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BUSINESS Thursday, 26 September, 2013

Cement sector shines with 93pc profits in FY13 KARACHI: After the lull period of FY10 where the price war broke amongst the industry players, the country’s cement sector has experienced a reversal in fortunes. According to analysts at Topline Research, improved margin scenario backed by higher retention prices and manageable coal cost coupled with reduced interest rate environment reflected positively on sector’s profitability. During the FY13, the sector posted profit growth of 93 percent to Rs 30.9 billion as against Rs16.0 billion in FY12. “Our sample includes 11 companies that represent 75 percent of listed cement companies’ market capital,” viewed Asad I Siddiqui of Topline Research. Amongst the sample companies, MLCF, FCCL and LPCL were the star-performers depicting a growth of 6.5, 4.8 and 4.6 times, respectively, in their profitability, he said. Whereas other major players like LUCK and DGKC depicted bottom line growth of 43 percent and 34 percent, respectively, he said. In FY13, the sector posted topline of Rs 151.2 billion as against Rs131.2 billion in the same period last year depicting growth of 15 percent. “The prime growth driver remained 10 percent in price of the commodity as estimated net retention prices rose to Rs 343 per bag verses Rs310 per bag in FY12,” said the analyst. In addition, 4 percent volumetric variance also played its due role with high margin domestic dispatches rising by 5 percent. Exports on the other hand declined by 2 percent. The profitability was supported by 20 percent decline in coal prices that account 40 percent for sector’s production cost. Subsequently, with 10 percent increase in net retention and with cost inching up at slower rate gross margins improved by significant 7pps to 37 percent in the FY13 as against 30 percent in same period last year. Lastly, declining interest rate also bode well for the sector’s profitability. As 450bps reduction in the policy rate by central bank from June 2011 along with reduction in the leverage of the cement sector culminated into 34 percent reduction in the financial charges of the sector to Rs3.8 billion. Reduction in financial charges coupled with follow through impact of topline growth has strengthened sector’s interest coverage ratio to 7.2x. Amongst the cement sector players, MLCF and FCCL remained the top performers as their profits grew by 7.0 and 3.0 times in FY13, he said. “We believe that both the companies are reaping the benefits of higher operating and financial leverage,” said the analyst. The MLCF and FCCL have the highest degree of total leverage with magnifies the impact of increase in prices on their profits. STAFF RePORT

Do more than is required. What is the distance between someone who achieves their goals consistently and those who spend their lives and careers merely following? The extra mile — Gary Ryan Blair

CII pleads barrier-free Pak-India trade LAHORE STAFF RePORT

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HE Confederation of Indian Industry (CII) vice president and head of 10-member visiting Indian delegation Arun Kumar Sexena on Wednesday advocated barrier-free Pak-India trade and called for exploiting proximity advantage between the two countries. Arun Kumar Sexena was speaking at the Lahore Chamber of Commerce and Industry. LCCI President Farooq Iftikhar, President-elect Engineer Sohail Lashari presented address of welcome while Vice President Mian Abuzar Shad, Vice President SAARC Chamber of Commerce Iftikhar Ali Malik, Vice President-elect Kashif Anwar, Chairman LCCI Pak-India Trade Promotion Committee Aftab Ahmad Vohra also spoke on the occasion. There should be no trade via third country as it would not only jack up the volume of two-way trade but would also cut transportation cost, he said, adding that the Pakistani sports goods, surgical goods, spices, cotton lawn, leather, chemicals and light engineering goods were in great demand in India, therefore, the Pakistani businessmen should avail the opportunities available in these sectors.

He also urged the LCCI members to initiate joint ventures with their Indian counterparts and enumerated a number of sectors where the businessmen of the two countries could join hands. He said the private sector in the two countries

There should be no trade via third country as it will not only jack up the volume of two-way trade but will also cut transportation cost ARUN KUMAR SEXENA should share their strengths for the sake of progress and prosperity in this region. He said that the visa regime should be more liberalised and there must not be city-specific visas. Citing the example of 10-year multiple visas being granted to businessmen by the USA, Canada

and UK, he said the neighbouring countries should adopt the same approach to facilitate the business doing people. While appreciating the efforts of the Lahore Chamber of Commerce & Industry for the promotion of trade and industry, he said the Lahore Chamber of Commerce & Industry was one of the most active chambers in the world. Speaking on the occasion, LCCI President Farooq Iftikhar said the best option to enhance bilateral trade would be to identify areas of common interest for economic cooperation. The LCCI president said that non-tariff barriers had been a key issue for the Pakistani businessmen while accessing the Indian market. There were genuine non-tariff barriers related to the complexity of regulatory procedures, non-transparent regulations, port restrictions, and problems related to recognition of standards and valuation of goods, he added. Business people fear entering these markets as they were not sure if their goods would be welcomed. However, there was evidence that some businesses had made a bold entry with their country labels and had not met much resistance. Exhibitions and fairs were an effective way of dealing with these perceived barriers.

KARACHI STAFF RePORT

The deposit base of scheduled banks has snuggled up by 7 percent CY13TD (13 Sept, 2013). However, unable to match such an increase, the banks’ gross advances declined by 1 percent during the same period. Investments on the other hand stepped down by 5 percent CY13TD, the decline in investments was even more drastic when assessed on a quarterly basis where the head declined by 10 percent 3QFY13TD. “We attribute such happenings to the uncertainty witnessed in the policy stance earlier during the CY13, which initially kicked off as the country instigated efforts

ISLAMABAD Online

The government of Pakistan will pay more 14 million dollars to the International Monitory Fund (IMF) under the loan re-payment programme on Friday. Per details, it will be the 18th continuous instalment to the IMF regarding the loan repayment while even after the payment of instalment, threat regarding pressure on rupee will persist. Sources from the ministry of finance said, till now 3.50 billion dollars had been repaid to the IMF in 17 instalments and the 18th instalment will be paid as stand by programme of loan return. Earlier in the month of August, 56 million dollars were returned to the IMF. Pakistan had obtained 7.80 billion dollars loan from the IMF under stand by programme in November 2008, while on September 4, 2013, the present government took more 6.64 billion dollars from the IMF under the facility of external debt. The first instalment of this external debt has been received which have given support to devaluing rupee and foreign exchange.

Circular debt surges to Rs 100b, NA informed ISLAMABAD inP

Pardon accepted, now you have one month! SENATE BODY WARNS PETROLEUM MINISTRY, PSO FOR NOT TAKING THE PARLIAMENT SERIOUSLY ISLAMABAD inP

Taking exception to lethargic attitude of the Ministry of Petroleum and Pakistan State Oil for not replying to the questions asked by Senator Zahid Khan, the Senate Committee on Rules of Procedure and Privileges warned the ministry of strict action for not taking the parliamentary business seriously. The meeting was presided over by Senator Col (R) Syed Tahir Hussain Mashhadi. It considered the breach of privilege arising out of failure of the

ministry of petroleum and natural resources to provide replies to the questions asked by Senator Zahid Khan regarding the number of persons appointed on regular, contract, daily wages and third party contract (outsource) basis in the PSO since 2008 and the name, education qualifications, place of domicile and nationality of the PSO Managing Director and salary, allowances and other fringe benefits admissible to him. “Members ask questions on the floor of the House to see whether or not the decisions are taken in a transparent manner but the delay in replying creates hurdles in the smooth working of the Parliament which is a matter of serious concern,” remarked Senator Mashhadi, the chairman of the committee. Senator Zahid Khan apprised the committee about his point of view on the issue. He said such a lapse on the part of ministry and its attached departments reflected

the dictatorial mindset. He said the regional quota was being violated grossly and smaller provinces were not being given due right in government services. Other members including Senator Haji Muhammad Adeel, Mian Raza Rabbani and Islamuddin Sheikh also expressed their dismay on the issue and pointed out various discrepancies in appointments in government departments particularly in the PSO. The committee directed the ministry to conduct inquiry against the officials involved in delay with regard to reply to the said questions. Ministry of Petroleum Secretary Abid Saeed submitted an unconditional apology before the committee which was highly appreciated by the committee. However, the committee members were of the view that why a senior officer should apologise for the mistake of his juniors. The committee gave one month time to conduct inquiry against the officials involved in the delayed response.

Re-rating likely as banking spreads widen ANALYSTS FORESEE POLICY RATE HITTING 10 PERCENT IN CY13

Pakistan to put $14 million in IMF bag

to enter the IMF programme stirring up investor concerns of spiralling inflation as subsidies were removed,” viewed Invest Cap analyst Muniba Saeed. Coupled with expectations of an increasing rate of inflation was the need to keep real interest rates positive and thus an increase in discount rate, she added. Such uncertainty, the analyst said, deterred the scheduled banks to invest in the risk-free government securities awaiting clarity on the policy rate front. The banking sector’s investment to deposit ratio (IDR) fell from 58 percent in Jan-13 to 50 percent on Sept 13. The ADR (advance to deposit ratio) also faced a similar situation, however, with lesser intensity sliding from 58 percent in Jan-13 to 53 percent in the same period. Where average banking spreads in 8MCY12 rested at 7.2 percent, the same registered a massive decline of 94bps, coming down to 6.26 percent in 8MCY13. The massive decline can be explained by a low

policy rate hovering at 9.5 percent and lower for most part of the year as well as the savings rate floor. Banking spreads on outstanding deposits and advances, stood at 6.28 percent in Aug-13 (3bps decline MoM) led by a deposit rate of 4.83 percent (14bps down MoM) whereas the lending rate for the same period hovered around 11.11 percent (17bps MoM decline) following the 50bps cut in discount rate announced on 21, Jun, 2013. About implications of monetary policy statement, Muniba said, the recent 50bps raise in the discount rate along with a forward view of monetary tightening led by higher inflation, the banking sector stood affected from such a transformation. For starters it is expected to put an end to squeezed margins where the banking sector spreads were initially compressed due to a floor of 6 percent placed on deposit rates set on average balance for savings accounts and discount rate at 9.0 percent.

Also expectation of a future discount rate hike is expected to rejuvenate interest of banks for investment in risk-free government papers in the absence of shaky investor sentiment in the private sector (led by both heightened security concerns and escalated cost of doing business as subsidy on electricity is removed) along with fears of rising NPL’s that such advances fetch. However, with IMF signalling restrictions on the government borrowing from scheduled banks, the positivity from risk-free investments seems limited. With the discount rate hiked by a mere 50bps, the upside at this point seemed narrow, she said. “However, we remain positive for the future foreseeing the rate to touch 10 percent by the end of CY13 and 11 percent during CY14,” she said. “We expect improvement in security situation and any development on alteration in minimum deposit rate to be major triggers for the sector,” said the analyst.

The National Assembly was informed on Wednesday that the circular debt had again surged up to 100 billion rupees, however, the production of electricity had increased. Replying to questions on behalf of the finance minister, Minister of State for Education Balighur Rehman said not a single IPP was non-functional at this time. He said there was no conditionality in the IMF agreement where they committed to devalue the Pakistani rupee. He said dollar’s rate was linked with inter-bank market. He said the government had paid off seven million dollars to the IMF whereas it had received 545 million dollars since the instalment of new government. Balighur Rehman said in the current fiscal year the government had to pay off three billion dollars while they would receive 2.25 billion dollars from the IMF. He said this was the way to get rid of foreign loans that they receive less and pay more. He said the government has not placed any cuts on educational budget instead the HEC budget had been increased up to 58 billion rupees. He assured the House that corruption would not be tolerated at any cost and the government had introduced a proper procedure to check this menace. He said the government would ensure appointment of good reputed officers on positions and performance would be monitored with reference to inefficiency and unfriendly attitude of officers and performance would be reviewed on quarterly basis.

We attribute such happenings to the uncertainty witnessed in the policy stance earlier during the CY13, which initially kicked off as the country instigated efforts to enter the IMF programme stirring up investor concerns of spiralling inflation as subsidies were removed MUNIBA SAEED. INVEST CAP ANALYST


Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while — Jack Welch

We want trade not aid: Nawaz

eral Assembly to share his ideas and suggestions on the issue of global partnerships for development to create jobs and improve sustainable lifestyles. Nawaz Sharif added that he was against aid because it created dependency and affected the growth of states. He said that despite efforts that had been made by the United Nations, “poverty is still stalking the earth. Climate change has made our planet extremely fragile and NEW YORK vulnerable”. He asked the forum to focus on jobs inP creation. “As politicians and leaders of our nations, we all know that jobs sit at RIME Minister Nawaz the heart of growing economies, Sharif has called for a degood governance and political velopment agenda that Poverty is still stability,” he added. He said is not based on aid stalking the his government was investalone but promotes market ing maximum time and enaccess and economic partearth. Climate ergy in indirect nerships among developing change has made interventions, in reviving and developed countries to their economy and taking achieve the goal of sustainour planet our growth from the present able development. “I am an extremely fragile 3.6 percent to more than 7 advocate of trade not aid; percent in next five years. This market access, economic partand vulnerable will give a strong stimulus to nerships, and transfer of technolagriculture, industry, trade, and ogy and scientific know-how,” the services and create millions of new prime minister said in his key note adjobs. The government was also giving incendress at the high-level political forum on sustainable development on Tuesday. The prime tives to the private sector to generate maximum minister was invited by the president of UN Gen- employment, the prime minister concluded.

PM PLEADS FOR MARKET ACCESS AND ECONOMIC PARTNERSHIPS FOR SUSTAINABLE DEVELOPMENT

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BUSINESS B

Thursday, 26 September, 2013

HMC must prepare spare parts for PR, OGDCL: minister ISLAMABAD APP

Minister for Industries and Production Ghulam Murtaza Jatoi on Tuesday urged the state entities like Pakistan Railways and the Oil and Gas development Company Limited (OGDCL) to contact Heavy Mechanical Complex (HMC) through their respective ministries for manufacturing of required engineering machinery and spare parts. The minister was addressing the 102 board meeting of the HMC. Secretary Industries and Production Shafqat Hussain Naghmi was also present on the occasion. Managing Director of HMC Dr Muhammad Ashraf Butt briefed the minister about the performance and activities of his organisation. In order to put his organisation on modern scientific lines, work was in progress under which a number of companies were working on investment in the energy sector, the MD said. He said during the next few years different kinds of machinery would be required and HMC would fulfil their requirement within the country, fully cooperate in provision of latest machinery to those companies besides introducing low cost and energy efficient equipment for them. Jatoi said there was a big network of Pakistan railways and for this purpose the country imported engines ,bogees, machinery and parts for the railways wasting precious foreign exchange. He stressed for manufacturing all these equipment through HMC to save huge foreign exchange for the country.

Major Gainers COMPANY Wyeth Pak Ltd Shezan Inter. Exide (PAK) XDXB Premium Tex. Ismail Industr

OPEN 3843.80 624.00 301.00 151.09 197.90

HIGH 3990.00 655.20 315.99 158.64 206.00

LOW 3890.00 654.00 303.00 152.00 188.01

CLOSE CHANGE 3955.15 111.35 655.19 31.19 314.28 13.28 158.64 7.55 204.62 6.72

TURNOVER 2,220 5,550 800 15,600 6,800

1800.00 949.05 207.00 157.20 1490.01

1750.00 949.05 197.50 157.20 1485.00

1763.33 949.05 198.00 157.20 1485.00

-71.08 -49.95 -9.63 -7.55 -5.00

140 50 2,100 200 80

7.08 10.68 12.60 24.60 4.42

6.36 10.05 12.35 23.52 4.10

6.50 10.43 12.48 23.80 4.15

-0.36 0.32 0.06 -0.71 0.04

13,920,500 10,901,000 9,998,000 7,582,000 6,943,500

Major Losers Bata (Pak) 1834.41 Island Textile 999.00 Sapphire Fiber 207.63 Dreamworld 164.75 Colgate PalmolivXDXB1490.00

Volume Leaders Telecard Limited TRG Pakistan Ltd. B.O.Punjab Maple Leaf Cement Pace (Pak) Ltd.

6.86 10.11 12.42 24.51 4.11

Interbank Rates USD GBP JPY EURO

PKR 106.9062 PKR 171.1141 PKR 1.0841 PKR 144.3982

Forex UK Pound Sterling Euro US Dollar Australian Dollar Canadian Dollar Japanese Yen Saudi Riyal UAE Dirham China Yuan

BUY

SELL

172.5 145.5 108.9 101 104 1.085 28.9 29.55 16.5

172.75 145.75 109.15 101.25 104.25 1.1 29.15 29.8 16.75

CORPORATE CORNER

Canadian High Commissioner visits CORC LAHORE: Greg Giokas, the Canadian High Commissioner recently visited Canadian Orthopedic & Rehabilitation Centre (CORC), pioneer in spinal decompression and shock wave therapy. Giokas appreciated the efforts of the organization and had a tour of the centre, where CORC doctors and management briefed him about the technology and advance machinery imported from Canada to treat patients with chronic and spinal pain. Dr Fauzia Moyen, senior CORC representative during a presentation to the Canadian High Commissioner informed His Excellency about the facilities, treatments and patient management. She presented the expansion plans of CORC in Pakistan with a vision to facilitate the under privileged. While requesting for the support of Canadian government office in Pakistan, Dr Moyen said, “Our mission is to inform, educate, treat and cure all Pakistan’s afflicted patients suffering from chronic and spinal pain with the higher standards of patient care and innovative technologies. We seek to collectively push the aims of CORC in partnership with the Canadian government in order to advocate for better relationship and goodwill through shared resources and infrastructure provided.” Furthermore, Dr Moyen expressed CORC’s desire to work with the Trade Chapter of The Canadian Embassy in Pakistan to provide transparent and backed opportunities for local business and commerce community to promote business investment, franchising and licensing of Canadian Health Care Facilities, treatments and advancements in medical science. Canadian Orthopedic & Rehabilitation Centre plans to make the services offered accessible nationwide through ethical and cost effective medical business partnerships, as well as, open doors for increased dialogue and collaborations towards making the treatments more affordable for the masses in Pakistan. PReSS ReleASe

to bring Intel-based tablets to market. Looking forward, we will build upon this foundation and work closely with our ecosystem partners, across operating systems, to deliver the best mobile products and experiences for consumers with Intel Inside.” Enabling Mobile Devices with Intel Inside® Intel today announced an expansion of its ecosystem enabling efforts to deliver new device and market innovations across a range of Windows*- and Android*based mobile devices. Intel platform and enabling programs have been the foundation of OEM and ODM innovation for decades. The new program will focus on accelerating time to market for leadingedge mobile devices based on Intel® architecture with top OEMs and ODMs. The program will focus first on tablets, followed by phones, providing pre-qualified solutions with simplified building blocks to scale designs quickly for mature and emerging markets. The Atom Processor Z2580 codenamed “Clover Trail +”, Z2460 codenamed “Medfield” and the company’s 22nm Atom SoC Z3000, codenamed “Bay Trail,” will be the starting foundation for the effort. Atom Z3000 (Bay Trail) processor based tablets will become available in Q4, 2013. PReSS ReleASe

ISLAMABAD: Islamabad Police recently signed an MoU with Ufone for an initiative to launch ‘Islamabad Police Verification System’. Islamabad IG Sikandar Hayat and Ufone Chief Commercial Officer Salman Wasay pose for picture after the agreement. PR

Intel Inside® Tablets Announced with Intel Technology Partners/Resellers Nationwide KARACHI: Intel Pakistan today announced a range of ecosystem and enabling efforts that will further accelerate the company’s presence in mobile devices and help usher in new devices and richer experiences with Intel Inside®. The announcements include support from OEMs for new dual-core Atom™ SoC (“Clover Trail+”) platform Android* tablets. “Today’s announcements build on Intel’s growing device portfolio across a range of mobile market segments,” said Naveed Siraj, Country Manager, Intel Pakistan. “In less than a year’s time we have worked closely with our customers

ISLAMABAD: OGDCL Chairman Shafi Arshad, Petroleum Secretary Abid Saeed and OGDCL Managing Director Riaz Khan address shareholders at the 16th Annual General Meeting of OGDCL on Wednesday. PR

ISLAMABAD: Jahanzaib Sarfraz (2nd R), director of Global Customer Care representing Nokia Care and Imtiaz Bhatti, (2nd (L), managing director of Pak-Kuwait Takaful are signing the MoU whereby Nokia Pakistan customers can now avail insurance security for their mobile phones. PR

LAHORE: Renowned Kathak dancer Nighat Chaudhry performs during a musical evening organised by the Pearl Continental Hotel Lahore in collaboration with TILLS. PR

LAHORE: Dr Rukhsana Kalim Dean SBE and Abid Shirwani present UMT souvenir to Salim Ghauri, CEO NetSol. PR

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