profit.com.pk

Agriculture can farm outeconomy Page 02

Thursday, 12 April, 2012

ONLY those with their headsburied in the sand would’vebeen seriously surprised by

banks refusing lending for powerprojects till the circular debt isresolved. And there shouldn’t be roomfor ostriches in policy-making circles.Yet surprise is in plenty in Islamabad,and dejection that the no-credit postureextends to all things energy, includingthe coal goldmine sitting dormant atThar. So, as things stand, not only arethere not nearly enough monies toresolve the debt matter, there will benone flowing in either. And since debtbanks on money-flow, it’s not going tobe resolved for some time to come.Normally, it’d surprise us that bankshave finally begun taking riskmanagement seriously, seeing howtheir generally risk-averse nature hasfacilitated excessive governmentborrowing, crowding out private sectorinvestment in the process. But it turnsout that power sector exposure is at thecentre of their risk fiasco, and there issimply no way any financialorganisation anywhere in the world willengage with the same sector till alloutstanding financial matters arecleared.So the responsibility falls right backon the government. They can claiminheriting energy problems from theprevious administration, a partly trueclaim, but so much more false thantrue that bringing it up can at best beface-saving desperation. But theycannot justify kicking the circulardebt can down the road all theiryears in office. And as regards Thar,the president’s recent public lamentregarding necessary investmentnotwithstanding, offers from Chinaand Japan went begging primarilybecause Islamabad couldn’t get itsact together in time.In a way it’s good that banks havenamed the debt as the principalobstacle to future financing. Now thegovernment will need to move withgreater agility and stronger purposethan before. Whether or not it is upto the task will become apparentsoon enough.

COmmENT

Circular debt andbank financing

ISLAMABAD

AMER SIAL

The Asian Development Bank(ADB) has said that Pakistan’seconomy faces a major hurdlein the shape of its persistent

domestic energy crisis, as the load-shedding intensifies losses arising frompower and gas shortages held downGDP growth by 3 to 4 percentage pointsin FY2011 and FY2012.

The bank’s flagship annual economicpublication, Asian Development Outlook2012 released on Wednesday says iden-tifies rising inflation, decline in invest-ment, low tax revenue and losses atpublic-sector enterprises as other fac-tors hindering economic growth. Beyondthe immediate fiscal and energy im-provement steps, the country needsclear business plans to boost the econ-omy, in particular manufacturing andinfrastructure development, to sustaingrowth and generate jobs.

The economy continues to be affectedby structural problems, including a do-mestic energy crisis, a precipitous declinein investment, persistently high inflation,and security issues. Budget deficits re-main high, driven by substantial subsi-dies and losses at state-ownedenterprises, and tax revenue below tar-get, says the report.

The ADB sees power as the main con-straint for economic growth, stressing forbetter load-management to minimizecommercial losses. The country’s Plan-ning Commission estimates that lossesarising from power and gas shortagesheld down GDP growth by 3 to 4 percent-age points in FY2011 and FY2012. Im-proved management of power resourcescould ameliorate predictability of load-shedding to allow the private sector tobetter schedule work and minimize costs.

For every unit of power sold, thereis a loss to the sector reflected in theform of subsidies. An outstanding accu-mulation of Rs 220 billion was carriedinto FY2012, and an additional financ-

ing of 1 to1.5 percent of GDP is likely tobe required in FY2012. The report ad-vises reforms in not only the energysector but also state-owned enterprises,naming Pakistan Railways, Pakistan In-ternational Airlines (PIA), and PakistanSteel Mills as entities suffering thesteepest of losses.

The challenge of improving effi-ciency and putting these enterprises ona viable commercial footing is formida-ble. Reforms are needed, including aseparation of these enterprises from op-erational interference by governmentministries,” advises the bank. The slowgrowth in recent years was exacerbatedby widespread floods in FY2011. Unlessprogress can be made in resolving thesefundamental problems, the growth out-look will stay modest.

The report says Pakistan’s economicoutlook is expected to stay modest as itsgrowth during fiscal year 2012 wouldhover around 3.6 percent. It says FederalBoard of Revenue (FBR) collections aremuch improved, running a full 33 percentahead of last year’s performance for thefirst 6 months. This reflects improvedeconomic activity in the first half of theyear, as well as extension of the flood-re-lated tax surcharges and improvementsto tax administration.

Yet meeting the overall revenue tar-get for FY2012 in part depends on thesale of third-generation telecoms licensesin the latter part FY2012-a sale alreadyrescheduled over the past 2 years. The ex-ternal accounts returns to deficit, withscant cushion from the financial and cap-ital accounts. Lower prices for key exportcommodities, particularly cotton, com-bined with higher import prices, pushedthe current account from near balance forthe first 7 months of FY2011 to a deficitof to a deficit of $26 billion (1.8 percentof GDP) by end-January 2012. Workers’remittances expanded by 23.4 percentduring July 2011- February 2012, slightlyslower than the pace for the same perioda year earlier. however, the economy willremain exposed to balance of payment

pressure in the current international en-vironment and subdued growth in otherAsian countries, says the report.MULTIYEAR POWER CRISIS PLAN: Noting with concern that the persistentpower crisis in Pakistan is a major con-straint for economic growth, the AsianDevelopment Bank (ADB) has suggestedimplementing a multiyear plan with solidsupport from stakeholders and con-sumers for a sustainable and reliablepower sector in the country.

The banks Asian Development Out-look report says power is the main con-straint for economic growth, asload-shedding intensifies and becomesless predictable. The power shortage isthe main factor constraining economicgrowth. The supply-demand gap at peakhours reached over 5,000 megawatts(MW) in FY2011. This reduced economicoutput, hitting manufacturing the hard-est. The current system, with tariff andcollections below cost recovery, is a majordeterrent to investment for capacity ex-pansion in the sector. Cost recovery hasnot yet been achieved despite substantialincreases in tariffs over the past 2 years,and measures to bring down costs havenot been effective. For every unit ofpower sold, there is a loss to the sector re-flected in the form of subsidies or accu-mulation of losses in the state ownedpower companies. An outstanding accu-mulation of Rs 220 billion was carriedinto FY2012, and an additional financingof 1 to1.5 percent of GDP is likely to be re-quired in FY2012.

The cause of the power sector crisiscan be divided into three pillars: cost-ef-ficient generation capacity not keepingup with demand, financial issues, andmanagement issues. The supply–demandgap has widened because of a lack of in-vestment in energy. The government hasin fact added 1,604 MW to the system bycommissioning six new independentpower producers of 1,264 MW and a nu-clear power plant of 340 MW.

however, other domestic resourceshydro, gas, and coal have not grown

enough to cover demand, thereby in-creasing reliance on imported fuel oil.The energy mix has changed from pre-dominantly hydro to thermal, which con-sists of domestic gas and imported fueloil. Industrial, retail, and fertilizer usersare competing for the depleting gas sup-ply, the preferred fuel for existing ther-mal plants. Plans to increase domesticgas production, import liquefied naturalgas, pipe gas from neighboring countries,or bring in electricity from Central Asiahave yet to materialize.

Financial issues are rooted in the factthat the cost recovery tariff determinedby the National electric Power Regula-tory Authority is not applied to cus-tomers. Thus the government bears thedifferential as a subsidy. Losses and costsexcluded from the tariff formula also ac-cumulate at the public sector companylevel. The lack of financing leads to ar-rears for the power generation and fuelcompanies. Timely payment to thesecompanies, essential for the sector’s reli-ability, has become increasingly difficult,partly because of increased dependenceon imported fuel, which is subject to wideprice fluctuations.

The cost of oil-based power genera-tion in the country escalated by almost 40percent in the 2 fiscal years endingFY2011. Despite steep increases in tariffand fuel price adjustments, customer tar-iffs remain below cost recovery, requiringlarge government subsidies to keep thesystem operating. The focus on massivelyincreasing spending on power subsidies,reforms, and efficiency measures hasbeen unable to remedy the accumulationof arrears in the system.

To improve management, the govern-ment has appointed independent boardsfor the public power companies to selectchief executive officers for these compa-nies. efforts are also ongoing to decreasecommercial and technical losses around20 percent. however, these efforts havebeen overshadowed by the increase incosts and unwillingness of some cus-tomers to pay the higher tariffs.

ADB’s revelation of the decade

LAHORE

IMRAN ADNAN

T he Ministry of Industries has once againmade a recipe to drain around $282 millionin urea imports, which is hovering around$450 per ton in international markets. The

ministry has proposed the government to import600,000 tons of urea, whereas the NationalFertiliser Development Centre (NDFC) believes thatcurrently, there is no need to import fertiliser in thecountry.The ‘NDFC Urea Outlook for Kharif 2012’ indicatesthat the kharif season is expected to begin with 0.851million tons of opening inventory. Total availableurea would be about 3.551 million tons, which will

include 2.70 million tons of domestic production –subject to normal availability of gas to ureamanufacturing plants. NDFC estimates that totalurea off-take would be around 3.20 million tonsleaving behind 351,000 tons of inventory for the nextRabi crop 2012-13.Industry experts estimate that the C&F price ofimported urea is around $470 per ton that means itwould land in the country at Rs2,397 per 50 kg bag,inclusive of 12 per cent landed cost. They point outthat if the government sell the imported urea atRs1,600 per bag, it will have to bear an additionalsubsidy of approximately Rs12 billion.They underscores that it will merely a wastage offoreign exchange and taxpayers money as it willnever benefit farmers, only middlemen andprofiteers will fill their pockets in connivance withstate machinery. They pointed out that as much as0.8 million tons of urea was carried forward fromRabi season to Kharif season that started from April1. They further disclosed that four fertiliser plants onMari Network are working at around 88 per cent oftheir capacity, while the SNGPL-based fertiliserplants are also operational since March 6, whichmeans that country can produce the requiredamount of urea for domestic consumption withoutspending precious foreign exchange and also withoutgiving away approximately Rs12 billion unnecessarysubsidy. Fertiliser industry sources allege that thegovernment is trying to import urea to take politicaladvantage as it did in the Rabi season by distributingimported urea through hand-picked politicallyinfluential middlemen, as well as to make good

amount of money for upcoming elections. They saidthat the whole strategy is being prepared on thepretext of benefiting farmers, but in fact smallfarmers would not even a single bag.Industry leaders lament that despite the fact thePakistan is the seventh largest urea producingcountry with manufacturing capacity of 6.9 milliontons, the country had to spend $783 million on ureaimports in 2011. In addition, the country had to payRs54 billion on account of fertiliser subsidy.They term year 2011 as the worst year in the history

of domestic urea industry as all manufacturing unitscould hardly produce 4.9 million tons of urea against

the installed capacity of 6.9 million tons due tomismanagement in the energy sector andunannounced gas curtailment. The SNGPL-basedfertiliser plants were badly hit as they could scarcelyachieve 31 per cent of fertiliser production againsttheir installed capacity, they maintained.Despite urea imports and heavy subsidies ureaconsumption dropped significantly during the Rabiseason 2011-12 (October-February. NDFC datashows that total fertiliser nutrient off-take duringRabi 2011-12 was about 1.596 million tons, whichdecreased by 18.9 per cent compared with sametimeframe of previous Rabi season.

NITROGENOUS NARRATIONS

Urea scam # 2186n Ministry of industries vies to ensure $282m go kaput n NDFC feels importing fertiliseris idiocy n Urea is also being touted as thelatest weapon in govt’s politicising arsenal

DUH!

g Unveils persistent energy crisis as major hurdle in Pakistan’s economic growth g Load-shedding, high inflation, security issuesalso among bank’s ‘earth-shattering’ revelations g Unearths power crisis plan to tame aforementioned menaces

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news02Thursday, 12 April, 2012

KARACHI

STAFF REPORT

MUhAMMAD AshrafKhan, executive Di-rector, State Bank ofPakistan (SBP) has

emphasized upon the banks toadopt agricultural financing as a vi-able business activity for the devel-opment of the agriculture sector inthe country.

Presiding over a one-day‘Farmers’ Financial Literacy &Awareness Program on Agricul-tural Financing,’ which was jointlyorganized by State Bank and habibBank Ltd. today at NRSP TrainingCenter, Bahawalpur, he said theagriculture sector has a key role incountry’s economy and stressedthe need for making necessary fi-nances available to farmers formultiple cropping activities. heoutlined SBP’s efforts for creatingawareness amongst the farmingcommunity and developing capac-ity of commercial banks through itsvarious training and awarenessprogrammes.

Prof. Dr. MuhammadMukhtar, Vice Chancellor, IslamiaUniversity Bahalwalpur, who wasthe Chief Guest at the inauguralsession, appreciated State Bank’sinitiative to promote farmers’ fi-nancial literacy and stressed theneed to synergise the efforts of allstakeholders to improve access tocredit especially to the agriculturesector. he said that academia can

play an important role in improv-ing credit culture and in creatingawareness among the farmingcommunity.

Dr. Saeed Ahmed, head, Agri-cultural Credit and MicrofinanceDepartment, SBP said the pro-gramme is aimed at creatingawareness among the farmingcommunity about agriculture fi-nancing products & services of-fered by banks, moneymanagement techniques and lend-ing procedures, documentations,etc. Besides, it would also developcapacity of agriculture field officersof banks in agri. financing and syn-ergize the efforts of all stakeholdersincluding policy makers, executingagencies, service providers & farm-ing community to improve accessto agricultural credit, he said,adding that SBP’s promotional ini-tiatives and policy interventionshave translated into around 200percent increase in the flow ofcredit to the agriculture sector fromRs. 137.4 billion in 2005-06 to Rs.263 billion in 2010-11.

however, he pointed out, de-spite this encouraging growth, thedisbursement to the agriculturesector was around 40% of the totalestimated credit requirements.‘SBP has planned to increase thedisbursement to 70-80 percentduring the next five years covering3.3 million borrowers by adoptinga multipronged strategy,’ he added.

The inaugural session was fol-lowed by a technical session for the

agricultural credit staff of banks inwhich senior officials of SBP andhBL made detailed presentationson dynamics of agriculture financeand related policies. The purpose ofthis session was to train the agri-culture finance officials of banksenabling them to conduct farmers’financial literacy programs at theirend and to share the best practicesin agriculture lending with the par-ticipants.

A farmers’ session was alsoheld to educate the farming com-munity about the products andservices offered by financial insti-tutions, their rights and duties ascustomers of financial institutions,consumer protection as well asmoney management skills to en-able them to use their limited fi-nancial resources in a prudentmanner. This session was attendedby a large gathering of farmersfrom adjoining areas of Ba-hawalpur. The officials of SBP andsenior management of hBL pres-ent on the occasion responded tovarious queries raised by the localfarming community and apprisedthem about the future plans/initia-tives for improving access to agri-culture finance.

The program was attended,among others, by Mr. Khadimhussain, Chief Manager, SBP BSCBahawalpur, bankers, officials ofAgriculture extension Departmentand farmers’ representatives, be-sides other senior officials of SBPand SBP BSC, Bahawalpur.

KARACHI

STAFF REPORT

SALeS in the country’s auto in-dustry posted a volumetricgrowth of 15 percent to climb

to 128,576 units duirng 9MFY12compared to 111,852 units of corre-sponding period last year.

According to PAMA data, the in-dustry car auto sales, including car,LCV and pickup, improved by 15 per-cent year-on-year (YoY) to 128.6kunits. The car sales soared by 15.3percent to 112.7k units with the PakSuzuki posting an enormous growthof 32 percent to 81.4k units.

Similarly, Indus Motor registereda growth of four percent to 68.9k units.however, honda’s unit sale was downby 34 percentYoY to8.0k units during9MFY12. “The volumetric growth pri-marily stems from June to July de-ferred sales on account of reduced tax

structure announced in FederalBudget FY12, Yellow Cab scheme an-nounced by the Punjab Government,21 percent increase in worker remit-tances in 9MFY12 and monetizationdue to rising government fiscal deficit,”said Murad hemani of Topline Re-search. In third quarter of FY12, Jan–March, the industry sales rose by sevenpercent from 43,753 units to 46,632units in same period last year. Thisshows a significant increase of 22 per-cent compared to last quarter, Oct-Dec. In March 2012, car sales stood at16,678 units up six percent as against15,710 units sold in March FY11, mark-ing 11 percent rise versus 14,962 unitssold last month.

With respect to individual com-panies, the PSMC continued to depictstrong growth of 32 percent in9MFY12 to 81,360 units versus61,693 units seen in same period lastyear as it stands out to be the prime

beneficiary of announced Yellow Cabscheme. In 3QFY12, the companysales stood at 30,642 units from3QFY11, up 31 percent and 26 per-cent from 3QFY11 and 2QFY12, re-spectively. In March, PSMC salesstood at 11,198 units, up 16 percentfrom same month last year and 12percent from last month.

Indus Motors 9MFY12 salesgrowth remained subdued as thecompany could sell 38,858 unitscompared to 37,259 units in same pe-riod last year, registering a mere fourpercent growth. In 3QFY12 the com-pany sold 14,792 units against 14,851units in the same period last year, butdepicted a significant jump of 26 per-cent as compared to last quarter.

“The recent recovery in sector’svolumetric sales along with the im-proved margin is expected to bodewell for the sector’s profitability goingforward,” said analyst hemani.

LAHORE

STAFF REPORT

LAhORe Chamber of Com-merce and Industry onWednesday demanded of the

Chairman Federal Board of Revenue(FBR) to expedite stuck-up Sales Taxand Income Tax refund claims. In astatement issued here, LCCI PresidentIrfan Qaiser Sheikh said: “The FBR iskilling the most productive sectors bydenying the exporters and manufac-turers their right of refund of Sales Taxand Income Tax.” The LCCI chief saidthat the delay in release of huge funds

that runs into billions has triggered se-rious liquidity crunch for the exportersand manufacturers that might lead toclosure of several industrial units.Irfan Qaiser Sheikh said the authori-ties concerned should take realisticview of the matter and allow the re-funds of sales tax and Income Tax toexporters and Manufacturers at theearliest, who were facing severe hard-ships. The LCCI President said thatthe process to get refunds is so lengthyand cumbersome that sometimes ittakes months for a manufacturer or anexporter to get his own money re-funded. he said that the businessmen

were bearing huge financial cost ontheir own hard earned stuck-upmoney, therefore, the FBR Chairmanshould look into the matter and en-sure early release of Sales Tax and In-come Tax refunds. The LCCIPresident said that the businessmenhave now started feeling the pinch asthe businesses were already in deeptroubles and experiencing toughesttimes because of multiple internaland external challenges including anacute shortage of electricity and gas.And now the delay in release of theirown money was adding to their mis-eries. Irfan Qaiser Sheikh said that hehad conveyed the business commu-nity concerns to the Federal FinanceMinister Dr Abdul hafeez Sheikhduring a meeting of Pakistan Busi-ness Council in Islamabad last monthand the Minister had immediately di-rected the formation of special com-mittees on the subject.

It takes more than LPG hikesto stop us from buying cars

LAHORE

IMRAN ADNAN

The government is losing a plausiblerevenue share from CNG kitmanufacturing companies that are

exporting around 60,000 kits to Afghanistan,Italy, Thailand, China, Brazil, Iran, andBangladesh. By din of imposing ban on CNGkits, the government is losing $6 millionforeign exchange a year what it gets from theexports of CNG kits to the said countries.Last year, one of the major players alone hasexported 51,000 CNG kits worth Rs. 135.6million and contributed around 70 millionrupees in terms of taxes and duties on partsimport and the kits’ export.It may be noted that roughly 50 per cent ofthe components of CNG kits are beingmanufactured locally, therefore, thegovernment’s decision of banning CNG ishaving adverse impacts, in terms of financiallosses and employment, on both thecompanies and their associated vendorindustry, which comprises of leading carmanufacturers and Tri-Wheelermanufacturers.Moreover, this decision is making way toerode all heavy investment made by suchcompanies and contribution to the nationalexchequer. The international communityincluding Italy and Argentina, which isalready surprised by many ironic decisions ofthe Pakistani government, has once againshowed its amazement on this decision of thegovernment.Lately, Japanese Ambassador hiro Shi Oereportedly conveyed his concerns to theCommerce Minister over banning CNG kits

in the country, which is to become a fatalblow to the Japanese investment in Pakistan.Talking about trade opportunities betweenJapan and Pakistan in the auto sector, theambassador was astonished that Pakistanigovernment has placed a ban on fitting CNGkits in new cars. It is to be noted thatOriginal equipment Manufacturers (OeMs)sold over 0.6m CNG fitted vehicles in the lastten years. Industry experts believe that therecommendation of the Ministry ofPetroleum to shutting down CNGconversions at much more safety abiding carmanufacturing companies is another blow tothe industry because their standards are verygood and could be checked at any stage.“Severe gas shortage in the country could bemanaged easily as it depends on governmentpolicies and their practical measures tocombat the issue. The government has tocome up with concrete solutions for energycrisis because CNG, being the best eco-friendly fuel, suits most to a developingcountry like Pakistan,” they added.“‘The energy shortage is there but a lot ofopportunities are available for its solution,”the experts said adding that thegovernment’s facilitation could bring in newenergy investments in Pakistan to generatefurther employment.Pakistan is a big market of CNG with a hugenetwork and infrastructure of over 3500CNG filling station which serve around 3million vehicles including 630,000 cars withfactory-fitted CNG cylinders.The experts said that the government shouldlift the ban as it would be a great damage tothis industry and will also create hugeunemployment.

KARACHI

STAFF REPORT

The National InvestmentTrust (NIT) has announcedthe results of all Funds underits management for the nine

months ended March 31, 2012. This isstated by the Chairman and MD NIT,Wazir Ali Khoja, in a statement issuedhere by the NIT on Wednesday.NI(U)T FUNd: During 9MFY12,NI(U)T has registered a net profit(excluding unrealized gains) of Rs.4,335 million compared to Rs. 3,343million in 9MFY11, a growth of 29.7%YoY. This net profit of Rs. 4,335million earned in 9MFY12 translatesinto an earning per unit of Rs. 3.23against earning per unit of Rs. 2.85 in9MFY11. The Chairman also statedthat during 9MFY12, the dividendincome earned by the Fund grew by36.7% YoY and stood at Rs. 2,148million as compared to Rs. 1,571million in the corresponding periodlast year. The Fund realized capitalgains of Rs. 891 million in 9MFY12against Rs. 548 million in 9MFY11, agrowth of 62.5% YoY. During 9MFY12,the Fund’s NAV increased by 6.65%from Rs 28.14 (ex-Dividend) as on30.06.11 to Rs 30.01 as on 31.03.12against the benchmark KSe-100 indexwhich increased by 10.13%.NIT-STATE ENTERPRISE FUNd(NIT-SEF): Referring to the results ofNIT-SeF, the Chairman said thatduring 9MFY12, the Fund earned a netprofit of Rs. 859 million (withoutimpairment) translating into an

earning per unit of Rs. 2.89. The fundrealized capital gains of Rs. 1,058million and earned a dividend incomeof Rs. 1,119 million in 9MFY12compared to capital gains of Rs. 851million and a dividend income of Rs.1,033 million in 9MFY11, a growth of24.3% and 8.28% YoY respectively.During the period under review, theNAV of the Fund has increased by8% from Rs. 84.21 (ex-dividend) on30.06.11 to Rs. 90.95 on 31.03.12against an increase of 10.13% in thebenchmark KSe-100 Index, thusunderperforming the benchmark by2.13%. however, since-inception thefund has outperformed itsbenchmark by 27.2%.The Chairman also stated that NITLpaid Rs. 5.375 billion to one of thelenders on March 26, 2011, therebyreducing the Government Guarantee ofprincipal facility from Rs. 20 billion toRs. 12.2 billion.NIT – EqUITY MARkETOPPORTUNITY FUNd: Whilepresenting the financials of NIT –equity Market Opportunity Fund, theChairman said that NIT eMOF hasoutperformed its benchmark by asizeable margin of 7.79% during the9MFY12 whereas the NAV increasedby 17.92% against the benchmark KSe-100 increase of 10.13%. During theperiod under review, the Fund’s netprofit grew by 27.1% YoY to Rs. 558million (without impairment) againstRs. 439 million in the correspondingperiod last year, translating into anearning per unit of Rs. 11.56 and Rs.9.34 respectively. The Fund also

realized capital gains of Rs. 198 millionand earned a dividend income of Rs.329 million in 9MFY12 compared tocapital gains of Rs. 147 million and adividend income of Rs. 253 million in9MFY11, a growth of 34.5% and 30.2%YoY respectively.The Chairman further stated that 10%redemptions of unit holding wereoffered and Rs. 551 million were paidto unit holders during the period.Thus, so far unit holders have beenoffered 50% of their respective unitholding since inception of the Fund.NIT GOVERNMENT BONdFUNd: During first nine months ofFY12, NIT GBF earned a net income ofRs. 197 million which translates into anearnings per unit Rs. 0.77 againstearnings per unit of Rs. 0.72 in thesame period last year.The NAV of NIT GBF increased fromRs.10.0968 (ex-Dividend as on June30, 2011) to Rs.10.8204 as on March31, 2012, thus yielding an annualizedreturn of 9.51% for its unit holders,where as the benchmark return stoodat 10.74%, thus underperforming itsbenchmark by 123 bps.NIT INCOME FUNd: During theperiod of nine months FY12, the netincome of NIT IF grew substantially by18.9% YoY to Rs. 185 million,translating into an earnings per unit ofRs. 0.98 from a net income of Rs. 155million in the period of nine monthsFY11, translating into an earnings perunit of 0.80.The NAV of NIT IF increased fromRs.10.1448 (ex-Dividend as on June30, 2011) to Rs.11.1151 as on March 31,2012, yielding an annualized return of12.69%, against the benchmark returnof 12.50%, thus outperforming itsbenchmark by 19 bps.

CNG kit ban = taking a $6m bath NIT results for 9mFY12

GEARHEADS

SECTOR ASSASSIN

CALAmITOUS CALCULATIONS

g SBP bets the farm on agri financing being a viable business activity

g Deferred sales, hiking remittances up auto sales by 15pc in 9mFY12

FBR is a murderer: LCCIg Claims FBR kills sectors by denying exporters,manufacturers right of refund

INVESTmENT IDEAS

PRO 12-04-2012_Layout 1 4/12/2012 12:24 AM Page 2

news

Thursday, 12 April, 2012

03

PTCL storms Sindh’s cities with creative customer outreach

ISLAMABAd: Pakistan Telecommunication Com-pany Limited (PTCL) recently conducted a creativetown marketing campaign in Sindh province to reachits valuable customers. The “PTCL Town Storming”campaign spread awareness about the Company’s ex-citing products and services, and also offered on-spotsales to potential customers by setting up attractivetown kiosks and running mobile floats manned byPTCL sales teams. Target areas included hyderabadcity, Jamshoro, Sanghar, Tando Adam, Shahdadpur,Umerkot, Mirpurkhas, Jhuddo, Thatta, Sajawal,Badin, Matli, Dadu, Mehar and Sehwan. These areaswere also covered with banners and outdoor brand-ing. In addition, a ‘Door Information Service’ alsoreached the general public by blending door-to-doorand cold calling outreach. PRESS RELEASE

millat Tractors Ltd presents Rs 10 million for FCC scholarship fundLAHORE: Mr Laeeq Uddin Ansari, Senior exec-utive Director (Technical) of Millat Tractors Ltd(MTL) presented a cheque of Rs 10 million to DrPeter Armacost, the Rector of Forman ChristianCollege, to provide financial assistance to deserv-ing students at the university. The amount willcover need-based scholarships for 75 studentsover a period of three years (2011-2014). Alsopresent at the occasion were Mr Javed Munir (Di-rector Finance MTL), Dr James Tebbe (executiveVice Rector FCC), Dr hamid Saeed (RegistrarFCC), Dr Manzur Gill (Chief Advancement OfficerFCC ) and Mr Anthony Williams (Director Finan-cial Aid FCC). The ceremony, which was attendedby a large number of student beneficiaries, washeld in the elahi Building at the FCC campus.Three Millat scholars, Moazzam Khan Lodhi,Mehwish Iqbal and Junaid ul hassan, thankedMillat Tractors for supporting their education atFCC. Faiza Maqsood, a financial aid recipient, also

spoke on the occasion. In all, the FCC FinancialAid Office has provided 1,800 students with finan-cial aid amounting to Rs 120 million for the cur-rent academic year. PRESS RELEASE

National Fertilizers Orientation ProgrammeLAHORE: A two-week orientation program wasconducted for the employees of National Fertiliz-ers Marketing Limited (NFML) at Lahore headOffice. Professional consultants and seasoned of-ficers of NFML shared their experiences with theparticipants. A press statement issued onWednesday said that the program was aimed tointroduce the employees about the system andpattern of organization and to develop theirskills. The participants from various departmentsattended the orientation sessions. The orienta-tions sessions were conducted by Top brass of theorganization under direct supervision of UzairAbu Baker DGM (Marketing). “Purpose of ar-ranging this orientation is to prepare youngstersfor the contemporary challenges” said Uzair AbuBaker DGM (Marketing). STAFF REPORT

LG to introduce to Europe Total HVACand energy solutions

LAHORE: LG electronics (LG) will present a fullline-up of commercial air conditioning and energy so-lutions at the Mostra Convegno expocomfort (MCe)2012 — europe’s premier air conditioning exhibition— in Milan, Italy. LG will highlight its latest systemair conditioning solutions, including the highly energyefficient Multi V III heat Pump VRF system and thenew hydro Kit, customized specifically for europeanconsumers. The Multi V III series boasts a 4.58 coef-ficient of performance and larger capacity per unitwith an extended piping length of 1,000m. The MultiV III heat Recovery System, which is capable of si-multaneously heating and cooling different zoneswith a maximum COP of 7.1, has been honoured as aClass A product and will be separately displayed at theevent, “Verso La Classe A 2012”. Meanwhile, the

hydro Kit, which will be unveiled for the first time atMCe 2012, offers an eco-friendly solution for floorand water heating, as it allows 77 percent savings inenergy consumption and 51 percent less emissionscompared to conventional boilers. LG will also show-case a range of air conditioning solutions, includingthe Multi V III heat Recovery System, the Therma V,the h Inverter and the Prestige Inverter. highly ver-satile building management systems will also be ondisplay. STAFF REPORT

Pakistan State Oil supports PakistanArmy in Siachen relief operationskARACHI: Pakistan State Oil (PSO) is fuelling therelief efforts being undertaken in the Siachen glacierregion through the supply of high Speed Diesel (hSD)to the Pakistan Army. PSO has dispatched an imme-diate consignment of 40,000 liters of hSD for use inthe rescue operations taking place in the Gyari regionof Siachen. These rescue efforts are taking place in thewake of an avalanche that engulfed an army camp onSaturday morning, and left 135 brave soldiers buriedunder mounds of snow. Keeping in view the urgencyof the situation, PSO not only provided the fuel sup-plies on a priority basis; it has also geared up its logis-tical operations in the region to ensure continouos andongoing support for the armed forces. PRESS RELEASE

Euromoney Air Finance Journal’s Asia Deal of the YearkARACHI: Pakistan International Airlines US$100million Islamic, IATA receivables-backed syndicatedtransaction has won the euromoney Air Finance Jour-nal’s Asia Deal of the Year. The facility was arrangedby Abu Dhabi Islamic Bank, Al hilal Bank, CitibankN.A., and United Bank Limited as Mandated LeadArrangers and Joint Bookrunners. Warba Bank inKuwait has joined the transaction as Lead Arranger.Citibank N.A. also performed the role of the AccountBank and Security Trustee. Munawar Noorani, Citi’sManaging Director & Aviation head for europe, Mid-dle east& Africa said, ‘We extend our heartiest con-gratulations to PIA for winning this prestigious award,especially given the tough competition there was fromother transactions in Asia. PRESS RELEASE

Etihad Airways announces passenger flights to NairobiLAHORE:- etihad Airways, the national airline of theUAe, recently announced its inaugural passenger flightto Kenya, at Jomo Kenyatta International Airport(NBO) in Nairobi. The new daily, two-class A320 serv-

ice is the airline’s first passenger service to east Africaand a critically important step in expanding its pres-ence in Africa. The airline aims to reach into WestAfrica with the introduction of flights to Nigeria in July,2012. etihad Airways commenced operations to theSeychelles in November, 2011, and Libya in January ofthis year, building on existing services to egypt, SouthAfrica, Morocco and Sudan. PRESS RELEASE

Pakistan to co-sponsor AIm 2012 inDubai to lure investmentkARACHI: Pakistan will be co-sponsoring the 2ndAnnual Investment Meeting 2012 (AIM 2012) in Dubai,United Arab emirates. AIM 2012 will be held from May1-3, 2012, designed to attract foreign direct investment(FDI), under the auspices of the UAe Ministry of For-eign Trade and with the support of the Consulate Gen-eral of UAe, said the Consul General of UAe, Suhail binMater Al Ketbi. AIM is one of the world’s first emergingMarkets FDI-focused events with a theme “FinancingPossibilities in Frontier and emerging Markets”. Pak-istan, being one of the emerging economies, sought tobecome one of its main sponsors to attract FDI andshowcase the trade and investment opportunities avail-able in Pakistan, for foreign investors. AIM is the brain-child of the UAe Minister of Foreign Trade, hhSheikha Lubna bint Khalid Al Qasimi, who visitedKarachi, Pakistan last year to open Magnificent 7 - UAeeXPO 2011, the largest single country exhibition. Theevent will have a gathering of major investors, leadingindividuals from global businesses and governments todiscuss investment opportunities in emerging markets.It is an FDI-focused event, a unique platform to discussprospects of investment in various businesses, frompublic-private partnerships to forming government togovernment interactions and realize more avenues forinvestment. STAFF REPORT

AbacusConsulting inaugurates new callcenter for Telenor customersLAHORE: AbacusConsulting inaugurated newGlobal Delivery Center at Shaheen Complex, Lahore.Mr. Lars Christian Iuel, CeO Telenor Pakistan andMr. Asad Ali Khan, President AbacusConsulting in-augurated the new call center facility which spans ap-proximately 24,000 sq. ft and is loaded with the stateof the art technological equipment. Senior manage-ment of both AbacusConsulting and Telenor Pakistanwere present at the ceremony. The new premises willserve as the office for AbacusConsulting’s BusinessProcess Outsourcing, Learning Services, LandRecords MIS, and healthcare Divisions. The centercan accommodate over 1,000 staff members and sup-ports over 300 seats for Telenor Pakistan’s call centeroperations which AbacusConsulting has been success-fully operating for over four years. STAFF REPORT

CORPORATE CORNER

Major Gainers

Company Open High Low Close Change Turnover

Indus Dyeing 385.58 404.85 399.97 404.85 19.27 5,525Sanofi-AventisSPOT 184.75 193.75 189.00 192.87 8.12 2,886Clariant Pak 147.18 153.00 147.50 152.28 5.10 13,716Packages Limited 91.10 95.65 92.85 95.65 4.55 287,285Island Textile 225.19 234.99 214.00 229.65 4.46 632

Major Losers

Nestle PakXD 4486.67 4575.00 4310.00 4350.43 -136.24 199UniLever Pak LtdXD 5896.30 6000.00 5806.00 5822.00 -74.30 18Colgate Palmolive 795.00 756.00 756.00 756.00 -39.00 50Attock PetroleumXD 456.02 457.50 451.00 451.64 -4.38 42,872Bata (Pak)SPOT 654.16 660.00 650.00 650.00 -4.16 30

Volume Leaders

Fauji Cement 6.20 7.20 6.21 7.15 0.95 74,362,783Lafarge Pakistan 5.09 5.85 5.15 5.58 0.49 62,602,942Azgard Nine 9.34 10.33 9.45 9.86 0.52 40,968,706Jah.Sidd. Co. 21.35 22.20 20.29 20.81 -0.54 30,207,185Dewan Cement 7.18 8.18 7.30 7.65 0.47 29,947,029

Interbank RatesUS Dollar 90.6934UK Pound 144.1118Japanese Yen 1.1230euro 118.8537

Dollar EastBuy Sell

US Dollar 90.70 0.00Euro 118.39 119.40Great Britain Pound 143.58 0.00Japanese Yen 1.1140 1.1232Canadian Dollar 89.85 91.10Hong Kong Dollar 11.55 11.71UAE Dirham 24.66 24.84Saudi Riyal 24.14 0.00Australian Dollar 92.59 94.82

KARACHI

STAFF REPORT

PAKISTAN Stocks closedlower on concerns for fall inglobal stocks andcommodities on weak US

jobs data undermining globaleconomic expectations. Viewed byAhsan Mehanti, Director at Arifhabib Investments Limited. The Karachi Stock exchange (KSe)100-share index declined 86.16points or 0.62 percent to close at13,816.96 points as compared to13,903.12 points of the previoussession. The KSe 30-share indexshed 98.09 points to close at12,063.72 points as compared with12,161.81 points.Analysts said that the massiveearthquake off Indonesia’s westerncoast triggered a tsunami watch forcountries across the Indian Oceanincluding Pakistan led investorconcerns. The market turnoverrecovered remarkably 3 million andtraded 511.29 million shares afteropening at 290.42 million shares.The overall market capitalizationdeclined 0.09 percent and traded Rs3.550 trillion as against Rs 3.574 trillion. Losersoutnumbered gainers 150 to 148,while 78 stocks were unchanged.

Mehanti added “Institutionalsupport in cement stocks andselected oil and banking stockssupported the index ahead of majorearning announcements and SBPkey policy rate announcement dueon April 13.”The KMI 30-share was down by114.91 points to close at 23,713.00points from its opening at 23,827.91points. The KSe all-share indexclosed with a loss of 49.16 points to9,726.57 points as against 9,775.73points. According to an analyst thatthe uncertainty over announcementson revised CGT regime, limitedexpectations for reduction in SBPkey policy rate affected thesentiments.Fauji Cement was the volumeleader in the share market with74.362 million shares as it closed atRs 7.15 after opening at Rs 6.20,gaining 95 paisas. Lafarge Pakistantraded 62.602 million shares as itclosed at Rs 5.58 from its openingat Rs 5.09, increasing Rs 51 paisas.Azgard Nine traded 40.968 millionshares and closed at Rs 9.86 asagainst its opening at Rs 9.34,rising 52 paisas. Jahangir SiddiquiCompany Limited traded 30.207million shares as it closed at Rs20.81 as compared to its opening atRs 21.35, increasing 46 paisas.

KSE bears the brunt ofIndonesian earthquake g Profit-taking bear hug drains KSE off 86 points

Keep your pens downg RTO employees launch pen down strike overpromotion proposals

LAHORE

STAFF REPORT

eMPLOYeeS of the Regional Tax Office (RTO) Lahorecontinued pen down strike on Wednesday against theproposal of promotion of senior auditors as Assistant

Commissioner (Inland Revenue). Federal Revenue Alliance(FRA) employees union President Mian Abdul Qayyum led ademonstration in front of the RTO to condemn the decisionwhich according to them would stop the promotion of incometax (Inland Revenue) employees. Mian Abdul Qayyum whiletalking to Business Recorder later on claimed that total strikewas observed in all the regions across the country exceptKarachi. he claimed no work was done at Lahore, Sialkot,Rawalpindi, Islamabad and every where in the country. he saidthat they were also in constant liaison with FBR employeesfrom Karachi to convince them to join FRA in its struggle. hesaid that customs wing of the FBR might also be joining themsoon in this effort for acceptance of their demands. Mian AbdulQayyum said that if their demands are not met till Monday,then the Union has decided to go for locking the offices of thetax across the country and not let happen any work by anybody.‘We may even go for hunger strike to press the FBR high ups foracceptance of their demands,’ he added. earlier participants ofthe demonstration held today demanded immediate withdrawalof the proposal claiming that it was also not agreed by MemberInland Revenue and Member Legal FBR which was the basicrequirement before sending the case to Ministry of Finance.Their other demands included that the Carrier path in theservices must be properly followed and in this respect the seniorauditors be asked to file surety bonds/affidavits so that theywould not file any case in the courts later on against this careerpath defined already. Two orders i.e. putting Sr. Auditors asUnit In charges and the other one designating them as AssistantCommissioner Inland Revenue (OPS) be withdrawnimmediately. An Inland Revenue Officer must be posted asMember (Admn). Inland Revenue Officers and InspectorsInland Revenue be also upgraded to BS -17 and BS – 16respectively.

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