Profit issue 16

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8 Weekly Roundup 12 Child Labour – End of a life before it begins Ayesha Aziz 15 What’s wrong with public debt in Pakistan Jazib Nelson

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16 Beards in Business 18 Mushrooms 20 Nexsource Pakistan 22 Stylo 24 Badre Alam Traders 26 TTI Labs 28 Diamond Paints 30 Al Shaheer Corporation 33 No better time than now, to move back! Zainab Tariq

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34 Top of the totem pole 40 Meet the man who delivers your food

Managing Editor: Babar Nizami l Joint Editor: Yousaf Nizami l Contributing Editor: Farooq Tirmizi l Business Editor: Agha Akber Editor Reporting: Farooq Baloch l Reporters Karachi: Aisha Arshad l Arshad Hussain & Usman Hanif Reporters Lahore: Syeda Masooma l Reporters Islamabad: Ghulam Abbas l Ahmed Ahmedani & Amer Sial Director Marketing: Zahid Ali l Regional Heads of Marketing: Muddasir Alam (Khi) l Zulfiqar Butt (Lhr) l Mudassir Iqbal (Isl) Design & Layout: Rizwan Ahmad l Illustrator: ZEB l Photographers: Zubair Mehfooz & Imran Gillani Publishing Editor: Arif Nizami Contact: profit@pakistantoday.com.pk

CONTENTS

“The decision to establish an IT park in Islamabad at a cost of Rs6b and allocation of Rs20b for laptop programme are laudable moves”

QUOTE

BRIEFING

“The One Belt, One Road Initiative is not only about physical connectivity, it is also about people and future generations” Pakistan Ambassador to China Masood Khalid

Pakistan Business and Intellectuals Forum President Mian Zahid Hussain

is the figure of exports for the service sector recorded for the Financial Year 201617. Thanks to the inflows coming from the Coalition Support Fund (CSF), Pakistan trade services recorded a $2.3b deficit during financial year 2016-17 which was 3pc higher than last year. On further review of SBP’s data, it came to light that services imports had reached $7.024b in FY 2016-17 inching up by $103m from $6.921b in FY 2015-16. Services exports had also gone up in FY 2016-17 to reach $4.708b in comparison to $4.678b last year. The breakup of service export inflows is as follows: $808m Transportation services, $770m Telecommunication, $272m Travel, $59m Construction, $96m Insurance, $937m on account of other business services, $92m Financial services and $1.643b from government services.

$4.708b

Rs25b

will be raised through commercial banks by the government to pay off the dues of IPPs and Pakistan State Oil. This was approved by the Economic Coordination Committee (ECC) in a meeting chaired at the PM office by Finance Minister Ishaq Dar. The IPPs Advisory Council (IPPAC) had on Tuesday claimed that the figure of payables had reached Rs191b and if the payment wasn’t made at once, they may have to cease their operations. The government was already facing the daunting prospect of fixing the menace of power outages during Ramazan, the Independent Power Producers (IPPs) have once again cited cash flow restraints which could lead to shutting them down their power plants. The due process for this loan to be disbursed to the aforementioned parties will take 8-10 days to complete. Last month, it had been reported that the circular debt figure had crossed Rs400b, and this loan of Rs41b will help to bring it down to Rs360b, but the stock of debt will rise to a staggering figure of Rs415b.

will be raised by Punjab through government securities with the aid of the State Bank of Pakistan (SBP). The current figure of provincial debt of Punjab stands a touch above 3pc. These government securities have been grouped into two namely Punjab Treasury Bills (PTBs) and Punjab Saving and Investment Bonds (PSIBs). PSIBs will be interest bearing fixed rate instruments with maturities of more than a year’s period and PTBs will be discounted instruments with a maximum tenure of a year or less. Both these securities will be tradable in secondary markets as per budgetary documents. The issuances of these securities will help the provincial government in expanding its Annual Development Plan (ADP), gaining access to prospective investors, provident funds, pension funds, domestic banks, corporate treasuries and mutual funds.

Rs41b

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BRIEFING

“Ban on construction of multi-storied buildings should be lifted. This restriction on construction is harmful for the industry” FPCCI President Zubair Tufail

QUOTE

Rs200m

have been earmarked in next year’s budget for financial year 2017-18 for the launch of state of the art e-payment gateway to be developed by the State Bank of Pakistan With the launch of an e-payment gateway system, SBP will be able to streamline mobile banking in the sector. And there is also news that Alipay and PayPal are about to enter the Pakistani market soon. Once the e-gateway gets launched, it will facilitate the citizens in being able to make and receive payments through the internet.

have been allocated by the KP government in its budget for Financial Year 2017-18. Unveiling the provincial budget at the floor of KP Assembly on Wednesday, Finance Minister Muzafar Said said the total volume of health sector was 11pc of total budget volume of Rs603b for the year 2017-18. He said as many as 394 posts were created in the current fiscal year. As many as 1149 posts were created at province and 2793 at district level in outgoing FY 2016-17.Grant in aid to be provided to health institutions across the province including Rs963m or Ayub Medical College, Rs1594m for Ayub Teaching Hospital Abbottabad, Rs248m for DHQ hospital Bannu, Rs144m for women and children hospital Bannu, Rs587m for Khalifa Gulnawaz teaching hospital Bannu, Rs278m for Bannu medical college, Rs232m for Gomal Medical College DI Khan, Rs313m for Mufti Mehmood Memoral Hospital DI Khan, Rs 628m for DHQ Hospital DI Khan and Rs772million for Mardan Medical Complex Mardan.

Rs65.7b

loan was seeked from China Development Bank to pay back for a Eurobond debt of $750m. This Eurobond was issued during the Musharraf era at 6.875pc interest rate for 10 years. The total amount of borrowing from Chinese banks in the last nine months has reached $2b, including the $1b to payback this Eurobond debt which was borrowed from China Development Bank. The interest rates for these loans range from 4.22pc to 4.44pc.

19.5pc $1b

$1.733b

sale tax has been imposed on internet services by the Punjab government in its budget for financial year 2017-18. It would be enacted on all forms of internet services which include fixed line broadband, 3G and 4G LTE services etc.

All internet customers across Pakistan are already subjected to a 14pc tax and with the inclusion of this new 19.5pc tax, the total amount of taxes will rise to roughly 35pc. However, students using internet packages below Rs1,500 will be exempted from this newly imposed sales tax.

is the foreign direct investment recorded for the financial year 2016-17. According to figures released by the State Bank of Pakistan (SBP), it has been revealed that foreign investors repatriated $1.5b on account of profit and dividends in the first 10 months of Financial Year (FY) 2016-17. During FY 2016-17, repatriation from foreign direct investment (FDI) grew by 8pc, inflows from foreign investors were recorded at $1.233b on account of return on FDI during the period mentioned above. It had been recorded at $1.140b during FY 2015-16, representing an increase of $93m. A decline was registered in the repatriation of profit and dividend on account of FDI in comparison to the total FDI that came into the country during FY 2016-17.

has been earmarked for the public health, education, agriculture, law and order and local governments, which make up 59 per cent of the total budget of Punjab. Presenting the Rs 1970.70b budget, the Finance Minister said the general revenue receipts are estimated at Rs 1502b while an income of Rs 1154.18b is expected to be given to Punjab under the Federal Divisible Pool (FDP), adding that provincial revenues are estimated at Rs 348.30b which include Rs 230.98b from the taxes and Rs 117b of non-tax revenue.

Rs107b

BRIEFING

BRIEFING

“Had the finance minister given half the time begging the IMF to the textile sector, exports would have increased” APTMA Chairman Aamir Fayyaz

QUOTE

47.49pc

is the yearly increase of petroleum crude exports recorded in March compared to last year in March. The exports of crude petroleum were recorded at $18.216 million in March 2017 compared to the exports of $12.351 in March 2016, according to the official data. In terms of quantity, the exports of crude petroleum witnessed decrease of 38.48 million during the nine months under review. The exports decreased from 9,203 metric tons last year to 5,889 metric tons during the first nine months of current year. It is pertinent to mention here that over all exports of petroleum and coal group increased by 7.97 percent during the current fiscal year.

is the figure of IT exports reached for the financial year 2016-17. According to official sources, the broadband penetration has jumped from a mere 3.7 million to 40.7 million subscribers.

Through enabling policies and auction spectrum for next generation mobile services, the IT and Telecom sectors are expanding and generating new jobs as businesses utilise modern ICTs, such as e-commerce, e-banking, e-health, e-education and business related to IT applications. Telecom sector showed positive growth during the first two quarters of FY 2016-17. Total teledensity reached 72.36 percent at the end of March 2017, as compared to 70.81 percent at the end of last fiscal year. The prime driver of increased teledensity is the growth in cellular mobile subscribers.

$3.1b

annual increase has been recorded in the sales of oil. Since the last three years, oil sales had averaged annually at 7pc a year.

This rise has been attributed to a rise in oil prices recently that helped it grow to 12pc in the outgoing financial year 2016-17. It was reported the sales of furnace oil rose 10pc on a monthly basis to reach 2.43m tons in May this year due to a rise in demand from power generation companies because of ongoing summer season. Arif Habib’s analyst Waleed Rahmani said “Furnace oil sales recorded the biggest jump of 14% month-on-month to 0.86 million tons in May among major products. The growth can be attributable to the seasonal surge due to the arrival of summer season.”

12pc

increase has been recorded in the exports of exports of fish and fish preparations for the Financial Year 2016-17. The fish exports during July-April (2016-17) were recorded at $316.926 million as compared to the exports of $270.69 million during July-April (2015-16), according to the data of Pakistan Bureau of Statistics (PBS). In terms of quantity, the exports of fish and fish preparations increased by 14.28 percent during the period under review by going up from trade of 105,349 metric ton last year to 120,388 metric ton. It is pertinent to mention here that the overall food exports during the period under review witnessed negative growth of 8.57 percent.

17.08pc

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$5b will be the figure of investment in the electronic media industry of Pakistan by the end of financial year 2016-17. There has been a cumulative investment of approximately $4b in the electronic media industry of Pakistan. According to official estimates, electronic media sector has generated direct employment for more than 250,000 people of diversified skills and qualifications. This expansion in investment would have multiplier effect on increasing job opportunities for skilled media personnel and journalists, expanding work of media production houses, advertising agencies and proliferation of the performing arts.

BRIEFING

OPINION

Ayesha Aziz

about it gives me shivers. My son is now nearing 12, and to me, he still is a baby. She must have been the same age. No child should have to go through anything like that.

Child labour was not an invention of the Industrial Revolution. Poor children have always started work as soon as their parents could find he was 11, shy and looked obviously very scared when I employment for them. With industrialization, the found her sitting on the floor of my living room with her new factories and mines were hungry for workers aunt, who had brought her all the way from a village near and required the execution of simple tasks that Sargodha to work. her father had died leaving 12 children, could easily be performed by children. The result a wife and an old mother behind with no source of income. was a surge in child labour – presenting a new kind She being older than the five younger brothers had no of problem that society had to tackle. choice but to quit school and start working, in order for her Despite centuries of efforts against forcing brothers to keep going to school and to keep the stove of children to enter the workforce across much of the her household burning. On the pleas of her aunt, I employed her to babysit developed world, internationally, child labour still my son while I was at work. With a small bag containing her few belongings is a major problem. The most horrific and wideshe came to stay with us and slowly became a part of our family. A year later spread child labour practices today are seen in when we moved to UAe, she went back with her aunt. This is Sonia.

Africa and Southern and Western Asia.According A few years later when I was visiting my parents in the summer and to Maplecroft's Child Labour Index, Pakistan ranks had a six month old baby, my parents’ housemaid had brought her younger among the ten worst countries, with children being sister Marya to babysit my son. She was barely 12 and a tiny one full of misforced into backbreaking labour. chief and ready for a prank at any time. After a few weeks I left and she went As per the United States Department of back to her village. Next year when I was planning to visit again, I asked my Labour report, nearly 13% of Pakistani children parents to find Marya again for me, since now my son was a toddler and accounting for 2,449,480 individuals between the with all the trips to the bazaar and social events, I needed someone to help ages of 10 to 14 are child labourers. 76% of these me while I was there. She didn’t come, but a very sad news came! During children work in the agricultural sector involving the course of that year, she went to work for someone else, got pregnant by activities like working in crop fields, fishing and their adult cook and aborted her child! even after so many years, thinking shrimp harvesting and processing. A large number of children are also engaged in restaurants, tea stalls, transportation, and garbage scavenging. The glass bangle industry, carpet weaving, coal mining, brick kilns, and the automotive industry also emAyesha Aziz ploy Pakistani children. According to ILO, poverty is the single major factor reis Mom, Mechanical sponsible for the high prevalence of child labour in the country. With 17.2% of the Engineer, Teacher, population living below poverty line, families are often forced to send their chilAspiring Masterchef and dren to work to sustain the family.

Photographer, Wanderer The most common kind of child labour is agricultural or domestic work for and a lot more! the family. While children can benefit from a reasonable level of participation in household chores/activities and derive a sense of self-worth from their work on behalf of their families, all too often work for the family demands far too much of them. It may require them to work excessively long hours that keep them from attending school and can take too great a toll on their developing bodies.

Child Labour – End of a life before it begins

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Much of the work for the family within the home is done by girls, and most of the hazards faced by working boys are faced by girls too. Yet girls have extra problems of their own to face: from the sexual pressures of employers to exclusion from education. According to ILO, 56 per cent of the 10- to 14-year-olds currently estimated to be working in the developing world are boys. Yet if we were able to measure the numbers of girls doing unregistered work as domestic servants, or work at home that liberates other family members to take up paid employment, the figures would show more female child labourers than male. Girls also work longer hours on average than boys.

This is especially true of girls who carry a double workload - who hold down a job outside the home but must still fulfill their domestic duties on their return.

The most vulnerable and exploited children of all - as well as the most difficult to protect may well be those in domestic service. They are often poorly paid or not paid at all; their terms and conditions are entirely at the whim of their employers and take no account of their legal rights; and they are deprived of schooling, play and social activity, not to mention emotional support from friends and family. What is more, they are vulnerable to physical and sexual abuse.

The isolation of children in domestic service also

makes it difficult to establish reliable estimates of their numbers around the world.

Bonded child labour occurs mainly, though not exclusively, in South Asia, where children, often only eight or nine years old, are pledged by their parents to factory owners or their agents in exchange for very small loans. Their lifelong servitude never succeeds in even reducing the debt.

No social sector can escape responsibility.All over the world, children are found to be doing industrial or plantation labour in hazardous conditions. The physical risks to these children - from dangerous chemicals or from faulty machinery, for example - are often more evident than the hazards to their emotional and social development,

which are nonetheless profound.

The industries involving children come in all shapes and sizes, from the leather industry in the Naples region of Italy to the brick-making industries of Colombia and Peru, which can involve children as young as eight.

The numbers of children exploited by plantation agriculture across the world may be as great as those involved in industry — and the dangers associated with their work no less appalling. In Brazil’s sugar plantations, for example, children cut cane with machetes, at constant risk of mutilation. In some areas, children make up a third of the workforce and are involved in over 40 per cent of work-related accidents. In Nepal, children work on tea estates for wages so low that they often need to work 14 hours a day.

Street work can be cruel and hazardous for children, endangering their physical and psychosocial development and often their lives. Most of these children struggle at legitimate work on the street for their own or their families’ survival. They shine shoes, wash and guard cars, carry luggage, hawk flowers and trinkets of every imaginable kind, collect recyclable junk and find a thousand other ingenious ways to make a little money. The vast majority of them return to their homes in shanty towns and squatter settlements each night: these are children on the streets, but not of them.

As the world strives to achieve the elimination of child labour by 2025, on this World Day Against Child Labour, let’s join forces to end child labour by promoting and enhancing education; building on national and international legislation and improving enforcement; empowering the poor; mobilizing society; and campaigning for companies to take greater responsibility for their actions and those of their subcontractors.

Sources: The Shapes of Child Labour Report by Unicef – 1997 Worst Countries for Child Labour – WorldAtlas.com April 2017. n *Names have been changed to maintain privacy

WORLD DAY AGAINST CHILD LABOUR

OPINION

Jazib Nelson

the government has to compromise spending on social sectors like education and health. Pakistan’s performance in health and education is already unpromising.

But these are not the only issues associated with high domestic borrowing. Over-reliance on domestic debt reduces the amount of credit available to private sector and he issue of public debt in Pakistan has received a lot of attention from renders the leftover credit expensive. Private sector which every concerned quarter. They have been many debates, seminars, and generates employment and is the lifeline of any economy conferences on this subject. For the most part, debate on public debt has is deprived of an essential opportunity to expand itself. centered on reducing it.

Issues are also present in external borrowing by the Incurring debt in principle is not bad per se. The key lies in sustainability of government.

Since coming into power, the PML-N govpublic debt. Developed economies with their astronomically high debt stocks have ernment has borrowed $655 million from Dubai-based been able to sustainably manage it given their robust economic and institutional Noor Bank at interest rate ranging from 4.1% to 4.71%. fundamentals. United States of America and Japan serve as examples of this.

These are non-traditional sources of borrowing where Pakistani economy does not feature such strong fundamentals. But most imterms of engagement are not transparent.

Unavailability of portantly recent borrowing strategy by the government has aggravated this situathis information can compromise parliamentary oversight tion. Pakistan’s flawed borrowing strategy becomes clear when it is evaluated on on matters of public debt. two criterions. First, where is the money coming from? Second, where is the Where the debt money goes? money going? Pakistani answer to both these questions raises serious concerns on Most of the borrowed money in Pakistan is used to sustainability of public debt in Pakistan. build up foreign exchange reserves or used as a budgetary Where the debt money comes from? cushion by the government.

Quite recently, the State Bank Government of Pakistan is borrowing heavily from domestic sources i.e. of Pakistan has borrowed $3.93 billion to bolster foreign commercial banks. In FY 2000, almost half of the total public debt was from doreserves.

Pakistan is forced to undertake this practice since mestic sources. Now this has increased to 70%. Debt from domestic sources is it earns less foreign exchange through exports than it has more expensive than from external sources like International Financial Institutions to spend on its imports.

In addition to this, in order to (the fact that borrowing from such institutions involve stern conditions is a differmaintain the value of rupee, Pakistan needs dollars to efent debate altogether). fectively intervene in the foreign exchange market.

Dollar Based on the latest available data, interest rate on domestic loan was 11.3% stability is mostly viewed in Pakistan as a symbol of politiin 2014 while interest rate on external debt was only 2.1% for the same year. Pakcal achievement.

So any incumbent government tries to istani economy which is growing at a rate of 4-5% per year may encounter probkeep it under control for political gains. lem servicing domestic debt at an interest rate of 11.3%. Apart from being Such policy choices are diverting borrowed money expensive, payments will be due on almost half of the domestic debt within a year. from development sector such as health and education.

While only 11 percent of the external debt will be due within a year. So Pakistan Spending on these areas can improve Pakistan’s debt carhas to pay off costly debt within short intervals of time. This fact has major implirying capacity in the long-run.

But the current regime of cations for the Pakistani economy. In order to make room for high debt servicing, spending most of the debt money on non-development sectors would induce even more borrowing in the future to pay off previously contracted debt.

Pakistan’s borrowing strategy which is dominated by excessive domestic borrowing and obsession with building foreign exchange reserves may render its public debt stocks unsustainable. It will hurt both Jazib Nelson private and development sectors. On top of that, a defective debt strategy has the potential to impair the is an Adjunct Scholar at policy space available to the policy makers because in some cases the creditor may steer the helms of the Policy Research Institute economy in order to ensure smooth repayments. The $6.6 billion Extended Fund Facility of International of Market Economy Monetary Fund (IMF) that Pakistan undertook in 2013 included various restrictions on the Government of Pakistan in terms of domestic policy choices.

There is both good debt and bad debt. Unfortunately, policy choices in Pakistan are relying more on bad debt. Such policy choices are a product of political ambitions which are most of the times oblivious of the tenets of sound economics. n

What’s wrong with public debt in Pakistan

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ECONOMY

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COVER STORY

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FROM THE MANAGING EDITOR

Atif Karamat’s Naafey employs about 15 people and they have several high value clients. But this GIK-qualified engineer, who has an MSc from the US, hasn’t started just another management consultancy. He is servicing a small but ever growing niche of religious businessmen who need muftis to not only tell them which aspects of their outfits are un-Islamic but also to suggest (or even devise) Sharia-compliant alternatives as well.

With more and more businessmen seeking out business practices that are truly in line with their religious beliefs, business for Naafey is only set to grow.

If I were to ask you to picture a Sharia-compliant business, chances are that you would immediately think of Islamic financial products that circumvent interest. Actually, there is much more to Sharia-compliance than the proscription of interest. Sure, you might say; that no one should be dealt with unfairly and that the company should be moral in its dealings?

Well, yes, but those are considerations for good people everywhere, whether they are formally religious or not. Formal Sharia-compliance goes beyond the simple rubric of do-theright-thing. It ends up in areas that one hadn’t really thought of. For instance, for businesses involved in some form of arbitrage, the muftis have decreed that a company cannot sell products that it does not yet own.

The profile of the seven businesses in this issue make for some uncomfortable reading.

For instance, when Mushrooms (a kids clothing brand) decided, at the behest of their mufti, to take out images of cartoons from its apparel for children, it was endangering its principal product. Still, they could hope against hope that parents would still buy their children their product, even without the cartoons. But when it decided, for its school uniforms division, to not make shirt-and-trouser uniforms for children ages 13 and above, it actually cut off a significant revenue source in one quick, painful decision. Ouch.

On the HR front, some of these businesses “encourage” a particular dress code for its employees while others do make it mandatory. Does that make these stifling places to work?

Maybe. But on the flipside, some of these companies have been advised not to impose penalties on tardiness. So employees are deducted their salaries only for the minutes (yes, minutes!) that they are late instead of some sort of arbitrary three-lates-mean-one-day-off rule.

Furthermore, if the employees were actually religiously inclined themselves, morale at the office could be downright magical!

On the revenue front, these entrepreneurs all reported higher levels of satisfaction, even the ones who were not doing all too well financially. You can’t really put a price tag on peace of mind, yes. But on the business front, there can be no denying that it will take away a ruthless edge away from a business when it is looking for more markets. To that, they have an answer: our rizq is written; if anything, it is the constant chasing down of new business leads that is a waste of time. One might disagree with that approach but it is certainly an internally consistent one.

Post-script: due to scheduling problems and other such reasons, the businessmen selected would all seem to be those of, broadly speaking, the same sect within Islam. That outcome was completely unintentional.

Babar Nizami

BEARDS IN BUSINESS

HOW DISCOVERING RELIGION TRANSFORMED ELAHI’S HERE AND HEREAFTER Shehzad Elahi, owner Mushrooms Kids and Ladies wear

Shehzad Elahi talks of difficult times, the trauma of a partner’s death and how becoming a staunch Muslim turned his life and his business, Mushrooms, upside down By: Babar Nizami

he owner of Mushrooms Kids and Ladies wear, Shehzad Elahi, turned to religion to seek help in making a choice between his failing enterprise with an uncertain chance of success and a lucrative job offer that meant doing away with his business. What perplexed him, as he described it, was “whether my livelihood had already been written by Allah in my fate, and I should stay with my business and help it grow or should I opt for working for someone else and take the job?”

His business partner had died only recently, making him acutely aware of his own mortality. In his words, “Since our birth we are aware that death is inevitable, yet really remembering it every moment of our lives really puts things in perspective.”

“Our company was in crises, and our loan application to the NDFC was pending.

Meanwhile, I got a job offer. Being a partner in the company, I was ambivalent. Should I ditch my company in crisis because if I were to waste another four, five years, then I will not be unable to adopt a career.”

Back then, says Shehzad, he was not a staunch practicing Muslim. “Back then I used to pray but only occasionally. At that time it wasn’t clear to me whether Rizq comes through fate or from hard work. We have grown up listening to such cliches: ‘On every grain is written the name of the person who will consume it’, and ‘you will only get what you have strived for’.”

In 1999, his partner [Tariq] passed away, and the trauma eventually not only changed

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how he ran his business but also the way he led his life. “Back then Mushrooms was the only kids-exclusive-retail-clothing brand in Pakistan, and were renowned nationwide. Our dream was to turn it into an international brand. When my partner died, it was a major setback, and our business suffered.”

Around that time, Shehzad met someone who introduced himself as “a liberal maulvi.”

He told Shehzad that it was all preordained and the hard work needed to earn a return was in fact meant for making one’s hereafter better by striving to do good deeds in life. “That did not make me turn to Allah and religion immediately but the idea had germinated.”

Later, when Shehzad joined the jama’at, he came to understand and learn that fate is irreversible, as Ahadith also say that ‘Rizq searches for a man as does Death, and that, ‘a man cannot die until he has consumed his Rizq.’

His thoughts about his business too changed, and from going international “so it brings me respect and riches,” he now believed in “honour and wealth being in Allah’s hands”, and, “this business is only a source to earn for my life hereafter.”

Shehzad dilates, “We know that each aspect of one’s life is a test, including one’s business. So, it should be conducted with the intent and awareness that one may have to stand trial any moment. Allah would ask us, why we did what we did, and if we have done something wrong we would not be able to resort to the excuse, ‘We did it to save our business’ because it’s Allah’s job to

save it, not ours.”

There was a massive change in Mushrooms product strategy, for which he has an elaborate explanation. Not only did he change the primary product designs but also gradually eliminated a product line altogether.

“Our main product was kids’ clothes for which we used Disney cartoons. In 2001-02, a mufti saab told me that cartoons were prohibited, so I decided to stop printing them,” said Shehzad.

It could have dealt a mortal blow to his business but he decided to go along. Years later, now he is happy to have made that choice because he is not just solvent but prospering.

His second product line, school uniforms, he was told that ‘pant and shirt’ were allowed for children but not past a certain age.

This was more than just a business decision for him. It also meant he had to change the way he brought up his own children. “When I saw the environment my children were living in, I felt that it was not suitable for them. I decided to start rectifying that from their clothing. But then the dilemma for me was that I was selling the same clothes to others that I did not want my own children to wear,” says Shehzad.

His next step was to eliminate pants and shirts line from 13-year old and up – again a risky business call but he went through with it.

“I decided to close that line irrespective of what impact it had on business but we were advised to do so gradually instead of doing it all at once.” Now Mushrooms maintains pant-

shirt clothing line for children Irrespective of whether it hinonly until the ages of 6 and 8, dered in the business growth or not and their main focus has turned Mushrooms decided to steer clear of towards eastern-wear instead.” financing with interest. “Irrespective Then his marketing strategy of what effect it has had on the busialso changed, as the focus shifted ness, it has led me to peace for sure.” from persuasive to informative Shehzad doesn’t believe that he marketing. “Instead of believing has had to make any sacrifices in in, ‘we have to sell our stuff making this change towards religion. come what, and manipulate the “I haven’t made any sacrifices. I consumers if need be, we fochose religion, reformed myself and cussed on fulfilling the customerwhatever measures I have taken in needs.” this regard, Allah has paid me off. My Another decision not to use home is at peace, my kids are obedipictures in marketing campaigns ent, Allah has given me heaven on also came as a consequence. earth. What else do you want in life!

The human resource policy What’s the point of having 50 factowas also put through a massive ries, if you have no time for family overhaul. He informed that iniand your children harbour hostility tially the rules of his company for each other?” were strict and late comers who When asked about how some even missed the reporting time people consider Zakat and taxes to be by a minute were penalized. alternatives whereby paying one sufThose who took time off without fices the need for the other, Shehzad prior notice had their salaries dehad his own opinion, “I don’t want to ducted for the off time and on top comment on taxes, but as far as Sadqa of it were financially penalised. and Zakat are concerned, there is no Shariah advertising: An advertisement of Mushrooms “With religion as our choice here. You cannot replace one where child models have been used in a manner that watchword, we decided to get with the other. Allah has said that if their eyes and other face features aren't visible.

Shariah compliance assessment you give one rupee, it may be reduring which I was told that fiwarded from ten to seventy times.” nancial penalty is not allowed in He shared his business experiwork in burqa which they can take off once Islam. So, now we only deduct the time that ence from the difficult days as well saying inside their working area but they also need to someone has missed but no extra penalty.”

“Me and my partner used to worry a lot be dressed modestly in case a male colleague He said that his leadership approach as a [when we were not doing well]. So we deor an outsider needs to enter the area. The business owner also changed from looking at cided to start giving alms. We first thought to salesgirls’ job however has been completely his employees as revenue-earners to considertake out a proportion from our profits but he eliminated, save one shop in Hyderabad ing himself a source by God to help his emsaid that we weren’t making any profits, so where the salesman was removed instead and ployees earn their livelihood. On the issue of how were we going to do that. But then we the salesgirl was kept on because she could leave, if an employee goes for Hajj or for decided that we do other expenses too, irrenot afford the means to earn a livelihood in other religious obligations, the company tries spective of our revenues. So we started takany other way. to share the burden. Shehzad said, “If someing out a proportion from our sales and we There is preference while hiring for relione takes four months leave for Hajj, we pay discussed it with our Tableegh partners back giously-inclined applicants but they are asked him for two months while two months are unthen which provided us benefits including to strictly abide by the working rules of the paid. While reducing the cost, we try to make the fact that our company’s health also imcompany. “If someone comes to religion, we sure that he also invests something.” proved. feel it is good for our means to salvation and if He also altered the rules of employment, While Shehzad does not subscribe to the someone doesn’t then we hope that Allah will segregating men’s and women’s departments. idea that taxes should not be paid, he defiguide them to the right path. But we don’t After receiving a complaint from a mosque’s nitely has his grouses with the system. “Taxes concern ourselves with what they do on their imam in the area where one of his shops is loyou cannot avoid; it’s a legal requirement. But own time.” cated regarding two of his employees, a male when one buys a car its cost is Rs 500,000 but As far as financial strategies of the busisales manager and a salesgirl and after investiit inflates to Rs1.8 million, with 1.3 million ness are concerned, Shehzad explained, “Our gating into the case, now the company has tax. There are also duties on the commodities financial strategy was reformed very early on packing, quality checking, threading departwe buy – petrol, telephone, grocery, the goveven when Tariq [business partner] was alive. ments exclusively for women and the rest for ernment has taxed everything. I think it is unWe had to establish a factory and we got fithe men. fair to levy so many taxes. Yet taxes and nancing for that, but when we faced troubles Women are also required to come to Sadqa and Khairat are different.” n we decided that repentance is better.”

BEARDS IN BUSINESS

SHARING IS THE MAINSTAY OF OUR PHILOSOPHY The chief of a prosperous Sharia-compliant social enterprise shares the secrets of his success and the philosophy that drives life and business Nazir Ahmed Vaid, Chairman Nexsource Pakistan

n his way to interview Nazir Ahmed Vaid, Chairman of Nexsource Pakistan, this correspondent is guided by the security to the second floor of Continental Trade Center, a commercial plaza located in the heart of Clifton.

After a brief wait at the company’s headquarter, a 1400-square-foot facility, this scribe enters the chairman’s office.

Two wooden shelves on the left – displaying Pakistan flag along with numerous awards and mementos from events and conferences he addressed as speaker over the years – lead him to the chairman, who is about to finish an ongoing meeting.

As this correspondent waits for the interview, a shiny scimitar, Vaid received as a gift 10 years ago, overlooks an empty chair, fully covered by a waistcoat and dozens of calling cards: souvenirs from business events and conferences he addressed over the years, as one gets to learn later. Clad in white shalwar kameez, the 56-year-old describes his business to be a Sharia-compliant, social enterprise as he responds to the first question.

What started in 1975 as a courier service has now grown into a large enterprise

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By: Farooq Baloch

with Rs1 billion in annual turnover, 156 employees, and offices in Karachi, Lahore and Islamabad. The company specializes in Business Process Outsourcing but has over the years ventured into consulting, import and sale of select vegetables, real estate, microfinance, and now application-based ridehailing services and electronic media.

In a candid talk with Profit, Vaid, who also sits on the board of trustees for many mosques and seminaries (madaris) including the famous Baitussalam Welfare Trust in DHA Phase IV, speaks about his experiences as the head of a Sharia-compliant business, influences his religion has over him, the challenges he faces and the benefits that have come his way.

“In everything we do, we make sure a good percentage of our earnings goes to some social solution. We focus on how we can involve community and benefit it,” Vaid said adding, “Obviously, we take care of our expenses and earn reasonable profit as well.”

Their upcoming ride-hailing app, ERide may well explain this philisophy. The company got Rs15 billion finance [Ijara] arranged through an Islamic bank for this program, which will bring 15,000 cars on

‘THERE IS A DOWNSIDE OF NOT GOING FOR A BANK LOAN BECAUSE YOU FACE FINANCIAL LIMITATIONS AND LIQUIDITY ISSUES BUT THERE IS AN UPSIDE TOO: THE RISK IS REDUCED IN CASE OF A LOSS’ 20

roads in three years.

“Through this app, we are going to help senior citizens, widows and orphans, who have some money in their savings accounts, earn a handsome return on their investment compared to what they can get from conventional banks,” the Chairman said.

These people will give down payment of Rs300,000 for their vehicles, which will be their equity and we will take care of the rest. Based on their feasibility study, the venture will offer a 33 per cent annual return on investment (RoI) to the aforesaid people. In three years, the RoI number will be almost 250 per cent after they become owner of their cars.

“E-Ride is 100 per cent sharia compliant, offers solution to a social problem, and has blessings attached to it: for example, a woman who gets Rs15,000 a year on Rs300,000, will get Rs100,000 a year on the same amount and becomes owner of the property as well,” Vaid says.

E-Ride is only one venture explaining Nexsource’s philosophy but the company is doing some other projects that adhere to the same principles. Another major program they are doing is providing interest free loans to the marginalized segment of our society.

Their microfinance venture, Akhuwat provides the economically poor with interest free loans so that they may acquire a self-sustaining livelihood. The funds collected for Akhuwat USA are used solely for

the purpose of disbursing interest-free loans to the unprivileged in Pakistan, the program’s website says. “We believe that access to capital is a much-needed step towards poverty alleviation in Pakistan,” it adds. They are also trying to raise funds for their upcoming project, Akhuwat University, that will provide “state-of-the-art but affordable” education to the poor.

The program provides loans for marriage, education, health, housing, and emergencies but the most famous is family enterprise loan (from Rs10,000 to Rs30,000), which comprises 91 per cent of Akhuwat loan portfolio. It is given for setting up a new business or expanding existing one to help borrower secure a sustainable livelihood.

Nexsource’s main website features it as an expert in BPO and consultancy business, but Vaid says for the last one-and-ahalf decade, they have been mainly focussing on the social enterprise aspect, which adheres to Islamic teachings and remains centric to its philosophy.

“I have been inclined to religion even before we turned into a social enterprise.

But, Maulana Abdus Sattar certainly influenced me during this time,” Vaid said responding to the question about what brought him close to religion and his business to Sharia -- Maulana Abdus Sattar is the Imam and Khateeb of Baitussalam masjid.

Vaid’s association with Baitussalam’s Imam has been quite long but the renowned Islamic scholar, Maulana Tariq Jameel also influenced him later on.

“Our philosophy is sharing of wealth and resources,” Vaid said. “It all starts with faith [Aqida], trust in God for what you will get or earn and what is not for you,” he added. Explaining, the chairman said one has to believe that God has produced rizq [means of earnings] for everyone and poverty is because people refuse to share.

The concept of Akhuwat (brotherliness) says if wealth is distributed equally there will be no social problem, Vaid said giving example of Hijrah, migration of

‘YOU CAN SAVE MONEY THROUGH BRIBE OR MANIPULATION OF FINANCIALS BUT THERE WILL ALWAYS BE SOME TENSION ATTACHED TO IT. YOU DO EVERYTHING FOR PEACE OF MIND, SO WHY OPT FOR A STRESSFUL ROUTE. WE INCLUDE TAXES IN OUR COST AND PASS IT ON TO OUR CLIENTS’ Prophet Muhammad and his followers from Mecca to then Yathrib and today’s Medina.

People of Medina shared all their assets with the migrants, who were skilled in business, and eventually both the parties benefitted, he said. “So, sharing is very important.”

However, Vaid’s target audience doesn’t remain limited to Muslims, all their programs are open to marginalized people from all faiths -- Nexsource itself has a Hindu graphic designer and Christian sales staff. “Our Akhuwat program starts operations from mosques, temples and churches,” Vaid said.

Adhering to one’s faith while doing business isn’t always a smooth sailing though. Infact, it may require compromises and Vaid’s case is no different.

Vaid wanted to enter the business of government contracts but there was no way he could avoid interest because the structure of that business was designed around loans. He decided against it. He also has a real estate business and can get higher rent from banks for his commercial property but refrains from doing business with banks.

“This means lower profit for us. So, you have to make compromises at times,” he said.

However, Vaid believes there are many benefits of sticking to your faith.

Giving an example, he said they import garlic and ginger based on how much cash they have at hand as opposed to taking interest-based loans. But some traders go for financing and end up flooding the market with excess supply, which often leads a fall in prices and loss for them, something he

‘IN EVERYTHING WE DO, WE MAKE SURE A GOOD PERCENTAGE OF OUR EARNINGS GOES TO SOME SOCIAL SOLUTION. WE FOCUS ON HOW WE CAN INVOLVE COMMUNITY AND BENEFIT IT’

experienced first hand. And he continued with more examples.

“If you can recall 2008 stock market crash, only those who borrowed huge amounts from banks to invest in stock market became broke,” Vaid said. “Similarly, in 2010-2011 real estate crisis in Dubai, some billionaires who borrowed from banks and invested in real estate suffered massive losses after that bubble burst and prices came down,” he added. These big shots defaulted on their payments and even left Dubai after facing ban. Those who invested their own money or did Musharika (agreement of partnership) with someone were better off during that crisis because their losses were distributed equally among all partners, he said.

According to Vaid, there is a downside of not going for a bank loan because it leads to financial limitations but on the flop side, the risk is reduced in case of a loss.

Musharika (partnership) is they way to go, he says.

Asked about his take on philanthropy as a substitute to taxes in country like Pakistan where tax system is in tatters, Vaid said, “Since it is imposed, a good businessman takes taxes as cost.” The Nexsource chief says one can save money through bribe or manipulation of financials but there will always be some tension attached to it.

“You do everything for peace of mind, so why opt for a stressful route. We include taxes in our cost and pass it on to our clients,” he said -- his company contributes Rs200 million in annual taxes to the national exchequer.

“Before starting any business, think about life after death. Is the work you are starting going to ruin your hereafter [Akhirat]?” he said of one advice he would like to give to aspiring entrepreneurs. “If you choose something that takes care of your hereafter, your current life will be taken care of automatically.” n

BEARDS IN BUSINESS

CONVERTING TO SHARIACOMPLIANT, AND BETTER OFF FOR IT Having made many compromises because of his decision to run a Sharia-compliant business, Javed Iqbal has no regrets Javed Iqbal, Director Stylo

aved Iqbal Siddiqui, Stylo’s Director, New Businesses, and Footwear Manufacturer Association Chairman, has no regrets over the compromises he has had to make while converting his business practices by bringing them in line with Sharia.

Stylo has its roots in an outlet opened in 1974 by Javed’s father Azhar Hussain Siddiqui; it was called Bano Chappal. The first Stylo shop was established a few years later which Javed started managing soon after. Trapped into a legal wrangle with the landlord, the family eventually had to bring the shutters down on Bano Chappal.

That’s when Stylo emerged as the primary family business for Javed. The vetting of business processes in light of religious teachings and running a Shariacompliant business happened much later, in the late 2000s. Javed says, this devotion to religion was not part of the business from the beginning. Rather it was a gradual shift towards religious practices that led to this change. He says, his association and environment at the time also

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By: Syeda Masooma encouraged this shift towards Sharia.

“Allah gave us the opportunity to turn to His ways and we started realizing the importance of religion and its commandments,” he said.

“Furthermore, the people around us then were also religiously inclined so we began to realize that business should not only be a means to earn for this world but should also pave the way for hereafter too.” he added.

Since then Stylo has taken on board Nafae, as Sharia compliance consultants, and Nafae have vetted every part of their business down to their contractual documents. This was followed by Time Lenders’ trainings to improve Sharia’s abidance in their business practices.

Starting from their marketing strategy whereby no female models are allowed in company’s advertisements anymore, Stylo also revamped its contracts with suppliers, employees and other stakeholders – ridding them of any unfair treatment and financial penalty or burden.

The company has also vowed to strictly stay away from any interest-based

‘SHARIA’S TEACHINGS HAVE BEEN VERY HELPFUL TO ME IN RUNNING BUSINESS AND I HAVE SEEN THAT ALL THE PROBLEMS EVENTUALLY GET RESOLVED AND THE VOLUME KEEPS ON GROWING’ 22

activity and is still running on one hundred percent equity without any bank or financial institution on board. Javed has two sisters, neither of whom are part of Stylo. He said that there is no compulsion for the women in his family to join the family business, rather it was their own decision and their personal life’s engagements that made them stay away from business.

He says that he does not believe religion bars women from entering business or sharing in wealth.

“All our children and family members, irrespective of their gender, are allowed to become part of the business. In fact when my father died, we not only gave our sisters their due share in our father’s property, but we brothers also forfeited our own shares to be given to them.” explained Javed.

The company’s HR policies regarding men and women also fall in line with Javed’s personal philosophy. There is no gender difference in the employees of the company, there is no restriction on employees on leaning towards religion and there is no enforcement of religious practices on the job.

Javed says, “It is a big misconception that religion restricts you or binds you, religion does not make things difficult for you and neither does our company. We are not dealing in religious education or something of that sort, so we don’t concern ourselves with what our

employees do in their life outside work.”

However, they are not unconcerned with the corporate culture of their company. The departments predominated with female workers are segregated and an unsaid but prevalent culture of the company also forbids them – though informally – of dressing up in an immodest manner.

In the director’s words, “We have about 30 female employees and they are working in every department. However, in the departments where there are more women, we segregate the working areas.

There isn’t any particular dress code either but the culture is enough to show what is preferable here, and no one transgresses that.”

While the management of the company is very particular about prayer timings, and the employees are allowed to get up from their seats for prayers, however there is no forced break or compulsion for anyone that he or she must follow in the footsteps of the management.

“At prayer time, we ourselves get up. But we don’t force it on our employees. They are allowed to take a break or if they are in a meeting they can offer prayers later, it’s their own choice. Religion does not force anything on people and we make sure that we don’t force anything on our employees either.”

Javed feels that his leadership role has not been impacted in any drastic way because of his changed approach towards his business. While he said that he now realizes that business is a means for him to earn for this world and pave the way for the life hereafter, he believes that he has only been assisted by religion in his leadership role.

‘TAXES ARE A LEGAL OBLIGATION AND IT IS COMPULSORY TO UPHOLD THE LAW. ZAKAT AND CHARITY ARE ONE’S PERSONAL DISCRETION AND DEPEND ON AFFORDABILITY. THERE IS NO REASON OR RATIONALE TO CONSIDER ONE THE ALTERNATIVE OF OTHER. BOTH ARE DIFFERENT BUT NECESSARY RESPONSIBILITIES’ His colleagues and acquaintances have, however, told him that his personality has undergone changes due to his increased inclination towards religion.

Quoting his wife, Javed said, “My wife tells me that I have become calmer and more composed over time. Before turning to religion, I used to get hyper quickly.”

Javed appears very accommodative about how other businesses work in the industry. He does not complain about anything in the industry practices but maintains that it is his ardent desire that interest based businesses come to an end wherever they are being practiced.

“If you ask me what is my personal wish, and talking about the shoe industry, I wish that interest-based industry, wher-

‘THIS DEVOTION TO RELIGION WAS NOT PART OF THE BUSINESS FROM THE BEGINNING. RATHER IT WAS A GRADUAL SHIFT TOWARDS RELIGIOUS PRACTICES THAT LED TO THIS CHANGE’

ever it is running, should end. It should be equity based.”

On the issue of taxes being considered as an alternative to Zakat and alms, Javed said, “Taxes are a legal obligation and it is compulsory to uphold the law.

Zakat and charity are one’s personal discretion and depend on affordability.

There is no reason or rationale to consider one the alternative of other.

Both are different but necessary responsibilities.”

Talking about the industry, he believes that being Sharia-compliant has provided him with some advantages. One change that his customers may appreciate even more is the changed return policy that Stylo offers on its shoes.

“Our return policy now is very flexible. This came after we started inculcating religious values. Now we have a cash-back policy, while earlier it was only exchange.”

Javed says that he has had to make loads of compromises because of his decision to run a Sharia-compliant business, but he does not regret making any one of them. He said that Allah has rewarded him for every decision he has to take keeping profits secondary while keeping commandments of sharia first.

“There have been ups and downs in business but they happen in every business. Sharia’s teachings have been very helpful to me in running this business and I have seen that all problems eventually get resolved and the volume keeps on growing.” n

BEARDS IN BUSINESS

FOLLOWING SHARIA IN BUSINESS HAS ITS BLESSINGS Though it takes motivation and perseverance to remain steadfast Badre Alam, CEO, Badre Alam Traders

he owner and CEO of Badre Alam Traders believes that it is daunting but rewarding to take a leap of faith and adopt Sharia.

For him this change came after 18 years in the chemical and machinery industry. It has been a little over two years that he got his business audited by the Sharia compliance standards and much to his shock he found that several chemicals and products he used to deal with were prohibited in Islam.

Though he vowed to make the shift gradually, he needed a lot of motivation and perseverance towards becoming Sharia compliant.

“As one starts a business, one is not too concerned with what one has to do. It is later that one gets to evaluate business practices. For me it happened after 18 years of doing business, when I realized that we were not even aware of what was allowed and what not.”

This lack of awareness, he laments, prevails not just in business community but in the society overall. “In our homes

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By: Syeda Masooma if you ask of faraiz of namaz, perhaps only one out of many would know.”

Similarly in terms of business, we have investments, dealings etc. and there are many things that are not allowed in Islam. For example, many companies put financial penalties on latecomers, which is prohibited in Sharia.”

The business managements appreciate values like truthfulness and honesty in workforce but the means used to promote these are flawed. “We have cameras to keep an eye on our employees instead of creating an environment which motivates them from within to follow moral rules.”

Following a Sharia-compliant model for his business has allowed him to overcome several such challenges. “The company policies to reward workforce for their good work and to avoid unnecessary penalties if someone lags behind has led to his employees becoming more loyal and honest without any strict controls.”

His personal life has also undergone massive overhaul as a result of this shift

‘THE COMPANY POLICIES TO REWARD WORKFORCE FOR THEIR GOOD WORK AND TO AVOID UNNECESSARY PENALTIES IF SOMEONE LAGS BEHIND HAS LED TO HIS EMPLOYEES BECOMING MORE LOYAL AND HONEST WITHOUT ANY STRICT CONTROLS’ 24

in his business practices. “Ten years ago, I never gave a single rupee in Zakat, but having realized that it was compulsory, now I pay in millions.” He says, now he has strong faith that his property, wealth and life is in Allah’s protection because he is paying Zakat. He is rather offended by the concept that people consider Taxes and Zakat/alms to be alternatives.

He is dismissive of claims that if someone is not aware of the right ways to follow religion, he might not be guilty.

“People are also not interested in getting the right answers because if you know the right thing then you are bound to abide by it. Not knowing does not absolve one of responsibility. ‘Ignorance of law is no excuse,’ is the most basic precept. The same applies to Sharia.”

He also shared his experience whereby an omission cost him dearly.

“We inadvertently opened a savings account. Four of our shipments got damaged. We wondered, how it could have happened when we were paying Zakat diligently. That’s when we found out about the interest-carrying account. Rs12 of interest was credited to, and as a consequence we had to suffer a loss of Rs300,000. We have total faith that if we pay Zakat, our property and wealth is safe.”

He says, worldly businesses are not meant to be for monetary gain alone but also to prepare for the life hereafter.

“When I say that I don’t have any com-

petitors, people are surprised. What I say to that is, no competitor can take away what is written in my fate.”

Failure in following Sharia to him is responsible for failing businesses and complications in our lives. “One of our ulema was telling us that religion says to ‘Live like brothers and do business like strangers.’ But we live like strangers and in business we extend favors like brothers. This leads to loss of compliance and then we have to face problems later; our courts are overloaded with cases and our lives are filled with complications just because we fail to understand the consequences of stepping away from what the religion commands and what Sharia requires.”

He expresses gratitude while saying that his business has been posting positive growth while the entire industry he operates in is going down.

Though he is not very optimistic about Pakistan’s industry prospering in the wake of China Pakistan Economic Corridor, he is satisfied that him and his business are going in the right direction.

The export and the overall growth of leather industry, where I work, is down by 40 per cent, and it is in decline for the last five years. However, our parameters as a company are improving. We have had 10 per cent annual growth in recent years because we are using different parameters, through which we are not only safer but are also getting returns for this world and the life hereafter.

“In Pakistan, we cannot even aim to be on top in an industry because in the next few years there won’t be any industry here to begin with. Prevalent conditions reflect that government has given everything to China. In a few years, they will own all the companies and we will be their employees.”

‘HIS BUSINESS INVOLVES TRADING WHICH BRINGS HIM IN CONTACT WITH A LOT OF FOREIGNERS. CONTRADICTORY TO WHAT THE MEDIA MIGHT PORTRAY, TO HIM IT COMES FROM EXPERIENCE, THE GLOBAL BUSINESS COMMUNITY STILL HOLDS MUSLIMS IN HIGH REGARD’ About the HR policies in his company, he said that he ensures to follow the Sharia principles by the book. While there is no room for financial penalties in the religion, according to him there is no edict making monetary compensations necessary even if an employee has not been able to deliver his designated work.

When it comes to taking holidays for Hajj, he believes that it is necessary for a human being to spend his own hard-

earned money in the way of Allah, and not through his employer’s contribution.

“It is not even allowed to provide monetary compensation. If someone isn’t spending his own resources on Hajj, then what’s the point?”

On a regular basis, Badre Alam holds trainings for his employees to educate them in ways of Sharia as prescribed

by Nafae and Time Lenders – the organizations he has on-board to audit his business and keep the practices in line with Sharia. However, there are no extra reli-

‘WE HAVE CAMERAS TO KEEP AN EYE ON OUR EMPLOYEES INSTEAD OF CREATING AN ENVIRONMENT WHICH MOTIVATES THEM FROM WITHIN TO FOLLOW MORAL RULES’

gious education classes or trainings on company time.

The chief executive is not worried about the social and industry backlash that results from following religious codes. Although he confesses that almost all government departments are riddled with corruption and even some private sector parties are bent on bribery and favors.

He said that he has decided to stay away altogether from people and sectors that necessitate corruption. “In industry and private sector, if we find a hurdle that cannot be passed without unethical means, we change our route. We have filtered ourselves and we don’t get involved in businesses or activities that necessitate the use of bribe or corruption etc.”

However, he does not seem angry with those involved in such unlawful practices. “It is not about corruption or backlash, because a person who is indulging in wrongdoings is not aware or is not willing to accept that he is involved in unlawful means. The people who are involved in such ways got there because of one reason or the other and now they don’t have a way out.

His business involves trading which brings him in contact with a lot of foreigners. Contradictory to what the media might portray, to him it comes from experience, the global business community still holds Muslims in high regard. “Foreigners are not affected by it and they don’t actually have such an image of us. I have travelled the whole world with this face and these clothes, the USA, Brazil and so many other places and everyone I met treated me with respect and got inspired by the values we practice in our business.” n

BEARDS IN BUSINESS

SHARIA COMPLIANCE PROVIDES TTI AN EDGE We test quality and without our report, those companies cannot export anything worth a penny.

So, we have a pivotal position and our edge is being Sharia compliant Sarim Mehmood, General Manager TTI Labs

o Sarim Mehmood, General Manager Strategy and Business Operations, the foundation of the TTI Labs is rooted in Sharia. He said, the CEO Hamid Latif founded the company on the premise of shunning unlawful and unethical practices prevalent in businesses around the country.

TTI is actually a set of two companies: TTI Testing Labs and TTI Inspections Private Limited. Neither of these is regulatory in nature, but companies wishing to get a quality test or inspection contact TTI Labs themselves. For the inspection category, majority of their clients are foreign companies wishing to ascertain the quality levels of their trading partners from Pakistan.

Sarim said, “We test quality and without our report, those companies cannot export anything worth a penny. So, we have a pivotal position and our edge is being Sharia compliant.” TTI Labs has been in the business since 1995. “We were the first in the private sector to start third party due diligence and testing inspections. There were a few multinationals working globally but none in Pakistan.”

Back then Hamid was working for a company that often faced compliance issues when they produced for multinational companies, such as quality not being up to the mark and products not fit for export but given the green signal by people who were gratified to issue letters and certificates.

“One of his consignments got in trouble

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By: Syeda Masooma due to shrinkage in garments and he couldn’t find a lab in Pakistan which could test and tell what went wrong. That’s when he realized that he needed a company that could do this pivotal testing for the industry. So he launched this small company with a twin-room office but the vision behind it was huge.

“Within the first five years we started getting testing requirements from various industries. Now we have about 200 employees here and 2,000 globally, with our multinational partnership encompassing nearly all USA and European brands sourcing from Pakistan.”

He doesn’t waste a second before attributing this entire success to only one factor – Sharia compliance. “Since the basic vision was to ‘Do things right’, Sharia compliance helped in promoting TTI and communicating with potential clients… They come here and are im-

‘SHARIA MEANS SHARING, AND NOT TAKING ONLY. SHARIA HAS BEEN INSTRUMENTAL IN KEEPING OUR WORKFORCE HAPPY AND STRONG’

pressed with the discipline and commitment… We’re working with all sorts of fancy brands, from H&M to Nike, and being a Pakistani company it is a big thing.

“The beauty of sharia is that it is one step ahead of the law. And Sharia is gaining in popularity for non-Muslims around the world too. “For instance, Halal certification is becoming popular to non-Muslims, owing to it being more hygienic. It is not anymore about Muslims anymore, its market is growing.

“TTI also has an NGO dedicated to halal food compliance, ‘Fehm-ul-Halal’ “It is doing research on how many unlawful ingredients were in use in Pakistan and what were their halal alternatives. For example, we point out why a certain gelatin is not halal because it is sourced from a forbidden animal’s bones, while an alternate is halal. The NGO held three sessions at its own expense in different companies and people responded well.”

TTI Labs, Sarim says with a measure of pride, does not transgress any moral limits. “We don’t lie and we don’t do anything unethical. We do 200 reports per day and each report represents a shipment. People try to offer us bribes frequently. Our manager here could be tooling around in a Mercedes if he wanted to! For example if a shipment costs around Rs 10 crores, even if he takes only Rs 50,000 each who would know. I am the General Manager and I can sign anything, but we don’t do it.”

The company also has ISO 17025 cer-

tification, mandatory for global companies in this sector – extremely useful when potential clients were being sought. The company allows all sorts of people to work and do business with, not enforcing its beliefs on them. “Time Lenders [Sharia compliance monitoring and guiding organization] have provided us and our employees HR trainings, including visions, time management and sleep management etc.

“They have also trained our wives in that, so we incorporate Sharia into our business and into our personal lives.”

While the company strictly abides by Sharia and literally follows the religious edicts, but as a policy it is not enforced on employees to change their ways and mindset. “There are non-Muslim employees in the company as well, who are required to uphold the moral principles as corporate culture but there is no restriction of religious values when it comes to hiring of employees,” says Sarim.

According to Sarim, it is not always easy to operate within the confines imposed by Sharia when it comes to dealing with external stakeholders. Sometimes TTI has to pass up on lucrative opportunities just to make sure that they were not indulging in any Sharia-prohibited practice.

However, that in no way upsets the management. “We believe that if one door is closed, ten others would open instead.”

Sharing an adverse experience, he says, “These days there is a government environment department causing us a lot of trouble. To give us a certificate, an official there is asking for Rs30 million. We don’t even need that certificate but it has been inserted in bid documents. It is causing financial loss to TTI, but we are not giving in to corrupt demands, though we are losing Rs10 million every month because if it. Such are the challenges, but the positive part is that if we remain strong, everyone would know that we are genuine.”

He is convinced that Sharia compliance has not only strengthened TTI’s busi-

‘IT IS NOT ALWAYS EASY TO OPERATE WITHIN THE CONFINES IMPOSEDBY SHARIA WHEN IT COMES TO DEALING WITH EXTERNAL STAKEHOLDERS. SOMETIMES TTI HAS TO PASS UP ON LUCRATIVE OPPORTUNITIES JUST TO MAKE SURE THAT THEY WERE NOT INDULGING IN SHARIA-PROHIBITED PRACTICE. HOWEVER, THAT IN NO WAY UPSETS THE MANAGEMENT’ ness appeal to clients but has also impacted its inner structure in a positive way. “The ownership that employees take to their work itself makes a lot of difference. We had a training by Time Lenders here in which they taught the concept of ehsan– perfection. That eliminated half the problems from our midst.

The message was: ‘When you are a good Muslim, you don’t have the option of being a bad employee, a bad boss, or a bad worker.’ It made everyone in the company far more committed than before. Mufti saab also did a training on Ehed (commitment), and as a result two of our employees came to us, holding forth that they have realized that delay at their end delays a shipment”.

Mufti Sahib, Sarim says, keeps him in check too. “If I make anyone stay back after work, he makes me compensate them.

Sharia means sharing, not only taking.

Sharia has been instrumental in keeping our workforce happy and strong”.

While the company does not discriminate against non-Muslim employees, Sarim thinks that their business line does not suit the female gender. “This company was initiated by two women and a man… But in our business, 8-9 hours of standing and testing is the norm, which is beyond female endurance levels. We tried it but it didn’t work. Currently we have a woman employee and we are open to hiring too, but

‘THAT’S WHEN HE REALIZED THAT HE NEEDED A COMPANY THAT COULD DO THIS PIVOTAL TESTING FOR THE INDUSTRY. SO HE LAUNCHED THIS SMALL COMPANY WITH A TWIN-ROOM OFFICE BUT THE VISION BEHIND IT WAS HUGE’

we have strict guidelines which include dress code, behavior and segregation and so on.”

Like Badre Alam Traders, TTI Labs also do not believe in compensating their employees for work not done, even if it is for the purposes of Hajj. “About Hajj holidays, we have a Khurooj policy. If someone leaves in the way of God, we appreciate it, but it has to be through the proper leave policy. We don’t compensate them monetarily for that absence.”

However, they do provide an annual opportunity to their employees for travelling in the way of God. “We do provide opportunity of one Hajj and one Umrah every year for our employees and this has been going on for about ten years now.”

On the marketing side, Sarim informs, since the company operates only in B2B market, they do not have to get involved in the practices of televised advertisements. He also said that the company focuses on informative marketing instead of persuasive approach. “We don’t try to persuade anyone. We focus on awareness and education instead.”

When asked to share his advice to the people in the business community who feel that it is difficult to survive the competition through only fair means but are still not happy to give up on their religious values, Sarim shared a voice message sent by the CEO Hamid to the employees just before the company’s audit. An excerpt from it: “Our audit is nigh…”, and then linking it with the day of judgement, he says, “Stay steadfast and make sure that we don’t tell any lie, don’t hurt anyone and don’t break any commandment of Allah.

God willing we will be successful. This is the motive of our efforts and we need to keep it intact.” n

BEARDS IN BUSINESS

PAINTING IT IN ALL THE COLOURS OF PIETY Heading two thriving businesses, Mir Shoaib follows Ubudiyah Business Model Mir Shoaib, CEO Diamond Paints

iamond Paints CEO Mir Shoaib introduces himself as a staunch follower of the Ubudiyah Business Model. He has gotten and is getting all aspects of his business operations vetted by the experts of UBM – and keeps on incorporating the proposed changes. The industry he operates in, however, has certain practices that according to him clash with his faith and principles, forcing him to comply to stay in business.

The ‘tokens’ in paint buckets is a decades old practice that all paint companies say they are compelled to use to sell their products.

Shoaib said, “We were compelled to be similar because every multinational – despite stringent controls and international ethics – has adopted this practice. In a competitive market, you have to adopt such practices if you are to survive”.

He is grateful to the Securities and Exchange Commission of Pakistan (SECP) to have made mentioning the token amount in buckets mandatory. “And may Allah bless SECP people who made us write the token amount on the cap. The positive thing is that Competition Commission took notice of this, and called us there. They said that it is supposedly a deceptive marketing practice, and if it is disclosed on the can and the shade card the amount of token included, it would eliminate the element of deception.” Shoaib said while explaining SECP’s decision.

Paint is not the only business Mir Shoaib is in, he also runs a car dealership. While

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By: Syeda Masooma claiming that Diamond Paints is the top paint company in the country, he is also the number one Suzuki dealer in Pakistan. He is very particular about keeping that business in line with moral and religious principles as well. Though he sets non-negotiable targets for his employees, such as number of plugs and quantity of brake oil sold, he is equally stringent about not using unethical means to meet those targets.

“I have instructed my workers not be dishonest, such as changing somebody’s car or bike’s functional parts just to fulfill targets.

Even if there is a huge pot of milk, a single drop of urine makes it impure, so haram is not the right thing. Allah is giving us halal, so there is no reason whatsoever to go the wrong way.” explained Shoaib.

He is also a strong advocate of paying taxes. He said, “I am surviving despite paying taxes. Our Religion says that if you don’t follow the law that is not in dispute to sharia, you are committing a sin. So when you run a red light, you are committing a sin. Same goes for tax evasion. No matter who you are, stealing tax is sinful because sharia does not stop you from paying taxes. Likewise, if you are not even paying the minimum wage, it’s double the sin because you are breaking the law and infringing upon the rights of the employee as well.”

He is very particular about how he treats his employees. “We follow the design for UBM by Sheikh Hashim, which has two main principles. One is that Allah said, And I did not create the jinn and mankind except to worship Me. And the second is the saying of Prophet

(PBUH) “The best of people are those that bring most benefit to the rest of mankind.”

“So according to the UBM it all comes down to doing it with the right intent. For instance, one should realize that one is not here to make money, but how one is supposed to make this business a means to one’s salvation for the hereafter. And to benefit mankind is the key.” he said explaining the crux of the UBM design.

Mir Shoaib says, “We have done a complete vision process with Time Lenders on where Diamond Paints would be in 50 years, what would be its vision and what it would be doing. Then we come to 25 years, then to 10 years and then to five years and then to the ongoing year. We have appointed a vision captain, Commodore (Retd) Naveed who makes sure that we don’t go off track and that there is a regular review of our business as well.”

In addition to minimum wage law abidance, Mir claims to have taken many steps for the benefit of his employees. He said, “With regards to workers benefits, many businesses avoid giving their employees mandatory rights.

Old age benefits, provident fund or gratuity is not given. A person spends his whole life with a company and when he leaves, he doesn’t have anything. So one, we are following labor laws hundred percent, including minimum wage laws.”

There is also a profit-sharing model for workers in Diamond Paints. “We also announced that we will share five percent of our profits with our employees. Last year by the

grace of God, we made 40 crores in profit, we paid tax on it too, and shared it with our workers. We introduced Workers Welfare formula through which everyone getting under Rs18,000 got Rs53,000 apiece and those earning above it got Rs32,000, except directors and GMs. “The formula aims to give a higher share to those employees who earn less and vice versa.” said Shoaib about sharing profits.

“We also give two bonuses a year. We have free lunch for our employees. Once a week we also bring a goat and serve mutton. It is all on the company; I eat the same food.” he added.

In addition to the direct profit sharing, there is also a foundation supported by Mir Shoaib’s business.Ten percent of Diamond’s total profit, which is from Suzuki and paint businesses combined, goes to endowment.

Amer Allaudin Foundation is named after Shoaib’s late father. It specializes in Hepatitis C, Diabetes and Hypertension, with professor doctors tending to the patients.

The foundation has also received a Philanthropy award after Bahria Town from President Mamnoon Hussain. It’s a new award introduced by SECP, who discovered the data through banking channels.

“I didn’t believe it at first, and told my son to check if it was not a money-making exercise, like the Chambers where you pay Rs500,000 and get the award from the prime minister.” he said.

According to Mir Shoaib his workers also have the option of asking for an advance payment or a loan in case of an emergency.

“Any of my workers can send an application to my secretary if he needs anything. Every Monday I take a look at those applications and try to provide for their needs. When one is doing charity for outsiders, one must look after his own too.”

He has several systems in place to provide religious education and learning opportunities to employees. “We have Tafheem-e-Deen course. Since there are many sects, and we are an emotional people, we only included Quran and Hadith, and kept it totally uncontroversial. There are two sessions daily of half an hour each before and after Zuhr prayers. These small things matter. To keep everyone motivated, we also give sizable cash awards to those who do well in viva.”

While he is convinced it is his responsibility to provide an environment for religious and personal betterment of his people, he does not burden himself with how his workers re-

‘FOR US THE BIGGEST PROBLEM IS THAT SINCE WE DON’T WORK WITH BANKS, A LOT OF CASH IS NEEDED TO FUEL THE 30 PER CENT GROWTH IN OUR BUSINESS... THAT IS WHY FOR NOW WE ARE TRYING TO RAISE THAT CASH OUT OF MARKET BY INCENTIVIZING DEALERS AND PUTTING OUT OTHER SCHEMES ETC’ spond.

Mir Shoaib also tries to put forward his beliefs and the message of UBM for his fellows, colleagues and customers whenever he gets an opportunity.

“For customers, whenever there is such a gathering, I hold a presentation on UBM. The idea is to be good to employees and honest to customers. For traders it is said that their Judgement (Hashr) will be done with prophets, just think what a big deal it is. Even a rehri wala is a trader, and if he only sells strawberries honestly, even he can get there.” explained Shoaib.

He also shared an experience in this regards. He said, “People from Club CEO came to me for an interview but I refused. They wanted me to purchase their books. I told them that I will buy them if they invite me on their seminar to speak on UBM.” To Mir Shoaib, it is important to keep reminding people of the importance and necessity of religious values and their usefulness in everyday life.

However, he considers it too big a responsibility to take investors’ money in his business. He just expanded his production capacity with a new factory but without having any bank on board or inviting any investors.

“For us the biggest problem is that since we don’t work with banks, a lot of cash is needed to fuel the 30 per cent growth in our business, and our plant needed a lot of investment. That is why for now we are trying to raise that cash out of market by incentivizing dealers and putting out other schemes etc” “The biggest issue for me with an IPO is that once someone buys your shares, he becomes the owner of the company by that much percent. So if I end up misappropriating a little, because you need to do it even if you don’t want to, I would be accountable to others then.

Otherwise for me an IPO is very easy, all our books are straight, and even two multinationals have approached us but I said no. I say

that thanks to the Almighty, we are doing well, and making money, what do we need more for.

For now it’s my money; I can burn it if I want.

But if I have shareholders then it’s their money too and mistakes can be made anytime; I don’t want to be accountable to so many people.

“For now I can invite professionals, buy horses from Argentina and spend wherever I want. That is not possible if you are accountable to others.”

He elaborated, “A hadith says that for someone’s few paisas you are supposed to give 700 accepted prayers in return. We don’t even know how many of our prayers are approved anyway. This is the trick behind success. Make Allah your partner and be happy. People do businesses and jobs, so all they need to do is to correct their intent. That’s why I am doing this because I don’t want to ask someone else, and if I have extra then I’ll give it for Allah’s sake.

“So it all boils down to making your intentions right. Ulema say that it is an everyday need to address your intentions. I like horses and play polo. The ponies are to be brought from Argentina and are very expensive. I used to feel very guilty. So a religious person told me to make an intention that if these horses and this skill were needed some day for jihaad, I’ll use them there.”

He is not averse to working with Islamic banks, though. “We work with Islamic banks.

We get LCs, we use accounts; we also did Mudharaba recently because we imported machinery. But we avoid excessive banking. We have three banks and they are all Islamic: Meezan Bank, Standard Chartered Islamic and UBL Ameen.”

He also shared how particular he is about making payments to his suppliers on time. In his own words, “A few days ago, Mufti Sahib was saying that delaying payments is a sin, unless you inform and apologize in advance.

There are times when market does not respond similarly so I said to the purchasing guy to start apologizing in advance”, he said in jest. n

BEARDS IN BUSINESS

EXPORTING HALAL MEAT THE SHARIA COMPLIANT WAY The company is so particular about being Shariah-compliant that an in-house Mufti has been engaged so that each and every practice follows Islam’s edicts Kamran Khalili, CEO Al Shaheer Corporation

aving spent around a decade in Pakistan Stock Exchange (then Karachi Stock Exchange), Kamran Khalili, CEO Al Shaheer Corporation, wrapped up his company Fortune Securities Limited, in 2006, on the back of ethical issues that he deemed contradictory to his beliefs. Soon after, in 2008 Khalili set up his Shariah-compliant company Al Shaheer Corporation to export meat to Middle East – which till date remains his largest export destination.

The business expanded in no time, with inclusion of local retail chains Meat One and Khas Meat – and the company got publicly listed in 2015, after nearly seven years in business. By the time it went public, the company had an enviable annual growth rate of 30 to 40 per cent, which means it was more than doubling its turnover in less than three years!

Khalili had started his career with banking in 1991, but now he strictly adheres to his interest-free business policy. Al Shaheer Corporation that runs Pakistan’s only branded meat retail chains Meat One and Khas Meat is a wholly Shariah-complaint company and Khalili is proud of that.

Started in 2008, Al Shaheer has so far

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By: Aisha Arshad maintained zero interest in the financial matters of the company and for that Khalili and his team rely on the various Islamic Banking options available in the country.

Khalili does admit that Islamic banking processes are lengthy and difficult for a newcomer to get accustomed to. But he does believe in interest-free banking system, which was made to provide an alternate to the normal banking practices not in consonance with Islamic precepts.

“Pakistan was made in the name of Islam, our constitution is in accordance with Shariah but practices are contradictory. It’s government’s task to eliminate [interest].”

Despite the growth of the company and inclusion of people from multiple ethnic backgrounds, Khalili maintained the practice of following Shariah intact.

So particular is the company about being Shariah-compliant that an in-house Mufti to look over all the contracts and policies of the company has been engaged so that each and every practice is in accordance with Islam’s edicts. From borrowing to implementing a dress code (covered head with modest dress for female employees) Al Shaheer in Khalili’s words tries to do ‘nothing against the rulings

‘BY THE TIME IT WENT PUBLIC, THE COMPANY HAD AN ENVIABLE ANNUAL GROWTH RATE OF 30 TO 40 PER CENT, WHICH MEANS IT WAS MORE THAN DOUBLING ITS TURN TURNOVER IN LESS THAN THREE YEARS’ 30

of Allah’. It is also noteworthy that in addition to the Shariah compliance, Al Shaheer also complies with the laws of the land. Adhering to all the regulatory measures, the company pays one per cent tax on its exports and 33 per cent on its local sales. According to Khalili, “If Allah has appointed someone as my ruler, he must be a better person than I am. We should obey and respect the state’s laws; and since I pay Zakaat, it does not in any way empower me to steal taxes. Such justifications are indeed gratuitous.”

In addition to complying with Shariah in financial matters, this being the guiding light is widely seen in other departments of the company as well. Both the marketing and HR departments follow practices that stay in line with Shariah and rulings of the religion.

A case in point is Meat One and Khas Meat’s advertising campaign in which female models and music is strictly prohibited. Similarly, the HR department’s policies are also in accordance with Islamic rulings and no financial penalties – for leave, late attendance, etc.

– are imposed.

When Khalili is asked for an advice for young entrepreneurs who wish to incorporate their faith in this business policy, he says.

“Those whose belief is strong do not care about challenges. If I believe that I am a Muslim and Allah has fixed my rizq and that he would provide for me, then nothing else matters. If you do not have musical ads or deal in interest, there’s nothing to be scared of [about your business suffering because of it],” he concludes. n

BEARDS IN BUSINESS

OPINION

Zainab Tariq

was developing. 3G had recently been launched increasing the use of smartphones, telecom companies had launched digital payment methods, both Careem and Uber launched back to back,Rozee, Zameen and Pakwheels were raising/had raised series, over 20 incubators/accelerators and 40 co-working spaces had launched through the country. moved back to Lahore close to the end of 2015, with a The Higher Education Commission had given heavy heart, worried about the lack of attractive digitalgrants to universities countrywide to set up ORIC cenbusiness opportunities. I had heard about a few startups ters (office of research innovation and commercializapaving the tech space then, Patari, Mangobaazand Travly tion), and allow students to build and scale businesses, and decided I would meet the founders to hear their stories meaning universities were turning away from curricuof struggle and success. In trying to connect with them, I lum and encouraging creativity and innovation on cammanaged to find something else, bigger and better than I puses.

The youth now had more opportunity and had expected. I found the incubator that housed them! motivation to control their future, by addressing a probPlan9 was launched in 2012 as a tech incubator backed by the lem they faced and creating an innovative solution for it.

Punjab IT Board, under Dr UmarSaif’s visionary chairmanship. In Startups were working on copycat ideas; uber for 2016, they were going to kick off their seventh cycle, of 15 startups laundry, uber for grocery, peer to peer classrooms, legal inducted through a countrywide roadshow competition. Startups and educational platforms, buzzfeed for Pakistan, sponeeded to focus on technology based products, in varying domains, tify for Pakistan, but I believe the actual innovation has but all required business expansion and strategy advice. I met the distarted now. Work has now begun in AI and machine rector of entrepreneurship at PITB, NabeelQadeer, and learnt so much learning, AR/VR, hardware, robotics and makerspaces more about the digital space that filled my heart with joy and positivand drone and 3D mapping (to name a few). This ity. change has attracted foreign companies, and investors My excitement to have found the right place encouraged me to to enter as well.

Starting Q3 last year, we had manageask around about it, and as I expected only a few understood what inment from the US State Department, City of Austin, cubation is, let alone know about Plan9. Fortunately, that helped me UK Aid, Australian High Commission, the IFC and make my decision. I joined the Plan9 team the next week.

Facebook visit and make partnerships with us.

In the year that followed I learnt quite a bit about the tech space, Venture funds like DotZero, CresVentures, Fatima the legal limitations, the investment processes, the creation and retenVentures, Sarmayacar, Planet N are accelerating their tion of teams, and most importantly the speed at which the industry processes to sign the best startups. Multinationals like Nestle, Unilever and CocaCola are getting involved in the growth of these companies, and working with them Zainab Tariq to find solutions to their set of niche problems. Pakistani startups are also getting internais the project manager at tional attention by participating in global competitions, like the GES, Startup Istanbul, Plan9 and can be reached South-by-South West, Rise, and the Mobile World Congress (4YFN). Some are also making at zainab.tariq@pitb.gov.pk their way through thousands of applicants to the Y-combinator, Blackbox, and Startup Chile and her twitter handle is programs. @zainab8108 We have come a long way from a time when the majority did not fully understand what we do. Our flagship event, The Launchpad is celebrating its 10th birthday this summer, and applications for entrepreneurs and startup founders looking for a workspace are open now. If you’re reading this, and you’ve thought of starting something, I encourage you to share your idea with us and help us make it the next big deal. There will never be a better time than now! n

no be‫מּ‬er time than now, to move back!

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economy

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‘I don't think there's another brand similar in scale or stature that's won the heart of Pakistani pizza lovers the way Pizza Hut has. So, I think we're in a unique situation in the pizza category here’ 34

By: Aisha Arshad t was 1958, when two brothers Frank and Dan Carney from Kansas, USA were approached by a family friend to open a pizza outlet. Seeing the potential in the venture, the then college students agreed and borrowed some $600 from their mother to start a restaurant in their hometown Wichita. this was the beginning of the glorious journey for world’s largest pizza chain, Pizza Hut – and it now holds outlets over 100 countries.

Some 35 years later, Pizza Hut, which had expanded its strong foothold around the globe entered Pakistan in collaboration with local conglomerate MCR under the leadership of seasoned businessman Aqueel Hassan.

Hassan, a graduate of Dhaka University, Karachi University and University of Cambridge has had a diverse career path. From banking to It to restaurant industry, Hassan joined his family business MCR in 1991 and brought the international pizza giant to Karachi in 1993 as the first ever international brand to step in the local restaurant industry. Since then, Pizza Hut Pakistan has grown manifold and currently operates 74 outlets in 20 cities.

I

many as 74 stores now, Pizza Hut signboard is visible at most places.

What we are proud of is that Pizza Hut has now established itself as an important dine-in category.

Profit: So, with 74 stores, how many cities are you operating in right now?

AH: We can be found in every major city in Pakistan – right now we are operating in about 34 cities.

Profit: In essence, you were the pioneers – building the pizza market locally – but in recent years there has been a recent growth in pizza outlets. How do you take on that competition and where do you see yourself?

AH: Competition is not a problem at all. What we have long advocated to the government is a level playing field. Most of these mushroom pizza companies in Pakistan have a growth on the back of taxation. They do not pay all the taxes that are due on them; the taxation system is trying to get them in their net but it’s taking time. So, if there is a level playing field, we would be happy with the competition.

Profit sat down with the man behind Pizza Hut Pakistan’s overwhelming success Aqueel Hassan and Randall Blackford – General Manager Pizza Hut Pakistan, Middle East, Africa and Turkey – joined us in the conversation right before MCR and Yum Brand (Parent Company of Pizza Hut) signed MoU for MCR’s IPO and expansion plans.

Affiliated with Yum Brands for over a decade now, Blackford has worked in various capacities and businesses of the company. Previously, serving as GM of KFC in Pakistan, Africa and Middle East, Blackford grew familiarity with Pizza Hut which now he considers his most favorite business. On his short trip to Karachi, Blackford – who

resides in Dubai – took some time out and together with Hassan reflected upon Pizza Hut Pakistan’s legacy, expansion and the way forward.

Profit: It has been nearly a quarter century since Pizza Hut’s arrival in Pakistan. Can you please shed some light on the journey?

Aqueel Hassan: Pizza Hut was the first international franchise to open in Pakistan, at Karachi. There was a lot of excitement then, and, it remains as we have remained on the path of continuous growth.

In the last 25 years, we have practically gone everywhere in this country and with as

Profit: I understand taxation is a huge matter, but what is your business strategy against the competition?

AH: Well, if my competitor has an advantage of 20-25 per cent owing to taxation, there’s very little I can do except [work] on our standards, innovation, new ideas and new products.

Profit: Who would you consider your biggest competitor in Pakistan?

RB: I think Pizza Hut is at the very top, for I don't think there's another brand similar in scale or stature that's won the heart of Pakistani pizza lovers the way Pizza Hut has. So, I think we're in a unique situation in the pizza category here.

There’s certainly other competition but when you look at big international brands on this scale it really stands alone and I think that speaks very highly of our partners – all the fun memories, birthday parties,

RETAIL

weekend celebrations and just making your family happy over a weekday night, it’s really hard-earned. And I think the team here has done a really terrific job over a long period of time.

Profit: How are you looking at things in the context of expansion and planned IPO of MCR? AH: The big picture is, we have agreed with Pizza Hut International that we are going to open many more stores in Pakistan. We want to maintain the leadership position we have as far as international brands here are concerned. And we are going to franchise some of our stores to local businesses who have the passion to do pizza.

Profit: Are you planning to take Pizza Hut to more cities?

AH: We would certainly go to more cities, more communities, and other areas where there is business opportunity.

Profit: With MCR going public, what is your plan for the next five years or so?

AH: IPO is something which is not planned for the next 12 months. We will ob-

‘THE BIG PICTURE IS, WE HAVE AGREED WITH PIZZA HUT INTERNATIONAL THAT WE ARE GOING TO OPEN MANY MORE STORES IN PAKISTAN. WE WANT TO MAINTAIN THE LEADERSHIP POSITION WE HAVE AS FAR AS INTERNATIONAL BRANDS HERE ARE CONCERNED. AND WE ARE GOING TO FRANCHISE SOME OF OUR STORES TO LOCAL BUSINESSES WHO HAVE THE PASSION TO DO PIZZA’ viously gauge the market and decide if it makes sense for our company to go public.

Once the company goes public, it will open opportunities for MCR to expand itself further. We have just signed an agreement [with Pizza Hut international] which will give us the right to do so.

Profit: What is Yum Brands?

AH: Yum Brands is our franchise partner, they are the brand owners and they support us wherever they can. And as far as MCR is concerned, MCR is a Pakistani entity, it will continue to operate in Pakistan and it will take the Pizza Hut brand to new heights.

What happens with the IPO is that it gives us presence in the stock market, it improves our compliance standards, and the Pakistani investor may also get an opportunity to be a part of an international brand like Pizza Hut. RB: This for us is a very unusual business relation which is a master franchise agreement. It allows MCR to recruit their own franchisees.

At this stage, I look after about 25 countries in the Middle East and Africa, and also Turkey and Pakistan and this is the only such agreement; it's really a special agreement because it's based on a huge amount of mutual trust built up over 25 years with a partner who has done a great job with the brand and now has capability, ambition and stature to recruit their own franchisees and we find

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it incredibly exciting.

Profit: What are you looking forward to from this deal?

RB: I am looking forward to lots more Pizza Huts. A favorite part of my job is when I go into stores and I see customers celebrating something; there's really nothing that makes me happier than when I see a group of friends or family celebrating a birthday or even just taking their kids out after school. I find that really nice and to know that this is going to happen many times over, in many more cities and locations; it’s important to us.

Profit: How big the Team Pizza Hut Pakistan is right now?

AH: Our team is over 3,500 and as we open more stores our team continues to expand of course. One thing Pizza Hut Pakistan is very proud of is the employment we create in local communities; and training that we give to our team members is exceptional, indeed world class.

Profit: Have you shut down any stores in last 5 years due to enhanced competition?

AH: We have never shut down any store, we have had relocation within the zone; for instance if the lease runs out then obviously we have to look for new lease.

Profit: What is your market share locally?

AH: In the pizza category, we would have some 50 per cent market share.

Profit: Are you the market leader in dine-in category?

AH: I think we are the market leader in dine-in category nationwide [in comparison to] any brand, any company

and any food.

Profit: What’s your sales mix? How much of it is delivery, dine-in and take away etc.?

AH: There are two ways to break it; one is transactions and the other is sales. Half of our sales value comes from dine-in and the other 50 per cent comes from delivery. In terms of transactions, they are more or less the same 32-33 per cent in each category.

Profit: If I ask you to give me an analysis of the last five years of Pizza Hut against the first few years of your opening in Pakistan, how would you describe the progress and growth?

AH: Obviously we have faced some [obstacles] over the last few years because of so much competition not only from local brands but also international brands. I am happy to report that we have grown every year in the last 5-10 years. We are happy to take competition and we think that Pizza Hut has a great future and our partners think the same. We will continue to work in the fast food business and provide pizza to local communities.

Profit: Mr. Blackford this one is for you, how different is the market from the time you started with MCR and how it is now?

RB: I think every market evolves and it would be difficult for me to speak on the broader market of Pakistan because it's such a big place but I think our business has evolved significantly in the last decade here.

I think there has been a big expansion in many more cities in the last decade as well as the existing cities having a lot more penetration. As Aqueel directly pointed out that diners have always been a strength of ours but in the last decade delivery has become a very meaningful part of the business as well. I think there has also been quite an expansion of innovation within the brand and I am delighted at

‘WE SEE THAT THERE IS GOING TO BE MORE MOBILITY, PEOPLE WILL BE MOVING FROM LOW INCOME TO HIGH INCOME GROUP. THERE’S GOING TO BE MORE PROFESSIONAL OPPORTUNITY IN PAKISTAN WHICH WILL BRING OUT MORE BUSINESS FOR COMPANIES LIKE US’ how the business has evolved.

Profit: We have in recent years seen a tremendous shift in buying patterns of middle income groups and now they have become a strong segment that dines out, indulges in fast food business. Is that an advantage? Where do you see the trend going?

RB: I would agree, I think for us it’s also a great opportunity for more stores and that’s what this agreement is about to continue to grow the business and to allow more Pakistani families to do the business and become a part of the Pizza Hut journey.

Profit: Do you think people’s buying power over the period of time has changed and in a way it has benefited the restaurant industry?

AH: In fact, today data has come out that per capita income of Pakistan has gone up. We see that there is going to be more mobility, people will be moving from low income to high income group. There’s going to be more professional opportunity in Pakistan which will bring out more business for companies like us.

Profit: What has been Pizza Hut’s growth rate over the years?

AH: Our growth rate has been variable but it has been in double digits for many, many years.

Profit: What is your USP, what makes you stand out amongst the competition?

RB: We have some fantastic products.

I was here for an extended stay a few weeks back and seeing how many people love the chicken tikka pizza, especially in pan, it's heartwarming. We have had some really good innovations, especially around stuff crust and different varieties, triple treat box, cheesy bites and whole range of pretty interesting rice-based products; our wings are terrific. So, I think it’s just a really good array of products.

But I think the heart of it is executing it well in the restaurant. You know people are giving their hard-earned money and they want to have a great experience for their friends and family. If you have really good food and then if you build a restaurant that is really welcoming that people really want to be a part of, that's really where the magic happens. So while the food is an important part, but equally important is having teams that are excited and love what they do.

Profit: Do you think that your team is your strength?

RB: Oh, big time. Recently I really enjoyed visiting Pizza Hut outlets; just feeling the energy was fantastic. From the guys making the pizza, to the guys selling it in the front, to the people tidying up the stores and delivering pizzas you could really feel the energy in the store is really heartwarming for me and so I thoroughly enjoyed.

Profit: What is the foremost challenge for Pizza Hut in Pakistan?

AH: Improving our standards and [obtaining] level playing field.

Profit: Mr Blackford what would you consider the foremost challenge for Yum Brands, since you’re operating quite a few restaurants here in Pakistan?

RB: The challenge that we face [while] building out a brand like this, is continued restaurant excellence, especially when we have this kind of bold expansion

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plans. Having partners like MCR, we feel just terrific about expanding together.

Profit: It is a common notion that Pizza Hut is slightly expensive than its competitors; how do you respond to that?

AH: Only about a few weeks ago through a focus group we tested some concepts and also as to exactly where we are.

From those focused groups what we found was not so much that we were expensive, but that consumers wanted a few extras when they go to Pizza Hut and we are going to work on that to dispel this impression that we are an expensive place to go to.

RB: There's lot of work in progress...

We have talked to so many customers to get their view. And rather than going stage by stage, I think it's better that we just launch a great campaign. Bring your family and friends and I think you'll see some amazing stuff in the coming months.

Profit: Moving forward, what’s your business and marketing strategy?

AH: The marketing strategy: get closer to the customer, which we are working on. As Randall has said, in the next few weeks you’ll see the results. We are at the R&D stage at the moment. As far as business strategy is concerned, it’s really improving the corporate nature and corporate governance of the company over the coming months and years.

Profit: What’s the timeline of expansion plan?

AH: Every quarter you’ll see that new stores are coming on line.

RB: I'd say that the expansion plans is happening [right now]. MCR has built dozens of Pizza Huts in Pakistan last year which I would not hesitate to guess would be bigger than many entire restaurant chains within the country. So, for that to be built in a single year the journey is happening right now.

Profit: What is it in the Pakistani market that interests Yum Brands and Pizza Hut to expand further?

RB: I think the reputation that the brand has earned over the last 25 years. It would be very difficult to think of this kind of bold expansion plan unless we thought there was a really strong core business and

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that kind of core business at least in the restaurant category is earned over a long period of time.

become a global brand as well but for now we are focussing on our aggressive plans for Pizza Hut.

Profit: Mr. Hassan, what is in the Pakistani market that has given you the confidence to expand further?

AH: It’s the sheer demand. Wherever I go, I find people asking that why Pizza Hut is not in that city, or that community. Pakistan has a very large under 25 population and they are our natural customers. We think that whereas Pizza Hut is very popular in families, growing among younger population is also a focus.

Profit: Like Pizza Hut built the market for Pizza, Yum Brands built a market for fast food itself. How do you see yourself now since there’s so much competition in the category, where do you stand?

RB: Well, we welcome competition, it makes us stronger and keep us on our toes but it also means there's much more demand for the category. Competitors wouldn’t be joining a category if they didn't see the same kind of growth we do. So, I think it's entirely natural that other businesses would want to participate in that.

Profit: Which city is generating the highest share of your revenue?

AH: Karachi, but there are other cities which are coming up; Lahore, Hyderabad, Islamabad and Rawalpindi these are all rapidly urbanizing. In Karachi, we have the largest number of stores, largest number of customers and we do very well here.

Profit: Some specific questions for Yum Brands now: Is there any plan to bring Taco Bell or other restaurants from your umbrella to Pakistan?

RB: Taco Bell is our third brand, we do have a few smaller brands within the China business but Taco Bell is really our third brand. It's been wildly successful in the US and it has been introduced in a few other countries. However, it hasn't become as big a global brand as either the Pizza Hut or KFC. Pizza Hut launched its hundredth country just last year and I think now we're somewhere around 104-105 countries and it's growing every day.

I'm sure that at some stage it’s going to

Profit: What’s Yum Brands strategy going forward, in Pakistan particularly?

RB: Actually I can't speak to KFC, of course, but our strategy is to continue to grow our brand with the trusted partner.

We've joined hands and worked really hard to begin to understand the consumer little bit better so that we can have even more compelling programs for them and then we're all going to continue to work to deliver the same high quality standards that have earned us nearly 75 stores in the country already.

Profit: Although the IPO is planned in next 24 months, what sorts of capital are you looking forward to raise?

AH: It’s going to be a modest offering and we will see what the response is. What it does to a company like MCR is that opens up the company to more regulation, better governance standards which are essential for survival of any company. n

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By: Usman Hanif anveer Khan, a delivery boy at Mr. Burger, runs his made-inChina to the maximum bike in order to reach his customer before the meal in his backpack loses its freshness and hotness. also he doesn’t want to hear complaint calls on his mobile from the staff at his branch or customers waiting for food at their houses. “When I am late for a while, branch staff or the customers start calling me, which makes me feel guilty,” said Tanveer.

Speed in a delivery rider’s job is everything otherwise they would be out of business. When he started working at Mr. Burger he didn’t know addresses and locations within the city but he only accepted the job because he was not getting a raise in his previous job at a superstore (Chase up ).

Though Tanveer got the rider’s job as he met the only criteria for the job at Mr. Burger that the candidate must have his own conveyance, the problem he faced was the lack of knowledge about routes and addresses of the city.

“Initially when I reached late at the given address, the customer would show their anger on my late arrival but I was good at making pretexts,” he tells while speeding up through streets of DHa Karachi to deliver the food on time.

His usual excuse to pacify the customer was to claim that his delivery bag was full of other orders and that he had to wait for his branch to prepare all the food and only then he could leave. In reality the bag contained only the one order for the customer he gave this explanation to. relying purely on the confidence in his voice he would invite the customer in question to even inspect his delivery bag but, as tanveer put it was a “rare occurrence”.

While delivering he twists his bike’s accelerator to the possible limit and cannot even see how fast he is going minus the odometer that he has taken off purposely.

The only measure for his speed that he has is the traffic either side of his bike whizzing away. “Sometimes I try to beat those speedy cars to be on time,” he told me while I accompanied him on his meterless bike.

While his aim to reach each destination on time forces him to ride his bike dangerously, Tanveer heads nowhere in his career as this industry offers

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Food delivery is big business and restaurants that don’t offer it these days are considered ‘incomplete’. But what really goes on behind the scenes of the delivery, we talk to one such rider who delivers your food 40

him nothing but commission of Rs30 under the head of petrol per order besides basic salary of Rs10,000. Tanveer and his fellow riders have no idea where they will be after 5 years, but they unfortunately have to make due with their current situation.

While delivering an order at a house in Popular Avenue DHA , an un-relaxed expression appeared on his face when he saw a servant coming out of the home to take the delivery.

Domestic servants especially watchmen are main rivals of Tanveer and his fellow riders because they deprive them of the tip which a customer pays them on delivery. “When a customer gives a tip, those servants keep it but it is actually ours to keep, we work hard and try our best to deliver food in the allotted time but don’t get the tip for good service at the end,” he said.

Tanveer Khan also dislikes delivering to Center Point, he says the tall building near KPT interchange is too far from Rahat Branch which burns his whole commission. “When I reach there a guard investigates who I am and where I am from, then an elevator takes you up to the floor and as soon you get out of it another watchman pops up and orders you to stop and get checked again.”

Tanveer is only allowed to take the specific order to the apartment and has to leave his bag with the security guard. The worse part is that residents at centre point do not tip, according to Tanveer.

As with the most of his fellow workers Tanveer too has little ambition.Upon being asked a simple question about his five year plan the group, including Tanveer pondered

“RIDER JOBS DO NOT HAVE ANY CAREER GROWTH BUT NEITHER DO A LOT OF OTHER DESK JOBS AS WELL IN THE COUNTRY” Maha Khalid Hassan, human resource expert at Career Counseling Portal Pakistan (CCP)

hard over it, and the best they came up with was that if they were able to secure a job with a big organization offering them Rs13,000 salary besides commission they would make the switch.

The job might be reasonable for the young boys who aren’t that educated but there are men in their 30’s who work as riders too.

The reason Tanveer cites is a lack of technical skills and education, so a riders job, according to Tanveer, is a better alternative.

“I keep emphasizing on the importance of education to the young ones that work here as it is the only way they can get better jobs and exposure,” says Agha Muazzam Hussain General Manager at Mr. Burger.

Mr. Burger has a few success stories, one of them was Wasim who started his job as a rider but looking at his potential, the company transferred him to the lobby, then he was elevated step by step and was promoted as

lobby in-charge. Then the company transferred him to the Kitchen owing to his product knowledge and subsequently promoted him as dispatcher and lastly he was posted as a cashier.

Mr. Burger has stories of people who progressed better than others but unfortunately not too many.

“Rider jobs do not have any career growth but neither do a lot of other desk jobs as well in the country,” said Maha Khalid Hassan, human resource expert at Career Counseling Portal Pakistan (CCP).

Tanveer also does now shy away from helping out his restaurant's staff where need be. While smoking a cigarette at Rahat Branch he got a call for an order and helped the cooks prepare the order in time as they were short handed.

The business for riders is somewhat seasonal as well. Tanveer explained that on the occasion of Eid-Ul-Fitr the volume of orders increased and he would earn around Rs1000 a

“I KEEP EMPHASIZING ON THE IMPORTANCE OF EDUCATION TO THE YOUNG ONES THAT WORK HERE AS IT IS THE ONLY WAY THEY CAN GET BETTER JOBS AND EXPOSURE” Agha Muazzam Hussain, General Manager at Mr. Burger

day in commissions and tips. However in slower months that figure would hardly reach Rs200-300.

Tanveer Khan worked in Dubai two years ago where he would earn more in three or four days what equals to his monthly salary here in Pakistan. He had to leave that life and come back here due to family issues. He started a job at Chase Up departmental store at Rs 8000 after which he shifted to Mr Burger for a better package.

Maha explained this propensity of people like Tanveer to shift jobs saying, “There is no loyalty to employers now either, this is probably the only way you can expect quick salary increases as you are in a position with a new company to contest for more salary to justify leaving your old employer.

The opportunity cost of staying with an employer for years therefore goes up. Also motivation to work, more to learn and a different workplace environment (i.e. change) are byproducts of doing this as well. All of which benefit the employee. We live in a day and age which is extremely selfish and self involved.

It's a rat race, if you must. We have social media posts going around stating never be loyal to a company, it does not care about you either” With the growing population of Pakistan that is uneducated due to a general lack of the government’s attention towards the education sector it is easy to understand why a majority of our population is not career focused. They prefer to switch odd jobs at the first sign of a bigger paycheck due to the lack of any mentionable skill set.

INSIGHT