Profit 10th January, 2012 by Profit Epaper

PDF Profit_Layout 1 1/10/2012 12:17 AM Page 1

Prospects for the airline industry in 2012 Page 4-5

Profiteers bag Rs400-450 per urea bag sale Page 7 Pages: 7

profit.com.pk

Tuesday, 10 January, 2012

Nashpa-2 production commences KARACHI

STAFF REPORT

CCORDInG to the weekly numbers released by PPIS for the week ending on December 27, 2011, production from nashpa-2 has commenced thereby taking the cumulative oil production from the block including the three wells of Mela to 15kbpd. Although, production for 1HFY12 remained dismal, tie-in of near completion projects could boost the production during 2HFY12. According to the guidance provided by the management, OGDC continues to face delay in completion of projects on account of floods occurred earlier during FY12 and liquidity squeeze from circular debt. Phase-I of KP-TAY is expected to be commissioned by mid-January 2012 after completion of work by SSGC on the 30km transportation pipeline. Accordingly,

Nine power firms, USAID sign electricity supply pact

LPG association rejects allegations of corruption

ISLAMABAD

LAHORE

STAFF REPORT

LL nine of the governmentowned power distribution companies (DISCOs) signed agreements with US on Monday for $60 million assistance to implement the second phase of Power Distribution Improvement Program (PDIP) that will help improve energy supply to consumers. Under the signed agreements, US will help DISCOs to generate more revenue to pay for energy production, reduce losses in power distribution from the producer to the consumer, and make the power supply more reliable. Speaking on the occasion, Director of United States Agency for International Development (USAID) Energy Office, John Morgan said, “By improving collection of energy bills, DISCOs will have more money to pay for power generation, thus reducing load-shedding in the country”. USAID financed three-year PDIP was initiated in September 2010. The first phase started with the indepth operational audits of each DISCOs to establish baseline information that could be used to measure improvement in performance over time. The audits covered governance, operational, financial, human resources, communications and customer service areas and surfaced opportunities for fundamental improvement in all areas. Second phase focuses on implementing specific performance improvement action plans at each DISCO, to fully empower them over operational control of its business systems, expansion planning, investment prioritisation, human resource management, and commercialisation of electric service. The action plan will reduce

various projects including Dakhni expansion and Sinjhoro development projects have also faced delay which we have already incorporated into our earnings and fair value estimates, said Salman Vidhani at HMFS. The spare capacity in nashpa block (OGDC Stake: 56.5 per cent) ensured fast track tie-in of appraisal well nashpa-2 which has added 5000bpd of oil and 13 mmcfd of gas. However, a successful effort at appraisal well nashpa-3, which is near completion, would require OGDC to enhance capacity at nashpa processing facility to utilise the flow from the well. OGDC would enhance the capacity further by 5,000bpd to 15,000bps by installing 3rd Separation Battery to utilise the flows from nashpa-3, which we have assumed at 3,000b/d of oil and 10mmcf/d of gas, he added. Furthermore, currently storage capacity at nashpa field is 60,000 barrels which is expected to be further raised to approximately 100,000 barrels.

PRESS RELEASE

Under the signed agreements, US will help DISCOs to generate more revenue to pay for energy production

theft, improve commercial control of operations, and reduce technical and non-technical losses.The programme focuses on improving governance without which power theft cannot be curbed. Theft control requires improved data management, including ensuring that all consumers are formally registered, metered and billed. An efficient commercial management would be established to ensure revenue recovery. While advanced metering technologies will be introduced like automated meter reading and prepayment meters. Implementation of Enterprise Resource Planning (ERP) system will be made mandatory to improve revenue enhancement. USAID will help DISCOs modernise equipment, provide expert consultations, and support the introduction of various international best practices to ensure a more reliable supply of power to consumers. In addition to improved energy distribution, USAID is also helping government in restoring and increasing its energy production capacity, and to introduce longterm energy sector reforms.

PG Association of Pakistan has strongly rejected allegations that LPG companies have pocketed billions of rupees as reported in a story published by Profit on the 5th of January, 2012. Commenting on the story, Belal Jabbar, spokesman for LPG Association of Pakistan, termed the comments made by Irfan Khokar, the self-proclaimed Chairman of LPG Distributors Association, as blatantly inaccurate. “LPG prices have reached historic highs of Rs92,133 per tonne, due to the government’s policy of linking local LPG production prices with Saudi Aramco Contract Price which jumped up by $87 per tonne, and not because of an arbitrary increase in price by companies,” said Belal. Bilal further added LPG companies retail their product in accordance with the margins mandated by OGRA. However, it is unfortunate that there is no control on profiteering by LPG distributors. LPG Association of Pakistan has repeatedly asked OGRA to bring the distributors into a regulatory ambit and hold them accountable for black marketing of LPG. OGRA is yet to begin the process of registering them, despite giving assurances to LPG companies that it would. “It is very important for the public to know that the government of Pakistan produces 70 per cent of the country’s LPG production. It is the largest producer of LPG in the country through its holdings in OGDCL, PARCO and PPL, and is the most direct and immediate beneficiary of a price hike. It is very unfortunate that people having zero stakes in LPG business are allowed to make false statements and misrepresent facts for their own gain,” said Belal. Belal also said that LPG prices would have been Rs200 per kilo today, had the Lahore High Court not issued a stay on LPG Policy 2011, which sought to impose a levy on local production and equate its price with imports.

Well head gas prices are expected to witness another jump of four per cent to nine per cent for 2HFY12 owing to four per centH/H rise in international crude oil prices on and depreciation of Pakistani rupee against the greenback fetching 4.64 per cent H/H. Although formal notification for Qadirpur gas price agreement of revised discount table is still being awaited, OGDC continues to reap benefits from adverse exchange rate movement whilst field contributes 30 per cent to the natural gas segment sales. Furthermore we flag tie-in of Makori east-1, completion of KP-TAY phase-1 and Dakhni expansion project as key triggers for 2HFY12. The scrip has come off by 16per cent since the high of Rs159.41 per share on FYTD and has underperformed the benchmark KSE-100 index by 12 per cent on a 52-week rolling basis. Consequently, its weight in the index has shrunk to 22.2 per cent, albeit remains a source of track-

ing risk. Imminent stress on external accounts and precipitous decline in value of local currency has caused downward pressure on the stock in recent days, as foreign investors holding of OGDC exceeds 70 per cent (440mn shares) of the free float. Even though, systematic risk casts concern, strong fundamentals driven by stable international oil price, USD index revenue stream and line-up of projects are likely to foster the bottomline ahead. Therefore, a shrewd investor’s boldness amidst present overplayed pessimism could garner attractive return relative to index once the dust is settled for the stock. He said, “We have conservatively estimated our earnings forecast at a long term oil price assumption of $95/b, which is a significant discount to FYTD Arabian gulf light oil prices of $110/b. We estimate OGDC to post an EPS of Rs18.24 along with full year DPS of Rs8.0 for FY12 on our base case assumption, he added.

PDF Profit_Layout 1 1/10/2012 12:17 AM Page 2

Tuesday, 10 January, 2012

news

Science and Technology minister directs halal board development LAHORE STAFF REPORT

EDERAL minister for science and technology (S&T) Mir Changez Khan Jamali said work on Pakistan Halal Product Development Board (PHPDB) would be expedited and all bureaucratic hurdles will be removed. He was speaking at Lahore Chamber of Commerce and Industry here on Monday. Federal minister said there were some technical issues that delayed the issuance of notification regarding establishment of PHPDB, but he had directed his additional secretary to sit down with LCCI and sort out all issues coming in the way of establishment of PHPDB. Jamali said allocation for science and technology sector would be increased in the coming budget and it would touch to one per cent of GDP in 2015 to help the country in joining the club of technologically advanced nations. He regretted that low allocations for vital sectors, like science and technol-

ogy, had kept the country dependent on developed world despite the fact that country had no dearth of resources. The minister said innovation was a key to economic competitiveness. Research institutions and researchers would have to come forward to bridge the gap by developing world-class technologies. He said, “Science and technology exhibitions provide a marketplace to showcase S&T innovations, products, projects, services and solutions in different industrial sectors. These exhibitions enable the industrial experts and researchers from across the country to identify joint objectives, activities and initiatives and to place focus on industrial science and technology related problems and their solutions as well as promote S&T partnerships for global sustainable development. Speaking on the occasion, LCCI President Irfan Qaiser Sheikh said that to Lahore Chamber of Commerce and Industry, it was really very unfortunate that despite enormous human and material resources, the Muslim world was still counted as backwards due to lack of scientific and technological advancement. Similarly, Pakistan

has not been able to earn that status in the world of S&T that it deserved. Pakistan had yet to be placed at some respectable position in the innovation index because of low end production of cheap goods and inefficient energy consumption ratio. In view of current resource constraint, there is need to utilise existing resources optimally through reorganising R&D infrastructure and moving towards knowledge economy to rectify the dismal situation. Irfan Qaiser Sheikh said that the country desperately needs to work for stimulating and managing the flow of knowledge and technology amongst universities, R&D institutes towards the industry. “We must build human capital and invest in science and technology to get parallel with rest of the world.” While stressing the need for setting up of technology parks in Pakistan, LCCI President said that technology parks in various countries are doing great job in spreading fruits of Science & Technology across their respective regions. But unfortunately, this idea could not gain much popularity in Pakistan. We still need

to make best use of this idea. Today, Pakistan is facing challenges of fast track national economic growth, poverty alleviation, better quality of life and economic independence. Even after more than six decades of its creation, Pakistan still remains a producer of primary commodities. The fact is that unlike India, we have neglected the education sector for quite a long time especially in the area of S&T. LCCI president urged the federal minister to arrange greater share of funds in budget for advancement of Science & Technology. Pakistan greatly needs to invest in science and technology to achieve the desired goals as science and technology is central to the dynamics of economic development itself. He emphasised the need to conduct modem scientific research, increase skill development and make innovation as integral part of technological system of the country for the sake of strengthening the economy. Former LCCI president Zafar Iqbal Chaudhry, LCCI executive committee member Husnain Reza Mirza and former EC member Haroon Shafique also spoke on the occasion.

Summit Bank, NIT introduce SECP suspends Zafar co-branded ATM Card Moti Capital Securities

RMGS to check unintended short selling at KSE

KARACHI: Summit Bank has partnered with national Investment Trust (nIT) to bring another great new service, which will definitely open new doors of convenience for nIT customers who can have easy access to their cash round the clock. Summit Bank and nIT, joined hands to offer nIT investors their new ATM card, “Summit Bank-nIT co-branded ATM card” through which they will be able to withdraw cash against instant redemption of their nIT units using entire Summit Bank ATM network, or any 1-Link ATM network machines in Pakistan. Husain Lawai, President and CEO, Summit Bank, Zahir Esmail, Chief Operating Officer, Summit Bank and Anwar Lutfulfah, Group Head IT and Operations, Summit Bank, Wazir Ali Khoja, Chairman and MD, nIT; Manzoor Ahmed, Chief Operating Officer, Syed Zubair Ahmad, Controller of Branches and Imran Butt Head of IT and SA, attended the launch ceremony of these ATM cards. Pioneering to offer such a unique service, Summit Bank is committed to be the preferred provider of financial products and services to the markets. Summit Bank, in a very short span of time, expanded its network across the country to 165 branches and built an infrastructure based on state of the art Risk Management Framework as well as a robust IT platform. JAVED MAHMOOD

KARACHI: Karachi Stock Exchange (KSE) has developed an electronic risk management system that would enable brokers to enjoy systematic controls and monitoring ability over their clients’ trading activities. Developed on the recommendation of KSE’s Development and Trading Affairs Committee, the Risk Management Gateway System (RMGS) is currently going through user’s acceptance test and would be introduced in the exchange by the 30th of this month. The new system would make the trading system of brokers more efficient and help them improve their general compliance with traderelated rules and regulations. Under RMGS, members of the exchange are envisaged to be able to exercise control and check on their clients’ orders, permissible quantity and amount with reference to their held margins or any other limit that may be required for risk management system of brokerage houses. Further, the system would enable the members to have control over unintended “wash sale” and would help identify “blank sale” and “short sales”, including enforcement of client-wise symbol restrictions and/or any other restriction that members may require to be placed on any of their specific clients from risk management point of view at order level. ISMAIL DILAWAR

ISLAMABAD: To safeguard investor’s interest, Securities and Exchange Commission of Pakistan (SECP) has penalised market participants for non-compliance with the regulatory framework during the month of December 2011. A statement issued by SECP said, an order was passed against Zafar Moti Capital Securities Ltd and member KSE, under Brokers and Agents Registration Rules, 2001 whereby, registration of the said brokerage house was suspended for 15 days for non-compliance with SECP’s earlier orders. A show cause notice was served to a commercial bank under Section 15E and to a brokerage house of KSE under Section 22 of the Securities and Exchange Ordinance, 1969. In two separate instances, warning letters were issued to two brokerage houses of KSE and two individual investors for execution of wash trades. Warning letters were also issued to two brokers of KSE and LSE for execution of blank sales. Moreover, two warning letters were issued to the directors of a listed company for non-compliance with Section 224 (4) of the Companies Ordinance 1984.The copies of all the warning letters are available on SECP’s website. STAFF REPORT

Activity starved bourse loses 85 points KARACHI STAFF REPORT

HE bourse continued its dismal performance during the new Year by further shedding 0.8% with low volumes of 21m shares. Investors chose to remain sidelined on the back off growing tensions between the judiciary and government of Pakistan. Energy heavyweights, PPL and OGDC, came under selling pressure as rumours of foreign selling persisted in the market. Even news regarding FATIMA increasing its urea price in line with EnGRO could not generate any excitement, while FFC is expected to follow suit. Triggers regarding the nRO case and a meeting between SECP and FBR regarding the circular debt issue remain on the investors’ mind. Market participants also awaits the news flow regard-

CORPORATE CORNER NIT electronically transforms its services for unit holders KARACHI: national Investment Trust (nIT), Pakistan’s first and largest asset management company, has electronically transformed its services using modern technological techniques to facilitate unit holders. With the introduction of latest technology for transaction, nIT is now set to redefine the mutual funds market as well as better serve its valued investors and customers. nIT has introduced new ATM cards for its unit holders all across the country which will enable customers to withdraw cash against instant redemption and dividends of their nIT units. PRESS RELEASE

Mobilink’s 5th Club Indigo Golf Invitational gets positive endorsement LAHORE: Mobilink inaugurated the 5th annual Club Indigo Golf Invitational, with the first leg of the tournament organised at the Karachi Golf Club. The one day tourney in Karachi attracted over 100 amateur golfers, representing a diverse segment of Karachi’s corporate and business sector, making for a well competed event, providing healthy entertainment and promoting golf in Pakistan. Similar tournaments will be held for Club Indigo members in Lahore and Islamabad over the coming weeks. PRESS RELEASE

Al Baraka Bank deploys ZRG Contact Center Solution KARACHI: Al Baraka Bank, Pakistan has deployed OneView Contact Center Solution by ZRG to deliver efficient services and enhance customer experience by offering convenience and flexibility to all customers. Chief Executive Officer of Al Baraka Bank (Pakistan) Limited, Mr Shafqaat Ahmed said, “Our bank will continue to invest in latest technologies and optimise the utilisation of resources in order to bring high quality and value-added services to our customers.” PRESS RELEASE

PTCL launches Pakistan’s first 3G Android Smartphone ISLAMABAD: Pakistan Telecommunication Company Limited (PTCL) has launched Pakistan’s first 3G enabled Android Smartphone IVIO Icon Pro that offers dual support for both EVDO and GSM/CDMA network. Based on Android 2.2 Froyo and powered by a 600 MHz Qualcomm processor, Smartphone IVIO Icon Pro is yet another first of its kind product introduced by PTCL in Pakistan’s handsets market. It lets its users surf and talk simultaneously while on-the-move and that too at 3G speeds of up to 3.1 Mbps. PRESS RELEASE

TES showcases internet and data products at ICT Global LAHORE: TES (Transworld Enterprise Services) and its exhibited products were positively received by the conference delegates at the thematic exhibition of ICT Global, being held from January 7-9th, 2012 at the Lahore International Expo Center. TES, a wholly owned subsidiary of Transworld, is providing specialised enterprise services of Transworld to major enterprise customers of Pakistan. PRESS RELEASE

Success story of a lucky December for cement sector KARACHI: As per the data released by All Pakistan Cement Manufacturers Association (APCMA) of the cement monthly sales for 1HFY12, total industry dispatches witnessed a rise of 4 per cent YoY to 15.41m tonnes in 1HFY12 as against total dispatches of 14.78m tonnes in the corresponding period last year. As far as the monthly performance of cement industry is concerned, local dispatches in December’11 posted a substantial rise of 24 per cent MoM to 2.04m tonnes versus local dispatches of 1.65m tonnes recorded in the month of november’11. PRESS RELEASE

Ufone introduces roaming buckets for USA ing the circular debt issue. The activity at the bourse floored with a mere 20m shares traded during the day amidst uncertain political scenario and economic concerns fueling fear of foreign outflow. Yet again influential index heavy stocks determined the direction of the index within volumes as index came tumbling to critical 11k level. With government

at loggers head with army and judiciary, investors opted for a wait and watch strategy drying out volumes from the market. Oil and gas sector stock resonated some optimism on the back of the news that inter-corporate debt would be transferred to power holding company once again. ‘We reiterate a cautious stance with exposure in select stocks as risk loom large,’

said Salman Vidhani at HMFS. The KSE 100 index closed at 11040.30 levels with the loss of 85.05 points, while KSE 30 index lost 41.39 points to close at 10124.20 levels. All Share index closed at 7661.66 levels after losing 55.20 points. Total 70 scrips advanced 112 declined and 120 remain unchanged out of total 302 scrips traded.

LAHORE: Ufone is prepared to take international roaming to a new level with affordable costs and convenience of connectivity. While visiting USA, Ufone prepaid connection now offers unique buckets for roamers. Customers can get 30 incoming minutes for $2 or 130 incoming minutes bucket for $5 on T Mobile network. This phenomenal offer will encourage friends and family in Pakistan to call roamers freely. The 130 minute bucket will expire in 30 days and 30 minute bucket will expire in 3 days. Subscription can be made by dialing *721*1# (for $2 bucket) and *721*2# (for $5 bucket). For balance enquiry, roamers can dial *706#. PRESS RELEASE

PDF Profit_Layout 1 1/10/2012 12:18 AM Page 3

Yuesday, 10 Januar y, 2012

EDITORIAL

PPP and gas load shedding OW does it reflect on a presiding administration that it promises a ‘roadmap’ to tackle one of the economy’s most pressing issues, but only by the time of the general election marking its term’s end? Despite obvious implications, for the sake of both households and industry, it is at least hoped that this will not be one of those promises that guarantee uninterrupted power every now and then, only to be blatantly dishonoured. And considering how power shortages have consistently intensified throughout the PPP administration’s tenure, what is it about this particular promise, coming just when electioneering is picking pace? Either it’s the cursed, seemingly insurmountable problem of circular debt, or an either/or between domestic consumers and value-addition, export revenue earning industry. Or it’s the perpetual squabbling between the petroleum and finance ministries, the former pushing for fuel price reduction

to parity with CnG, the latter unrelenting. For some reason, Dr Sheikh’s boys just don’t buy into the argument that with CnG and petrol similarly priced, people will have obvious incentive to shift to black gold, easing natural gas strain enough to divert to industry. That they push for CnG prices to be jacked up to fuel oil levels, for similar results, says a lot about the model of economics pursued at the finance ministry. Strangely, it seems to have passed all relevant ministries that forward planning of all important commodities is based on the simple, text book procedure of calculating demand and supply. The democratically elected government, reflecting the will of the people, was well aware of demand trends and supply bottlenecks when it took office. That precious little has been done to ease the strain on limited supply, with promises only now of some ‘roadmap’, that too when the government prepares to bow out, is just plain unsatisfactory.

Optimistic about growth in Pakistan

Can SBP arrest the rupee fall?

Syed Asad Hussain OR a poor country like Pakistan, which largely depends on imports, the fall of the rupee against the dollar produces multiplier effects in the economy. Increase in foreign debt and domestic inflation, rise in import bill, interest rates hike and increase in costs of production are some major shocks that the economy has to absorb in the backdrop of depreciation of the rupee in FY 12. The lower the vulnerability of the economy to absorb these shocks the higher the risk of failure for the economy. The recent slide in the rupee to 91.30 against the dollar leaves economic pundits and businesses in dismay. The outlook for 2012 remains gloomy indeed. The rupee was traded around Rs62.00/$ in April 2008 and is trading around 91.30 in Jan 2012. Thus the currency has lost around 46 per cent of its value in nearly 4-years. The slide of rupee may be attributed to unstable security situation in the country which accelerated the flight of capital and choked foreign investments-two extremely important sources which help provide a good base for foreign reserves to hold ground. Also the inflow of foreign aid/loans to the country has remained intermittent. Add to this picture, repayments the country has to make to the rest of world, have risen too. When reserves are limited, increasing foreign debt repayments coupled with rising import bill is making the

The fall of the rupee against the dollar produces multiplier eﬀects in the economy

This is with regards to the article, ‘In search of business confidence’, published on 07/01/12. Having well agreed with the article, I still feel optimistic about Pakistan even though the country is facing regressive/stagnant growth; the root cause of all the problems is shortage of energy and its high cost provision, because every activity is interconnected with it. Say for example, an increase in the fuel price will inflate everything from Consumer Price Index (CPI) to cost of business. Although, our country has an abundance of natural resources, but our authorities are least concerned for their productive utilisation and are just messed up with making popular decision to gain political mileage. Only the provision of cost effective energy can resolve 90 per cent of the problems. On the brighter side, the law and order situation has improved remarkably and we must applause it in terms of financing SBP, by taking a relaxing monitory policy stance which is a good sign for the business community. One thing is for sure that this country needs a paradigm shift.

FAISAL

task even more difficult for the SBP. no doubt, whilst exports can benefit from the depreciation of the currency, the domestic economy on the other hand stands much to lose if the vulnerability is weak. As the local currency loses steam the cost of imports rises and if these are largely based on necessities (energy and food items), which in practice face inelastic demand, it will further stoke inflation. Their savings, if any exist, evaporate gradually and the quality of life suffers and penury rises fast. This is a never ending cycle and if the SBP’s intervention, to stabilise the currency, is not timed well the economy might face perverse effects. The country is unfortunately caught in the same syndrome. Foreign exchange reserves have already declined to $16.91b by Dec-end from a high of $18.31b on July 30, 2011. Besides regular import bill which might cross $37b mark in the FY 12, repayments of $1.2b to the IMF and total foreign debt payment $ 4.2b are also due. The current account deficit ballooned to $2.1b during Julynov 2011 as against $589million in July-nov 2010. The economy in FY 12 might need extra $12-15b to service its Balance of Payment deficit. If export earnings and home remittances were unable to generate much needed steam in FY 12, country’s reserves might come under extreme test and so might the currency. The choice for Pakistani central bank thus gets limited to coddle the exchange rate in the backdrop of narrow and ever drying streams of foreign currency earnings and fast depleting reserves. Momentary interventions (such as selling of dollar in the open market and to banks) by the SBP could push the rupee slightly up but the long term movements of exchange rate will remain under pressure so long as outflows of dollar outpaced the inflows. Fast depleting reserves will force the SBP to rise from the bed and do something. Alas. ‘stillness and capitulation’ are perhaps the only options left with the SBP to see helplessly the fall of the rupee touching near 100 mark at the end of 2012. The author is an Islamabad based freelance contributor and Director SZABIST, Islamabad campus. Views expresses herein are personal. He can be reached at asad.syedd@yahoo.com.au

LAHORE

The road to redemption

Kunwar Khuldune Shahid HA (national Highway Authority) isn’t exactly known for its imaginative spark or the use of their neurons of ingenuity. However, if nHA were to think out of the book – so to speak – and stimulate their opportunistic senses, they would realise that a luminous bundle of hope – one that could instigate their stalled projects – is vying to penetrate inside their household; while the Authority slumbers on with their windows closed. The opportunity

that lies in the wait is of the completion of the remaining segments of the Motorway, and sans the expenditure of even half a penny – the sort of opening that even their prognosticating catnap wouldn’t have allowed them to dream of. now, economists tell us that with every opportunity comes a certain opportunity cost, and the tradeoff for the Authority is merely the act of hurrying up in getting themselves off their lazy backsides. The current stand of the government to blockade nATO supplies and in turn the preparation of conditions that the organisation must meet before the resumption of supplies has resulted in a fairytale prospect for nHA. For over a decade, nATO and its troops have been using our road network for their supply to Afghanistan via Karachi to Khyber and Chaman; and as a result have damaged a lot of the roads. In fact, some of the aforementioned routes are bordering on worn out leftovers of gravels, rocks and asphalt.

And of course it goes without saying that our dear nATO ‘friends’ weren’t generous enough to pay toll taxes for their relentless road deterioration enactments. now, while the government mulls over its shopping list that it would want Uncle Sam to finance, nHA can also throw in a few items to add to the list – most notably the construction of the Motorway. The stalled project from Gwadar to Kandahar – one that is used for nATO supplies and Afghan trade – should be the obvious inclusion in the list. And while we ostensibly have an upper hand in this shopping list discussion, for what it’s worth nHA can throw in a couple of other motorway projects into the mix as well. The remaining portion of the Lahore-Karachi Motorway – from Multan to Karachi – and another one from Gwadar to Ratto Dero – as a link to the Lahore-Karchi motorway can also be added to the demands. While the list might make our uncle

ShAhAB JAfRy Business Editor

KUNwAR KhULDUNE ShAhID Sub-Editor

BABUR SAGhIR Creative Head

ALI RIZvI News Editor

MAhEEN SyED Sub-Editor

hAMMAD RAZA Layout Designer

Let’s construct hope while US lurks on its boulevard of broken dreams

think of us as spoilt brats; one feels that we have done enough to deserve this little treat at the tail-end of the holiday season. There is a multitude of reasons that might urge the US to pull out its credit card. First of all, by constructing all these projects the US would be paying the compensation for the damage that it has caused to our roadnetwork, and also recompensing for the toll taxes that were never paid. Afghanistan has also been using our roads candidly, and of course US would have to pay the arrears for that. And yes, it would also be the much needed gesture of goodwill from our dear uncle for the late november disaster that he conjured up. Efficiency of road network would also aid the US, because transport delays would be curbed. USAID should be asked to sign a deal with the government, and the former

could ask American contractors to do the job and they could be paid directly. The Agency can discuss the matter with Washington. Meanwhile, nHA can use their funds – with motorway construction taken care of – to ameliorate the national Highway and other problem areas in the country. And of course with the new motorways up and running, the revenue generation would also precipitously increase. We have been at the receiving end of skewed US policies, and barefaced ingratitude from Washington. About time we started constructing our road to redemption, as the US prowls on its boulevard of broken dreams. The writer is Sub-Editor, Profit. He can be reached at khulduneshahid@gmail.com

For comments, queries and contributions, write to: MUNEEB EJAZ Layout Designer

Email: profit@pakistantoday.com.pk Ph: 042-36298305-10 fax: 042-36298302 website: www.pakistantoday.com.pk

PDF Profit_Layout 1 1/10/2012 12:18 AM Page 4

Tuesday, 10 January, 2012

With its exceedingly important geographic location, a vast expatriate population segment, and extensive socio-economic relations across the world, Pakistan surely presents some fabulous opportunities and potential for the airline industry

news

Etihad Airways Country Manager Amer Khan

Prospects for the airline i FARAKH SHAHzAD

IR travel is a multi-billion industry that is one of the most dynamic sectors in the business world. It has always been taken as a direct derivative of business climate around the globe. The profits of commercial airlines define the state of health of economic and business activity in a particular part of the world. The importance of international air travel with regards to commerce cannot be underestimated, since it links business people across the world, and is also a means of shipping cargo.

BATTLE of PRofITABILITy Airlines in the world are struggling hard to win the battle of profitability in the business but the time and climate appears to be against them. Since the last decade, the cost of flying aero planes have literally ‘flown up’ due to rocketing fuel prices, post 9/11 security arrangements, global recession and political turmoil. Financially speaking, the airlines that continued to suffer heavy losses during 2011 are likely to continue landing and taking off at business-slippery runways during their flight operations of 2012.

INDUSTRy oUTLooK 2012 IATA has revised its industry outlook for the year 2012 that shows that profitability will be weaker than 2011. “The biggest risk facing airline profitability over the next year is the economic turmoil that would result from a failure of governments to resolve the Eurozone sovereign debt crisis. Such an outcome could lead to losses of over $8 billion—the largest since the 2008 financial crisis,” said Tony Tyler, IATA’s Director General and CEO. The Eurozone crisis puts severe downside risk on the 2012 outlook as illustrated by the recently published economic outlook. In a worst case scenario, should the Eurozone crisis evolve into a full-blown banking crises and European recession, IATA estimates that the global aviation industry could suffer losses exceeding $8 billion in 2012. “The global forecast for 2011 is unchanged at $6.9 billion. But regional differences have widened, reflecting the very different economic environments facing airlines in different parts of the world. And the overall margin of 1.2% tells you just how difficult the battle for profitability in this business is,” said Tyler.

REGIoNAL PERfoRMANCE In its sectorwise analysis of IATA, the global airline industry is imminently having losses. How-

ever, Asia Pacific and Middle East regions will remain profitable although the ratio is likely to fall as compared to 2011. north America is the only region with improved profitability on the cards. African carriers are still expected to break-even.

EURoPE European carriers are by far in the most challenging position. Higher passenger taxes and weak home market economies have limited profitability in Europe. The region’s carriers are forecast to generate a collective profit of just $1.0 billion, down from the previously forecast $1.4 billion. Low profitability has been despite European airlines being one of the fastest growing regions in terms of traffic this year.

profit among the regions.

MIDDLE EAST Middle East carriers are expected to see profits of $400 million (down from the previously forecast $800 million) as high fuel costs squeezed profit margins on the more price sensitive long-haul traffic connecting over Middle Eastern hubs.

AfRICA African carriers are still expected to breakeven. new trade lanes with Asia are developing and markets within the continent are reflecting the improvement in economic development in many African

AMERICA north American carriers are in a much more benign environment. They have seen yield and load factor improvements as a result of tight capacity management, which has improved profitability to $2.0 billion (up from the previously forecast $1.5 billion). The US economy has also grown at a faster pace than Europe. This gives the region the strongest EBIT margin of 3.2%. none-the-less, the bankruptcy filing of American Airlines indicates that the region faces intense competitive challenges as well. In a similar pattern Latin American profits will see a downgrade to $200 million (from the previously forecast $600 million). Performance has been mixed across the region with much of the downgrade due to the impact of intense competition and falling load factors on Brazil’s domestic market.

ASIA PACIfIC Asia Pacific carriers also saw stronger though varied trading conditions. Japan’s domestic market still has not fully recovered from the March earthquake and tsunami, and load factors remain under pressure. By contrast airlines have improved load factors and profitability on China’s expanding domestic market. We have upgraded our forecast for the region by $800 million to a $3.3 billion profit. This is the largest absolute

economies. However, competition has been fierce and the region’s airlines have struggled to keep load factors at profitable levels.

CoST CUTTING After decades of frenzied competition and staggering losses, domestic airlines have taken a more sober approach to the business of flying, with their first priority simply making money. And so the fancy fuselages and lively paint have gone the way of free meals, pillows and checked bags. The color of choice these days is sensible white. White does not fade as fast in the sun and requires fewer touchups. And without the added flash of color, less paint is needed, making planes lighter and saving fuel. “There used to be romance in air travel,” said Steve Cone, a marketing expert who helped create the first frequent-flier programs. “The airlines were run by dreamers, creative types and entrepreneurs. “They’ve been replaced by penny-pinchers who don’t think about the real estate outside of the plane.” The staid designs reflect the current state of the industry. Unlike in their heyday in the 1970s, the airlines today have little reason to stand out.

TIME of RECKoNING Joe Sherkey, an airline industry analyst wrote an

article titled ‘Airlines Are Retrenching, and Alternatives Are Slim’. “The coming year will be a time of reckoning in business travel, as airlines reduce service at many airports and prospects fade for practical alternatives to flying, including the long-term promises of highspeed rail. Consider the new realities of air travel. Competition is decreasing, fares are rising and airlines are adjusting routes (and charging extra fees) in ruthless calculations to extract the greatest possible revenue per mile flown”, he wrote in the article.

CAPACITy REDUCTIoN STRATEGy Michael Boyd, the president of the consulting company Boyd Group International, sums up the phenomenon succinctly. “The cost of flying airplanes across the sky has eclipsed the ability to support it at many communities,” he said in a recent forecast. In 2012, he predicts, airlines will accelerate the mothballing of smaller 50-seat jets, the workhorses for connecting service between many midsize airports, and even some big ones. Many airlines will continue shrinking overall capacity and trimming domestic routes in 2012. During the first quarter of the new Year, American will “ground some planes and resize our network,” the company’s chief exec-

PDF Profit_Layout 1 1/10/2012 12:18 AM Page 5

Tuesday, 10 January, 2012

news

industry in the year 2012 utive, Thomas W. Horton, recently told employees. In addition, John P. Heimlich, the chief economist of the trade group Airlines for America, said, “Capacity reduction is one of the steps the industry is taking to preserve profitability.”

KEy fACToRS of DowNGRADE Demand: Passenger demand is expected to grow by 4.0% (down from previously forecast 4.6%), while cargo is expected to show flat growth (down from the previously forecast 4.2% expansion). Yields: Passenger and cargo yields are expected to remain flat in 2012. While this is unchanged for cargo, passenger yields were previously forecast to grow by 1.7%. Fuel: Fuel costs are relatively unchanged from the previous forecast at $198 billion. That is based on oil at $99 per barrel (against a previous forecast of $100 per barrel). Revenues and Costs: Industry revenues are expected to grow by 3.7% to $618 billion. This will be outstripped by cost increases of 4.5% to $609 billion.

Infographic

s by B a b u r

The Committee was told that PIA needs Rs 58 billion bailout package which included Rs 45 billion for debt services while Rs 13 billion for immediate liabilities payment. According to sources, the government has concluded that the prevailing crisis in the national carrier is because of ‘mismanagement’ and ‘bad governance’ and not financial shortcomings PAKISTAN’S NATIoNAL CARRIER Amid the no-win situation prevailing in the industry, PIA’s failure to return to profitability is no surprise. national flag carrier of the country, Pakistan International Airlines (PIA), keeps bleeding heavy losses for the current fiscal year. The accumulative losses for the company have reached a staggering Rs. 100 billion as the airlines keeps sinking towards a point of no return. In a recent meeting of the national Assembly Stand-

Saghir

After decades of frenzied competition and staggering losses, domestic airlines have taken a more sober approach to the business of flying, with their first priority simply making money. And so the fancy fuselages and lively paint have gone the way of free meals, pillows and checked bags ing Committee on Defence, it was revealed that the national flag carrier is leaking out heavy losses on continuous basis. The Committee was told that PIA needs Rs 58 billion bailout package which included Rs 45 billion for debt services while Rs 13 billion for immediate liabilities payment. According to sources, the government has concluded that the prevailing crisis in the national carrier is because of ‘mismanagement’ and ‘bad governance’ and not financial shortcomings. The government turned down an Rs20 billion immediate bailout package requested by the management to help it come out of a ‘financial crisis’. “The government does not have the capacity to provide cash support. We can help them in loan restructuring but they will have to meet performance indicators,” Finance Secretary Dr Waqar Masood Khan said. The most interesting contradiction in PIA as an organization is that it has an average manpower of 450 employees per aero plane as compared to 225 in the other airlines. The recruitment criterion is more political than professional and the employees union is more powerful than their bosses. The precedent of sacking of its top official at the demand of the union is ample evidence that this is a workforce that has a de’facto authority to hire and fire its own boss.

Establishing a progressive aviation sector

mAIntAInIng exCellenCe

Well, being named the world’s best airline is one thing, but maintaining that title is another. The product must continuously be innovated; we cannot sit on our laurels and expect to remain number one AkBAR AL BAkER Qatar Airways CEO

south AsIAn ProsPeCts

By 2021, travel and tourism is expected to contribute more than $400 billion to GDP in South East Asia. Moreover, Asia is a growth area, and Asian airlines are generally able to benefit from this growth GOH CHOOn CEO Singapore Airlines

Customer sAvIngs

KunwAR KHuLDunE SHAHID

E have a vivacious civil aviation industry in our neck of the woods and it’s about time that we capitalise on it. The task ahead might seem daunting, but rest assured that it does not penetrate into the realms of impossibility. There are scores of fronts where we can enhance the industry; and if taken care of meticulously there is no reason why the efforts would not bear the desired fruits. The government should take up the mantle of being the trailblazer, and lead the way. First up, a professional high level national committee on civil aviation should be formulated, consisting of representatives from the airline industry, the government, the regulatory body, support industries and of course the military. This should be done along the lines of the Edwards Committee formed in the 70s in United Kingdom. And it goes without saying that a connoisseur apropos aviation should be at the helm of the committee. It should be made mandatory for the aforementioned committee to study the national Aviation Policy and that of other developing countries to ensure that the body is able to sermon a thorough and progressive policy that can be implemented after being rubberstamped by the Cabinet. The committee should also be given a strong support cast to cover all the bases. The national interests should be at the top of the pile of any priority list, and vested interests and intra-regional biases should be shunned. The policy that would be synthesized, once all the aforementioned points are taken care of, would be futuristic, progressive and in tune with the modern technologies. The government, after taking all stakeholders into confidence should also revamp the CAA so that its functions of economic regulation, safety regulation and airport infrastructure development would be further bolstered. One

For the first time we are offering unprecedented savings to our customers. There has never been a better time to experience the award-winning service of Emirates THIERRy AnTInORI Emirates Executive VP – Passenger Sales

PIA ProfItAbIlIty

feels that there is a need of independent organisations to concentrate their individual focus on managing safety regulation, economic regulation and airport infrastructure development. The government should ascertain the writ of the revamped CAA; and also that violators should be dealt with strongly. PIA should be asked to run on professional and commercial lines in synchrony with the PIAC Act 1955, and should become an active part of a competitive market; and this of course can be done – on PIA’s part – by the usage of latest

information technology and other means of enhancing efficiency. It’s about time the government stops bailing-out PIA. Lastly, accountability should also be channelised and institutionalised, and pointless mechanisms should be purged out. Corruption – possibly the biggest hindrance towards progress in any façade in Pakistan – should be curtailed by a strict no-nonsense approach. The writer is Sub-Editor, Profit. He can be reached at khulduneshahid@gmail.com

It is expected that with the approved business plan for PIA, it would be profitable in the next five years CHAuDHRy AHMAD MukHTAR PIA Chairman

PDF Profit_Layout 1 1/10/2012 12:19 AM Page 6

Tuesday, 10 January, 2012

06 Markets top 10 sectors

43% 02% 17% 09% 04%

Chemicals

05% 12% 02% 04% 01%

Support Services

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Automobile and Parts

top 5 perForMers sector wise SyMBoL

oPEN

hIGh

Low CURRENT

418.00 110.49 24.13 7.09 87.23

412.50 108.25 22.75 6.84 85.70

ChANGE

voLUME

Oil and Gas Attock Petroleum Attock Refinery Burshane LPG Byco Petroleum Mari Gas Co.

STOCK MARKET HIGHLIGHTS Index 11040.30 2871.25 2376.85

KSE-100 LSE-25 ISE-10

Change -85.05 -8.67 -16.37

Volume 16,865,876 757,459 110,100

Agritech(PREF)(R) Arif Habib Co SD Clariant Pakistan Dawood Hercules Descon Chemical

Open 5283.00 230.07 128.71 160.40 79.74

High 5430.00 236.70 135.14 166.00 82.22

Low 5350.00 232.00 126.15 162.00 78.01

Close 5381.67 234.13 131.99 163.00 82.19

Change 98.67 4.06 3.28 2.60 2.45

Turnover 31 458,960 149,976 806 857,634

Major Losers Nestle PakistanXD Exide (PAK) Packages Limited Attock Petroleum Allied Bank Ltd

3163.18 166.10 82.68 414.91 57.21

3280.00 166.10 82.68 418.00 57.80

3005.03 163.25 80.00 412.50 54.51

3019.99 163.27 80.00 412.73 55.19

-143.19 -2.83 -2.68 -2.18 -2.02

185 10,338 15,168 4,706 79,798

Volume Leaders Fatima Fert.Co. 23.01 TRG Pakistan Ltd. 1.15 Lotte PakPTA 10.05 K.E.S.C. 1.65 Thal Ltd 79.74

23.23 1.20 10.35 1.90 82.22

22.60 1.05 10.02 1.70 78.01

22.66 1.07 10.14 1.72 82.19

-0.35 -0.08 0.09 0.07 2.45

2,704,926 2,132,392 1,323,451 956,984 857,634

Bullion Market Gold 24K Gold 22K Silver (Tezabi) Silver (Thobi)

Per Tola (PKR) 54,995.00 51,608.00 982.00 1025.00

Per 10 Gm (PKR) 47,199.00 44,245.00 843.00 880.00

Per Ounce US$ 1,618.00 – 35.05 –

Crescent Steel Dost Steels Ltd. Huﬀaz Seamless Pipe Int. Ind.Ltd. Inter.Steel Ltd.

19.00 1.18 8.48 33.07 11.61

2.90 51.30 1.79 13.97 9.40

0.01 27.80 156.90 40.20 1.60

0.01 27.25 150.10 38.46 1.45

0.01 27.63 150.80 38.63 1.50

-0.01 0.17 0.70 -0.90 0.05

99,000 249,506 4,018 48,529 11,448

26.75 3.66 40.19 8.00 82.68

19.00 1.20 8.21 33.00 11.60

19.00 1.06 8.16 31.42 11.01

19.00 1.11 8.16 31.51 11.01

0.00 -0.07 -0.32 -1.56 -0.60

60,000 2,276 712 24,720 2,102

5.72 186.78 6.97 24.31 375.86

Agriautos Industries Atlas Battery Ltd. Atlas Engineering Atlas Honda Ltd. Bal.Wheels

57.50 163.00 58.00 120.00 26.12

Adam Sugar AL-Noor Suger Mills Chashma Sugar Mills Colony Sugar Mills Crescent Sugar

18.75 51.89 7.80 1.39 13.00

18.85 50.63 8.00 1.46 13.00

2.89 51.85 1.71 14.00 9.35

2.61 51.02 1.70 13.97 8.60

2.70 51.30 1.70 13.99 8.63

-0.20 0.00 -0.09 0.02 -0.77

26.75 3.66 40.66 8.55 82.68

26.00 3.65 40.19 7.76 80.00

6.00 190.00 6.97 25.00 377.00

5.65 184.00 6.21 23.11 365.05

57.50 163.00 58.00 120.00 26.12

55.51 163.00 58.00 119.10 24.82

1,964 2 2,500 866 5,510

18.75 50.63 7.80 1.39 12.90

0.00 -1.26 0.00 0.00 -0.10

261 10 117 299 859

24.50 8.20 3.49 15.94 8.20

25.50 8.93 3.64 15.94 8.30

24.50 8.20 3.35 14.94 8.01

24.50 8.20 3.40 15.94 8.22

0.00 0.00 -0.09 0.00 0.02

1 1 18,006 1 3,417

(Colony) Thal AL-Azhar Textile Amtex Limited Artistic Denim Mills Azam Textile

1.95 0.25 1.32 21.45 1.08

1.16 0.89 1.40 21.75 1.60

1.15 0.27 1.30 21.45 1.08

1.15 0.27 1.31 21.51 1.08

-0.80 0.02 -0.01 0.06 0.00

1,000 2,001 178,624 150,120 1

AHCL-JAN ATRL-JAN DGKC-JAN ENGRO-JAN FFBL-JAN

27.68 109.56 19.86 96.46 42.76

27.95 110.88 19.95 96.25 42.61

27.35 109.11 19.71 95.36 42.17

27.70 109.56 19.80 95.53 42.31

0.02 0.00 -0.06 -0.93 -0.45

48,500 132,500 111,500 232,500 277,000

101.02 73.62 66.10 16.53 144.39

-0.98 0.00 0.00 -0.87 0.00

1,461 56 260 28,481 170

Pharma and Bio Tech 26.19 3.66 40.19 8.00 80.00

-0.56 0.00 0.00 0.00 -2.68

8,350 7,000 1 6 15,168

5.72 188.50 6.78 23.13 375.01

57.50 163.00 58.00 120.00 26.12

109.00 111.18 145.05 145.58

Abbott Laboratories Ferozsons (Lab) Ltd. GlaxoSmithKline Pak. IBL HealthCare Sanofi-Aventis

102.00 73.62 66.10 17.40 144.39

102.00 75.00 67.50 18.40 144.50

101.00 73.62 66.10 16.40 144.00

Fixed Line Telecommunication 0.00 1.72 -0.19 -1.18 -0.85

102 203 3,002 1,721 8,676

0.00 0.00 0.00 0.00 0.00

5 120 10,975 200 88

Beverages 110.49 111.43 150.02 150.00

AL-Abid Silk Mills Diamond Ind. Pak Elektron Ltd. Singer Pakistan Tariq Glass Ind.

0.69 -4.44

1,170 203

P.T.C.L.A Pak Datacom Ltd Telecard Limited Wateen Telecom Ltd WorldCall Telecom

10.19 34.50 0.77 1.70 0.97

10.20 34.50 0.84 1.97 1.00

10.06 34.50 0.76 1.72 0.95

10.17 34.50 0.80 1.75 0.97

-0.02 0.00 0.03 0.05 0.00

300,655 1 41,081 19,028 114,268

0.30 33.89 0.63 1.65 15.85

0.39 34.00 0.65 1.90 16.00

0.28 33.51 0.60 1.70 16.00

0.30 33.59 0.60 1.72 16.00

0.00 -0.30 -0.03 0.07 0.15

5 232,100 35,501 956,984 393,500

57.21 10.01 5.72 11.61 28.94

57.80 10.05 5.85 11.64 29.49

54.51 9.98 5.70 11.43 28.60

55.19 10.00 5.70 11.46 29.25

-2.02 -0.01 -0.02 -0.15 0.31

79,798 34,397 169,609 149,549 108,175

Electricity Genertech Hub Power Co. Japan Power K.E.S.C. Kohinoor Energy

Banks Allied Bank Ltd Askari Bank B.O.Punjab Bank Al-Falah Bank AL-Habib

SyMBoL

oPEN

hIGh

Low CURRENT

ChANGE

voLUME

Non Life Insurance 18.75 49.30 7.80 1.38 12.75

Future Contracts

Industrial Engineering Ados Pakistan AL-Ghazi TractorsXD Ghandhara Ind. K.S.B.Pumps Millat Tractors Ltd.

voLUME

Personal Goods

General Industrials Cherat Packaging ECOPACK Ltd Ghani Glass Ltd MACPAC Films Packages Limited

ChANGE

Household Goods

Construction and Materials Al-Abbas Cement Attock Cement Bal.Glass Berger Paints Cherat Cement

Low CURRENT

Adamjee Ins Atlas Insurance Cres.Star Insurance Cyan Limited IGI Insurance Ltd.

46.27 35.99 2.00 50.02 45.59

48.00 37.69 3.00 51.00 45.60

46.70 36.50 2.00 51.00 44.75

46.79 36.50 2.00 51.00 44.95

0.52 0.51 0.00 0.98 -0.64

19,175 1,951 1 1,500 2,393

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.42 14.36 14.23 0.65 0.80

0.00 0.00 0.00 0.00 -0.17

2 98 453 1 15,939

Life Insurance American Life East West Life Assur EFU Life Assur

14.50 1.40 65.53

14.50 2.34 68.80

Financial Services AMZ Ventures A Arif Habib Investmen Arif Habib Ltd. Dawood Cap.Man XB Dawood Equities

0.42 14.36 14.23 0.65 0.97

0.42 14.95 14.39 1.00 1.04

0.36 14.00 13.78 0.65 0.75

Equity Investment Instruments Atlas Fund of Fund B.R.R.Guardian Cres. Stand.Mod Elite Cap.Mod Equity Modaraba

5.30 2.45 0.50 2.55 0.75

5.60 2.44 0.50 2.90 0.99

5.30 2.28 0.26 2.55 0.75

5.30 2.43 0.50 2.55 0.75

0.00 -0.02 0.00 0.00 0.00

362 3,632 6 24 303

34.00 35.50 12.00 70.50 1.05 65.00 106.00 3.45 15.79 8.05 23.00 53.63 16.00 1.95 15.80 18.67 14.01 70.60 60.51 22.60 1.30 1.70 8.12 3.00 8.60 2.65

34.00 36.00 12.07 70.50 1.07 65.00 110.07 3.56 15.94 8.05 23.00 53.63 17.01 1.95 16.00 18.87 14.01 72.01 61.00 22.60 1.38 1.70 8.47 3.00 8.63 3.00

0.43 0.00 -0.60 0.44 -0.08 -0.39 0.00 -0.01 0.00 -0.21 0.00 0.00 0.96 -0.01 0.00 0.02 -0.04 0.00 0.10 0.00 0.03 -0.03 -0.16 0.00 -0.21 0.82

500 300 24,217 579 2,132,392 1,000 225 77,819 29 14,201 500 15 1,000 9,992 60,618 7,687 2,500 101 1,000 30 178,527 5,005 204,027 1 36,102 5,508

Miscellaneous Pak Paper Prod. Security Paper P.N.S.C. Pak.Int.Con. SD TRG Pakistan Ltd. Murree Brewery Shezan Inter. Pak Elektron Ltd. Singer Pakistan Tariq Glass Ind. Grays of Cambridge Pak Tobacco Co. Hum Network Ltd. P.I.A.C.(A) Sui North Gas Sui South Gas American Life EFU Life Assur Jubilee Life In AKD Capital Ltd. Pace (Pak) Ltd. Wateen Telecom Ltd Netsol Technologies Pak Telephone Netsol Technologies Pak Telephone

33.57 36.00 12.67 70.06 1.15 65.39 110.07 3.57 15.94 8.26 23.00 53.63 16.05 1.96 16.00 18.85 14.05 72.01 60.90 22.60 1.35 1.73 8.63 3.00 8.84 2.18

34.00 36.00 12.85 72.00 1.20 65.60 110.07 3.69 15.94 8.35 23.00 54.90 17.01 1.95 16.00 19.22 14.01 74.49 61.00 23.73 1.45 1.98 8.75 3.70 8.93 3.00

Mutual Funds Buy 89.80 113.94 138.07 1.1619 86.75 11.42 24.43 23.94 91.12

International Oil Price WTI Crude Oil

$101.52

4,706 290,024 4,448 106,366 86,210

Industrial metals and Mining

Murree Brewery Co. Shezan Int’l

90.7614 140.0903 1.1801 115.9387

US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar

-2.18 -0.11 1.13 -0.09 -1.10

Automobile and Parts

Interbank Rates US Dollar UK Pound Japanese Yen Euro

0.02 27.46 150.10 39.53 1.45

hIGh

Food Producers 412.73 108.88 24.12 6.86 86.01

Chemicals

Market Value 816,425,627 20,979,923 709,999

Major Gainers Company UniLever Pak Ltd. P.S.O. ICI Pakistan Tri-Pack Films Thal Ltd

414.91 108.99 22.99 6.95 87.11

oPEN

SyMBoL

Sell 90.80 117.18 141.65 1.1886 90.24 11.81 24.96 24.43 95.00

Brent Crude Oil

$113.29

fund

oﬀer

Repurchase

Alfalah GHP Cash Fund Askari Islamic Asset Allocation Fund Askari Islamic Income Fund Askari Sovereign Cash Fund Atlas Income Fund Atlas Islamic Income Fund Atlas Money Market Fund Atlas Stock Market Fund Crosby Dragon Fund Crosby Phoenix Fund Dawood Islamic Fund Faysal Income & Growth Fund Faysal Islamic Savings Growth Fund Faysal Money Market Fund Faysal Savings Growth Fund First Habib Cash Fund First Habib Income Fund First Habib Stock Fund HBL Income Fund HBL Islamic Money Market Fund HBL Islamic Stock Fund

501.2900 114.7196 103.6501 100.6900 519.3500 519.0900 516.9700 453.1500 82.9800 102.5100 0.0000 103.9600 101.4000 101.1400 101.4400 100.8800 100.8900 101.4400 98.8551 100.2278 105.1082

501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500 102.5100 0.0000 102.9300 101.4000 101.1400 101.4400 100.8800 100.8900 99.4500 98.8551 100.2278 103.0473

NAv 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500 102.5100 0.0000 102.9300 101.4000 101.1400 101.4400 100.8800 100.8900 99.4500 98.8551 100.2278 103.0473

fund

oﬀer

Repurchase

HBL Money Market Fund HBL Multi Asset Fund HBL Stock Fund IGI Income Fund IGI Stock Fund JS Principal Secure Fund I JS Principal Secure Fund II KASB Cash Fund Lakson Equity Fund Lakson Income Fund MCB Cash Management Optimizer Fund MCB Dynamic Cash Fund MCB Dynamic Stock Fund NAMCO Income Fund National Investment Unit Trust PICIC Income Fund UBL Capital Protected Fund II UBL Islamic Savings Fund UBL Savings Income Fund

100.2768 87.0103 97.6745 101.8987 112.3545 121.5000 104.1200 0.0000 106.3763 102.2115 100.5994 103.2259 83.2931 108.2753 26.55 101.3261 106.7800 100.4576 101.9855

100.2768 85.3042 95.2922 100.8898 109.6141 111.5200 96.5000 0.0000 103.2779 100.7009 100.5994 101.6775 83.2931 108.2753 25.74 101.3261 101.4400 100.4576 100.9757

NAv 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087 103.2779 100.7009 100.5994 101.6775 85.4288 108.2753 25.74 101.3261 106.7800 100.4576 100.9757

PDF Profit_Layout 1 1/10/2012 12:19 AM Page 7

Tuesday, 10 January, 2012

Value addition is the key for Pakistani companies to compete globally. Teradata is busy hiring 200 Pakistani youth to groom them for global consultancy services

news

Teradata Pakistan MD, Khuram Rahat

‘Truck overloading causes Rs10-15b loss every year’

Profiteers bag Rs400-450 per urea bag sale: ECC observes LAHORE

IMRAn ADnAn

COnOMIC Coordination Committee (ECC) of the Cabinet has decided that the price differential between prices of imported urea and selling price of locally manufactured urea should, in no case, be more than Rs50 per 50-kg bag. ECC in its recent meeting was informed that the national Fertiliser Marketing Limited (nFML) was supplying imported urea at Rs1,300 per 50-kg bag, while the locally produced urea was available to the farmer at Rs1,700-1,750 per 50-kg bag and in this way the middleman was benefiting. The meeting recalled ECC’s earlier decision where-under price differential between imported urea and the locally manufactured urea should not be more than Rs25 per 50kg bag. It was suggested that in order to ensure benefit to the farmer, it was imperative that the aforesaid decision of the ECC should be strictly enforced. However, the price differential may be adequately enhanced. It was also observed that, transport charges and other incidentals are not included in the price mechanism to determine the cost effectiveness of the price differential. ECC was informed that in pursuance of its decision of February 1, 2011, 23,497 tonnes of urea out of 70,000 tonnes reserved for the flood affectees of Sindh for Rabi 2010-11 was diverted to Punjab from Trading Corporation of Pakistan (TCP)

LAHORE

IMRAn ADnAn

HE Economic Coordination Committee (ECC) of the Cabinet has constituted a special committee, comprising of Planning Commission Deputy Chairman nadeem ul Haque (Convenor) and secretaries Ministries of Communications, Commerce and Industries, to formulate Transport and Trucking Policies within two weeks, Profit learnt on Monday.

PRohIBITING ovERLoADING The ECC, in its meeting held on Tuesday, was informed that the country had to lose some Rs10 to Rs15 billion per annum on account of road maintenance due to trucks overloading. It was indicated that the country could easily save this amount by prohibiting overloading to single-axel trucks. During the ensuing discussion, it was pointed out that there was no check on the truck load, which was a major cause of deterioration of road networks. It was stated that there was a dire need to install weighing bridges on all important entry points of major roads and any truck carrying excess load should be fined heavily.

KARACHI

STAFF REPORT

YInG to enhance the current trade volume of $1.36 billion between Pakistan and South Korea to at least $2 to 3 billion in the next couple of years, efforts are underway to negotiate and sign the Free Trade Agreement between the two countries. This was said by ambassador of Pakistan to South Korea Shaukat Ali Mukadam in a recent meeting with office bearers of Karachi Chamber of Commerce and Industry (KCCI) at chamber’s office. He highlighted that South Korea sees

TRANSPoRT PoLICy PREPARED The ECC was informed that transport policy had already been prepared and ready for submission to the ECC. It was also stated that, besides transport policy, there was also a need for proper trucking policy and for giving a long-term roadmap to the transporters. The ECC was also apprised that a trucking policy was framed in 2008 and its recommendations were deliberated upon. There were some good proposals in that policy and the same may also be considered before formulation of transport policy. It was informed that the ECC, in its meeting held on April 26th, 2011, on a summary submitted by the Ministry of Commerce constituted a Committee under the chairmanship of Planning Commission Deputy Chairman to review the issues pertaining to transport policy. The committee in a meeting held on May 6th, 2011, recommended that there was a need to treat CnG cars and buses separately.

DEDICATED CNG BUSES It recommended that there was a need to sharply increase tariff on

Pakistan as the most promising country for investment. He said that owing to great trade potential the recent trade of $1.36 billion can increase to $2-3 billion if trade potential is effectively utilised. He said that a paradigm shift for Korean investment has been observed and now they are prioritising to invest in Pakistan and other regional countries while they have made huge investment in Western countries. Other Korean leading consortiums are investing in Hydro-power and steel sectors. He said that one Korean Steel sector giant is joining hands with Tuwarqi Steel in Pakistan. LahoreIslamabad Motorway, Lowari Tunnel,

CnG kits for cars, whereas dedicated CnG buses for public transport might be considered as the Advisor to Prime Minister on Petroleum & natural Resources was of the view that CnG could be provided through dedicated CnG stations.

Prem Nagar dry port establishment approved LAHORE

CoMPREhENSIvE PoLICy It was further disclosed that if dedicated CnG buses were allowed an already approved public transport project, sponsored by Ministry of Environment, could become operational. It was revealed that certain dedicated CnG buses imported by some private investors lying at Karachi Port Trust (KPT) and waiting for clearance of Customs due to settlement of original equipment manufacturing (OEM) issue could also be allowed for public transport in case CnG was available. It was indicated that a draft comprehensive transport policy had been prepared by the Ministry of Communications, which would be considered under nTC taskforce headed by Planning Commission Deputy Chairman. Some members suggested that the concept of transport policy may be broadened subject to the consideration of the nTC taskforce for Transport Sector Reforms.

Hyderabad-Mirpurkhas dual carriage highway projects endorse the Pak-Korea friendship. He said that efforts are underway to negotiate and sign Pak-Korea FTA. He pointed out the immense export possibility of mangoes, dates, fruits, readymade garments and sports goods. He stated that around 10,700 Pakistanis were residing in Korea performing as businessmen, skilled workers and students. Pak Government was also considering establishing a special economic zone for Korea, the ambassador maintained. President KCCI Mian Abrar assured the Ambassador to extend best possible support and facilitation to the

stocks with an understanding that this quantity would be replenished on arrival of imported urea. At the time, price of urea charged by the nFML was Rs780 per 50kg bag, which later increased to Rs1,300 per bag. It was revealed that the matter was taken up with government of Punjab for return of the same quantity of urea to Sindh, but that the Punjab had not agreed. However, on the directions of senior minister for industries, 5,068.75 tonnes of urea costing Rs131.78 billion had been supplied to the government of Sindh, leaving a balance of 18,428.55 tonnes, cost of which at the prevailing rate of Rs1,300 per 50-kg bag comes to Rs479.14 million. Ministry of industries proposed that this amount may be reimbursed by the finance division. During discussion, it was observed that transfer of urea to Punjab was a good gesture of the government of Sindh and it needed to be reciprocated. It was also observed that ECC’s decision relied upon by ministry of industries did not mention the transfer of urea to Punjab or the risk recovery. Thus, government of Punjab could not be forced to return the urea. However, ECC suggested that the matter may again be taken up with government of Punjab for an amicable solution. It decided that secretaries finance and industries division should jointly have a meeting with Punjab chief secretary, and if needed, with the chief minister Punjab also, to persuade the later to reciprocate the good gesture of the government of Sindh.

COnOMIC Coordination Committee (ECC) of the Cabinet has approved the establishment of a dry port at Prem nagar and directed Revenue Division to submit a summary showing total number of dry ports and industrial estates established in the country as well as their performance, Profit learnt on Monday. ECC in its recent meeting was informed that industries located at Sundar and Raiwind-Manga corridor had been demanding the establishment of a dry port in their closer vicinity. Besides, the Prime Minister’s Secretariat also directed Federal Board of Revenue (FBR) for establishment of a fully equipped dry port either at Jia Bagga or Raiwind. ECC was further informed that Pakistan Railways was already establishing a Dry port or inland container depot (ICD) through private public partnership at Prem nagar near Raiwind. The project had been completed in all respects. In the

Korean business community. Vice President Zia Ahmed Khan and the Managing Committee Members of KCCI also participated in the meeting. Earlier Mian Abrar urged the Korean Investors to enter into joint ventures in Pakistan in the alternate energy, agriculture and engineering sectors. He also asserted upon the need of building trading blocks of Pakistan with Asian countries, Central Asian Republics and SAARC countries. He urged the Ambassador to suggest and convince the Seoul Chamber to form Karachi-Seoul Joint Chamber of Commerce & Industry on the pattern of Pakistan-Afghanistan

light of availability of required infrastructure, land customs station / dry port at Prem nagar, District Kasur on Lahore-Sahiwal section was ready to be made operational. Revenue Division, therefore, sought approval of ECC for the establishment of a dry port by Pakistan Railways through private public partnership at Prem nagar near Raiwind, subject to fulfillment of all applicable conditions. During the discussion, ECC was informed that overall charge of dry ports, except a few, was with Pakistan Railways. It was stated that some of the dry ports were not properly functioning. It was suggested that ECC might be apprised of the number of dry ports and industrial estates working in the country as well as of their performance. ECC was also apprised that Pakistan Railways had invested a heavy amount for the establishment of dry port at Prem nagar, in addition to investment by private sector. ECC nevertheless, observed that the dry port should be linked with major highways and Railways network to benefit public. IMRAn ADnAn

Joint Chamber which KCCI formed last year. He articulated that Pakistan possess great potential to multiply its exports and $25 billion export alone can be made to USA if allowed. He expressed discontentment on meager 7 per cent trade among SAARC countries and asserted to execute Indo-Pak trade via Karachi and Mumbai ports to bring prosperity and alleviate poverty in the region. He also requested the Ambassador to invite business delegation and exhibitors to participate in the Karachi Chamber’s My-Karachi Oasis of Harmony Exhibition scheduled to be organized in July 2012.