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The political economy of trade blocs Page 3 Privatisation an economic watershed Page 2 No load shedding for industry: LESCO Page 4 Pages: 8

profit.com.pk

Tuesday, 15 November, 2011

OGDCL makes landmark oil discovery g

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Remittances increase to $4.3 billion KARACHI

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Nashpa well 2 drilled down to depth of 4340 meter, to test oil and gas potential OGDCL earned net profit after tax of Rs63.5 billion last fiscal ISLAMABAD

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AMER SIAL

TATe owned Oil and Gas Development Company Limited (OGDCL) has made a major oil discovery from “Nashpa well two”, in Karak, Khyber Pakhtunkhwa. Initial estimate of production of 3370 barrels per day, nearly equals 20 per cent of the company’s current crude output of 36,092 barrels per day (bpd).

Output LikeLy tO iNCRease A senior official of OGDCL said this is a major crude oil discovery as the output from the first formation is 3370 bpd of crude oil and it is likely to go up as the remaining four other formations are tested within next four weeks. he said there are high expectations of increase in output once other formations are tested but it was too early to give an estimate. Testing of four potential reservoir formations will also be undertaken wherein similar encouraging results are expected. Full flow potential of this well and the extent of the discovery will be determined after completing the testing program. An announcement made by the company said, OGDCL, the operator of Nashpa exploration License, together with its joint venture partners Pakistan Petroleum Limited (PPL) and Government holding Private Limited

(GhPL) have discovered a new hydrocarbon bearing horizon from its appraisal well Nashpa 2, located in district Karak, KP.

iNDiGeNOus expeRtise empLOyeD Structure of well was delineated, drilled and tested, utilising indigenous expertise. Nashpa well 2 was drilled down to depth of 4340 meter, to test the oil and gas potential of Datta, Shinawari, Samanasuk, Lumshiwal, hangu and Lockhart formations. Significant reserves of hydrocarbons have been found at the well. First targeted zone “Datta Sandstone” has been tested and has produced 3370 barrels per day of crude oil and 11 MMCFD gas through 32/64 choke at well head flowing pressure 3800 psi. This discovery will add to the hydrocarbon reserve base of the company and joint venture partners, bringing significant savings to the country in term of oil import bill.

ResuLts fROm ZiN bLOCk OGDCL earned a net profit after tax of Rs63.5 billion for the fiscal year ended on 30th June, 2011. During the first quarter of the current fiscal year, the company’s crude oil production remained 36,092 bpd which was almost equal to production during the same period last fis-

cal year. however, its gas production saw an increase of 7.8 per cent to 1,023 mmcfd as compared to the same period last year. The company is working on many development projects and the results from its most prospective Zin block are expected soon.

increased to Rs21.9 billion as compared to Rs16.7 billion in the corresponding period of preceding year translating into earnings per share of Rs5.10 with a payable interim dividend of Rs1.50 per share.

faCt CheCk Net saLes iNCRease tO Rs44.6 biLLiON OGDCL’s net sales increased to Rs44.6 billion in July-September period of current fiscal year as compared to Rs39.4 billion in the corresponding period last fiscal year. Net profit before taxation increased to Rs31.0 billion as compared to Rs24.1 billion in the corresponding period last fiscal year. The net profit after taxation

The flagship national oil and gas exploration and production company, OGDCL is the largest upstream company in the country. It is listed on all three stock exchanges of the country and on London Stock exchange since December 2006. Based on recently concluded reserve evaluation study carried out by Tracs International, UK OGDCL’s total proved, probable and possible remaining recoverable reserves

as of 30th September, 2011 stood at 214 million barrels of oil and 10,660 billion cubic feet of gas. It holds the largest portfolio of the recoverable hydrocarbon reserves of Pakistan, at 37 per cent of gas and 48 per cent of oil, respectively, as at December 31st, 2010. It contributed 23 per cent of the country’s total natural gas production and 56 per cent of its total oil production as at August 31, 2011. With a portfolio of 34 exploration licences, the company has the largest exploration acreage in Pakistan, covering 22 per cent of the total awarded acreage as of August 31st, 2011. While its primary activities are focused at onshore exploration, the company has also begun conducting offshore exploration activities.

OiL impORt biLL tO ease ON aCCOuNt Of bReakthROuGh KARACHI

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ISMAIL DILAWAR

he cash-strapped country would see some ease in its burgeoning oil import bill as the Oil and Gas Development Company Limited (OGDCL) has discovered what the company said were, “significant reserves” of hydrocarbons in the Khyber Pakhtunkhwa province. “Significant reserves of hydrocarbons have been found,” the OGDCL told its shareholders at the stock exchanges in London, Karachi, Islamabad and Lahore through a notice Monday. Oil impOrt bill: According to Federal Bureau of Statistics data, during the first quarter of current fiscal year the country’s oil import bill accumulated to

$3.827 billion, registering an increase of 62.46 per cent when compared with $2.356 billion of the same quarter last year. Of the total imports, the crude oil import ballooned by 98.97 per cent to $2.506 billion against $1.259 billion of the last corresponding period. CushiOning Oil impOrts: Amidst rising demand for crude oil, such discoveries by the OGDCL might comfort the country’s economic managers who are supposed to be concerned over the increasing oil import bill that might offset the positive impact of healthy dollar inflows to the cashstrapped country on account of worker remittances and exports. The new reserves of oil and gas have been found by a join venture comprising OGDCL, Pakistan Petroleum Limited (PPL) and

Government holding Private Limited (GhPL) from its appraisal well Nashpa 02 located in District Karak of Khyber Pakhtunkhwa. “This discovery would add to the hydrocarbon reserves base of the company and (the) joint venture partners,” said Company Secretary erum Ali Aziz. The company secretary believes that the new finding would also bring “significant savings” to the country in terms of oil import bill. She went on to say that the structure of the newly-discovered well was delineated, drilled and tested utilising indigenous expertise. She said the well was drilled down to the depth of 4340 metres targeting to test the oil and gas potential of Datta, Shinwari, Samanasuk, Lumshiwal, hangu and Lockhart formations.

pOtential disCOveries: The first targeted zone called “Datta Sandstone” had been tested and produced 3370 barrels per day of crude oil and 11 MMCFD gas through 32/64” coke at well head flowing pressure 38700 Psi, she said. Testing of another four potential reservoir formations, the secretary said, would also be undertaken wherein similar encouraging results are expected. The full flow of potential of this well and the extent of the discovery would be determined after completing the testing phase. The OGDCL and all listed firms are required under Clause (xxiii) of the Code of Corporate Governance to notify its stakeholders in the local and international stocks markets of all such developments that could affect the price of its shares.

ISMAIL DILAWAR

AKISTANIS working abroad remitted over $4.315 billion during first four months (July– October) of the current fiscal year (2011-12), the central bank reported Monday. This shows what the regulator called an “impressive” growth of 23.24 per cent or $813.66 million over $3.501 billion the country had received during the corresponding period last year (July-Oct 2010). Remittance receipts from across the world grew during the review period, said State Bank of Pakistan (SBP). Central bank attributes this increase in remittances to a joint initiative named “Pakistan Remittance Initiative (PRI)” it had taken in collaboration with the ministries of finance and overseas Pakistanis to facilitate foreign inflows in the dollar-hungry cash-strapped country through formal channels. “This initiative has shown remarkable progress,” the SBP chief spokesman Syed Wasimuddin said. Inflow of remittances in July-October from Saudi Arabia, United Arab emirates, USA, UK, GCC (Gulf Cooperation Council) countries (including Bahrain, Kuwait, Qatar and Oman), and eU countries amounted to $1.145 billion, $963.12 million, $795.35 million, $486.92 million, $486.15 million and $129.81 million, respectively. Last year, the country’s receipts from these destinations stood at $764.31 million, $819.57 million, $666.27 million, $393.24 million, $416.91 million and $117.07 million, respectively. The remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the said period amounted to $308.34 million as against $324.03 million received in JulyOctober 2010. The monthly average remittances for the July-October 2011 period comes out to $1.078 billion compared to $875.35 million during the corresponding period of 2010, registering an increase of 23.24 per cent. In October last year, $1.017 billion were sent back home by overseas Pakistanis, up 19.03 per cent when compared with $855.11 million received in the same month last year. It may be pointed out that except for the month of September (2011), overseas Pakistanis have remitted over $1 billion in July and August of the current fiscal year, the State Bank said. In October 2011, the inflow of remittances from Saudi Arabia, UAe, USA, GCC countries, UK, and eU countries amounted to $291.20 million, $216.50 million, $167.60 million, $131.54 million, $117.56 million and $28.08 million, respectively. The corresponding stats last year were $187.99 million, $198.28 million, $154.35 million, $104.18 million, $96.35 million and $32.42 million. The remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during October accumulated to $65.39 million compared to $81.53 million received in the same month last year. export receipts constitute another stimulus for the country’s declining foreign exchange reserves that in recent weeks have contracted to $ 17.02 billion after crossing the historic $18 billion mark. During the first quarter of FY12, the country exports grew to $6.141 billion against $5.241 billion of corre sponding period in FY11. But, the imports grew more precipitously to $10.178 billion compared to $8.233 billion of first quarter last year. This widened the country’s deficit-prone trade balance to $4.037 billion compared to last year’s $ 2.992 billion. More worrisome for economic managers perhaps is the zeroing foreign financing especially in the post-May 2 episode, as foreign disbursements nosedived to merely $246 million during July-Sept (FY12) compared to $623 million of the same quarter last year. Foreign investment, viewed by the economists as only permanent stimulus for the terrorismhit country’s dollar reserves, also dipped to $236.2 million during the first quarter.


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Tuesday, 15 November, 2011

debate DuRDANA NAjAM

e live and survive in a need based economy; one of the roles of the government in any economy has been to manage resources so that people would get what they want with ease of time and availability. Prudent identification and strict management of resources were believed to be the key to development of an economic system. For years governments assumed – and more so the socialist societies – that if left on people, the greed of amassing all into one and the desire to subjugate others through deprivation could piece the society into pockets of individuals thinking about their own interest. Therefore, to keep the notion of selfinterests in check, governments have been producing, supplying and selling goods and services to its citizens on its own; although without much success. hence state organisations, instead of becoming a resource, become a burden due to lack of competition .At the turn of the 80s, in the preceding century, it was finally decided that governments should concentrate on anything but production. It was decided that self-interest could be best checked through government regulations – the original business of a government. It was decided to let the private sector take over government owned entities, through different contracting or selling mechanism so as to draw maximum advantages from resource utilisation.

sugar, automobiles, fertilisers and pharmaceuticals after privatisation. The million dollor question is; did privatization improve the life of a common man in Pakistan or was it a boon for the top twenty again?

ing number of ownership shares have contributed to the government’s goal of creating property-owning democracy through privatisation.” Privatisation opens new avenue for investment, brings new skill dimensions to the labour market, widens the tax base of the state and infuses a flare of competitiveness in people, taking progress to a new high. There is a positive correlation between growth and privatisation.

What aND hOW tO pRivatise? pRivatisatiON iN pakistaN

Looking into the British experience of privatisation we find a complete tilt towards getting away with state-owned infrastructure industries or what can be called the national utilities. United Kingdom has sold electricity, water, gas, rail network, and now the NhS run hospitals are finding their way into the private sector as well. In fact in an ideal scenario, every small or large, profitable or non profitable entity should be privatised to

As is always the case, any venture undertaken by the government of Pakistan reeks of financial

Why pRivatise? Different government adopt privatisation for different purposes but the objective of all these remain the same: cost affectivity and efficiency. It is believed that owing to its massive size and intertwined arrangements governments themselves become the cause of failure of state owned enterprises, by using it as an instrument to further political interests. One loud and clear allegation on Pakistan’s state owned enterprises has been the recruitment of incompetent people on strategic positions. On top of it, excessive employments coupled with unjustified perks and privileges had become the additional louts that sucked into the remaining productivity of SOes. In the pre-1945 era, colonisation has been the fate of most of the world we live in today. State was omnipresent in every endeavour. This governing strategy moved into the system in the post colonial period as well. States controlled the economy, at times to give maximum benefits to the citizens and at other instances to exert more pressure over them. however, in early 80s it was fully realised by many developed as well as less developed countries that the intervention of government into every production activity was creating losses. SOes were eating into the government budget through subsidies and capital infusions, while soaring debt and increasing fiscal problems came as a by-product of the former two. Thus it was thought that capital released from the sale of state owned entities would be made available for public service development ventures to further facilitate people. In the years to come, privatisation opened the doors of economic participation through shares ownership, widening the sphere of collective prosperity. As British government, on the eve of its thunderous success of privatisation in late 80s, narrated its success story by saying that “ris-

fully in the mill’s privatisation deal. The Cabinet Committee on Privatisation took the Privatisation Board’s recommended price of Rs17.20 per share for granted and consequently, shares were sold at a low rate of Rs16.81.” The echo of short selling of state owned entities can be heard in nearly every sale the government undertook; PTCL and KeSC being a few toppers. On the flip side however, empirical evidences of different countries have shown that countries usually fail to balance the options between privatising quickly and extensively and the desire to maximise proceeds from privatisation. Observers believe that privatisation should be implemented slowly and carefully but of course not at the cost of strengthening opponents by giving them sufficient time to organise their resistance. What differentiates Pakistan’s case from the rest is not short selling but the use of proceeds of privatisations for developmental purposes. When Musharaf left the throne of Pakistan in August 2008, the country was snarled in the worst fiscal crisis, with its foreign reserves almost dried up and its financial managers knocking at the doors of IMF to bail the country out of financial crisis. Though, only a year earlier on 12th November 2007 Shaukat Aziz, then Prime Minister of Pakistan, claimed to have earned $6.41 billion from privatisation. One should not be misdirected by 8.96 per cent growth rate during much of 200506 – the windfall of foreign aid, for being the frontline ally of America, in the war of terror has feared the beast of sluggish economy away.

maNaGiNG stakehOLDeRs

make it efficient. Though privatisation reduces government control but it can mess with people’s control as well if the property of competitiveness is not taken into account. In the example of United Kingdom as well as in France and Japan, industries were restructured before put on sale. Sector competitiveness is important to keep people from exploitation of the private sector. It is argued that privatisation in Pakistan has given birth to cartelisation. In theory it is not enough to have two large enterprises and one small to guarantee competitive environment, it requires a balanced spread of companies to give a fair price, quality and quantity to the consumers. It is perhaps for this very reason that industries in UK, France as well as in Japan have been floated in the open market, encouraging individual citizens to share the ownership. The divisibility of companies in term of loosening off of structures, fragmenting market through lower entry barriers, raising public stakes in the entities sold and putting regulations to monitor the private sector have made privatisation a success not a burden to the people of these and many countries that followed right rules of privatisation. According to the competitive commission of Pakistan and World Bank estimation, monopolistic practices and cartels are perceived to hold sway in Pakistan in such businesses as banking, cement,

corruption, the privatisation process too has this foul air about it. The famous judiciary movement, that happened to change the fate of this country by almost 40 per cent, has its origin in the privatisation plan of Pakistan Steel Mills, sold by the Musharf-Aziz government at a throw away price. The intervention of Supreme Court through a petition moved by different stakeholders, layered off the deal to its bare reality that included massive kickbacks, personal aggrandisement and the non-national approach of our leaders in disposing of national entities. Selling the steel mills short and without taking into account the consequence of rendering its employees, numbering in thousands, unemployed, was termed by the Chief Justice of Pakistan Iftikhar Muhammad Chaudhry a callous move. During one of the proceeding in 2006 the Chief Justice of Pakistan remarked that “the objective of privatisation of state owned enterprises is to alleviate poverty and debt retirement, but this was not considered

The hue and cry that comes following the announcement of privatisation is common to all countries. employees, contractors, suppliers even consumers fear losing something in the wake either in term of jobs, orders, or high prices. It is the job of the privatisation commission, or whatever board is asiigned the task of dealing with privatisation process, to assuage the fears of stakeholders. Governments do not let unemployment or missed contracts give sleepless night to its people. Compensation in term of different welfare programmes aimed at giving monitory incentive in case of job loss is built in the privatisation contract. It is how the government pitches its case to the people, determines the reaction to and execution of the sale deal. What we saw in the case of KeSC and recently in the case PePCOs, it was a show of the communication gap between people and the government. Fears of unknown is a normal emotion bound to overwhelm the stakeholders. The process of privatisation is not merely changing hands of ownership; it is a process whereby goods and services are enhanced through specialisation and competitiveness of private sector driven by profit but sustainable only if quality, quantity and accessibility of goods and services are guaranteed. To prevent the private sector from getting carried away by profit, regulations are defined by the government to check any deviation from the mechanisms of market economy. “Durdana Najam is a freelance financial feature writer, currently doing Executive MA in Governance and Public Policy, from FC College Lahore, she could be reached at durdananajam456@hotmail.com”

Storm approaches for India’s banks, analysts say HEATHER TIMMONS

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BLooMBERg

eWSMOODY’S downgraded State Bank of India’s rating to D+ from C- in October. how bad will things get for India’s banks? It depends on who you ask. Moody’s downgraded the outlook for the entire sector Wednesday from “stable” to “negative,” setting off a selling spree on Dalal Street that left Indian markets as one of Asia’s worst performers on Wednesday. “India’s economic momentum is slowing because of high inflation, monetary tightening, and rapidly rising interest rates,” Moody’s wrote. Borrowers will be late on loan payments or not make them at all, and profitability will come under pressure in the sector over the next 12 to 18 months, the rating agency said. Rival ratings agency Standard & Poor’s did the opposite on Thursday,

assigning Indian banks a rating of 5 on its Banking Industry Country Risk Assessment, or BICRA, an improvement from a rating of 6. A rank of 10 represents the highest risk on the BICRA scale, so India’s banks moved up a notch, to the same economic risk as those in China, Turkey and Portugal. “We consider the lending and underwriting standard to be moderately conservative,” S&P wrote, and sector concentrations and currency risks low. Whether you see the glass as half full or half empty, there’s little question that the strength of India’s approximately $1.3 trillion banking system is about to be tested. The financial system in India is dominated by state-run banks, which control about 75 percent of the market’s assets. They, with their commercial banking counterparts, lent aggressively to the nation’s fastgrowing companies, infrastructure projects and private-public

partnerships during the recent economic boom years. Corporate lending increased by 21 percent a year in the last fiscal year, even as signs of a slowdown were showing. The bank lending system now needs to weather a nasty storm, a growing number of analysts and economists say. “We haven’t seen the worst. We haven’t even seen the beginning of the worst,” said V. Krishnan, a bank analyst with Ambit Capital in Mumbai who downgraded State Bank of India, India’s largest bank with a 1.2 trillion rupee ($24 billion) market capitalization, to “sell” in August. Conditions will be “meaningfully bad for the entire economy,” predicts Mr. Krishnan, and companies will be unable to pay back bank loans. “Corporates are bleeding operationally, and they have less and less money to service their debt obligations,” he said. Paradoxically, the bad times to come are in part the government’s own

making. While negative global economic conditions present a bleak backdrop, analysts and businessmen say that some of the immediate loan problems can be traced to a paralyzed central government, corruptionrelated losses, sector blowups and misguided policies that have left even decently performing companies at the mercy of the whims of various government agencies. essar energy said in August that three projects were being delayed over regulatory clearances, sending the company’s value plummeting, Kingfisher Airlines is teetering on the brink of bankruptcy, in part, its founder says, because of the government’s continued support to state-run Air India, and United States electricity producers AeS said this month it will scale down in India after failing to get planned projects off the ground, worsening confidence in India’s power sector. On Friday, the government

announced that India’s industrial growth rate fell to its lowest rate in two years. “Indian policy makers can at times be their own worst enemies,” said Rajeev Malik, senior economist with CSLA Singapore, a research firm. There is a saying in India that applies here, Mr. Malik said. The english translation is “to use the ax on one’s own foot,” he said. If things go very bad for India’s banks, rating agencies do agree on one thing – the Indian government, which helped to create the mess, will be forced to help clean it up. “We classify the Indian government as ‘highly supportive,’” Standard & Poor’s wrote Thursday. “The government is likely to provide timely financial support to the banks, if needed.” Moody’s concurs. Moody’s “expects the government to remain committed towards providing support to both public and private banks,” the rating agency wrote.


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Tuesday, 15 November, 2011

EDITORIAL

Drainage through patronage

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O they have not been able to shed their diapers these many years, observed renowned economist Professor Samuelson regarding inability of various industries/sectors to grow out of government protection. Contrary to what the economic orthodoxy once held sacred, official patronage invariably ends up doing more harm than good, turning entire sectors into complacent producers at best, addicted to unending injections to stay afloat. Yet the subsidy/protection phenomenon remains central to our economic model, despite obvious wastage. The centre’s position is understandable to an extent. Resource and energy bottlenecks continue to undermine central pillars of our growth, with no immediate sign of improvement. Also, there is a blatant lack of capacity in both government structures and industry setups to engineer economic growth. The development budget is a prime example. Despite devolution of crucial powers to provinces, we observe a disturbing inability to

implement policy, resulting in economic retardation. In industry, we observe resistance to progressive change primarily because of government patronage bailing out sick enterprises, in effect discouraging necessary upgradation without which competitiveness will forever be compromised. Little surprise, then, that our industry manages little value addition in the export market. The government is advised to channel subsidy funds into capacity building where most needed, so dedicated sums become targeted investments, enabling recipients to stand on their own feet sooner rather than later. The international financial environment is undergoing a phenomenal change in the aftermath of the great recession, with countries turning to their comparative advantages to finetune new trade regimes. For Pakistan to partake in this paradigm shift, we will need industry to produce at its maximum. And for that, capacity building must replace subsidy dispersal. In the present system, patronage, essential though it seems, is actually adding to resource drainage. This trend must reverse immediately.

The political economy of trade blocs

Shaukat Tarin

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IMe has come for Pakistan to seriously consider just how long it can let security concerns overshadow commercial and economic interests. For over 60 years, the establishment has reacted to safety concerns by increasingly assuming a security-state posture, often at considerable financial and trade revenue cost. There can be no denying that security issues must take precedence, but unprecedented international economic developments mandate shifting focus to an economic welfare state for the greater benefit of the people as well as the government. The emergence of trading blocs, and subsequent spill-over advantages to member states provide both examples and opportunities for countries like Pakistan. Presently, proximity and cost-effectiveness has led to the establishment of three giant international trading blocs – Asean, eU and Nafta – reducing the cost of doing business and increasing mutual revenues. Pakistan, too, is part of two major trade associations, eCO and Saarc, a $3 trillion economy even if China is excluded. even though Pakistan’s current share is less than five per cent either way, it remains the only country with representation in both bodies. And considering our geographic location, by acting as a tradebridge between the two and opening crucial trade routes connecting them, we can attract major revenue by simply managing the traffic. We can be the bridge through which Central Asian States, Iran, Turkey and Afghanistan can trade with India, Bangladesh and Nepal, materialising unprecedented gains for all concerned, while benefiting Islamabad in the form of transit fees. Again, such decisions can only be the consequence of bigger concerns that invariably include politics and security. Pakistan’s trade issues with

Pakistan must make its guiding policy more trade specific Let economic forces work

Quality education

Pakistan and India are traversing through their worst energy crisis. It is time to resolve them. The TAPI project provides best opportunity besides the IP project. Pakistan must serve its national interest and it is in the interest of Pakistan that it must adhere to both IP and TAPI projects to meet its energy needs. If geopolitics could be averted on granting the Most Favored Nation status to India, it should also be averted on both IP and TAPI projects. Let economic forces work and build trust and peace. There is no Afghan-like irritant on the IP project. Geopolitics should not affect these projects, as they would bring enormous prosperity to Pakistan in the near future.

The article raises a number of very important issues. Unfortunately, the education system of Pakistan is such, that rote learning is patronised instead of being discouraged. And this is not only limited to Pakistan but also, many developed countries as we know them. There is a need to completely revamp educational structures, but for that to happen, as you rightly pointed out, we need to redefine the definition of education. The modern system is a process of standardisation where batch by batch students are churned out, without much value addition. Also, as pointed out in the article, the definition of literacy courtesy UNeSCO is not only ambiguous but immensely bizarre.

AHMAD RASHID MALIK

DANISH HAMEED

KARAchI

India also incorporate just such matters. But it needs to be noted that engineering a more relaxed trade environment can prove mutually beneficial, and to no small extent. As an example, cement needs in Delhi are better addressed by imports from Lahore than Andhra Pradesh. Similarly, agriculture and commodity prices in Pakistan can be rationalised to a great extent in case of unhindered trade with the eastern neighbour, highlighting the positive impact of increased trade on price rationalisation. It is also important to understand how India’s large corporations give it added muscle in the international trade environment. The likes of Tata and Reliance can leverage large amounts of capital essential for ambitious investments, hence India’s increasing footprint in the African continent. There is a way to use this advantage for Pakistan’s advantage also, provided political and security concerns are cleared amicably. Pakistan is naturally endowed with huge Thar coal reserves, sitting right next to India. If a mutually beneficial agreement can be reached and targeted investments channeled towards their proper exploitation, both Pakistan and India can share subsequent power generation, marking a new chapter in the political and economic history of the sub continent. Similarly, Gwadar is another potential goldmine for Pakistan if taken advantage of judiciously. Given the right circumstances, we can invite participation from India, China, Japan and even Turkey to exploit this strategic corridor between the Middle east, Iran, Central Asian Republics and Pakistan, raising it to a position of centrality in international maritime trading. The benefits of softening the traditional security-centric posture in favour of increased economic, financial and commercial linkages are enormous. But arriving at such an arrangement requires political will in all parties concerned. The proposed shift involves risks, but also brings unprecedented rewards. The deciding factor will be the criteria these states set to define their standing as the international financial system undergoes serious overall transformation. If we remain committed to safeguarding the present position with security issues dictating overall direction, numerous avenues of mutual cooperation will go waste. But if public and official benefit is put at the centre of a new, integrated strategy, chances of graduating into the economic welfare state model are encouraging. The writer is a former finance minister

LAhoRE

Debt, Berlusconi and pepperoni

Kunwar Khuldune Shahid

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NY ardent follower of the Italian cuisine would let you know whether the topping atop any given pizza has deserved its right to be there or not. The quintessential pepperoni pizza has its meat topping blending seamlessly with the layer of cheese beneath it. even if it is slightly overcooked, the pepperoni loses its shape and the pizza becomes a tasteless serving of unfulfilled promises. however, only a deluded chef would continue to try and have another go at the same recipe,

without giving much thought to the fact that the same ingredients could not possibly result in a rejuvenated taste, especially when the oven simmers to unprecedented temperatures. Italy’s political arena is one such sweltering oven, and Silvio Berlusconi proved himself to be that pepperoni that fails to fulfill the collaborative demands of the cheese below it and succumbs to increase in temperatures. As the Italian market continues to plunge into obscurity, the groundbreaking debt numbers being posted have obvious repercussions for the rest of europe as well. The FTSe has been disturbed owing to the Italian predicament while the Dax in Germany and the Cac-40 in France have had their applecarts upset at varying scales. Italy, being the third largest country in the euro domain would, without a shadow of doubt, encompass most of the zone as far as after effects are concerned. Also, while the massive Italian debt encumbers the neighbourhood, its sheer volume connotes that

that it is too big to bailout, unlike Greece, Ireland and Portugal. As the focus shifts from the Greek Apáki to the Italian Pizza, there is a myriad of reasons to destroy the european appetite. Italy is the eighth largest economy in the world, with a GDP of $2 trillion, and debts exceeding the $2.2 trillion mark – or 120 per cent of the total GDP, it would be an understatement to say that the chef slightly overcooked this pizza. Rates on Italian bonds have escalated to over 7 per cent – while the numbers are haunting, the precipitous increase is even more daunting. Amidst such earth shattering crises, the tasteless pepperoni is only exacerbating the situation. Berlusconi’s idea to tackle the matter was manifested via his reform policy, which was met with scrutinising glares and sceptical noises – the businessmen were perturbed and the politicians were downright offended. It seems as if the Italian crisis is at a point where recovery

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Silvio Berlusconi proved to be that pepperoni that fails to fulfill the demands of the cheese below it

seems like a herculean task – and not just your Average Joe hercules; someone with unprecedented savoir faire and drive. According to estimates if Italy’s borrowing continues to mount, the Italian hierarchy would have to raise around $880 billion in the next three years. The devil is becoming more menacing day by day and the deep blue see has reached an unparalleled depth, so to speak. And now with the pepperoni, out of colour, out of shape and out of demand which topping would the cuisine doctor order? The first option is a dose of ‘endive’ straight from the Sicilian recipe – Angelino Alfano. Often labeled as the fixer ingredient and fresh in taste and spirit, this particular brand of endive has stuck loyally to the pepperoni and enhanced its taste in the past – but is it time

for him to become ‘the’ topping? The second option is the plum tomato from up north – Mario Monti. hardly anything could be more contrasting to the ferocity of the would-be supplanted pepperoni. A banking connoisseur, Monti is a technocratic tomato and might just have enough sauce to whet the appetite of the Italians. Nevertheless, it is clear that Italy is in a sweltering pot and it would take a lot of courage and prudence for the nation – and indeed europe as a whole to – dig itself out. There are a lot of key players in the game and one could hope for the europeans sake that too many cooks do not spoil the broth. The writer is sub-editor, Profit and can be reached at khulduneshahid@gmail.com

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email: profit@pakistantoday.com.pk ph: 042-36298305-10 fax: 042-36298302 Website: www.pakistantoday.com.pk


Profit pages 15-11-2011_Layout 1 11/14/2011 10:57 PM Page 4

Tuesday, 15 November, 2011

Industry is my priority and I am taking all possible steps to facilitate the business community

news

04

LesCO Chief executive sharafat ali sayyal

No load shedding for industry: LESCO LAHORE

O

STAFF REPoRT

N demand of Lahore Chamber of Commerce and Industry, LeSCO chief has announced to put an end to forced load shedding for the entire industrial sector. “From now onwards there would be no more forced load shedding for the industry.” LeSCO chief said industry was his priority and he was taking all possible steps to facilitate the business community in general and the industrial sector in particular. he also informed LCCI members that long awaited New Kahna grid station and transmission line project has been commissioned. When LCCI took up high prices of electricity and repeated increases in power tariff, Sharafat Ali Sayyal informed LCCI members that negotiations with NePRA are underway on high fuel adjustment charges in LeSCO. The distribution company is the highest rev-

enue generation DISCO, while the line losses are at the lowest ebb when they are compared with other distribution companies in country. LeSCO chief said to stop the electricity pilferage, LeSCO has adopted the policy of stick-and-carrot and all LeSCO men found involved in this heinous crime would be given exemplary punishments. Those who are doing good work would be rewarded he added. he said a quarterly review would be carried out in this regard. he said the LeSCO management committee in which private sector representation is involved to make certain decisions with regards to sector-wise load management would also be activated as soon as LCCI forwards names for the committee. LeSCO chief also said that LCCILeSCO Dispute Resolution Committee would be activated as soon as the LCCI forwards names for the committee. Speaking on the occasion, LCCI President Irfan Qaiser Sheikh drew the attention of LeSCO chief towards the ever-mounting

energy crises which are causing sufferings to all the segments of society. he said that power outages not only halt the production process but also increase the cost of production because shifting to generators fueled by diesel is hardly affordable. Irfan Qaiser Sheikh said the price of electricity had been increased by 72 per cent in the span of four to five months. It seems that high-ups only know one way to manage the demand and supply of electricity. Whereas no serious attention is being given to efficiently do the load management and also explore the other economical ways of generating electricity. LCCI President said the LeSCO still needs to do a lot to minimise the line losses, reduce the distribution losses and control the pilferage that is done by some unscrupulous elements. LeSCO’s overall distribution losses amount to 11 per cent which are much lesser than the losses of other DISCOs where situation is very pathetic. PeSCO’s distribu-

tion losses are roughly up to 35 per cent followed by KeSC at around 40 per cent plus, heSCO at around 40per cent, QeSCO at around 25 per cent. The most unfair outcome of these factors is that the genuine and fair-minded users have to bear the brunt. he urged the LeSCO chief to ensure the electricity rates are determined as per the performance and efficiency of the particular DISCO. “Why the cost of inefficiency of certain DISCOs is to be borne by those areas or users whose DISCOs are comparatively efficient.” LCCI President said the LeSCO should strictly follow the schedule of load shedding in Quaid-e-Azam Industrial estate, Ferozepur Road industrial estate, Kattar Bund road industrial estate and some associations especially Steel Re-rolling association, Plastic Bags & Sheets Manufacturers Association as any deviation from the schedule hits them very hard as they can neither meet the production targets nor can bear the extra cost

Bears return to KSE with 30 point dip KARACHI STAFF REPoRT

T

he extension of Friday’s session witnessed low volume gains during early trade, wherein oil stocks witnessed change of hands on strength, while the triple digit achieved in international oil market became an excuse for relatively expensive trade. The fauji group stocks from fertiliser sector continued to invite buying from local quarters, however, the steam soon fizzled out with FFC being an exception due to prolonged stagnation and absence of follow-up support. The high priced stocks witnessed off-loading thus wiping off the early gains, and massive decline in turnover with improving values that has become a trend continued to send horror signals to the local stake holders, thereby keeping the trading horizon quite narrow. high quantum trade

through change of hands in BAFL however contributed substantially to the overall turnover that stayed almost 50 per cent at midday trade, allowing only the blue eyed brokers to cherish the commission revenue while others were mere spectators. The KSe 100 index closed at 12008.48 levels with the loss of 30.45 points, while KSe 30 index lost 2.47 points to close at 11380.51 levels. All Share index closed at 8304.29 levels after losing 21.34

points. Total 88 scrips advanced 142 declined and 99 remain unchanged out of total 329 scrips traded. Absence of buyers on intervals did invite a colour of panic, thus forcing the benchmark to melt at high pace in post midday trade. Targeted activity in index heavy weights however did restrict unprecedented decline besides allowing the benchmark to manage 12000 psychological that was made to sustain due to early close on Friday.

The fears of further deterioration in fragile fiscal numbers becoming a reality with widening trade gap coupled with start of interest re payments to IMF early next year will have an adverse impact on the dollar reserves, wherein more than 50 per cent are financed by IMF through reserve support funding. The long awaited CGT review probably stays the only hope for the revival of local equity market, hasnain Asghar Ali at Aziz Fidahusein said.

because of running heavy generators. he said that there are some areas in Lahore like Daroghawala and Mehmood Booti Bund Road where industrial feeders need to be separated from residential feeders. Due to tripping and unscheduled load shedding, the industrial units face lot of problems. The following executive Committee Members also attended the meeting:- Rehman Chann, Raees A. Sheikh, Mehmood Ghaznavi, Mian Abuzar Shad, Nabila Intisar, Kh. Shahzeb Akram, Khamis Saeed Butt, Sheikh Mohammad Ayub, Shoaib Zahid Malik. LeSCO Chief executive Sharafat Ali Sayyal was speaking at the Lahore Chamber of Commerce and Industry on Monday. LCCI President Irfan Qaiser Sheikh presented the welcome address while Senior Vice President Kashif Yousif Meher, former Presidents Mian Anjum Nisar, Mian Misbahur Rehman and former Senior Vice President Abdul Basit also spoke on the occasion.

sbp asks banks to automate Capital adequacy Returns KaraCh: Central bank, asked the banks and development finance institutions (DFIs) to submit soft copies of their quarterly and annual Capital Adequacy Returns (CARs). State Bank’s move, which was notified by the regulator through the issuance of BSD circular number 2, is aimed at the automation of CARs. “This refers to BSD Circular No 02 dated 26th March 2007 and BSD Circular No 01 dated 6th January 2009, wherein reporting formats were prescribed for the calculation of the Capital Adequacy Ratio by banks and DFIs,” the circular said. Central bank advised the banks and DFIs to submit soft copies of their quarterly un-audited CARs on consolidated as well as on stand-alone basis, on the enclosed formats within 18 working days of the end of each calendar quarter. The regulator also asked the banks and DFIs to submit soft copies of their annual audited CARs on consolidated and stand-alone basis on the enclosed formats within three months of the end of each calendar year. STAFF REPoRT

seCp extends the last date for filing details of form 29 till November 18 islamabad: Securities and exchange Commission of Pakistan (SeCP) has extended the last date of filing Form 29, till 18th November, to facilitate the corporate sector. Form 29 of Companies Ordinance, 1984 (Section 205) demands particulars of directors and officers, including chief executive, managing agent, secretary, chief accountant, auditors and legal advisers of the company. Last date of filing Form 29 for most of the companies is 14th November. This extension shall be applicable to both online and offline filing of Form 29. Corporate sector and relevant quarters had requested the SeCP to extend the last date in view of eid holidays. Most companies are already busy in filing their income tax returns with Federal Board of Revenue (FBR), which made it difficult to prepare and file Form-29 with the SeCP in time. Companies are required to file annual returns on Forms A/B within 45 days, in case of listed companies and 30 days in case of other companies, of holding of annual general meetings (AGMs). STAFF REPoRT

proposed increase in wheat price to cause inflation: pfma lahOre: Pakistan Flour Mills Association (PFMA) Punjab Chairman Chaudhry Abdul Jabbar has said proposed increase in wheat prices will result in a new wave of price hike in the country. Proposed increase will make it impossible for masses to even basic necessities like flour. In a statement issued, he claimed Pakistan had become self-reliant in wheat production for the last three years. It is not only producing for its own requirement but also exporting wheat and wheat products. But, increase in the wheat support price would destroy flour milling industry set up in the country with an investment of billion of rupees, Abdul Jabbar added. PFMA Punjab claimed wheat prices in Pakistan were already high from the international market and further increase would cut the country from rest of the world market. STAFF REPoRT


Profit pages 15-11-2011_Layout 1 11/14/2011 10:57 PM Page 5

Tuesday, 15 November, 2011

We're going to continue to be firm that China operate by the same rules as everyone else

news

us president barack Obama

Obama to China: Behave like a ‘grown up’ HONOLuLu

P

REuTERS

ReSIDeNT Barack Obama served notice on Sunday that the United States was fed up with China's trade and currency practices as he turned up the heat on America's biggest economic rival. "enough's enough," Obama said bluntly at a closing news conference of the Asia-Pacific economic Cooperation summit where he scored a significant breakthrough in his push to create a pan-Pacific free trade zone and promote green technologies. Using some of his toughest language yet against China, Obama, a day after face-to-face talks with President hu Jintao, demanded that China stop "gaming" the international system and create a level playing field for U.S. and other foreign businesses. "We're going to continue to be firm that China operate by the same rules as everyone else," Obama told reporters after hosting the 21-nation APeC summit in his native honolulu. "We don't want them taking advantage of the United States." China shot back that it refused to abide by international economic rules that it had no part in writing. "First we have to know whose rules we are talking about," Pang Sen, a deputy director-general at China's Foreign Ministry said. "If the rules are made collectively through agreement and China is a part of it, then China will abide by them. If rules are decided by one or even several countries, China does not have the obligation to abide

by that." even as Obama issued the veiled threat of further punitive action against China, it was unclear how much of his tough rhetoric was, at least in part, political posturing aimed at economically weary U.S. voters who will decide next November whether to give him a second term. Obama insisted that China allow its currency to rise faster in value, saying it was being kept artificially low and was hurting American companies and jobs. he said China, which often presents itself as a developing country, is now "grown up" and should act that way in global economic affairs. The sharp words between the U.S. and China contrasted with the unified front that AsiaPacific leaders sought to present with a pledge to bolster their economies and lower trade barriers in an effort to shield against the fallout from europe's debt crisis. The members of APeC, which accounts for more than half of the world's economic output, said they had agreed on ways to counter "significant downside risks" to the world economy. That followed an appeal by Obama, seeking to reassert U.S. leadership to counter China's growing influence around the Pacific Rim, for a commitment to expand trade opportunities as an antidote to europe's fiscal woes. International Monetary Fund chief Christine Lagarde, in honolulu to consult with APeC leaders, said the euro zone upheaval risked sweeping the world economy into a "downward spiral" that all countries had a stake in resolving the crisis.

TRADE LIBERALISATION APeC said in a final commu-

nique: "We recognize that further trade liberalisation is essential to achieving a sustainable global recovery in the aftermath of the global recession of 2008-2009." The communique also expressed a firm resolve "to support the strong, sustained and balanced growth of the regional and global economy" -- a clear reference to U.S. concerns about a huge trade deficit with China's exportdriven economy, fiscal problems in developed nations and the low savings rate in the United States. In another bow to U.S. pressure, APeC committed to reducing tariffs on environmental goods and services to 5 per cent as a way to promote green technology trade, overcoming China's resistance to the idea. Differences persist among APeC members -- a point hammered home by U.S.-China tensions -- and the question remains how far leaders will be able to go in turning promises into action. Many, Obama included, will face resistance to opening markets further to foreign competition. Obama's public denunciation of China's policies came as he faces pressure at home, from Republican presidential contenders as well as fellow Democrats, for a tougher line on Beijing. But U.S. leverage is limited, not least because Beijing is America's largest foreign creditor. Though Obama acknowledged a "slight improvement" in the value of China's yuan, he insisted it was not enough. The United States has long complained that China keeps its currency artificially weak to give its exporters an advantage. China counters that the yuan should rise only gradu-

PAKISTAN TRACTOR INDUSTRY

International exhibition attracts large orders ISLAMABAD STAFF REPoRT

R

ePReSeNTATIVeS of tractor industry from Pakistan are getting large orders at Agri-technika International exhibition 2011, the world’s largest agricultural machinery and technology fair at hannover, Germany. Statement issued by engineering Development Board (eDB) said the Agri-technika International exhibition 2011 will last for a week till 20th November in which two tractor venders out of a total of seventeen are also displaying their products at the stand of the Dutch “Centre for Promotion of Imports from Developing Countries” (CBI). Organiser of Agri-technika has designed one-hour forums for broad range of other organisations to bring participants fully up-to-date on specific topics and to promote a dialogue that increases overall understanding of the subject. This year forum subjects are smart farming, machinery and farm management, and forest machinery and energy crop cultivation. A total of 18 forums are

going to take place. Smart farming forums, which all take place in hall 16, alongside the special smart farming show, will explore topics as diverse as controlled-traffic farming; what N-sensors can do; use of eGNOS and Galileo for precision farming; and social media’s role in agriculture. Machinery and farm management forum topics include market trends in the fertiliser market; how to find and keep good staff; using the money markets to tackle exchange rate volatility; and successful direct drilling in Argentina and Russia – a session that is hosted jointly by DLG and the club of european Arable Farmers. Forums on forest machinery and energy crop cultivation address a range of topics relevant to these sectors including organising logistic chains the use of bio digester residues as fertiliser. Other sessions include how woodland visitors should protect themselves from health hazards and the importance of compacting and storing biomass silage properly. Pakistani participants at Agri-technika recommended that Pakistani

agriculturists, agricultural professionals, universities as well as machinery manufacturers should attend Agri-technika in large numbers. They could benefit from knowledge and experience, as well as from the growth opportunities it provides for Pakistan’s agro machinery exports and the insights which can be gained for value added agriculture. An important part of this mission is the special shows and forums that are carefully selected to reflect trends taking place in the Agro-machinery market throughout the world. To make the forums accessible to a global audience, a number of the sessions provide simultaneous translation from German into english to open them up to international participation. The exhibition will last for a week. It promised to be a paradigm of showcasing future technology of agriculture in 27 halls. At the heart of Agri-technica is the tradition of giving visitors the opportunity to benefit from global knowledge and perspectives on a wide range of topics related to agriculture and related industries.

ally to avoid harming the economy and driving up unemployment, which would hurt global growth. hu was quoted by Chinanews.com in Beijing on Sunday as saying a big appreciation in the yuan against the dollar would not help U.S. trade and unemployment problems.The yuan inched up against the dollar. Dealers said hu's comments in honolulu indicated that China had no intention of letting the currency rise faster in the near term.

US ENGAGEMENT Obama declared U.S. engagement in the Asia-Pacific region as "absolutely critical" to America's prosperity. By harnessing the potential for expanded trade with the world's fastest-growing region, Obama hopes he can create U.S. jobs to help him through a tough reelection fight in 2012. Obama's drive toward a pan-Pacific free trade zone -- the signature U.S. achievement of the summit -- got a boost when Canada, Mexico and Japan said they were interested in joining talks now under way among nine countries, and they agreed to complete the detailed framework in 2012. The Philippines was discussing the matter, US officials said. The Transpacific Partnership adds momentum to Obama's pledge to double U.S. exports, made more urgent by the virtual collapse of the Doha round of trade talks. A free trade zone in the region would outstrip the market size of the european Union. But for Japan, such a deal faces major political obstacles at home. Yet there was little promise of immediate economic dividends as such trade deals often take years to take effect.

kisan board pakistan stages protest LAHORE STAFF REPoRT

G

ROWeRS across the country on call of Kisan Board Pakistan (KBP) staged demonstrations and took out rallies to protest against increasing prices of fertiliser, electricity, pesticides and other agricultural inputs. Rallies and demonstrations were held in Pattoki, Kashmore, Nankana Sahib and other places of Punjab and Sindh provinces asking the government to restore subsidy on agricultural inputs. KBP Central President Sardar Zafar hussein and Sindh President Dr Abdur Razzak Soomro led the rally at Kashmore and demanded that the government should withdraw sales tax from agricultural inputs and implements as it would ruin our economy and lead the country to food shortage. KBP Central Secretary Information haji Muhammad Ramzan, District Chief Nazir Ahmad led the rally in Pattoki and also staged a sit-in out side district courts. While in Sheikhupura KBP workers staged a sit-in out side haseeb Waqas Mills, KBP Secretary Information haji Ramzan claimed. Speakers urged the government to accept their justifiable demands or they would be staging similar demonstrations in front of assemblies.

05

CORPORATE CORNER Raja Riaz addresses waseela-e-haq cheques distribution ceremony

Faisalabad: Opposition leader in Punjab Assembly, Raja Riaz addressed the waseela-e-haq cheques distribution ceremony under Benazir Income Support Programme (BISP). he said that the programme is empowering women and providing rights of the people at their door steps. Director General BISP Punjab, Shahid Aslam Mohar said the waseela-e-haq component of BISP is aimed at making the beneficiary families self sufficient by enabling them to earn their livelihood in a dignified manner. PRESS RELEASE

ufone distributes eid gifts and conducts tree plantation activity at sOs village

islamabad: Members of Ufone volunteer group availed the opportunity to be part of an eco-friendly project and took part in making the SOS Children village greener. The Plant-a-Tree activity was conducted at the village to promote a healthy environment and also provides shade for the children, guardians and teachers. Akbar Khan, Chief Marketing Officer at Ufone also distributed eid gifts amongst the children and shared a special moment of bonding with them. PRESS RELEASE

ptCL to bring high quality broadband services to sukkhur region islamabad: Pakistan Telecommunications Company Limited (PTCL) has won yet another Universal Service Fund (USF) project for installation and provision of broadband services in Sukkhur region. “PTCL is committed to the government of Pakistan’s vision for bridging the digital divide and creating an expansive growth of broadband in Pakistan,” said PTCL Senior executive Vice President Corporate Development, Sikandar Naqi. Through an open bidding process, PTCL has won the rights to provide broadband services in 10 districts covering the entire Sukkur region. PRESS RELEASE

usaiD and heC award 155 in-country university scholarships islamabad: US government in partnership with the higher education Commission of Pakistan has initiated a merit and needs based scholarship program aimed at providing financial assistance to talented, but financially challenged students. Recently, the National Scholarship Management Committee of the higher education Commission has awarded 155 scholarships under this program. PRESS RELEASE

KARAchI: The annual financial report of Pakistan State oil (PSo), the nation’s leading energy company, was awarded 2nd position in the Fuel and Energy Sector at the recent “Best corporate Reports 2010” award ceremony organised by IcMAP and IcAP. Seen in the pictures is Mr Yacoob Suttar, Executive Director (Finance and IT) receiving the award on behalf of PSo. PRESS RELEASE


Profit pages 15-11-2011_Layout 1 11/14/2011 10:58 PM Page 6

Tuesday, 15 November, 2011

06 Markets top 10 sectors

24% 09% 35% 10% 08%

Chemicals

01% 07% 02% 03% 01%

General Industrial

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Equity Investment Instruments

STOCK MARKET HIGHLIGHTS Index 12008.48 3168.28 2669.76

KSE-100 LSE-25 ISE-10

Change -30.45 -10.19 -20.74

Volume 33,960,091 1,221,701 115,816

Market Value 1,918,969,223 30,959,720 1,998,565

Major Gainers Company UniLever Pak Ltd. Indus Dyeing XD Indus Motor Co. Clariant Pakistan Fauji FertilizerSPOT

Open 5594.77 390.18 201.09 151.20 185.63

High 5790.00 409.00 208.00 156.00 189.60

Low 5390.00 401.00 201.00 151.00 185.65

Close 5646.35 403.84 202.57 155.07 189.26

3090.00 328.49 59.78 132.39 133.65

2965.00 3016.81 322.00 322.45 54.11 54.11 129.50 129.88 129.00 129.72

Change 51.58 13.66 1.48 3.87 3.63

Turnover 879 611 15,540 13,852 1,962,738

-79.99 -3.80 -2.84 -2.22 -2.28

349 34,649 3,619 34,202 1,219,826

Major Losers Nestle Pakistan National Ref.XD Clover PakistanXD ICI Pakistan Engro Corporation

top 5 perForMers sector wise symbOL

OpeN

hiGh

LOW CuRReNt

ChaNGe

vOLume

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 Bank Al-Falah Lotte PakPTA Meezan Bank XB Fauji Fertilizer Fatima Fert.Co.

11.88 11.18 19.99 185.63 23.79

12.11 11.34 20.99 189.60 24.25

11.70 10.91 19.50 185.65 23.91

11.76 10.98 19.88 189.26 24.00

-0.12 -0.20 -0.11 3.63 0.21

10,703,127 2,929,178 2,305,693 1,962,738 1,693,417

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

Per Tola (PKR) 57,659.00 51,608.00 1,111.00 1025.00

Per 10 Gm (PKR) 49,486.00 44,245.00 953.00 880.00

Per Ounce US$ 1,777.00 – 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 86.00 116.59 136.19 1.1071 84.03 10.85 23.33 22.85

Sell 87.00 118.48 138.31 1.1269 87.83 11.18 23.62 23.12

Brent Crude Oil

$113.99

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

AHCL-NOV AHCL-OCT ANL-OCT ATRL-NOV ATRL-OCT

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

symbOL

OpeN

hiGh

LOW CuRReNt

ChaNGe

vOLume

Non Life Insurance 7.00 1.70 22.50 27.50 11.50

Fixed Line Telecommunication

Beverages Murree Brewery Co. Shezan Int’l

vOLume

Pharma and Bio Tech

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

ChaNGe

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

$98.33

24.70 1.50 9.00 35.00 11.52

Industrial Engineering

86.6528 138.0640 1.1267 118.6711

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

hiGh

Household Goods

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

OpeN

Food Producers

Chemicals

3096.80 326.25 56.95 132.10 132.00

symbOL

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 AL-Noor ModarXD 3.98 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

13.60 32.00 35.59 6.35 30.31 15.56 70.00 1.61 70.50 109.00 7.99 2.95 4.49 8.50 25.00 62.35 133.00 29.80 16.40 7.96 1.99 10.80 1.00 1.95

13.62 32.00 35.59 7.00 31.00 16.46 70.01 1.73 70.87 115.85 7.99 2.95 4.50 8.60 25.00 65.60 140.00 29.90 16.40 8.48 2.04 10.83 1.00 2.01

-0.20 -0.07 0.00 0.00 0.00 0.46 0.00 0.04 -1.43 3.04 0.00 0.00 0.17 -0.10 0.00 0.00 0.00 0.40 -0.10 -0.48 -0.17 0.03 -0.04 0.01

11,206 8,305 50 1 355 9,801 822 357,472 1,280 1,400 20 106 24,044 13,049 75 331 1 610 2,000 101 6,511 284,606 64,702 231,690

Miscellaneous Century Paper Pak Paper Prod. Security Paper Johnson & Philips Pakistan Cables P.N.S.C.XD Pak.Int.Con. SD TRG Pakistan Ltd. Murree BreweryXDXB Shezan Inter.XD Hala Enterprise Hussain Industries Pak Elektron Ltd. Tariq GlassXD Grays of CambrXD Pak Tobacco Co. Philip Morris Pak. Shifa Int.Hospitals Hum Network XD Media Times LtdXR P.I.A.C.(A) P.T.C.L.A Telecard Limited Wateen Telecom Ltd

13.82 32.07 35.59 7.00 31.00 16.00 70.01 1.69 72.30 112.81 7.99 2.95 4.33 8.70 25.00 65.60 140.00 29.50 16.50 8.96 2.21 10.80 1.04 2.00

14.15 32.98 36.10 7.00 32.50 16.80 72.00 1.79 72.90 116.00 7.99 3.80 4.58 8.65 25.70 68.87 140.00 29.90 16.40 9.00 2.18 10.95 1.05 2.13

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 pages 15-11-2011_Layout 1 11/14/2011 10:58 PM Page 7

Tuesday, 15 November, 2011

indus motors will be able to post a decent growth in profitability of 17 per cent in fy12 due to higher car prices rendering into higher absolute margins and improved other income

news

07

furqan punjani at topline Research

p&G pakistan finalist for us corporate excellence award ISLAMABAD STAFF REPoRT

P steeL miLLs CRisis

g

steel mills owes Rs4.6 billion to ssGC Company does not have revenue to pay staff salaries g

KARACHI

S

WAQAR hAMZA AnD ghuLAM ABBAS

UI Southern Gas Company (SSGC) while not upholding its promise has started 8 hour gas loadshedding to Pakistan Steel Mills (PSM) from last Saturday.

OutstaNDiNG biLLs Sources informed Profit that PSM was issued a notice by the gas company earlier that the company would disconnect the gas connection of the mills from 22nd of this month if the mills don’t pay the bill amounting to Rs4.6 billion. Intriguingly, from Saturday, before ten days of the final disconnection date, the SSGC started 8 hours gas loadshedding at the mills from 12pm to 8pm daily, which is piling on to the miseries of the loss-making PSe that is passing through it’s worst financial crisis, sources added.

WORseNiNG fiNaNCiaL CRisis Since the coke oven battery of the mills is not working, the plants of the mills are being run on natural gas for 16 hours a day, which consumes gas worth Rs400 million a month, and now the total amount of the gas bill due to financial crisis has exacerbated to Rs4.6 billion. ‘On the other hand, the authorities at the government owned Steel Mills does not have cash to pay this gargan-

tuan bill, as total revenue earned this month barely crossed Rs210 million. Therefore the question of paying the bill does not arise till the government intervenes to settle this issue,’ sources said, adding that the loss making PSe does not even have money to pay staff salaries, they added. SSGC stance to pick on the mills that is already in turmoil does not seem to have sound justification because SSGC is not disconnecting the gas of other organisations that have to pay a greater amount than PSM in terms of gas bills, sources said. ‘KeSC is defaulting Rs30 billion to SSGC, but they are not interrupting gas supplies to KeSC,’ sources explained.

suspeNsiON Of Gas tO DefauLteRs When the Deputy Managing Director (operations) SSGC Syed hassan Nawab was contacted he said the company has issued notices to all defaulting institutions which collectively owe around Rs45 billion to SSGC as the gas company was unable to keep the uninterrupted supply of gas under the acute financial crisis. ‘As the company is facilitating supplies through borrowing credit from banks it will no longer be able to ensure uninterrupted supply to various government and private institutions including Pakistan Steel Mills, Karachi electric Supply Company which default around Rs5 billion and Rs30 billion to SSGC respectively,’ he added. he said the company has not started loadshedding for PSM and supplying gas to the PSe round the clock without any interruption.

steeL miLLs issues ChaRGe sheet aGaiNst five OffiCeRs KaraChi: Administration of Pakistan Steel Mills has issued charged sheets against five of its officers who were named in the forensic audit report for being involved in corruption. Sources informed Profit that on Friday evening PSM has issued charged sheets against its officers including, Riaz Mangi (manager at purchase department), Naeem-ulhaq (principal exchange officer from BMR department), Khalid Ghani (manager at PPC department), Azim Soomro (General Manager BMD department), and Chaudhary Masood (director at production department). Azim Soomro and Chaudhary Masood were given 3 charge sheets each, sources added. Sources further said that forensic audit report was carried out by a local audit company on the directions of the mills and it has named a total of 22 people involved in corruption. Out of those named, only those five officers are regular employees of the mills. Many of the named persons were either under contract or had already retired. This report was supposed to be submitted with the Supreme Court on 6th June, 2011, by the mills regarding the suo muto notice by the apex court, sources said. The mills had made this report in just 40 days for which SC had asked for a hearing in March, sources further added. ‘So, Pakistan steel mills has to submit this report to the SC, therefore, issuing charged sheets to its officers is simply a gimmick showing that the institution is stern against the corruption,’ sources added. PSM has taken this step just to show that they are serious about corruption, but the involved officers have not been removed from their posts, which is sad indeed, sources added. WAQAR hAMZA

ROCTOR and Gamble Pakistan has been chosen as one of the 13 finalists out of 62 nominations submitted by US Ambassadors around the world for States Secretary of State’s Award for Corporate excellence (ACe) 2011. A statement issued by the US embassy said ACe finalists are international business leaders who recognise the vital role that US businesses play abroad as good corporate citizens. The company was noted for consumer products and its humanitarian assistance efforts that provided clean drinking water, food, hygiene products, medical care, and laundry services after unprecedented floods in the region. Furthermore, sustainable partnerships to establish a network of schools, early education programmes, and support for orphanages also enhanced the companies repertoire. And, implementation of science and technology standards, reduction of carbon dioxide emissions at its facilities and collaboration with universities to develop young business leaders were other highlights. The awards, which were established in 1999, demonstrate how American firms can have a tremendous impact by promoting our values and helping define the United States as a positive force in the world. As Secretary of State hilary Clinton has stated, “Corporate social responsibility and socially responsible development are not marginal to our foreign policy but essential to the realisation of our goals.”

Largest container ship berths at port Qasim KARACHI STAFF REPoRT

P

ORT Qasim Authority (PQA) safely berthed the largest container ship that has ever visited the country’s second largest port. According to a statement issued by the port operations division of the PQA, the container vessel, M.V Maersk UTAh, having a length overall (LoA) of 292 meters and 11.7 meters draught was berthed. “Since the start of night navigation facility at PQA in 2004, this vessel with largest LoA was berthed” at the Qasim International Container Terminal (QICT), the statement said. This historical achievement, it said, was due to immaculate planning of the port operations division, the ship agent and QICT (DP World).

Strengthening yen haunts local car assemblers g

During fy12ytD, pak rupee has depreciated by 2 per cent against yen g indus motors to show growth in profitability of 17 per cent: topline Research KARACHI

D

STAFF REPoRT

eSPITe highest ever profits during the first quarter (of FY12) on account of better gross margins, continuous weakening of the rupee against Japanese yen and US dollar and subdued volumetric growth are expected to keep the Indus Motor’s gross profitability in check, analysts say. Further, the analysts believe, resurfacing of regulatory risk due to concerns over revision in Auto Industry Development Plan (AIDP) policy, due to be announced in this fiscal year, has also compelled the observers to associate

higher discount to the Indus’ valuation. “Indus Motors will be able to post a decent growth in profitability of 17 per cent in FY12 due to higher car prices rendering into higher absolute margins and improved other income amid better cash position,” viewed Furqan Punjani at Topline Research. “We expect Indus to post ePS of Rs41.0 compared to ePS of Rs34.9 in FY11,” the analyst added. he said since the Japanese earthquake, yen had gained strength against other major currencies on account of reconstruction activities. During FY12YTD, Pak rupee has depreciated by 2 per cent (post intervention) against yen, which was expected to

mount cost pressures on local car assemblers as imported CKDs and other high tech parts were yen-denominated. This, coupled with reducing pricing power due to recent relaxation in used car imports, would also kept gross margins under pressure. Thus, with all these risks expected to continue in FY12, we estimate gross margins to clock at 6.8 per cent, up by a meager 20bps assuming 5-6 per cent increase in car prices. however amid continual interventions by Japanese government to curb Yen’s appreciation, Indus has capitalised through forward booking from the parent company. Thus, if these interventions continue, gross margins may increase due to aforementioned rea-

sons. With squeezing farm income due to higher cost pressures and lower agriproduct prices, tmajor sales market for Indus is expected to remain muted. Furthermore with no revival in consumer financing despite reduction in discount rates, sales from urban areas would also depict meager growth. Therefore, current pace of volumetric sales (up 9 per cent in 3MFY12) is not a true depiction of full year sales and would ease going forward. It is expected that Indus would show minute growth of 5 per cent in locally assembled car to 52.5k units compared to 50.0k units last year. “The major growth driver would continue to be prime Corolla

with its newly launched eco models with cheaper fuel source (CNG),” Furqan said. Apart from fundamental concerns, the analyst said, local car assembling industry was also surrounded by regulatory risks like recently relaxed used car policy and upcoming AIDP policy. Government is expected to announce a revised AIDP policy in current fiscal year with new import tariffs for CKDs and CBUs, he said. “The news flow in recent months have also indicated that government might also peruse relaxing the new entrant policy by reducing duties on CKDs in first, second and third year to 5 per cent, 10 per cent and 15 percent, respectively,” Furqan said.

Profit 15th November, 2011  

PakistanToday

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