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Saudi Pak: a symbol of growing economic cooperation.

Saudi Arabia and Pakistan are bound together through unassailable historical and religious links. They have also availed the opportunities of mutual co-operation in the socio-economic fields. Saudi Pak Industrial and Agricultural Investment Company (Pvt) Limited (Saudi-Pak) is most significant among several joint ventures of the two countries which are geared towards strengthening the brotherly relations and promoting the development of Pakistan.

Saudi Pak is a joint venture between the Kingdom of Saudi Arabia and the Government of Pakistan. It was established in 1981 under an Inter-governmental agreement signed between the two countries. Saudi-Pak aims at providing financial assistance to the private sector for setting up of industrial projects in various sectors of the economy. It offers diverse facilities including equity participation in selected projects, term financing in foreign as well as in local currency and syndication. In order to keep pace with rapidly growing and highly competitive financial market, Saudi-Pak has since broadened the spectrum of its activities by carrying on merchant banking operations which include underwriting of public issues of shares, assurance of guarantees and leasing through managed funding lines.

Saudi-Pak has a paid up capital of Rs. One billion which is contributed equally by the Kingdom of Saudi Arabia and the Government of Pakistan. The equity base has grown to Rs. 1.8 billion and the asset base to Rs. 2.5 billion over the period.

The business operations of Saudi-Pak are conducted solely on commercial considerations. The project financing decisions are based on critical analysis of the commercial, economic, technical and financial factors influencing the viability of the projects. The projects providing import substitution and/or export potential and based on local raw materials are encouraged by Saudi Pak. Saudi Pak also encourages projects involving transfer of technology. In view of tremendous development potential inherent in the Pakistan's agro-economy, Saudi Pak has a definite preference for sound investment proposals in the agro based sector.

Saudi Pak achieved a significant breakthrough in its operations during the year 1991. The amount of financing approved for development projects denoted a sharp increase. The amount of financing approved, including underwriting commitments for public issue of shares squared by 94.5 per cent from Rs. 246.724 million in 1990 to Rs. 479.885 million in 1991. The operations received further fillip in the first half of 1992, when the aggregate financial commitment jumped to Rs. 447.075 million. The financial commitments in 1991 included equity investment of Rs. 56.00 million channelled into the growth sectors of modarabas/modaraba companies, leasing companies and banks. The term finance facilities approved during 1991 amounted' to Rs. 376.760 million representing 59.4 per cent increase over the last year. The facilities included Rs. 75.00 million provided under lease finance arrangements to manufacturing companies for purchase of machinery and Rs. 60.00 million to a leasing company under a line of leasing. The major portion of term financing commitments went for textiles, chemicals, engineering and fuel sectors.

Since its inception, Saudi-Pak has provided funded financing to 75 projects. As on June 30, 1992, the aggregate financing amounted to Rs. 1940.034 million including Rs. 739.067 million in foreign currency. The overall sectoral exposure is spread over a number of key sectors. The textile, chemicals and services sectors separately accounted for exposure of around 20 per cent.

As on June 30, 1992, direct equity investment accounted for 21.34 per cent of the total financing while share of term finance stood at 78.66 per cent. Of the term finance commitments, local currency financing constituted 35.75 per cent and foreign currency 42.91 per cent.

Saudi-Pak owns a 20 storey most modern office building in Islamabad. The building is a rare blend of traditional language adapted to contemporary architecture. lt embodies all the salient feature of traditional architecture reflecting on the systemetrical and geometrical concept of open and covered courtyards. Rarely in a high rise building traditional architectural language has been captured with such overwhelming success. In spite of it's traditional inspiration the building is ultra modern in its facilities as well as in its technology.

In the coming years, Saudi-Pak plans to play an important role as a catalyst in the financial sector. Efforts would be made to beef-up its resources inter-alia through funding lines from multilateral financial agencies and invest the funds judiciously to realise the great potential of the economy of Pakistan.
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Title Annotation:Saudi Pak Industrial and Agricultural Investment Company Ltd.
Publication:Economic Review
Article Type:Company Profile
Date:Oct 1, 1992
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