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Saudi-Pak: a growing financial institution.

Saudi-Pak Industrial and Agricultural Investment Company (Pvt.) Limited (Saudi-Pak) is a symbol of fraternal bonds which tie the people of Saudi Arabia and Pakistan. It reflects the depth of economic cooperation between the two countries. Saudi-Pak performs as a catalyst in promoting efficient flow of institutional finance in the industrial sector in Pakistan by offering a broad range of financing facilities to the corporate sector of the country.

The basic objective of Saudi-Pak is to accelerate industrial development in Pakistan. It provides term financing facilities in both local and foreign currency for the medium and large scale projects in the private sector. Its clientele consists of entrepreneurs/companies enjoying high credit ratings. In addition to term-financing, Saudi-Pak provides a wide spectrum of merchant banking services including direct equity investment, underwriting of public issues of shares and issuance of guarantees. Saudi-Pak is also engaged in the business of lease financing. The local currency financing which covers bulk of the operations, are based on Islamic modes of financing.

Saudi-Pak, a joint venture of Kingdom of Saudi Arabia and Islamic Republic of Pakistan has a Paid-up capital of Rs. 1.495 billion which is contributed equally by the governments of two countries. As on December 31, 1993, the equity base of the company amounted to Rs. 2.5 billion, which is on e of the largest amongst the banks and financial institutions in the country. A dynamic and forward-looking institution, Saudi-Pak achieved record performance in all areas of its operations during the year 1993. As a result of accelerated business activity, net profit of the company increased by 83.01 percent from Rs. 174.69 million in 1992 to Rs. 320.07 million in 1993. The company is supported by a solid asset base, which increased from Rs. 3.012 billion on December 31, 1992 to Rs. 5.17 billion on December 31, 1993. The return on average total equity improved from 9.0 per cent in 1992 to 14.89 per cent in 1993. The return on average total assets stood at 6.19 per cent in 1993.

During 1993, Saudi-Pak provided net financial assistance of Rs 754.30 million comprising term-loan financing, equity investment, underwriting, leasing and guarantees. Since its inception Saudi-Pak has provided a total financing of Rs. 2,286.50 million to 109 companies/projects by way of direct equity and term financing and Rs. 871.78 million to 45 companies by way of underwriting and guarantees. Projects financed by Saudi-Pak are geographically located throughout the country and belong to the economic sectors of food, chemicals, cement, sugar, paper, engineering and services.

Saudi-Pak has maintained its growth momentum during the first half of 1994 also. Profit of the Company increased by 23.5 per cent from Rs. 130.44 million in January-June, 1993 to Rs. 161.15 million in January-June, 1994 and assets base to Rs. 8.43 billion on June 30, 1994 from Rs. 5.17 billion on December 31, 1993. During the period January-June, 1994, the company approved total financing of Rs. 719.97 million and disbursed an amount of Rs. 184.21 million against direct equity investments and loans.

Saudi-Pak is now well set to face new challenges of a growing financial market. Guided by its basic objectives and the market imperatives, Saudi-Pak encourages investment proposals falling in key sectors including energy, fertilizer, cement, chemical, pharmaceutical and engineering. The Company, for the successful implementation of its projects, places great emphasis on timely disbursement of funds. To promote Islamic modes of financing, Saudi-Pak would further increase its role direct equity financing and lease financing in the coming years.
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Title Annotation:Saudi-Pak Industrial and Agricultural Investment Company Limited
Author:Zahir, Muhammed Rashid
Publication:Economic Review
Date:Oct 1, 1994
Previous Article:Pakistan and ADB: a fact sheet.
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