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8 Weekly Roundup 12 Foodpanda, after the highs, hitting the proverbial trough 16 Abracadabra – you, too, are now the best performing CEO
26 26 No match to China, India 30 Corrupting power KK Shahid 32 Where money is not the prime mover
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36 The good ol’ Jackson 39 Gunning for capital growth
Managing Editor: Babar Nizami l Joint Editor: Yousaf Nizami l Contributing Editor: Farooq Tirmizi l Business Editor: Agha Akbar Editor Reporting: Farooq Baloch l Reporters Aisha Arshad l Arshad Hussain l Usman Hanif l Syeda Masooma l Ahmed Ahmedani 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 Photographers: Zubair Mehfooz & Imran Gillani Publishing Editor: Arif Nizami Contact: profit@pakistantoday.com.pk
CONTENTS
“People used to light candles but we have added 10,000 megawatt of electricity to the national grid” Minister for Planning, Development & Reform/Interior, Ahsan Iqbal
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“Pakistan is well-poised to make rapid progress in the renewable energy sector” German Ambassador to Pakistan Martin Kobler
losses have been suffered by customer of Habib Bank Limited in Karachi and Islamabad due to ATM hackings. Habib Bank Limited’s six-hundred customers across Pakistan were targeted in this attack which the bank admitted about. Over 600 customers of HBL are said to have suffered losses close to Rs10 million due to the cyberattack. An FIA official said an ATM at Khayaban-e-Ittehad, Karachi was target of the attack. Various other cases have also surfaced said to have been reported from Dolmen Mall, Karachi. News of same kind of cyberattack has also been reported in Islamabad. Other banks including HBL took notice of the hack and blocked ATM cards as safety measure against further losses being incurred. Over 579 customers have been affected by the cyberattack at HBL at ten ATM locations, said its Chief Marketing Officer Naveed Asghar. Asghar said the attack is being probed and all affected customers who lost less than Rs10 million will be compensated. The attack was made possible by installing of skimming devices on ATM machines which permits consumer data to be stolen resulting in user ID’s and pin-codes to be leaked.
Rs10m
30pc
would be the projected size of Pakistan’s e-commerce market by 2020 which currently falls between $ 70-150 million. The regulations regarding Framework for Payment System Operators (PSO) and Payment Service Providers (PSP) have been devised and approved by State Bank of Pakistan (SBP) while development of e-commerce Policy Framework is also under process to cater to all elements of the user, merchant trust with dispute resolution and remedial mechanisms. Annual report-2017 of Pakistan Telecommunication Authority has revealed that on directions of Prime Minister, Ministry of Commerce has formulated “ECommerce Policy Board” to monitor progress and ensure coordinated cross-institutional efforts for development of e-commerce in Pakistan. The report said in private sector, entrepreneurs have launched e-commerce initiatives for consumers (B2C) that have been huge successes such as daraz.pk, olx.com.pk, homeshopping.pk. The most important element of the e-commerce ecosystem is Payment Gateway that will enable entry of credible international players in e-commerce ecosystem of Pakistan and will resolve longstanding barrier to growth of Pakistani e-commerce market.
gas deficit will be reduced by LNG terminals of Engro led private firms. The country’s first LNG terminal set up by conglomerate Engro Corp, in 2015, has reduced the gas deficit of the country by 15 per cent while its second terminal, which is expected to be there by early 2019, would reduce the deficit by 30 per cent. The Engro Corp CEO said that at least 6.1 million tonnes of LNG have been handled since commissioning of the terminal in 100 shipments (25 via Q-Flex carriers, 74 conventional carriers). The terminal has the capacity to regas 600 mmscfd, biggest gas source in Pakistan. Engro’s terminal is providing round-the-clock supply of natural gas at a utilization rate of 100 per cent for the FSRU.
$1b
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“The opportunities including what is available in the form of CPEC., must not be allowed to go waste” Former State Bank of Pakistan Governor Ishrat Hussain
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12.5pc
withholding tax on mobile recharge has been termed as exorbitant by Pakistan Telecommunication Authority in its annual report. The report read the amount paid under withholding tax cannot be refunded in such people’s annual tax returns. For financial year 2017-18, federal excise duty on mobile balance recharge has been lessened to 17pc from 18.5pc. On the contrary, tax rates for provincial revenues department remain high and should be lessened in line with the federal budget, read the report.
funding will be provided by World Bank (WB) for promoting water usage efficiency among farmers in Punjab. The purpose of providing this funding is to minimize widespread wasteful irrigation techniques and promote usage of drip and sprinkler systems. This $130 million funding from World Bank represents additional financing for the first phase of Punjab Irrigated Agriculture Productivity Improvement Programme (PIAPP), whose original investment stood at $250 million. PIAPP project is a scheme of the Punjab government termed High-Efficiency Irrigation Systems that envisages to double efficiency of water usage and encourage private-sector involvement via supply of materials and manufacturing. Due to decreasing water levels and wastage during agriculture production, this scheme is being used to persuade farmers to increase crop yields and move to high-value crops, which include fruits and vegetables.
$130m
increase was recorded in Pakistan’s crude exports during July-September of financial year (FY) 2017. According to the data provided by PBS, Petroleum Crude worth $ 33,075 were exported during the first quarter of the current year as compared to $ 21,651 of last year. Petroleum Products (Excl Top Naphtha) worth $ 38,427 were exported during the first quarter of current as compared to $ 21,779 of last year. Petroleum Products (Excl Top Naphtha) exports into the country increased by 76.44 percent during the first quarter of the current fiscal year as compared to the same period of last year. Petroleum Top Naphtha worth $ 23,288 were exported during the first quarter as compared to $ 9,118 of last year. Petroleum Top Naphtha exports of the country increased by 155.41 percent during the first quarter of the current fiscal year as compared to the same period of last year.
52.76pc
memorandum of understanding (MoU) has been inked between Ittehad Chemicals Limited and Punjab Board of Investment and Trade to establish state-of-the-art facility, valued at $40 million, as Punjab continues to boost its economy by attracting investors globally. The establishment of this facility to produce vaccine is expected to boost Punjab’s status internationally on the level of manufacturing chemicals. According to the MoU, PBIT and ICL will work together for greater efficiency, common objectives and willingness to prosper. According to the MoU, both organizations intend to share quality and consistent information and the data essential to serve investors, enabling to address the needs of the people whom they serve. ICL desires to establish facility for the manufacturing of vaccine against foot and mouth disease with an investment size of $40 million. Punjab Board of Investment & Trade assured them provision of absolute facilitation in order to acquire land in Special Economic Zone (SEZ).
$40m
71pc surge was seen in international sales of fashion outlet Maria B, a Facebook Business study revealed. As a result of Maria B’s winning Facebook campaign, which ran from June 1 till August 31, 2017, the brand grew beyond borders and achieved 36 per cent increase in new customers, 35 per cent increase in overall traffic during the campaign period and a whopping 71 per cent increase in international sales. “Facebook has quickly become one of the most powerful tools to reach international markets without having any physical presence. As part of an export strategy, it can lead businesses to have better marketing penetration and customer engagement with a few simple clicks,” Maria B Director Operations and HR Najia Butt told readers in the case study.
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“Pakistan has entered a phase where it has surplus electricity and does not need to award contracts on upfront tariff basis” Federal Minister for Power Division Awais Leghari
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94.65pc
was the cement industry’s capacity utilization during first five months of financial year 2017-18. Pakistan’s Cement industry despatched 2.261 million tonnes more cement in the first five months of this financial year, which is 13.91 percent higher than the cement despatched during the corresponding period of last financial year. Although the increase recorded in domestic consumption in November 2017 was 9.89 per cent, the overall growth of the sector stood at 5.16 percent; as it was negatively impacted by a steep decline in exports that went down by 27.11 per cent.
increase was reported in rice exports during first four months (July-October) of current fiscal year increased by 16.87 per cent compared to same period of last year (SPLY). The rice export during the period under review rose to $457.66 million from $391.595 million during July-October 2016-17, according to latest data released by Pakistan Bureau of Statistics (PBS). On month-on-month basis, the rice export also increased to $137.423 million in October 2017 from $96.306 million in September 2017, showing an increase of 42.69 per cent. However, on year-on-year basis, the rice export decreased by 7.71 per cent as the export went down $148.9 million in October 2016 to $137.42 million. Demand of Pakistani rice has increased due to its special fragrance, colour and quality across the world. Pakistan produces world class rice and has a well-developed rice processing industry as proven by its exports to high-end and the most sensitive markets around the world.
16.87pc
29pc
Rs19.2b $5.8b
was the increase in assets of non-banking financing sector as of June 2017. According to a report released by the SECP, the NBF sector assets stood at Rs 1,190 billion as of June 30, 2017, compared to Rs 925 billion on June 30, 2016, reflecting an overall increase of 29 per cent during the period under review. As of June 30, 2017, the total size of the industry stood at Rs 710 billion as compared to Rs 546 billion on June 30, 2016. The total number of funds /plans stood at 228 as of June 30, 2017, as compared to 199 as of June 30, 2016. The industry was also managing a discretionary portfolio of Rs 141 billion as of June 30, 2017. Moreover, as of June 30, 2017, equity funds (both conventional and Shariah-compliant) dominated the assets under management of the industry with the largest share of the mutual fund industry that is 48.03 per cent.
seventeen projects were approved by Central Development Working Party (CDWP) and forwarded 7 mega projects of worth Rs 51.27 billion to Executive Committee of National Economic Council for further approval. Projects related to energy worth Rs 18.6 billion, Rs 5.8 billion of projects related to water resources, Rs 24.2 billion related to transport and communication, Rs 12.2 billion related to science and technology, Rs 8.3 Billion related to health, Rs 3.8 billion related to food and agriculture, Rs 66.356 million related to physical planning while projects worth Rs 592 million related to culture, sports and tourism were part of the CDWP meeting. In the energy sector, 2 projects worth Rs 11533 million and Rs 4339.05 were referred to ECNEC for approval. The projects include 32.5MW Hydropower Project at Attabad Hunza and evacuation of power from 1230 MW RLNG Power Plant near Trimmu, Jhang.
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of short-term loans were obtained by State Bank of Pakistan from commercial banks to paint a picture of stability in the currency market, as commercial banks have been left with usable foreign currency reserves of roughly $200 million. Data released by the central bank on Friday revealed it had obtained $5.81 billion from commercial banks under forward and currency swap arrangements. As per SBP data, the central bank reserves for November stood at $12.66 billion which includes $5.8 billion of forward contracts and currency swaps. SBP included this $5.8 billion as part of its own reserves, but the central bank has added the same amount to $6.01 billion reserves owned by commercial banks. From this $5.8 billion short-term loan obtained, $1.68 billion was borrowed for one month, $2.46 billion for three months and $1.7 billion for one year, the SBP data revealed.
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Such a rage not that long ago, the top food delivery app though is neither despairing nor desperate at all
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n what seems like an almost unbelievable scenario, over the last few months Foodpanda has witnessed a 70% decline in orders. According to unimpeachable sources and various customer accounts, Foodpanda has seen this steep downward slide owing to a variety of issues, though none as pronounced as that of ‘service’ – or the lack of it. Pakistan’s largest online food delivery portal, Foodpanda was formerly owned by German tech giant Rocket Internet, which also acquired the indigenous startup EatOye and in turn was acquired earlier this year by its compatriot, another giant foodora (Hero Delivery) – is staring at a 70% decline in its orders. Post-acquisition Foodpanda changed its app’s looks from its renowned red to pink and user interface which hasn’t been much popular amongst its customers till yet. The website also uses archived
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photographs to display restaurants on the app – a move widely unapproved by many. However, the issue is far larger than a different color scheme or tempting yet misleading photographs displayed on the app. Given the impact Foodpanda had made, Profit takes an all-encompassing look into the matter. According to customers, of late Foodpanda delivery on occasions was sub-par. Orders were delayed by an irritable length of time and canceled without informing the customers, while prices on the app were noted as higher than the ones offered by the restaurants on direct orders. Such issues have driven away what can be called long-standing Foodpanda patrons. Most of these customers were also loyal patrons of EatOye – an indigenous startup acquired by Foodpanda in 2015 – and conveniently moved to Foodpanda once the two were amalgamated, with the combined entity until last year reportedly posting revenues upwards of Rs2 billion.
‘IN PAKISTAN, FOODPANDA IS GROWING AT 115% YEAR-ON-YEAR WITH BUSINESS REGISTERING AN INCREASING EACH MONTH. THE YEAR 2017 PARTICULARLY HAS BEEN A GREAT YEAR AND WE ARE EYEING AN EVEN STRONGER 2018’ Nauman Sikandar Mirza, CEO, foodpanda Pakistan
Tracing back footsteps to direct ordering owever, recently these customers who made a quick transition to food delivery portals in their early years of launch have hit the reverse gear and prefer to use direct delivery services of the restaurants still available to them on Foodpanda. Some of these customers also told Profit that the riders that come to deliver orders also give their menu cards and brochures and seem to encourage direct orders to the restaurants. They say – correctly in some cases – that compared to the Foodpanda customers would find cheaper rates on the restaurant’s website. Profit spoke to a number of Foodpanda customers out of which many seemed dissatisfied with the online delivery portal’s service despite the undeniable convenience on offer to its patrons for the last few years. Mahira Mukati, a Master’s student, said, “I placed an order a couple of months ago from a burger chain through the Foodpanda app and the delivery was made after about two hours. It was very frustrating indeed.” Although Mukati is continuing to use the Foodpanda app – albeit a little less frequently – but only because she is not amenable to locating and calling the restaurant numbers. Needless to say, she’s hoping that the tech startup would improve its services to facilitate its loyal clients who are no longer impressed
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by the app’s customer services. “I did complain to the Foodpanda but they didn’t pay much attention,” said Mukati. Presumably, it is on the back of this dissatisfaction of regular customers that Foodpanda – the one of its kind food delivery portal – is said to have witnessed a rather significant decline in the number of its orders in recent months. According to some restaurant owners, the decrease has been a gradual month-on-month drop since the last year and by now Foodpanda orders are at least 15% lower than in the same period around December 2016. The company though categorically denied such a major fall in its traffic volume. In an emailed response to Profit, CEO Foodpanda Nauman Sikandar Mirza said, “in Pakistan, Foodpanda is growing at 115% year-on-year with business registering an increasing each month. The year 2017 particularly has been a great year and we are eyeing an even stronger 2018.” Sikandar further added that there is a general slowdown in the overall retail sector in the country which comes on the back of the removal of PM and unstable political situation. Still, Foodpanda is a growing business, in the process bringing orders for its partner restaurants. While Sikandar’s opinion of slowed down retail sector was backed by old Foodpanda partner Mr Burger’s Managing Director, Ashfaq Raza, the latter also agreed to the continuous customer com-
‘VIA THE APP – BECAUSE OF MULTIPLE-PARTY INVOLVEMENT – THE MINIMUM DELIVERY TIME IS 45 MINUTES. IF THERE ARE FURTHER DELAYS – QUITE POSSIBLE IN THIS BUSINESS – THE CONSUMERS ARE OBVIOUSLY GOING TO BE CHEESED OFF BY IT’
plaints regarding delayed order deliveries and a greater shift towards direct orders. The notion was endorsed by CEO 14th Street Pizza, Tanveer Yousuf, whose business (and other pizza businesses) have been contributing a major share to the tune of billions of rupees in the overall Foodpanda revenues. According to Yousuf, the decline in the number of order decrease has come on the back of pizza chains and other restaurants setting up their own websites and apps that have made consumers rethink the usefulness of Foodpanda – basically acting as a bridge between conventional to digital medium.
Plausible issues he issue that occurs is that when the order is taken at Foodpanda and transferred to a restaurant, it sometimes gets mixed up or not conveyed properly, hence a wrong order is delivered to the end customer who blames both the service providers but mostly Foodpanda as they are the interface,” said Raza, who has seen a noticeable increase in direct orders recently at his Defence branch. “Another thing is that we give an estimated delivery time of 20-25 minutes on direct orders whereas via the app – because of multiple-party involvement – the minimum delivery time is 45 minutes. If there are further delays – quite possible in this business – the consumers are obviously going to be cheesed off by it,” said Raza. “They have expanded too much in last year and because of additional workload and with every Tom, Dick and Harry restaurant onboard, Foodpanda is probably unable
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to maintain its previous standards,” said Raza, talking of the plausible service issues. “Previously what happened was that if there was a delay in the order from restaurant’s end, Foodpanda – just the middleman and not at all responsible for the delay – used to get reaction from customers who had no way to directly check with the restaurants. Now most of the restaurants have set up their websites or mobile apps and customers find it a better option to directly order as then they can directly track down their order with the restaurant,” said Yousuf, of 14th Street Pizza, who is also seeing an increase in direct orders and proportionate reduction via Foodpanda. However, for customers there seems to be another significant problem with the app and that is the difference in prices on the Foodpanda app and restaurant’s own website/menu card. “Just yesterday I ordered a pizza deal through Foodpanda for Rs500, when the restaurant rider came to me he informed me that the same deal was available for Rs400 on direct order from the restaurant,” said a customer, complaining that previously this was not the case with the food delivery app. “The whole point of Foodpanda or EatOye was that they offered convenience at the same rates as restaurant – sometimes even less – now what’s the point?”, questioned the same client. According to Raza, the price difference claim is true as the 15-25% commission that Foodpanda charges from the restaurant is added in the prices shown on the app and paid by the customers themselves – this is a part of the agreement between restaurant and food delivery portal. The same statement was endorsed by another restaurant owner who wished not to be identified. “I pay 18% commission to
‘ACCORDING TO UNIMPEACHABLE SOURCES AND VARIOUS CUSTOMER ACCOUNTS, FOODPANDA HAS SEEN THIS STEEP DOWNWARD SLIDE OWING TO A VARIETY OF ISSUES, THOUGH NONE AS PRONOUNCED AS THAT OF ‘SERVICE’ – OR THE LACK OF IT’ Foodpanda and since I work on a minimum margin, I add that additional percentage in my prices on the app, however, customers who directly order from me get the same product at the lesser price,” said the owner of the fast-food joint who is also receiving a larger number of direct orders now. Though patrons are switching to direct orders and restaurants are also approaching the customers directly, Foodpanda does not seem to have hit the panic button – at least as of now. “This is happening globally and here since when we launched our business in Pakistan this has been taking place. However, this has no impact on our business as convenience offered to customers through our website and apps is far superior to ordering from restaurants directly,” said Foodpanda CEO. While pricing and service issues are a major concern amongst the customers and partner restaurants, when asked about the changed outlook of the application, many customers were of the opinion that though the user interface is slightly more complicated as compared to before, nobody would bat an eyelid on the color scheme of the app or the unrealistic photographs if Foodpanda provides service that matches the one compatible with its earlier reputation. “When I recently placed an order, I found the app a little confusing, but if I am being given a good service – which is something I always expect from Food-
‘THE RESTAURANTS’ UNCERTAINTY OVER THE USEFULNESS OF THE APP, COMBINED WITH THE GROWING NUMBER OF UNSATISFIED CUSTOMERS WHO ARE ABANDONING THE DIGITAL MODE TO A CONVENTIONAL ONE – ALSO A SETBACK TO E-COMMERCE IN THE COUNTRY – THAT FOODPANDA IS BRAVING IT OUT SEEMS COMMENDABLE’ 14
panda – then I think I can get used to the new app,” said Tehmina Chaudhry, a Lahore-based Foodpanda aficionado.
Foodpanda’s counter-argument e have received a phenomenal positive response for our new web and apps from the customers as there are many great features which are introduced i.e. order tracking, visually appealing images, facility to preorder food, more seamless design etc,” said CEO Foodpanda. He further added, “There were customers who did not feel comfortable with the change, but that is expected and now we see the same customers adapting to the change and using Foodpanda with some facility.” The restaurants’ uncertainty over the usefulness of the app, combined with the growing number of unsatisfied customers who are abandoning the digital mode to a conventional one – also a setback to e-commerce in the country – that Foodpanda is braving it out seems commendable. “Pakistan is an important market for foodora group. Our vision for Pakistan is that each food order should be placed via Foodpanda and our goal for 2018 is to expand into 10 more cities across, adding around 2,500 new restaurants as we go along in our existing and new cities,” said Sikandar, the only constant between EatOye, Rocket Internet and foodora, oozing optimism on the company’s outlook in the near-term. So can it be expected from Nauman Sikandar Mirza, who can be dubbed as the standout entrepreneur of his generation after the largest acquisition of his brainchild EatOye, to turn it around and save the business that he has built in the last five years as the CEO of Pakistan’s largest food delivery portal? The jury shall remain out on it for some time. n
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By: Syeda Masooma s with most things in Pakistan even recognition and accolades are controversial. One can argue the more subjective of these awards are those for film, television, fashion and music with jury’s consisting of experts from the respective field making decisions to the best of their abilities. Objectivity has little to do with these awards. Reportedly a tinge of politics does play a part in these ‘awards for the arts’ but who are we kidding, even the Oscars are political. One would assume therefore that when it came to awarding industry and business leaders or corporations for their success it would be a straightforward matter of going over the various financial performance indicators available to objectively arrive at a conclusion as to who is better than the other and best of the lot. That assumption, for Pakistan, would be dead wrong. We take a look at some of the most dubious awards out there being organised by self-serving glorified PR junkies with little understanding of what actually makes a business stand out amongst others.
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“THERE MIGHT NOT BE A TOTAL OF HUNDRED COMPANIES WORTH NOTING IN PAKISTAN. BUT MY INTENTION IS TO FOCUS ON THE GOOD IN EVERYONE, AND THERE IS SOME PART OF EVERY CEO’S OR MANAGER’S WORK THAT NEEDS COMMENDATION. I CONCENTRATE ON THAT WHEN I DECIDE IF THEY DESERVE TO BE COUNTED AMONG THE TOP LEADERS” Ijaz Nisar, president Management House, founder CEO Club
Top 100 Business Leaders of Pakistan hen I enter the office of any CEO, I say I am not a journalist, I am a business psychologist. I never say I am here for an interview, I tell them I am here for an inner-view,” intoned Ijaz Nisar, president Management House, founder CEO Club and Manager Today magazine, and author of multiple editions of a book titled ‘Top 100 Business Leaders of Pakistan.’ Through “inner-viewing” quite a few people over the years, he has somehow found the secret to his own success – cashing in on the vanity and narcissism of the interviewees. Such attributes are found in almost everyone but are especially manifest among those who have the least to show for it. Most people loathe this part of human nature, but in Ijaz Nisar’s bag of tricks, it presents itself as an opportunity knocking at the door to milk. And milk it, he does. He has made the most of that culpable human failing: the craving to be recognised – through awards, no less. And this in people who should otherwise be best equipped to see through such fawning sycophancy. Ijaz’s hold over hundreds of CEOs and managers in the Pakistani business community
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has allowed him to not only make those otherwise shy of the media eating out of his hands, but also build a whole new enterprise purely catering to the psyche of these very people. Every year he publishes and releases a new volume of his book with a hundred new names, and launches it in no less than six leading capitals. On the one hand, it provides a consolidated account of some true success stories in Pakistan, while on the other it also humors the persistent need of sycophancy among many unworthy businessmen and CEOs, all the while making enough hay for Ijaz in the process. Before delving into the book and its merits, let’s take a look at Ijaz Nisar’s career. “I am a former government servant, I teach in IBA Punjab, and at the LUMS, and also coach new qualifiers of central superior services exam in the Civil Services Academy at Walton,” said Ijaz. According to his assertions, his last assignment as a government officer, before his resignation, was as Human Resource Training and Development Director in the State Bank of Pakistan. Profit’s inquiries from LUMS however revealed no record whatsoever of him being on the university’s faculty, permanent or otherwise. His linkedin profile also mentions him as a team leader in national institute of banking and finance which is a subsidiary of
SBP, and not the HR director of the whole SBP. Equipped with four master’s degrees [his claim] – including one in psychology – and some rudimentary understanding of management needs and businessmen’s dispositions, he tried putting forth several proposals for training and teaching civil servants and preparing them for management and leadership roles. But his ideas were mostly ignored due to what he calls financial, political, or sundry reasons. In November 2010, he decided to go on his own – never looking back. Now he is the proud owner of Management House, claiming it to be first purposebuilt training center in Pakistan. Painted in undertones of grey and blue from the outside and complemented by black flooring and blue colored sitting chairs inside, this threestorey building with additional basements situated in Johar Town offers a lavish environment for ‘C’ level managers to hold their conferences, trainings or meetings. This management house includes training halls, auditorium, lecture theater, computer lab, meeting rooms, boardrooms, library, a corporate cafeteria, radio station, online TV as well as residential rooms according to the Management House’s social media pages.
‘THE PLETHORA OF AWARDS AND TITLES SUFFOCATING secret to success’ PAKISTAN’S INDUSTRY AND PEOPLE ARE ALSO IN THE ‘The alled the ‘Leading Edge’, he opened SAME BUSINESS AS IJAZ, ALBEIT WITH MUCH LESS shop with a consultancy company. Using his contacts as the starting VALID EXPLANATIONS OF THEIR INTENTIONS. SO point, he began training upper tier RAMPANT HAS BEEN THE ABUSE OF SUCH management at some of the corporates in country. Not much later he launched a REWARDS THAT IT WAS ABOUT TIME ONE TOOK A the magazine, Manager Today, which to him reCRITICAL LOOK AT THE GOINGS-ON’ mains ‘‘the secret to his success’’. After in-
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“MANY OF US FEEL, WHAT HE DOES SHOULD HAVE BEEN DONE IN A MUCH BETTER WAY, BUT WE ONLY GOT TO FEEL THAT BECAUSE SOMEONE GOT OUT THERE AND DID IT. IJAZ, HOWEVER, SAW THE POTENTIAL AND HE WENT FOR IT. WHAT HE ACHIEVED IS WORTHY OF COMMENDATION” Umer Saeed, CEO, Evenement terviewing a couple of dozen people, he decided to publish them. That’s when the title ‘Top 100 Business Leaders of Pakistan’ took shape. Among reasons for launching this book, in his own words, his experience made him realise that “there was no professional record of business success stories of Pakistani people”. And he wanted to present an alternate view to the world about Pakistan’s eroding economic image. An unintended, or perhaps intended, consequence was the receptiveness of the people who had no significant success to their credit yet were quite eager to be named as one. Another unintended consequence was the negative impression he was creating on his fellow businessmen while paving his own path. “I don’t know him, but I have heard of him and he is in my friends’ list on Facebook but I don’t know how he got there,” so said the co-owner and CEO of event management company Klockwork, Arif Jalil Piracha about Ijaz Nisar. It pretty much sums up Ijaz’s presence. He makes his place, sometimes to the surprise and at others to the discomfort of others.
Dubious tactics media company’s chief executive spoke to Profit about the time he launched a new business publication, at an invitation-only event.
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“Ijaz gatecrashed uninvited, with a load of his books and started distributing it to the guests. For us, it was indeed annoying because it was not just an unnecessary distraction for our guests, which included the likes of Mian Mansha and Hussain Dawood, but also because it was literally a competitor in publication industry distributing his books at our cost and at the launch of our new publication.” Completely oblivious to the impact Ijaz was having on his hosts, rubbing shoulders with the business industry topnotchers, he secured himself a seat in the front row with Hussain Dawood for the rest of the event. However, his odd conduct is not at all questionable in view of some businessmen familiar with his underhand tactics. To them, it is enterprise. Indeed. For instance, corporate event management company Evenement CEO Umer Saeed Khan said, “Many of us feel, what he does should have been done in a much better way, but we only get to feel that way because someone else got out there and did it. Ijaz saw the potential and he went for it. What he achieved is worthy of commendation.” The CEOs and managers he chooses to profile in his books, however, have proven to be more than happy and sometimes willing to pay any price for being
‘ON THE ONE HAND, IT PROVIDES A CONSOLIDATED ACCOUNT OF SOME TRUE SUCCESS STORIES IN PAKISTAN, WHILE ON THE OTHER IT ALSO HUMORS THE PERSISTENT NEED OF SYCOPHANCY AMONG MANY UNWORTHY BUSINESSMEN AND MANAGERS, ALL THE WHILE MAKING PLENTY OF HAY FOR IJAZ IN THE PROCESS’
hailed as ‘the best’. The Top 100 Leaders book is launched in three chapters in Islamabad, Lahore, and Karachi in elaborate events, funded by sponsors – who happened to be the very people named in these books. Ijaz Nisar chooses CEOs and managers for one issue of his book every year, sends invites to the nominees along with a sponsorship form after ascertaining the company’s affordability. Once they respond to the sponsorship requests, they are bestowed upon with more than a mere mention in the book and are provided with incentives to further their reputation. If they decline, Ijaz still does not strike out their names from the list but sends out a single person invitation to the C-level management to the book launch.
How the undeserving rule the roost t the very outset, in the initial pages of the book, provided is an elaborate criterion, mostly subjective over which of the nominees are evaluated. To sum it up, in Ijaz’s own words, “Fastest growing turnover (this could also be a startup as long as it’s growing fast), largest operations (such as more than 500 employees), and/or innovation,” are the factors that he accounts for. Taking the example of India’s Business Today, let’s compare this method with the criteria used and trusted anywhere else in the world for evaluating the performance of CEOs. The business magazine publishes top CEO rankings using a mix of objective and subjective factors, giving the former higher weightage.
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COVER STORY
Since there is no denying that any company’s financials provide the most trustworthy insight to the company’s performance, Business Today uses Compound Annual Growth Rate (CAGR), Market Capitalization, and Return on Equity (RoE) as their guiding principles for objectively evaluating a CEO’s performance. For the visible, but unaccounted in numbers, developments, Business Today uses the term ‘X-Factor’ which is evaluated by an independent jury in addition to the objective evaluation. This is not just Business Today’s recipe for evaluating the performance of a business head, rather a universally accepted and trusted criterion for objectively approaching a conclusion about the competence and skills of a CEO. Forbes, Fortune, and Inc. are all renowned to keep objectivity as their sole criterion when it comes to publishing performance evaluations. The subjective element is nothing but a cherry on the top of objective conclusions. The companies, and CEOs, who do not provide their financial data for public scrutiny are not included in a majority of these titles, precisely because subjective factors alone cannot determine the performance of a business leader accurately. Ijaz Nisar, however, is too kind to his chosen names, to the extent that it appears almost ridiculous to label them even as average CEOs rather than among the top. His book mentions the numbers and ratios he chooses to evaluate but then gives no further explanation to the factors considered for innovation, comparison points for revenue, intercompany analysis, nor mentions the existence of an independent and unbiased jury. Notwithstanding the fact that a majority of these CEOs operate in non-listed companies with no publicly available financial data, one wonders about the objectivity in Ijaz’s evaluation. Instead, he insists that his chosen names are not a ranking, rather a highlighting of ‘everyone who performed well’. He accentuated that he came from a
“humble background” and he values hard work in everyone, at every step of their career, which is why he strives to look for the positive elements in everybody. No wonder, then, that there are dozens of CEOs named in successive editions of his books as ‘best’ only to be dismissed by their companies’ boards a short while later, often quite unceremoniously. Several of these ‘top’ CEOs are also renowned to be helpless in the face of losing market share, deteriorating revenues, worsening financials and even plunging their companies from a position of market leadership to a forgotten brand on the lowest aisles of rural supermarkets. A cursory look at the initial pages of any of the annual editions would be enough to bring several such names to the surface. All said and done, Ijaz himself is under no illusion about the people he names in his book either. “If you take a look at this country, there might not be a total of hundred companies worth noting. But my intention is to focus on the good in everyone, and there is some part of every CEO or manager’s work that needs commendation. I concentrate on that when I decide if they deserve to be counted among the top leaders,” he said. He also accounts for Pakistanis living and doing business abroad, and mentions them due to their Pakistani heritage.
‘NOTWITHSTANDING THE FACT THAT A MAJORITY OF THESE CEOS OPERATE IN NON-LISTED COMPANIES WITH NO PUBLICLY AVAILABLE FINANCIAL DATA, ONE WONDERS ABOUT THE OBJECTIVITY IN IJAZ’S EVALUATION’ 20
By hook or by crook hile the intentions of Manager Today’s CEO might not be inherently wicked, entitling certain business leaders as the best when they have less than nothing to show for their performance is by no means fair – to the business community, to the students and aspiring entrepreneurs looking up to these businessmen, and especially to those who suffer at the hands of the incompetence and lack of business acumen of these people. Nevertheless, Manager Today has erected an entire chain of money-making opportunities owing to these businessmen most of whom will pay a price to be labeled as the best. Ijaz’s masters’ degree in psychology is certainly paying him dividends. Today his book is found in almost every office and is considered no less than an award. The book launch also costs Rs20,000 per participant not invited or nominated. Two of his three major revenue streams flow from sponsorship of the events and book sales. The third being
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trainings to companies and officials. These three put together make up for a nifty Rs50m to Rs60m in annual revenues. Another source of revenue is companies engaging him in branding their business or CEO because of his marketing and audience reach. The ‘Leading Edge’, so claims a full of hauteur Ijaz Nisar, “has morphed into the largest purpose-built training center of the country and I am one of the most expensive and most wanted corporate trainers of Pakistan.” The leading trainers and HR experts take this statement with a solid pinch of salt – if not utter disdain. “I don’t think any trainer should make that boast because there is no data to validate this for anyone,” said Umer Saeed Khan, mentioning several renowned names from the HR world that included Kamran Rizvi, Ramiz Allahwala (late), Farhad Karamally, Qaiser Abbas, Wali Zahid, Taher Hussain, Nadeem Chauhan (late) and Max Babri. “When I am competing against anyone for work, I always believe I should be able to serve better in my area of expertise and this is how we all must believe. Give our very best and let the efforts take care of the results,” Umer concluded. That said, Ijaz Nisar is streets ahead of others in his chosen realm, for he may not be the only one to have realized the potential of cashing in the narcissistic tendencies of the successful and not so successful, but with money to burn, but certainly has put it to good use for his own benefit – employing it ‘efficiently’ with a tangible outcome for those he awards with awards too.
Consumer Choice Awards he plethora of awards and titles suffocating Pakistan’s industry and people are also in the same business as Ijaz, albeit with much less valid explanations of their intentions. So rampant has been the abuse of such rewards that it was about time one took a critical look at the goings-on. Let’s start with Consumer Choice
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“QUALITY OF A PRODUCT OR SERVICE THE COMPANY IS OFFERING IS THE MAJOR CRITERIA FOR THE AWARD” Kokab Iqbal, Chairman of Consumer Association of Pakistan Awards. Introduced and organized by the Consumer Association of Pakistan (CAP), these awards are meant for brands that are supposedly highest selling and highly preferred by the general consumers. Kokab Iqbal, Chairman of Consumer Association of Pakistan, boasts, “In the private sector, I pioneered awards, and now everybody is giving these awards.” On Feb. 1, 2015, a young girl lost her life from food poisoning after consuming a burger of Dilpasand in North Nazimabad, Karachi. Lo and behold, Dilpasand landed the consumer choice award the same year. While it may not be possible to prove that the bakery still was consumers’ favorite, a serious evaluation of an organization awarding businesses for their ‘achievement’ was definitely in order. Iqbal though had a simple explanation. “The area DIG made an inquiry and no poisonous material was found in the burger… Sometimes a brand is opposed without any reason.” It is ironic that he accepts that the brand was opposed – even if without any reason – yet it was bestowed ‘the consumer’s choice’ award. Who exactly opposed it then and why? The CAP didn’t! If it were the consumers, how was it considered worthy of the award? Let’s look into CAP’s research tactics now. One may assume that an elaborate survey is conducted where fully aware consumers, a considerable number of them, vote on their favourite brands based on the quality of the products. According to Iqbal, CAP is a volunteer-based organization that neither
‘NO WONDER, THEN, THAT THERE ARE DOZENS OF CEOS NAMED IN SUCCESSIVE EDITIONS OF HIS BOOKS AS ‘BEST’ ONLY TO BE DISMISSED BY THEIR COMPANIES’ BOARDS A SHORT WHILE LATER, OFTEN QUITE UNCEREMONIOUSLY’
takes money from the government nor accepts any from its recipients. As a result, it is not surprising that these ‘countrywide’ surveys are carried out by a team of just two dozen people. According to the CAP chairman, “at least 25 people were involved in the last campaign for the consumer choice award who surveyed all over the country to know which product people like the most.” “We do polling through social media and our volunteers carry out market survey too. We have a memorandum of understating (MoUs) with many universities, including Karachi and Dadabhoy Universities for this purpose. In Karachi, for example, we have chosen markets at Tariq Road, Defense, Nazimabad Water Pump and North Nazimabad where our volunteers speak to consumers,” said Iqbal.
No polls, no surveys here is no record whatsoever of any polls or voting on any of the social media pages of Consumer Association of Pakistan or Consumer Choice Awards. Despite repeated requests to CAP officials, Profit did not receive any link or proof of whether these polls even actually happen. Secondly, there is no set criteria to conduct this survey. Responding to this query, all Iqbal had to say was, “Quality of a product or service the company is offering is the major criteria for the award.” How the quality is assessed and whether the surveyed population is even aware of the quality standards is difficult to ascertain. All this makes one wonder about the reason, process, as well as value of these consumer choice awards. In reality, the only benefit this award accrues to the winner is brownie points in terms of marketing.
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COVER STORY
CAP also hands out three more categories of awards: the CEO of the Year Award, the Consumers Icon Award and the Consumers Demand Award. It is still a matter of doubt what differentiates consumers’ choice from consumers’ demand. For the sake of argument, even if polls had been conducted, what are the factors that make the general public aware and capable of choosing CEO of the year. Profit conducted its own research and asked representatives of some organizations distributing these awards about the money changing hands in the process. The most common answer received was, “Simultaneous with the invitation to the award ceremony, we also attach a letter for donating to our organization. It doesn’t always have to be money, it could also be in-kind. But it is up to them if they wanted to pay up or not. We don’t demand it.” Since there is no way to filter out the intent of the givers and takers of these ‘donations’, all that is left to evaluate is the winners of such awards and their standing in the market. Furthermore, the concept of ‘participation’ in awards is itself absurd. The point of an award is to recognize the performance of a company or a brand with respect to the market, which should mean that every brand in the market is part of the evaluation by default. Alternatively, these award giving associations should be giving out lists of ‘participants’, instead of nominations, instead of fooling everyone into believing that the brand winning the award indeed outperformed all others.
Environmentally unfriendly n addition to these corporate awards and honors, there are environmental awards, with the National Forum for Environment & Health (NFEH) holding annual Environment Excellence Awards. “The award has been instituted to recognize and promote the organizations which made an outstanding contribution to sustainable development and economic growth of the country,” says its website. Before getting into the processes of nominations and awards, let’s look into the concept of environmental damage and the sectors that are globally considered to be most environmentally harmful – directly or indirectly. The most common industry polluters
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“EVERY COMPANY PAYS RS50,000 AS REGISTRATION FEES AND WE TELL THEM IN CASE YOU ARE NOT NOMINATED FOR THE AWARD YOU CAN GET A REFUND” Naeem Qureshi, President of National Forum for Environment and Health include companies involved in production of chemicals, pesticides, oil refining, petrochemicals, metal smelting, iron and steel, and food processing industries. As ironic as it may seem, NFEH has been able to award environmental awards to companies belonging to almost all these sectors. Companies that indirectly add to the pollution include automobiles and food packaging, which have also been among the winners of NFEH awards. The list of 2014 NFEH Environment Excellence Award holders includes Lotte Chemical Pakistan Ltd., National Refinery Ltd., OGRA, Pak Arab Refinery Ltd, and Sui Northern Gas Company Ltd. In 2015-16, the recipients list extended to include Engro Fertilizers Zarkhez Plant Karachi, Fauji Fertilizer Bin Qasim Ltd., Fauji Oil Terminal & Distribution Company, Mughal Iron & Steel Industries Limited, Packages Limited, Sui Northern Gas Pipelines Limited, and Sui Southern Gas Company Limited. In earlier years, Indus Motors and Pakistan Tobacco Company have also been awarded environment excellence awards. Let’s just look at the refinery activities first. According to research conducted in MIT, “Refining process introduces a set of environmental concerns, mostly revolving around the release of metal byproducts into the environment. It is very easy for metals to enter the air, ground, or water in an environment, and once there it is nearly impossible to remove them. The metals in an environment can also prove devastating to organisms.” According to the WHO, every year 30,000 to 35,000 people in Pakistan die – the number being greater to deaths from terrorism in the country in a decade – due to diseases caused by air, food, water and other environmental pollution. Another study published by Hazardous Substance Research Center says, “Petroleum
refineries are a major source of hazardous and toxic air pollutants such as BTEX compounds (benzene, toluene, ethylbenzene, and xylene). They are also a major source of criteria air pollutants: particulate matter (PM), nitrogen oxides (NOx), carbon monoxide (CO), hydrogen sulphide (H2S), and sulphur dioxide (SO2).” Some refineries use deepinjection wells to dispose of wastewater generated inside the plants, and some of these wastes end up in aquifers and groundwater. Contamination of soils from the refining processes is generally a less significant problem when compared to contamination of air and water. However, the report added that such contamination including some hazardous wastes, spent catalysts or coke dust, tank bottoms, and sludge from the treatment processes can occur from leaks as well as accidents or spills on- or off-site during the transport process. Readers may now evaluate the legitimacy of these recipients for of these awards. That said, an award to such companies will make sense if it is given for minimizing the damage that was bound to happen in any industry. But in that case, NFEH is also required to publish the details of the damage being incurred by any particular company, the costs going into the achievement of this minimization, and the possible impacts resulting from such compliance. However, the wording on NFEH’s website says: “These [award winning] companies are working tremendously towards achieving economic and social development without harming the environment and natural resources.” In a conversation with Profit, Naeem Qureshi President of National Forum for Environment and Health, who is also CEO of public relations company Publicity Chan-
nel and Editor of an energy-related magazine Energy Update, said: “Every company pays Rs50,000 as registration fees and we tell them in case you are not nominated for the award you can get a refund.” If we multiply the registration fee Rs50,000 per company with 80 (number of companies that got registered for the award) it becomes Rs4,000,000 which Naeem says they spend on further environment protection related trainings, seminars and ‘image building’ of the companies that win the award. The procedure of nomination application includes the companies submitting their company performance and reports on their compliance with the environmental laws in place. Naeem says, an environment-related award is easy to evaluate as technical people judge it. There was no further explanation given by the forum for the criteria to evaluate the applicants, apart from the absence of any conviction over environmental laws violation.
The chief guests or culprits in chief here is one more party outside the realm of givers and receivers of the awards, which is probably most responsible for uncontrolled growth and success of such fake honors and awards – regulators and authority figures gracing these events with their presence. Their fault is not just in failing to curb this unethical practice, but also in lending undue credence to it. These regulators are responsible for ensuring that business in the industry is operating according to legal requirements, such as hygiene and cleanliness for foodrelated businesses, strict abidance to accounting laws for banks, tax compliance and employee protection for the manufacturing industry, and so on. But instead, they send their representatives as chief guests for such events without doing any due diligence whether these businesses are keeping up with the laws and whether such
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awards hold water. In fact, this year’s Consumer Choice Awards ceremony took place in Sindh Governor House, in Karachi. Terrabiz CEO Hamza Wasi Hashmi shed more light on the matter. “The legitimacy and credibility are solely provided to such events when the likes of commerce minister, the finance minister, the State Bank governor etc. show up as chief guests. While these officials have legitimate credibility, they don’t put it to good use when they get an invitation to appear at such awards. They show up merely to raise their political or public profile. Some of them don’t even need publicity, they are public figures, but they just agree to go without even asking for the criteria for these awards or basis for distributing such titles.”
The vicious cycle here are, of course, a few exceptions. In September this year, Institute of Bankers Pakistan (IBP), AF Ferguson & Co (AFF) and a media group organized ‘Pakistan Banking Awards’ for the second time. “They made it clear from day one that no money was involved. Their criterion for choosing the winners was already briefed to the stakeholders and the entire event went without any sponsor or payment from any party. State Bank’s governor was present at that occasion, and it made sense for him to be there. But
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‘FOR THE VISIBLE, BUT UNACCOUNTED IN NUMBERS, DEVELOPMENTS, BUSINESS TODAY INDIA USES THE TERM ‘X-FACTOR’ WHICH IS EVALUATED BY AN INDEPENDENT JURY IN ADDITION TO THE OBJECTIVE EVALUATION’
money is not the only bad thing. Paid awards happen all over the globe and they are not all necessarily corrupt. Winners pay the participation fee, but money is not the path to land the award. Having a fee for the award isn’t bad, but if these regulators don’t do proper vetting before agreeing to attend and distribute these awards, then the point of having credibility in these awards vanishes altogether,” explained Hamza Wasi Hashmi. When such leaders and authority figures appear to these awards, then the brands winning these awards receive instant credibility – adding to the clout of the company dishing these out. And it doesn’t end there. It is the start of a vicious cycle. For instance, if a bakery gets the consumer choice award, it is not just a title for one-time publicity. Wasi added, “The next time a conference is held on workplace hygiene or safety policies for food production, the award-winning bakery will obviously be at the top of the invitees’ list. A few of the attendees of the conference, or the conference itself might get that very bakery to do the catering as well. And next time someone from the health and safety department goes to inspect the bakery’s kitchen, the owner will simply turn him away saying that the highest authority handed me the award and you still dare to question my practices.”
COVER STORY
“I BELIEVE THAT THERE IS NO POINT IN PROTESTING AGAINST THESE FAKE AWARDS BUT TO CONVINCE THE REGULATORS AND FIGURES IN AUTHORITY TO VET THE EVENT BEFORE GIVING CONSENT TO ATTEND. WITHOUT THEIR PARTICIPATION, THIS SHADY BUSINESS WILL DIE ITS OWN DEATH” Hamza Wasi Hashmi, CEO, Terrabiz
It’s the easy way out he amount the award winners should be spending on improving their workplace and practices goes into buying these awards. This, in turn, creates marketing opportunities and possibly more customers from these award ceremonies, as well as a ticket to bypass the legal inspections. The same thing happens with businesses in every sector, only because someone who was responsible to keep a check on the industry was ignorant enough to hand the award lending credibility in the public’s eyes giving two hoots whether the entity deserved it. “The entire fake awards business is thriving because the regulators are not doing their job. If a common man decides to make an organization or distribute such awards, no one in the market will even consider paying a hefty amount to buy that award if there is no political or government personality present at the event. If a governor or a minister is not at the event, the winning brands would get no benefit out of the award – save a possible one-time marketing advantage. Once a few
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ministers’ or big shots presence is assured, anyone can go to a hundred brands out there and tell them that you will receive the award from so-and-so, and we will do branding for you, include you in post-event press release and will also allow you to use this title for your marketing. But if no regulator or important head honcho is present at the event, these awards would have no credibility whatsoever”, said Hamza Wasi Hashmi. “It is shocking to see that these highlevel officials cannot spare fifteen minutes to check the antecedents of the awards or the company handing them out before giving their consent to be a part of it,”said Wasi. Another spillover effect of regulators’ indulgence with fake entities is that the few legitimate awards in business feel discouraged. If anyone can get as much publicity and credibility without going through all the time and cost that intensive procedures of evaluation of the recipients entail, then why bother? The end result is going to be the same at best. “I believe that there is no point in protesting against these fake awards, but to convince these regulators and authority fig-
Governor Sindh, Mohammad Zubair photographed with Ijaz Nisar and others at the 16th CEO Summit organised in Karachi last week
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ures to vet these awards before giving consent to attend. Without their participation, this shady business will die its own death,” concluded Wasi.
Regulators’ disregards spawns mushroom growth n a nutshell, the regulators’ complete indifference to the legitimacy of these awards and agreement to attend ceremonies without vetting, makes a lot of sense to start an awards business. No surprise there that it is on the rise. Naeem Qureshi admits, “In general awards, there is a mushroom growth, creating a problem for early players to make a headway.” However, the concept of displaying it as an achievement or advertising based on the awards a company received, most likely, because other contenders did not ‘apply’ or because other businesses could not ‘afford’ to apply, is duping innocent consumers. There is no accountability mechanism for these awards and no transparent processes for choosing a winner, but there are magazines, press releases, and, of course, shiny trophies everywhere labeling companies and people as winners – proclaimed as the best of the best in any industry. As long as these companies can afford to purchase an award and pass right under the nose of the very regulators supposed to keep a check on them whatever they do to their employees, consumers, or the environment doesn’t really matter.
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COVER STORY
By: Masooma Syeda ver wondered why some fabrics feel smooth as silk to touch while others are abrasive against one’s skin? Ever chose a dress that looks stunning on the body but feels like you’re wearing a wire mesh? Or, despite being hailed as one of the best in the world, have you ever wondered why Pakistan’s cotton isn’t all that popular internationally? Conversing with Profit, Adeel Khalid, Rang Rasiya’s Managing Director, shares his insight credible insight while commenting on these prickly questions as well as the rag industry and trade overall. With his freshly acquired degree in Textile Technology from North Carolina State University, Adeel was in 2008 a third generation entrant into the family business – thinking that he was best equipped to carve out greater success than his father and grandfather, who had stepped into textiles by setting up a hand-printing mill in 1974. Adeel was in for a rude shock. “On returning back home, I was convinced that our edge was in thicker thread – known as the coarser count – of 8, 10 and 12,” said Adeel. [For the uninitiated, thread count
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means the number of threads woven together in a square inch. It’s counted both lengthwise, called warp threads, and widthwise, called weft threads. The higher the thread count, the higher the quality of fabric and the smoother the finish]. “We make the best fabrics in 10 counts, making us good in socks and towels. I was interested in that and I had seen firsthand the huge demand for these products in the US.” His father advised against it, but determined to prove his point Adeel invested with his maternal uncle in his Five Star Textiles, producing luxury towels. Unwilling to accept failure, he is still convinced that he may have succeeded if it wasn’t for the export crisis hitting Pakistan in 200810. “India beat us by a great deal back then too. Their government assisted [the industry] but we had many issues here. So, in 2011, I had to shut it down. It did not help that my preferred customer JC Penney was only buying from India. So I was left with only Walmart. JC Penney’s is at the highend, with many in between that and Walmart. Walmart has a limitation: it sells basic category towels and 90 percent of these are made in Pakistan. “There was 40-50% cost differential. If we were selling at $4-5 per kg, JC Pen-
ney was buying it at $7 per kg from India – having an entire industry behind it, with superior technology in weaving and dyeing.” Eventually, Adeel gave up and decided to move to lawn business – “to fulfill my ambition in value. My family business is in printing, making commodity lawn, sold at Rs70-80 per meter. But I decided to launch my own lawn brand.” Reminiscing about titling his brand, Adeel noted, “My wife and I came up with two options Rangrez and Rang Rasiya. I chose Rang Rasiya. A couple of months later, my friend Haroon Hasaan told me, he had chosen Rang Rasiya for his brand. I told him I have already registered it. In the same instant, he said, then he’ll go with Rangrez.” Starting up with Standard Textile Mills in 2011, he said, “My aspiration was to provide a high-end option through investing immensely in research and development of contemporary clothing for Pakistani women. We produce exquisite apparels using standardized fabric, further embellished with modern accessories.” His drive stems from “need and passion”. People are going to continue to need clothes, said he, adding, and, “My passion is to provide fashion – updated high-street fashion with value and luxury – at a reasonable price.”
The edge is in finesse t the end of the day, he reckons, the game in this industry ends up on the ‘designs’. “You can hire a chef for Rs20,000 or for Rs200,000. All the difference is just in the finesse. There are so many designers out there, everyone, every brand, is into designing these days. The edge is in the finesse, which must reflect in each and every piece you put in the market. If you put out 20 designs, every single one ought to show effort and hard work.” Seeing someone else wearing the exact same outfit as themselves cheeses off Pakistani women – a tendency many high-end brands eschew by maintaining ‘the exclusivity factor’ through producing a design in limited numbers and then shortly discarding it for good. So, keeping a high focus on design quality and managing people’s penchant for exclusivity is a drain on the cost-effectiveness of a brand. “It is only about the numbers. If we consider the number of clothes per design, we reduce the number of potential customers out there, the result is 0.12 approximately. The number of units we or anybody makes in one design is very low to the proportion of customers, so that is not a major problem. Even if I make a thousand pieces in one design, that as compared to the customers is extremely low but it serves the purpose of keeping designs exclusive.” Continuing on the issue of cost-effectiveness, he elaborates, “The innovations in the digital printing methods have been immensely helpful. It’s just like a computer printer: you give a command and a thousand shirts are printed in an hour.” Digital printing is more expensive than conventional printing for now but it has several advantages, most important being no limit on colors in a single design. If a flower has hundreds of hues, one can have them
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all. “Going back to my grandfather’s time there were one-color designs, then twocolor, and then for 20 good years only fourcolor. Even today several printers are working on a four-color palette. But now that limitation has ended.” To him, lower-cost alternatives are no threat if the accent is on design. “The design is of huge value. The new brands can attract customers on lower prices only for so long. But the creativity cannot be compromised upon. For example, when Limelight or Agha Noor entered the market, Sana Safinaz ensembles may have lost a proportion of their market but their customers remained.”
The importance of design ick up the top few design colleges in Pakistan and you have 1,200 graduates every year. “But there might be a hundred at most who
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‘THERE ARE SO MANY DESIGNERS OUT THERE, EVERYONE, EVERY BRAND, IS INTO DESIGNING THESE DAYS. THE EDGE IS IN THE FINESSE, WHICH MUST REFLECT IN EACH AND EVERY PIECE YOU PUT IN THE MARKET. IF YOU PUT OUT 20 DESIGNS, EVERY SINGLE ONE OUGHT TO SHOW EFFORT AND HARD WORK’
are actually good. There is a natural talent and then there is the hunger to become better. I always tell my team to go for the hunger of being able to put something out there that no one else is doing.” The importance of design, he noted, has been there forever, but customers have consciousness towards this has developed recently. Now, it’s importance is overwhelming. “The fabric is almost similar all around, everybody has perfected their fabrics, 90% of fabrics, dupattas and embroidery are the same. The flow of information is so fast that a single picture put up on social media tells all about the makeup artist, the photographer, the designer and the clothing brand. In times bygone, designers did not use to allow photographs of their work, now they share close-ups. Because now designers know that even if they are copied, the name stays, for the copies are sold as copies of the brand. If someone cannot afford the Rs6,000 suit and buys a Rs600 copy, even he/she will aware of who the original designer and the brand were.” Talking about his own products, Adeel informed, “We retail in price band from Rs2595 to Rs6500, and this involves four-piece embroidered unstitched range. Our basic fabric is almost the same in all
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‘Pakistan has always been under Pressure in the international market. the Policy-instability in successive governments and the fact that the government has never been very suPPortive of textile industry has taken its toll’ Adeel Khalid, Managing Director, Rang Rasiya our products because we don’t use substandard quality in any product. The price difference comes from other factors. For instance, in a Rs 6,500 dress, we use pure silk dupatta, which alone is worth Rs2000. That is a luxury not available in lower-priced items. Then the quantity of embroidery and designing, and overall layout of the piece forms the price difference.” As of now, he is not in it, but he shares the sentiment of many retail establishments about its decline whom Profit has spoken to. Perhaps that’s why his plans to enter retail are set 3-5 years from now. “In crisis for a while now, the sector isn’t doing well in Pakistan.” Sharing his expansion plans he said, “We shall introduce our Pret range exclusively on outlets and not online so that buyers could have a feel of the texture prior to the purchase.”
our coמּon, not such a rage on world stage
oving onto the world markets and Pakistan’s share there, Adeel explained why Pakistan’s cotton isn’t very popular internationally. “The best cotton isn’t from Pakistan. It’s from India or Egypt. The thing is that longer the size of the fiber, the finer it is. Think of this as a regular rope. If you cut it into very small pieces and then join it, it will give a coarser feel because the ends will be protruding outwards giving a rough finish. We are best in the range of 8 to 12 count but they are best above 30. We don’t even get close to them [in sheer quality]. Their cotton is extremely fine. Egypt itself produces longer thread. Then their technology is also better.” The comparisons on fabric, said Adeel, are made worldwide on the price range in different thread counts. There is no comparison between a 20 and a 60 thread count, rather how pricey the product is in a partic-
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ular count. “Below 20 Pakistan is the best because we are the cheapest in that count. In quality, they are much better but they are also expensive and it takes them higher cost and more time to produce it. We also produce 30, 40, and 50 thread count fabrics but in that category, we are more expensive than them. Count 60 and above is beyond our range and production capacity.” About the final finish, Adeel added, thread count and length are not the only determinants. “Quality of yarn is one thing, and every mill has a different quality. But then processing may be different as well. The mills with a better finish will have a softer, more expensive end-product. So, if a particular retailer has both coarse and smooth types of denims, for instance, he might have gotten the finer ones processed from Turkey, and the coarser ones processed from Bangladesh or Pakistan.” Then there are instances when a coarser fabric is produced by choice – to cater to consumer tastes. That is why brands like Levis and Armani sometimes display jeans and types of denim that feel like hardened paint against the skin. “Sometimes we provide amazing finish but the customers don’t like it. That necessitates treating clothes after production to make them conform to prevalent tastes, irrespective of fabric quality.”
how and where we lost it ow over the years Pakistan lost its major share in cotton exports in world markets? “The cost of production in Pakistan depends on individual products. We were competitive in under-30 count category internationally. Then China developed microfiber and started mass production about 10-12 years ago. Those here specializing in the coarser bedding, such as T150, T128, used to purchase it at a lower cost. They went towards
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microfiber. China was producing it with 100% polyester, while we were still in polycotton mix production. So, China took a major share from us. When we tried to overcome that by going into higher-thread counts, China and India were already major competitors there. In terms of clothing that didn’t translate locally, because women here don’t only concern themselves with the fabric but also with how it looks. But in bedding sector even locally it has affected us massively.” Adeel also blames the government policies, or the lack thereof, for the unrelenting increase in local competition and the ever-decreasing competitiveness of Pakistan’s textiles in the world markets. “Pakistan has always been under pressure in the international market. The policyinstability in successive governments and the fact that the government has never been very supportive of the textile industry has taken its toll. Second, because there is no policy and therefore no barrier to entry – now the case in almost every industry in Pakistan – the inner competition is high. But if you compare it with the world, India or China etc., certain policies are governing the industry. Owing to the absence of governance, the inner problems in the local industry also become pronounced to the world. If for example, there is a devaluation in the prices in the local economy, it is immediately passed on to the foreign market even before anyone has the time to digest it. The brands start to provide discounts and other incentives to secure orders, devalued their products.”
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OPINION
KK Shahid Crude AwAkening
Corrupting power The problem of corruption in completing power projects and making them operational is another reality in the energy sector akistan’s energy crisis remains an issue that several governments have failed to tackle during their reign over the nation. The state of affairs of the energy sector in Pakistan is poor, to put it politely. To further drive home the point, here are some facts to underscore the depth of the quandary:
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‘IT IS ESTIMATED THAT INEFFICIENCY IN THE TRANSMISSION AND DISTRIBUTION SYSTEMS, COMBINED WITH THE ENERGY THEFT THAT TAKES PLACE, CAUSES AS MUCH AS 18% OF THE POWER PRODUCED TO BE LOST’
ergy sector has cost the country as much as Rs145 billion over the course of the last five years. n Although the situation in the energy sector has not shown improvement, investments in the sector have been on a decline falling to 0.7% of the GDP in the n The average shortfall in the energy sector consists of nearly 4,000 last decade, from their previous benchmark of 1.5%. MW for power and approximately two billion cubic feet per day for Having these facts laid out in front of us, it is not natural gas. This shortfall doesn’t stop here as it has the potential to difficult to notice the woes of the common man. Will rise to as much as 7,000 MW for power. this power shortage continue to haunt the nation or will n The shortage of energy has its negative impacts on the economy of the common person receive some respite from the chalPakistan, costing it nearly Rs14 billion in 2015. This amounts to lenges of gaining what in other parts of the world is nearly 7% of the country’s GDP. deemed their basic right? n More than 140 million people are deprived of energy i.e. either they The presently ruling party PML-N has vowed to have no connections to electricity or face acute power-cuts on a daily put an end to the energy shortfall by 2018. They have basis. been true to their promise to some extent as August ren The energy crisis is directly related to unemployment in the country. ports of electricity demand and supply gap declined to As many as 500,000 households are impacted by unemployment as 12% of the total output, according to Arif Habib reindustries shut down due to lack of power supply search. n Inefficiency in the transmission and distribution mechanism in the enThis is reportedly the lowest level the demandsupply gap has achieved in the last couple of years, which in itself is an achievement. The ruling party also has plans to add 9,000 MW of generation capacity to KK Shahid the grid of the country to tackle the energy shortage. But is the demand-supply gap the only reason why an energy crisis exists in is Energy Correspondent, Profit the country? While this may be one of the reasons, another prominent reason is the corruption and theft that takes place behind closed doors that prevent the nation from reaching its optimum when it comes to producing power for its population. It is estimated that inefficiency in the transmission and distribution systems, combined with the energy theft that takes place, causes as much as 18% of the power produced to be lost. Not fixing the distribution system and leaving loopholes within it will continue to present itself as a problem for the energy sector until higher authorities take further action to rectify the issue.
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While the ruling party is embarking on plans to add more capacity to the grid, there are several questions raised regarding the reliability and stability of the grid itself. Former officials have their reservations about whether or not the grid will be able to hold up as new capacity is installed and brought online, leading many to believe that installing capacity is not the only thing that needs to be done if the energy crisis is to meet its end. If these issues weren’t enough, the problem of corruption in completing power projects and making them operational is another reality in the energy sector. In the recent past, corruption in a hydropower project, Golen Gol Hydro Power Project Chitral (GGHP) came to the surface. Designed to generate 108 MW of electricity, the project was initiated back in 2011, with an estimated cost of Rs7.0335 billion. It was scheduled for completion in January 2015. Unfortunately, fraudulent motives of the people in-charge of the project have prevented the project from being completed in a timely manner, with the cost of the project scaling up to nearly Rs28 billion (more than threefold). Besides that, there are claims that the transmission lines have not been designed in an effective manner, which has resulted in the cost increase by nearly 38%. With unqualified staff and contractors working on this project, it is estimated that losses to the government are amounting to as much as Rs20 million a day due to GGHP. So is there a solution to the problem of
‘THE ENERGY SECTOR OF PAKISTAN IS PLAGUED BY SEVERAL PROBLEMS. CORRUPTION IS THE BIGGEST CONCERN OF ALL AS IT IS AN OBSTACLE IN THE COMPLETION OF PROJECTS AT OPTIMUM COST LEVELS. THE DELAYS IN COMPLETING PROJECTS AND BRINGING THEM ON-LINE ADD TO THE PLIGHT OF THE NATION’ ending corruption in power projects undertaken by Pakistan? It seems that the Chinese and their plans for investment in Pakistan’s energy sector are a light at the end of the tunnel. There are plans to invest over $62 billion over the next 15 years under CPEC to build roads, rails, power plant and special economic zones in Pakistan. To make this possible, the Chinese have deployed workforce in thousands, it is estimated that there are nearly 9,581 engineers, experts and technicians working on CPEC related projects, and more than 10,000 on the ground for nonCPEC related work. However, labor is solely sourced from Pakistan to complete these projects. Corruption in projects has not gone unnoticed by the Chinese as they stressed upon guarding against ‘external interferences’ and ‘disturbances’ to ensure infrastructure and energy projects are completed. According to Mushahid Hussain, Pakistani Senator heading the committee on CPEC, the current projects are being monitored closely and so far there is ‘no evidence of corruption’. Other than the investment that the Chinese are bringing in, the speed of execution in
projects is also promising. Take the Sahiwal Power Plant, for example. With a capacity of 1,320 MW, the plant was completed in a record time of 22 months – a year faster than it would typically take. To conclude, the energy sector of Pakistan is plagued by several problems. Corruption is the biggest concern of all as it is an obstacle to the completion of projects at optimum cost levels. The delays in completing projects and bringing them online add to the plight of the nation. However, with the ruling party adamant to leave a mark before the next elections, and with China and CPEC in the picture, it seems as though progress is not too far away. The energy sector could witness massive improvement if everything goes according to plan over the next 15 years or so. Not only will this eliminate the gap in energy demand and supply, but would overcome other problems like unemployment and losses that are presently faced by the nation. With added productivity and fewer losses, it is possible that the economic engine of Pakistan could be well-oiled in the future if energy sector improvements are witnessed.
ENERGY
By: Syeda Masooma ot a medical doctor himself but having received training in hospital management, Fahdel Sheikh is upscale Aadil Hospital’s owner and director. With a pleasant demeanor that might or might not have been an acquired attribute, considering that is a job requirement, he keeps involved with the hospital’s procedures and activities. While conversing with Profit, he was interrupted a few times to receive patient updates from several doctors, reminding them of the convalescent’s history and inquiring about their current status. “My primary training was in business studies but I was always very clear that I am not going to limit myself to just that. So I specialized in health services and hospital management.” Hailing from a well-heeled family, his focus is on quality standards instead of using his hospital as a money-printing machine. That said, Aadil generates about Rs2 million a month in revenues. “For a hospital
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administrator, success does not emanate from popularity, it comes by putting in place a system that works even if he is not there. If it does, it is an accurate measure of effective management,” said Fahdel.
Health Care Managers: Trend comes to Pakistan n the developed world, a statutory condition for hospitals is to be managed by healthcare managers. The trend is catching up here now. The new legislation requires that either trained hospital managers or similarly qualified doctors are in hospital management. This raises the possibility of the managers being at odds with doctors. “The model that works best is to leave the job to professionals, with an effective oversight system in place. Some people always want to overstep the boundary, and that’s where the system comes in. The new healthcare law, called minimum service delivery standards, clearly defines those boundaries. It clearly dictates what a
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medical practitioner can and cannot do,” said Fahdel. Fahdel has the same philosophy when it comes to the pharmaceutical provisions in the hospital. “We don’t have any pharmacy of our own because that is better left to professionals. We have a contract with Green Pharmacy, and we do have a drug enforcing committee ensuring supply of quality medicines and ensuring no sales to anyone without a prescription. “Sometimes people appearing to be otherwise very decent claim to be my relatives or my father’s friends and try to snub the staff, but they are well trained to not to compromise. Even relations have to come to me first.” Yet some people feel being wronged by the healthcare professionals. “The best solution is to try and bridge the gap through dialogue. The good thing about the latest legislation is that an unresolved issue goes to Punjab Healthcare Commission, and not a regular court. That Commission regulates all doctors and hospitals and evaluates the complaints about service delivery gaps on whether it was medical negligence on the part of a doctor, hospital, or if there was anything lacking during the process of treatment.” Having his legal and medical problems solved through legal recourse, Fahdel concerns himself primarily with the managerial issues and maintaining the reputation of his hospital.
Steps in the right direction ealthcare industry in Pakistan is growing, with the market being explored. Patients and clients are becoming more aware and demanding better services that are value for every rupee spent. “There is lot of space for more medical services. About 60 percent of Pakistan’s healthcare is being provided by the private sector, including some philanthropic institutions. Successive governments have failed to provide for and allocate necessary budgets for health care.”
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‘FOR A HOSPITAL ADMINISTRATOR, SUCCESS DOES NOT EMANATE FROM POPULARITY, IT COMES BY PUTTING IN PLACE A SYSTEM THAT WORKS EVEN IF HE IS NOT THERE. IF IT DOES, IT IS AN ACCURATE MEASURE OF EFFECTIVE MANAGEMENT’ Fahdel Sheikh, Owner/Director, Aadil Hospital However, he appreciates the recent developments at the government’s end, allowing for a more conducive environment for entrepreneurs to invest in the sector. “The recent reforms have taken the right step of privatizing the management and board of public hospitals. The ghost hospitals (Basic Health Units) in rural areas are now beginning to deliver services in an attempt to reduce the burden off the tertiary care hospitals in big cities. It may be too little too late but certainly a step in the right direction. The political appointments and red tape have meant the government hospitals underperforming and overburdened at the same time. This will change for good. The government will monitor the performance of these public hospitals and hold the autonomous boards responsible for delivery. “The government has introduced standards and regulating bodies for implementation of these standards to include the Punjab Healthcare Commission (Minimum Service Delivery Standards, Licensing of hospitals, handling complaints and monitoring quackery), and the Punjab Blood Transfusion Authority, in addition to pre-existing regulatory bodies like the federal regulatory bodies
like Punjab Drug Authority, PM&DC & UHS.” There still is room, he feels, for the government to play a bigger role in this sector through granting “more autonomy to the health sector, monitoring health indicators and paying those who (HCE) provide service to people.” Speaking on the operational model for Aadil Hospital, he said, “Our model of service delivery is personalized care. We proudly say ‘Let your Health be our Concern’. Our focus is to provide affordable health care service without compromising on ethics.” Aadil Hospital provides subsidized health services, with the accent being on not to espouse a commercial approach. It is a 150-bed teaching hospital operating as a non-profit organization under the umbrella of Abdul Waheed Trust and under the parent company Genix Medical Services Pvt. Ltd. Other projects of the Abdul Waheed Trust include Avicenna Medical College, Abdul Waheed Institute of Allied Health Sciences, Gulfreen Nursing College, Avicenna Charity Teaching Hospital, and soon to start Avicenna Dental College. Fahdel’s aims for the future include Avicenna Dental College becoming a degree-granting institution.
‘IN THE DEVELOPED WORLD, A STATUTORY CONDITION FOR HOSPITALS IS TO BE MANAGED BY Top healthcare at HEALTHCARE MANAGERS. THE TREND IS CATCHING UP one-third the rates e don't do direct HERE NOW. THE NEW LEGISLATION REQUIRES THAT fundraising, but for EITHER TRAINED HOSPITAL MANAGERS OR SIMILARLY Avicenna Hospital we channel the fees of the QUALIFIED DOCTORS ARE IN HOSPITAL MANAGEMENT’
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HEALTH
medical students, nursing students and technicians. The funds generated through the fees of the medical students are used for payments of salaries, utility bills, and for running the charity hospital. It is a self-sustaining, self-generating model which is also quite popular these days. The Trust has the support of doctors and Pakistani professionals working in the United Kingdom and Canada as well.” According to Fahdel, Aadil Hospital offers the same service as the top hospitals in Lahore for 1/3rd the price. “Those who can afford even that can always get premium service for more. The idea is self-sustainability. As for Avicenna Hospital, the service is completely free.” The value of service depends upon the need of the patients receiving the service and their social economic background. “In the government sector or the charity hospitals, the patients’ main focus is to access basic healthcare without barriers. The equation changes with the insurance company and corporate sector who demand more value for the service delivered for the insured or the employees of the company. One’s client teaches one everything. At the end of the day, a hospital has to serve the needs of the patients and differentiate the
need from the wants; after all, one size does not fit all.” There are patients who are constrained by their budget as opposed to those who look for brand names in doctors and exclusive rooms and foreign trained staff. Offering a right mix of service according to the need and want of the patient can be a challenge at times, considering that it is a buyers’ market. Aadil Hospital accounts for these premium services and makes them available for the wealthy at appropriate costs. “A digital x-ray can cost you Rs800 from a private hospital on average whereas the same is provided free by the public sector or a charity hospital. But the real question is whether someone is ready to go to a public hospital?” Talking about keeping his hospital’s goals aligned with those of his staff, Fahdel said that the management believes in an open door policy resulting in a very low turnover rate. “We are happy to share the goals and objectives of the hospital with the department heads, staff members, paramedical staff and even the cleaners. All people in their own sphere understand and work towards the common good of the patient.” His HR department constitutes of members from all departments in the hospital and
‘ABOUT 60 PERCENT OF PAKISTAN’S HEALTHCARE IS BEING PROVIDED BY THE PRIVATE SECTOR, INCLUDING SOME PHILANTHROPIC INSTITUTIONS. SUCCESSIVE GOVERNMENTS HAVE FAILED TO PROVIDE FOR AND ALLOCATE NECESSARY BUDGETS FOR HEALTH CARE’ 34
while hiring, prior to the interview, it ranks prospective candidates. “Proper background checks are made while the performance post-hiring is also measured at regular intervals.” Regarding the operational budget for the hospital Fahdel said, “The expenditure depends upon the revenue collected and the demand for new services or redesigning the existing ones according to the new trends in the healthcare industry. The department heads bring in their demands with estimated outcomes, like an increase in the service range, and in direct and indirect sales. The budget is accordingly allocated to develop new services and acquiring equipment as per most pressing priority.” Instead of marketing, Fahdel is focused on developing business through word of mouth, and so far, he says, he has been very happy. “For the last three decades, our hallmark has been to provide emergency services irrespective of the affordability of the patient. One satisfied patient brings in 10 more.”
Segregating emergency services alking about the challenges of his industry and the ways to overcome them, he said “We were constantly pressured to hire all-round doctors – now almost extinct as a human resource. So, we segregated our emergency services into an adult male, female and pediatric service round the clock. This is relatively a new trend in the private hospitals. We faced resistance from doctors but overall the quality of service improved remarkably, creating
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the ripple effect of patients being able to walk in 24/7 and getting a suitable doctor to attend to their immediate needs without having to go to a specialist. “Though the return on investment may not always be great keeping up with the latest technology is essential to survive. Each year we have an outlay for new purchases of equipment and work out collaborations with industry partners to provide affordable and quality diagnostic solutions.” The power bills are Aadil’s biggest expense, and Fahdel hopes to minimize these through a gradual shift to solar energy. Aadil Hospital engages in philanthropic work, especially during times of natural disasters and national tragedies. On May 8, 2015, seven people died when a military helicopter on way to the inauguration of a ski resort chairlift crashed at Naltar near Gilgit. One of the seven casualties included the Philippine ambassador Domingo D Lucenario.
‘THOUGH THE RETURN ON INVESTMENT MAY NOT ALWAYS BE GREAT KEEPING UP WITH THE LATEST TECHNOLOGY IS ESSENTIAL TO SURVIVE. EACH YEAR WE HAVE AN OUTLAY FOR NEW PURCHASES OF EQUIPMENT’ Aadil Hospital volunteered, “as it was as upsetting for us Pakistanis as much as it was for the countries whose diplomats died in that accident. We stepped in and to our surprise, the government was the last to respond and slowest to move. We offered our services to the Philippines embassy and within 24 hours we were able to identify and repatriate the remains of the late ambassador.” “And then we started getting calls from other embassies to do it for them too. We were appreciated for that.” Embalming, packing, and sealing services were offered by Aadil Hospital at the CMH Rawalpindi for which the institution was appreciated by
all foreign missions and the ministry of foreign affairs. In December 2016, Fahdel became the first Pakistani to have been awarded with the Kaanib ng Bayan Award by the President of Philippines Mr Rodrigo Duterte for his dedication and services towards the Filipino community living and working in this country. In addition to this, Aadil Hospital is now also working with a couple of foreign missions for their medical checkups, free medical camps, and vaccination, including camps for the Philippines, the British High Commission, and Nigeria. n
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Recognized by Pakistan Dental and Medical Council (PM&DC) as a Teaching Hospital. Affiliated with the University of Health Sciences (UHS) as a Teaching Hospital. Notified as a Teaching Hospital by the Ministry of Health, Pakistan. Licensed by Punjab Healthcare Commission. Certified by TUV Austria for ISO Quality Management System. Licenced by the Punjab Blood Transfusion Authority
HEALTH
By: Muzhira Amin s one drove down the Native Jetty Bridge, the unpleasant ubiquitous stench of stale fish hit the nostrils. With high-axle vehicles rolling towards Karachi Port, all of a sudden the road felt narrower and congested. And then the car stopped. I had arrived at the Jackson Market – the biggest and most popular black market of the largest and most populous metropolitan of the country. Standing adjacent to a dilapidated church, the entire neighbourhood is Rajperiod architecture. The shops are on the one side, placed in linear form next to each other, while vendors offering street food lineup on the other. Inside these oblong little structures you would find crammed everything electronic that you might require for home – ranging from television sets,
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washing machines, air conditioners, theatre speakers and bicycles, at prices to kill for.
Irresistible branded bargains
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reviously the sales point for second hand appliances from ships, the local legend recounted by the shopkeepers puts Jackson Market’s age as it stands today at around 35 years. “Every month at the beginning, truck loads of electronic equipment comes to the market, with the shop owners bidding for the stuff. The one with the highest walks away with the best stuff,” said 40-year old Ameen Abro, manning his shop – the first at the corner and the largest – with two of his sons in tow. Jackson specialises in second-hand international brands at half the price, or even less. The serious bargains remain the major enduring attractions why people still come all the way to shop at Jackson. Another temptation is home delivery upon request, which every outlet at Jackson offers. Top of the line brands like Sony,
Samsung, Kenwood etc. are all up there for grabs, at a fraction of the regular price tag, making it quite affordable even to the less well-heeled. That is perhaps why shopowners also come over to pick up pieces of their choice from Jackson to resell at a premium at their upscale outlets. Abro confided that most of the B2B shopping that takes place at Jackson is by savvy shopkeepers from the Saddar’s electronics markets, who usually pick up refrigerators and air conditioners etc. The number of such traders has however said to have decreased quite considerably over time. Since this writer was on her own, Abro sent his youngest son to take me along and guide me. Only a dozen years old, already the young prodigy knew everything that was there to know about the Jackson. Strutting about the place, he was familiar Throughout the tour, he kept strutting about as if he was in his own backyard, greeting the
shop-owners with familiarity that bordered on intimacy. “I have been around at our shop since when I was just three. I know all the bylanes, each and every turn, and everybody around here,” crowed the young prodigy with an air of confidence that could only be seen to be believed.
Dodging the import duty ccording to a Pakistan government report, the undocumented trade on the Pak-Afghan Torkham and Chaman borders exceeds $2.5 billions annually. The smuggled stuff east of the Durand Line includes cheap electronics, fabrics, medicines and tyres. “None of the appliances we sell are imported. All of these are trucked down from the Afghanistan border. The truck driver usually has a deal with the duty officer over there, which explains how the import duties are dodged,” said Abro. This writer’s next
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‘TOP OF THE LINE BRANDS LIKE SONY, SAMSUNG, KENWOOD ETC. ARE ALL UP THERE FOR GRABS, AT A FRACTION OF THE REGULAR PRICE TAG, MAKING IT MOST AFFORDABLE. THAT IS PERHAPS WHY SHOP-OWNERS TOO PICK UP PIECES OF THEIR CHOICE FROM JACKSON TO RESELL AT A PREMIUM AT THEIR UPSCALE OUTLETS’ destination was a store – again a large one – selling air conditioners. From splits to window ACs, they had almost every air-conditioning solution to a household’s requirement. The shop was owned by Noor – a Pakhtoon. He told us that the air conditioners were not new, but scavenged from various dysfunctional ships and cruises.. “Air conditioners are the kind of equipment that, being seasonal in nature, cannot be sold through the year. However, the custom that we generate during the summers is so heavy in terms of volume to compensate for the leaner part of the year,” said Noor. He also said that In a typical summer day, said Noor, we sell anywhere between 1000 to 2000 pieces, with the prices ranging between Rs5000-Rs20,000 apiece. Naseem Ghulam, a middle-class lady, bought an LED TV from one of the shops in
Jackson. “I picked up a 32-inch Sony LED TV for only Rs16,000 – almost half the price compared to what I would need to pay in a regular Saddar shop or elsewhere. There are a few minor differences, but these only be noticed by the keenest of observers.” Its value for tourists as a historic site aside, the market in Kemari is frequented by people coming from higher income groups, and the middle and lower middle classes alike. While the tax authorities and anti-smuggling state apparatus looks the other way, the sheer number of shoppers keeps the volumes at the thriving black market high. n
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By: Syeda Masooma ntroducing equity investment in Pakistan, Capventures brought $5 million as FDI to Pakistan from the UK, the UAE and Hong Kong – yet kept the door firmly shut on the local investors. The company though has plans, as divulged by the CEO, to include local investors. But for the moment, bringing them into the fold does not seem worthy of the hassle to Capventures as it involves oversight of the local authorities. “With us transparency is not the issue. We already disclose more to our investors than is required by the law.” Though left unsaid, the inference obviously is that harassment of the powers-thatbe is scary enough for Capventures to not to allow a look-in to the locals. Since it aims at rapid capital growth, the company deals in high-risk, high-revenue assets. Since the investors need to be willing and have the capacity to hold their investments for longer in case a bear run ensues, by its nature it reduces the proportion of population having the capacity to hold onto its investment. There is another side to Capventures: taking over businesses through investment and put these to high-growth trajectory. It may seem zero risk for the company and its management, but it is not for it has put in considerable investment. And their share in equity brings as much benefit to the original business owners as it does to Capventures, if not more. Ali Nadir Syed’s tete-a-tete with Profit shed light on the projects, plans and prospective operations of Capventures.
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Profit: Define your motivation for this business and why don’t you have an online presence? Ali Nadir Syed: Four years ago when we started, the idea behind Capventures was quite simple. I had been an expat for the last decade and a half, in the UK and in the Middle East, engaged in investment banking and private equity work. Looking at other markets developing back in 2013, I felt that it was the time to do something
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similar for Pakistan. We wanted to do it slightly differently – starting with small investments and getting to know the business before publicizing it. Now we have enough of a track record and experience to market ourselves and we are now gradually becoming known. Since we were neither raising money from the market nor doing anything requiring marketing, our business is not dependent on people's perception. There are two sides to it: the ability to identify opportunities and the ability to talk to entrepreneurs and business owners. That comes through personal networks, which I and my partners have developed over the years. Profit: Which sector has been most successful for you so far? ANS: We prefer to operate in sectors that are dependent on the domestic economy. With 80 to 85% of the GDP coming from domestic consumption, Pakistan is a consumer-driven country, with exports playing a very small part. I look at consumer dependent or consumer driven in the same way. If you look at businesses, these are primarily of two kinds: those that are competing on international level, and those that are only local – the latter’s demand stemming from the indigenous consumers, though it does not necessarily mean it lacks presence on international level but that the growth is at home. That market – including apparel, consumables, FMCGs, all kinds of consumer goods like electronics and cars etc. – in Pakistan is growing rapidly, at almost two and a half times more in the GDP. We are not
in all these sectors but their growth is rapid. Profit: What other parameters do you take into account while evaluating a potential investment aside from the local consumer demand? ANS: From the industry perspective we look at a few things: the mid-term and long term growth, how competitive the players are, and also the people who have strong positioning in their respective sectors. And then we also like to work in sectors where we can add value, improve processes and financial management for. We don't provide consultancy services but are pretty hands on with our investments. We have a full finance team and for every investment that we make two or three people are dedicated to work on that. We don't pretend to know better than the people running the business, and don't get involved in the operations run by the owners. Our role is more on the strategy and growth side. In small businesses and family home services there are lots of complaint issues. So our focus areas have to be in total compliance with the laws and taxes. Profit: How do the people take it? From the outside it seems like somebody else is coming and taking over the business? ANS: It depends on one’s ambition and growth plans. If you are willing to grow and to put in the hard work then it's not a problem. Mocca is an example – well done, enjoyable experience but there was just one outlet. Aesthetically or from a business point of view it can be a different market but whatever is marketed, the product needs to be providing a quality service suited to that market. Usually what happens is that the owners do not have the capital or they have lived abroad for a long time or they just don't have the ability to grow the business beyond one outlet. We go to such businesses and tell them that if you want to grow, we will be there with you but then we will take a portion of ownership in terms of how the business is run. And for them it's a good thing anyway because they were just running one outlet. In the case of Mocca now we have six outlets, with plans to extend it 10 by the
‘WE ARE GROWTH CAPITAL INVESTORS. WE TYPICALLY WANT TO INVEST IN COMPANIES WHICH ARE UP AND RUNNING AND WHERE THE INDIVIDUAL OR THE OWNER HAS ACTUALLY SPENT SOME TIME IN DEFINING THE CONCEPT AND ALSO SHOWN SOME COMMITMENT TO STAND BEHIND THEIR BUSINESS.’ Ali Nadir Syed, CEO, Capventures end of 2018. Now we own a majority stake in that business. About three years ago, we invested in and gradually increased our stake in Zara Shahjahan – an apparel business. Profit: What is the risk appetite of your organisation? ANS: We are growth capital investors. We typically want to invest in up and running companies, where the owner has spent some time in defining the concept and displayed some commitment to stand behind the business. They must have spent 3-4 years, having seen good times and bad and having proven themselves to be resilient. The business has to make sense for us but the owner is most important for our investment decision, for he needs to have the vision and also understand the long-term benefits of working with somebody like us. In the beginning we make many suggestions, telling them how to run things. The owner has to be ready and willing for that. Profit: How are you different from a mutual fund? ANS: A mutual fund usually invests in public equities, and rarely in private equity because mutual funds rely on small investors and are concerned about risk. Private equity firms on the other hand invest in unlisted businesses and if they want to sell their stake in a business that might not be very easily or quickly possible. My investors have to understand that the things that we are buying into cannot be immediately sold.
Profit: The SECP regulations require eligibility of investors, notice periods for liquidating investments etc. What are other statutory regulations for your investments? ANS: There are some regulatory frameworks around how private equities are supposed to work but we are not bound by that yet. For private companies there are no such limitations. We do have financial statements of the potential companies and we go privately and do our due diligence before making investment decisions. Profit: So how does it work? You go to the company and ask them for financials and then ask if they want your investment or not? ANS: We do have a list of sectors that we prefer and keep an eye on and also which companies are making a mark. If something interesting comes up there, we enter into that. Recently, after monitoring it for a while, we moved into the transportation business. Since we couldn't find a company to partner with so we came up with a new venture – called Veda. The company is supplying buses to the Multan metro. Profit: You gave a wide berth to public limited companies but are now dealing with the government. Why the shift? ANS: We don't stay away from the public limited companies because they are under so much control. We don't invest in them because they are typically larger, and would not allow us the kind of control that we need to run our
‘WE PREFER TO OPERATE IN SECTORS THAT ARE DEPENDENT ON THE DOMESTIC ECONOMY. WITH 80 TO 85% OF THE GDP COMING FROM DOMESTIC CONSUMPTION, PAKISTAN IS A CONSUMER-DRIVEN COUNTRY, WITH EXPORTS PLAYING A VERY SMALL PART’
investments. And being in partnership with the government also does not necessarily mean that we can't control the business. Obviously over some things we have absolutely no control, but the operations is totally in our hands. We do have to run it within the parameters set by the government but within them we have complete autonomy. Profit: Why don't you have investors from Pakistan on board? ANS: We do have plans but there is certain regulatory things that we have to take care of before we can do that. If we bring in indigenous investments then we will be regulated by the SECP. It is not because of any data disclosure issue. The information we give to our investors is already more than what SECP requires so being regulated or informationsharing is not an issue to us. As a next step we want to take local investors on board because we think that this is an interesting opportunity for Pakistani businessmen as well. But usually even if people here want to invest, they veer towards real estate. Profit: There is obviously no liquidity, no short term return, and no profit sharing. How do you present yourself to your potential investors? ANS: They are no guaranteed or annual returns, but there are long-term equity returns involving capital growth. There is no profit-sharing either but that is the worldwide private equity industry procedure. There is a hurdle rate, if you made that hurdle rate and make any returns above it, you can have a percentage of that for yourself and the rest goes to the investors. For example, if the hurdle rate for a particular business is 12%. If you can make 18%, a percentage of that – 3% is ours and the rest is investors’. Every business has a different profile and hurdle rate. Despite absence of short term gains or
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liquidity, people invest because in the long run you can make a lot of money in this. Profit: What is the average rate of return for private equity investments? ANS: We will not be happy with our services if on average we are making less than 20% annual return. Hurdle rate is obviously lower than this, around 10-12% usually. Profit: What is your share on stake in your investments on average and a ballpark figure for revenues? ANS: I cannot disclose that because it’s proprietary information but generally we have a minority stake. Profit: As I understand it you operate on zero risk apart from your own investment in a business? ANS: This business is like any other business. All we are doing is managing people's money. So our risk is not exactly how much money we are making on our investments but whether we are providing a return with which our investors are happy. Our risk or return in the long run would be measured in terms of how many people come to us to manage their money. Profit: On the one side, you are bringing in direct foreign investment and on the other if any of your investor liquidates his investment you will have to send back the remittances. So what is your net impact on the national economy? ANS: So far it has only been FDI. And we are in the investment phase anyway. The economy of the country is growing and FDI has improved a little with the advent of China Pakistan Economic Corridor but it still is extremely low. And we feel that there is a long way to go before net investment can work the other way or when our investors starts to look at liquidating their investments. Profit: How do you choose your workforce? How many people work here? ANS: With different kind of skillset needed, workforce is our biggest expense. We need two things mostly, financial analysis modelling, forecasting, risk management and compliance expertise. We evaluate our candidates based on these. We have a core team of six people. They look at our current and new businesses. These are all employees and none of them has any stake in the business. There are also two oper-
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‘WE DO HAVE FINANCIAL STATEMENTS OF THE POTENTIAL COMPANIES AND WE GO PRIVATELY AND DO OUR DUE DILIGENCE BEFORE MAKING INVESTMENT DECISIONS’ ating partners, I and Amir Zaidi. Profit: Do you provide any other fringe benefits to your investors such as making trade easier or finding customers here for their primary businesses? ANS: No, and there is no spillover effect apart from that they get to look at such investments on their own. We are very heavy on disclosure and reporting, so we also publish reports on what is happening in the market and the country. They are not posted online but sent to them directly. Profit: How much have you invested so far? ANS: Close to $5 million but we have significantly more committed than we have invested. Profit: Why are there not many private equity funds in Pakistan? ANS: There is not enough knowledge or awareness about this sort of business here. Even the stock market penetration is significantly lower than other countries. Private equity as an asset class is also significantly less known in Pakistan. Being risk averse maybe the single biggest reason, but people are not comfortable with sharing information. They have grown up with a mindset that if you disclose information, other businesses and tax authorities will know etc. Such mindset isn’t amiable to change but for professional investors to come in it does need to change. Profit: Do you think that the market is ready or do you think that you are preparing the market for private equity investments in Pakistan? ANS: We hope the market is ready. The response has been good so far. I have spent a lot of my time out of Pakistan and I have seen markets develop in other countries similar to Pakistan, or maybe about 10 years ahead of Pakistan. If you look at Indonesia or Malaysia, we have the same growth of private equity industry there. This is a natural evolution that is going to happen. That is not to say that we will be successful or unsuccessful because nobody can say that but
it's about time. About a decade ago, a couple of companies started this in Pakistan but could not do well; we also had a lull period of seven years, but since the last couple of years the market seems ready. The thing is that you need to rely on growth in the country and that is happening in Pakistan now. Profit: Have you considered investing in startups or businesses at the stage of incubation? ANS: We will slowly look into that. And this may get too technical but there are subspecialties in private equity investment. There are venture capital firms that invest in earlystage businesses and primarily things that are new. And then there are growth capital investors, like us, who invest in businesses that need to grow. And very large private equity firms tend to be late stage investors, providing expansion capital. We are growth capital investors but it does not mean that we will not do venture capitalist work at all. But even when it happens, it will be a small part of our portfolio. Profit: Do you have a minimum investment requirement? ANS: Contractually there is no minimum. Typically for a single investment, only rarely $100,000 – usually it's bigger than that. Profit: Your investors belong to how many countries? ANS: Three, the UK, the UAE and Hong Kong, but we are investing only in Pakistan. Profit: What are your plans for the next 510 years? ANS: To deploy $30-35 million in three years is our target. We will also like to have one to two successful exits by then – so far there has been none. Given that we are not a fund structure, we are not obligated to sell after a certain period of time. If investors see growth, they might not wish to sell anyway. We keep getting management fee on an annual basis, so the going is good but for the reputation of the business, successful exits are also important.n
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