Layout Profit 7 pages_Layout 1 11/12/2011 11:59 PM Page 1
Rebirth of a company: the Wateen story 2 The flat tax debate Page 3 Pakistan shipping corporation loses interest in $40 million loan Page 8 Pages: 8
profit.com.pk
Friday, 11 November, 2011
OGDC: Zin block too early to determine KARACHI
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Government has already imported 500,000 tonnes of urea during current year ISLAMABAD
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AMER SIAL
rading Corporation of Pakistan (TCP) has awarded contract for the import of 215,000 tonnes of urea even though the Economic Coordination Committee of the Cabinet (ECC) had granted it permission to import 700,000 tonnes of urea to bridge the deficit just before the commencement of wheat sowing in the country. an informed source said the red tape has delayed urea imports and the country was facing a difficult situation. With the start of wheat sowing season from november there will be an acute shortage of urea and there will be strong push from officers to do away with all regulatory mechanisms for swift imports. ECC had directed TCP to import urea on an urgent basis to help growers in sowing their wheat before the deadline of 15th december. The urea off-take in the current rabi season is expected to be more than 3 million tonnes. The fertiliser companies have low inventory as they faced an unprecedented natural gas shortage during the current year. according to the Sensitive Price index (SPi) there is an unprecedented increase of 113 per cent in the prices of urea. The price of urea has risen to rs1,770 per bag as compared to rs30 per bag in October last year. While there is another 55 per cent hike in daP prices which has increased from
rs2,705 per bag last year to rs4,189 per bag in October this year. Urea prices have increased from rs800 per bag to rs1,700 per bag over the last two years as compared to rs750 per bag increase in the last 32 years. Pakistan is faced with a gas supply shortage of 1 billion cubic feet per day during summers which mainly affected the fertiliser production and the shortage expected to double during the winters the supply to the fertiliser sector will be completely cut off for three months. The government will bridge the urea deficit by incurring a cost of $400 million on importing 700,000 tonnes of urea and will have to provide subsidy of rs26 billion on the cost and freight of price of $530 per tonne. TCP had awarded the contract for the import of urea at $538 per tonne cost and freight. The increase in urea
prices and low availability will directly impact its use by the farmers. Without a suitable support price the farmers will not take risk for using balanced fertiliser, as the high cost of production may not be compensated through the official support price. it is important to mention that urea is the major fertiliser used by farmers which meets 46 per cent of the nitrogen content. The industry estimates 90 per cent of recommended urea dosage was applied in 2010 which resulted in bumper wheat harvest of over 24 million tonnes last year. The country has annual urea demand of 6.5 million tonnes of urea which could be easily fulfilled by the local fertiliser industry having capacity to produce 6.9 million tonnes per annum provided they get feedstock gas supplies. The annual production for the current year is estimated to be 5 million tonnes with an estimated urea shortage of 1.3 million. The government has already imported 500,000 tonnes of urea during the current year.
STAFF REPORT
n recent days, the Zin block of the Oil and gas development Company (OgdC) has been in the limelight because of the potential it holds for eliminating gas curtailment, which has crippled the country’s industrial activity. it has had a positive impact on stock price of its operator, OgdC, which has outperformed the broader KSE100 index by 10 per cent in the last 6-trading sessions. “Though it is high profile, we continue to flag that it is as premature to coin Zin as a success story on account of field not entering the final testing stage,” viewed nauman Khan of Topline Securities. On the other hand, the analyst said volumetric impetus to OgdC’s FY12 growth story comes from commissioning of long-awaited KPdTaY integrated and Sinjhoro development projects along with augmented production flows from naspha and Tal blocks. He said the recent price rally had already factored in the likely increase in the company’s profit in FY12 along with the news of Zin discovery. as per latest Pakistan Petroleum information Services (PPiS) report, OgdC has reached the target depth of the exploratory well of the highly anticipated Zin Block. Furthermore, because of its close proximity to other major gas producing fields like Sui, Kandkhot and Uch, hopes were high of a potentially large size gas discovery from the field. “However, we would like to be less optimistic, as the final testing phase has not been completed. and thus, it is premature to dwell on the actual flow size from the field.” For this reason, the analyst said, we had not included any production flow from the block in our company’s valuation. “We believe major price trigger for the company are commissioning of stalled developmental programs of Sinjhoro and KPd&TYa. (Kunnar Pasahki deep – Tando allah Yar).” The 1st stage of both the stalled projects were expected to come online by the third quarter of FY12, which would cumulatively add 2,400 barrel per day and 115 million cubic feet of oil and gas, respectively, to OgdC’s production profile, Khan said.
EU hopes unanimous agreement on trade concession to Pakistan KARACHI
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STAFF REPORT
UrOPEan Union (EU), which is waiting for the approval of the proposed unilateral tariff preferences for Pakistan through getting a waver from the World Trade Organisation (WTO), for the last year, has hoped a unanimous agreement on the issue soon at WTO. Though the issue was vetoed by Bangladesh in recently held session of council for trade in goods (CTg) of WTO after india, the EU, appli-
cant of the move, has affirmed that it would like to consult with all members to approve the draft waver in the next session. according to the report of CTg meeting held on 7th november, the EU representative said in the meeting that it has done its best to respond to the consultations, but it was clear that some complexity remained. it would like to consult with members, and hoped for a unanimous agreement as soon as possible. EU recalled that almost a year ago it tabled its request for tariff preferences for Pakistan to help the country
recover from massive flooding. it has now submitted a revised request that takes into account the systemic concerns expressed by several members, and stressed that the measure is for two years only. United States and norway supported the EU request. Vietnam said its concerns had been addressed in bilateral talks, and that it was now ready to support the EU request. Morocco said it could support the EU request but would have preferred prior consultations with the EU since the waiver request covers textiles, a capital sector of its economy. Bangladesh, indonesia, Peru and
argentina said they were still studying the revised request, and requested more consultations with the EU. Brazil expressed reservations about the request and asked the EU for consultations on possible effects on Brazilian exports. according to the report, Pakistani representative informed the meeting that the revised EU request has made clear that this waiver would not be a precedent for the future. Thus it had addressed the systemic concerns of some members. Besides, the council has taken note of the statements and agreed to revert to this matter at its next meeting. it is
worth mentioning here that, earlier EU had put forward the draft bill in WTO for ‘waiver from gaTT articles i and Xiii’ concerning autonomous preferences for Pakistan. But no positive development emerged, even after six meetings of WTO since the European Council in its meeting on 16th September, 2010 decided to grant Pakistan special concessions to support its ailing economy in the wake of devastation sustained by the unprecedented floods. The total worth of these tariff lines was expected to be about $1.03 billion and the average tariff on these products around 8.86 per cent.
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Friday, 11 November, 2011
debate
Rebirth of a company: the Wateen story NAEEM ZAMINDAR, T HE Wateen job turned out to be one of those paradoxical interview assignments that make an editor’s job extremely difficult and pretty rewarding at the same time. and in hindsight it was for the better that this was not our usual ‘Lunch with Profit’ outing, or Fujiyama’s inviting sushi would’ve been left feeling just as ignored as the latte served at the CEO’s spacious office, and unfairly so. For, no sooner than we presented the mundane employee turnover, annual losses and company restructuring questions did Mr naeem Zamindar take us on a tangent, only to reconnect with telecom specifics, associating industry dynamics with wider social currents at play across the world.
ThE TURNAROUND sCRIPT Mr Zamindar finds interesting parallels between running a company relying predominantly on customer satisfaction and writing a stage play banking on audience appreciation. and the script of this particular narrative is ‘rebirth of a company’, an ambitious project especially since the first edition was eventually discarded by disappointed users after building quite a following in the early chapters. Luckily for the turnaround man, the breakdown owed more to general mismanagement and inability to translate the company’s long-term vision well enough for customers to stay loyal once initial rigidities began surfacing. There weren’t too many technical inefficiencies to speak of, which enabled him to focus more on identifying and enabling a vision befitting the outreach of the platform he seemingly volunteered to inherit. it is hardly surprising that Wateen began going seriously astray around the fateful fall of ’08, when macro financial contraction compromised the telecom industry on an international scale. also, much of its problems were typical of emirati enterprises of the time, name-staffing, ineffective human resource management and very loose monitoring and evaluation. So a simple return to fundamentals must not have been the most demanding task for an industry veteran of 20 years. His touch involves much finer details.
continents. Second, ensuring stable funding will be crucial. Even as the company turns to profitability, fine-tuning the balance sheet will take some time. and thirdly, it will invest in systems, adding value to lives.
IDEAL DEMOGRAPhICs; GENIUs FOR INTEGRATION it turns out that Pakistan’s current social and demographic state provides near-ideal ‘lab conditions’ for the CEO to experiment his vision for the company. approximately 60 per cent of the population is under 30 years old, the most tech-savvy segment of society. This group has been at the forefront of the communications revolution for more than a decade. in places not much different than our own country, this group has tapped the internet’s genius for integration to engineer serious deviations in social, political and historical narratives, upsetting a regressive status-quo that went back decades. it is this vibrant portion of the population that will be at the forefront of the Wateen miracle, first filling loopholes and overcoming bottlenecks that retard their progress and then elevating them to integrate with international crosscurrents on an equal footing. One of the most significant features of the revolution will comprise tackling fault lines in the national education system, with electronic devices connected through the fibre optic network making the current paralysed system redundant. The social spillover of such exercises can be ascertained to a large extent by linkages already formed by the mini mobile phone revolution of the last decade.
Technical compulsions of running and managing a large entity being one thing, it is the guiding vision that is most important, the rest automatically falls into place once a grand strategy is finalised and the will to implement it mustered
FIbRE-OPTIC REvOLUTION With innovation increasingly driving the world economy, particularly since the onset of the 21st century, fibre-optic technology is at the centre of the revolution integrating the world on an electronic platform. and with its own cable tv, six channels, longest fibre-optic and satellite network, Wateen is best placed to represent Pakistan in this ‘new world order’. a grand strategy envisioning nothing short of total transformation of society enabled by technological innovation has also been set in place. all that remains is tactical implementation of the new vision, meant to change Pakistan forever. On the micro level, this will be done in three phases. First, the organisation will be made more customer-focused and dynamic, probably a reaction to excesses of the past that derailed a very spirited initiative reaching out into three
PERsONAL sTORy; ThE ZEN INFLUENCE and here’s the most fascinating part of this stage play. Enjoying a pretty profitable career as a venture capitalist riding the dot com bubble in silicon valley, Mr Zamindar learned much from the subsequent market crash that decimated finance execs like himself in the early years of the new century. it was then that the exercise of finding value and opportunity in debris and collapse fashioned an integral part of his professional outlook. and it was then that he associated spiritual lessons of balance, harmony and assimilation with the grater conscious with the technical niceties of the telecom industry. in a mesmerising and animated sermon, Mr Zamindar explained how spiritual mantra regards the present time as a focal point in the larger narrative of the world. it
represents a crossroads where human beings as a whole must evolve to a higher paradigm, rendering much of the present system obsolete. For those that fall behind the curve in this epic transformation, the coming half decade or so will indeed spell apocalypse, those resistant to change being rubbished to the dustbin of history forever. He finds the telecom industry at the threshold of a similar existential evolution. not only will the sector be at the heart of mankind’s overall transformation to a more efficient and connected way of living, it will also undergo tremendous overhaul itself.
CEO WATEEN TELECOM
AGE OF AbUNDANCE; INFRAsTRUCTURE AND vALUE ADDITION g
The coming era will mark the age of abundance of knowledge. Machines will continue to get smarter than humans, and in addition to education, mobile technology will take over all financial, information transfer and communication services. Present systems will no longer matter, unlocking unprecedented productive capacity in entire economies. Even better, steps are under way to connect regional countries through fibre-optic technology. nature has provided Pakistan with a natural geographic lottery. it is the ideal gateway connecting many regional economies. Therefore, linkages are being formed with iran, afghanistan, China and india, tapping windfall transit opportunities in the process.
ThE JObs EFFECT
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One of the most interesting themes to come out of the brief interaction with naeem Zamindar was that technical compulsions of running and managing a large entity being one thing, it is the guiding vision that is most important, the rest automatically falls into place once a grand strategy is finalised and the will to implement it mustered. For making ambitious advances in the complicated yet fascinating world of fibre-optic technology, he cites the inspiring example of perhaps the greatest tech wizard of them all, the late great Steve Jobs, and takes a deep breath, staring into empty space, quoting from his famous address to Stanford graduates: Stay foolish, and stay hungry!
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With an MBa from France’s prestigious inSEad and over twenty years of progressive work experience in the field of telecommunications, Mr naeem Zamindar is the charming and vibrant chief executive of Wateen Telecom. Mr Zamindar attained his professional certification as a public accountant from the State of Washington, following his graduation from the University of Texas at austin with a Bachelor’s degree in Business administration. Mr Zamindar then joined KPMg Peat Marwick as an auditor, before going on to establish Comnet, Pakistan’s first cable TV operator, in 1992. Mr Zamindar’s first foray into mobile telecommunications came as a senior manager at Mobilink, where he held various roles, including financial controller and head of customer services. as one of the founding members of Mobilink and its key Strategy and Business development operative, Mr. Zamindar effectively demonstrated his leadership traits and strategic planning abilities as he propelled the company to become the telecom giant that it is. Following his MBa from inSEad, Mr Zamindar joined Silicon Valley venture capital firm inter Capital as a senior investment manager, focusing on fibre optic networks, as well as WiFi and WiMax. This experience proved invaluable when establishing Zamindar Capital, a firm that developed and provided consultative support to companies leveraging technology to leapfrog social and economic development. Coupled with Mr Zamindar’s subsequent stint as Mobilink’s head of broadband business, this provided Mr Zamindar with the strong knowledge base he now brings to Wateen’s operations. despite being a savvy businessman and keen entrepreneur, Mr Zamindar takes an extremely Zen approach to life. He is the founder and chairman of the Pakistan chapter of The art of Living Foundation, a multifaceted organisation that promotes holistic health, and meditates on a regular basis. as an individual who perfectly walks the tightrope between the fast-paced life of a successful entrepreneur and the meditative existence of a Zen master, Mr Zamindar is the perfect person to lead Wateen in its mission to become Pakistan’s leading lifestyle company. Mr Zamindar believes that the high speed broadband and modern day telecommunications have the capacity to not only connect us with one another and the world at large, but also to affect our lives and influence positive change.
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Friday, 11 November, 2011
EDITORIAL
The flat tax debate
Now Bangladesh
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aKiSTan’S trade concession at the EU seems an inherent nonstarter. Suddenly it seems all the effort behind cajoling new delhi into a more compromising posture, even throwing in the MFn concession for good measure, apparently risks going waste. Whether or not there have been behind-the-scenes discussions between delhi and dhaka, especially since the deal in no way impedes upon the latter’s trade position, is better taken up elsewhere in the press. But it bears noting that the EU gambit is time bound, and the more our neighbours delay progress, the more Pakistan loses out, with india perhaps the biggest winner, MFn and all. The pitfalls on the trade road ought to have taught some valuable lessons to our policymakers. Far from the ‘win-win’ euphoria of the Sharma-Fahim summit, we seem to have played into india’s hands yet again. This ‘one step forward, two steps back’ position is symptomatic of our relations with india of
late. Ever since the Musharraf days, when CBMs were all the rage, there was always reluctance on india’s side to reciprocate. Even the coveted MFn status, which india accorded Pakistan way back in ’96, was blunted by delhi’s carefully crafted non-tariff barriers. as regards trade, we will move away from puerile concerns once our export basket is no longer miniscule. We continue to rely on agriculture and related industry to comprise the bulk of our revenue base. as the world moves into production and value addition, we are already left far behind in the overall trade narrative. instead of falling on time-barred concessions, we must become proactive in enhancing export earnings. and the way to that is through increased production and manufacturing. and for that, the most pressing concern is energy shortfall, which is already largely responsible for underutilisation of capacity. Once we are self-sufficient, india and Bangladesh will be unable to exert downward pressure on our trade earnings.
Javed Gilani
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HErE is a rising crescendo in the US regarding a flat tax system – a policy of income tax which in principle assesses a single rate of tax for all – where pundits are criticising this exercise for its apparent flaw that it increases tax on the less privileged to reduce tax on the relatively wealthy. However, what we should analyse is that if flat tax was really a bad idea, then why is it that so many nations across the globe have worked to embrace it? When studied in detail, most countries that have managed the flat tax regime mainly in post communist countries of Eastern Europe, along with micro states across the globe, suggest that there are three fundamental reasons for their success. Firstly some states are relatively poor with negligible domestic capital, therefore they choose to drop rates mostly as a tool to attract foreign investors. Other countries are small and inefficient at raising revenue, therefore they cannot afford to employ a progressive tax regime. Lastly, some countries have battled with corruption and therefore give the rich a rate cut to induce them to pay any taxes at all. none of these conditions exist for the United States, therefore it is not clear why a flat tax rate is really needed. Those countries from the post communist era that adopted the flat tax regime including Estonia, Latvia, Lithuania, Macedonia, Ukraine amongst others, were lacking in investment capital. in these countries that are competing rigorously for foreign investment, a flat tax regime is a signal to investors that they are welcome, that they will be allowed to retain their
A progressive increase of tax burden on the poor while reducing tax obligations of the rich Civil servants resist cut in perks
Pakistan to miss wheat sowing target
Prime Minister Syed Yusuf raza gilani is said to approve or reject the monetisation package for cutting perks of the civil servants. it is a good step and i am glad that the government has finally realised that other than spending so much money on these perks, they can allocate the same money elsewhere in order to benefit Pakistan. But there has to be something done about the politicians etc as well. How about putting up an estimate of the privileges of the generals and politicians? after all, everyone in Pakistan knows that currently, no one else other than them is enjoying the most remuneration and perks.
There has been a great increase in the prices of fertilisers, seeds, electricity and pesticides along with the other input prices, which is why the farmers are reluctant to cultivate wheat. Similarly, the government is not even providing enough subsidies and high wheat support prices to the farmers, which is why the farmers are facing a lot of losses. These subsidies are without any doubt, going to the pockets of the ministers. if the government does not take immediate steps then we are very much likely to face a wheat production shortfall and the farmers will surely miss out on the wheat sowing target. it is time the government makes an efficient and effective plan to aid the farmers.
SAMAn SALeeM
SAjjAD ALI
wealth and earnings. according to an iMF report, flat tax is consequently less effective in countries that have a record of inward investment and abundance of capital. Therefore, when making an analysis of developed countries that we use as comparison, the flat tax regime has not been adopted by any and China is no exception in this case either. Other countries that have adopted the flat tax regime are micro states, including Seychelles, Jamaica, Tuvalu, Mauritius and others. The only exception to the micro states in this aspect is the state of Paraguay which adopted a flat tax system last year. Therefore, the analysis one can make from these cases is that in places where an effective progressive tax system cannot evolve owing to administrative limitations, as is the case with these micro states, a flat tax regime might actually make sense. Countries and states that are larger in size have the ability to design more equitable ways of raising tax revenues. Lastly, as mentioned before, if public institutions of a particular country are suffering the rot where oligarchs have made a habit of stealing with impunity, then a good way for the government to induce the rich to pay taxes would be to introduce the flat tax regime. Therefore in the year 2001, the russians became the first nation to induce the flat tax system to overcome the crises of corruption and tax evasion. What can be understood when studied in detail is that almost in all countries that have adopted the flat tax, government revenues from income tax have relatively decreased. That is why the adoption of the flat tax is simultaneously coupled with an increase in value added tax rates, something that was implemented by Eastern European countries. Most importantly, it needs to be understood that republican presidential candidate Herman Cain’s “9-9-9” plan is demanding the implementation of a nine per cent rate of personal and corporate tax, along with nine per cent national sales tax. What we can decipher from this is – something the gods have suspected for a long time now while hoping it was not true – that america is now like a school boy who has run out of luck and pocket money, broke, struggling for inward investment, ill governed, and run by a bunch of self interested oligarchic bourgeoisie. The writer is a seasoned banker with more than 30 years of experience and is currently chief manager SME bank.
kARAchI
ISLAMAbAd
shARI’A MATTERs
Leasing in Islam
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Humayon Dar
HE baseline rule in shari'a is that only those assets that have an inherent usufruct can be leased with the condition that the leased asset is used only for shari’a compliant activities. according to jurists, the lessor and lessee must agree on the lessee benefiting from the usufruct and that the leased asset must have that usufruct. according to the Shafi'i school of thought, it is not sufficient to agree upon benefiting from the inherent usufruct of the asset, rather they require further specifica-
tions as to what extent and what manner the lessee may benefit. imam abu Yousuf and some later Hanafis are more liberal when it comes to the conditions of a lease. according to them, the two parties can lease an asset as long as it has a usufruct, without having to specify in detail its exact usage. There are two leasing-based contracts under use in contemporary islamic banking & finance: ijara and ijara wa iqtina'. it is preferred that the lessor must have the asset to be leased at the time of entering into the lease contract. However, this is only a preference and not a strict requirement, as it is acceptable for someone to enter into a lease agreement with another party before it acquires the asset to be leased. However, it is required of the lessor to acquire the asset before the actual lease period starts and make it available to the lessee. The issue of possession may follow from ownership but it is possible for someone to legitimately possess an asset. For example,
an agent may hold an asset on behalf of a principal who has instructed him to lease the asset to a third party. The baseline rule is that the lessor must possess the asset to be leased before the actual lease period starts, whether as a principal or an agent or even in some other cases. There are many Western-educated Muslim economists who argue that interest is nothing but rent for renting money to someone for a specified period. as leasing or renting is acceptable in islam, so should be the lending of money for a return. This reasoning is based on a lack of understanding of the treatment of leasing in islam. applications of leasing in modern islamic banking and finance are abound. On a retail level, some islamic banks offer auto financing on the basis of leasing. There are some leasing-based home financing products as well. The most widely practiced use of leasing in capital markets is that of a leasing-based sukuk. While all these products broadly follow
shAhAb JAFRy Business Editor
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Use of ijara wa iqtina' as a financial lease is problematic from a shari'a viewpoint
shari'a requirements, there is one area that needs re-thinking and improvement, i.e. with regards to the responsibility of ongoing maintenance of the leased asset. in order to understand this point more adequately, we may use an example. a bank buys a car from the market for the price of £50,000 and leases it to a client for a period of five years for a monthly rental of £1,000. if this lease is part of a hire purchase deal, then the bank must undertakes to sell the leased asset to the lessee for an agreed price once the lease period has lapsed and the lessee has fulfilled all its obligations. The lessee in turn undertakes to purchase the car for a price, from the lessor if the former is in breach of the lease contract during the lease period. The price is normally determined by a formula based on the amount outstanding in favour of the lessor
pursuant to the lease agreement and a profit margin. during the lease period and before the leased asset is sold to the lessee, the responsibility of maintenance remains with the owner. However, in practice this is given to the lessee by way of a service agreement between the lessor and the lessee. The estimated maintenance charges are included in the rental agreed in the lease agreement. it appears as if the use of ijara wa iqtina' as a financial lease is problematic from a shari'a viewpoint. it is indeed a complicated structure but the way it is practiced by islamic banks by and large fulfils the generally acceptable shari’a requirements. The writer, PhD (Cambridge), is a Shari'a Advisor and Chairman of Edbiz Consulting Limited. He can be contacted at hdar@edbizconsulting.com
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Friday, 11 November, 2011
news
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We feel that these students also deserve an opportunity, just like college students
CEO Pak-Qatar insurance, Ahmed Pervaiz explaining the need for hiring seminary students
EID UL AZHA
ANIMAL SACRIFICE BIG BOOST TO DYING LEATHER INDUSTRY ANALYSIS FARAkh ShAhzAd
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fair number of Pakistanis who collectively slaughtered 5 million goats and 2 million cows on Eid ul adha last year remained unable to perform the ritual this time due to increased poverty, surging inflation and high cost of living. according to surveys, this year witnessed 25-30 per cent decline in the number of slaughtered animals as compared to last year. The flip side is that the leather industry which is struggling due to shortage of raw material in the local market is upset due to lower figures of animals slaughtered on Eid which provides the biggest quantity of animal hides to the industry. it is unfortunate that the yield of animal hides which is the only raw material for leather industry is declining year by year. The value added exports of leather market that have amounted to more than one billion dollars has significantly decreased since the last three years. during fiscal year 2007-08, the country's export of leather goods stood at $1.15 billion, during 2008-09 at $943 million and during 2009-10 Pakistan's leather goods exports witnessed a further decline to $860 million. The declining trend in the exports of leather products is alarming but the bitter fact that is more alarming is that we are losing to our competitors in the global markets. For example, in 2009-10 the sector faced a sharp decline of 28 per cent in leather goods export, while on the other hand indian exports of the same commodity witnessed a 26 per cent increase during the same period. according to a Federal Bureau of Statistics report, Pakistan's second biggest export-earning segment, leather and leather goods, witnessed an 18 per cent fall during July-June 2009-10, as against the same period last year. during 2009-10 the country's leather exports went down by about 7.57 per cent, leather garments exports declined by 12.53 per cent, exports of leather
gloves fell by 37 per cent and exports of other leather-based goods declined by about 31.60 per cent. The leather industry has a long-standing demand to ban live animal export to afghanistan and iran, saying that this causes acute shortage of skins – a basic raw material of the leather industry. The ministry of commerce issued a notification in august which said that the government had placed a ban on the export of live animals along with meat exports. But, after a gap of five hours, the ministry issued another notification saying that it was just a proposal and the final decision will be taken by the Economic Coordination Committee (ECC). The leather industry wants a complete ban on export of livestock. Contrary to the leather industry’s interests, there are also a significant number of businessmen who hope to make a living in the livestock and meat export business. Which industry will get its wishes fulfilled is anybody’s guess as the ministry of commerce has sent the proposal of banning live animal exports to the ECC. Pakistan Tanners association (PTa) says that the government should immediately ban live animal export to western and neighbouring countries. The tanners are not against the export of meat as this has little impact on the availability of skins which remain in the country. The leather goods exporters are unanimous that the leather industry is primarily hurt by the exports of live animals and not by growing meat exports. analysts say that when we export a live animal, it means we are giving away the animal hide for free which has pushed the local leather industry to the verge of collapse. it is pertinent to note that we can double the amount of foreign exchange by prudent export strategy through the export of mutton and finished leather. The prime benefit of this policy is to create employment for thousands of skilled workers in value added industry dealing with tanning and leather product manufacturing. There is yet a bigger challenge faced by our leather industry that is more serious than animal export. The smuggling of ani-
mals to iran and afghanistan has increased manifolds due to laxity of law enforcement agencies. government authorities have acknowledged that huge numbers of live animals are being smuggled to afghanistan and iran. according to statistics, Pakistan exported over $53 million of meat and meat preparations during the year 2011. This is the tip of an iceberg as compared to the illegal money earned from the smuggling of animals. according to rough estimates, live animals worth over $500 million are smuggled out of Pakistan every year which is 10 times of our meat exports. Pakistan is now earning huge foreign exchange from its packaged meat exports to Middle East region due to its geographical proximity to the arab world. This industry should be encouraged so that we can grow our market share in growing Middle Eastern markets. The promotion of mutton export automatically means the promotion of local leather industry due to increased supply of raw material. Leather industry is solely dependent
on local raw material and according to careful estimates currently there are over 1,000 registered and unregistered leather units in Pakistan mostly located in Lahore, Kasur and Multan. giving the reasons behind declining trend in the export of leather products, the leather stakeholders say that shortage of raw material is mainly due to smuggling of at least 100 trucks loaded with livestock/cattle to afghanistan and iran every month. in addition to that hundreds of animals are also reportedly sent to Middle East by boats. Moreover, thousands of animals have perished during two major floods in Pakistan which has aggravated the shortage. Eid ul adha is a good opportunity to resuscitate the dying leather industry owing to an inflow of 5 million cow skins and 2 million goat skins during Eid to the raw material market of the leather industry. Leather market sources say that an average price of a goat skin is rs500/ whereas a cow skin fetches around rs4,500/.
LCCI urges govt to tackle financial instability LAHORe STAFF REPORT
L
aHOrE Chamber of Commerce and industry urged the government to prepare a fool proof, well designed and well thought out strategy to avert downward spiral of financial instability that is currently sweeping the euro zone. in an issued statement, the LCCi President, irfan Qaiser Sheikh said that the present economic situation being faced by the country needs urgent measures as the shocks caused by the deepening debt crisis in Europe is likely to create ripples for a developing country like Pakistan. "if we do not act now, the economy will run the risk of a downward spiral of uncertainty, financial instability," he said. The LCCi President said that an appropriate economic roadmap backed by a well thought out implementation and monitoring mechanism, is a prerequisite to economic revival of the country. The two sides, the government and the private sector would have to sit together as early as possible to achieve this much cherished goal. He said that the private sector has the ability to make this country a hub of economic activities. irfan Qaiser Sheikh said that the fact remains that Pakistan is faced with multiple internal and external challenges. The economy is in bad shape and the law and order situation are deteriorating. There are issues of governance because of which we are sinking slowly, but surely. He said that at the international front, the country’s image is plunging with every passing day. its goods are fast becoming uncompetitive while foreign investors are reluctant to even visit this country. The LCCi President said that despite having all the resources, Pakistani businessmen are fast losing hope because of the high costs associated with the business. There is a daily upward fluctuation in the prices of inputs and high markup rather the highest one, not only in the developing world but also in the developed countries. He said that the President of Pakistan, the Prime Minister, the governors, the Chief Ministers, the Federal and Provincial cabinets and all the leading Chambers of Commerce need to have a joint sitting in order to identify the solutions of the problems being faced by the country since the time is running out. He said that if the situation remains the same for quite some time, a large number of businessmen would not be able to pay their dues to the banks and would be bound to default.
KSE remains stable despite wary investor sentiments KARACHI STAFF REPORT
L
OCaL bourse trailed regional peers in today’s session as trading commenced amidst wary sentiments after the prolonged Eid holidays. as italy replaced greece at the center of European debt crisis, fear of a split in the euro-zone kept global equities under pressure. investor participation remained dismal with 49 million shares traded during the day as the benchmark index could not sustain 12K level amidst profit taking. Since local fundamentals remain mostly impervious to the latest development in euro-zone, the reaction at the local bourse appears transitory. Positive news flows especially in energy sector indicating speedy resolution of circular debt depict possible re-rating in the sector thus positively influencing the overall index’s performance in the intermediate term. The KSE 100 index closed at 11969.05 levels with the gain of 11.75 points, while KSE 30 index gained 7.81 points to close at 11300.38 levels. all Share index closed at 8281.27 levels after gaining 7.10 points. Total 96 scrips advanced 108 de-
clined and 110 remain unchanged out of total 314 scrips traded. The local bourse, on syndicated efforts energised by positive developments, restructuring of maturing T-bills and meeting of Pak-india leadership, successfully resisted otherwise an extensive decline, mainly on the fierce meltdown in international and regional equities and commodities. The index failed to sustain the initial low volume high of 12000, supported by OgdC and MCB. The stocks contributed almost 40 points to the benchmark 100, for it too managed an unchanged status on closing besides keeping the benchmark in brown zone during the closing hour. issuance of bonds and T-bills to offset interest receivables of the local banks did inspire the accumulators to adopt an aggressive stance, as the step will create space for financing to the OMCs and iPPs, although the plan to settle circular debt by securing loans from international lenders seems far fetched. Since LOC from iMF stays a major pre requisite, the financial transaction executed will provide some breathing space to the mentioned beneficiaries, thus keeping the interest in banking stocks alive. Cued up
sellers on strength following the old saying “act on rumors and react on news” however, disallowed the sector stocks as well as various high priced stocks from staging a rally, thus leading to a weaker market. This was reflected by low volumes despite news flash suggesting improved relations with india. The propagation did inspire snap rallies in frontline cement and textile stocks, absence of follow-up however disallowed aggressive display despite corporate participation, thus forcing the
strength to defuse after change of hands on strength. Therefore, stagnation invited low volume price erosion during the closing hour. Fauji group stocks from the fertiliser sector undoubtedly led the market during early hours inviting renewed buying after staying under correction phase for quite a few sessions. The junior partner lost steam quite early while range bound activity and lack of interest disallowed the elder brother FFC to find consolidation on strength. “The stock however managed to stay
in green zone, while Engro on fears of gas supply and high debt portfolio witnessed off-loading from various quarters, thus keeping the stock under pressure. Covering purchases however did allow the stock to resist bottom lock and managed to trade around lower trajectory for most part of the session, while fears of low volume price erosion mainly due to shallowness kept the likely entrants in search of panic sell, caution was therefore quite evident,” said Hasnain asghar ali at aziz Fida Husein.
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Friday, 11 November, 2011
We have gone pretty far in what we can do but there is not much more that can be expected from us
news
ECb Governing Council Member Klaas Knot
Italy eyes unity cabinet as EU dithers on crisis ReUTeRS
i
ROME
TaLY moved closer to a national unity government on Thursday, following greece's lead in seeking a respected veteran European technocrat to pilot painful economic reforms in an effort to avert a euro zone bond market meltdown. after four days of chaotic haggling, former European Central Bank vice-president Lucas Papademos was appointed to head an interim crisis cabinet charged with saving greece from default, bankruptcy and an exit from the euro zone. in rome, former European Commissioner Mario Monti emerged as favorite to replace italian Prime Minister Silvio Berlusconi within days and lead an emergency government that would implement long delayed reforms of pensions, labor markets and business regulation. Political and economic turmoil in italy has spurred fears of a possible break-up of the euro zone with borrowing costs for Europe's third biggest economy at unsustainable levels and the 17-nation currency bloc unable to afford a bailout. german Chancellor angela Merkel, Europe's main paymaster, called for broad political support for reforms in greece and said she believed italy was winning back confidence, but political clarity was still needed in rome. She rejected talk of a possible shrinking of the currency area, saying: "We only have one goal, that is to bring about a stabilization of the euro zone in its current form." European Union officials continued to dither and pass the buck on how best to fight the worsening sovereign debt crisis. Three senior ECB policymakers rebuffed pressure from investors and foreign governments to intervene massively as a lender of last resort on bond markets to shield italy and Spain from rapidly spreading financial contagion.
"We have gone pretty far in what we can do but there is not much more that can be expected from us. it is now up to the governments," ECB governing council member Klaas Knot told the dutch parliament. Knot, who is also dutch central bank chief, said bond-buying only had a temporary effect. The ECB has bought more than 180 billion euros of peripheral euro zone bonds and traders said it was active again in the market on Thursday, but the purchases have failed to lower borrowing costs durably. Stepping up the scale of bond-buying would eventually force the ECB to start printing money with the risk of stoking inflation, which was why the EU treaty had excluded such action, Knot said. ECB executive board member Peter Praet said it was not the task of the central bank to intervene "when there are fundamental doubts about the sustainability of some countries". Outgoing ECB chief economist Juergen Stark earlier rejected calls for the ECB to act as lender of last resort like the U.S. Federal reserve or the Bank of England. in Brussels, a euro zone official said there were no plans to use the bloc's 440-billion-euro ($600 billion) rescue fund to help italy, even with a precautionary credit line. "Financial assistance is not in the cards," the official said. a second official said: "The ECB will be drawn like every one else by the weight of gravity (to act)."
MARKETS STEADIER
italian 10-year bond yields steadied at around 7 percent, a level seen as unquestionable in the long term, due to signs that the political deadlock may be easing. rome paid less to sell 1-year treasury bills than many had feared. Sources in Berlusconi's conservative PdL party said he was now convinced it would be better not to call elections at the moment, an abrupt reversal. The billionaire media magnate has agreed to resign within days after parliament approves long de-
layed economic reforms demanded by European partners. PdL parliamentary floor leader Fabrizio Cicchitto said the party was considering backing a unity government led by Monti, a respected economist favored by the center-left opposition. Berlusconi's populist coalition partner, the northern League, said it would not support a Monti government. Monti, 68, was appointed a senator for life on Wednesday in a move that appeared to prefigure his possible rise to the premiership, but he has made no public statement and it is unclear what conditions he may set for taking office. in athens, Papademos said after agreeing to head a crisis coalition: "The greek economy is facing huge problems despite the efforts undertaken. "The choices we will make will be decisive for the greek people. The path will not be easy but i am convinced the problems will be resolved faster and at a smaller cost if there is unity, understanding and prudence." The euro rose from a one-month low and world stocks inched up on hopes that new governments being formed in italy and greece could help fend off a euro zone break-up.
SMALLER EURO ZONE DENIED
Merkel, French officials and the EU's executive Commission all tried to quash talk of a possible shrinking of the euro area, although they raised the possibility last week that greece might leave the single currency. EU sources told reuters that French and german officials had held informal discussions on a twospeed Europe with a more tightly integrated and possibly smaller euro zone and a looser outer circle. The discussions among senior policymakers, still in the realms of the theoretical, have focused on how to protect the euro zone from breaking up via tighter common policies which some members may by unable or unwilling to live with. European Commission President
Jose Manuel Barroso issued a stark warning of the dangers of a split in the European Union. "There cannot be peace and prosperity in the north or in the West of Europe, if there is no peace and prosperity in the South or in the East," Barroso said in a speech in Berlin. Merkel called on Wednesday for changes in EU treaties after French President nicolas Sarkozy advocated a two-speed Europe in which euro zone countries accelerate and deepen integration while an expanding group outside the currency bloc stays more loosely connected. The head of the international Monetary Fund called for political clarity in efforts to tackle italy's debt crisis, warning that the world could face a "lost decade" if Europe's problems were not tackled boldly. Uncertainty around who would succeed Berlusconi was fuelling market volatility, Christine Lagarde said on a visit to China. "no one exactly understands who is going to come out as the leader. That confusion is particularly conducive to volatility," she told a news conference in Beijing. "Political clarity is conducive to more stability and my objective from the Fund's point of view is better and more stability." a senior g20 source said the idea of convening an emergency meeting of finance ministers of the world's leading economies to discuss support measures for the euro zone before the French presidency ends at the end of the year had been dropped. They would meet next in Mexico in February. Euro zone finance ministers agreed on Monday on a road map for leveraging the currency bloc's rescue fund to shield larger economies like italy and Spain from a possible greek default. But markets are running faster than policy and there are deep doubts about the efficacy of those complex leveraging plans, and with italy's debt totaling around 1.9 trillion euros even a larger bailout fund could struggle to cope.
‘WORLD’S POOREST 137 MILLION RECEIVED MICRO LOANS IN 2010’ ISLAMABAD STAFF REPORT
M
OrE than 137.5 million of the world’s poorest families received a micro loan in 2010, an all-time high, according to a report released by the Microcredit Summit Campaign (MSC) on Thursday. The report’s release precedes the global Microcredit Summit to be held in Valladolid, Spain on november 14-17. The summit will be inaugurated by Queen Sofía and grameen Bank founder, Muhammad Yunus. at the first Microcredit Summit in 1997, only 7.6 million of the world’s poorest families had been reached. While the growth in numbers has been inspiring, we must keep our attention on the wisdom of the clients. The report tells us that when asked what they want for themselves and their families, their answers include, ‘education for their children,
health for their family, decent housing that keeps the rain and cold out, and regular, nutritious meals.’ This is what we will pursue when we gather at the Microcredit Summit in Valladolid”, Prof Yunus said. assuming an average of five persons per family, these 137.5 million micro loans affected more than 687 million family members, which is greater than the combined populations of the European Union and russia. Micro loans are used to help people living in poverty in both industrialised and developing countries to expand a range of small businesses, such as selling products in a local market, making clothes, and providing computer and other business services in rural areas. as a strategic partner of MSC, Pakistan Poverty alleviation Fund (PPaF) supports the work of MSC in Pakistan. PPaF works closely with MSC for inclusive and improved financial services to the underserved.
Since its inception, PPaF has disbursed more than $775 million through 4.7 million microcredit loans. Currently, almost 45 per cent of Pakistan’s 2.1 million borrowers are financed by PPaF through its 52 partner organisations in 92 districts across the country. While more than 205 million people worldwide received a micro loan in 2010, this multi-year campaign focuses on outreach to the poorest clients. according to the report, over the last 13 years, the number of very poor families with a micro loan has grown more than 18fold from 7.6 million in 1997 to 137.5 million in 2010. The latest data comes from more than 3,600 institutions worldwide, with more than 94 percent of the information having been collected within the last 18 months. The report also highlights the number of poorest women
reached. not only have these women been excluded from traditional banking, but they are also the ones most likely to ensure that the increased income is used to improve the lives of their children. From 1999 to 2010, the number of poorest women reached has increased from 10.3 million to 113.1 million. MSC aims to reach 175 million of the world’s poorest families by 2015 and ensure that 100 million of those families move above the World Bank’s $1.25-a-day poverty threshold. MSC is a project of rESULTS Educational Fund, a U.S.-based advocacy organisation committed to creating the will to eliminate poverty. The campaign was launched in 1997 and, in 2007, surpassed its original goal of reaching 100 million poorest families with credit for selfemployment and other financial and business services.
05
CORPORATE CORNER 6th Jazz sMs khazana awards 50 tolas of gold
Lahore: Mobilink has announced the grand prize winner of the 6th Jazz SMS Khazana offer who was awarded 50 tolas of gold as grand prize. The Jazz SMS Khazana has been one of the most heavily participated SMS campaigns in Pakistan. The winner of the grand prize, Mr Javaid, a resident of Lahore, was overwhelmed at the occasion, saying, “SMS Khazana has changed my life and has made all my dreams come true. i am extremely thankful to Mobilink and Jazz for giving me an opportunity to win this amazing prize.” PRESS RELEASE
samsung brings smartphone for the youth - Galaxy y Lahore: Samsung electronics, a global leader in digital media, telecommunications and convergence technologies, has launched galaxy–Y. This is an innovative smartphone, customised to suit the communication needs and budget of the youth. The Samsung S5360 galaxy Y promises the android experience at a bargain. it has a highly economical price with amazing features. Moreover, the android market also offers plenty of games, handy tools and productivity apps for the galaxy Y users. Samsung Pakistan’s Managing director, Mr Hee Chang Yee said, “Using the advanced technologies in the smartphone market, Samsung electronics will enable the young consumers to enjoy a smart life with the galaxy Y smartphone.” PRESS RELEASE
silkbank announces ‘swipe, spend and Gain’ promotion for debit cardholders Karachi: Silkbank has launched its latest promotional scheme, “Swipe, Spend and gain” which offers exciting perks to the users of Silkbank’s visa debit card. Through this scheme the visa debit card users will enjoy guaranteed 5 per cent cash back on all retail transactions of rs500 or above within or outside Pakistan and win fabulous prizes through monthly lucky draws. Expressing his views about this new scheme, Country Manager, Pakistan and afghanistan, ViSa, Mr amer Pasha said, “The programme was developed in response to the growing need for tailored products in Pakistan and so we decided to reward the customers for their preference of Visa debit Cards.” PRESS RELEASE
kARAchI: The consul General of UAE and dean of the diplomatic corp, Mr Suhail bin Matar Al ketbi, presenting a traditional silver shield to the out going consul General of Afghanistan, Mr Abdul Ahad khaliqyar, at a simple ceremony at UAE consulate premises. PRESS RELEASE
kARAchI: The honorary consul General of Morocco, Mr Ishtiaq baig hosted a dinner in honour of the newly arrived diplomats, consul General of Turkey Mr Murat Mustafa Onart, and consul General of Germany, dr and Mrs Tilo klinner, at his residence. PRESS RELEASE
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Friday, 11 November, 2011
06 Markets top 10 sectors
55% 11% 10% 05% 07%
Chemicals
01% 01% 02% 10% 01%
Food Producers
Construction & Materials Electricity Banks
Fixed Line Telecommunication
Oil & Gas
Financial Services
Personal Goods
General Industrials
STOCK MARKET HIGHLIGHTS Index 11969.05 3171.71 2656
KSE-100 LSE-25 ISE-10
Change +11.75 -24.7 +13.75
Volume 43,892,446 969,974 68,550
Market Value 3,230,255,806 46,949,351 2,860,239
Major Gainers Company Unilever Pak Foods Bhanero Tex.XD MCB Bank Ltd Linde Pakistan Ltd. National FoodsXD
Open 1673.33 229.00 155.77 100.00 58.56
High 1690.00 235.00 161.50 104.35 61.48
Low 1689.99 235.00 156.10 100.04 59.11
Close 1690.00 229.00 160.41 102.84 61.34
Change Turnover 16.67 20 0.00 30 4.64 1,363,637 2.84 410 2.78 710
3197.87 427.00 2651.00 138.09 5850.00
3100.00 405.10 2501.09 129.85 5328.09
3161.93 415.68 2600.16 131.49 5624.93
9.78 -9.06 -4.70 -4.35 21.33
Major Losers Nestle Pakistan Attock Petroleum Rafhan Product Engro Corporation UniLever Pak Ltd.
top 5 perForMers sector wise syMbOL
OPEN
hIGh
LOW CURRENT
ChANGE
vOLUME
404.69 120.40 6.98 93.80 334.90
396.00 116.10 6.75 89.30 308.94
396.87 117.57 6.77 92.03 310.82
-6.98 -1.21 -0.12 1.02 -14.37
61,485 833,559 399,510 91,674 314,938
15.00 31.05 71.99 143.49 40.80
14.00 29.29 65.17 137.50 37.06
15.00 29.30 70.64 139.79 37.39
0.00 -1.53 2.05 -0.90 -1.57
1,500 2,485,646 855 4,017 244,529
Oil and Gas Attock PetroleumXD Attock Ref.XD Byco Petroleum Mari Gas Co.XB National Ref.XD
403.85 118.78 6.89 91.01 325.19
131 90,668 803 3,902,316 5
Agritech Ltd. Arif Habib CoXDXB SD Biafo IndustriesXD Clariant Pakistan Dawood Hercules
15.00 30.83 68.59 140.69 38.96
Volume Leaders Bank Al-Falah National Bank Engro Corp Arif Habib SD Fauji Fertilizer
11.47 45.17 135.84 31.51 181.93
11.95 46.20 138.09 31.98 186.30
11.30 44.56 129.85 30.92 179.80
11.74 44.89 131.49 31.10 182.64
0.27 6,414,600 -0.28 4,395,422 -4.35 3,902,316 -0.413 766,883 0.71 2,863,727
Bullion Market Gold 24K Gold 22K Silver (Tezabi) Silver (Thobi)
Per Tola (PKR) 57,482.00 51,608.00 1,098.00 1025.00
Per 10 Gm (PKR) 49,334.00 44,245.00 942.00 880.00
Per Ounce US$ 1,772.00 – 35.05 –
Interbank Rates US Dollar UK Pound Japanese Yen Euro
23.25 1.41 8.60 34.00 11.00
23.59 1.45 9.00 34.50 11.00
-0.31 0.00 0.07 -0.48 -0.56
Al-Abbas Cement Attock CementXD Berger Paints Bestway Cement Cherat Cement
2.00 51.11 11.79 8.11 7.66
29.62 2.49 41.17 7.72 22.00
Buy 86.00 116.88 136.35 1.0894 84.03 10.85 23.28 22.75
Sell 86.70 118.99 138.70 1.1109 87.83 11.18 23.61 23.11
Brent Crude Oil
$112.31
6.93 184.30 28.50 7.00 108.00
2.00 51.99 12.00 9.11 8.19
1.90 50.81 11.60 8.11 7.50
1.92 51.02 11.91 8.11 8.01
-0.08 -0.09 0.12 0.00 0.35
26,799 108,952 4,762 100 197,042
58.00 169.52 117.00 2.63 168.53
30.40 3.25 42.00 7.95 22.00
28.14 2.21 39.12 7.01 20.95
28.14 3.08 39.60 7.65 22.00
-1.48 0.59 -1.57 -0.07 0.00
14,022 614,084 16,802 993 70
8.00 1.75 23.52 28.10 11.58
8.00 1.75 23.90 28.50 11.70
7.90 184.30 28.50 6.90 108.00
6.93 184.30 28.25 6.25 102.60
58.00 170.00 118.00 2.79 169.99
0.00 0.00 -0.24 -0.30 0.00
10 90 5,055 5,004 2
58.00 168.94 117.94 2.51 168.53
0.00 -0.58 0.94 -0.12 0.00
2,000 240 302 39,802 31
109.00 111.18 145.05 145.58
0.69 -4.44
1,170 203
58.00 168.50 117.00 2.43 168.53
110.49 111.43 150.02 150.00
(Colony) Thal AL-Qadir Textile Amtex Limited Annoor Textile Artistic Denim XD
1.70 11.25 1.67 13.00 18.50
1.11 11.25 1.70 14.00 18.50
AHCL-NOV AHCL-OCT ANL-OCT ATRL-NOV ATRL-OCT
31.00 30.82 4.01 120.42 119.16
31.00 30.82 4.25 121.50 120.30
Abbott Laboratories Ferozsons (Lab) Ltd. GlaxoSmithKline Pak. Highnoon (Lab) IBL HealthCare XD
102.49 80.00 68.92 28.09 10.92
103.00 80.00 68.26 28.09 11.92
6.93 184.30 28.26 6.70 108.00
P.T.C.L.A Pak Datacom LtdXD Telecard Limited Wateen Telecom Ltd WorldCall Telecom
10.89 35.03 0.95 .68 1.13
10.98 34.01 1.00 1.70 1.19
P.T.C.L.A Pak Datacom Ltd. Telecard Limited Wateen Telecom Ltd WorldCall Telecom
11.47 31.65 1.09 1.51 1.32
8.00 1.74 22.54 27.88 11.50
0.00 -0.01 -0.98 -0.22 -0.08
53 23,501 91,748 70,820 2,995
1.11 11.25 1.45 14.00 18.25
1.11 11.25 1.60 14.00 18.49
-0.59 0.00 -0.07 1.00 -0.01
1,000 500 132,822 1,000 1,049
29.45 29.28 3.90 117.90 116.50
29.51 29.32 3.95 119.21 117.71
-1.49 -1.50 -0.06 -1.21 -1.45
376,500 516,500 24,500 201,000 200,000
101.00 78.10 67.01 27.65 10.99
102.10 80.00 68.06 28.09 11.92
-0.39 0.00 -0.86 0.00 1.00
1,283 45 1,557 100 25,154
10.71 34.01 0.90 1.65 1.06
-0.18 -1.02 -0.05 -0.03 -0.07
470,873 500 68,502 152,954 235,458
10.65 34.01 0.90 1.52 1.00
11.77 32.66 1.09 1.68 1.35
11.42 31.65 1.01 1.47 1.15
11.64 32.66 1.03 1.50 1.28
0.17 1.01 -0.06 -0.01 -0.04
4,752,418 1,430 194,249 449,333 649,632
0.50 36.38 0.75 1.70 41.36
0.50 36.50 0.77 1.70 41.80
0.36 36.10 0.70 1.56 41.25
0.50 36.10 0.71 1.60 41.53
0.00 -0.28 -0.04 -0.10 0.17
1 1,022,035 38,682 752,756 220,355
63.16 11.15 5.94 11.15 29.95
64.00 11.29 6.08 11.35 30.20
62.50 10.75 5.79 10.70 29.55
62.69 10.89 5.83 10.89 29.91
-0.47 -0.26 -0.11 -0.26 -0.04
32,694 944,906 319,287 1,929,563 175,090
Electricity Genertech Hub Power Co.XD Japan Power K.E.S.C. XR Kot Addu PowerXD
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 7.00 1.70 22.50 27.50 11.50
Fixed Line Telecommunication
Beverages Murree Brewery Co. Shezan Int’l
Abdullah Shah Colony Sugar Mills Engro Foods Ltd. Habib Sugar Mills Habib-ADM Ltd.XD
Pharma and Bio Tech
Automobile and Parts Agriautos Indus.XD Atlas Battery Ltd. Atlas Honda Ltd. Dewan Motors Exide (PAK)
vOLUME
Future Contracts
General Industrials Cherat PackagingXD ECOPACK Ltd Ghani Glass LtdXD MACPAC Films Merit Pack
ChANGE
Personal Goods 40,885 8,285 3,035 25,300 63,850
Construction and Materials
Ados Pakistan AL-Ghazi Tractors Bolan CastingXD Ghandhara Ind. Hinopak Motor
International Oil Price WTI Crude Oil
$96.44
24.70 1.50 9.00 35.00 11.52
Industrial Engineering
86.4483 137.7467 1.1126 117.7166
US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal
23.90 1.45 8.93 34.98 11.56
LOW CURRENT
Household Goods
Industrial metals and Mining Crescent Steel Dost Steels Ltd. Huffaz Seamless Pipe Int. Ind.Ltd. Inter.Steel Ltd.
hIGh
Food Producers
Chemicals
3152.15 424.74 2604.86 135.84 5603.60
OPEN
syMbOL
Adamjee Ins XD Ask.Gen.Insurance Atlas Insurance Central Ins Co. Century Insurance
49.64 8.50 34.49 48.67 7.16
49.50 8.50 35.00 50.00 7.50
48.60 8.10 33.86 48.00 7.06
49.40 8.47 33.99 49.79 7.50
-0.24 -0.03 -0.50 1.12 0.34
6,785 1,651 1,110 3,909 1,500
13.50 1.40 65.53
14.50 1.40 65.53
0.00 0.00 0.00
2 1 157
0.30 14.89 17.71 0.86 7.25
-0.02 -1.00 -0.25 -0.02 -0.01
9,463 13,487 19,659 9,495 2,100
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 InvesXD Arif Habib Ltd. Dawood Equities Invest & Fin.Sec.
0.32 15.89 17.96 0.88 7.26
0.35 15.50 18.34 1.09 7.26
0.22 14.89 17.20 0.86 7.25
Equity Investment Instruments 1st.Fid.Leasing Mod 1.70 AL-Noor ModarXD 3.98 Allied RentalModXDXB 19.90 Atlas Fund of Fund 6.00 B.F.ModarabaXD 5.56
1.50 4.00 19.90 6.10 5.56
1.50 3.60 19.88 5.90 5.00
1.50 4.00 19.90 5.90 5.56
-0.20 0.02 0.00 -0.10 0.00
15,000 25,100 3,700 414,000 7
13.81 32.07 35.60 31.00 69.85 1.67 70.55 4.30 12.00 8.60 25.00 60.50 133.00 29.28 16.50 2.10 10.50 0.93 2.06 1.12 17.61 20.07 1.06 68.50
13.86 32.07 35.60 31.00 69.94 1.70 72.30 4.50 13.00 8.72 25.00 62.59 140.00 29.28 16.50 2.22 10.90 1.00 2.10 1.21 17.66 20.19 1.06 68.50
-0.16 0.00 0.00 -1.14 -0.06 -0.05 2.15 0.05 0.00 0.02 0.00 0.00 0.00 0.00 0.00 0.02 0.10 -0.06 -0.02 0.07 -0.41 -0.14 0.00 -1.09
22,200 100 86 1,500 4,603 42,103 2,304 4,504 305 1,758 25 26 1 300 1,500 46,002 947,959 10,953 106,937 94,631 5,075 5,522 300 66
Miscellaneous Century Paper Pak Paper Prod. Security Paper Pakistan Cables Pak.Int.Con. SD TRG Pakistan Ltd. Murree BreweryXDXB Pak Elektron Ltd. Singer Pakistan Tariq GlassXD Grays of CambrXD Pak Tobacco Co. Philip Morris Pak. Shifa Int.Hosp.XD Hum Network XD P.I.A.C.(A) P.T.C.L.A Telecard Limited Wateen Telecom Ltd WorldCall Telecom Sui North GasXDXB Sui South GasXDXB East West Life Assur EFU Life Assur
14.02 32.07 35.60 32.14 70.00 1.75 70.15 4.45 13.00 8.70 25.00 62.59 140.00 29.28 16.50 2.20 10.80 1.06 2.12 1.14 18.07 20.33 1.06 69.59
14.20 32.88 36.39 31.00 70.99 1.79 72.95 4.59 13.00 8.80 25.99 62.59 140.00 30.73 16.50 2.29 10.94 1.10 2.20 1.24 18.19 20.49 1.20 68.50
Mutual Funds Fund 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 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
Offer 100.2768 87.0103 97.6745 101.8987 112.3545 121.5000 104.1200 0.0000 106.3763
Repurchase 100.2768 85.3042 95.2922 100.8898 109.6141 111.5200 96.5000 0.0000 103.2779
NAv 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087 103.2779
Layout Profit 7 pages_Layout 1 11/12/2011 11:59 PM Page 7
Friday, 11 November, 2011
PNsC is not planning to get the loan of $40m from ECO because of the recent decline in the international shipping industry, and buying a vessel at this time would be a bad decision
news
07
Official sources
INTERNATIONAL shIPPING CRIsIs
Pakistan shipping corporation loses interest in $40m loan g
Dip in international shipping industry to remain till 2013 PNsC exposed to various financial risks g
KARACHI WAQAR hAMzA
P
aKiSTan national Shipping Corporation (PnSC) has seemingly lost its interest in getting the $40m loan from Economic Cooperation Organisation (ECO) that they had applied for, due to a recent dip in the international shipping market. Though the Minister of Ports and Shipping and the Chairman PnSC have recently announced that they are planning to buy new vessels, yet the dip in the international shipping industry would not improve till the year 2013. Official sources at the corporation told Profit that they are not planning to get the loan of $40m from ECO because of the recent decline in the international shipping industry, and buying a vessel at this time would be a bad decision. This is seemingly against the will of the minister and the chairman of the PnSC who recently announced their plan of purchasing new vessels. Sources further informed that most shocking decision in this regard is that the administration of the corporation has decided to scrap two of it’s bulk carriers namely M.V. Sargodha and M.V Multan soon, which will leave the corporation with a fleet of 7 vessels, although they don’t have to buy new vessels. after the scrap of these vessels they would go to buy new vessels with the help of loan,
which means they would like to increase the liabilities on the corporation, sources added. The need of new loan does not arise as the corporation already has $20m left with them from the previous loans they got for buying 6 vessels, sources reasoned. The previous administration took a $130m loan of total and bought 6 new vessels with $110m, so the current administration still has $20m. in addition the carriers they are scrapping would give the PnSC around $6m, as each of them would be sold for $3m, sources added. a new vessel of the same capacity being scrapped is available for $15m. it is pertinent to mention that Economic Cooperation Organisation (ECO) is an intergovernmental regional organisation established in 1985 by iran, Pakistan and Turkey for the purpose of promoting economic, technical and cultural cooperation among the Member States. it is also to be noted that PnSC has already been exposed to a variety of financial risks that include credit risk, market risk (including foreign exchange risk, cash flow, fair value interest rate risk, price risk) and liquidity risk. For example, according to annual report of the corporation, in the previous financial year out of the total financial assets,
financial assets of the company that are subject to credit risk amounted to rs3,548.898 million (2010: rs3,133.362 million). Similarly, the corporation has a high exposure to interest rate risk due to the financing obtained during the reported year, and if interest rates on borrowings had been 250 basis points higher/lower with all other variables held constant at the end of the last financial year, profit after taxation for the year would have been lower/higher by rs 21.981 million (2010: rs nil). Moreover, during the year, the corporation has obtained financing facility of rs10,300 million (June 30, 2010: nil). The financing was obtained in the form of a syndicated term finance loan of rs9,000 million and the remaining amount of rs1,300 million in the form of Term Finance Certificates (TFCs) with a face value of rs5,000 each by way of private placement. The Corporation has also paid loan arrangement fee amounting to rs106.662 million out of which rs88.160 million (June 30, 2010: nil) was included in the amortised cost of the long term financing whereas the unamortised portion amounting to rs18.502 million (June 30, 2010: nil) has been included in deposits and short-term prepayments.
The administration of the corporation has decided to scrap two of it’s bulk carriers namely M.V. Sargodha and M.V Multan soon, which will leave the corporation with a fleet of 7 vessels
Exports grow by 13pc during July-October 2011 KARACHI STAFF REPORT
P
aKiSTan’S exports during October 2011 were valued at $1.896 billion which was 2.2 per cent lower than the $1.938 billion worth of goods exported during October 2010. imports during October 2011 were valued at $3.607 billion registering an increase of 12.9 per cent from the $3.196 billion worth of imports in October 2010. according to available statistics, the cumulative figure shows that Pakistan’s exports during JulyOctober 2011-12 were worth $7.899 billion, while in the corresponding period last year exports were valued at $6.996 billion, which shows a 12.9 per cent growth in numbers. Whereas the imports during July-October 2011-12 were worth $14.313 billion as compared to $12.225 billion during the same period last year; registering a 17.1 per cent increase.
Dollar reserves decrease to $17.028 billion KARACHI STAFF REPORT
T
HE country’s liquid foreign exchange reserves, that have been showing a week long downward trend, shrank to $17.028 billion. Compared with last week’s $17.146 billion, the country’s latest week’s dollar holdings depict a decline of 0.6 per cent or $118 million, the central bank reported. State Bank of Pakistan also counted its dollar reserves at $13.280 billion, 0.9 per cent or $129 million down when compared with $13.409 billion of the preceding week. The week under review however, saw a slight increase of $11 million in the reserves of the commercial banks that stood at $3.748 billion against $3.737 billion of last week. during the previous week, the foreign exchange reserves of the banks, a major stimulus for the country’s overall reserves, had contracted by $29 million. SBP chief spokesman, Syed Wasimmudin attributes such ups and downs in foreign exchange reserves to growth in the banks’ deposits, withdrawals and routine debt repayments.
budgetary loans make banks’ NDAs cross Rs100 billion g
Monetary expansion down at 0.07 per cent due to declining foreign assets g Cash strapped government’s bank loans up by 36.4 per cent to Rs241 billion KARACHI
T
ISMAIL dILAWAR
HE massive budgetary borrowings by the cash strapped federal and provincial governments from the commercial banks have increased the latter’s net domestic assets (ndas) by over 68 per cent during first four months of the current fiscal year, 2011-12. despite this astronomical increase in ndas, the monetary expansion in the inflation stricken country was set in the red zone and was recorded at
0.07 per cent or rs4.882 billion, in monetary terms, during the JulyOctober 28 period. The expansion in broad money, also called M2, was 1.94 per cent or rs112.036 billion during the corresponding period last year. The decrease in monetary expansion, the analyst believe, is because of the banks’ declining net foreign assets (nFas) that during the review period contracted to minus rs96.098 billion against a positive growth of rs52.140 billion during the same period last year. as expected, the banks’ ndas are upward and skyrocketed by
rs41.083 billion to rs100.979 billion during the period under review. Last year, the same was counted by the central bank at rs59.896 billion. The economic observers attribute this exorbitant increase in the banks’ domestic assets to heavy budgetary borrowings by the funds starved government. according to State Bank, the government loans from the banking system climbed by 36.4 per cent or rs64.337 billion to rs241.087 billion compared to rs176.750 billion of last corresponding period.
The government, however, has succeeded in arresting its loans from the central bank at rs64.597 billion against last year’s rs126.618 billion in order to check what the analysts warn, already double digit inflationary pressures. But, it is borrowing extensively from the commercial banks which during the review period lent rs176.496 billion, up 252 per cent or rs126.365 billion compared with last year’s rs50.131 billion. The economists believe that continued and excessive government borrowings from the risk averse banks would lead to a sharp rise in
the latter’s domestic assets in the near future. Other indicators of the monetary expansion are also showing a downward trend with currency in circulation shrinking to rs91.068 billion from rs140.915 billion in last year. The analysts warn the resource constrained government against opting for easy sources of money led by bank borrowings instead of introducing long-term economic reforms that, they say, might prove to be short term bitter political pills, but would bring the ailing economy back on track in the long run.