1) Case for Local Advance Murabaha – Cotton Industry

Bilal Saleem Oil Industries is engaged in Cotton Ginning, Oil & Oil Cake Manufacturing (Oil
Extraction) from Cotton Seeds, rap seed, canola, sunflower & other Oil Seeds & Trading
business. They purchase Raw Cotton directly from Growers/Brokers or through
brokers/commission agents. The market norm is that growers deliver cotton seeds at the factory
of customer, where it is weighed and than entered into the factory premises and is kept separately
with proper marking of weight and supplier name. Regarding the price of goods delivered it is
mutually agreed at the time of receipt of goods that whatever will be the market rate of phutti in
8th day or 5th day will be paid to the grower. Moreover the inventory holding period of the client
is minimum 3 Days, but it usually varies to 4-5 Days in higher consumption seasons. The
customer requires a proper financing mode to serve this need and to arrange an easy payment
connection between the payment receipts from ultimate customers and payment to be made to
the suppliers.
1) What factors must be considered by you before finalizing Shariah Compliant process
flow for the client.
2) Devise a process flow based upon your recommendations.

2) Case study for expanding your business

Mahmoud is a businessman from Bradford. He is very successful and is a highly respected
member of the community. His business owns several large commercial properties across
Bradford which he leases primarily as manufacturing units. Due to planned infrastructure
improvements to a business park site where Mahmoud owns two units, demand for space on the
site appears to be increasing. Mahmoud, eager to take advantage of what he sees as a good
business opportunity, wants to increase the number of units he owns on the site from two to
four. To finance the purchase, he plans to sell a less profitable unit which he owns on another
site and expects this sale to provide around 40% of the capital he requires. Mahmoud wants the
remaining 60% of the capital to come from a 10 year agreement with a finance provider. The
rent he will receive from the new units will comfortably cover the expected finance payment. As
a practising Muslim with a position of responsibility within the community, Mahmoud has
sometimes felt uneasy borrowing money from conventional banks, due to the fact that these
loans must be repaid with interest. Mahmoud is aware that banking has changed in recent years
and that nowadays he may have more options, so he has been reading Al Rayan Bank's, formerly
Islamic Bank of Britain (IBB's) website to find out more on the Sharia compliant business
banking services it provides. As a Sharia compliant commercial finance provider, Al Rayan
Bank’s products enable Muslims to buy commercial property in the UK in a way that is
permitted in Islam, without interest.

1) Which mode of financing suits best in order to expand the business?

2) What rules to be kept in mind to make the contract valid?