Profit 1st December, 2011 by Profit Epaper

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Middle class, growth engine of Pakistan: seminar Page 8 The evolution of cinema Page 3 Gwadar, the future economic hub Page 2 Pages: 7

profit.com.pk

moneTAry PolICy AnnounCemenT

Govt borrowing binge crowding out private sector KARACHI

ISMAIL DILAWAR

entrAL bank, which announced to keep the interest rate unchanged at 12 per cent for next two months, finds itself in a “dilemma” as the cash-strapped government appears to be the main user of banking system’s liquidity and

the banks are hesitant to extend credit to the growth-oriented private sector. excluding the issuance of rs391 billion government securities to settle lingering circular debt and commodity loans, the funds-starved government borrowed rs317 billion from central and scheduled banks during July to 18th november 2011 to fund its ever-burgeoning budgetary expenditures.

InJeCTInG moneTAry PenICIllIn And state Bank has to pump “substantial liquidity” in banking system to cater to this prevailing demand for money. By 28th november this year, the outstanding amount of liquidity injected by state Bank stands at rs340 billion. On the other hand, the risk-averse banks’ credits to growth-oriented prioutstanding vate sector remain “muted” so far. regulator is in a kind of liquidity fix as it helplessly says any effort to scale down ongoing abnormal liquidity injections could have implications for setinjected tlement of payments in the inter-bank market. “in this context by SBP where government is the main user of the system’s liquidity and banks remain hesitant to extend credit to the private sector, sBP faces a dilemma,” central bank said in its monetary policy decision.

rs340b

12pc

CurrenT ACCounT DeFICIT severe energy shortages were also holding back effective utilisation of productive capacity and adding to the high inflationweak growth problem. On the external front, the earlier current comfortable external current account position for FY12, which account helped sBP in lowering its policy rate, had become “less bedeficit for first nign”. Actual external current account deficit of $1.6 billion for the first four months of FY12 was now higher than earlier four months projected deficit for the year, central bank observed. “the main of FY12 reason for this larger than expected deterioration is the rising trade deficit”. in particular, windfall gains to export receipts due to abnormally high cotton prices in FY11 had dissipated faster than anticipated.

$1.6b

At the same time, sBP said, international oil prices of around $110 per barrel and strong growth in non-oil imports had kept total import growth at an elevated level of close to $3.4 billion per month. “Adding to the challenges faced by the external billion sector is the precarious global economic outlook,” it said. total import state Bank said a relatively larger external current account deficit in FY12 would require higher financial inflows to maingrowth tain foreign exchange reserves. However, during July-October, FY12, the total net direct and portfolio inflows were only $207 million while there was a net outflow of $113 million in official loans.

$3.4

sBP ForeIGn reserves

$1.5b drop in SBP foreign reserves observed

As a consequence, sBP’s liquid foreign exchange reserves have declined to $13.3 billion at end-October 2011 compared to $14.8 billion at end-June 2011. Given scheduled increase in repayments of outstanding loans in H2-FY12, realisation of substantial foreign flows, especially the proceeds of assumed privatisation receipts, euro bond, coalition support funds, and 3G licence fees, becomes important for strengthening the external position.

neT ForeIGn AsseTs DroP A reflection of widening external current account deficit and declining financial inflows can be seen in the reduction of rs115 billion in the net Foreign Assets (nFA) of sBP’s balance sheet during July to 18th november 2011. “this implies that to meet the economy’s prevailing demand for money, sBP has to provide substantial liquidity in the system, at least to the extent of compensating for the declining nFA of sBP,” the bank said. About its billion money injection operations, the bank said, as of 28 novemreduction ber 2011, the outstanding amount of liquidity injected by in NFA sBP amounted to rs340 billion. “this is significantly higher than normal sBP operations and appears to have developed characteristics of a permanent nature at this point in time,” the bank said. it said a dominant source of demand for money and thus liquidity injections by sBP was government borrowings for budgetary support from the banking system. sBP said while government had borrowed rs317 billion from the banking system, the banks’ credit to the private sector was muted.

rs115

InFlATIonAry Pressures Adding a reassessment of latest developments and projections indicated that macroeconomic risks had somewhat increased during the last two months. For instance, although the year-on-year CPi inflation stood at 11 per cent in October 2011, the month-on-month inflation Average trends, averaging at around 1.3 per cent per month during the first inflation in four months of FY12, showed existence of inflationary pressures. 2012 to sBP said shifting of commodity level CPi data revealed that numsettle at ber of CPi items exhibiting year-on-year inflation of more than 10 per cent was consistently increasing and almost all of these items belonged to non-food category. “the government has also increased its wheat support price by rs100 to rs1050 per 40kg for the next wheat procurement season,” it said. thus, the bank said, while average inflation might settle around the targeted 12 per cent for FY12, it was uncertain that inflation would come down to a single digit level in FY13.

Courts should issue notices over gas load management concerns: Dr Asim

non oIl ImPorTs rIse

InTeresT rATe sTATIC regulator announced to keep interest rate static at 12 per cent in view of, what the policymakers said, a pressing need to revive growth and emerging risks to macroeconomic stability. the decision was taken by Central Board of Directors of state Bank of Pakistan, who met under chairmanship of Governor Yaseen Anwar to decide fate of discount SBP retains rate for the next two months, January and February. “sBP reinterest duced its policy rate by 200 bps, to 12 per cent, in FY12 so far. the objective of adopting this stance is to support revival of rate at private investment in the economy despite a constraining domestic and global economic environment,” the bank said in its MPD. it said primary factors in support of this stance were expectation of average CPi inflation remaining within announced target in FY12 and a small projected external current account deficit. in pursuing this stance sBP did acknowledge risks to macroeconomic stability emanating from fiscal weaknesses and falling foreign financial inflows.

Thursday, 01 December, 2011

PrIvATe seCTor CreDIT To ImProve Growth in private sector credit, it said, might pick up in coming months as the desired effects of a cumulative decrease of 200 bps in policy rate and reduction in financial constraints of the energy sector gather momentum. “in this context where government is the main user of the system’s liquidity and banks remain hesitant to drop in policy extend credit to the private sector, sBP faces a dilemma,” the bank rate previously said. efforts to scale down liquidity injections could have implications for settlement of payments in inter-bank market. even if made, these considerations are addressed, government may end up settling beneficial its obligations by borrowing from sBP. the marginally increasing trend of these injections, on the other hand, also carries inflationary risk.

200bps

TAx reForms AnD ForeIGn InFlows there are three solutions to this predicament of reconciling price and financial stability considerations and supporting private investment in the economy. First, government needs to ensure that all or major parts of budgeted foreign inflows materialise as soon as possible. this will alleviate pressure on balance of payments and help inject fresh rupee liquidity in the system. second, sooner than later government strategy to would have to initiate comprehensive tax reforms that overcome broadens the tax base of the economy. this is of paramount predicament importance to reduce government’s borrowing requirements. third, efforts need to be stepped up to improve financial deepening and increase competition in the banking system. the last of these solutions is something that sBP has been actively working on encouraging depositors to invest in government securities through iPs accounts, the bank concluded.

pronged

Financial advisor IP gas pipeline project to be appointed in two days Dr Asim to visit India in January for TAPI transit fee Gas supply to fertiliser sector to be curtailed from today ISLAMABAD AMER SIAL

inister for Petroleum, Dr Asim Hussain, has said if the courts have any concerns over the gas load management plan, they should issue proper notice to the government before granting stay. talking to reporters, he said the executive should be allowed to implement the gas load management plan, as influence exerted by the industries and CnG sector was adding to the woes of domestic consumers. He said the work on iran Pakistan gas pipeline was progressing and financial advisor for the project will be appointed in next two days. He said the construction of the pipeline will not be an issue, as gas infrastructure cess and levy on natural gas will be generating rs45 billion per annum. the estimated cost of laying the infrastructure is rs120 billion. On turkmenistan-Afghanistan-Pakistanindia (tAPi) transit fee with india, he said dates of his visit were being worked out with indian authorities. He said the visit was likely to take place in January. On the litigation, he said a court had granted stay over LPG extraction from Kunnar Pasaki Deep that would halt the linking of 125 mmcfd of gas from the field into the transmission network. the government was targeting linking the gas supply from December this year. He said if the courts have any concerns over the gas load management plan, they should issue proper notice to the government before granting stay. there is no additional gas available in the country and the winter demand could only be managed through load management. there should be no influence from anybody and let the executive decide to meet the requirements of domestic consumers. During the last six years, gas transmission network has doubled and gas demand has risen to 8 bcfd, as against the supply of 4 bcfd, he added. About the gas supply to fertiliser sector, he said it would be curtailed from today onwards and gas supply will be provided to only two fertiliser plants. However, he did not share the names of the fertiliser plants that would be getting supply after December 1. the fertiliser plants were given a supply of 170 mmcfd as compared to their demand of 240 mmcfd, to meet up the urea shortfall. the minister said the gas supply situation would remain tight during this winter season. Giving his own example, he said he has purchased LPG cylinders for his hospital in Karachi as the system will face unprecedented shortage during the winter season. Petroleum Ministry estimates shortage of 911 mmcfd in December and 1.1 bcfd during January. He said despite announcing enhancing gas supply from 140 mmcfd to 180 mmcfd to Karachi electric supply Corporation, no additional gas could be provided, as no gas was available. However, he said efforts were under way to enhance supply to curb the power load shedding.

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Thursday, 01 December, 2011

02 debate Gwadar, the future economic hub G

MAQBOOL AFRIDI

wADAr, “the Future of Pakistan”, is a Balochi word which means “Door of wind”. However, looking into the future, it can be referred to as the “Door of Prosperity wind”. Let this wind dry the sweat of people who have worked hard and may this wind turn into a fragrance of prosperity for every home and individual working at Gwadar or living in Pakistan. Gwadar has geo-strategic significance due to many reasons. it is on the conduit of three most commercially important regions of the world. the oil rich Middle east, Central Asia bestowed with natural resources and south Asia having the potential for growth, for this century. Gwadar has attained an international stature sooner than the expectations of many analysts. the fishing village mindset needs to be tuned to shifting paradigms of the geo strategic epicenter of emerging trade horizon. the new economic epicenter now revolves round and around Gwadar. the epicenter has all the natural pulls and potential of converting the “Dream into reality”. those who have a vision and an interest, sitting at a far distance, understand the potential of Gwadar far better than us sitting close to it - an unfortunate dilemma. those who have clung to the mindset of a fishing village, and do not appreciate the dynamics of a changing world and ground realities, are unfortunate for themselves and for the country. Let this mindset be infused with reality oriented information, and focus their attention on Gwadar’s economic prospects in the future. it is my firm belief that via Gwadar we can take Pakistan to far greater heights, provided we exploit its potential, build it in a planned way and attract potential Pakistani and foreigner investors. Pakistan has neither a dearth of human resources nor lack of geo-economic, geo-political or, geo-strategic potential. where, perhaps, we lack is in the realm of will and the sincerity of purpose to actualise our stated goals. therefore, to achieve our high-priority national aims and objectives, we shall need to evolve a strategy that would essentially entail hiring, harmonising and fruitfully utilising the services and expertise of both national and international experts and concerned people within the country.

PoTenTIAl

Gwadar has enormous potential from all angles and dimensions, whether it is business, trade, manufacturing, storage or any kind of business activity, whether known today or emerging with the help of ever developing technology. Merely the construction of Deep sea Port will not serve the purpose till we explore all the potential of Gwadar, which we know but are not encashing. in short any type of business activity is possible here due to many obvious reasons “imagination is the limit”. Deep Sea Port: the definition of a deep sea port is that the mother ship comes directly at the port and is unloaded. Presently the depth is 14.5 m but ultimately it will be increased. As per the vision envisaged for Gwadar port development, 88 mother ships will anchor at a time by 2050. the port is equipped with essential port handling equipment and required infrastructure for smooth port operation. in phase-i (completed), 3 berths of the port is handling up to 25,000 to 30,000 Dwt containers vessels and bulk carriers respectively. in phase-ii, it will have nine additional berths. (i) Four container berths. (ii) One bulk cargo terminal (to handle 100,000 Dwt ships). (iii) One Grain terminal. (iv) One ro-ro terminal. (v) two oil terminals (to handle 200,000 Dwt ships). in comb Geographical Location: parison to Gulf ports, especially Dubai, it gives more facilities and will handle more cargo and trade because Gwadar is a deep sea port, and is lo-

cated at the mouth of the Gulf and is a gateway to Central Asian republics (CArs) / western China. For Dubai, ships have to wait for days for the route clearance due to strait of Hormuz, where only a few ships can cross at a time. As far as the iranian Ports (Chah Bahar & Bandar Abbas) are concerned, they will not be able to attract and generate business while the iranian state remains hostile to major western powers. Moreover, these ports are in creeks and require colossal maintenance cost, which from a business point of view, is not so attractive. Transit Trade: the land locked Central Asian states are dependent on Gwadar. similarly western China and north western india shall have a short route to the world market through Gwadar. Presently transit trade facilities are provided to Afghanistan (from Karachi) and the same can be extended to CArs from Gwadar. the location of Gwadar Deep sea Port is such that the whole world business converges and diverges at this place. in comparison, Dubai lacks all this. Trans-shipment: the whole region, indeed the whole world can take advantage of trans-shipment facility. the transit cargo (liquid and dry both) can easily be undertaken from Gwadar and transported to any part of the world in a short span of time, in comparison to other ports. imagine a ship carrying 5,000 – 8,000 containers, the enormity of warehousing, transportation and manpower required to handle all this. For transshipment we have to give facilities as provided by the Dubai government to the investors. in the list of the world’s busiest trans-shipment port, Dubai is at number eight and handling (teU 000) 322,050 annually on which no country is dependent, is 700 km ahead of us and has to pass through strait of Hormuz. it is high time to realise the importance of Gwadar and “we must start trans-shipment” as it does not require road infrastructure and other extra expenditure. Warehousing/Container Yards: Due to transshipment there will be a lot of requirement of warehousing and container yards. All consignment/cargo has to be unloaded and kept in warehouses before shipment. similarly all cargo/consignment unloaded from ships has to be stored in warehouses/container yards and then transported to their final destination. Being a deep sea port on the main shipping route, it will facilitate the movement of cargo. there will be a major requirement of warehouses, both open as well as bounded. Transport: the movement of containers / cargo to and from the up countries will either be done through railway or heavy transport. the rail network should be laid by the government. there is a dire need for a modern railway network as the existing rail networks is of old vintage and will not be able to sustain new load volume. For heavy road transport the private sector will be involved. the transport industry will have to import all kind of vehicles and especially heavy vehicles for fast delivering of goods at the far destination as well as in the city limits. transportation of goods through air also stands a chance due to long distances, and for urgent deliveries, thus an international airport is required. Trade & Business / Import & Export: the trade and business of all kinds and quantity, starting from a needle till ships, will flourish, irrespective of the cost. import and export of all items and magnitude is possible, because the means of transportation like sea/road/rail (being developed) are available and linked with all important countries and trade routes. Gwadar shall be the “Meeting Point” for sellers and buyers, rich and poor, haves and have nots, and so on. h Manufacturing Industries: Being a deep sea port and with facilities for transportation available, the industry of any kind is feasible, both from raw material as well as finished material point of view. the mineral resources of Central Asia have no

CATeGory

yeAr

Dry Cargo (million tones) Liquid Cargo (million tones) Container (1000 TEUs) Trans-shipment (1000 TEUs)

2005 3.96 16.62 200 200

2010 4.74 17.54 241 250

2015 5.77 18.77 295 300

PROVEN RESERVES Country

Crude oil

natural Gas

Coal

(Million Barrels)

(Trillion Cubic Feet)

(Million Short Tons)

Kazakhstan

5,417

37,479

Kyrgyzstan

0.2

895

Tajikistan

0.2

Minimal

Turkmenistan

546

101

Minimal

Uzbekistan

594

66.2

Minimal

Total

6,609 million barrels

232 trillion cu ft

38,374m tons

shorter route to get transported and to reach world markets, than Gwadar. the developed world cannot reap these benefits except through Gwadar. invariably what may happen, it is a natural phenomenon that industry develops at all ports due to availability of all kinds of facilities. Gas/Oil Refinery and Petro Chemicals: Gwadar Port should be termed as an energy port. the gas and oil deposits of CArs will find their new storage destination at Gwadar, because of its natural flow direction. even iran can benefit from Gwadar by securing an opening to the world market for gas and oil. the Pacific countries, india and other countries short of energy can easily be supplied Liquid natural Gas (LnG) from Gwadar. there will be a need for an oil refinery rather an “Oil City” to cater for all these. China has to pump iranian gas through national trade Corridor (ntC). similarly the Middle eastern oil will also be pumped to China, being cheap in terms of distance and time, through ntC. Fisheries: Presently fishery is one of the most important economic activities in Gwadar district, in which a vast majority of the population is engaged. the district has a 600 kilometers long coast line which provides the residents not only a means of income, but also food to subsist. About one fourth of the total catch of different varieties in Pakistan is produced in Gwadar. At present there are two jetties (Gwadar and Pasni) in the district. till today fishing is a family skill. the skill is transferred from father to son. there is a need for training on modern fishing techniques. On an annual basis there is potential for an additional catch of at least 70,000 tonnes. Fish processing at Gwadar is providing employment to many of the local educated and uneducated unemployed youth. in case fish farming and shrimp farming are encouraged, it can double the quantity, besides improving the quality. Tourism: the landscape of district Gwadar is unique in itself. the mud hillock, the God gifted landscape looks as if carved by an artist. the two hammer heads of Gwadar and Ormara are matchless. the turquoise sea water with golden sand beaches facing south, is unparalleled. the beaches can be used throughout the year. the tourism ministry has yet to realise the beauty and potential of tourism, of the area. they must be encouraged and pushed to market the area initially for locals and ultimately for foreigners. Across the sea, Dubai is attracting six millions tourists each year, whereas we have yet to start tourism. we should try to encourage and at-

tract these tourists, as tourists from far flung countries would like to see another adjacent country, spending a meager amount by air or by ferry service. in case we are not able to attract international tourists, we can have domestic tourism in the initial stage. Being a new city and having virgin beaches, everybody would like to visit it once. Real Estate: the foremost thing in any kind of business activity is real estate. God will not increase the size of the earth; rather due to population explosion land is shrinking. thus the value of real estate will increase. On top of that if some business or trade activity is generated, the value of the real estate further escalates - a universal phenomenon. Construction: Presently Gwadar has no building or accommodation to accommodate the human influx and store the bulk supplies of any kind. the construction industry has so much potential that one has to start from the making of bricks, till the construction of high rises, for which there is no limit, “sky is the limit”. Job opportunities: the Gwadar project can provide job to thousands of people of the country in a short span of time, as everything new has to be developed and there will be a large requirement of human resource i.e. from labourers till the executive class. Developing new projects in the country has far reaching benefits in comparison to loans and outside jobs – begging for each and every penny and job.

eConomIC sIGnIFICAnCe oF GwADAr a

Presently Gwadar is a fishermen’s town, having a population of fifty thousand people. Gwadar is connected through a coastal highway, approximately 600 Km long, with Karachi. the travelling time is 7 – 10 hours depending on mode of transportation. the master plan of the city has been prepared (Annex A). necessary road networks have been completed. the area west of Jinnah Avenue has been earmarked for residential and area towards east for commercial / industrial. For export Processing Zone (ePZ) 46,000 acres of land has been earmarked on the eastern side with 10 years tax Holiday. Future Trade Forecast: the envisaged trade forecast of Gwadar port in early 2000, from western China, Central Asian republics and Afghanistan, is as shown in the tables.

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Thursday, 01 December, 2011

EDITORIAL

The evolution of cinema

The HBL verdict

OinG by the trend, a supreme Court verdict that doesn’t derail a contested privatisation exercise sets a precedent in itself. Yet there are a number of features in the HBL decision that need careful attention. One, it sends a strong ‘transparency’ signal to interested investors, especially the foreign variety. two, coming when Pakistan must embark on a very ambitious privatisation drive very soon, the timing is important, and addresses concerns regarding credible risk management and political interference quite amicably. three, it bolsters the privatisation commission, perhaps pushing for a permanent arrangement that resolves all issues related to fair-pricing prior to binding, deciding signatures. Four, and perhaps most important, it makes for the text-book successful strategic privatisation case, and impresses upon all parties concerned the benefits of relieving the centre’s fiscal burden. in fairness, due credit must also be given to

HBL’s post-privatisaion team. success is the only and ultimate vindication in such endeavours. they are at the centre of the turnaround narrative, which must now be embraced across the board. the key to economic survival in the immediate to medium term will be transparency and efficiency, without which serious investors will simply not channel funds towards Pakistan. simply put, if the economy is to register meaningful growth and the centre’s fiscal burden controlled, we must have more such cases. we have repeatedly called for turnaround and strategic privatisation of loss-making entities in this space. now, with the boost to the privatisation commission’s credibility, we must prepare other enterprises for similar treatment, checking unnecessary leakages and stimulating growth and healthy competition at the same time. it is now extremely important that this momentum is not lost. Our current economic and social complexities simply do not allow it.

Imran Mufti

Digital cinema has given rise to 3D projection technologies that far eclipse those from the days of yore

Philip Morris – comedy of errors

Rage against the machine

i loved the article and it is a job well done by the writer. For years, we have been fooled with the illusion of the hunk and the cigarette as a sign of grandiosity and power. ever since the British colonialism, the sub-continent has been infected with numerous addictions and one can't really blame the companies for corrupting our minds. But then again, there is no room for excuse. the government has done a wonderful job by imposing a ban on these commercials. However, at the same time, there are millions of fake and smuggled tobacco brands and the government is not doing anything to regulate them. what about their taxes or regulatory laws?

As long as we remain dependent on American aid, the rage against nAtO would be pointless. Yes it is true that Uncle sam needs our support to drag them out of the mess that they find themselves in, but the way things work in the real world, economic dependence will always be more menacing. the attacks were totally uncalled for, and yes we need to take a strong stance against such an uncalled-for act, but at the end of the day we can’t afford to take things beyond repair. Unfortunately in the real world, where money governs most matters, it is difficult to play hardball against someone you owe.

NADIRA

NIDA MANSOOR LAhoRE

LAhoRE

t was in the mid-1800s, a little after photographic equipment was invented, that the concept of ‘moving pictures’ began. Photographs and drawings were placed in specially designed motion devices whose revolving apparatus gave the viewer an illusion of motion. the phenomenal inventions and discoveries during the same century, such as sound recording, electric light, the Kinetoscope, a ‘peep show’ viewing device and ultimately, the world’s first film projector called the cinematograph, helped pave the way for modern day cinema. the early 1900s saw the development of coloured movies and cartoon animations, the onset of commercial radio broadcasting, the advent of ‘talkies’: movies with integrated sound and dialogue, the establishment of ‘Hollywood’ and the invention of the world’s first television. By the mid 1900s, movie theatres were abundant in most parts of the world and cinema-going became a favourite pastime of both the old and young. Cinema technology was pretty straightforward and basic up till then. Movies were shot using cameras that incorporated a standard 35mm celluloid film. Upon completion, multiple reels of such film would be spliced together by a projectionist, and through a complicated shutter-and-light sequence in an analogue projector, the movie would be displayed onto a projection screen at a cinema. it is worth noting here that traditional film distribution meant that the movie had to be printed onto several reels which were then physically transported to various cinemas worldwide. it wasn’t until the 1990s, with the proliferation of computer engineering, broadband telecommunication and the bounties these offered, that the concept of ‘digital cinema’ came to into being. Digital cinema technology works in a simple and

efficient manner. Movies are initially stored onto computers, an increasingly simple task if the movie is shot using a digital camera to begin with. this soft copy is then distributed to cinemas, through satellite transmission and high-speed broadband connections, directly to a digital projector which then processes the file and displays it on digital projection screen. Compared to this, traditional analogue technology seems like an arduous and unnecessary process. in layperson terms, digital cinema projection basically means that the traditional 35mm film containing the movie is replaced by an electronic copy, contained on a storage device, such as a high-capacity external digital drive. it also means that a digital projector is used instead of a conventional film projector. there are currently two types of digital projectors, according to an international specification standard set by Digital Cinema initiatives LLC, a joint venture of Disney, Fox, Paramount, sony Pictures entertainment, Universal and warner Brothers studios. First is the digital light processing projector and the second type is the digital projector. Cinemas all over the globe are making the gradual shift from film to digital projection, since the latter, with its unique advanced technology, guarantees unparalleled picture quality. electronic or digitised movies are not at risk of fading or getting scratched, they provide high definition, stable, non-grainy images and offer a sound quality that won’t deteriorate over time. in addition, digital cinema brings with it various other benefits that far outweigh the extremely high initial investment that’s required to install digital projectors, most importantly the significantly lower distribution costs, faster and greater market penetration, increased control over piracy, and finally, increased flexibility in terms of programming by providing the ability to show alternative content, such as live streaming of sports events and musical concerts. we are living in what has been officially labelled ‘the digital age’, with the concept of ‘digitising’ infiltrating all aspects of our existence. For cinema and movie buffs, this means a completely immersive experience – digital cinema has in turn given rise to 3D projection technologies that far eclipse those from the days of yore. remember the green and red glasses? the move has begun moving towards an increasingly ‘real’ experience – who knows, in a few years, we may enter a world of ‘holographic’ cinema. Until then, lie back, grab some popcorn and enjoy the show! The writer is manager of Royal Palm Golf and Country Club’s new AudiPlex private cinema. He can be reached at imran@rpgcc.com

AverAGe Joe InvesTor

Awaiting the fortune cookie in Feb

Agha Akbar

Fter a week’s sabbatical abroad, which really was not a time off for one was working, yours truly is back in harness. Meanwhile, with the regional situation tense and volatile as it is, especially after some gung-ho nAtO helicopter gunship fliers by design or by accident (the uppermost feeling in these parts is that it was more of a case of the former than the latter) the market was inevitably likely to take a plunge in the

week that one was away; and it did. However, it didn’t quite plumb the depths – the Kse-100 benchmark lost about 600 points, most of them in only one particularly bad session. Business as usual, or rather unusual! the investors, both of the institutional and the individual variety, were not just wary, they were jittery. And this little bout of nerves was quite justified. in such troubled times as these, you don’t venture out flashing your pocketbook. But with some reconciliatory noises emerging from washington, the slide down the slippery slope not only stopped, some recovery was already witnessed on tuesday and a bit further by wednesday, and the Kse-100 had already topped well over 11,500 by noon. still, one’s activity as far as buying and selling is concerned has obviously mostly been in the dormant zone these last few weeks. Perhaps, the reason is that having parked one’s little stash in

the right scrips one is now waiting patiently till the dividend-paying time around February. But one has to watch out for the goings-on with keen interest. Maybe something quite attractive out of the blue would catch one’s attention these days. Or probably better still waiting for a windfall from somewhere (like every Average Joe investor, this writer’s dream too) that would provide the wherewithal and the vim and vigour to embark on a buying binge. Meanwhile, it makes one happy that the December-closing scrips that one had projected as decent buys have not done too badly despite the overall bearish trend. the reason why these survived and held their own despite the prevalent investor indifference towards the market in general that reflected in low volumes, was because the assessment was based on their balance sheets. the capital gain may not have been there as yet, but that too shall be dan-

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

It makes one happy that the December-closing scrips have not done too badly despite the overall bearish trend

gled before one once we are well into January 2012 – close to the payout time when investors come back in droves to pick up with a focus on a handful of good prospects. Getting to the specifics, there is further information that reaffirms one’s faith in these scrips. For one, the third quarter reports are out and only a month remains before the close of the ongoing year. these are quite healthy and heartening. we knew that profitability in the fertiliser sector was high. the reports on the brace of Fauji companies, the FFC and FFBQ reconfirm the fact that earning per share after three quarters year on year has been far higher. the FFC’s ePs after three quarters this year has been rs16, while it was exactly half at rs8

last year. And it is already in the business of sharing its profit with an interim dividend of 55 per cent – or rs5.50 per share. in case of FFBQ the ePs is even better than hundred per cent: rs7.68 this year, against rs3.14 last year. in terms of steep profits, not quite similar is the scenario in the three banks that were mentioned: Bank AlHabib, Allied Bank and Habib Bank Limited. But in the case of all three, the gain over last year has been around 40 per cent. not as good as the fertiliser sector, but definitely better considering that the banking sector had taken a hammering in recent years. The writer is Sports and Magazine 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, 01 December, 2011

Benazir Income Support Programme (BISP) is striving to eradicate poverty in the country and as a result more than 6 million beneficiary families have been included in the programme

news

Chairperson BIsP, Farzana raja

CONTAINERS TO BE SEARCHED AT KARACHI PORT KARACHI GhULAM ABBAS

AKistAni fruit and vegetable exporters have started facing huge financial losses due to 100 per cent search of refrigerated containers at ports started by Drug enforcement Cell and Federal Board of revenue. exporters have suffered loss of almost rs80 million during last few weeks as at least 50 containers loaded with Kinnow, which were scheduled to be exported to various countries, were

cancelled. Although only 5 per cent of loaded perishable items should be searched at ports by concerned authorities, but opening all refrigerated containers at ports is damaging fruits. these fruits are later rejected by foreign buyers, waheed Ahmed Co Chairman All Pakistan Fruit and vegetable exporters importers and Merchant Association (PFvA) said while talking to Profit. Under fresh move started by authorities, exporters are likely to face huge losses which would also badly affect export target fixed by government.

search of refrigerator containers loaded with vegetables and fruits, which are kept at specific temperature to maintain their quality and standard in line with demand of importers from different countries, would also cause loss of many important international markets, he said. He added that important markets include saudi Arabia, england, UAe, iran, and european countries where a huge quantity of fruits and vegetable was being imported from Pakistan. “the refrigerated container loses its previous temperature when it is

Kitchen gardening plan finishes in a mess LAHORE

IMRAN ADNAN

rOvinCiAL Agriculture department has been proudly claiming that it has successfully achieved the sale target of 170,000 seed bags for kitchen gardening across Punjab. However, no official in provincial agriculture department is able to estimate economic impact as no recordkeeping has been done during activity for monitoring and evaluation. sources revealed that agriculture department had directed all lower cadre officials to sale minimum 10 seed bags for promoting culture of kitchen gardening in the province. they disclosed that all junior officials were compelled to deposit rs500 – an amount equivalent to the price of 10 bags – to the agriculture department. they claimed that most officials had to bear the cost of flawed project, while some had recovered their amount by selling seeds to their friends and families. speaking to Profit, a senior official of Ayub Agriculture research

institute (AAri), who was part of the whole campaign, agreed that the department had failed to maintain records of buyers. He also failed to give any concrete answer about economic impact of the whole activity. However, he claimed that three greengrocers had closed their businesses in district Jhang as people in the area were producing sufficient vegetables to meet their requirements. responding to a query, he underlined that as prices of vegetables were showing rising trend, government had decided to encourage masses to produce vegetable for their own consumption. However, he was not aware about a single kitchen gardener who had achieved success through this project, mainly due to absence of buyers’ data. speaking to Profit Hamid waleed, a buyer who bought seeds for kitchen gardening from Punjab Agriculture Department said he had to acquire services of a professional gardener for setting up a small kitchen garden in his home. the seed packet did not have any remarkable information or instruction about sow-

ing or growing of plants, except the contact numbers of the agriculture department. He further disclosed that he was not offered any support from provincial agriculture department as his contact information was not recorded at the time of purchase. After contacting Punjab Agriculture Department Director General (extension) Dr Anjum Ali, he claimed that his department had telephone numbers of seed buyers and Agriculture Department was contacting buyers to provide them extension services. He disclosed that historically, the agriculture department could not sell more than 10,000 seed bags; but it had happened for the first time that his department had surpassed the target of 170,000 bags. He said it was a gigantic programme as department had sold 170,000 seed bags in which some 108,000 Agriculture extension officials, nGOs and agriculture research institutes were involved. He underscored that government did not have to invest a single penny in the project. rs8.5 million worth of sale proceeds had been deposited in the government account, he maintained.

opened at ports. Hence fruits refrigerated also lose their lives, making them unqualified or substandard for the already quality sensitive customers of the country’s exports,” he said. there is also no cooling or refrigerated system at the country’s ports to ensure that the quality of fruits remains unaffected. “if the concerned authorities did not stop the move, exporters will face huge losses besides losing many important markets across the world not only for the current season but also next year.

Basic measures yet to be taken by India and Pakistan KARACHI STAFF REPoRT

LtHOUGH many rounds of talks have been completed by Pakistan and india to improve the neglected bilateral trade ties, many of the basic and short term measures are yet to be taken. interestingly, short-term measures mainly relating to trade facilitation were agreed in principle at the Musharraf-singh meeting but they remain unimplemented so far. According to a report prepared by sAArC in collaboration with trade Development Authority of Pakistan, the following specific short-term measures were included: A protocol to permit indian and Pakistani ships to lift cargo for third countries has been signed. this eliminates the reciprocal requirement that ships touch a third-country port before bringing in imports. third-country port restriction particularly affects trade of high-bulk, low-value goods, such as coal, tar, and cement, makes their transportation via sea commercially unviable. Also, sea shipments in addition to the current Mumbai-Karachi route have been allowed.

KSE gains 26 points amid renewed Pak-US tensions

ISLAMABAD: Pakistan being the agrarian country needs to utilise its potential in the agriculture sector by adopting modern farming techniques and shifting its focus from conventional agriculture methodology which would ultimately increase the crop yield. President islamabad Chamber of Commerce and industry, Yassar sakhi Butt said while addressing a meeting of the representatives associated in agro business. iCCi President said government should emphasise towards increase in exports in the agro sectors through research and developing more varieties of agriculture produce. Pakistan has vast areas of cultivated land, but due to conventional way of farming and lack of know-how of modern technology and sowing methods, Pakistan was still unable to increase its per yield production, which was the lowest in the region. thus, modernisation and diversification of crops is very much needed in this sector to get optimum results and increase exports, as our country greatly relies on agriculture, he added. He also proposed that growers should also give attention to non-seasonal agriculture produce because it would provide them a good opportunity of exporting these commodities to other countries along with meeting domestic needs. Yassar sakhi Butt said no serious efforts were made to increase crop yield so far, international agriculture experts must be invited to find ways and means for increasing per yield production and developing new varieties for fruits and vegetables. STAFF REPoRT

lCCI expresses dismay over state Bank’s decision LAHORE: Lahore Chamber of Commerce and industry expressed its dismay over state Bank’s decision to keep policy rate unchanged and called for bringing it down to single digit to encourage new investments, for revival of businesses to give a jumpstart to economy which is at a standstill. in a statement, LCCi Acting President Kashif Younis Meher and vice President saeeda nazar said availability of cheaper money to businessmen is necessary to expedite process of industrialisation that would ultimately result in much-needed job creation. LCCi office-bearers said 150 basis point cut made after a long period of eight years by state Bank of Pakistan in previous bi-monthly monetary policy was quite encouraging. However the interest rate needs to be brought down to single digit they exclaimed. LCCi office-bearers said ongoing economic scenario shows that there is hardly any time left for economic managers of the country to manage things on economic front; therefore they should understand well that a cut in policy rate is direly needed. LCCi office-bearers said all major economies despite having higher inflation have either curtailed or are in the process of reducing interest rates to protect their respective economies. LCCi Acting President and vice President said state Bank of Pakistan should understand that its continued tighter stance is inflicting a very heavy loss on national economy therefore they should ensure availability of cheaper money to the businessmen. STAFF REPoRT

Industrial relations Institute organises series of trainings

KARACHI STAFF REPoRT

He Karachi stocks market maintained a bullish trend on wednesday and gained 26 points amid lower volumes. with the investors being mindful of the renewed Pak-Us diplomatic tensions and new policy announcement by the central bank, the day witnessed the benchmark 100-sahre index gaining 25.88 points to close at 11,532.83 points. the index had closed at 11,506.95 points in the previous session. “stocks closed broadly higher amid lower volumes,” said Ahsan Mehanti, director at Arif Habib investments. the intraday high and low was, respectively, recorded at 11,593.29 and 11,504.75 points. the trading volumes ended slightly higher and closed at 38.491 million shares compared to tuesday’s 37.386 million shares. the trading value, however, ended up in the red zone and contracted to rs1.546 billion as against rs2.176 billion on the previous day. Of the total 304 traded scrips, 125 advanced, 86 declined and 93 re-

Per yield production needs to increase to enhance exports: ICCI

mained unchanged. the market capitalisation added some value and closed at rs3.0 trillion compared to rs2.99 trillion recorded on the stock market a day earlier. the Kse-30 index too set in the green zone and gained 35.52 points to close at 10, 800.24 points against the previous day’s 10,764.72 points. the index hit the intraday high and low of 10,869.83 and 10,763.55 points. “investors remained cautious ahead of sBP policy announcement today expected to ease in policy rate,” said Mehanti. the state Bank of Pakistan, however, announced to keep the interest rate static at 12 percent.

the analyst attributed the wednesday’s bullish trend to recovery in global markets, renewed institutional support in banking, oil and fertiliser stocks on strong valuations saying these factors played a catalyst role in positive close at Kse. Jahanigir siddiqui Company appeared as volume leader of the day. the company counted its traded shares at 5.815 million with its share price closing higher at rs5.83 after opening at rs5.58. Other best performers included Fatima Fertiliser Company, DG Khan Cement, PiCiC Gro Fund, Fauji Fertiliser Bin Qasim, Arif Habib Co sD, engro CorpsPOt,

Fauji FertiliserXD, Japan Power and Lotte PakPtA. these scrips’ traded shares were counted, respectively, at 4.1 million, 3.1 million, 2.6 million, 1.8 million, 1.4 million, 1.1 million, 1.1 million, 1.1 million and 1.1 million shares. the future market, however, registered an upset with the trading turnover sliding to 3.3 million shares compared to 5.019 million shares of the previous day. the scrips that gained numbered 87, those categorised as minus were 20 and only one remained unchanged. engroDeC continued to lead the companies with 0.671 million of its shares traded on the day

LAHORE: industrial relations institute (iri), labour and human resource department has organised a series of trainings on “Gender responsive Budgeting” (GrB) in collaboration with United nation Development Programme (UnDP), under its project “strengthening Poverty reduction strategy Monitoring”.the focal person and trainer, Mr tahir Manzoor, Deputy Director iri, told the participants that Gender responsive Budgeting (GrB) is the approach to mainstream the gender dimension into all stages of the budget cycle. He briefed the goals of GrB that it is process of skill and attitude, raise of awareness of gender issues of budgets and programmes, promotion of transparency and accountability of the gender impacts of government budget and demonstration of the programmes and budget to promote gender equality. GrB is not a separate budget for women, it refers to the variety of processes and tools aimed at facilitating an assessment of the impact of the government expenditures, he added, while training the participants. He also briefed the tools and analysis of GrB. iri and UnDP have organised four trainings till now where 122 officials participated. the purpose of these trainings was to develop capacities of myriad of stakeholders including, government officials, it concluded. STAFF REPoRT

Profit 01-12-2011_Layout 1 11/30/2011 11:52 PM Page 5

Thursday, 01 December, 2011

The British embassy attack in Tehran, is an action that reduces our relations with Iran to the lowest level consistent with the maintenance of diplomatic relations

news

Britain Foreign secretary, william hague

Iran oil sanctions to shrink foreign buyers

rAn faces new hurdles to getting paid for its oil as the Us tightens financial sanctions to deter buyers from the world’s third-largest crude exporter. the Us approved additional curbs on iran’s banking system and oil industry on nov 21, hoping to thwart the country’s nuclear program, and the european Union may follow. Current sanctions have led indian importers to route payments for iranian crude through a turkish bank. these refiners, concerned turkey may stop cooperating amid the latest Us rules, are asking banks in russia to arrange alternatives, said three people with direct knowledge of the situation. “the idea of the sanctions is to shrink the circle of buyers and so increase their ability to extract discounts from iran,” said robin Mills, an analyst at Dubai-based Manaar energy Consulting, who worked for a decade at royal Dutch shell Plc (rDsA) in the Middle east. the Us is stepping up pressure after a nov 8 report from the United nations’ international Atomic energy Agency concluded that iran was working on a nuclear weapons program. At stake is crude supply from the OPeC nation, whose exports last year were exceeded only by those of saudi Arabia and russia. Oil is iran’s main source of income, earning it $56 billion in the first seven months of 2011, according to Us energy Department estimates. the country pumped 3.6 million barrels a day last month, a Bloomberg survey showed, and exported an average 2.58 million barrels a day in 2010, according to Organization of Petroleum exporting Countries statistics.

EUROPEAN PRESSURE “On iran, we need to step up pressure,” eU President Herman van rompuy told ambassadors today in Brussels. “the eU is preparing new restrictive measures,” he said. France has proposed that the eU ban iranian oil, French Budget Minister valerie Pecresse said nov 23. Maja Kocijancic, an eU spokeswoman, said the same day that european foreign ministers will discuss the topic at

a meeting scheduled for tomorrow. iran, which is already subject to some Un and eU sanctions, denies it is developing nuclear weapons. iranian protesters broke into and vandalized the British embassy’s compound in tehran yesterday. U.K. Prime Minister David Cameron, in a statement, called the attack “outrageous and indefensible” and said all staff had been accounted for. Britain today ordered the closure of iran's embassy in London.

FINANCIAL IMPACT “the latest measures will make it even harder for people to finance trade with iran,” said nick Grandage, a London-based partner at law firm norton rose LLP, who specializes in trade finance. sanctions have stifled trading of iran’s oil in London, europe’s financial hub, and may have forced importers to pay for crude in non-dollar currencies, he said in a nov 22 interview. should europe adopt more formal restrictions on iranian crude, the Persian Gulf nation would likely be forced to offer oil more cheaply to refiners in Asia, its biggest market, Olivier Jakob, managing director at Oberwil, switzerland-based Petromatrix GmbH, said in a nov 28 note to investors. By targeting financial transactions and stopping short of sanctioning international trade in iranian oil, the Us aims to pressure iran without risking a surge in crude prices at a time of global economic fragility, said Mills of Manaar energy.

RUSSIA OPTION indian refiners, which got 11 per cent of their imported oil from iran in 2010, are trying to arrange a conduit for payments via russia, said the three people familiar with the matter, declining to be identified because the talks are private. vladimir Lavrov, a spokesman for russia’s central bank, declined to comment this week about the indian effort. the Us sanctions against iran are “unacceptable and violate international law,” russia’s Foreign Ministry said nov 22. turkey,

which gets half its oil imports from iran, also criticized the Us action. turkiye Halk Bankasi As (HALKB), the Ankara-based lender indian refiners have used to transfer cash to iran, declined to comment on its transactions other than to say Halk complies with Un rules, according to a bank official, who cited company policy for declining to be identified. iran’s past flexibility over payment terms makes it an attractive supplier. the country gives indian refiners 90 days to pay their bills, compared with 30 days from saudi Arabia, according to the people with knowledge of those purchases. when indian importers were unable to pay on time because of sanctions, iran kept supplying them even as they amassed $5 billion in unpaid invoices.

SAUDI CRUDE saudi Arabia will increase oil shipments to indian refiners next year, four people with knowledge of the plans said nov 15. india’s Petroleum Ministry Media Director r. C. Joshi didn’t answer two calls for comment to his mobile phone yesterday. refiners in europe, collectively the second-largest market for iranian oil after China, may also face difficulties from tighter constraints on transactions with iran. “europe has been importing crude oil from iran, and it certainly hasn’t lowered amounts recently,” Jakob of Petromatrix said by telephone nov 22. “Greece is importing most of its crude oil from iran.” A potential eU ban on iran’s oil would have a smaller financial impact on european companies than the recent Libyan crisis because state-run entities control oil output, Fitch ratings said in a note today. still, european companies “would feel the impact of a ban through their refining operations as they would have to replace iranian crude,” it said.

GREEK REFINERS Motor Oil Hellas sA Chief executive Of-

ficer Petros tzannetakis said on a conference call yesterday that a potential ban would not affect it because the Greek refiner sources crude from other nations such as saudi Arabia and russia. Hellenic Petroleum sA (eLPe), Greece’s biggest refiner, declined to comment on nov 25 on its exposure to iran. Oil prices rose this year as political turmoil in the Middle east stoked concern about the reliability of supply. the price of european benchmark Brent crude rose to more than $125 barrels a day in April as exports from Libya dwindled because of the rebellion in that country. Brent has risen 18 per cent this year and traded at $111.63 a barrel at 1:59 p.m. in London. iran’s three biggest national customers -- China, Japan and india -- together buy more than half its exported oil, according to Us energy Department data. this concentration of cus-

tomers and iran’s reliance on oil sales for income make the country vulnerable to disruptions, Jakob said.

CHINA WINS An unintended consequence is that China, a critic of the latest Us sanctions, may benefit from any price discounts, said Mills, the Dubai-based consultant. “it will favor non-Us allies who will be able to get oil somewhat more cheaply.” China accounted for 22 per cent of iran’s export volumes in the first half of this year and increased its purchases by 27 per cent over the same period of 2010, Us data show. the eU, Japan and india bought 18 per cent, 14 per cent and 13 per cent of iran’s oil, respectively. BLooMBERG

CORPORATE CORNER mobilink concludes Pakistan’s first online art competition

management accountants and those who support them throughout their careers. PRESS RELEASE

lG and ruba electronics sign distribution-ship agreement

the global DFC school Challenge, 2011 programme throughout the nation with at least 35,000 children being reached in over 7000 schools. PRESS RELEASE

Beaconhouse and Diverse learning Concepts sign memo of partnership

media briefing in a local hotel. it was announced, that including Pakistan, 14 countries of the world have launched a new weCAn Global network (wCGn). this is an alliance of 14 weCAn national campaigns (indonesia Bangladesh, sri Lanka, Pakistan, india, Ugenda, Democratic republic of Congo, tanzania, niger, Burundi, Kenya, netherland and Canada). PRESS RELEASE

Bata launches flagship store

KARACHI: Mobilink has concluded the first Artpad competition, with Muhammad Osama of Karachi winning. the Mobilink Artpad was the latest in a series of innovative digital events organised by Mobilink, enabling Pakistan’s online community to interact with the company and initiate an art-based dialogue on the role played by Mobilink and its partner HtC in ‘reshaping Lives’ across Pakistan. PRESS RELEASE

CImA celebrates business excellence in management accountancy KARACHI: Chartered institute of Management Accountants (CiMA) announced the individuals, teams and companies from around the globe who have delivered an outstanding performance in business at the CiMA Annual Awards. Over 350 guests attended the prestigious ceremony. speaking at the event, Harold Baird, CiMA President, said, “the CiMA Annual Awards acknowledge the successes of first class chartered

KARACHI: LG electronics and ruba electronics signed a distributor-ship agreement according to which ruba electronics will provide sales, marketing, after sales services and distribution support to LG electronics in Pakistan. the agreement was signed by Mr H s Paik, President LG electronics Gulf region and Mr Manzoor Khan, Director ruba electronics in a ceremony. ruba electronics will now provide support to LG’s home appliances, air conditioners divisions and health care products. PRESS RELEASE

safeguard and Design for Change announce 35 children winning stories KARACHI: safeguard and Design for Change (DFC) Pakistan announced 35 winning stories by Pakistani children from all walks of life who have demonstrated their commitment to be changemakers and future leaders of the country. in Pakistan, DFC and safeguard joined hands to take

LAHORE: Mr Alan Linden, CeO Diverse Learning Concepts (DLC) worldwide and Mr noor-ud-din Ahmed, Director Development Beaconhouse groups (Bss) signed a memorandum of partnership agreement. DLC worldwide is the only institute offering complete package of chartered courses around the world both in distance learning and blending learning. this partnership will enable DLC worldwide to provide the learning contents, DLC worldwide branding, partnering with charted institute, training the tutors, offering international accredited corporate courses. PRESS RELEASE

The launch of weCan Global network LAHORE: south Asia Partnership Pakistan (sAPPK), one of the leading civil society organisation in Pakistan, fighting and raising voice to eliminate violence against women in Pakistan, organised a

KARACHI: Bata Pakistan has launched its flagship store at Clifton, Karachi. retail Manager Bata Pakistan, Mr Zil-e-Husnain, inaugurated the flagship store along with other Bata officials. Bata offered valuable giveaways and gift hampers on purchase of rs1,000 or above. Media representatives and a large number of guests also marked the occasion. the store offers a wide range of brands and accessories by Bata. PRESS RELEASE

KARAChI: Mr Raza haroon, IT Minister- Sindh along with Mr Rolf Bauer, Director operations hashoo Group of hotels and Chef Morgan, Mr Azeem Qureashi, GM Sales and Shagufta Khan, Director Public Relation, at the new menu launch of Sakura restaurant at PC Karachi. PRESS RELEASE

Profit 01-12-2011_Layout 1 11/30/2011 11:53 PM Page 6

Thursday, 01 December, 2011

06 Markets top 10 sectors

24% 09% 35% 10% 08%

Chemicals

01% 07% 02% 03% 01%

General Industrials

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Equity Investment Instruments

STOCK MARKET HIGHLIGHTS Index 11532.83 2970.37 2596.89

KSE-100 LSE-25 ISE-10

Change +25.88 +25.02 -10.38

Volume 33,035,817 762,450 80,108

Market Value 1,525,347,260 27,588,304 2,799,355

top 5 perForMers sector wise

Major Gainers Company Bata (Pak) Ltd. UniLever Pak Ltd. AL-Abbas Sugur Shield Corpor Nestle PakistanXD

Open 715.76 5518.60 91.00 71.25 2751.90

High 751.00 5547.00 95.50 74.81 2764.00

Low 730.00 5400.00 95.00 74.81 2701.01

Close 730.70 5528.40 95.50 74.81 2755.15

Change 14.94 9.80 4.50 3.56 3.25

Turnover 272 7 2,001 348 25

750.60 238.53 270.92 152.61 177.10

755.00 228.00 272.00 145.26 178.75

713.07 228.00 262.01 145.00 168.25

725.86 228.00 263.14 145.02 171.78

-24.74 40 -10.53 120 -7.78 587,812 -7.59 534 -5.32 4,771

Volume Leaders Jah.Sidd. Co. Fatima Fert.Co. D.G.K.Cement PICIC Gro Fund Fauji Fert

5.58 22.95 20.44 12.27 54.43

5.92 23.57 21.22 12.60 54.65

5.51 22.78 20.49 12.30 54.00

5.83 23.12 20.75 12.57 54.11

0.25 0.17 0.31 0.30 -0.32

5,815,125 4,148,594 3,153,270 2,673,918 1,869,805

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

Per Tola (PKR) 56,968.00 51,608.00 1,050.00 1025.00

Per 10 Gm (PKR) 48,893.00 44,245.00 901.00 880.00

Per Ounce US$ 1,716.00 – 35.05 –

hIGh

low CurrenT

409.80 119.90 22.06 7.00 92.00

402.00 115.40 21.15 6.87 90.05

ChAnGe

volume

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

402.21 115.99 22.06 6.89 90.36

Arif Habib Co SD Biafo Ind. Clariant Pakistan Dawood Hercules Descon Chemical

28.05 69.39 153.64 35.89 1.49

5.13 3.19 0.00 0.06 0.55

94,034 1,798,600 289 278,943 26,862

20.00 1.40 8.61 30.05 10.24

29.00 69.39 153.64 37.50 1.50

28.15 66.50 152.50 35.85 1.50

28.87 69.39 153.00 36.45 1.50

0.82 0.00 -0.64 0.56 0.01

1,689,569 10 1,804 101,880 2,982

1.80 52.69 14.27 7.61 19.94

20.79 1.46 8.79 31.00 10.10

20.00 1.35 8.63 29.60 10.00

20.00 1.35 8.66 30.05 10.00

0.00 -0.05 0.05 0.00 -0.24

1 6,507 1,100 414 9,012

25.82 3.60 40.34 7.70 20.50

Ados Pakistan AL-Ghazi Tractors Ghandhara Ind. Hinopak Motor K.S.B.Pumps

88.7340 137.7507 1.1373 117.8920

5.25 161.88 7.49 78.54 26.95

1.97 53.00 14.30 7.98 20.53

1.83 51.02 13.27 7.70 19.90

1.83 53.00 14.13 7.87 20.44

0.03 0.31 -0.14 0.26 0.50

3,101 64,581 2,536 903 1,419,943

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

International Oil Price WTI Crude Oil

Sell 88.70 118.26 138.58 1.1305 87.44 11.42 24.13 23.61 90.41

Brent Crude Oil

Atlas Battery Ltd. Bal.Wheels Dewan Motors Exide (PAK) General Tyre

170.00 23.60 2.20 177.10 16.00

27.10 4.10 40.50 8.59 20.50

25.15 3.26 40.01 7.70 19.48

25.90 3.90 40.50 8.43 20.50

0.08 0.30 0.16 0.73 0.00

8,219 151,477 2,251 3,414 125

5.99 161.99 7.95 79.95 26.95

4.60 158.50 6.66 74.62 25.61

172.89 23.70 2.20 178.50 16.83

169.00 23.70 2.05 173.00 15.71

110.49 111.43 150.02 150.00

5.25 158.63 6.66 74.65 26.95

$110.82

171.50 23.70 2.20 177.10 16.80

109.00 111.18 145.05 145.58

Dewan Sugar Engro Foods Ltd. Habib Sugar Mills Habib-ADM Ltd. Ismail Industr

2.25 23.95 27.23 13.30 65.00

2.49 24.25 27.48 13.69 64.99

AL-Abid Silk Mills Diamond Ind. Hussain Industries Pak Elektron Ltd. Tariq GlassXD

23.34 8.20 3.90 4.20 8.65

23.60 9.03 3.90 4.40 8.89

(Colony) Thal Ali Asghar Textile Amtex Limited Artistic Denim Mills Azam Textile

1.40 0.56 1.29 20.10 1.35

1.40 0.55 1.33 21.07 1.39

AHCL-DEC ANL-DEC ATRL-DEC DGKC-DEC ENGRO-DEC

28.90 3.50 121.61 20.25 126.68

28.60 3.47 119.49 20.25 123.99

Abbott Laboratories Ferozsons (Lab) Ltd. GlaxoSmithKline Pak. Highnoon (Lab) IBL HealthCare XD

100.37 76.20 67.51 28.20 12.74

101.60 76.90 68.00 29.25 12.50

0.00 -3.25 -0.83 -3.89 0.00

30 730 2,005 809 45

1.50 0.10 0.00 0.00 0.80

2,700 500 213 38 1,313

0.69 -4.44

1,170 203

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

10.80 34.50 0.96 1.85 1.11

2.25 23.98 27.40 13.19 64.97

0.00 0.03 0.17 -0.11 -0.03

3,000 19,195 179,447 1,775 1,504

23.34 8.20 3.80 4.20 8.65

23.34 8.20 3.90 4.25 8.65

0.00 0.00 0.00 0.05 0.00

2 2 6 8,650 10

1.40 0.55 1.26 20.15 1.16

1.40 0.55 1.30 20.98 1.35

0.00 -0.01 0.01 0.88 0.00

511 500 1,802 13,064 52

28.00 3.36 116.55 19.76 121.00

28.21 3.46 117.30 20.09 122.70

-0.69 -0.04 -4.31 -0.16 -3.98

220,500 629,500 165,000 55,000 454,500

100.00 76.31 68.00 29.25 12.30

-0.37 0.11 0.49 1.05 -0.44

2,094 1,113 10,200 7,001 14,060

100.00 75.99 67.99 28.00 12.00

10.95 34.50 1.00 2.00 1.17

10.70 34.00 0.89 1.82 1.05

10.74 34.50 0.90 1.88 1.06

-0.06 0.00 -0.06 0.03 -0.05

873,286 50 179,056 2,098,153 74,429

0.28 36.50 0.61 1.63 41.70

0.37 36.55 0.67 1.68 41.90

0.37 36.02 0.60 1.62 41.26

0.37 36.08 0.64 1.65 41.30

0.09 -0.42 0.03 0.02 -0.40

9,500 851,435 98,815 25,551 54,238

60.24 10.31 5.57 11.87 29.53

59.20 10.45 5.75 11.98 29.90

59.00 10.20 5.46 11.66 29.46

59.00 10.28 5.55 11.80 29.50

-1.24 -0.03 -0.02 -0.07 -0.03

6,927 25,619 422,339 805,934 182,086

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

oPen

hIGh

low CurrenT

ChAnGe

volume

Non Life Insurance 2.20 23.63 27.25 13.15 62.01

Electricity Genertech Hub Power Co. Japan Power K.E.S.C. Kot Addu Power

symBol

Adamjee Ins Ask.Gen.Insurance Atlas Insurance Cres.Star Insurance EFU General Ins

43.20 8.00 36.50 2.00 35.80

43.78 8.50 36.75 2.20 36.00

42.12 8.00 35.99 2.00 34.46

42.76 8.42 36.51 2.00 35.96

-0.44 0.42 0.01 0.00 0.16

13,373 1,218 1,993 1,065 747

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.32 16.30 15.17 1.00 0.80

0.02 0.00 -0.02 -0.25 -0.01

12,419 101 36,007 5,008 90,802

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

0.30 16.30 15.19 1.25 0.81

0.33 16.79 15.59 1.00 0.96

0.27 16.30 15.00 0.80 0.70

Equity Investment Instruments 1st.Fid.Leasing Mod Allied Rental Mod Atlas Fund of Fund B.R.R.Guardian Cres. Stand.Mod

1.63 21.64 5.78 2.24 0.42

1.60 21.64 5.90 2.32 0.44

1.60 20.90 5.78 1.92 0.37

1.60 21.64 5.85 2.24 0.44

-0.03 0.00 0.07 0.00 0.02

6,000 125 250,001 101 503

12.05 30.75 6.00 13.50 69.00 1.39 66.00 6.00 3.80 8.49 24.00 140.00 27.89 15.45 7.00 2.00 17.01 19.09 68.00 26.00 1.50 9.80

13.00 30.75 7.00 14.48 70.17 1.42 66.52 6.01 3.85 8.49 24.00 140.00 29.40 16.00 7.96 2.00 17.30 19.12 68.09 26.16 1.51 9.87

-0.02 -0.50 0.00 0.48 0.00 0.04 -1.14 -0.57 -0.14 0.01 0.00 0.00 0.05 -0.44 0.00 0.00 0.28 -0.09 -1.50 0.51 -0.02 0.10

602 783 1 2,557 12 226,773 5,760 1,054 6,714 3,586 30 808 36,111 3,501 310 52,513 15,194 14,935 4,725 811 66,831 96,401

Miscellaneous Century Paper Pak Paper Prod. Johnson & Philips P.N.S.C. Pak.Int.Con. SD TRG Pakistan Ltd. Murree Brewery Hala Enterprise Pak Elektron Ltd. Tariq Glass Ind. Grays of Cambridge Philip Morris Pak. Shifa Int.Hospitals Hum Network Ltd. Media Times Ltd P.I.A.C.(A) Sui North Gas Sui South Gas EFU Life Assur AKD Capital Ltd. Pace (Pak) Ltd. Netsol Technologies

13.02 31.25 7.00 14.00 70.17 1.38 67.66 6.58 3.99 8.48 24.00 140.00 29.35 16.44 7.96 2.00 17.02 19.21 69.59 25.65 1.53 9.77

13.25 31.96 7.00 14.50 70.17 1.45 69.00 6.01 4.05 8.68 24.50 140.00 29.98 17.44 7.96 2.11 17.50 19.50 70.25 26.93 1.67 9.99

Mutual Funds Fund

$99.11

volume

Fixed Line Telecommunication

Beverages Murree Brewery Co. Shezan Int’l

ChAnGe

Pharma and Bio Tech

Automobile and Parts Buy 88.20 116.77 136.97 1.1207 85.08 11.16 23.92 23.44 87.73

low CurrenT

Future Contracts

General Industrials Cherat Packaging ECOPACK Ltd Ghani Glass Ltd MACPAC Films Merit Pack

hIGh

Personal Goods

Construction and Materials Al-Abbas Cement Attock Cement Berger Paints Cherat Cement D.G.K.Cement

oPen

Household Goods

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

symBol

Food Producers 407.34 119.18 22.06 6.95 90.91

Industrial Engineering

Interbank Rates US Dollar UK Pound Japanese Yen Euro

oPen

Chemicals

Major Losers Siemens Pak Bhanero Tex. National Ref.XD Sanofi-Aventis Exide (PAK)

symBol

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

oﬀer 501.2900 114.7196 103.6501 100.6900 519.3500 519.0900 516.9700 453.1500 82.9800

repurchase 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500

nAv 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500

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

100.2768 87.0103 97.6745 101.8987 112.3545 121.5000 104.1200 0.0000

100.2768 85.3042 95.2922 100.8898 109.6141 111.5200 96.5000 0.0000

nAv 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087

Profit 01-12-2011_Layout 1 11/30/2011 11:53 PM Page 7

Thursday, 01 December, 2011

The newly concluded PakistanAfghanistan Transit Trade Agreement opens new horizons for enhancing bilateral economic cooperation

news

Federal Commerce minister, makhdoom Amin Fahim

NA committee to investigate 50 CNG licenses orders checking of degrees of oGrA oﬃcials g licensing checking done in light of letters sent to prime minister g

ISLAMABAD

AMER SIAL

Ot satisfied with transparency claims of Oil and Gas regulatory Authority (OGrA), a sub committee of national Assembly standing Committee on Petroleum is investigating into licenses of 466 CnG stations. relocation of 47 stations during banned period is also decided. And investigation into last 50 licenses, to ascertain whether they were awarded legally, will also take place. Meeting of the sub-committee was held under its convener sardar talib Hassan nakai. He ordered OGrA authorities to submit files of last 50 cases and the sub committee will look into each case whether procedure was followed or not. He said action would be taken against OGrA officials if any dis-

crepancies were found as they have all claimed that no illegal work was done. nakai said investigations were started after acting MD OGrA and its current member Mansoor Muzaffar told the committee that irregularities took place in new licenses. However, Mansoor Muzaffar said he made a misstatement, as he was not aware of the complete situation. He said despite ban on issuance of new licenses, provisional licenses will have to mature into marketing licenses. He said had then chairman provided policy guidelines there would have been no confusion. nakai said buck was being passed on former chairman. He said Mansoor Muzaffar has misguided committee with his statement which he has now changed. we are not clear as now all officials were claiming there were no irregularities. However the committee will proceed with case to case basis to

determine the truth. Founding Chairman of OGrA, Chaudhry Munir Ahmad was there to clarify the issue to members. He claimed best international practices were adopted to make OGrA an independent body. shahnaz sheikh of PML-Q countered his claims and said he had vast powers and twisted rules for granting licenses. However, he said, he retired as Chairman OGrA in september 2008, while licenses were issued in 2009 and 2010. Convener talib nakai pointed out that all the process for licensing was done in light of his letters that he sent to Prime Minister. Munir Ahmad said he had sought clarification from PM on the ban and he confirmed that it was implemented as per directions. Chaudhary Barjees tahir of PML-n said OGrA officials were misguiding them and were not ready to disclose irregularities. the only option available

sBP lures depositors to government securities KARACHI ISMAIL DILAWAR

before the committee was to proceed on case to case basis, he claimed. He said they had relocated 47 CnG stations and only mentioned one CnG station that was relocated on directives of Prime Minister for one parliamentarian riaz Hussain Peerzada. executive Director OGrA sarmad Aslam said relocation of 46 CnG stations were done under policy guidelines approved by cabinet division after first directive of PM. Committee also ordered checking of degrees of all OGrA officials and whether they met the criteria required against their present posts. shahnaz sheikh of PML-Q demanded verification of degrees as ex-MD OGrA was ordered to be sacked by supreme Court after his degree was found to be fake. she said registrar of OGrA was working illegally and he did not even have the required law degree. Despite repeated questions on whose recommendation the registrar was appointed, OGrA officials gave vague answers that he was on additional charge and working for the last four years and process was under way for appointing a qualified person.

Hubco owes Rs81 billion to PSO KARACHI JAVED MAhMooD

UBCO, the largest independent power producer in the country, owes a huge amount of rs81 billion to Pakistan state Oil on account of supply of fuel. in fact, wAPDA and national transmission and Dispatch Company Limited (ntDC), have withheld payment of over rs100 billion to Hubco that has left the company with no other choice, but to delay payment to PsO. wAPDA alone owes a massive amount of rs97.40 billion while ntDC is supposed to make payment of rs8.42 billion to Hubco. this has been disclosed in a research report of the Arif Habib research. Due to delayed payments from wAPDA and ntDC, Hubco was forced to avail its running finance facilities that

has put extra financial burden on the company. the company receives penal interest from wAPDA, at state Bank of Pakistan (sBP’s) discount rate plus 2 per cent per annum compounded semi-annually. in its 1QFY12 unconsolidated results, Hubco posted profit after tax of 1.241 billion, depicting flat Year-on-Year earnings. Although, gross profits improved by 61 per cent YoY but a massive 218 per cent growth in financial charges curbed the growth in company’s bottom line. this growth in financial charges was mainly led by 47 per cent YoY increase in short terms borrowings which settled at rs17.571 billion as of sept 11. During the period under review the Hub plant operated at an average load factor of 74 per cent whereas the plant availability stood at 87 per cent.

On the other hand narowal plant has been operated on an average load factor of 77 per cent with plant availability at 77.5 per cent. Both the plants generated total 2,377 Gwh of electricity in 1QFY12. Debt due to soaring circular-debt, the company’s financial cost increased by 218

per cent on year-on-year basis, from rs559 million to rs1,779 million in 1QFY12. Capital market analysts believe that company’s earnings will likely emanate from rising PCe component along with indexation factor (narowal expansion and Laraib Project,

operational commencement Jun’13 estimated). this in our opinion will likely push company’s earning to the tune of rs6,805 million (ePs: PKr 5.88) and will pay a dividend of rs5.9 per share in FY12. this will translate into a dividend yield of 16.0 per cent in FY12. According to the Power Purchase Agreement (PPA), company has a dollar based irr of 17.05 per cent whereas in Pakistani rupee term, company has an irr of 19.31 per cent. the analysts Dividend Discount Model (DDM) based target price for June 2012 works out to be rs49.9 per share, which offers an upside potential of 36 per cent from its last closing price of rs36.82 per share. Beside attractive upside potential, the stock offers FY12F dividend yield of 16 per cent, making it one of the best defensive play in the market.

eePinG the interest rate static at 12 per cent, central bank unveiled its highly “negative approach” of luring depositors to risk-free government debt securities. this, the analysts believe, means after leaving little or no liquidity with banks for the growth-oriented private sector, the central bank now wants individual investors to invest in government debt securities like Pakistan investment Bonds (PiBs), Market treasury Bills, ijara sukuk, etc to raise more budgetary funds for the cashstrapped government. Central bank, in its Monetary Policy Decision (MPD) for January and February, said it had been encouraging depositors to invest in government securities through investor’s Portfolio securities (iPs) accounts to promote competition in banking system and to offer alternative sources of savings to the population. the regulator said option of maintaining saving deposits or investments in iPs accounts could provide stiff competition to banks and hence forcing them to offer better returns on deposits. “this in turn would incentivise savings and help lower the currency in circulation,” it added. Moreover, the move would improve transmission of monetary policy changes to market interest rates, said sBP adding that over time this strategy would also diversify the government’s funding source, deepen secondary market of government securities, and facilitate issuance of corporate debt. “it’s a negative approach. if the banks really fail to compete with government savings, who is going to fund the all important private sector,” wondered Asfar Bin shahid. terming sBP’s decision of maintaining the discount rate at 12 percent as “rational”, the economist said aforementioned comment was “pretty odd” coming from governor of state Bank. “there are many other banks to offer better rates of return to the savers instead of inducing the savers to go and invest in government securities,” A.B shahid said. the economist said regulator should, instead, have planned other savings with commercial banking sector. “surely, sBP has effective communication with banking sector and can advise them to start offering better returns to savers rather than letting the government securities teach the banking sector a lesson,” shahid said. Other analysts also appeared critical of sBP’s revelation that it had been encouraging investment in government securities. they argued that the trend as a side effect would decrease economic activity in private sector. they said the funds-starved government was sucking enough of the banks’ money to cater its non-productive budgetary needs and should now diversify its financing sources.

Middle class, growth engine of Pakistan: seminar ISLAMABAD JALALUDDIN RUMI

AKistAn needs to take a leap frog from large scale industrialisation and focus on services sector as participation of middle class is contributing much more towards country’s growth. in the seminar organised by Planning Commission on the topic of “Businesses and the Middle Class in Pakistan” participants were of the view that countries with larger proportion of middle class have achieved exceptional economic growth despite the recent global recession in national economies throughout the world. shahid Javed Burki, former caretaker finance minister and vice President of world Bank said that for any country in the world middle class is the driving force of change and growth and in Pakistan’s case middle class is playing a pivotal role in progress of the country. He said that trend and ratio of acquiring higher

education in middle class of the country is much higher as compare to india and Bangladesh and inorder to tap this advantage; private sector of Pakistan can play its role. He said policy makers in Pakistan should also focus on the presence of Pakistan’s Diaspora residing outside the country and their role in changing trends and growth of Pakistan. Dr nadeem-ul-Haque, Deputy Chairman Planning Commission said middle class is supposed to be the driver of change and growth in any country. He said Planning Commission in its growth strategy has focused upon and urged for entrepreneurship, market development, and urban growth while focusing on cities which are engine of growth. Dr vaqar Ahmed, Head, inclusive Growth Unit, sustainable Development Policy institute (sDPi) said major chunk of this middle class is residing in urban areas as size of middle class in Pakistan ranges between 32 million to 80 million depending upon various methods of calculation. He warned that if middle class was not provided

with venues for channeling human capital and savings, then tendency of consumption expenditure will put sustainability of growth in danger. He discussed that middle class is mostly employed in civil and military services, and this class provides the major chunk in professional cadres such as engineering and medicine. Furthermore micro and macro barriers to entrepreneurship are holding back middle class from moving from wage to self employment. vaqar, while citing results from a recent Pakistan institute of Development economics (PiDe) study, explained that middle class is predominantly an urban phenomenon who lives and works in cities. referring to the size of middle class population in country, he said Pakistan has a bigger middle class as compared to its neighbours. He said that recent global trends that indicate that middle income countries are now drivers of global growth such as india and China, who have grown at a very faster pace. He deliberated that higher in-

come has led to higher household consumption in these countries where one sees a relative shift away from necessity items and towards choicedriven consumption. He said that declining growth rate in Pakistan is resulting into unemployment whereas no physical and intellectual space available to middle class. He stressed on urban growth and management to accommodate middle class in the country. He also recommended measures such as infrastructure and social sector governance, legal and judicial reforms for inclusive markets and efficiency of public expenditure through results based management. Afnan Ahsan, CeO of engro Foods said that middle class is the largest tax payee in the country and proving back bone of the country in growth. He said that in 2020, 70 percent of China’s total population would be from Middle class. He said that the government should provide sound base and do structural legislation for more opportunities for middle class.