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Category: Corporate

  • United Brands Limited stops consumer products’ distributions of leading brands

    United Brands Limited stops consumer products’ distributions of leading brands

    KARACHI: A leading distributor of consumer goods has discontinued distribution of leading brands from its business portfolio which may cause monthly loss of Rs58 million.

    According to a notification to Pakistan Stock Exchange (PSX) on Thursday United Brands Limited, which is involved in distribution of consumer products, informed that it had discontinued following businesses from business portfolio, which would result in loss of revenue by approximately Rs58 million or Rs696 million annual loss:

    a. Mars

    b. Wrigley’s

    c. Haleeb Foods

    d. Unilever

    e. Heinz

    f. IFFCO

  • Car sales down 4 percent on economic slowdown, high prices

    Car sales down 4 percent on economic slowdown, high prices

    KARACHI: The sales of locally assembled cars have declined by 4 percent during first nine months (July-March) 2018/2019 owing to slowdown in economy and recent rise in car prices, analysts said on Wednesday.

    The sales of locally assembled cars fell to 185,023 units during July – March 2018/2019 as compared with 192,734 units in the corresponding period of the last fiscal year, according to Pakistan Auto Manufacturers Association (PAMA).

    Analysts at Topline Securities attributed the decline in car sales to slowdown in economy and rise in recent car prices.

    Indus Motors (INDU) reported 11 percent YoY decline during March 2019 mainly on account of lower sales of Fortuner & Hilux, which were down 63 percent and 65 percent, respectively, YoY.

    The analysts said that this was due to 10 percent Federal Excise Duty (FED) imposed on above 1700 CC engine cars.

    Corolla sales posted growth of 2 percent YoY.

    Pak Suzuki (PSMC) reported 23 percent YoY growth in sales led by growth in Wagon R with growth of 63 percent YoY.

    Other major contributors in overall growth were Cultus, Bolan and Ravi, up by 17 percent, 38 percent and 36 percent YoY, respectively.

    Swift was the only PSMC variant to record decline, down 16 percent YoY.

    Honda cars (HCAR) sales fell 29 percent YoY in Mar 2019, steepest YoY decline during a month since May 2012. In addition to economic factors, decline in City and Civic variants is attributed to anticipation of a launch of new variant (Civic 1.5 Turbo new variant launched in April-19).

    The analysts said that overall demand of automobiles is expected to remain subdued due to recent hike in policy rate (+475bps since Jan 2018 to 10.75 percent), resulting in higher borrowing cost for auto financing.

    Furthermore, incremental cost as a result of rupee devaluation & increasing inflation has led to higher car prices, impacting purchasing power of car buyers.

    To note, the government is mulling over removal of 10 percent FED on engines with 1700CC above, as per news reports.

    However no official announcement has yet been made, adding to the uncertainty to the car sales with engine size of over 1700CC.

  • CDC freezes shares of Ansari Sugar Mills

    CDC freezes shares of Ansari Sugar Mills

    KARACHI: Central Depository Company of Pakistan (CDC) on Tuesday frozen ordinary shares of Ansari Sugar Mills following placement of the company on defaulter segment by Pakistan Stock Exchange (PSX).

    A notification issued by the CDC informed that consequent to placement of Ansari Sugar Mills Limited on the defaulter’s segment by the PSX with effect from April 08, 2019 as informed by PSX dated April 05, 2019 with advise to CDC to freeze the ordinary shares of issuer held in CDS accounts of sponsors, directors and senior management officers of issuer, CDC has frozen the ordinary shares in accordance with the CDC regulations.

    The ordinary shares shall remain frozen in CDS accounts of persons till further notice.

  • High Speed Diesel July- March sales hit decade low

    High Speed Diesel July- March sales hit decade low

    KARACHI: The sales of High Speed Diesel (HSD) have declined to decade low due to slowdown in economy, analysts said on Tuesday.

    In July – March 2018/2019, HSD sales decline (-20 percent YoY in 9MFY19) touched over decade low due to slowdown in economy. While Motor Spirit (MS or Petrol) growth remained limited to 1 percent YoY, almost 9-Year low on account of decline in Cars/Bikes sales by 4.5 percent/5 percent during 8MFY19, said analysts at Topline Securities.

    Pakistan Oil Sales was down 18 percent YoY during Mar 2019, dragged by 50 percent YoY decline in Furnace Oil (FO) and 21 percent YoY drop in HSD sales.

    FO sales decline continues due to its low usage in power generation after commencement of new RLNG and coal based power plants.

    HSD sales remained on lower side on back of slowdown in economy as indicated by 7MFY19 Large Scale Manufacturing (LSM) decline of 2.3 percent vs. 7 percent growth in 7MFY18.

    Further, continuous smuggling from Iran could also be attributed to this decline.

    Pakistan State Oil (PSO) regained its market share during Mar 2019 by 5ppts and 3.5ppts MoM in MS and HSD sales respectively to 39 percent and 41 percent respectively. While, Hascol lost 4ppts and 6ppts MoM in both products.

  • 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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  • 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.