Thursday, April 1, 2010

Pakistani Beer Company in KSE-100 Index

Murree Brewery Company (KAR-MURE), a publicly listed beer maker founded in 1861, has now been added to the Karachi Stock Exchange's KSE-100 index, according to media reports from Pakistan's financial capital Karachi. The Murree Brewery is one of the oldest public companies of the sub-continent. Its shares were traded on the Calcutta Stock Exchange as early as 1902, and is now the oldest continuing industrial enterprise of Pakistan, and among the top 25 performing public companies listed on the Karachi Stock Exchange.

The Karachi Stock Exchange KSE100 Index includes the top company from each of the 34 sectors on the Karachi Stock Exchange, in terms of market capitalization. The rest of the companies are picked on market cap ranking, without any consideration for the sector to make a sample of 100 common stocks with base value 1,000. As of Feb 26, 2010, the new index, with the inclusion of 11 new companies, makes up 91.11 percent of the total market capitalization of Karachi Stock Exchange.

Ten other companies, namely Security Papers Ltd, Pakistan Cables, TRG Pakistan, PEL (Pak Elektron Ltd.), Grays of Cambridge, Shifa International, PACE Pakistan, NetSol Technologies, Pakistan Telephone Cables and Clariant Pakistan have also been made a part of the widely watched shares Index, as of April 1, 2010.

The new entrants will replace First Habib Modaraba, Sigma Leasing, Fazal Textile, Nakshbandi Industries, Bannu Woolen Mills, Habib Sugar, Agriauto, Wazir Ali Industries, JS Global Capital, JS Bank and Silkbank Ltd.

After total prohibition imposed in the late 1970s under Zulfikar Ali Bhutto, and throughout 1980s under General Zia ul Haq, there has been a gradual relaxation that has allowed Murree Brewery to bring back Murree beer, vodka, gin and whisky in Pakistan. The Murree products are now available in legal liquor stores that operate openly in Karachi and other major cities. Although consumption of alcohol in public is banned, it is becoming increasingly available in private clubs and expensive restaurants. The company produces 660,000 gallons of beer every year and the 110,000 gallons of whisky that is stored in its cellars. A division of the company also produces and markets fruit juices in Pakistan. Its total annual sales last year were about Rs. 2.3 billion ($28 million). Murree's competitors include Quetta Distillery, as well as smuggled alcoholic beverages from the rest of the world.

In 2007, the Daily Telegraph reported that "the Islamic republic of Pakistan has won the distinction of producing the Muslim world's first 20-year-old malt whisky".

During the strict prohibition period, Murree Beer was produced in Austria for European markets and was available in various Pakistani and Indian restaurants in London, an enterprise which has since ceased since 2004.

The company is not allowed to export its alcohol products. However, Murree beer company is working on making it available in Indian and Pakistani restaurants in Britain under a promotion "Have a Murree With Your Curry" in collaboration with a licensee.

While Murree Brewery surprises some people and raises the eyebrows of others, this company is not alone in defying the generally known conventions of the Islamic Republic. A new class of entrepreneurs has emerged in Pakistan during the last decade who, in small but significant ways, have challenged the religious orthodoxy. They present a sharp contrast to the rising wave of Islamic radicalism that the U.S. and others view as an existential threat to Pakistan. And with many well-traveled Pakistanis importing ideas from abroad, they are contributing to Pakistan's 21st-century search for itself.

The new entrepreneurial outfits range from fashion apparel and cosmetics to upscale restaurants, personal fitness clubs and places offering men's hair transplants.

While most of the new entrepreneurs cater to Pakistan's young, urban consumers, there are a few who have found highly unusual niches for export markets. For example, Integrated Dynamics of Karachi designs, builds and exports unmanned aerial vehicles used by the US for border patrol duty on its southern border with Mexico. Recently highlighted by the New York Times, AQTH offers a more shocking example of a small, entrepreneurial Karachi company that caters to the $3 billion a year bondage and fetish industry in the United States and Europe. AQTH's mom-and-pop-style garment business earns more than $1 million a year manufacturing 2,000 fetish and bondage products, including the Mistress Flogger, and exporting them to the United States and Europe.

Here's a CNN report on Murree Brewery:

Related Links:

KSE Outperforms BSE, BRIC Markets

Pakistan's Brewery Thrives in Islamic State

Life Goes On in Pakistan

Market Cap-GDP Ratios of Countries

Media and Publishing Boom in Pakistan

Pakistani Entrepreneurs Survive Dowturn

Merry Murree

KSE-100 Index Charts By


Riaz Haq said...

Murree Brewery and Distillery are located in the resort town of Murree near Islamabad. Here's a recent report about Murree written a British writer Chris Cork:

Leaving aside that Murree is a development disaster with unregulated buildings going up all over the place that another earthquake would mostly flatten, Murree is up and running as a domestic tourist option. A day-trip turned into a vertical-slice view of the middle class at play – and there were a lot of them and they were having a merry old time. Perhaps the first thing that struck my friend and I was just how relaxed Murree was – it may have been bustling and crowded, but there was no sense of tension. The streets were notably clean and the prominent rubbish bins were used by people who would normally throw their litter wherever they liked. There was a sense of civic pride about the place that is certainly not present in many of the places I visit and this was a town that was, as they say, comfy in its own skin.

Wandering around the knick-knack and gift shops there was an odd familiarity. I was reminded of English seaside towns, towns like Blackpool and Morecambe that attract day trippers as does Murree, and having shops that catered to much the same type of clientele – visitors who wanted a souvenir of their day out, a piece of memorabilia that they would point to at some future date and smile and say…’aaaah yes…do you remember when we bought that?’ And hats. There is something about day-tourism that persuades seemingly normal people that what they really want to do is buy a hat that they would otherwise never be seen dead in, and then walk around wearing it all day whilst their friends, similarly hatted, took pictures of them on their mobile phones. Silly bags are also prominent, but it was the hats that stood out.

That sense of Englishness was heightened by a visit to one of the three churches, all dating from colonial times and well-preserved. Inside, stained glass windows, polished brass plaques memorialising ‘fallen’ (as in dead – I never understood why the euphemism ‘fallen’ replaced ‘dead’; after all it is not as if they have just taken a bit of a tumble and are about to get up again is it?) soldiers and the poignant memorials to children who died in early infancy. Was there any tension here, I enquired of the man who let us into the church? No, he said. This is a peaceful place, tolerant; there are about thirty Christian families here and no trouble or tension. Sectarian clashes? Not that I have heard of, he said.

After drinking the worst cup of coffee I have ever paid good money for we walked out of town, following the gentle rise and fall of the contours and taking shelter at a viewpoint during a rain shower. The soft mist that covered the middle distance rendered the landscape almost as a water-colour painting. Further on, a house for sale. A colonial dak bungalow in some dilapidation but with obvious possibilities if one was prepared to spend the money on it. On a whim, phoned the number on the gate and enquired the price – two crores for two canals – and spent a pleasant half-hour fantasising about having a place up in the hills to live out my retirement.

We came back to Islamabad on the brand-new road that was fast and safe and reflected on the day. Both of us felt refreshed by Murree, almost invigorated. It was such a relief to leave behind the eternal anxieties of life below 7,000 feet and catch a dose of the Murree merriness. Warmly recommended to young and old alike and please – do remember to use the rubbish bins.

Riaz Haq said...

Improvement in macro imbalances: KSE-100 records 8% return in 1Q 2010, says Daily Times:

By Tanveer Ahmed

KARACHI: Robust foreign investment and gradual improvement in macro imbalances propelled the Karachi stock market to record eight percent return in the first quarter of 2010.
Following dismal performance in the fourth quarter of 2009, Pakistan’s benchmark equity index posted 8 percent return (8 percent in dollar) during the first quarter (January to March 2010) despite the political and security issues, whose intensity increased in recent weeks especially the deadlock on 18th Amendment.
“This is the second highest quarterly gain during the last one year, thanks to robust foreign activity and gradual improvement in macro imbalances,” Topline Securities analyst Farhan Seth stated.
Because of strong performance of equities, overall market capitalisation reached $34 billion whereas average volume during the first quarter of the current year stood at $76 million.
In March alone the equity prices rallied 5 percent led by $100 million net buying by foreign investors, after $32 million net inflow in the first two months of this year that inched up the index by 3 percent.
The comparison of the first quarter returns of the last 10 years show that, the last quarter gains are lower than the average gains. Interestingly, during the last decade, market average in the first quarter in any current year’s return was 14 percent.
The lower return this time is mainly due to exceptional gains of 60 percent (51 percent in dollar terms) in 2009 coupled with severe liquidity crunch being faced by local investors. Only local mutual funds’ net selling was at $54 million until March 30 due to continuous redemption pressure.
The sector-wise performance of the capital market indicates that fertilizer companies performed impressively due to robust earnings in the last quarter of 2009 and handsome payouts. FFBL was the star performer with 30 percent return, outperforming the index by 22 percent followed by Engro with 21 percent return while FFC outperformed the index by 2 percent.
On the other hand, OMCs (PSO and APL) and refineries’ (ATRL and NRL) remained laggards due to growing circular debt and lower refinery margins. Subdued refinery margins and lower capacity utilisation haunted refinery earnings, whereas despite better earnings circular debt remained the major issue for OMCs’. ATRL posted negative returns of 16 percent while NRL posted nominal 2 percent return where as PSO and APL posted 4 percent and 5 percent, respectively.
OGDC, the largest state-owned company with capitalisation of $6.3 billion, posted 17 percent return mainly led by huge foreign buying. Out of $132 million net buying so far in the first quarter of 2010, 30-40 percent is parked in OGDC, the analyst noted.

Riaz Haq said...

Here's a Bloomberg report about Pakistan's stocks being cheapest in Asia, and poised to rise by 23% by Dec this year:

" April 9 (Bloomberg) -- Pakistan’s stocks, the cheapest in Asia, may advance by 23 percent in the next eight months, buoyed by overseas funds and improved company earnings, according to National Investment Trust Ltd.

“All the fundamentals indicate that the market will pare most of its losses of the past two years” and reach 13,000 by end-December, Manzoor Ahmed, who manages the equivalent of $857 million as head of asset management at state-owned National Investment, Pakistan’s largest equity fund, said in an interview yesterday. “The economy is in a good recovery phase.”

Pakistan’s benchmark Karachi Stock Exchange 100 Index trades at 8.75 times future earnings, the lowest in Asia, according to Bloomberg data. A Taliban guerilla offensive has killed hundreds in a nation that’s been ruled by the army for half of its existence since 1947, when it gained independence.

The KSE100 rose 0.5 percent to 10,589.26 as of 12:13 p.m. in Karachi, from yesterday’s close of 10,533.57. Still, its 41 percent lower than its record in April 2008.

Oil companies, power generators and lenders may lead gains in Pakistan’s stocks this year, said Ahmed, without naming any.

The KSE100 index sank as much as 69 percent from its peak after the Karachi Stock Exchange restricted trading for four months from August 2008 to prop share prices up.

The gauge has climbed 13 percent this year, extending last year’s 60 percent advance as overseas investors bought more equities in South Asia’s second-largest economy. Gross domestic product may grow 3.4 percent in the financial year ending June 30, after a 2 percent gain in the previous year, according to the Finance Ministry.

Inflation, Politics

Stock gains may be limited if accelerating inflation prompts the central bank to raise borrowing costs, while a struggle between the nation’s top politicians, President Asif Ali Zardari and opposition leader Nawaz Sharif, a former prime minister, may limit the government’s ability to implement policies aimed at buoying the economy, Ahmed said.

Foreign investors bought net $176.6 million of Pakistan stocks between Jan. 1 and April 8, after selling a net $237.4 million in the same period last year, according to stock exchange’s National Clearing Company of Pakistan Ltd.

The KSE100 Index plunged 58 percent in 2008, its first annual decline since 2001. Pakistan needs to expand at an average 6 percent pace over the next five years to cut poverty, according to the government."

Riaz Haq said...

In spite of all the bad news that the media love to project, KSE has risen about 13% in dollar terms versus 6.8% increase in BSE so far in 2010.

Riaz Haq said...

Here's a London trader Manraj Singh talking about Pakistan's KSE stocks potential:

Taliban and credit crunch or not, I expect to uncover some absolute bargain investments in this country. Three Pakistani companies that I have had my eye on have shares that trade in London. I think that they are worth a closer look.

Two long-term plays on Pakistan’s turnaround

United Bank(ticker:UBLS) is one of Pakistan’s top commercial banks. It focuses on servicing the corporate sector and has more than 1100 branches across the country. It has the big advantage of being backed by the colossally rich royal family of Abu Dhabi, the Al-Nahayans. The bank’s chairman, Shaikh Nahayan Mabarak Al Nahayan, is also the United Arab Emirates Minister of Higher Education and Scientific Research. So there doesn’t seem much chance of United Bank running into funding problems even if credit conditions in Pakistan stay tight.

Then there is MCB or Muslim Commercial Bank(ticker: MCBS). This is one of Pakistan’s biggest banks. It focuses on retail customers and has an impressive network of over a thousand branches and some 4 million customers. That makes it a good proxy for the long-term growth of the country’s middle class.

MCB is a highly professional organisation and it has attracted a big international shareholder base. Its biggest shareholder is the Malayan Banking group, which owns a 20% stake. And the Templeton emerging markets funds headed by investment bigwig Mark Mobius are also major shareholders.

Neither of these banks is dirt cheap right now. MCB’s share price has more than doubled since February and United Bank is up by some 80% over that period. They now trade at about eight times earnings. Not expensive, but not cheap either. But they are big, liquid companies and they will be among the first to benefit when international investors start looking at Pakistan seriously again.

Major banks are a good proxy for the performance of emerging markets. So as longer-term investments over the next 3-5 years, these two could pay-off massively.

And one punt for the brave…

On a completely different note is Lucky Cement(ticker:LKCS). Thisis Pakistan’s biggest cement producer. It is also a major exporter to countries in the surrounding region. It ships cement to neighbouring Afghanistan and India as well as to Ceylon and the Middle East. The region is still seeing strong economic growth and that has helped this company.

Lucky Cement has delivered impressive financial results . Despite the credit crisis, political upheaval and Taliban uprisings, profits have more than doubled this year. Its share price has risen by 148% since the start of the year. But it still trades at a reasonable five times earnings. It’s an interesting company, but not without risk. Its major cement production plant is located in the volatile North West Frontier Province where the Pakistani Taliban is active. Appropriately, its shares in Karachi trade under the ticker symbol LUCK. Here in London, its GDRs trade under the less ominous ticker symbol LKCS.

There’s more work to be done and I have other candidates I’m looking at. But I believe Pakistan will be an outstanding investment opportunity in the next few years. The time to get in is when investors fear to go there. That’s now.

I’ll get back to you when I have decided the best way to profit from Pakistan’s undervalued markets.

Till then, good investing.

Manraaj Singh
For The Right Side

Riaz Haq said...

Here's an excerpt from Pakistan's consumer electronics market report:

Pakistan’s consumer electronics market, defined as the addressable market for computing devices, mobile handsets and AV products, is projected to be worth around US$1.6bn in 2010. Underlying demand will grow at a CAGR of about 7%, but spending will be restrained by a sizable grey market of smuggled or illegally assembled products.
The market’s considerable potential is currently depressed by a large grey market, poor IP protection, an unstable economic and security situation and weak distribution channels. Growth will be driven, however, by improved ICT infrastructure, and more credit availability. Reform of often high national and provincial taxes and tariffs on products ranging from computers to prepaid mobile cards would also boost the market.
Computer Computers accounted for around 18% of Pakistan’s consumer electronics spending in 2009. BMI forecasts Pakistan’s domestic market computer sales (including notebooks and accessories) of US$283mn in 2010, up from US$264mn in 2009. Computer hardware CAGR for the 2010- 2014 period will be around 7%. The abolition in September 2009 of a minimum sales tax on imported computers should boost the market.
AV AV devices accounted for around 40% of Pakistan’s consumer electronics spending in 2008. Pakistan’s domestic AV device market is projected at US$632mn in 2010. The market is expected to grow at a CAGR of 11% between 2010-2014, to a value of US$946mn in 2014. TV sets remain the core product in this category, but the growing availability of smuggled colour televisions is a market inhibitor.
Mobile Handsets Pakistan’s market handset sales are expected to grow at a CAGR of 1% to 18.8mn units in 2014, as mobile subscriber penetration reaches 91%. Revenue growth will be slower due to lower average selling prices (ASPs) of mobile handsets, with most handsets sold at a under US$40 price-point. Another issue is a declining growth rate of mobile subscriber penetration, which is now above 60%.

Riaz Haq said...

Pakistan Attractive as Growth Outweighs Violence, Atlas tells Bloomberg:

---“I really don’t spend any time worrying about law and order,” said Muhammad Abdul Samad, 40, who oversees $77 million in Pakistani stocks and bonds as chief investment officer at Atlas Asset in Karachi. “If you want to make returns, you have to look at the positives: we have a huge market of 180 million people and the economy is still growing.”

Gains in National Refinery Ltd. (NRL), the second-biggest oil processor, and Attock Petroleum Ltd. (APL), a fuel retailer, boosted Atlas’s top fund in the year ended June, Samad said. For the fiscal year starting July, it’s seeking investments in banks, oil and gas, and fertilizer industries, he said.

Pakistan’s benchmark stock index, which trades at 6.4 times estimated earnings, the lowest in Asia, has fallen 9 percent since the end of June as escalating violence hurt business confidence. Prime Minister Yousuf Raza Gilani’s government aims to boost economic growth to 4.2 percent in the year to June 30, 2012, from 2.4 percent in the previous 12 months.
“Selling from foreign portfolio investors is affecting the local market,” Samad said.

Last year, global funds bought $344 million worth of Pakistani stocks compared with net sales of $65 million, according to central bank data. More than 35,000 Pakistanis have been killed in terrorist attacks since 2006 as Taliban militants retaliate against military offensives in the northwest, according to the government.

Samad’s 650 million rupee ($7.5 million) Atlas Stock Market Fund outperformed all Pakistan’s 30 equity funds, according to Invest Capital Markets Ltd. The fund returned 40 percent in the 12 months ended June 30 and beat the 29 percent return of the benchmark Karachi Stock Exchange 100 Index.

His top five holdings as of June 30 were Nishat Mills Ltd., MCB Bank Ltd., Pakistan Oilfields Ltd., United Bank Ltd. and Allied Bank Ltd.

“Banks are going to post attractive earnings because if interest rates come down, they will lend more to the private sector and if they don’t, they will invest in high-yielding government securities,” said Samad, adding that the three banks are among his top picks this fiscal year. “Banks are in a comfortable position either way.”

Pakistan’s central bank unexpectedly cut the benchmark interest rate to 13.5 percent on July 30, after holding it at 14 percent, one of the world’s highest, for four straight reviews.

In the oil and gas sector, Samad likes Pakistan Oilfields, Pakistan Petroleum Ltd., and Attock Petroleum. Pakistan, which imports 80 percent of its fuel needs, is increasing production to reduce reliance on shipments from overseas. He also favors Fauji Fertilizer Ltd., the biggest urea maker, and Fauji Fertilizer Bin Qasim Ltd. (FFBL), a fertilizer producer.
“Active fund management, timely investment and divestment, as well as the performance of some stocks like Attock Petroleum were main reasons for Atlas’s outperformance,” said Mazhar Sabir, an analyst at Invest Capital Markets in Karachi.

Samad said Atlas may introduce a government bond fund this year targeting investments of three to five years and is considering a dividend-yield equity fund and a sector-specific stock fund next year.

“In the short run, law and order problems definitely hurt investors,” Samad said. “But in the long run, there’s no impact. And we’re here for the long run.”

Riaz Haq said...

Pakistan to begin exporting beer, according to media reports:

An official in the Ministry of Commerce in Islamabad said a ruling this month by its Economic Committee on Trade would allow Pakistan to export beer and spirits from next year.

"India would be the largest market for our alcoholic products," the official said.

"It would be exported through non-Muslim enterprises to non-Muslim countries." The change in law, which requires final approval by the prime minister, was welcomed yesterday by Sabih-ur-Rehman, a retired army major who runs Murree, the Pakistan brewery, in Rawalpindi. It is licensed to produce beer and spirits for consumption by foreigners and Pakistani minorities, including Christians and Hindus.

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"The sky is the limit. If we get the permission we plan to distribute everywhere," he said.

Alcohol exports were banned by Pakistan in 1977 by then prime minister Zulfikar Ali Bhutto, the father of Benazir Bhutto, in a move to favour Islamist groups. "Pakistan is known for a lot of bad things, but it is time for us to be known for some good things too, like our beer," said Isphanyar Bhandara, whose family owns the brewery. It was founded in 1860 to supply beer to the British Army, and his Zoroastrian family has owned it for more than 60 years. Under Pakistani law, drinking alcohol is illegal for Muslims, who make up 97 per cent of the country's 173 million people.

Despite the lurch towards fundamentalist strands of Islam in recent years, Pakistanis are consuming more and more alcohol.

"Demand is definitely increasing," said Major Sabih-ur-Rehman, who added that Murree had trebled its beer production since 1995, all of which is consumed domestically.

An estimated 10 million Pakistanis drink regularly and they include many political and military leaders such as the former president, Pervez Musharraf, who discreetly quaffed whisky and wine at private homes, weddings and parties. Mr Bhandara said: "Running a brewery here requires a lot of courage and a big heart. We are living in perilous times."

The brewery is next to the headquarters of the armed forces, which has helped to guarantee its security. "The best bars in the world are in the houses of Islamabad," said Major Rehman, who claimed his office at the brewery was the only place in Pakistan to serve draught lager.

For Muslims, such drinking is technically illegal, although in practice no one has been lashed for drinking since the 1980s, under the regime of General Zia.

"It's like ordering a pizza," an Islamabad resident said. "You pick up the phone and in 15 minutes the bootlegger is at your front door."

Riaz Haq said...

Here's a BR report on changes to KSE-30 index:

The Karachi Stock Exchange has carried out the exercise of re-composition of KSE-30 Index for the review period from January 1 to June 30.

The re-composition has been carried out on the basis of the pre-requisites/criteria of selection of companies and as a result thereof, three companies would be affected due to re-composition, a KSE notice issued here on Wednesday said.

The three incoming companies are Fatima Fertilizer Company Limited, Engro Foods Limited and Jahangir Siddiqui and Company while the three outgoing companies are ICI Pakistan Limited, Lotte Pakistan PTA Limited and Nestle Pakistan Limited.

The recomposed KSE-30 Index, based on the prices of June 30, will be implemented with effect from August 15.

After re-composition, the KSE-30 Index companies include Fauji Fertilizer Company Limited, Oil and Gas Development Company Limited, Pakistan Oilfields Limited, MCB Bank Limited, Pakistan Petroleum Limited, Engro Corporation Limited, National Bank of Pakistan, Lucky Cement Limited, Pakistan State Oil Company Limited, The Hub Power Company Limited, Fauji Fertilizer Bin Qasim Limited, DG Khan Cement Company Limited, Attock Refinery Limited, United Bank Limited, Nishat Mills Limited, Fatima Fertilizer Company Limited, Engro Foods Limited, Arif Habib Corporation Limited, Habib Bank Limited, Bank Al Falah Limited, Bank Al Habib Limited, Attock Petroleum Limited, National Refinery Limited, Jahangir Siddiqui and Company Limited, Pakistan Telecommunication Company Limited, Unilever Pakistan Limited, Kot Addu Power Company Limited, Millat Tractors Limited, Adamjee Insurance Company Limited and Dawood Hercules Corporation Limited.

Riaz Haq said...

Here's a Reuters' story on underground parties in Pakistan:

Women in short skirts and men with gelled hair bump and grind on a dance floor as a disc jockey pumps up the volume. The air is thick with illicit smoke and shots of hard liquor are being passed around. Couples cuddle and kiss in a lounge.

This is not Saturday night at a club in New York, London or Paris. It is the secret side of Pakistan, a Muslim nation often described in the West as a land of bearded, Islamic hardmen and repressed, veiled women.

Pakistan was created out of Muslim-majority areas in colonial India 65 years ago, and for decades portrayed itself as a progressive Islamic nation. Starting in the 1980s, however, it has been drifting towards a more conservative interpretation of Islam that has reshaped the political landscape, fuelled militancy and cowed champions of tolerance into silence.

But the country remains home to a large wealthy and Westernized elite that, in private, lives very differently.

Every weekend, fashion designers, photographers, medical students and businessmen gather at dozens of parties in Islamabad, Karachi and Lahore to push social boundaries in discreet surroundings that would horrify, and enrage, advocates of the stricter brand of Islam.

"This is just epic," said Numair Shahzada, bobbing his head to the beat at a party in a farmhouse outside Islamabad as fitness instructors moonlighting as bouncers looked on. "The light and smoke show is phenomenal."

Young men and women mix freely, dancing, talking or drinking. Some curl up together in quiet areas.

Although alcohol is prohibited in the country, many have brought their own liquor. Whisky is carried in paper bags and vodka is disguised in water bottles arranged along the dance floor.

The party-goers form only a tiny minority of the country's 180 million people, but overall, Pakistan is not repressive. Women can drive, are enrolled in universities and have played prominent roles in politics. Unmarried men and women can interact without risking the wrath of religious police.

People from its most populous province, Punjab, are renowned for their exuberance.

But a conservative form of Islam is chipping away at the tolerance.

A few hours drive from Islamabad's party circuit, parts of remote tribal regions have fallen under the sway of hardline Taliban militants, who dream of toppling the U.S.-backed government and creating a society where revelers would face flogging, or worse....

Riaz Haq said...

Here's an Express Tribune story about Bruce Willis' and Demi Moore's daughter caught drinking Murree beer from Pakistan:

RAWALPINDI: What have Demi Moore, Bruce Willis, underage drinking and Pakistan’s only beer maker got in common? It was the arrest of the Hollywood stars’ daughter in New York with a can of Murree Brewery’s beer last June that propelled the company out of obscurity and into the spotlight.

Inundated with emails asking about its beer, Murree Brewery seized on the free publicity to launch expansion plans outside.

Five months since the arrest, the 150-year-old company says it has lined up distributors that could see its flagship beer arrive on liquor store shelves in the United States and Dubai as early as the first quarter of next year.

“Demi Moore and Bruce Willis’ daughter gave us multi-million dollars worth of publicity by default. We plan to go to the United States and make a queue to hug both the daughter and the mother,” Sabih ur Rehman, special assistant to the chief executive, joked with Reuters.

Murree Brewery, established in 1860 by British colonial rulers to supply beer to their troops, is desperately looking for business overseas to hedge against its uncertain domestic market.

Prohibition was imposed in Pakistan in 1977, and non-Muslims and foreigners must obtain a government permit to purchase alcohol at designated retailers, mainly upscale hotels.

It also produces a line of juices and non-alcoholic drinks, but is prohibited from advertising its beer, whisky, gin and other liquor products.

Relying on word of mouth and an influx of thirsty diplomats and foreign investors, annual alcohol sales have grown an average of 20 percent over the past five years, reaching $26.8 million in the 2012 financial year.

The company’s stock is up 175 percent so far this year, trading at 160 rupees on November 13, far outpacing the 42 percent rise in the Karachi Stock Exchange benchmark 100-share index.

Despite its strong sales, the company’s net profit after taxes rose a mere 1 percent year-on-year to Rs525 million for the year ended June 30, due to an increase in alcohol taxes and rising labour costs....

Riaz Haq said...

Here's an ET report on Pak beer company profits:

Murree Brewery, Pakistan’s most prominent manufacturer of alcoholic products, has announced its earnings results for the quarter ended March 31, 2013 (3QFY13) and the nine months of the ongoing fiscal year (9MFY13).

The company recorded a profit of Rs175.94 million for the quarter, up an impressive 18% year-on-year (YoY). Its 9MFY13 profit, meanwhile, has registered a staggering 63% increase over the same period of the preceding year. The company has decided not to pay out any dividends with the result.

The company’s stock hit its upper circuit breaker in trading on Wednesday, after the results were made public.

Murree Brewery has the distinction of being one of the oldest public companies of the subcontinent. Its shares were traded on the Calcutta Stock Exchange as early as 1902, and it is now the oldest continuing industrial enterprise in Pakistan. It ranks among the top 25 performing public listed companies at the Karachi Stock Exchange, according to some accounts.

The company does not advertise its products, and is legally prohibited from exporting them. Nonetheless, it is valuable contributor to the economy, having paid nearly Rs314 million in taxes on profits alone so far this fiscal year, apart from the duties and taxes levied on the sale of its products. That figure is 74% higher than the same period of last year.

And while Pakistan forbids the consumption of alcohol by the Muslim-majority population, the company has recorded an impressive 20% increase in its topline so far this year, as compared to the same period of last year, while seeing gross profits grow 37% in 9MFY13 over the previous year. Higher ‘administrative and marketing’ expenses (up 14%) may point to increased marketing activity, ceteris paribus, which would explain the higher profits.

The company’s stock has been doing quite well. It offers investors a one-year return of 297.83%, with stock prices surging from Rs75.68 on April 24, 2012, to close at Rs293.19 on April 24, 2013.

Riaz Haq said...

Here's a Daily Times report on Karachi stock market rally:

KARACHI: The Karachi stock market crossed 18,900 points level on the last trading day of the week Friday as earnings frenzy continued to encourage investors to go for buying in oil, fertilizer and cement sectors.

The Karachi Stock Exchange (KSE) 100-share index gained 32.10 points or 0.17 percent to close at 18,917.71 points as compared to 18,885.61 points of the previous session. The KSE 30-share index was up by 10.81 points to close at 14,584.18 points as compared with 14,573.37 points.

“Mixed activity was seen at the market with corporate results season almost coming to an end,” said Topline Sec dealer Samar Iqbal. “Mixed March quarter results were announced today.”

Once again TRG came in the limelight as it closed at its upper cap with 27.5 million shares, she said and added that Engro Corporation and Foods saw some profit-taking ahead of the weekend.

The market turnover went down by 3.53 percent and traded 206.02 million shares as against 213.57 million shares of the previous session. The overall market capitalisation rose 0.34 percent and traded Rs 4.649 trillion as against Rs 4.633 trillion. Gainers outnumbered losers 204 to 146, while 17 stocks were unchanged.

“Stocks closed higher led by second-tier stocks on strong valuations,” said Arif Habib Corporation Director Ahsan Mehanti. “Index remained in a narrow range amid concerns over security unrest in the city, economic uncertainty and rupee fall despite recovery in global commodities and record quarter-end earnings announcements in oil, fertilizer, textile and cement stocks.”

The KMI 30-share index gained 36.24 points to close at 32,930.01 points from its opening at 32,893.77 points. The KSE all-share index closed with a gain of 48.06 points to 13,455.50 points as compared to 13,407.44 points of the previous session.

“The market closed in the green zone with intraday gains clipped by selling pressure in Engro Chemicals and Pakistan Petroleum,” said JS Research analyst Ovais Ahsan. “The banking sector gained led by MCB Bank and UBL as the sector continued to limp out of a long spell of underperformance.”

Adamjee Insurance corrected overbought momentum after a weeklong rally.

“Bulls reined the final session of the week as index came close to 19,000 points level during intraday trade,” said Habib Metropolitan Finance Corporation Salman Vidhani. “Selling pressure in Engro dampened overall sentiment as some stocks also registered a negative close.”

TRG Pakistan Ltd was the volume leader in the share market with 27.54 million shares as it closed at Rs 11.30 after opening at Rs 10.30, gaining Re 1. Lotte Chemical traded 16.43 million shares as it closed at Rs 7.54 from its opening at Rs 7.35, rising 19 paisas. Maple Leaf Cement traded 11.81 million shares and closed at Rs 18.95 as compared to its opening at Rs 19.36, shedding 41 paisas. Pervaiz Ahmad traded 11.50 million shares as it closed at Rs 3.29 as against its opening at Rs 2.57, increasing 72 paisas.\04\27\story_27-4-2013_pg5_17

Riaz Haq said...

Here's a NY Times on soaring stock market in Karachi, Pakistan:

If the best time to buy, as the old business adage says, is when there is blood on the streets, then Pakistan’s commercial capital, Karachi, offers the ideal investment opportunity.

For more than a decade, the sprawling seaport megalopolis of about 20 million people has been racked by political, militant and criminal violence that has taken thousands of lives. Yet, over the same period, the city stock market, which is also Pakistan’s main exchange, has posted spectacular results.

Over the past 12 months alone, the Karachi Stock Exchange has surged more than 44 percent, placing it among the world’s top-performing stock markets in dollar terms this year, according to Bloomberg.

That follows a decade of growth in which one dollar invested in an index fund of Pakistani stocks 10 years ago would have earned, on average, 26 percent every year, analysts say, in a period otherwise notable mostly for bad news. As the stock market rose, the Pakistani military leader Gen. Pervez Musharraf fell, Osama bin Laden was captured and Taliban violence spread from the northwest to cities across the country, including Karachi.

Just as surprising, perhaps, Wall Street firms are driving the latest phase of the stock boom. Bad news can make for a good bargain, they say.

“What you see in the popular press is just one part of the picture,” said Mark Mobius, a fund manager at Franklin Templeton Investments, which has more than $1 billion invested in Pakistan stocks, mostly in the energy sector. “There’s another side to these countries, where life goes on. And that’s what we focus on.”

The gloomy image of Pakistan obscures positive aspects of its economy that, investors say, make some companies an attractive bet. Beyond the headline news, much of the country is getting on with normal life. And with a population estimated at nearly 200 million people — a high proportion of them young — Pakistan offers a large, lucrative market for consumer goods, construction and financial services firms, which constitute the bulk of the Karachi stock market.

The biggest publicly listed companies — like the multinational NestlĂ©, the Oil and Gas Development Company and Fauji Fertilizer, a military-run conglomerate — pay handsome dividends, which makes them attractive to foreign investors.

And the recent election victory of Prime Minister Nawaz Sharif, a business tycoon, has injected confidence into the financial community, which had been wary of the previous government.

For a time, Pakistani stocks were undervalued by as much as 50 percent to account for risk, compared with a regional discount of about 20 percent, said Taha Javed, a financial analyst in Karachi. Now, as foreign investors pile in, he said, “we are catching up.”...

Riaz Haq said...

Here's a WSJ story on a high-priced designer Peshawari chappal knock-off:

Imitation, it is often said, is the sincerest form of flattery, but many in Pakistan failed to take the compliment when British designer Paul Smith released a new sandal bearing close resemblance to the country’s Peshawari chappal (slipper), called it Robert, and sold it for $595.

The company received a torrent of abuse on social media for the design on Monday.

While the Pakistani sandal sells in markets across the country for around $6, Paul Smith’s version of the shoe is on sale for a 9,816% mark up.

Most of the criticism on Twitter focused on the sandal’s price, while others called for Paul Smith to give credit to the shoe’s Pakistani origin.
The Peshawari chappal is originally from the northwestern town of Peshawar, but is today manufactured across the country. You can find the shoe from Karachi to Gilgit and on the feet of markets traders, government officials and young bridegrooms.

“It is as much of a part of our national identity as is the chicken tikka in our traditional cuisine,” said journalist Madeeha Syed of the shoe in an article for local English-language newspaper, Dawn.

Paul Smith’s version of the sandal is not the first time that the quintessentially Pakistani shoe has ventured overseas. A number of Pakistan-based online outlets already sell the sandal to customers around the world. They mostly target the widespread Pakistani diaspora, but the sandal has also proved very popular in France, says Sidra Qasim, co-founder of Hometown, a Pakistan-based online shop that sells Peshawari chappals.

“They like it because it has quality and good design and it is having a good impact,” she told The Wall Street Journal.

Hometown was started in 2010 by Ms. Qasim and Waqas Ali with the goal of providing a bigger market to local shoemakers in Pakistan. All the shoes sold by Hometown are made by a small group of craftsman in a small village in Punjab province, and are sold via the company’s site in 17 different countries. The biggest markets are India, the U.K. and France, said Ms. Qasim.

Despite the outrage from Pakistan’s vocal Twitter population, Ms. Qasim said that she thought it was mostly positive that Paul Smith had decided to use the Pakistani design in his summer collection.

“One thing we are very concerned about is that Hometown is about promoting Pakistani artisans to the global level, so at least they [Paul Smith] should give the right credit,” she said, “We are really happy, on the other side, that someone on the global level has recognized this design”

Hometown’s version of the Peshawari chappal starts at $90 – still a steep markup from the average market price. Another Peshawar-based online chappal shop, Zalmay, sells the sandals for around £27 ($45.)

Riaz Haq said...

Here's a Wall Street Journal story on Pakistani brewer's soaring profits:

In the heart of the military base in Rawalpindi, Pakistan is the thriving–and legal–Murree Brewery.

The 153-year-old producer of beer and spirits was established by the British and continues in what is today Pakistan. It survived partition and the creation of Pakistan as a Muslim-majority nation. It kept brewing during the sweeping Islamization efforts of the late 70s and 80s, when access to alcohol was restricted to the tiny non-Muslim minority. It has also weathered the doldrums of Pakistan’s economy, and is one of the most successful businesses in the country.

While Pakistan’s economy struggles to grow, Murree Brewery’s revenues and profits in the third quarter are up sharply, following a record-breaking year in 2013, according to the company’s financial reports.

The brewery is meticulous about its accounts, partly because it is acutely aware of its position in a country where alcohol is illegal for the majority of the population.

“We don’t give anyone a cause of point a finger at us,” says Major Sabihur Rehman, special assistant to the brewery’s chief executive, Isphanyar Bhandara. That extends from ensuring the company’s finances are perfectly maintained to the treatment of the employees, who belong to one of the country’s most active labor unions.

The brewery’s over 1,500 employees are nearly all Muslim. Many have worked for the company for decades, with sons following fathers into the hoppy air of the brewery. But Murree Brewery CEO Mr. Bhandara says that recently more people have turned down job offers when they realized that they would have to come into contact with alcohol – a sign that the company hasn’t been totally insulated from the growing influence of the religiously conservative.

The brewery is located at the heart of the military base in Rawalpindi, just a stone’s throw from Army House, the official residence for the chief of army staff, one of the most powerful positions in the country.

A series of rambling brick buildings reminiscent of northern England house the brewery and distillery. The only trappings of Pakistan are the patriotic colors on the main gate and the ornately painted trucks, that bring raw materials in and carry out beer and liquor.
It is an open secret that many in Pakistan enjoy their drink. Bootleggers do swift business supplying the westernized elite and there is a thriving trade in moonshine in the villages. News reports of deaths from homemade liquor are not uncommon.

But, the consumption of alcohol has become an increasingly inflammatory issue in Pakistan as the religious right has grown more vocal and violent.

“We are not doing anything that we should be afraid of,” says Mr. Bhandara sitting in his wood paneled office surrounded by photos depicting the brewery’s long history.

Riaz Haq said...

Murree Beer comes to America:

In a Park Avenue building in Manhattan, Murree has established a flagship office to head up the Murree Brewery USA initiative, which will incorporate a 30-barrel brewhouse system, producing an initial run of 6,000 barrels annually. It is unclear when the brewery will begin production.
Two years ago, Murree scored “multi-million dollars worth of publicity by default” when Bruce Willis’ daughter was caught underage with a can of its beer in New York’s Union Square subway station, and the case was chronicled in the tabloids. “We plan to go to the US and make a queue to hug both the daughter and the mother,” Rehman told Reuters.

Murree’s rather sad domestic growth market paired with the unexpected publicity seems to have launched the company onto a newly international playing field. In 2012 it began announcing expansion plans for new markets including those in the United States, China, India, and Dubai. The following year, Murree even made Forbes’ Asia’s 200 Best Under a Billion list. While some markets like India, whose population put down about two billion liters of beer in 2011 alone, are likely moneymakers, others veer off into the unknown.

Riaz Haq said...

#KP Governor inaugurates new unit of #Murree Brewery Group (Murree Glass) in #Pakistan via @ePakistanToday

Governor Khabar Pakhtonkhawa Sardar Mehtab Ahmed Khan Abbasi has said that China –Pakistan Economic Corridors would provide excellent trade route and new opportunities for trade and commerce development and being the back bone of national economy, the industrialists should get benefit of trade friendly infrastructure development policies of government.

He expressed these views while talking to the inaugural ceremony of new industrial unit of Murree Brewery Group with the name of Murree Glass at Industrial Estate Hataar. The Chief Executive Officer of Group and Member National Assembly PML (N) Mr. Isphanyar Bhandara, President Workers Union Chaudhry Saleem, General Secretary Nazar Hussain Shah, prominent industrialists and high officials of KPK present on the occasion.

Governor KPK appreciated the spirit of Mr. Isphanyar Bhandara for huge investment in KPK and also acknowledged the contribution of Murree Brewery Group in industrial sector which has provided business and job opportunities. He said it is need of hour that we should promote economic and trade activities to overcome poverty and backwardness. He said despite of law and order situation and terrorism not only in KPK but also in rest of country, the patriotic Pakistanis preferred to invest in the country and it is good example of Hataar Industrial Estate where heavy industrial units had been established by the investors.

Mr. Mehtab Abbasi said that government striving hard to resolve the issue of energy crises and with the efforts of Prime Minister of Pakistan Muhammad Nawaz Sharif, 46 billion dollar Chinese investment in Pakistan would open new horizon of economic development in the country. On this occasion he also admired the role of Armed forces who had been eliminating terrorism by launching Zarb e Azeb.

Mr. Isphanyar Bhandara, talking to the ceremony said that Pakistan under the leadership of Prime Minister would become Asian tiger in economic sector. He said that Murree Brewery up holds the golden traditions of investment in the country and new industrial units would be opened to accelerate business opportunities. He lauded the active role of industrial workers who had worked hard for keeping production units alive. He also announced 10 day salary bonus for workers of Murree Glass and said that we have excellent working relations and administration always paid regards to the workers.

Earlier, Governor KP along with Mr. Isphanyar Bhandara inaugurated the new industrial unit of Murree Glass and congratulated the management on achieving another milestone of success.

Riaz Haq said...

#Pakistan Tells Pilots ‘Don’t Fly Drunk’. #Shaheen #Lahore #Crash via @WSJIndia

Pakistani aviation authorities have warned domestic carriers to ensure their pilots aren’t flying drunk after the investigation of an accident last week discovered the captain of the flight had elevated blood-alcohol levels.

Amjad Ali Toor, the director-general of Pakistan’s Civil Aviation Authority, said in a statement Thursday that medical tests showed the pilot in command of a Shaheen Air International plane that skidded off a runway in Lahore had an “unacceptable” amount of alcohol in his blood.

There were no fatalities or serious injuries in the accident, which involved a Boeing 737 with 114 passengers and seven crew members aboard. Shaheen Air didn’t respond to repeated requests for comment. Neither the airline nor regulators publicly named the pilot.

Alcohol was banned in Muslim-majority Pakistan in 1977, with some exceptions for non-Muslims, but is still sold illegally by bootleggers across the country.

On Thursday, the aviation authority called an emergency meeting with representatives of all domestic airlines and asked them to conduct “snap medical tests” on their crews.

Aviation officials said they don’t know whether the captain’s alcohol consumption caused or contributed to the Shaheen accident, which is still under investigation. “It may have been one of the factors, but it [being drunk] is unacceptable and dangerous on its own,” said one official.

State-owned Pakistan International Airlines, the country’s largest carrier, said Friday that it adheres to global safety standards and that crews are examined regularly.

“PIA is the only airline in Pakistan which is IOSA-compliant,” said airline spokesman Aamir Memon, referring to the International Air Transport Association’s Operational Safety Audit benchmark.

A PIA pilot was sentenced to nine months in prison by a British court in 2013 for attempting to fly an aircraft from the United Kingdom to Pakistan with a blood-alcohol level above the limit allowed for pilots.

“This was one incident in five or ten years, he was punished,” said Mr. Memon. “We have zero tolerance for negligence.”

Riaz Haq said...

Dry #Pakistan’s alcohol industry is booming | TODAYonline. #beer #whisky

This is despite booze being banned for 97 per cent of the population

At Murree Brewery, home of Pakistan’s national lager, vintage copper boilers belch odorous fumes as they churn out 10 million litres of beer each year.

Hundreds of tonnes of gin and whisky are stored in climate-conditioned cellars, shielded from the pummelling sun.

Whether it’s beer produced by the crateful in Murree’s venerable red brick brewery — opposite the powerful army’s headquarters in Rawalpindi — or wine discreetly fermented in a bedroom, alcohol sales are booming in “teetotalitarian” Pakistan.

Strangers to the Islamic Republic may be surprised that the country industriously — and at Murree openly — produces such quantities of booze, despite it being forbidden to 97 per cent of the population.

But although Pakistani Muslims are banned from drinking alcohol, topers take advantage of the fact that the country’s minorities, mainly Hindus and Christians, face no such prohibition, and often snaffle up their quota.

So although officially only three million adults can buy alcohol, the country’s three breweries must work hard to please the nation’s enthusiastic tipplers.

Murree produces two cask-aged whiskies and a gin dyed an electric blue — not coincidentally exactly the shade of bottles containing its more internationally renowned counterpart, Bombay Sapphire.

Founded by the British in 1860 and now Parsee-owned, Murree brewery has been burnt down by Muslim protesters, temporarily shut down in an Islamist purge and and continues to survive prohibition, which was imposed in the 1970s.

Far from bowed, it flourishes as one of Pakistan’s most successful companies, with an annual growth of between 15 to 20 per cent, a rarity in a country regularly wracked by Islamist violence.

“There is no risk as such, because we are a very very legal entity -- one of the biggest taxpayers in this country,” said Major Sabih-ur-Rehman, a brewery executive.

“It is in the interest of everybody that the Murree brewery as a legal business should flourish and continue.”


With cans priced at 300 Pakistani rupees (S$3.90) on the legal market in a country where the average salary is 13,000 rupees, the brewery caters mainly to a Muslim elite willing to break the rules.

Mr Tahir Ahmed, a therapist specialising in addiction, who is worried about the rise in alcoholism, says that off licence stores “sell the booze to the people who can afford it, and only Muslims can”.

“The middle class is steeped in Islamic morality, but the upper class are getting richer, and it is a new norm that if you invite someone for dinner you will be serving alcohol. It is socially expected,” he said.

Well-stocked bars at birthday parties, dinners awash with Italian wines and discreet “car-bars” in the parking lots of wedding halls are supplied by a thriving blackmarket that also relies on vast foreign imports.