Professional Documents
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Pro.Kashif Ali
Submitted
By
Hammad, Nazir, Umer
Mubarik, Adnan
Tijara
Case
Meezan Tijarah is a Finished Goods financing facility for Customers to sell Finished Goods on Credit basis.
The facility will enable the Customers to sell their Finished Goods stock, meet their working capital
requirements and enjoy the benefits of Cash sales.
Under this concept the Bank will purchase the finished goods of the Customers and will appoint the
Customer as its agent to sell the same goods in the market generally on Credit basis.
It is necessary for the validity of Finished Goods transaction that the price is fixed with the consent of the
parties and that the necessary specification of the required items is fully settled between them. The Finished
Goods price is ideally paid on Spot with immediate delivery of Goods.
Finished Goods product can be easily utilized to facilitate payment of wages, overheads etc. in addition to
raw materials. Hence, this product provides flexibility for the benefit of the Customers who deal with ready-
to-sell items and have always demanded some facility to finance overheads, which may constitute a
substantial portion of the production cost. It is also to be clarified that amount paid out as Finished Goods
price to the Customer can be used by him anywhere he deems fit. (source: Meezan Bank website)
Case Background
M/s PKN Electroplating Chemicals is a family owned Pvt. Ltd. concern. Companys principal activity is
trading and import of Nickel Concentrated Chemicals, polishing material and industrial chemicals for trading
& industrial use. They act as sole distributor of M/s INCO Europe Ltd., which is worldwide largest producer
of Nickel Metal and its salts. In order to meet high demand, the client imports above-mentioned items from
nearly all parts of the world. They sell their products on cash and credit. Suggest a proper process Flow to
execute Tijarah Transactions for Nickel Plates/Sheets, Nicle Sulphate, Nicle Chloride, Boric Acid, Chromic
Acid, Sodium Cyanide, and other chemicals etc. Following are the details of this transaction:
Repayment schedule:
The case requires single payment at Maturity date: of October 10, 2015
The payment by the bank on January 10, 2015 is PKR 10 million
Profit amount is PKR 702,740/- (which makes @ 9.5% p.a. and on 240/365 days)
Net amount payable to the bank comes to 10,702,740 + 10,000 = PKR. 10,712,740/=