Will Pakistani shoppers return to Daraz as Temu’s tax-induced price surge backfires?
10 Falling in line 14 The growing corp of the Pakistani Businessman-Diplomat
17 Attock Refinery: cash-rich, policy-ready and poised for a once-in-a-generation upgrade
18 AKD-led consortium buys majority stake in Pearl Continental Hotels
20 Dost Steel reaches restructuring agreement with lenders
21 Bawany Air Products to resume production
23 Cement sector expected to see profits soar 38% in most recent quarter
24 Energy majors dominate mutual-fund portfolios as OGDC, PPL and PSO soak up fresh flows
26 Efficiency in manufacturing has to be achieved through cost management Asif Saad and Eram Hasan
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By Abdullah Niazi
Falling in line
After one of their employees was arrested for an anti-government tirade, Qarshi was accused of firing him and became the focus of a boycott campaign. Their response was complete silence. We’re not surprised
It was a surprise to no one when Sajid Nawaz was picked up by the police from his home in Lahore. His face and voice had been resoundingly played on phones across the country when a video of him going on an obscenity laden tirade against the Chief Minister of Punjab and other high officials went viral.
It was a moment of pure authenticity that could not be matched by any rant recorded with a fat budget in a well-lit studio. Here was a man trudging along on his motorbike on a flooded street when he saw a local reporter with a microphone and a camera. He stopped for a grand total of 12 seconds, looked directly at the camera as water dripped through his raincoat and launched a tremendous philippic. The contents of the video are profane, immature, and besides the point. It was an expression of rage that blazed through the internet.
In any normal country, the video would have come and gone. Unfortunately for Sajid Nawaz, we are at the stage of authoritarianism where 12 seconds of dissent can land you a couple of nights in a holding cell. The police showed up at his doorstep, carted him away, made him record an apology video, and when his son demanded to know where his father was, law enforcement told him they did not have him.
It took a couple of days and a writ of Habeas Corpus filed by a group of well meaning lawyers, but Mr Nawaz was released. He was never going to be held indefinitely. His detention had delivered the desired message.
But the consequences for Sajid Nawaz’s actions were seemingly much deeper. News began circulating that he had been fired from his job at Qarshi Industries where he had been gainfully employed for close to three decades. His LinkedIn listed him as Qarshi’s country manager for Saudi Arabia.
Almost immediately, calls to boycott Qarshi products inundated social media. It was a campaign based on a rumour. There were two possibilities here. The first was that Qarshi did indeed fire Sajid Nawaz. This might be considered a bit of an overreaction, but an employer is well within their rights to terminate an employee based on their conduct outside the workplace. The second was that Qarshi had done no such thing and was the focus of a mean-spirited, misguided campaign.
But even as the rumour spread, Qarshi Industries remained completely silent. It seemed the company was choosing to ignore the issue completely, and even the boycott threats were not moving them. Silence at a moment like this often sounds like guilt. This publication tried to reach out to Qarshi. Dozens of calls to their offices were cut or redirected. Emails remained unanswered. Messages on LinkedIn, Whatsapp, and other social media were ignored. The closest we got to a response was that it was policy to not talk about Sajid Nawaz. Even this information was communicated by a member of Qarshi’s legal department, who let it slip in frustration because it was the third time that day they were speaking to us.
The refusal to talk about Sajid Nawaz’s employment seemed almost a confirmation at this point. Sajid Nawaz was off the scene and declined to speak to the media. He is understandably spooked. However, Profit spoke to Sajid Nawaz’s legal team. Two of the lawyers that represented him, Noman Dogar and Sameer Khan Khattak, both said on behalf of their client that he had not in fact been fired from his job. They pointed out that he had been employed at Qarshi for a very long time, and he was not going anywhere. The company was just keeping a low profile and did not want to get caught up in the case.
The situation makes no sense. Qarshi Industries was taking a beating for something they did not do. Not only did they fail to defend themselves, they were ignoring opportunity after opportunity to clarify their position. Was this a complete failure in public relations? Was it ignorance? Did they just not consider the situation worth addressing?
There is one more possibility: perhaps the management at Qarshi Industries did not feel the company had the liberty to acknowledge even the slightest connection to the event, even if their business was hurting. This reality spells the sorry state of corporate Pakistan. Even large corporations are stuck in a position where they have no option but to toe the line, even when it is not in the interest of their bottom line. Simply put, they have no choice.
Where does the extra mile start?
Try to put yourself in the position the executives of Qarshi found themselves in. An employee you have had around for nearly three decades becomes an overnight social media sensation for a politically controversial video in a country where being politically controversial is not exactly in vogue these days. Following this virality, the employee is arrested and disappears. At a moment like this, what exactly is the responsibility of the organisation that employs this man? One might say if your employee fails to turn up for work, you should look for them. In the case of Sajid Nawaz there was no doubt where he was. He had been rounded up by the police. As an organisation, Qarshi could not exactly afford to be seen fighting for an employee that had been implicated because of a political stance. If they came out too strongly to defend their employee, it might seem like they were condoning his actions. The organisation would be well within its rights to fire him for bringing disrepute to his employer with the kind of language he used, but such an action would be in bad taste against such an old employee who is already suffering the heavy hand of the state for one angry outburst that lasted a dozen seconds.
The most prudent course of action in response to this situation would be to stay quiet and do nothing. According to one of Sajid Nawaz’s lawyers, that is exactly what happened. “Qarshi did not fire Chacha from his job,” says advocate Sameer Khan Khattak. “He is still an employee at Qarshi and is very happy with his career.”
This is something we now know. But while Sajid Nawaz was locked up, Qarshi Industries suddenly became a focal point of serious criticism. A rumour began spreading on social media that Qarshi had fired Sajid Nawaz for his actions and supporters of the Chacha
The funny part was that my client was not even in Pakistan at the time that this case was registered since he would travel to Saudi Arabia and a couple of other Gulf countries quite frequently for work
Advocate Noman Dogar, counsel of Sajid Nawaz
tried to launch a boycott campaign against Qarshi products.
Lurking dangers
As with any good rumour, there is no clarity regarding where it started. A screenshot began to circulate of Sajid Nawaz’s LinkedIn profile, where he had listed himself as the Country Manager for Qarshi Industries. Qarshi Industries is no lightweight. It is a grand old pre-partition company. The popular story goes that Allama Iqbal had requested Muhammad Hassan Qarshi, a famed hakim, to open a store for herbal medicine. In 1968, his son and the current Chairman of the Qarshi Group, Iqbal Ahmad Qarshi, opened the Qarshi Dawa Khana. Since then, their products, including Jam e Shireen and Johar Joshanda, have become common items in monthly household shopping lists. The company has increased its footprint, founding a research institute and even a university. They have taken the business of herbal medicine and made it a juggernaut that is still run privately and by the family.
While they do not have a large international presence, their products are sought outside Pakistan as well. In Saudi Arabia, where Sajid Nawaz worked for Qarshi, they have listed FAZCO as one of the vehicles of their international presence. Fazco Trading Company Limited is one of the largest foreign investment foodstuff trading companies in the Kingdom, and supplies Tapal Tea from Pakistan as well as Qarshi products. Qarshi also has a presence in 10 European countries, Canada, the US, five more GCC countries, Japan, Malaysia, and Turkey among others.
While the international business is not seemingly a big chunk of their revenue stream, it is clear from how Qarshi Industries presents itself that it is looking to be bigger than just Pakistan. This is ambitious – it could even
work, since they have an impressive portfolio of products. Controversy can easily hurt companies with international ambitions, particularly those that are interested in markets like Europe and North America where labour conditions, sustainability, and ethical consumption are important both to customers and regulators. And when you think of a natural herbal products company, it doesn’t quite fit the image to have controversies.
Despite this, even as the calls for a boycott caught steam, Qarshi continued to ignore them. At least two correspondents from Profit spent the week trying to get a hold of someone at Qarshi that could give us an answer. What we found was an organisation that had clearly discussed this issue and had decided to ignore it. Calls placed to their corporate office would be picked up promptly, but any mention of the boycott or Sajid Nawaz would lead to a curt and uniform statement of “this information is not available here” before the line would be cut. Calls to the legal and HR departments yielded similar results. Messages to corporate executives including the COO on different platforms went unanswered. Emails received no replies.
So why would Qarshi choose to stay mum? One explanation might be that this was a complete failure in public relations. It would not be too surprising, considering one of the representatives from the company claimed Qarshi Industries simply did not have a PR department. The other more likely possibility, however, was that they were not in a position to say anything. As Sajid Nawaz’s lawyers clarified, he was not fired at any point and was happy with his employer. However, speaking up might have been a daunting task for Qarshi Industries because even saying they had not fired their employee might raise the question of why not? After all, if a man can be hauled around holding cells for a 12 second video clip, is it not possible for a business to feel the heat
for saying – or appearing to have said – the wrong thing?
Pakistan’s business community is no stranger to the perils of dealing with the Government of Pakistan. In fact, no matter who is in charge, the government has proven to be a poor and unreliable business partner. The cost of this has often been borne by innocents. No example in recent times is better suited to this than NAB’s prosecution of the LNG reference against former prime minister Shahid Khaqqan Abbasi and senior executives from Engro. The investigation, first launched in 2018, lasted years. Not only did Shahid Khaqan Abbasi see jail time, so did Sheikh Imran ul Haque, the CEO of Engro Elengy. In 2024, NAB cleared all the accused. No apology was made for the time they spent in jail.
That is only one example of a corporate sector CEO being caught up in what was a politically motivated investigation. In more recent times, we have seen that one does not have to be involved in a business deal to be implicated by the state. Even association is enough sometimes. In May 2023, after the arrest of former prime minister Imran Khan, Profit reported on how Pakistan’s only media ratings company, MediaLogic, was shut down with very little ceremony. The head of that company was a close associate and friend of the former prime minister.
There are other examples as well. When an employee of a donut shop, Crusteez in Islamabad, was caught refusing to serve and calling then Chief Justice Qazi Faez Isa “shameless”, there were reports that the company had fired that employee. Once again, to be very fair, the company would have been well within its rights to do so if the employee was being rude to a customer, even if they hadn’t happened to be the Chief Justice. That did not stop demands for a boycott. In that case as well the employee had not been fired.
Damage by association takes place even on a very small scale. Recently, Al Jazeera reported on how people that had done small scale business with independent journalist Asad Toor had their bank accounts blocked by the FIA. In the report, Al Jazeera mentioned how Mr Toor, who is an avid bird collector, made payments to vendors of exotic birds in exchange for animals. The bank accounts of the people he bought the birds from were blocked. The FIA claimed that the banks were blocked as part of an investigation into Mr Toor’s allegedly anti-state narrative that earned him money through YouTube. The journalist’s own bank accounts and those of his family were also blocked by the FIA.
Some of this is anecdotal evidence, but that itself can be very effective. Individuals that disagree with a state are often caught in the crosshairs of their activism in this way. But when it comes to corporations and businesses,
Qarshi did not fire Chacha from his job. He is still an employee at Qarshi and is very happy with his career
Sameer Khan Khattak, counsel of Sajid Nawaz
one can hardly expect them to behave like dissidents. Businesses literally have a lot to lose. If the government wants, they can nail your entire organisation for a sloppy fire escape. Sure, they might not have a valid point, but they can tie you up in litigation long enough to run your business into the ground. That is the reality corporate Pakistan has to live with. Businesses are famously lily-livered in this regard and in Pakistan that is for good reason.
Playing it safe
This is a business publication. While we are in the business of reporting on businesses and the economy, we usually keep any advice we might have close to our chests. But in this particular case we must venture to give one piece of advice to anyone running a business right now: always err on the side of caution and always keep your head down where possible.
Pakistan has never been a particularly friendly environment for business. This has fostered a business community that is often immature and reactive. The reality is stark. Align yourself with politics and you might have a good run for a while, but when the tide turns it will come for you too. Turn your business into a platform and it won’t end well for you. The best bet in this environment is to focus on your fundamentals, do right by your employees, and keep your head down.
Qarshi Industries did exactly that on this occasion. They did not fire Sajid Nawaz. They did not make a statement of any kind. Even when threats of boycotts came in, they had the foresight to see that this was a situation that would be forgotten within a few weeks.
Of course, the state of free speech in Pakistan is concerning. The facts of Sajid Nawaz’s case are horrifying. While Sajid Nawaz himself was not willing to speak to anyone from the media, his lawyers told us everything that went down. Nearly a dozen police officials, some in plain clothes and others in uniforms, showed up in one police pickup truck and two to three motorbikes. They
knocked on the door and entered the house. No warrant was presented and no lady constable was there at the time either. They identified Sajid Nawaz as the ‘chacha’ from the video and loaded him into a truck. His son Umar insisted on going with him. There, the police made him record a video message apologising for his words. Pro government menaces began posting the video on social media bragging that the Chacha’s “software” had been updated.
The police let Sajid’s son Umar go but did not release Sajid. His son went to a group of lawyers. They submitted a writ of Habeas Corpus. The next day, the SHO of the Johar Town police station said Sajid Nawaz was not in his custody and had instead been locked up in a different case with the Green Town station. The judge called on the Green Town SHO to present Sajid and it turned out they were holding him for a case from 2024. That case was registered against unknown persons. Sajid’s lawyers told Profit the case had been one of those registered against unknown protestors on the 9th of May, when protestors destroyed state property. “The funny part was that my client was not even in Pakistan at the time that this case was registered since he would travel to Saudi Arabia and a couple of other Gulf countries quite frequently for work,” said Advocate Noman Dogar, the counsel for Sajid Nawaz.
The writ petition worked and Sajid was released. He still has his job and we doubt he will be making any other cameos in street punditry. In fact, there are likely millions of other Sajids out there filled with rage that will now think twice before pulling such a move.
That is simply how control works: by turning ordinary people that dare to express an emotion such as rage, into examples.
That is the Pakistan that we live in, learn in, work in, and operate businesses in. A Pakistan in which we are consistently shown through examples that our thoughts are not safe. A Pakistan in which we are constantly reminded that there is a tremendous cost to being free and speaking our minds. n
The growing corp of the Pakistani Businessman-Diplomat
The world has changed dramatically in the past few years. The relationship between businesses and foreign governments have become blurry. Where does Pakistan’s business leadership fit in this equation?
By Abdullah Niazi
What does it mean to be a major corporate sector leader in today’s world? The men and women that lead major
corporations, banks, manufacturing companies, charities and other big businesses are supposed to be the very best professionals in the world. They are expected to have a wide range of skills. They need to understand the business they are running from its finances to its operations and production.
Increasingly they are also expected to be diplomats.
The role of the Businessman-Diplomat is nothing new. It was coined by Time Magazine in a 1959 article about Norman Kenneth Winston. One of the world’s largest real estate developers with hundreds of construction companies in his hand, Winston made a name for himself as a public figure by continuously from continent to continent as envoy extraordinaire of U.S. capitalism. In the heat of the Cold War, his efforts were instrumental in establishing initial business relations between the United States and the Soviet Union.
Over the decades the intersection between big business and government has only grown. It makes sense. With globalisation, the business interests of many industrialists and entrepreneurs went far beyond borders. Businesses have always had to deal with the governments in their home countries, but the 20th century began the era of businessmen having to lobby, liaise, negotiate, and establish tie with foreign governments as well.
Countless luminaries have benefitted from this relationship. Joseph Kennedy Sr, the father of President John Kennedy, began his career in the real estate and entertainment industries. His connections from his time in business led to his appointment as Ambassador to the United Kingdom which gave him the political pedigree to establish the Kennedy political dynasty.
In more recent times, the former energy executive Rex Tilerson served as the United States Secretary of State during President Donald Trump’s first term in office. The United States has also appointed Meg Whitman, a private sector trailblazer, as US Ambassador to Kenya, a position she used to shape international conversation surrounding Africa.
The reason for giving so many examples from the United States is that for the past 80-odd years, the US has led by example in both the realms of business and diplomacy. The past decade has seen a particular shift. We have examples like Secretary Tilerson where business executives have transitioned
to becoming diplomats. But what is becoming clearer and clearer with time is that even without transitioning into formal diplomatic roles, major business leaders are already part of the diplomatic corps.
It can be seen in the close friendship and later fallout between President Trump and Tesla CEO Elon Musk. Mr Musk often sat in on meetings between the President and foreign leaders. Even beyond these direct political associations, business leaders and corporate executives are representatives for their businesses. When President Trump visited Saudi Arabia in May 2025, he was joined by the CEOs of major tech companies including OpenAI, Google, Amazon, NVIDIA. Their purpose was not just support but finding business opportunities in these countries.
That is where the crucial part of this conversation comes in. Many of these international businesses have budgets and valuations larger than the GDPs of major world powers. Apple, for example, has a total market capitalization of greater than $2.1 trillion. This is higher than the GDPs of Russia, Italy. Australia, Brazil, Canada, and Indonesia among countless others.
Many of these companies have their own gravitational pull and presence that requires diplomacy. Apple, for example, designs its products in the US, procures parts from Taiwan, and assembles products in India. As a result, Tim Cook, Apple’s Chief Executive Officer (CEO ), has to navigate regulatory environments across four countries. To do this he has to have a warm relationship with the political leadership of these countries. However, he also needs local business partners.
This is where Corporate Pakistan comes in. Following the decimation of the Pakistani economy in 2022 and the skyrocketing inflation that followed, the state has renewed its focus with a vigour towards opening Pakistan up for investment. Offers have been made in agriculture, minerals, mining and the government has created a framework to actually use Pakistan’s natural resources as an asset instead of just a bragging point.
The government cannot do this alone. They need the help of the country’s business community and there is a vital role for major business leaders in this. Pakistani executives that operate at the Presidential and CEO level are no strangers to dealing with their own governments. In fact that is perhaps the most important element of their jobs. However, we are quickly seeing a more active approach from Pakistan’s business leaders on the international scale. There seems to be a genuine interest in promoting Pakistan’s interests abroad, and growing beyond our borders.
Nowhere was this vigour more evident than at the recent World Economic Forum’s
Annual Meeting of the New Champions (AMNC) in China, where a delegation from Engro, led by Mr. Hussain Dawood, participated in high-level discussions centred on the theme of entrepreneurship for a new era. This publication has in the past referred to Engro as one of the most responsible corporations in Pakistan. It is no surprise that they are ahead of the curve in terms of being leaders in the emerging trend of Pakistani Businessman-Diplomats. Engro’s Chairman, Hussain Dawood, is no stranger to this kind of business diplomacy. He was at the centre of a significant moment at this particular meeting when he joined a select group of leaders for a direct dialogue with Chinese Premier Li Qiang. The audience with Premier Qiang was not just a victory for Engro and Hussain Dawood, but for all of Corporate Pakistan, which is clearly angling to have a presence on the world stage.
What makes this more hopeful is that this meeting was not an exception. Pakistani entrepreneurs and business leaders are being pro-active in stepping forward to represent the country’s potential on the global stage. It is a pretty simple formula. Present Pakistan as open to the world and your own business interests will be helped.
In 2023 as well, Corporate Pakistan sent its best foot forward when a business delegation went to Washington D.C. The delegation included Sultan Allan of HBL, Muhammad Ali Tabba of the Lucky Group, Saquib Shirazi of Honda Atlas, Amir Paracha from Unilever, and Abdul Samad Dawood from Engro among others.
Delegations of this nature are not rare, but their composition usually does not include this many heavyweights. They also normally go to discuss a specific matter. On this occasion, however, the delegation engaged directly with the United States State Department, the Department of Commerce, and international financial institutions. The members of the delegation were able to establish working relationships with American officials. This is the kind of soft diplomacy that business leaders often do for their country.
More recently, a delegation of Pakistani entrepreneurs also travelled to Saudi Arabia to explore investment and collaboration opportunities with the Kingdom. The group included influential figures such as Mr. Arif Habib, Mr. Shahid Soorty, Mr. Shabbir Dewan, and Mr. Shahbaz Malik. Such engagements reflect a growing confidence within the private sector to act as bridge-builders – demonstrating impact and shaping narratives that traditional diplomacy often struggles to reach.
And then there are leaders like Mr. Asif Peer, CEO of Systems Limited, whose leadership has helped position Pakistan as a credible resource hub for tech services. Under
his guidance, Systems has expanded across the world earning consistent recognition, including five consecutive listings on Forbes Asia’s Best Under a Billion.
It is most definitely a slow process and the business community is not going to be able to do it on their own. They need consistency from the Government of Pakistan, which they have not always gotten. However, it seems clear that many of the country’s prominent business leaders have decided to go ahead with their own efforts and see if they come to fruition.
Pakistan needs this.
Just think about it. One of the greatest goals for this country that everyone agrees on is that the economy needs to be more export oriented. For that, the textile sector needs to have a direct line to the United States since most of our cotton is imported from there. We have similar examples of other products from the US such as oilseeds that require significant back and forth. If major business leaders push to be diplomats in their advocacy for Pakistan, there may be smoother roads ahead for Pakistan’s position on the global stage. Similarly, it is important to have relationships of this nature between the business community and other countries. One major avenue
of export, for example, could be meat to the Gulf or agricultural products to the European Union. However, there are so many regulatory challenges in this that business diplomacy becomes necessary.
The global world order is also one that is more conducive to such diplomacy. The incumbent Trump Administration has shown it is more than happy and willing to allow businesses to deal directly with countries, and that it is also interested in doing the same. There was once a time when the United States had a laissez faire approach towards business diplomacy — it existed but it was secondary. That is changing as President Trump makes it clear that the Businessman-Diplomat is as important as the career diplomat. This reordering is shaping the entire world as a result, not just the United States.
We are lucky to be in a small moment where Corporate Pakistan seems energized in its desires to pitch itself to the world. As more Pakistani companies participate in global forums and bilateral dialogues, it’s becoming clear that some of the country’s most effective ambassadors may increasingly be found in boardrooms, not just embassies. And that may be exactly what Pakistan needs in this new era of entrepreneurship-driven diplomacy. n
Attock Refinery: cash-rich, policy-ready and poised for a once-in-a-generation upgrade
The fortress balance sheet gives the company a distinct advantage in pursuing the kind of capital expenditures that have eluded some of its competitors
Profit Report
Arif Habib Ltd (AHL) has initiated coverage of Attock Refinery Ltd (ATRL) with a ringing “BUY” and a Rs1,136 per share June-2026 target price – implying 69% upside to last week’s close and valuing the company at barely 3.9 times FY-26 earnings. The house model projects a 36% four-year EPS CAGR, driven by an upgrade that, in the brokerage’s words, could “shift ATRL’s product slate from penalised furnace oil to premium Euro-V motor fuels” and plug an historic profitability gap with southern peers.
The foundation of the call is financial muscle. As at March 2025 ATRL was debtfree and sat on Rs77 billion in cash – equivalent to Rs721 per share or more than one-tenth
of the refinery’s replacement cost. Book value stands at Rs1,345 and the working-capital cycle is the least demanding in the sector: local-crude suppliers allow two months’ credit versus the one-month norm enjoyed by hydro-skimming peers. The cash hoard alone could finance 40% of management’s Rs180 billion upgrade budget before a single rupee of project debt is drawn.
Behind the headline numbers lies a plan already moving from PowerPoint to project office:
• Front-End Engineering Design (FEED) and Project Management Consultancy (PMC) have been awarded to STP Studi Technologie Progetti of Italy.
• The scope will lift gasoline (MS) output by 25%, push diesel into full Euro-V compliance and slash low-value furnace-oil yield to the low-teens.
• Quality penalties – currently costing c. Rs5 billion a year – will disappear once high-RON
petrol and low-sulphur diesel roll off the racks.
• Under the Refinery Policy 2023, ATRL will retain the entire 10% “deemed duty” on its two main products for six years, channelling an estimated Rs130 billion into an escrow account earmarked for capex.
Combine those cash streams with existing liquidity and the upgrade becomes internally fundable even under a conservative oil-price deck.
Geography is destiny in a deregulated world
ATRL supplies roughly 15% of Pakistan’s refined-product demand from its Morgah complex in Rawalpindi. That northern location is about to become a profit centre in its own right.
Today the Inland Freight Equalisation Margin
(IFEM) socialises transport costs, meaning the company cross-subsidises rivals hundreds of kilometres closer to Karachi port. Post-deregulation, freight margins will be set (and kept) by individual refineries.
AHL’s model assigns a conservative Rs8.5 per litre saving on high-speed diesel and Rs7.9 on petrol once the equalisation lid comes off – worth an incremental Rs62.8 per share after tax, or almost a quarter of FY-24 earnings, on existing volumes alone.
On AHL’s discounted-cash-flow (DCF) the refinery’s equity comes out at Rs121 billion, with the present value of future operating cash flows a modest Rs4.4 billion and the balance made up by surplus cash (Rs77 billion) and a Rs39.7 billion terminal value. Key inputs include:
• Capex profile: Rs12–13 billion a year until FY-28, then a Rs144 billion spike when the new conversion units break ground in FY-29.
The stock therefore trades at 0.5 times FY-26 book, 2.4 times FY-27 earnings and an implied EV/EBITDA of 1.6 times – levels AHL argues are “inconsistent with a cash-rich balance-sheet, regulatory tail-winds and double-digit dollar returns.”
Macro tail-winds –and a sector in flux
Pakistan imports roughly 7.8 million tonnes of refined products a year because the five incumbent refineries
– ATRL, PARCO, NRL, Cnergyico and PRL – were designed for a fuel-oil economy that no longer exists. Industry utilisation averaged 49% in FY-24; furnace-oil demand has collapsed from 9 million tonnes in 2015 to less than one million in FY-25 as LNG and coal elbowed it out of the power mix.
Policy-makers have responded with the most generous incentive package in a generation: duty protection, tax holidays and customs exemptions tied to upgrade milestones. While critics question whether government can keep its side of the bargain, AHL notes that “gross margin lifts of even 2–3 US dollars per barrel on a 67% throughput could treble profitability.”
No research note is complete without caveats and AHL flags several. Islamabad’s delay in gazetting the upgrade agreements has already pushed timelines to the right. Ongoing wrangling with the Federal Board of Revenue over deemed-duty proceeds could crimp free cash flow.
ATRL relies on northern E&P fields such as Adhi and Naimat; any supply upset squeezes throughput until imported crude logistics are in place. IFEM could be replaced by a yet-tobe-defined freight matrix, blunting some of the
geographic windfall.
How big could the prize be?
Put the moving parts together and the numbers scale quickly. AHL’s base case shows net profit climbing from Rs11.7 billion in FY-25 to Rs31.7 billion by FY-28 – an average ROE of 15–18% on an equity base that itself rises to Rs218 billion. Gross-refining margins expand from 2.7% to 9.6% as the product slate improves, while cash per share swells to Rs888 even after capex drag.
For context, every additional US $1 per barrel of margin adds roughly Rs15 to earnings per share, so a bullish crude-product spread could take the June-2026 target price north of Rs1,300.
Why does a refinery with a double-digit dividend, a war chest equal to 30 months of opex and a regulatory glide-path to higher margins still trade at a 50% discount to book?
AHL offers three explanations:
• Hydro-skimming stigma: investors view the sector as a furnace-oil relic and ignore the optionality of conversion.
• Policy scepticism: after years of false starts, the market prices in perpetual delay.
• Low free float: The Attock Oil Company retains 61%; effective float is about Rs28 billion, too small for many international funds.
Yet for domestic institutions hunting yield, that combination is precisely what makes ATRL attractive: better-than-bank-deposit returns, dollar-linked balance-sheet assets and a built-in catalyst in the policy document’s signature page.
The bigger picture: a refinery renaissance?
ATRL is not alone in dusting off blueprints. National Refinery and Pakistan Refinery have both signed upgrade MOUs; PARCO is studying a grass-roots 400,000 bpd “deep conversion” project at Hub; and Cnergyico has re-committed to its second-phase isomerisation unit. Analysts believe that within five years Pakistan could have an additional 100,000 bpd of gasoline and diesel capacity, cutting the import bill by US $2 billion at today’s prices.
ATRL’s upgrade is the smallest in dollar terms but the first fully funded – and its proximity to the consumption heartland means every litre of Euro-V product has a ready buyer. If the project proceeds on schedule, commissioning should start in FY-29, when AHL’s model assumes motor-spirit’s share of the yield climbs from 34 to 40% and furnace-oil drops below 14%. That alone could more than halve sensitivity to power-sector fuel switching.
Refineries worldwide face an existential question: upgrade, shut down or be subsidised. Attock Refinery appears set to upgrade – and to do so from a position of balance-sheet strength rare in the emerging-market downstream space.
If Islamabad locks in the fiscal sweeteners and crude supply holds, ATRL could move from policy supplicant to policy poster-child, just as Pakistan’s energy mix flips decisively towards cleaner fuels. For investors willing to look beyond next quarter’s crack spread, the stock offers deep value, visible catalysts and – thanks to that Rs77 billion cash pile – a hefty margin of safety. In a market still dominated by banks and fertiliser giants, that combination is hard to find. n
AKD-led consortium buys majority stake in Pearl Continental Hotels
It is not yet clear if the Hashwanis will be conceding management control or if this is a passive interest
Profit Report
In a significant development in Pakistan’s hotel sector, a consortium of investoRsled by Aqeel Karim Dedhi – known in Pakistan’s capital markets simply by his initials as AKD – has snapped up a controlling 55.95% stake in Pakistan Services Ltd (PSL), the operator of the Pearl Continental (PC) brand. The consortium consists of the AKD Group Holding (Pvt) Ltd – the flagship investment vehicle of Aqeel Karim Dhedhi – has acquired 9,089,651 shares, equal to 27.95% of PSL’s equity, at Rs700 per share. The ticket size works out to Rs6.3 billion. Dawood Jan Mohammad, founder of DJM Securities, has purchased just over 28% at the same price,
lifting his outlay to roughly Rs6.3 billion as well. Together, the duo will pay Rs12.7 billion (about $45 million) in cash, valuing PSL at Rs22.7 billion. Incidentally, the purchase price of Rs700 per share is a discount to what the shares had been trading at for much of the past two years. The last time the companies shares were trading at or below Rs700 per share was in 2023.
The shares appear to have been largely the result of AKD and DJM buying out the shareholding of several foreign investors who collectively owned about 54% of the company. It is not clear who the ultimate beneficial owners of those anonymous-sounding tax-haven incorporated foreign corporations are, so it is not known who was the ultimate seller.
From state asset to private jewel
PSL was incorporated as a government corporation in 1958 to develop and own hotels that were then managed under the Inter-Continental flag. When Inter-Continental exited Pakistan in 1985, entrepreneur Sadruddin Hashwani led Hashoo Group to win the privatisation bid, re-branding the properties as Pearl Continental and embarking on an expansion drive.
Today the chain counts eight operating PC hotels, 1,744 rooms and franchises the PC Gwadar property; mid-market subsidiaries PC Legacy and Hotel One add another 1,200-plus keys across the country. Yet despite its pedigree PSL has had to deal with the highly cyclical nature of the hotel business in Pakistan, which has not been an easy ride. Indeed, the company has already written down the entirety of its investment in Hotel One. Nonetheless, the company has been investing heavily in growth. It has invested approximately Rs5.7 billion in developing the PC Rumanza in Multan, a golf resort, and Rs3.7 billion in in Mirpur, Azad Kashmir.
Separately, the Hashoo Group-owned company inaugurated PC Legacy Skardu in December 2024, a 40-key alpine resort developed in partnership with orthopaedic surgeon-turned-hotelier Dr Imran Ali Shah. Investment details were not disclosed, but management touts it as a valuable proposition and points to strong forward bookings for the 2025 summer season. The new shareholders inherit these projects – along with a bruising interest-rate environment – but also the uplift that inevitably follows once construction risk is removed.
A crowding competitive field
PSL’s dominance is no longer uncontested. Serena Hotels, run by the Aga Khan Fund’s Tourism Promotion Services, now operates nine properties.
International brands have begun to circle again after a 20-year hiatus:
Hilton will bring the DoubleTree Nathiagali to market in 2025 under a management contract with Baron Nathiagali (Pvt) Ltd. Radisson Hotel Group has signed two franchises in Islamabad and Gilgit (announcement October 2023). The Hashoo Group itself also owns the Pakistan franchise for Marriott (Islamabad & Karachi).
And Avari (Lahore, Karachi, now Multan) have refreshed inventories.
Domestic upstarts – Roomph, Luxus and Luxus Grand – vie for younger travellers.
Add a burgeoning pipeline of Airbnb-style serviced apartments in Lahore and Karachi and it is clear that AKD and Dawood Jan have bought into an industry on the cusp of structural change.
The acquirers
Founded in 1947 by Abdul Karim Dhedhi’s father as a commodities brokerage, the AKD Group has morphed into a sprawling conglomerate spanning securities, asset management, telecoms, mining and real estate. Reuters once called it “one of Pakistan’s largest domestic corporates.”
AKD’s flagship property venture is The Arkadians – a 43-acre, 13-tower mixed-use development overlooking Karachi Creek. Launched through Creek Developers (Pvt) Ltd and one of Pakistan’s first REIT structures, Arkadians is pitched as the country’s most expensive residential address, with penthouses marketed at up to Rs980 million.
The group also owns AKD Tower in Clifton and has land banks in Gwadar and Islamabad, giving it the balance-sheet heft (and construction know-how) to finish PSL’s stalled hotels. AKD may eventually spin off the enlarged hospitality arm into a dedicated REIT, unlocking tax benefits and cheaper
A former nominee director of the Karachi Stock Exchange, Dawood Jan Mohammad co-founded DJM Securities (Pvt) Ltd and sits on a clutch of private construction companies. According to corporate filings, he draws on more than 20 years’ experience in capital markets and real estate.
He appears to be mainly a financial investor rather than an operator; the expectation is that he will support strategy but leave dayto-day hotel management to Hashoo’s existing team and AKD’s corporate finance unit.
What the deal means
A56% bloc vote gives the consortium effective board control, yet the Hashwanis retain roughly 18% and brand-management contracts, ensuring continuity of service quality.
Despite the capital outlay in buying shares in the company, none of the cash will actually hit the company’s balance sheet which means any additional money for growth or other initiatives still has to be raised from other sources.
The Takeover Regulations require a public-tender offer by the acquirers. The stock is already up past Rs1,216 per share in anticipation of such an offer. Key in understanding what happens next will be the degree to which the buyers had consulted the Hashwanis before the move. The amicable nature of the announcement indicates that this may not be a hostile takeover bid.
If that is the case, there may be a reshuffling of the board of directors, and potentially a change in management itself.
For now, though, the story is one of long-awaited capital rotation: an ailing stateera champion handed new life by capital-markets veterans betting that Pakistani hospitality’s best days still lie ahead. n
Dost Steel reaches restructuring agreement with lenders
Company will pay down Rs2 billion worth of debt over the next four years in equal installments after receiving an equity injection from new investors
EProfit Report
mbattled long-products maker
Dost Steel Limited (PSX: DSL) has clinched a debt-workout deal with its banking syndicate after securing a Rs2.08 billion equity injection from two private investors, Muhabbat Khan and Zahir Khan.
A notice to the Pakistan Stock Exchange says the fresh capital, backed by the pair’s personal guarantees, unlocks a four-year repayment plan under which Dost Steel will discharge the restructured bank facilities in sixteen quarterly instalments. The new backers have already lodged an initial Rs50 million down-payment with the consortium, signalling that the agreement is now live.
The accord removes an existential cloud that has hung over the company since late 2022, when surging finance costs and erratic scrap prices pushed it to the brink of default.
Dost Steel hopes the lighter debt service will free enough cash to keep its 350-ktpa Phool Nagar bar mill running while it completes a long-delayed rights issue.
Dost Steel’s latest unaudited accounts, covering the nine months to 31 March 2025, paint a stark picture:
fresh borrowing. The restructuring targets the Rs2.08 billion chunk of short-term loans that had rolled over repeatedly; reducing that principal by half should slice the annual finance-cost run-rate by roughly Rs350 million once fully implemented.
The agreement also obliges Dost Steel
31 Mar 25 Rupees (million) Comment
Short-term bank borrowings 3,095 Working-capital lines with four private banks
Long-term debt (gross) 108 Residual on two rescheduled facilities
Total interest-bearing debt ≈ 3,250 95 % floating-rate
Share-holders’ equity (1,855) Negative after cumulative losses
EBITDA (9 m) (169) Still loss-making Finance cost (9 m) 381 Effective rate c. 21 %
Source: Dost Steel interim statement, PSX filing
With equity wiped out, traditional gearing metrics are meaningless; more telling is cash-flow cover. The firm’s interest-coverage ratio sits at –0.4x, meaning every rupee of debt service has, until now, been met with
to maintain minimum quarterly utilisation levels at the mill and to channel at least 70 % of operating cash flow into debt service until the facility is fully amortised. Management says it will escrow sales proceeds to improve lender
visibility and avoid the liquidity squeezes that plagued the business last year.
For shareholders, the near-term picture remains challenging. The company booked a Rs242 million net loss in FY-24 and burned cash in each of the last seven quarters. That said, analysts note that the bulk of the statutory loss stems from finance charges rather than gross-margin erosion; strip those out and the underlying operating deficit is narrowing as the plant climbs towards 50 % utilisation.
New investors: capital, guarantees and a turnaround blueprint
The rescue hinges on Muhabbat Khan and Zahir Khan, Karachi-based construction entrepreneurs who will buy 416 million shares via private placement – equivalent to 47 % of the enlarged equity base – for Rs2.08 billion. Their subscription money doubles as the cash pool for loan repayment, while their personal guarantees derisk the banks’ exposure, allowing them to push out maturities without breaching State Bank provisioning rules.
In parallel, Dost Steel is running a renounceable rights issue of 444.7 million shares at Rs10 par. If fully taken, the rights could raise an additional Rs4.45 billion, money the board says would finance working capital and finish a waste-heat-recovery unit that could shave 50 kilowatt-hours off the energy bill per tonne of rebar. Any untaken rights may be scooped up by outsiders, offering a secondary pathway for new investors to join the cap table.
Beyond cheques and guarantees, the Khan duo are bringing operational oversight. A termsheet annex circulated to lenders (and reviewed by this magazine) stipulates that one nominee of the investors will hold the chief restructuring officer seat for at least two years, with veto power over new borrowing, capex above Rs100 million and dividend policy.
Market reaction has been swift: the stock – long marooned on the PSX’s “non-compliant” board owing to production interruptions – has trebled since mid-June and now trades near Rs9, still below par but the highest level since 2021. Dealers say the move reflects a bet that the rights issue, plus the reduced debt overhang, will finally restore positive equity and pave the way for the scrip’s return to margin-financing eligibility.
Company profile and back-story
Dost Steel was set up on 19 March 2004 as a private company and listed on the Karachi bourse three years later. Its flagship asset is an
18-stand, straight-line rolling mill in Phool Nagar, Kasur, capable of turning steel billets into ASTM- and BS-grade deformed bars from 8 mm to 40 mm in diameter. Rated capacity is ≈ 350,000 tonnes per annum, putting it in Pakistan’s mid-tier rebar league between the integrated giants (Agha, Amreli, Mughal) and the cluster of micro-mills around Lahore.
The business rode Pakistan’s last construction boom (2015-2018), doubling output and flirting with export orders to Afghanistan. In 2019 management installed a Pomini Thermex quenching system, enabling high-ductility bars for seismic applications. But expansion was funded almost entirely with short-term rupee debt, a risk that materialised when the policy rate jumped above 22 % in 2023 and billet prices soared in the wake of Russia’s invasion of Ukraine.
By late-2022, Dost Steel’s interest bill exceeded gross profit. Load-shedding and scrapprice volatility pushed utilisation below 35 %, triggering loan-servicing shortfalls. Banks froze limits, suppliers demanded cash and the PSX flagged the company as non-compliant for failing to demonstrate continuous production. Management’s first attempt at a rights issue in early 2024 fizzled amid thin liquidity.
The current recapitalisation marks the third – and by most accounts final – attempt to salvage the franchise. Management insists the mill’s core mechanics remain sound: billet-to-rebar conversion yields have averaged
90.5 % in test runs, and the product carries a brand premium in Punjab’s institutional projects.
Looking ahead, the strategic plan presented to lenders envisages:
• 50 % utilisation by December 2025, rising to 70 % a year later as public-sector infrastructure spending revives.
• Energy efficiency gains of 12 % through waste-heat recovery and upgraded electrical drives.
• Diversification into wire-rod by retrofitting the finishing stands – a Rs300 million project slated for FY-27, contingent on debt covenants being met a year early.
If those milestones are hit, Dost Steel forecasts positive EBITDA by FY-26, restoring regulatory capital and clearing the way for dividend resumption in FY-28.
The Rs2.08 billion restructuring pact, underwritten by new strategic sponsors, buys Dost Steel breathing space in a capital-intensive sector hammered by high rates. The company is not out of the woods – negative equity, razor-thin margins and a still-crowded rebar market remain stern tests – but the agreement converts a looming liquidity crisis into a manageable amortisation schedule. For Pakistan’s wider industrial universe, it also showcases a template: marry fresh equity with personal guarantees, win bank forbearance, and swap fatal leverage for a fighting chance at operational turnaround. n
Bawany Air Products to resume production
Company was out of commission for about three years and has clawed its way back from the dead
Profit Report
After nearly three years in hibernation, Bawany Air Products Limited (PSX: BAPL) has restarted its Hub industrial-gas facility and formally asked the Pakistan Stock Exchange to strike its name from the bourse’s non-compliant segment.
In a letter dated 16 July 2025, the company informed the exchange that it had obtained an independent auditor’s certificate “certifying that the company has started operations in line with its principal line of business” and attached a copy of the certifi-
cate to support its request for reinstatement.
A day later, cylinders were again being filled at the Hub site in Lasbela, Balochistan. The comeback ends an uncomfortable chapter that began in late-2022 when soaring energy costs and intense price competition from Pakistan Oxygen and Ghani Gases forced Bawany Air to mothball production, triggering the PSX “business-continuity” rule that lands idle companies on a watch-list. Being tagged non-compliant means a company’s shares are transferred to a separate board and can be traded only on a cash-settlement basis – anathema for liquidity-hungry small caps. Management has spent the past 18 months cutting overheads, repairing equipment and, crucially, securing fresh equity to restart.
The rescue has been financed in stages. First, shareholders approved a drastic expansion of authorised capital – from Rs150 million to Rs12.1 billion – opening headroom for a mammoth 600 million-share rights issue and for further placements “other than cash”.
Then, in April, Bawany Air deposited Rs2.25 billion of share-subscription money, a cheque that lifted cash on the interim balance-sheet from barely Rs0.1 million to more than Rs2.28 billion. The funds have been used to settle arrears with gas cylinder suppliers, refurbish cryogenic compressors and purchase a modest stock of liquid oxygen to prime the pipeline while in-house production ramps up.
The cash injection arrived just as the State Bank began paring its policy rate, slashing the company’s finance cost on a small working-capital line and stretching scarce rupees further. It also soothed auditors worried about “material uncertainty related to going concern” in last year’s opinion.
A sector in flux
Industrial gases occupy an unglamorous but essential niche: hospitals, steel re-rollers, ship-breakers and welders cannot function without a reliable supply of oxygen, nitrogen and acetylene. Pakistan’s market is dominated by Pakistan Oxygen (formerly Linde Pakistan), which operates large air-separation units in the south and centre of the country; and Ghani Gases, whose plant in Sheikhupura focuses on bulk nitrogen contracts. Bawany Air’s distinguishing feature is proximity to Pakistan’s biggest cluster of ship-breaking yards at Gadani, along with Karachi’s refineries and ship-repair docks.
During the Covid-19 pandemic the company enjoyed a windfall as hospitals strained to secure medical-grade oxygen. But once demand normalised, price competition intensified and Hub’s older, less fuel-efficient equipment struggled against imports of cheaper Indian cylinders. Restarting now, as spot electricity tariffs fall and rupee stability reduces import arbitrage, looks well-timed.
The restart does not mean Bawany Air will look exactly as it did pre-shutdown. In December 2024 shareholders voted to broaden the Memorandum of Association, permitting the company to “invest in, acquire and hold shares, stocks, debentures, bonds [and] other securities” in addition to manufacturing gases. The amendment effectively converts BAPL into a hybrid industrial-cum-investment vehicle and sets the stage for a much bigger recapitalisation. Indeed, management has already advanced Rs2.27 billion to Al-Man Seyyam Sugar Mills (Private) Ltd, signalling that the revived company could act as a holding house for acquisitions far removed from oxygen cylinders.
Speculation intensified earlier this month when a consortium led by construction executive Mohabat Khan filed a “public announcement of intention” to acquire up to 98.76% of BAPL’s equity – roughly 600 million shares – a move that, if consummated, will hand the new owners a ready-made PSX listing and some prime industrial land in Hub. Market participants see the restart of production as a necessary pre-condition for the takeover to advance: the Securities Act prohibits changing control of a listed firm if it is not engaged in its declared business.
Stock-market reaction
BAPL’s thinly traded scrip jumped the PSX upper circuit (7.5%) on the day of the announcement, extending a run that has seen the share price triple since mid-June on takeover rumours. Even so, the market capitalisation is barely Rs330 million, valuing the plant and its 14-acre plot at less than the cost of replacing a single cryogenic column.
Analysts warn that liquidity will remain constrained until the rights issue lists and the non-compliant tag is lifted. That process could take two to three weeks: the PSX listing department must review the auditor’s certificate, verify that commercial invoices match production claims and obtain a fresh undertaking from the company secretary. If satisfied, the exchange will issue a notice restoring BAPL to the regular counter, after which brokers can offer normal margin finance against the shares.
Restarting is a milestone, not a finish line. The Hub plant’s vintage equipment, commissioned in the early 1990s, is energy-intensive and operates best at high utilisation. Keeping costs in check will require reliable
grid power – something Balochistan’s industrial estate does not always provide.
A quarter of the 45,000-strong fleet is past hydrotest expiry and needs to be re-certified or swapped, an exercise that could cost Rs150 million.
Pakistan Oxygen’s new 150-tonneper-day ASU in Port Qasim is only 40 km away and already courting the same steel and ship-breaking customers.
On the upside, the CPEC-linked revamp of Gadani to handle scrapping of larger ocean-going vessels could lift southern Pakistan’s oxygen demand by 20% over the next three years, according to industry consultancy CRU.
Why it matters
For investors, Bawany Air is a case study in how the PSX’s compliance regime – often criticised as overly stringent – can nudge moribund companies back to life. The threat of delisting, combined with the carrot of easier capital raising once back in good standing, compelled management to inject cash, repair equipment and court strategic buyers.
For the real economy, the restart adds a third significant source of medical oxygen in the south at a time when public hospitals still complain of intermittent supply, and gives ship-breakers leverage against the duopoly that had developed during Bawany’s absence.
And for regulators, the episode demonstrates that the exchange’s business-continuity rule – which requires listed firms to prove they are actually doing what their prospectus promised – has teeth: companies cannot simply reinvent themselves as shell-investment vehicles without restoring, or relinquishing, their original operating lines. n
Cement sector expected to see profits soar 38% in most recent quarter
Topline Securities anticipates that declining interest rates and rising pricing ability will help the sector improve margins and boost profitability
PProfit Report
akistan’s leverage-laden cement industry is poised to turn in its strongest June-quarter earnings in four years, according to a fresh preview by Topline Securities. The brokerage projects aggregate after-tax profit for its five-company universe at Rs17.8 billion for 4QFY25, a leap of 38% year-on-year that more than offsets a lacklustre domestic demand backdrop. The upgrade rests on three pillars: sharply lower finance costs, a surprise bounce in exports, and another round of incremental price rises at the retail end.
Net revenue is expected to rise 8% YoY to Rs96.7 billion, reflecting a mix of higher retention (ex-factory) prices and better realised dollar prices on outbound cargoes to Sri Lanka, East Africa and the Gulf. Equally important, interest expense across the universe
is seen sliding 25% YoY to Rs3.6 billion as a string of State Bank rate cuts feed through to floating-rate debt and several producers use free cash-flow to pay down working-capital facilities.
For context, finance charges devoured more than one-third of sector earnings in FY23 when the policy rate peaked at 22%. Topline’s arithmetic implies the interest bite is now back in single digits – a game-changer for an industry whose expansion spree was funded largely with rupee loans.
A tale of two quarters
Quarter-on-quarter comparisons tell a slightly different story. Versus the March 2025 quarter, profits are forecast to fall 22%, chiefly because Eid holidays shaved four working days off domestic dispatches and Lucky Cement missed out on a chunky dividend from its Thar
coal-fired associate, Lucky Electric. Even so, analysts see the pull-back as seasonal noise rather than the start of a down-cycle.
Industry capacity utilisation averaged 56% during the quarter, but the headline masks a yawning north–south divide: plants in Punjab/KPK ran at just 48%, while coastal mills hummed along at 78% on the back of export orders.
Margin recovery is the other standout. Gross profit is expected to expand to 34% of sales, up four percentage points year-on-year, thanks to a leaner energy mix and firmer selling prices. Southern producers relied mainly on Richards Bay coal, which averaged US $90/ tonne in the period, down from US $95 in the previous quarter; their northern peers blended cheaper Afghan and indigenous lignite.
Meanwhile, the average domestic retention price hit Rs805 per 50-kg bag, a 5% YoY (and 8% QoQ) uplift that more than absorbed
small hikes in electricity and freight. Put differently, the industry is succeeding at pushing through price rises even as private construction remains in the doldrums.
Dispatch data underline the shift. Local sales were flat at 8.8 million tonnes, but exports – dominated by clinker shipments out of Port Qasim – surged 35% YoY to 2.7 million tonnes, nearly a quarter of total offtake. The numbers vindicate management claims that currency depreciation and lower coal prices together have restored Pakistan’s cost competitiveness in regional spot markets.
Perhaps the most striking chart in Topline’s report is the bar graph tracking sector profitability over 11 quarters: the black troughs of FY23, when borrowing costs spiked and utilisation fell below 60%, have given way to double-digit bars. Finance cost relief is not just cosmetic. Debt service coverage ratios that flirted with covenant breaches in FY22 now look healthy, freeing up cash for maintenance capex and dividend resumption.
Company-by-company score-card
Lucky Cement (LUCK) – Even without the LEPCL dividend, Lucky remains the sector bell-wether. Topline pegs June-quarter consolidated earnings at Rs13.6/share, up 36% YoY, helped by a 22% fall in finance cost and resilience in its non-cement portfolio (chemicals, autos and power). A Rs4 per share dividend is anticipated.
Kohat Cement (KOHC) – Expected to post Rs13/share, a 7% YoY climb, on the back of robust northern retention prices and favourable royalty adjustments in Khyber Pakhtunkhwa. Margins stay lofty at 37%.
Fauji Cement (FCCL) – The fastest-growing play, with quarterly EPS forecast at Rs1.4, up 181% YoY. The secret sauce is last year’s takeover of Askari Cement’s Wah plant, which now accounts for 87% of FCCL’s exports. A Rs2.5 payout looks likely.
DG Khan Cement (DGKC) – Swings back to profit (Rs4.3/share) from a loss a year earlier, thanks to a 53% drop in finance charges and export volumes nearly quadrupling.
Maple Leaf Cement (MLCF) – Consolidated EPS of Rs3.0 would mark a 58% YoY surge, fuelled by domination in high-margin white cement and cheaper alternative fuels.
Income streams repositioned
Topline flags a 42% YoY decline in ‘other income’ to Rs5.8 billion –evidence that managements are becoming less reliant on treasury bills and dividend windfalls, and more on the core cement franchise. Lucky still accounts
for 58% of the line item, but its composition is increasingly operating rather than passive.
Roll the clock forward and the brokerage forecasts FY25 sector earnings at Rs77.5 billion, 47% higher than the year before – good for a blended price-to-earnings multiple below 6× at prevailing share prices. Unsurprisingly, Topline keeps an “overweight” call on the entire cement basket, citing still-attractive valuations and a positive rate trajectory.
The Association of Pakistan Cement Manufacturers (APCMA) data suggest total industry dispatches have plateaued at 45 million tonnes a year – barely two-thirds of installed capacity. Topline’s strategists, however, argue the worst is behind. They expect 8% domestic volume growth in FY26, predicated on the federal budget’s concessional housing finance and a long-awaited thaw in public-sector development spending.
Export momentum should persist too: clinker arbitrage over Chinese supply has widened since Beijing re-imposed pollution curbs on inland kilns, while Iraqi reconstruction is absorbing more bagged cement from southern Pakistan.
So what could go wrong?
The coal rally has paused, but a sudden spike back above $120/tonne would squeeze margins, particularly in the north where Afghan deliveries are sporadic. The rupee’s recent calm is fragile; 10% depreciation could erase half the forecast profit gain, Topline warns.
A fresh round of capacity additions (Bestway’s 7,200 tpd brown-field line is due in FY26) could tempt producers into discount-
ing to protect share. And any reversal of the super-tax cut or reinstatement of provincial royalty hikes would eat into the finance-cost savings story.
The broader investment narrative
Even with those caveats, the sector’s risk-reward trade-off looks the healthiest in half a decade. Debt has been refinanced at single digits, utilisation in the south is flirting with 80%, and managements from Kohat to Maple Leaf are doubling down on waste-heat recovery and alternative-fuels roll-outs – initiatives that structurally compress unit cash costs.
Add to that the Rs805/bag ex-factory anchor and the prospect of an export rebate extension, and it becomes hard to argue against cement as the earnings-beta play for Pakistan’s hoped-for capex cycle.
Topline’s 38% YoY profit surge headline is not merely a statistical artefact; it captures a sector re-rating that rests on tangible cost relief and pricing power. The June quarter could therefore mark the point where Pakistani cement shifts from defensive yield play to cyclical recovery proxy. Investors betting on that thesis will find the brokerage’s pecking order – Lucky, Maple Leaf and Fauji at the top – useful signposts, but the broader story is that the industry has rediscovered its margin mojo. Whether it can keep it will depend on coal markets, monetary policy and the government’s ability to turn budget promises into bricks and mortar. n
Energy majors dominate mutual-fund portfolios as OGDC, PPL and PSO soak up fresh flows
Index-heavy names take up the bulk of new cash flowing into equity mutual funds, but some funds have surprising picks
Profit Report
Pakistan’s equity mutual-fund industry has seldom been accused of imagination, but the latest positioning data compiled by Arif Habib Ltd reveal a concentration that
is striking even by local standards. In its June quarter review of public portfolio disclosures, the brokerage finds that three state-linked energy giants – Oil & Gas Development Company (OGDC), Pakistan Petroleum Ltd (PPL) and Pakistan State Oil (PSO) – now sit at the top of almost every equity fund’s shopping list.
OGDC leads the pack: 62 open-ended and closed-ended funds report holding the exploration behemoth, controlling a combined 17.2% of the company’s free float. Close on its heels, PPL appears in 51 funds with 15.5% of free float under collective ownership. PSO, the downstream monopolist, ranks third: 50 portfolios together own 29.7% of the fuel marketer’s tradable shares. “It is the highest retail-cum-institutional stack-up we have seen in PSO since the GDR days of 2008,” notes Arif Habib’s research team.
The skew lays bare two realities: first, professional investors still favour high-liquidity, dividend-rich large-caps in a market where average daily turnover rarely tops US $30 million; second, the energy patch remains one of the few sectors offering index weight, currency insulation and a predictable payout policy.
Small steps towards diversification
Yet the report also detects tentative forays into mid- and small-cap territory. Among the top-ten holdings lists published by 46 funds, a clutch of lesser-known symbols crops up repeatedly:
ucts oversee roughly Rs 259 billion ($930 million), still dwarfed by money-market and income funds, which together command more than Rs1.9 trillion.
The hierarchy within equities remains familiar. National Investment Trust (NIT), steward of the country’s oldest open-ended scheme, clings to pole position, followed by Shariah specialist Al Meezan Investment Management and NBP Fund Management (NAFA). Collectively the trio account for just over 58% of equity AUM, leaving 18 licensed rivals to fight for the balance.
Their heft partly explains the crowding in OGDC-PPL-PSO; when a large house tweaks sector weightings, market liquidity forces it towards the same small pool of mega-caps.
New names break into the top-ten club
Portfolio churn, however, is far from static. Arif Habib highlights 14 fresh entrants that barged into at least one fund’s top-ten list in June after being absent in May. Among them:
• National Refinery Ltd (NRL) –riding an upgrade cycle in hydroskimming margins;
• Fauji Cereals (FCEPL) – beneficiary
liquidity rather than making conviction bets.
The liquidity conundrum
Why, then, has diversification been so slow? The answer lies in market microstructure. Free-float in many KSE names is thin; single-day turnover above Rs 100 million is rare outside the top fifty stocks. Funds fearing exit-risk gravitate towards oil & gas, fertiliser and banking blue chips. Add to that the stock-screen constraints of Islamic funds – now 43% of the equity universe –and the investible set shrinks further.
Liquidity concerns are compounded by benchmark hugging. Most funds are measured against the KSE-100 or its Shariah counterpart, indices in which OGDC alone holds an 8.6% weight and the energy trio together exceed 20%.
Underweighting them courts uncomfortable tracking-error, a career-limiting prospect in a market where retail unitholders rarely look beyond month-on-month NAV rankings.
Outlook: can the herd break formation?
Looking ahead, analysts say the picture will evolve only if two conditions align. First, the government must deliver on privatisation of large-cap assets – specifically the sale of minority stakes in power distribution companies – which would inject fresh float and sector diversity. Second, more mid-caps need to migrate to the Growth Enterprise Market board or pursue secondary offerings to widen their shareholder base.
While none threaten the dominance of OGDC or PPL, their presence hints at a marginally broader risk appetite. Asset managers are dipping a toe into counter-cyclicals and export themes, partly because the KSE-100’s energy complex already discounts Brent at $60 a barrel.
Assets grow, but remain a small slice
The pivot comes as equity mutual-fund assets under management (AUM) edge higher. As of 30 June 2025 the segment accounted for 12.0% of industry-wide AUM, up from 10.7% in May and the first double-digit reading since April 2022. In rupee terms, equity prod -
of falling palm-oil prices;
• Flying Cement (FLYNG) – a small but nimble northern-zone clinker producer;
• National Foods (NATF) – stalwart of the consumer foods business;
• TPL Trakker (TPLT) and TPL Properties (TPLP) – wagers on real-estate digitisation;
• BF Agro (BFAGRO) – an animal-nutrition play expected to list on the main board later this year.
The newcomers underscore a modest rotation into sectors viewed as interest-rate sensitive and import-substitution centric – a strategy that could gain traction if the State Bank begins its forecast easing cycle next quarter. Still, most positions are nibble-size for now, suggesting managers are testing
In the meantime, the dividend allure of oil & gas firms is unlikely to fade. Global crude prices remain sticky above US $80; Islamabad continues to demand hefty payouts to plug its own fiscal gap; and constant rupee depreciation flatters reported earnings. “Unless you believe Brent is going back to US $50, it is hard to dislodge the energy majors from the top shelf,” concludes Arif Habib’s note.
For unitholders the message is clear: their fortunes remain wedded to the same handful of state-backed companies that have underpinned the KSE-100 for a decade. True diversification will require structural reform, deeper capital-market development and a willingness among fund managers to venture beyond the comfort of high-yielding leviathans. Until then, OGDC, PPL and PSO are likely to retain their iron grip on Pakistan’s mutual-fund portfolios. n
Asif Saad and Eram Hasan OPINION
Efficiency in manufacturing has to be achieved through cost management
Pakistan’s manufacturing and industrial sector finds itself at a pivotal moment. For decades, the industry thrived under generous government support through tax incentives, subsidized energy, and concessional financing. These enablers allowed many firms to grow in both domestic and export markets, often without needing to address deeper structural inefficiencies.
As a result, many industrialists focused more on lobbying for favorable policies from Islamabad than on improving their internal operations. But the economic tide has turned. Government support is no longer guaranteed, and the “Islamabad well” has run dry. Manufacturers must now learn to stand on their own feet.
In today’s environment, the survival of Pakistani manufacturing businesses depends on internal efficiency and resilience. With little external support left to count on, organizations must rigorously examine their operations, identify inefficiencies, and optimize processes across the board.
Traditional cost-cutting measures are no longer enough.
Asif Saad and Eram Hassan are management consultants with extensive C level experience in multinational and national companies
Instead, a comprehensive and strategic approach to cost management is required—one that can deliver savings of 15–30% when implemented effectively.
Why Manufacturing Still Matters
Manufacturing remains a backbone of Pakistan’s economy, providing employment and contributing significantly to tax revenues. Yet the industry faces mounting pressure from both external and internal forces.
Externally, inflation, energy price volatility, and increasing ESG and compliance obligations are squeezing margins. Internally, outdated infrastructure, organizational inefficiencies, and bloated overheads further erode competitiveness.
To survive and thrive, manufacturers must reimagine their operations, shifting toward leaner, more agile, and technology-enabled models. Reducing reliance on a handful of owners or senior executives and institutionalizing robust systems is essential.
Multinational corporations offer relevant examples. Operating in similar environments, they have consistently applied global best practices and promoted cross-learning to stay competitive. Local firms can and should learn from these playbooks.
Through years of hands-on experience with both multinational and domestic companies, we’ve identified actionable opportunities for local businesses to improve margins and profitability by investing in processes, people, and capabilities. These improvements not only reduce costs but also enable companies to price more competitively, creating a virtuous cycle of growth and reinvestment.
A Five-Step Framework for Cost Transformation
Sustainable cost transformation requires a structured and phased approach. We recommend the following five-step framework:
1. Diagnosis: Establish cost baselines and conduct a detailed gap analysis
2. Design: Define cost targets and create an initiative roadmap
Labour & Overheads 10-20% Delayering, Organisational Redesign
Digital & Automation 10-30% PMS, Predictive Maintenance Energy & Utilities 5-10% Energy Audits, Green Energy
Common Pitfalls and Cross-Cutting Themes
There are some common pitfalls that cut across many of the above-mentioned cost levers. A few of these cost-cutting themes are discussed below.
PriceVsConsumption
Cost is influenced not just by the price of inputs but also by how much is consumed. Many businesses focus solely on price, ignoring usage inefficiencies. For instance, instead of merely reacting to higher energy rates, companies should analyze peak loads, consumption patterns, and alternative
tariff structures. The same thinking applies to raw materials—are alternatives considered, and is consumption actively tracked?
Benchmarking
Benchmarking—both internal and external—is critical to driving improvement. While competitive data may be hard to access, industry experts, peer networks, and operational KPIs offer valuable benchmarks. Comparing performance against both local and global standards encourage a culture of continuous improvement.
BuyingSpecifications
Outdated specifications often result in overengineered inputs and higher costs. Reviewing input specs regularly ensures alignment with current operational needs and technology, helping avoid unnecessary spending. For example, many organizations buy long lasting lubricant oils but change them at much shorter intervals thus paying an unnecessary premium.
CentralizedProcurement
In many family-run or group companies, different business units procure the same inputs independently, missing out on economies of scale. In one large conglomerate, for example, several plants purchased the same commodity chemicals from different vendors—missing out
on bulk discounts due to lack of coordination. Cost transformation timelines can vary depending on the scale and complexity of operations, but broadly follow a trajectory where diagnosis takes up to three months, implementation is 4-9 months, and scaling and optimization is 9-18 months.
The critical factor
Many organizations begin cost transformation efforts with enthusiasm, only to falter due to poor execution. Success depends on a holistic approach that spans the full value chain. It requires unwavering leadership support, alignment with business strategy and a performance culture that drives change from the top.
For Pakistan’s manufacturers, especially those in export markets, cost competitiveness is no longer optional. It is fundamental to longterm survival. For domestic players, higher margins and profitability build enterprise value and unlock future growth.
The next generation of industrial leaders must stop looking to the government for bailouts and instead embrace internal transformation. Cost management must become a core competency, not a one-time project.
By embedding efficiency and accountability into operations, Pakistani manufacturers can navigate economic uncertainty, enhance margins, and secure sustainable growth for the future. n
Dewan Cement adds solar power to its energy mix
Company joins loud chorus of Pakistani industrial entities looking to set up their own solar energy generation capabilities
Profit Report
Dewan Cement Limited (PSX: DCL) has flipped the switch on a 6-megawatt (MW) rooftop solar array at its Dhabeji, Karachi works, instantly supplying more than half of the plant’s electricity demand with photons rather than furnace oil or grid power. The project, disclosed to the Pakistan Stock Exchange earlier this week, sits astride the cement maker’s captive power station and feeds straight into the plant’s internal network.
The installation positions DCL among a small but fast-growing cohort of Pakistani manufacturers turning to on-site photovoltaics
to blunt fuel-price volatility, tame emissions and improve energy security. Within the past quarter alone, flat-steel producer International Steels Limited has energised a 6.4 MW system at its Port Qasim mill, while textile and food-processing players are lining up for similar solutions. Industrial demand is emerging as the single most dynamic segment of Pakistan’s nascent solar market, outpacing residential net-metering in both absolute megawatts and year-on-year growth.
Utility-scale renewables have struggled to clear policy hurdles, but behind-the-fence solar is booming. Developers cite simple economics: levelised costs for an industrial rooftop array now sit well below Rs 12 per kWh – less than half the current off-peak industrial tariff –
while installation timelines rarely exceed nine months. And unlike diesel back-up, photovoltaic generation comes with neither import bills nor exposure to the rupee’s chronic slide. The Ministry of Energy’s draft Solar 2030 Roadmap foresees 9 GW of merchant and captive PV by the decade’s end, with Karachi’s export-oriented corridor accounting for a third of that capacity.
Cement’s carbon conundrum
Dewan’s move is more than a cost-saving play; it chips away at one of industry’s knottiest climate problems. If global cement were a country
it would rank as the planet’s third-largest emitter, responsible for roughly 8 % of total CO₂ output. Two distinct sources drive that footprint. About 40% of emissions arise from burning fossil fuels – mainly coal, pet-coke and bunker-grade fuel oil – to bring grey clinker to 1,450 °C. The remaining 50%+ stems from the calcination of limestone, a chemical reaction that releases CO₂ even in an electric kiln.
Because electricity accounts for only a slice of cement’s energy bill (kilns are primarily heat-hungry), a 6 MW PV system will not make Dewan carbon-neutral. But it will curb the Scope 2 emissions linked to grinding, packing and ancillary processes, while shaving operating expenses that have ballooned since the national grid’s fuel-charge adjustments pushed per-unit prices to record highs. Management expects the array to displace around 9 million kWh of grid electricity annually, equivalent to roughly 5,500 tonnes of CO₂ at Pakistan’s current generation mix.
Most decarbonisation road maps for cement assign three levers to curbing emissions: lower-carbon fuels, clinker substitution and, longer-term, carbon capture. Yet electricity efficiency – though often overlooked – delivers immediate, bankable gains. Grinding mills, conveyors and bagging lines together consume 90–110 kWh per tonne of cement; cutting that draw by half through self-generation yields a marginal abatement cost well inside the price of voluntary carbon offsets.
For Dewan, the pay-off is twofold. First, solar generation hedges against Pakistan’s notorious load-shedding, which can stretch to several hours a day during peak demand. Second, by reducing its draw from the national grid (which is still 60% fossil-fuel-based), DCL lowers its indirect emissions intensity – an increasingly important metric for export customers facing European ‘fit-for-55’ trade rules and the impending EU Carbon Border Adjustment Mechanism.
A brief primer on Dewan Cement
DCL is part of the Yousuf Dewan Companies, whose interests span sugar, automobiles and textiles. The family entered cement in May 2004 by buying Pakland Cement (Karachi) and Saadi Cement (Hattar) out of distress and subsequently merging them into Dewan Cement Limited. Today the company operates two integrated plants with a combined clinker capacity of just under 2.9 million tonnes per annum – making it one of only three Pakistani producers with footprints in both the north and south markets. The Karachi unit, established in 1982 and handily close to the port, can grind 5,880 tpd, while the Hattar line (1995 vintage) offers 3,780 tpd and serves the Islam-
abad–Peshawar construction belt.
These dual hubs underpin a brand portfolio that spans ordinary Portland cement, sulphate-resistant cement and various blended grades certified for export. Dewan at one time held nearly 6% of national market share, though financial turbulence within the wider group and sluggish public-sector spending have seen volumes ebb in recent years. Even so, the company retains a coveted logistics advantage: Karachi is the closest clinker source to the deep-water terminals, a fact that keeps Dewan on the radar of regional importers from East Africa to Sri Lanka.
The Dewan story has not been a straight ascent. After aggressive debt-fuelled diversification in the early 2000s, the group skidded into default during the 2008 financial crisis and spent much of the following decade restructuring bank exposures. Cement proved one of the more resilient assets, thanks largely to cash sales and a favourable location mix. By 2018 the unit had achieved ISO 9001:2015 certification and resumed exports, albeit at lower volumes, and has since embarked on incremental efficiency projects – including waste-heat recovery and, now, solar power – to claw back margins.
Dewan’s management argues that the new PV system is only the beginning of an energy-transition roadmap. Future phases could include biomass co-firing in the kiln’s calciner, exploration of synthetic gypsum to lift clinker substitution rates, and digital optimisation of grinding circuits. Each measure tackles a different slice of the emissions pie, but together
they align the firm with international lenders’ evolving ESG covenants.
What next?
The 6 MW plant will pay for itself in four to five years, assuming conservative capacity-factors of 18% and today’s average industrial tariff of Rs 26 per kWh. From year six onward, Dewan should pocket upwards of Rs150 million annually in avoided energy costs – a non-trivial boost to earnings for a company whose net profit last year barely crossed Rs300 million.
More importantly, the installation burnishes Dewan Cement’s sustainability credentials at a time when green finance is finding its way to Pakistan. Multilateral lenders and domestic banks alike are piloting ‘transition bonds’ and preferential green-loan tranches; early movers stand the best chance of tapping that capital pool for kiln upgrades and, eventually, carbon-capture pilots.
Cement will never be a zero-carbon product without radical technology. Yet Dewan’s solar gambit shows that meaningful, immediate cuts are possible even within today’s policy and price environment. As federal ministries inch towards a firm Nationally Determined Contribution target for industry, and as construction clients start to specify embodied-carbon limits, the premium on self-help solutions such as captive solar is only set to rise.
For Dewan Cement the sun now does half the heavy lifting – and in a sector synonymous with smoke stacks, that is a quietly revolutionary development. n
JS to consolidate energy investment vehicles
Move could signal a commitment to consolidate disparate energy initiatives under one roof
Profit Report
In a move that rationalises one of Pakistan’s most sprawling corporate structures, Jahangir Siddiqui & Co Ltd (JSCL) has announced that it will fold Quality Energy Solutions (Pvt) Ltd (QES) into its bigger sister company Energy Infrastructure Holding (Pvt) Ltd (EIHPL).
The Securities & Exchange Commission of Pakistan (SECP) approved the scheme of amalgamation on 15 July, and the merger will take economic effect from 31
May 2025. A notice filed with the Pakistan Stock Exchange on 16 July confirmed that, following court endorsements, “all assets, liabilities, rights and obligations” of QES will vest in EIHPL, leaving the latter as JS Group’s single umbrella for power, petroleum and infrastructure investments. Although both companies are wholly-owned and therefore elide into JSCL’s consolidated accounts, the transaction cleans up a balance-sheet that had become cluttered with specialist micro-vehicles. As at 30 September 2024, EIHPL carried net assets of Rs4.31 billion, underpinned
by land for oil-storage depots and long-term equity in fuel-logistics ventures. QES meanwhile held a modest Rs32.37 million in net assets, largely cash and government debt securities warehoused for prospective renewable projects.
Group-wide numbers dwarf those figures but underline how small the energy portfolio still is: in the nine months to September 2024 JSCL booked Rs182.5 billion in consolidated revenue, yet only Rs631 million (0.35%) came from the energy, infrastructure and petroleum segment. Management has long argued that tidying the corporate chart is a prerequisite for growing that slice of the pie.
Why is JS slimming the structure?
JSCL’s filing points to three drivers. Firstly, there is cost efficiency. Multiple private subsidiaries mean multiple statutory audits, tax returns and SECP filings; amalgamation trims recurring overheads in legal and compliance work. Then there is capital consolidation. Combining two balance-sheets gives EIHPL a deeper equity base, making it easier to raise large-ticket project finance without additional parental guarantees. Finally, there is simpler disclosure for public shareholders. JSCL’s investors have complained that the group’s web of off-balance-sheet vehicles obfuscates performance; a single energy holding company creates a clearer line of sight.
The step also caps a sequence of internal mergers: in April 2024 Khairpur Solar Power (Pvt) Ltd was absorbed into QES, and in July 2024 JS Engineering Investments 1 (Pvt) Ltd was rolled into EIHPL. Friday’s announcement therefore completes the house-cleaning exercise that began last year.
A growing energy portfolio
Even trimmed, the energy arm now fronts JS Group’s ambitions in three arenas:
Shifting all of those stakes into a single legal entity paves the way, insiders say, for a future external fund-raise – most plausibly a rupee-denominated infrastructure Sukuk or even a partial stake sale to a strategic partner specialising in renewables.
JSCL is funding the energy build-out largely from its own cash-flows. At the nine-month mark the group showed Rs94.9 billion in cash and bank balances, more than enough to seed greenfield projects without diluting shareholders. Coupled with healthy consolidated profits of Rs6.74 billion over the same period, the holding company enjoys the latitude to deploy capital on long-gestation assets while Pakistan’s benchmark interest rate remains punitive at 19%.
A brief history of JS Group
Founded as a one-man brokerage by Jahangir Siddiqui in October 1971, the group has repeatedly reinvented itself. In the 1970s–80s, it started out as an equity dealing and fixed-income market-making firm on the Karachi Stock Exchange.
In 1991 came the conversion into Jahangir Siddiqui & Co Ltd, an investment holding company. In the 2000s, the company entered commercial banking via the acquisition (and lat-
er public listing) of JS Bank; expansion into asset management, insurance and brokerage.
In the 2010s, it began its diversification beyond financial services, buying or building footholds in telecoms, information technology and real estate. In the 2020s, it began its pivot towards energy and infrastructure, crowned by last year’s purchase of a controlling stake in BankIslami and the ongoing renewables push. Today the group controls listed entities with a combined market capitalisation of roughly Rs150 billion, employs more than 18,000 staff and funds the Mahvash & Jahangir Siddiqui Foundation, one of Pakistan’s most active private philanthropies.
The road ahead
With internal alignments largely done, the next milestones are operational. Financial close on the Khairpur solar farm should be simplified as a result of this move. Ground-breaking on the Port Qasim storage expansion – an extra 36,000 m³ designed to capture the anticipated uptick in IMO-compliant marine fuels, could also be helped along.
Finally, the retail petrol pilot under the Quality-1 brand, which could place JS in direct competition with PSO and Hascol on the forecourt by mid-2026.
For shareholders the merger is largely a paper shuffle – no cash changes hands and there is no earnings impact this year. Yet the symbolism matters: by putting all its energy eggs in one basket, JS Group is signalling that the segment has outgrown incubation status and now merits the same disciplined capital-allocation framework that built its financial-services empire. If management executes, the next few years could see JS move from bit-player to major sponsor in Pakistan’s transition from fossil fuels to cleaner, domestically generated power. n
Govt should disincentivise water-depleting sectors like sugar industry, says Rice Exporters Association
“We simply can’t afford crops that guzzle water irresponsibly,” says spokesperson while standing knee-deep in a paddy field
By Profit
HAFIZABAD - In a bold move applauded by environmentalists that do not read till the end of a sentence, the Rice Exporters Association of Pakistan (REAP) on Monday urged the government to take “quick and decisive” steps against a water-intensive crop like sugarcane, calling it “unsustainable in a water-stressed nation like ours.”
“Our aquifers are running dry,” said REAP Chairman Haider Chatta, while speaking from the offices of Cheema-Chatta Rice Mills, in front of the mill’s paddies.
“The government is constantly being black-
mailed by the Pakistan Sugar Mills Association (PSMA),” said Chatta, “not realising that if the government were to simply allow imports and end the practice of support price to the sugarcane farmers, the end consumers will actually have cheaper sugar.”
“But that is not it. The more important point is water conservation,” he said, talking to reporters, while moving on to the dera in the middle of the rice paddies where a lunch had been arranged for the reporters covering the press conference.
“The future will not be kind to those nations that use so much water,” he said, carefully protecting his starched white shalwar-kameez from the water in the field.
“We must be the only nation that actually uses water from tube wells to irrigate a crop like sugar,” he exclaimed. “We’re basically exporting groundwater to the rest of the world, if you think about it.”
In the end, he highlighted the need for the government not to be blackmailed by mafias like the PSMA, and instead be open to suggestions from advocacy groups like the REAP.
A total of four from the larger contingent of reporters present at the event then fell into a pool of water that had accumulated in one of the rice paddies and had to be extracted from it by a team of divers from the local Hafizabad Rescue 1122 service.
New e-commerce taxation policies are reshaping Pakistan’s digital marketplace, with consumers abandoning Chinese platform Temu
By Nisma Riaz
The honeymoon period for Chinese e-commerce giant Temu in Pakistan appears to be over.
Following the implementation of Pakistan’s aggressive 2025-26 tax overhaul targeting digital commerce, Pakistani consumers are witnessing dramatic price increases on the platform that once promised customers could shop like a billionaire with rock-bottom prices.
What started as a Rs 250 LED strip light in December 2024 now costs upwards of Rs 850 on Temu, representing a staggering 240% price increase that has left many Pakistani shoppers questioning their loyalty to the platform. This shift is creating an unexpected opportunity for local e-commerce marketplaces to reclaim market share it lost to international competitors over the past two years.
The tax tsunami
Pakistan’s 2025-26 federal budget introduced sweeping changes to e-commerce taxation, fundamentally altering the competitive landscape. The new regime imposes an 18% GST on all e-commerce transactions, including foreign platforms, alongside a 5% Digital Presence Levy specifically targeting international operators without local offices.
“There’s two new taxes that have been applied on sellers, on marketplaces, one is income tax and one is sales tax. They’ve imposed 2% on the income tax side and 2% on the sales tax side, so essentially a 4% additional tax has come on,” explains Abrar Bajwa, Founder of Zambeel, a logistics company serving Pakistan’s e-commerce sector.
In its attempt to widen the tax net,
the Federal Board of Revenue (FBR) has introduced a transaction-based tax regime that disproportionately affects Pakistan’s e-commerce and delivery ecosystems. Both online marketplaces and logistics services are now subject to per-transaction taxes, a move that might make sense on paper but has had troubling real-world consequences. By taxing each sale or delivery individually, the system adds financial friction at every point of the customer journey. What was meant to broaden the tax base is instead narrowing the pool of active buyers and sellers.
This policy shift has particularly destabilised small digital merchants, many of whom were just beginning to build sustainable businesses online. Facing new compliance demands and a heavier tax load, many have either shut down their operations or gone off the grid into informality, ironically defeating the FBR’s own goals of increased visibility and documentation. Instead of encouraging entrepreneurship, current tax policies are making the digital economy less viable, less competitive, and ultimately less taxable.
The impact extends beyond just tax additions. International platforms like Temu and AliExpress now face withholding tax requirements, mandatory registration protocols, and increased scrutiny from customs authorities who are cracking down on previously exploited loopholes.
Pakistan’s e-commerce boom, once driven by affordable online access and a growing delivery infrastructure, is showing signs of strain. As transaction taxes are passed down the value chain, consumers are seeing higher final prices, making online purchases less appealing. Meanwhile, sellers and service providers are squeezed from both sides, paying more to stay compliant while selling less due to price-sensitive consumers. The result
“I had a cart full of random items on Temu including phone holders, kitchen gadgets, accessories. When I saw the new prices, I realised I was just buying stuff because it was cheap, not because I needed it.”
Sarah Ahmed, marketing professional
is thinner profit margins and slower business growth.
Delivery partners and platforms like TCS, Leopard, and Careem have also seen a dip in transaction volumes, with some reportedly operating below sustainability thresholds. This marketplace attrition has a domino effect; fewer sellers mean less variety for buyers, and reduced consumer interest discourages new entrants. Over time, the cumulative pressure could significantly contract the e-commerce sector, reversing years of digital progress. The very market that promised to modernise Pakistan’s economy is now being throttled by policies that fail to consider the operational dynamics of the digital age.
However, this has resulted in something interesting. Once known for its too good to be true prices, Temu has also come under fire.
Temu’s rapid ascent in Pakistan was built on aggressive subsidies and supply chain efficiencies that allowed it to offer products at prices that seemed too good to be true. The platform’s most popular items such as LED strip lights, silicone kitchenware, wireless earbuds, and fashion jewelry, were priced 2040% below comparable offerings on Daraz.
However, the new tax regime has exposed the vulnerability of Temu’s subsidy-dependent model. Real-world examples of price increases are startling. According to a price comparison conducted by Profit, LED strip lights have increased from their previous price range of Rs. 400-600 to Rs. 850-900. Wireless earbuds, which were formerly priced between Rs. 800-1200, now cost Rs. 1400-1800. Fashion jewelry has risen from Rs. 200-400 to Rs. 500-700. Silicone kitchenware previously cost Rs. 300-500 but now ranges from Rs. 650-850. This highlights that Temu appears to be using tax implementation as cover for reducing unsustainable subsidies.
Is this an opportunity for local online marketplaces to step up?
While Temu grapples with its new cost structure, can Daraz use it as an opportunity for its own renaissance?
The platform’s locally-sourced inventory and established vendor relationships are proving advantageous in the new tax environment.
E-COMMERCE
There’s two new taxes that have been applied on sellers, on marketplaces, one is income tax and one is sales tax. They’ve imposed 2% on the income tax side and 2% on the sales tax side, so essentially a 4% additional tax has come on
Abrar Bajwa, Founder of Zambeel
Consider the wireless earbuds category. While Temu’s offerings have jumped from Rs. 800-1200 to Rs. 1400-1800, Daraz’s imported TWS earbuds remain competitively priced at Rs. 1300-1800. More importantly, Daraz’s local alternatives, while slightly more expensive at Rs. 1500-2000, offer faster delivery, better customer service, and established return policies.
“After these taxes, a seller’s take-home went from 95 to 91. That changes your inventory planning, pricing strategy, even your marketing ROI,” Bajwa explains. However, local sellers on Daraz are better positioned to absorb these costs through established business relationships and local market knowledge.
The shift is particularly evident in high-frequency purchase categories. Phone cases from Daraz’s locally-sourced options, priced at Rs. 250-450, now match or undercut Temu’s inflated prices. Pakistani-style cookware available on Daraz for Rs. 1000 and above offers better value than Temu’s generic alternatives. Fashion items from local boutiques on Daraz, ranging from Rs. 800-1500, provide culturally relevant designs with faster delivery compared to other platforms.
Closing the De Minimis loophole
Asignificant factor in Temu’s pricing model was its exploitation of customs loopholes, particularly the de minimis rule that exempts certain B2C imports from duties. Pakistani customs authorities have now begun scrutinizing this practice more closely.
“There is a loophole that is used everywhere; the de minimis rule. In most markets, shipments are classified into B2B and B2C. B2B shipments attract duties, B2C, not so much. What Temu and Shein do is classify all shipments as B2C,” Bajwa explains.
Recent reports indicate that Temu is under investigation for tax evasion, deceptive pricing, and under-invoicing. The platform’s consolidated air shipments from Shenzhen and Guangzhou, once a competitive advantage, are now subject to enhanced scrutiny and addi-
tional compliance costs.
The pricing realignment is forcing Pakistani consumers to reconsider their shopping habits. Where Temu once attracted buyers with impulse purchases driven by ultra-low prices, the new pricing structure is encouraging more deliberate purchasing decisions.
Sarah Ahmed, a Lahore-based marketing professional, exemplifies this shift, “I had a cart full of random items on Temu including phone holders, kitchen gadgets, accessories. When I saw the new prices, I realised I was just buying stuff because it was cheap, not because I needed it.”
The gamified shopping experience that made Temu addictive, spin wheels, daily check-ins, and flash sales, loses its appeal when the underlying value proposition disappears. Pakistani consumers are showing a preference for the predictability and reliability that local stores offer.
The tax implementation has essentially forced Temu to confront its unit economics prematurely. “Whatever they do, that’s like a 25% to 30% increase in their costs. But Temu also subsidizes excessively, in every market, they’ve done this. When there’s a market-level event like this, for example, a new tax, they reduce their subsidies and say the price hike is due to taxes,” Bajwa observes.
Navigating the new normal
While international platforms struggle with the new tax regime, local sellers on Daraz are adapting more effectively. The platform’s established infrastructure for tax compliance, local language support, and understanding of Pakistani business practices provide significant advantages.
“If the merchant previously used to get Rs 100 for a transaction, after deducting payment gateway charges or COD charges, he would try to get Rs 95 or Rs 96. Now he’s getting Rs 91-92, so this in itself has impacted the merchants quite significantly,” Bajwa notes. However, local sellers have more flexibility in adjusting their business models, from tweaking
product mixes to optimising logistics costs. The impact is particularly pronounced for smaller sellers who previously struggled to compete with Temu’s subsidised pricing. Instagram sellers, local boutiques, and specialised retailers are finding renewed competitiveness as the playing field levels.
Pakistan’s tax reforms represent the most significant attempt to regulate the digital economy in the country’s history. The 5% Digital Presence Levy specifically targets international platforms, while the expanded GST and withholding tax requirements create a more level playing field for local businesses.
“There’s a digital presence tax of 5% on international sellers whether physically or digitally present. This is now being applied in Pakistan. Temu cannot avoid it, they’re visible, they’re big, and the government knows who they are,” Bajwa explains.
However, implementation challenges remain. “This isn’t just about stopping Temu, it’s about building an enforceable system. Without fintech integrations, seller support, and credible last-mile enforcement, it’ll just push more sellers off the radar,” he warns.
The tax-induced transformation of Pakistan’s e-commerce landscape represents more than just a pricing adjustment, it’s a fundamental shift toward a more sustainable and equitable digital marketplace. While Temu’s dramatic price increases have shocked consumers accustomed to ultra-low prices, they’ve also created an opportunity for local platforms and sellers to demonstrate their value proposition.
As Pakistani consumers adapt to the new reality, the emphasis is shifting from pure price competition to value, reliability, and service quality.
The ultimate test will be whether Pakistan’s regulatory framework can maintain this level playing field while continuing to encourage innovation and competition in the digital economy. For now, the early indicators suggest that local players are better positioned to navigate this new landscape, potentially marking the beginning of a more mature and sustainable e-commerce ecosystem in Pakistan, and a potential comeback of Daraz. n
