Profit 5th January, 2012 by Profit Epaper

PRO 05-01-2012_Layout 1 1/4/2012 11:41 PM Page 1

Strengthening economic stability through SMEs Page 4-5 Policy issues as elections draw near Page 3 Pakistan sells LPG at highest price in South Asia Page 7

Pages: 7

profit.com.pk

Thursday, 05 January, 2012

Lack of expertise hampering gas crisis resolution g

Kalabagh dam vital for Pakistan’s future, claim economic analysts

straints in promoting indigenous exploration, as summarized before the national Assembly standing Committee on Petroleum by secretary Petroleum ejaz Chaudhary who said that Ministry of Defence had refused permission for an aerial survey of Kharaan block in Balochistan. the source said changing the expensive fuel mix is major issue for the government which could not be resolved by expediting indigenous oil and gas exploration. this requires a national consensus to be implemented on war footing. Government has opted for the safest way to address the power crisis by enhancing the power tariff, which despite being increased by a massive 75 percent during the last two fiscal years has failed to resolve the problem. People are being burdened with a high power tariff but still have to fret for hours due to long blackouts.

LACK OF INVESTMENT ISLAMABAD

AMER SIAL

overnMent is facing hurdles in vying to resolve energy crisis due to; lack of expertise in concerned ministries, failure to reduce the price difference of different fuels, delay in backing energy imports, absence of rules for regulating the sector after devolution, and above all the failure to address circular debt.

SHORT SIGHTEDNESS According to official sources, short term measures taken in the last four years with no long term planning due to lack of expertise at the central level has led to the present energy dilemma.

MINISTRY NONCOMMITAL Petroleum Minister Dr Asim Hussain has complained that finance ministry was noncommittal on the proposal that sought reduc-

ing rs10 per litre petroleum levy on to bring its prices closer to CnG. He is of the opinion that reduction in levy will not affect government’s revenue as petrol sales volume would increase with price parity. it would at least allow additional gas supplies to the fertiliser, power and industrial sectors.

TECHNICAL EXPERTISE Lack of professionals in the ministries of water and power and petroleum is another major handicap. the ministry of water and power had to temporarily bring in a professional from nesPAK for better management of its power wing. Petroleum Minister has ordered hiring of an executive Director General Hydrocarbons from the market to head the technical wing of the ministry to put existing staff on the right track. He has also ordered hiring of at least 25 per cent new staff members in lieu of incumbent promotees and deputationists. even so, establishment of technical wings in both the ministries

were being delayed due to red tape.

INTER-PROVINCE SKIRMISHES the implementation of new petroleum policy has already hit snags, as Khyber Pakhtunkhwa and Balochistan want to regulate the sector and own the royalty without giving any control and share to the federal government. An official source said the situation could have been averted if the concerned officials had bothered to address the concerns of the province before and during policy making. now the matter has been again referred to the Council of Common interests (CCi) for resolution, even though earlier the Law Ministry had interpreted that the centre would continue to regulate the sector and would have a share in royalty.

INDIGENOUS EXPLORATION Delay in petroleum policy means that no new blocks could be awarded for oil and gas exploration, the last auctioning of blocks was held in 2010 before the approval of the 18th amendment. But there were other con-

Lack of public sector investment is another major cause for slow progress in hydel and coal sectors. Private sector investment has been on the hold, as the local banks are reluctant to finance any new projects till the resolution of circular debt. independent Power Producers (iPPs) receivables have been increased to rs266 billion on December 31, 2011. they have to repay rs150 billion in debts to banks by the year end. Circular debt is also affecting the prospects of the private sector LnG imports in the country, as some of the investors have started seeking sovereign guarantees if their dues are not cleared in time by private sector entities. LnG imports will be used for power generation but if circular debt is not rooted out nobody would be making $2 billion investment for the imports.

THE KALABAGH IMPERATIVE economic analysts have repeatedly said that the most viable project for hydel power generation remains the Kalabagh dam but the failure to have a national consensus was delaying its execution.

Feed-in tariﬀ for coal and solar power soon, says Naveed Qamar ISLAMABAD STAFF REPORT

inister for water and power, syed naveed Qamar, said government will soon announce feed-in tariff for coal and solar power projects to meet the rising energy requirements of the country. the minister said this while presiding over Board of Directors meeting of the Alternative energy Development Board (AeDB). He said to attract investors in renewable energy sector a new incentive laden alternative energy policy is being finalised. He said draft policy will be sent soon to Council of Common interests for approval. He directed AeDB and the ministry to finalise the policy as soon as possible. He said government has set a target of generating 1500 MW from wind power generation by 2013 and procedure has been simplified for investors in order to achieve the target. it has also been ensured that investors will get land lease in the wind corridor without any delay after completing the formalities. He said the country has wind power potential of more than 300,000 MW which needs to be explored. Government is attaching high priority to this sector and will facilitate investors in this respect. . the meeting was informed that about wind projects with a potential of 100MW were under construction phase in sindh. Meeting was informed that three Gorges Corporation of China has started construction of 50 MW wind project while Zorlu energy of turkey has completed all formalities for their project. the signing ceremony with Zorlu will be held shortly. Another signing with Chinese company for their second project will be held.

CNG prices reduced by Rs0.72 and Rs0.38 per kg ISLAMABAD STAFF REPORT

iL and Gas regulatory Authority (oGrA) on Wednesday notified reducing CnG prices in Khyber Pakhtunkhwa, Balochistan and Potohar region by rs0.72 to rs73.58 per kg and in Punjab and sindh by rs0.38 to rs69.24 per kg. notification for reduction in prices was issued after government acceded to CnG and transport associations demand reduced gas infrastructure cess from 60 to 50 per cent. imposition of the rest of cess will be decided after consulting the associations.

14PC INCREASE REJECTED oGrA had notified a massive hike of 14

per cent in the gas tariff along with imposition of gas cess on CnG sector against which the association gave a strike which was observed countrywide, forcing reduction in cess while forming a committee to review gas prices. oGrA notification said increase in gas sale prices was necessitated owing to cess imposed by federal government, rise in cost of gas decease in gas sales volume as well as prior year adjustments of gas companies in respect of line losses and non-operating income. About adjustment in CnG consumer price, it said it was necessitated owing to hike in natural gas prices and imposition of gas cess by federal government.

12 PER CENT UFG LOSSES the abnormally high annual unaccounted for gas (UFG) losses of 12 per cent of the two state owned gas utility

companies as compared to international bench mark of five per cent was the main reason for the hike in tariff. one per cent UFG converts to a loss of rs2 billion per annum. this translates into a massive loss of rs24 billion per annum. According to notifi-

cation tariff for CnG in Zone i consisting of KPK, Balochistan and Potohar region at the rate of 1070 BtU revised to rs73.58 from rs74.34 kg. While in Zone ii consisting of sindh and Punjab at the rate of 950 mmBtU, the tariff revised to rs69.24 to rs69.62 per kg.

Petroleum ministry has been stressing reducing gap between CnG and petrol prices to reduce the demand for gas to provide it to industries, which under agreement are eligible for only nine month supplies.

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Thursday, 05 January, 2012

news

Cm uRGES TuRKS to invest in Punjab LAHORE STAFF REPORT

UnJAB Chief Minister Muhammad shahbaz sharif along with his delegation met the mayor of istanbul, Kadir topbas, and discussed matters regarding investment by turk companies in bus rapid transit system, traffic management, solid waste management and other projects as well as launch of joint ventures. Chief Minister appreciated the pace of progress of istanbul city and exchanged views about different projects of provision of civic amenities in major cities of Punjab on the same pattern and the scope of provision of professional services by turk companies. He expressed gratitude to the mayor of istanbul for taking personal interest in investment in various projects especially in Lahore and expressed hope that mutual cooperation will fur-

Punjab government is thankful to the government and people of Turkey for always being generous in extending cooperation

ther increase in the days to come. While welcoming the chief minister Muhammad shahbaz sharif on his visit to turkey, the mayor of istanbul Kadir, assured him of full cooperation on behalf of himself and his colleagues. He appreciated the vi-

sion of Mr shahbaz sharif for the uplift of health, education and other sectors. Both leaders exchanged views on investment by various turk companies in the provision of civic amenities and the potential launch of new projects as well as extending professional services. earlier, the chief minister was presented with the guard of honour and salute by a smartly turned out contingent. Later, the chief minister flanked by istanbul Mayor, talking to media said Punjab government is thankful to the government and people of turkey for always being generous in extending cooperation. He said he is happy to announce that an agreement has been reached between istanbul Mu-

Punjab irrigation NEPRA increases PLDDB to market department starts GENCOs tariﬀ by Rs0.14 products in Central, desilting of 482 canals and Rs0.35 per unit South East Asia LAHORE

nicipality and Lahore Waste Management and the mayor of istanbul will personally inaugurate the project. He said agreements are also being signed for promotion of vocational education in Punjab which will set up new examples of mutual affection and brotherhood between the two countries. He said agreements between Pakistan and turkey are a proof of unflinching friendship between Pakistan and turkey and he gives credit for all these achievements to turk President Abdullah Gul and Prime Minister tayyip erdogan by virtue of whose wisdom and sagacity economic and trade relations are getting strengthened between the two countries. He said he is proud of the great leadership of turkey and desires cementing of bilateral relations b e t w e e n turkey and Pakistan in the future.

Trading Corporation of Pakistan signs agreement with SABIC KARACHI

STAFF REPORT

rovinCiAL irrigation department has started its annual canal desilting campaign, in which 482 irrigation canals will be desilted across Punjab, to improve water flow. irrigation department workers will remove 117million-cubic-foot of silt from 2,618 canal miles. this was disclosed in a desilting campaign review committee meeting, which was chaired by Punjab agriculture and irrigation minister Malik Ahmad Ali Aulakh. Chief engineers of various irrigations zones informed the meeting that the provincial irrigation department completed desilting on 2,597 canal miles in 2009-10, while 2,112 canal miles were desilted in 2010-11. Meeting was informed that irrigation department had constituted monitoring committees to supervise the desilting campaign. the minister directed all officials to ensure timely completion of the desilting process.

He national electric Power regulatory Authority (nePrA) on Wednesday notified increase in power tariff of Gulf rental Power Plant of northern Power Generation Company (GenCos) by rs0.14 to rs16.32 per kilowatt hours (kWh) and Guddu Units 3 and 4 of Central Power Generation Company by rs0.37 to rs19.49 per kWh. this decision was taken due to an increase in furnace oil prices in December. the revised tariff becomes effective from December 31, 2011. the fuel tariff for 62 MW Gulf Power rental Plant of nPGCL on furnace oil increased as their price decreased to rs68,827 per tonne, compared to previous fortnight price of rs69,333 per tonne. the adjustment made in the tariff for CPGCL’s Guddu Units 3 and 4 increased as the price of furnace oil increased to rs68,636 per tonne, compared to previous fortnight price of rs66,355 per tonne.

AKistAn can fetch precious foreign exchange worth billions of rupees by developing its livestock sector and marketing its products in Central Asia and south east Asia. Punjab Livestock and Dairy Development Board (PLDDB) set up under directives of Chief Minister Punjab Muhammad shahbaz sharif to achieve this goal. it would not only revolutionise the dairy sector by providing jobs to youth but also increase the number of milk producing animals in the province. these views were expressed by the senior advisor to the chief minister Punjab sardar Zulfikar Ali Khan Khosa while speaking at the certificate distribution ceremony of Artificial insemination Assistants (AiAs) and Women Livestock extension Workers (WLeWs) here on Wednesday.

rADinG Corporation of Pakistan (tCP) signed a commercial agreement with saudi Arabia Basic industries Corporation (sABiC) at Karachi. M/s Jaffer Brothers (Pvt) Limited, Karachi who are sABiC’s agents for Pakistan signed the agreement on their behalf. According to official sources of tCP, the agreement covers supply of approximately 200,000 Mt urea to Pakistan under the $100 million credit facility provided by saudi Fund for Development (sFD). Agreement between Government of Pakistan/economic Affairs Division and saudi Fund for Development (sFD) was signed earlier at islamabad. Urea shipments under the contract will start arriving in Pakistan within this month. this will be in addition to 700,000 Mt already imported for rabi crop 2011-12, as well as 300,000 Mt for which an international tender was floated by tCP on 28th December 2011.

Market subdued despite Zin oil discovery KARACHI STAFF REPORT

Fter yesterday’s bombastic performance, the benchmark’s movement was fairly restricted and moved within a band of 129 points with 46 million shares traded during the day. Banks were in the limelight on the back of better result expectation and final dividend announcement. nBP, the underdog of CY11, gained some respect from the investors, while MCB ruled the banking stocks with its performance. Fertiliser sector became the victim of profit booking. the penny bank niB was unable to post major gains despite acquisition news from China. the political drama is in full swing with major opposition parties foreseeing early elections or campaigning against current

SAP implements ERP solution at Continental Biscuits KARACHI: sAP Pakistan provides its erP solution to Continental Biscuits Limited (CBL) where siemens Pakistan is the designated project implementation partner on behalf of sAP. the primary objective of the project is to fast track the implementation using sAP standard functions. Providing proper erP support infrastructure to Continental Biscuits Limited would help the company achieve efficiency in its business processes and a competitive edge in the market. PRESS RELEASE

Bank AL Habib Current Plus Account oﬀers various facilities KARACHI: Bank AL Habib, Current Plus Account, aims to meet all individual and business needs by offering various free facilities to its customers such as personalised cheque book, pay orders, AtM/debit cards, internet banking, online banking and sMs alerts on maintenance of a minimum balance of rs20,000. At present, Bank AL Habib has a network of 351 branches/sub-branches in 98 cities and towns of Pakistan, including a wholesale branch in the kingdom of Bahrain. PRESS RELEASE

PIA closes $100 million Shari’a compliant facility

LAHORE

ISLAMABAD

CORPORATE CORNER

KARACHI: Pakistan international Airlines Corporation (PiA) has closed a $100 million shari’a compliant financing facility. the facility was arranged by Abu Dhabi islamic Bank, Al Hilal Bank, Citibank n.A., and United Bank Limited as mandated lead arrangers and joint bookrunners. Warba Bank in Kuwait joined as lead arranger and Citibank n.A. is also performing the role of the account bank and security trustee. the three-year facility will be used for PiA’s general corporate purposes and reflect investor confidence in the airline and its strategic importance to Pakistan. PRESS RELEASE

Dr Arbab Almagir reviews NHA development projects in KP PESHAWAR: Federal Minister for Communications Dr Arbab Alamgir Khan Khalil, reviewed ongoing development projects under nHA in Khyber Pakhtunkhwa (KP), chaired by Governor KP Barrister syed Masood Kausar. Dr Arbab said that work on construction projects worth rs81 billion is going on under nHA in KP. He said the country’s economy depends much on the commercial traffic plying on these roads and most of the traffic runs on the roads maintained by nHA. He also told the governor KP that out of these important construction projects, the Luwari tunnel is the most important which will be completed with a sum of rs18 billion and 43 per cent of this project has already been completed, whereas, for the rest of the project, the prime minister has approved rs2 billion more. PRESS RELEASE

Engro Foods congratulates IoBm on winning research challenge LAHORE: At the finale of the 4th CFA institute research Challenge (irC) hosted by CFA Pakistan, students of institute of Business Management (ioBM) emerged as winners to represent Pakistan at the 2012 Asia Pacific regional Final of the competition to be held in Hong Kong on March 2, 2012. the subject company for research this year was engro Foods Limited, on which students from eight leading business schools were required to prepare detailed equity research reports. Mr Afnan Ahsan, Ceo, engro Foods Limited said, “on behalf of engro, i would like to congratulate all the winners for putting in so much thought and effort into their report. i have no doubt that you will make Pakistan proud at the final leg of this competition later this year.” PRESS RELEASE

NBP organises session on risk management

regime. Keeping in view political uncertainty and economic challenges, we may foresee market performance to remain depressed, said Bilal Asif at HMFs. Kse-100 index closed down 40 points with dismal volumes of 46 million shares. PPL and oGDC witnessed activity with 1.1 million and 2.3 million shares respectively. Likely upward revision in wellhead gas prices

stirred activity in PPL, while weak numbers from Zin block kept investors interested in index heavy weight oGDC. Amongst banks, nBP and MCB gained 2.8 per cent and 1.1 per cent respectively on expectations of a payout with the full year results. sustainability of high cement prices continued to keep LUCK and DGKC amongst volume leaders. interest-

ingly, LotPtA was the volume leader with seven million shares, despite the weak PtA-PX margin outlook. Kse 30 index closed at 10359.14 levels with the loss of 19.09 points, while ALL share index lost 26.45 points to close at 786873 levels. total 107 scrips advanced 104 declined and 110 remain unchanged out of total 321 scrips traded.

KARACHI: A discussion session on “Challenges posed by latest developments in risk management and emerging regulatory framework” was organised by national Bank of Pakistan for the senior management and board of directors. this session was arranged on the specific instruction of board of directors, keeping in view changing regulatory environment and the challenges faced by the banks, which was attended by the members of the board and senior management of nBP. Ms Lubna Farooque Malik, Director BsD state Bank of Pakistan and syed Faraz Anwer Partner risk Advisory services A F Ferguson & Co, graced the occasion as guest speakers. PRESS RELEASE

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Thursday, 05 Januar y, 2012

EDITORIAL

Policy issues as elections draw near

Inflation drop

He inflation surprise to the downside, and subsequent market rally, ought to be selfexplanatory. Yet there are deeper issues that must be calculated, which explain why the following trading day brought bears back to the floor. CPi easing most likely owes to one of the rare bright spots in the year just ended – the government curtailed its borrowing binge in part, even retiring some of the monies taken from the central bank. However, it would be naïve of the market to expect the correction to continue in election year, hence the quick disappointment. Markets have clearly priced in continued pressure on the reserve position and external account. temporary government prudence on the debt matter may have pulled inflation down momentarily, but the growing fiscal deficit, fast depreciating rupee and widening trade losses mean prices are set to rise again sooner rather than later. And since only the foolish expected huge Pse losses to be checked with

campaigning underway for all intents and purposes, the government’s fiscal space will remain uncomfortably tight. Yet the current administration is in a dilemma. it might cite election compulsions for unpopular decisions. But since the present economic situation dictates that some such decisions will have a more pronounced impact on ordinary citizens than before, the exercise is more than likely to be self-defeating. in times of persistent low growth and high unemployment, official mismanagement of crucial sectors like energy has added tens of thousands to the jobless list. Already, with earning compromised and prices still high, people’s agitation is beginning to find expression on the streets. if the present state is not checked, and official apathy continues, this distress will resonate even more loudly at the ballot. the government may not have employed the best strategy at its disposal. the country needs bold leadership. there’s a hint there for top guys in islamabad.

Shaukat Tarin

He new year brings fresh challenges for the government, especially since decision-making traditionally alters in islamabad as elections draw near. Given the present situation, the government’s options are limited. the fiscal deficit is still pretty high and budgeted earning and revenue targets look suspect. the Coalition support Fund is compromised, putting additional upward pressure on fiscal liabilities. Abandoning the iMF program has distanced other multi- and bi-lateral donors for whom the Fund’s posture is a litmus test for lending. And estranged relations with the Us and nato mean further rollback of crucial aid. Hence the pressure on the current account will be tremendous. now, if this is to be the election year, the political government must make sure its organs do not indulge in irresponsible expenditure, or the situation will get completely out of control. if the practice of money printing picks up any more pace, there will be added pressure on deficits, jacking up inflation, straining the balance of payments, weakening the rupee and diluting foreign exchange reserves. At this juncture, the government is well advised to exercise fiscal prudence by cutting expenditure and adopting official austerity measures that have already been approved. it must also urgently improve management and efficiency of all public sector enterprises, especially since their privatisation is off the shelf, at least for now. they are an immense drain on the government’s fiscal

There is an urgent need for the government to ease fiscal constraints in the new year

Korean Peninsula

Rice exports

this is with regards to the article, “the Beijing-Pyongyang bond” published yesterday. the instability of the Korean Peninsula is something that is generating apprehension all over the world. China is the biggest supporter of north Korea, because the Chinese believe that north Korea is an archetypal model of their own nation. the death of Kim-Jong il has left a massive hole in the Korean hierarchy; one that might never be properly filled. the ‘heir apparent’ has his work cut out in trying to ensure that the country rises up to the global challenges. nevertheless China has a huge part of play in ensuring the stability of the Korean Peninsula.

this is with regards to the news report, “Pakistan losing iranian market to india” published yesterday. rice used to be one of out major strengths as far as export potential is concerned. And now after the hullabaloo of MFn, watching india usurp the iranian market for rice is definitely not a pretty sight. What has gone wrong? What has happened to the quality of our rice? i mean there was a time when none of the indian brands of rice was a match for our rice, and now they seem to be on the up as we take a nosedive into oblivion. And it’s not just about the rice; our agriculture sector as a whole is plummeting to new lows.

SABA JAvAID CHEEMA

NAMRAH SyED

LAhORE

position, and leave little elbow room, which will be troubling in the election environment. Present times also require the government to think out of the box and initiate prudent debt management techniques through asset management and sales. it is a great challenge, but the fiscal deficit should be managed between the 4-6 per cent range. Continuing the momentum on improved tax collection is critical. the 27 per cent improvement over last year is appreciated. now, FBr reforms need to be pushed through with greater force, while closing policy loopholes, to build on the success, because there is little fat left to chew on. And while progress on agriculture tax is too much to ask for in election year, tax collection gains need to be protected. they will play a crucial role in easing the government’s fiscal burden. the balance of payments position is not much rosier. the trade gap is widening with exports not only held hostage to growth slowdown in our main export markets, but also the unfortunate incidence of cotton prices crashing in the international market. Presently, they are at their lowest level in two years, far from last year’s scenario when commodity price hike prompted larger than usual trade inflows. Also, shortage of gas and electricity has crippled industry, with a pronounced impact on exports. At this time, spending on imports needs to be curtailed. Concerned quarters much ensure import of luxury items is checked. it will be important now to shift focus to bolstering remittances. We started actively promoting remittance inflows in ’09, and now they have increased to approximately $12 billion. there is still capacity to raise this number to the $12-13 billion tune over the next 12 months if correct policy decisions are taken. Considering how election year policy making invariably involves more-than-usual expenses, the need to plug unnecessary leakages, while building on the narrow earning base, cannot be stressed enough. Yet it is also in such environment that people-friendly policies are framed. the government has a difficult juggling game ahead of it. But at the cost of repetition, without exercising austerity and prudence, it will have to wriggle hard to avoid the axe. The writer is a former finance minister

AvERAGE JOE INvESTOR

Dull and indifferent in the new year

Agha Akbar

He start of new Year has brought no immediate rewards. Dull and indifferent, that is mostly what generally describes Pakistan’s main bourse, the Karachi stock exchange these days. that is the general drift, so to speak, and it is reflected in Kse-100 index and volumes. there have been brighter sessions too, such as the one on tuesday that saw the market get a 120-point boost. But these have been few and far between, and as a result the benchmark has stayed well below

the 11,500 mark. And there is nothing immediately in the offing that promises the kind of resurgence that could catapult it towards the 12,000 point peak achieved some weeks ago. But, some analysts say, things might perk up in a couple of weeks, or by close of January and early February at the latest. that is when the dividends and bonus shares are due from December-closing companies and institutions and individuals keen on making a fast buck make a bull run on the options they fancy. For the Average Joe with liquidity, this down time in the market is also an opportunity, for he can do his buying at discounted rates. those intending to go on a buying binge indeed have quite a few options to pick from. in the banking sector, as one had suggested before, there is ever dependable Habib Bank Limited in the midpriced shares, while Bank Al-Habib is a decent cheap option. in between there is Allied Bank, going at under rs58 despite

Wednesday’s rise by a rupee and three quarters. similarly UBL, at rs54 apiece, is available at cut-rate. some who like to take a wager suggest Bank Alfalah, at a bit over rs11, as one that could bring some windfall. the argument for it goes like this: it is under a new management, and its figures have seen an improvement. And the promise of a decent dividend, compared with its near base price, make it a bargain. sounds good, maybe too good, and one thing is certain: it is not likely to take a tumble. But expecting a windfall may turn out to be wishful thinking. only go for it if you are in a betting mood – which means not much profit or a little loss would not upset you too much. But this scribe is not a betting man, so he would suggest treading with caution. the really bad thing about speculation is that it is indeed ruinous even if you make a profit – because you’re lured to indulge in more and more, and finally script your own

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

The fertiliser sector, though under a bit of cosh owing to stringent curb on gas supplies, still is most lucrative amongst the December closing shares

fall.

the fertiliser sector, though under a bit of cosh owing to stringent curb on gas supplies, still is most lucrative amongst the December closing shares. Here the Chhota and Barra Fauji, which in the brokers parlance stand for Fauji Fertiliser Company and its subsidiary Fauji Fertiliser Bin Qasim (Chhota and Barra neatly depicting their value, with the former give or take a few rupees nearly one-fourth of the latter) are the top buys. the FFC gives dividend twice a year, and makes those who keep faith in it with bonus shares too. But the real sweetie is the FFBQ. if you don’t take my word for it, give close attention to Mr Ali Malik, Ceo of the First national equities. According to him, here’s

why. “the FFBQ doesn’t offer any bonus shares but after every quarter without fail you’d find the dividend cheque in your mail box,” says Mr Malik. At under rs44, it is a steal for you’re likely to get a quarter of the value back in one year. in percentage terms, the yield gets to well above 50. And that is why Mr Malik advised this writer to get a whole year’s salary in advance and invest in this beauty. it is entirely another thing what the Coo of the company that owns this newspaper said when one took the request for a dozen salaries in advance to him. regardless, one has already bought a sizable chunk and is happy with it. The writer is Sports and Magazines Editor, Pakistan Today

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

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Thursday, 05 January, 2012

We should put money into simple industries, like the garment industry, where you can employ a lot of people, you don’t consume too much energy, and you don’t need too much capital

news

mCB Chairman mian mohammad mansha

Strengthening economic s mCB – top pick A for banking sector in 2012 KARACHI

STAFF REPORT

esPite expected slowdown in earnings growth in 2012 due to decline in policy rate, Muslim Commercial Bank (MCB) remains our top pick for 2012 in the banking sector, said Farhan Mahmood of topline securities. thus with highest niMs (8.5 per cent), better asset quality (nPL ratio of 11 per cent and highest coverage ratio of 86 per cent) and reasonable dividend yield of nine per cent, MCB with one of the highest roe of 24 per cent offers an opportunity to capitalise once the economy revives amid hope of general elections, he added.

OvERCOmING FOREIGN SELLING PRESSuRES the analyst said despite expected earnings growth of 23 per cent in 2011, foreign selling amid global crisis led MCB share price to fall almost by one third. “MCB, which stands out amongst top five companies in which foreigners have substantial holding, yielded a negative return of 31 per cent. We believe that offshore selling which resulted in underperformance of the scrip in 2011 will likely to continue in early part of 2012 as well albeit at a slower pace,” he said.

HIGHEST NET INTEREST mARGINS With a decline in interest rate, improvement in ADr will slightly offset impact of reduction in net interest income (nii) of the bank, we believe. MCB currently has one of the lowest advances to deposit ratio of 50 per cent amongst the big five of the banking sector. thus with highest niMs (net interest margin) on advances, earnings growth impact would be higher on MCB once credit demand picks amid recovery in economy. As the economy showed lackluster growth in last few years due to floods and higher interest rate scenario, banks faced asset quality concerns which led to higher growth in nonperforming loans (nPLs).

ALI RIzvI

CCorDinG to sBP’s recently released report Pakistan continues to be a country with the lowest financial penetration levels in the world, with 56 per cent of the adult population completely excluded, while another 32 per cent served informally. sMe’s employ 78 per cent of the country’s non agricultural workforce, constituting according to estimates 98 per cent of the country’s total economic establishments and contributing one third towards the GDP, with a 1/4th share in the country’s total exports. Given these staggering statistics it is indeed a pity that it has a meager 10 per cent share in the country’s total bank advances. With 3.2 million business enterprises listed according to the economic Census of Pakistan -2005 they comprise of 99 per cent of all organisations. sMe’s according to research has a 78 per cent share in industrial employment with 35 per cent share in value addition.

Removing socio-economic disparities sMes have over the years played a pivotal role for the economy as a whole by providing employment and facilitating the transition of the lower income groups into middle and higher incomes. thus, inherently they have the ability of bridging the financial divide by eliminating socio-economic inequalities in the country. thus the sMe sector does not only inherently tackle the problem of inequality but is also a pre-requisite to pursuing economic growth. it has been

Pakistan has the lowest financial penetration levels with

empirically proven that no country has been able to achieve economic growth without active participation from the sMe sector. the state Bank Governor while presiding over the 4th meeting of the sMe Credit Advisory Committee talked in detail about some alarming trends emerging in the banking front and lending to sMe’s. “in percentage terms, the share of sMes financing in the total lending portfolio of banks has also fallen from 16.2 percent in Dec2007 to 7.7 percent by sep-2011. Clearly, this is not a very desirable situation,” he said. Most importantly governor sBP highlighted that while Banks have been financing sMe’s for working capital loans there has been a reluctance to provide long term financing to these

are choosing for more risk free options like government securities. nPLs for sMes reached 29 per cent in December 2010, thus explaining the reluctance of banks to finance small enterprises. UBL President Atif Bokhari, in one of his latest interviews said, “sMes can sustain a 14-18 per cent interest rate environment because of high margins. What killed them was not the banking industry but lack of power and gas. i don’t have a soft corner for the large corporations but i do with sMes, however there has to be some incentives for a bank to lend to the sMes.”

The Grameen bank model Lending to sMes picked up pace when Dr Yunus in Bangladesh started his initiative of providing soft loans Grameen bank reversed the practice of conventional banking by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. it provides loans to the poorest in Bangladesh with little need of collateral. What is most impressive is that loan payback rate of Grameen Bank according to them stands at an outstanding 99 per cent. With the deteriorating macroeconomic indicators the cost of doing business in Pakistan has also been on the rise. this has been highlighted by many reports and studies recently conducted including that of the World Bank. in

Shrinking advances Advances to the sMe sector have shrunk too with total outstanding advances to sMes standing at rs334 billion as of December 2010, which according to estimates is the lowest in five years. the deteriorating macroeconomic conditions of the country have not helped either with sMe’s struggling to cope with the power crisis that is taking a toll on their production and performance. therefore, while banks need to encourage lending to the sMe’s other stakeholders cannot be excluded from blame in suppressing the development of these enterprises. With non Performing Loans (nPLs) going from bad to worse, and an overall economic recession, banks

SMEs employ

78 % 56% of the country’s non of the adult population agricultural completely excluded workforce

Inf

p gra

hic

B by

a rS

12%

SBP blasts banks for ‘cautious’ approach to SmEs g g

KARACHI STAFF REPORT

LOwEST INCREmENT OF BAD LOANS However, MCB is showing a divergent trend with one of the lowest increment of bad loans in its books. Moreover, banks’ aggressive provisioning over the years and stringent risk policy has led MCB to enjoy one of the highest coverage ratio of 86 per cent (the five big banks average of around 75 per cent), though nPL ratio of 11 per cent is also one of the lowest (the five big banks average of 14 per cent).

Governor state Bank of Pakistan Yaseen Anwar Wednesday chided commercial banks for their “excessively cautious” approach toward sMe lending that shrank by 38.67 per cent or rs169 billion during December 2007 and september 2011. expressing his dissatisfaction over the decline of sMe financing by banks, sBP governor said banks’ advances to the small and Medium enterprises

SmE lending dropped by 39pc to Rs268b in Sep-2011 from Rs437b in Dec-2007 Banks’ SmEs financing in their total lending portfolio fell from 16.2pc to 7.7pc

(sMes) had reduced to rs268 billion in sep-2011 compared to rs437 billion in December 2007. “in percentage terms, the share of sMes financing in the total lending portfolio of banks has also fallen from 16.2 per cent in Dec-2007 to 7.7 per cent by sep-2011. Clearly, this is not a very desirable situation,” the governor observed. He was presiding over the 4th meeting of sMe Credit Advisory Committee here at sBP. Governor sBP stressed upon the banks to develop an effective sMe strategy by focusing on important areas for sustainable growth of sMe sector. sBP Governor said a thorough analysis of banks’ aggregate sMe loan portfolio shows that a major share of

total sMe advances (76 per cent) constitutes working capital loans, which suggested reluctance on the part of banks to meet the long-term financing needs of sMe sector. “this has significant negative implications for both the drive for modernisation, expansion of businesses and the process of asset formation by sMes,” he added. Anwar said the overall adverse macro-economic conditions have led to decreasing demand and lower sMe lending. “However, i feel that another major factor for this decline is banks’ excessively cautious approach toward sMe lending in the face of a difficult business environment.” “i would suggest that this is not a sustainable situation. Banks

need to recognise their own need to diversify and grow their customer base entails greater focus on this potentially lucrative market segment,” sBP Governor added. sBP had revamped its Credit Guarantee scheme and various refinancing schemes with some encouraging results, Anwar said noting, however, with concern that the overall utilisation of these schemes was still below expected levels, which, he said, needed to be looked into seriously by the participating banks. “the review of sMe Prudential regulations has been completed after collecting feedback from relevant stakeholders and the revised Prs will be issued

soon,” he added. Anwar observed that a sustainable approach towards the development of sMe secto would require a more active role from all stakeholders specially the banks in improving availability of finance and other banking services for sMes. “this is ver important, as sMes account fo the vast majority of the business establishments in Pakistan (over 98 per cent) an account for over 78 per cent of the non-agricultural employment in the country,” h observed. sBP on its part stand ready to support banks wishin to increase lending to this important sector with appropriate policy interventions, he said.

PRO 05-01-2012_Layout 1 1/4/2012 11:41 PM Page 5

Thursday, 05 January, 2012

news

sha

c stability through SMEs

k model

up pace when tarted his inians Grameen ce of conveng the need for nking system ccountability, y. it provides Bangladesh eral. What is loan payback according to nding 99 per ating macrocost of doing also been on ighlighted by dies recently ng that of the . in

other parts of the globe, almost 12 per cent of sMes have been able to evolve into Medium and eventually larger organisations. this can be attributed mainly to the conducive business environment in those countries.

Slow down in micro credit growth According to sBP report, the slow down in micro credit growth in the country was attributable to a number of factors that include, funding, high operating costs, credit risks, organisational development and external factors. Financing of lending operations is limited, due to which the micro finance sector faced a difficulty in accessing commercial funds from risk averse commercial banks. High operating cost to loans ratio that is presently at 22 per cent also poses a great chal-

lenge of making microfinance a viable business product, the report states. the report mentions how lack of appropriate internal controls gave rise to the phenomenon of over-borrowing by clients that created negative spill over effects. inflation has also been highlighted as affecting the repayment capacity of micro-borrowers. organisational development has also been highlighted that is a prerequisite for sustainable growth. the report cites how these factors limit the potential of achieving the required levels of growth.

adopted by all stakeholders, especially banks as also mentioned by sBP Governor, that can eventually improve the availability of finance and other relevant banking services for the sMe sector. the model of success in other countries has been achieved via ensuring personal guarantees through collateral supervision, a lending approach based on cash flow, prudent lending measures, sMe courts, and a relationship based on mutual trust. segmenting and profiling of sMes is a must that needs to be done in Pakistan.

Challenging macro-economic variables

Adopting a multi-pronged approach

Finally the report states that external factors such as challenging macroeconomic variables and volatile law and order are inhibiting the growth of the microfinance sector. the Grameen bank model has been adopted successfully by institutions in other countries as well, enjoying great success. CArD for instance is one of the largest Grameen replication, currently operating in Philipp i n e s . CArD has also had a recovery of credit rate of 98 per cent. For the development of the sMe sector in Pakistan a comprehensive approach would have to be

the solution to the dilemma lies in adopting a multi pronged approach to the problem at hand. Firstly there needs to be greater collaboration amongst sMes and larger companies. entering into sub-contracting arrangements will allow the sMes to leverage the established track record and credit worthiness of larger companies. the dealings of sMes with these larger companies will provide banks with ample information regarding their dealings with the larger companies and allow sMes to grow and evolve as well. secondly the technical know how, marketing, managerial, accounting, book keeping and preparation of financial services are often lacking in sMes. this gap can be filled through social intermediation where intermediaries including the public, private or non government entities can step in and fill the void. taking this step will further improve the bankability of these entities with proposals

and requests for fixed and working capital. While sMeDA is already contributing in this regard we need more such organisations to facilitate the sector. Further, provincial governments must work to improve the quality and educational standards of the large number of vocational training institutes that on the one hand claim to produce skilled labour, however with the technical and professional know how lacking, leave the graduates redundant once they enter the labour force. Managerial and entrepreneurial training also needs to be developed in government and public institutions. sMe bank and other government lending institutions must make the documentation processes for availing loans easier through standardization and creating easy to fill documentation. Finally more banks need to assign exclusive branches to deal with sMes. this will enable these specialized bank branches to cater better to the sMe clients through improving on the products and services with the constant feedback received from sMe clients. Habib Bank has taken some brilliant decision in this regard by assigning branches to exclusively deal with the sector. While the lending to the sMe sector has remained to be rather low with recent figures indicating a drop in lending to sMes, however the blame does not totally lie with banking institutions as it requires collaboration from all stakeholders, including government, semi government and private entities. By doing so, we will not only be collectively working towards the benefit of the country, but will also be able to improve the socio-economic disparities that plague the nation. Comments and queries: ali.rizvi7957@gmail.com

SMEs have a

1/3rd 29%

of SMEs across the globe have been able to transform into medium and large enterprises

o SmEs

07 7.7pc

ed. d that a proach towards nt of sMe sector a more active akeholders anks in lability of her banking Mes. “this is very sMes account for ty of the ishments in 98 per cent) and er 78 per cent of ltural n the country,” he on its part stands rt banks wishing ding to this or with licy he said.

Non Performing loans of SMEs have reached

KARACHI

overnor state Bank of Pakistan Yaseen Anwar has said consumer expectation surveys will facilitate the process of designing a forward-looking monetary policy in the country. “such surveys will help us study the inflation expectations and economic confidence of households and their reaction to economic and policy decisions,” he added. speaking at the inaugural ceremony of the Centre for survey research (Csr) here at sBP on Wednesday, he said these expectation surveys are based on households’ perceptions about current as well as future economic conditions. ‘expectations regarding inflation, interest rates, stock prices, and em-

Most cases in Pakistan are willful defaults; not SMEs but large businesses. This can be rectified through the legal system ATIF BOkhARI President UBL

energy crippled

The SME sector has been hurt by the energy crisis while consumer credit has gone through challenging times ZAkIR MEhMOOD hBL President

elevating the loWest

share in Pakistan’s GDP

as of Dec’2010

Monetary policy to base on consumer expectation survey: SBP governor STAFF REPORT

Willful defaults

ployment are important for policy formulation,’ he said, adding that this explains why many developed and developing countries are using household surveys for policy research purposes. Anwar said that until recent times, a documentation of the expectations channel at household level – one that is nationally representative of Pakistan – was not available with either sBP or private sector. it was this very fact which made it all the more important for state Bank of Pakistan, being the central bank of the country, to enhance its efforts to collect information on expectations, he said and added; “this will allow us to undertake meaningful research, well-supported by first-hand knowledge of the situation in the country.” He said it was against this backdrop that the idea of undertaking

households’ expectation and confidence surveys was developed. “i am glad that we have the support of a reputable institution like institute of Business Administration. the groundwork has been laid by both the institutions to make the project a real success. it should be noted that the survey is of particular importance in that it is the first such exercise undertaken on ‘full- scale’ level in Pakistan. in this regard, a pilot project was completed last July, which enabled us to stop, rethink and ultimately adopt the most appropriate strategy to steer this idea into practice,” he added. sBP Governor said this joint effort between sBP’s research Department and Professors in Accounting and Law, Computer sciences, economics, statistics of the institute of Business Administration will go a

long way in providing a reliable set of information regarding consumers’ expectations in Pakistan. “Apart from its instantaneous contribution towards the process of policy formulation, i hope that this project will be of great help to future generations of policy makers in Pakistan, primarily by bi-monthly documenting consumers’ expectations,” he added. speaking on the occasion, Director, institute of Business Administration (iBA), Dr ishrat Husain recognised the efforts of state Bank of Pakistan in formulating consumer expectation survey and also appreciated it (sBP) for undertaking such a research of national level and importance. He said both sBP and iBA will keep working together in future to build such economic intelligence tools with a view to developing a better understanding of country’s economy.

We will be financing the low-income housing under the Aashiyana Scheme nAEEMUDDIn khAn President Bank of Punjab

untouched by crisis

Microcredit has been one area the crisis has not impacted. The crisis has not touched it, still it is robust as ever DR MUhAMMAD YUnUS nobel Laureate

PRO 05-01-2012_Layout 1 1/4/2012 11:42 PM Page 6

Thursday, 05 January, 2012

06 Markets top 10 sectors

49% 09% 10% 04% 04%

Chemicals

01% 03% 01% 02% 17%

Real Estate Investment

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Equity Investment Instruments

top 5 perForMers sector wise SymBOL

OPEN

HIGH

LOw CuRRENT

CHANGE

vOLumE

418.00 113.48 23.00 6.92 87.00

415.00 111.01 22.76 6.61 85.50

415.09 111.59 22.99 6.82 85.99

-1.30 0.22 0.47 0.02 0.71

9,152 868,241 1,533 302,860 63,469

0.01 28.18 5.68 152.25 40.82

0.01 27.47 4.72 150.00 39.65

0.01 27.87 5.68 150.05 39.81

0.00 -0.01 0.00 -2.51 -0.76

5,000 568,749 5 5,607 79,999

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

STOCK MARKET HIGHLIGHTS Index 11361.97 2903.78 2507.33

KSE-100 LSE-25 ISE-10

Change -40.07 +0.15 +10.61

Volume 39,976,120 1,140,965 32,487

Agritech(PREF)(R) Arif Habib Co SD Bawany Air Products Clariant Pakistan Dawood Hercules

Open 361.81 40.77 62.00 56.21 143.93

High 368.00 42.80 64.00 58.00 147.60

Low 360.00 41.90 61.90 55.16 144.16

Close 365.42 42.70 63.86 57.79 145.50

Change 3.61 1.93 1.86 1.58 1.57

Turnover 48,111 3,256 2,103 46,257 1,159,418

Major Losers UniLever Pak Ltd. Nestle PakistanXD Siemens PakXD Bata (Pak) Ltd. Wyeth Pak Limited

5569.13 3285.12 958.32 818.40 780.00

5569.13 3300.00 915.00 800.00 755.00

5371.10 3150.00 910.42 777.48 753.00

5397.42 3190.65 911.83 777.48 753.75

-171.71 -94.47 -46.49 -40.92 -26.25

59 71 35 177 50

Volume Leaders Lotte PakPTA 9.98 National Bank 43.02 NIB Bank Limited 1.68 Fatima Fert.Co. 23.85 Oil & GasXD 146.82

10.49 44.45 1.83 24.00 149.30

9.85 43.25 1.62 23.31 145.50

10.19 44.23 1.71 23.46 146.37

0.21 1.21 0.03 -0.39 -0.45

6,988,482 4,735,349 3,021,424 2,288,040 2,257,530

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

Per Tola (PKR) 54,120.00 51,608.00 988.00 1025.00

Per 10 Gm (PKR) 46,449.00 44,245.00 848.00 880.00

Per Ounce US$ 1,600.00 – 35.05 –

Al-Abbas Cement Attock Cement Bal.Glass Berger Paints Cherat Cement

2.60 51.54 1.78 13.60 8.99

18.30 1.10 8.11 33.51 9.57

18.30 1.10 8.11 33.54 9.57

-0.51 0.00 0.02 -1.71 0.00

6,639 3,480 12,150 10,504 10

27.37 3.65 41.03 7.78 82.29

2.70 51.90 1.78 13.90 9.97

2.61 51.54 1.72 13.60 8.56

2.61 51.54 1.78 13.88 9.25

0.01 0.00 0.00 0.28 0.26

11,500 202 100 7,300 222,766

5.45 186.78 28.50 0.75 6.56

Atlas Battery Ltd. Atlas Engineering Atlas Honda Ltd. Bal.Wheels Dewan Motors

163.61 58.00 122.18 26.12 1.70

Adam Sugar AL-Abbas Sugur Ansari Sugar Chashma Sugar Mills Clover Pakistan

18.50 89.79 7.58 7.95 54.60

18.85 89.89 7.50 8.24 55.00

27.50 3.85 41.50 8.00 82.10

26.75 3.55 41.03 7.97 80.25

5.80 189.00 28.50 0.75 6.50

5.75 181.20 28.50 0.75 6.36

164.00 58.00 122.18 26.12 1.79

162.00 58.00 119.00 25.00 1.70

26.76 3.65 41.03 8.00 81.10

-0.61 0.00 0.00 0.22 -1.19

10,377 5,002 177 5,195 380

18.69 89.89 7.50 8.00 54.60

0.19 0.10 -0.08 0.05 0.00

4,071 2,199 3,000 2,012 160

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

Amtex Limited Artistic Denim Mills Ashfaq Textile Azam Textile Azgard Nine

1.36 21.75 8.50 1.11 2.91

1.40 21.50 8.50 1.60 2.98

1.26 21.00 8.50 1.11 2.87

1.38 21.45 8.50 1.11 2.94

0.02 -0.30 0.00 0.00 0.03

24,704 5,547 1,000 1 540,170

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

28.00 112.18 20.10 97.58 44.65

28.20 113.90 20.55 98.30 44.90

27.70 112.11 20.07 96.21 43.75

27.99 112.52 20.11 96.56 44.01

-0.01 0.34 0.01 -1.02 -0.64

37,500 456,000 273,000 629,500 627,500

5.76 186.78 28.50 0.75 6.40

163.31 58.00 122.18 26.12 1.70

109.00 111.18 145.05 145.58

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

100.12 79.00 67.84 18.65 144.81

100.00 77.10 68.00 19.60 141.00

100.00 77.00 67.84 19.40 141.00

-0.12 -2.00 0.00 0.75 -3.81

409 400 291 45,144 500

99.85 77.00 67.65 17.91 141.00

Fixed Line Telecommunication 0.31 0.00 0.00 0.00 -0.16

1,880 64 200 9 10,004

-0.30 0.00 0.00 0.00 0.00

2,224 4,627 106 305 97,184

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

10.39 34.50 0.80 1.79 1.00

10.17 36.20 0.84 1.89 1.05

10.00 34.50 0.77 1.75 0.91

10.09 34.50 0.80 1.82 1.00

-0.30 0.00 0.00 0.03 0.00

219,504 1 6 60,883 410,692

0.30 34.66 0.64 1.66 1.50

0.39 35.31 0.65 1.67 1.70

0.30 34.71 0.60 1.62 1.50

0.30 35.05 0.64 1.62 1.50

0.00 0.39 0.00 -0.04 0.00

4 1,405,470 203,501 46,105 241

56.21 10.25 5.94 11.75 28.72

58.00 10.30 6.08 11.75 28.90

55.16 10.06 5.76 11.54 28.61

57.79 10.12 5.85 11.60 28.76

1.58 -0.13 -0.09 -0.15 0.04

46,257 135,530 585,795 305,232 21,374

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

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 18.55 86.00 7.50 8.00 51.95

Pharma and Bio Tech

Industrial Engineering Ados Pakistan AL-Ghazi TractorsXD Bolan Casting Dewan Auto Engg Ghandhara Ind.

vOLumE

Future Contracts

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

CHANGE

Adamjee Ins Atlas Insurance Century Insurance EFU General Ins Habib Insurance

47.77 36.21 6.80 37.51 10.00

48.40 37.00 6.99 39.00 10.00

47.00 36.00 6.80 37.70 9.90

47.74 36.00 6.80 38.81 10.00

-0.03 -0.21 0.00 1.30 0.00

133,097 4,900 300 2,601 802

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.31 14.36 14.99 0.65 1.00

-0.07 0.00 0.16 0.00 0.06

30,974 10 9,643 10 9,000

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

0.38 14.36 14.83 0.65 0.94

0.39 14.90 15.30 1.09 1.00

0.30 14.36 14.21 0.65 0.90

Equity Investment Instruments 1st.Fid.Leasing Mod AL-Noor Modar B.F.Modaraba B.R.R.Guardian Cres. Stand.Mod

1.55 4.20 4.00 2.26 0.50

1.58 4.07 4.49 2.26 0.49

1.56 4.07 4.00 2.25 0.40

1.57 4.07 4.00 2.26 0.49

0.02 -0.13 0.00 0.00 -0.01

12,973 1,000 100 150 26,517

13.15 32.00 36.20 12.76 70.60 1.19 65.25 23.28 3.41 7.80 52.75 26.20 16.00 11.41 1.95 28.80 10.00 0.76 1.76 0.94 16.00 19.15 14.01 72.05 62.50 22.60 1.35 8.60

13.30 32.23 36.25 13.58 71.02 1.20 66.26 24.50 3.42 8.20 56.29 26.20 16.00 12.40 2.01 28.80 10.09 0.82 1.76 0.97 16.10 19.27 14.01 73.94 63.21 23.06 1.36 8.75

0.00 0.23 0.25 0.64 -0.98 0.00 0.27 0.00 -0.19 0.08 0.79 0.00 -0.25 0.00 0.05 0.00 0.08 0.02 -0.09 -0.01 0.07 -0.03 0.00 0.00 0.71 -0.72 -0.07 -0.26

1 915 4,857 55,775 1,890 469,988 444 10 175,954 84,280 1,867 300 1,000 12 72,975 100 713,707 22,300 46,505 42,944 177,791 1,550 15 300 4,000 2,221 32,682 86,099

Miscellaneous Century Paper Pak Paper Prod. Security Paper P.N.S.C. Pak.Int.Con. SD TRG Pakistan Ltd. Murree Brewery AL-Abid Silk Mills Pak Elektron Ltd. Tariq Glass Ind. Pak Tobacco Co. Shifa Int.Hospitals Hum Network Ltd. Media Times Ltd P.I.A.C.(A) Pak Hotels P.T.C.L.A Telecard Limited Wateen Telecom Ltd WorldCall Telecom Sui North Gas Sui South Gas American Life EFU Life Assur Jubilee Life In AKD Capital Ltd. Pace (Pak) Ltd. Netsol Technologies

13.30 32.00 36.00 12.94 72.00 1.20 65.99 24.50 3.61 8.12 55.50 26.20 16.25 12.40 1.96 28.80 10.01 0.80 1.85 0.98 16.03 19.30 14.01 73.94 62.50 23.78 1.43 9.01

13.30 32.40 36.25 13.78 74.00 1.25 67.50 24.50 3.78 8.29 57.00 26.51 16.00 13.34 2.15 30.00 10.12 0.85 1.94 1.00 16.43 19.45 14.05 73.94 63.40 24.01 1.52 9.20

Mutual Funds Buy 89.80 116.46 139.98 1.1644 88.05 11.43 24.45 23.96 92.30

International Oil Price WTI Crude Oil

$102.61

18.89 1.20 8.65 35.50 9.95

Construction and Materials

Murree Brewery Co. Shezan Int’l

90.2426 141.3379 1.1775 117.7214

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

18.81 1.10 8.09 35.25 9.57

LOw CuRRENT

Personal Goods

Industrial metals and Mining Crescent Steel Dost Steels Ltd. Huﬀaz Seamless Pipe Int. Ind.Ltd. Metro Steel

HIGH

Household Goods

Automobile and Parts

Interbank Rates US Dollar UK Pound Japanese Yen Euro

0.01 27.88 5.68 152.56 40.57

OPEN

Food Producers

Chemicals

Market Value 2,124,178,826 24,459,354 1,506,703

Major Gainers Company Millat Tractors Ltd. Pak Gum Javedan Corp Allied Bank Ltd MCB Bank Ltd

416.39 111.37 22.52 6.80 85.28

SymBOL

Sell 90.80 118.27 141.81 1.1760 90.45 11.67 24.67 24.14 95.06

Brent Crude Oil

$112.13

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

PRO 05-01-2012_Layout 1 1/4/2012 11:42 PM Page 7

Thursday, 05 January, 2012

In the early 1980s, John Reed of Citibank invested heavily in ATMs when most bankers were skeptical about the new technology. Look where the world stands in terms of use and acceptance of ATMs today

news

State Bank of Pakistan Governor, yaseen Anwar

SSGC’s 18 inch pipeline blows up in Balochistan

Pakistan sells LPG at highest price in South Asia

CNG stations in Sindh and Balochistan to face breakdown for 36 hours

LAHORE

KARACHI STAFF REPORT

mALDIvES BETTER OFF

IMRAn ADnAn

AKistAn has emerged as the regional leader in liquefied petroleum gas (LPG) prices as liquid fuel price is touching rs135 to rs140 per kg in retail markets. the country already has the not-so-revered distinction of sitting at the apex in terms of CnG price among various south Asian countries.

He already gas crisis hit consumers of CnG in sindh and Balochistan have now started facing another prolonged breakdown of 36 hours from Wednesday night to Friday morning owing to a blowup of high pressure gas pipeline in Balochistan. According to sui southern Gas Company (ssGC), a serious incident of insurgency occurred at 01:30 am on January 04, 2011 near the village Khudad Jhakarani in district Jafarabad in Balochistan. As a result of the incident the ssGC’s high pressure 18 inch diameter gas pipeline was blown up by some unknown miscreants. the incident was caused by an explosive device, resulting in an 8 to 10 feet deep trough and rupturing the nearly 50 feet long pipeline in a tract of wet muddy land. the pipeline was carrying 114 million cubic feet gas daily (mmcfd) from sui gas field to ssGC’s pipeline system at shikarpur, for its onward transmission to entire Balochistan. in the aftermath of the incident, the effected section of pipeline was immediately isolated. At the same time, company’s emergency response team rushed to the site from shikarpur to inspect the situation, which is awaiting permission by security agencies, who are engaged in clearance of the aforementioned area. Another team was also mobilised from Karachi, early this morning, carrying heavy repair equipments and necessary material. ssGC is trying its best to manage smooth and uninterrupted gas supply to customers of Balochistan, who are combating freezing temperatures nowadays. to manage the gas load, that was lost due to pipeline rupture, ssGC has announced a ‘shut down’ for all CnG stations in its franchise area of sindh and Balochistan for a period of 36 hours. Henceforth, all CnG stations will be closed from 08:00 pm on Wednesday 04 January 2012 till 8:00 am on Friday 06 January 2012. As a corollary of this shortfall, ssGC management has requested its valued domestic, commercial and industrial customers to voluntarily curtail the use of gas by 20 per cent immediately or else the customers would have to bear unfathomable gas shortage. However, ssGC assured that it will spare no effort to maintain uninterrupted supply of natural gas to its valued domestic, commercial and industrial customers.

TOP OF THE PILE A comparison of liquid gas prices in south Asia shows that Pakistan has the highest LPG price of rs135 to rs140 per kg, followed by Maldives, Bangladesh, sri Lanka, nepal and india. A study conducted by Profit indicates that almost all south Asian states have similar circumstance as they import a major chunk of liquid gas for their domestic needs. But in most countries, government is subsidising liquid fuel to make it affordable.

However, LPG prices comparison show that in Maldives, LPG – commonly known as cooking gas – is being sold at rs133 per kilogram, while an 11.80 kg cylinder is available at rs1,327 in Pak rupee terms.

BANGLADESH GOvT’S PRuDENCE similarly, in Bangladesh, where the demand for liquid gas witnessed a steep rise during recent months following the suspension of new gas connections to households and industrial units due to acute shortage of natural gas, LPG is being sold at rs128 per kg or rs1,594 per 12.5 kg cylinder. Bangladesh LPG demand and supply figures show that liquid gas consumption increased by 80 per cent during 2011 and touching 90,000 tonnes. the study shows that to keep liquid gas prices affordable, Bangladesh government has waived import duty and taxes on LPG, cylinders and its accessories. earlier, the Bangladesh government had imposed five per cent import duty on LPG.

BIGGEST JumP in Pakistan, after the highest ever increase of rs10.50 per kg liquid gas prices have been swelled to rs135 per kg that makes it the most expensive fuel in the country. the latest price figures released by LPG Association of Pakistan (LPGAP) indicates that LPG price in the country has touched the rs92,136 per tonne mark inclusive of all taxes, which representative an increase of rs 11,274 during the last two days.

SRILANKAN NumBERS Price comparison shows that in sri Lanka, the liquid fuel is being sold at rs120 per kg, whereas 12.5 kg cooking gas cylinder is available at rs1,496 in Pak rupee term. similarly, in nepal, LPG is being marketed at rs106 per kg or rs1,508 per 14.2 kg cylinder.

INDIA TAKES THE CAKE OGDCL TO FOLLOw SuIT LPGAP spokesman points out that state owned LPG producers, Pak Arab refinery and Pakistan Petroleum Limited, have increased the base stock price of LPG from rs69,623 to rs79,340 following the increase in saudi Aramco Contract Price for January. other LPG producers, including oil and Gas Development Company Limited, are expected to match the price, he indicated.

india is the least expensive country in LPG prices across south Asia as indian government is heavily subsidising the cooking gas. Figures show that in Pak rupee term, india is selling LPG at rs48.00 per kg. At present, a 14.2 kg LPG bottle costs indian rs399.26 in Delhi and rs398.45 in Mumbai as the indian government is offering a subsidy of indian rs288 per cylinder. However, now a debate has been instigated in government circles as to why government is subsidising liquid fuel for all sections of society, including rich and poor.

ENERGy CRISIS

Marble exports decline by 65 per cent g

marble exports worth only $13 million out of targeted $50 million achieved during July-December 2011 $100 million export target to remain elusive this year g

KARACHI

GhULAM ABBAS

roLonGeD power outages in the country, especially the industrial sector of Karachi, have severely hampered export of marble which has declined by 65 per cent during last six months. the country has exported marble worth $13 million against the targeted $50 million during July to December 2011. the current

export figure has also shown a decline of 65 per cent as compared to $20 million the country fetched during the corresponding period of financial year 2010-2011. As a corollary of the eight to 12 hours long electricity load shedding the industry has faced huge losses as marble factories remained closed for up to 15 hours, sanaullah Khan Chairman, All Pakistan Marble Mining, Processing and export industry told Profit on Wednesday. the

target of $100 million set for financial year 2011-2012 would remain a distant dream despite of the fact that the country recorded over 70 per cent growth in marble exports last year, he added. though the law and order situation in the city especially Qasba Colony area has improved during last couple of months, the extensive power outages have exacerbated the production of marble industries located in the area. sanaullah said Karachi

electric supply Company (KesC) has reduced the loadshedding hours from 12 hours to eight hours after a series of protest launched by the city’s marble industrialists. But the eight hours of breakdown were enough to dismantle the marble sector, he concluded emphatically. intriguingly, KesC was supplying uninterrupted power supply to Gidani, another marble industries unit of the city, he said; adding that present exports of country

were also based on block and raw materials exports especially to China. Also, other exporters of the product like China, india et al have got an edge over Pakistani exporters owing to these inevitable circumstances of frequent electric load shedding, high cost of production. the sector is now losing valued export orders from potential foreign customers, which is causing the loss of precious foreign exchange. He also advised the government that

instead of making short term decisions for meeting shortfall of electricity and energy conservation, concerned authorities should focus on permanent solutions to purge the country of continued power crisis for smooth running of industrial units for the growth of industries. He also demanded government to arrange early shifting of marble industries to the already approved Marble City besides providing all utility services.