Profit E-Magazine Issue 370

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By Farooq Tirmizi

However bad you think Procter & Gamble leaving Pakistan is, we suspect after reading this story, you will see that it is worse. There are no two ways to say it, so we will start with the uncomfortable truth first: P&G is important for Pakistan, but Pakistan is not important enough for P&G.

P&G’s presence in Pakistan is perhaps one of the best examples of how a global multinational started off in the country with a miniscule presence and barely any resources and ended up becoming one of the largest manufacturers in the nation. Indeed, P&G had gone from being mainly an importer, to a domestic manufacturer, and had already begun to be an exporter.

It was one of the best examples of attracting foreign direct investment into the country: allow imports to start with, let them build up their market, and slowly they will start manufacturing, technology transfers, and even exports. It was working.

Until it stopped.

This is one of those stories where there is not one person or party to blame. Did the government’s policies drive away the company? They certainly did not help, and we will explain the specific policies that hurt P&G’s business. But a detailed examination of the company’s financials indicates a much more complex story, one that indicates that Pakistan’s consumer goods market may be a lot smaller, and growing a lot slower, than the headline numbers may indicate.

In this story, we take a look at what P&G built in Pakistan, and how they moved from importers to manufacturers and net exporters. We then examine the recent downturn in the company’s performance in the Pakistani market, as well as its generally sluggish growth globally. Finally, we take a look at reasons why P&G may have made the decision to leave the country.

Procter & Gamble in Pakistan

P&G is one of the largest consumer goods companies in the world and the owner of a set of brands that tend to be among the dominant ones in their respective market segments. It started life in 1837, when two Irish immigrants – William Procter and

James Gamble – to Cincinnati, Ohio in the United States met each other through their wives: Olivia and Elizabeth Norris. Prior to meeting, Procter had been a candlemaker and Gamble had been a soap maker. Their father-in-law Alexander Norris persuaded them to become business partners, which is how Procter & Gamble was founded – as is still headquartered – in Cincinnati.

The company owns such iconic brands as Always, Ariel, Gillette, Head & Shoulders, Olay, Pampers, Pantene, and Vicks, in addition to many others. It owns 20 brands that each individually have sales exceeding $1 billion.

It started its existence in Pakistan on August 5, 1991, when it first imported a set of cleaning products into the country for the first time. Since then, for much of its history, Procter & Gamble remained largely a trading and branding presence in Pakistan.

Its Pakistan operations in its early years were mainly a corporate office that would help market its brands to a Pakistani audience, with a handful of employees who helped import the products from manufacturing facilities around the world, and then distribute them through large distribution companies in the country.

Over time, it has consolidated its operations and expanded them, setting up lo -

cal manufacturing for a variety of products, including Ariel, which was the first product the company started manufacturing locally, and Safeguard. Over the first 25 years of the company’s presence in Pakistan, it invested $150 million into local manufacturing facilities to help localise its revenue streams.

In 2013, the company’s global parent announced a list of top 10 emerging markets on which it would focus over the next decade for investment, and Pakistan was on that list. In an interview with The Express Tribune, P&G Pakistan Country Manager Faisal Sabzwari said: “We have a very clear intention that we will continue to increase localised manufacturing in Pakistan.”

Among the factors he cited for the focus on Pakistan: urbanisation and a youth bulge. “If you compare the urbanisation rate in Pakistan with other developing countries, you will see that we are getting urbanised faster than others,” said Sabzwari back then. “Pakistan is one of the top countries adding 20-year-olds to the world, and these are the people establishing new families and helping market sizes grow,” he added.

In 2019, the company announced that it would invest $50 million in the local manufacturing of Pantene and Head & Shoulders brands of shampoo locally, through a 58-acre production facility locat -

ed at Port Qasim.

At the time, Sami Ahmed, vice president at P&G Pakistan said, “We are committed to contributing our share in the economic development of the country. Our latest investment is testimony to our longterm commitment to Pakistan. For over 25 years, we have been serving consumers with high quality products and have made significant investments of over $150 million in fixed assets to date while nurturing and developing Pakistan’s finest talent and making them business leaders.”

Later in 2019, the company achieved another milestone: not only had it gone from ceasing its imports of Safeguard from other countries and started local manufacturing of the product, but it also began exporting Safeguard from Pakistan to 20 countries in Europe. For the financial year ending June 30, 2020, total exports of Procter & Gamble Pakistan products clocked in at Rs1,838 million ($11.6 million), the bulk of that being the exports of Safeguard.

That is correct, ladies and gentlemen: Pakistan did a complete 180-degree turn on Safeguard. It went from being an importer, to being a domestic manufacturer, and now to an exporter.

“This is an important milestone for our local operations. Our plant in Pakistan

is one of the few locations in the P&G world where Safeguard is manufactured and exported from and it is the only site from which P&G is acquiring Safeguard for export to Europe,” said Sami Ahmed at the time. “Since the establishment of our soap manufacturing facility in Hub over 20 years ago, this facility has served Pakistani consumers with high quality products that has improved everyday life which has now become a lucrative export item as well.”

The manufacturing juggernaut

Over the past decade and a half, Procter & Gamble has completely turned around its business strategy with respect to imports versus local manufacturing. In 2010, more than 75% of the company’s revenues came from imports and less than 25% from local manufacturing. By 2024, the latest year for which financial statements are available, those numbers had been more than reversed: more than 98% of its revenues now come from local manufacturing and less than 2% from imports.

And unlike, for example, the automotive industry in Pakistan, which imports more than 50% of the price of the car, P&G’s manufacturing really was almost

entirely local: less than 5% of the total cost of production involved imported raw materials. If you bought a P&G product, you were paying employees and suppliers almost entirely within Pakistan.

And the size of the business is nothing to sneeze at either. In 2023, the company clocked in Rs51 billion in revenue, which would make it comfortably one of Pakistan’s top 50 manufacturing companies. Revenue then declined in 2024 to Rs44.5 billion, but this remains a sizeable company, and one that was beginning to export some of its production.

Unfortunately, the plant that was engaged in the exports – the soap manufacturing unit in Hub, Balochistan – was sold to Nimir Industrial Chemicals in September 2024, for Rs816 million. So what happened?

Financials: weaker than they look

When Profit last did a deep dive into P&G Pakistan in January 2021, the company was coming off a 5-year period where its revenue essentially did not grow at all. And while we do not have the financial statements for 2021 and 2022, the data from 2023 and 2024 indicate that the company did eventually break out of its

performance slump, with revenue growing 53% between 2020 and 2023. That sounds impressive until you realise it is a 15.3% annual average growth rate at a time when inflation averaged 19.8% per year.

And the numbers must look absolutely abysmal to P&G’s holding company, which is based in the United States and hence measures its revenue and profits in US dollars. On that metric, P&G’s revenue in Pakistan peaked in fiscal year 2017 at $321 million, and since then have declined every single year, and hit $153 million in 2024, the latest year for which numbers are available. That number is especially abysmal when one considers the fact that it is lower in USD than the company’s revenues in 2009, when it made $158 million in revenue. Effectively, all of the gains made in building up its market from 2009 through 2017 was wiped out over the next seven years.

(Note: Profit’s convention for converting income statement figures into US dollars is to divide the rupee number by the average exchange rate over the year in question, using the open-market exchange rate, as published in Business Recorder every trading day.)

What caused this slump?

Could it be competition from other brands? This one can be ruled out. Gross margins during this whole time were

remarkably steady, which means that the company did not face enough competition to feel the need to cut prices in order to grow.

Could it be that P&G made a mistake in not cutting prices and was therefore losing market share? It is possible, but unlikely when you consider the fact that it maintained gross margins while growing revenue by less than inflation, because that combination of data points represents two things:

1. It did not feel sufficient pressure from lower priced competitors to cut prices that would eat into its margins.

2. It also did not arrogantly continue increasing prices beyond what the market would be willing to bear, which we know because its revenue increased by less than inflation even as total production increased, meaning the unit price got cheaper relative to overall inflation levels in the country.

That second point may be the key to understanding what happened: P&G’s brands have enough strength that they do not need to engage in a price war with other companies, but they cannot defy economic gravity. The consumer’s ability to withstand high consumer prices was declining substantially, and that got reflected in P&G’s financial results in the form of declining revenue, as measured in USD.

Is P&G overreacting to a cyclical eco -

nomic slowdown in Pakistan? Possibly, but look at the data from P&G’s perspective. They invested about $94 million in Pakistan starting around 2019, shortly after their best year in the country. But then after that, their revenue – as measured in their home currency – keeps declining every single year for the next eight years.

That feels like an investment that just is not working out. How long can a company wait for the returns on its investment? Eight years is not a hasty decision. It seems like a measured response to what the data indicates, which is that Pakistan may have demand for P&G’s products, but likely not enough to continue investing in the country.

P&G’s global struggles

As tempting as it might be to look at just the local context, the fact of the matter is that the decision to pull out of Pakistan was likely made by someone looking at P&G’s global financial performance, not at Pakistan in isolation. And on that front, the news is rather clear. Over the past 10 years, P&G’s revenue growth has come entirely from its home market in the United States, while

its revenue from the rest of the world – as measured in US dollars – has declined.

The numbers are rather stark: US revenue for the 10 years ending June 30, 2025 grew by about 4% per year, but overall revenue grew by only 1% per year during that same period, meaning that the US was carrying the weight of the non-US markets as they declined.

In other words, P&G can grow faster by getting rid of its non-US businesses. So that is exactly what they are doing. P&G has been publicly disclosing to its shareholders for several quarters now that it is undertaking a review of its global portfolio and would be shedding assets as a means of focusing its energy and resources on its strongest markets.

Pakistan is simply one of the many markets from which it will be exiting.

What comes next f or P&G’s assets in Pakistan

This then leaves the big question: having already invested in setting up manufacturing facilities in Pakistan, what happens now? Will P&G simply shut them all down and leave? Will Pakistan have to begin importing

products it was previously manufacturing domestically?

Luckily, given the fact that P&G has already sold its soap manufacturing plant in Pakistan to Nimir, we have a reasonable estimate of what is likely to come next, which is – in some ways – less catastrophic than the news might appear at first glance.

In the case of the Nimir deal, P&G sold the factory as an asset to Nimir. It then gave a contract to Nimir to keep manufacturing the same product (Safeguard soap) and even label it the same name, with P&G retaining ownership of the brand.

Here is how Safeguard is working right now: Nimir manufactures the soap in the plant that was previously owned by P&G. It then sells the finished product to P&G’s exclusive distributor in Pakistan – which is the Pakistani subsidiary of the Abu Dawood Group of Saudi Arabia. Abu Dawood will then distribute Safeguard all throughout Pakistan, same as it did while P&G directly owned and operated the factory in Hub.

As part of its cost, Nimir will pay a licensing fee to P&G for the brand, and for technical assistance in manufacturing the product should any future changes be needed to the production process. Everything else stays the same.

This is the most likely formula for how P&G’s other two factories. The one in Port Qasim manufactures Pantene and Head & Shoulders, its best-selling shampoo brands, and the one in Korangi, Karachi, manufactures Pampers (diapers) and Always (feminine hygiene products). It is unclear who the buyers will be at this stage and P&G has about a year to find suitors. But when it does, Pampers, Always, Pantene, and Head & Shoulders will continue to be manufactured in Pakistan, largely with local raw materials and labour, the same as it is right now.

What changes then? The P&G Pakistan headquarters staff in Karachi will ei -

ther be laid off or moved to Dubai, as brand management and technical supervision moves entirely off shore. The actual job loss will be less than it appeared at first glance from the announcement.

One more substantive thing will change: while P&G’s factories are currently working at between 40% and 50% capacity utilization rates, when they start reaching their limits and need expansion, the capital for the expansion will not come from P&G but rather the local company who owns the plant (such as Nimir for Safeguard). In other words, P&G’s financial risk for these business lines is going to be much lower, since it will not be the one putting up the money to expand them.

If, at this point, you are tempted to think that this may not be so bad, hold that thought. The core set of reasons that compelled P&G to leave still say something bad about Pakistan, the fact of the company leaving will still hurt the country, and while the government of Pakistan is not the main cause, it certainly did make matters worse.

Why the departure matters for Pakistan

The broadest possible way to summarize the data we presented above is that Pakistan’s middle class grows in fits and starts, and is not a linear progression upwards. The government’s obsession with trying to control inflation through the exchange rate has created a highly distorted economy and one that is prone to extreme shocks. Our economic booms are followed by very sudden, and very sharp, recessions, and they seem to have gotten worse over the past two decades.

That means that the number of middle class consumers that would be customers of companies like P&G expands and shrinks, meaning that the risk associated with setting up a factory in Pakistan is higher

than in an economy where growth might be slower, but more steady. This is why P&G is not leaving the Pakistani market, but it is taking measures to shift the risk of setting up a factory in Pakistan.

That, more than anything else, is the worst thing about this departure. It says that Pakistan is a market you want to sell to, or maybe buy from, but one where the risk of investing serious amounts of capital in setting up productive capacity is too high. That even a company with decades of in-market experience cannot make it work.

So even though Head & Shoulders and Pampers will still be locally made, the next stage of the leap beyond this level of productive capacity is now uncertain. Will whoever buys these factories have the capital and risk-taking appetite to grow them? Will they have the appetite to seek P&G’s cooperation in taking these factories to the next level and try to compete for P&G’s regional production goals, meaning making the product fully export-worthy?

Maybe, but the uncertainty around the answer is greater than it would have seemed had P&G never left.

And finally, while these are factors not entirely in the government’s control, it really would be nice if the government were able to come up with a better way to control inflation than messing with the currency exchange rates, which cause wild gyrations in the purchasing power of ordinary Pakistanis. We do not expect them to change their behaviour, so we will not dwell on this point too much.

The British economist Charles Robertson once told Profit that Pakistan needs to graduate from being a trade to becoming an investment. A trade being a short-term transaction, and an investment being a long-term place to park one’s money.

What P&G did this past week was to downgrade Pakistan from being an investment to being a trade. And that, for Pakistan, is a crying shame. n

Treet Corp’s arithmetic mistake causes stock market frenzy

The mistake was admitted within 24 hours, however, the damage seems to have been done

By Zain Naeem

Aseemingly simple arithmetic error has landed the Treet Corporation in trouble with investors and possibly the subject of an investigation by the Securities and Exchange Commission of Pakistan (SECP).

Treet announced its financial results early in the afternoon of the 30th of September. After posting a loss of Rs 11 crore the previous year, the company had managed to make Rs 1 billion profit this year. The excitement was compounded when the earnings per share were listed in the document as Rs 4.8 — up from Rs -0.49 the previous year.

The results caused a bit of a rally. Treet’s share price, which had been trading at Rs 29.8 before the results were announced, began to move upwards. It eventually touched a high of Rs 32.65. The stock was trading near its upper lock which means that it had seen a price increase of 10% and could not go any higher than that for the day.

Investors that had Treet in their portfolios were buoyed. The improvement in yearon-year performance had increased interest in the stock. The price of the stock closed at Rs 31.85 and there was a feeling more investors would gravitate towards Treet stocks when the markets opened today (Wednesday October 1st).

That never happened. Before the markets opened the next day, Treet put up an announcement on the Pakistan Stock Exchange. They had been mistaken. The earnings per share rate of Rs 4.8 was a miscalculation. The actual number was Rs 2.82.

The mistake was significant enough that after Treet made the revision, the share price fell back to the levels it was at before the results had been announced on September the 30th. The company was trading at Rs 29.8 before the announcement and fell back to the same levels after the correction was made.

Caught in the lurch were investors who had bought shares in Treet on the basis of their mistaken results. Once the revision was made, they would have seen immediate loss in their investment due to a calculation error made by someone at the company.

As a result, the SECP has received multiple complaints about the error. Reports from within the SECP claim the commission has begun collecting data to determine what to do next. No formal investigation has been launched yet, and it is expected for the SECP to track and look into any unusual changes in stock price.

But questions remain. How did the mistake come about? Is there any remedy for investors that were misled by the announce-

ment? And is a company liable for misrepresentation even when it claims it was an honest mistake?

The sequence of events

The mistake seems quite simple. Treet had scheduled a meeting for 2PM UAE time on the 30th of September to announce their results. The meeting was being held in Dubai.

The next morning, the meeting was brought forward to 11 30 AM UAE time. There had already been some excitement surrounding the announcement since investors were expecting improved results from the previous year.

Less than 45 minutes after the start of the meeting, the results were announced. At 1:10 PM Pakistan time, it was announced that the company had ended up making a profit of Rs 1 billion. This was a huge turnaround from the loss made last year of almost Rs 11 crores. The earning per share had gone from -0.49 per share to Rs 4.8 per share in 2025.

The market rallied and the stock price began trading near its upper lock. But someone at Treet eventually realised they had made a mistake. Sometime between 3 30PM on the 30th of September and 8AM on the 1st of October, Treet sent a new notification to the stock exchange.

We do not know the exact time that the new notification was sent. While the responsibility to make all material announcements rests with individual companies, the PSX has developed a system called PUCARS (Pakistan Unified Corporate Action Reporting System) which allows the company to report their corporate announcements directly to the exchange.

In the past, physical notifications had to be sent by the company to the exchange on their official stationery which would then be forwarded by the exchange to the investing public. PUCARS was developed to cut down on the time it took to disseminate this information and would make the announcements in a swift manner. This system shuts down after 3:30 PM and starts operating again at 8:00 AM the next day.

From the close of day on Tuesday to the start of business on Wednesday, no company could upload any new notification to the exchange. In the space of 16 hours, someone at the company realized that a mistake had been made. Treet had earned Rs 1 billion in profits, however, the number of shares taken to calculate the earnings per share had been taken to be much lower than the actual number of shares the company had outstanding.

Earnings per share is a shorthand metric that is used by companies to disclose

how much profit they have earned based on the number of shares they have issued. The financial markets operate on an understanding that everything has to be relative and has to be put into context of the market as a whole. So if a company makes a profit of Rs 1 billion but has 1 billion shares, it will have an earnings per share of Rs 1. Meaning a shareholder will have made a single rupee from every share they own. Similarly if another company makes the same profit of Rs 1 billion but with 100 million shares, the earning per share will be Rs 10. The higher the earning per share the better a company is for investors.

As the PUCARS became operational at 8 AM, the announcement was made that Treet had made a mistake and had stated that its earning per share had been recorded as Rs 4.8 per share. In actuality, a typographical error had been made and the company should have stated its earning per share as Rs 2.82.

This announcement led to more questions being raised. How did the company end up making such a huge mistake? What was the error that led to the earning per share being recorded incorrectly?

The profit earned by the company was around Rs 1 billion. In both the statements, the profit stayed the same. The error was made in the shares that were considered for the calculator. The company had 371,028,800 outstanding shares. If these numbers of shares had been used, the earning per share should have been Rs 2.82. In the earlier announcement, the number of shares used seem to be around 217,816,667 shares.

So where did this figure come from and how could 154 million shares be ignored?

The reason for the mistake

It seems like the people at the finance department at Treet failed to polish up on their financial fundamentals.

One important thing to note here is that the number of shares considered in the calculation are supposed to be the average number of shares outstanding over the period of the year. This is a correction made to the formula as it will allow any additional shares being issued during the year to be taken into account. If the company had 100 shares at the start of the year and 200 shares at the end of the year, the best course of action is to take 150 shares in the calculation to make sure that an average of these two figures is considered. This is added to make sure that the true number of shares are reflected rather than understating or overstating the number of shares.

The error that has been made here is rooted in something that happened almost two years ago.

Back in 2023, Treet had 178,721,100 outstanding shares. Between 2023 and 2024, the management decided to carry out a right share issue to the tune of 107%. This meant that for every share held, the investor was going to get 107 additional shares for which they would have to make an additional investment of Rs 13 per share in order to avail this facility. An investor holding 100 shares was going to get 107 right shares and would have to make an investment of Rs 1,391.

Once the right share had been made, the number of shares were going to jump from 178 million to 371 million. To keep things relative, the earning per share in 2023 should have used the 178 million figure and the number of shares should have increased in 2024. This is where the first error was made. In the annual report for 2024, the company should have used the 178 million figure when it was reporting its earnings per share of 2023. In the accounts of 2023, the earning per share was Rs 0.75. In the next report, the earning per share fell to Rs 0.61. This was due to the fact that the company took the revised average shares for both 2024 and 2023 which should only have been considered for 2024. The right share had not taken place by June 2023 and due to that those shares should not have increased.

A cursory view of the accounts would have allowed the finance department at the company to realize its mistake. The weighted average shares for 2024 were accurate as Treet had deposited the shares in January of 2024 which should have been weighted and then taken into consideration. The weighted average number of shares came to around 217 million.

If this mistake had been caught on earlier, the recent mistake could have been prevented. This never happened. The formula used for 2024 was copied and then used for 2025 as well. Due to this mistake, the formula took 217 million shares when the true number of 371 million shares should have been taken. The number of shares stayed the same throughout 2025 which meant that the average would have remained the same from July 2024 to June 2025.

This was not done and the same weighted average number of shares considered for 2024 were again taken for 2025. This was a compounding of two mistakes. The figure for 2023 should have stayed lower leading to higher earnings per share in 2023 as shown in the annual report of 2024. As the same number of shares were carried forward for 2025, the earning per share ended up being overstated when they had been much lower.

The error seems to be caused by a haste and lack of proofreading while preparing the accounts which ignored the basics that had changed from 2023 to 2025 and failed to take

everything into account.

A representative at Treet was contacted in relation to this. The source stated that the matter was being investigated currently and the results will be shared once it has been looked into thoroughly. The source also stated that the market performance of the company before the announcement was contingent on the fact that a bonus was expected. Some of the price decrease was also due to the fact that no such entitlement was announced.

Treet’s tough spot

In terms of repercussions and consequences of this mistake, it is expected that the Securities and Exchange Commission of Pakistan (SECP) will look into this issue in order to reprimand the company that has made such a mistake. Only after an action has been taken will investors be given assurance that regulators are looking out for the investors and that anyone who makes such a costly mistake will be made to pay for it.

A contrarian view that can be stated in this case can be that well when so much money is involved, why would investors not double check what they are being presented and verify the results that are being disclosed? The answer to that is reaction time. The stock market and its trading is measured in a matter of seconds. The market reacts to any new information instantly. If people start to doubt and question the information they are being presented, they will lose out on the ability to make a profit.

The dictum at the market is “you snooze, you lose”. Be a second late in reacting to an opportunity and lose out on making money. Even the reaction of the market following the announcement shows that the share price jumped by almost 10% in less than an hour. People who would have missed out on buying at Rs 29.8 would have lost out on making a good amount of profit.

For Treet, what appears to be a mistake in calculation is sullying what should have been a moment of recovery for them. The time before their ill-fated announcement on the 30th of September was one of optimism. The company has long dominated the local steel blade market and claims a huge chunk of the market share. Due to this, it feels that it has a steady stream of revenues that it can depend upon. There have been efforts made in the past where they have tried to diversify their company profile, however, it has always made sure the blade business was its cash cow.

In its initial years, the company was providing a cheap alternative to the market which was looking towards high quality imports in order to fulfil their need. Treet identified a market gap as they were the only ones who were able to provide high quality products at

a much cheaper price. Due to its high standard at a low price, barbers around the country start to rely on Treet. This was the reason which led to the success of Treet as the company expanded its production footprint.

Recently, the company has faced some challenging times. There has been a trend for men to grow beards and to shun the blade in the name of fashion. The impact of this can be seen on the sales volume of Treet as it has seen its sales shrink in response to this. So what did Treet do to counter this trend? They started to go from low margin, high volume strategy towards high margin, low volume one. This meant that as their sales started to decrease, Treet was able to charge a higher price leading to higher profits being earned per unit.

This fact can be seen in the fact that in 2010 the gross margins had fallen to 18% which have consistently been above 30% since 2019. WIth similar costs, Treet is charging a higher price for its product which is leading to higher gross margins. In conjunction with this, production for the company has steadily decreased from 2 billion blades in 2021 to 1.7 billion blades in 2023.

In the same period, the revenues of the company went from Rs 7.5 billion in 2021 to Rs 11 billion in 2024. Even with a decrease in production of 30%, revenues actually increased by 46%. Based on the growing revenues, it was expected that the same trajectory would continue and Treet would see better revenues in 2025 as well.

Another reason for optimism around the company and its results was higher administrative and marketing expenses due to inflation in the country. These costs were compounded by interest rate expenses which were increasing as interest rates were increasing in 2023 and 2024. June 2024 saw the highest interest rates in the country in the history of 22%.

The impact of these costs was that operating margin fell from 14% in 2023 to 8% in 2024 while net margin went from 1.3% in 2023 to -1.7% in 2024. The net margin in 2023 was already on the downward trend as it was 11.6% in 2022. This constant decrease was caused by finance cost which was 10% of sales in 2022 increasing to almost 15% in 2023 and to 17% of sales in 2024. Since June 2024, the interest rates halved from 22% to 11% by June of 2025.

As it was expected that a major chunk of finance cost was going to decrease, it was expected that the company would be able to announce better results for the year 2025. This was clearly the case because the problem was never the profit they had made. While the mistake regarding the earnings per share was admitted within 24 hours, the damage was very much already done. n

The Audi Pakistan controversy: How not to deal with a disgruntled customer

Premier Systems, the official importer of Audi AG in Pakistan, dealt with a loud and disgruntled customer by suing him for criminal defamation. Now, the customer has responded in kind. Here is what happened

By Abdul Hameed Niazi

The customer, it seems, is not always right. At least that is what Audi Pakistan would have you believe. In fact, not only is the customer not always right, sometimes the customer is so wrong they deserve to be slapped with a criminal defamation suit.

Just over a year ago in July 2024, Naeem Afzal received notice that he was the defendant in a criminal defamation case under Pakistan’s draconian defamation laws. These laws govern the expression of thoughts and opinions in print, as well as on social and electronic media in Pakistan. In most countries, defamation is a civil matter not a criminal one. In fact, even in Pakistan most defamation cases are tried in civil courts. But because these criminal defamation laws exist, a person can be accused in a much more serious criminal trial that requires them to appear in court regularly under threat of arrest.

Naeem Afzal’s accuser was a company called Premier Systems Pvt Limited. Premier is the official importer of Audi AG, the German luxury car manufacturer, in Pakistan. They also exclusively operate the several Audi

showrooms all over the country. Premier runs on a very basic business model. Audi AG has them listed as their official import partner in Pakistan on their website. They market Audi AG products in Pakistan and when a customer walks in looking to get hold of an Audi car, they take an advance payment and place an order with the manufacturer in Germany. Premier gives the customer a timeframe for how long it will take to import the car and the remaining payment is made upon delivery.

That is the relationship that was first established between Naeem Afzal and Premier in May of 2022. But how in the world did this seemingly simple transaction snowball into a messy legal battle stuck in three different civil and criminal courtrooms, with arrest warrants issued for both parties? More importantly, exactly what makes a company sue their client in a criminal capacity, and can it possibly be considered a good business strategy?

Importing hazards

The story starts simply enough. Naeem Afzal wanted to buy an Audi. A resident of DHA Lahore, he went to Askari Towers off Liberty Chowk and walked into the Audi showroom. He met with a representative of the dealership, he told

them what car he wanted, and they told him they could get it for him. On the 16th of May 2022 he put down a deposit of just over Rs 1 crore (Rs 1 crore 3 lakhs and 29 thousand to be exact) for an Audi E-Tron 50 Quattro.

The colour was supposed to be Manhattan Grey.

He paid with a banker’s cheque issued by Habib Metropolitan Bank DHA Phase VI Branch. The pay order was made out to Premier Systems (Private) Limited. The offer letter he received had the letterhead and branding of “Audi Pakistan”. All pretty run of the mill.

It turned out this was the worst possible time to try and buy an imported car. Three days after Naeem Afzal put down the deposit, the government of Pakistan formally announced it was running out of dollars. The State Bank’s foreign exchange reserves were running on fumes and with loan repayments just around the corner, the word default was being thrown around quite casually.

The government’s answer to this was to shut everything down until they had time to think. A ban was imposed on all but the most essential imports such as fuel. Luxury cars were the second item named on the list. In the offer letter sent by Audi Pakistan to Naeem Afzal, the expected delivery time was men-

tioned as 30-32 weeks. With the temporary import ban now in place, it was likely to take longer.

In the meantime the Rs 1 crore deposit remained with Premier. At the time this accounted for about 60% of the car’s value. Premier’s estimate had placed the final price at around Rs 1.72 crore including all duties and taxes. This price was subject to change depending on the exchange rate or any change in the taxation schedule. Premier as an importer makes payments to Audi AG in Euros. Because of the volatility of the rupee, the sales contract for Audi and other luxury cars always include a devaluation clause protecting the importer from forex shocks.

Naeem Afzal was well aware of this. When the import ban hit, the value of the rupee was also dropping fast. He knew the devaluation cost would hit him eventually. He kept in touch with Premier and they continued to give him updates. In July 2023, 76 weeks after Naeem Afzal made the Rs 1 crore deposit, Premier told Naeem Afzal he could have his car in December if he agreed to get it in black instead of the grey he had ordered it in. He agreed. Premier said the car would arrive at Karachi port by the end of December.

On the 4th of December, they sent a revised estimate for the final price of the car. The devaluation charges were high. Much higher than Naeem Afzal expected. In fact, according to Naeem Afzal, the devaluation charges were applied not just on the 40% remaining payment, but also on the initial Rs 1 crore he had paid. This quickly became a major sticking point between both parties.

Look at it this way. Naeem Afzal had paid Rs 1 crore in May 2022 which was supposed to be 60% of the cost of the car. The price of the Euro was Rs 200.8 on the day the deposit was made. In his mind, that Rs 1 crore was worth €51,371. At the time, the estimate for the car including duties was Rs 1.72 crores. If we convert even that entire amount (including the duties meant to be paid in rupees) into Euros the price of the car comes out to €85,693. That means his maximum remaining payment was another €34,322 or Rs 72 lakhs. By the time the car was ready to arrive in December, the exchange rate had gone up to Rs 311.19. This meant the remaining Rs 72 lakh was now Rs 1.06 crores. On top of this, as the revised estimate sent by Premier details, another Rs 22 lakhs had been added in new duties. The price of the car had gone from the estimated Rs 1.72 crores in May 2022 to Rs 2.31 crores in December 2023. Since a little over Rs 1.03 crore had already been paid, Naeem Afzal assumed he would have to pay another Rs 1.29 crores to get his car.

He was wrong. Premier’s revised estimate asked him to pay Rs 1.77 crores – nearly

Rs 50 lakhs more than what Naeem Afzal expected, bringing the overall price of the car to Rs 2.8 crores. What was Premier’s logic? While the company did not speak with Profit on the record, we were able to get some information from senior Premier executives on the condition of anonymity. This executive explained to Profit that the Rs 1 crore was simply a deposit meant to function as a holding price on the order. It did not indicate partial payment on the vehicle. In other words, if you wanted to park an Audi in your garage, you first had to park Rs 1 crore in Premier’s bank account.

While no official comment came from Premier, this dispute was discussed in an email exchange between Naeem Afzal and Syed Farhan Hassan, the company’s Country Lead, and the executive that had been in touch with Naeem Afzal throughout this time. In this email thread, one statement from Farhan Hassan is quite clarifying.

“The advance payment made at the time of the vehicle order is a minimum requirement for booking the vehicle. The percentage of the advance payment is irrelevant because, upon arrival, we will assess customs duties, taxes, and the exchange rates in effect for the vehicle,” it reads. “Any corresponding charges due to changes in duty, taxes, and/or exchange rate fluctuations will be passed on to you. If there are no changes in customs duty, taxes, or exchange rates, we will not impose any additional charges on our customers. Conversely, if there are decreases in duty, taxes, or exchange rates, we will gladly reimburse you accordingly.”

The message here is clear. That Rs 1 crore was exactly that – one crore rupees. It did not indicate value in euros at the time nor was it

inflation protected. The estimate document from Premier sent to Naeem Afzal is actually a very fascinating document. It provides an interesting calculation that seems to lump together the new duties and convert them into Euros before arbitrarily deciding to calculate 80% of the car’s cost at the original rate and then subtracting that from the 80% cost of the car at the new exchange rate. The document does not clarify why the devaluation charges were applied on only 80% of this total value instead of on the entire 100% (as was being claimed by Naeem Afzal). According to one source within the Premier management, this had been their way of extending a favour to a customer that had to wait longer than expected even though the circumstances of that wait had been out of their hands. The calculation can be seen below.

It’s a favour: In an official revised estimate sent to Naeem Afzal, Premier charged devaluation on 80% of the value of the car. They claim this was a favour to a customer that had to wait longer than expected even though the wait time was not in the importer’s control.

In any case, Premier insisted its remaining payment was Rs 1.77 crores and Naeem Afzal insisted it was no higher than Rs 1.29 crores. The two parties were now locked in a battle of wills.

Where’s my money

Naeem Afzal was livid. He did not understand why his money had just been sitting with Premier losing value when it could have either converted it to foreign currency or at the very least put it in a bank account and gotten interest

off it. Instead, Premier either had that money parked in a bank account and was collecting interest on it, or was using it in their regular cash flows, or had possibly even invested it somewhere. In any case, the money was with Premier and they were now claiming Naeem Afzal would have to pay for the devaluation of that money.

Premier immediately pointed towards the contract Naeem Afzal had signed. Standard Audi sales contracts include clauses that protect them from situations exactly like this. Indeed, there is a price fluctuation clause which shields Premier the importer from any kind of financial hit due to rupee devaluation or duty changes. Premier also claims ownership of the car remains 100% theirs until 100% of the payment is made. Add to that a standard force majeure clause, which protects them from unexpected (but in Pakistan, very expected) delays or expenditures. Then there’s the kicker: the right to cancel the contract rests with Premier.

These contracts are designed exactly for situations like this. It might seem like a harsh deal, but Premier’s iron-clad contract would indicate they are protected from liability in such situations.

When Premier sent him the revised estimate in December 2023, Naeem Afzal said he was not paying a devaluation price on the Rs 1 crore he had paid back in May 2022. The dealership decided they would cancel the contract and send him his Rs 1 crore back. Naeem Afzal did not want this as well. The Rs 1 crore was now worth at least Rs 1.25 crores even if he had done nothing but put it in a savings account. He went to court against the cancellation and got a stay order.

The matter is still subjudice. The legal merits of the case will be determined by the court. One might sympathise with Nadeem Afzal. After all, it was not his fault imports got banned and his money stayed tied up with Premier when he could simply have been collecting interest on it. However, one must keep in mind that the clauses in the sales contract go to great lengths to protect the importer and Audi AG. It is designed to protect against shocks like this. There is no knowing what way the court might lean in this civil case. At this point, one might accuse Premier of pushing some harsh terms on their customers, but is that also illegal?

What happened next, however, is actually quite shocking.

Facebook criminal

What do you do with a disgruntled customer? This single question, more than anything else, is what matters in this story. Up until now we have detailed a dispute

between a customer and a company. No big deal disputes like this are common enough. Anyone in business knows that customers can sometimes be annoying, entitled, unfair, and downright dense.

Perhaps that is how Premier saw Naeem Afzal. Perhaps they were trying in earnest to explain something that he simply was not understanding. And when the matter could not be solved by talking, it ended up in court. This finally made Premier sweat. And no, it was not necessarily because the legal case against them was particularly potent. When Naeem Afzal filed his case, he filed a petition against Audi Pakistan, which was the name of the company he thought he was dealing with. He also made Audi AG, the company in Germany, a party to the case. When he filed this case he discovered no entity by the name of “Audi Pakistan” existed. His complaint should have been addressed against Premier Systems (PRIVATE) Limited. Audi Pakistan was simply a branding term Premier was using on their letterheads and in their communications.

To Naeem Afzal this seemed to be a smoking gun. Up until this entire point, all of the dealings Naeem Afzal had with the dealership was under the letterhead of “Audi Pakistan”. The only time Premier Systems Lim-

ited was mentioned was when he made the Rs 1 crore payment. According to Afzal, when he had asked the dealership what Premier was, he claims they had told him that was the name of their importer without clarifying the dealership itself was run by Premier.

Lady Justice was not the only avenue this customer turned to. Sans money and sans car, Naeem Afzal did the only other thing he could: posting on social media. He became active in groups like Voice of Customers on Facebook which have become the boogeyman for many businesses afraid of getting bad reviews. He started writing emails to Audi AG but received no reply. He took to twitter and began tagging Audi AG with details of the case he had filed against Audi Pakistan and against them as well. Eventually he received confirmation from Audi AG in Germany through a twitter reply and through an email. They said their local partners are completely separate legal and economic entities with no ties to the Audi AG group. They were simply allowed to use the Audi branding because they were displaying their products.

Audi AG uses this technique elsewhere in the world as well. They want to sell their cars in markets that they do not want to enter directly, so they strike a deal with an investor

that becomes their importer in that country. In this case, it was Premier. Audi AG wants to have a “presence” in these countries through these importers and allow them to use their branding without actually having any legal skin in the game. For the local importer, it is a matter of prestige to be running the presence of an international brand with its branding at home. This was turning out to be a problem for Premier. Naeem Afzal’s crusade threatened to sour their relationship with Audi AG, which naturally does not want to have its name dragged in the courts and in the media. On top of this, these import agreements can prove to be fickle. This would not be the first time a luxury car importer would have their position threatened. A few years ago, when Porsche’s importer in Pakistan got in trouble over a similar issue, the Mansha Group wanted to take over the contract from Porsche Germany. This campaign was beginning to hit Premier where it hurt.

But there was no stopping Naeem Afzal. With a background in textiles, Naeem Afzal claims there is a difference between being an importer of a foreign company and claiming you are that company’s Pakistan arm. According to him, the term “Audi Pakistan” was misleading and gave him the impression he was directly doing business with the German car manufacturer and not with an importer. He points towards how other car sellers in Pakistan deal with this.

Mercedes’ official importer, for example, brands themselves as Mercedes Shahnawaz Motors. Similarly, BMW is known as BMW Dewan Motors. Even in the case of assemblers, the names are branded as Toyota Indus Motors, and Honda Atlas Motors. Suzuki is the only company that refers to itself as just Suzuki or Suzuki Pakistan, and that is also because Suzuki Japan owns the majority of the Pakistani company. In all these cases the names these importers or assemblers use are the names of actual legal entities (read companies), but that was not the case for Audi Pakistan. There is no entity called Audi Pakistan registered anywhere.

Naeem Afzal took this discrepancy and ran with it. It is entirely possible that he knew this was the case and had picked up on Premier using the “Audi Pakistan” branding earlier as well. After all, he has been involved in the import-export heavy business of textiles himself for many years. But once his dispute with Premier picked up, he decided to go after them for it. Since the case has become public, Premier has started using letterheads that use the Audi Logo and say “Premier Private Limited” instead of the Audi Pakistan branding.

In Naeem Afzal, Premier had found one of the most annoying things a business can face: a vigilante customer. Most companies

have the good sense to ignore such people. Sometimes they will send a quiet message and try to resolve the issue. Other times they will simply not give it the time of day. If the matter persists and attracts attention they might put out a professionally written statement. Premier’s response was to send a legal notice. It accused Naeem Afzal of defamation and told him to cease and desist and pay them damages. Naeem Afzal’s attorney responded to the letter. Normally, a legal notice is an out of court method employed by companies and people when they feel they are being criticised in public. It is actually quite simple.

A person says something about you on the internet. You send them a legal notice. You don’t actually have to spend money and take them to court but next time someone asks you about the accusation you can simply say “I have initiated legal proceedings and will wipe the floor with them in court”. A legal notice is, after all, the first step to initiating legal proceedings. Once you have that handy line in the bag there is no reason to actually take a contentious matter to court. So if a customer asks you about that man on Facebook that keeps telling him not to do business with you, you can always respond by telling them it is being handled by the lawyers. For that matter, you could even go ahead and pursue a civil case which can then be argued for years in the courts.

But Premier did not stop there. The company went ahead and pursued a case. Not only that, they significantly escalated the situation by filing a case against Naeem Afzal on criminal defamation charges under Sections 499 and 500 of the Pakistan Penal Code. The case was filed in Karachi.

As journalists around the country know all too well, this is a technique used by many to make a defamation case hurt as much as possible. You see, in Pakistan when a criminal case is filed, the defendant has to appear in person in court. The person filing the case, conveniently enough, does not have to do anything of the sort. It is a law designed to hurt the accused and cripple them even before a case is decided upon. Even though the showroom was in Lahore and so was Naeem Afzal, the case was filed in Karachi so he would be forced to undertake the expensive business of travelling to Karachi regularly. By March 2025, the court had issued warrants for his arrest, which by the way is standard procedure in any criminal case to summon the accused by a court.

Naeem Afzal was now implicated in a serious legal battle. The civil case he had filed was not so important. He now had to fight for his name which he felt had been sullied. That was far more important to him than the Rs 50 lakh he had been fighting over up until now. He responded by filing criminal cases of forg-

ery and deception against the leadership team of Premier as well. His argument was the same one he had been making on social media: How could Premier use the name “Audi Pakistan” when they were just an importer? According to him this was criminal misdirection. The entire saga was now spread over one civil court and two different criminal courts.

For Premier, their decision to pursue a criminal case was about to seriously backfire.

Can businesses afford bruised egos?

Let us take a break here for a second. A simple transaction between a buyer and an official importer has become a nasty legal battle. Court cases are nothing new in the world of business but most of them occur at times when there is some sort of financial dispute or fraud involved. Most businesses don’t exactly enjoy having their business dragged around in the courts.

But what did Premier achieve by pursuing this case? On the surface some of it makes sense. Naeem Afzal’s complaints and constant posts against Premier are not great for PR. People actually take reviews and customer feedback on Facebook very seriously. In a fast evolving market for automobiles, they do not want to have their credentials as “Audi Pakistan” questioned and would want to put an end to it. An even bigger problem would be if this affected their relationship with Audi AG in Germany. Premier sent notices to express displeasure and possibly scare Naeem Afzal but it did not seem to have the desired effect.

One might argue that Premier had no other choice. But the results of this single decision are not going in their favour. The first thing to happen was that the added attention from the legal battle resulted in misinformation spreading. On the 19th of September, PakWheels reported that Pakistan’s Customs Authority had suspended Premier’s rights to issue price evaluations on imported Audi cars. This is important because when a used Audi car is imported to Pakistan from, say Japan, customs charges duties based on the value of the car. This value is judged by Audi’s official importer. Similarly if it were a Mercedes or a BMW their official importers, Shahnawwaz and Dewan Motors, would make the assessment. These importers have it in their interest to set higher values since they want people importing cars through them and not directly from sellers in other countries.

The news spread quickly. Speculations began that Premier was in trouble with Audi AG and they might be stripped of their official importer status. Audi customers began to panic. They were worried about what would happen to their warranties and car service if the importer they had bought the car from was

suddenly out of business. With Premier not saying anything, shows began to air on television and posts began to circulate on social media with all sorts of unfounded rumors.

PakWheels said in a story three days later that “Earlier reports suggested that Customs Pakistan had suspended the Premier’s right to set import trade prices (ITPs). This has now been clarified: Premier retains its authority, and ITPs are still being issued by the dealership.”

Similarly, the news of warranties being suspended had no basis. The legal battle had aired what was up until that point a private matter into a public one and the facts of the case were lost in all of the noise.

Then there is another matter besides misinformation. How was this going to affect customer perception? Think of it this way. On the one hand, there is a person out there, a customer, that is saying negative things about your company. Perhaps he is taking personal pot shots against the company’s leadership. A company can be worried this will affect their market and spook away customers. But just how spooky can one guy (not an influencer by any measure, just a regular internet user) be for an entire company that has the backing of an international luxury car brand?

What this does do is create an atmosphere of mistrust. A customer might see a man ranting on the internet against a car brand which could raise some alarms for them. They might want the brand to clarify or ask for an explanation before conducting business with them. But then this same customer finds out that the brand has sued a former customer in a criminal capacity for posting about them on the internet. All of this after the brand was unable to provide the customer with their product at the original agreed upon price. That might actually end up spooking the customer more.

Even when it comes to their relationship with Audi AG, and overly aggressive response that complicates and delays a solvable dispute will not inspire confidence among the German executives.

On top of this, the clientele for Premier is high end. People buying Audis in Pakistan have wealth. No one is spending multiple crores on a car when they don’t have many more lying around. So even though a car manufacturer like Suzuki might theoretically be able to bully their customers, Premier might have a harder time taking on some of their clients. Then there is the fact that any high profile client that might be a public figure would not want to touch a car company with a messy legal battle on their books with a ten foot pole.

The noise around the criminal case and Naeem Afzal’s crusade on social media seems to have done more damage for Premier. Details of the case were warped. Existing Audi customers began to worry about what would happen if Premier’s import agreement would

get revoked. Would their warranties still hold? Rumors began circulating that had no basis. Media coverage remained confusing and Premier was not speaking with anyone or issuing a statement.

From a PR perspective, Premier was in a very good position to make a simple statement clarifying the matter in a simple and professional tone. Instead, they took serious legal action that put an already disgruntled customer in a tough corner. Naeem Afzal has responded in turn. He has filed criminal cases against Premier’s executives under Sections 420 and 468, entailing forgery and cheating. He also lodged complaints with the SECP and the CCP. And that is where it stands currently. After all of this came to the fore, Premier did finally issue a statement. It has been shared in full below.

The statement, which interestingly enough has the letterhead of “Premier” along with the Audi logo and no mention of the term Audi Pakistan, is belligerent in tone. While the press release clarifies issues surrounding Pre-

mier’s status and relationship with Audi AG, it also alludes to “false and misleading claims” being circulated on social media. It does not specify or get into the dispute with Naeem Afzal but does mention that PECA is a tool at their disposal. Essentially, Premier is trying to beat out the flames that their case had fanned. It was also a clear indication that they were not ready to put this matter aside and reach an out of court settlement. The cases would continue to be pursued.

This is where we stand. Premier and Naeem Afzal got in a tit-for-tat legal escalation match over a financial dispute worth Rs 50 lakh. For Naeem Afzal, the dispute has cost him time and money. He also feels the need to defend his honour. For Premier, their decision to pursue the case has magnified the issue far beyond any social media posts that their disgruntled customer might have been making. Even as the legal battles rage on, it is unlikely that the entire ordeal will end up being worth it to either party. n

Tepid growth for Colgate Palmolive Pakistan

Weakened consumer spending sentiment hit the company’s pricing power, though it was able to extract efficiencies and continue to grow profit margins

Profit Report

Colgate-Palmolive (Pakistan) closed its financial year with numbers that speak to a market stuck in second gear but an operator that has learned to squeeze more from every rupee it spends. Net sales for fiscal year 2025 edged up just 2.0% to Rs116.0 billion from Rs113.2 billion a year earlier – nearly flat in real terms given inflation – but gross profit rose 10.0% to Rs40.7 billion, lifting the gross margin to 35% from 33% and signalling cost and mix efficiencies across the portfolio. Operating profit climbed 11.0% to Rs27.4 billion, while after-tax profit increased 6.0% to Rs18.4 billion. Earnings per share improved to Rs75.8 from Rs71.2, and the full-year dividend per

share ticked up to Rs61.5 from Rs57.0.

The year’s final quarter told a more subdued story, underscoring the delicate balance between pricing and volume. Fourth-quarter net sales slipped 1.0% year-on-year, gross profit fell 7.0%, and profit after tax was down 17.0% versus the same three months of last year. Net margin for the full year nevertheless rose to 16% from 15%, pointing to structural gains that persisted despite a soft exit to the fiscal period. Management characterises the topline performance as “in line with inflation” for the year ahead, a hint that volume-led growth remains hard to conjure in the current consumer climate.

Peel back the layers and the drivers are clear. The company says it remains heavily dependent on imported raw materials –about 75% of inputs – so the relatively stable exchange rate during the year was a tailwind

for margins, particularly in oral care, which management identifies as the highest-margin category. Detergents, by contrast, carry the thinnest margins and were the most disrupted this year by a growing cohort of non-compliant, unregistered retailers who benefit from a structurally lower cost base and have pressured prices and shares for tax-compliant producers.

Even so, Colgate-Palmolive (Pakistan) kept investing behind the franchise. It quietly diversified further into cleaning supplies, test-marketing a new detergent brand –Toofan – during the year, and commissioned in-house solar capacity at its Sundar plant capable of generating 367 MWh annually, a small but symbolic hedge against energy volatility and an operational efficiency lever that complements the margin story.

Meanwhile, the company continued

category development work in its crown jewel, oral care. Management puts Pakistan’s per-capita toothpaste consumption at just 85 grams a year – well below developed market benchmarks – and is running usage-raising awareness campaigns to expand the category rather than relying solely on price and promotions. The strategic logic is simple: if oral care is the fattest-margin franchise, nudging usage habits upward can compound both social benefits and financial returns over time.

In market terms, management estimates a detergents share in the 30–38% band and a commanding 50–60% share in dishwashing, testament to brand equity and distribution muscle, even in a price-sensitive environment. Yet those same numbers also reveal the battleground: categories with big informal-sector footprints and high elasticity will continually test how much pricing power any branded player can wield.

Colgate-Palmolive hardly needs an introduction worldwide: a 200-year-old consumer goods house whose red-and-white smile is almost a lingua franca for toothpaste, and whose Palmolive equity has long anchored personal and home care aisles across continents. In Pakistan, the subsidiary’s journey reflects the classic multinational template – transfer of brands and processes, localisation of manufacturing and sourcing where possible, and a long march of route-to-market refinement to make premiumised hygiene and home-care habits affordable for a mass-market consumer.

The Pakistani arm’s evolution over the past decade has mirrored the push-and-pull of the local macro cycle. Episodes of rupee depreciation forced procurement and pricing pivots; fiscal measures widened the price gap versus untaxed informality in select categories; and energy costs swung from painful to manageable and back again. Against that backdrop, the fiscal year 2025 margin expansion stands out. With 75% of raw inputs imported, a calmer currency provided relief at the factory gate, while the company’s portfolio management, cost discipline and operational tweaks (including the new solar installation) show up directly in the 200-basis-point lift in gross margin and the 11.0% gain in operating profit –despite only 2.0% sales growth.

The company has also been willing to experiment. The Toofan detergent test signals a readiness to refresh the lower-margin end of the mix and defend relevance in a segment where the non-compliant channel has nibbled aggressively at share. Such launches seldom rocket to scale overnight in a cluttered aisle, but they hint at a tactical blend of innovation and localisation that can help hold the line on volume without giving away the store on price.

Looking ahead, management’s near-term

growth guide – “in line with inflation” – is realistic. It implies that the story for fiscal year 2026 will likely be one of continued margin housekeeping, tight execution, and selective bets to cultivate usage and defend share, rather than a return to heady double-digit real growth. That framing aligns with the company’s experience in 4Qfiscal year 2025: demand remains elastic, and the trade structure – especially where informality thrives – keeps threatening to turn price passes into share leaks.

A scan of the detailed fiscal year 2025 scorecard shows the levers at work. Cost of sales fell 1.0% to Rs75.3 billion even as net sales inched up, yielding that 10.0% gross profit increase. Selling and distribution outlays rose 9.0% to Rs12.0 billion – intelligible in a year of brand support and test launches – while administrative expenses rose 18.0% to Rs1.4 billion, together lifting operating costs but not enough to offset efficiency gains. Other income, which can be lumpy, decreased 23.0% to Rs3.9 billion; other charges ticked up 2.0% to Rs2.0 billion. Finance charges were essentially flat at Rs0.2 billion, reflecting a balance sheet that remains conservatively run. Profit before tax advanced 5.0% to Rs29.1 billion; tax expense rose 4.0% to Rs10.7 billion. Free cash flow is not disclosed in this note, but the stable dividend progression – from Rs57.0 per share to Rs61.5 – speaks to confidence in cash generation.

The category read-through is equally instructive. Oral care, the highest-margin vertical, benefited most from exchange-rate calm and the company’s category-building programmes. Detergents, by contrast, faced the pincer of informal competition and margin drags, underscoring why Colgate-Palmolive keeps nudging its mix towards categories where brand, formulation and habit formation yield defensible economics. Dishwashing – where management claims a 50–60% share – sits somewhere in the middle: still competitive, but with a brand moat substantial enough to defend price architecture more effectively than in laundry.

On the manufacturing side, Colgate-Palmolive operates facilities that enable local production of key lines, reducing lead times and currency exposure. During fiscal year 2025 it augmented the Sundar plant with a solar installation expected to generate 367 MWh annually, a modest contribution that nonetheless lowers grid dependence and provides a visible sustainability marker at a time when energy availability and cost remain strategic variables for Pakistani manufacturers. Beyond the energy project, there were no splashy factory announcements in the note, but the test-market work in detergents suggests ongoing line-level investments and retooling as the company iterates.

The headcount is not disclosed in the briefing note and recent public materials have been light on specifics; however, the footprint implied by the company’s nationwide distribution and multi-category operations suggests a sizeable direct workforce complemented by third-party partners across logistics and retail activation. What is explicit is the import intensity of inputs – three-quarters of raw materials – which continues to shape both cost structure and working-capital management. Any sustained rupee volatility would therefore ripple quickly through gross margin, while import frictions can complicate production planning.

Colgate-Palmolive’s fiscal year 2025 narrative lands at the intersection of three realities in Pakistani consumer goods.

First, pricing power is not what it used to be. After two inflation-heavy years, households remain cautious; the replacement cycle even in low-ticket FMCGs has stretched, and down-trading is pronounced in categories like laundry. That makes every rupee of price increase an invitation to volume trade-offs unless brand salience and product superiority are unmistakable. The final quarter’s dip in sales and profit illustrates just how quickly elasticity can bite when the market tightens.

Second, the informal channel is more muscular. Management’s reference to “unregistered retailers” is a pointed reminder of the structural tax and compliance asymmetries that tilt unit economics in favour of non-compliant players. In laundry especially, that can mean shelf prices that compliant brands struggle to match without destroying margins. The result is a grinding competitive equilibrium where share defence relies on innovation, pack-price architecture, and relentless costout to fund consumer value.

Third, operational efficiency is the currency of resilience. The 200-basis-point gross margin expansion on anaemic sales growth demonstrates that procurement, formulation, manufacturing yields, energy management and freight discipline are not back-office niceties; they are the P&L. The energy initiative at Sundar is small in absolute terms, but symbolises a broader philosophy: bring volatility under control where you can, even at the margin, to defend profitability when the topline cannot pull its weight.

The result is a company that eked out higher profits on flat sales, protecting margins while preparing the ground for when demand finally re-accelerates. If inflation continues to cool and FX remains broadly steady, fiscal year 2026 could look like fiscal year 2025 but with slightly more sunshine: modest nominal sales growth, a disciplined cost base, and a tilt towards categories where science, trust and habit change create durable value. n

Trump tariffs expected to boost PEL’s exports to the US

High tariffs on China and Mexico offer PEL the opportunity to enter export markets in a way it has previously struggled to in the past

Profit Report

Pak Elektron Ltd (PEL) has done something it has seldom managed in its nearly seven decades of manufacturing: it has begun to export at scale. In March this year, the Lahore-based company shipped its first batch of distribution transformers to the United States – an inaugural consignment that caps a stream of orders worth about $44 million and puts PEL on track, by its own and analysts’ estimates, for $50 million in export sales in calendar 2025 and potentially $100 million in 2026. For a business whose fortunes have traditionally risen and fallen with Pakistan’s domestic cycles, this is a step-change: exports that could contribute roughly a fifth of group revenue next year, with export gross margins materially above what PEL earns in the local market.

The context matters. Washington has maintained steep tariffs on Chinese electrical equipment and has tightened scrutiny on supply chains crossing Mexico (and to a lesser degree Canada), even as North American utilities grapple with transmission bottlenecks and long replacement cycles. That combination has created a price and capacity gap into which a cost-competitive, compliant supplier with shorter delivery times can walk. PEL, analysts argue, has arrived with a tariff advantage –the landed duty for Pakistani shipments is set at about 19% – and with a logistical pitch built around delivery in eight to nine months, against an industry norm that can stretch to two years. For a US grid chasing a surge of building to keep pace with the voracious electricity needs of the artificial intelligence boom while replacing ageing hardware, that timing matters as much as price.

What sets the new phase apart is not just the dollar value of orders, but their quality. The export book spans units from 225 kVA up to 9,000 kVA, including higher-capacity models worth about $3 million, indicating PEL is not merely offloading low-end inventory. Margins tell the same story. Where domestic gross margins in the power division have hovered in the mid-20s (about 25–26%), exports are pencilled

in at above 40%, with the blended group gross margin projected to climb from about 28.5% in CY25 towards 30% in CY27 and beyond, as exports scale to nearly one-fifth of total sales. The margin uplift is visible even in the company’s in-year progression: net margins in the power division improved from 5% in CY24 to just under 10% in the first half of CY25.

This is unusual territory for PEL. For most of its life, the company’s export line was more aspiration than anchor, susceptible to price squeezes abroad and forex shocks at home. The US transformer orders do not erase those old vulnerabilities, but they do reframe the risk-reward. If PEL delivers consistently – on quality, certifications, after-sales and timelines – the export channel could become a structural complement to its domestic base, rather than a cyclical side bet.

PEL’s journey from grid gear to fridges

PEL’s story starts in 1956, when Malik Brothers set up an electrical manufacturing shop in collaboration with Germany’s AEG. Commercial production of transformers began in 1958; air conditioners followed in 1981 as the Saigol Group, which acquired PEL in 1978, diversified the product set into consumer appliances. The company listed on the Karachi bourse (now Pakistan Stock Exchange) in 1988 and, by 1992, had secured an ABB USA licence to produce energy meters – an early signal of the technical direction that would later underpin its US pitch. A timeline of product milestones – refrigerators in 2011, inverter air conditioners in 2016, 4K smart Android TVs in 2018, semi-automatic washing machines in 2019, and the entry to the US market in 2024 – reads like the long, iterative arc of a manufacturer learning to move up the value chain while broadening its consumer footprint.

Today, PEL straddles two distinct but complementary businesses. Its power division designs and manufactures power and distribution transformers, switchgear, grid-station equipment and energy meters, and also undertakes EPC assignments. Its appliances

division produces refrigerators and deep freezers, air conditioners, microwave ovens, washing machines, water dispensers and LED televisions. The split has swung between the two over cycles – pandemic-era squeezes and import controls hurt appliances, for instance – but management expects power to reclaim share as exports scale, with division revenue contributions converging again over the medium term. A product map on page 7 of the analyst note lays out the full catalogue across both divisions.

Ownership remains firmly with the founding group: the Saigol family controls about 53%, with foreign companies holding roughly 12%, financial institutions 10%, and the general public about 12%. That concentrated but diversified base has historically allowed PEL to ride out rough patches without dilutive equity raises, while leaving room for market float and institutional coverage.

In the power business, PEL claims strong domestic shares across categories: roughly 90% in power transformers (a figure that speaks to installed base and tender performance), about 17% in distribution transformers, 25% in switchgear and 18% in energy meters. Historically, that dominance has not translated into export heft, largely because global tenders favoured scale and long-standing supplier relationships. The US opening resets some of those entry barriers. Analysts estimate export revenue could reach Rs12–15 billion in CY25–26 on current order visibility, amounting to about 19% of total revenue next year. The power division’s net margin, which improved to about 9.8% in the first half, is expected to trend higher as the export mix deepens.

In appliances, PEL’s performance is tied to Pakistan’s household economics and the weather. The searing summers of recent years have pumped demand for cooling; easing inflation and better credit availability have helped, too. Appliance revenue jumped 80% to about Rs40 billion in CY24 and surged 54% year-onyear in the first half of CY25. Management and analysts now pencil in about 25% growth for CY25, led by refrigerators and air conditioners. New alliances – most notably a February 2025 tie-up with Electrolux and an April 2025

expansion with Panasonic – should bolster the range in LED TVs and premium “smart” solutions, even if licensing fees shave a sliver off margins. Refrigerators/deep freezers are at the core, ACs a growing slice, and smaller categories like water dispensers and washing machines building out the tail.

A third leg that could become material by 2026 is advanced metering. With the government planning a transition to Automated Meter Reading (AMR) meters, PEL – already licensed with all the distribution companies – has a first-mover line of sight. AMR units can be priced at almost three times traditional meters and are among the highest-margin products in the portfolio. If the policy timetable holds, meter sales could post growth of about 25%, adding another high-return stream to complement exports.

Why the US window opened – and how PEL is trying to walk through it

The trade maths are straightforward. The US has applied steep punitive tariffs on Chinese transformer imports, while supply from Mexico and Canada – the two biggest US sources –has been pinched by capacity constraints and longer lead times. Pakistan, by contrast, faces a significantly lower tariff rate of about 19% on this equipment, and PEL is offering delivery within eight to nine months, less than half the delivery time many US buyers have been quoted. The pricing room created by the tariff wedge, plus PEL’s faster timelines, add up to a compelling proposition for municipal utilities and EPC contractors staring at backlogs and grid-hardening mandates.

Of course, an orderbook is only as good as its execution. Transformers are safety-critical assets; failures are expensive and reputation-damaging. PEL’s pitch leans heavily on compliance with international standards and on total cost of ownership (TCO) rather than initial ticket price. If it can back that promise with field performance and service discipline, repeat business could compress its customer acquisition costs and soften the cyclicality that has plagued domestic tender-led sales.

The financials:

where the growth – and the risks – are

The top line has already snapped back from the macro trough. Group revenue rose 37.3% year-on-year to Rs53.1 billion in CY24, led by ap -

pliances and better power-division margins. Analysts project revenue of about Rs63.9 billion in CY25 and Rs80.8 billion in CY26 as exports scale and appliances keep their momentum. The gross margin is expected to lift from 28.5% in CY25 to about 30% in CY26–27, while EBITDA margin is modelled to move into the low- to mid-20s. The earnings sensitivity is visible in the bottom line: EPS is forecast to climb to Rs4.9 in CY25 and Rs9.3 in CY26, with return on equity improving from single digits into the midteens. The model keeps dividends on hold in the near term as working capital absorbs cash (exports are hungry on receivables and inventory), with a potential resumption around CY28 if the balance sheet strengthens as planned.

Over the last cycle, domestic margins fluctuated with raw-material volatility and price competition. As exports rise from a trivial base to nearly a fifth of revenue, the blended margin steps higher, cushioning future cost spikes. That shift is mirrored in division-level profitability: power-division net margins have been climbing as export mix expands, while appliances settle into a steadier, mid-single-digit to low-double-digit zone depending on seasonality and pricing power.

Valuation mirrors the earnings trajectory. On forward numbers, the stock trades near 6.5 times CY26 earnings and about 5.5 times CY27, a sizeable discount to its fiveyear average multiple of around 12.4.

There are, inevitably, risks. The power sector at home remains a drag: cash-strapped utilities and delayed projects can sap domestic order flow. Export dependence introduces geopolitical and policy risk; a shift in US tariff policy or an easing of North American capacity bottlenecks would crimp PEL’s advantage. Appliance competition is intense – both from local assemblers and from imported brands – and consumer purchasing power remains hostage to inflation and rates.

Set against those risks are a few stabilisers. First, working-capital discipline: keeping dividends suspended while exports ramp is unpopular with income-seeking investors but prudent if receivable cycles lengthen. Second, policy tailwinds in metering: if DISCOs stick to AMR conversion timetables, the meter line could provide high-margin ballast. Third, brand and service density in appliances: the distribution map illustrates a network that can win where after-sales confidence is decisive. Finally, cost learning: repeated, time-bound export runs tend to squeeze waste out of production; if PEL turns that learning back into domestic tenders, it can defend share without sacrificing margins.

What the next 24 months could look like

On the export side, watch three data points: (1) booked vs delivered revenue (execution and milestone acceptance in the US can shift recognition), (2) repeat orders from the same counterparties (a cleaner signal of product-market fit than new-logo wins), and (3) the spread between export and domestic gross margins (to test if the >40% export margin thesis holds after freight and warranty).

In appliances, the June–September quarter will again be decisive; if refrigerators and ACs hold their gains without destructive discounting, the division could meet the 25% growth case even if consumer sentiment wobbles. The Electrolux and Panasonic partnerships will need to show up not only as shelf presence but as mix upgrades – higher average selling prices with acceptable sellthrough – and as serviceable differentiation rather than badge engineering.

For meters, the story is policy and procurement. Licences from all DISCOs give PEL a head start, but AMR rollouts require funding, system integration and cyber-secure back-ends. The opportunity is substantial precisely because it is technically demanding – and because the unit economics (prices nearly 3 times legacy meters) justify the investment for both the utility and the supplier. Expect PEL to talk up this pipeline as pilots convert to framework contracts.

From local champion to export contender?

The most interesting question, strategically, is whether PEL can convert a tariff-created opening into a capability-driven moat. Tariffs come and go; delivery credibility, field performance and customer intimacy – especially in a market as exacting as US utilities – are harder to dislodge. If the company uses the next two years to bake in process certifications, strengthen design and testing, and build a small but loyal US customer set, it will have shifted its identity: no longer just Pakistan’s transformer incumbent and a midtier appliances brand, but a credible exporter with optionality in metering and EPC.

That, in turn, would change how investors model the company. Instead of valuing PEL as a domestic cyclical with a second engine that sputters, the market could value it as a two-engine business with counter-cyclical export earnings and secular appliance growth – both supported by improving margins. n

Competition Commission staff drowns its sorrows in Murree Brewery products after hearing Murree

Brewery crossed $100 million in yearly revenue

By Profit

The Competition Commission of Pakistan (CCP) staff ordered a huge shipment of products from the Murree Brewery Corporation after the company announced that it had recorded its first-ever annual revenue figures that exceeded $100 million.

”It’s nothing, just some Bigg Apple,” said a source at the CCP on the condition of anonymity despite taking hearty gulps from a bottle that was clearly not Bigg

Apple.

The Rawalpindi-based beverages maker, which holds a nigh monopoly in its niche, reported net revenue of Rs28.6 billion for the year ended 30 June 2025, up 20.0% from Rs23.8 billion last year. Net profit rose 24.4% to Rs3.3 billion, as gross margins widened and finance income stayed elevated.

”You know what, our job is to take down all monopolies and oligopolies,” said anoth-

er CCP staffer present at the occasion. “And we do drop the Hammer of Thor on them. Yes, there are times when we are unable to do so, but even in those instances, these cartels are scared of us.”

”But here we have these plucky little guys, proudly announcing it,” he said, while taking a swig. “Have some shame, man. At least for our sake. Don’t rub it in.”

“Why don’t you also come over to our offices and steal our lunch while you’re at it?

Pension Reckoning

Pakistan’s costly promise to its retirees has finally forced the state to confront the arithmetic of pensions. The change is overdue, but the test will be whether the reforms are executed with discipline rather than delay

Profit Report

Pakistan’s budget documents rarely make for gripping reading, but one number stands out in stark relief: more than one trillion rupees will be spent on pensions this year. A decade ago, the figure was a fraction of that. Today, pensions are on course to become one of the largest drains on the federal purse, rivaling even development spending. The promise of lifelong benefits to every civil servant and soldier who retires has swelled into a fiscal liability too heavy to sustain.

This summer, under pressure from international lenders and confronted by its own arithmetic, the government has begun to rewrite the rules. The newly notified Federal Government Defined Contribution Pension Fund Scheme will replace the traditional system for fresh entrants. Instead of an open-ended commitment by the state, pensions will now be tied to actual contributions from both employee and employer. New civil servants will put aside ten percent of their pensionable pay, matched by a twelve percent contribution from the exchequer. Over time, their retirement security will depend not on unfunded promises but on the balance that accrues in their pension accounts.

For existing employees, nothing changes. Their defined benefits remain intact. The reform is prospective only, designed to slow the growth of future liabilities. In reality, this is less a solution than a damage-control strategy. Pension bills have been rising at nearly thirty percent over two years, and much of this is driven by the armed forces. Military pensions alone are projected to reach 742 billion rupees in 2025–26, up by almost one third from just two years ago. Civilian pensions, though smaller, add another 243 billion rupees to the tally.

The blunt truth is that Pakistan has left the matter far too late. For years, economists warned that pensions were becoming a silent fiscal time bomb. Unlike salaries or subsidies, pensions are not discretionary; they are legally owed and politically untouchable. They accumulate relentlessly as each cohort of employees retires and lives longer. Attempts to rationalise or merge civilian and military pension heads have repeatedly run into resistance. Governments preferred to postpone reform, borrowing

more to meet obligations and hoping growth would someday outpace costs. That hope has not materialised.

The numbers tell the story. In 2023–24, the federal government spent 821 billion rupees on pensions. In the space of two years, the allocation has ballooned to more than a trillion. That is a larger increase than the entire annual budget for higher education, and one that eats into the fiscal space for health, infrastructure, or energy reforms. The burden is now crowding out the very investments that could expand the economy and generate revenues to pay for obligations.

The new contributory scheme is therefore as much a signal as a financial instrument. It signals that the government has finally accepted pensions as a structural problem rather than a footnote. It signals to lenders such as the World Bank that Pakistan is willing to align with global practice, where defined benefit schemes have long been replaced by contribution-based systems. And it signals to future employees that retirement will not be a gift of the state but the result of disciplined savings.

Still, the scheme is only a first step. It covers only new civil entrants from July 2024 and armed forces personnel from July 2025, with implementation for the latter still pending. That means the bulk of today’s workforce, which will retire over the next three decades, remains under the old unfunded system. The immediate fiscal savings are therefore negligible. For now, the pension bill will continue its upward climb, driven by the retirements of those already in service.

This lag is unavoidable but it makes swiftness in execution all the more vital. Any delays in operationalising the new system, or loopholes that allow carve-outs and exemptions, will erode credibility. The architecture of the scheme is complex: contributions will be transferred electronically through the Accountant General’s office to designated employer pension funds. Authorised pension fund managers will be responsible for investment, record-keeping, and insurance coverage. Employees will see their contributions and balances listed on salary slips. Withdrawals will be restricted, with only a quarter of the balance accessible at retirement and the rest locked into long-term savings. All of this requires robust systems, coordination

across institutions, and oversight mechanisms that Pakistan’s bureaucracy has historically struggled to enforce.

The government has promised to set up a dedicated non-banking finance company to supervise the scheme. In the interim, the Ministry of Finance itself will stand in as regulator. Whether this interim arrangement becomes yet another open-ended stopgap remains to be seen. Success will hinge on building institutional capacity to manage funds transparently, publish returns, and prevent leakages. The slightest scandal could sink confidence in the system and give ammunition to those who oppose reform altogether.

The politics of pensions is also treacherous. For employees, the shift represents a trade-off: certainty of future state payouts is replaced with investment risk. While the government contribution is sizable, the change will inevitably be seen as a dilution of benefits. That makes communication essential. If new entrants perceive the system as unfair or poorly managed, morale within the civil service could suffer. If armed forces personnel resist, reform could stall altogether.

For all its challenges, the move represents overdue recognition of a simple truth: Pakistan cannot afford to carry the pension promises of the past into the future. The system is already consuming resources that the country desperately needs for growth and public services. Without reform, the state would eventually be forced into even harsher measures, such as cutting pensions outright or resorting to unsustainable borrowing. Both would be politically and socially destabilising.

The test now is not whether reform has begun, but whether it can be sustained and expanded. The defined contribution scheme must be implemented with discipline, free of exemptions, and monitored with transparency. It will not by itself resolve the trillion-rupee problem, but it could prevent tomorrow’s burden from becoming even heavier than today’s.

Pakistan’s pension reckoning has been delayed for decades. The bills are due, the arithmetic is unforgiving, and the margin for postponement has run out. What happens over the next few years will determine whether reform becomes a genuine turning point or just another entry in the long ledger of half-measures. n

Can fro-yo make a comeback?

In 2014 frozen yoghurt made a whimpering exit from Pakistan. Labeled a fad with no hope of resurgence, there is still belief in some that the internationally popular dessert can work in Pakistan

By Marvi Masud

In 2014, the frozen yoghurt business in Pakistan was melting away faster than a swirl left out in the sun. International chains like Tutti Frutti and Berrylicious, which had rushed the market with retail stores and marketing campaigns barely three years ago, were packing up.

Shuttered fro-yo outlets followed one after another in Lahore, Karachi, and Islamabad. What looked like a promising wave of international franchises targeting a health conscious clientele turned into a cautionary tale of overexpansion, a market that saturates far too quickly, and misplaced optimism.

Fro-yo’s first foray into Pakistan raised an important question: was Pakistan simply not ready for fro-yo, or was the execution not done right?

A decade later, that question remains open even as a number of new players try to tackle it. Frozen yoghurt has quietly returned to Pakistan’s food scene in the past couple of years. But will this second coming be any different?

The beginnings

The first fro-yo place to enter the retail market in Pakistan was Berrylicious. They started off in November 2011 as a minimalistic, grab-and-go set-up in Karachi’s Park Towers. Berrylicious was importing an unbranded fro-yo mix from California which proved to be quite popular. By the summer of 2012, they had opened up a flagship retail store on 26th Street in DHA Karachi.

That summer began the rise of fro-yo in Pakistan. A month after Berrylicious, the premium London based brand “Snog” launched two franchises in Karachi — one in Clifton and the other in Zamzama. In Punjab, the trend began with Tutti Frutti, a fro-yo brand from Los Angeles that set up their first branch at Bhera to attract customers stopping midway on the Lahore-Islamabad motorway. They quickly followed this up with multiple retail stores in Lahore, a franchise in Faisalabad and finally one in Karachi in May 2012.

The concept of fro-yo caught on quickly. In the initial days, not only was it a new kind of sweet treat but it also had added novelty.

Customers would walk into retail stores with machines lined up and pump the fro-yo out themselves and get their toppings before having their cup weighed and paid. The craze for froyo was strong enough to get the attention of ice cream manufacturers in Pakistan. Unilever Pakistan launched a fro-yo variant under its Cornetto brand, called Cornetto Fruity-Yo and Igloo launched Igloo Fro Yo in March 2012 to be sold at retail stores.

Then the problems started. Frozen yoghurt was very much still a new product people were getting used to. The initial novelty of any new product always wears off. The question is always how well a business can sustain regular interest in the product. In the case of fro-yo, too many retail stores were popping up far too close to each other. On top of this, the retail stores were expensive to run. These were usually large shops the size of small cafes. Initially, the competing fro-yo brands tried to out-price each other but this did not last long. The costs of maintaining retail franchises were too high and the brands had to increase their prices. Very soon a situation developed where fro-yo was an expensive product with too many players

and not enough customers. The excitement and optimism of the people entering the fro-yo business made it saturated very quickly.

Resurgence on the cards?

Frozen yogurt works best when it presents itself as an affordable indulgence. It costs less than a full café meal but still feels like a treat. In 2014, that positioning was weakened by poor branding and rapid overexpansion. Too many assumed international names would carry the concept. They overlooked the importance of the overall experience, how the space looks, how you feel while balancing a cup piled high with toppings.

As a result, by the end of 2014, the fro-yo market had been gutted in Pakistan. All that remained were a couple of retailers in Lahore and Islamabad running single machines out of their cafes. A branch of TuttiFruiti reappeared in Lahore for a couple years between 2016-18 until that disappeared too.

It has only been recently that fro-yo has made a bit of a comeback. And it seems they have learned lessons from the past.

Today, fro-yo chains are more careful. Locations are chosen with intent. Branding leans into lifestyle cues instead of only pushing the “healthier ice cream” idea. Rather than opening everywhere at once, operators concentrate on high-traffic areas where young people already gather. The model feels less like a gamble, more like patience.

A big driver for these new fro-yo places are Gen Z customers that have grown up watching trends travel instantly across borders. Think of it this way. Pizza Hut was founded in 1958 in Kansas. This would be the first international fast-food franchise to arrive in Pakistan in 1993. KFC would come in 1997 and McDonald’s would follow in 1998. Go back 30 years and trends were slow to travel across borders. It would take a cousin coming from abroad to tell you about the latest fad in American High Schools. But with the advent of the internet and global mass media consumption, trends travel much faster.

Bubble tea in Seoul, matcha lattes in New York, and Dubai Chocolate —these are all part of Gen Z’s visual vocabulary as soon as they become popular anywhere in the world. And Gen Z wants their local versions to feel just as polished. But what really sets this generation apart is that many of them are now in the workforce. They have jobs, disposable income, and a willingness to spend on experiences that feel global but are accessible at home.

For them, frozen yogurt is not just dessert. It is a small luxury they can afford regularly, a treat to enjoy after work or while hanging out with friends. The self-serve format fits their preference for personalization, but it

is the ability to pay for it themselves that gives the product weight. In many ways, the fro-yo cup has become a symbol of Gen Z’s economic independence as much as their taste for novelty.

YoFroYo and the local comeback

Perhaps nothing shows this shift better than YoFroYo, a Karachi-born brand that has grown steadily since its launch.

One of its owners, Nisha Zohaib, describes it as a family dream. “We loved froyo on every international trip and kept wishing Karachi had a place like that. We decided that if it didn’t exist, we would build it.”

What began with one swirl in Khayaban-e-Shahbaz in December 2023 soon expanded to Tipu Sultan in 2024 and, most recently, to Islamabad in 2025. Its success tells us how different the market looks now. Families, young professionals, and Gen Z students make up the core audience.

Much of YoFroYo’s edge lies in its relentless focus on quality and product development. Machines are cleaned daily, which is very important when it comes to maintaining the taste and quality of dairy products. The inhouse R&D constantly experiments with new options, testing and tasting until only the best flavors make it to the menu. Currently, flavors are grouped into three categories—signature, seasonal specials, and limited edition, ensuring novelty without overwhelming choice.

The same discipline applies to toppings. From fresh fruits to bobas, gummies, wafers, and brownies, everything is checked daily by the quality control team. “If it’s not fresh, it doesn’t go on the bar. Simple,” Nisha says. This consistency has helped YoFroYo build a reputation in a category that once failed to inspire loyalty.

For Nisha, YoFroYo’s USP is not just what’s in the cup but the act of creating it. “YoFroYo is the pioneer of turning frozen yoghurt into an experience. It’s about the fun of making it yours.” The self-service model, with pumps for dispensing yogurt, gives customers the freedom to design their own cup . The outlets themselves are designed to be spacious, allowing customers to linger, socialize, and enjoy the atmosphere as much as the product.

YoFroYo has also become a hub for promoting young creatives, providing young talent a space to conduct workshops. “We want them to feel that dreams do come true, one step at a time. We’re arranging that first step for them,” Nisha adds.

And Karachi is not the only place where frozen yoghurt is making a comeback. A popular Lahore-based store called Baked, which also displays products from different cafes, cloud kitchens and home chefs in addition to their own products, has been stocking fro-yo for more than a year. With four retail stores in Lahore in-

cluding a new massive flagship store in Gulberg, people have been lining up for their fro-yo as well. They keep two machines only at each store and change the flavours and toppings regularly to keep things fresh.

A stronger backdrop

Pakistan’s economy, though far from perfect, has matured enough to create room for these indulgences. Urban middle-class households now dedicate more of their budgets to eating out. Coffee chains, burger joints, bubble tea spots, and now fro-yo outlets benefit from this willingness to pay for “small luxuries.” The scale may be modest compared to regional neighbors, but the direction is clear.

This context matters. In 2014, the gap between aspiration and affordability was wide. Frozen yogurt felt expensive without feeling valuable. In 2025, it feels like a modest treat within reach, especially for young professionals and students who see food as part of their identity. Keep this in mind as well: frozen desserts are a pretty large market. According to a Euromonitor report from this year, the sales of frozen desserts in the last financial year was Rs 87 billion, up 26% from Rs 71.6 billion last year. According to the report, the share of frozen yoghurt in this is non-existent. Of course, the return of fro-yo has only just begun and cannot be compared to the ice cream giants that exist in Pakistan. However, the report does point out that there is a very clear demand for healthier alternatives to ice cream and frozen desserts.

‘The ice cream market in Pakistan is witnessing a growing demand for healthier alternatives. Sugar-free, low-fat, and high-protein ice creams are gaining popularity among consumers looking for guilt-free indulgence. Additionally, some local and premium brands are using natural sweeteners like stevia and honey instead of refined sugar to attract health-conscious buyers,” it reads. But could this alternative be fro-yo?

More than dairy and toppings

The comeback of frozen yogurt is less about dairy and more about timing, culture, economics and most importantly, execution.. Markets are not fixed. A product that fails in one decade can thrive in another, not because its recipe has changed, but because its consumers have.

In 2014, fro-yo fizzled out under the weight of poor strategy. In 2025, it has returned to a landscape shaped by Gen Z confidence, evolving consumer habits, and a sturdier economy. Whether this moment belongs to the frozen yogurt category as a whole or to standout players like YoFroYo remains to be seen. n

One more round of circular debt restructuring and why it still won’t fix the problem

The new instrument is an innovative structure to help ensure that the problem at least creates partial self-correcting mechanisms, but the government is still punting on the reforms needed for a permanent fix

Profit Report

The government’s latest attempt to tame the beast that is circular debt looks, on paper, like a genuine breakthrough: a cheaper pile of money, a clearer payment cascade, and – if all goes to plan – breathing room for the fuel suppliers and power producers that keep the lights on. Yet talk to anyone who has covered this saga over the past decade and a half, and you will hear a familiar refrain. The arithmetic that creates circular debt is still very much intact. The state is rearranging liabilities to buy time, not solving the pricing, collection, and cost‑recovery problem that causes arrears to spiral.

Below, we unpack the transaction now on the table, trace the origins and evolution of circular debt since 2008, and examine why – despite real near‑term relief – this fix will not end the cycle. We also explore how the energy transition at the consumer end, especially the rapid pivot to rooftop solar, may sharpen the challenge by eroding the utility revenue base even as capacity charges remain fixed.

What the new transaction actually does: cheaper money and a cleaner queue

The government has orchestrated a large refinancing of the power sector’s arrears, centred on a Rs1.225 trillion syndicated bank facility priced at KIBOR minus 0.9%. The facility will replace a medley of higher‑cost obligations that have accumulated over years: independent power producers’ (IPPs) penal late‑payment charges – often referenced to 3‑month KIBOR plus 200–450 basis points – and interest on loans parked at Power Holding (Pvt) Ltd (PHPL), historically levied around KIBOR + 2%. By swapping this stack of expensive liabilities for a single, cheaper instrument, the authorities expect to shave roughly 1.5–5% off the implied finance cost on the relevant portion of the debt.

A key design feature is how the refinancing is to be serviced. The plan channels

Debt Service Surcharge (DSS) receipts –currently Rs3.23 per kWh under the PHPL surcharge – towards the annual interest and principal payments. Any excess collections against this surcharge are earmarked for accelerated principal retirement over six years. To reduce the risk that the surcharge breaches an administrative cap in a high‑rate environment, the FY26 budget removed the 10% DSS cap, creating headroom for collection targets that gradually decline to zero by FY31 as the loan amortises. A residual Rs~436 billion of circular debt not covered by the new bank facility is intended to be absorbed via the power‑sector subsidy line.

The starting point of the liability clean‑up is an existing power circular debt stock of Rs1.661 trillion. Within that number sit Rs908 billion of payables to power producers, Rs93 billion owed by power generation companies (GENCOs) to fuel suppliers, and Rs660 billion parked in PHPL. The Rs1.225 trillion bank facility is sized to retire all PHPL loans (Rs660 billion) and address Rs565 billion of interest‑bearing arrears to power producers. What remains – ~Rs436 billion – is meant to be financed by allocations under the ~Rs1 trillion power subsidy envelope.

Who benefits first? Cash will move from Central Power Purchasing Authority (CPPA‑G) to RLNG power plants (notably National Power Parks Management Company Ltd (NPPMCL), Quaid e Azam Thermal Power (Pvt) Ltd (QATPL) and Nandipur Power), flow through Sui Northern Gas Pipelines (SNGPL), and ultimately reach Pakistan State Oil (PSO) – albeit with some lag. Analysts expect PSO to be the primary beneficiary, with a conservative impact estimate of roughly Rs100 per share, underpinned by expected recoveries on RLNG fuel receivables. PSO will likely be able to clear receivables of ~Rs64–74 billion, equating to ~Rs136–157 per share depending on the accounting cut‑off.

That improvement is already visible: PSO recovered Rs75 billion from SNGPL and Rs14.8 billion from HUBC, used excess liquidity to trim FE‑25 borrowings by Rs89 billion to Rs356 billion as of June 2025, and saw finance costs fall to Rs34 billion in FY25 from Rs52 billion in FY24. The circular debt

cash‑through should further improve PSO’s working capital and net finance costs. It is not just PSO. The government also intends to settle outstanding dues of coal power plants, making HUBC, Lucky Cement (LUCK), Engro (ENGRO), Fauji Fertiliser Company (FFC), and Thal (THALL) clear secondary beneficiaries in the listed space. Stake‑adjusted numbers crunched by analysts suggest HUBC’s overdue receivables via China Power Hub Generation Company (CPHGC) (~Rs53 billion), Thar Energy Ltd (TEL) (~Rs12 billion), and ThalNova Power Thar (Pvt) Ltd (TNPTL) (~Rs11 billion) –about Rs28 per share on a stake‑adjusted basis – as well as Lucky Electric Power Company Limited (LEPCL)’s trade debts (~Rs19 billion, ~Rs13 per share) and Engro Powergen Thar Private Limited (EPTL)’s receivables (~Rs50 billion, ~Rs21 per share). For LUCK and ENGRO, the analysis prudently applies a 20% discount to reflect a potential LPS (late‑payment surcharge) waiver, though clarity is still pending, particularly for China ‑ Pakistan Economic Corridor (CPEC) independent power producers (IPPs). The note flags that disbursements will follow a one‑month assessment, after which the government will have three months to draw and fully utilise the facility – timelines that could, in practice, accelerate.

Finally, look at the FY26 power subsidy lines. A consolidated view of Water and Power Development Authority (WAPDA), Pakistan Electric Power Company (PEPCO), and Karachi Electric Supply Company (KESC, or K Electric) shows ~Rs1.036 trillion budgeted, including Rs249 billion for inter‑DISCO tariff differential, Rs125 billion for K‑Electric tariff differential, Rs95 billion to IPPs, and a Rs400 billion lump‑sum provision. This is the cushion meant to absorb the residue that the bank loan does not refinance – and to smooth tariff‑differential pressures across utilities and regions.

In financial‑engineering terms, the state is consolidating scattered arrears into a single, cheaper, time‑bound loan serviced by a dedicated surcharge, while using the budget to mop up the leftover. That should lower interest costs and improve liquidity across the sector’s cash‑starved nodes over the next 12–24 months. But the arithmetic

that generates arrears remains in place.

Why circular debt happens in the first place: the tariff–cost gap the budget cannot fully fill Circular debt does not start in bank ledgers; it starts in tariff policy and system perfor mance.

At its core lies a differential between the weighted‑average price at which elec ‑ tricity (and now, increasingly, piped gas and regasified LNG) is sold to end‑users, and the full economic cost of generating, transport ‑ ing, and delivering that energy. When the notified consumer tariff sits below cost recovery, the government promises to pay the difference via subsidies. That promise is honoured erratically, often in arrears and usually below the cost gap. The result is a cash shortfall that accumulates first at the distribution companies (DISCOs), then CPPA‑G, then at IPPs, fuel suppliers, and eventually banks – forming the now‑familiar chain of receivables and payables that define circular debt.

Three ingredients intensify this gap:

1. Technical and commercial losses. High T&D losses, theft, poor metering, and delayed billing reduce the effective revenue collected for every unit generated. Even if tariffs are notionally cost‑reflective, a 1–2 percentage‑point slippage in loss targets can create tens of billions of rupees in annual shortfalls.

2. FX and interest‑rate pass‑through. A large share of Pakistan’s generation cost – fuel, O&M, and capacity charges – have historically been indexed to the US dollar and domestic interest rates. And fuel price is still driven in large part by international markets. Depreciation and rate spikes drive the cost curve up faster than notified tariffs adjust, especially when reg ‑ ulator‑approved pass‑throughs lag political realities.

3. Take‑or‑pay contracts and seasonal demand. The post‑2013 build‑out of capacity (coal, RLNG, and other large plants) introduced substantial fixed capacity payments. These do not fall when demand weakens or shifts off‑grid; they are due regardless of actual dispatch in a given month. That creates a rising fixed‑cost floor that must be recovered from a consumer base straining under high tariffs.

On the gas side, a similar pattern is visible. Cross‑subsidies and delayed price adjustments create gaps between procure ment costs (especially for RLNG) and tariffs charged to consumer categories. As with power, the state’s promise to budget the difference is often partial and late, pushing state‑owned gas utilities and suppliers into

the same receivable spiral that haunts the power chain.

When the sums do not add up, arrears fester. Interest and late‑payment surcharges snowball. Liquidity stress prompts load curtailments and fuel supply interruptions – which, in turn, depress billable sales and collections. The circularity tightens.

How we got here: a brief history of creative fixes, 2008 to now Circular debt in Pakistan’s power sector is not new. It surged in 2008–09, when oil prices spiked and the state struggled to rec oncile subsidised consumer tariffs with es calating generation costs. The response was a series of ad‑hoc cash injections and the creation of Power Holding (Private) Limited (PHPL), a special‑purpose vehicle that could raise debt (TFCs/Sukuk, bank loans) to clear payables rapidly without showing the full fiscal hit upfront. The intent was always the same: park the liability, restore liquidity, and buy time for “structural reforms” that never quite materialised.

In 2013, the incoming government ex ecuted the most famous of these clearances, paying down roughly Rs480 billion of accu mulated arrears to IPPs and fuel suppliers. Much of that was financed via government borrowing and PHPL instruments. The move delivered immediate relief and briefly reduced load‑shedding, but the underlying mismatch between tariffs, losses and costs reasserted itself. Within a couple of years, arrears rebuilt.

Between 2015 and 2018, as new capaci ty arrived, capacity payments ballooned. The policy objective – ending load‑shedding –was achieved, but the financing model relied heavily on take‑or‑pay contracts indexed to FX and interest rates, leaving the system more vulnerable to macro shocks. Periodic tariff hikes, surcharge layering, and renewed PHPL borrowing did the heavy lifting of li quidity, while DISCO losses and governance barely budged.

By 2019–21, another round of “circu lar debt management plans” was in vogue: partial settlements with IPPs, tweaks to payment priorities, and attempts to rene gotiate the terms of some contracts. There were moments of progress – improvements in fuel mix, some regulatory pass‑throughs, and targeted subsidy rationalisation – but the impact was insufficient to reverse the underlying dynamics.

Then came 2022–23: a commodi ty‑price shock, currency depreciation, and a surge in local interest rates. The cost base exploded; tariff adjustments lagged; collec tions struggled under the weight of inflation; and circular debt swelled again. As liquidity

tightened, the late‑payment surcharge (LPS) on IPPs rose, PHPL interest costs climbed, and the arrears chain lengthened – bringing us to today’s refinancing, in which Rs1.225 trillion of cheaper bank debt is being used to retire PHPL loans (Rs660 billion) and re structure arrears to power producers (Rs565 billion), with the residual funded via the subsidy line. The note’s exhibits on stock, financing, and the DSS path are explicit on these flows.

If the architecture sounds familiar, that is because it is. The instruments vary; the amounts get larger; the surcharge labels change; but the underlying logic – refinance, re‑sequence, and hope the runway is long enough for reforms to catch up – has not budged much since 2008.

Why this fix helps – but cannot solve – the problem

There is real value in the current transac ‑ tion. It lowers funding costs, consolidates obligations into a clearer payment stream, and eases working capital stress for critical counterparties (fuel suppliers like PSO, coal IPPs, and certain RLNG‑based plants). That alone can reduce churn, cut LPS accrual, and stabilise dispatch. The structured use of the DSS at Rs3.23/kWh gives banks comfort that there is a dedicated revenue source for servicing the loan, while the FY26 removal of the 10% cap on the surcharge mutes a key implementation risk. And with ~Rs1.036 trillion of budgeted power subsidies across multiple heads, there is visible fiscal space (on paper) to absorb the remainder of the stock that the loan does not refinance. But look past the cash‑flow relief and the contradictions come back into view:

n Tariff design remains politically con ‑ strained. The consumer price of energy is not set by a pure cost‑of‑service formula. It is mediated by social policy (lifeline slabs, cross‑subsidies), regional considerations, and macro management. As long as the weighted‑average notified tariff sits below the true economic cost, the budget must fill the gap. When fiscal space tightens – as it often does – the gap is only partially filled, and arrears regrow.

n DISCO performance is still the Achilles’ heel. High losses and low recoveries in some service areas obliterate the math of cost re ‑ covery. Year after year, circular debt manage ‑ ment plans assume aggressive loss‑reduction targets; year after year, only modest gains materialise. Until collections and losses move decisively towards world‑norms – and are locked in through governance changes and enforcement – arrears will continue to seed themselves at the distribution level. n Fixed capacity payments are inflexible.

A growing share of the bill is contracted capacity, not energy. If demand is soft – or shifts to self‑generation – the system still owes the fixed charges. Those charges, indexed to FX and interest rates, climb whenever the rupee weakens or rates rise. A cheaper bank loan cannot offset a structural capacity‑payment overhang.

n Fuel‑mix and FX exposure persist. Import ed fuels embed FX risk in the cost base. Un ‑ less domestic generation (hydel, local coal with sensible logistics, nuclear, wind, solar with storage) scales in a way that actually reduces the FX‑linked component without inflating capacity payments, the volatility will remain.

n Gas circular debt mirrors power. On the gas side, delayed price decisions, cross‑sub sidies, and RLNG pricing misalignments keep recreating budget‑funding gaps. The current transaction mainly clears power‑sec ‑ tor arrears; it does not directly reform gas pricing or ring‑fence RLNG economics for power vs non‑power users.

n Legal and contractual complexities linger. The research note itself flags uncertain ty on LPS waivers for CPEC IPPs and a staged disbursement timetable (one‑month assessment, three‑month draw window). If waivers stall – or if payment conditions are not met quickly – the liquidity relief may be slower than forecast.

In short, the deal treats the symptoms – high financing costs and jammed pay ables – but not the cause: an energy‑pricing regime misaligned with costs, exacerbated by weak distribution economics and an inflexible capacity stack.

Why tomorrow’s problem could be bigger: solar defection meets a costly post‑2013 capacity build‑out

There is a paradox at the heart of Pakistan’s power sector. Consumers – households and businesses – are doing the rational thing in response to high and volatile tariffs: install ‑ ing solar (and, where affordable, batteries), trimming grid consumption, and smoothing their bills. But the system they are stepping away from is one in which fixed capacity charges have grown sharply since 2013, as a raft of capital‑intensive plants – coal, RLNG, and other large baseload units – came online under take‑or‑pay contracts.

The result is a classic utility “death‑spiral” risk:

1. Tariffs rise to recover a large fixed‑cost base (capacity payments, FX‑linked O&M, debt service).

2. Customers defect partially (or fully) to rooftop solar, especially for daylight loads.

3. The remaining grid sales shrink, forcing higher per‑unit charges on those who stay.

4. Higher charges encourage more defection, and the cycle repeats.

Pakistan’s post‑2013 generation expansion was a deliberate policy choice to end load‑shedding. It succeeded in adding capacity and reducing outages, but it also locked in dollar‑indexed capacity payments across several large plants – think RLNG combined‑cycles and imported‑coal units –and some newer units with limited dispatch flexibility. When demand growth falters (recession, energy efficiency, solar adoption) or shifts in shape (midday solar hollowing out the peak sunlight hours), those plants are dispatched less but still paid. That is precisely what makes the fixed cost hard to spread across a shrinking kilowatt‑hour base.

Now layer in the subsidy architecture. Much of the tariff cross‑subsidises lifeline and protected slabs by charging more to higher‑usage households and commercial/ industrial users. But these are precisely the categories that move first to solar. Take a large residence or a medium‑sized shop: a 5–15 kW rooftop system can knock out most daylight consumption. For a factory, cheap daytime PV offsets part of the load even if the grid remains essential for nights and process stability. Each defection removes high‑tariff units from the sales mix, eroding the cross‑subsidy that supports lifeline and agricultural tariffs.

The current refinancing does not, and cannot, arrest this dynamic. It reduces the cost of carrying yesterday’s arrears; it does not change the fact that tomorrow’s capacity bill must be shared by fewer grid‑dependent consumers if off‑take keeps sagging. Unless the sector pivots towards tariff structures and market designs that (a) recognise the value of the grid as a network service, not just an energy commodity; (b) charge con ‑ nection and capacity fairly; and (c) incen ‑ tivise demand to show up when the system has surplus (e.g., dynamic pricing, flexible industrial loads), circular debt pressures will intensify.

A further complication is net meter ‑ ing. In its simplest form, net metering pays rooftop solar users the retail tariff for energy exported back to the grid. While that can accelerate adoption, it can also over‑reward exports relative to their avoided system cost (which may be low at midday when utility‑scale generation is available), shifting more fixed costs onto non‑solar customers. Many countries have moved towards “net billing” (paying a wholesale‑like rate for ex ports) or time‑of‑use structures. Pakistan’s policy here will be critical: get it wrong, and the cost‑shift becomes a political flash point; get it right, and the grid can integrate

distributed solar without detonating its revenue base.

What does this mean for the 2013‑vin tage fleet? Expect more attention to flexible dispatch, coal‑to‑local‑coal blending where feasible, improved fuel supply logistics, and, controversially, contract renegotiations that trade shorter tail payments for tariff ratio ‑ nalisation or conversion of some take‑or‑pay obligations into take‑and‑pay with floor. None of this is easy. But without some change in the capacity‑payment geometry, even perfect refinancing will only postpone the next arrears build‑up.

The uncomfortable conclusion

The new circular debt plan is, in a narrow sense, good policy: it cuts financing costs, consolidates liabilities, and unclogs the payment chain. PSO and several IPPs –including HUBC, LUCK, ENGRO, FFC and THALL exposures – should feel immedi ‑ ate relief as cash begins to move and the DSS‑backed amortisation kicks in. If LPS waivers for CPEC IPPs are clarified prompt ly and disbursements begin quickly after the one‑month assessment, the market will like ‑ ly price in improved balance‑sheet strength for the obvious beneficiaries. The FY26 subsidy line – about Rs1.036 trillion across key heads – will do the rest of the firefight ing that the bank loan does not cover.

But these are palliative measures.

The structural disease is unchanged: tariff under‑recovery, DISCO losses, an import‑ex ‑ posed cost base, and a capacity stack that demands fixed payments whether consumers buy from the grid or not. As solar adoption rises and daytime grid demand softens, the cost recovery challenge will only grow. The risk is that Pakistan finds itself back here in a few years – organising another round of refinancing, layering another surcharge, and assembling another budget provision to keep the system liquid.

Breaking that cycle requires politically hard choices: targeted cash subsidies instead of blunt tariff suppression; loss‑reduction with teeth (including privatisation or long‑term concessions for DISCOs); a cred ible multi‑year tariff path that stays ahead of costs; market designs that pay fairly for capacity, flexibility and network value; and contractual reforms that balance investor certainty with system sustainability. Those changes take time. The new loan buys some. It is welcome. It is not a cure.

The arithmetic is neat; the intentions are sound. But the name “circular debt” en dures for a reason. Unless Pakistan changes the circular economics at the foundation, this is one more round – useful, necessary even – but not the final one. n