Issuu

CONTENTS

10 What’s happening at Buxly Paints? 16 Pakistan is hungry

26 Profits at Attock Group’s energy companies rose 144% to Rs77.2 billion 29 Pioneer and Maple Leaf’s merger would create a top 3 cement company in Pakistan 32 Pakistan’s solar rush has surprised the world. What lies next?

34 PABC is being badly hurt with little relief in sight 39 India’s Great Wall of Rice leaves Pakistan exposed

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One of the oldest paint manufacturers in Pakistan, Buxly has gone through devastating fires, losses of their foreign assets, and still survives as a brand in Pakistan’s paint market. While you might not hear of them often, the recent movement in their share price is nothing short of astonishing. 10

By Zain Naeem

n February 1937, Mir Osman Ali Khan, the last Nawab of Hyderabad and Deccan, appeared on the cover of Time Magazine. The cover was adorned with an oil painting of the Nizam enrobed in glittering diamonds and the vestiges of what was the most wealthy princely state of British India. “His Exalted Highness The Nizam of Hyderabad — Richest Man in the World” read the caption underneath his likeness. At the time, his net worth was estimated at $2 billion, which was around 2% of the US economy at the time. Yet for all his money and power, the Nizam was best known for his frugality. Stories of his refusal to iron his clothes, his insistence on living in the run-down King Kothi Palace instead of Chowmahalla, his search to find the cheapest cigarettes in India, and his casual use of the 185-carat Jacob Diamond as a paper weight have become legendary. One of the most oft-cited anecdotes about this eccentric figure from the last days of the Raj is his refusal to spruce up his residence. He entertained visitors and other Nawabs at the King Kothi Palace with paint peeling around him. One cannot be certain whether Rahim Bux Khan thought the Nizam would become a client if he produced cheap enough paint in Hyderabad, but we do know he was the first man to set up the first paint factory in Hyderabad. The story of Buxly Paint is an incredible tale of entrepreneurial spirit and unavoidable tragedy. The company has seen highs, lows, tragic fires, and perseverance in a business that has somehow stayed alive, even if it has seen much better days. And while Buxly might not be one of the first names that come to mind when one thinks of Pakistan’s rather complicated paint industry, the month of August has been a whirlwind for it on the Pakistan Stock Exchange (PSX). The pre-partition pain manufacturer saw its share price climb from Rs 189 on the 5th of August to Rs 720 on 27th of August 2026. This is an increase of 281 percent in a matter of 14 trading days. In order to bring this under context, that would mean that the share price has hit the upper lock of 10 percent for 13 consecutive days without fail. But what could be causing such a sudden rise? To understand where Buxly Paints stand on the stock market, we must go back to its very beginning.

A brief history of Buxly

uxly paints was founded when Pakistan was barely an idea. It was the decade that Iqbal had first delivered his address envisioning a separate

Muslim homeland. The Quaid was still in his self-imposed exile in London practicing law. Rahim Bux Khan’s foray into the paint business was not the first attempt by an India to compete with British players like Imperial Chemical Industries (ICI), but it was a first for Hyderabad. But the 1930s was not an easy time for manufacturing to be carried out. The Global Depression in the West meant that demand was shrinking leading to a fall in demand and global trade. Similarly, the history of the paint industry in the subcontinent was in its embryonic stage. This was the time when decorative paints, seen to be ubiquitous nowadays, was a privilege set aside for colonial elites alone. Locals relied on lime washes to cover the walls of their houses.

In February 1930, the Nizam of Hyderabad appeared on the cover of Time Magazine which declared him the richest man in the world. The Nizam, famous for his frugality, lived in the King Kothi Palace with peeling paint. Three years later, Rahim Bux Khan opened the first paint factory in the princely state of Hyderabad and Deccan. There was industrial demand in terms of industrial coatings that had to be carried out, however, this demand was being met by imported paints. Trying to establish a new paint manufacturing plant might seem to be foolish to some. Bux proved everyone wrong. The company started off as a sole proprietorship which was going to be handed down from generation to generation. Buxly started off as a small company which produced for the local market. Their strategy was as old as time: provide similar quality to imports but cut back

on prices by manufacturing locally. The initial two decades saw Buxly grow at a steady pace. The company grew steadily, but it was to be shaken by the pains of partition. What had been built on the land had to be left behind as the subcontinent saw the largest migration in human history. Among many that left their ancestral land was Khan Rahim Bux and his family which took their knowledge, experience and an entrepreneurial spirit along with them. But they left their factories behind, which meant starting from scratch.

The Pakistan chapter begins

n one way, coming to Pakistan was a boon for the Bux family. The new state didn’t really have an industrial infrastructure to speak of. Bux had chosen to make Karachi, the then capital, as his new home. At this time, the port city was bursting with the influx of refugees. There was a shortage of housing, power and manufacturing and the government had to prioritize survival. What should have proven to be a challenge became a huge opportunity. Many of the muhajir trading and manufacturing families who had come from Bombay, Delhi and other neighboring states brought along with them the skills, knowledge and commercial networks which allowed them to kickstart the new textile mills, banks and factories that took hold in Karachi. Over time, Bux was able to set up a new paint factory in Karachi under the name of Buxly Paint Works in a year. In a country which had a history of British names dominating the paint industry, Buxly sounded Anglican enough to garner interest and trust.

After partition, Rahim Bux Khan came to Pakistan having left his paint factory behind. What he brought was his expertise, which over time he turned into multiple factories in different parts of the world. In reality, it was the founder using his own name with a suffix of ly to convert a

PSX

From left to right: Scenes from the Bangladesh Independence movement in 1971. Children playing on top of a bullet-ridden car in Beirut during the 1975 Civil War. President George HW Bush speaks with American soldiers after his forces pushed back Saddam Hussain’s invasion of Kuwait. The three events were detrimental to Buxly’s factories in Chittagong, Beirut, and Kuwait family name into a brand that would build over time. It was also a tongue in cheek way of making the name sound foreign which guaranteed imported quality and standard which was attached to foreign products around this time. The early years were hard but rewarding. Bux had to build non-existent supply chains. Similarly, labour had to be trained. The fruits of this effort started to come as the company converted itself into a private limited company by 1954. Buxly had gone from a family owned business to a corporate element of the new state. If the 1940s saw growing pains, the 1950s and 60s saw the company grow coinciding with the country’s industrial golden age. From Karachi, a new factory was set up in Chittagong. By 1956, there were two factories in Karachi alone and by the 60s the company became the largest paint manufacturer in Pakistan. This was no small claim for a market which was seeing an influx into Pakistan. This was the time when Berger, ICI and Jenson & Nicholsons were entering, equipped with deep pockets, established brands and imported technology. Not only being able to compete with these giants but being able to beat them shows just how well the company was able to

perform in such an environment. The prowess of Bux in the paint industry is shown by the fact that his company was not only able to lead the field but he also became the founding chairman of the Pakistan Paint Manufacturers’ Association. After making its name on the local level, Buxly became the first Pakistani firm to export paints to the Far and Middle East. The export market then grew towards Southeast Asia and Africa as well. The next step in the Buxly story was going to be the boldest one. In 1963, Buxly established a paint factory in Beirut as a joint venture with a local entrepreneur. Buxly was able to bring their know-how and brand to the new venture. Another factory being established in Kuwait in 1973 was in the same vein.

The Fog of War sets in and the new owners

uch like the separation of 1947, the devastation of 1971 would hit Buxly hard. They were by no means the only industrial family to lose a great deal when Bangladesh became independent. The Chittagong factory was lost

as spoils of war. Then came the civil war in Beirut. The 1960s had seen prosperity for the Beirut factory in line with the progress of the Levant. With the country being engulfed by civil war in 1975, Buxly saw another one of its factories lost to geopolitics. The last blow came in 1991 when Saddam Hussein invaded and annexed Kuwait which triggered the Gulf War being set off. The invasion meant that the Kuwait factory was also lost. Three wars, three countries, three factories lost. WIth these three losses, the company looked inwards and chose to focus on the local market yet again. It was still a dominant force in Pakistan and still held onto that title as Pakistan’s largest paint manufacturing company. As the focus shifted inwards, the company converted itself into a public limited company in 1985. The fabled history of the Bux family with the company finally came to an end in 2000 when the third generation of the Bux family chose to sell the company to Slotrapid Limited, a British Island Virgin registered holding company which already owned Berger Pakistan. With the new acquisition, Buxly came under the umbrella of SlotRapid which already owned Berger Pakistan Limited at this point. Berger Paints was also a storied name in Pakistan’s paint industry as well as it had descended from the British Berger group. Established in 1950 by the Jenson & Nicholson Limited, it was a trading office importing the tins and selling them in the local market before the company decided to manufacture them in 1955. Berger had already been sold by Jenson & Nicholson to Slotrapid in 1991 which acquired 52 percent of the company from its previous British parent.

The new chapter goes up in ashes

W 12

ith the new acquisition, a competitor now became an associated company as Berger acquired 19 percent stake in

Buxly as well. The relationship also developed into an operational one where Buxly signed a toll manufacturing agreement with Berger Pakistan. Under this agreement, Buxly would provide the raw materials to Berger Pakistan who would then manufacture at specified toll fees while Buxly continued to manufacture and market paints, pigments, protective surface coatings and varnishes by itself as well. The agreement worked as Buxly rented out the land and building on a lease to Berger and was able to earn royalty income from this association. This turned fierce rivals into partners bound by shareholding and supply contracts. This was an important deal for Buxly as by the early 2000s, it had become integral to people by building public and industrial relationships. They had the networks but their manufacturing had stagnated compared to the other giants in the market. This arrangement allowed the capacity of the larger company to be used while retaining the customer base and surviving. And then came the next tragedy. On April 8th 2009, Buxly paints factory in Karachi caught fire. A fire is always a bad thing, but in a factory full of paint and thinner, it can be particularly devastating. By the 16th of April the company announced that the fire had caused total damage to the production area including building, plant and machinery, raw materials, finished goods storage and record room which contained documents related to the accounts. At this time, the shares for the company were trading at Rs 36 and a dividend of Rs 1 had been paid out in 2008. After the disaster, the toll manufacturing agreement took on a greater importance as the company had no plant to talk of. The agreement made sure that the market still had access to Buxly’s products while it operated three offices in Karachi, Lahore and Islamabad. Since then Buxly has existed in a sort of limbo existence. It currently produces paints,

pigments, protective surface coating, varnishes and other related products to a client base of Pakistan Army, Navy and Air Force. It has also provided paint to Chinese built coaches to the Pakistan Railways while it is the product of choice used by any Chinese experts. Industrial giants like Fauji Fertilizers, Siemens Engineering, Pakistan Petroleum, Pakistan Oil field and many auto assemblers also trust the brand name.

Buxly’s recent financial history

n order to understand the financial performance of the company, the period before and after the fire need to be taken into account. Going as far back as 2007, it can be seen that the company made sales of Rs 30 crores in the year before the disastrous fire struck. By 2009, these sales had fallen to just around Rs 10 crores before they recovered back to Rs 14 crores by 2013. Even though 2007 was a good year in terms of revenues, the company

had been marred by topsy turvy profits which showed a loss per share of Rs 5.5 for the year. The next year, sales halved to only Rs 14 crores, however, the company saw a profit per share of Rs 4 and even gave out a dividend of Rs 1 per share. After the fire, losses became a constant from 2009 to 2011 before the company was able to retain a small profit in 2012 and 2013. The biggest blow to Buxly after the fire was that their fixed assets fell from Rs 1.6 crores in 2008 to Rs 26 lakhs in 2009. As current liabilities started to pile up on its books, the asset base went from Rs 3 crores to Rs 64 lakhs in a matter of five years. The period from 2014 to 2019 can be considered a phase of consolidation after the disaster as revenues crossed the Rs 31 crore mark again in 2018. While this should have been a positive sign, the company failed to maintain much of these profits with 2019 being closed out with a loss per share of Rs 10.9. The asset base for the company also started to grow, however, this was due to the revaluation it carried out in 2018 which increased its assets from Rs 8 crore to Rs 15 crores. The consistent losses meant that the unappropriated losses of the company equaled its share capital and the revaluation allowed the equity to stay positive. The reason behind the roller coaster of the profits was the fact that the company had little control over its cost of sales which oscillated wildly from year to year. As revenues were inconsistent, the costing related to that could not be kept under control which meant that gross profits moved wildly from one year to the next. Due to this, earning per share suffered as the company was not able to earn more than what its costs. The most recent period from 2020 to 2025 shows that sales have increased consistently, even crossing the Rs 62 crore mark in 2024 and settling at Rs 59 crores in 2025.

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However, again the earning per share has moved wildly with 2024 closing out at Rs 5 per share and 2025 ending with loss per share of Rs 3. The asset bae has strengthened yet again on the back of further revaluations. A detailed look at the balance sheet for 2025 shows that the fixed assets of the company are worth Rs 17 crores while the company holds Rs 8 crores of inventory and Rs 27 crores of trade debt. After the fire disaster took place, its receivables are worth more than all its fixed assets combined. This has also led to another troubling phenomenon where the current liabilities are worth more than the current assets leading to negative current assets for the company from 2020 to 2025. The bulk of these payables are attached to trade payables of Rs 36 crores.

Why the increase in price?

o what is behind the sudden rise in the stock price of a company which is barely able to sustain profits for a long period of time? Why is the market valuing Buxly at Rs 1.03 billion when it barely has assets and equity worth Rs 62 crores and Rs 18 crores respectively? These kinds of sudden stock increases on the PSX happen every now and then. Once they come under notice, a familiar script plays out. The stock exchange asks the company if there is any material information that is causing this price change. The company responds by saying they are not aware of anything of the sort, and they have disclosed all relevant information already. This formal exchange is the dog and pony show that always has to go on when a large increase in the share price is seen. The company has actually gone through the exercise twice since July where they were sent an earlier letter on 6th of July to explain why their share price had increased from Rs 150 to Rs 250 in a space of 7 trading sessions. They replied on the 13th of July that they had no material information that needed to be disclosed. The recent price increase has also come under scrutiny as the exchange sent a letter again on the 27th of August to explain the latest increase in the share price. As of yet, the company has not sent any reply. But one can try to make an educated guess on what could be happening. The obvious answer might be a pump and dump. For those that don’t know how that works, it is a simple scenario in which an investor can see the liquidity of a share like Buxly and decide to pump its price. First, the organizers buy a large amount of the cheap asset. Next, they spread false, overly positive rumors or hype online to trick other investors into buying it, which

“pumps” up the price. Finally, the scammers sell their own shares at the high price for a quick profit, which causes the price to crash and leaves the misled buyers with heavy financial losses. Of course, this is a stock explanation that could be possible with any stock. It is just the way of the stock market, and is for the company, the SECP and PSX to figure out. But perhaps a more reasonable explanation might be a potential acquisition. One such possibility can be a merger between Buxly and Berger where the former is bought out by the bigger company outright and the operations are merged together. It makes sense for Berger to think along these lines. Buxly is already a well established name and brand which has deep ties to some of the most prestigious clients as part of its customer base. By acquiring Buxly, Berger gets access to this market which they might not have been able to break into. Buxly has also shown revenues of Rs 59 crores with a potential to further increase it in the future. Berger can add these revenues to its current revenues of Rs 9 billion in order to expand its topline further. With better funding, marketing and a sales team push, these revenues can cross the Rs 10 billion mark in the near future. Berger is already producing the products for Buxly at a toll fee that it is charging under the agreement that has been made to it. By merging with Buxly, the toll fee can be eliminated which will further decrease the cost of production for the Buxly line of products. Berger will be able to see a higher rate of profit and margin than Buxly is bearing currently. By merging the scale of production, Berger can also expect certain efficiencies to kick in which can further improve the profitability of Buxly brand once it comes under its own roof. Berger also has an agreement whereby they rent out the land from Buxly and pay a

rental expense for the use of this land to Buxly. This land is worth Rs 17 crores on the books of Buxly and can be revalued upwards. By acquiring the company, the asset base of Berger will be further strengthened and they will have no need to pay the rental expense any more as well. Lastly, the trade payables on the books of Buxly are worth Rs 35 crores out of which Rs 33 crores are payable to Berger alone. If the merger goes through, a part of this liability can be eliminated against the assets which will decrease the financial distress Buxly is under and allow the company to perform better. It will also improve the current assets being negative for the company and Berger can inject new working capital into the company in order to boost sales. Berger Pakistan already owns 19% of Buxly while the remaining chunk is owned by Slotrapid and its directors. It will not be a difficult task for Berger to either buy more shares from Slotrpaid against consideration or buy up part of the free float of 40% that is available in the market in order to complete the merger. The sudden price increase figures into this matter as any bid to collect shares from the public and market would require a formal public offer to be made. In line with this, the prevailing market price will be used as a proxy to carry out the public offer. The public would want the share price to be high and they will be expected to get a better return on their investment if the share price is near Rs 720 rather than near Rs 182. If a deal is being contemplated behind the scenes, the public has an active interest to make sure the price is as high as possible and there is a rush to buy the shares before any such announcement is made public. Berger Pakistan has also seen its price increase from Rs 110 on 7th August to Rs 164 on the 27th of August. Whatever the case of Buxly paint’s sudden rise in price, it will become clearer in the next few months. n

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COVER STORY

By Abdullah Niazi

akistanis are eating less and they are eating worse. Data from the Pakistan Bureau of Statistics (PBS) shows that over the past six years people across the urban and rural divide are, on average, consuming less across almost all food categories. That means families are cutting back on how many cups of rice they make, the size of their rotis, the number of times meat is cooked in a month, how much milk is being given to their children, and even how many cups of tea they are drinking a day. In fact, the only food category that has seen any significant increase is vanaspati ghee — the consumption of which has increased 81% from 690 grams a month to 1.25 kilograms. The results in terms of social indicators are painful to digest. The percentage of households categorised as “moderate to severely food insecure” in Pakistan has gone from 15.92 percent in 2019 to 24.35 percent in 2025. Severe food insecurity has also gone from 2.37% of households to 5.04% of households in the past six years. That means more than a quarter of Pakistani households face some form of hunger and malnutrition. That is an embarrassing statistic for a country which has long prided itself on being an agrarian economy. It has been drilled into us by Pak Studies textbooks which regularly display lush green fields and by fertiliser ads showing unusually happy looking farmers throwing urea around at sunset for some weird reason. It is a reassurance this state has given its people time and again. When Pakistan conducted its nuclear tests, we were told no matter what happens we will not go hungry — we can grow enough food to feed ourselves. The same consolation was mentioned during Covid-19 as well when the global economy began to fall apart. But this ability to feed ourselves has not existed for some years. We have been a net importer of food since at least 2021. The resulting inflation has caused this gradual change in Pakistani diets. It means we are raising future generations who will be weaker, more prone to illness, and less energetic than previous ones. It is a recipe for social disaster. While the macro picture is bleak, it is still worth zooming into the major food categories to understand exactly what is happening, and whether there is a way out.

Daal-Roti

he most basic component of any Pakistani kitchen is grain. Pulses, wheat, and rice are at the heart of what this country eats — Daal, Chawal, and Roti. Yet all three are being consumed in smaller quantities. Take a look at the

numbers below: Out of these three, the most significant and important caloric input in the average Pakistani’s diet is wheat. Wheat makes up nearly a third of the caloric intake by an average Pakistani, and Pakistan’s per capita consumption of wheat is 124 kilograms annually. The reliance on wheat as a core dietary component has been built into Pakistan’s DNA. What is today modern Pakistan is the result of the British Empire’s appetite for wheat. The British constructed railways in what is now Pakistan in 1855, in no small part due to a desire to connect the wheat-growing parts of Punjab and Upper Sindh to the port in Karachi. {Note: There is a discrepancy in data here. The HIES data claims Pakistanis consume around 7 KG of wheat and wheat flour a month — which would be around 84 KG a month. The USDA and the Pakistan government has long been citing this number as 124 KG. Profit asked the PBS about this data discrepancy but did not receive an answer. The safest conclusion we have come to is that the PBS separately categorises products like besan, suji, and maida as well as bread, biscuits. These are products that use wheat but are recorded separately in terms of household data. Hence the PBS data probably indicates how much direct wheat is consumed in households} Yet despite the centrality of wheat, at independence, Pakistan’s population had grown so rapidly that it became a net importer of wheat. Indeed, a major initial bone of contention in the Cold War was the race between the United States and the Soviet Union to supply Pakistan with wheat. Between 1949 and 1952, nearly all of Pakistan’s wheat imports came

from the Soviet Union. The US considered it a major foreign policy victory to get Pakistan to accept imports from the United States from 1953 onwards. Within Pakistan, however, the reliance on imported wheat was seen as a national embarrassment, and one of the handful of the successful policies initiated by the pre-Ayub governments was to embark on a program to help Pakistani farmers improve the quantity of wheat produced in the country. By the latter half of the Ayub era, the government succeeded. As a result, Pakistan had a massive increase in wheat yield. Since then, Pakistan has largely been self-reliant when it comes to wheat. Our farmers grow it every year and produce enough to feed the country. But securing the supply chain for this wheat is where the problem begins. Over the decades, government procurement policies have left farmers dependent on the state. Any time the state backs off (which it regularly does and is currently doing under direction of the IMF) farmers are left to the mercy of arthis, hoarders, and middlemen. The hoarding gets bad enough that despite Pakistan producing more than enough wheat, the government has semi-regularly had to import wheat to make up the gap. In this entire time, it has not occurred to anyone that Pakistan with its heavy reliance on wheat requires a robust system of wheat storage and strategic reserves. Pakistan currently has just 37 accredited warehouses under the electronic warehouse receipt system, with a combined listed capacity of 461,550 tonnes. All of them are in Punjab, and their space is shared between wheat, maize, rice and rice paddy. To understand how small that network is, compare it with

The Kissan Ittehad has demanded the resignation of Chief Minister Maryam Nawaz over this year’s wheat procurement and threatened a millions march if their demands are not met. Pakistan’s relationship with wheat has become an increasingly contentious issue, with sporadic need for imports following hoarding incidents. Pakistan’s total wheat crop. The country produced about 29.6 million tonnes of wheat in 2025-26. Even if every accredited warehouse were emptied and used exclusively for wheat, they could hold only around 1.6% of one year’s production. In practice, the proportion would be lower because

those facilities also store other crops. The storage issue is one where lessons can be drawn from India. Unlike Pakistan, India has traditionally relied more on rice for their main caloric input than wheat. At the time of partition, the caloric input of rice in the average Indian diet was 35 percent while

it was just nine percent in Pakistan. India has, over the decades, not just become the world’s largest exporter of rice but has done so not despite but by making sure their domestic needs are first and foremost. Just take what has happened this year. Around four years ago, India restricted rice exports and banned non-Basmati white rice in 2023 after an uneven monsoon raised concerns about domestic supplies and food inflation. Its withdrawal created a gap that Pakistan quickly filled, increasing rice exports from 3.72 million tonnes in 2022-23 to a record 6.01 million tonnes in 2023-24, largely by selling non-Basmati varieties. Again, Pakistanis don’t eat as much rice so there isn’t as much domestic demand. But India’s extensive procurement and storage system allowed it to rebuild stocks after a large harvest. With official reserves reaching 67.6 million tonnes, nearly nine times its buffer requirement, India has now removed the restrictions, returned with lower prices and greater scale, and rapidly reclaimed its dominant position in global rice trade. Pakistan’s rice exports are already falling as a result. But out of the three main grains, perhaps none is a more blatant example of everything wrong with our crop agriculture than pulses. Daal — the most humble and basic of foods is largely imported in Pakistan. That was not always the case. Pakistan currently imports far more daal than it grows. In FY2025-26, the country imported 1.40 million tonnes of pulses worth $832 million. Recent domestic production has hovered around 400,000 tonnes against annual consumption of roughly 1.3 million tonnes. Masoor is the starkest example: in 2022-23, Pakistan produced just 3,800 tonnes while importing approximately 145,000 tonnes. Pakistan imported virtually no pulses in 1975, but purchases began rising during the 1980s and reached 254,000 tonnes by 1993. By the late 1980s and early 1990s, the country had become a sustained importer. The shift began with the agricultural policies of the late 1960s and 1970s, when high-yielding cereals became the centre of Ayub Khan’s Green Revolution. Irrigation, research, fertiliser support and government procurement favoured wheat, rice and other major crops. Pulses received little comparable attention and were pushed onto rain-fed, marginal land. Yields stagnated, farmers moved towards more profitable crops and imports gradually became the permanent answer to the widening gap between domestic production and demand.

Right to protein

Harvested paddy rice at a wholesale market in Haryana, India. The country’s strategic rice reserves have put it at the centre of global agriculture trade in a year severely hampered by El Nino

n terms of consumption, the downturn in wheat, rice, and pulses is concerning. The shift is significant, but it is not as serious as the sources of protein Pakistanis consume. Take a look at the numbers below:

COVER STORY

The average Pakistani now consumes barely half a kilogram of mutton, beef and chicken combined in an entire month. Egg consumption works out to less than one egg every ten days. Fresh milk consumption is down to roughly one small glass a day. Protein has actually been one area where Pakistan’s agricultural industry has developed rapidly and successfully. That is what makes these numbers particularly worrying. Unlike pulses, Pakistan is not overwhelmingly dependent on imports for its meat, milk or eggs. Unlike wheat, there is no vast procurement system regularly producing surpluses, shortages and political crises. Pakistan has successfully built farms, hatcheries, feed mills, dairy businesses, slaughterhouses and export channels required to produce protein. In fact, as Profit has pointed out before, the livestock sector has kept Pakistan’s overall agriculture numbers up at a time when we have seen a number of our major crops failing. The country has become quite good at producing protein, but it has also reached a point where many of its own people cannot afford what it produces. The development of chicken is perhaps the clearest example. Commercial poultry farming in Pakistan began in the 1960s. Before then, chickens were largely the slower-growing desi variety, raised in small numbers around homes and farms. Chicken was not the default cheap meat it is considered today. In fact, it was often more expensive than beef.

That began to change when improved breeds, commercial hatcheries and specialised poultry feed arrived. The University of Agriculture Faisalabad developed the Lyallpur Silver Black breed in the 1960s, capable of gaining weight faster and producing more eggs than local birds. Lever Brothers started a poultry-feed mill in Rahim Yar Khan. Tax concessions, research institutes and the creation of the Federal Poultry Board in 1972 helped turn scattered chicken farming into an industry. Commercial egg production increased from 624 million eggs in 1976 to more than 1.2 billion in 1980, while broiler production more than doubled from 7.2 million to 17.4 million birds. Over the following decades, controlled sheds, breeding operations, feed mills and distribution networks expanded across the country. Chicken went from being a relatively expensive meat to the main defence ordinary households had against rising beef and mutton prices. That transformation has continued. According to the Pakistan Economic Survey 2024–25, Pakistan is now the world’s 11th-largest poultry producer. The industry employs more than 1.5 million people, has grown by an average of 8.1% annually over the past decade and accounts for around 43% of the country’s meat production. In FY2025, Pakistan produced an estimated 2.58 million tonnes of poultry meat and 26.7 billion eggs. Milk and red meat tell a similar, if slightly messier, story. Livestock is the largest part of Pakistani agriculture, accounting for nearly

15% of GDP and supporting more than eight million rural households. The country produced an estimated 72.3 million tonnes of milk in FY2025, placing it among the world’s largest milk producers. Around 58.3 million tonnes were officially considered available for human consumption. Pakistan has also built a modest but increasingly successful export business around meat. Total meat production reached nearly six million tonnes in FY2025, including 2.55 million tonnes of beef and 835,000 tonnes of mutton. Meat exports rose from around $196 million in 2015 to more than $500 million in FY2025. Pakistani exporters have established markets in Saudi Arabia, the UAE and other Gulf countries, alongside China, Malaysia and newer destinations in Central Asia and the Middle East. In the first half of FY2024 alone, meat exports rose by nearly 25% to $239.7 million. And yet Pakistanis are eating less of it at home. The scale of this contradiction becomes clearer when production and consumption are placed side by side. In 2018–19, Pakistan officially produced 4.48 million tonnes of meat, 1.52 million tonnes of poultry meat, 19.05 billion eggs and 59.76 million tonnes of milk. By 2024–25, meat production had increased by 33%, poultry meat by 70%, eggs by 40% and milk by 21%, according to the two Economic Surveys. During almost exactly the same period, the HIES shows per-capita consumption falling across every one of these categories. Between June 2019 and June 2025, Pakistan’s national consumer price index increased from 121.6 to 264.2. In other words, the general price level more than doubled in six years, according to PBS’s historical price indices. Food inflation reached 48.65% in May 2023, with egg prices alone rising by more than 90% over the preceding year. Inflation eventually slowed, but this offered limited relief. The HIES contains a particularly revealing example. Between 2019 and 2025, chicken’s share of the average household food budget increased from 3.58% to 4.24%. Yet the quantity consumed fell from 360 grams to 340 grams per person per month. Households were devoting more of their food spend-

TEXTILES

ing to chicken and receiving less chicken in return. The national averages also hide an even harsher class divide. In 2024–25, a person in the poorest consumption quintile recorded only five grams of mutton, 31 grams of beef and 169 grams of chicken per month. They consumed an average of 1.16 eggs and 3.21 litres of fresh milk. For the richest fifth, the corresponding figures were 156 grams of mutton, 269 grams of beef, 648 grams of chicken, 5.76 eggs and 10.31 litres of milk. It is also worth remembering that daal is supposed to be the fallback when meat becomes unaffordable. But pulse consumption has fallen by more than a quarter as Chai has been a basic part of Pakistan’s social fabric since before its birth. Yet people are well. Poor households are drinking less of it as tea, milk, and sugar all become more out of reach. therefore losing access to animal and plant protein you go in the country you are likely to, at the from sunflowers, mustard, and even cotton at the same time. Meat is very least, be offered a cup of sweet tea. Yet seeds. In the 1930s, Lever Brothers figured out replaced by daal, daal is watered down and monthly tea consumption has fallen from a technique to hydrogenate cheap palm seeds eventually both are replaced by roti, potatoes 86.95 grams to 81.47 grams per person, while into a substance that looked and tasted sort and ghee. sugar consumption has declined from 1.28kg to of like Desi Ghee. Vanaspati soon became the Protein deprivation is not the only cause 1.22kg. Pakistan imported around $638 million core cooking fat of the subcontinent’s poorer of malnutrition. Chronic infections, unsafe of tea in FY2025, making even the ordinary cup households. water, poor sanitation, inadequate maternal of chai vulnerable to the exchange rate. But even this cheaper substitute rests health and shortages of calories and microEvery passing day more Pakistanis are on imports. Pakistan does not produce nearly nutrients all contribute. But diets containing unsure about where their next meal will come enough oilseed to meet its needs and relies sufficient protein, iron, zinc, calcium and from. Put this into perspective. We started by overwhelmingly on palm oil from Indonesia vitamins are indispensable to the development and Malaysia. In FY2025, the country imported saying a quarter of households are moderately of muscles, bones, organs and the immune to severely food insecure. This category is a a record 3.21 million tonnes of palm oil worth system. spectrum of people who do not know where approximately $3.4 billion. The cheapest Pakistan was already in the middle of a their next meal will come from. Meanwhile nutrition emergency before the latest inflation- calories in the Pakistani kitchen are therefore 5% of households are severely food insecure also tied to the dollar, the exchange rate and ary crisis. The National Nutrition Survey 2018 — that means they regularly go days without international commodity prices. found that four in ten children under five were eating anything at all. There are health concerns as well. stunted and nearly two in ten were wasted. There is a lot behind the maxim of “you Vanaspati produced through partial hydroMore than half of adolescent girls were anaeare what you eat.” Food is the most basic fuel mic, while one in eight adolescent girls and one genation can contain industrial trans fats, necessary for human survival. And more even while palm oil is naturally high in saturated in five adolescent boys were underweight. than the air that we breathe, food has a direct fat. The World Health Organisation links high relationship with culture, religion, and identrans-fat consumption to an increased risk of tity. What we consume, what we put in our coronary heart disease and recommends elimbodies, has a singular, laser-focused relation inating partially hydrogenated oils from food. to who we are as people and how we define Not every modern vanaspati product contains his is what brings us to Vanaspati ourselves. In its rawest form, food serves as the the same amount, but replacing milk, meat and Ghee. With meat, milk, eggs, and daal with greater dependence on cheap fats border between nature and culture, between even daal becoming less affordable produces a more calorie-heavy and nutritionalhuman and non-human. for a large number of Pakistanis, the ly poorer diet. For Pakistanis, the relationship is consumption of vegetable ghee has jumped 81 While Pakistanis rely on cheaper ghee quickly becoming one that is defined by a lack percent, from 0.69 to 1.25 kilograms per person to insulate itself from the caloric deficit caused more than anything else. And if things remain monthly. by inflation, even simple luxuries have become the same way, our coming generations will Pakistan’s relationship with Vanaspati unaffordable. Take tea and sugar. Neither be weaker and sicker than the current ones. is complex. Up until the early 20th century, is essential nutrition, but it is an ingrained That, perhaps, is a fundamental failure all of us the primary cooking substance used in what is part of Pakistan’s culture. No matter where should be ashamed of. n now Pakistan was either ghee or oil extracted

What the downturn really means

COVER STORY

Profits at Attock Group’s energy companies rose 144% to Rs77.2 billion Attock Petroleum, Pakistan Oilfields, Attock Refinery and National Refinery all reported sharply better earnings for the year ended June 2026

here are years in which a conglomerate’s results tell a coherent story. Demand rises, prices improve, fixed costs stay relatively stable, and virtually every subsidiary benefits from the same economic tide. The Attock Group’s financial year 2026 results look like one of those years at first glance. All four of the group’s major listed energy companies reported substantial improvements in profitability. Attock Petroleum Ltd (APL) increased profit after tax by 63% to Rs17.0 billion. Pakistan Oilfields Ltd (POL) increased standalone profit by 32% to Rs31.9 billion. Attock Refinery Ltd (ARL) nearly doubled standalone refinery profits, with total profit

rising 85% to Rs22.1 billion. And National Refinery Ltd (NRL), which had lost Rs14.9 billion the previous year, swung all the way back to a Rs6.2 billion profit. Yet the similarity largely ends there.

A closer examination of the income statements shows that the four companies did not become more profitable for the same reason. At the two refineries, particularly NRL, the answer was overwhelmingly a recovery in the

economics of refining itself. At APL, the biggest factor was likewise gross-margin expansion, but much of that came from inventory gains during a period of extraordinary oil-price volatility. At POL, by contrast, gross margins actually declined. Its profit growth came from lower exploration expenses, lower finance costs and a considerably lighter effective tax burden. That distinction matters because not all profits have the same durability. Here is the simplest way of looking at the results. Margins below are calculated against net sales from the companies’ published accounts. The Attock Group, in other words, had a very good year. But it did not have one single good year.

The biggest turnaround was at the refineries

he most striking figures are those from Attock Refinery. ARL’s net sales rose a respectable 13% to Rs341.6 billion. Yet its gross profit did something completely different: it more than tripled, from Rs9.7 billion to Rs31.3 billion. That took ARL’s gross profit margin from just 3.2% to 9.2%, an extraordinary increase of almost six percentage points. Operating profit nearly doubled to Rs36.2 billion, while profit before tax from refinery operations rose 97% to Rs35.8 billion. Total standalone profit rose 85% to Rs22.1 billion. It is particularly important to notice what did not cause the improvement. ARL has an enormous cash and investment portfolio, and in recent years its treasury income has occasionally mattered almost as much as refining. But other income actually fell during FY26, to Rs9.7 billion from Rs12.2 billion. Finance costs changed only modestly. In other words, this was not an accounting or treasury-income windfall masquerading as operational improvement. The refinery itself became dramatically more profitable. The explanation lies largely in the international refining cycle. During FY26, product crack spreads – the difference between the price of refined petroleum products and the crude oil from which they are produced – expanded sharply, particularly during the extraordinary disruption to global energy markets during the second half of the financial year. ARL’s profitability had recovered on the back of sharply wider international product crack spreads, with the company’s gross margin reaching 10% in the first nine months of FY26 versus about 4% in the comparable period. In the fourth quarter, Arif Habib analysts estimated average international motor-spirit and high-speed-diesel crack spreads of roughly $15.50 and $46 per barrel respectively. ARL also benefited from higher

motor-spirit volumes. This is operating leverage in its most useful sense. Net revenue increased by only Rs40 billion, but gross profit increased by more than Rs21 billion. Administrative and distribution costs barely moved by comparison. Once the refinery earned more on each barrel processed, a very large part of that incremental margin fell directly to operating profit. National Refinery provides an even more dramatic demonstration. NRL had been genuinely loss-making at the manufacturing level in FY25. Its Rs307.7 billion of net sales generated a gross loss of Rs6.2 billion. After overheads, it recorded a Rs7.7 billion operating loss, before the burden of more than Rs10 billion in net finance costs. In FY26, net revenue rose 43% to Rs440.8 billion. Cost of sales rose by just 33%. That ten-percentage-point difference transformed the income statement. NRL generated a gross profit of Rs23.5 billion, equivalent to a 5.3% margin, versus a negative 2.0% margin the previous year. Operating profit swung to Rs20.2 billion. Even after Rs9.3 billion of finance costs and Rs4.0 billion of taxation, the company finished with Rs6.2 billion in net income. That is a roughly Rs21 billion year-on-year swing in bottom-line profitability, but almost Rs30 billion at the gross-profit level. The conclusion is difficult to miss: NRL did not return to profit primarily because it cut overheads, refinanced debt or received some large one-off income item. It returned to profit because the economics of converting crude oil into refined products stopped destroying money. Finance costs helped – they declined about 10% – but they were secondary. And NRL still has a financing problem. Its Rs9.3 billion finance bill consumed nearly half its operating profit. That is one reason the company, despite finally returning to the black, did not declare a dividend. There is also a warning buried inside the annual figures. NRL had already generated almost all of its FY26 gross profit by March: its ninemonth gross profit was Rs23.50 billion, compared with Rs23.54 billion for the entire year. The extraordinary refining conditions that produced the turnaround were therefore highly concentrated rather than evenly distributed across the year.

The refinery policy did not cause the profit boom

here is an obvious temptation to attribute the refinery recovery to the government’s Brownfield Refinery Upgradation Policy. That would be mostly wrong. The policy introduced in 2023, and amended in February 2024, was designed to encourage Pakistan’s existing refineries to

invest billions of dollars in producing cleaner Euro-V fuels and reducing low-value furnace-oil output. Among other incentives, refineries were to receive additional tariff protection – including effective deemed-duty support on petrol and diesel – with part of those proceeds being accumulated for upgrades. But implementation became bogged down. The Finance Act 2024 changed major petroleum products from zero-rated taxable supplies to exempt supplies. That sounds like an inconsequential accounting distinction. For refineries it was anything but. Because the final product became exempt, refineries could no longer offset much of the sales tax they paid on inputs. That raised both operating costs and the estimated cost of the billions of dollars of equipment required for refinery upgrades. The problem persisted into FY26. NRL’s own interim accounts explicitly state that the sales-tax change increased operating costs, while the company recognised receivables based on a government mechanism intended to reimburse disallowed input taxes through the inland freight equalisation mechanism. The Finance Act 2025 created another complication by imposing petroleum and climate-support levies on local furnace-oil sales, further weakening the economics of a product Pakistani refineries already struggle to sell profitably. So government policy was, if anything, an obstacle to refinery economics during much of FY26 rather than the source of the earnings boom. Only after the financial year ended did the government make substantial progress in removing those obstacles. In July 2026, the government approved amendments designed to resolve the sales-tax problem, including relief on imported plant and machinery for upgrades. By August, the Petroleum Division said all five major refineries were preparing to sign upgrade agreements, potentially unlocking more than $6 billion of investment. That may matter enormously for future profits. It does not explain FY26. FY26 was fundamentally a refining-margin story.

Attock Petroleum: the inventory-gain bonanza

t APL, the pattern looks superficially similar. Net sales rose 12% from Rs474.1 billion to Rs533.1 billion. Gross profit, however, jumped 70% from Rs18.8 billion to Rs32.1 billion. That increased the gross margin from 4.0% to 6.0%. Operating expenses rose only 12%, close to the growth in revenue, and other income increased. Consequently operating profit more

ENERGY

than doubled from Rs12.5 billion to Rs25.6 billion, pushing the operating margin from 2.6% to 4.8%. Profit after tax rose 63% to Rs17.0 billion. That certainly looks like operating leverage. But what created the extra gross margin? A large part of the answer was inventory accounting. Oil marketing companies hold substantial physical inventories of petrol and diesel. When international petroleum prices rise rapidly, fuel purchased earlier at lower prices can subsequently be sold at higher regulated replacement prices, generating inventory gains. When prices decline quickly, the reverse occurs. That dynamic was extraordinarily favourable to APL during the third quarter. Business Recorder calculated that APL’s nine-month gross margin had risen to 7.5% from 3.9%, with the third-quarter margin reaching an exceptional 11.9%. Analysts attributed much of that jump to sizeable inventory gains during the surge in international petroleum prices. Then came the reversal. In the fourth quarter, APL’s gross margin collapsed to about 2.7%, as falling petroleum prices produced inventory losses. The full-year 6.0% margin is therefore an average of two very different environments: a spectacularly profitable inventory-gain period followed by a much weaker final quarter. This is important because regulated OMC margins themselves did not suddenly become more generous during FY26. The ECC proposed an increase during December 2025, but the federal cabinet subsequently blocked implementation and linked additional OMC profitability to digitalisation of the petroleum supply chain. Through the financial year, OMC margins therefore remained around Rs7.87 per litre on petrol and diesel. (Dawn) Even in August 2026, after the financial year had ended, a proposed Rs1.22-per-litre increase for OMCs remained conditional on meeting digitalisation targets. So APL’s 63% earnings increase should not be interpreted as a structural government-mandated increase in OMC profitability. It came primarily from better realised gross margins – and those, in turn, included unusually large and inherently volatile inventory gains.

Pakistan Oilfields is the odd one out

akistan Oilfields presents the most interesting result precisely because its earnings improvement came from almost everywhere except gross margins. POL’s net sales increased 10% to Rs63.0

billion, helped during parts of the year by improved gas production, including incremental output from Razgir and Makori Deep. Gross profit rose only 6%, however, to Rs42.2 billion. The gross margin therefore fell from 70.0% to 67.0%. If the question is whether POL’s 32% earnings increase was caused by gross-margin expansion, the answer is unequivocally no. The biggest single difference was exploration expenditure. Exploration costs collapsed from Rs11.2 billion to Rs4.7 billion, a reduction of roughly Rs6.5 billion. Arif Habib analysts noted earlier in the year that the comparable FY25 period had included dry-well expenses at Balkassar; the absence of an equivalent charge produced a dramatic reduction in FY26 exploration costs. Then came financing. POL’s net finance cost fell from Rs4.8 billion to Rs2.5 billion, another Rs2.2 billion benefit. Administration costs were also slightly lower. Some of that improvement was offset because other income fell from Rs14.5 billion to Rs9.8 billion, largely reflecting lower returns on the company’s enormous cash portfolio as interest rates came down. Even with that drag, profit before tax rose 19%. And then taxation supplied another boost. POL’s tax provision actually fell to Rs9.6 billion from Rs10.6 billion despite higher pre-tax profits, while final levies fell sharply. The effective tax burden consequently dropped materially. The combined result was a 32% increase in net profit to Rs31.9 billion. It would be misleading to call that classic operating leverage. POL did not simply sell more hydrocarbons while fixed costs remained constant. Its direct production costs rose, its gross margin compressed, and its other income declined. The better description is below-gross-profit normalisation: fewer unsuccessful exploration charges, cheaper financing and lower taxes. There are nevertheless policy changes that could matter to POL over the longer term. The amended Petroleum Policy allows E&P companies to sell up to 35% of qualifying pipeline-quality gas to licensed third-party buyers through competitive bidding, rather than relying entirely on state-controlled gas utilities. The policy is designed partly to improve cash collection and reduce the enormous receivables problem that has discouraged upstream investment. Pakistan has also been diverting and deferring LNG cargoes to reduce the excess imported gas that had forced domestic E&P companies to curtail production. POL benefited during FY26 from improved gas output at assets including Makori Deep and the newly introduced Razgir field, although declines at

mature oilfields such as Jhandial and Adhi remained an offset. Those changes could make POL’s future production economics better. But, again, they should not obscure what happened in the FY26 accounts: the largest earnings boost came from spending far less money on unsuccessful exploration.

The quality of the profit matters

he synchronised earnings recovery allowed three of the companies to return considerably more cash to shareholders. POL declared total dividends of Rs100 per share for FY26; APL’s total payout reached Rs60 per share; and ARL declared Rs17.50 per share. NRL, despite returning to profitability, declared nothing – a sensible reflection of its still-leveraged financial position and large capital requirements. But investors looking at the Attock Group’s results should resist the temptation to lump those profits together. ARL’s improvement was arguably the cleanest operational result: its core refining margin expanded enormously even as other income declined. NRL achieved an even more spectacular operating turnaround, but its profitability remains vulnerable to refining spreads, inventory movements, substantial debt costs and the capital expenditure required to modernise the refinery. APL enjoyed genuine operating leverage, but its margin expansion was amplified by inventory gains that can – and did – reverse rapidly. And POL’s earnings increase was almost the opposite story: gross profitability became slightly weaker relative to sales, while the absence of large dry-hole expenses, lower financing costs and a lower tax rate carried the bottom line higher. That leaves one broad conclusion from the Attock Group’s FY26 results. The Pakistani energy business became substantially more profitable during the year, but not because the government suddenly created a uniformly friendlier operating environment. The refinery policy remained troubled for most of the period. OMC margins were not materially raised. And the upstream sector continued to struggle with gas curtailments and declining mature fields. Instead, FY26 presented each part of the Attock energy chain with a different opportunity: unusually rich refining spreads for the refiners, enormous inventory gains for the fuel marketer, and a year with fewer exploration write-offs for the producer. The numbers are excellent. The more important question for FY27 is how many of those conditions can repeat. n

ENERGY

Pioneer and Maple Leaf’s merger would create a top 3 cement company in Pakistan More precisely, the combined company would become the second-largest cement producer in Pakistan’s northern market and one of the three largest nationally.

akistan’s cement industry may be about to lose another independently listed company. Maple Leaf Cement Factory Ltd and Pioneer Cement Ltd have both scheduled board meetings for September 2, 2026. Neither company has formally said that the meetings are intended to approve a

CEMENT

merger, but the coincidence has been enough for analysts at Topline Securities to conclude that a full amalgamation of Pioneer into Maple Leaf may now be under consideration. Topline’s August 28 note is principally concerned with what Pioneer shareholders might receive if such a merger takes place. Its analysts estimate that a reasonable exchange

ratio could fall somewhere between 2.1 and 2.6 Maple Leaf shares for every Pioneer share. But the share-swap calculation is almost the least interesting thing about the potential transaction. The far more important story is what it says about where Pakistan’s cement industry is going.

A Maple Leaf-Pioneer merger would create a company with roughly 13.4 million tonnes of annual cement manufacturing capacity concentrated in northern Pakistan. That would make it the second-largest producer in the northern region, behind Bestway Cement, and put it among the three largest nationally. For completeness, current capacity data mean that the combined entity would technically rank third nationwide: Lucky Cement increased its total capacity to about 15.6 million tonnes in July, while Bestway has approximately 15.3 million tonnes. But because both Maple Leaf and Pioneer operate in northern Pakistan – which functions as a substantially distinct cement market because of freight economics – the more economically meaningful ranking is regional. There, the combination would create the clear number-two player. And unlike a new cement plant, this merger would add precisely zero tonnes of capacity to an industry that already has too much of it. That may be exactly the point.

The takeover has already happened

o understand the potential merger, it is important to recognise that this is not actually the beginning of Maple Leaf’s acquisition of Pioneer. Economically, that acquisition has already taken place. Maple Leaf began pursuing Pioneer in late 2025. At the time, Maple Leaf and its associated company Maple Leaf Capital already owned around 18.5% of Pioneer. The Saigol-controlled company then agreed to buy the controlling shareholders’ stake and launched the mandatory public offer required under Pakistan’s takeover regulations. By February 2026, the transaction was complete. Maple Leaf itself had acquired 77.38% of Pioneer, while the wider group’s holding reached 88.28%. Pioneer consequently became a subsidiary of Maple Leaf from February 20. Maple Leaf’s FY2026 annual report now explicitly describes Pioneer as a subsidiary and says the acquisition was intended to strengthen the group’s market presence and long-term growth. It was not a small transaction. The acquisition was valued at approximately Rs75 billion, with Habib Bank leading the financing arrangements through a Shariah-compliant syndicated structure. Maple Leaf paid Rs478.43 per Pioneer share in the transactions through which it acquired the controlling stake and made the public offer. (CemNet) So if the September 2 meetings do indeed result in a merger announcement, Maple Leaf would not suddenly gain control over 5.2 million tonnes of Pioneer capacity. It already

has that control. What would change is the corporate architecture. Instead of Maple Leaf owning a separately listed subsidiary with its own minority shareholders, board, capital structure, financial statements and stock-market quotation, the two cement businesses could be folded into a single company. Pioneer would cease to exist as a separate corporate entity, its assets and liabilities would vest in Maple Leaf, and the remaining Pioneer shareholders would presumably receive Maple Leaf shares according to an agreed exchange ratio. That distinction matters because the operational consolidation began months ago. A legal merger would be the second stage: turning an acquisition into one company.

Why cement companies would rather buy each other

he broader industrial logic is even more interesting.Pakistan does not have a shortage of cement plants. The All Pakistan Cement Manufacturers Association reported installed cement capacity of nearly 87 million tonnes at June 2025. Since then there have been incremental additions, including Lucky Cement’s recent optimisation of its Karachi facility. Yet total cement dispatches in FY2026 were only around 50 million tonnes. Local dispatches rose strongly, by roughly 9.5% to 41.5 million tonnes, while exports were around 9 million tonnes. That leaves enormous spare capacity. At a national level, the crude utilisation calculation is somewhere in the high-50% range. The problem is particularly acute in northern Pakistan, where the majority of the country’s manufacturing capacity is located and where producers depend far more heavily on the domestic market than their southern counterparts. That completely changes the economics of expansion. In the previous cement investment cycle, companies expanded by ordering new kilns. Today, an ambitious cement producer has another option: buy somebody else’s kiln. Industry estimates late last year put average Pakistani cement-company enterprise values at roughly $46 per tonne of capacity, compared with perhaps $80 per tonne for brownfield expansion and $100-$110 per tonne for a new greenfield plant. Those numbers will fluctuate with share prices and construction costs, but the relationship is what matters. Existing cement capacity has been available in the equity market for substantially less than it costs to recreate physically. (CemNet) For Maple Leaf, therefore, Pioneer rep-

resented the industrial equivalent of buying a house for less than the cost of the bricks. And, crucially, buying Pioneer did not make the sector’s overcapacity problem any worse. Had Maple Leaf spent tens of billions of rupees installing another five-million-tonne production line, Pakistan would have had five million additional tonnes competing for the same customers. Buying Pioneer gives Maple Leaf essentially the same increase in corporate scale without adding a single new bag of theoretical supply. For shareholders, that is potentially a much more rational way to grow.

A much bigger player in the North

he geographical aspect of the transaction is particularly important. Maple Leaf’s main manufacturing facility is at Iskanderabad in Mianwali district. Pioneer operates at Chenki in neighbouring Khushab district. Both serve the northern cement market, where Punjab and Khyber Pakhtunkhwa account for the overwhelming majority of demand. Maple Leaf alone has a little over eight million tonnes of annual cement capacity. Pioneer adds more than five million tonnes. Earlier analyst estimates suggested that combining the two raises Maple Leaf’s capacity-based share of the northern region from roughly 12% to around 19%-20%. That is a significant change in competitive positioning. Bestway remains larger in the North, with approximately 15.3 million tonnes of capacity. But a merged Maple Leaf-Pioneer would move decisively ahead of Fauji Cement and the northern operations of Lucky Cement. That has implications beyond simply producing more cement. Cement is heavy and relatively cheap per unit of weight. Freight therefore matters enormously. A cement factory cannot economically serve every customer in Pakistan merely because the country is one national market. Distance from the plant to the dealer or construction site can determine whether a sale is profitable. That gives regional scale unusual importance. A larger Maple Leaf could potentially rationalise distribution between the Maple Leaf and Pioneer plants, directing customers to whichever factory can supply them most efficiently. Dealer networks could overlap. Procurement could be centralised. Coal, petroleum coke, packaging and other inputs could be bought at greater scale. Administrative functions could be combined. Working capital could be managed across the entire operation rather than in two separate listed companies.

There are potential energy synergies as well. Maple Leaf has spent years developing a relatively sophisticated fuel mix incorporating petroleum coke, alternative fuels, waste heat recovery and solar generation. Analysts have consistently regarded its energy efficiency and ability to avoid expensive grid electricity as a competitive advantage. Applying parts of that procurement and operating expertise across the Pioneer asset base could eventually narrow differences in production costs. (Scribd) None of those savings is guaranteed. And many can already be pursued while Pioneer remains a subsidiary. But a full merger makes them easier to institutionalise because there is no longer a requirement to maintain strict economic boundaries between two companies with different minority shareholders.

And then there is pricing power

This is where the industry implications become more sensitive. A cement market with fifteen independent producers behaves differently from one dominated by a handful of companies controlling most capacity. Consolidation can generate genuine efficiency: lower administrative costs, greater procurement scale, better plant utilisation and more efficient logistics. But consolidation also reduces the number of companies independently deciding how much cement to produce and at what price to sell it. The Competition Commission of Pakistan has already examined the underlying Maple Leaf acquisition of Pioneer and allowed it to proceed. The CCP concluded that the combined market share would remain moderate, that several substantial competitors would continue imposing competitive pressure and that the transaction would not create or strengthen a dominant position. (Nukta) That is a reasonable conclusion at the national level. But the trend across the industry is worth watching. Fauji Cement absorbed Askari Cement through a merger sanctioned in 2022, exchanging five Fauji shares for each Askari share and transferring all of Askari’s assets and liabilities into the surviving company. That transaction helped transform Fauji into one of the largest northern producers. Now Fauji is expanding again. Along with Kot Addu Power Company, it has pursued control of Attock Cement Pakistan. The Competition Commission approved that proposed transaction in February 2026. Maple Leaf, meanwhile, has already swallowed Pioneer economically and may now be preparing to swallow it legally.

The direction of travel is difficult to miss. Pakistan’s cement industry is moving from an expansion cycle towards a consolidation cycle.

Consolidation may actually be what the industry needs

here is a counterintuitive argument that this is healthy. Pakistan’s cement companies spent much of the previous decade repeatedly adding production capacity in anticipation of construction booms that did not always materialise. When demand weakened during the economic crisis, plants were left operating dramatically below their potential. That creates terrible incentives. A cement plant is enormously capital intensive but has relatively low marginal production costs once it is operating. When companies have spare capacity, each producer has an incentive to chase additional volume to absorb fixed costs. If everyone behaves that way simultaneously, pricing can deteriorate. Consolidation does not eliminate the capacity, but it concentrates decisions over that capacity in fewer hands and makes rationalisation more feasible. For Maple Leaf specifically, Pioneer offers a shortcut to scale just as domestic cement demand is finally recovering. FY2026 local dispatches increased almost 10%, helped by lower interest rates, improving construction activity and a somewhat more stable macroeconomic environment. The combined company would enter that recovery with materially greater available production capacity, rather than having to wait several years for a new kiln to be constructed. That is the strategic attraction. The danger is that management has borrowed heavily to buy an asset in an industry still running well below full utilisation. Scale is valuable only if the enlarged company eventually finds customers for its capacity and extracts the promised efficiencies.

Which brings us to the swap ratio

hat industrial context is what makes Topline’s valuation exercise interesting. Under Securities and Exchange Commission of Pakistan guidelines, a merger exchange ratio should ideally be established by a recognised valuation expert after examining the financial positions of the two companies. The commonly used approaches include net asset or break-up value, market prices, future

earning capacity through discounted cash flow, and comparable transactions. The guidelines suggest that, where possible, fair value should be based on an average derived from three of those methodologies. Topline has run all four. The break-up-value approach produces an estimated exchange ratio of 2.63 Maple Leaf shares for every Pioneer share. The DCF approach produces 2.12. The market-price approach gives 2.59. Using the previous Maple Leaf acquisition of Pioneer as a comparable transaction generates a higher 2.88. Topline’s average is 2.56, and the brokerage believes a plausible final range is approximately 2.1 to 2.6 Maple Leaf shares for each Pioneer share. The market itself is already near the upper end of that range. On August 27, Pioneer closed around Rs265.64 while Maple Leaf was around Rs102.09. The relationship between those prices is broadly consistent with Topline’s market-value swap estimate of 2.59. That should not be surprising. Once investors begin expecting an all-share merger, the two stock prices tend to become linked by expectations about the eventual exchange ratio. There is also a useful precedent. When Fauji Cement merged Askari Cement, EY Ford Rhodes valued the companies using income, market and cost approaches. Those methods generated exchange ratios ranging from 4.6 to 5.6 Fauji shares per Askari share, with the companies ultimately using a ratio of five to one. Topline cites that transaction as the clearest recent Pakistani cement-sector precedent. The final Maple Leaf-Pioneer ratio, if there is a merger at all, may differ from Topline’s estimate. Independent valuers, boards, shareholders and ultimately the legal approval process will determine the actual terms. But shareholders should think about that number in the correct context. The fundamental transaction took place when Maple Leaf paid roughly Rs75 billion to obtain control of Pioneer. The next transaction, if approved, would be about finishing the job. It would exchange the remaining complexity of a parent-subsidiary structure for a single listed cement company controlling more than 13 million tonnes of capacity. And that is why the September 2 board meetings matter beyond the fortunes of Pioneer’s minority shareholders. The potential merger would be another indication that Pakistan’s cement industry has entered a new era. For years, being ambitious meant building the next kiln. Now ambition increasingly means buying the company that already owns one. In an industry with nearly twice as much production capacity as it currently needs, that may be the more sensible form of growth. n

CEMENT

Pakistan’s solar rush has surprised the world. What lies next? Profit interviewed the CEO of Global Solar Council, who argued that Pakistan’s solar revolution was a stupendous story, but work still needs to be done to drive the advantages home

Profit Interviews

he solar boom, the solar rush, the solar revolution. You can replace the final word of each of these phrases with any other word denoting unprecedented speed, and connoting a change in fortunes, and it would likely be true of what Pakistan in recent years has experienced. According to a report by Renewables First, a Pakistan-based think tank, in the last two years, Pakistan’s electricity generation rose by 21%, making a total increase of 33 TWh. The remarkable thing about this is that this surge was led entirely by distributed solar generation, which increased by 36 TWh. In the two years between July 2023 and June 2025, distributed solar generation in Pakistan tripled from 15 TWh to 51 TWh. This is a staggering rate. To discuss this rapid solar adoption in Pakistan and the potential that lies ahead, Profit sat down to talk with Sonia Dunlop, the CEO of the Global Solar Council (GSC), an international representative of the solar PV industry aiming to help accelerate solar adoption across the world. Before joining the GSC, Ms. Dunlop had spent years in the policy and think tank circles covering the solar transition, and since 2023, she has been leading the GSC in its bid to push the deployment of solar and battery solutions in global contexts.

The Pakistan Story and its Causes

“B

y the way, Sonia, do you know what’s happening in Pakistan? They seem to be importing a huge amount of solar. It’s almost [as if] it can’t be true”. Ms. Dunlop admits that Pakistan’s solar rush actually flew under the radar. There were some reports coming in, but some skepticism

dampened the extent of what really had been occurring. As she relates, she got to know of the massive solar transition in Pakistan through a friend at Bloomberg New Energy Finance, a leading global markets data provider around solar. The company had to make use of satellite imagery to confirm that solar deployment in Pakistan was actually picking up pace quite quickly. “Slowly, it dawned on us that something amazing was happening in Pakistan,” Ms. Dunlop says. “This was a massive solar rush that was happening without anyone having planned it, without any kind of intervention from the government [or] from any kind of external investor. This was a totally grassroots, bottom-up thing that was happening on the ground.” It was both the speed and the nature of the change that was remarkable, and this event, according to Ms. Dunlop, is an “inspirational example” that other countries – including from the global north – are looking to emulate and copy. But what really got the ball moving in the first place? Ms. Dunlop identifies three main causes that came together to catalyze the solar moment in Pakistan. “The first was obviously the reduction in the cost of solar, which means that Pakistanis had access to this very cheap alternative source of generating electricity.” She credited China’s investment in manufacturing over the years which has brought down the cost of solar by over 90 percent over the last 10 to 15 years. “The second major cause was the big spike we saw in retail power prices in Pakistan,” explained Ms. Dunlop. Pakistanis were faced with a choice: either pay a very high electricity bill or put some money in solar and see the savings immediately start coming in. The final cause she identified was the hardy and motivated attitude of Pakistanis, who were being buffeted by these rising energy costs. “The country [had] a can-do, get-it-done attitude to things. They decided to go for the thing that could really bring down their electricity bills, give them resilience, and give them certainty in terms of what their electricity was going to cost,” explained Ms. Dunlop. It was a combination, then, of need for a solution,

availability of the solution, and a fervent desire for that solution that together pushed the solar revolution in Pakistan to the current level. The conditions were ripe for it to happen.

The Real Point

hat her explanation elucidates is the power of economic factors behind this solar surge. According to Ms. Dunlop, “what’s important is not that this is renewable or clean or CO2-neutral. What’s important is that it is saving people money. Businesses and households can [now] save money and have more certainty in terms of their power bills over the long term, and that is what has spurred people to do it.” While she agreed that the emphasis on clean energy has been part of the discourse, it is no longer seen as the primary motivator behind a transition to solar energy. Rather, solar and battery storage and similar technologies are seen as important ways to deliver economic competitiveness and sustainable growth in a country. She cited a simple example: half a million jobs in Pakistan had been created because of this solar rush. It is just another aspect of the financial incentive a shift towards solar and battery storage systems can offer. The story, then, is less about ushering in green energy, although that is still important, and more about the economic gains that such a transition can hope to offer. And Ms. Dunlop offered examples from across the world where “pure economic and project finances” logic had triumphed over considerations of green and climate-conducive energy. According to her, “if you ask a Californian household why they installed solar, [they’ll tell you that] they are doing that because they are facing high energy bills and it is a way of protecting themselves from the energy cost of living crisis. If you ask the same question in Nigeria, it’s because it is the best alternative to diesel power generation. If you ask the same question in Zambia, it’s because there is now a specific fund in every constituency across the country to support local people to build solar projects.” Economic factors are king.

What Does Pakistan Need?

s. Dunlop did concede that while there was much work already done, there was much work left to do as well to really drive home this solar transition. In order to achieve that, she argued, Pakistan needed to reform how its electricity market was designed and incentivize households and businesses to consume themselves as much of the electricity they were generating through solar. In addition, she pointed out that “they need to be moving their demand for electricity to the middle of the day when solar generation is high. They also need to be installing battery storage. We need a big surge in battery storage now.” On the level of rooftop solar, then, having solar panels installed is not enough. People need to be encouraged to change their patterns of energy consumption – and production – and the liberty to do that depends upon the freedom they must acquire. The major way of achieving that freedom is through battery storage systems. These systems enable consumers to front-load their solar generation in the peak afternoon hours, and actually store it for use during other, darker times of the day. But rooftop solar is only part of the equation. The grid is the other major part. Ms. Dunlop urged that “we also then need to be thinking about the role of utility-scale solar farms in the grid, independent power producers feeding electricity at large volumes into the grid, and ideally having hybrid projects between battery and solar storage.” At the same time, she emphasized that “we need to work with the transmission system / grid operators to help [them] enter this brave new world of the dawn of the solar era.” Australia emerges as a potential blueprint for this. As Ms. Dunlop pointed out, like Pakistan, Australia’s solar generation fleet is highly skewed towards residential rooftops, so there’s a lot to learn there. The difference – for now – is that the Australian government incentivized the people to put battery systems in their homes. But that’s not something that’s necessarily needed. According to Ms. Dunlop, “you don’t necessarily require a pure subsidy. You can do that by just allowing those battery systems to gain revenues from the grid operator for the ancillary services they provide”. These can include, as she pointed out, “voltage control services, the frequency control services, inertia, black start, reactive power, and so on”. This would be on top of them selling energy to the grid. Ways, therefore, exist these systems to start making financial sense. Other economies have adopted them. Going back to the Australia example, Ms. Dunlop pointed out, the grid operators in Australia have begun to control how much energy these solar and storage systems inject

into the grid. The result is impressive, as she explains: “There are entire days now in South Australia, where the entire electricity grid of South Australia is run entirely on rooftop solar. And it absolutely can be done [here in Pakistan as well].” Conversation between respective stakeholders from these countries, therefore, is needed, so that learnings are shared. This is one part of the mission of the organization Ms. Dunlop belongs to.

Limitations and Possibilities

he cost of capital required – on the household level, for instance – for these battery storage systems, however, is still prohibitive. Ms. Dunlop acknowledged that, but indicated that things seemed to be moving in the right direction: “The cost of batteries has been coming down a lot. We have seen a 73% reduction in the cost of battery packs since 2017. We expect probably another 20% reduction over the next few years.” She still conceded that the prices are still high, but expressed hope that with the right regulatory market design framework in place, the industry can do the rest. On an institutional level investment and funding is also a complicated ask. Until now, and this according to Ms. Dunlop was the really remarkable thing about Pakistan’s solar rush, “it was essentially done with local currency domestic capital mobilization, which meant that there was no currency risk, which meant that it was all local money being invested because the paybacks were good.” Now that the market is maturing, however, larger institutional investors, especially global ones, assume an important role. Public investors, according to Ms. Dunlop have evinced interest in investing in such energy projects in Pakistan. These include the World Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank, the Islamic Development Bank, and several others. On the private finance side, the picture is less straightforward. According to Ms. Dunlop there are indeed massive global renewable investments funds that invest in similar projects, but those are usually too risk averse to go into developing markets such as Pakistan. They would need certain market data and risk guarantees, for instance, in order to do that, and that is something she and her team at the GSC are working towards doing. As she pointed out, there are myths in the global world around Pakistan, that it is tough to do business here and negotiate the red tape. “We need to do a bit of myth busting that actually when you come and do business on the ground, it is not what you initially might have perceived it to be.” Of course, things might be better. The more regulatory certainty the government and utilities can provide, the more attractive the

Slowly, it dawned on us that something amazing was happening in Pakistan Sonia Dunlop, CEO of the Global Solar Council

proposition becomes. But the caricature does not necessarily hold true. For Pakistan, the solar rush might yield benefits that are beyond the simple energy savings and grid relaxation they purport to offer. There is potential to manufacture batteries and so on, but Ms. Dunlop argues that there’s a need to be smart about the deployment of our energies and capital. One way to do it would be to invest in recycling capabilities. She points out: “Pakistan already has around 50 gigawatts of capacity installed. That will last 25 plus years. And then you are sitting on a mine of polysilicon, of silver, of aluminium, of glass – 97% of which can be recycled. So, the smart thing is to invest in the recycling facilities here in country and build up that domestic supply chain so that at some point in the future it becomes totally circular and self-sufficient.” Pakistan also can take up a leadership role in global conversations around solar transition, according to her. Not only the local industry, but the government can help and convene other governments going through similar transitions to help them with their solar transitions. And once such engagements start to take place, a concerted effort can be made to push globally towards a solar transition by highlighting the economic benefits it might yield the consumers – not only by saving on their own electricity bills, but also being compensated for the energy they sell to the grid. Pakistan’s story, after all, has been astonishing. But it is not done yet. n

PABC IS BEING BADLY HURT WITH LITTLE RELIEF IN SIGHT The company is looking to weather the storm with corrective measures, however, good times seem far into the future

By Zain Naeem

he 12th October 2025. Pakistani officials confirm that the country had closed down crossings along the 2,600 km border with Afghanistan. The decision was taken after Afghan and Pakistan forces exchanged heavy fire along multiple sections of the frontier after Afghan forces attacked its border posts. While the closure of the border might

have been necessary from a political point of view, it has had far reaching consequences on businesses. There was a healthy trade that was carried out between the two countries before the closure. Some of the key ones were rice, vegetables, fruits and cement. As the borders closed, many of these exports were adversely impacted. One company which felt the brunt of this adversity was Pakistan Aluminum Beverage Cans (PABC). This was going to dampen the meteoric rise that had been seen till date.

When the Initial Public Offer was carried out back in 2021, PABC was seen to be the hottest new stock which was going to monetize its position in the market. The issue was oversubscribed by 2.5 times as it offered almost 94 million shares to the capital markets. The interest in the stock meant that the stock was able to reach its ceiling of Rs 49 in its book building stage. This allowed total funds of Rs 4.6 billion being raised which made it the second largest IPO to be carried out in the history of the

Soft drinks served in the original glass bottles had been replaced by plastic well before PABC came onto the scene. But since then, the introduction of cans have taken restaurants and catered events in particular by storm. country after Interloop at that time which was able to cross the Rs 5 billion threshold. Compared to traditional manufacturing like textile, refinery, cement and fertilizer, PABC was going to manufacture something unique and different. Aluminum cans to be manufactured for beverages only. The company was set up in 2015 and it immediately made a splash when it started production in 2017 with the year being closed out with production of 700 million cans. The purpose of the IPO was to allow the company to expand its production which went from 900 million cans in 2021 to 1.2 billion by August of 2023. As PABC was the only game in the market, it was able to cater to a wide array of the market while having little to no competition to deal with. There was an unlimited upside potential with demand for carbonated drinks increasing each year and no one to share the market with. This was the time when the company faced its first big challenge as war broke out between Hamas and Israel. In the ensuing months, Israel launched an offensive that has since been declared genocide against the Gazan population by every international forum that deliberates on such matters. As global outrage against the atrocities increased, there was a revival of the international Boycott Divest and Sanction (BDS) movement, which calls for people to boycott companies complicit in supporting Israeli economic interests. While companies like Caterpillar and HP are on the top of these lists, in Pakistan the anger turned towards multinational companies like Coca Cola, Pepsico, and McDonalds. What

started off as a boycott against Israeli products soon turned into a boycott of all international products. This was supposed to be a testing time for PABC as carbonated beverages started to face a fall in their demand. The solution to this crisis was going to be an initial pivot towards a new market. The company turned its attention towards exports in order to fill the gap that had been left by the fall in local demand. There had already been efforts being made as the company started exporting to Afghanistan, Uzbekistan and Tajikistan with many of the logistics being carried out through Afghanistan. The next crisis was going to be one that was going to hit the company even harder as the border closures meant that no trade was going to be carried out after a spate of terror attacks taking place within Pakistan. As trade came to a stop, the impact was going to be harder and unavoidable. The recently released half yearly accounts show just how bad the situation has gotten where revenues have been badly hampered due to lack of exports. The War in the Strait of Hormuz has also meant that the costs associated with production are rising which are coupled with higher inflation in the country reducing the purchasing power of the consumer. Being squeezed with lower demand and higher costs, the company is feeling the pressure to increase its price in order to sustain itself. Another mitigating development that has been planned is to establish a plant in Afghanistan which will be able to meet demand in Afghanistan and adjoining countries and

would reduce the impact of the border closure to some extent. At this point, the company which was flying high, seems to have had its wings clipped and it will take some time for the good times to return considering there is no end in sight to the border closure.

The history of beverage packaging

he history of beverage packaging in the country is a sparse and varied one. From 1947 till the 2010s, most of the market was being catered to with tin being used as the primary material. The lack of any large industry was rooted in the fact that before partition, Metal Box of the United Kingdom used to operate only two manufacturing plants and that too on the Indian side of the country in Bombay and Calcutta. The purpose of these factories was to provide packing for food used by the British army. After partition, Pakistan did not have any facility to speak of and Metal Box exported these items which was complimented by the army setting up shoddy facilities in order to flatten and repurpose old cans. Due to the situation being so stark, a manufacturing plant was finally set up in 1953 with collaboration of local sponsors under the name of Hashmi Can Company. For a long period of time, Hashmi was the largest tin manufacturer in Pakistan. As Hashmi Cans Company was plagued by issues, glass soon took over as the main material which was used. Throughout the 50s, 60s and 70s, Coca Cola and Pepsi took on glass bottles as their primary means of packaging with the shape of the bottle being used in the

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PABC’s can manufacturing facility took Pakistan’s beverage market by storm. But their capacity and ambitions went beyond just serving Pakistani clients. marketing campaigns of that time as well. In the 2000s, glass was taken over by plastic as the companies started to promote convenience and practicality. Glass bottles of yesteryear were converted into plastic bottles of ranging sizes. Around this time, cans in the market were primarily being imported by retailers, however, due to the high cost of these products, the idea never gained mass popularity. In 2017, another new development was going to take place. Cans which had once been imported by store chains catering to international taste were being replaced by a thinner and taller can which had never been seen in the stores before. It was a common sight to see stacks of these cans being seen in retail stores all over the country. This was the entry of PABC in the retail market of Pakistan.

The market is ripe for PABC

n 2015, Ashmore Investment Management, Liberty Group and Soorty Enterprises came together to establish an aluminum beverage can facility in Faisalabad. The company was incorporated in 2015 with the manufacturing facility coming online in 2017. “This was the first project of its kind in Pakistan,” says Abdullah Yousaf, the Co-Chairman of PABC. “Before this it was entirely imported cans. What this facility has done is to ensure that not only are there not any imports, but there will also be exports which will help Pakistan. With the employment benefits from this project, it is in the national interest.” The market was waiting for such a development and PABC was able to take advantage. Pepsi and Coca Cola became a few of the initial customers as they wanted the new medium for their own package. With most of the local demand being met, the company started to

establish links by exporting to Afghanistan, Tajikistan and Iraq which became the next big markets. At this point, only Muree Brewery, Mehran Bottlers and Nestle were some of the other clients that PABC was able to get as there were cheaper packaging solutions which were available to them. Cans allow the shelf life of beverages to be extended, however, there is a cost that is associated with them. With many of the local brands being limited to certain regions and geographic locations, they did not feel the benefit outweighed the cost for them. Since the company started its manufacturing process in 2017, the revenues of the company kept growing from one year to the next. At the end of 2018, the company registered revenues of Rs 2 billion. By the end of 2023, these revenues had grown almost 10 fold to 19.7 billion. The effect of this could be seen in terms of the losses of Rs 80 crores seen in 2018

turning to profits of Rs 5.3 billion by 2023. To understand the secret to the company’s success, the best measure of performance is the gross profit margin that was earned. In 2018, due to the higher cost of production, the company actually made a gross margin of -10.7% and net margin of -38.8%. By 2019, the company had reversed this trend making a gross margin of 22.3% in 2019 and 3% in terms of its net margin. The key raw material used by Pak Aluminum is quite simple aluminum. Specifically, it is aluminum coil which is then used to be turned into cans. During 2018, the price of aluminum fluctuated between $2,200 per metric tonne and $1,800 per metric tonne. These prices kept decreasing throughout 2019 and 2020 hitting a low of $1,400 per metric tonne in mid 2020. Due to this decrease, the gross margin increased to 22.3% in 2019 and 30.3% in 2020. The next time the threshold of $2,200 per metric tonne was crossed was in March of 2021. The company was able to maintain its gross profit margin to some extent in 2021 as well as its recorded margin of 35.5%. Pak Aluminum was also able to take advantage of a tax holiday that was granted to it for a period of 10 years as they were located in the Special Economic Zone in Faisalabad which expired in September of 2027. In addition to that, the management has complete control over the pricing power and control as they follow a cost plus pricing model. Any increase in the cost is passed on to the customer which guarantees that they end up making a profit. Due to its position in the market, the company is practicing cost plus margin pricing which allows it to pass on any increase in the cost to its customers. This was the disclosed policy as the company was the only game in town and bottlers had no other option but to

absorb the increase in the price. The year 2022 saw gross margins decrease from 35.5% to 33.4%. This was due to the fact that aluminum prices escalated from $2,200 per metric tonne to $3,500 per metric tonne in a space of one year. Due to the lag between ordering, producing and then selling the cans, the cost increase could not be passed on leading to a decrease in the margins. Prices started to ease once again through most of 2023 which allowed the company to once again see its gross margin increase back to 38.7% in 2023.

The first shock and opportunity

ue to the war in Gaza, there was going to be a change. As the war between Hamas and Israel started, there was an active boycott carried out of Pepsi and Coca Cola. The movement started as the BDS Movement which slowly expanded to international brands as well. As sales of these carbonated drinks started to fall, the fall in sales was going to reach PABC as well. From 2020 onwards, the company’s growth in sales had been 42%, 96% and 39% respectively. The growth in sales in 2024 plummeted down to only 17% which does show that the boycott was having an impact. Another negative factor was that aluminum started to increase in price yet again as it went from $2,200 in January 2024 to $2,500 in December of 2024. The gross margin yet again took a hit to some extent as it fell from 38.7% to 36.5% in 2024. With the economy seeing historically high interest rates and the company carrying out expansive selling and distribution expenses, it could be expected that its net margin would take a serious hit during 2024. Fortu-

This was the first project of its kind in Pakistan. Before this it was entirely imported cans. What this facility has done is to ensure that not only are there not any imports, but there will also be exports which will help Pakistan. With the employment benefits from this project, it is in the national interest Abdullah Yousaf, Co-Chairman of PABC nately, the company had the farsightedness to invest its cash resources into profit bearing investments. Between 2023 and 2024, the short term investments of the company jumped from Rs 4.5 billion to Rs 15 billion. The effect of this investment was that even when gross profit margin decreased, other income increased from Rs 46 crores to Rs 2.2 billion in a span of a year. This was a way for Pak Aluminum to be able to boost its profits in the face of declining margins. The earnings per share in 2023 were Rs 13.9 per share which increased to Rs 16.9 in 2024. Another shift that was seen at the company was that local sales had already started to plateau. In 2022, local sales were Rs 9.5 billion making up 61.5% of its total sales. Exports only made up the remaining 38.5%. From 2022 to 2023, local sales remained more or less the same while exports surpassed local sales clocking in at Rs 11.7 billion. By 2024, this gulf had widened further with exports valuing Rs 14.5 billion and local sales falling behind at Rs 10.2 billion. In just two years, exports had gone from 38% to 59% of sales. This was one way Pak Aluminum was able to compensate for the fall in local sales. By looking to exploit its export markets, any decrease in local sales was countered and revenues ended up actually increasing.

The second shock seems to be persisting

he year 2025 was going to be the year where the company was going to beat all past records. To get an idea of this, it was seen that the company was able to make revenues of Rs 21 billion which had been the first time it crossed the Rs 20 billion mark for the 9 month period starting from January 2025 and ending in September 2025. Based on these revenues, PABC was able to generate gross profit of Rs 7 billion or around 33% gross margin. With similar indirect costs, the earning per share came to around Rs 15.67 which had been Rs 12.38 for the same nine months a year before. The stage seemed set for another stellar year where it was going to end the year with earnings of more than Rs 20 per share. Alas, that was not going to happen. On 9th of October 2025, Pakistan carried out airstrikes in Kabul, Khost, Jalalabad and Patika. The purpose of the strikes was to target Pakistani Taliban for giving a safe haven to the terrorists including Noor Wali Mehsud who were targeted. In response, the Afghan Taliban carried out attacks on multiple Pakistani military posts along the border. After this, the ruling Taliban announced the conclusion of their side of the operation. The damage that was caused due to these clashes on Pak Aluminum was that on the 12th of October, the border between the two countries was closed down. This has not been opened as of yet. The company itself threw some light on this issue with a notification sent to the exchange on 15th of October. The company stated that “We would like to apprise….out esteemed stakeholders of certain recent developments in the regional landscape affecting Pak-Afghan trade routes. In view of the current tensions and hostilities along the border, all border crossings have been closed for commercial activities.” The statement went on to say that “Our company values its established trade connections with partners in Afghanistan and Central Asia, which form an integral part of our diverse sales activities. In the event that this closure

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persists, it may present some considerations for our sales performance in these areas. We are attentively following the situation, always with a focus on upholding the trust and expectations of our shareholders and clients.” To apprise just how much damage was caused by the closure, the revenues for the whole year of 2024 came to around Rs 23 billion while for 2025 the figure was Rs 24 billion. The difference starts to become clear when it is seen that in the last three months of 2024, PABC was able to make sales of Rs 5.5 billion which decreased to only Rs 3 billion in 2025. WIth the cost of aluminum increasing during this period, the gross margin actually dropped from 36.6% to 32.7% for the recent year closed. The drop in gross profit carried down the income statement with the earning per share dropping from Rs 16.90 in 2024 to Rs 14.44 in 2025. In a year where old records were going to be broken, the profits actually dropped. The impact on the exports directly can be seen where the company was able to increase exports from Rs 10.6 billion in September 2024 to Rs 14.5 billion. For the same three month period sales increased minutely from Rs 13 billion to Rs 14 billion from September 2025 to December 2025. With the situation persisting, it could be expected that the first three months of 2026 would show a similar downgrade in performance. In the first three months of 2025, revenues earned were of Rs 4.6 billion which decreased to Rs 3.8 billion for the first three months of 2026. The only bright spot for the company was that the cost of its raw materials fell leading to higher gross margin for the period. With decreased sales, the company had to bear fewer selling and distribution expenses which led to earnings per share actually increasing slightly from Rs 3.54 per share to Rs 3.85 per share at the end of the March quarter. The impact of the exports can be seen by the fact that exports of Rs 2 billion till March of 2025 decreased by 65% to fall to just 0.7 billion in the March quarter. The company was able to increase local sales to some extent, however, the damage seemed to have been done with the fall in exports. The War in the Strait of Hormuz only made things worse for the company as there was an expectation that the cost of aluminum was going to rise at the end of March 2026. This was going to have an impact on the margins of the company. It might seem that the cost plus margin pricing model would be able to absorb any increase in cost of raw material. This could not happen as there were inflationary pressures in the economy which were going to impact the purchasing power of the consumers as well. In such an environment, passing on more cost to them would adversely impact the demand for the product. Due to these mounting pressures, the

company felt that it was at a crossroads to either increase their price or face shrinking margins going forward. The results released for the half year ended show how badly the revenues of the company are actually being affected. From January 2025 to June 2025, PABC was able to record sales of Rs 13.5 billion which almost halved to Rs 7.6 billion in the same period in 2026. Even though gross margins improved, the earning per share for the current half year stood at Rs 7.9 per share which were Rs 10.8 for the same period last year. The figures become starker when it is seen that last year exports clocked in at around Rs 8 billion in the first six months which have fallen to only Rs 1 billion in the current year. A detailed breakdown of regions and countries will be released at the end of the year which will show which markets are sustaining exports, however, it is clear that the loss of exports are hurting and damaging the profitability of PABC. In regards to addressing this issue, the

company started to plan a can manufacturing plant in Afghanistan as far back as October of 2025. The purpose of this plant was to nullify the impact of the border closure by manufacturing these cans in Afghanistan and selling them into its Central Asian markets. The goal was to build a facility with a capacity of 1.3 billion cans which would cost the company $110 million after customary and regulatory approvals had been attained. It will take some time for the new plant to come online and negate some of the impact of the border closures. What is clear through this analysis is that PABC was destined for greater heights and better profitability. It was able to circumvent the BDS movement and kickstart its sales in order to lead to better earnings per share. However, the challenge now is much greater which it had to face due to its growing dependence on the export markets. It seems evident that it will take time and considerable effort and resources to weather this latest storm. n

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India’s Great Wall of Rice leaves Pakistan exposed El Niño is threatening Asian harvests just as global rice consumption overtakes production. But India enters the disruption with enormous reserves and the ability to keep exporting. Pakistan enters it with a falling water table and a business model built increasingly on cheaper rice

ndia is sitting on a mountain of rice. The United States Department of Agriculture (USDA) expects the country to carry 51 million tonnes of milled rice into 2027. That is almost 40 per cent of India’s annual consumption and more than twice the volume it is expected to export.

AGRICULTURE

In a nervous market, those stocks are more than food security. The source of the nerves is El Niño. The World Meteorological Organization expects it to strengthen through the second half of 2026, with dry conditions likely across the Indian subcontinent. India’s monsoon rainfall was

already 13 per cent below the long-period average by late August, and the full season could finish about 15 per cent short — the widest rainfall deficit since 2009. That does not mean a complete rice crop failure, but it raises irrigation costs and yield risk. The USDA’s August forecast puts world

milled-rice production at 537.3 million tonnes in 2026-27, down 8.2 million tonnes. Consumption is expected to rise to 542.8 million tonnes, creating a 5.5 million-tonne gap and pulling ending stocks down from 198.2 million to 192.6 million tonnes. The world is not running out of rice, but it is beginning to consume its cushion. For Pakistan, this will be a moment of reflection. Pakistan has been filling some of the gap created by India when it closed rice exports a few years ago to meet domestic demand. But that gap has been filled mostly by selling non-Basmati rice into lower-value markets. Now, with India reasserting itself via a larger crop in a market that is short on rice, Pakistan might struggle to catch up.

When the giant stepped aside

akistan’s recent export boom began with an Indian policy decision. In September 2022, New Delhi banned exports of broken rice and imposed a 20 per cent duty on several other grades. It went further in July 2023, banning non-Basmati white-rice exports after an uneven monsoon raised fears over domestic supply and food inflation. The restrictions mattered because India had shipped 22.2 million tonnes in 2022, accounting for more than 40 per cent of global exports and exceeding the combined shipments of Thailand, Vietnam, Pakistan and the United States. The withdrawal left importers scrambling. Indian rice had supplied more than 60 per cent of imports in 17 African countries in 2022. Benchmark Thai white-rice prices subsequently averaged $615 a tonne until late September 2024, about 20 per cent above their pre-ban level. The International Food Policy Research Institute estimates that India’s restrictions added roughly $100 a tonne. Pakistan moved into the opening. Its rice exports jumped from 3.72 million tonnes worth $2.15 billion in 2022-23 to a record 6.01 million tonnes worth $3.93 billion in 2023-24. Now, New Delhi has dismantled the restrictions after a large harvest refilled its warehouses. The white-rice ban was replaced with a minimum export price in September 2024, before the floor and remaining duties were removed. The broken-rice ban, the last major constraint, ended in March 2025. By then official stocks stood at 67.6 million tonnes, almost nine times the buffer target. The effect on Pakistan was swift. Exports eased to 5.82 million tonnes worth $3.35 billion in 2024-25. In the first four months of 2025-26, earnings fell 46 per cent from a year earlier and volumes dropped 37 per cent. Softer prices played a part, but Pakistan’s record year had also depended on the absence of the market’s lowest-cost giant.

India now enters El Niño from the opposite position. It harvested a record 154 million tonnes of milled rice in 2025-26, according to the USDA, and is forecast to produce 150 million tonnes this season against domestic consumption of 128 million tonnes. Its projected exports of 25 million tonnes would represent roughly 40 per cent of world trade. In December 2025, official stocks including the rice equivalent of paddy were already 57.6 million tonnes — more than seven times the January buffer norm. Those reserves are part of a broader global defence against the weather shock. Reuters reported that China holds nearly half of world wheat stocks, palm-oil inventories are close to historical highs, and Brazil and Russia have emerged as major soya and wheat exporters. For rice, however, the centre is unusually concentrated. India can determine whether a regional crop scare becomes a global price shock. This is good news for importers, but uncomfortable for Pakistani exporters. At the start of August, Indian five-per-cent broken white rice was quoted by the USDA at about $358 a tonne. Comparable Pakistani rice was $395, Vietnamese rice $437 and Thai rice $458. If El Niño raises prices, Pakistan will earn more per tonne, but India can sell into the same rally at greater scale and from a lower price base. Its reserves provide the world with a buffer; they also place a ceiling on Pakistan’s opportunity.

Two crops, two political economies

he imbalance is not merely a product of India’s size. It reflects two different relationships with the same grain. India built its rice system

primarily to feed itself and export the surplus. Pakistan built an export industry around a crop that most Pakistanis do not depend upon as their main staple. That distinction explains why India treats stocks as strategic insurance while Pakistan tends to treat output as foreign exchange. The contrast was visible at independence. Julian Roche’s The International Rice Trade puts rice on roughly 750,000 hectares in the territory that became Pakistan in 1947. World Rice Statistics 1987 shows that by 1950 India cultivated 29.8 million hectares and produced about 32 million tonnes; Pakistan cultivated 884,000 hectares and produced 1.1 million. Pakistan’s yield, at 1.24 tonnes per hectare, exceeded India’s 1.07 tonnes, but India’s domestic requirement was in another league. Around 1960, rice supplied about 35 per cent of the average Indian’s calories, compared with roughly 9 per cent in Pakistan. That dietary gap turned similar farming questions into very different economic ones. In 1951, India imported 941,000 tonnes of rice to meet local demand. Pakistan imported none and exported more than 206,000 tonnes. Across the two decades to 1970, India bought an average of about 600,000 tonnes a year from abroad, while Pakistan remained a regular exporter. India’s rice mountain is its answer to that old vulnerability. Higher-yielding varieties, irrigation, support prices, state procurement and public distribution turned a chronic importer into the dominant exporter. The system is costly and ecologically damaging, yet it gives New Delhi a stock that serves welfare, political stability and export strategy at once.

Pakistan’s advantage was different. Lower domestic consumption left an exportable surplus, while Punjab’s Basmati belt provided a premium product. Basmati 370 established the region’s reputation but also demonstrated its limits: true Basmati depends on a narrow combination of soil, climate and geography. Faster-maturing, higher-yielding IRRI types are easier to scale, so they increasingly dominate export volumes. The modern numbers preserve the divide. Pakistan is expected to produce 9.1 million to 9.6 million tonnes this season, consume about 4.7 million and export around 5 million. India will consume most of its 150 million-tonne harvest and still dominate trade. Exports are India’s release valve; Pakistan needs them to make the crop commercially viable. Pakistan’s real equivalent of Indian rice is wheat. It covers about nine million hectares, roughly 40 per cent of the country’s field-crop area, and the USDA has estimated that it provides 72 per cent of daily caloric intake, with consumption near 124 kilograms per person each year. Wheat is therefore where food security, farm incomes and urban politics collide. Rice brings in dollars; wheat determines the price of roti. Recent wheat policy shows the exposure. A record harvest and heavy imports in 2024 created excess stocks, drove prices down by about 35 per cent and left farmers carrying losses. The government then withdrew from large-scale procurement and the support-price regime. For 2025-26, the USDA initially forecast production of 27.5 million tonnes against consumption of 31.9 million, although later estimates improved. Pakistan can export rice because its people mainly eat wheat; failures in the wheat market are therefore part of the rice story. India’s reserve power was created by treating rice as a national necessity. Pakistan’s export surplus came from the crop’s distance from domestic food security. The first model produced expensive abundance; the second encouraged volume without always asking what scarce resource was being exchanged for each dollar.

The price of selling water

here is another side to Pakistan’s recent bet on exporting non-Basmati rice. In 2024-25, non-Basmati rice accounted for 5.01 million tonnes, or 86 per cent of export volume, but earned $2.52 billion. Basmati contributed only 809,000 tonnes, yet generated $831 million. The average export price was about $504 a tonne for non-Basmati and $1,027 for Basmati. Pakistan is using most of its land and water in the low-

er-value half of the business. That model has expanded rapidly. Between 2011-12 and 2023-24, rice area rose 40 per cent, from 2.57 million to 3.62 million hectares, while production increased 46 per cent. Much of the expansion moved beyond the traditional Basmati belt and depended on groundwater rather than new canal supplies. Solar power accelerated the shift. Cheap panels made it profitable to plant rice where diesel or grid electricity once imposed a limit. Reuters estimated that Pakistan had around 650,000 solar agricultural tube wells by late 2025. The farmer saves on energy; the aquifer absorbs the bill. El Niño exposes the weakness of that bargain. Pakistan’s official 2026 rice target is 9.17 million tonnes from 3.39 million hectares, but the USDA’s Islamabad office cut its forecast to 9.1 million tonnes because of lower planting, water shortages, input constraints and higher energy costs. Canal-head water availability for the Kharif season was estimated at 67.45 million acre-feet, while soil moisture entered the season under stress. Rainfall may still rescue some districts, but an uneven monsoon cannot substitute for a water strategy. The answer is not to abandon non-Basmati rice. It provides farmer income, supports mills and wins markets that premium varieties cannot serve. Nor is Basmati immune to commercial problems: India has scale, established brands and aggressive pricing in the same segment. But Pakistan’s current mix rewards gross volume at a time when both water and competitive space are tightening. A better strategy would treat each cubic metre of water as an economic input. That means confining expansion to suitable zones; regulating groundwater; promoting direct

seeding, alternate wetting and drying, laser levelling and shorter-duration varieties; and rewarding water productivity rather than acreage. It also means investing in Basmati seed purity, research, traceability, residue compliance and branding. Pakistan should still sell ordinary rice, but policy should favour value per tonne and per unit of water over another volume record. The premium gap shows the opportunity. A tonne of exported Basmati earned roughly twice as much as non-Basmati in 2024-25. Shifting the mix would not double earnings overnight; premium markets are finite and quality cannot be manufactured by decree. It would give breeders, farmers and exporters a common target: earn more from Pakistan’s ecology instead of pumping more water to imitate India’s scale. India has water problems of its own, and its procurement system has often encouraged rice in ecologically unsuitable regions. The difference is that India enters the current shock with stocks, fiscal capacity and a domestic market large enough to absorb its crop. Pakistan has fewer buffers and a more fragile irrigation base. Competing head-on in cheap rice therefore carries a higher strategic cost for Pakistan than it does for India. El Niño may deliver a temporary rise in prices. It may even give Pakistani exporters another profitable quarter. But weather-driven scarcity is not a strategy, especially when India can release millions of tonnes from its warehouses and reclaim buyers as quickly as it once withdrew from them. India enters this uncertain season with a stockpile. Pakistan enters it with an export record and a falling water table. The second is not the stronger position. n

AGRICULTURE

Govt to set up rival Competition Commission to encourage competition between competition watchdogs

By Profit In a bid to address systemic inefficiencies within the country’s regulatory framework, the Ministry of Finance announced Thursday the creation of the National Regulatory Competition Commission (NRCC), a brand-new statutory body tasked exclusively with fostering healthy market competition between existing regulatory watchdogs. The decision comes after senior officials concluded that the primary Competition Commission of Pakistan (CCP) had operated as a de facto monopoly in the market regulation sector for far too long. “For years, the CCP has enjoyed a 100% market share in the business of preventing monopolies,” said a senior Finance Ministry spokesperson during a press briefing. “Without a rival entity threatening to undercut its regulatory enforcement or offer more attractive antitrust penalties, the CCP naturally grew complacent. By introducing a secondary, market-driven watchdog into the ecosystem, we are letting the invisible hand of free-mar-

ket capitalism decide which regulator truly regulates best.” According to the draft framework, Pakistani corporate cartels and price-fixing syndicates will soon enjoy total consumer choice. Sugar, cement, and poultry alliances will be able to select which competition watchdog investigates their price manipulation based on corporate perks, turn-around times, and the quality of executive lunch spreads provided during tribunal hearings. The news was warmly received across the private sector, where industry leaders hailed the move as a major step forward for ease of doing business. “Under the single-regulator regime, we were forced to accept whatever stay orders and show-cause notices the CCP handed us,” said Chaudhry Tariq, Chairman of the All-Pakistan Sugar Mills & Price-Fixing Association. “Now, if the old commission threatens us with a heavy penalty for market manipulation, we can simply take our business to the NRCC, which has already promised us a 20% discount on total fine values and a complimentary press

release clearing us of all charges.” Real estate developers similarly praised the shift toward consumer-driven oversight. “Healthy market competition always benefits the consumer—or in this case, the cartel,” noted a senior director at a prominent housing scheme conglomerate. “If the CCP takes six months to issue a stay order on our unapproved land acquisition, we expect the new NRCC to process that exact same stay order in three business days. That is the power of free-market innovation.” Insiders confirm that to ensure the two watchdogs remain transparent, plans are already underway for a third, overarching authority—the Competition Watchdog Competition Authority (CWCA)—to monitor whether the two watchdogs are competing fairly, or if they have secretly colluded to form an anti-competitive cartel of anti-cartel regulators. At press time, the Ministry of Finance was reportedly seeking an IMF technical grant to fund a feasibility study on whether a fourth watchdog might be needed to keep the third one honest.

SATIRE