Tuesday, 31 July, 2012

Leather uplift inthe pipelineRs38.4m released tolay water pipelinefor leather

KARACHI

STAFF REPORT

Sindh Governor Dr Ishratul ebad Khan has released Rs38.4million for laying of an exclusive water pipeline to theTannery Zone of Korangi Industrial Area (KIA) to providewater to the export-oriented leather industries. The PC-I ofthe project has already been prepared by the Karachi Waterand Sewerage Board (KWSB) and the contract for the projecthas been awarded to a local firm following tendering process.After the completion of project the Tannery Zone would begetting three million gallons water per day. The GovernorSindh took this decision following a meeting of thedelegation of Pakistan Tanners Association (SZ) led by itsChairman Khurshid Ahmed with the Governor, ManagingDirector KWSB Misbah Uddin Farid, Administrator KMC,Muhammad husain Syed and Commissioner KMC MatanatAli Khan at Governor house recently. Khurshid Ahmedapprised the meeting that billion dollars leather industry wasdying due to the water crisis and the over Rs40 billion’sexports have been threatened due to the drought likesituation at Tannery Zone. he further said that PTA had sentmany SOS to the KWSB high ups but to no avail. The KWSBMD, Misbah Uddin informed the Governor about shortage offunds for not laying a separate pipeline for Tannery Zone.

India wheats Afghan appetiteTo send 1.5lakh tonnes wheat toKabul via Pakistan

NEW DELHI

ONLINE

Keeping up with its commitments to Kabul, India is all set tosend another 1.5 lakh tonnes of wheat to Afghanistan throughKarachi port. With the external affairs ministry setting up thenew Development Projects Administration (DPA) wing solelyto monitor India-aided projects, Afghanistan, Bangladesh,Myanmar and Sri Lanka have become New Delhi’s focus areasin the sub-continent, according to The hindustan Times.Senior MeA officials said financial bids for the transportationof 1.5 lakh tonnes of wheat to Kandla will be finalised nextweek. Part of India’s commitment to supply 1.1 million tonnesof the food grain, the latest tranche will be lifted by ships hiredby the Afghan government to Karachi port,and from there to Kabul for distribution.Until now, India has supplied 600,000tonnes of wheat to Afghanistan, ofwhich 500,000 tonnes was in the formof fortified biscuits. While New Delhiis exploring opportunities to sendwheat and other goods throughChahbahar port in Iran, the lastwheat shipment went throughKarachi port as part of thebilateral agreement betweenPakistan and Afghanistan. The DPA,which revived the Salma Dam projectin herat, has approached the financeministry to approve cost escalationemanating from security problems posed byTaliban insurgents, and certain vestedinterests in Pakistan.

PROTECTIONPRIVILEGES PERISHAuto industry protections to be

abolished to reduce prices of

locally made vehicles: PEW

ISLAMABAD

ONLINE

While expressing deep concerns overrising prices of locally made vehicles,the Pakistan economy Watch (PeW)has urged the government to abolishprotections for smashing powerfullobby of auto industry in a bid toreduce prices of vehicles.In a statement issued here onMonday, Pakistan economy WatchPresident Dr.Murtaza Mughalexpressed dismay over government’sslow move to abolish protectionsextended to the auto industry in orderto bring down the prices of locallymadevehicles. he said theabolishment of protections extendedto the auto industry was essential forsmashing lobby of auto industrywhich was so powerful that evengovernment appeared unable to makepolicy against their vested interests“Government should gradually reduceprotection given to the auto industryby reducing the tariff on CompletelyBuilt Units (CBU) to ensureavailability of imported substitutesfor consumers at affordable prices,’ hesaid, adding that there was also needto rationalise tariffs applicable onCompletely Knocked Down (CKD)units. he said the engineeringDevelopment Board (eDB) hasproposed a reduction in the tariff oncars up to 1,000cc engine size, fromthe current 55 per cent to 40 percentfor the next five years; from 60 percent, to 50 per cent for 1,001cc to1,500cc cars; and a 5 percent increasein the tariff of 1,501cc to 2,000cc carsfrom the current 75 percent. he saidthe eDB has also proposedwithdrawal of the 50 percentregulatory duty on cars exceeding 1,800cc; which it believes is an impediment to thegrowth of this segment.

ISLAMABAD

APP

National Assembly (NA) Standing Committee on TextileIndustries here on Monday directed the Federal Boardof Revenue (FBR) to exempt sales tax on the sizing,weaving and warping industry including power looms.

The Committee which met here with haji Muham-mad Akram Ansari in the chair also directed for thepostponement notices of recovery already sent to sec-tor till the issuance of new SRO in this regard.

The small units of textile industry should be givenrelaxation for their survival and large units of textilesector should be taxed properly, he remarked.

The FBR representative, Abdul Sattar Aora toldthe committee that the government introduced aregime of zero rating and reduced rate of sales tax oninputs, intermediate and final products of five ex-ports oriented sectors including Textile, Carpets,Leather, Sports and Surgical.

The sizing, weaving and warping industry includ-

ing power looms are also required to charge sales taxat the rate of 5 per cent on account of services chargedin lieu of services of warping, weaving and sizing ren-dered to their unregistered clients, he added.

he further said, all this was done to eliminateany undue benefits to the unregistered operators inthe sectors.

The committee also directed the Ministry of TextileIndustry (MoTI) to release funds worth Rs.11.2 billionto textile sector collected by Ministry of Finance (MoF)under export Development Fund (eDF).

Besides, the committee recommended that theMoTI Secretary should brief the committee on gas dis-tribution for textile industry.

Member of committee, Abdul Rashid Godil saidthat the export was decreased by 8 per cent not 26 percent as quoted by exporters, as saying there were somany reasons including shortage of gas and electricity.

Moreover, the difference of rates of commoditiesby 50 per cent also caused a decline in the export andrate of commodities in international markets are fluc-tuating all the time, he added.

The meeting was attended by MNAs Amir Ali Shah,Chaudary Iftikhar Nazir, Mahmood hayat Khan TochiKhan, Syed Akhonzada Chitan, Tasneem Siddiqui,Abdul Rashid Godil and Munwer Lal.

ISLAMABAD

ONLINE

The mining sector has the potential to reshape theeconomy as it can bring $ 50 billion investment inthe country by offering incentive to investors,sources said. According to the sources familiar withthe development told “Online” that Afghanistanwas getting around $30 billion through mining sec-tor, compared to it Pakistan can get $40 to 50 bil-lion investment by offering incentive to investors.

According to the sources most of the potentialof mining sector in the country has remained un-tapped so far due to human capital, local expertiseand capital and now government was makingserous efforts to promote and bring investment inthe mining sector by removing the barriers that dis-courage investment. “During current financial year2012-2013, an area of about 3900 sq. km is plannedto be mapped in different parts of the country,”

sources said, adding that around 300 sampleswould be collected and analyzed in the country.

The projects of up gradation and strengtheningof Geosciences Advance Research laboratories, ac-celerated Geological mapping, Geo chemical explo-ration of the out crop areas and the project ofreview and updating of Mineral Policy would becarried out during current fiscal year. It is relevantto mention here that the mining industry of Pak-istan holds great potential because of the vast un-explored resources of the country. Mining hasprovided the manufacturing and energy needs ofthe country in the past many years and has con-tributed to the enrichment of the world through in-dustrial development.

Don’t be too hard on the little ones!

Not quite so lucky after all…

KARACHI

ISMAIL DILAWAR

The market observers foresee some toughchallenges ahead for the Lucky Cement aconsortium which has acquired 76 percentshareholding in the ICI Pakistan from itsDutch owners at a cost of $ 152.5 million.

The deal was reached in Amsterdam on July27 after a Share Purchase Agreement (SPA) wasinked between the Yunus Brothers Group “YBG”,Pakistan’s leading conglomerate, and OmicronB.V., a subsidiary of AkzoNobel N.V. Netherlandfor the acquisition of 75.81 percent shareholdingin ICI Pakistan Limited.

The YB Group companies participated in thistransaction include Lucky Cement, Yunus TextileMills, Gadoon Textile Mills, Lucky Textile Millsand YB Pakistan. Payable in equivalent Pak Ru-pees, the payment of $ 152.5 million would besubject to certain adjustments based on lock boxmechanism for cash and indebtedness to be as-certained as per the terms of the agreement.

“This acquisition is a part of the Group’sstrategy of diversification and entry into busi-nesses that are integral to the economic fabricand opportunities in Pakistan,” said Lucky Ce-ment Monday. It said the consortium was intentto invest in the existing businesses of ICI Pak-istan for continued growth whilst evaluating ad-ditional opportunities to maintain its leadershipposition. The Group also intends to retain the ex-isting experienced management of ICI Pakistanwhich it said was the “most critical component”

for the development of the company.“With relatively less-leverage balance sheet,

Lucky cement is planning to take benefit of gear-ing the transaction from debt side amid borrow-ing the major part from banks,” viewed InvestCapanalyst Abdul Azeem.

About a possible impact of acquisition on theparties’ share price at stocks market, he saidLucky Cement, which is presently enjoying adebt-free balance sheet, was expected to seekloan to finance the acquisition of its 41 millionshares (51perent of total acquisition) in ICI.

Azeem said if the company financed the ac-quisition with 50 percent debt (while 50% fromits internal sources) the financial cost would havean impact of Rs1.46 per share. “Incorporating thedividend income of ICI Pakistan to be followed inFY13, the net impact of the acquisition wouldstand at positive Rs0.49/share,” he added.

While in case the Lucky Cement financed theacquisition with 100 percent debt, the bottomline impact would stand at Rs2.92 per share, re-sulting the net impact of negative Rs0.97 per

share after incorporating the dividend of ICI.“If the company goes with the first option i.e.

with 50% leverage financing, we expect the exist-ing dividend policy to be curtailed down as com-pany will be financing 50% of acquisition costfrom its own internal resources,” the analyst said.

however, the analyst said if the companyopted for financing the acquisition through 100percent debt, the company would maintain itscurrent payout policy which has stood average34% payout during last three years.

Topline Research’s Farhan Mahmood, how-ever, believes that while the ICI share price wouldrally that of Lucky may come under pressure onaccount of the latter’s consortium’s aggressivebidding for the ICI.

“Investors may take opportunity to buy ICI tomake money from the tender offer while theymay offload Lucky amid fear of low dividend pay-out as it may divert funds for this acquisition,” hesaid.

The analyst said the Rs 8.4 billion transac-tion, including the tender offer, would be fi-nanced through 50 percent equity and 50 percentdebt. Lucky Cement, backed by better marginsamid high cement prices and decline in coalprices, may generate Rs 11-12 billion during FY13and would thus be well positioned to retire a por-tion of the debt earlier.

The short-term cost and benefit for the ce-ment giant would be as follows:

Opportunity loss on its Rs4bn cash holdingsamounts to after tax loss of Rs0.3bn (per shareimpact Rs0.95) assuming return of 12%.

Over $152m ICI deal casts doubts on Lucky’s ability to paydecent dividends to shareholders

NA body directs FBR to exempt sales tax on small textile units

Go, Go, Go! Mine, mine, mine! Pakistan can bring $50b

investment through mining sector

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02

Tuesday, 31 July, 2012

Major Gainers

COMPANY OPEN HIGH LOW CLOSE CHANGE TURNOVERUniLever Pak 7360.00 7728.00 7500.00 7728.00 368.00 120Siemens Pakistan 655.31 688.00 688.00 688.00 32.69 200Mithchells Fruit 315.19 330.94 327.00 330.94 15.75 2,400Millat Tractors 507.00 523.00 508.50 519.71 12.71 42,300Shezan Inter. 227.48 238.85 234.66 238.50 11.02 4,700

Major LosersRafhan Maize SPOT 3710.00 3525.00 3525.00 3525.00 -185.00 20Bata (Pak) Limited 700.00 709.00 665.00 675.00 -25.00 200Unilever Food 2850.00 2825.00 2825.00 2825.00 -25.00 20Nestle Pakistan Ltd. 4091.15 4140.00 4025.00 4085.42 -5.73 8,360Lucky Cement 129.29 128.50 123.01 123.85 -5.44 6,787,000

Volume LeadersBank Al-Falah 18.06 19.00 18.05 18.89 0.83 19,440,000D.G.K.Cement 45.90 47.15 45.51 46.32 0.42 10,041,000Lucky Cement 129.29 128.50 123.01 123.85 -5.44 6,787,000Maple Leaf Cement 6.25 6.62 6.15 6.52 0.27 5,070,000Arif Habib Corp. 33.48 34.09 33.26 33.70 0.22 3,461,500

Interbank RatesUS Dollar 94.6726UK Pound 148.5318Japanese Yen 1.2111euro 116.0402

Dollar EastBUY SELL

US Dollar 94.30 95.10Euro 114.81 115.90Great Britain Pound 147.19 148.55Japanese Yen 1.1965 1.2074Canadian Dollar 93.19 94.56Hong Kong Dollar 11.99 12.17UAE Dirham 25.61 25.82Saudi Riyal 25.11 25.27

Australian Dollar 98.09 100.45

Business

KARACHI

STAFF REPORT

ON Monday the Karachi share marketshed 15 points on the back of, what themarket observers viewed as investors’concern for uncertain macroeconomicand a poor law and order situation in

the city in the wake of country wide protestsagainst power outrages.

First working day of the week saw sharetrading at the Karachi Stock exchange (KSe) re-mained thin despite strong corporate earningsoutlook and recovery in global stocks and com-modities. “(The) stocks closed lower on in-vestors’ concerns for uncertain macroeconomicsituation and security concerns in the city oncountry wide protests for power outrages,” saidAhsan Mehanti, a senior stocks analyst and di-rector at Arif habib Securities.

The benchmark 100-shareindex slid by 14.87 points or0.10 percent to close at14,511.54 points againstFriday’s 14,526.41.The intraday highand low stood, re-spectively, at14,560.01 and1 4 , 4 9 2 . 7 3

points.“Concerns for rising circular debt in the

country’s energy sector, revenue loss to fertilizersector on gas supply worries and pending Capi-tal Gains Tax (CGT) collection issues played acatalyst role in bearish sentiment at KSe,”Mehanti said. The trading turnover marked im-provement to stand at 81.83 million shares com-pared to 58.33 million of the previous tradingsession. In value terms, too, the share tradingset in green zone and rose to Rs 3.15 billion fromRs 2.11 billion of the previous day.

The market capitalization ended up in neg-ative and shrank to Rs 3.707 trillion as againstRs 3.708 trillion of last week.

The free-float KSe-30 index also closedlower at 12,567.47 points against the previous12,581.70 points, loosing 14.23 points. Bank Al-falah appeared as a volume leader by countingits traded shares at 19.440 million each pricedat Rs 18.06 in the opening and Rs 18.89 in clos-ing. Other nine well-performing scrips includedDG Khan Cement, Lucky Cement, Maple Leaf Ce-ment, Arif habib Corp, Jahangir Siddiqui Com-

pany, Fatima Fertilizer, PTCL, engro Foods andNishat Mills Limited. In future

contracts, the trading vol-umes nosedived to 7.6 mil-

lion from 19.4 million ofthe previous session.

The Designers Multi-brand Storecelebrates Ramadan in Dubai witha 3 day fashion extravaganza KARACHI: With the opening of the first ever multi-brand store exhibiting solely Pakistani designers inthe UAe, renowned fashion retailer Asad Tareen haslaunched a new dimension in the expansion of Pak-istani fashion abroad. Now, residents of UAe canenjoy high end Pakistani designer wear at theirdoorstep and have access to latest designs by top de-signers such as Rizwan Beyg, Umar Sayeed, NomiAnsari, Karma, Mehdi and others. PRESS RELEASE

NBP increases social media presenceKARACHI: In a span of ten months NBP’s official face-book fan page has registered more than 13000 mem-bers. The reason for such significant growth is mainlydue to the fact that not just official information onNBP’s operations, services and products is given butalso the fan page offers coverage to positive news anddevelopments taking place in the country. PRESS RELEASE

HEC indigenous scholarship2012-date extended ISLAMABAD: The higher education Commission(heC) has extended the last date for receipt of appli-cations for indigenous PhD fellowship for 5000scholars- Phase-II” till 7th August 2012. The mainpurpose of the extension of the date is to facilitate thecandidates especially from the far flung areas of thecountry. PRESS RELEASE

IMC to facilitate customersKARACHI: Indus Motor Company staying true to itsvision of “Customer first” is introducing partial pay-ment scheme on all of its Toyota variants. PRESS RELEASE

CORPORATE CORNER

KARACHI: The Consul General of the Switzerland Mr.Didier Boschung,hosted a reception to celebrate 721st National day at a local hotel.

Depilex Institute is equipped with internationally qualified staff andis the only beauty institute in Pakistan that has foreign affiliationswith The British Association of Beauty Therapy and Cosmetology,City of Sunderland College in the United Kingdom to name a fewand is also ISO certified.

Pakistan Squash Federation President Air Chief Marshal Tahir RafiqueButt, awarding cash prizes to Pakistan Squash team, on winningsilver medal during the Men World Junior Squash Championship 2012,in a ceremony held at Air Headquarters, Islamabad.

BEAR INSECURITYedges out bull tenacityMacroeconomic, security uncertainties down KSE by 15 points

KARACHI

ISMAIL DILAWAR

Otherwise inflation-stricken Pakistanis, some79 million or 43 percent of which an independ-ent survey suggests live under poverty line, ap-pear to be extravagantly bounteous on religiousfestivities like eid-ul-Fitr.

During the three-day annual festival, whichis celebrated on the first day of Shawwal tomark the end of the holy fasting month of Ra-mazan, the Muslims across Pakistan distributebillions of rupees among the children as what islocally called “‘eidi’.

According to official banking sources, lastyear the eid celebrators gave away ‘eidi’ worthover Rs 111 billion. Traditionally, the ‘eidi’ isgiven in fresh currency notes that are speciallyarranged by the central bank every year.

“We had issued fresh currency notes worthover Rs 111 billion during last Ramazan,”Syed Wasimuddin, chiefspokesman of the StateBank of Pakistan, toldPakistan Today.

The SBPspokesman had,however, no ideawhat would be thevolume of fresh banknotes, to bedistributed as ‘‘eidi’’, this year. “Itvaries from year to year,” he said.

The new currency notes are issuedthrough a large network of over 10,000branches of commercial banks which onMonday were notified by the State Bank to fa-cilitate the general public in obtaining fresh cur-rency notes during the holy month.

The distributable bank notes are usually of

small denominations ranging from Rs 10 to Rs100.

The SBP Banking Services Corporation(SBP BSC) has made elaborate arrangementsfor the supply of adequate quantity of fresh cur-rency notes to commercial banks dependingupon their branch network.

According to the central bank, the bankbranches would issue only one packet each of Rs10 and Rs 20 per person to the visiting generalpublic and their account holders.

The notes would be handed to masses fromAugust 1 till the last working day before the eidor until the exhaustion of bank’s currency stock.

Those wanting the notes would have to pres-ent their original Computerized National Iden-tity Card along with a photocopy of it for record.The corporate clients of the banks, however,would be allowed to get a maximum of 5 packetseach of Rs 10 and Rs 20 denomination fresh

notes. The clients would have to show aformal request on their company’s let-

ter head duly signed by the au-thorized representative.

Oil up in Asia

ahead of Europe,

US policy moves

SINGAPORE

AGENCIES

Oil rose in Asian trade Monday butprices were under pressure as investorsawait further measures by policymakersto boost the ailing eurozone and USeconomy, analysts said. New York’s maincontract, light sweet crude for Septemberdelivery was up 46 cents to $90.59 abarrel in the afternoon, while BrentNorth Sea crude, also for delivery in thesame month, was 26 cents higher at$106.73. German Chancellor AngelaMerkel and French President Francoishollande have vowed to preserve theeuro project while investors arecautiously hopeful the US FederalReserve will unleash a fresh stimulus thisweek to bolster US growth, analysts said.“With the main focus this week being thecentral bank meetings out of europe andthe US, and much Qe (quantitativeeasing) potentially already priced in tothe market, there seems to be a fairlylarge amount of downside risk for mostasset classes this week,” said Jasonhughes from IG Markets Singapore.

Siemens Pakreports higher profit

KARACHI

APP

Siemens Pakistan engineering Ltd hasposted a higher profit after tax of Rs519.050 million during nine monthsending June 30, 2012.According to financial results of thecompany despatched to Karachi Stockexchange here Monday, the pre-taxprofit surged to Rs 621.983 millioncompared to Rs 298.758 million in thesame period last year.The earning per share also improved toRs 62.94 during the period under reviewover last year’s Rs 17.21

Eurozone economicsentiment slid in July: EUBRUSSELS: Business and consumer confidence in europe slidin July, with Germany suffering the biggest fall as the eurozonedebt crisis threatened Spain, the european Union said onMonday. The economic Sentiment Indicator produced by theeuropean Commission fell to 87.9 points across the eurozone,down about two points on the previous month, the data showed.That marked a fourth consecutive monthly fall and London-based analyst howard Archer of IhS Global Insight said a35-month low for the headline figure, taken together with weaksurvey data from purchasing managers, indicated “further clearGDP contraction” for the third quarter of the year. AGENCIES

EIDI: EUPHEMISM FORSPLURGING BILLIONSg Celebrators distribute billions of rupees’Eidi’ every year g Banks issued over Rs111bnlast year for three-day festival

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