CONTENTS 18
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10 Why Formula 1 fans are annoying and K-Electric ownership - this week in Pakistan’s business and economics twitterverse 12 The seesaw of Covid-19 regulations that have pulverized the restaurant industry
14 15 FinTech – shaping the future for the better S.M. Talib Rizvi 18 Can KIA be King, or do the Big 3 have another trick up their sleeve?
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32
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32 Developing an entrepreneurial vision for Pakistan Talib S. Karim
34 “Focus is fintech, not grocery delivery anymore”
Profit
24 Next Capital repeats the year 2017 26 Panther Tyres’ phenomenally good 2021 28 Another day, another fraudulent housing society
Executive Editor: Babar Nizami l Managing Editor: Farooq Tirmizi l Joint Editor: Yousaf Nizami Reporters: Ariba Shahid l Babar Khan Javed l Taimoor Hassan Abdullah Niazi l Meiryum Ali l Shahab Omer Chief of Staff & Product Manager: Muhammad Faran Bukhari Regional Heads of Marketing: Muddasir Alam (Khi) l Zulfiqar Butt (Lhr) l Mudassir Iqbal (Isl) Layout: Ahmad Salahuddin l Photographers: Zubair Mehfooz & Imran Gillani l Business, Economic & Financial news by 'Pakistan Today' Contact: profit@pakistantoday.com.pk
Readers Say Well written Farooq. I've thought quite a lot about this. Advice is especially important for first time founders. Apropos: Beware of foreign VCs bearing term sheets @heykahn, Twitter Some great points here man. Need to get a subscription for Profit now! Apropos: Beware of foreign VCs bearing term sheets @hwbhatti, Twitter Solid advice and some words of caution for the emerging founders of Pakistani startups. Great read. Even greater points of wisdom from a founder to founders. Apropos: Beware of foreign VCs bearing term sheets @aadilmaan, Twitter The talent exists in a continuous spectrum, not just top4 universities and nothing afterwards. I believe there are a bunch of universities that produce workers needed for the software houses. The biggest problem is the brain drain. That can only be stopped by offering higher salaries and better non monetary incentives. Tech cannot be looked at in Pakistan focused only because unlike any other field, getting a work visa is also extremely easy for tech sector workers. But nonetheless, I think there are enough people – new kids growing up – in Pakistan to support lower levels of both software houses and the startups. There is no real shortage. The bigger challenge is to keep senior workers around. I am writing as a Software TeamLead working in a FinTech startup in Germany, and a graduate of LUMS, also having worked in Pakistan for a couple of years before moving here. Apropos: As Pakistan’s IT sector booms, software companies and startups lock horns over tech talent Anzak Aleem, Website I think @anantha should monetize his email ID in a similar fashion. Apropos: The Pakistani meme that shook the world @Gunmaster_G9, Twitter
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HOW TO CONTACT
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Memes are an underrated Pakistani export. Apropos: The Pakistani meme that shook the world @fghori, Twitter Ever thought about what NFTs are? I share a few words about them on @Profitpk , on how they work through a retrospect of that one Pakistani meme that got sold for ~$60,000, and where do creators from the local scene fit in. NFT stands for Non-fungible tokens where ‘non-fungible’ means unique. Imagine trading
a rare Pikachu Pokemon card for a Wasim Akram collectible card, is a non-fungible transaction since both cards are different and vary in value. A fungible transaction would be if one currency is used interchangeably to purchase a good of an equivalent value. What makes NFTs unique is that they are assigned a singular internet address, with no existing duplicate address. An art piece is ‘minted’ on the address when the creator uploads the content after paying a processing fee to the marketplace. It’s like buying a plot of land and building a house on top but think digital.What artifacts could be put up as an NFT? There are a number of things and as I list them, they progressively get stranger — Fine art, digital collectible cards, music, memes, tweets or even crypto-kitties are all valid examples that have been sold.Most of these are hosted on Ethereum based marketplaces such as Foundation, Open Sea and Rarible where artists and creators can sell to the highest bidder. In conversation with @nft_alter ; the team behind the successful auction of the ‘Friendship with Mudasir’ NFT, narrated the journey from acquiring an invite to the Foundation App, to reaching out to Asif, enabling them to mint the meme and put it on auction. 2021 is already an exciting time where technology is moving in the direction of the ‘metaverse’ and NFTs are a big part of this movement. How can more creators in Pakistan reap the benefits of this movement? Apropos: The Pakistani meme that shook the world @mahmooyo, Twitter I don't know why our artists and gamers are not taking it seriously.. 14 billion market cap and growing. I've seen you can learn alot only from YouTube and CT to start. Apropos: The Pakistani meme that shook the world @Acefakhar, Twitter Want to know what NFTs are? How and why the friendship over meme was sold for approx $60k? Read @mahmooyo 's op-ed. Apropos: The Pakistani meme that shook the world @AribaShahid, Twitter What a brilliant explainer by @mahmooyo . Apropos: The Pakistani meme that shook the world @MirSanaullah, Twitter Have to admit I didn’t understand exactly what NFTs were until this piece. Relatable examples to explain the buzz in the world of digital art. Apropos: The Pakistani meme that shook the world @malik_warda7, Twitter
COMMENTS
IN BRIEF Minister of State for Commerce, Trade and Investment Abdul Razak Dawood has tested positive for coronavirus, he confirmed on Thursday. In a tweet, Dawood said he experienced mild symptoms and had isolated himself at home. “Prayers requested.”
“The business community is driving the economic growth of Pakistan and the government is making every effort possible to encourage businesses. Now the business community must make an active effort to mentor and encourage women and empower them” Arif Alvi, President of Pakistan
The rupee hit a new low against the dollar as it dropped to Rs166.98 on Thursday, depreciating 11 paisas or 0.07 per cent. The domestic unit weakened against the greenback. The local currency extended its recent sequence of posting losses versus the greenback in the interbank market for the fourth consecutive day. Pakistan and India may fight the case of exclusive rights to the Geographical Indication (GI) of basmati rice in European Union (EU) courts as the time period extended for bilateral negotiation and resolving the case amicably comes to an end this week. According to sources, the two rival neighbors have so far made no progress in reaching an amicable resolution Pakistan State Oil is in hot water after different ministries filed a complaint with the PM over PSO’s discontinuation of transporting petroleum, oil, and lubricants products through Pakistan Railways. PSO has been utilizing the services of foreign shipping companies resulting in the use of precious foreign exchange reserves of Pakistan.
The Khyber Pakhtunkhwa (KP) government has approved the establishment of three new small industrial zones in Abbottabad, two each in Peshawar, Bannu and Mansehra district of the province. The Small Industrial Estate Peshawar has been in operation for more than 45 years with more than 400 factories. The Cotton Crop Assessment Committee (CCAC) on Wednesday told over 8.46 million bales of cotton production was expected during the current season. The committee met here with Syed Fakhar Imam, Federal Minister for National Food Security and Research in the chair.
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Why Formula 1 fans are annoying and K-Electric ownership this week in Pakistan’s business and economics twitterverse
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riter Mohammad Hanif had a bit of a gaffe by not knowing how private equity works this week, but we cannot quite blame him because most people would not know this and it really only was a gaffe to those nerds that actually understand a little bit of finance. That was not even the worst part of the week, with car prices and work from home being hot topics. Ariba Shahid brings you all this and more in this week’s social media roundup.
Two sides
Yes
Yes. Yes it has. Trust us. It has.
Startup mania
Startups pump a lot of money into consumer acquisition costs. They could either go boom or bust someday. In the meantime, as consumers don’t you love it when you get discounts on ecommerce platforms? Try to enjoy this time while it lasts. Because once they are done buying customers, you are the ones that they are going to make that initial investment up from.
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Formulas derived and tested. That is what Nida Yasir thought when two NUST engineers told her about the formula 1 cars they made. There are two sides to this whole debate. The first is that Formula1 fans are extremely annoying, particularly the new ones that have popped up since they watched some God forsaken series on Netflix so it is fair for Nida Yasir to do this to them and bring them down a peg and show them nobody really cares. The second side is that she really should have at least known what she was interviewing them about. We are probably leaning towards the former side, because despite our journalistic interviewing sensibilities, boy oh boy are racing fans annoying.
Loopholes
Work from home rules
Work from home means working from bed, your dining room table, drawing room, coffee table, and even kitchen counter (where I’m writing this from). If you have a fancy table with a nice bookshelf in the background to impress people at your zoom meetings, we will call you bougie. The real ones of course are those that use those plastic desks you can use in bed as well. A work desk is just so much work and so much expense, and we will judge you for it.
Assets
Waiting for Jinnah cola, Jinna chips, Jinnah bubble gum, Jinnah mobile phone, Jinnah car, and Jinnah housing scheme. The possibilities are endless. Although it would be interesting to see if they could get away with this by using a loophole like spelling Jinnah with a single n or something.
Kudos
Credit where credit is due. What we hope to see in the future is politicians from various parties accepting the good things others have done or are suggesting. The collective effort should be towards a better Pakistan and not towards competition just for the sake of power.
Remember when everyone told you to buy gold or a plot as a form of investment. Turns out all you needed was to buy a car and even drive it around town, wear it out a bit, and get more than what you put in. Essentially making a profit on disposal if you take into account depreciation. That is the power of dwindling currency. It has also played somewhat of a role in convincing Pakistanis to only buy cars that they perceive as having a good ‘resale value’ - a silly proposition that somehow holds true here. Go figure.
Allah janay
You never know where you’re going to be but you can hope to be somewhere by a certain time. But yes, this seems like the only valid answer during an interview when you’re flustered. It is also technically an answer for every question they throw at you, but we advise that you use this phrase with caution. Perhaps restrict yourself to just the single utterance in every job interview? Choose your moment carefully.
SOCIAL MEDIA ROUNDUP
The seesaw of Covid-19 regulations that have
pulverized the restaurant industry With every new wave and every new variant, restaurants suffer a little more and there doesn’t seem any way out
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By Ariba Shahid
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ne minute in, the next minute out. No, we’re not talking about Pakistani openers in cricket. We’re talking about restaurants and the rules regarding their operations during a pandemic. With the authorities constantly oscillating between allowing customers to dine in, allowing outdoor dining only, or only allowing takeaway and deliveries – it has been a tough time for restaurants across the board. From the very beginning, restaurants have been one of the industries most affected by the pandemic not just because they are always the first up in the chopping block whenever cases of Covid-19 get out of hand, but also because the regulations they have faced have varied widely. Restaurants have had to go from operating fully to shifting to outdoor dining to only serving takeaway and delivering food. And this entire process has happened multiple times with the regulations for Covid-19 changing at the drop of a hat. Because of the strain that this has put on eateries, many business models have crumbled in the face of this onslaught. Restaurants are indoor places where people gather to eat - which makes sense for them to be a significant spot of spreading the virus. Lots of your favorite food joints may no longer exist, may have moved to smaller premises, or may even have resorted to share kitchens. There is constant adaptation that is taking place just to stay afloat until the end of the pandemic. We have seen in this time the advent of cloud kitchens and all kinds of other innovations.
The dining experience
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hen it comes to restaurants the cost of food is not merely just the cost of raw materials or ingredients and staff. The cost of running and maintaining the restaurant is an overhead that depends on the scale of the restaurant and how hard it is trying to maintain
a particular ambiance. Naturally, the lockdowns and dining restrictions have not been great for the industry. “Around 20% of restaurants have closed down,” says Athar Chawla, Vice President of the Federation of Pakistan Chamber of Commerce and Industry and the CEO of Wah! Brands. “We need to realize that historically, the majority of the restaurants in Pakistan were dine-in centric. The takeout/ delivery culture was not as prevalent. Sales on deliveries made up a smaller share. Proof of this is that as soon as dine in and out is opened up people rush to eat out if they can.” There is merit to that. In a country like Pakistan where there is a lack of public spaces, what does one really do to socialize? Think about it. If you ever want to catch up with friends, where do you usually go? Some nice café or restaurant, the mall or the movie theater? These make up the major sources of entertainment for citizens. There are not really widely available places of entertainment like very developed parks, plazas, art galleries, museums, theaters, mini golf or other game courses. Which is why restaurants and cafes are so significant to the social milieu, and why when a new one opens it always starts off so strong because it is something different to do. Which is why takeaway makes little sense in Pakistan, and ordering in feels wrong when you’re paying the same without the ambiance, service, or the fun of being out. “If we take Karachi, for instance, prior to COVID outdoor dining was primarily done at Do Dariya or highway,” says Chawla. Of course, the traditional roadside charpayi and table chair restaurants did exist then too. But those were places one would go for cheap and tasty food rather than ambiance and dining experience.
What did Covid change?
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f we look back, when Covid hit last year, the world went into lockdown and restaurants in Pakistan were closed. They were then allowed to operate on deliveries
and takeaway. “Delivery sales had always been 15-20% of total sales. After Covid, they became the new focus. says Babar Nehal, Chairman of the All Pakistan Restaurant Association who also happens to own Hoagies and Tooso. “Dine-in restrictions resulted in a significant chunk of business being eroded. While sales rose on the delivery front, they just couldn’t compensate for the total sales. The impact wasn’t big because the share of delivery sales was small to begin with,” he says. What that means is there has been a growth in delivery sales but the total sales witnessed prior to covid are far from attained without dine in. Let’s take an example. If you love steaks, chances are you only like eating them at restaurants and not at home. That’s because there’s nothing like a steak right off a skillet. This is a customer that a restaurant no longer has. Another example could be the people that order dessert after a meal to celebrate birthdays or an event. However, that chunk of customers doesn’t exist. Because honestly, who wants to order an overpriced dessert which is almost the same price as a 2 pound cake at a popular bakery? “Overheard largely remained the same because your fixed costs remained the same. You may have saved on electricity and may have let go of some of your wait staff, but you still had to pay rent and other operational costs.” Says Nehal
Discount wars, commissions and a race to the bottom
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ven though every time you order food, your mom is probably going to tell you she can make it at home cheaper, the restaurant industry insists that the cost of ingredients and making food is significantly high. “The cost of the food is the biggest component in the pricing of a dish. However, with more and more people jumping the delivery bandwagon the market started becoming saturated. This resulted in discount wars at
We need to realize that historically, the majority of the restaurants in Pakistan were dine-in centric. The takeout/ delivery culture was not as prevalent. Sales on deliveries made up a smaller share. Proof of this is that as soon as dine in and out is opened up people rush to eat out if they can Athar Chawla, CEO of Wah! Brands
RESTAURANTS
a time where profits were already struggling. It was like a race to the bottom to protect or acquire turf. This is not how you cover your overheads.” Says Nehal Chawla agrees and says the marketing cost to retain or attract new customers has also increased. One such cost is the commissions paid to third party delivery apps that sometimes can charge commissions of up to 32% leaving very little for restaurants to take home. One also needs to keep into account that the packaging costs also roughly make up 5% of costs, in addition to the fact that delivery and takeaway portions are believed to be slightly bigger. “Delivery is one of the most expensive mediums of sales for a restaurant,” says Chawla. He adds that while third party delivery apps have helped, there remains one major aggregator with a significantly high market share which sometimes results in it being tougher for restaurants and their bottom lines “Third party delivery apps did help in a way by reaching out to customers and making food available to them, however in order to survive after paying their commissions you needed to rely on volumes. Heavy discounting brings in volumes but also ruins your bottom line.” Says Nehal
“Dine-in restrictions resulted in a significant chunk of business being eroded. While sales rose on the delivery front, they just couldn’t compensate for the total sales. The impact wasn’t big because the share of delivery sales was small to begin with,” Babar Nehal, Chairman of the All Pakistan Restaurant Association
What lies for the dining industry?
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ell, COVID seems like it’s going to mutate a few more times before leaving. The restaurant industry is tired of it and the restrictions it has brought with it. “No businesses are closed. The major lockdown restrictions we see are for weddings, malls and stores, and restaurant dining. Everything else is functional regardless of how they implement SOPs. The restaurant industry is far more likely to implement SOPs. Opening up dine-in for vaccinated people is the way forward,” says Chawla. While that is for the government and health officials to decide, it is interesting to see some restaurants expanding and franchising as some close down for good. “Some brands are expanding that have money or are old and big names. They can afford to do so. However, around 80% of restaurants are small mom and pop operations. They are suffering,” he says. Nehal however feels that this is the perfect time to expand for those that can afford. “Franchising and expanding has slowed. However, it is the perfect time because good days are to follow soon. It is also the perfect time to create a local franchise.” Nehal explains that one could create a local franchise of the same restaurant opened up in different places across the city, but smaller in size. “You can open up smaller restaurants
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at multiple locations or franchise.” This way you’re able to cater to a larger audience and do not have the additional overhead of a large outlet not being fully utilized. However, again, this option is available to those that can afford to pump in money at the moment.
authority to tell the readers what to do, this scribe requests everyone to tip generously, even to the person that is dropping your order to your car when you’re ordering takeaway.
The waiters?
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orking in the service industry is no walk in the park. Sometimes serve meals to families that are way above your paycheck for the month. Sometimes you’re disrespected by the customers despite being underpaid and underappreciated. The only saving grace is when you get generous tips, or even tips for that matter. However, as a result of COVID, the amount of tips have also drastically increased. They only get tips when a customer is dining at the establishment, regardless of indoor or outdoor. With this additional income vanishing, the waiters find it hard to make ends meet. While Profit does not have the moral
Loss for some, opportunity for others hen you order pasta at a restaurant, you’re paying for the food, the overheads, and the vibe. That is exactly why you could have pasta for Rs 300, Rs 600, or Rs 2000 depending on where you go. However, when you’re ordering home you’re not really paying for the vibe and ambiance. In fact you’re washing your dishes yourself. In that case, you’re basically paying for the taste and ingredients. Home chefs have been able to increase sales because they do not have high overheads and are able to operate at cheaper prices and have been able to pick up customers during the pandemic. n
RESTAURANTS
OPINION
S.M. Talib Rizvi
FinTech – shaping the future for the better
gy that digitizes, augments and streamlines traditional financial services that has been popularised by the influx of startups trying to digitize financial services in Pakistan and the rest of the world. The basic idea behind fintech is to use technology and automation to enhance the processes involved in financial services. Fintech is usually wrongly associated with being just “an app”. The app is simply one of the tools that fintech companies use to offer services. Fintechs consist of a wide array of activities such as money transferring through smartphones, depositing a cheque, and applying for credit through the use of digital platforms. Furthermore, the scope of FinTech’s applicability ranges from industries such as education, retail banking, consumer, and commercial banking to non-profit organizations. The services offered by fintechs are varied in nature and are more efficient than traditional banking entities due to the use of ong gone are the days where the idea of opening a technology in their processes. The use of technology has allowed bank account made you shudder with the dread of for greater flexibility for the consumer. Transactions are faster and taking an entire day out to go to the bank, wait in the use of high-level security ensures their safety. Additionally, finline, sign a bunch of papers, provide what feels like techs have also played a crucial role in leveling the playing field for countless identity card copies, and be told to come the underrepresented communities. The brick-and-mortar banks back in a couple of days to finalise your account did not cater to such demographics but fintech doesn’t differentiopening and getting your cheque book. If you were lucky, your ate - all you usually need is a phone and the internet. It allows all ATM card might get to you in less than a month. customers to carry out transactions with the same ease. But in much of the world, and hopefully now in Pakistan, a Given the strides that are being made by fintechs towards process as simple as opening a bank account will become signififinancial inclusion and ease of access, the State Bank of Pakistan cantly easier through the powers of fintech. The new technology (SBP) is on a mission to revamp and revolutionize the financan be shockingly simple. After downloading a mobile applicacial ecosystem of Pakistan. For this purpose, the SBP has taken tion, all you need to do is to make a couple of taps on your mobile significant steps in the recent past. For the first time in this phone to open your bank account or to pay online through your country’s banking history, Non-Resident Pakistanis (NRPs) can debit card instantly without leaving your house. now remotely open a bank account in Pakistan through entirely Fintech possesses the power to revolutionize the way we digital and online processes. This is possible due to Roshan Digital live and this is just one example of how FinTech will augment our Account (RDA), which features services such as Roshan Apni lives. So what is fintech? It is a catch-all term for any technoloCar, Roshan Apna Ghar, Naya Pakistan certificates and Samaaji Khidmat. Crucially, this initiative supports investment into Pakistan’s stock market and property market, which will serve as an important driving force to augment the development of Pakistan’s economy. These steps by the regulator have proven fruitful, as funds received via RDA have grown exponentially from 7 million USD to 2+ billion USD in S.M. Talib Rizvi a span of 10 months. is a senior professional As a part of the National Digital Infrastructure Development Strategy, the State Bank of Pakistan has launched a micropayment gateway called RAAST. This is a key step banker with varied experience towards financial inclusion and will bring about seismic changes to Pakistan’s economy. spanning over 25 years Particularly, RAAST will provide financial inclusion for underrepresented and unbanked communities, a secure platform for digital payments, and will spearhead the significant transition towards a paperless, green economy. This shows that the regulator is akin to
Pakistan may be late to the party, but that doesn’t mean it’s even close to last call
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COMMENT
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using a digital pathway for financial inclusion. These initiatives are precursors to a great future. So far, it has been a great start but it's just a start. Pakistan is gearing towards one of the biggest changes in its history of banking. Exciting times lie ahead. Pakistan has a growing population with a growing number of mobile internet users. Pakistan currently is the 5th most populous country in the world (250 million approximately) and is on track to be 4th within the next couple of years. The number of mobile internet users has reached a critical mass of 100 million and PTA projects this number to double by 2024. The number of mobile internet users is exponentially growing by about a million a month. Pakistan lags behind in tech adoption. One of the key segments happens to be fintech, which is currently a greenfield. Incumbents (Banks and telcos) have been complacent. They employ complex revenue models and have moved away from innovation. Most of the banks do not offer mobile banking. The ones that do have poor products, limited applicability, complex designs, and unreliable operations. These Banks still employ outdated systems and have failed to evolve. They have not graduated into the 21st century tech-wise. Therefore, incumbents are in a vulnerable position to lose to an innovative, challenger bank. To go back to our original example, opening a bank account with incumbents for youth (75% of Pakistan’s population is under 35) and women (50% of Pakistan’s population) is filled with impediments and takes on average 30 days to successfully open a bank account. For youth and women (mostly homemakers), the main impediment is to show proof of income before beginning the process of opening a bank account. This has led to a huge portion of the population being unbanked (80% or 100 mln). To put into perspective, Pakistan’s unbanked population is larger than Germany’s total population. With a history of 70 years of Banking in Pakistan with 30+ banks operating throughout the country, brick and mortar banks have failed so far to scale up and make banking easy and available to the people. The banking sector needs a game-changer and fintech appears to be just that. Technology can scale up and fill this void. Fintech will play an instrumental role in the Government of Pakistan’s initiative of financial inclusion and digitalization of the economy. Why hasn’t anybody solved this problem yet? Despite the complacency of incumbents, much could not be done to operate like a fintech in Pakistan before 2019. To function as a bank or a microfinance bank Minimum capital requirements were very high (50 mln USD). State Bank implemented the EMI regulation
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Crucially, this initiative supports investment into Pakistan’s stock market and property market, which will serve as an important driving force to augment the development of Pakistan’s economy. These steps by the regulator have proven fruitful, as funds received via RDA have grown exponentially from 7 million USD to 2+ billion USD in a span of 10 months around the end of 2019 predominantly being the reason as to why fintech is a greenfield in Pakistan. Also, the advent of tech-powered startups is a recent development in Pakistan. Furthermore, Pakistan has recently embarked on the journey towards digitalization. Revenue in the eCommerce market is projected to reach US$3,900m in 2020. Revenue is expected to show an annual growth rate (CAGR 20202024) of 16.3%, resulting in a projected market volume of US$7,133m by 2024 (Statista). During the last five years, significant progress has been recorded in the usage of Internet Banking and Mobile Banking channels with an annual transactions growth of 31 percent and 88 percent respectively. All of these indicators point out that successful operation of a FinTech company in Pakistan wasn't possible before. Crossing of 100mln mobile users has only been recently achieved and this critical mass is needed for a FinTech company in Pakistan to successfully operate. Furthermore, Pakistan remains an untapped market with huge potential and promise, long ignored by foreign investors due to its poor geopolitical situation. This has stabilized and improved drastically recently. All in all, as of now, Pakistan is the perfect breeding ground for FinTech and any early mover will capture a large market, displace incumbents and possess a unique advantage. TAG aims to fully capitalize on that. Pakistan’s delay in tech adoption has led Pakistan to become a mere spectator to success stories of fintechs around the globe. FinTechs vying to enter Pakistan only have to look at 2 FinTechs that operate in comparable economies. Take the example of Nu. Valued at $30 billion USD as of 2021, is perhaps closest to what TAG aims to deliver. Starting by targeting 30% of the country’s population, Nu provided an e-wallet to the unbanked and underserved with 0 fees. Backed by big-league investors like Warren Buffet, Nu changed Banking in Latin America. With basic initial services like P2P payments, a credit card and no marketing, it now serves a staggering 40 million people in under 7 years since its incep-
tion. What made Nu so successful? It solved the issues of poor customer service, exorbitant fees, and lack of banking access. These issues are also prevalent in Pakistan. India’s leading P2P and e-banking service provider Paytm is set to have India’s third-largest IPO later in 2021 valued at $ 16 billion. Offering services like QR payment, online transactions, cash in and cash out facilities all through one simple app, Paytm has been able to capture India’s ever-growing banking sector. Paytm captures the unbanked and unfacilitated populous in India and has seen exponential growth in under a decade thanks to higher mobile and internet penetration in India. Paytm is the best example of what TAG promises the Pakistani market; reliable and affordable services all at one’s fingertip. It has now expanded to diverse services such as retail and loans which makes it a market leader. One needs to only see Paytm’s success to judge TAG’s potential and what it has to offer its customers and supporters in the years to come. All this points to a real possibility that a fintech in Pakistan can not only displace incumbents but also successfully acquire the largest customer base of a bank in Pakistan Currently, there are various fintechs that have the potential of disrupting Pakistan's economy. Three, in particular, have been granted an Electronic Money Institute (EMI) license by the State Bank of Pakistan: TAG, Sadapay and Nayapay. TAG is Pakistan’s first all-inone super financial app. TAG’s user-friendly interface makes it easy for a user from any gender, age and background to operate the app, navigate through transactions, monitor scheduled payments and payment history, and send and receive money. TAG offers a safe and reliable experience while being convenient and transparent. TAG’s use of cutting-edge technology makes it the best in class. TAG has been granted the approval from State Bank of Pakistan to start its pilot operations in Pakistan. TAG promises to be for the people. TAG is reimagining the very essence of banking in Pakistan. TAG is on a mission to equip and empower the segments that have long been ignored by brick and mortar banks in Pakistan. n
COMMENT
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AUTOMOBILES
By Abdullah Niazi and Ariba Shahid
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et us preface this article by saying that the KIA Sportage, in our very humble opinion, is one ugly car. Of course, the aesthetics of car design is not exactly business or financial analysis, and thus not the forte of Profit, but on a personal level we must profess that it looks very much like an oversized soap dish. It is also trying just a little too hard to look both like a sport utility vehicle (like the Land Cruiser) and your average soccer-mom SUV at the same time. Why do we say all of these horrendous things about the KIA Sportage? Mostly because we want to get this part out of the way, since the rest of this article will paint a very pretty picture of the position that the Sportage has put KIA in. Manufactured by KIA Lucky Motors, a joint venture between KIA and Pakistan’s cement producing Lucky Group, the new entrant in Pakistan’s automobile sector has managed to sell more than 25,000 KIA Sportages between August 2019 and August 2021. That means on average KIA Lucky Motors has managed to sell more than 1000 Sportages every month since the pandemic. And now, with car sales continuing to skyrocket in Pakistan, it is very much in the realm of possibility that in the financial year 2022, the KIA Sportage will outsell the Toyota Corolla. Now, there are a few reasons for this - most significantly that Toyota has stopped making 1300cc versions of the Toyota Corolla and are instead making the more affordable Toyota Yaris - which is why we must say from the outset that KIA is nowhere close to outselling Toyota overall. Toyota has sold 38,514 Corolla units in around the same time frame. The Toyota Yaris, on the other hand, has only been around for 14 months, and in that time has sold 29,266 - making it the fastest growing car around. Honda, in the meantime, seems to have taken a bigger hit from the KIA revolution
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with a total of 37,915 Honda models, both City and Civic, being sold in the same 24 month period from 2019-2021. Yes, car sales have grown overall in Pakistan as well, but that has been driven not just by the ability to buy cars but the choices available. It also means that the Big Three failed to tap into a massive market - cheap SUVs. Because at the end of the day, that is what the KIA Sportage has brought to the market. You can now buy an SUV for the same price as a sedan. What is undeniable is that KIA’s successful entry into Pakistan’s auto sector has not just taken away a significant chunk of the market from mainstay players like Toyota, Suzuki and Honda, but it has also caused these three companies (collectively known in Pakistan’s automobile industry as the ‘Big Three’) to change strategies that they have been using for decades to tactfully maintain the triopoly. Somehow, because of the Big Three, the choices for cars in Pakistan have remained very limited. With a population of nearly 220 million people, and more than 23 million cars out on the roads in the country, surprisingly Pakistan does not manufacture any cars locally and for decades consumers have been restricted from choosing between Honda, Toyota, and Suzuki. But the success of KIA is challenging this status quo, and their success also means that other car manufacturers making their entry into the Pakistani market are not just being emboldened, but they are also finding it easier to convince customers that there are viable alternatives to the Big Three. Already Hyundai has seen a surge in popularity, the Chinese Changan has made a name for itself with its budget sedan Alsvin, and even Lucky Motors is now planning to sign a similar joint venture with French automobile manufacturer Peugeot. And while these are all early in-roads, could KIA and the other challengers to the Big Three change Pakistan’s automobile industry forever? Yes. Very much so. And the change has been long, long, overdue.
Cars in Pakistan a brief history
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ur story begins in the early 1990s. Up until then, cars were mostly only for the uber elite, and the auto industry in Pakistan had flip flopped between privatisation and nationalisation. A quick perusal of Wikipedia will give you the details of what cars were being produced before the 90s, but the critical moment that spelled the fate of car buyers in Pakistan was the arrival of Suzuki in 1982. Pak Suzuki Motors was launched as a joint venture between the government of Pakistan and Suzuki Motors Japan, formalizing the arrangement by which Awami Auto Ltd. had produced the Suzuki SS80 from 1982. Suzuki originally owned 25% of the stock, but when the Pakistani automobile market began to deregulate around 1990, Suzuki Japan began an aggressive campaign to gain control of the company and have since increased their holding up to 75% of the company. And why would they not want to do that? Pakistan was an open market with no major player already there and Suzuki saw the opportunity to thrive. In 1989, they launched the now iconic (and now discontinued) Suzuki Mehran. Other models like the Suzuki FX followed and even their vans like the Suzuki Bolan became wildly popular. Suzuki was the first real car manufacturer that Pakistanis got an opportunity to buy from, and they were offering small, affordable, hatchback models that were reliable and provided comfort and safety according to the standards of that era. Sensing this success, other Japanese companies knew that Pakistan was an open market and decided to step in. These companies were Toyota (which also sells under the brand name Daihatsu) and Honda. Now, Suzuki had already taken first-mover advantage and would fight tooth and nail to keep their monopoly, which is why Honda and Toyota decided to target a completely different
market - sedans. In a joint venture with Toyota Japan, Indus Motors Pakistan rebranded itself as Toyota Indus in 1990 and started to assemble. The Toyota Corolla started being manufactured in Pakistan in 1993. Honda Atlas was based in Lahore, and under the auspices of Yusuf Sherazi and the Atlas Group, launched in 1992. By 1994, they were giving Toyota Indus a run for their money with the production of the Honda Civic and Honda City in direct competition with the Toyota Corolla. Suddenly, the Pakistani market had three new entrants and what seemed to be a world of choice. Initially, Suzuki did try to fight back by trying to produce their own sedans from the Suzuki Khyber to the Margalla and the very modern looking Baleno. However, all of their attempts to make sedans work, even up until recent years with the Suzuki Liana and Ciaz, have failed. The Big Three from this point on maintained a tactful and unspoken agreement. Suzuki kept its monopoly on the hatchback category and Honda and Toyota slugged it out for the sedans. If any new entrants came onto the market (and many tried), they were quickly sullied and sent packing. In this way, for nearly three decades there were essentially only six options for locally assembled ‘family cars’ in Pakistan. Suzuki at any given time was assembling three to four hatchbacks, with mainstays including the Mehran, the Alto, and the Cultus. Meanwhile Honda produced its cheaper sedan the Honda City, and it’s more expensive competitor to the Toyota Corolla the Honda Civic. Toyota focused on making just the one car, albeit in different variants with different engine sizes.
The state of the market - why it was KIA’s time to shine
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his is how it continued. A number of companies tried to launch in Pakistan. The Chinese company FAW brought in its hatchbacks along with heavy loaders around 2014. All of the attempts failed. Why? One simple reason - resale value. Successively bad car policies and the unwillingness of these three companies to manufacture completely in Pakistan meant that
This is the third time Kia is being introduced to Pakistan. What’s different is who the people behind the project are. The Lucky Group is Pakistan’s largest and fastest growing group. It has a positive track record with success stories like ICI Muhammad Faisal, Chief Operating Officer of KIA Lucky Motors car prices remained high. Even though the cars were being assembled in Pakistan, they were being imported here part by part. This meant that no matter what car prices would also rise with the price of the dollar. So very quickly, cars in Pakistan were no longer just a mode of transport, they also became an investment and a crutch against the devaluation of the rupee since most parts of the cars were imported. So, for example, if a person bought a Suzuki Alto in 20007 for Rs 500,000, a likely price they would sell the car for in 2012 would be somewhere between 600,000 - 700,000. Because of this phenomenon, one of the major factors when buying a car became resale value. And because the Big Three had become mainstays, anytime a new manufacturer came around, consumers would be worried that if they failed and packed up, then the resale value of their cars would plummet. When you only have five or six cars out on the roads of an entire country (minus the imported Mercs and BMWs of the uber rich) then any new entrant is bound to be treated with mistrust. As a result, a lot of the new manufacturers coming in would see the less than lukewarm response towards their cars and go running in the other direction and investors would pull out their money.
Suzuki originally owned 25% of the stock, but when the Pakistani automobile market began to deregulate around 1990, Suzuki Japan began an aggressive campaign to gain control of the company and have since increased their holding up to 75% of the company
This is where KIA comes in. “This is the third time Kia is being introduced to Pakistan. What’s different is who the people behind the project are. The Lucky Group is Pakistan’s largest and fastest growing group. It has a positive track record with success stories like ICI,” says Muhammad Faisal, the Chief Operating Officer of KIA Lucky Motors and himself a former Toyota Indus executive. Faisal claims that the success of the KIA Sportage has come because of Lucky Motors. However, the real difference this time around has been two-fold. The first difference, which is a more technical difference but still a more important one, is that the Lucky Group put some skin in the game themselves. KIA Lucky Motors opened up three dealerships in Pakistan themselves - an unprecedented move. Normally, manufacturers simply assemble and provide the cars to dealership franchises. “We took on no debt on our balance sheet when we conceived this project. We made an investment of $175 million. All equity. We put our skin in the game. People trusted us,” explains Faisal. The other reason is the KIA Sportage in particular. You see, KIA does not just have one car on offer. There is the KIA Carnival in the Multi Purpose Vehicle (MPV) category, as well as the KIA Picanto in the 1000cc hatchback category as competition to the cars offered by Suzuki. However, while the Picanto has good reviews and has done well, it has been the Sportage that has mainstreamed KIA and given them a head start. And that is because it is a very reasonably priced SUV in the price of a top of the line sedan, that does not cut corners to achieve this cost.
AUTOMOBILES
The SUV factor
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et us try to understand what your options are if you want to buy a car in Pakistan. If you’re rich, and we mean rich rich then you don’t need to worry yourself about Toyota showrooms or which version of the Corolla to get and whether it is better than the Civic or not. You simply go to the Porsche dealership or import a brand new Mercedes and you’re done. If you want an SUV instead of a luxury sedan, you can go to Audi or even go to the Toyota dealership and get a fortuner or the Hyundai dealership for a Tucson. Now, these are cars that range anywhere between Rs 7 - 40 million. For most people, the range that they can buy a car in is Rs 1 - 5 million. Because of this, up until around 2018, cars within this range were divided into four different categories. There were the hatchbacks that Suzuki offers, with the Alto pricing at around Rs 1.2 million, the WagonR at around Rs 1.5-1.7 million, and the Cultus at around Rs 2 million. In the price segment above this, you could find Japanese
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refurbished hatchbacks, a completely different industry. The imported Toyota Vitz and Toyota Passo could be found in the Rs 2.2 - Rs 3 million range depending on the condition of the car. After this point there are the sedans. A basic model of the Toyota Corolla with a 1300cc engine used to cost around Rs 2.7 million, and a fully loaded Toyota Corolla Grande with an 1800cc engine went for around Rs 3.6 million. Similarly, the Honda City in its top most variant was priced around Rs 2.4 million at this time and the Honda Civic with its top most variant cost around Rs 4 million. If you wanted to buy an SUV, you either had to get a Toyota Fortuner for around Rs 7 million or a Hyundai Tucson for around the same price. These were the prices around 2018-19, and around this time, the import of Japanese refurbished cars was down. The reconditioned car market shrunk. Pakistan used to import around 70,000 cars. The number has gone down to less than 15000. This meant options were tighter than ever and the prices of the Big Three were rising, with a Civic going beyond the Rs 4 million mark and the Toyota Corolla’s top most
variant not far behind. And that is exactly the moment when KIA struck. Initially, Honda tried to introduce the BRV, a seven seater SUV within the Rs 3 million range, however, the car had an underpowered engine of 1300cc and the seven seater nature made it seem more like a wagon than an SUV and it did not sell very well. In 2019, KIA Lucky Motors launched the KIA Sportage for around Rs 4.5 million. Most people loved the design and KIA provided a quality SUV in Rs 4.5 million. Before the KIA Sportage, SUVs were being sold in the Rs 7-8 million range even by new entrants like Hyundai. The KIA Sportage suddenly meant that people buying the top most variant of the Toyota Corolla or the Honda Civic could now simply add another Rs 500,000 and enjoy the comforts and the sex-appeal of an SUV. And if a person can come up with Rs 4 million to buy a car, it is more than likely that they will be able to muster up another Rs 500,000 from somewhere or the other. Especially in a country like Pakistan, where SUVs and Land Cruisers are considered the height of wealth. The KIA Sportage could give you that feeling of being a
TEXTILES
Chaudhry Sahab without the extra Rs 3 million that it cost to upgrade from a Corolla or a Civic to a Fortuner or a Tucson. “As for the Sportage, there was no such product that gave such value for money. We were also the first to introduce a 4 year or 100,000 km warranty,” explains Faisal. He is clearly proud of the move KIA pulled here, because it was undoubtedly brilliant.
Toyota claps back
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he KIA Sportage suddenly broke the market for the Honda Civic and the Toyota Corolla. As a result, Corolla had the idea to launch the Toyota Yaris. Essentially, they discontinued the cheaper variants of the Toyota Corolla with 1300cc engines, and launched a new car from scratch that was cheaper. Now, people could either buy a Toyota Corolla in the Rs 3.5 - 4 million range, or a Toyota Yaris in the Rs 2.5 - 3 million range. Essentially, Toyota did to the sedan exactly what KIA did with the SUV. KIA offered an SUV at a comparable price to a sedan and people went crazy for it. Toyota offered a sedan at just a little over the price of a hatchback. Think of it this way. If you were going to buy a Suzuki Cultus hatchback with a 1000cc engine in 2019, you would be spending around Rs 2 million. Now, you could simply add in Rs 400,000 and get a Toyota Yaris, which is a sedan with a 1300cc engine. The Yaris was also priced just a little lower than the Honda City, which ranges from Rs 2.7 - Rs 3.1 million. And since the Yaris is a newer design, people naturally gravitate towards it. Similarly, if you were buying a Honda Civic for Rs 4 million in 2019, now you can add Rs 500,000 and get a KIA Sportage SUV. So what was the result of this massive change? For starters, Suzuki had to fall back on their smaller car the Suzuki Alto, which is a 660cc car that ranges from Rs 1.2-1.5 million and is the cheapest car available in the Pakistani market other than the United Bravo, which has not seen great success and has continued to achieve the same brand value as Suzuki or
the other new entrants. This was because the segment that the Suzuki Cultus in the Rs 2 million and above range catered to was cut by the Toyota Yaris in particular, as well as the KIA Picanto - which is KIA’s hatchback car that has done well but not as well as the Sportage has done. The real damage was done to Honda, since KIA cut into their sale of the Honda Civic, and the Toyota Yaris meant another budget sedan was available causing the sales of Honda City to be affected. That is why Honda Civics and Honda Citys combined sold a total of 37,195 units in the past two years. In comparison, the Toyota Corolla alone, despite being challenged by the KIA Sportage, sold 38,514 units in the same two year period. Toyota had an incredible run with the Yaris, with 29,622 units sold in 14 months. If we take an average of the number of Yaris sold in 14 months, we get 2115 cars. If we then multiply it with 24 months, that makes it 50,780 cars in total. Meaning, had Yaris been produced and sold all 24 months, it would be the most sold car. At this rate, the number of Toyota Yaris sold are double the number of KIA Sportages - something that is to be expected since the Yaris is Rs 2 million cheaper and cutting into both the Suzuki Cultus market and the Honda City market. Meanwhile the KIA Sportage sold just over 25,000 units - which would otherwise have been split between the Toyota Corolla and the Toyota Civic. Honda will be hoping to regain some momentum with the launch of the new generation of the Honda City which might help them capture some of the market from Toyota Corolla and also Suzuki Cultus. However, whatever happens, in only a couple of years it has become very clear that the KIA Sportage has changed the landscape of what Pakistan’s automobile industry looks like.
The other challengers
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et us give some credit where credit is due. Other manufacturers had already entered Pakistan before KIA Lucky Motors began operations and were
taking a gamble on Pakistan. However, there was always going to be hesitation within the consumers over buying outside of the Big Three. The Big Three fail to provide airbags and other basic services, but they are a familiar evil that has good resale value. That is why KIA did what they did - they offered the deal of a lifetime and it just couldn’t be ignored. A quality SUV in the price of a sedan with a 100,00KM warranty. People went for it, and as a result became more comfortable with not just the idea of shopping KIA, but of buying cars outside of the Big Three as well. That is why the rest of the new entrants owe a debt to the KIA Sportage as well. Take, for example, the Chinese-English company MG, which has launched its own MG HS and ZS, including all electric variants in the price range of Rs 5 - 6 million. They are also preparing to launch a sedan called the MG 5 which will also reportedly be priced less than the Toyota Corolla and the Honda Civic. Similarly, Chinese company Changan has launched its budget sedan called the Alsvin, which is within the Rs 2 - 2.3 million range and could make a significant impact. While Hyundai has kept its SUV Tucson in the Rs 6.5 - 7 million range, it has now brought in its Hyundai Elantra, which in the Rs 3.8 million price category is a little cheaper than the Civic and the Corolla and has a bigger 2000cc engine and more features. Most importantly, now that Pakistani consumers are more comfortable with buying outside the Big Three and it has become clear that resale value exists for these other cars as well and that these new entrants are going nowhere, people are excited to try out these new cars. The Toyotas and Hondas are old news, and fresh designs and features have excited people. While Toyota, Honda, and Suzuki are going to remain the ‘Big Three’ for a while with the most sales, they are no longer a triopoly. They have serious competition and that is a good thing. Not just because it makes the market more interesting and diverse, but because now they will have to improve their standards and quality as well. n
AUTOMOBILES
Next Capital
repeats the year 2017
In 2021, brokerage income stands at around 85% of total operating revenue, while investment banking only makes up 15%
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y all accounts, it looks like an astonishingly good year for Next Capital. In its recently released financials to the Pakistan Stock Exchange, the company’s turnover jumped to Rs421 million from just Rs 246 million, while its net income shot up to Rs 81.9 million, compared to just Rs17.7 million the year prior. That’s a jump of nearly 4.5 times. But the increase does not look as impressive when one zooms out. In fact, this is the second best pair of results that the company has ever earned. In 2017, the company had a net profit of Rs108 million, the highest it has ever been. That year also boasted the highest revenue, at Rs424 million. So the question is now why the company did well this year - it is what happened between 2018 and 2020 that forced it to catch up? But first, some context on Next Capital. The investment bank and equities brokerage house is the brainchild of Najam Ali. Perhaps most famously before Next Capital, Ali was the
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chief executive officer at JS Investments Limited. During his tenure at JS Investments, the company achieved the highest rating of AM2 Plus in the industry, and remained the largest asset management company in the private sector, with Rs300 million assets under management. He has also been the founding chief executive officer of the Central Depository Company (CDC), Pakistan’s first and only securities depository. While at CDC, he also led the development and implementation of the National Clearing and Settlement System, which is the centralized clearing system in Pakistan for all the stock exchanges. The point of listing these resume activities is to say that when Najam Ali decided to start Next Capital in 2009, people paid attention. It helped that he was able to also snag other members for Next Capital form the industry: such as Zulqarnain Khan,direc-
tor, who had previously worked at JS Global Capital Limited, and at AKD Securities, Ali Akhter Ali, the man aging director for Capital Markets, who had previously worked at TPL Life Insurance and JS Investments. Next Capital was quick to list: while started in 209, it was listed on the exchange in 2012. That year, its turnover stood at Rs41 million, cand crossed the Rs100 million mark in 2014, and the Rs150 million mark just a year later. It was in 2017 that the company did astoundingly well. According to that year’s annual report, where total revenue increased by 116%, the brokerage revenue has grown by 77%. The company has basically increased its presence significantly in foriegn equity brokerage. There was only one ominous line from
the report: “Although a subdued outlook for the equity market could not be ruled out in the immediate term given macroeconomic headwinds, long term prospects for local equities remain robust.” And it was that short term crash that ruined them. The very next year, revenue fell 38% to Rs263 million, and the company made a loss of Rs 25 million - its second loss in two years. The economy and the capital markets had essentially crashed the following year. As a rule, an election year is always a miserable year of uncertainty, which is reflected in Pakistan’s general economic health. The decline in trading volumes meant a decline in the brokerage income by 28.5%. Institutional and retail equity brokerage declined by 30.5% and 25.3%. It also didn’t help that the same year the government changed some of its taxation laws around brokerages. The tax rate on equity brokerages was doubled in 2018’s budget, which meant that even though the company made a pre tax profit of Rs4.7 million, it ended up making a loss of Rs25.3 million. Still, it didn’t do too bad in the years
Perhaps most famously before Next Capital, Ali was the chief executive officer at JS Investments Limited. During his tenure at JS Investments, the company achieved the highest rating of AM2 Plus in the industry, and remained the largest asset management company in the private sector, with Rs300 million assets under management after. WHile revenue fell to Rs219 million just the year after, the company made a profit of Rs5 million, and then a profit of Rs18 million the next year. This year was a bumper year, as it were. The company’s operating revenue increased by 885, while the brokerage income increased by 78%, mostly because of increased trading activity. The advisory and consultancy revenue also increased by 35% from last year. What is interesting is how the composition of how Next Capital makes its money has changed. For instance, in 2017, almost 30% of the company’s operating revenue originated
from consultancy fees, while the brokerage segment contributed 70% Of that, more than 62% of brokerage income originated from institutional clients, such as banks, mutual funds and insurance companies, while the rest came from retail investors. Fast forward to 2021, and brokerage income stood at Rs355 million or around 85% of total operating revenue, while investment banking only makes up 15%. Meanwhile only 28% of the brokerage income comes from institutional clients, while retail clients make up the rest. n
BANKING
Panther Tyres’ phenomenally good 2021 After finally being publicly listed, the tyre company has made a strong debut showing
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f you’ve never heard of Panthers Tyres, you’re not alone. The website, for instance, only features one lone annual report for 2021 (which was released to the Pakistan Stock Exchange on September 1). That’s because Panther Tyres only just became a publicly listed company this year, in February 2021. In fcat, it was oversubscribed 4.4 times over, and managed to raise Rs2.6 billion. That is not surprising; what is perhaps surprising is that the company did not go for an IPO sooner. After all, it was established all the way back in 1983. It is a welcome change; there are only two other publicly listed companies that manufacture tyres. So, who is behind this company? Panther Tyres took life as Mian Tyre and Rubber Company Limited, started by, you guessed it, someone called ‘Mian’ - Mian Iftikhar Ahmed, to be precise. He graduated with an engineering degree from Idaho in 1970, and then for the next 13 years worked for multinational companies. His own manufacturing business was to start in October 1983, which was later converted to a public limited company in 2003. Panther Tyres Limited is the first company in Pakistan to locally manufacture tyres for two wheelers, beginning in 1984, and three wheelers in 1993. Considering that Pakistan had been importing tyres before then, it is somewhat an achievement that just two years later, in 1996, the company was able to start exporting “Made in Pakistan” wheelbarrow tyres and tubes to European markets. That would kick off an exporting frenzy: today, the company exports tyres and tubes to different countries including Turkey, Poland, Macedo-
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nia, Egypt, Bangladesh, UAE, Afghanistan, Nigeria, Kenya, Sudan, Ethiopia, Algeria, Yemen and Somalia. What about in Pakistan? Panther Tyres caters to two two broad markets locally, i.e. OEM (original equipment manufacturer) and replacement market. In that department, Panther Tyres has done very well, having maintained a long standing relationship with key OEMs such as Suzuki, Honda and Yamaha for more than 26 years. Meanwhile, the replacement market is the secondary market for tyre manufacturers, including distributors, wholesalers and retailers. This has picked up in recent years, since this market depends on increased imports, and increased sales of used vehicles. After sales from OEM, the vehicles become part of the replacement market, which means the size of the replacement market increases every year. All of this simply means more tyre demand for companies like Panther Tyres. In fact, the Company has built a large distribution network with more than 500 direct business partners. In April 2018, the company even ventured into trading automobile lubricants and spare parts, taking advantage of that distribution system. Still, the local tyre industry only caters to 35% of demand; the remaining 65% demand is catered by imports. This is set to change. For one, the local industry, after many years, has started making high quality tyres at lower costs due to increased efficiency. Second, the federal government has started taking stricter measures against smuggling and under-invoicing. That meant that this was the right time
for the company to seek an IPO. It helped that the company had been doing financially alright. Sales in 2015 stood around Rs5.5 billion - this crossed the Rs10 billion mark in 2020. Meanwhile, profits hovered around the steady Rs200 million mark. But nothing compares to the year 2021, which has been a record year for the company. This year, the company’s sales shot up to Rs16 billion. In fact, the compounded annual growth rate over the last five years has been at 22%. Exports sales of the company also increased from Rs878 million to Rs 1,350 million, posting a growth of 54%. While selling and distribution expenses during the year increased from Rs414 million to Rs581 million, it was offset by higher capacity utilization. This meant sales stood at an astonishing Rs851 million, compared to last year’s Rs251 million. And Panther Tyres has been working diligently at investing back. The company generated 1,951 million cash from operations prior to working capital changes, and to support working capital requirements Rs.2,464 million were already invested. Another Rs 1,860 million was invested in plant and machinery in line with the expansion plan. What expansion plan? The very plan that the IPO was needed for. All segments of segments of production are being increased, but especially relating to tractor.The first phase of the expansion will be completed by September 30, 2021 which will support the company’s sales plan for the year 2022. The second phase of expansion is expected to be completed by March 31, 2022, whereas the third phase is expected to be online by June 30, 2022. n
AUTO PARTS
Unraveled By Maxine Bédat cutting the cloth
This survey of the excesses of the garment industry puts a determinedly human face on the high cost of cheap clothing
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lothing has never been cheaper, nor its volumes so immense. A casual browse of the summer sales at Swedish fast fashion purveyor H&M unearths a sleeveless dress in white cotton for £3, and a pair of “Conscious” drawstring-waist trousers cut from a viscose-polyamide mix for £9. At Manchester-based Boohoo, which is running a 70 per cent off promotion, bandeau tops and a “Mindful” white cotton T-shirt will each set you back just £2. For less than a cup of coffee, you might be tempted to buy that T-shirt and, even if you didn’t really like it, toss it in a donation bin after a wear or two. At £2, what’s the harm? But there are vast — and for those of us in the west, often unseen — consequences to be paid for these small, mindless purchases, as Maxine Bédat outlines in her smart new book Unraveled: The Life and Death of a Garment. Although fashion’s abuses have been well documented for decades (see the sweatshop controversies of the 1990s) the problem has ballooned rapidly. In the first 15 years of this century, global garment production is estimated to have doubled to as many as 150bn items per year — a staggering figure when you consider the size of the global population (7.9bn) and the number of clothes already stuffed in our closets. The toll of our cheap fashion thrills is paid by the women (and it’s mostly women) who work 12 to 14-hour days on a gruelling assembly line making less than the legal minimum wage in Dhaka, Bangladesh — an experience one woman likens to a “cage”. It’s paid in the ink-black, sinus-clogging rivers where Chinese factories allegedly dump their chemical waste, and which dangerously feed the local crops. It’s paid in the early-onset cancers of pesticide-spraying farmers in Texas, who unload their cotton in opaque exchanges before it is shipped halfway around the world to be spun, woven and saturated with industrial chemicals (a third of a pound of which are involved in the making of an average T-shirt, Bédat reports). And it’s paid in our accelerating climate
Book Review
emergency, of which fashion, with its relentless demand for raw materials and energy to power its factories, is a significant contributor. For those who have seen Andrew Morgan’s documentary The True Cost (2015), or read Elizabeth Cline’s Overdressed (2012) or Dana Thomas’s Fashionopolis (2019), all of which investigate the growing human and environmental abuses of the globalised garment trade, none of this might sound particularly new. Bédat is a former lawyer and fashion entrepreneur who in 2019 founded the New Standard Institute, a not-for-profit that combats greenwashing in the fashion industry. What she brings to that growing body of literature is a meticulously researched, even-handed and remarkably human account of how fashion, in its pursuit of ever-lower prices and higher profits, became so reckless, dirty and inhumane. The author’s journey begins in Texas, where she discovers what half a century of spraying fertilisers and chemicals has done to the soil and to farmers’ health, and yet why so few are willing to make the switch to organic. (It’s simply too costly for them to do without further government-sponsored financial incentives, and even though only 0.7 per cent of the world’s cotton is organic, there is not enough demand for it, meaning cotton sometimes trades at a lower multiple to conventional cotton than other kinds of organic crops.) She then travels to China to see why manufacturing jeans there costs only a fifth the price it does in El Paso, Texas, once the denim capital of the world — low wages and poor environmental and worker protections have a lot to do with it. Later, in Bangladesh and Sri Lanka, she meets the seamstresses who toil in factories, some of whom are also coerced into sex work when there are not enough garments to sew. Back in America, Bédat observes the robot-like way in which warehouse workers must operate at Amazon, now the US’s largest clothing retailer. And finally she looks at where our clothes, once discarded or “donated”, ultimately end up: often, in burning refuse piles in Africa.
Throughout — and this is where the book excels — she connects the dots between what she is seeing first-hand, and the many forces that have turned fashion into the dangerous and disconnected industry it is today. Among them, neoliberalism, labour unions, western trade policies designed to protect domestic manufacture that in fact have the opposite effect, and fashion brands’ shift away from making their own clothes to merely curating and selling them. In profiling individuals and telling their stories, Bédat gives a human cast to a book that might have otherwise been mired in statistics, as so much writing about fashion and sustainability (mine included) often is. But is it enough to get readers to change their shopping habits and to become, as she suggests in her final chapter, not just consumers but citizens advocating for change? Perhaps because of Bédat’s approach — so measured in her language, so careful not to sensationalise — I didn’t feel the same rousing drive to change my habits as I have after digesting certain articles and documentaries on fashion and climate. And the suggestions to buy less but better, and to put social media pressure on fashion executives, have appeared many times before. Yet her stories of the people she so empathetically profiled in writing this book — the cotton farmer who said he’d “rather spray” than switch to organic, the sewing women living in shanties in Bangladesh and Sri Lanka, who profess no hope for themselves and only for their children — will stay with me a long time. Courtesy FT
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Like many others, the Grand Avenue Housing Project is based on lies and deception By Shahab Omer
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ur readers might feel at this point that every week, come hell or high water, no matter what else is going on in the world of Pakistani business, economics, and finance there is always at least one story about a massive real estate project that is a fraud. Trust us when we say that we are a bit tired of it as well at this point. Particularly because it feels like all of these projects use the same classic techniques to defraud people. This week, we are bringing to you the case of the Grand Avenue Project on Lahore’s main Ferozpur road. Many things will be familiar the overselling of files, the paying off of real es-
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tate agents, the grabbing of land, and generally shady activities. All of these tricks of the trade we point out nearly every week ad nauseum. But what can we do as well? Every week there is a new project getting up to the same old things with some twist of their own - that is how prevalent real estate fraud is in Pakistan. It preys on people with dreams of investing or making a house of their own one day. And that, perhaps, the most sinister part of this constantly repeated vicious cycle.
Development extravaganza
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etween 2008 and 2010, when Mian Shehbaz Sharif returned to the Punjab Chief Minister’s office, even though his party had lost the election at
the center, they were in a good position for the next five years. With democracy finally returned, the PML-N would silently allow the PPP to blunder their way through running the federal government, pointing out their foreign policy mishaps and all other little things they were getting wrong. And while the PPP faced the heat, Shehbaz Sharif would go on a flashy glow-up project on Punjab - mostly Lahore. Roads were remade, overhead bridges were constructed, and underpasses were being built every other day. It was an infrastructural lollapalooza in Lahore and voters loved it. Thus, it was a good place to be. But what this also did was heat up the real estate market in Punjab, and without any eye to regulating these privately led projects, it is something Punjab is still suffering from today. Take Lahore’s Ferozepur Road for example.
It was developed and Shehbaz Sharif had made plans to build a number of overhead bridges here, and even before it had happened the real estate business began to flourish. With the development of roads, there started the development of business and construction. A number of housing schemes were introduced in the surrounding of Ferozepur road due to its significance and accessibility. You see, developers need to find new, attractive areas to develop their real estate on. Often, they have to build malls or repair road or make other central locations to get people to come towards their projects. However, as soon as the government starts developing an area, it becomes attractive to prospective real estate customers without the real estate developers having to do much about it. They find a good area to start their new projects on using the government’s dime - which is why when a road like Ferozpur is renovated, builders and developers swarm their like flies to fallen ice cream on a hot summer day. Many renowned developers got into the business with the housing scheme. But the unique thing that is common in all the schemes on this road is that they are found in corrupt charges, in particular deceiving general people and looting their money. There were some bigger developers and some small developers involved in this real estate business. But no matter their size and the amount of skin they had in the game, all of them were finding innovative and some not so innovative ways to fleece people out of their money - all built on false hope and empty promises.
Grand Avenue
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n 2012, when Ferozpur road was fresh and had gone through its makeover, a developer named Riaz Chauhan started the Grand Avenue Housing Scheme. The Ferozepur Road area was a good choice for Chuhan for two reasons. The first one we have explained in detail above (the development of the road by the Punjab government). The second reason was just the cherry on top of the cake - apparently it is very easy to grab government and agricultural land in this area. Patwaris of this area are incredibly powerful and they do as they wish with official records with little to no accountability. Now, these developers had also started another project called the Central Park Housing Scheme. However, it was claimed that this [Grand Avenue Scheme] would be a mega housing project where all the housing facilities would be available. This is the typical part of how these stories go. Marketing was started even before the project started and a good commission was also offered to all the property dealers in the area. Traditionally, while the developers were trying to sell the project,
large property dealers in the area were also selling files of the scheme to people in droves. However, these files belonged to Block A and Block B of this project and those who got the files here had also got plots. But the kind of development claimed by the developer for the beauty of the society was left incomplete. For example, when you look at the Main Boulevard from the entrance of this society, the plots along with it are empty and there is still a lot of construction to be done. However, as the plot file was getting cheaper and people were getting possession of the plots, people did not complain much about the stalled works from the developers. This is where the techniques used by Chauhan and Grand Avenue get a little different and a little more interesting. The developers had also improved their position in the market by capturing the files of two blocks and then the plots and had also won the trust of the people. During this time the success of the project was publicized through large land portals and vloggers. The announcement was made because the developer now intended to defraud the public. Now, an interesting and noteworthy thing here was that this society was doing business without the approval of the Lahore Development Authority (LDA) i.e. the society was illegal. Meanwhile, the developer made a strong statement in the market and said that the society’s phase one, which included the A and B blocks, did not fall within the limits of the LDA. Therefore, the developer obtained approval from the Town Municipal Administration (TMA) Nishtar Town. The developer had obtained approval from TMA for Grand Avenue society on land near 62 kanals and 18 marlas. Now another thing to consider is that the approval for the Grand Avenue Housing Society was obtained from the TMA, but this approval was for a small piece of land. It is impossible to form a society on a land area of 62 kanals and 18 marlas. Sources in the district administration even told Profit that in the past, approval of any housing society, plaza, or house map from the TMA was not a difficult task. “Fixed bribes are taken for every job in the TMA office and since then on a monthly basis the field staff of this office has been taking bribes and approving numerous societies. As the location of this society was Ferozepur Road to Kasur Road, the developer contacted TMA. If a little investigation is done, then within the limits of Kasur, many of the housing societies which have been given approval by TMA are either defrauding the people or grabbing the land of the common man and selling it illegally,” they said. Following the traditional manner, the administration of the Grand Avenue Housing scheme also introduced residential and
commercial plots of 5 marlas 10 marlas and of 1 kanal. The management of the society set the rates of the plot files cheaper than the actual market price. The plots of 5 Marlas residential plots of Block A&B were being sold from 2 million to 2.7 million in the beginning whereas now the same plot file is being sold from 1.5 million to 3.9 million. The file of 10 Marlas residential plots of the same blocks were being sold from 3.5 million to 4.7 million in the beginning whereas now the same file is being sold from 4.1 million to 5.8 million in open market. The price tag for 1 kanal plot was set by administration at 6 million approx. Whereas now the same plot is being offered at 7 million approx. As the matter of commercial plot is concerned, the 4 Marla commercial plot was set to sell at 8-9 million by the administration of Grand Avenue Housing Scheme. A senior LDA official informed Profit that some land of the society were not really included in the LDA boundaries at that time, but much of the area that was included in the society was within the LDA boundaries. “If you open a beauty parlor inside your home and start a business, LDA and PRA (Punjab Revenue Authority) staff will be at your door the very next day. Not only that, but the district administration, the police and the officials of unknown government departments are trying to shut down your business. Because you are doing this business without the approval of the relevant authorities. Now think for yourself whether the officials of all the institutions will not reach such a big housing project. Absolutely, but these people take bribes and remain silent and do not take any action,” said the official. “The same thing happened with Grand Avenue. The project, which began in 2012, was declared illegal by the LDA in 2015 and had sold land illegally in those three years. In those three years, even the top officials slept soundly because of a good amount of money from the developer as a bribe was coming to them every month. To this day, the society has not been able to get approval from the LDA because it has many technical flaws. Requests from the developer have been received by the LDA several times, but its approval is still a mystery that has not yet been resolved,” they lamented. The official added that the government and the concerned agencies should first identify the corrupt elements in the LDA so as to prevent fraud in the name of housing societies. “Look at the case of Ferozepur City in which two LDA staff members were found guilty. I don’t know how many cases in which the LDA staff is the main culprit. People spend their whole lives trying to buy their house and LDA staff allow fraudsters to loot such people. No illegal housing society can fool the public if timely action is taken,” he suggested.
REAL ESTATE
Method of fraud
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he real game started after the society had sold the files of Block A and B and had also given possession of the plots to the people. Although all these sales were illegal because the society was not approved by the LDA. During this time all kinds of marketing tools were used to win the trust of the people and it was now much easier for the developer to defraud the public. The developer gradually began marketing the C block of Grand Avenue in the market. The only problem for the developer during this time was that the society was not approved by the LDA. Chauhan hired a large number of property dealers from the market who could satisfy the people to buy files despite there being no LDA approval. One thing is clear, the role of the property dealer has always been important in every real estate fraud and the dealer is as guilty as the developer. An affectee of Grand Avenue official told Profit that a friend of his had not only acquired a plot in the B block of the society, but his house was also under construction there. “I got some money from my inherited property and I was trying to buy a house for my family. Meanwhile, my friend introduced me to a property dealer named Arshad, and he was also claiming deals to buy and sell plots and houses of most housing societies on Ferozepur Road. Arshad insisted that I should also buy a plot in Grand Avenue because the said society has announced its C block and the files of this block are also being sold in the market. The satisfying thing for me was that society was fine and after all, my friend is also building a house there, so what’s wrong with me buying a plot here?” he explained. “I consulted my brother about this and he advised me to see if the society is approved by LDA. When I checked a little, I found out that the society is not approved by the LDA. I asked the property dealer [Arshad] if the society is illegal then would it be right to invest here. The dealer reassured me that the society did not fall under the purview of the LDA and the officials of LDA are blackmailing developers only for their bribes. The dealer said that this society is within the limits of TMA Nishtar Town and is also approved from there. He (the dealer) even told me that he is ready to give any kind of guarantee. It was my stupidity that I bought the C-block file and later found out that there was nothing there,” he informed. This is how it goes for so many people that end up spending their life savings or their inheritance on a completely fraudulent project. The developer had sold only plot files to naive people even though he had no land for them. When people started demanding plots, quarrels started. Every day, the victims began to surround Chauhan’s office and Chauhan kept
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on avoiding the people with his cunning but when nothing was done, he started threatening the people. People had nothing but files and they had sunk their money. The developer had skillfully defrauded the people and the poor people were knowingly hoping that their sunken money might be recovered. This practice of real estate developers is nothing new, but it is astonishing why the public is so deceived.
Fraudsters get NABd
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rofit also contacted a National Accountability Bureau’s (NAB) spokesman since NAB had arrested the developers at one point. However, the spokesperson informed that during 2016, the management of Vesta Developers launched a mega housing project named Grand Avenue Housing Scheme and started booking plots.The spokesperson added that the developer lured the general public to buy plots on installments but possession of the plots had not been given to the affectees. “Accused persons, the owner of the project along with the other involved market dealers had cheated a number of public at large by collecting huge amounts from them. In pursuant to the multiple complaints pertaining to the offence of cheating general public at large, an inquiry was authorized by NAB Lahore against owners and developers of Grand Avenue Housing Scheme, Lahore & others dated 6th of January 2020. Immediate after scrutinizing of data collected in bulk, the NAB team investigating this scam requested their high-ups for upgrading said inquiry into investigation level against owners and developers of Grand Avenue Housing Scheme as soon as knowing the magnitude of the matter the Director General (DG) NAB Lahore Shehzad Saleem, subsequently authorized to upgrade it in September 2020. That the owner of the Grand Avenue Housing Scheme got sanction of the land subdivision known as Grand Avenue measuring merely 62 kanals and 18 marlas located at Mouza Jhulkey of Ferozepur Road from Town Municipal Administration Nishtar Town, Lahore and extended their housing scheme illegally up to 4000 kanals without any approval and in sheer violation of laws intact,” the spokesperson informed. They added that as per LDA, an application floated on 17th august 2016 by the society administration was received in LDA seeking preliminary planning permission of Grand Avenue Housing Scheme comprising an area measuring 5300 kanals land falling in Mouza Jhulkey and Shaahzada, Ferozpur Road, Lahore. “Amazingly, the management of society forwarded another application dated March 26, 2018 to LDA about revision of the area for
preliminary planning permission by reducing it from 5300 kanal to 2022 kanal. Afterwards another request was forwarded for incorporation of additional area of 1978 kanals. During the course of Investigation, it was unearthed that the accused persons had sold 2818 files of Blocks A&B and 2582 files / plots of Block C, which complete land required for sold out Block C of Grand Avenue Society was not available with them. Going deep into the case it was further established that the accused owner and developers were found deeply involved in the commission of offence with malafidely and ulterior motives of grabbing public money,” he informed adding that into the bargain, it was also revealed that the prime accused even did not spare his co accused persons in the sale of files/plots. “As per record confiscated from society, it had offered possession in Block-A and Block-B, however possession was not given to the members of Block-C and Society admin had been lingering on the matter of handing over actual possession to the public. So far, NAB Lahore has received 1434 complaints of the affectees against the management of Grand Avenue Housing Scheme alleging therein that they had been shown smoke screens and vehemently cheated by the owners of the said scheme on the pretext of selling plots in society. Even after the lapse of considerable time, neither possession of the plots was given to them nor was society approved by LDA. Similarly, there was no development work in Block-C of the society, whereas, development work of Block A & B remained incomplete, till time,” he added. The spokesperson informed that during the course of subject investigation proceedings the owner accused Riaz Ahmad Chuhan along with land dealers namely accused Majid Nazir, accused Ashfaq Ahmad, accused Muhammad Irshad and accused Muhammad Yousaf were arrested by NAB. “They consequently offered to return the crime proceeds / applications along with affidavits. DG NAB Lahore after thorough deliberation, recommended the plea bargain offers of the accused Chohan worth RS 2,207.457 Million, accused Majid Nazir worth RS 12.1 Million, accused Ashfaq Ahmad woth RS 7.5 Million, accused Muhammad Irshad worth RS 22.7 Million and accused Muhammad Yousaf worth RS 11.7 million and the same were verified by Chairman NAB, Justice Javed qbal and subsequently approved by the Accountability Court, Lahore. Total determined Liability was RS 2,261,751,458. First installment of said liability has been disbursed on 12th August 2021 among 1431 affectees amounting to RS730 million. This was a case in which not only the developer but also the property dealers were arrested. However, a second installment for affectees is planned for late September or early October.” n
REAL ESTATE
OPINION
Talib S. Karim
Developing an entrepreneurial vision for Pakistan Universities need to step-up and give their students an entrepreneurial culture they can thrive in
First, faculty can connect with experts to discuss new advancements in particular fields. Second, students can acquire in-depth knowledge pertaining to their field of study. Experts can also guide students for their Capstone Projects
In a broader context, entrepreneurship provides a basic structure to resolve impending challenges of society and the economy. Pakistan can move towards an entrepreneurial-fonnovation and creative thinking are the two pillars on cused economy, but a mindset and an ecosystem are required. which the ability to conceive new ideas and solve problems The mindset for entrepreneurship could be developed when stands. Entrepreneurs are the business leaders who develop the students are connected to experts in the fields they are a business model and earn revenue by offering a product or interested in. Learning and watching first hand successful service. Their business generates employment opportunities entrepreneurial ventures is not just an enriching experience, that strengthen the socio-economic fabric. And given how but also encourages the development of the entrepreneurial entrepreneurial our world is becoming, it would not be a stretch to spirit in these students. Such specialists guide students on say that the age of business management may be coming to an end, how to tread when working on their start-ups. An ecosystem and that the age of entrepreneurship is upon us and has room to is created when multiple start-up ventures operate, compete, thrive by those aspiring to launch their businesses. and collaborate to develop the industry. Students use digital media, especially social media, to connect A business school needs to promote a culture of with customers and stakeholders, market their ventures and launch innovation. It identifies students aiming to launch a starttheir start-ups. Business schools across Pakistan have been offering up venture and induct them into their incubation center for undergraduate degree programs in entrepreneurship that students mentorship. The practical guidance can come from the faculty opt-for with enthusiasm. of the institute and industry experts. An effective linkage between the faculty and industry can streamline the exchange of information. This academia-industry relationship can serve multiple objectives. This academia-industry linkage is a major buzzword in business education and this is for a reason. First, faculty can connect with experts to discuss new advancements in particular Talib S. Karim fields. Second, students can acquire in-depth knowledge pertaining to their field of study. is the President of the Experts can also guide students for their Capstone Projects. These Projects are multidimensional assignments that formally end the students' academic journey but add value to Institute of Business their intellect and industry-centric acumen. Experiential learning, therefore, is the foundaManagement (IoBM) tion on which the various graduate and undergraduate programs are developed. Business schools facilitate students to acclimate to the concepts and principles they learn in class and implement them once they step into the industry. Undergraduate degree programs
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in entrepreneurship include such meticulous details spread across the curriculum to nurture an entrepreneurial vision among students. To promote this vision of entrepreneurship, business schools should develop their incubation center and conduct extensive industry engagements to facilitate students in launching their start-ups. The faculty members and industry experts can provide insights on how to launch a sustainable business model that will promote entrepreneurship as a degree program, motivate students to become entrepreneurs, and create an ecosystem where students, faculty, and industry experts can interact to exchange insights and knowledge and experience. Furthermore, the start-up incubators and accelerators working in Pakistan need to engage with academia. Venture capital will be acquired when the start-up industry thrives and raises investor confidence, and that will happen when all stakeholders work in cohesion. With changes in industry trends, market needs, concepts, and practices, we must attune our learning to the idea of entrepreneurship. Gone are the days when entrepreneurs were considered individuals who took risks to set up a business. Today, they are guided by mentors, inspired by well-established entrepreneurs, enthused about working through social media and digital media that connect them with national and international clients, mentors, and investors. Global connectivity is not an issue in today’s age of information.
The question is how to develop a practical business idea, a logical business model, a realistic financial plan, and a vision to run the operational and strategic aspects of the startup smoothly. Business schools should integrate entrepreneurial insights into the curriculum of undergraduate courses offered for entrepreneurship. These acumens must come from the local landscape of Pakistan. Students must know what action plans must be implemented to turn a start-up idea into a success. Academia needs to associate theory with practice. Business schools can launch elective courses in their undergraduate programs about entrepreneurship. The faculty must not instruct but guide students on how best to use innovative solutions when developing a business model or completing prerequisites for launching a business venture that includes theories and concepts about business management, finances, human resource and capital, marketing and promotion, among others. A flipped classroom method can work wonders. Students complete their classwork and reading assignments at home and deliberate upon ideas in classroom discussions. When talking about an entrepreneurial vision, business schools can construct a mechanism to foster the business ideas of their students in their on-campus incubation centres. Initiatives such as business competitions and exhibitions can be organized to compel students to present their ideas. Experts from
Business schools should integrate entrepreneurial insights into the curriculum of undergraduate courses offered for entrepreneurship. These acumens must come from the local landscape of Pakistan. the industry can serve as judges and select the best business models to be incubated. Such entrepreneurial initiatives should be supported at the national level. It is essential to conceive a business idea that works. It is a different ball game altogether to make it a viable enterprise. Faculty must impart relevant information, insights, and ideas among students to help them become successful entrepreneurs. It is heartening to see Pakistan's youth from business schools using their resourcefulness, creativity, and ingenuity to start ventures. This ecosystem needs to be evolved into a subset of the entrepreneurial sector of Pakistan that remains connected with the industrial sector at large. n
COMMENT
By The Dependent Airlift Technologies, the former bus company, former grocery delivery company, is seeking to raise funds for its latest pivot into the fintech sector. “I sat on a table with a group of my partners and we decided that delivering groceries to people through an app isn’t something we really believed in, the way we all had sat together earlier when we had decided that selling bus rides through an app wasn’t a product that we believed in,” said Airlift CEO Usman Gul on Bloomberg, with program hosts visibly impressed by his responses. “So we thought, what is a problem that we could solve,” he said. “And the idea suddenly hit us. We know people always want money in exchange for lesser money. So why not use our cutting edge technology to do exactly that?” “So we decided to start an app that sells people Rs 100 notes for just Rs 75,” he said. “Only our CFO wasn’t on board
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and unfortunately we had to let her go, because I for one am a firm believer that the whole team needs to really believe in the product.” “If we get this new funding, which we will thanks to the VC’s deep-seated FOMO, we can guarantee immediate revenue growth and a dedicated, active user base that will keep growing. A sure shot unicorn in the making.” he said. “Too early to be asking about profitability and viability of the business model,” he said, in response to a question. “Even asking questions like these reveals a silly, seth mentality that has no space in the exciting new startup world. Suffice to say that our unit economics are great and for now we are choosing not to be profitable to focus on growth.” Aatif Awan of Indus Valley Capital, who was sitting right next to Gul throughout but out of the frame, then asked Bloomberg reporters if they wanted to invest in this round. The above piece is a work of satire and does not present itself as the truth.
SATIRE