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New wave of optimism.

New Wave of Optimism

The stock market was booming with activity during the month under review. General Index of share prices as compiled by State Bank showed an upturn from 306.98 on February 6, to 322.71 on March 20 showing a gain of 15.73 points. Aggregate market value of share prices also indicated a handsome gain of Rs. 2.448 billion. The following table illustrates the position.
 General Aggregate
 Index Market
 Number Capitalisation
 (Rs. in billion)
06.02.91 306.98 53.185
12.02.91 309.57 53.297
20.02.91 316.03 54.387
13.03.91 322.34 55.580
20.03.91 322.91 55.633

KSE decided to delist seven companies from the list. These companies are, Pakistan Paper Corporation and the Chemicals Limited (both under liquidation), National Match Company, Ghafoor Textiles, Noor Textiles, Saifee Development Corporation and Pioneer Insurance. It was also decided that the company delisted from one stock exchange would also be delisted from the other stock exchange. More delisting would be followed.

The encouraging sign was the permission to foreign banks to invest in shares in Pakistan to the extent of 30% of its paid-capital. The cut in POL prices ranging from 12 to 28 per cent has provided a fillip to the market. Trading volume was more than 2.0 millionshares on March 27.

Half Yearly Reports

Cement & Vegetable Ghee: Losses were sustained by Javedan Cement, Kohinoor Oil, Suraj Ghee, Wazeerali Industries and Maqbool Co. The losses were due to increase in the cost of inputs. Moreover government had not allowed fair selling price to the vegetable ghee units.

Engineering Sector: In the automobile sector Hinopak not only maintained its position as the market leader put also achieved a growth of 24 per cent in the sale of truck and bus chassis and 37 per cent in overall sales revenue as compared to the preceding year. In foreign markets it has been able to secure an order of 46 buses for export to Somalia. The government has been urged to revise the duty structure for CBU vehicles to maintain the previous duty differential between CU and CKD units. Chairman Javed Burki pointed out "In case this is not done it will have serious consequences not only on local assemblers but also the component manufacturers.

Sales of National Motors reported a net profit of Rs. 11.1 million during the half year ended 31.12.1990 as against a net loss of Rs. 42.5 million during the year ended 31.12.89. With the commissioning of engine and transmission assembly facilities in Pak Suzuki Motors in the new plant the indegenisation of components has entered a new era of development of high tech components. Local development of critical engine parts and other high tech components has also been under.

Bela Engineers sales dropped substantially from Rs. 28.951 million to Rs. 8.486 million as a result of final end of Bedford business and reduced assembly of FIAT engines. The outlook for the next six months appears healthier as the company will start machining of FIAT tractor engines, Cylinder Head and also assemble an estimated volume of 4,000 units of FIAT engines.

The gross sales of PEL during the first half of the year 1990-91 have increased to Rupees 222 million as compared to Rupees 192 million in the corresponding period of 1989-90 The gross profit has improved to Rupees 49 million as against Rupees 44 million and profit before tax has increased to Rupees 11 million as compared to Rupees 10 million during the same period of the last year. The Company has managed increase in the profits by improving the efficiency and productivity inspite of the gulf crisis and increase in prices of imported raw materials and petroleum based products.

Jute Mills: Operations of Jute Mills during the half year ending December 31, 1990, was adversely affected due to alround increase in the input cost. Effective December 1, 1990 additional special allowance of Rs. 200/- was allowed to employees drawing wages upto Rs. 2,585 per month. Incase of Pakistan Jute and Synthetics this factor has increased the wage bill by Rs. 3.6 million per annum.

Paper & Board: During the half year period ending December 31, 1990, Chilya Corrugated and Adamjee Paper sustained losses. Pakistan Paper and Security Papers, however, showed rise both in profits and sales, Security Papers Limited is planning to increase the capacity of the plant either by installing a second new machine or by uprating the existing paper making machine. The company has already prepared and sent PC-1 Proforma for uprating the machine and on completion of formalities it would proceed to complete the expansion. The performance of the companies was affected due to overall increase in the input cost and wages of workers.


Atlas Autos Limited: The Shares of former Panjdarya Ltd. to be converted into the Shares of Atlas Autos Ltd. will not be entitled to Dividend for Atlas Autos Ltd. financial year ended 31 December 1990, when the shares of Atlas Autos Ltd. will be issued on Conversion of shares of former Panjdarya Limited.

Mohammad Farooq Textile Mills Limited: earned a pretax profit of Rs. 0.560 million on sales of Rs. 403.031 million during the year ending September 30, 1990. The company announced bonus shares of 10 per cent. The poor profit figures were due to heavy financial expenses on account of new equipment, much increased cost of carrying cotton inventories, increased Cash Lock-up due to much longer production cycle in Weaving Finishing and Stitching.

Silver Star Insurance Co.: Company has applied to CLA for grant of permission for increase in Authorised Capital from 10 million to Rs. 50 million and paid-up Capital from Rs. 3 million to Rs. 10 million.

Rafhan Maize Products: An amount of Rs. 120.0 million has been sanctioned by NDFC for Rafhan Maize Products Co. Limited., Faisalabad, which envisages expansion in its present production capacity from 2,500 tonnes of corn to 133,000 tonnes at a total cost of Rs. 203 million. The sanctioned amount of Rs. 3.046 billion included working capital finance of Rs. 1.494 billion.

Foreign Banks: State Bank of Pakistan has given general permission under which foreign banks in the country can under-write the issue of shares to the extent of 30 per cent of the public offering or 30 per cent of its own paid-up capital and reserves whichever is less.

They have also been permitted to under-write public issues of participation term certificates term finance certificates and modaraba certificates provided that where the terms and conditions of issue of such securities grant an option to the holders to convert the securities into ordinary shares, the restrictions of 30 per cent as mentioned above would apply, says a bank's exchange control department circular. Under-writing of shares, participation term certificates, etc., by foreign banks eventually involves holding of those shares/securities which are not taken up by the general public, and as such attracts the provisions of Section 13 of the Foreign Exchange Regulation Act, 1947.

Half Yearly Reports Ending December 31, 1990
 (Rs. in million)
 Pretax Pretax
 Sales Sales Profit Profit
 1990 1989 1990 1989

Javedan 358.192 339.889 -10.713 0.133
Cherat 379.50 399.428 39.272 42.437
Dandot 182.100 172.677 0.432 0.255
Gharibwal 313.363 288.218 39.781 15.191

Associated Industry 439.783 457.278 10.950 21.618
Kohinoor Oil 193.883 176.375 -10.302 - 8.305
Punjab Oil 167.851 140.114 0.934 0.984
Suraj Ghee 178.274 200.864 - 4.099 3.504
Wazir Ali Industry 410.990 422.595 - 5.241 11.305
Sh. Fazal Rehman 256.552 236.996 1.562 2.989
Maqbool Co. 91.419 103.935 - 6.668 - 1.123

Allwin Engineering 113.329 118.445 1.698 4.086
Allied Tractors 634.000 3,625.000 136.159 109.819
Bela Engineering 8.486 28.350 - 16.001 - 6.810
Hino Pak Motors 818.933 595.522 79.217 23.972
Metropolitan 538.231 605.445 2.364 8.709
Pak Suzuki 2,447.763 2,151.155 141.240 107.313
Pak German 5.307 7,078 0.646 0.840
P.E.L. 222.137 192.288 10.941 9.953
Suzuki Motor Cycles 30.208 6.186 - 6.717 - 4.393
National Motors 137.473 107.540 11.082 -42.470

Amin Fabrics 99.119 76.868 10.323 - 1.592
Crescent Jute 298.888 205.430 12.821 14.713
Indus Jute 95.710 80.668 7.640 1.996
Latif Jute 54.337 58.335 0.840 - 0.758
Mehran Jute 66.864 67.846 3.564 1.265
Pak Jute & Synthetic 70.431 50.436 4.932 1.188
United Jute 54.869 43.922 2.801 2.390

Adamjee Paper 148.967 102.134 - 7.016 - 13.659
Chilya Corrugated 8.605 8.818 - 8.062 - 3.633
Pakistan Paper Products 14.360 8.208 2.415 1.150
Security Papers 50.866 47.402 13.139 12.361

[Graphical Data Omitted]
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Title Annotation:stock market boom
Author:Haidari, Iqbal
Publication:Economic Review
Date:Mar 1, 1991
Previous Article:Reform in exchange payment regulations.
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