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Unprecedented boom.

Karachi Stock Exchange displayed marked optimism during the month under review. Even the depressing factors like stoppage of foreign aid and law and order situation in Sindh could not cast its shadow on the upward march. The General Index of share prices was at 322.34 on March 13 jumped to 345.14 on April 15 showing a gain of 22-80 points. Aggregate market value of shares showed a net gain of Rs. 4696 million up from Rs. 55.380 billion to Rs. 60.276 billion during the same period. The following table illustrates the point.
 General Aggregate
 Index Market
 Number Capitalisation
13.03.91 322.34 55.580
27.03.91 324.57 56.019
03.04.91 336.47 58.222
10.04.91 341.80 59.354
15.04.91 345.14 60.276


It is widely speculated that there was foreign buying through local agents in the rings in a big way and this would not allow the market to fall below the currently established levels.

The capital gain is exempted upto June 30, 1991 and it is widely believed that further extension will be given in this exemption. Another factor is the virtual exemption of dividend income from income tax.

The Monopoly Control Authority has decided that henceforth only those private limited companies, firms and other undertakings whose total value of assets is not less than Rs. 150 million will be required to convert themselves into public limited companies under the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance 1970.

Similarly, only those individuals shall be required to disinvest their shareholding who hold and control 50 per cent or more shares in public limited companies with assets worth not less than Rs. 150 million.

Previously this limit of total value of assets in such cases was Rs. 50 million. In this respect the authority has published Monopoly Control Authority (Value of Assets) Rules, 1991. These rules shall come into force at once.

The new limit of total value of assets of Rs. 150 million does not change the requirement of registration with the authority of those undertakings whose total value of assets is not less than Rs. 50 million and those individuals who hold or control 50 per cent or more shares in public limited companies with total value of assets of not less than Rs. 50 million.

Such undertakings and individuals shall continue to be liable to registration under the existing provisions of the anti-monopoly law. However, proposal to enhance the limit is under consideration.

According to figures now available for the year ending September 30, 1990 several companies have put up excellent performance particularly companies operating in vegetable ghee, textile and sugar sector. For instance Associated Industries has shown an Earning per share of Rs. 38.70. Fateh and Dewan Textile have also shown Earning per share at Rs. 29.19 and Rs. 28.75 respectively. Sugar mills have also shown good earnings. Bawany, Habib Sugar Mehran and Husein are the top earners. Price Earning Ratios are also quite attractive and for investors they could prove a good buy.

Sugar Mills

During the current year Dewan Sugar a new mill in lower Sindh has achieved a record production of refined sugar of over 81,000 metric tonnes. This is the highest figure among the 49 producing mills all over the country. Among other new sugar mills Pangrio and Sindh Abadgar produced 42,500 and 45,000 metric tonnes of sugar respectively. Among the old sugar mills, Habib Sugar Mill at Nawabshah has achieved the highest production of 66,728 metric tonnes. Meanwhile, the Federal Government has fixed fresh support prices of sugarcane at mill gate for 1991-92 crop. Per 40 Kgs. price for cane in Sindh will be Rs. 17, Punjab Rs. 16.75, NWFP Rs. 16.75 and Balochistan Rs. 17.00. In addition to these prices, the quality premium at the rate of paisa 22 per 40 kg. of cane delivered to the sugar mills for each 0.1 per cent point excess recovery above the bench mark of 8.7 per cent in Sindh and 8.5 per cent in Punjab and NWFP would be paid. Pakistan Sugar Mills Association has demanded immediate stoppage of sugar imports.
TOP EARNINGS PER SHARE
 Earning Price
 Per Market Earning
 Share Rate Ratio
Associated Industries 38.70 76.00 2:1
Fateh Textile 29.19 67.00 2:1
Dewan Textile 28.75 105.75 4:1
Khalid Textile 20.24 62.25 3:1
Fazal Textile 15.33 38.00 3:1
Ittehad Textile 13.58 46.00 3:1
Burewala Textile 13.09 51.50 4:1
Mushtaq Textile 12.69 47.75 4:1
Bawany Sugar 11.13 40.00 4:1
Habib Sugar 10.98 51.00 5:1
Kohinoor Industries 10.13 39.00 4:1
Mehran Sugar 9.98 27.15 3:1
Dawood Cotton 9.93 44.00 4:1
Exide Pakistan 9.71 60.50 6:1
Husein Sugar Mills 9.53 38.00 4:1


Banking in Private Sector

Soon many banks will come on the list of KSE. Many top industrial groups have shown keen interest in setting up banks. As many as 23 applications are being scrutinised. These applications are as under:

- Union International Bank, Schon Bank (Capt. Ather Hussain),

- First Habib Bank Ltd., (Dawood Habib family),

- Army Welfare Trust, First Overseas Bank (Yaqub Ali OBE),

- Metropolitan Bank (Kassim Parekh),

- Progressive Bank Ltd., (Agha Hasan Abedi),

- Republic Bank (S.M. Shafi Azam),

- General Tijarati Bank (General Habibullah),

- Atlas Bank Ltd. (Yusuf Shirazi),

- First Commercial Bank (Ashraf Nawabi),

- J.K. Commercial Bank (Jawed Anwar),

- Continental Bank Ltd. (Idrees Allawala/Himayat Ali Khan),

- The Progressive Bank Ltd., (Mian Sher M. Rafique),

- Prudential Bank Ltd. (Hussain Lawai/Rashidullah Yaqoob),

- Soneri Bank Ltd. (Badruddin Ferasta),

- National Commercial Bank Ltd. (M.R. Khan),

- Trade & Exchange Bank, Franklin Commercial Bank (Aslam Siddiqui/Kamal Shoib),

- Crescent Investment Bank (Mian Rafi and Crescent family Group),

- Trustee Credit Bank, Al-Ameen Bank Ltd. (Aftab Ahmed Khan/Siddiq Dawood) and

- Eastern Bank Ltd.

The committee is expected to compare the tabulations on April 23 and once the selection is made, work on draft recommendations would commence. The members would vet final draft before it is sent to the Government by the end of the month.

After its last session the committee members have made some preliminary projections that at least 4 to 5 applicants would definitely make it to the last round.

If the three investment banks, namely, Crescent, Prudential and Atlas are given the permission to convert into full-fledged commercial banks, at least two to three names additionally are likely to receive favourable recommendations. Among the hot favourites are First Habib and Agha Hasan Abedi's Progressive Bank.

CORPORATE BRIEFS

Packages Limited: The company has received consent from CCI for issue of right shares to the value of Rs. 37.440 million (1:5) at a premium of Rs. 13.43 per share.

Crescent Boards Limited: Company has received consent for issue of right shares to the value of Rs. 35.012 million at premium of Rs. 1.50 per share.

Standard Chartered Mercantile Leasing: with a paid-up capital of Rs. 32.5 million is to issue shares of Rs. 17.5 million. Of the offer, Rs. 14.0 million (80 per cent) will be intended for general public while Rs. 3.5 million (20 per cent) will be reserved for National Investment Trust (NIT).

Kohinoor Spinning Mills: The Board of Directors of the company has announced bonus shares at the rate of 25 per cent for the year ended September 30, 1990. AGM on April 28, book closure from April 27 to May 5.

Ishaq Textile Mills: The directors of the company have declared a cash dividend at the rate of 22.5 per cent for the year ended September 30, 1990. AGM on April 30, book closure from April 26 to May 6.

Husein Industries: The Board of Directors of the company has announced final dividend at the rate of 10 per cent plus right shares in the ratio of 1:5 at a premium of Rs. 5.00 each subject to the approval of CCI. AGM on April 30, book closure from April 25 to May 4.

Private Sector Power

Project in Balochistan

A 24 MW coal fired floating power plant will be built at a cost of 26 million dollars with a foreign investment of 12.5 million to provide electricity to industries in the Winder Industrial Trading Estate beyond Hub Chowki in Balochistan. It is tripartite joint venture among the West German investors contributing 12.5 million dollars, Lasbela Industrial Estate Development Authority, (LIEDA), and local investors represented by Farooq Siddiqui. The project sponsored by LIEDA under self-generating scheme will be accomplished by Balochistan Electric Works Limited, a public limited Pak-German joint venture in power generation.

The power station first of its kind in Pakistan will be floating on a platform in the sea and will use low grade local coal making generation cheaper. It will be completed in 18 months time. The German investors will have three roles in the project namely the equity participation, supply of machinery and the investment. Besides the German contribution of 12.5 million dollars an amount of 13.5 million dollars will be loaned by the IMF.

The present electricity requirement of the Winder Industrial Estate is 32 MW and the KESC is supplying 16 MW. The German investors will run the power plant for 10 years training the local cadre for shouldering the future responsibilities. The power plant to be based on low grade coal will not cause any pollution in the air or in the sea because a special technique will be used to desulphurise the sulphur. Karl Bay GmbH have supplied similar plants to China and other countries.

Power Plant on

Pay-in-Kind Basis

Private textile entrepreneurs propose to establish a power plant at Jamshoro with four units of 210 megawatt each. The plant has been issued letter of support by the government recently. The plant will be set up with Soviet machinery and expertise to be paid back through supply of textile goods produced by the sponsor in their own textile mills. The sponsors belong to the ABS group of textile mill owners. Considered to be a major power plant in the private sector in view of its capacity of a total of 840 megawatts to be produced in four units together, it will be oil-fired.

The power produced by it would be purchased by WAPDA for putting it into the national grid. Because of the direct Soviet assistance, the plant will have no financing problem which is generally being faced by other private sector power projects now in different stages of processing. In view of this fact and also of the sponsor's resources to pay back in kind, it is considered to be one of the fast-tract private power projects to be commissioned sooner than other old projects.

Coal Fired

Thermal Complex

The work on installing 3x50 MW units 1-3 at Lakhra has been started and is scheduled to be completed by May 1993. Under Phase-II of Lakhra coal development project, three more units (4 to 6) of the same capacity will also be installed. Further extensions of bigger size units have also been planned. The coal reserves in Sonda-Thatta areas will also be used for power generation. The scarce indigenous energy resources alone cannot meet the power requirements in the future years which have to be suppplemented by establishing thermal plants on imported coal for which a feasibility study has been submitted by Shawinigan an Integ of Canada in association with EBASCO Overseas Services incorporated of USA.

The proposed capacity of this imported coal fired thermal complex will be 3,600 MW and is proposed to be constructed in 3 phases, each comprising of 2x600 MW units. The work on the first 600 MW is envisaged to be started during the current Plan period. The power complex is planned to be sited at Khalifa Point, located in coastal area of Balochistan, some 30 MM North West of Karachi.

Qaiser Brothers

(Pvt.) Limited

Qaiser Brothers (Pvt.) Ltd., has signed a joint venture agreement with a major South Korean trade conglomerate, Lucky Goldstar Group, to set up a DOP plant near Sheikhupura which will be the first of its kind in Pakistan. The Pakistani firm owns 50 per cent of the equity of the venture while the Korean party will have another 50 per cent including 40 per cent by Lucky Ltd. and 10 per cent by Lucky Goldstar International Corporation. The DOP plant will start production in the second half of 1992 to supply 20,000 metric tonnes of DOP per annum for export as well as for local consumption.

DOP (DI-octyl phthalate) is used for plasticizer in the production of PVC products such as sheets, films, leather, cable. All the quantity of DOP currently being used in domestic PVC products is imported and the demand in the local market is large enough to absorb most of the DOP production. Under the agreement Qaiser-Lucky Petrochemicals will be developed and diversified into such plasticizer as DINP, DOA, TOTM and PVC resin which will also be associated with Lucky Goldstar Group. The joint venture would start production DOP in the second half of 1992 to supply 20,000 metric ton of DOP per annum for export and local market.

Fauji Electric Co. Ltd.

This company has proposed to set up a 350 MW power plant at Port Bin Qasim. It is aimed at bridging the gap between the peak demand and supply of power in Pakistan. It will this contribute to the economic, social and industrial development of the country. The estimated cost of the project excluding duties, taxes, interest during construction and working capital will be in the range of US dollar 320,330 million.

SSGC Plan

The Sui Southern Gas Company, (SSGC) has begun discussions with a fact-finding mission of the Asian Development Bank on the financing of its Rs. 9,900 million expansion programme. The transmission and distribution programme which will be carried out in five years has a foreign currency component of Rs. 3,680 million. The expansion programme to be spread over between 1992-93 to 1995-96 will cover 150 million cubic feet of additional gas. It will enable the SSGC to give about 3 lakh new gas connections in Sindh and Balochistan. The additional gas supplies will be brought from the new gas fields near Khairpur and Qaderabad in Ghotki now being developed by the producers.

Transmission

Power Project

WAPDA has undertaken the construction of a new 500 kv transmission line between Tarbela and Peshawar for transmitting cheaper hydel power from Tarbela to load centres of NWFP and to cope with the mounting demand for electricity. According to a WAPDA press release the 500 kv transmission line will be the second extra high voltage transmission line between Tarbela and Peshawar. A 220 kv Tarbela, Mardan transmission line in already in operation. This first ever vital 500 kv transmission project on the route envisages the construction of 120 km long, 500 kv single circuit transmission line along with the necessary 6500/220/132 kv grid stations at Peshawar. A salient feature on the project is that the planning and designing of the entire transmission line and grid stations has been done by WAPDA's own engineers.

Hydro-Electric Plant

There is proposal under the consideration of Government to install a hydro electric plant at Chashma Hydro Power Project. In a written answer, the National Assembly was informed in response to a question by Fazal Karim Kundi that the proposed project would initially have a total installed capacity of 135,000 kv which would be implemented in a period of 51 months after the award of contract, which is expected during financial year 1991-92.

The Assembly was further informed that subject to results of hydrological studies and tests, further additions to project may be undertaken in unit sizes of 22,500 kw each, subject to maximum project size of 270,000 kw i.e. 12 units of 22,500 kw each.

Hub Industrial Estate

150 industrial units at Hub have started production while government had issued NOC to 400 industries. Construction work on most of the remaining industries is under way. Hub had been declared tax free industrial zone for five years but in 1988, the facility was withdrawn, yet the Lasbela Industrial State Development Authority, issued NOC to 400 units. About 30,000 workers are engaged in day and night shifts. The government has fixed 75 per cent employment in local industries by the locals but the industrialists are not observing this quota strictly, which in the past created law and order situation, yet the locals are peaceful. Work on Industrialisation is in full swing here. Recently the provincial government has selected Windur, located on RCD highway and 50 kilometers from Karachi, for industrial development.

Windur has been declared tax free industrial zone for eight years. Work on industrial installation has begun at Windur. So far NOCs have been issued to 20 industries at Windur. Two started production. Balochistan government has approved private power h ouse at Windur to be installed by the local industrialists and with foreign foreign aids, to provide power to Windur industries. Earlier the government had already approved installation of a 1200 mgw.power house in private sector at Hub river, work on which would start soon. Balochistan will have an industrial revolution with Hub industrial zone, Windur industrial zone and Windur power project, and people will be provided with job locally.

New Sugar Mills

Two new NOCs have been issued for new sugar mills to set up at Tando Mohammad Khan and Choohar Jamali at Thatta District. It is reported that 18 more applications have been filed by new parties to obtain fresh sanctions for the establishment of new sugar mills in Sindh. These applications are reported to have been filed by influential people and they are pressing the Provincial Government to issue NOCs. The plea of the sponsors is that since two new mills have been sanctioned in the recent past then why not their mills? It is reported that the Government may be compelled to issue some NOCs to new parties. It will be recalled that about half a dozen sugar mills sanctioned by the previous government had been cancelled by the present Government. In place of the cancelled sugar mills, six new mills had been sanctioned. It had been done before the notification of February last which imported ban on sugar industry expansion.

Sulphuric Acid

Production

A private Pakistani engineering company has successfully established and commissioned the first ever turnkey project of 50 metric tonnes per day of Sulphuric Acid production near Sheikhupura.

It is for the first time that a project had ever been planned, designed, engineered in detail, fabricated, installed and commissioned by a Pakistani engineering firm to manufacture the best quality of sulphuric acid of all grades, using local materials for construction.

Pedcon Engineering (Private) Limited is an integrated engineering company established to provide technical and engineering services to entrepreneurs and industrialists in public and private sectors who are involved in the development of new projects identification, feasibility studies, planning and design through detailed engineering, instrumentation and electrification design and installation to plant commissioning and trial performance runs.
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Title Annotation:Karachi Stock Exchange trading
Publication:Economic Review
Date:Apr 1, 1991
Words:3232
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