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Waiting for the change.

The downward swing of the stock market continued unabated. The index touched the highest on July 2, 1992 at 186.11 since the basis of index was changed by the State Bank of Pakistan. The lowest was at 152.71 on March 21, 1993. Aggregate market value stood at Rs. 216.949 billion on July 2, while it was at Rs. 190.597 billion on March 21. The monthly turnover of shares declined from 85.475 million in January 1993 to 39.622 million in March 1993.

Complete lull prevailed in the market due to political uncertainty. The tussle between the President and the Prime Minister has taken its toll. The investment activity came to a stand still on the rumours that National Assembly might be dissolved any day. Moreover, the feeling that Pakistan would be declared a terrorist state has dampen the investment climate.
 Aggregate
 General Market
Year Index Number Capitalisation
 (Rs. in million)
24.02.93 158.99 196.289
04.03.93 153.71 192.443
11.03.93 152.35 194.486
18.03.93 151.93 189.642
21.03.93 152.74 190.597
01.04.93 149.83 187.384
Source: State Bank of Pakistan


DIVIDEND

Dividend announcements were encouraging. Multinationals like Wyeth Brooke Bond, Philips and Berger Paints declared satisfactory dividend. In the textile sector Shafiq Textile came out with handsome dividend 33% cash and 33% bonus.

Investment

The Government has set up a high level committee of experts to review the overall investment structure regarding policy as well as incentives. The committee will have the following terms of reference.

* Examine the investment policy and its benefits whether they have been evenly distributed;

* Review the structure of the existing investment incentives;

* Examine the flow of investment in different sectors of the economy;

* Identify whether investment is flowing towards productive or non-productive sectors of the economy;

* Identify incentives which need introduction/revision/modification.

It is a welcome step and it is hoped that the committee will objectively evaluate the investment in the light of the deregulation of policy of the government.

Textile Industry

The textile industry is in a state of crisis. Half a million spindles are reportedly in the pipeline after the sanction of loans to the influential owners. The APTMA pointed out that the excess number of spindles installed in the spinning sector is reported to be far excess to the yarn demand and enough for the requirement for the next five years on the basis of 28 per cent projected increase in demand every year. The yarn production is touching 110 to 115 kg. per month against an average export of 33 million kgs. The exports shot up to 61 million kg. the largest ever quantity of yarn exported from the country in a month.

CORPORATE BRIEFS

Fecto Sugar Declares 100pc Right Shares: The Fecto Sugar Mills Limited has proposed to issue Right Shares in the ratio of one share for every one share held (1:1) or 100 per cent, subject to the approval of the Controller of Capital Issues. The company earned a gross profit of Rs. 48.926 million as compared to a loss of Rs. 5.796 million in 1991. It is only due to increase in sales, which registered a substantial rise of 39.40 per cent from Rs. 282.635 million in the period under review to Rs. 202.748 million a year back. The production as well as recovery rate showed an upward trend. The production was up by 8.12 per cent from 29.893 tonnes to 32.321 tonnes during the period ended September 30, 1992. The mills during the year operated for 136 days and average recovery rate was 8.50 per cent as compared to 166 working days with an average recovery rate of 6.82 per cent during the last year.

The board has decided to expand the crushing capacity. To increase its capacity nearly Rs. 302 million are required. The company has already negotiated with the financial institutions such as the PICIC, NIT and Ghemni Leasing Company Limited and they have sanctioned loans worth Rs. 70 million, Rs. 50 million and Rs. 55 million respectively. So far the production results of sugarcane were satisfactory. The quality of cane was healthy and showed higher sucrose. This was possible only because company continued to provide every available incentatives to the cane growers in seeds, fertilizers etc.

Baba Farid Sugar: The Baba Farid Sugar Mills Limited has declared Bonus shares of 12.5 per cent or in ratio of one share for every eight (1:8) shares held for the financial year ended September 30, 1992. The company's Chief Executive, Ghulam Mohammad A. Fecto, at the 14th Annual General Meeting said that the sales of the company were up by just 8 per cent from Rs. 324.039 million to Rs. 350.158 million during the period under review. The sales of the company were badly hit by the non-availability of the sugarcane for the season. The shortage of cane occurred due to less production in the vicinity of mills and situation further aggravated by the new sugar mills which have started production. He added that in the process government allowed import of sugar at a much lower tariff as against the Excise Duty of Rs. 2,150 per ton leviable on local production. Thus next half of the company's financial results were not healthier as it was estimated earlier.

The mills commenced its crushing from November 7, 1991, which ended on April 25, 1992. While operating for 170 days the mills produced nearly 42,285 tonnes of white sugar obtained by crushing 482,060 tonnes of cane, with an average recovery rate of 8.77 per cent. During the previous year, the mills operated for 180 days and crushed nearly 532.218 tonnes of cane, giving a total production of 40,395 tonnes of white sugar with an average recovery rate of 7.60 per cent. The government has increased the minimum support price of sugarcane and fixing it at Rs. 17.50 per 40 kg., which in turn would increase cost of production. The balancing and modernization programme initiated in 1989 has been completed which has improved the overall efficiency of the plant. In view of the rising cost of production, the existing average crushing capacity of 2,500 metric tonnes has become uneconomical and requires to be expanded to 3500 per day.
DIVIDEND ANNOUNCEMENTS
 (%) Bonus Book
Companies Divided (%) Right Closing
Wyeth (Lab.) 32.5 -- 06.04.93
Firsth Sanaullah Modaraba 25 6.25 07.04.93
Glaxo (Lab.) -- 10(i) 09.04.93
Brooke Bond 50 10 15.04.93
Abbot (Lab.) 10 10 16.04.93
Jubilee Spinning -- 15 17.04.93
Philips Electrical 37 10 19.04.93
Berger Paints 25 -- 20.04.93
1st Hajveri Modaraba -- 16 20.04.93
Crescent Sugar -- 20 22.04.93
Shafiq Textile 33 33 22.04.93
Ghandhara Nissan -- 25 29.04.93
Ciba Geigy -- 20 29.04.93
Packages Ltd. 30 -- 13.05.93


SSGC Shows Big Hike in Pretax Profit: Sui Southern Gas Company (SSGC) earned a pretax profit of Rs. 248 million between period July to December 1992, as against Rs. 93 million earned during the corresponding period ending December 1991. This was stated in the half-yearly unaudited accounts of the company for July/Dec. 1992, according to which the operating results of the company with the exception of LPG were satisfactory.

The report said that however, after the issue of half-yearly accounts 1991, the wellhead price ex-Sui field was adjusted downward, the SSGC tariff was also adjusted, as a result of which the profit before tax for the period July/Dec. 1991 stood at Rs. 225 million and profit after tax at Rs. 126 million.

During the period above, the volume of gas sold amounted to 2,067,792 thousand cubic metres (73.394 mmcf) registering an increase of 139.161 thousand cubic metres 7 per cent over the gas sales of 1,928,631 thousand cubic metres (68.445 mmcf) during the similar period in the corresponding year. The average day sale stood 11,238 thousand cubic metres (399 mmcf) during the period under review compared to 19,482 thousand cubic metres (372 mmcf) during the previous year.

Interpak Shaving Products Sales Rise by 18 per cent: The Interpak Shaving Products Limited's sales amounted to Rs. 191.6 million as compared to Rs. 162.8 million in 1991, registering a healthy rise of 18 per cent. The chairman said that the company's struggling against the menace of smuggling. In the rural areas, the people use carbon razors or Ustra's and in Urban areas nearly 30 per cent of the market is flooded with the smuggled razors and blades. He added that the remaining market is shared by Treet and Gillete. The people usually prefer to use foreign made items. The company earned an operating profit of Rs. 7.481 million as against a loss of Rs. 4.381 million last year. Due to financial charges, other expenses and last year's loss brought forward, the accumulated loss worked out to be Rs. 84.248 million. The production during the current year amounted to Rs. 89 million as compared to Rs. 77 million last year.
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Title Annotation:stock market trends in Pakistan
Author:Haidari, Iqbal
Publication:Economic Review
Date:Mar 1, 1993
Words:1550
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