PROJECT APPRAISAL AND FINANCE

PROJECT

SUBMITTED BY:

NAMES ROLL NO.

SIDRA NAEEM L4F17MCOM0059
AQSA AMANAT L4F17MCOM0036
HUMA IFTIKHAR L4F17MCOM0037
IQRA ARIF L4F17MCOM0138
ABDULLAH NAEEM L4F17MCOM0088
USAMA WAHED L4F17MCOM0120
HAMZA AKRAM L4F17MCOM0100

SECTION: MB4

SUBMITTED TO: PROF.ASIM

DATE: 2 July,2019.
LEASE

A lease is an agreement giving to another party the right to use an asset for a specified period in
exchange for a periodic payment referred to as the rent or lease payment. The party who owns
the asset is the lessor, the party granted the right to use it is the lessee.

Leasing an asset is often an alternative to purchasing it. But there is difference between leasing
and buying: a firm buying an asset can finance it using debt, or some mix of both. A firm leasing
that same asset essentially financing it with debt. The difference affects how we analyze a
decision to buy or to lease.

VALUING OF LEASING

Investment proposal with a positive NPV are attractive and maybe made even more attractive by
an economically beneficial leasing agreement. An unattractive investment proposal may be
turned into an attractive investment proposal. If the combine NPV under normal financing and
the NPV of the leasing agreement is greater than zero.

A lease is an agreement whereby the lessor (owner of property) allows the lessee use of the
property in exchange for lease payments. Operating leases give the lessee the use of property
without ownership. Operating leases are sometimes used to initiate off-balance-sheet financing
of assets. Capital or Financing leases transfer ownership from lessor to lessee. Under capital
leases, the lessee will record the asset at the present value of lease payments not to exceed the
fair market value of the asset.
NAME OF THE BANK :

The bank that we have selected is: MCB BANK LIMITED

INTRODUCTION :

MCB Bank Limited, is one of the oldest and leading banks in Pakistan. It was incorporated on
July 9 in 1947. MCB Bank was nationalized along with other private banks in 1974 as part of
Government of Pakistan's economic reform movement and was later privatized in 1991. The
Bank has journeyed a remarkable tenure of more than half a century of competitively edged and
well positioned heights of success by deploying quality banking, heads on technological
developments, professionally leading management and prudent and ethical work methodologies.

MCB Bank in one of the largest foreign banks in Sri Lanka; the first bank in Pakistan to launch
Global Depository Receipts (GDR) in 2006 and has strategic foreign partnership with May bank
of Malaysia which holds 20% shares in MCB Bank through its wholly owned subsidiary May
bank International Trust (Labuan) Berhad since 2008.

The Bank is versed as one of the oldest and most responsible Banks in Pakistan and has played
pivotal role in representing the country on global platforms while being one of the few
institutions that are recognized and traded in the international market.

MCB Bank is actively involved in various CSR activities as well and constantly strives to
contribute towards the country’s betterment. It has played a key role in enhancing the role and
value of service and technology in the banking industry through its customer centric objectives.
The Bank has also been acknowledged though prestigious recognition and awards by Euro
money, World Finance, MMT, Asia Money, SAFA (SAARC), The Asset Triple A, Finance Asia,
NFEH, CFA, Pakistan Centre of Philanthropy and The Asian Banker.

MCB bank
In year 2005, the name of the bank was changed from "Muslim Commercial Bank Limited" to
"MCB Bank Limited". This need was felt because the bank was already known and popular as
"MCB" among its clients and the public, and most people would refer it to as MCB instead of its
full name.

INFORMATION ABOUT MCB

MCB Bank Limited, is one of the oldest and leading banks in Pakistan. It was incorporated on
July 9 in 1947. MCB Bank was nationalized along with other private banks in 1974 as part of
Government of Pakistan's economic reform movement and was later privatized in 1991. The
Bank has journeyed a remarkable tenure of more than half a century of competitively edged and
well positioned heights of success by deploying quality banking, heads on technological
developments, professionally leading management and prudent and ethical work methodologies.

MCB Bank in one of the largest foreign banks in Sri Lanka; the first bank in Pakistan to launch
Global Depository Receipts (GDR) in 2006 and has strategic foreign partnership with May bank
of Malaysia which holds 20% shares in MCB Bank through its wholly owned subsidiary Maybe
International Trust (Labuan) Berhad since 2008.

Industry classification

It is a commercial bank

BUSINESS ACTIVITES
MCB Bank limited is a Pakistan based company . The bank operates in four business
segments:

 Corporate financing
 Trading and sales
 Retail and consumer banking
 Commercial banking

Corporate financing

Corporate finance includes underwriting, securitization, investment banking, syndications;

initial public offerings(IPO) related activities (excluding investment) and secondary private
placement
Trading and sales

Trading and sales segment includes fixed income , equity, foreign exchange commodities,
lending and deposit banking services and retail offered to its retail customers and small and
medium enterprises

Commercial banking

Commercial banking segment includes project finance , export finance , trade finance, leasing ,
lending , guarantees and bills of exchange relating to its corporate customers. Islamic banking

PRIMARY SERVICES:

Project & Structured Finance

Involves financing complex projects, usually in an SPV structure, where the loan is tightly
structured around the cash flows, risks are allocated amongst various stakeholders, and there is
limited or no recourse to the sponsors.

Syndicated Loans and Debt Capital Markets

Involves structuring/advisory arrangement, underwriting and placement services for significant

financing requirements by large and medium sized corporate and institutional clients. Our wide
array of activities also includes financial restructuring of corporate, issuance of commercial
paper, placement of syndicated loans and bonds.

Quasi Equity / Hybrid Instruments

Structuring and placement of a category of debt that has some characteristics of equity such as
being unsecured or subordinated or with a potential equity upside.

Equity Capital Raising

Services include due diligence and valuation, private placements, underwriting and management
of public offers.

Advisory Services
Varied services such as financial advisory, commercial structuring support and M&A advisory.

Facility Administration

Management of creditor interests in syndicated transactions in capacities such as facility agent,

security trustee, project monitoring bank, book-runner etc.

Commercial Banking

Complementary products and services such as revolving lines of credit, trade services and cash
management that may be bundled with our Investment Banking Products.

ADDRESS OF COMPANY WEBSITE:

The address of MCB bank’s website is:

www.mcb.com.pk

ADDRESS OF COMPANY’S PRINCIPAL OFFICE:

MCB Building, 15 - Main Gulberg, Jail Road, Lahore, Pakistan

UAN: +92 42 111000111

COUNTRIES IN WHICH COMPANY OPERATES:

MCB Bank is versed as one of the oldest and most responsible Banks in Pakistan and has played
pivotal role in representing the country on global platforms while being one of the few
institutions that are recognized and traded in the international market. MCB bank operates in
Bahrain, Pakistan, Sri Lanka, and U.A.E.

COMPANY REVENUE:

MCB bank becomes Pakistan’s most profitable private bank in 2018. MCB bank has recorded a
profit of Rs.21.36 billion in 2018, which is the highest profit so far among the private banks of
Pakistan, and most likely the second highest in overall banking industry.

Earnings per share for the year ended December 31, 2018 was Rs 18.02 as compared to Rs 19.5
for 2017.
COMPANY CEO

Mr. Imran Maqbool serves as President & Chief Executive Officer of MCB Bank Limited. He
is a seasoned professional with over three decades of diverse, international banking experience.
Prior to his current role, he was the Head of Commercial Branch Banking Group, where he
successfully managed the largest group of the Bank in terms of market diversity, size of the
workforce, number of branches, on a countrywide basis and diversified spectrum of products.
His earlier, multi-faceted assignments included heading Wholesale Banking Group–North,
Special Assets Management and Islamic Banking. He was also posted as Country Head, MCB
Sri Lanka. Before joining MCB Bank in 2002, Mr. Maqbool was associated with local banking
operations of Bank of America and Citi Bank for over seventeen years where he worked in
various senior management roles in respective banks. Mr. Maqbool holds an MBA degree from
the Institute of Business Administration (IBA-Karachi) as well as an MS in Management from
the renowned Sloan School of Management (Massachusetts Institute of Technology) in the USA.

CHAIRMAN OF THE COMPANY:

Mian Mohammad Mansha started his career at the age of 24 as the CEO for Nishat Mills Ltd.
At present, the business group is one of the leading and most diversified in SouthEast Asia,
having presence in Textile, Cement, Insurance, Banking, Financial Services, Power Generation,
Hotel &Hospitality, Dairy, Paper Products, Retail Commerce, Real Estate, Agriculture, Aviation
and Automotive sectors. It operates in various countries across the globe including SiriLanka,
Azerbaijan, UAE, USA, Hong Kong and Bahrain. The Nishat Group is one of the largest private
sector employers, exporters and tax contributors in Pakistan.
Mr. Mansha has served as Chairman of MCB Bank, after its privatization, from 1991 to mid-
1995 and then from 1997 till date. Presently, he is also a member of the Board’s Human
Resource & Remuneration Committee, at MCB Bank Limited.

In the past he has lent personal support to Shaukat Khanum Memorial Trust, Lahore Hospital
Welfare Society, Mind Organization, Human Rights Society of Pakistan, Kidney Care Centre,
The Citizens Foundation, Friends of Pakistan Institute of Cardiology Trust, Care Foundation,
SOS Village, Lahore Model School Sant Nagar, Aziz Jahan Trust for the Blind and Altaf
Mehmood Foundation among many others.He was presented with Pakistan’s Civil Award, the
Sitara -e-Imtiaz, for his contributions to industrial development, in 2004.

STOCK EXCHANGE OF COMPANY:

The stocks of MCB Bank is traded by Pakistan Stock Exchange (PSX).

TICKER SYMBOL OF COMPANY:

 The MCB Bank common stock is listed on the PAKISTAN STOCK EXCHANGE under
the ticker symbol: PSX-MCB

PRICE OF COMPANY’s STOCK:

Price of company is Rs 174.45

ANALYSIS OF CAMPANY:

To analyze the company and its performance about leasing is that the MCB bank provide a
service MCB Car4U, provides a one-stop financing solution to help you own a car of your
dreams. Whether you are a salaried professional or a self-employed businessman, MCB Car4U
has a complete solution for you. In addition, MCB offers a specially designed Car4U product for
agriculturists as well as landlords. All MCB account holders who receive overseas remittances
regularly from any closely related family member are also eligible to apply for a Car4U finance
facility. MCB Car4U offers competitive rates for all car variants and tenors. Enjoy even a lower
mark-up rate if you are already a MCB Bank customer.
COMPANY OPERATIONS:

MCB bank offers MCB car financing solution through its MCB Car4u product. This simple
financing solution from MCB has created to offer you the chance to own your own car. It is a
product that is suitable for both salaried professionals and self employed individuals, providing a
one stop for all. There is also a special product available for agriculturists and landlords

IMPROVEMENT OF COMPANY PERFORMANCE:

If you choose to apply for MCB Car Loan, you will benefit from different levels of financing
depending on the vehicle you plan to purchase such as a new or used vehicle. The payment of the
loan can be spread over anything from one to seven years, making finance affordable, while it is
available up to certain percentage of the value of the car. The rate you pay will be determined by
the length of time you take the loan over. So the rate is lower for the one to five years and higher
for six to seven years.

VALUATION

Valuation is the analytical process of determining the current (or projected) worth of an asset or a
company. There are many techniques used for doing a valuation

Valuation=D0(1+g)/Ks-g

Where:

Do=Dividend per share

G= Growth rate

KS 10%cost of capital

We have taken the values from the annual report

=15999190(1+34%)/10%-34%

=89328810.83