Shariah Methodology - Al Meezan Investment Management Limited
Al Meezan Investments

Shariah Methodology

At Al Meezan, we are dedicated to providing Shariah compliant investment solutions. In this regard we adhere to the Shariah guidelines as advised by the Shariah Board. The investments are limited to asset classes approved by the Shariah Advisor and all companies under investment consideration are regularly screened for Shariah compliance.

Shariah Screening Criteria (for equity securities)

Shariah compliance of stocks is done under the guidance of qualified and reputed Shariah experts. For stocks to be “Shariah compliant”, it must meet ALL the six key tests given below.

Business of the Investee Company

Core business of the company must be halal and in line with the dictates of Shariah. Hence, investment in securities of any company dealing in conventional banking, conventional insurance, alcoholic drinks, tobacco, pork production, arms manufacturing, pornography or related activities is not permissible.

Debt to Total Assets

Debt to Asset ratio should be less than 37%. Debt, in this case, is classified as any interest bearing debts. Zero coupon bonds and preference shares are, both, by definition, part of debt.

Non-Compliant Investments to Total Assets

The ratio of non compliant investments to total assets should be less than 33%. Investment in any non-compliant security shall be included for the calculation of this ratio.

Non-Compliant Income to Total revenue – Purification of Non-compliant income

The ratio of non compliant income to total revenue should be less than 5%. Total revenue includes Gross revenue plus any other income earned by the company. This amount is cleansed out as charity as a pro rata ratio of dividends issued by the company.

Illiquid Assets to Total Assets

The ratio of illiquid assets to total assets should be at least 25%. Illiquid asset, here, is defined as any asset that that Shariah permits to be traded at value other than the par.

Net Liquid Assets to Share Price

The market price per share should be greater than the net liquid assets per share calculated as: (Total Assets – Illiquid Assets – Total Liabilities) divided by number of shares.

COMPANIES FOR KMI-30 INDEX RECOMPOSITION BASED ON ACCOUNTS FOR JUNE 2020

Sr. # Ticker Company Status Charity Rate
1 AABS Al-Abbas Sugar Mills Ltd * Compliant1 1.09%
2 ABOT Abbott Lab (Pakistan) Ltd * Compliant 1.00%
3 ACPL Attock Cement Pakistan Ltd Compliant 0.07%
4 AGIL Agriauto Industries Ltd Compliant 0.77%
5 AGL Agritech Limited Non-Compliant3 0.27%
6 AGP AGP Limited * Compliant 0.16%
7 AGSML Abdullah Shah Ghazi Sugar Mills * Compliant1 0.00%
8 AGTL Al-Ghazi Tractors Ltd * Compliant 0.16%
9 AHCL Arif Habib Corporation Ltd Non-Compliant 16.44%
10 AKZO Akzo Nobel Pakistan Compliant3 1.50%
11 ANL Azgard Nine Ltd Non-Compliant 0.79%
12 APL Attock Petroleum Ltd Compliant 0.93%
13 ARPL Archroma Pakistan Ltd * Compliant1 0.00%
14 ASC Al Shaheer Corporation Ltd Compliant3 0.00%
15 ASL Aisha Steel Ltd Non-Compliant 0.05%
16 ASTL Amreli Steels Ltd Non-Compliant 0.01%
17 ATBA Atlas Battery Ltd Compliant 0.09%
18 PREMA At-Tahur Limited Compliant 0.23%
19 ATRL Attock Refinery Ltd Compliant 1.46%
20 AVN Avanceon Limited * Non-Compliant 0.53%
21 BATA Bata (Pakistan) Ltd * Compliant 0.27%
22 BCL Bolan Castings Ltd Non-Compliant 0.06%
23 BGL Balochistan Glass Ltd Non-Compliant 0.03%
24 BIFO Biafo Industries Ltd Compliant 2.05%
25 MEBL Meezan Bank Limited * Compliant N/A
26 BIPL BankIslami Pakistan Ltd. * Compliant ** N/A
27 BWCL Bestway Cement Ltd Compliant 2.55%
28 BYCO Byco Petroleum Pakistan Ltd Non-Compliant 0.54%
29 CEPB Century Paper & Board Mills Compliant 0.05%
30 CHCC Cherat Cement Co. Ltd Compliant 0.08%
31 CLOV Clover Pakistan Ltd Compliant3 4.44%
32 CPPL Cherat Packaging Ltd Compliant 0.01%
33 CRTM Crescent Textile Mills Ltd Non-Compliant 0.48%
34 CSAP Crescent Steel & Allied Products Non-Compliant 7.70%
35 CTM Colony Textile Mills Ltd Non-Compliant 1.30%
36 CWSM Chakwal Spinning Mills Ltd Non-Compliant3 0.00%
37 CYAN Cyan Limited NC by Nature  
38 DAWH Dawood Hercules Corporation * Non-Compliant 5.90%
39 DCL Dewan Cement Ltd Compliant 0.02%
40 DCR Dolmen City REIT Compliant 0.00%
41 DFSM Dewan Farooq Spinning Mills Ltd Compliant 0.00%
42 DGKC D.G. Khan Cement Co. Ltd Compliant 3.18%
43 DOL Descon Oxychem Ltd Compliant 0.17%
44 DSIL DS Industries Ltd Compliant 0.03%
45 DYNO Dynea Pakistan Ltd Compliant 0.10%
46 ECOP EcoPack Ltd Non-Compliant 0.00%
47 EFERT Engro Fertilizers Ltd * Compliant 1.19%
48 FCEPL Frieslandcampins Engro Foods Limited * Non-Compliant 0.09%
49 ENGRO * Engro Corporation Ltd ***** Compliant 5.43%
50 EPCL Engro Polymer & Chemicals * Compliant 3.98%
51 EPQL Engro Powergen Qadirpur Ltd *** No Opinion 0.88%
52 EXIDE Exide Pakistan Ltd Compliant1 0.03%
53 FATIMA Fatima Fertilizer Co. Ltd * Compliant 3.36%
54 FCCL Fauji Cement Co. Ltd Compliant 0.18%
55 FECTC Fecto Cement Ltd Compliant 0.69%
56 FEROZ Ferozsons Laboratories Ltd Compliant 1.37%
57 FFBL Fauji Fertilizer Bin Qasim Ltd * Non-Compliant 3.73%
58 FFC Fauji Fertilizer Company Ltd * Non-Compliant 5.89%
59 FFL Fauji Foods Ltd * Non-Compliant 0.84%
60 FLYNG Flying Cement Co. Ltd Compliant 0.00%
61 FML Feroze1888 Mills Ltd Compliant 0.19%
62 GAIL Ghani Automobile Industries Ltd Compliant 0.11%
63 GATM Gul Ahmed Textile Mills Ltd Non-Compliant 0.03%
64 GGGL Ghani Global Glass Ltd Compliant 0.11%
65 GGL Ghani Global Holdings Limited  Compliant 0.07%
66 GHGL Ghani Glass Ltd Compliant 0.00%
67 GHNI Ghandhara Industries Ltd Compliant 0.02%
68 GHNL Ghandhara Nissan Ltd Compliant 1.39%
69 GLAXO GlaxoSmithKline Pakistan * Compliant 0.82%
70 GSKCH Glaxo SmithKline Consumer Healthcare * Compliant 0.21%
71 GTYR General Tyre & Rubber Co. Non-Compliant 0.01%
72 GVGL Ghani Value Glass Ltd Compliant 0.28%
73 GWLC Gharibwal Cement Ltd Compliant 2.35%
74 HABSM Habib Sugar Mills Ltd * Compliant1 4.53%
75 HASCOL Hascol Petroleum Ltd Non-Compliant3 0.21%
76 HCAR Honda Atlas Cars (Pakistan) Ltd Compliant1 0.37%
77 HINOON Highnoon Laboratories Ltd * Compliant 0.58%
78 HSM Husein Sugar Mills Ltd * Compliant1 0.00%
79 HTL Hi-Tech Lubricants Ltd Compliant 1.10%
80 HUBC Hub Power Company Ltd Non-Compliant 7.58%
81 IBLHL IBL HealthCare Ltd Compliant 0.93%
82 ICI ICI Pakistan Ltd Compliant 0.07%
83 ICL Ittehad Chemicals Ltd Compliant 0.00%
84 INDU Indus Motor Company Ltd Non-Compliant 2.60%
85 INIL International Industries Ltd Compliant 0.01%
86 ISL International Steels Ltd Compliant 0.01%
87 ITTEFAQ Ittefaq Iron Industries Compliant 0.10%
88 KAPCO Kot Addu Power Company Non-Compliant 12.92%
89 KEL K-Electric Ltd Compliant 0.87%
90 KOHC Kohat Cement Co. Ltd Compliant 0.07%
91 KOIL Kohinoor Industries Ltd Compliant 2.31%
92 KOSM Kohinoor Spinning Mills Ltd Non-Compliant 0.00%
93 KTML Kohinoor Textile Mills Ltd Compliant 0.33%
94 LOADS Loads Limited Non-Compliant 0.31%
95 LOTCHEM Lotte Chemical Pakistan Ltd * Non-Compliant 2.97%
96 LPL Lalpir Power Ltd * Non-Compliant 0.43%
97 LUCK Lucky Cement Ltd Compliant 1.33%
98 MARI Mari Petroleum Co. Ltd Compliant 2.71%
99 MDTL Media Times Ltd Non-Compliant N/A
100 MERIT Merit Packaging Ltd Non-Compliant 0.11%
101 MFL Matco Foods Ltd Non-Compliant 0.17%
102 MLCF Maple Leaf Cement Factory Compliant 0.05%
103 MTL Millat Tractors Ltd Compliant 0.30%
104 MUGHAL Mughal Iron & Steel Industries Compliant 0.15%
105 NATF National Foods Ltd Compliant 0.02%
106 NCL Nishat (Chunian) Ltd Non-Compliant 0.07%
107 NCPL Nishat Chunian Power Ltd Non-Compliant 14.61%
108 NETSOL NetSol Technologies Ltd Compliant 3.61%
109 NML Nishat Mills Ltd Compliant 3.66%
110 NPL Nishat Power Limited Non-Compliant 16.39%
111 NRL National Refinery Ltd Compliant 0.04%
112 NRSL Nimir Resins Ltd Compliant 0.00%
113 OGDC Oil & Gas Development Co. Ltd **** Compliant 6.05%
114 PACE Pace (Pakistan) Ltd Non-Compliant 0.47%
115 PAEL Pak Elektron Ltd * Compliant 0.02%
116 PAKOXY Pakistan Oxygen Limited * Compliant 0.00%
117 PIBTL Pakistan International Bulk Terminal Ltd Non-Compliant 0.85%
118 PICT Pakistan International Container Terminal * Compliant 1.70%
119 PIOC Pioneer Cement Ltd Non-Compliant 0.18%
120 PKGP Pakgen Power Ltd Non-Compliant 0.71%
121 PKGS Packages Limited Compliant 0.26%
122 PMI First Prudential Modaraba  Non-Compliant ** N/A
123 PNSC Pakistan National Shipping Corporation Compliant 3.62%
124 POL Pakistan Oilfields Ltd ****** Compliant 6.63%
125 POWER Power Cement Ltd Compliant 0.19%
126 PPL Pakistan Petroleum Limited Compliant 1.80%
127 PRL Pakistan Refinery Ltd Non-Compliant 0.10%
128 PSMC Pak Suzuki Motor Co. Ltd * Non-Compliant 0.14%
129 PSO Pakistan State Oil Co. Ltd Compliant 0.55%
130 PSX Pakistan Stock Exchange Ltd. Non-Compliant 38.26%
131 PTC Pakistan Telecommunication (PTCL) * Compliant 1.76%
132 QUICE Quice Food Industries Ltd Compliant3 1.10%
133 REDCO Redco Textiles Ltd Compliant 0.02%
134 RPL Roshan Packages Ltd Compliant 1.80%
135 SAIF Saif Textile Mills Ltd Non-Compliant 0.01%
136 SAZEW Sazgar Engineering Works Compliant 0.00%
137 SEARL The Searle Company Ltd Compliant 0.20%
138 SEPL Security Papers Ltd Compliant 4.87%
139 SERF Service Fabrics Ltd Non-Compliant 0.00%
140 SHEL Shell (Pakistan) Ltd * Compliant 0.07%
141 SHSML Shahmurad Sugar Mills Ltd * Non-Compliant1 0.02%
142 SKRS Sakrand Sugar Mills Ltd * Compliant1 0.00%
143 SNGP Sui Northern Gas Pipelines Ltd Compliant3 1.46%
144 SPEL Synthetic Products Ltd Compliant 0.00%
145 SPL Sitara Peroxide Ltd Compliant 0.01%
146 SPWL Saif Power Ltd *** No Opinion 0.01%
147 SRVI Service Industries Ltd * Non-Compliant 0.00%
148 SSGC Sui Southern Gas Co. Ltd Compliant3 2.30%
149 STCL Shabbir Tiles & Ceramics Ltd Compliant 0.12%
150 STPL Siddiqsons Tin Plate Ltd Compliant 1.36%
151 SYS Systems Limited * Non-Compliant 4.28%
152 TELE Telecard Limited Non-Compliant 0.88%
153 TGL Tariq Glass Industries Ltd Non-Compliant 0.03%
154 THALL Thal Limited Non-Compliant 5.35%
155 THCCL Thatta Cement Company Compliant 1.14%
156 TPL TPL Corporation Non-Compliant 5.67%
157 TREET Treet Corporation Ltd Non-Compliant 0.10%
158 TRG TRG Pakistan Ltd  Non-Compliant 100.00%
159 TRIPF Tri-Pack Films Ltd * Non-Compliant 0.00%
160 TRPOL Tri-Star Polyester Ltd Compliant 0.01%
161 TSPL Tri-Star Power Ltd. Non-Compliant 15.37%
162 UBDL United Brands Limited Non-Compliant 0.04%
163 UNITY Unity Foods Ltd Compliant 0.00%
164 WAVES WAVES Singer Pakistan Ltd * Compliant 2.87%
165 WTL WorldCall Telecom Ltd Compliant 3.73%
166 WYETH Wyeth Pakistan Ltd * Non-Compliant2 8.56%
167 YOUW Yousaf Weaving Mills Ltd  Non-Compliant 0.00%
168 HUMNL Hum Network Ltd NC by Nature  
169 786 786 Investments Ltd NC by Nature  
170 AHL Arif Habib Ltd NC by Nature  
171 BOK Bank of Khyber NC by Nature  
172 ESBL Escorts Investment Bank Ltd NC by Nature  
173 FCSC First Capital Securities Corp. Ltd NC by Nature  
174 FDIBL First Dawood Investment Bank Ltd NC by Nature  
175 HGFA HBL Growth Fund – (A) NC by Nature  
176 HIFA HBL Investment  Fund (A) NC by Nature  
177 ICIBL Invest Capital Investment Bank NC by Nature  
178 IGIHL IGI Holdings Ltd NC by Nature  
179 JSCL Jahangir Siddiqui & Co. Ltd NC by Nature  
180 MUREB Murree Brewery Company NC by Nature  
181 PASL Pervez Ahmed Securities Ltd NC by Nature  
182 BNWM Bannu Woollen Mills Ltd Compliant 0.57%
183 CHAS Chashma Sugar Mills Ltd * Non-Compliant1 0.05%
184 DAAG Data Agro Limited Compliant 0.00%
185 FHAM First Habib Modaraba Compliant ** N/A
186 FUDLM First UDL Modaraba  Compliant ** N/A
187 GADT Gadoon Textile Mills Ltd Non-Compliant 0.06%
188 ILP Interloop Limited Compliant 0.26%
189 JSML Jauharabad Sugar Mills Ltd.* Compliant1 0.02%
190 KOHE Kohinoor Energy Ltd Non-Compliant 10.76%
191 KSBP K.S.B.Pumps Company Ltd * Compliant 0.13%
192 LEUL Leather-Up Limited Non-Compliant 5.05%
193 MACFL MACPAC Films Ltd Compliant 0.00%
194 MFFL Mitchell’s Fruit Farms Ltd * Non-Compliant1 0.00%
195 NAGC Nagina Cotton Mills Ltd. Non-Compliant 0.46%
196 ORIXM Orix Modaraba Compliant ** N/A
197 PCAL Pakistan Cables Ltd Compliant 0.03%
198 PHDL Pakistan Hotels Developers Ltd Compliant 0.14%
199 PSYL Pakistan Synthetics Ltd. Compliant 0.01%
200 SFL Sapphire Fibres Ltd. Compliant 1.94%
201 SHDT Shadab Textile Mills Ltd. Compliant 0.80%
202 SHEZ Shezan International Ltd. Compliant 0.05%
203 SHFA Shifa International Hospitals Compliant 0.13%
204 SIEM Siemens (Pakistan) Engineering * Non-Compliant1 0.02%
205 TOWL Towellers Limited Compliant 0.88%
206 TPLP TPL Properties Ltd  Non-Compliant 15.39%
207 ZIL ZIL Limited * Compliant 0.01%
208 FNEL First National Equities Ltd NC by Nature  
209 NEXT Next Capital Limited NC by Nature  
210 PIAA Pakistan International Airlines Corporation Limited (PIACL) Non-Compliant3 0.05%

NOTE: The above criteria of KMI Index is approved by Sharia’h Supervisory Board of KMI Index Partner, MBL Group.

NC= Non – Compliant

N/A = Not Applicable

* These are provisional rates for dividend purification which are subject to final adjustment upon announcement of respective companies’ annual accounts for the year

** Only illiquid Assets to Total Assets and Net Liquid Asset ratios calculated of all Islmaic Financial Institutions.

*** Status is not ascertained due to non-disclosure of the required information as per last available financial statement i.e breakup of sales revenue including interest element. Therefore, such companies will not be included in KMI Islamic Index.

****OGDC is facing circular debt issues. Company is bound to retain interest bearing TFC/Bonds having no permission to sell from government. Further, company had provided written confirmation that its non compliant income ratio will be less than 5% due to lower interest rates during July-Dec 2020.

*****Due to increase in income ratio,ENGRO acknowledged that due to Covid -19 their plants were completely suspended for approximately two months which results dicline in their revenue. However,compared to June 2020, income ratio has been improved in Sep-2020.

****** Income ratio exceeds 5%. However,compared to June 2020, income ratio has been improved in Sep-2020.

  1. Based on March-2020 accounts
  2. Based on May-2020 accounts
  3. As per last available annual / half-yearly accounts