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WELCOME TO OUR PRESENTATION

Lease financing of uttara finance & investments ltd

Company OverviewUttara Finance and Investments Limited has been in business since 1995. It got listed in the stock exchange during 1997. It is honored as the only listed Financial Institution in DSE20. Its CAMEL rating by Bangladesh Bank is strong with A+ rating by CRISIL.Currently, it enjoys credit rating of BBB which ensures high security of investment so enjoys credit, bridge finance and standby facility for World Bank funded projects.It was awarded with first position by ICMAB National Best Corporate in 2007.

Uttara Finance and Investments Limited is the member of almost all leading Business Associations like:BLFCA (Bangladesh Leasing and Finance Companies Association)ALFCA ( Asian Leasing and Finance Companies Association)BAPLC ( Bangladesh Association of Public Listed Companies) ICC ( International Chamber of Commerce Bangladesh)FICCI ( Foreign Investors Chamber of Commerce and Industry)DCCI (Dhaka Chamber of Commerce and Industry)

Uttara Finance has performed excellently in last five years. It is reflected in its EPS which stands above 10. Reputation and Goodwill in business plays an important role for the success of a company and if it is a financial institute, it plays a prima fascia role. With transparent management policy, flexible products, motivated employees and a vision to become big has planted a seed for Uttara finance to be a leading finance company in Bangladesh shortly.Uttara Finance provides financing facility to variety of customers and it has designed its lending portfolio based on socio-economic concerns. It provides Lease Finance to industry for acquiring capital assets.It gives short term to mid term loans for fulfilling working capital requirements of industry.For selective clients it provides bridge finance to fulfill their equity shortfall.Lending Procedure

Apart from Business and Industry, for individuals with high income (above BDT 50,000 per month) it imparts home loan. To fulfill urgent financial obligation it has the facility of Personal Loans for individuals. SCHEMESIts investment portfolio is at the evolution stage.Individual investors deposit schemes=12-36 monthsbusiness houses schemes= 6-36 months.Merchant Banking Unit basket has Portfolio Management, Mutual Funds, Bridge Financing, Individual Investor Account etc.Zero Down Payment Scheme for purchasing vehicles.For small and medium enterprises, schemes by Bangladesh bank. Lease ProcedureLeaseClient EvaluationFinancing Evaluation

Client Evaluation

Financial Evaluation

Accounting Aspects of Lease FinancingDirect Pricing refers to the construction cost or purchase prices found in the catalogs, vendor quotations or engineering estimates.Indexing refers to the application of appropriate indices to the historical cost of the equipment.

In case of furniture and fixturesFair value is determined by the following methods.

Accounting Aspects of Lease Financing

Residual ValueThe residual value is of importance to the Uttara Finance because the lessor records as part of its gross investment in the lease the estimated residual value accruing to its benefit.Residual value is called Transfer Price in Uttara Finance. Transfer Price is determined at the inception of the lease to avoid any future uncertainties. Transfer Price is 1% of the acquisition cost.In some circumstances, it may be appropriate to estimate the residual value by applying a ratio of the economic life remaining at the end of the lease term tothe total economic life times the estimated fair value at the inception of the lease.For example: the fair value of the leased asset is 10,00,000 BDT, economic life is 5 years and the lease term ends in 4 years then the residual value, RV= 10,00,000 * 1/5 = 200,0002. Business Purpose:1. Lack of Equity Interest:Tax Effects of Sale and LeasebackSale & leaseback bring with them some tax advantages. If the transfer of the asset is made solely to avoid taxes then the transfer will not be recognized. There have been two criteria employed in making this determination.The keeping of reversionary interest has been construed to represent an equity interest and has led to the disallowance of a deduction for rent paid to a trust.This is an area where the reasonableness of the rent paid will be considered in determining whether there was a legitimate business transaction.Tax Rate: 42.5 on total profit

The leasing market is becoming more competitive because of the new leasing companies are entering the market. However, There are still leasing companies are doing well.

The political stability and overall economic development is an essential precondition of the smooth growth of this sector. If we can ensure these two preconditions, the leasing sector of Bangladesh would be able to perform a strong role in our industrial development.Conclusion