10 Karachi isn’t resilient. It’s suffocating under the PPP
20 Crescent Star Insurance to buy stake in SG Power
21 Climate change, rains devastate 31,596 acres of farmland in KP
24 Habib Rice shuts down UAE business over visa constraints 26 Staying the course to where?
Market Maker or Market Wrecker?
The evolution of Mandviwalla Mauser
Publishing Editor: Babar Nizami - Editor Multimedia: Umar Aziz Khan - Senior Editor: Abdullah Niazi
Editorial Consultant: Ahtasam Ahmad - Business Reporters: Taimoor Hassan | Shahab Omer
Zain Naeem | Saneela Jawad | Nisma Riaz | Mariam Umar | Shahnawaz Ali | Ghulam Abbass
Ahmad Ahmadani | Aziz Buneri - Sub-Editor: Saddam Hussain - Video Producer: Talha Farooqi Director Marketing : Muddasir Alam - Regional Heads of Marketing: Agha Anwer (Khi) Kamal Rizvi (Lhe) | Malik Israr (Isb) - Manager Subscriptions: Irfan Farooq Pakistan’s #1 business magazine - your go-to source for business, economic and financial news. Contact us: profit@pakistantoday.com.pk
Karachi isn’t resilient. It’s suffocating under the PPP.
The country’s financial capital is a uniquely dysfunctional city. Its real estate tells the story of how its citizens cope with the incompetence of their ruling class.
By Farooq Tirmizi
The only airport in Larkana, the district home to the Bhutto family, is at Mohenjo-daro, about 30 minutes south of Larkana city, and about an hour south of Garhi Khuda Buksh, where both former prime ministers Bhutto – Zulfikar and Benazir – are buried. Standing in the ruins of Mohenjo-daro, it is impossible to escape a sense of history, and marvel at the length of the history of human civilization in our part of the world.
It is also impossible – as a resident of Karachi – to not look at the drains that run alongside literally every single street in that ancient city and not feel a spurt of homicidal rage at the Bhuttos and the party they lead, the Pakistan Peoples Party, which rules over
Sindh and its capital city of Karachi. Around the time the Great Pyramid of Giza was being constructed, and 2,000 years before the founding of the Roman Republic, there existed a city in Sindh that had drains that have lasted thousands of years after the city itself perished, all while the current capital of Sindh drowns after the faintest of rain spells.
Karachi, the financial capital of Pakistan, still its largest city, and its single largest concentration of middle class economic opportunity, is one of the most dysfunctional large cities in the world. There are many historical political reasons why Punjab’s politicians dote over Lahore, Khyber-Pakhtunkhwa’s politicians have finally gotten around to building up Peshawar, but Karachi languishes in neglect so willful as to border on malicious.
We are a financial publication, so we will largely stay out of the political commentary of it all. And we will also not engage in the
canned blather of “the resilience of Karachi” nonsense. No, this is the unhappy tale of the sad fact that Karachi is being strangled and struggling to breathe.
That struggle is reflected in the economic map of the city, where the rich, middle-class and poor all pay in one form or another to deal with Karachi’s dysfunction. The rich pay in money, the middle-class pay in time, and the poor pay with their health.
Five years ago, prompted by the same monsoon-driven madness witnessed on Karachi’s roads this year, we wrote about how the country needs its largest city to help lead its economic growth story, and talked about the role the government could play in helping make that a reality. We have since abandoned such naïve hopes about anything positive ever coming from the government.
Instead in this story, we try to lay out the economic map of Karachi and the story it tells
of what it takes to survive the city. It is not a happy tale. This is a case of a feckless ruling elite believing that the city will continue to generate wealth, not realizing that they have already stretched it to beyond its limits. This shows up in the decisions of a fourth group of people: migrants, which includes those coming to Karachi and those leaving.
But before we dive into that, first, let us take a look at Karachi’s place in the Pakistani economy.
Karachi’s place in the Pakistani economy
As the largest city in Pakistan by population, Karachi is the city of Pakistani superlatives. It is home to the largest number of people in Pakistan, the biggest financial institutions, the biggest seaport, (barely) the busiest airport,
the biggest shopping mall, and the tallest building in Pakistan.
But it is able to offer all of these for one very simple reason: it is the best natural harbour in Pakistan close to the Indus River delta. Port cities become big usually for geographic reasons, and those geographic reasons generally tend to change on a timescale that often stretches millions of years. Just as the one thing the government of Pakistan cannot ruin is Pakistan’s location, so too the one thing Karachi and its politicians cannot ruin is its natural harbour.
That harbour is the reason why the British were determined to invest heavily in expanding Karachi beyond its smaller origins, and it is why the Railway ends in Karachi, very close to the Port itself. It is why Karachi attracted financial institutions such as banks and insurance companies: because you need access to lending, letters of credit, and shipping
insurance, to engage in cross-border trade. With bankers and insurance companies come lawyers and accountants, which is why some of Pakistan’s largest law firms, and its biggest accounting firms, are all headquartered in Karachi.
Bring all of these middle-class professionals all living in one city, and all of a sudden you have some serious consumer spending power available to you to sell to. What follows next are retail and consumer goods companies, seeking a piece of the action.
With all those consumer goods companies coming in and competing against each other, they will need advertising and marketing services, and hence professionals who offer those services set up shop. No sense in advertising with media to advertise in, and hence the small publications become bigger with more advertising revenue, and when television and radio open up, those print media folks move
into the electronic media here too.
And all of that is before we get into the manufacturing. Since we have gone ahead and built a port here, why not take some of that raw and ginned cotton and start spinning it into thread, or better yet, weaving it into cloth, or better still, stitching it into clothes before you load it onto a ship and send it off to some other part of the world. So, you get textile companies headquartered here, with thousands of well-paying blue collar and white collar jobs added. Sell some at home, and some abroad.
That whole story started with one natural harbour. This particular story happens to be about Karachi, but we could just as easily have been talking about Mumbai, Shanghai, Hong Kong, Singapore, Istanbul, New York, or San Francisco. The natural harbour built the port, and the port built the city.
Today, Karachi remains the largest concentration of Pakistan’s middle class in a single city, and home to its financial services, news media, entertainment, and professional services (law, accounting, etc.) industries, as well as the single largest cluster of large scale manufacturing, retail and wholesale trade, and a host of other industries.
By some measures, it accounts for a quarter of the total size of the Pakistani economy. (We refuse to count how much of the tax revenue of the country is collected in Karachi: that number is highly disputed, and the number attributable to just Karachi, and not connected to global trade from the rest of the country, has not yet been accurately measured by anyone, including the Federal Board of Revenue.)
In other words, Karachi is as important as it gets to the Pakistani economy, which means it is worth paying to be in the city. And pay is exactly what the rich and upper middle class do.
How the rich pay: with money
Here is a rather remarkable fact for those who are familiar with both Lahore and Karachi: on a per-square foot basis, a house in Nazimabad, one of the most quintessential of Karachi middle class neighbourhoods, costs more than a house in Model Town, one of Lahore’s most well-established old-money neighbourhoods – Rs26,000 to Rs23,000 per square foot, according to data from Zameen.com.
This, by the way, is not some isolated data point. Look at the most expensive neighborhoods in Karachi and compare them to what might be considered comparable – at least from a socio-economic perspective – areas in Lahore, and the Karachi neighbourhoods are considerably more expensive, to the point where they would be solidly within the middle class band in Karachi.
Karachi’s Gulistan-e-Johar and Lahore’s Gulberg are roughly the same price, Malir and Lahore DHA are comparable in price points. Anyone who has been to these four neighborhoods knows that paying the same price for these is just outright insane. And yet, those are the actual prices.
What is going on? Simply put, the rich in Karachi are willing to pay a lot higher in prices to avoid having to sit through traffic on Sharae Faisal, pushing out the Karachi middle class further and further.
Unlike Lahore – which has abandoned its old urban core (the Walled City) and not replaced it – Karachi’s services-dominated economy has three adjoining economic cores: the port in Keamari, the old financial district along McLeod Road, and the new financial and commercial district sprouting up in Clifton.
Taken together, these three adjoining areas are about as big as the entire city of Faisalabad. But within Karachi, the city that is five times the size of New York City in area, they are all in one corner. And every morning around 8am, all of Karachi is descending upon them at roughly the same time, which makes morning traffic in Karachi an absolute beast.
Add in the fact that absolutely none of Karachi’s major thoroughfares were built with any drainage, and that means that it is quite literally impossible to traverse them for several days in the month of August every single year. You can find headlines from Dawn in 1953 describing the exact same thing that was witnessed this past week.
This morning traffic, excruciatingly painful on normal days and outright impossible to deal with in the monsoon season, defines the city’s geography and where people are willing to pay to live, even in neighbourhoods that
have infrastructure that shocks visiting Lahoris when they are told that they are in the “posh” areas of Karachi.
In general, that means paying north of Rs30,000 per square foot (Rs13.5 crore for a 500 square yard / one kanal house) to live within a 20 to 30 minute driving distance to one of these areas. In NHS Zamzama, arguably one of the most expensive areas of the city for which price data is routinely available, prices reach as high as Rs80,000 per square foot or higher.
High prices can feel like a signal of wealth creation, and this is at least partially true. If nobody was making money in Karachi, prices would not be this high. But high prices can also be a signal that costs are being internalized instead of being borne socially.
So, instead of living in a city where one pays taxes and gets a reasonable infrastructure, Karachiites pay taxes and live in a city with terrible infrastructure, then pay more money to provide infrastructure for themselves privately rather than having their tax money pay for it.
The high price is effectively protection money, not a signal of value.
How the middle class pay: with time
This is admittedly a hard thing to measure, since the Pakistan Bureau of Statistics does not collect nearly as much data on time use or commuting patterns in Pakistan, but clearly, if the rich are living in all of the areas closest to economic opportunities, the middle class must live further out, which means they must pay with time.
Karachi is the world’s largest city by population without any rail-based mass transit system, which means there is absolutely no
An auto rickshaw with Pakistan Peoples Party (PPP) flags make its way through a flooded street in Karachi.
way to escape the road traffic during commuting. In Delhi, if you catch the train at the right time, you will probably get to work on time. In Karachi, you need to hope and pray that traffic is not any worse than usual in order to make that happen.
When we say the middle class pays to live in Karachi with time, we mean they pay by having less time for and with their families. Having to leave significantly earlier to arrive at work on time means children starting school earlier, and having to be picked up later.
Perhaps nothing makes this more evident than the operating times of Karachi’s day care centers.
Yes, unlike other cities in Pakistan, Karachi has quite a few day care centers because a substantial proportion of its middle class women work in service sector jobs where they are required to be in the office every day and where their salaries are significantly higher than the marginal cost of child care provided by non-family members.
These day care centers exist mostly in upper middle income and middle income neighbourhoods and their timings reflect how long it takes the parents of those children to get home. If you live in Clifton or Defence, the daycare closes by around 5:30pm because they assume that the parents live and work in the same neighbourhood and hence have a short drive to pick up the children before they go home.
If you live in Gulshan-e-Iqbal, day care centers in your neighbourhood stay open as late as 8pm, because the assumption is that it will usually take you upwards of 90 minutes to commute from your office to your home every day, and hence you cannot be expected to arrive any sooner than 7pm if you leave the office at 5:30pm.
This is obviously not the way most young children in Karachi are raised, since even in Karachi, the majority of middle class women are stay-at-home mothers, but it does reflect a sad reality for a large number of children in the city: they effectively do not see their parents during the weekdays except right as they wake up and just as they are about to go to bed. Even in households where just one spouse (usually the father works), that still means that children get very little time with their fathers during the weekdays.
How the poor pay: with health
In Karachi, as in most cities in South Asia, there is of course the urban slum where many poor and working class people live. These slums, by virtue of the fact that they operate outside the bounds of the law, can sprout up anywhere since the people moving onto them are not concerned with buying the
land they live on, at least initially. (An informal system of property rights does sprout up after they come into existence.)
This means that right next to some of the most desirable real estate in Karachi often exist slums where the working class can live for not very much money at all. However, you get what you pay for, and since you are paying very little to be in proximity to the biggest areas of economic opportunity in the country, you pay for it by having the very worst of infrastructure, particularly as it relates to water and sanitation, which means that disease prevalence in these slums is very high relative to most other parts of the country.
The PBS does track data on health outcomes, but does not break it out by census tract, which makes it difficult to tell apart health outcomes within cities and districts, but anecdotal evidence suggests that health outcomes of people living mere yards away can be wildly different depending on the nature of their housing and whether it is formal or informal.
The migration signal
We imagine that if anyone in the Sindh cabinet or the city government reads this article, they will find absolutely nothing in the preceding paragraphs as convincing for a case that they are running out of time to fix Karachi, so we will say the one sentence that we think might capture their attention: in the past five years, more people moved to Lahore than to Karachi, something that have never happened since Partition.
According to data from the 2023 census, in the preceding five years, 2.4 million people moved to Lahore, and 2.3 million moved to Karachi. According to sources at the National Database and Registration Authority (NADRA), it is now common for more computerized national identity cards (CNICs) in any given time period to be issued in Lahore than in Karachi.
And this, by the way, is despite the fact that Lahore’s air is unbreathable for about four months of the year.
Lahore, the core of Pakistan’s mega region, is now the biggest urban migration magnet, not Karachi. This, more than anything else, was Karachi’s crown and it has been lost already.
Not everything, everywhere, all at once
It is tempting to look at a problem as intractable as Karachi’s dysfunction and think that nothing can or has changed. But the fact of the matter is that many things
have, including the drainage system, and its lack thereof that we spoke about earlier.
Yes, all of the old thoroughfares in Karachi get flooded, but the city government – and the many other governing bodies also involved in governing the city – have clearly made an effort to improve the drainage. In 2011, the monsoon made most of DHA Karachi waterlogged for days on end. This year, despite much heavier rain, the waterlogging affected much smaller parts of DHA Karachi and for shorter periods of time.
Even in the rest of the city, the flooding did not affect newer roads. The Lyari Expressway is a newer construction, an important thoroughfare, and was (mostly) not flooded because it was built with adequate drainage.
The problem with governing a city this big is that one might think that fixing its problems requires tackling and improving everything. And while many, many things need fixing, not everything is equally important, which means that some things will have a much greater impact if addressed than others.
And the one thing Karachi needs more than anything else – the one thing that would perhaps do the most good – is trash collection.
Karachi is easily among the filthiest Pakistani cities. Just about any mid-sized city in Punjab and Khyber-Pakhtunkhwa is cleaner. That trash, however, is more than just an eye sore. It is what clogs the city’s drains, and makes large parts of the city undesirable to live in, driving up prices in the parts of the city that are slightly cleaner.
Fix the trash problem, and you would fix the drainage problem, which in turn then makes the problem of sewage easier to deal with.
To their credit, it does appear that the Mayor Murtaza Wahab understands this, and so does Sindh Chief Minister Murad Ali Shah. A Lincoln’s Inn-educated lawyer mayor and a Stanford-educated engineer chief minister sounds like a dream combination.
The problem is that despite their valiant efforts, they are hamstrung by a PPP political leadership that clearly has contempt for the people of Karachi even as it tries to put in place a management that is at least trying to fix the problems facing the city. Given that contempt, they never allocate the resources necessary to put into effect any plans the mayor or chief minister might have (yes, let’s be honest: Sindh’s decisions are not made by its chief minister.)
Can the duo get something done?
Well, the PPP has controlled the city for the past 17 years and not quite gotten around to doing much for it, so we are not holding our breath for the problem to be fixed. But if they ever to do get around to it, we would hope they would understand that the key to solving big problems can often be to start small. n
The arbitrage loop from hell
The
landa bazaar is big business. Some new players might throw you for a loop.
By Abdullah Niazi
The first thing you notice when you walk into landa bazaar is the smell. It isn’t exactly pungent, but it is unique and very strong. It smells almost like diesel, but with a hint of hospital and pesticide mixed into it. It is as strange and confusing for newcomers as it is familiar for veterans of the many flea-markets and thrift stores dotted all over major urban centres across Pakistan.
The smell comes from fumigation. Nearly all of the clothes in these markets from t-shirts to trousers, jeans, entire three-piece suits, high-end shoes, dresses, skirts, and even lingerie are hand-me-downs imported from developed countries. Some of the biggest sources for these items are the United States, England, Australia, Japan, and South Korea. When the massive containers holding them are shipped out, they are first fumigated before they make the long journey to Pakistan. The smell stays until the clothes hit the thrift markets and doesn’t go away until customers take them home and put them in the wash.
In terms of sheer volume and money it is big business. In the financial year 2024-25, Pakistan imported 1.137 million tonnes of used clothes spending $511 million. What makes these numbers especially relevant is that they are going up. In 2023-24 the imports of used
clothes were valued at 990,266 tonnes at $434 million. That marks an increase in imports of 15% in terms of volume and nearly 17% in terms of value. The price of these imports has remained nearly stagnant. The per kilogram cost of the imports was $0.43 in 2024-25 and was $0.44 the year before that.
The increase in imports comes at a time when lower income households in Pakistan are struggling. While the inflationary tsunami of 2019-23 has slowly subsided and the inflation rate is at its lowest point since the beginning of this period, the damage from those years has hit households hard. A recent report by the World Bank pointed out that nearly 45% of the population lives below the poverty line. Most of these households can be found in rural areas, but urban life has also been deeply affected. People’s savings have been eroded. The cost of living has increased dramatically. According to Profit’s estimate made using data from the Pakistan Bureau of Statistics, the prices of core necessities increased by 160% between 2019 and 2024. With prices rising this fast, it is only natural that demand for cheap second hand clothing is increasing.
But the mood inside these markets is dour. The increased volume of business comes with its own caveats. Customers complain of rising prices while shopkeepers claim they need higher margins to survive rising inflation. Then there is another long shadow that looms high and dark over the landa bazaar: insta-
gram. For at least the past six years, countless accounts have appeared on Instagram and Facebook selling thrifted clothes. These accounts, run mostly by enterprising young women, pick hot-ticket items from thrift markets which they then sell online.
The dynamics of these online thrift stores are fascinating. A number of women running such pages that Profit spoke to informed us they were actually college-age students. On the weekends, they go to their local thrift markets where they discern which products are sellable based on their condition and branding. They then take these clothes with them, oftentimes washing, photographing, modelling, packaging and shipping them all by themselves. They, of course, charge significantly higher margins than you would find in the actual flea markets in Lahore, Karachi, Rawalpindi, and Islamabad, drawing the ire of shopkeepers that have been doing this for a long time.
All of this is possible through what is one of the most fascinating examples of arbitrage in international trade. And it all starts from someone getting rid of their old clothes.
Tracing the charity
Conservative estimates claim at least 80 billion articles of clothing are produced all over the world every year. Since most of these clothes
are made as part of the massive deluge of fast fashion, the turnover for clothes is massive. According to one report focusing on Sweden, the average person buys 12 t-shirts a year and ends up replacing most of them within a year. What happens to the clothes that are discarded? There are only so many rags and washcloths that can be made with old clothes. The horrifying reality is that most clothes are simply thrown away. Next to oil, fashion in its broadest sense, fast fashion, is the second biggest industrial polluter of the world’s waterways. But there is still a very large proportion of clothes that are donated or thrown away. This is the origin point of this entire story. People in developed countries often donate their old clothes to charity. They might give the clothes to a Goodwill hamper in Boston, to the Salvation Army in London, or to a clothes drive organised by the Catholic Church in Seoul. Most people donating these clothes might think the clothes will be given to people in need. That would require the organisations collecting them to sort through them, wash them, package them, and get them to people in need. That is a very expensive proposition. What these organisation do instead is put these clothes into massive bundles which are then sold per kilogram to merchants. Since the clothes are given to them for free, they inherently have no value. The people that buy these bundles get them for dirt cheap. Many of the clothes in these bundles are unusable, but there are other clothes people give away which are practically in mint condition or brand new. The people buying these clothes sort through the bundles. Some of the clothes are in such a state that they end up being sold to textile recyclers. The rest of the clothes get sorted by category (pants, shirts, shorts etc) and by their condition.
The prices of these clothes are suddenly nothing compared to what they were when they were first bought, even if they are brand new. For example, imagine someone Boston gives away a brand new Ralph Lauren button-down to charity. Now, that brandnew Ralph Lauren shirt would have cost $110 at retail price in the US. But as part of a 50Kg bundle being bought by a used-clothes merchant at a rate of say $2 per KG, that shirt ends up costing literal cents.
These clothes, including the brand new shirt, are then sorted, packaged, and shipped to third-world countries where they are sold at low rates. A shirt in the US that would have cost $110 in the US (Rs 31,000) will be available at a flea-market in Lahore for as low as Rs 1000-1500 ($4-5).
It is a classic example of the economic concept of arbitrage, in which you buy the same product in one market at a lower price and sell it in another market at a significantly
higher price.
The Pakistan equation
Pakistan has been dependent on the import of second-hand clothes for quite some time now. The old story goes that there was a wife of an officer of the Raj named Linda who noticed a large number of impoverished Lahoris that could not afford winter clothes. She had her relatives and friends in the UK send their old winter coats and sweaters which she distributed in a ‘bazaar’ that became known as Linda Bazaar — and eventually came to be known as Landa Bazaar.
The historical evidence for this is weak. Before the British Raj, the people of Punjab and Northern India relied on shawls and woolen shirts to fight the bitter winter cold. The more plausible explanation is that during the 1970s and 80s in particular, a large number of Pakistani families shifted to the UK. These families would send their clothes back home as presents. The quality of these clothes was such that people began to demand more. A number of enterprising young Pakistanis in the UK decided they would buy these clothes in bulk from charities and send them back to Pakistan where they could be sold in clothes markets that already existed.
Traditionally, Pakistani clothing is tailored. Most people wear cotton or lawn. The cloth is spun in the country’s many textile mills and comes to market where it is bought and taken to the tailor. A major shift occurred during the 1990s, particularly with Pakistani women entering the workforce and requiring more ready-to-wear clothing. Similarly, traditional brands that used to sell cloth now began selling pre-stitched clothes as well. It is a story this publication has covered in the past as well. But these second-hand clothes coming from the UK quickly became a staple and large markets emerged where these clothes began to dominate the shops.
Today, Pakistanis still dominate the second-hand clothing business in the UK. A massive 351m kilograms of clothes (equivalent to 2.9bn T-shirts) are traded annually from Britain alone. The top five destinations are Poland, Ghana, Ukraine, Benin, and yes, Pakistan.
As a result, second hand clothes are actually a pretty large market and Pakistan is a big part of that business. The global wholesale used clothing trade is valued at more than $4 billion. It is a textbook example of arbitrage. Donated clothes are sold dirt cheap in developed countries, but since they are not readily available to low-income families in the third world, their value is higher in that market. Normally, the thrifted clothes that arrive in
Pakistan are so cheap that merchants from other countries such as Turkey, Afghanistan, and India buy these clothes from Pakistan at a slightly marked up price.
That’s right. Pakistan imports these landa-bound clothes at such cheap rates that they then sift through the clothes, find the most high-quality product in the best condition, and export them in a strange case of double-arbitrage.
The web of arbitrage is mind-bogglingly complex. Just look at Pakistan’s domestic textile industry. Historically, textiles are Pakistan’s largest export oriented sector. Much like Vietnam or China, many fast fashion brands buy clothes from Pakistan. There was a time when the cotton used by Pakistani textile mills came from Pakistan itself. In the past two decades, however, Pakistan’s cotton crop has been widely decimated. Pakistan now imports the majority of its cotton from the United States. In fact, cotton imports accounted for $905.5 million last year — nearly double the amount of imported second hand clothes. However, this imported cotton is then turned into clothes and shipped to different markets including the United States.
That means it is entirely possible that a bale of cotton gets picked on a farm in Arkansas, it gets shipped to Karachi, transported to Faisalabad where it is spun and turned into a t-shirt before it is once again shipped to the US and put on display at a GAP store. Over here, a young farmer might buy this shirt, wear it around the house and at work before he packs it into a bundle with other clothes that are then given to charity. The shirt could then very much find itself on its way back to Karachi, from where it makes its way to a second hand clothes market in Faisalabad where it is bought by the factory worker that first stitched it.
It seems unnecessarily complicated but it makes sense. For the textile mills, it only makes sense to import cotton from the US (since the local crop is so unreliable) and sell it to the export market. For the farmer in Arkansas, it makes sense to give the shirt away after a while. For the factory worker in Faisalabad, his wages only allow him to shop from the second hand clothes market.
In the past few years the demand for these clothes has only increased. This year, as mentioned earlier in the story, the clothes hit a new high with imports rising 15% from $434 million to $511 million. In fact, this makes second-hand clothing number 18 on the list of items imported into Pakistan in terms of value. The pattern is quite stark and obvious in terms of inflation. Back in the financial year 2020-21, when Pakistan had first entered its inflation spiral, the import of used clothing increased by 90% to $309.56 million and it
weighed 732,623 metric tons.
In the first two months of 2022, when the winter months were at their peak and so was Pakistan’s inflation spiral, 186,299 metric tons of pre-used garments were imported. That was only for two months. Compare this with the same two month period a year before this and the increase is a shocking 283%. Why? Because in the winter months, people needed coats and sweaters and they could not afford to buy them brand new.
Overall, since 2020, Pakistan’s imports of second hand clothes have increased by a staggering 65%. That marks a 13% growth per year. The data is clear: Pakistanis are buying more second hand clothes than ever before and by all measures the trend will continue.
Muhammad Usman Farooqui, General Secretary of the Pakistan Second Hand Clothing Merchants Associa¬tion (PSHCMA), says this rise in second hand clothing imports is directly related to rising poverty. “Many families from lower and middle-income brackets are increasingly dependent on affordable used goods,” he says.
The shopkeepers and traders that run these second hand clothes markets are well aware of this and know their business model has solid footing. They claim it is a uniquely profitable business. “Be it an importer of pre-used clothes, a wholesaler, a shopkeeper or a wheelbarrow, no one has ever lost in this business. The main reason for this is that the price fix is only for the imported container and not for the pre-used clothes coming out of it. We take the pre-used clothes from the importer or wholesaler where the clothes are delivered in bundles and the price of the bundle depends on its weight, grading and type,”
says Shams Khan. A native of Peshawar, he has been selling clothes to Lahore’s landa bazar for decades now.
According to him, there is no way anyone can make a loss in this business because of how ridiculously cheap the second-hand clothes are. One needs to understand that these clothes are extremely undesirable in their home markets, and the traders that buy them there buy them from charities that want the masses of clothes off their hands and quickly, which means they settle for very cheap rates.
“When we sort the bundle approximately 500 to 600 shirts come out that look brand new and these shirts are of famous brands and easily sell for between Rs 300 to 500. Now if I sell 500 shirts myself for Rs 300, it becomes RS 150,000 and think for yourself, I bought this bundle for 36,000, so I have more than tripled my initial investment. The other aspect is that I do not sell these 500 shirts myself but I sell them to five different shopkeepers at the rate of Rs 150 per shirt. Even then I earn Rs 75,000 and make a profit. The rest of the 1000 shirts that were not as high quality I can sell to smaller shop owners or roadside merchants. At the rate of Rs 50 per shirt, I can earn another Rs 50,000. There is no losing here.”
The new kids on the block
T— everything from dress shirts to shoes and loungewear. But demographics at these markets are changing.
In the past few years, things in the landa have started to change. People from relatively affluent backgrounds, mostly women, have started visiting the landa and sifting through second-hand but branded clothes and buying them in bulk. They then sell them online through Instagram, marketing themselves as sustainable fashion brands dealing in ‘preloved’ clothes.
A big market is students. College going students need clothes, and a lot of the time they do not have the money to buy designer clothes that are a status symbol in elite universities. So for those students on a budget that want to keep up with their richer peers, the landa has been a saviour for decades. While the clothes might not be in the best condition, they are branded, comfortable and stylish.
raditionally, these second hand clothes markets have been the go to for lower to middle income groups. They are a haven where they can find clean and good looking clothes at cheap rates to wear to work and around the house
Middle and upper-middle class sensibilities keep people away from the landa, because the market is dingy and there is a complex about buying used clothes. However, young people are able to traverse shabby markets and have less of an ego when they are on a budget. International brands are readily available at the landa and with some washing and sprucing up, entire wardrobes can be made for dirt cheap. These clothes are often even noticed by their high-rolling peers, who recognise the brands as not easily available in Pakistan. This was all there was to it, until of course, Instagram came about.
The trajectory has actually been quite ingenious, and the way some of these pages operate is truly enterprising. “I used to get almost all of my clothes from the landa since I started Increase in second hand clothes
studying in Karachi,” says one student from IBA that runs a thrift store on the side when she isn’t busy with her studies. “I’ve always gotten compliments from friends and strangers alike for my outfits. It isn’t just as simple as going to the flea-market, you really have to have an eye for the right stuff and that means knowing about fashion.”
It is actually very enterprising work to be going to the landa and then selling clothes from there through Instagram. People do not like going to flea-markets, so these people with an eye for fashion and an understanding of landa dynamics go to the market for them. Many of these women then buy clothes and shoes in bulk, bring them back home, clean them or fix them if they need fixing, and after that photograph them aesthetically. Some of them even model the clothes themselves or get their friends to model them for them. “There is barely any additional cost. There is the Careem fare that I incur going to and from the landa, and then sometimes I wash the clothes again, and then I put them on, set my camera on timer-mode and model them myself too. I upload the pictures and start getting DMs, my customers then bank-transfer me the payment and they pay for shipping too,” says the online thrift store owner we spoke to.
They brand their products as ‘preloved’ or ‘rescued’ and supporting sustainable fashion, which they claim is environmentally friendly. All of this coupled with well-done photography means that middle and upper-middle class people that see these pages are more than happy to buy from them, especially since they are so cheap.
And all of this is why this year could be big for the Insta thrift stores. For starters, they have a very good understanding of what products are high value and what brands sell better and go for better rates. On top of this, they have the added advantage of a clientele that buys sitting from home and not by going to dingy flea markets. As a result, people will be willing to pay more — especially for branded products.
Emerging dynamics
One result of this has been a surprising change in the kinds of clothes women are wearing. Over time, especially over the past decade, locally manufactured western clothing options for women have grown in Pakistan. They have grown because the demand for them has increased ever since women have become a larger part of the workforce. According to the Pakistan Bureau of Statistics’ 2023 Labor Force Survey, women’s labor force participation in urban areas stood at 11.9%, representing approximately 32 lakh women in the formal workforce across major cities.
But the outlets manufacturing these clothes have restrictions. By their own accounts, they often have to self-censor the kind of clothes they produce and put on sale out of the fear of moral outrage. Yes, many players try to push boundaries, but they are aware of the delicate disposition of most mobs. That means they do not make tube tops, and tank tops, and halter tops, and shorts, and mini bodycon dresses, and miniskirts, and the list goes on. These clothes, however, are very much part of the massive containers of second hand clothes that are imported to Pakistan every year. Instagram, it seems, is a safe place to sell these clothes.
In Karachi’s Playhouse market, one of the largest second hand clothes markets in the country, one shop keeper proudly displays clothes that local fashion brands would have a hard time putting in their windows. “Our job is to source and sell clothes. It is not our business as to why or where women wear these clothes, that is their private matter,” he says without making eye contact, rows and rows of halter tops and short skirts hanging behind him. “If it comes to Pakistan it will sell. That is all I know.”
These clothes, according to the shop keeper, are mostly bought in bulk by young girls that then sell them online. “We know they sell them on Instagram. We have set up our own pages as well but they are too much of a hassle to operate. If they buy them from us in bulk it helps them and it helps us.”
It is a fact that Pakistani fashion brands are well aware of. “There’s multiple facets to that,” explained Wasay Hasan, Director at Lulusar and Koyo . “There’s one in the design element, there’s one in the marketing aspect, then your physical presence and your digital presence. These are all factors we have to consider.”
Unlike Instagram thrift stores, which operate in a gray area with minimal oversight, formal brands are under constant scrutiny. “We try not to hold ourselves back just because we are in Pakistan,” Hasan said, adding. “At the end of the day, there are so many brands over here making clothes for international markets, yet within Pakistan, we still have to be careful about what we put on display.”
Despite wanting to cater to the consumers’ demands, when asked whether cultural norms dictate the creative process of designing clothes, Hasan admitted that they do face a certain degree of self-censoring. “Yeah, I won’t lie, it’s tough. It’s not easy. But my personality is such that I try my best not to care about what people say. As long as I believe something is ethically and morally right, then no one should have the power to dictate what I can or can’t do.”
Regardless, businesses remain cautious,
with designs that flirt with inappropriateness (by Pakistani standards) but just modest enough to avoid backlash.
On occasions when their designs were a bit too daring for the supposed Pakistani market, Hasan recalls receiving backlash, “It’s a mix of both perspectives. It’s definitely not for the faint-hearted.
Priced out?
Not all shopkeepers are happy with this new equation. According to a recent report published in Dawn, he shopkeepers at the Mayo Hospital Landa Bazaar in Lahore have coined the term “landa professors” for these online thrift-shop owners. “They come here and inspect each pair so cautiously, making sure it’s from the right brand, is not too damaged, and is not a rip-off,” says shopkeeper Ameer Hamza. ““We now call them professors for their dedication in this search.”
The online thrift stores, however, are defiant. They are aware that the shopkeepers do not like them. One online thrift page that Profit reached out to over Instagram DM gave a fascinating response:
“We source our clothes and shoes from Lahore’s Mayo Lunda. The shopkeepers are often very catty with us. It is already an uncomfortable experience as a young woman to go to these places and deal with men that are much older than me. However they always sell to us. There was a time in the middle where they stopped selling to us because they were trying to set up their own pages but they could not connect with the buyers. The people buying from us are mostly other young women that are our age. They understand the clothes we get from the shops and they appreciate the hassle free process of communicating with us. I, for example, even model my clothes and give advice to customers that DM me depending on what I feel would be a good fit for different body types.”
These online thrift stores have only grown over the years, but they also point to the increasing demand for cheap clothes not just in lower income groups. Second hand clothes have long been a staple in Pakistan. In the past five years, the amount of these clothes coming into the country has increased massively. As a result, new dynamics are also appearing. On the one hand, prices are rising in landa bazaars all over the country. Despite this, people are flocking to these shops because they are still the cheapest option available. The online thrift stores are creating a new dynamic: where people pay a premium price for these thrifted clothes in exchange for someone going there, picking the best stuff and packaging it for them.
The landa bazaar, by all measures, is changing. But its growth tells an even more important story: it is very much here to stay. n
Crescent Star Insurance to buy stake in SG Power
Strategic move marks Crescent Star’s expanding footprint in power generation
Profit Report
In a significant move that highlights Crescent Star Insurance’s growing ambitions, the publicly listed company has announced its decision to purchase a substantial stake in SG Power, a prominent power generation company. The deal, which is expected to bolster Crescent Star’s position in the diversified business holding sector, comes with an estimated transaction value of Rs4.8 billion. This acquisition is part of Crescent Star’s strategy to evolve beyond its traditional role as an insurance provider into a broader holding company, a model reminiscent of American conglomerates such as Berkshire Hathaway.
The announcement, made through a filing with the Pakistan Stock Exchange (PSX), indicated that Crescent Star plans to acquire a controlling interest in SG Power, which will allow it to expand into the energy sector, a crucial component of Pakistan’s economic infrastructure. According to the PSX filing, the acquisition will be funded through a mix of cash and shares, with the final agreement subject to regulatory approval.
The move reflects Crescent Star’s evolving corporate strategy, as it seeks to diversify its business portfolio amidst the backdrop of Pakistan’s volatile economic environment.
Profile of SG Power
SG Power is a privately held power generation company that operates a diversified portfolio of energy assets in Pakistan. Established in 2003, the company has grown into one of the country’s significant independent power producers (IPPs), with a particular focus on thermal power generation. SG Power owns and operates several power plants that contribute to the national grid, generating electricity through both oil and gasfired generation.
The company’s portfolio includes both large and medium-scale plants that are strategically located across Pakistan, giving it access to a wide market and helping meet the grow-
ing demand for electricity. SG Power’s flagship project, the 400 MW thermal plant in Punjab, has consistently been a reliable contributor to the country’s energy needs. Despite the sector’s challenges, SG Power has maintained a strong market presence, working closely with the state-owned electricity utilities and private buyers to ensure its electricity is distributed efficiently.
Financially, SG Power reported annual revenues of approximately Rs12.2 billion in the fiscal year 2024, with net profits of Rs1.8 billion. The company’s EBITDA margin stood at a healthy 23%, a reflection of the high demand for power and the relatively stable tariffs that are set under long-term power purchase agreements (PPAs) with state-owned utilities. However, SG Power faces challenges due to the fluctuating cost of fuel and the political climate surrounding power sector regulations, which have led to delays in payments from government entities.
The energy generation company has been striving to increase its operational efficiency by investing in modernisation projects and exploring renewable energy alternatives. SG Power’s leadership has also been proactive in managing its debts, which have remained stable, although financing for future expansions may depend on how the broader market for energy projects develops.
Profile of Crescent Star Insurance
Crescent Star Insurance, one of the oldest and most reputable insurance firms in Pakistan, has a long history of providing general insurance products, including coverage for automobiles, property, and health. With its headquarters in Karachi, the company has been a prominent player in the local insurance industry, boasting a client base that spans individuals and businesses across the country.
In recent years, Crescent Star has made significant strides to diversify its operations. The company has actively pursued a strategy
to transform itself into a holding company, much like American conglomerate Berkshire Hathaway. Crescent Star’s first foray into non-insurance businesses came in 2021 when it acquired a minority stake in a leading pharmaceutical company, marking the beginning of a multi-sectoral expansion.
Now, with the acquisition of a substantial stake in SG Power, Crescent Star is taking its ambitions to the next level. According to its financial report for 2024, Crescent Star Insurance posted a revenue of Rs6.8 billion, with a net profit of Rs410 million. The company’s return on equity (ROE) stood at 8%, a respectable figure for the insurance industry in Pakistan, but one that the company is aiming to improve through its expanding investments in other sectors.
This diversification has been strategically timed. The company’s shareholding in SG Power fits into its broader strategy to build a business model that spans multiple industries, including insurance, pharmaceuticals, and now energy. Management’s vision is clear: to replicate the success of multinational conglomerates by building a stable and diversified portfolio of businesses that can weather Pakistan’s economic volatility and political shifts. Crescent Star’s focus on investments that complement its core business areas indicates a forward-looking approach that seeks both stability and long-term growth.
Crescent Star’s evolution into a holding company
Crescent Star Insurance’s move towards becoming a holding company signals a significant shift in its corporate philosophy. The company has indicated that it plans to continue expanding its portfolio into other sectors, including real estate, technology, and financial services. The model is one that has proven highly successful for conglomerates like Berkshire Hathaway, which owns a broad range of businesses from insurance to railroads to energy.
In a recent statement, Crescent Star’s CEO, Hamid Sultan, noted, “The decision to evolve into a diversified business group aligns with our long-term vision of reducing dependency on any one sector, especially in a market like Pakistan, where economic fluctuations are frequent.” The CEO added that the acquisition of SG Power would allow Crescent Star to leverage its existing expertise in risk management, while also tapping into the lucrative energy sector.
Crescent Star has also highlighted that it is working closely with international financial advisers to raise capital for further acquisitions. The company’s long-term strategy includes scaling up its operations in power generation, particularly in renewable energy projects, and increasing its footprint in the real estate and technology sectors. The company has identified several high-potential companies for future acquisitions, particularly those in industries with high barriers to entry and longterm growth prospects.
Pakistan’s power generation sector
The power generation sector in Pakistan is one of the most important drivers of economic activity, but it has also faced several challenges in recent years. The country’s growing energy demand, coupled with regulatory and financial difficulties, has left many power generation companies struggling.
The power sector in Pakistan has been undergoing significant regulatory changes, particularly concerning power purchase agreements (PPAs) with state-owned utility companies. These PPAs have often resulted in delayed payments and financial instability for independent power producers like SG Power. Recent efforts by the government to renegotiate power contracts with IPPs have added further pressure on companies in the sector, with some projects having been delayed due to a lack of regulatory clarity.
Additionally, Pakistan’s reliance on imported oil and gas for power generation has led to volatility in energy prices, as global fuel prices fluctuate. This makes the sector highly sensitive to international market dynamics. To combat this, many companies, including SG Power, are beginning to explore renewable energy alternatives such as wind and solar power to hedge against the high costs of fossil fuel-based generation.
The rise of solar power has been particularly noteworthy. The Pakistani government has set ambitious goals for expanding solar energy capacity, with projects such as the Quaide-Azam Solar Park in Punjab contributing to a growing share of the country’s electricity mix. However, despite the push for renewables, the
country’s energy infrastructure remains heavily dependent on fossil fuels, and this dependency continues to drive up the cost of electricity for consumers.
Crescent Star’s move into the power generation sector comes at a time when there is both risk and opportunity. While regulatory uncertainties and rising fuel costs present significant challenges, there is also significant potential for growth in renewables and in the country’s ongoing push to modernise its energy infrastructure. As such, Crescent Star’s investment in SG Power could be seen as a bet on the future transformation of the sector.
Conclusion
Crescent Star Insurance’s decision to buy a controlling stake in SG Power marks a transformative moment in the company’s history. This acquisition is not just about diversifying its business interests, but about positioning itself as a major player in the power generation sector,
a move that reflects the changing dynamics of the Pakistani business landscape.
SG Power’s solid financial track record, coupled with Crescent Star’s growing presence in multiple sectors, sets the stage for a longterm partnership that could see Crescent Star taking a more prominent role in the energy sector. While challenges remain—particularly in the regulatory environment—there is no doubt that Crescent Star is positioning itself to capitalise on the opportunities that the power sector and other industries present.
By continuing to expand its portfolio and diversify its holdings, Crescent Star Insurance is emulating some of the most successful holding companies globally. As it transitions into a diversified conglomerate, its leadership will need to navigate the complexities of the Pakistani market while maintaining a keen focus on long-term growth and stability. With a diversified portfolio and a strategic entry into energy, Crescent Star is on track to becoming one of Pakistan’s foremost business powerhouses. n
Climate change, rains devastate 31,596 acres of farmland in KP
The floods saw massive damage to farmland at a time when the provincial government is trying to promote mountainous farming in the face of shrinking farm sizes
By Aziz Buneri
Climate change and torrential rains have destroyed 31,596 acres of farmland in Khyber Pakhtunkhwa (KP), wiping outstanding crops and causing financial losses worth billions of rupees.
The provincial agriculture department has released initial data confirming the extent of the destruction caused by the recent floods and cloudbursts. The report shows that Buner suffered the heaviest damage, with 26,141 acres affected. Of this, 23,487 acres of maize fields, 1,300 acres of rice, 700 acres of vegetables and 641 acres of orchards were completely lost. In Lower Swat, crops across 2,702 acres were destroyed, including 729 acres of maize, 1,209 acres of rice, 334 acres of vegetables, 362 acres of orchards
and 68 acres of other farmland.
Elsewhere, the damage extended across the province: 3.25 acres in Battagram, 214 acres in Bajaur, 87 acres in Charsadda, 617 acres in Lower Dir, 88 acres in Mansehra, 130 acres in Nowshera, 520 acres in Shangla, 1,035 acres in Swat, two acres in Upper Swat, and 55 acres in Upper Chitral.
Climate change researcher Dawood Khan said the crisis reflects the need for adaptation in farming practices. He argued that spring crops vulnerable to hailstorms and heavy rainfall should be replaced with alternative crops better suited to the changing climate. “Scientific methods exist to protect agriculture,” he said, pointing to systems adopted in China, Japan and India. “They have introduced shade structures to shield crops from storms and hail, but in
Pakistan farmers are too poor to afford even fertiliser, let alone advanced technology.”
He recalled that the United States Agency for International Development (USAID) had once initiated work on such systems, but the project collapsed after funding cuts from Washington. “The agriculture department does not have the resources to carry this forward,” he said.
According to Khan, global agricultural practices have been shifting for two decades under the Agro-Tech model, with countries cultivating crops in proportion to their population’s needs. He warned that poor planning in Pakistan had already led to losses in the tobacco sector, where bumper production this year meant buyers offered farmers less than the official government price.
He urged authorities and farmers in northern KP to alter planting schedules. “Like in the rest of the world, we must change crop cycles so they mature before the monsoon rains and hailstorms,” he said. “This will reduce the scale of losses.”
The provincial agriculture department acknowledged that climate change is driving the destruction and said efforts are underway to develop faster-growing varieties. Officials explained that vegetables which previously required 120 days to mature are being replaced
with 100-day varieties so crops are ready before the rains. “We are bringing in new varieties that can withstand heat and heavy rainfall, so the damage is minimised,” an official said.
Currently, five lakh acres of land in the province are used for vegetable cultivation. But installing protective shade systems across such a vast area would cost billions of rupees, the department said. The cost of setting up shade for one acre alone is estimated at 2.2mn rupees, a figure far beyond the government’s capacity. With the required material imported, the department suggested that eliminating taxes on raw imports could make it affordable for farmers.
While local media widely described the recent disasters as cloudbursts, the meteorological department clarified that the devastation was not caused by a single phenomenon. Officials said unusually heavy rains combined with lightning, known locally as thandar, triggered the losses in Buner, Swat, Bajaur, Swabi, Shangla and other districts.
The agriculture department concluded that unless Pakistan adapts its crops, techniques and planting schedules to climate change, thousands of acres will continue to fall victim to extreme weather each year.
The destruction comes at a time when the entire country’s agriculture sector is struggling with shrinking farm sizes. The average size
of a farm in Pakistan in 2024 was 5.1 acres, down from 6.4 acres per farm in 2024. Overall in Pakistan 97.5% of farmers in Pakistan are operating on farms that are smaller than 12.5 acres. {Editor’s note: The provincial data for this is fascinating as well. Sindh, for example, has the largest number of farms that are above 100 acres. In fact, the average size of a farm in Sindh that is over 100 acres is 251 acres, significantly more than in other provinces. But at the same time the percentage of people with farms less than 5 acres is also the highest in Sindh. The other province with the largest farm size disparity is Balochistan, but this provincial distribution will be the subject of a different story.} What is also interesting to note is that the number of farms have increased as a result of this. Overall, there are 11.7 million farms in Pakistan, up from the 8;2 million farms in the country in 2010. This means that the size of the average farm has not just shrunk because of the new acreage added to the cultivated land, but also because a lot of existing farms have been divided in the process of inheritance. This is a massive problem because in Pakistan the smaller a farm is the less profitable it becomes. Agriculture produce is quite cheap, and farmers often have slim margins. The less land they have the less money they will be able to make. n
Habib Rice shuts down UAE business over visa constraints
Pakistani rice exporters are pulling out of the Gulf amid tightening travel restrictions that seem to have no end in sight
Profit Report
When Habib Rice Products Ltd informed the Pakistan Stock Exchange on Thursday that it would shut down its United Arab Emirates subsidiary, the disclosure looked, at first glance, like one more corporate notice in the churn of company filings. Yet behind it lies a story of how immigration policy intersects with trade and finance, and how small procedural barriers can ripple across entire export sectors.
The company cited a specific difficulty: obtaining visas for its personnel in the UAE had become increasingly challenging, and without the ability to post staff on the ground, running a subsidiary there had become un-
workable. “Despite efforts to sustain operations, the company faced persistent obstacles in securing visas for its employees,” Habib Rice stated in its official filing. “Consequently, the continuation of the UAE subsidiary was no longer feasible.”
The decision comes at a moment when many Pakistani businesses, professionals, and workers have reported hurdles in securing entry permits, work authorisations, and
residency in the Emirates. Travel agents in Lahore and Karachi speak of rejected visa applications, and trade associations have flagged increased scrutiny. The Rice Exporters Association of Pakistan (REAP) noted in a recent communication that members were “finding it increasingly difficult to maintain commercial presence in the UAE, which has historically been a gateway to Middle Eastern and African markets.”
“Our members are finding it increasingly difficult to maintain a commercial presence in the UAE, which has historically been a gateway to Middle Eastern and African markets.”
Statement
from Rice Export Association of Pakistan
Profile of Habib Rice
Habib Rice Products Ltd is not just another agribusiness firm. With roots in the Habib Group’s long-standing trading tradition, the company has carved out a specialisation in basmati and non-basmati rice. It processes paddy from Punjab’s agricultural heartland, packages it for diverse consumer bases, and exports it to markets across the Middle East, Africa, and Asia.
According to its latest financial statements, Habib Rice reported revenues of approximately Rs5.7 billion for the year ending June 2024. Net profit stood at about Rs320 million, with a gross margin near 14 percent. These figures place it in the mid-tier of Pakistani exporters—profitable, but vulnerable to the price swings and financing constraints that define the commodity export trade.
The company’s export orientation is clear: more than 70 percent of its revenues come from overseas sales. The UAE subsidiary, established some years ago, was meant to give Habib Rice both logistical reach and financial agility in a market where Pakistani rice has long found steady demand. Its closure represents not only an operational retreat but a forced rethink of its international strategy.
Dependence on UAE exports
Industry data suggest that between 12 and 18 percent of Habib Rice’s exports are directed to the UAE. While the company has not published a country-specific breakdown, customs figures show that Pakistan exports over 400,000 tonnes of rice annually to the Emirates, worth around $250 million across all players. Habib Rice, as one of the recognised exporters in this segment, holds a measurable slice of this trade.
For exporters, Dubai functions as more than a consumer market. It is a logistics hub, a re-export node, and a financial centre rolled into one. Rice entering Jebel Ali or other ports is often repackaged and shipped onwards to
“Despite efforts to sustain operations, the company faced persistent obstacles in securing visas for its employees. Consequently, the continuation of the UAE subsidiary was no longer feasible.”
Statement from Habib Rice
Iran, Iraq, and East Africa. And this is mostly true for the non-Basmati varieties. From Dubai, Basmati rice is then also sometimes exported to major markets such as the US and the EU. REAP has long pointed out the strategic significance of maintaining a presence in Dubai.
The absence of a subsidiary means Habib Rice will likely need to rely on third-party distributors or agents. This arrangement reduces margins and dilutes control, particularly over branding and customer relationships. It also raises the risk of disputes, as contracts mediated through intermediaries rarely offer the same protections as a locally managed operation.
Trade ties between Pakistan and the UAE
The broader backdrop is the depth of Pakistan’s trade relationship with the Emirates. Bilateral trade stood near $11 billion in 2024, dominated on one side by petroleum imports into Pakistan and on the other by textiles, food products, and rice heading to the UAE. For decades, Pakistani exporters have treated the Emirates as both a market and a launchpad to other regions.
The ties are reinforced by remittances. Nearly 1.5 million Pakistani workers are employed in the UAE, sending back billions of dollars that sustain Pakistan’s fragile balance of payments. In 2024, remittances from the Emirates were estimated at over $4 billion. The relationship, then, is systemic: anything that constrains the movement of people inevitably constrains the flow of trade and money.
It is this context that makes the tightening of visa regimes so consequential. Businesses that once assumed easy access to Dubai’s logistics and banking systems now face uncertainty. The company will now be reliant entirely on Pakistani banks for its financing needs. In its filing, Habib Rice underscored this reality: “The inability to station staff in the UAE not only affects the company’s operational efficiency but also restricts access to regional markets that were previously serviced through Dubai.”
Financial implications of losing a UAE base
The closure of the subsidiary has direct financial consequences. Chief among them is the loss of access to Gulf banking. By maintaining a UAE entity, Habib Rice could secure trade financing from banks in Dubai at relatively competitive rates. With the closure, the company is now confined to Pakistani banks, where financing is constrained by high interest rates and limited foreign exchange liquidity.
Exporters often structure their businesses around such offshore hubs. Letters of credit can be opened more quickly in Dubai, payments can be cleared in dollars without bureaucratic delay, and currency risk can be hedged more effectively. REAP has repeatedly highlighted this in its submissions to the government. “Access to regional financing centres is critical for sustaining Pakistan’s rice exports,” the body stated earlier this year. “The lack of overseas subsidiaries weakens our ability to compete.”
For Habib Rice, the costs will be real. Financing expenses may rise, supply chains may slow, and clients accustomed to warehouse availability in Dubai may turn to competitors. In an industry where margins are often in single digits, these differences can be decisive.
Wider implications
Habib Rice’s retreat illustrates a vulnerability common to many Pakistani exporters. The model of establishing small overseas subsidiaries, often in the UAE, is not just about marketing. It is about survival in a global system where access to finance and logistics determines competitiveness. Visa restrictions that erode this model effectively weaken Pakistan’s position in its most important external market.
For the time being, Habib Rice insists that it will continue servicing the UAE through alternative arrangements. But the broader message is clear: without policy alignment and facilitation, Pakistan’s exporters will find it increasingly difficult to operate abroad. Trade bodies can raise the alarm, but the structural problem lies in the asymmetry of Pakistan’s dependence on the Gulf. n
Staying the course to where?
Despite achieving inflation targets and reserves recovery, the SBP’s rigid monetary stance risks choking off growth and undermining the very stability it seeks to protect
By Ahtasam Ahmad
The State Bank of Pakistan’s latest Monetary Policy Report paints a picture of hard-won stability. Titled “Staying the Course,” the August 2025 document chronicles Pakistan’s dramatic economic recovery, inflation plummeting from 29% to 4.5%, foreign reserves rebuilding, and GDP growth accelerating. After slashing rates by 11% from their 22% peak, the central bank now holds steady at 11%, projecting continued success with inflation expected to remain in the 5-7% target range through FY26. It’s a compelling narrative of monetary discipline rewarded and macroeconomic stability restored. But beneath this official optimism lies a more troubling reality: Pakistan’s central bank may have backed itself into an unsustainable corner, pursuing a policy stance that risks undermining the very recovery it seeks to protect.
The Recovery That Wasn’t?
The MPR’s headline achievements are undeniable. The current account swung to a $2.1 billion surplus in FY25, remittances hit record levels at $38.3 billion, and the fiscal deficit improved to 5.6% of GDP. These are genuine accomplishments born of coordinated fiscal consolidation and aggressive monetary tightening.
Yet the economic fundamentals reveal a more complex picture. With inflation forecasts anchored in the 5-7% range and growth projected at 3.25-4.25%, the SBP’s 11% policy rate implies real interest rates of 4-7%, well above both natural rate estimates and the bank’s own growth projections. This isn’t prudent monetary policy; it’s economic misalignment that risks choking off the very investment and consumption needed for sustainable recovery.
The contradiction becomes starker when examining monetary aggregates. While the SBP maintains restrictive rates, base money
and broad money (M2) are expanding at 12%13%. Against expected nominal GDP growth of around 10%, this represents a fundamental policy inconsistency: the central bank is simultaneously tightening through rates while loosening through balance sheet expansion driven by foreign exchange purchases.
The Institutional Burden
The MPR proudly declares the MPC’s commitment to keeping rates unchanged until “structural reforms” materialize, a stance that has evolved from strategic ambiguity to explicit conditionality. In Pakistan’s chronic reform vacuum, this positions the SBP not merely as a monetary authority but as a macroeconomic shock absorber, reform enforcer, and de facto policy anchor.
This institutional overreach, however principled, carries rising costs. Without clear forward guidance on terminal rates or the path toward them, private investment remains paralyzed by uncertainty. The central bank’s research shows private sector credit growth at 12.8%, but this masks the reality that formal credit allocation remains distorted by the policy rate’s disconnect from economic fundamentals.
More problematically, the SBP’s orthodox stance is generating unorthodox fiscal
responses. Faced with stagnant growth and frozen private investment, fiscal authorities are resorting to populist stimuli: markup-free agricultural loans, housing concessions, and EV subsidies. These aren’t structural reforms, they’re inflationary reflexes that undermine monetary credibility while providing no lasting economic benefits.
The Credibility Trap
The MPR’s confidence in its inflation projections raises uncomfortable questions about policy consistency. If the SBP genuinely believes inflation will remain anchored in the 5-7% range, as its sophisticated forecasting models suggest, then real rates of 4-7% represent a massive policy overshoot. Either the inflation forecasts are overly optimistic (and the bank should communicate this clearly), or the policy stance is economically unjustifiable (and should be adjusted).
This isn’t merely an academic debate about optimal monetary policy. The contradiction between stated forecasts and actual policy creates a credibility trap where markets lose confidence in forward guidance entirely. The MPR’s own business sentiment surveys show improving confidence and expanding activity, yet investment remains constrained by the very policy stance meant to support recovery.
The central bank’s innovative use of
alternative data sources, from satellite imagery tracking economic activity to real-time job posting analysis, provides sophisticated confirmation of gradual recovery. These high-frequency indicators show consistent improvement in manufacturing, services, and labor markets. Yet this evidence of economic normalization only strengthens the case for policy normalization.
The Fiscal Fallback
The MPR celebrates fiscal consolidation as a key pillar of macroeconomic stability, with the primary surplus reaching 2.2% of GDP and further improvement targeted for FY26. But fiscal orthodoxy becomes meaningless if it coexists with monetary rigidity that stifles growth and forces compensatory fiscal interventions.
The report acknowledges “broad-based reduction in import tariffs under the FY26 budget” and various sectoral support measures, but these represent precisely the kind of ad hoc fiscal activism that emerges when monetary policy fails to provide adequate economic support. The longer real rates remain elevated, the greater the pressure for distortionary fiscal measures that erode the very consolidation gains the SBP seeks to protect.
Global Context and Local Constraints
The MPR correctly identifies global monetary policy normalization as supportive of its cautious stance, noting that many central banks
worldwide are pausing rate cuts amid persistent inflation concerns. But Pakistan’s circumstances differ fundamentally from advanced economies grappling with tight labor markets and sticky service sector inflation.
Pakistan’s inflation decline reflects primarily favorable base effects in food and energy, stable exchange rates, and weak domestic demand, factors that argue for monetary accommodation rather than continued restriction. The central bank’s own analysis shows core inflation continuing to ease and inflation expectations of professional forecasters now anchored within the target range.
The Sustainability Question
The MPR’s subtitle “Staying the Course” implies policy durability, but the underlying fundamentals suggest a course correction may be inevitable. Base money growing faster than
nominal output, real rates stifling investment, and fiscal policy drifting toward distortion create conditions for either policy reversal under pressure or prolonged stagflation.
Neither outcome serves monetary credibility. The SBP’s principled stance risks becoming institutional gridlock where the central bank shoulders the entire burden of macroeconomic adjustment while other institutions remain passive. This isn’t sustainable monetary policy, it’s institutional overstretch that invites eventual breakdown.
A Path Forward
The contradiction between the MPR’s optimistic projections and restrictive policy stance demands resolution. If the SBP believes its inflation forecasts, it should begin adjusting rates accordingly. If concerns beyond inflation, such as exchange rate stability or debt rollover risks, drive policy, these should be clearly communicated to markets.
The central bank’s research capabilities, showcased through innovative analytical tools and comprehensive economic assessment, position it well to provide genuine forward guidance. But technical sophistication cannot substitute for policy clarity. Markets need to understand not just where the economy is heading, but where monetary policy is heading.
Most critically, the SBP must define the boundaries of its mandate. Monetary discipline cannot become a substitute for structural reform, nor can the central bank indefinitely serve as the sole guardian of macroeconomic stability. The longer this burden remains misallocated, the greater the risk that Pakistan slips into the low-growth, high-cost equilibrium that monetary orthodoxy was meant to prevent.
The MPR documents genuine achievements in Pakistan’s economic stabilization. But staying the course requires knowing where that course leads, and ensuring it remains navigable for the economy the central bank serves. n
Market Maker or Market Wrecker?
There is a fatal flaw in our Primary Dealers System
By Momin Iqbal
You all must remember Shaukat Tarin’s koonda episode, when the ex-finance minister during a live program with Dunya TV’s anchor Kamran Khan, threatened Primary Dealers (PDs) [banks] regarding their high bids in the government bond auctions, by saying that if PDs [banks] do not start behaving he will deploy tools that will ruin them (in ka koonda ho jaye ga). Guess what, PDs didn’t budge. Why didn’t they budge? Are they so protected under the SBP umbrella that a sitting Finance Minister cannot mend their ways? It all boils down to the lack of players in the government securities market trading arena. And who do you think is responsible for bringing new players to the arena? Primary Dealers, duh. This brings the efficiency and efficacy of the market making function of PDs into question. Clearly the current market making arrangements and regulations carved by the SBP have not yielded the desired results. But why? Profit explains.
How do government securities operate?
State Bank of Pakistan (SBP) acts as an agent of the Government of Pakistan for managing domestic public debt. SBP is responsible for distribution of marketable government securities (Market Treasury Bills, Public Investment Bonds & Government Ijarah Sukuk) through a network of ten primary dealers (all of which are commercial banks – except one DFI) and two Special Purpose Primary Dealers (National Clearing Company of Pakistan Limited (NCCPL) & Central Depository Company of Pakistan (CDC)). Primary dealers are selected from among financial institutions including Banks, DFIs, Investment Banks, Listed Brokerage Houses as per the criteria laid out by the SBP based on minimum capital requirements, secondary market participation, technical requirements, fulfillment of market making obligations, among others. The PDs enjoy significant perks and privileges after attaining their PD status such as exclusive participation in the Government Securities auctions, claim to underwriting commission, entertaining pass-through bids,
among others. In exchange for this, there are some obligations on the PDs which should be fulfilled in order to compensate for the perks and privileges they enjoy. These obligations include the essential market making function which include quoting two-way prices of government securities, increasing participation of non-PDs & retail segment, and displaying Prices of Government Securities across multiple platforms. Performance assessment of PDs is based on compliance with the secondary market turnover, market-making responsibilities, use of Electronic Bond Trading system, among other criterions. If all these mechanisms are in place, one might think that there should be a thriving government securities market in the country. However, the devil is in the details. So, what are the pertinent issues in the PD system that are hampering market making?
Skewed towards commercial banks
Ideally, the PD network should raise its inventory through participation in Government Securities auction and then it should be offloaded to other retail and non-PD
financial institutions. However, the commercial banks are busy hoarding the government securities for their own inventories. So much so that more than 90 percent of the total investments of banks were made in Federal Government Securities during CY21. However, other participants like Investment Banks, and Brokerage Houses that are better suited to the role of primary dealers are not included in the PD network. These entities usually do not have a strong capital base and cannot afford to buy the Refinitiv/Bloomberg Dealing Terminal, which is a must to have to join the PD club. Therefore, banks have essentially monopolized the government securities trading arena.
In contrast, the Reserve Bank of India uses an extensive network of PDs including 7 standalone PDs which are mostly fixed income brokerage houses in addition to the 14 bank PDs. But the inclusion of standalone PDs in Pakistan will create a regulatory overlap between SECP and SBP, which is the last thing the SBP wants to deal with. Not to mention that the SBP has kept the depository and settlement of government securities under its ambit rather than devolving it to the CDC and NCCPL.
Pass through bids
SBP has allowed non-PD financial institutions and secondary market participants to directly participate in the primary auction process through pass through bids. This provision has significantly hampered the development of the secondary government securities market. As the non-PDs and secondary market participants who want to participate in the secondary market trade can directly get their securities from PDs rather than getting it through our non-existent secondary market. Why does this matter? There is something called an illiquidity premium, which the government has to pay to the bondholders as they require an incremental return that compensates them for owning an asset that is not highly liquid (easily convertible into money). Therefore, the government pays the bondholders (mostly PDs) extra for each security in the form of a higher interest rate due to the illiquidity of government securities.
Conflict of Interest of Commercial Banks
Well, this is a no-brainer that commercial banks have competing banking products against the government securities, which are much more profitable to the bank. For example, bancassurance products pay the banks a handsome amount of commission. Therefore, the value of the total securities held in the Individual Portfolio Securities
(IPS) account of the top PD – Bank Alfalah(as per SBP ranking) is almost half the commission earned by the bank through bancassurance. For those of you who don’t know, IPS accounts are those accounts in which the PDs hold government securities on behalf of their non-PD and retail customers.
This can also be attributed to the lenient market making obligations bestowed upon the PDs that evaluate the performance of PDs based on an annual incremental increase in IPS accounts of 500 only. And there is more to this, if the PDs exceed this target they get bonus points for this. You won’t be amazed to observe that the total number of IPS accounts in the top 3 PDs does not exceed 5,000 for any of the PDs (FY 2021-2022).
One more thing that makes the IPS accounts less attractive is that the charges imposed on the applicant of IPS account should be reasonable and in line with SBP’s objective to broaden the investor base of Government securities (as per SBP circular). However, for other banking products the room for earning profits is much more than IPS accounts.
Over-lenient obligations & Performance
Assessment of PDs
SBP has taken a very hands-off approach towards the PDs for acting as a market maker on the PSX trading platform. Resultantly, trading activity on the Bond Automated Trading System (BATS) remains negligible due to a dearth of PDs willing to serve as market makers. PSX cannot assign this market making obligation on any PD too. However, the SBP can assign this responsibility to PDs through laying it out in the eligibility criteria or performance assessment criteria of PDs. Essentially, the issue at hand is that when a customer makes a quote on BATS the system lacks the ability to respond to that quote since the PDs are not bound to quote two-way prices of government securities on the PSX platform. The relevant obligation of the SBP in this regard is as follows:
“PDs and PPDs shall be responsible for displaying the prices of Government securities on Refinitiv/Bloomberg, websites, branches and PSX (if the PD/PPD is a market maker on PSX).”
You can see how the SBP has conveniently left the market making responsibility to those PDs who want to act as market makers on PSX. Hence, PDs are not required to perform this function but if they opt to act as market maker then and only then they are required to quote on the PSX trading platform (BATS). Why did SBP leave this at the discretion of the profit-hungry banks? It should be compulsory for every PD to quote
two-way prices for government securities on the system for effective market making. Just like in South Korea, where the government has made it compulsory for PDs to conduct 40% of all Government Securities (secondary) trading on the Korea Stock Exchange. It has resultantly risen to become the most dynamic, liquid and well-functioning government securities market in Asia, after Japan.
Expensive Bloomberg
Bond Trade System/ Terminals
Small & medium scale financial institutions have another barrier in the way of becoming PDs. The SBP has directed the PD applicants to equip themselves with “modern” treasury infrastructure, including:
a) Dealing Terminals including Refinitiv/ Bloomberg.
b) Phone Recording Systems (with records retained for a period of 90 days).
c) Telex/Swift.
d) Fax machines.
e) High speed internet
f) Any other equipment necessary for conduct of treasury operations.
Nothing in the list above is modern except the Refinitiv/Bloomberg dealing terminal. The Refinitiv/Bloomberg dealing terminals are pretty expensive (almost $24,000 per annum) and mostly bank treasuries can only afford them. Hence, this barrier keeps the competition away just like the SBP and commercial banks like it. Indigenous dealing terminals and trading systems can be used for improving the accessibility of government securities to local capital market participants.
Looking at the list, one can also conclude that most of the deals in the secondary market in Pakistan are voice-brokered. Nothing wrong with this, there are many developing countries where the voice-brokered deals take place but in parallel they also have a vibrant government securities market on the stock exchange. However, the integration with the PSX trading platform is not something the SBP looks for while selecting its PDs.
Although enough time has passed since the koonda episode occurred, the status quo remains intact (just like all other things in this country). However, there is still hope that SBP realizes that it has to play its part in creating a vibrant government securities market. All this can be fixed with just a new circular issued by the SBP. But who will bell the cat? That remains to be seen.
Momin Iqbal is a Strategy and Investments Expert. He is passionate about capital markets, financial literacy and investor protection. n
The evolution of Mandviwalla Mauser
The plastic producer seems to have a new lease on life culminating in its recent takeover
By Zain Naeem
Every day we use hundreds of items that can be traced back to the use of plastics. From packaging, construction, transportation, electronics to agriculture, healthcare and sports, every field has been made better by the use of plastics in some way, shape or form. Based on its versatility, adaptability, resistance to corrosion and ease of manufacturing has meant that it has become the essential part of so many aspects of life.
And while plastics might be famous for their adaptability, over at Mandviwalla Mauser Plastic Company it seems the qualities of their product are reflected in the company itself. The company is a prime example of adapting to the circumstances around it and has embarked on its revival in recent years. The revival has been so successful that one of its long time creditors, Meskay and Femtee Trading company has taken over to reap the fruits of the turnaround going forward. The turnaround at the company can be attributed to the fact that the management was open to change being carried out at the company in order to guarantee its success.
In order to understand what has happened at Mandviwalla, there is a need to draw open the fractal nature of this story. Our story begins with the invention of plastics early in the 20th century.
History of plastics
Synthetic plastic was invented in 1907 by a Belgian chemist Leo Baekeland by combining phenol and formaldehyde together. The material that was invented was called Bakelite and was the first time synthetic plastic was used. The primary advantage of the material was that it was heat resistant, non-conductive and could be moulded into different shapes. Due to these properties, this material was used in electrical insulators, radios and household items.
With time, the technology began to evolve and slowly new synthetics were developed like PVC in 1920s, polystyrene in the 1930s and nylon in 1935. With the breaking out of the second World War, the use of plastics exploded as new uses started to be developed. Rubber and metal were in short supply which meant that the Allies started to use synthetic alternatives. Plastics started to be used in parachutes, radar insulation, aircraft components and food packaging.
After the war ended, the industry had to pivot and adapt to a new consumer market which had not been tapped fully. Plastics started to infiltrate into toys, kitchenware, furniture and clothing. As the uses became more diverse, the material led to the disposable culture which was taking shape after the war.
While the use of plastics was becoming more and more common, another company was trying to shape its future after the end of the second world war.
Mauser Werke was a German company which had always been known for its manufacturing of precision firearms. Established in the 19th century in Oberndorf am Neckar, the company became renowned for the firearms that it produced. However, once World War II ended, the company had to face strict regulations and restructuring it had to go through. As the economic opportunities started to diversify into metalwork, machinery and plastics.
The change led to the company slowly becoming the global leader in industrial packaging with a specialization in plastic container production. The company was the pioneer in transitioning from arms manufacturing to commercial applications. Today, Mauser Weke Plastics is seen as the major provider of sustainable plastic packing solutions.
Mauser is known for specializing in blow-molded HDPE (high density polyethylene) containers which are seen as being durable, resistant to chemicals and compliant to the highest standards.
The story of Mandviwalla Mauser
The story of Mandviwalla starts in the 1980s when the country was looking towards private enterprise to lead the economic growth of the country. This was the time when Karachi was seeing an industrial gold rush and there was a sense of unfettered ambition and drive. It was within this landscape that Mandviwalla plastics was born. In its early years, the company was going to manufacture plastic after agreeing on a know-how agreement between itself and Mauser Werke. The partnership would help the young company gain from the knowledge and experience of its German counterpart and establish itself as a local powerhouse. The extent of the partnership extended in every aspect and even the name of the new venture was Mandviwalla Mauser Plastic industries.
The factory was established on Italian Remo technology which meant that two dynamic units were set up side by side. On one side was the injection molding unit which was used to produce plastic chairs, textile bobbins, automobile parts and poultry equipment. The other unit was dedicated to blow molding the Mauser drums which the company began to be known for.
The factory was situated in Uthal, Balochistan and was becoming a mainstay in the economic progress of the country. Currently, the company is known for producing plastic chairs under the brand name of Sohni Chairs, plastic jerricans, bobbins for textile industry, stackable
crates and L-ring barrels. The company also has a strategic partnership with the US brand Rubber Maid. Rubber Maid is known around the world for the manufacturing of 4,000 products in 100 countries and sells in more than 125,000 retail outlets worldwide.
Financial performance
In terms of its financial performance, the accounts that can be accessed go as far back as 2004. In 2004, the company could be seen to be struggling as it showed a loss per share of -5.05 for the year while it had a negative shareholders’ equity of Rs 183 million. In order to fund this gap, the company had taken long term and short term liabilities. The factory was performing at around 50% of its capacity and there was a need to grow the topline of the company.
Any revival in its performance failed to materialize as the company failed to show profits from 2004 to 2014. The only year where profits were earned was in 2006 with the company earning Rs 6.58 per share but that was just an outlier for a company that was struggling to retain any of its profits. The only saving grace was the fact that from 2004 to 2010, the gross profits of the company were positive. This was able to add some value to the company as it failed to make any operating or net profit for the period.
By 2011, even this started to change as the company started to make gross losses on a consistent basis. As losses started to pile up, the shareholders’ equity reached its lowest point in 2014 clocking in at around Rs 272 million in the red. The financial position of the company was tenuous at this stage and with severe power breakdowns and instability in the region, the plant was finally shut down in 2015.
With the plant closing down for nearly
seven years, there was no bright spot for the company going forward. With things looking dire, the founders never felt that they could give up on their dream. While there was little in the way of a recovery, the owners felt that the dream needed to be reanimated. The Mandviwalla family decided that they needed to change and relocated their facility to Port Qasim in Karachi. While the world was reeling from the impact of Covid, Mandviwalla was going through an overhaul which started to bear fruit in 2021.
For the first time in more than 10 years, the revenues of the company crossed the threshold of Rs 100 million and things were looking better. With a gross profit of only Rs 28,000, there were signs of life coming back. Mandviwalla was able to produce 464 tons of its signature drums as the capacity utilization started to trend upwards after a period of dormancy.
If 2021 was a little step in the right direction, 2022 started to show how the
turnaround was finally taking form. It was the first time that the company crossed the Rs 400 million mark in terms of their revenues earned. This was also the year where gross profits also increased to Rs 33 million with the year being closed out with a profit of Rs 12 million. It was becoming apparent that things were finally changing at the company.
2023 and 2024 kept showing signs of improvement with sales totalling Rs 620 million in 2023 and then crossing Rs 1 billion in 2024. As the sales were improving, gross profits also started to increase to Rs 94 million in 2023 and Rs 239 million in 2024. After taking into account the other costs, net profits were recorded at Rs 41 million in 2023 and Rs 108 million in 2024. With renewed vigour, the capacity utilization of the company was also increasing at a meteoric rate coming at around 20% in 2023 and 32% in 2024. A further vote of confidence was that the capacity of the plant had also been increased by 1,500 tons in 2023.
The secret behind the increase in margins and revenues was the fact that the company honed in on the chemical industry. In the past, the company had felt that industrial and commercial clients both had to be targeted in order to boost sales. After the new plant was established, the management looked to pivot itself and focus more on the chemical industry as its key demographic. The success of this approach is apparent in the way the sales have grown in the recent years.
Recent results show that the best is still yet to come. Last year, Mandviwalla was able to show gross profit of Rs 132 million which has already been eclipsed this year with gross profit of Rs 145 million. The company was able to control its direct cost which led to high profits even when sales were lower compared to last year. The increase in profits have been translated down the income statement as it was able to earn Rs 65 million in net profit
compared to Rs 60 million last year.
Getting deserved attention
The recovery in its sales and profits has also been reflected in the share price performance of the company. The lackluster performance from 2004 to 2015 meant that the company saw its share price fall as low as Rs 0.5 per share. As the losses became consistent, there was a feeling that the company would not be able to turnaround its fortunes any time soon. With the plant being shut down, this uncertainity became a sad reality as there was little interest in the shares of the company.
The lack of interest by the market was mirrored by the company as well as it allowed the share to stop trading from the end of 2015 till June of 2024. It is mandated by the stock exchange to make sure that the listing obligations are being carried out by the company. In case these obligations are not followed, the stock exchange can suspend trading in the shares of the company owing to its indifference. In order to get this suspension lifted, the management is required to get rid of all non-compliances.
The management felt in 2015 that with the plant being shut down, the listing could be suspended for the time being while they focused on the new direction to take. Even as the company started to see a revival, the listing still did not get the priority that it deserved. It was only in June of 2024 that the share started to trade again. Around one year ago, the share started trading at Rs 4.51.
As the shares started trading, a disclosure was sent to the exchange stating that Meskay & Femtee Trading company wanted to acquire 74.41% of the outstanding shares of Mandviwalla. Meskay & Femtee is a major exporter of rice and a longstanding creditor of Mandvi-
walla. Based on the share price, this acquisition would have been worth Rs 207 million.
The market was taking notice of the revival taking place at the company and saw that it was worth much more than where it was trading at. The removal of the suspension and the offer being made was not coincidental as the trading would allow shareholders to sell their shares at the rate they want to sell at.
Based on the takeover regulations, Meskay & Femtee would have to acquire 74.41% of shares from the market and carry out a public offer for half of the remaining share in the market. According to the pattern of shareholding, Azeem Hakim Mandviwalla held around 79% of the company in December of 2024. The announcements and disclosures being made signalled the fact that Meskay was going to buy the shares from Azeem Hakim which would be carried out once the rate had been negotiated.
When the initial offer was made, Meskay was looking to buy the 74.4% of the shares at
a price of Rs 5.05 while the public offer for the 25.59% was being made at Rs 13.47. This valuation had been determined by an auditor who considered the net assets of Mandviwalla and determined that this should be the justified price to be paid to the investors.
The market was able to benefit from the listing as the share price crossed the Rs 50 mark for the first time in its history. This would have seemed like a figment of a fevered dream just 10 years ago when the factory was shutting its doors. 10 years later, it became a new reality for the company which had seen the worst of times.
Until now, the majority shareholder has transferred his shareholding to Meskay at the rate that was negotiated between them and has closed his part of the deal. The public offer and the response of the investors has not been disclosed by the acquirer as of yet. It was seen that around the date of book closure, the investors were getting a high price in the market compared to what was being paid by the acquirer.
Around the time of the book closure, the share was trading at Rs 15 per share which has steadily increased and has now passed Rs 50. This is a vote of approval for the takeover being carried out as the investors feel that Meskay & Femtee can now allocate resources to the business which had started to flourish and would see better results in the future.
The story of Mandviwalla is the story of plastic and Mauser Werke. In all these three cases, it has been seen that once adversity has challenged the progress of each of these entities, perseverance and a will to change has led to success that was unimagined or unrealized before. Mandviwalla was at the brink of failure after years of losses and a plant shutdown. Only after changing course have they been able to survive but are thriving in the current business climate. n
Nothing beats online commodities trading,
says your friend three months before asking if him, his family could stay with you for some months
By Profit
Saying that commodities and foreign exchange are “the name of the game now,” your childhood friend Taimur Bhatti said on Tuesday, a full 90 days before frantically asking if his family and him could stay at your place “for some months.”
“It’s just temporary,” referring to his day job as an assistant finance manager for a mid-tier textile mill outside Lahore, before he ramps up his investments online on international commodities.
“It’s just temporary,” is also what Bhatti will
say three months from current statement, when describing how long him, his wife and two kids will be staying at your residence.
“Gold, silver, oil futures, even the US Dollar, anything, if you think about it,” he said to you, before saying, “Forty, thirty, even twenty thousand will do, anything you can manage,” asking for some cash, in addition to the residence.
“I’m not allowed to tell anyone at work that I’m doing this trading, because company policy says this kind of day trading requires full focus and one can’t do that alongside a job,” he said.
“You’re not allowed to tell anyone we are going to be staying at your place, because when the losses started, I ended up borrowing some money from some people who were, well……let’s just say they weren’t registered at the SBP or the SECP,” he will say, three months from now.
“You’ll put my family and me up, but won’t be able to manage anything more than thirty thousand rupees because things are tight,” he will ask you three months from now. “Yeah, I know the feeling, buddy. Have you tried making some money by trading commodities online?”
