An Eye On The Future!

The second half of the year under review - my first six months as the President and CEO of Escorts Investment Bank - has been demanding but extremely rewarding. Demanding because, the bank required urgent Repositioning for Growth. Rewarding because I have received substantial goodwill from sponsors, colleagues, and customers as we together set Escorts on the path to progress and growth. A candid SWOT Analysis of the Bank revealed a fundamentally sound Bank, with a number of strengths, but a track record of persistent under-performance.

Immediately after my appointment in November 2001, we launched a comprehensive strategy review to determine the best option for creating shareholder value and achieving returns that compare favorably with those of our peers. We collected and analyzed data on our market, competitors, business opportunities and historic performance. Our review confirmed the imperative for focus. We must concentrate our efforts on those business activities that have the best growth potential and where our strengths can be built into a competitive edge. We then tested a number of strategic alternatives for their fit with the ground realities, their potential for rapid recovery and their ability to deliver the overriding requirement of enhanced shareholder value.

With An Eye On The Future, we launched an all out bold initiative starting with a redefining of our Statement of Objectives as:

" Value addition for our Shareholders through enhanced business activity and
a shift from risk avoidance to proactive Risk Identification and improved Risk Management."

Accordingly the Board of Directors approved a Road Map that, in our collective judgment, marked the shortest, safest and the surest route to the desired goal.

Let us review some of the key strategic and operational measures we have implemented over the last few months:

Proactive Marketing

A proactive Resource Mobilization Campaign was launched at Lahore, Karachi and Islamabad. As a result, the Total Deposits of our bank increased from Rs.281 Million, as at December 31, 2001 to Rs.762 million, as at June 30, 2002, depicting an increase of 160 % in six months. The FY on FY increase is Rs. 417 Million i.e. 132 %.

Optimizing Business Mix for enhanced Profitability

A number of new business activities were initiated to diversify the Product and Earning Mix of the Bank, with substantial impact on our profitability. The success of the "New Strategy" is amply reflected in the Financial Highlights as appended below :

Financial Highlights

Recognizing Treasury as a major driver for Value Addition

Treasury Operations were relocated and centralized, at Karachi, and enhanced to include new and innovative products, with excellent results.

Fresh Credit Lines

Fresh credit lines were secured from a number of Financial Institutions, which is a reflection of enhanced brand recognition and visibility in the market.

Reengineering Work Processes for Time Efficiency

Work processes were reengineered and positive interventions wherever necessary were made to ensure maximum time efficiency.

Good Corporate Governance

Internal Controls have been reinforced to ensure Good Corporate Governance
and adherence to highest Professional and Ethical Standards. Investor confidence rests on three factors viz. Corporate Governance, transparent, accurate and timely Financial Information and a System of checks and balances. Capital Formation is encouraged only by maintaining trust in each of these. We have a strong independent Board and a professional Executive Management with a disciplined focus on what is in shareholders' interest. Furthermore, Audit Committee of the Board now has the Head of Internal Audit reporting directly to the Committee.

Deployment of Quality Human Resource

Major changes were made in the Senior Management Team. From my perspective

What we do is important…. but not as important as, how we do it!

I have always believed and said that

Together Vision and Skills can make the difference… Policies won't work unless
the team does!

People tend to do what they are good at. That's precisely the reason why today, Arshad I. Khan has transformed our Treasury into a roaring engine of growth and profitability; Our Finances are looking good under the efficient and meticulous
control of Shauzab Ali, our CFO; Saqib Ahmad's Marketing efforts have yielded
unprecedented results; under Azmat Baig our Operations are providing flawless services to our customers; Mustapha Aaref and Malik Suleman Hasan have made
our presence felt at Islamabad and our Executive Director Shazia Bashir, in addition to numerous other value additions, steadfastly ensures that our organization remains frugal, by holding the lid tight on our expenses.

Each one of my colleagues does his or her job better than I could ever do. Any success that can be ascribed to me, for the improvement in results under review, comes from the very fine quality of these professionals I have been able to
motivate to work so diligently and selflessly for our bank.

Let's place the credit where it is due - under the name of each and every member
of my team.

Future Outlook

Moving forward, the outlook for Escorts Investment Bank Limited remains very positive.

We are determined to diligently and meticulously pursue the aforementioned strategy. We are conscious of the fact that the ability to compete effectively in the future will demand even greater efficiencies within our business operation and a reduction in the cost base. We also intend to enhance our Capital Base through a well-planned series of Mergers and Acquisitions. Towards this end a Memorandum
of Understanding has already been signed with a Leasing Company and the
Scheme of Arrangements for the merger of said company into Escorts Investment Bank Limited is swiftly taking shape. The proposed Merger, subject to the approval
of the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan and the Honorable High Court, would generate significant synergies for addition to share holder's value of both the companies.
With a view to further widen the spectrum of services being provided to our customers, the process of acquisition of a seat at the Lahore Stock Exchange and Associate Membership of Islamabad Stock Exchange has already been initiated.

We also foresee a very positive impact of the Financial Sector Reforms initiated by the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan, aimed at reducing segmentation of the financial markets, introducing competition in the financial sector, strengthening capital base of financial institutions and switching over to indirect, market based and relatively more efficient monetary policy. Stock Market Reforms and measures ensuring good Corporate Governance and Corporate Transparency are also very well tailored and appropriately timed. We consider this set of reforms as the right step towards creation of an enabling environment. The marked improvement in the country's Foreign Exchange Reserves, stabilization of
the $/Rupee parity and the rationalization of the interest rates, are all pointers towards a better and even playing field for progressive institutions like our Bank.

Sincerely,

Rashid Mansur
President & CEO

September 26, 2002
Lahore