Page 1

Profit 02-11-2011_Layout 1 11/3/2011 11:21 PM Page 1

Apple’s iPhone 4S bangs smartphone markets 2 Revisiting free-market fundamentalism Page 3 Shipping corporation under threat Page 8 Pages: 8

Wednesday, 02 November, 2011

Government mulling over parity in gas and electricity prices Meeting to finalise gas load management plan today Industrial sector pressurising govt to continue gas supply Curtailment of gas supply to put Rs125 billion burden on consumers g Contribution of natural gas in terms of GDP highest in power sector g




ITH the gas shortage expected to increase over 2 billion cubic feet per day (bcfd) during winters, the Petroleum Ministry has convened a meeting of all the stake holders to finalise the gas load management plan today.

DRaft loaD ManaGeMent Plan An official source said the Petroleum Ministry had drafted a gas load management plan which recommended gas supply to various sectors as per their agreements. Industrial sector was likely to be the most affected sector of the new plan, as they were getting gas supply for the whole year for the last two years instead of 9 month agreements. Under their agreements the industrial sector gas supplies have to be cut for three month period from December to February to meet the rise in demand of the domestic consumers.


the form of increased export earnings without any other external inflows from donors. CNG and fertiliser sectors are also putting pressure for equitable load management across the board.

CnG SeCtoR The government is in no position to increase the load shedding for the CNG sector as they could launch a protest campaign. CNG sector uses 7 per cent share in the gas supply while the general ind u s t r i e s

utilised 29 per cent. Fertiliser sector has been claiming that it was subject to 55 per cent gas curtailment as against 40 per cent or less curtailment to other sectors. The source said considering the precarious gas supply situation, there is no option left other than to implement in letter and spirit agreements with the consumers. According to an official study on economic value of natural gas, the contribution of natural gas, in terms of GDP output, is highest in the power sector. This, coupled with the high cost of the alternative fuel, implies that the power sector should be given higher priority for gas supply. Within the power sector, the economic value of natural gas is higher when it is used to replace high speed diesel (HsD) in comparison to furnace oil (FO).

eConoMIC valUe The value addition of the industrial sector is the second highest. However, the economic value of gas in the industrial sector in comparison to other sectors is comparatively lower due to the lower cost of alternatives. Thus, gas for heating and boiler usage should be supplied only to those industries which are either non-switchable or have highly efficient processes, such as co-generation. It says the value addition in fertiliser sector is relatively low in comparison to the power and industrial sectors. However, the economic value of natural gas is high for existing plants and therefore, the supply of gas to these plants should be continued. Additional urea demand should be met through the import of urea instead of allocating gas to new plants. The economic value of gas in the transportation sector is high, but the contribution of the natural gas to GDP through the transportation sector is insignificant.

alloCatIve effICIenCy To lessen the demand for gas, the government is also considering a proposal to increase gas prices to the level of electricity tariff. Then the industrial sector will have no need to pressurise the authorities for getting 750 mmcfd gas supply which they mainly utilise for power generation. The demand side management will be very difficult in coming winters and the entire system could choke as the gas transmission network in Punjab is working under extremely tight conditions, the source said.

PoweR SeCtoR Power sector is demanding gas as its first right for power generation. The stoppage of gas supply to four IPPs is estimated to put an additional burden of Rs125 billion on the consumers, as the power plants were using costly diesel for power generation. Industrial sector is lobbying for gas to maintain its exports growth, which is a bonanza for the government in

US Pakistan water dialogue today ISLAMABAD AMER SIAL


s the relations improve between United states and Pakistan; both the countries will discuss providing financial and technical assistance for the construction of mega water reservoirs, setting up National Water Commission, water regulator body and improvement in irrigation system at the water working group here on Wednesday. An official source, at the one day water dialogue Us delegation will be led by the Under secretary of state for Democracy and Global Affairs Maria Otero, while Pakistan will be led by the secretary Water and Power Imtiaz Kazi and will include Chairman of Water and Power Development Authority shakil Durrani. The meeting will discuss national water supply and infrastructure, especially dams, storage and delivery systems and identify key areas where Us government can provide technical assistance to facilitate progress on policy and regulatory reforms like glaciology, dam design and operations, remote sensing and high efficiency irrigation system. The meeting will also review the government’s priorities on water, including the Bhasha Diamer Dam and the establishment of a National Water Commission. Us had been stressing Pakistan’s need to draft a national water policy and strengthen the role of provinces in the projects and development of a national water policy and commission, as their ultimate implementation would be done at the provincial level. A coherent water policy is required to reduce inefficient water usage, improve cost recovery, increasing water storages, removing subsidies and improving water management systems. The source said provinces had objected on having a water regulatory body as they were of the opinion that Indus River system Authority was doing the job effectively. However they supported setting up of a national water commission. Pakistan is seeking financial assistance for the Gomal Zam Dam, Kurram Tangi Dam, satpara Dam and Bhasha Diamer Dam. Islamabad is confident that with assistance of ADB, it will be able to raise funds for the construction of the Basha Dam. However, it was still seeking a token investment of $10 million by the Us government to get better risk insurance and involvement of other donors. Bhasha Diamer dam project would provide additional water storage capacity of 8 Million Acre Feet (MAF) and would also have power generation capacity of 19 billion KV. But the most important feature of the dam would be flood mitigation as it could hold an enormous amount of water and would prevent overflow of floods to the rest of the Indus River system.

Urea price hike causing food inflation KARACHI


to its plant enven.


KyROCKeTING increase in urea and DAP prices is leaving almost no option for the farmers. Hence, eventually, the crops grown would be sold at high prices transferring the burden onto consumers. Therefore food inflation would be the product of this vicious cycle. Gas curtailments are continuing and subsequently fertiliser companies are countering their losses from gas shortages by increasing their per bag fertiliser prices. One company that has very frequently used this policy is engro Fertiliser which had increased its prices many times in the past to make up for its production loss owing to gas stoppages

Govt oPPoSItIon aGItateD: ‘aDDInG fUel to fIRe’ If fertiliser companies like FFC matches engro price then it may create further agitation against the government. Pakistan Peoples Party is traditionally a feudal based rural party and continuous increase in fertiliser prices on account of gas curtailments would deteriorate its holding in the rural areas. Therefore, it is very important at this point in time, that in order to save their leadership, government officials make appropriate, well-balanced and effective policies regarding gas supply to the fertiliser plants and the fertiliser

prices so that farmers could have some relief from the present government.

fatIMa anD ffC exPeCteD to GaIn This increase in prices by engro might instigate other fertiliser companies such as Fauji Fertiliser (FFC) as well to realise gains on high margins causing their revenue to shoot in Cy11 (although it is believed that it may create a lot of upheaval in the farming community since fertiliser agents may play havoc with price mechanism and supply chain). earlier for FFC we were expecting an ePs Cye11 of Rs23/sh. But, on the basis of our sensitivity analysis FFC

may yield an ePs in the range of Rs27/sh or Rs29/sh with a DCF fair value of around Rs226.44/sh for Cye11 if it increases it prices to Rs2000/50kg bag and the impact of the increase is applied on around 190,000 tonnes of urea dispatches, said Gulshan D. Ferozepurwalla at sCs Trade. The company is already expected to yield high revenue on account of hike in prices and urea shortages resulting in the entire production of the company to be dispatched. Thus if imaginary prices of Rs2000/bag are applied, it would further boost its earnings. Going forward we expect urea prices to decrease government institutions such as Competition Commission may act to stabilise fertiliser prices, she added. Apart from FFC, a compara-

tively new company Fatima can also be expected to benefit from high margins. Fatima since the start of its commercial production has been performing quite value, with an edge over engro owing to no gas stoppages.

enGRo GaS PRobleMS exPeCteD to ContInUe It is believed that increasing prices would not put an end to engro’s problems; in fact it would just have economic repercussions in the agriculture sector, subsequently affecting our entire economy. Farmers would be further pressurised than they already are resulting in a decrease in productivity of our nation.

Profit 02-11-2011_Layout 1 11/3/2011 11:21 PM Page 2


Wednesday, 02 November, 2011


Apple’s iPhone 4S bangs smartphone markets I


N the last quarter of 2011, the sale of smartphones witnessed an unexpected decline throughout the globe. It was not because the consumer market had reached its saturation level. On the contrary, the reason may be that high-end smartphone consumers were waiting for Apple’s iPhone announcement before making a buying decision.

Steve JobS effeCt The dip, however, appeared only temporary as Apple recently announced the launching of their much awaited iPhone 4s as the company’s best selling smartphone ever, beating out sales of the earlier version of iPhone 4 launched over a year ago. The posthumous presentation of the late steve Jobs is selling like hot cakes throughout the world as the high-tech mobile lovers thronged the Apple stores in all big cities of the world. It has already become a record-breaker as more than one million units were sold in 24 hours. It is interesting to note that Apple smratphones users included Barak Obama and David Cameron who are said to be fond of playing games on iPhone.

iPhone 4s, with fans laying flowers alongside the long queues waiting for their chance to buy their desired product. Apple users see themselves as an elite group, and their sense of community was boosted by the tributes for Jobs and by jokes about the debacle suffered by Apple’s rival Blackberry, whose mobile network was disrupted this week.

aPPleS’ StRonG USeR-baSe In Frankfurt, scuffles broke out in the queue as shoppers camped overnight, in Paris several of the most prized versions of the model sold out at dawn and in London more than 300 fans mobbed the brand’s biggest store. some love Apple’s range of computers, smartphones and media tablets because they have changed the way consumers relate to technology. In some cases, they have changed the users’ entire way of life.

aPPleS’ fIRSt ReleaSe SInCe JobS Apple stores worldwide were gripped the familiar scenes of gadget geeks scrambling for Apple’s latest smartphone, the Us giant’s first new release since the death of co-founder steve Jobs who could not see the success of his dreamed product; featuring browsing the web, streaming video, uploading content to youTube, and downloading on their carrier’s mobile broadband connection. It is available at $199 in Us local markets. However, a Karachi-based online retailer ‘’ is offering the unit for Rs92,990 that reflects an unbridgeable gap in the prices as compared to the global market. Carriers noted that they ran out of pre-order inventory and were sold out on the first day of launch despite some customers feeling dissatisfied that the iPhone 4s isn’t a revolutionary evolution from its predecessor, but rather only brought forth modest improvements.

SoMbeR aIR SURRoUnDInG laUnCH The iconic chief executive’s death brought a more somber air than usual to some of the Apple shops celebrating the launch of the

Bidding to build on the proven track record of the best-selling smartphone, Apple says the latest iteration boasts faster speeds, a voice-controlled assistant called siri and an improved camera. For some, it looks too similar to its predecessor; and many fans, investors and analysts were initially under-whelmed following its October 4 unveiling, but sales are expected to benefit from an outpouring of sympathy for Jobs.

‘SIRI’, a GRoUnDbReaKInG featURe One of the most talked about features of the new product is siri, the intelligent assistant. ‘siri’ is an automated voice control system unique to the 4s and unlike existing voice control systems, ‘siri’ can be used to control many different iPhone functions: whether it’s having text messages read aloud to you and being able to dictate a reply or asking to find the best local Italian restaurant, ‘siri’ can do it and lets you do it hands free. The idea is that you can ask your phone any question and it will answer it. Questions could be like what the weather is, or you could ask it to read a text message or you could ask it to set an alarm for a specific time. It can even search Wikipedia and Wolfram-Alpha to look for answers to your questions.

CoMPaRISonS wItH PReDeCeSSoR There are users of earlier model iPhone 4 who find the new model little different from its predecessor at it looks a lot like the iPhone 4 it’s replacing. But you shouldn’t judge a book by its cover. Looking beyond the first glance, there are several changes that put it miles ahead of older iPhones and will tempt iPhone 4 owners to upgrade. Overall, the iPhone 4s is a great piece of technology from a company with tried and tested experience and is recommendable to anyone who fancies buying a top-of-the-market phone. Apple is calling iPhone 4s as a world phone. It supports both GsM and CDMA network and comes in both black and white colour with same prices. As mentioned above, Apple didn’t redesign iPhone this time – iPhone 4s looks exactly like iPhone 4 – however, there are plenty of upgrades in terms of hardware (and software obviously). Alexander Wyld wrote: “As an iPhone 4 owner the new features aren’t enough to justify the upgrade to me and I shall be eagerly awaiting the next iPhone model”. These comments are a testimony to the fact that Apple lovers are waiting for the next iPhone 5 by the company to stay ahead in the race of mobile technology. The performance of the new iPhone will be seen as an early test for Apple’s life after Jobs, the creative visionary whose death was mourned worldwide by government leaders, industry titans and ordinary fans alike.

The coming global credit glut


AnDRew SHeng

ITH world leaders meeting at the end of this week at the G-20 summit in Cannes, France, the next economic minefield that they will face is already coming into view. It is likely to take the form of an opaque global credit glut, turbocharged by the fragile mixture of toobig-to-fail global banking with a huge and largely unwatched and unregulated shadow banking sector. To be sure, that is not what many see. Federal Reserve Board Chairman Ben Bernanke and others have blamed the financial crisis of 2008 on a global savingsglut, which fuelled flows of money from high-savings emergingmarket economies – especially in Asia – that run chronic balance-of-payments surpluses. According to this school of thought, excessive savings pushed long-term interest rates down to rock-bottom levels, leading to asset bubbles in the United states and elsewhere. But Claudio Borio and Piti Disayat, economists at the Bank for International settlements, have argued convincingly that the savingsglut theory fails to explain the unsustainable credit creation in the run-up to the 2008 crisis. They have shown that the major capital inflows were not from emerging markets, but from europe, where there was no net balance-of-payments surplus.

The alternative theory – of a global credit glut – gained more ground with the release last week of the Financial stability Board’s report on shadow banking. The FsB report contains startling revelations about the scale of global shadow banking, which it defines as “credit intermediation involving entities and activities outside the regular banking system.” The report, which was requested by G-20 leaders at their summit i n

seoul last November, found that between 2002 and 2007, the shadow banking system increased by $33 trillion, more than doubling in asset size from $7 trillion to $60 trillion. This is 8.5 times higher than the total Us current-account deficit of $3.9 trillion during the same period. The shadow banking system is estimated at roughly 25-30% of the global financial system ($250 trillion, excluding derivatives) and at half of total global banking assets. This represents a huge regulatory “black hole” at the center of the global financial system, hitherto not closely monitored for monetary and financial stability purposes. Its importance was exposed only by analysis of the key roles played by structured investment vehicles (sIVs) and moneymarket funds (MMFs) in the 2008 meltdown. The shadow banking system is complex, because it comprises a mix of institutions and vehicles. Investment funds other than MMFs account for 29% of total, and sIVs make up 9%, but the shadow system also includes public financial institutions (such as the government-backed mortgage lender Fannie Mae in the Us). They are some of the largest counterparties with the regular banking system, and their combined credit creation and proprietary trading and hedging may account for much of the global liquidity flows that make monetary and financial stability so difficult to ensure. The trouble is that, by 2010, the shadow banking system was about the same size as it was just before the 2007 market crash, whereas the regulated global banking system was 18% larger than in 2007. That is why the FsB report pinpoints the shadow banking system, to-

gether with the large global banks, as sources of systemic risk. But the global problem is likely to be much larger than the sum of its parts. specifically, global credit creation by the regular and shadow banking systems is likely to be significantly larger than the sum of the credit creation currently measured by national statistics. There are several reasons for this. First, credit that can be, and is, created offshore and through offbalance-sheet sIVs is not captured by national balance-of-payments statistics. In other words, while a “savings” glut may contribute to low interest rates and fuel excess credit creation, it is not the main cause. second, the volatile “carry trade” is notoriously difficult to measure, because most of it is conducted through derivatives in options, forwards, and swaps, which are treated as off-balance sheet – that is, as net numbers that are below the line in accounting terms. Thus, in gross terms, the leverage effects are larger than currently reported. Third, the interaction between the shadow banking system and the global banks is highly concentrated, because the global banks act as prime brokers, particularly for derivative trades. Data from the Us Comptroller of Currency suggest that the top five Us banks account for 96% of the total over-the-counter (OTC) derivative trades in the Us. Indeed, the nightmare scenario haunting the world is the collapse of another shadow banking entity, causing global trade to freeze, as happened in 2008. The Basel III agreement on capital adequacy and other recent reforms still have not ring-fenced trade financing from these potential shocks. We urgently need to monitor and understand the role of shadow banking and the too-bigto-fail banks in creating the global credit glut. Obtaining a full picture of global monetary and credit numbers and their determinants is a vital first step. so far, the G-20’s call to “think globally” has turned into “act locally.” We hope that the G-20 leaders will think systemically at Cannes, and act nationally and cooperatively to defuse the global credit glut minefield. Andrew sheng is President of the Fung Global Institute, a new Hong Kong-based think tank that seeks to understand global issues from Asian perspectives. He was Chairman of the Hong Kong securities and Futures Commission and is chief adviser to China’s Banking Regulatory Commission. This article was first published in Project Syndicate

Profit 02-11-2011_Layout 1 11/3/2011 11:22 PM Page 3

Wednesday, 02 November, 2011


MFN concerns


ARMeRs Associates Pakistan (FAP) has raised valid objections over the MFN debate, even if its voice all but drowned in the recent “win-win” euphoria. It’s a good thing that the commerce ministry noticed Indian intransigence immediately following the celebrated Fahim-sharma summit in Delhi, and halted the grant. No doubt GoP was eager to push the deal through once the Indians agreed to barter it for removing objections to Pakistan’s special trade package in the european Union. But with the promise proving hollow, as usual, the deal has lost its rationale, especially since the eU concern is time-bound. The bottle-neck also gives the government time to do its homework properly. Apparently, India heavily subsidises its agriculture sector, much in contrast to the fortunes of our largest national employer. And free access to Indian produce, while New Delhi sticks to its nontariff barriers, seriously risks compromising our own production, diluting long term benefits of even eU-like initiatives. FAP’s argument also raises concern

about other important factors concerning agriculture. While the 18th amendment was a step in the right direction, it has little face value, and must be followed by properly transferring the operational mechanism to provinces. Currently, a void exists in the agriculture domain, along with other heads transferred to provinces, with decision-making practically paralysed. And the FAP’s threat of physically limiting Indian agri-imports indicates the level of their frustration with relevant official bodies. The government is reminded that while increased eU access is rightly pursued, the country’s agri-fortunes should not be used as a bargaining chip, especially not when subsequent trade interaction can upset our subsistence calculus. With hindsight, it seems the Fahim-sharma affair was just another rushed job. If it hadn’t caved in on its own, we would’ve come perilously close to hurting the most crucial employment and export sector. Trade liberalisation does stand to benefit both countries, but not when its essential dynamics are skewed.

Revisiting free-market fundamentalism

Ali Rizvi


eAR death experiences compel us to re-evaluate our priorities in life. The global economic recession was one such scenario where economists were forced to re-visit the fundamentals of economics. The global economy has been a victim of hit and run, where the crisis has not only blatantly exposed flaws in economic fundamentals, but has also revealed the inherent weakness of the human mind to treat economic paradigms as universal truths. economic paradigms are formulated with the the of knowledge known, not the unGlobal known. economies have forged this destructive path to oblivion themselves, and the trust of people has been severely compromised. With socio-economic disparities on the rise, and protests being waged in almost a 1,000 cities, the world can no longer afford to ignore calls for a new just social order. The dominant paradigms of mainstream economics have now been challenged as the world is now being slapped across the face with its own arrogance. The debt crisis is threatening the existence of the eU, raising questions on America’s ability to maintain its hegemony in this increasingly complex, globalised society and marginalising the needs of humanity at large. economists now find themselves on very shaky grounds that are shaking the very foundations of a social order that was deemed infallible. The future of capitalism is being challenged as the financial tsunami that has hit the western world is now on the brink of washing it away. In these modern times, where socio-economic inequality and rising unemployment are forcing people out of their homes, the threat of an Arab spring to sweep through europe and parts of America seems to be a glaring reality. This, then, compels

The curious, resistant-to-change, case of Pakistan Retrieving Europe’s dead

Taming the chaos

The article made a good analysis of the dilemma being faced by europe. The economic growth of europe is slowing down terribly and it has to adopt realistic solutions for these problems rather than completely being ignorant of them. In this respect, I completely agree with the solutions that have been provided by the writer at the end of the article. In order to stabilize its financial position, europe by all means has to adopt the Greek default together with a broad and wide restructuring course. It is surely high time that europe realizes their present situation in order to revive the dead.

The statement of the railway minister was indeed amusing for its lack of factual accuracy and the fact that he compared us to Afghanistan, but sadly that is not where the problem finds its center – it is a collective thing sadly. We need to focus on the grass roots more than the idiocy up top. The writer of the article gave a very solid example of how the U.s began to focus on the railway network after ignoring it at their own expense. Despite the advancements in aerial transport, the importance of railways will always be there and it is about time we decide to take this problem seriously and focus on its solution.




E-commerce on a global scale


S A J Shirazi

-COMMeRCe is global in nature. Connected users from all over the world will resort to online shopping if businesses can offer safe, user-friendly online shopping experience. A recent international ecommerce survey conducted by Pitney Bowes has crossed my desktop that points out major preferences that can be mirrored anywhere in the world. As per the findings, “71 per cent international internet users look for competitive prices, 42 per cent want a broad selection of products and serv-

ices online and some 35 per cent opt onlineshopping for an easy checkout and other savings; deals, free shipping and taxing costs”. In any market based economy, prices convey all of the information that consumers require to make learned decisions. On both the production and consumption sides, market prices act as coordinating signals. In order to make informed decisions about what to offer and how, businesses need to know the prices of inputs. similarly, consumers need to know the prices of the goods and services they might buy so that they can make appropriate decisions. The internet offers a very advanced means to communicate prices that were never possible before. The ability to access information and share it instantly has empowered consumers. In the process, consumers also get influenced by reviews, ask questions and find out the best prices. This is not pitting businesses against one another in a death match of ever lowering prices. In fact, this is the price transparency on the internet that has become one of the SHaHab JafRy Business Editor alI RIZvI News Editor

newest challenges in online markets. Local businesses need to adapt and learn to manage information accordingly, and more importantly, learn to handle price transparency working within this new online paradigm. Internet is also helping consumers who want a broad selection of products and services in more than one ways. Neatly laid out, user friendly and functional ecommerce websites allows businesses to assemble, aggregate, normalise, and distribute product information and more. On the other hand, websites also provide potential buyers with an interactive interface that offers a multimedia representation of the product information as well as retrieval, classification, ordering services and innovative shopping incentives. savvy shoppers navigate and analyse product information analytically selecting suitable products to buy. e-commerce websites that don't accommodate international shoppers are losing most of their potential sales. Accommodation goes much beyond shipping internationally. Busi-

KUnwaR KHUlDUne SHaHID Sub-Editor

The writer is News Editor, Pakistan Today

International ecommerce is even more enticing as Pakistan can offer products that attract international consumers

nesses need to address such issues with their products and not wait until shoppers check out. The whole world does not work like we do here. Websites intended to target foreign countries should be internationalized by offering physical features of the products, language and cultural peculiarities and differences duly localised for target markets in foreign countries. While shopping may be an international hobby, each country requires specific types of communication in a specific way. The ease and speed of online checkouts, the ability to track an order, easy to understand return policy and taxing requirements are also important to consumers who shop online. Analysts say that availability of ‘PayPal’ alone could increase Pakistan ecommerce by 25 per cent. If it is not convenient, why should they be shopping online in the first place?

babUR SaGHIR Creative Head HaMMaD RaZa Layout Designer

one to re-visit the free market fundamentalism based system in order to transform it into a more human centric one, where the focus is on re-distributing income and wealth to evolve a more egalitarian society based on the principles of equity. In this context, let us evaluate the curious case of Pakistan. It is often argued, that Pakistan is resistant to change. We are comfortable to sit in our cosy cocoons allowing our mind to dwell in pleasantries of the past. 30th October, a sunday, was a good day to do just that. so what are the odds of finding more than a 100,000 people in Manto park attending a political rally which promises to change the status quo. Only last week, I said that we are a dead nation. We died when we failed to raise our voice against the social inequality that compelled a Pakistani to burn himself alive outside the parliament. However, Imran Khan’s political campaign at Minar e Pakistan has forced me to revisit my pessimism. The clamour for a just, egalitarian society has now hit a new crescendo. I do not have any political affiliations and have my reservations about Imran Khan. However, sunday’s political rally by the Pakistan Tehreek e Insaf was without a doubt a glaring statement by tens of thousands of people. That gathering was not about PTI, it was not even about Imran Khan or his speech, but a statement of the people – they are no longer victims of their fate. They have decided to become agents of change. And so, on sunday everything else paled in comparison as I analysed the global economic scenario in a local context. The proletariat defied the gods, they defied the powers to be, and defied reason and logic. They want equality, they want justice and they want an equitable social order like the proletariat across the globe. This reality forces us to wonder if these winds of change will mark the end of traditional capitalism. Just like the fall of the Berlin Wall in that fateful November of ‘89, are we moving towards the demise of capitalism? so, for all Imran haters, and all Imran supporters, Mr Khan is simply a cog in this machine and this time unlike common perception, the people are the agents of change. A reconciliation of humanity centric approach in a free market system is required. Can Khan do it? I don’t know. But he certainly has stirred the common sentiment that promises to take charge to redefine the fundamentals of an unjust and morally depraved society.

Given today’s international economic situation, international operation is definitely not out of reach. International e-commerce is even more enticing as Pakistan can offer products that are very attractive and affordable for international consumers. However, to be successful online, businesses need to ensure they can offer a simple and seamless online shopping experience, and have a clear understanding of consumers’ purchasing, shipping and communications preferences in each market. Only then Pakistan e-commerce can figure out at a global scale. The writer is Deputy Controller of Examinations at Lahore School of Economics. He blogs at and can be reached

For comments, queries and contributions, write to: MUneeb eJaZ Layout Designer

email: Ph: 042-36298305-10 fax: 042-36298302 website:

Profit 02-11-2011_Layout 1 11/3/2011 11:22 PM Page 4

Wednesday, 02 November, 2011

Stocks trading at high multiples that are likely to continue to face wrath of gas curtailment along with various regulatory and pricing issues need to be avoided for the time



Hasnain asghar ali at aziz fida Husein

Pak-India textile sectors propose more trade LAHORe



RADe between Pakistan and India should be enhanced and barriers be removed, as both countries are producing more than 40 per cent of global cotton while their textile share in international market is only five per cent. These views were shared between Northern India Textile Mills Association (NITMA) delegation and All Pakistan Textile Mills Association (APTMA) the other day. Minister for Textile Makhdoom shahabud Din was also present on the occasion. NITMA delegation led by its

chairman Mukhund Chaudhry shared its views with APTMA officials. APTMA Chairman Mohsin Aziz said that around 40 per cent of cotton in the world is produced by Pakistan and India but their share in global market is only five per cent. He said that it is the need of the hour that the relations between both countries should be improved and they come closer. NITMA Chairman Mukhund Chaudhry said that his delegation is here to make personal and commercial friends. “We would like to attend and invite friends from Pakistan on the weddings of our children,” he said adding both countries have the capacity to capture global textile industry

SnGPl’s approved 10pc cash dividend and 5pc bonus shares

water availability is an issue and the farmers have to depend upon the rains or other resources. If weather does not favour them then they come under problem,” Mukhund opined. APTMA Former Chairman Gohar ejaz said that Pakistan’s exports heavily depend upon textile sector. He said there has been tremendous increase in the textile exports in the recent years. He said that Indian and Pakistani foreign ministers and secretaries are talking and it is a good omen. Makhdoom shahabud Din said there is a need to remove barriers on both sides. He appreciated Indian delegation and APTMA for holding talks and improving relations.

govt SECP holds roundtables Provincial pursuing sustainable on capital issue rules and agricultural growth DST regulations P LAHORe





and they should benefit from each other’s potentials. He said we have also decided that delegations from both sides would visit each other every year. To a question of what Pakistan gained after getting Most-Favourite Nation (MFN) status from India since 1995, he said there have been irritants and better results could not be produced. “Now, we will remove all those irritants,” he added. To another question of what is the reason of high number of suicides by the farmers in India, he defended the Indian government saying these suicides are not because of government policies rather there are other reasons. “Most of the suicides occurred in Maharashtra, where

He 48th Annual General Meeting (AGM) of the sui Northern Gas Pipelines Limited was held on Monday under the chairmanship of Mian Misbah-ur-Rehman. The company’s annual accounts for the year that ended on 30th July 2011 were placed before the shareholders. As per deceleration the company earned gross profit Rs3,600 million whereas the net profit after tax was Rs1,125 million. The Managing Director briefed the shareholders with the performance of the company, the initiation being taken by it and also the hectic efforts being made to control unaccounted for gas losses. The proposed dividend at 10 per cent, bonus shares at 5 per cent and the Annual Accounts of the Company for Fy 2010-11 were approved by its shareholders. The shareholders also approved the appointment of M/s A.F. Ferguson & Co., Chartered Accountants and M/s M. yousuf Adil saleem & Co, Chartered Accountants, as joint auditors, for the Company for the Financial year 2011-12.




eCURITIes and exchange Commission of Pakistan (seCP) held a roundtable meetings in Karachi with external stakeholders to review the proposed amendments to the Companies (Issue of Capital) Rules, 1996 (CI Rules) and the draft Debt securities Trustee Regulations (DsT Regulations). earlier, the revised draft of the CI Rules and the draft DsT Regulations had been notified for eliciting public opinion on 8TH september 2010, and 13th, 2011 respectively. Both laws were then revised in light of the stakeholders’ comments. The objective of amendments

to the CI Rules is to streamline the capital issuance process. The introduction of the concept of the book building process for initial public offerings and the difficulties faced by the issuers while complying with various requirements of the CI Rules necessitated review of the existing CI Rules. The review is being made to bring clarity in understanding of its various clauses, to protect investors’ interests and to facilitate the issuers. DsT Regulations are new set of regulatory framework for regulating affairs of the Debt securities Trustees. The proposed draft DsT Regulation broadly covers registration of Debt securities Trustee; duties and responsibilities of Debt securities Trustees; minimum contents of the Trust Deed and code of

conduct for the trustee. Now around 30 professionals from various sectors, representing prominent institutions such as the state Bank, Karachi stock exchange, Central Depository Company, Mutual Funds Association of Pakistan, credit rating agencies, commercial banks, corporate brokerage houses, asset management companies and investment companies attended the roundtables. Both sessions were highly interactive and detailed deliberations took place on the revised drafts of the CI Rules and DsT Regulations and the participants gave valuable suggestions for further improvement in these laws. seCP officials assured the participants that their suggestions would be given due consideration.

Local equities undergo technical adjustment as KSE loses 106 points KARACHI STAFF REPORT


FTeR back-to-back gains the local bourse underwent a technical adjustment, as the initial gains supported by OGDC did allow the index to breach 12000 psychological and sell-off that was quite visible from the early hours overpowered the low volume strength in OGDC, declining regional and international equity and commodity markets along with consistent dumping by off-shore participants disallowing even the cued up buyers from previous session from resisting the incoming float. Volume leaders from previous session from fertiliser sector underwent technical correction too, while intra day volatility of almost 3 per cent

during the session kept the day traders active through out the session. The Kse 100 index closed at 11776.09 levels with the loss of 106.16 points, while Kse 30 index lost 100.50 points to close at 11142.90 levels. All share index closed at 8155.69 levels after losing 60.15 points. Total 126 scrips advanced 186 declined and 25 remain unchanged out of total

337 scrips traded. Massive turnover in fertiliser sector generated mainly due to stock swapping by the local syndicate of brokers and corporate participants kept the sector stocks in the limelight wherein some managed upper locks while some were seen trading at the lower trajectory during the session. However, the show of

strength was quite prominent in engro stock despite various issues such as gas curtailment and government actions making the stock a risky affair, nevertheless the stock managed to trade at the upper lock for most part of the session. Hasnain Asghar Ali at Aziz Fida Husein said with nod of caution intact, accumulation is recommended in the stocks of-

fering consistent in reporting growth and payouts, although syndicated efforts mainly of the local participants might allow various stocks to stage hefty trading and generate high volume. stocks trading at high multiples that are likely to continue to face wrath of gas curtailment and various regulatory and pricing issues need to be avoided for the time, he added.

UNJAB Agriculture Minister Malik Ahmad Ali Aulakh has said that provincial government is actively pursuing the sustainable and consistent growth of agriculture sector and a number of measures have already been taken in this regard. Addressing the International Agriculture, Livestock, Industry and Food (ALIF) Conference held under the aegis of Farmers Associates Pakistan (FAP) in connection with World Food Day, the minister said that ample funds had been

Under Green tractor Schemes, 200,000 tractors have been provided to the farmers on subsidised rates provided to research-related institutions to improve the overall situation of agriculture sector. During the last three years, he pointed out, production of important crops, including wheat and rice, had substantially increased. Wheat production had reached up to 19 million tonnes and 0.9 million tonnes wheat had also been exported. He said that Punjab seed Council and Punjab Agriculture Research Board were engaged in demand-driven research to increase production and protection of crops and in order to increase the pace of agricultural research, Punjab Agriculture Research Board had been provided Rs1 billion. Aulakh further stated that the under Green Tractor schemes, 200,000 tractors had been provided to the farmers on subsidised rates. Agriculture minister said that provision of agricultural inputs was the responsibility of the federal government and due to federal government’s apathy, the price of urea fertiliser had reached up to Rs2,000 per bag. He further said that the ministry of industries should take notice of rise in urea prices and effective measures should be taken to control it. earlier, the agriculture minister inaugurated the FAPALIF expo and visited various stalls set up by the agriculture-related companies. He observed that such events are the need of hour which can play a vital role in the growth of agriculture sector. FAP ViceChairman Hussain Jahanian Gardezi and President Tariq Bucha were also present on the occasion.

Profit 02-11-2011_Layout 1 11/3/2011 11:22 PM Page 5

Wednesday, 02 October, 2011

It's difficult to see what the referendum is going to be about. Do we want to be saved or not? Is that the question?


Swedish foreign Minister Carl bildt


Greece struggles after bailout bombshell REuTERS

formulated and on what exactly the Greeks people will vote on."

ReeK Prime Minister George Papandreou faced calls from within his own party to step down on Tuesday after he threw the nation's euro zone membership into jeopardy by calling a referendum on a bailout package agreed only last week. A leading lawmaker from Papandreou's socialist party quit while two others said Greece needed a government of national unity followed by snap elections, which the opposition also demanded. The leaders of France and Germany scrambled to limit the damage to the wider euro zone, and european politicians expressed incredulity at an announcement that caught everyone by surprise -- including Papandreou's own finance minister. "It's difficult to see what the referendum is going to be about. Do we want to be saved or not? Is that the question?" asked swedish Foreign Minister Carl Bildt. Business executives in Greece expressed despair at how the country was being run and markets speculated on whether Italy will be the next euro zone country to slide into a debt crisis. Jean-Claude Juncker, who chairs meetings of euro zone finance ministers, refused to rule out a Greek debt default. "The Greek prime minister has taken this decision without talking it through with his european colleagues," he said in Luxembourg. Asked whether a Greeks "no" vote would mean bankruptcy for Greece, Juncker responded: "I cannot exclude that this would be the case, but it depends on how exactly the question is

Papandreou, whose PAsOK party has already suffered several defections as it pushes waves of austerity measures through parliament while protesters rally in the streets, said he needed wider political backing for the budget cuts and structural reforms demanded by international lenders. But his problems deepened dramatically after his announcement on Monday. A cabinet meeting was due to held later on Tuesday. PAsOK lawmaker Milena Apostolaki quit the parliamentary group on Tuesday, reducing Papandreou's strength to just 152 seats out of 300 deputies before a vote of confidence. "It's my duty to resist this wrong political choice which divides in an effort to replace the popular mandate and threatens the country's viability," Apostolaki wrote in a letter to the president of parliament. "These are crucial moments and citizens need to be represented by members of parliament they have elected. Therefore, I am becoming independent." Fellow PAsOK lawmaker Vasso Papandreou demanded a new government to ensure Greece receives the 130 billioneuro rescue deal agreed at a euro zone summit only last week. "I am calling on the President of the Republic to convoke political leaders with the object of forming a government of national unity to safeguard the aid package decided on October 27 and call elections immediately afterwards," said Papandreou. Papandreou did not even inform his Finance Minister, evangelos Venizelos, he was going to announce the referendum on the latest eU aid deal, a Greek government official said. "Venizelos had no idea about the referendum. All he knew about was the vote




of confidence," the official told Reuters on condition of anonymity. "THey MUsT Be CRAZy" French President Nicolas sarkozy will call German Chancellor Angela Merkel on Tuesday, his office said, while emotions ran high in Greece itself about the referendum idea. "They must be crazy... this is no way to run a country," said the senior executive of one of Greece's biggest firms, speaking on condition of anonymity. elsewhere in the euro zone, politicians complained Athens was trying to wriggle out of the bailout package, concerned not so much about the fate of Greece as the possibly dire consequences for the entire currency union of the referendum. Ireland, which itself took a bailout, attacked Papandreou's idea. "The summit last week was to deal with the uncertainty in the euro zone...and this grenade is thrown in just a few short days later," european affairs minister Lucinda Creighton said. "Legitimately there is going to be a lot of annoyance about it," she told Reuters. The Greek opposition demanded a snap election and financial markets, which had calmed down after euro zone leaders agreed the second Greek bailout, took Papandreou's bombshell badly. shares in banks dived, investors fled to the safety of German bonds and Italian borrowing costs climbed despite european Central Bank action. Investors speculated that Italy might follow a similar path. One senior German parliamentarian suggested the euro zone might cast Athens adrift, cutting off its aid lifeline and allowing the nation to default on its huge debts. "This sounds to me like someone is trying to wriggle out of what was agreed - a strange thing to do," said Rainer

Bruederle, a leader in Merkel's coalition. Bruederle, parliamentary floor leader for the Free Democrats and a former German economy minister, said he was irritated by Papandreou's announcement. europe would have to consider turning off the flow of money which is keeping Greece afloat, he told Deutschlandfunk radio. "One can only do one thing: make the preparations for the eventuality that there is a state insolvency in Greece and if it doesn't fulfill the agreements, then the point will have been reached where the money is turned off," he said.


On the markets, players scurried for safer investments, hammering stocks and punishing the euro. "The referendum is a bad idea with a bad timing. The post-summit rally is over," said Lionel Jardin, head of institutional sales at Assya Capital, in Paris. The FTseurofirst 300 index of top european shares was down almost four percent, due not only to the possibility of a disorderly Greek default but chaos surrounding the euro zone's attempts to stop the debt crisis spreading to more significant economies such as Italy. euro zone banks exposed to Greece and europe's bigger, troubled economies, suffered particularly. shares in France's societe Generale tumbled 17 percent and Credit Agricole was down almost 12.5 percent. Andrew Lim, banking analyst at espirito santo in London, said that a Greek "no" vote could trigger a "hard default", forcing banks to take losses of about 75 percent on their Greek sovereign bonds and raising the threat of a systemic risk. "If we get a hard default in Greece, it will exacerbate the situation with Italy and spain. It just increases the problem of Italy going down the same route, and that's the real risk," Lim said.

Investors sold off bonds issued by Italy and spain -- two major economies with debt problems which would be much tougher to rescue than Greece, one of the euro zone's smallest members. Traders said that prompted the eCB to step in and buy the bonds of both countries as implied Italian borrowing costs hit a three month high around 6.26 percent. On currency markets, the euro fell over one percent versus the dollar and yen. "The Greek referendum is a real curve ball. Nobody saw it coming and it injects a lot of uncertainty," said steven saywell, head of FX strategy at BNP Paribas.


In Athens, the conservative opposition leader called for snap elections. "elections are a national necessity," conservative leader Antonis samaras told reporters. Germans on the streets of Berlin expressed exasperation with the entire euro project. "All I understand is that the Greeks keep causing us problems. We'd be better off without the euro," said Bert Kuehn as he delivered rolls to a bakery. Analysts said the latest opinion poll showed a majority of Greeks took a negative view of the bailout deal. The renewed uncertainty is likely to be an embarrassment for G20 leaders meeting in France this week trying to coax China into throwing the euro zone a financial lifeline. Greece is due to receive an 8 billion-euro tranche in mid-November, but that is likely to run out during January, around the time of the referendum, leaving the government with no funds if there is a "no" vote.A survey carried out on saturday showed that nearly 60 percent of Greeks viewed the agreement on the bailout package as negative or probably negative.

CORPORATE CORNER Jazz Malamaal reshapes lives across Pakistan

unlimited zero line rent budget packages, Double Play Packages and International Packages at unbeatable rates. PRESS RELEASE

Pakistan’s ambassador to Un, visits bahria University Islamabad

economic mayhem. The first year has been highly flourishing for Al Baraka, as the bank witnessed a sea change in terms of burgeoning growth. The assets have increased by 31 per cent from Rs.52.5 Billion at the time of merger, to more than Rs.68 Billion as of september 2011. The deposit base of the bank also grew by more than 41per cent and crossed Rs.58 Billion. Financing and Investments of the Bank showed an encouraging increase of 41 per cent to Rs.46.18 billion in september 2011. PRESS RELEASE

hospitals and laboratories. The CBC machines perform an essential task in dengue diagnosis, as they separate the platelets from the blood and determine the platelet count, which is the conclusive test for diagnosing dengue. Timely diagnosis using the machines will help in proper treatment and even save precious lives. PRESS RELEASE

Samsung pleads ban on iPhone4S sales in Japan & australia Lahore: Mobilink has concluded the Jazz Malamaal campaign for 2011, with a grand awards ceremony held in Lahore. The winner of the grand prize was presented with the keys to a brand new house in the prestigious safari Villas in Lahore. Luxury 1300 cc cars were also awarded to four other lucky Jazz subscribers from across Pakistan. Jazz’s month long Malamaal campaign was received with great enthusiasm by Jazz subscribers from across the country. The winner of the grand prize, Mr Mudassir salim, who hails from Daska, was overwhelmed on the occasion, and said, “I still can not believe that I am now the owner of my very own home in Lahore. Jazz has fulfilled a life long dream, and I am truly thankful to Allah, and Jazz Malamaal.” PRESS RELEASE

PtCl gives five new reasons to have a landline IsLamabad: Pakistan Telecommunication Company Limited (PTCL) has given five new reasons for customers to have landline services being offered in a variety of value-added packages. Customers can now enjoy ‘super sundays’ with unlimited free on-net calls in crystal clear voice transmitted through PTCL’s state-of-the-art network. In addition, customers can also avail

IsLamabad: Pakistan’s permanent representative to the UN, Mr. Hussain Haroon on a short visit to Islamabad addressed students and academia of Bahria University, Islamabad. The one and a half hour highly informative and insightful discussion focused on arousing nationalistic feelings among the students along with thought provoking advices. The audience showed their interest and eagerness towards the discussion and lauded the diplomatic efforts of Mr Haroon who recently helped Pakistan win a seat in the prestigious security Council for the next two years. PRESS RELEASE

al baraka bank ltd declares 1st year pre tax profit of Rs505 million karachI: steady growth trajectories, comprehensive product portfolios and increasing network points have helped this niche market to gain popularity. Al Baraka Bank (Pakistan) Limited (ABPL) has not only pioneered in Islamic banking in Pakistan, but has also shown tremendous progress in the current

Lahore: samsung electronics filed preliminary injunction motions in the Tokyo District Court, Japan and in the New south Wales Registry, Australia requesting the courts to stop the sale of Apple’s iPhone4s in the respective countries. In a separate filing, samsung has appealed the Australian court's decision on October 13 to grant a preliminary injunction over the Galaxy Tab 10.1. In Japan, samsung is also seeking an injunction order to immediately bar the sale of iPhone4 and iPad2, which seriously violate samsung's intellectual property. samsung's preliminary injunction request in Australia cites three patent infringements related to wireless telecommunications standards, specifically Wideband Code Division Multiple Access (WCDMA) and HsPA. In light of these violations, samsung believes the sale of such Apple devices should be banned. PRESS RELEASE

Manchester united has signed a three-year partnership with China Mobile Pakistan-ZONG. Picture shows Mr Feng Tuixian, CFO, ZONG presenting a souvenir to Sir Alex Ferguson at the ceremony held at Old Trafford. Also seen in the picture are ZONG and Man utd officials with Man utd players. PRESS RELEASE

Coca-Cola donates CbC machines for dengue diagnosis to Sahara trust Lahore: Coca-Cola Company has donated seven Complete Blood Count (CBC) machines to sahara Trust for the early diagnosis of dengue. sahara Trust will collaborate with the Government of Punjab to install these machines at designated government

uS Agency for International development (uSAId) Mission director dr Andrew Sisson, Chairman dairy and Rural development Foundation (dRdF) dr Salman Shah and Project director dRdF Jacob Moser, along with the successful trainees at a Certificate distribution Ceremony at the Punjab Vocational Training Council (PVTC), burj Attari in Sheikhupura. PRESS RELEASE

Profit 02-11-2011_Layout 1 11/3/2011 11:22 PM Page 6

Wednesday, 02 November, 2011

06 Markets

top 10 sectors

48% 07% 17% 07% 07%


02% 02% 02% 01% 08%

Food Producers

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Real Estate Investment

Personal Goods

Financial Services

STOCK MARKET HIGHLIGHTS Index 11762.72 3160.86 2557.98

KSE-100 LSE-25 ISE-10

Change -106.16 -68.36 -18.54

Volume 67,820,223 2,571,500 128,428

Market Value 4,783,109,336 109,607,954 4,763,358

Major Gainers Company Unilever Pak Foods Engro Corporation Millat Tractors Ltd. P.S.O. UniLever Pak Ltd.

Open 1643.54 118.23 379.97 244.63 5734.60

High 1685.00 124.14 388.99 251.60 5839.99

Low 1650.00 122.16 381.05 244.00 5555.01

Close 1673.33 124.14 384.47 248.41 5737.80

Change Turnover 29.7915 5.9 14,914,062 4.5036,917 3.78677,305 3.20 16

3309.99 3200.00 801.01 791.00 326.90 315.00 161.40 154.00 360.00 355.05

3209.18 797.90 315.34 154.28 356.11

-83.82 54 -34.49 227 -9.76 61,651 -5.77 527,379 -4.34 866,941

Major Losers Nestle Pakistan Bata (Pak) Ltd. National Ref.XD MCB Bank Ltd Pak OilfieldsXD

top 5 perForMers sector wise SyMbol



low CURRent



404.69 120.40 6.98 93.80 334.90

396.00 116.10 6.75 89.30 308.94

396.87 117.57 6.77 92.03 310.82

-6.98 -1.21 -0.12 1.02 -14.37

61,485 833,559 399,510 91,674 314,938

15.00 31.05 71.99 143.49 40.80

14.00 29.29 65.17 137.50 37.06

15.00 29.30 70.64 139.79 37.39

0.00 -1.53 2.05 -0.90 -1.57

1,500 2,485,646 855 4,017 244,529

Oil and Gas Attock PetroleumXD Attock Ref.XD Byco Petroleum Mari Gas Co.XB National Ref.XD

403.85 118.78 6.89 91.01 325.19

Agritech Ltd. Arif Habib CoXDXB SD Biafo IndustriesXD Clariant Pakistan Dawood Hercules

15.00 30.83 68.59 140.69 38.96

Volume Leaders Fatima Fert.Co. Fauji Fertilizer Fauji Fert Jah.Sidd. Co. F.Credit & Inv

26.52 193.41 62.47 5.81 4.79

27.80 199.80 62.50 6.06 5.70

25.20 184.05 60.01 5.53 4.10

25.29 189.25 60.49 5.58 4.50

-1.23 -4.16 -1.98 -0.23 -0.29

14,996,468 8,413,577 6,232,616 5,833,516 5,700,020

Bullion Market Gold 24K Gold 22K Silver (Tezabi) Silver (Thobi)

Per Tola (PKR) 54,809.00 51,608.00 1133.00 1025.00

Per 10 Gm (PKR) 47,039.00 44,245.00 973.00 880.00

Per Ounce US$ 1691.50 – 35.05 –

Interbank Rates US Dollar UK Pound Japanese Yen Euro

23.25 1.41 8.60 34.00 11.00

23.59 1.45 9.00 34.50 11.00

-0.31 0.00 0.07 -0.48 -0.56

Al-Abbas Cement Attock CementXD Berger Paints Bestway Cement Cherat Cement

2.00 51.11 11.79 8.11 7.66

29.62 2.49 41.17 7.72 22.00

Buy 86.00 116.88 136.35 1.0894 84.03 10.85 23.28 22.75

Sell 86.70 118.99 138.70 1.1109 87.83 11.18 23.61 23.11

Brent Crude Oil


6.93 184.30 28.50 7.00 108.00

2.00 51.99 12.00 9.11 8.19

1.90 50.81 11.60 8.11 7.50

1.92 51.02 11.91 8.11 8.01

-0.08 -0.09 0.12 0.00 0.35

26,799 108,952 4,762 100 197,042

58.00 169.52 117.00 2.63 168.53

30.40 3.25 42.00 7.95 22.00

28.14 2.21 39.12 7.01 20.95

28.14 3.08 39.60 7.65 22.00

-1.48 0.59 -1.57 -0.07 0.00

14,022 614,084 16,802 993 70

Abdullah Shah Colony Sugar Mills Engro Foods Ltd. Habib Sugar Mills Habib-ADM Ltd.XD

8.00 1.75 23.52 28.10 11.58

8.00 1.75 23.90 28.50 11.70

7.90 184.30 28.50 6.90 108.00

6.93 184.30 28.25 6.25 102.60

58.00 170.00 118.00 2.79 169.99

0.00 0.00 -0.24 -0.30 0.00

10 90 5,055 5,004 2

58.00 168.94 117.94 2.51 168.53

0.00 -0.58 0.94 -0.12 0.00

2,000 240 302 39,802 31

109.00 111.18 145.05 145.58

0.69 -4.44

1,170 203

58.00 168.50 117.00 2.43 168.53

110.49 111.43 150.02 150.00

(Colony) Thal AL-Qadir Textile Amtex Limited Annoor Textile Artistic Denim XD

1.70 11.25 1.67 13.00 18.50

1.11 11.25 1.70 14.00 18.50


31.00 30.82 4.01 120.42 119.16

31.00 30.82 4.25 121.50 120.30

Abbott Laboratories Ferozsons (Lab) Ltd. GlaxoSmithKline Pak. Highnoon (Lab) IBL HealthCare XD

102.49 80.00 68.92 28.09 10.92

103.00 80.00 68.26 28.09 11.92

6.93 184.30 28.26 6.70 108.00

P.T.C.L.A Pak Datacom LtdXD Telecard Limited Wateen Telecom Ltd WorldCall Telecom

10.89 35.03 0.95 .68 1.13

10.98 34.01 1.00 1.70 1.19

P.T.C.L.A Pak Datacom Ltd. Telecard Limited Wateen Telecom Ltd WorldCall Telecom

11.47 31.65 1.09 1.51 1.32

8.00 1.74 22.54 27.88 11.50

0.00 -0.01 -0.98 -0.22 -0.08

53 23,501 91,748 70,820 2,995

1.11 11.25 1.45 14.00 18.25

1.11 11.25 1.60 14.00 18.49

-0.59 0.00 -0.07 1.00 -0.01

1,000 500 132,822 1,000 1,049

29.45 29.28 3.90 117.90 116.50

29.51 29.32 3.95 119.21 117.71

-1.49 -1.50 -0.06 -1.21 -1.45

376,500 516,500 24,500 201,000 200,000

101.00 78.10 67.01 27.65 10.99

102.10 80.00 68.06 28.09 11.92

-0.39 0.00 -0.86 0.00 1.00

1,283 45 1,557 100 25,154

10.71 34.01 0.90 1.65 1.06

-0.18 -1.02 -0.05 -0.03 -0.07

470,873 500 68,502 152,954 235,458

10.65 34.01 0.90 1.52 1.00

11.77 32.66 1.09 1.68 1.35

11.42 31.65 1.01 1.47 1.15

11.64 32.66 1.03 1.50 1.28

0.17 1.01 -0.06 -0.01 -0.04

4,752,418 1,430 194,249 449,333 649,632

0.50 36.38 0.75 1.70 41.36

0.50 36.50 0.77 1.70 41.80

0.36 36.10 0.70 1.56 41.25

0.50 36.10 0.71 1.60 41.53

0.00 -0.28 -0.04 -0.10 0.17

1 1,022,035 38,682 752,756 220,355

63.16 11.15 5.94 11.15 29.95

64.00 11.29 6.08 11.35 30.20

62.50 10.75 5.79 10.70 29.55

62.69 10.89 5.83 10.89 29.91

-0.47 -0.26 -0.11 -0.26 -0.04

32,694 944,906 319,287 1,929,563 175,090

Electricity Genertech Hub Power Co.XD Japan Power K.E.S.C. XR Kot Addu PowerXD

Banks Allied Bank Ltd Askari Bank B.O.Punjab Bank Al-Falah Bank AL-Habib




low CURRent



Non Life Insurance 7.00 1.70 22.50 27.50 11.50

Fixed Line Telecommunication

Beverages Murree Brewery Co. Shezan Int’l


Pharma and Bio Tech

Automobile and Parts Agriautos Indus.XD Atlas Battery Ltd. Atlas Honda Ltd. Dewan Motors Exide (PAK)


Future Contracts

General Industrials Cherat PackagingXD ECOPACK Ltd Ghani Glass LtdXD MACPAC Films Merit Pack

low CURRent

Personal Goods 40,885 8,285 3,035 25,300 63,850

Construction and Materials

Ados Pakistan AL-Ghazi Tractors Bolan CastingXD Ghandhara Ind. Hinopak Motor

International Oil Price WTI Crude Oil


24.70 1.50 9.00 35.00 11.52

Industrial Engineering

86.5937 139.4677 1.1412 122.7378

US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal

23.90 1.45 8.93 34.98 11.56


Household Goods

Industrial metals and Mining Crescent Steel Dost Steels Ltd. Huffaz Seamless Pipe Int. Ind.Ltd. Inter.Steel Ltd.


Food Producers


3293.00 832.39 325.10 160.05 360.45


Adamjee Ins XD Ask.Gen.Insurance Atlas Insurance Central Ins Co. Century Insurance

49.64 8.50 34.49 48.67 7.16

49.50 8.50 35.00 50.00 7.50

48.60 8.10 33.86 48.00 7.06

49.40 8.47 33.99 49.79 7.50

-0.24 -0.03 -0.50 1.12 0.34

6,785 1,651 1,110 3,909 1,500

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.30 14.89 17.71 0.86 7.25

-0.02 -1.00 -0.25 -0.02 -0.01

9,463 13,487 19,659 9,495 2,100

Life Insurance American Life East West Life Assur EFU Life Assur

14.50 1.40 65.53

14.50 2.34 68.80

Financial Services AMZ Ventures A Arif Habib InvesXD Arif Habib Ltd. Dawood Equities Invest & Fin.Sec.

0.32 15.89 17.96 0.88 7.26

0.35 15.50 18.34 1.09 7.26

0.22 14.89 17.20 0.86 7.25

Equity Investment Instruments 1st.Fid.Leasing Mod 1.70 3.98 AL-Noor ModarXD Allied RentalModXDXB 19.90 Atlas Fund of Fund 6.00 B.F.ModarabaXD 5.56

1.50 4.00 19.90 6.10 5.56

1.50 3.60 19.88 5.90 5.00

1.50 4.00 19.90 5.90 5.56

-0.20 0.02 0.00 -0.10 0.00

15,000 25,100 3,700 414,000 7

14.30 32.00 36.00 6.99 16.01 68.00 1.64 72.00 109.00 25.00 133.00 30.57 16.00 1.85 17.62 20.13 0.80 69.50 61.00 26.73 1.60 10.95

14.50 32.07 36.02 6.99 16.50 68.80 1.66 72.21 112.81 25.00 140.00 30.57 16.50 2.00 17.80 20.39 1.40 69.50 61.00 26.73 1.73 11.11

-0.122 -0.82 -1.86 -1.00 0.12 0.75 -0.0 -0.79 0.00 0.00 0.00 0.00 -0.21 -0.03 -0.23 -0.08 0.60 0.03 -2.20 0.00 0.08 -0.82

5,540 1,935 20,783 1,000 3,102 2,236 347,818 4,202 113 1 2 251 300,021 56,691 42,963 70,946 6,140 1,000 500 41 907,682 493,177

Miscellaneous Century Paper Pak Paper Prod.XD Security Paper Climax Eng. P.N.S.C.XD Pak.Int.Con. SD TRG Pakistan Ltd. Murree BreweryXDXB Shezan Inter.XD Grays of CambrXD Philip Morris Pak. Shifa Int.Hosp.XD Hum Network XD P.I.A.C.(A) Sui North GasXDXB Sui South GasXDXB East West Life Assur EFU Life Assur New Jub. Life AKD Capital Ltd.XD Pace (Pak) Ltd. Netsol Technologies

14.62 32.89 37.88 7.99 16.38 68.05 1.75 73.00 112.81 25.00 140.00 30.57 16.71 2.03 18.03 20.47 0.80 69.47 63.20 26.73 1.65 11.93

14.69 33.15 36.98 8.99 17.25 69.00 1.72 73.00 115.66 26.00 146.00 32.00 16.78 2.04 18.24 21.00 1.40 69.50 61.00 27.88 1.77 11.93

Mutual Funds fund Alfalah GHP Cash Fund Askari Islamic Asset Allocation Fund Askari Islamic Income Fund Askari Sovereign Cash Fund Atlas Income Fund Atlas Islamic Income Fund Atlas Money Market Fund Atlas Stock Market Fund Crosby Dragon Fund

offer 501.2900 114.7196 103.6501 100.6900 519.3500 519.0900 516.9700 453.1500 82.9800

Repurchase 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500

nav 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500

fund HBL Money Market Fund HBL Multi Asset Fund HBL Stock Fund IGI Income Fund IGI Stock Fund JS Principal Secure Fund I JS Principal Secure Fund II KASB Cash Fund Lakson Equity Fund

offer 100.2768 87.0103 97.6745 101.8987 112.3545 121.5000 104.1200 0.0000 106.3763

Repurchase 100.2768 85.3042 95.2922 100.8898 109.6141 111.5200 96.5000 0.0000 103.2779

nav 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087 103.2779

Profit 02-11-2011_Layout 1 11/3/2011 11:22 PM Page 7

Wednesday, 02 November, 2011

closing bell





You hit a new achievement today -one that you may have been working on for quite some time. It's a good idea to leave the celebrations for another time, though, as things are still quite busy for you!

You and a coworker, or maybe a friend, are butting heads over something that others think is preposterously silly. That doesn't mean you can back down -- things are just getting interesting!

Your big brain is throbbing with power today -- so make sure that you're making the most of it! You need to get back to whatever business had stymied you in the past, as you can make good progress now.




Your financial situation is seizing the spotlight right now, so make sure that you're blocking out enough time to deal with it. Your mind is just right for handling the ins and outs of cash flow.

You feel legitimate pride in your accomplishments, but that emotion might not go over so well with your people today. See if you can get them to at least acknowledge your strengths.

Your methods of organisation are legendary, but on days like today, you may wonder if they're worth the effort. You know they are deep down, but do yourself a favor and mix things up a little.




You're having too much fun to think hard about what comes next -- which is a great problem to have, really! Don't worry too much about tomorrow or next week; just enjoy the moment.

Your home life is suddenly causing problems. It might be a sprung pipe, an angry roommate or a kid acting out, but it's up to you to take care of things. Patience is likely an asset.

You should open up and pour out your thoughts and feelings now -- your social energy makes communication easier than ever! It's one of those days when things start to really gel for you and yours.




Your money is one of your assets today -- even if you're flat broke! Somehow, you can leverage your situation into something much more congenial, so make sure that you're up for it.

Your energy levels are wonderful right now, so make sure that you're sharing them with others. There are people in your life who could use a dose of your enthusiastic spirit. Ring them up!

Your helpful nature comes out in force today -- so make sure that you're spreading it around. You should try volunteering for a big organization or finding a way to make everyone a little happier.






hOW TO PLAy Fill in all the squares in the grid so that each row, column and each of the squares contains all the digits. the object is to insert the numbers in the boxes to satisfy only one condition: each row, column and 3x3 box must contain the digits 1 through 9 exactly once.

angular archaic asinine aureate avatar beastly climate coddle compost conquer cost debit dislike grape loyal main nestle overlord peculiar perceive petulant

piquant pressure priority pugilist quail renegade research roust sanction slippery spoliate squander straggle tail tenement tomorrow vineyard wanderer waste windpipe

Today’s soluTions


ChESS White to play: play and mate in 2 moves 8



1 Pretentious talk — peppermint sweet (6) 2 Causes puzzlement (7) 3 Part of a stair (5) 5 I act OAP (anag) — edible substance made from cassava (7) 6 Where one goes to vote (5) 7 Expose to fresh air (6) 9 Pegs used for holding two parts of a structure together (5,4) 13 diplomatic building (7) 14 Muslim ascetic (given to whirling movements?) (7) 15 unkempt individual (6) 16 do a runner (6) 18 Stratum (5) 20 bottle (5)


crossword solution

5 4 3









chess solution


1.Qd8+ bxd8 2.Re8# 1-0


sudoku solution

1 destination of an annual yacht race starting at Sydney (6) 4 Supposed ideal land (6) 8 Infectious glandular disease (5) 9 Austrian physicist, d. 1853 famous for his discovery of the effect of movement on perceived wavelengths (7) 10 Twist off (7) 11 beginning (5) 12 Caribbean ensemble (5,4) 17 Famous person (abbr) (5) 19 Guts (7) 21 James Joyce novel (7) 22 Indian yoghurt dish (5) 23 Raids (6) 24 Expert in some practical science (6)





Profit 02-11-2011_Layout 1 11/3/2011 11:22 PM Page 8

Wednesday, 02 November, 2011

CCaC is the authentic and official forum for cotton crop assessment in the country and its initial estimate that has been issued by the committee for the current year is based on unbiased data



textile Ministry spokesperson

Shipping corporation under threat KARACHI



AKIsTAN National shipping Corporation has been exposed to a variety of financial risks that include credit risk, market risk (including foreign exchange risk, cash flow and fair value interest rate risk and price risk) and liquidity risk. According to the annual report of the corporation for the year ended on 30th June 2011, credit risk for the company arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including trade debts and committed transactions. Out of the total financial assets, the financial assets of the company that are subject to credit risk amounted to Rs3,548.898 million (2010: Rs3,133.362 million), the report said. Moreover, a significant component of the receivable balances of the group relates to amounts due from the private sector organisations.

foReIGn exCHanGe RISK The group faces foreign currency risk on receivable, payable transactions at foreign ports and the derivative cross currency interest rate swap. Foreign currency risk is covered as a considered management decision, since the income from the derivative cross currency interest rate swap fluctuates widely due to change in exchange rate. As of 30th June 2011, if the currency had weakened by 5 per cent against the Us dollar with all other variables held constant, pre-tax profit for the year would have been Rs386.541 million (2010: Rs11.507 million) lower, mainly as a result of foreign exchange gains or losses on the translation of Us dollar denominated assets and liabilities. If at the same date the currency had strengthened by 5 per cent against Us dollar with all other variables held constant, pre-tax profit for the year would have been Rs427.044 million (2010: Rs11.507 million) higher; mainly as a result of foreign exchange gains or losses on the translation of Us dollar denominated assets and liabilities. But, the affect of fluctuations in other foreign currency denominated assets or liabilities balances would not be material, therefore, not disclosed.

CaSH flow anD faIR valUe InteReSt Rate RISK Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in the market interest rates. The group has a high exposure to interest rate risk due to the financing obtained during the year. In order to manage its exposure to such risks the management of the holding company has entered into a derivative cross currency interest rate swap under

which the holding company receives KIBOR on the PKR notional in exchange for payment of LIBOR on the UsD notional. The group has interest bearing liabilities and has floating interest rates. On 30th June 2011, if interest rates on borrowings had been 250 basis points higher or lower with all other variables held constant, profit after taxation for the year would have been lower/higher by Rs21.981 million (2010: Nil).

lIqUIDIty RISK Liquidity risk is the risk that the group will encounter difficulties in raising funds to meet commitments associated with financial instruments. The group believes that it is not exposed to any significant level of liquidity risk. The management forecasts the liquidity of the group on the basis of expected cash flow considering the level of liquid assets necessary to meet such risk. This involves monitoring balance sheet liquidity ratios and maintaining debt financing plans. The group is subject to external restrictions in respect of long term financing against which it needs to comply with certain covenants; debt equity ratio shall not exceed 60:40 and debt service ratio of 1.25 times. The group is in compliance with the requirements of such covenants and maintains a debt equity ratio of 30:70 and debt service coverage ratio of 3.4 times.

Textile Ministry rejects cotton estimate criticism ISLAMABAD


FTeR strong criticism from the private sector on the projected cotton production of 12.2 million bales during the current year, the Ministry of Textile has clarified that the initial estimate of cotton crop issued by the Cotton Crop Assessment Committee (CCAC) was based on unbiased data and research. A spokesperson of Ministry of Textile Industry has said that CCAC is the authentic and official forum for the cotton crop assessment in the country and its initial estimate that has been issued by the committee for the current year is based on unbiased data and research as it consisted of stakeholders and experts that assessed and finalised a close to real estimate. The misleading figures being provided by different organisations are based on their vested interests which are an attempt to malfunction the market. The estimate of CCAC is mainly based on the data provided by the crop reporting services of the provincial agriculture departments, which conduct structured surveys at fortnightly intervals on 500 representative villages in the cotton growing areas. The crop

estimates are based on different factors like germination, plant population, average number of bolls per plant, average boll weight datacorrelated with pest outbreak data, pest and disease prevalence, weather data, fertiliser and pesticide availability and usage, water availability and flood damages. The committee was informed that the cotton crop assessment of 12.2 million bales amounting to 2.078 million tonnes which is a preliminary estimate based on international standard weight of bales of 170 kg each. The bales being produced in the country are approximately of 150 kg and if this weight is taken into consideration, the estimate enhances to13.8 million bales. The ministry also urged the organisations to provide their estimates in tonnes in order to avoid this ambiguity. Moreover, it has also been highlighted that the decision regarding the estimate was made on a rational basis as per established methodology by mutual consultation and representative of all associations like APTMA, KCA and PCGA who were present in the meeting. It was also reiterated that it is an initial estimate and it would be reviewed in the 2nd meeting of CCAC on 23rd November, in consultation with the relevant stakeholders.

Corporate profits soar by impressive 43pc yoy in 1st quarter

lonG-teRM fInanCInG During the year, the Corporation has obtained financing facility of Rs10,300 million (June 30, 2010: nil). The financing was obtained in the form of a syndicated term finance loan of Rs9,000 million and the remaining amount of Rs1,300 million in the form of Term Finance Certificates (TFCs) with a face value of Rs5,000 each by way of private placement. The corporation can draw down the amount till 1st February 2012. The financing carries mark-up of KIBOR+2.20 per cent. The loan along with the mark-up is repayable on quarterly basis and the last repayment date is 23rd November, 2018. The facility is secured by a first mortgage charge over certain vessels owned by its subsidiary companies, all present and future receivables of the corporation from three major customers and its investment properties. As of 30th June 2011, the corporation has drawn Rs7,438.806 million (June 30, 2010: nil) and Rs1,074.494 million (June 30, 2010: nil) from syndicated term finance and TFCs’ respectively. The corporation has also paid loan arrangement fee amounting to Rs106.662 million out of which Rs88.160 million (June 30, 2010: nil) was included in the amortised cost of the long term financing whereas the unamortised portion amounting to Rs18.502 million (June 30, 2010: nil) has been included in deposits and short-term prepayments.





ORPORATe profits during 1QFy12 soared by 43 per cent yoy and 15 per cent QoQ led by growth in the heavyweights e&P and Banks, along with Fertilizer and Cement sectors. However, Kse100 failed to respond in a likewise manner, gaining a mere 0.9 per cent in Oct’11 (underperforming regional markets by an average 5 per cent), while registering a fall of 5.2 per cent in Fy12 to date. We believe domestic political uncertainty and tensions with the Us together with the global economic woes overshadowed the impressive corporate results, said Atif Zafar at Js. Absence of any significant payouts tamed the excitement as well. Looking ahead, we expect earnings growth to settle in the vicinity of 17 per cent yoy in Fy12, translating into an impressive earnings yield of 16 per cent (a spread of 420bps over 1 year T-bill), he added. Hence, we maintain our positive stance at the Kse (discount of 48 per cent to the regional market’s earnings multiple), with POL, PPL, PsO, LUCK, eNGRO, FFC and MCB being our top picks, he added. key takeaways from 1Qfy12 corporate resuLts: While basing their

analysis on a sample of 40 companies, representing 75 per cent of the Kse-100 market cap, cumulative corporate profits were recorded at Rs86.5 billion ($997mn) in 1QFy12 versus Rs60.4 billion ($705mn) in 1QFy11, up 43 per cent yoy. Profits of exploration and Productions and Oil marketing companies increased by 32 per cent yoy and 69 per cent yoy, respectively during 1QFy12, while refiners and power utilities respective earnings declined by 11 per cent yoy and 26 per cent yoy. Hence, energy companies cumulatively posted earnings growth of 27 per cent yoy led by enhanced production profile of e&Ps, higher international oil prices and lower turnover tax rate. The manufacturing concerns profits (+ 128 per cent yoy) were boosted by higher domestic demand and price hikes. To recall demand received a battering last year following heavy floods. All fertiliser off-take, local cement demand and auto sales increased by 30 per cent yoy, 12.2 per cent yoy and 30 per cent yoy, respectively while a respective average price increase of 42 per cent yoy, 40 per cent yoy and 9 per cent yoy were witnessed. The banks led the growth in the services sector (up 38 per cent yoy) on the back of increased spreads owing to higher KIBOR (average 6M up 81bps). PTCL’s profits declined by 32 per cent yoy owing to higher operating costs and lower other income.

bank advances being eaten up by non-productive public sector g

Govt moves to borrow indirectly from SPb g Risk-averse behaviour of banks to reflect adversely on govt’s growth targets KARACHI



UNDs-sTARVeD government continues to rely heavily on the easy money with its budgetary borrowings from the risk-averse banks surging by Rs60.904 billion or 32 per cent by October 21st of current financial year. According to state Bank data, during July-October 21 the resource-constrained government’s bank borrowings accumulated to Rs252.284 billion against Rs191.380 billion it borrowed during the corresponding period in Fy11. Of the total bank credits, the government raised Rs67.515 billion from the central bank while Rs184.770 billion were sought from the

commercial banks, which though facing a severe liquidity crunch, are extensively investing their available money in the risk-free and heavilyweighted government securities. The government, fearing inflationary consequences of borrowings from the state Bank, also seems to have shifted its borrowing focus to the scheduled banks whose – according to sBP data – advances to the cash-strapped government skyrocketed by Rs130.998 billion or 244 per cent during the period under review. Against the current Rs184.770 billion, the government had borrowed Rs53.772 billion from the scheduled banks during July-October 21 last year. This period, however, saw the government’s budgetary borrowings from the state Bank shrank significantly from

Rs137.607 billion to Rs67.515 billion. The reduction, some quarters believe, is part of the government’s move to borrow indirectly from the state Bank. some analysts apprehend that the government, after seeing the chances for foreign financing getting dimmer, was first raising billions from the commercial banks and then asking the regulator to inject more liquidity into the system through continued reverse repo-operations. According to central bank, of the total budgetary support the sBP extended to the federal and provincial governments, Rs37.353 billion against Rs170.046 billion went to the former’s account and Rs34.994 billion in the latter’s. The provincial governments also seem to have embarked on a borrowing spree as up to this date last year they had

maintained a credit balance of Rs22.778 billion with the state Bank. The governments in the center and peripheries heavily borrowed from the scheduled banks that during the said period lent Rs185.755 billion to the federal government and Rs13.227 billion to the provinces. The loans the two governments had collected from the banks last year had amounted far less to Rs48.544 billion and Rs4.935 billion, respectively. This, the analyst said, present a gloomy picture as the growth oriented private sector was nowhere in sight in terms of bank financing. The sBP figures substantiate such a view showing that the bank advances to the private sector was downward. The private sector borrowers were having an increased credit balance of Rs61.462 billion with

the banks against last year’s Rs29.552 billion. On the other hand, the banks were more interested in lending to the loss-making Public sector enterprises (Pses) which sucked up Rs18.836 billion of liquidity from the banking system against a credit balance of Rs25.274 billion these had maintained with the banks in Fy11. This riskaverse behaviour of the banks, the official and unofficial economic observers warn, would reflect adversely on the government’s growth targets as most of the bank finances were being consumed by the nonproductive public sector. The bank advances should, ideally, for the private borrowers who, through generating economic activity, create jobs that further lead to economic growth in the country.


Profit Epaper