFS Department has also begun to offer commodity fund investment products to
individuals via direct channels.
Card Loans
VIP Loan Card, offered by ORIX Credit Corporation, is a card-based line of credit
provided to businesspeople. Well received by customers, this service allows cardholders
to make withdrawals from a broad nationwide network of CDs and ATMs up to
prearranged limit at reasonable interest rates and select from a range of repayment plans.
ORIX also issues the CLUB CARD through its ORIX Club Corporation.
To enhance convenience for customers, applications for these card products can be
submitted not only to ORIX offices but also through newspaper advertisements and via
the Internet.
Discount Brokerage Services
To take advantage of deregulation with respect to securities brokerage commissions
scheduled for October 1999, ORIX Securities Corporation is making preparations to offer
discount brokerage services to individual investors. As part of this move to further
develop its activities, in May 1999 the Company began to offer ON-LINE TRADE, an
equity trading service available via telephone, facsimile, and the Internet.
Housing Loans
ORIX offer a range of housing loans to individuals especially tailored to their needs and
circumstances. Examples include one million yen loans that require down payment of
only 1 million for customers purchasing a home for the first time, 100% loans that
ensure that customers can finance the difference between the prospective selling price of
their present homes and the purchase cost of a new house, level-up loans, that
accommodate the needs of customers desiring to sell their present houses where the
balance of their mortgage exceeds the sales price, loans over leasehold housing, and
floating-rate loans with a initial fixed-rate option.
Management by objectives
The ORIX Group presents a management style quite different from the standard image of
Japanese business houses. The style is flexible and based on trust and confidence in the
local management of joint ventures. The Group network is represented in many countries,
but is guided by similar objectives and guidelines. The emphasis is on understanding
these goals and the corporate philosophy, so that individual strategies could be
implemented in the best possible way.
A strong bond exists between the ORIX employees of different countries, which have
helped evolve a distinctive corporate culture that all employees can relate to. The group
gives high priority to exchange of information and personnel among the group
companies.
Active Global Expansion
Since entering Hong Kong in 1971, ORIX has actively expanded its international
activities and has built a network of 45 companies in 21 countries. Most recently,
preparations have been moving forward for the establishment of a joint venture in Saudi
Arabia in summer 1999. ORIXs approach to international expansion has been to focus
first on direct financing leases and, while taking account of the ways of thinking and
customs in the host nation, to either establish wholly owned operations or set up joint
ventures with a strong local partner. In the cases of ORIX Commercial Alliance
Corporation, in the United States, and ORIX Polska S.A, ORIX has been able to expand
its network coverage through acquisitions. In addition to direct financing leases, in order
to diversify and provide greater value, ORIX has offered automobile maintenance leases
in Singapore, Malaysia, Hong Kong, and Taiwan and has provided operating leases for
measuring equipment in Singapore and Malaysia.
In addition to leasing operations, ORIX began providing services for individuals in Hong
Kong, including housing loans and credit card services. In the United States, ORIX has
undertaken a diverse range of financial and real estate related businesses, including
corporate finance as well as real estate financing and development operations.
ORIX has also offered aircraft operating leases, which are by nature borderless and
international. The Company has established a base in Ireland and provides these aircraft
leasing services to superior airlines around the world. As of March 31, 1999, ORIX
maintains 23 Airbus 320 aircraft and one Boeing 737 aircraft under lease. In addition to
these services, ORIX is responsible for the management of two other Boeing 737 aircraft.
Along with these international activities, the company also offers financing and operating
leases for shipping and manages a portfolio of securities.
International Expansion in the United States
Since entering the U.S. market in 1947, ORIX has undertaken a diverse range of financial
service and real estate related businesses.
ORIX USA CORPORATION (OUC) is engaged in a wide spectrum of activities, real
estate related financing, investing in and providing financing for mortgage-basked
securities, and providing lease financing for capital equipment. In addition, drawing on
OUCs experience in securities investments, in June 1998, collateralized bond obligations
(CBOs) were issued based on securities held by OUC to obtain low-cost funding.
ORIX Commercial Alliance Corporation, another U.S. subsidiary, specializes in lease
financing for transportation equipment and construction machinery. ORIX Real Estate
Equities, Inc (OREE), is engaged primarily in investing in profitable properties and
providing real estate management services. OREE has a good track record for employing
the build-to-suit approach to real estate development, which involves locking in
revenues by negotiating a long-term contract in advance and offering a purchase option to
potential tenants.
Banc One Mortgage Capital Markets, LLC, provides highly sophisticated professional
services, including the securitization of commercial mortgage-backed loans and
commercial mortgage servicing. Another company accounted for by the equity method is
Stockton Holdings Limited, which is engaged in various typed of commodity investments
and financial futures trading as will as offering reinsurance services.

ORIX LEASING PAKISTAN LIMITED
History and Prospects
ORIX Leasing Pakistan Limited began operations in January 1987, as a joint venture
between ORIX Corporation, Japan and local sponsors. ORIX Corporation is Japans
leading diversified financial services institution with assets in excess of US$ 50 billion
and subsidiaries and associates in 21 countries. Following the footsteps of its Japanese
parents,OLP has played a major role in promoting the leasing industry Pakistan. Its
strength lies in an extensive branch network, a diversified portfolio of over 3000 clients, a
wide range of financial products, personnel development and office automation.
Operations
Since the start of operations in January 1987, the Company has written leases totaling Rs
15.54 billion. The Company has an asset base of Rs. 6.1 billion, net worth of Rs. 926
million and earned a pretax profit of Rs. 156 million for the year ended June 30, 2000.
The Pakistan Credit Rating Agency has rated the Companys short and long-term debt as
A1+(A one plus) and AA- (double A minus) respectively. The Company enjoys the
highest Credit rating in the leasing sector. The Companys Head Office is in Karachi with
branches in Lahore, Islamabad, Peshawar, Faisalabad, Hyderabad, Multan, and Sialkot.
The company serves as the regional base for ORIX Groups activities in the Middle East
and North Africa. It manages joint venture leasing companies in Oman and Egypt. The
Company has recently established a joint venture leasing company in the Kingdom of
Saudi Arabia. The Company is also a founder shareholder of ORIX Investment Bank
Pakistan Limited.

Business Activities
The Companys main business is leading of moveable assets primarily industrial
machinery, commercial vehicles and passenger cars. The Company provides lease
financing to both large and small businesses. Lessees include public and private limited
companies, partnerships, and sole proprietorships. The Company specializes in providing
lease financing to small and medium size businesses. The Company has also been active
in micro enterprise financing since inception and has been given special lined of credit
for micro enterprises by multi lateral institutions, which include the World Bank, FMO
(The Netherlands Development Finance Company) and the Swiss Development Agency.
Other business areas
While lease financing remains the Companys core business, ancillary financial services
have also been added to its product range. These include installment loans for household
appliances to corporate employees, auto leasing to salaried employees, self-employed
professionals and businessmen, and provision of vehicles and equipment on operating
lease.
OLPs current portfolio of financial services includes:
Corporate Finance Lease:
Providing industrial commercial machinery and transportation equipment to corporate
sector.
Consumer finance:
Allowing corporate employees to acquire domestic appliances.
Automobile Leasing:
Vehicle leases for individual and corporate clients.
Operating Leasing:
Providing productive assets on short-term rental basis.
Micro Enterprises Lease:
Financing for cottage industries and unorganized sector entities.
Certificate Of Investment (COIS):
Offering investment plans matching the needs of our valued customers.
Strategic Focus
The Companys business strategy is to concentrate on providing lease finance to small
and medium sized enterprise. This has resulted in a high degree of risk diversification
through sectoral and asset class diversification with risk spread over a large client base
with lower per party exposure. At the same time, the Company also competes actively in
the big-ticket lease market where target lessees comprise local and multinational blue
chip corporate.
Product Development
Since inception, the Company has primarily developed its leasing business and ancillary
products such as consumer finance, rental of equipment and operating lease. Accordingly,
a high degree of expertise has developed amongst the Companys staff in the various
leasing products. This technical expertise of the Companys management is being fully
utilized in the various job placements in the joint venture abroad.
Assets Class and Strategic Shifts
Economic slowdown and low capital formation has resulted in weak demand for plant
and machinery. To make up for the decline in machinery leasing, the Company has
shifted emphasis to vehicle leasing over the past three years and this has been the
business focus since then. Vehicles provide greater comfort in the event of default due to
their high resale value, as under current market conditions, plant and machinery has low
residual values.
Diversification
A major strength of the Company is its ability to maintain a highly diversified portfolio
with low single party exposure. The Company will continue to target its niche market of
small to medium size lessees with low exposures and will only entertain big-ticket leases
where spreads are reasonable and credit risk is good. The Company has eight marketing
offices located in the Countrys major industrial cities. To further extend its market
reach, the Company uses its existing offices to source business in adjoining cities through
periodic visits by marketing teams and intends to continue this strategy, as marketing
results in smaller cities have been good.
To further diversify revenue sources, the Company has entered into related ancillary
businesses of consumer finance and auto lease for individuals. The Company started
operating lease two years ago and is now among the market leaders in providing
generators and communication equipment on short-term rental basis. Recognizing the
potential for investment banking in Pakistan, OLP established ORIX Investment Bank
Pakistan Limited (OIBP) in 1995.
The Companys policy on internal diversification is to enter into fields closely allied to
leasing to reduce risk and make best use of available expertise within the ORIX Group of
companies.

Area of Activity
Fund Based Activities
Leasing remains the Companys main activity. However, the Company has diversified
into different areas of leasing such as operating lease, factoring, hire purchase and
consumer finance, etc.
Non-Fund Based Activities
Non-Fund based activities include technical advice which the management of the
Company has been providing to its associated companies in the region.
Resource Mobilization
The Company offers Certificates of Investment (COIs) with varying maturities ranging
from 3 months to five years.
A key factor in the Companys profitability has been its ability to raise finance for its
business at competitive rates. The Companys sources of funds are diversified and
continuous efforts are made to broaden this base and ensure that the ratio of short term to
long-term funds remains satisfactory.
The Companys long term funding has traditionally been provided by multilateral lending
institutions while local financial institutions have provided the Company with medium
and short term funds. Companys long term financing sources include:
International Finance Corporation
Asian Development Bank
FMO (Netherlands)
IBRD (World bank)
The Company follows a conservative policy of ensuring that the average maturity of its
borrowing exceeds the average maturity of its lease portfolio. The Company aims to earn
sufficient spread to enable the Company to be cushioned against major shifts that might
occur in future interest rates
Use of Proceeds
The TFCs are being issued for purposes of writing new leases and other business as
permitted under the Companys Memorandum & Articles of Associations. The
Companys lease disbursement in the past two years (1999 & 2000) exceeds Rs. 4,849
million and in 2001 exceed 5.1 billion and the business requires term financing since
leases being written are for three years or longer period. The total amount of Rs. 700
million realized from the present issue (first tranche) will be used to finance new business
volumes. The Company has traditionally relied on International and domestic lending
institutions to meet its medium to long-term funding requirements and the Company sees
TFCs as a instrument to diversify its funding sources.
Relationship with ORIX Group
A significant factor in OLPs development over the past decade has been the harmonious
relationship and complete understanding between its foreign and local sponsors. This
partnership is a model for successful joint ventures, where foreign shareholders provide
the technical know how and local partners support through funding and market
knowledge. With cohesion at Board level, management is left free to pursue development
of the Company.
OLP enjoys good relations with the ORIX Group, enabling it to capitalize on the
expertise of other Group companies. Over the years, OLPs staff has visited Group
Companies in Japan, Thailand, Singapore, Malaysia and Australia under an exchange
program, which sends one or two employees of OLP for overseas training every year.
OLP also contributes to the Group by referring business and investment opportunities in
Pakistan to Group companies. The Company anticipates doing the same in other Middle
East countries as it expands its international presence..
Associated Companies
Overseas Joint Ventures
Oman ORI X Leasing Company SAOG (Oman ORI X):
Oman ORIX, in which ORIX Leasing Pakistan Limited holds 20.25% of equity and
provides management support, continues to show strong growth in volumes and profits.
IN 1999, net profit after tax rose by 26% to Rial Omani (RO) 684,989 (Pak Rs 92.33
million) from RO 542,403 (Pak Rs. 73.1 million) enabling the Company to declare a
dividend of 10% and a bonus of 2.45%. Purchase cost of new business written during the
year increased to RO 16.9 million (Pak Rs.2.28 billion) compared to RO 13.6 million
(Pak Rs.1.84 billion) last year and gross lease receivables increased by 33% to RO 24
million (Pak Rs.3.24 billion). As at December 31,1999, Oman ORIX had total assets of
RO 22.3 million(Pak Rs. 3.0 billion) and a net worth of RO 5.397 million (Pak Rs.727.47
million).
For the year ended June 30, 2000, the Company earned a pre-tax profit of RO 455,719
(Pak Rs.61.4 million) and increased its asset base to RO 29.19 million (Pak Rs.3.9
billion).
Oman ORIX leases all type of assets including motorcars, construction, earthmoving and
transportation equipment, information technology equipment and plant and machinery.
The Companys lessees include individuals; small and medium size companies and large
sub contractors in diverse economic sectors including services, trading and contracting,
construction and manufacturing.
Oman ORIXS Head Office is in Muscat and during the year the Company extended its
geographical reach by opening branches in the cities of Sohar and Salalah.
ORI X Leasing Egypt SAE (ORI X Egypt)
ORIX Corporation, Japan and ORIX Leasing Pakistan Limited each hold 23% of ORIX
Egypts equity. The Company started operations in November 1997 and has established a
good business base.
For the year ended December 31,1999, ORIX Egypts profit before tax of Egyptian
Pounds (EP) 2.04 million (Pak Rs. 30.8 million) was more than double last years profit
of EP 0.9 million (Pak Rs, 13.6 million). Business volume increased by 57% with
disbursements of EP 38.3 million (Pak Rs. 577.9 million compared to EP 24.4 million
(Pak Rs. 368.2 million) last year. Gross lease receivables increased to EP 47.7 million
(Pak Rs. 719.8 million) from EP 30.5 million (Pak Rs.460.3 million). The Company
continued to focus on needs of small and medium sized businesses, which enables it to
diversify risk and earn good spreads.
Saudi ORI X Leasing Company (Saudi ORI X)
Saudi ORIX is under formation and is expected to commence operations by the end of
this year. The Company will be a pioneer of leasing in Saudi Arabia. As the largest
economy in the Gulf with the biggest oil production in the world, Saudi Arabia offers
immense potential for leasing.
Saudi ORIX Leasing Company will start with a paid up capital of Saudi Riyal 60 million,
equivalent to approximately Rs.900 million at current exchange rate. ORIX Leasing
Pakistan proposes to take 10% equity in the new venture together with other sponsoring
shareholders ORIX Corporation, Japan (20%), International Finance Corporation (10%),
Saudi Investment Bank (30%) and a private business group consisting of eminent Saudi
bankers and businessmen (jointly holding 30%).
Joint Venture in Pakistan
ORI X I nvestment Bank Pakistan Limited (OI B)
ORIX Corporation, Japan and ORIX Leasing Pakistan Limited hold 20% and 15%
respectively of OIBs equity. For the year ended June 30, 2000 OIBs profit before tax
rose by 37.5% to Rs.44.28 million from Rs.32.2 million last year. The bank continues to
concentrate on maintaining a high quality loan portfolio while seeking to improve fee-
based income from advisory services. OIB is primarily engaged in providing a range of
investment banking products, which include corporate advisory services, project
packaging, structuringand placement of capital market debt products, issuance and
discounting of bankers acceptance and treasury operations. At June 30,2000,OIB had
total assets in excess of Rs. 1.46 billion.
Board of Directors
Mr. Yoshihiko Miuauchi Chairman
Mr. Shakirullah Durrani Vice Chairman
Mr. Takeshi Sato Director
Mr. Masatoshi Yokota Director
Mr. Muhammad Mazharuddin Director
Mr. Shaheen Amin Director
Mr. Mohammad Qamrul Haq Director
Mr. Humayun Murad Chief Executive

Branches of ORIX Leasing Pakistan Limited
Head Office of ORIX Leasing Pakistan Limited is in Karachi. There are total 8 braches of
ORIX Leasing in different cities of Pakistan. Which are as follows:
1. Karachi (Head Office)
2. Lahore
3. Islamabad
4. Faisalabad
5. Sialkot
6. Peshawar
7. Multan
8. Hyderabad
DEPARTMENTALIZATION OF ORIX LEASING PAKISTAN
LIMITED
There are total 11 departments in Karachi Head Office of ORIX Leasing Pakistan
Limited. Which are as follows:
1. Marketing department
2. Credit department
3. Business Control department
4. Rental Recoveries
5. Administration department
6. Human Resource department
7. Finance & Accounts department
8. Treasury department
9. Rental Collection department
10. Information System development
11. Hard Ware Section
12. Consumer finance services
13. Auto lease
14. Operating lease
Marketing department
The principal responsibilities of the marketing department are identify customer need for
credit, carry out credit analysis, prepare detailed report on lessees financial position and
submit it to higher-ups for approval. Involve in searching and developing new clients and
manage good relationship with them.
They also evaluate the documents submitted by the customers prepare the files (approval
and payment) and then send it for checking to the Business Control department
Credit department
This department define broader based credit polices for the Company. By evaluating
different environmental conditions it set guidelines for credit evaluations. Mostly big-
ticket files credit analysis is done here.
Business Control department
The legal documents, which are signed by the customers, are re-checked here. They also
maintain the record of these documents. They handle the matters related to insurance of
the asset such as arrangement of insurance, insurance claims etc.
Rental Recoveries
The cases, which require special handling regarding recovery of overdue rentals, go to
rental recoveries department. The recovery process is carried out by various means such
as:
Repossession of vehicle
Legal action
By customer consent
Administration department
They handle all the office matters related with office administration such as office vehicle
maintenance, utilities bills, rents of offices, renovation of offices, maintenance of office
equipment, arrangement of inter branch tours etc. In short it can be said that it deal with
all the general administration matters.
Human Resource department
This department involve in the activities such as planning of the human resource,
development of the human resource, annual reviews for promotion, for employment
made broad based policies, evaluate employees and nominate for different courses,
arrange orientation for new employees, formalized job description, set employees
packages etc.
This department also set rules and regulation for the employees and employer or
redefined them. Also it deals with the hiring and firing of the employees. In short we can
say that it deals with all the affairs related with the employees of the company such as
salaries, promotions, annual leaves, bonuses, employees in house training sessions etc.
Finance and Accounts department
It maintains companys accounts records. It maintains the record of all the business
transactions. It operates the companys bank accounts and maintains the record of
payments and receiving.
This department arranges internal audits. It also facilitates external audits by State Bank
of Pakistan or by different audit agencies.
Treasury department
This department manages and arranges the financial resource for the company as and
when required. The finance is required for the disbursement activities. It also manages
the holding financial resources of the company. So the basic function of this department
is the money management.
On branch level it facilitate the account opening or provision of over draft. Also it
handles the repayment of the loans, which are taken by the company.
Rental Collection department
This department involves in the activities like physically collecting the rentals on due
dates and updates the records by feeding the date about the rentals collection. Branches
send statement of deposits to this department and it is then feeded it in the computer
and debt notes are generated.
Information System Department
1.Software development and data maintenance.
This department is responsible for the development and continues up gradation of the
information systems. On the basis of data generated at different locations this system
generate required reports.
The integrated computer system has the information about customers history,
customer grading, contract information, rental repayment records, customer exposure,
salary database etc.
Presently it is working for connecting all the braches on line. Recently on very shorter
scale they are developing software for different companies on their demand.
2.Hard ware section
They are responsible for the replacement of the hard ware of the computer also they
repair if there is any fault occur in the hard ware of the computers.
Consumer Finance Services
This department gives household appliances on hire purchase basis to the individuals
such as refrigerators, microwave ovens, computers, bikes etc. In the beginning they have
provided this service to the employees of the multinational companies such as PIA, Engro
chemicals etc. Companies gave undertaking that the rentals will be deducted form the
salary of the employees and it will be paid to ORIX in one check. But now this service
can also availed by the general public.
Auto lease
They finance automobiles to individuals including businessmen; corporate employee and
self employed professionals. The lease period is 3 to 5 years and insurance is included in
the rentals. They provide different features of insurance such as the individual life
insurance are also included in it.
Operating lease (Rentec Division)
This department provides various types of assets on rental basis such as:
Power generators
Air compressors
Satellite equipment
Delivery vans
Luxury buses
Transportation vehicles
ORIX has wider range of diesel and gas power generators. It gives them on short-term
lease. It gives air compressors on lease to civil aviation. Satellite equipment is used for
wide area computer networking it gives it to different companies and banks. Delivery
vans are given on lease to different distribution companies on daily bases. Luxury buses
are given on lease to different multinational companies. Transportation vehicles such as
big containers and traulas are given on lease to different companies for moving their
goods.
For every type of asset there is separate asset manager. These asset managers are
appointed by the companies or firms or business houses, which are expert in maintenance
of these assets.
Benefits of operating lease
Off Balance Sheet Financing
As the asset is returned to ORIX at the end of the contract, the transaction is a pure
operating lease, therefore it remains off balance sheet thus improving the return on assets.
No capital budgeting is required.
Lower Rentals
As the asset is not completely depreciated therefore it carries higher residual value, which
results in lower rentals for the user as the financial costs are significantly reduced.
Value added comforts
Operating lease can bundle together various services required with the asset such as
maintenance, operation, insurance and replacement of the asset in one value added
package.
Customizable
The package can be tailored for the requirements of your organization.
Resource allocation flexibility
Operating lease allows your business greater flexibility in terms of utilization of the
capital and insulates your business against the risk associated with capital investments.
Furthermore operating lease allows you to:
Complete solution as per user demand
Hedge against technological obsolescence and inflation
Asset without investment
Better utilization of tax benefits
Conservation of credit lines
Time to concentrate on core business
Take advantage of the lessors purchasing power

Historical success
In the recently closed financial year they got the historical success by achieving
disbursement of Rs.5 billion. The major reasons for this success were availability of
cheaper funds due to which they have low rates, they have offered new products in CFS
and operating lease, they start providing factoring services and they have exploit new
markets
Comparison with competitors
ORIX is providing diversified financial services to its customers. They are providing
corporate lease, auto lease, operating lease, consumer finance services, term finance
certificates and hire purchase.
They are providing much better rates in leasing as compared to their competitors because
cheaper funds are available to them. It is a multinational company and has a good
reputation in the financial market due to which they can get better funds in the local
money market.
They believe in providing personalized services to their customers. The person who
generates business he has to build good business relations with the customers. Similar
person deals with the customer from taking of the lease proposal to follow up so he is
building a long-term relation with a customer. Also ORIX is providing doorstep services
to its customers.
Critical Success Factors
Today OLP occupies a leading position in the leasing industry. The companys success
may be attributed to its:
Marketing expertise
Funding ability
Branch network
Technical ability based on the world wide experience of the ORIX group

FUTURE PLANS OF ORIX LEASING PAKISTAN LIMITED
Presently they have entered into a strategic alliance with United bank limited to introduce
leasing business in previously untapped areas. As per the scheme ORIX will establish its
counters in selected UBL branches in the cities where ORIX does not has its own offices.
In the first phase such 5 counters will be established in Rahim Yar Khan, Bahawalpur,
Sargodha, Sahiwal and Gujranwala. The operations will eventually be extended to other
locations.
Moreover ORIX plans to increase its business and profitability by introduction of new
products, expanding the operating lease and CFS business etc.

ORIX LEASING PAKISTAN LIMITED MULTAN
BRANCH
ORIX Leasing Pakistan Limited Multan Branch established in February 2001 on LMQ
Road Trust Plaza.
Multan Branch is offering three types of leasing.
1. Corporate Lease
2. Auto Lease
3. Hire Purchase
Corporate Lease
In this lease the asset is leased in the name of the Company. In Corporate lease they are
offering finance against these assets:
1. Automobiles
2. Machinery
3. Office equipment
In corporate lease there are two modes of leases:
1. Direct Lease
2. Sale and Lease back agreement
Direct lease is mostly of Automobiles and office equipment. In this case ORIX buys the
asset to be leased directly from the vendor and then leases it to the lessee.
In sale and lease back agreement they are giving mostly machinery. In this case ORIX
lease on the cost of the machinery custom duties are berried by the customer. So
customer purchase machinery himself and sell it to ORIX than from ORIX he leases it
back.

Equipment selection and price
In all cases, the lessee determines selection and price. Upon approval of a lease, ORIX
purchases the equipment to the lessees specification, and pays the vendor in full when
the equipment has been delivered and accepted by the lessee.
Payment
Rental payments are usually due in advance. A deposit is usually required at inception of
the lease contract. Lease can be structured on lessee requirement such as monthly or
quarterly payments, for advance or arrears payment, equal or uneven payment.
Length of lease
The minimum lease term is 3 years and this can be extended to five years depending on
lessees requirements
Expiration of lease
At the expiration of lease, several options are normally available to the lessee:
The equipment can be returned to ORIX
The lease can be renewed on a year-to-year basis at a greatly reduced annual cost
The lease may purchase the equipment at the residual value of the asset.
In corporate lease there is option that the asset either insured by ORIX or by the lessee.
The interest rate and the deposit rate in corporate lease are set by negotiation with the
lessee. The minimum down payment is 10%.

Auto Lease
Auto lease program was launched in January 1997 with all the cars dealers manufacturers
through their authorized dealers in order to market individuals falls under three categories
as follows:
1. Corporate Employee
2. Self-Employed Person (Professional)
3. Businessman
In auto lease brand new cars are leased to the individuals. Maximum leased period is 3 to
5 years. The insurance of the asset in this case is arranged by ORIX. Minimum down
payment is 20% and minimum interest rate charged is usually from 19% to 23%.
Hire Purchase
Hire Purchase is same as lease the only difference is lease period, which is less than 3
years. In higher purchase automobiles, household durable is given on installment,
Honda Easy Purchase Plan
ORIX Leasing Pakistan Limited on 2
nd
July 2001 launched Honda Easy Purchase Plan
with the cooperation of Atlas Honda in all eight cities where it has its branches.
They are offering Honda CD 70 and Honda CG 125 with a minimum down payment of
Rs. 25,000. Lease period is 1 to 3 years and this plan is offered to both salaried person
and businessman.

Departments in Multan Branch
There are two departments in the Multan Branch.
1. Credit and Marketing department
2. Accounts department
Credit and Marketing department
In credit and marketing department the designation of the working staff is credit and
marketing officer. At presently only one person is working in this department other three
persons are yet to be appointed.
Credit and marketing department is responsible for achieving assigned targets and in
developing business. Ensure recovery of over dues and maintenance of relevant records.
Principal activities of the department include:
Business Development:
Credit and marketing people strive to generate corporate clients for the company and
define strategies to retain them.
Target Accomplishment:
These people work as a team member to assist team leader in achieving the targets.
Follow Up:
They collect and follow up rentals in order to assist Rental department in their operations.
Reporting:
They prepare various reports and documents to submit them to concerned authorities for
further proceedings.
Credit Approval:
They coordinate with team leader for credit approval.
The people working in the credit and marketing department identify the customer need
for credit, carry out credit analysis, prepare detailed report on lessees financial position
and submit it to higher-ups for approval. Involve in searching and developing new clients
and manage good relationship with them. They try to contribute and meet targets as a part
of a team. Interact with Rentals department for daily rental updates. Responsible for
recovering rentals on due dates and overdue rentals as well. Prepare credit analysis report
of lessee, complete lease execution documents for credit approval and contract execution.
Submit lessees financial standing to top management for the credit approval.
Accounts department
The designation of the person working in accounts department is Assistant Accounts.
At this time only one person is working in this time. The main responsibilities of the
assistant account are as follows:
Cash and cheques holding and preparation of relevant registers and statements
Purchase of stationery for office use.
Makes statement of deposit.
Paper filling of contract and confidential files.
Dealing in other branch expenses such as telephone, electricity, courier service, petrol
and hotel bills payment.
Maintenance of contract papers.

HIERARCHICAL STRUCTURE OF ORIX LEASING PAKISTAN
LIMITED
Branch Manager


Credit &
Marketing
Assistant Finance
& AccountOfficer








Process of Lease
Process of lease consist of following steps:
Contact of customer for lease information
First of all the company in case of corporate lease or the individual in case of auto lease
contacted the ORIX for getting information about the lease options and terms. Marketing
and credit officer give this information to the customer. He gives them lease proposal in
which terms of lease are mentioned about their selected lease option. In other case
marketing and credit officer himself contacted the company or individual and give them
the lease proposal.
Approval of Lease proposal
If the company or individual accepts the terms and conditions of the lease proposal they
give the lease acceptance to ORIX.
Submission of the required documents by the customer
Marketing and credit officer ask customer to submit the required documents for getting
asset on lease which are as follows:
For an Employee
1. Copy of National Identity Card
2. Copy of recent Utility Bills (Residential) in his / her name
3. Copy of last six months Bank Statement
4. Copy of Ownership Documents or Rent Agreement of the residence
5. Original / Copy of recent Pay slip
6. A letter from employer confirming:-
Date of joining
Designation
Salary Package
For a Self-Employed Person (Professional), Like Doctors / Lawyer etc.
1. Copy of National Identity Card
2. Copy of Ownership Documents or Rent agreement of the residence
3. Any of the recent utility Bills (Residential)
4. Copy of Professional Degree
5. Copy of Membership Evidence in case the applicant is a member of any
professional organization
6. Financial statement (audited) or Management Accounts, If audited Financial
Statement are not available.
7. Copy of Last two years Tax Assessment Statements.
8. Copy of Last Six months Bank Statement
For a Businessman (I ndividual)
1. Copy of National Identity Card
2. Copy of Ownership Documents or Rent agreement of the residence
3. Any of the recent utility Bills (Residential)
4. Copy of Last two years Tax Assessment Statements.
5. Copy of Last Six months Bank Statement
6. Copy of Driving License
For a Business (Corporate)
1. Copy of National Identity Cards of all partners (if partnership)
2. Copy of Last two years Tax Assessment Statements.
3. Copy of last three years audited accounts (Balance Sheet, Profit & Loss Account)
4. Copy of Last Six months Bank Statement
5. Copy of Form 29
6. Copy of Form A
7. Copy of Certificate of Incorporation
8. Copy of Ownership Documents or Rent agreement
For Honda Easy Purchase Plan these documents are required
1. Copy of individuals NIC
2. Copy of driving license
3. Copy of last six months paid utility bills
4. Two fresh snaps
5. Copy of NIC of two guarantors
6. Copy of last six months bank statements
7. For salaried persons copy of their appointment letter and salary certificate.
8. For businessmen copy of tax return of their last assessment.
9. Bank managers certificate.
10. If the business is on rent then their deed of rent or ownership documents.
Analysis of the credit worthiness of the customers
After the submission of the documents by the customer credit worthiness of the
customers is evaluated for giving them asset on lease.
Individuals (employee) credit worthiness is evaluated from their salary slip and bank
statements. From these documents they come to know the monthly income of the
customer and deposited amount in the bank account.
Individuals (businessman) credit worthiness is evaluated from the bank statements they
gave from the bank statements they done the volume test to calculate their monthly
average revenue. Also marketing and credit officer personally visited the customers
business place to verify the information provided by the customer.
Corporate customers credit worthiness is evaluated from the financial information
provided by them. From their financial statements (balance sheet, income statements etc;)
ratios analysis are conducted to measure the financial strength of their business.
Approval of the lease from ORIX
Credit limit, which can approve by different persons, is as follows:
Designation Credit Limit
Assistant Manager 500,000
Manager 1.5 million
SR. Manager 2.5 million
A.G.M 3.5 million
Director marketing 5 million
Managing director 10 million
Executive committee 30 million
Board of Directors Above 30 million
Final procedures
After approval of the lease legal documents are prepared and signed by the lessee and
lesser. Deposit is taken from the lessee and purchase order is issued to the vendor in case
of direct lease. In case of sale and lease back first vendor issue sale invoice and cash
receipt to the lessee, lessee gave these documents to ORIX and issue sale invoice to
ORIX. ORIX then issue purchase order to lessee and leased the purchased asset to lessee.
After this lessee rentals are started which can be in advance or in arrear.
In corporate lease two types of files are prepared
1. Approval file
2. Payment file
Approval file
In approval file documents relating to credit evaluation and are kept.
Lease Application Form
Summary lease report
Annual Reports
Lessee information sheet
Volume test
Bank statements
Tax Returns
Property documents
Purchase certificate
Checklist for lessee
Payment file
In payment file all legal documents are kept such as lease contract, promissory note,
acceptance receipt, undertaking indemnity for the use of the asset, for import, taxes,
duties and other charges, for insurance premium, also it include guarantee and indemnity,
execution slip, all rental receipts and all other memos related to the leased asset. In case
of auto lease there is only payment file and all document are kept in it.

FUTURE PLANS OF ORIX LEASING PAKISTAN
LIMITED MULTAN BRANCH
In future they want to offer more lease options to its customers such as they want to offer
operating lease and consumer finance services. For operating lease they intended to target
textile sector in which they plan to provide power generators on lease there is a much
potential in this sector. Also they plan to target pharmaceutical sector because lots of
hospitals are establishing in the surrounding areas of Multan so they wanted to provide
medical machinery on lease to them also they wanted to target doctors market for
automobile lease which is presently dominated by Al-Falah financing.
They want to provide consumer finance services to multinational companies in this area
such as PARCO and CAPCO. They want to make contracts with them that ORIX will
provide household appliances, automobiles etc on lease to their employees and the
company will deduct rental form the salary of their employees and paid it to ORIX.
Also Multan Branch always wants to remain ahead of their annual business targets set by
the company. Multan office also planning to expand operation geographically to the
surrounding areas i.e R.Y.K, Bahawalpur and other cities.