PRO 17-08-2013_Layout 1 8/17/2013 12:08 AM Page 1
BUSINESS Saturday, 17 August, 2013
Pak Suzuki faces huge 47pc loss in 1HCY13 KARACHI StAff RePoRt
The Pak Suzuki Motor Company (PSMC) is likely to post a profit after tax (PAT) of Rs 733 million (EPS Rs 8.90) in 1HCY13 registering a massive decline of 47 percent YoY as compared to the same period last year. However, the dividend expectations remain muted with the result under review. “The massive decline in the company’s bottom line is due to the slimming topline of the company as sales volume tapered off by 33 percent YoY to 41,3k units as compared to 61.6k units in 1HCY12,” said the analysts at Topline Research. During the same period last year, the company taking advantage of the yellow cab taxi scheme sold 13.1k units, they said. Furthermore, discontinuation of production of its Alto variant turned out to be another factor as during 1HCY12 the company sold 9.5k units of its Alto model. However, other income of the company is expected to provide some support to the bottomline with the increase of 6 percent YoY to Rs 352 million, as better cash balance is anticipated to provide handsome returns on bank deposits. On a quarterly basis, the PSMC is estimated to post a profit after tax of Rs 371 million (EPS Rs4.50) in 2QCY13 as compared to a net profit of Rs 362 million in last quarter, registering a minimal rise of 2.4 percent QoQ. “Such expectations are backed by an increase in other income due to better cash balance of the company during last quarter,” the analysts said. Increased taxes announced in budget FY14 and heavy rains are both expected to exert pressure on sales volume of the company going forward.
Govt facilitating investors: Dar ISLAMABAD NNI
Finance Minister Ishaq Dar says the government has taken numerous measures to facilitate the investors. The minister was talking to Standard Chartered Pakistan Chief Executive Officer Mohsin Nathani who called on him in Islamabad. He said the measures would help create a conducive environment for business and stimulate economic growth in the country. The chief executive officer expressed willingness to work with Pakistan. Mohsin Nathani discussed various proposals for extending support to the government including the interest shown by his bank in extending financial support for Neelum Jehlum hydro-electric project.
Connecting Khunjrab with Gwader! PRIME MINISTER NAWAZ SHARIF APPROVES PAK-CHINA TRADE CORRIDOR PLAN ISLAMABAD INP
RIME Minister Nawaz Sharif has said that the Pak-China Economic Corridor is future of the country and it will connect Pakistan with China and Central Asian countries making it a hub of transit trade in the region. The prime minister said this in a meeting which discussed the Pak-China Trade Corridor from Kashgar to Khunjrab and Gawader. The prime minister, principally, approved the proposed alignment of Pak-China Trade Corridor with the directions to further evaluate the proposal in terms of time and cost efficiency. The meeting was attended by
Muhammad Ishaq Dar, Minister for Finance, Ahsan Iqbal, Minister for Planning and Development, Pervez Rashid, Minister for Information, Broadcasting & National Heritage, Khawaja Saad Rafiq, Minister for Railways and Tariq Fatmi, Special Assistant to PM and other officials. Earlier the prime minister was given a detailed briefing on the alignment of the Economic Corridor starting from Khujrab Pass and ending at Gawader and Lahore-Karachi Motorway. The meeting also discussed alternate and shorter route along KKH, connecting Chilas with Mansehra through Babusar top. The prime minister directed that this route should be developed on priority basis and a tunnel should be made across Babusar top making it accessible throughout the year. He directed that this route should be connected with Muzaffarabad through a road from Balakot and Garhi Habibullah. The distances must be reduced by building connecting bridges and tunnels by using latest technologies and equipments, he added. Nawaz Sharif also directed to prepare feasibility for constructing a road
between Hawalian and Islamabad to provide a shorter route to commuters from Gilgit, Mansehra and Abbottabad. The premier stressed the need for mitigating environmental impacts during the construction of these roads. The meeting also approved construction of Muzaffarabad-Mirpur Road which will reduce
Pak-China rail link impetus for sluggish tourism industry ISLAMABAD APP
The modern road and rail link between Pakistan and China will not only help boost trade and industrial activity in the region but will also help in promoting tourism in Pakistan, especially in Gilgit-Baltistan, Khyber Pakhtunkhwa and coastal areas of Makran. Pakistan and China have recently agreed to establish an economic corridor between Kashgar in China and Gwadar in Pakistan. This $18 billion joint venture will include road and rail links passing through the mighty Karakorum and Himalayas in the northern Pakistan. Elaborating the importance of this link for boosting fragile tourism industry in the country, President Sustainable Tourism Foundation Aftab Rana told APP that this road and rail route would pass through the most spectacular mountain ranges where they had world renowned high mountain peaks, glaciers and beautiful valleys. He said improved accessibility created through this modern road and rail network would also at-
( REPAYMENT OF $291M IN A WEEK
tract large number of tourists from across the globe and especially from China which had already achieved the No 1 position in outbound tourism market in the world with over 70 million Chinese travelling abroad each year. Aftab Rana said the rail route along the Karakorum Highway had great potential to become one of the top 10 rail journeys in the world because of the incredible landscape value of this region. Similarly the railway link between Kashgar and Gwadar passing through the mighty Karakuram will defiantly at-
tract millions of tourists, foreign as well as domestic, he added. He urged that while planning this rail link, the government should also pay special attention to develop the areas along the route with the tourism point of view. “While developing tourism industry along this rail link, other businesses such as hotels, restaurants, transport, handicrafts, shopping, local recreational resorts and local entrepreneurs get simultaneously boosted and create thousands of new jobs and income generating opportunities for common people,” he said.
the distance between the two cities to 150 km and give Mirpur direct access to GT Road at Dina. During the briefing, the prime minister was told that the alignment for Lahore-Karachi Motorway will start from Babo Sabo Interchange on M-2 passing through Khanewal, Multan, Sukkur, Khair Pur and Dadu.
WTAP concerned over tariff, free trade of wheat Karachi: The Wheat Traders Association of Pakistan (WTAP) Friday said the EEC’s reported decision based on FBR’s recommendation would result in a significant setback to the consumers. WTAP Secretary Saleem Ahmed said on Friday that the country had not met its wheat production target and consequently PASSCO and provincial food departments had only met 70 to 75 percent of their procurement targets. Wheat is a staple food item and its price is affecting the poor man profoundly, Saleem added. The WTAP requested the govt (EEC) to reconsider and reduce the withholding tax on all wheat imports to 1 percent and ensure that only quality wheat is imported and prices not only remain in check but also decline to previous levels. He supplemented that the government needed to facilitate an open wheat trade policy in the country by the private sector. StAff RePoRt
Pakistan paves way for $7.3b fresh IMF bailout KARACHI ISmAIl DIlAwAR
The outgoing week witnessed the dollarhungry government of Pakistan repaying “successfully”, as the central bank puts it, the 17th and 18th instalments of the International Monetary Fund (IMF) loan the country had obtained in 2008 under Standby Arrangement (SBA) facility. On Friday, the dollar-hungry Government of Pakistan, via the State Bank, was able to make another payment of SDR 95.8 million equivalent to $145.4 million to the IMF. It was a couple of days back on Tuesday when the cash-strapped country had repaid the 17th instalment amounting to SDR 95.8 million or $145.3 million to the IMF.
The analysts believe that Islamabad, despite having nominal foreign exchange reserves in hand, was doing its best not to offend the international lender by defaulting over its financial obligation under the SBA facility. Given the fact that the economic managers in Pakistan are looking hopefully at the IMF for a fresh bail-out package of $5.3 billion at least and $ 7.3 billion at maximum, the country takes the current repayments as an opportunity to please the IMF Board which may be mulling to approve the initial $5.3 billion Extended Financial Facility to be handed the resource-constrained Pakistan. An “official-level” approval has already been secured by the PML-N-led federal govt from a visiting IMF team recently.
“Pakistan successfully paid the 18th instalment today under IMF/SBA facility,” said an SBP spokesman. In total, the country dolled out to the IMF SDR 191 million or in dollar terms $ 290 million during the current week, on Tuesday and Friday. The SBP spokesman said with Friday’s repayment of 18th instalment, the country todate repaid to the IMF SDRs 3.061 billion or $ 4.662 billion since July 2011. Of this total, the spokesman said, SDRs 2.577 billion, equivalent to $ 3.918 billion, fall under the SBA facility. Pakistan now owes to the IMF SDR 2.359 billion under the IMF’s SBA, to be repaid until September 2015 in various instalments. Having gone alarmingly short of dollar exchange, the newly-elected PML-
N-led federal government is pursuing the IMF for a widely-speculated bail-out package of $ 7.3 billion. The sought billions, however, would be used for no development works but, masterly, for the repayment of IMF loan. The country’s dollar reserves have depleted to an alarming level of $ 10.23 billion, of which the central bank holds only $ 5.142 billion. Breathing under immense pressure hard, the economic managers in the politico-diplomatically-troubled Pakistan are striving hard to comply with the IMF’s pre-conditions for the fresh loan. Critical of a narrow tax base in Pakistan, where the tax-to-GDP ratio stands hardly at 9.5 percent, the international lender wants the newly-elected PML-N government to undertake across-
the-board reforms ranging from expanding the tax base to suspending huge power subsidies by rationalising utility tariffs. Also, the IMF is pressing for the tightening of monetary policy, currently standing at 9 percent against the July-2013 inflation rate of 8.7 percent, by the central bank. Given this pressure from the IMF, the economic observers are speculating an upward revision by the State Bank in the discount rate by 50 basis points in the forthcoming policy statement. “Unofficial pressure from the IMF as a pre-condition for loan approval coupled with argument that inflation can rise in coming months may force SBP to hike rate by 50 basic points,” viewed Zeeshan Afzal, an analyst at Topline Research.
PRO 17-08-2013_Layout 1 8/17/2013 12:08 AM Page 2
BUSINESS B Saturday, 17 August, 2013
We’ve eNouGH WHeAT! MINISTER TELLS NA THAT ONE MILLION TONS OF WHEAT WILL BE EXPORTED, INCLUDING 0.1 MILLION TONS TO IRAN UNDER BARTER ARRANGEMENT
Wyeth Pak Ltd Clariant PaK. Siemens Pakistan Gillette Pak Treet Corporat
INISTER of State for Parliamentary Affairs Shaikh Aftab Ahmad informed the National Assembly on Friday that the government was trying to get better market access for the local businesses in international markets by concluding free trade and preferential trade agreements with different countries. Replying to questions on behalf of the commerce minister, Sheikh Aftab said there was no ban on export of rice to Iran and other countries. He said there was no shortage of wheat in the country and the PASSCO had been allowed to export one million ton of wheat. One hundred thousand ton of wheat will be exported to Iran under the barter system, he added. He said Pakistan had granted the MFN status to all the members of WTO on reciprocal basis, except India and Israel. He said it had been an earnest desire of Pakistan to have friendly relations with all the neighbouring countries but regrettably India had never reciprocated positively
The All Pakistan CNG Association (APCNGA) on Friday expressed serious reservations over the role of gas distribution companies in the on-going campaign against electricity and gas theft. Gas utility companies have been victimising innocent to hide their own inefficiencies, corruption and UFG losses, it said. The gas companies have been misguiding district administrations and Ogra to safeguard the interests of big gas fish involved in massive theft, said Ghiyas Abdullah Paracha, Chairman Supreme Council APCNGA. He said gas companies installed faulty metres by themselves, their staff got the reading from metres and they decide about theft and action. The utilities had been playing ‘judge, jury and executioner’ which was not acceptable, he added. The ministry of petroleum should take note of the situation and stop the gas companies from this exploitation of the business community, he demanded. Paracha said it was amazing that a large number of theft cases had been registered during the last few months but not a single official involved in it had been brought to the book despite the fact that a consumer could not steal energy without consent of officials concerned.
OPEN 5199.95 5100.00 704.00 1680.20 362.19
HIGH 5459.00 5290.00 730.00 1700.00 380.29
LOW 5459.00 5290.00 730.00 1700.00 370.00
CLOSE CHANG 5459.00 259.05 5290.00 190.00 730.00 26.00 1700.00 19.80 380.29 18.10
TURNOVER 20 20 100 100 200
2439.00 364.32 1176.60 321.00 303.51
2345.00 346.11 1218.00 304.95 296.50
2317.05 346.11 1150.00 304.95 288.34
2317.05 346.11 1160.03 304.95 288.34
-121.95 -18.21 -16.57 -16.05 -15.17
340 1,200 7,950 700 21,000
14.10 58.45 10.49 15.72 154.75
13.60 57.15 9.32 15.25 147.65
13.69 58.06 9.45 15.35 151.62
-0.31 0.57 -0.81 -0.02 1.60
15,180,000 10,319,500 7,918,000 7,787,000 6,340,900
Gas companies penalising innocent to hide losses: APCNGA
COMPANY Rafhan Maize Unilever Food Indus Dyeing Bata (Pak) Bhanero Tex.
B.O.Punjab National Bank. JS Investments Fauji Cement Engro Corporation
14.00 57.49 10.26 15.37 150.02
Interbank Rates USD GBP JPY EURO
PKR 102.9000 PKR 160.8739 PKR 1.0557 PKR 137.1760
Forex BUY to Pakistan’s gesture of goodwill. He said they wanted good trade relations with India but currently the relations were not normal. Minister of State for Privatization Khurram Dastgir told the House that efforts were being made to settle the issues of Pakistanis workers in Saudi Arabia. He said 2400 Pakistani workers had voluntarily returned from Saudi Arabia.
Minister for Kashmir Affairs and GilgitBaltistan Barjees Tahir said an international airport would be constructed in Mirpur, Azad Kashmir. He said the PC-1 of the project had been completed and on the availability of funds, it would be completed within two years. He said efforts were also being made for the early completion of Islamabad International Airport.
US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal
102.60 134.92 158.17 1.0332 97.40 12.91 27.65 27.15
SELL 102.85 135.17 158.45 1.0436 99.08 13.14 27.90 27.40
Indonesia to double palm oil export to Pakistan JAKARTA INP
As the preferential trade agreement (PTA) with Pakistan is expected to take effect in the next few weeks, Indonesia hopes to see its annual palm oil export to the South Asian country double in the upcoming years. Deputy Trade Minister Bayu Krisnamurthi said the country might see its shipment to Pakistan reach US$1.5 billion starting from next year, up from $714 million last year. “For this year alone, we hope exports to Pakistan will rise by around $200 to $300 million as it gets a boost by the PTA,” the trade minister said on Friday. Apart from becoming the market for Indonesia’s palm oil, Bayu added that Pakistan might serve as an export hub to surrounding countries. The PTA will become effective as soon as both countries sign the mutual recognition agreement (MRA) and pestarea recognition for horticulture imports, both of which provide special entry access for Pakistani main export commodity, kinnow oranges. Under the PTA that was sealed last year, Pakistan will slash import duties for Indonesia on palm oil to as low as it is for Malaysia. This policy is an exchange in the removal of 25 percent import duties on kinnow oranges of which Pakistan is the largest producer worldwide.
The agreement should have taken effect this year, but has been delayed for months because of technical reasons, mainly the ban on kinnow oranges from entering Indonesian market through the country’s main port, Tanjung Priok Port in North Jakarta. This ban is to comply with a series of import rules rolled out last year stipulating that shipment of fruits and vegetables
can only enter the country via Tanjung Perak Port in Surabaya, East Java, and another five entry points, except Tanjung Priok Port, following poor supervision in the country’s biggest international trade gateway. The port is not restricted for imports from countries sealing special arrangement with Indonesia, such as MRA and pest-free area recognition.
The bilateral trade between Indonesia and Pakistan amounted to $1.65 billion last year, up 44.74 percent from 2011, with Indonesia exporting $1.38 billion and importing $273.22 million. Indonesian Palm Oil Producers Association (Gapki) executive director Fadhil Hasan echoed Bayu’s view, saying the estimated increase in palm oil export to Pakistan would be feasible as in the past Indonesia, the world’s biggest palm oil exporter, was once the largest supplier of the commodity to Pakistani market. Indonesian palm oil export lost ground in 2007 when Pakistan inked a PTA with Malaysia. “However, to achieve the target, efforts to promote our commodity, penetrate the market and intensive interactions with business players in Pakistan will be necessary,” he said. As Indonesia will get equal treatment as Malaysia, Fadhil said, local palm oil would be able to compete with its key competitor. Responding this issue, Pakistani Ambassador to Indonesia Sanaullah said he appreciated the Indonesian government’s move to sign MRA with Pakistan following recent inspection of Pakistani facilities and kinnow farms in Karachi and other cities. “The PTA will give multiple choices to Pakistan in the field of buying vegetable fat such as palm oil,” Sanaullah said.
MCB declares interim dividend of Rs 3.5 per share KARACHI StAff RePoRt
The Board of Directors of MCB Bank, under the chairmanship of Mian Mohammad Mansha, has declared a cash dividend of Rs 3.5 per share after approving the financial statements for the first half ended June 30 this year. Despite the challenging operating and economic environment, the bank has created history by posting remarkable results in the second quarter of 2013 outperforming the highest quarterly profit before tax reported in the first quarter, said an MCB statement on Friday. The decreasing trend in policy rate offering floor rate of 6 percent on saving and
fixed deposits computed on monthly average balance are specific challenges which have been addressed by MCB through commendable strategic financial performance and growth in the first half of 2013. Earnings per share (EPS) for the period came to Rs 11.75 compared to Rs 11.07 for June 30, 2012. Return on assets improved to 3.08 percent and return on equity came to 25.91 percent with book value per share improving to Rs. 93.56. The bank registered profit before tax of Rs 17.700 million with an increase of 4 percent and profit after tax of Rs 11.887 with an increase of 6 percent over June 30, 2012. The growth in profitability numbers is reflective of the underlying financial strength of the bank in such operating en-
vironment. The gross markup income decreased by 4 percent over corresponding period last year which was off-set by the lower cost of funds on strategically managed CASA base. The bank focused on improving its non-markup income proportion and registered a growth of 12 percent over the corresponding period last year. On the operating expense side, the bank reported a decrease of 3 percent in its administrative expense block. The reduction was primarily on the back of synergies attained through central authorisations and annual capping for heads of expenses, with major portion of the block being centrally managed and authorised. The reversal in provision charge
is reflective of the prudent and aggressive provision strategy coupled with the refined risk management framework adopted by the bank in the past for subjective downgrades. A massive recovery of approximately 1.4B was reported in the loss categorised loans which enabled the bank to reverse the specific provision held in respect of such loans. The bank’s total asset base was reported at Rs 775.156 billion which increased by 1 percent over Rs. 767.075 billion as of December 31, 2012. Net investments increased by Rs 8.153 billion to Rs 410.222 billion whereas gross advances were reported at Rs. 244.616 billion. The NPL base of the bank further con-
tracted by Rs 796 million in the first half of 2013 with major recoveries in “loss” categorised classified advances. On the liabilities side, the deposit base of the bank registered an increase of 65B, translating into 12 percent over December 31, 2012. The bank continued with its strategy of shifting its base to low cost current and saving accounts, each growing by 17 percent and 14 percent respectively over December 31, 2012, and taking the total CASA base to an all-time high of 88 percent. Convergent with the declining interest rate scenario, this quarter supplemented the decreasing trend marked in previous quarters of reduction in high cost fixed deposits, with a 2 percent decline in the quarter ended June 30, 2013.