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  • Drug pricing mum on adjustment in foreign currency movement: SBP

    Drug pricing mum on adjustment in foreign currency movement: SBP

    KARACHI: The present drug policy is silent on adjustment of prices under foreign currency movement, State Bank of Pakistan (SBP) said in its latest report.

    “The latest drug pricing policy does not say anything about the adjustment of prices under foreign currency movements. The policy becomes ineffective in mitigating the external risk, given the origin of imported raw material is mostly different from India and Bangladesh,” the SBP said.

    Drug Regulatory Authority of Pakistan (DRAP) is the implementing body of the Drugs Act of 1976, which was promulgated to ensure availability of medicines at affordable prices.

    DRAP exerts control over all the aspects of drugs market. While the current policy regime has kept prices mostly at par with inflation in the medium term, the pricing policy is the cause of disagreement between the private sector and the regulator.

    The central bank said that pharmaceutical industry has extensive exposure to exchange rate risk. “Depreciation of the PKR has a direct impact on this industry. Its profitability gets squeezed, as producers are not allowed a timely and commensurable increase in the prices of their products,” the SBP added.

    The dependence on imported materials is a critical factor in limiting the growth potential of the industry under lagged adjustment of prices, it added.

    The SBP said that extensive delay in adjustment of prices has made investors, both foreign and domestic, wary of investing in pharmaceutical sector.

    The government fixes the maximum price of medicines based on the respective cost of production of each drug. A generic case involves a lengthy regulatory procedure (typically taking 1-2 years) to determine the prices of medicines.

    The process requires the eventual approval from the federal cabinet.

    Retrospective analysis of prices reveals interesting insights to the patterns of price adjustments, i.e. prolonged periods of low medicinal inflation, followed by periods of significant adjustments. These price corrections have been more frequent in recent times.

    In this regard, DRAP issued a new drug pricing policy in 2018. To overcome the lag issues, domestic price of medicines were linked with average price of the same dosage form and strength of the same brand in India and Bangladesh.

    Moreover, the policy also allowed annual price increments equal to 70 percent of the annual inflation rate with a cap of 7 percent.

    Whilst the latest policy has a more relaxed tone compared to the previous one, it still has some issues. First, it should be noted that compared to Pakistan, India has very different cost dynamics, as it is one of the largest producers and exporters of generic drugs and its raw material.

    On the other hand, Pakistan’s pharma industry is heavily reliant on raw material imports and its industry is inward looking.

    In addition to slow regulatory framework, another critical factor is the lack of government support for the industry, especially in R&D required for obtaining international certification from the US Food and Drug Administration (FDA).

    This certification is a prerequisite for exporting medicines to developed countries where profit margins are higher. On the contrary, India has state of the art research labs.

    It gains significant advantages by fast-tracking its FDA approvals as soon as patents expire. As a result, India’s pharmaceutical industry has not only attained economies of scale but helps in earning foreign exchange as well.

  • FIA summons fashion designers in PIA premier service case

    FIA summons fashion designers in PIA premier service case

    KARACHI: Federal Investigation Agency (FIA) has summoned leading fashion designers in inquiry related to losses to PIA in Premier Service Operations.

    The FIA summoned the fashion designers in connection that PIA had acquired their services for design of ‘PIA Premier Service Uniform’ for its cabin crew.

    The agency said the designers were acquainted with the facts of the enquiry. Therefore, the designers have been asked to record their statements on April 03 and 04.

    The designers are included Noman Ansari, Yasmin Sheikh, Saniya Maskatiya and Pinto Kazmi.

    Sources said that the PIA acquired services of these designers in 2015. The PIA organized a fashion show abroad for the uniforms designed by such designers.

    The sources said that the PIA issued large number for free tickets to members of a local television channel.

  • PNSC adds MoGas Carrier vessel to its fleet

    PNSC adds MoGas Carrier vessel to its fleet

    KARACHI: Pakistan National Shipping Corporation (PNSC) has added MoGas Carrier LR-1 vessel to its fleet on Monday, Federal Minister for Maritime Affairs Syed Ali Haider Zaidi said.

    The ship, which has been named Bolan, will help reduce the dependency on foreign vessels and will help in saving million of dollars in freight chares, he said in a tweet.

    He termed it as another step towards self reliance of the country.

    Zaidi said that the with the addition of latest carrier the PNSC fleet increased to 10, out of which five ships are bulk cargo and four were crude oil.

    He congratulated chairman PNSC for successful acquisition. Zaidi said that another ship would be added to PNSC fleet before end of Summer 2019.

  • Engro Powergen successfully tests electricity generation

    Engro Powergen successfully tests electricity generation

    KARACHI: Engro Powergen Thar (Private) Limited (EPTL) has successfully tested and energized the first unit of 330MW of the combined 660MW coal based power plant – located in Thar Block II.

    A statement on Tuesday said that the successful synchronization happened amidst presence of senior officials of the Company and from China Machinery Engineering Corporation (CMEC) – the EPC contractor of the project.

    The injection of the electrons produced for the very first time from Thar coal – regarded as the 7th largest coal reserve in the world with 175 billion tons of lignite coal – has redefined Pakistan’s energy landscape and secured the country’s energy future on an indigenous, native footing which will eventually relinquish Pakistan’s dependence on foreign fuel mix.

    EPTL – one of the early harvest projects of the China Pakistan Economic Corridor (CPEC) – commenced the construction of Pakistan’s first 660MW power plant after the financial close of the project in April 2016.

    EPTL operates as a subsidiary of Engro Energy along with other sponsors that include HBL; Liberty and China Machinery Engineering Corporation.

    The synchronization of the first unit of the power plant is a considerable achievement given that the project has been constructed in a record time of under 3 years – as per schedule and projected costs, a feat in itself given the complexity of the project.

    EPTL power plant will utilize 3.8MTPA of coal supplied by Sindh Engro Coal Mining Company as both projects achieve their commercial operations date (COD) in June 2019.

    Together both the mining and power projects, managed by Engro Energy, will be able to bring average foreign exchange savings of up to $1.6 billion per annum thereby delivering on Company’s promise of producing electricity which is from indigenous resources; is abundantly available and is economical.

    The 660 MW power plant of EPTL will use circulating fluidized bed (CFB) technology to burn coal.

    Post-COD, the plant will evacuate 660MW of electricity through a 282-km long 500 kV Double Circuit Quad-Bundle transmission line from EPTL plant to Matiari in Sindh province.

    The power plant – although first for Pakistan to run on Thar coal – complies with all local environmental laws and has voluntarily adopted various international compliance standards.

    Celebrating this transformational event, the President of Engro Corporation, Ghias Khan said: “The first sync of the power plant on Thar coal is truly a momentous occasion for entire Pakistan.

    “Engro’s commitment to the Thar coal project goes back almost a decade when we entered into a public private partnership in 2009.

    “The synchronization of the first unit of the 660MW power plant is both testament to Engro’s capacity to engineer excellence and deliver on this project of national importance which will ensure the energy security of the county.

    “At this juncture, I would like to thank the Government of Sindh and the Federal Government for their catalytic role and support in helping us deliver on our commitments of the Thar coal projects.”

    Commenting on the landmark achievement, Ahsan Zafar Syed – the Chief Executive Officer of Engro Energy and EPTL said: “This is a historic moment for us where Engro has not only delivered on its promise of realizing the Thar dream but technically demonstrated proof of the concept that Thar coal is suited to produce indigenous energy which can prove to be economical in the long run and reduce our dependence on imported fuel mix.

    “I would like to acknowledge the efforts of our partners and sponsors in the project who have played an instrumental role in this landmark achievement. I am confident that together with all our partners, Engro will forge ahead with synchronization of the second unit of the 660 MW power plant in April 2019 and Insha-Allah achieve the COD of both the mining and the power project, as per our commitment, in June 2019.”

    Syed Abul Fazal Rizvi, CEO of Sindh Engro Coal Mining Company (SECMC), congratulated all the partners and teams involved in this achievement and said: “I congratulate the EPTL management on successful energization of the first unit of the plant.

    “Sindh Engro Coal Mining Company (SECMC) has already commenced the delivery of coal to the EPTL plant and we will now further optimize the mine to deliver on our promise of providing economical, indigenous energy to Pakistan.”

  • Car sales drop by 4.5 percent in eight months

    Car sales drop by 4.5 percent in eight months

    KARACHI: The sales of locally assembled cars have dropped by 4.5 percent to 162,692 units during July – January 2018/2019 as compared with 170,354 units in the same period of the last fiscal year.

    Analysts said that the decline car sales were due to jump in prices and restriction imposed on non-filers to register new cars.

    However, the government lifted this restriction through amendments made in Finance Supplementary (Second Amendment) Act, 2019.

    Analysts at Topline Research said Pakistan Auto sales are down by 13 percent YoY in February 2019, as against 4.5 percent YoY decrease in January 2019.

    Moreover, sales are down 13 percent MoM which can be attributed to lower number of working days in February compared to January.

    To note, measures in economic reforms package are expected to support declining volumes, however, volumes will still see a downward trend in months to come, in our view, due to slow down in economy as well as significant jump in prices in last 15 months.

    Total sales during 8MFY19 have come in at 163K units, down by 4.5 percent YoY.

    Indus Motors (INDU) reported YoY growth yet again (up 8 percent YoY in Feb 2019) as the strong (albeit thinning) order book continues to support sales. Fortuner sales rose 80 percent YoY, first YoY increase in 8 months, while Corolla continued its growth trend with sales up 23 percent YoY.

    On the other hand Hilux sales fell 72 percent YoY, highest YoY decline in 19 months.

    Pak Suzuki (PSMC) continued to report YoY decline in sales, down by 17 percent YoY in Feb 2019. Sales decline was led by Mehran, Bolan, Swift, Cultus and Ravi variants down by 33 percent YoY, 18 percent YoY, 28 percent YoY, 14 percent YoY and 14 percent YoY, respectively.

    Wagon-Rwas the only PSMC variant to record growth YoY (up 16 percent YoY).

    Honda cars (HCAR) sales fell 27 percent YoY, worst YoY decline since Apr 2012. This coincides with worst YoY decline in sales of city and civic variants, which fell by 24 percent YoY.

    In addition to the economic factors, decline in City and Civic variants can also be attributed to the expected launch of Civic 1.5 Turbo (substitute for Civic 1.8) in coming months.

    Simultaneously BR-V sales fell 45 percent YoY. To, note, BR-V sales have fallen YoY for the 10 consecutive month as the variant introduced in Apr 2017 loses its charm with the consumers.

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    Car sales decline 3.2 percent in July – January

  • Cement exports increase by 52 percent in eight months

    Cement exports increase by 52 percent in eight months

    KARACHI: Pakistan’s cement exports registered unprecedented growth of 52 percent during first eight months (July – February) of fiscal year 2018/2019 mainly on the back of rupee depreciation and focus on low margin exports.

    The export of cement rose to 4.65 million tons during first eight months of current fiscal year as compared with 3.05 tons in the corresponding months of the last fiscal year, analysts said on Tuesday.

    However, provisional cement data for the month of February 2019 displays a 9 percent MoM decline to 3.33 million tons (January 2019: 3.65 million tons) given surprise rainfalls across the country as well as extension in the winter season, according to analysts at Arif Habib Limited.

    On a YoY basis, the slowdown in dispatches appeared more visible at 12 percent led particularly by weakness in domestic dispatches of 19 percent YoY to 2.82 million tons in February 2019.

    Albeit, exports remained robust at 0.51 million tons (up by 69 percent YoY) in lieu of Pak Rupee depreciation against US Dollar, domestic over capacity allowing companies to focus on low margin exports, US sanctions on Iran opening up other exports markets for Pakistan as well as wasteful capacity cuts globally.

    The analysts said that drop in local offtake was triggered by lackluster demand in North (down by 24 percent YoY to 2.31 million tons) for aforementioned reasons where local offtake underwent a dip of 25 percent YoY to 2.15 million tons.

    This took the 8MFY19 total dispatches to 30.09 million tons, stable over SPLY, owed to a stunning 52 percent jump YoY in exports at 4.65 million tons which cushioned the 6 percent dip in local sales at 25.44 million tons.

    Further dissection unveiled that South continues to show resilience with growth in total dispatches at 8.25 million tons, up by 49 percent YoY amid a sharp 3x escalation in sea-based exports to 2.79 million tons, whereas local offtake also remained healthy at 16 percent YoY to 5.46 million tons.

    On the flipside, the North region sustained continuous pressure with dispatches pulling down by 11 percent YoY; local offtake depicted an identical decline to 19.98 million tons while exports dipped by 16 percent to 1.86 million tons.

  • PSO receives Rs60 billion from power companies

    PSO receives Rs60 billion from power companies

    KARACHI: Pakistan State Oil (PSO) has said it received Rs60 billion as partial settlement of receivable from power sector companies.

    In a notice to Pakistan Stock Exchange (PSX) on Monday, the state run oil marketing company said that it had received an aggregate amount of Rs60 billion as partial settlement of receivables related to certain power sector companies on March 01, 2019 after close of normal business hours.

    Consequently, PSO’s principal receivables balance from these power sector companies has reduced accordingly. The amount received by the company has been used for partial repayment of its bank borrowing, the company said.

  • Philip Morris decides closing factory in Kotri

    Philip Morris decides closing factory in Kotri

    KARACHI: Philip Morris (Pakistan) Limited, an American multinational cigarette and tobacco manufacturing company, has decided to close down its factory located in Kotri.

    In a notice to Pakistan Stock Exchange (PSX) on Monday, the company said that as part of a strategic review to optimize process efficiencies and operational effectiveness and to best position the company for a strong and viable future growth, management of Philip Morris (Pakistan) Limited has decided to reorganize its operational footprints by closing its factory in Kotri located on Plot No. E-15, S I T E Kotri, Pakistan.

    The company said it will file an application for closure of the factory and retrenchment of permanent workers employed by PMPKL with the provincial labor department.

  • Murree Brewery declares profit amid liquor ban in Sindh

    Murree Brewery declares profit amid liquor ban in Sindh

    KARACHI: Murree Brewery Company Limited has declared 4.6 percent increase in net profit despite ban on liquor sale in Sindh, according to half- year financial results for period ended December 31, 2018 submitted to Pakistan Stock Exchange (PSX) on Thursday.

    The net sales revenue increased by 10.2 percent to Rs4.582 billion during July – December 2018 from Rs4.15 billion in the corresponding period of the last year.

    The gross profit of the company has increased by 10.2 percent to Rs1.544 billion from Rs1.4 billion.

    Earnings per share of the company have increased by 4.6 percent to Rs23.78 from Rs22.75 EPS.

    The company declared the profit despite ban on liquor sale in Sindh. It said that as advised earlier the case is pending before the Sindh High Court. Meanwhile, sales during the half year were satisfactory.

    The company also pointed out depreciation in local currency. It said that the rupee has further devalued to Rs.138 per US dollar increasing the cost of imports and making repayment of foreign currency loans and interest thereon dearer.

    The benefit to the country by making exports cheaper has been marginally received by reducing the current account deficit. The cost of production has increased with dearer imports and increases in the cost of gas and electricity which has also increased the cost of living of the public utilizing higher quantities of these utilities, it added.

    The company said that the Punjab Government issued a notification # SO(E&M)2-3/2011(P-II) dated 24th June, 2015 by which Still Head Duty was levied from 1st July, 2015 on all Pakistan Made Foreign Liquor and beer meant for consumption outside the province of Punjab. The Company challenged this notification in the Lahore High Court, Lahore.

    The notification was set aside by the Honorable High Court on 27th June 2016.

    The Company is paying this duty and recovering it from the buyers, which makes Murree Brewery products dearer than our competitors.

    The Punjab Government has filed an appeal in the Lahore High Court, Lahore praying the impugned judgment may be set aside and the Notification dated 24th June, 2015 be declared intra vires to the Constitution of Islamic Republic of Pakistan.

    Punjab Excise has got a stay against Sindh wine dealers and is collecting “extra duty”. The intra court appeal of the Excise Department has been dismissed by the Honorable Lahore High Court, Lahore on 19th February, 2019. However, the department has the right to appeal in the Supreme Court.

    The company said that tax on extraction for business purpose also affected the sales.

    In December 2018 the Supreme Court ordered a Re 1 per litre tax on water extracted for business purposes on a suo motu case pertaining to selling of water extracted from underground sources without any charge as well as the fitness of the same for human consumption.

    Finally it applies to many industries including cement, beverages, textiles etc. The modalities of this tax have not yet been determined.

    As the Company’s Tops and Liquor Divisions come under the purview of this tax, a review petition has been led in the Supreme Court.

  • Byco Petroleum declares 96pc decline in half-year profit

    Byco Petroleum declares 96pc decline in half-year profit

    KARACHI: The net profit of Byco Petroleum Pakistan Ltd. fell sharply by 96 percent for the first half ending December 31, 2018 due to depreciation in Pak Rupee value and weak upliftment of furnace oil.

    Byco Petroleum Pakistan Ltd. (BPPL) on Tuesday announced financial results for the six months ending on 31 December 2018.

    The net profit was Rs. 89 million as compared with Rs2.3 billion a year earlier, said a press release.

    On a per share basis, the company earned Rs0.02 per share during the six months ending on 31 December 2018 as opposed to Rs0.44 per share in the prior year.

    Byco Petroleum generated a gross profit of Rs1.4 billion in the first half of the current fiscal year compared with a profit of Rs4.7 billion a year earlier.

    The company’s gross sales increased by an impressive 52 percent during the first half of the fiscal year from the same period in the previous year to Rs123.47 billion.

    The company said that it was a difficult period for Pakistan’s energy industry however, and particularly so for the oil refining industry.

    The country witnessed a 14 percent drop in the value of the Pakistani Rupee against the US dollar.

    The oil price environment was highly volatile as the international Brent oil price jumped to annual highs then plunged to annual lows within a few months.

    Meanwhile, the upliftment of furnace oil (FO) remained weak in the country.

    This challenging backdrop had a negative impact on Byco Petroleum Pakistan Limited’s refinery throughput as well as refining margins.

    However, the management made every effort to minimize the company’s exposure to the tough market.

    Byco Petroleum is fully committed to improving its operating and financial performance in the future, said the press release.