Friday, August 10, 2012

Toyota Pakistan Auto Profits Up 57% in 2012

Indus Motor Company earned Rs. 4.3 billion in net income on sales of Rs. 75 billion in 2011-12, representing an increase 57% in net income and 25% in total revenue over previous year. The company that is 37.5% owned by Japan’s Toyota Motors sold over 55,000 cars during the financial year that ended on June 30, 2012, its highest ever for a single year. Both revenues and profits were the highest in the company’s history in Pakistan, according to media reports. Pakistan's total car market was about 235,000 units in July 2011-June 2012 period.



The domestic auto industry sold 178,753 cars, 23% more than last year. The rest of the demand was met by imports of 55,000 cars in fiscal year 2012, representing an increase of 50% over last year. In addition to durables like automobiles, companies in FMCG (fast moving consumer goods) sector are also expected to report strong sales and earnings this year. Engro Foods has emerged emerged as the supercharged FMCG player with over 400 percent in bottom line in 2011, grabbing fourth position after Nestle, Unilever and Rafhan, and outpacing National Foods. The sector growth has been particularly well supported by strong rural consumption in recent years.

Here are a few key points excerpted from a recent Businessweek story on rise of the rural consumer supported by higher crop prices in Pakistan:

1. Unilever and Colgate-Palmolive Co. are sending salespeople into rural areas of the world’s sixth most-populous nation, where demand for consumer goods such as Sunsilk shampoo, Pond’s moisturizers and Colgate toothpaste has boosted local units’ revenue at least 15 percent.

2. “The rural push is aimed at the boisterous youth in these areas, who have bountiful cash and resources to increase purchases,” Shazia Syed, vice president for customer development at Unilever Pakistan Ltd., said in an interview. “Rural growth is more than double that of national sales.”

3. Consumer-goods companies forecast growth in Pakistan even as an increase in ethnic violence in Karachi has made 2011 the deadliest in 16 years for the country’s biggest city and financial center.

4. Nestle Pakistan Ltd. is spending 300 million Swiss francs ($326 million) to double dairy output in four years, boosted sales 29 percent to 33 billion rupees ($378 million) in the six months through June. “We have been focusing on rural areas very strongly,” Ian Donald, managing director of Nestle’s Pakistan unit, said in an interview in Lahore. “Our observation is that Pakistan’s rural economy is doing better than urban areas.”

5. Haji Mirbar, who grows cotton on a 5-acre farm with his four brothers, said his family’s income grew fivefold in the year through June, allowing him to buy branded products. He uses Unilever’s Lifebuoy for his open-air baths under a hand pump, instead of the handmade soap he used before. “We had a great year because of cotton prices,” said Mirbar, 28, who lives in a village outside south Pakistan’s Matiari town. “As our income has risen, we want to buy nice things and live like kings.”

6. Sales for the Pakistan unit of Unilever rose 15 percent to 24.8 billion rupees in the first half. Colgate-Palmolive Pakistan Ltd.’s sales increased 29 percent in the six months through June to 7.6 billion rupees, according to data compiled by Bloomberg. “In a generally faltering economy, the double-digit growth in revenue for companies servicing the consumer sector has come almost entirely from the rural areas,” said Sakib Sherani, chief executive officer at Macroeconomic Insights Pvt. in Islamabad and a former economic adviser to Pakistan’s finance ministry.

7.6 billion rupees, according to data compiled by Bloomberg. “In a generally faltering economy, the double-digit growth in revenue for companies servicing the consumer sector has come almost entirely from the rural areas,” said Sakib Sherani, chief executive officer at Macroeconomic Insights Pvt. in Islamabad and a former economic adviser to Pakistan’s finance ministry.

7. Unilever is pushing beauty products in the countryside through a program called “Guddi Baji,” an Urdu phrase that literally means “doll sister.” It employs “beauty specialists who understand rural women,” providing them with vans filled with samples and equipment, Syed said. Women in villages are also employed as sales representatives, because “rural is the growth engine” for Unilever in Pakistan, she said in an interview in Karachi. While the bulk of spending for rural families goes to food, about 20 percent “is spent on looking beautiful and buying expensive clothes,” Syed said.

8. Colgate-Palmolive, the world’s largest toothpaste maker, aims to address a “huge gap” in sales outside Pakistan’s cities by more than tripling the number of villages where its products, such as Palmolive soap, are sold, from the current 5,000, said Syed Wasif Ali, rural operations manager at the local unit.

9. Palmolive's detergents Bonus Tristar and Brite are packed in sachets of 20 grams or less and priced as low as five rupees (6 cents), to boost sales among low-income consumers hurt by the fastest pace of inflation in Asia after Vietnam. Unilever plans to increase the number of villages where its products are sold to almost half of the total 34,000 within three years. Its merchandise, including Dove shampoo, Surf detergent and Brooke Bond Supreme tea, is available in about 11,000 villages now.

10. Telenor Pakistan Pvt. is also expanding in Pakistan’s rural areas, which already contribute 60 percent of sales, said Anjum Nida Rahman, corporate communications director for the local unit of the Nordic region’s largest phone company.




 Undeterred by the gloom and doom reports in the media, Pakistani consumers are continuing to spend and private consumption has now reached 75 percent of GDP. It rose 11.6% in real terms in 2011-12 compared with just 3.7% growth a year earlier , according to Economic Survey of Pakistan. In fact, many analysts believe that Pakistan's official GDP of  $220 billion is understated by as much as 50%, buttressing a recent claim by the head of Karachi Stock Exchange that Pakistan's real GDP is closer to $300 billion.

I believe that even a modest effort to increase tax collection can significantly improve Pakistan's state finances to support higher public sector investments in energy, education, health care and infrastructure.
 
 Related Links:

Haq's Musings

Pakistan's Underground Economy

Tax Evasion Fosters Aid Dependence

Poll Finds Pakistanis Happier Than Neighbors

Pakistan's Rural Economy Booming

Pakistan Car Sales Up 61%

Resilient Pakistan Defies Doomsayers

Land For Landless Women in Pakistan

37 comments:

Riaz Haq said...

Here are some excerpts of BMI's Q3-2012 auto report for Pakistan:

The Pakistan Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Pakistan's automotive industry.


The Pakistan autos sector continues to present a mixed picture as we approach the end of the country’s fiscal year in June 2012. While the outlook for passenger cars and pick-ups remains robust, with strong growth seen in both production and sales year to date, the country’s sluggish commercial vehicle sector and plunging farm tractor sector are acting as brakes on the progression of the wider vehicle industry.


According to figures from the Pakistan Automotive Manufacturers Association (PAMA), for the nine months ending March 31 2012, a total of 154,573 four-wheeled vehicles (passenger cars, trucks, buses,
LCVs, jeeps, pick-ups and tractors) were produced in Pakistan, marking a 9% decline on the 169,743 four-wheeled vehicles produced in 9MFY11. Over the same period, a total of 156,877 four-wheeled vehicles were sold in Pakistan, down 5% on the 164,820 four-wheeled vehicles sold in 9MFY11.


The main cause of the drop in both sales and production was the government’s decision in March 2011 to impose a 16% general sales tax on tractor purchases, which were previously GST-exempt. This saw demand from farmers collapse over H1FY12, leading to Fiat’s tractor production dropping by 236% y-oy over the six-month period, while Massey Ferguson’s tractor output was down by 109% y-o-y.


Since that time, the government has revised its decision, reducing the GST levied on tractor sales down to 5% as of January 2012. This reduction in GST has had a swift impact on both production and sales from Fiat and Massey Ferguson. From a year-low of just four tractors produced in January 2012, Fiat had returned to over 2,000 units produced in March 2012. Similarly, Massey Ferguson has returned production to over 4,000 in March 2012, from a year-low of 963 in November 2011. At the same time,
monthly sales figures have improved from a year-low of just 369 for January 2012 (for both Fiat and Massey Ferguson) to 6,229 as of March 2012. However, with the government still planning to increase GST on tractors to 10% in 2013 and then to 16% in 2014, it remains to be seen what effect these staggered tax hikes will have on tractor sales over the medium term.


Without the negative impact of the GST rise, then FY12 would have been a very strong year for the Pakistani auto sector. As it is, there is now scope for the industry to make back some of its losses by yearend,
although tractor production and sales will still be down sharply year-on-year. Our current forecasts call for a total of 205,335 vehicles produced in Pakistan in FY12 and 203,504 vehicles sold.


Looking at manufacturers, Pak Suzuki has had a very strong year, profiting to some extent from the difficulties being experienced by Honda Atlas, which had to temporarily suspend local production of the City and Civic models owing to a lack of spare parts from parent company Honda following the Thai flooding. Indeed, while Honda Atlas saw a 37.5% fall in production over 9M11, to 7,798 units and a 43.3% fall in local sales, to 7,999 units, Pak Suzuki saw a 26.2% increase in production, to 65,692 units and a 36.9% increase in local sales, to 68,722 units. The third local passenger car manufacturer, Indus Motor (Toyota/Daihatsu) has seen essentially flat performance over FY12 to date, with production up by 0.7%, at 36,549 units and sales up by 1.5%, at 36,000 units.


http://www.researchandmarkets.com/reports/2200999/pakistan_autos_report_q3_2012.pdf

Riaz Haq said...

Here's a BR report on Pakistan tractor industry:

Currently, Millat Tractors and Al-Ghazi Tractors Limited are two of the largest producers of tractors and other agricultural implements within the country, with their total production of tractors standing around 65 thousand units at the end of FY11. With an annual installed capacity of 75 thousand units, the tractor manufacturing industry has been performing relatively consistently over the last few years contributing towards the upgradation of local farming practices. With the number of tractors in agricultural use in Pakistan rising from 5,500 in 1961 to 470,000 in 2007 according to World Bank data, the number of local producers engaging in selective mechanisation has also been on a consistent rise. However, the start of the current fiscal year brought bad news for both manufacturers and farmers as a hike in GST on tractor sales brought down production by a staggering 70 percent resulting in negative growth of 2.2 percent in production during this period. With tractor sales dipping as low as 78 percent month-on-month at one point and just 771 units being sold in December 11 as compared to the 3,625 units sold during the previous month, the industry faced a severe crisis with thousands of unsold tractors parked at factories and dealership networks across the country. The government subsequently announced a cut back in GST to a modest 5 percent in January 2012, following which sales have risen up sharply once again. With total units sold jumping from a dismal 369 in January to 8,906 in February following the tax cut, the sectors productivity is on the rise again. Further abetments have been provided in the form of incentives provided to small farmers aiding them in tractor purchases through different schemes such as the Sindh Tractor Scheme where the government distributed six thousand units to farmers at subsidised rates during April-May12. Moreover, the future for the tractor industry looks robust in the future with Millat Tractors already having booked 25 thousand units for the next six months, according to a report compiled by IGI Securities. This news bodes well for all stakeholders as the net return of these investments into mechanisation of agricultural machinery has always been positive in terms of crop output. What is essential at this point is to reiterate the importance of long-term policy commitments by the government to ensure that upgradation of farming practices is made within the reach of the average local producer. In a country where demand for increased food production follows logically from an ever increasing population, facilitating primary producers in obtaining machinery to increase output should be of consummate importance. Consequently, with the terms of the current Auto Industry Development Programme expiring at the end of June 2012, it is suggested that the Government should undertake new initiatives to foster dissemination of tractors and other farm machinery in the country.

http://www.brecorder.com/br-research/44:44/2607:tractor-sales-fostering-mechanisation/?date=2012-06-27

Meer said...

Wow if you have been lately to Pakistan you will see this phenomenon of overcrowding at Car showrooms. I have see big showrooms in small towns.

Khan said...

craze of Toyota corolla GLI-XLI in pakistan

Riaz Haq said...

Meer: "I have see big showrooms in small towns."

You got it! Pakistan's rural economy is booming due to higher crop prices. About Rs 200-300 billion are being transferred in income from urban to rural areas since 2009.

http://www.riazhaq.com/2011/01/pakistans-rural-economy-showing.html

HopeWins Junior said...

Dr. Haq,

Material for next blog article:

As you have always said, he was bound to trip-up on all his lies sooner or later.

They finally got the bastard!

http://dawn.com/2012/08/11/time-and-cnn-suspend-fareed-zakaria-for-plagiarism/

http://india.blogs.nytimes.com/2012/08/11/fareed-zakaria-is-suspended-after-admitting-plagiarism/

http://india.nydailynews.com/newsarticle/7dbe8622133c1a4df2b10e33d50afc12/fareed-zakaria-pays-the-price-for-plagiarising

http://www.theatlanticwire.com/business/2012/08/fareed-zakarias-take-gun-control-strikingly-similar-new-yorkers/55652/

http://articles.baltimoresun.com/2012-08-10/entertainment/bal-fareed-zakaria-plagiarism-cnn-20120810_1_plagiarism-zakaria-cnn-com

This now calls into question all his fake work praising India and maligning Pakistan with his lies!

I'm loving it!

Look forward to good blog article on this typical Indian deception, theft and lies....

Thank you.

Ramdaan Kareem said...

There’re various reasons for the accumulation of this loan, among which, Bush’s policies, the federal government’s spending spree and paying for two wars on borrowed money, stand out prominently. But, despite this loan, it’s also advancing aid to various countries. One fails to understand as to how it’s managing all this?

It looks as if we, in Pakistan, are also toeing the US line. Our total external debt has swelled to around $67 billion. This is over and above the huge internal debt. We’re printing currency notes to the tune of Rs1.5 to 3 billion daily. Every Pakistani man, woman and child is indebted to an amount of Rs 61,000 each. It appears that this loan will keep rising till the time the next general elections take place. One fails to understand as to where all this money has gone and how this debt is going to be repaid.

The value of Pakistani rupee has fast eroded during the last four-and-a- half years, and will soon touch Rs100 to a dollar.

Are we headed for inflation that exists in Zimbabwe where 100bn Zimbabwean dollars can buy only three eggs?

A. KHAN
Rawalpindi

Riaz Haq said...

Here's a BR report on telecom equipment imports in Pakistan:

The imports of various telecom products witnessed increase of 23.89 percent during the fiscal year 2011-12 as against the same period of the previous year.

The over all imports of telecom sector reached to US$1.268 billion during July-June (2011-12) against the imports of US$ 1.023 billion recorded during July-June (2010-11), according to data of Pakistan Bureau of Statistics.

Among the telecom sector, the highest increase of 31.63 was witnessed in mobile phones, imports of which increased from US$ 522.825 million to US$688.170 million, the PBS data revealed.

The imports of other telecom apparatus increased from US$500.712 million to US$579.899 million, showing increase of 15.81 percent.

Meanwhile, during the month of June 2012, the telecom imports increased by 13.04 percent as compared to the imports of June 2011 while decreased by 20.43 percent when compared to the imports of May 2011.

The telecom imports in June 2012 stood at US$ 96.680 million against the imports of US$ 85.527 million in June 2011 and US$ 121.499 in May 2012, the data revealed.

During the month under review, the mobile phone imports surged 25.63 percent when compared to the imports of June 2011 and decreased by 11.17 percent when compared to the imports of May 2012.

In June, the mobile phone imports were recorded at US$ 56.176 million against the imports of US$ 44.714 in June 2011 and US$ 63.237 in May 2011.

However, in June 2012, the imports of other telecom apparatus decreased by 0.76 percent and 30.48 percent as compared to the imports of June 2011 and May 2012.

The imports of telecom apparatus in June 2012 stood at US$ 40.504 million against the imports of US$ 40.813 million in June 2011 and US$ 58.262 million in May 2011, the data revealed.

It is pertinent to mention here that the overall impost from the country during the fiscal year 2011-12 increased by 11.13 percent.

The imports during the year under review were recorded at US$ 44.912 billion against the imports of US$40.414 billion, according to the PBS data.


http://www.brecorder.com/top-news/108-pakistan-top-news/72599-telecom-mobile-imports-up-2389pc-3163pc.html

Riaz Haq said...

Here's a Businessweek story on Pakistan Lucky Cement reporting record profits:

Lucky Cement Ltd. (LUCK), Pakistan’s largest producer of the building material, said full-year profit surged 71 percent to a record as an increase in domestic sales offset a decline in exports.

Net income was 6.78 billion rupees ($71.8 million), or 20.97 rupees a share, in the 12 months ended June 30, compared with 3.97 billion rupees, or 12.28 rupees a share, a year earlier, the Karachi-based company said in a filing to the stock exchange today. Analysts forecast profit of 6.81 billion rupees, according to the average of 11 estimates compiled by Bloomberg.

Local sales rose 7 percent, while overseas shipments slipped 4.7 percent to 2.25 million tons, the company said in the statement. Lucky derived 62 percent of its revenue for the year from domestic sales and 38 percent came from exports, it said. The company expected sales at home to boost earnings for the year ended June, Chief Financial Officer Abid Muhammad Ganatra said in an interview in March.

Domestic consumption of cement “is expected to increase during the next financial year,” the company said in the statement, citing “spending on public development projects by the government in the view of upcoming national elections.”

Revenue gained 23 percent to 39.1 billion rupees, topping the average analyst estimate of 33.4 billion rupees. Sales volumes were 3 percent higher at 5.97 million tons, the company said.

Lucky shares fell 0.9 percent to 129 rupees at the close of trade in Karachi. The stock has rallied 71 percent this year, compared with a 34 percent gain in the benchmark Karachi Stock Exchange 100 Index.


http://www.businessweek.com/news/2012-08-15/pakistan-s-lucky-cement-posts-record-profit

Riaz Haq said...

Here's a Dawn report on Karachi stocks hitting 4 year highs:

Pakistan’s main stock market closed at a four-year high on Wednesday as investors cheered the central bank’s decision to cut its key policy rate, dealers said.

The Karachi Stock Exchange benchmark 100-share index gained 58.95 points, or 0.4 per cent, to close at 14,970.92, its highest close since April 2008. The volume of shares traded was 135.996 million.

“The positive trend in the market is because of the cut in the discount rate by the State Bank (of Pakistan) last week,” said Shuja Rizvi, a trader at Al-Hoqani Securities.

“The rise we saw today was a continuation of the rally on Monday.”

The State Bank of Pakistan in its monetary policy announcement on Aug 10 lowered its key policy rate from 12 per cent to 10.5 per cent.

In the currency market, the rupee strengthened slightly to close at 94.32/39 to the dollar, compared with 94.42/48 on Monday. Financial markets in Pakistan were closed on Tuesday for the Independence Day holiday.

Overnight rates in the money market closed lower at 8.50 per cent, compared with 10.40 per cent on Monday.


http://dawn.com/2012/08/15/pakistan-stocks-hit-four-year-high-rupee-strengthens-on-rates-down/

Riaz Haq said...

Engro Foods forecasts 80% jump in profits, reports Businessweek:

Engro Foods Ltd. (EFOODS), Pakistan’s biggest maker of packaged milk, may record an 80 percent increase in net income this year as demand for dairy products rises, the chief executive officer said.

Profit may cross 1.6 billion rupees ($17 million) in the year ending Dec. 31 compared with 891 million rupees a year earlier, Muhammad Afnan Ahsan said in telephone interview from Karachi yesterday. Net income rose to 531.8 million rupees in the three months ended June 30, from 99.2 million rupees a year ago, the Karachi-based company said in a filing to the stock exchange yesterday.

Engro Foods, which has a 45 percent share of the milk market and a quarter of the ice cream trade, may introduce as many as 13 new products and lines, Muhammad Aliuddin Ansari Chief Executive Officer of Engro Corp., the parent company, said in an interview this month. The food business may become the largest segment by profit and sales and will be the dominant area in the next five years, he said.

Engro Foods, which has climbed threefold this year, compared with a 20 percent gain in the benchmark KSE100 index, increased as much as 1 percent to 67.83 rupees at 9:33 a.m. local time.


http://www.bloomberg.com/news/2012-07-18/pakistan-s-engro-foods-net-income-may-rise-80-ceo-says-1-.html

Riaz Haq said...

Here's a BR report on Uniliver Foods profits:

Unilever Pakistan Foods Limited has posted Rs 401.143 million as profit after tax in the half year period ended June 30, 2012 as compared to Rs 364.523 million earned in the same period in 2011.

The company’s earning per share increased to Rs 65.15 in the period under review against Rs 59.20 in the same period last year.

In view of the financial results for the half year January to June 2012, the board of directors of the company has declared second interim dividend – 2012 of Rs 25 per share or 250 percent per ordinary share of Rs 10. This will be payable to members on the number of ordinary shares held by them at the close of business on September 13, 2012.

According to the financial results sent to Karachi Stock Exchange, the company’s sales increased to Rs 3.006 billion in the first half of 2012 against Rs 2.546 billion in the same period in 2011. The cost of sales increased to Rs 1.808 billion against Rs 1.522 billion.

The company’s profit before taxation increased to Rs 600.830 million in the first half of 2012 against Rs 538.860 million in the same period in 2011.

On quarterly basis, the company’s profit after taxation stood at Rs 213.201 million translating earning per share of Rs 34.62 in the quarter ended June 30, 2012 as compared to after tax profit of Rs 219.466 million with per share earning of Rs 35.64.


http://www.brecorder.com/pakistan/markets/74098-unilever-pakistan--foods-posts-rs401143m-profit-after-tax-.html

Riaz Haq said...

Bata shoe company in Pakistan reports higher profits, according to Business Recorder:

The profit after tax of Bata Pakistan Limited has increased to Rs 472.704 million in the half year period ended on June 30, 2012 as compared to Rs 375.722 million earned in the corresponding period in 2011. The board of directors of the company in its meeting held on Monday declared that the company's earning per share has increased to Rs 62.53 in the period under review against Rs 49.70 in the same period last year.

According to the financial results sent to Karachi Stock Exchange the company's net sales increased to Rs 5.189 billion against Rs 4.434 billion. The cost of sale increased to Rs 3.187 billion against Rs 2.754 billion. The company's profit before taxation increased to Rs 626.731 million in the first half of 2012 against Rs 509.879 million in the same period last year.

On quarterly basis, the company's profit after tax increased to Rs 300.370 million translating earning per share of Rs 39.73 in the quarter ended on June 30, 2012 as compared to after tax profit of Rs 205.625 million with per share earning of Rs 27.20 in the corresponding quarter in 2011.


http://www.brecorder.com/company-news/235/1227592/

Riaz Haq said...

Pak Petroleum profits soar 30%, reports Express Tribune:

Pakistan Petroleum Limited (PPL), the country’s second largest oil and gas explorer, profits soared 30% to Rs40.9 billion in fiscal 2012 on the back of higher oil and gas volumes and its prices.

The explorer benefitted from the 19% increase in oil price and 3% to 4% jump in gas price, said BMA Capital analyst Furqan Punjani.

Pakistan is an energy deficient and natural resource rich country, the ideal working climate for oil and gas explorers, according to experts.

The explorer set aside Rs5 billion each for asset acquisition and insurance reserve, says a notice sent to the Karachi Stock Exchange on Monday. The asset acquisition reserve reached Rs25 billion with the latest addition, shows the balance sheet.

In the most recent venture, Pakistan Petroleum was awarded exploration blocks in Diyala and Wasit provinces in eastern Iraq.

Earlier, PPL and Zhenhua had entered into a joint venture to participate in Iraq, and were expected to make an investment of $200 million, however, the Chinese firm has decided not to proceed due to security issues in Iraq.

Along side the result, the board of directors in its meeting also announced a full year bonus of 25% and cash dividend of Rs6.5 per share, taking the full year dividend to 11.5 per share.

The outgoing period proved to be an eventful year for PPL where higher average oil prices coupled with incremental oil volumes from fields like Nashpa, Mela, Kandhkot surfaced as major profit drivers.

PPL’s oil production is estimated to grow 10% with the commissioning of Nashpa-2. Production from the field shot up by 58% on a yearly basis and constituted 27% of the company’s total oil production during the outgoing financial year. On the gas front, production is anticipated to rise by 2% with Kandkhot field’s rise of 30% fuelling growth.

Resultantly, the company’s revenue grew by 23% to Rs96 billion in fiscal 2012 mainly on the back of improved gas prices and dollar appreciation.

The growth in topline was well complemented by 2.6-fold increase in company’s other income to Rs11.6 billion against Rs4.5 billion last year.

Stock price reacted positively and rose its upper daily limit of 5% to close at Rs215.34 on the announcement of a strong payout.


http://tribune.com.pk/story/421711/corporate-results-pakistan-petroleum-makes-rs41-billion-in-fiscal-2012/

Riaz Haq said...

Here's BR report on Engro Foods:

Engro with its rich history of over four decades of developing the agricultural sector of Pakistan used dairy as a stepping stone to enter the foods business in 2005 to give further impetus to its already diversified business portfolio including fertilisers, petrochemicals, energy, trading and chemicals storage and handling.

In a span of just seven years, with a compound annual growth rate (CAGR) of 65 percent and a planned infrastructure investment in 2012 to the tune of eight billion rupees, Engro Foods has become the country's fastest growing local company catering to a wide demographic consumer base from high income groups to the more economically conscious segment of the market both in Pakistan and abroad.

Serving over five million consumers nation-wide every day, Engro Foods had revenues of about Rs 19.76 billion during 1H-2012 with profitability registering an increase of over 450 percent to close at Rs 1.02 billion. Since its inception Engro Foods has invested heavily in dairy development initiatives, cold chain infrastructure, enhancing capabilities of dairy farmers across Pakistan through innovative breakthroughs that have redefined the milk collection standards and benchmarks in the dairy industry. Employing over 12,000 individuals both directly and indirectly, Engro Foods' continues to touch and improve life for over 160,000 dairy farmers through improved payment cycles, guaranteed collection, improved margins and up to a 15 percent increase in milk yields. Through its wide network of over 900 milk collection centres, Engro Foods focuses its impact at the most economically challenged communities in Pakistan - an effort that has also been recognised at local and international fronts including the IFC managed G20 Challenge on Business Innovation where Engro Foods was declared the winner from over 300 global contracts.

The Company also had the unique opportunity to become the first company in Pakistan to produce one billion packs within a year in 2010 alone; a distinction that has been achieved by only 18 companies out of 3,000 Tetra Pak customers world-wide. Living its vision of 'elevating consumer delight world-wide' the business established its Global Business Unit (GBU) and acquired Al-Safa Halal - the oldest Halal meat brand in North America in 2010. With presence in key retail stores including Loblaws, Wal-Mart, Sobeys, Metro, Kroger etc, Engro Foods GBU has obtained a market share of 15 percent in Canada and three percent in USA in the branded foods category.

Speaking at the occasion, Afnan Ahsan - CEO Engro Foods said: "The story of Engro and that of Engro Foods is a source of national pride. The fact that in a short span of seven years a home-grown multinational company has been created - with a geographic footprint spanning across Pakistan, Afghanistan, US and Canada - is testament to the vision and business acumen of the Company. Engro Foods is an example that through focused approach companies can create real business value - not just in the Pakistani market but also globally." Building on plans for the future of the Company Afnan said: "We are in the early stages of our growth trajectory and looking ahead we will continue to further explore diversification with focused growth in our dairy and beverage business - both locally and on the international front. We are also confident that we will continue to create real value for all our stakeholders by pursuing an inclusive growth strategy that positively impacts each individual through the value chain process."


http://www.brecorder.com/business-a-economy/189/1226476/

Riaz Haq said...

Here's a BR piece on Colgate Palmolive Pakistan:

Colgate Palmolive Pakistan, one of the leading manufacturers of personal care and consumer products in the country, began its operations back in 1985 when the US granted the firm license to manufacture and market Colgate Palmolive products in Pakistan.

Currently, the firm is engaged in the production and marketing of some of the leading international brands of oral and personal care products, bringing a few of the world's most trusted household names such as Colgate Toothpaste and Palmolive Naturals to the Pakistani market.

Working under the umbrella of the Lakson Group, the company boasts of 450 distributors across the country and has been a KSE top performer, being listed amongst the Top 25 best performing companies for seven years straight as of 2012.

Financial highlights The company's accounts ended 30th June saw its Net Profits go through the roof, managing a 38.7 percent increase to top off Rs 1.6 billion versus Rs 1.17 billion recorded last year on account of a hefty top-line growth that saw sales climb by 28.6 percent year on year.

The steady growth in revenue, which amounted to Rs 18.71 billion- up from Rs 14.15 billion in the last year-came mainly off the back of the firm's well spent money devoted to advertisement and distribution as well as through effective in-store promotions which allowed the relevant brands to achieve steady volume growth thorough out the year.

The company managed to retain profitability as a result of their ongoing cost-saving initiatives which enabled to offset the exorbitant input prices hindering most other manufacturers. Consequently, the firm also made small price adjustments across various products to pass on the rising costs of packaging and raw material to the consumers, thereby ensuring that the Gross profit margin only saw a small decline, going down to 28.92 percent as compared to 29.40 percent.

However, despite the fact that the rising input prices dampened the firm's stellar top line growth somewhat, Colgate continued to steadily increase its overall spending on sales promotion which has been mainly responsible for the propagation of the company's sales volumes. Overall, the media and promotional spending increased by 43 percent, going up to Rs 1.6 billion as compared to Rs 1.1 billion spent during the same period last year.

The year-end also saw Colgate's financial position improve as the firm's cash and cash equivalents increased by 35.3 percent, signing off at Rs 840 million, up from Rs 620 million recorded during last year.

Key operational highlights In the previous quarter, Colgate Palmolive Pakistan had launched "Brite Anti Bacterial Detergent" powder, which was the first such product in the Pakistani market. Marketed as a detergent with a unique germ-busting formula, this latest innovation was hailed positively by the consumers. The product continued to strengthen Colgate's equity during the last leg of FY12, and was a major driver of sales volume growth.

In the dishwashing category, Colgate saw increasing competition from a number of local and imported brands, however, the firm arranged a brand re-launch for the entire Lemon Max range. This make-over saw one of the pioneer dishwashing products on the market undergo an overhaul and acquiring a new look. Formulated with real lemon juice, the re-launched Lemon Max boasted greater grease cutting powers in heavily circulating adverts, which allowed increased brand equity and sales growth......


http://www.brecorder.com/brief-recordings/0/1238003/

HopeWins Junior said...

^^Riaz Haq Wrote: "You got it! Pakistan's rural economy is booming due to higher crop prices. About Rs 200-300 billion are being transferred in income from urban to rural areas since 2009"

-------

But then why are these farmers not using this money to buy tractors?

http://www.pama.org.pk/images/stories/pdf/historical-data.pdf

Here is what PAMA is reporting for tractors (AlGhazi/Fiat & Millar/MF):

2002-03 - 26,832
2003-04 - 35,900
2004-05 - 43,578
2005-06 - 48,802
2006-07 - 54,052
2007-08 - 53,203
2008-09 - 60,351
2009-10 - 71,512
2010-11 - 69,203
2011-12 - 49,745

I can see a nice rise up to 2009. But then it just seemed to have to tipped over and COLLAPSED. I believe this years numbers will come out to be same as 2003.

So where is the story you are telling of "booming farmer incomes and rising tractor sales"?

I am confused. Would you please explain?

Thank you.

Riaz Haq said...

HWJ: "So where is the story you are telling of "booming farmer incomes and rising tractor sales"?"

The big bump in crop prices and tractor sales occurred from 2007-8 (53,000) to 2008-9 (60,000) and 2009-10 (71,000).

November 9, 2012 9:47 PM
Delete

HopeWins Junior said...

^^^RH: "The big bump in crop prices..............occurred from...

---------------

Here are crop prices for Rice & Wheat:

http://www.indexmundi.com/commodities/?commodity=rice&months=120

http://www.indexmundi.com/commodities/?commodity=wheat&months=120

They are still high by historical standards.

Cotton prices did peak in 2011, but that did not seem to help tractor sales, as they kept falling throughout that year:

http://www.indexmundi.com/commodities/?commodity=cotton&months=120

Please explain why tractor sales are falling when crop prices are still high by historical standards?

Is GOP interfering with the market?

I am confused.

Riaz Haq said...

HWJ: "Please explain why tractor sales are falling when crop prices are still high by historical standards?"

Tractors are not the only thing on the farmers' shopping list. Pakistan's rural economy is booming with rising spending on education, health care, housing, hygiene and various other consumer goods and services.

Here are a few key points excerpted from a 2011 Businessweek story on rise of the rural consumer in Pakistan:

1. Unilever and Colgate-Palmolive Co. are sending salespeople into rural areas of the world’s sixth most-populous nation, where demand for consumer goods such as Sunsilk shampoo, Pond’s moisturizers and Colgate toothpaste has boosted local units’ revenue at least 15 percent.

2. “The rural push is aimed at the boisterous youth in these areas, who have bountiful cash and resources to increase purchases,” Shazia Syed, vice president for customer development at Unilever Pakistan Ltd., said in an interview. “Rural growth is more than double that of national sales.”


3. Nestle Pakistan Ltd. is spending 300 million Swiss francs ($326 million) to double dairy output in four years, boosted sales 29 percent to 33 billion rupees ($378 million) in the six months through June. “We have been focusing on rural areas very strongly,” Ian Donald, managing director of Nestle’s Pakistan unit, said in an interview in Lahore. “Our observation is that Pakistan’s rural economy is doing better than urban areas.”

4. Haji Mirbar, who grows cotton on a 5-acre farm with his four brothers, said his family’s income grew fivefold in the year through June, allowing him to buy branded products. He uses Unilever’s Lifebuoy for his open-air baths under a hand pump, instead of the handmade soap he used before. “We had a great year because of cotton prices,” said Mirbar, 28, who lives in a village outside south Pakistan’s Matiari town. “As our income has risen, we want to buy nice things and live like kings.”

5. Sales for the Pakistan unit of Unilever rose 15 percent to 24.8 billion rupees in the first half. Colgate-Palmolive Pakistan Ltd.’s sales increased 29 percent in the six months through June to 7.6 billion rupees, according to data compiled by Bloomberg. “In a generally faltering economy, the double-digit growth in revenue for companies servicing the consumer sector has come almost entirely from the rural areas,” said Sakib Sherani, chief executive officer at Macroeconomic Insights Pvt. in Islamabad and a former economic adviser to Pakistan’s finance ministry.

6. Unilever is pushing beauty products in the countryside through a program called “Guddi Baji,” an Urdu phrase that literally means “doll sister.” It employs “beauty specialists who understand rural women,” providing them with vans filled with samples and equipment, Syed said. Women in villages are also employed as sales representatives, because “rural is the growth engine” for Unilever in Pakistan, she said in an interview in Karachi. While the bulk of spending for rural families goes to food, about 20 percent “is spent on looking beautiful and buying expensive clothes,” Syed said.

7. Colgate-Palmolive, the world’s largest toothpaste maker, aims to address a “huge gap” in sales outside Pakistan’s cities by more than tripling the number of villages where its products, such as Palmolive soap, are sold, from the current 5,000, said Syed Wasif Ali, rural operations manager at the local unit.

8.Telenor Pakistan Pvt. is also expanding in Pakistan’s rural areas, which already contribute 60 percent of sales, said Anjum Nida Rahman, corporate communications director for the local unit of the Nordic region’s largest phone company.

HopeWins Junior said...

^^^RH: Currently, Millat Tractors and Al-Ghazi Tractors Limited are two of the largest producers of tractors and other agricultural implements within the country, with their total production of tractors standing around 65 thousand units at the end of FY11. With an annual installed capacity of 75 thousand units, the tractor manufacturing industry has been performing relatively consistently over the last few years contributing towards the upgradation of local farming practices. With the number of tractors in agricultural use in Pakistan rising from 5,500 in 1961 to 470,000 in 2007 according to World Bank data, the number of local producers engaging in selective mechanisation has also been on a consistent rise."

------

Dr. Haq,

India EXPORTS more tractors than the total number we produce in any given year.

India's annual production of tractors is MORE that the total number of tractors present in our country.

If we open our markets to them, they will just take over without even breaking a sweat.

We must not allow that to happen.

Please comment on these obvious dangers of allowing "free-trade" with India.

Thank you.

REF: http://www.scribd.com/doc/36863967/Analysis-of-Tractor-Industry-in-India

http://www.scribd.com/doc/14487696/Pakistan-Automobile-Industry

Riaz Haq said...

HWJ: "If we open our markets to them, they will just take over without even breaking a sweat."

Many countries produce lots of tractors and they have not been able to compete in Pakistan with local manufacturers.

Here's a excerpt of a recent story in The Nation newspaper:

Appreciating the performance of local tractor parts makers, who have presently introduced new technology power steering, turbo charge engine, green engine, electronic display and power brake, said that several foreign companies have failed to compete with Pakistani tractor due to its less cost.

For example, John Den (John Deere), a US tractor company has flopped in Pakistan to compete local tractor makers, as they were not using domestic cheaper components. Though company imported Chinese tractor parts at zero duty but still they remained uncompetitive to operate.


http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/03-Sep-2012/int-l-buyers-prefer-import-of-pak-tractor-parts

HopeWins Junior said...

^^^RH: "Many countries produce lots of tractors and they have not been able to compete in Pakistan with local manufacturers"

------

Dr. Haq,

I do not understand.

The article says that our tractor companies are producing the SAME tractors for HALF the price of Indian tractor manufacturers.

If this is true, we should have been be able to wipe out India's export market.

I mean I can understand that India may have devious non-tariff barriers to prevent our companies selling cheaper tractors in India itself, but how can India be exporting the SAME tractor at TWICE the price charged by Pakistani companies. Wouldn't their export customers just prefer to buy the SAME tractor from our tractor companies for HALF the price?

So how is India exporting 65,000 tractors (more than our total current production) to all these different countries? What are our tractor companies doing? Why are they not doubling capacity to grab all of India's export with their 1/2 price tractors?

How is this even possible?

Would you please explain?

Thank you,

Riaz Haq said...

HWJ: "If this is true, we should have been be able to wipe out India's export market."

It will happen as Pakistanis gear up to export tractors in large numbers after having satisfied domestic demand.

In fact, it's already started.

Recent examples:

1. 1000 tractors export to Nigeria.

2. Establishment of tractor rebuild factory in Africa.

Riaz Haq said...

Here's an Automotive World story on Pakistan restricting used car imports:

With local policy aimed at making Pakistan a favourable trading country, rather than a manufacturing one, the significant inflow of used cars into Pakistan has, in the past, constricted the local automotive industry. This may be about to change, however, following a decision by the country’s Economic Coordination Committee (ECC).

The ECC has decided to reduce the age limit of used car imports into Pakistan to three years, from the previous limit of five years, according to The News International. This directive will come into effect on 15 December 2012.

The Economic Coordination Committee is a cabinet-level body responsible for final decisions pertaining to Pakistan’s economy. Set up under the Chairmanship of the country’s Central Finance Minister, the committee comprises ministers in charge of the country’s economic ministries.

This decision has drawn mixed reactions from the various automotive industry bodies in Pakistan. The Pakistan Automotive Manufacturers Association (PAMA) has welcomed this decision, as it favours local vehicle manufacturers. The association’s Chairman, Parvez Ghias, feels that this move is in the greater national interest.

The All Pakistan Motor Dealers Association (APMDA), on the other hand, has called this move unfair and unjust, as it is a setback to the import of used cars. Chairman HM Shahzad says this cut in age limit, along with the depreciation policy in force at present, will push the prices of cars significantly.

Earlier, Daily Times, citing industry experts, said the government lost nearly Pakistani Rs16.5bn (US$171.79m) due to the import of 55,000 vehicles. Around US$371m were reportedly spent on the import of used cars last year. According to Shahzad, though, this move to restrict import of used cars into Pakistan will result in a Pakistani Rs32bn loss to national exchequers
---------
The report stated that there were more than 100 vehicle assemblers in the country. These companies assemble cars, buses, trucks, two- and three-wheelers and tractors. The number of automotive parts manufacturers, however, totals approximately 1,700.

Japanese companies lead the list of vehicle assemblers in Pakistan, while local companies form the bulk of the country’s parts manufacturers. This is compounded by a weakness in terms of manufacturing systems and technology in the supply industry, which the report attributes to a lack of competition brought on by localisation requirements.
....



http://www.automotiveworld.com/articles/manufacturing-logistics/ecc-move-to-restrict-import-of-used-cars-brings-cheer-to-assemblers-in-pakistan/


HopeWins Junior said...

RE: http://alturl.com/3e8cr

Vice Chairman of Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Munir K. Bana said that the automotive-parts vending industry has lost billions in sales, as sales of locally-made new cars was hindered by the arrival of used cars.

He also said the local production of cars and LCV’s have registered a massive reduction of owing to import of used cars in huge volumes, also hurting the domestic auto parts vending industry.

1) Toyota-Pakistan Suffering:
http://alturl.com/mapku

2) Auto-manufacturers Suffering:
http://alturl.com/ycvcz

3) Auto-parts Suppliers Suffering:
http://alturl.com/quzqg

Riaz Haq said...

HWJ: "He also said the local production of cars and LCV’s have registered a massive reduction of owing to import of used cars in huge volumes, also hurting the domestic auto parts vending industry. "

Nonsense!

They have making huge profits...like Indus Motors' 57% increase in profit.

All of this complaining is desiged just to reduce competition to raise prices and further fatten their bottom lines.

HopeWins Junior said...

^^^RH: "All of this complaining is desiged just to reduce competition to raise prices and further fatten their bottom lines."

----

So if their complaining does not work (as it shouldn't), and more competition is introduced (as it should) by the rising imports of used cars, then it follows that their current bottom-lines are only artificially-fattened and will soon be drastically reduced.

But that would negate the very title and purpose of this blog-article of yours, would it not?

Is this what you are now trying to say? That Toyata-Indus profits are up right now, but are going to collapse in the near future. Will you then be writing another blog article next year highlighting this collapse in profitability of Toyota-Indus?

Please clarify.

Riaz Haq said...

HWJ: "Is this what you are now trying to say? That Toyata-Indus profits are up right now, but are going to collapse in the near future."

There you go again! Collapse! What nonsense!

Please learn some basics about market economies.

Competition is an essential ingredient that makes Capitalism work for consumers.

In the long run, there are winners and losers. Only those who take advantage of temporary protections to learn to compete win, the rest lose!

HopeWins Junior said...

Dr. Haq,

Here is the secret to the profitability (thus far) of our Auto-Industry: "Disproportional inflation of prices and fattening of profit-margins due to lack of competition".

Here is a simple example that you can verify/check yourself:

A) Pak-Suzuki Basic 800cc Model
= PKR 650,000
= INR 368,000
= USD 6,725

B) Maruti-Suzuki Basic 800cc Model
= PKR 397,000
= INR 225,000
= USD 4,113

These guys are merely robbing helpless ordinary Pakistanis.

Something to think about.

Thank you.

HopeWins Junior said...

^^^RH: "Toyota Pakistan Auto Profits Up 57% in FY 2012"
---

For a fair comparison, The Express Tribune recalculated their financial results so as to ascertain profits and revenues over the fiscal year ending June 30, 2012. The results were interesting.

(PART I) Suzuki saw its gross revenues jump over 49% to just over Rs79 billion during fiscal 2012. Profits expanded eight-fold to reach almost Rs1.9 billion during that period.

Toyota also had a good year, with gross revenues expanding over 22% to Rs91.6 billion, and profits grew by nearly 57% to reach Rs4.3 billion.

HOWEVER....

(PART II) During the first quarter of fiscal 2013, however, the picture REVERSED itself. Revenues for the quarter from July through September at Suzuki are down more than 25% and the company swung from a profit to a loss.

At Toyota, revenues were down more than 21% and profits slid more than 26% compared to the same period the previous year.

CONCLUSION: "Toyota Pakistan Auto Profits DOWN 26% in QI FY 2013"

Source: Dec 3, 2012
http://alturl.com/idbnw

Riaz Haq said...

Here's a Nation report on Japanese investor interest in Pak auto sector:

Huge potential exists between Pakistan and Japan to further strengthen economic ties as Pakistan offers a big market for investment in different sectors and hoped that the Japanese companies would tap that potential.

These remarks were made by Mr.Hiroshi Oe, Ambassador of Japan to Pakistan while addressing business community at Islamabad Chamber of Commerce & Industry (ICCI). He said that major reasons that keep Japanese companies away from investing in Pakistan are security and energy supply.

The Ambassador said that he has been trying to provide Japanese companies with opportunities to clear their perception gap and turn their eyes to the opportunities that Pakistan possesses. He said that Key areas of trade and investment between Pakistan and Japan could be textile, surgical equipments, furniture and automobile industry. He said that many big Japanese auto-industries investors are seriously planning to shift their units to Pakistan from Thailand due to heavy floods.

In his welcome address, Zafar Bakhtawari, President ICCI said that Japan is third biggest and one of the trillion dollar economies of the world and is an important trading partner of Pakistan as well as a major donor. ...


http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/islamabad/18-Dec-2012/japanese-auto-industry-investors-shifting-focus-to-pakistan-hiroshi-oe

Riaz Haq said...

Here's ET on cost difference in Indian and Pakistani cars:

In support of his claim, he said average cost of a Pakistani car (excluding taxes) is Rs750,000. An average Pakistani car uses 60% of local components and the value of such components is around Rs450,000. This is the amount that the parts makers lost on each imported car, he said.

Most people believe that locally assembled cars are much more expensive than vehicles manufactured in other countries, but this is a wrong perception, the industry representatives said while giving a comparison between prices of Pakistani cars and those manufactured in regional countries.

Pakistani cars are cheaper than most cars manufactured in India, Allawala claimed, adding 1,800cc Toyota Corolla is being sold in India for $16,334 (retail price excluding taxes) while the price of the same car in Pakistan is $13,253, lower by $3,081.

Including taxes, the retail price of Toyota Corolla in India is $26,744 while in Pakistan it is $19,781, a difference of $6,963.

Similarly, the retail price of 1,800cc Honda Civic in India he said was $19,216 (excluding all taxes) while the same car is being sold for $15,214 in Pakistan, a difference of $4,002, he said.

After including all taxes, the difference in prices of Honda Civic in Pakistan and India is $7,403. In India, Civic is being sold for $30,455 while it is available at $23,052 in Pakistan.

The automakers and vendors have underlined the need for revision in the import duty slabs, saying the old duty structures are favouring car importers.

In response to a question, PAMA Director General Abdul Waheed cautioned the consumers, who are opting for imported used cars, saying they were making a wrong decision.

“The buyers of used cars may spend less initially, but eventually they pay much more in terms of expensive maintenance and low resale value compared to a new car,” he said.


http://tribune.com.pk/story/478485/auto-assemblers-say-cannot-sustain-liberal-import-policy/

Riaz Haq said...

Here's an interesting Op Ed by Mazur Ejaz in Friday Times:

The condition of an economy is often confused with the financial health of its government. Pakistan's economy is perceived to be in a deep hole because of its near-bankrupt fiscal conditions. Similarly, America's inability to settle on a national budget is taken to be an indicator of the collapse of the US Empire.

In some ways, the condition of the economy and the financial health of the government are separate matters. Major stock market indexes at Karachi Stock Exchange and the Wall Street are at their highest level, but both governments are facing serious financial problems. Most of the countries around the world are facing similar dichotomous situations. So how does one solve the riddle of the corporate sector making record profits while governments around the world are in serious financial jeopardy?

The phenomenon needs to be analyzed at grass-roots level. A shopkeeper from my village comes to mind. He told me that he sells PTCL internet cards grossing about Rs 9,000 every day. There are several other such shops in the village. That means that just in one village, the total sale of PTCL internet cards is up to 50,000 rupees. This consumer item was not present five years ago, which means hundreds of computers have been bought in the village recently. Furthermore, if such luxury products are making such huge profits for village shops, traders throughout the country must be making much larger profits selling essentials every day. One of the indicators of booming business in our village is that the United Bank branch in the village is doing very well, according to its manager.

There are thousands of such villages in the country, and that gives one an idea of the mammoth growth of rural markets. Such an undocumented economy is not even factored in estimating the economic growth of the country. From these supposedly marginal markets, one can extrapolate the profits of the corporate sector in towns and cities.

It may be astounding for some that Pakistan's banking sector is considered fourth in profitability in the entire world. Producers of other major industrial and agricultural products are also making huge profits. Cement, fertilizer, automobile, construction and telecommunication industries are doing extremely well. Other than the textile industry, which has been hit by power shortages, there is hardly any manufacturer or importer/exporter of any kind of goods who is not making money. The stock markets look at the profits of these industries and price them accordingly. Therefore the claims of Pakistan's economic growth are not a fairy tale. The evidence is out there in the market.

The government is also like a large corporation whose income depends mainly on tax revenue. Most of the goods and services (such as roads, defense, education and health) provided by the government are public goods which are not priced directly. The government has to price its public goods through direct taxes on income and sales, or indirectly. Following a certain brand of capitalism, countries like Pakistan and the US are not collecting enough taxes to cover the cost of public goods. They have failed mainly in collecting direct taxes on income. While Pakistan cannot implement an appropriate tax collection mechanism because of corruption, the US has leaned towards favoring high income groups and ended up in a jam. The net result is the same: the rich are getting richer, appropriating most of the new wealth generated....


http://www.thefridaytimes.com/beta3/tft/article.php?issue=20130322&page=9

Riaz Haq said...

Unilever announces $514 million investment in Pakistan, reports News Tribe:

Karachi: Unilever Plc., through its wholly owned subsidiary, Unilever Overseas Holdings Limited on Tuesday committed to invest circa €400 Million (US$514m Million, Rs.50 Billion) in acquiring the 24.92% of issued shares in its Pakistan subsidiary, Unilever Pakistan Limited, that it does not already own.

This follows price and buyout threshold determined by the Special Committee constituted at the Karachi Stock Exchange as per applicable delisting regulations.

€400 Million is the single largest foreign direct investment in the recent history of Pakistan and underlines Unilever’s commitment to a business established in the country in 1948.

For the last 65 years, Unilever has been working to create a better future every day for millions of Pakistanis, with brands and services that help people make sustainable living a common place. There is hardly a household that does not daily use one of its 27 brands in the home care, personal care, foods, beverages and ice cream categories.

It directly employs 2,000 individuals in addition to generating a further 6,000 jobs in the value chain. Over 95% of what it sells is manufactured in Pakistan. The company ranks as the Most Preferred Employer amongst business graduates.

Under the Unilever Sustainable Living Plan, the company focuses on improving health and well-being, enhancing livelihoods and reducing the environmental impact.

The aforementioned investment is subject to approval by Unilever Pakistan’s shareholders at an Extraordinary General Meeting to be held shortly.


http://www.thenewstribe.com/2013/04/02/unilever-commits-e400-million-investment-in-pakistan/

Riaz Haq said...

Here's an ET story on middle class powering FMCG growth in Pakistan:

Procter & Gamble (P&G), one of the world’s largest consumer goods company, has recognised Pakistan as one of the top 10 emerging markets to focus investment in. This sounds like good news for our cash-strapped economy, and it is equally good news for those who have invested in P&G.
It makes sense for any fast moving consumer goods (FMCG) to invest in a country where the world’s biggest consumer goods names – Unilever, P&G, Nestle and Mondel-z (formerly Kraft Foods) – are not only operating, but also growing significantly.
According to the State Bank of Pakistan, the net profits of FMCG companies listed on the Karachi Stock Exchange grew in excess of 20% in fiscal year (FY) 2011-12. P&G, which is not listed on the KSE, has witnessed tremendous growth in revenues during the past three years – including 50% revenue growth in FY2012. Besides the consumer goods sector, its supporting industries like packaging and distribution companies have also seen their toplines grow significantly.
So what are the factors contributing to this growth?
If the fact that these companies are selling essential food items and consumer goods in the world’s sixth-largest market by consumer size is not satisfying enough for you, here’s a more detailed and nuanced explanation.
“Economics and demographics are together at play in Pakistan,” P&G Pakistan Country Manager Faisal Sabzwari told this correspondent in a recent interview. The boom in the rural economy has also been a major contributor to their growth – thanks to a series of bumper crops of agricultural produce and wheat support prices, which were raised by the government in recent years.
Besides this, according to Sabzwari, Pakistan is one of the top countries adding 20-somethings to its workforce; these are the people establishing families, getting new jobs and helping market sizes grow.
“We have millions of consumers entering independent disposable income space in their lives every year,” Sabzwari said, while referring to the growing middle class.
The market size in Pakistan has also grown in terms of volumes, without taking pricing into account. “Increasing urbanisation and the growing middle class are key drivers of the FMCG business,” Sabzwari said.
Pakistan’s is urbanising faster than other developing countries, according to Sabzwari. “The country’s population is growing at under 3%, while the rate of migration to urban centres is even higher,” according to Muzammil Aslam, managing director at Emerging Markets Rsearch.
“A population base of 180 million talented and hard-working people hungry for prosperity ensures that nothing can hold this country back from growing,” P&G Pakistan’s chief said. While looking at the growing middle class, he said, it is important to look at their consumption habits. “We are exposing more consumers to value brands like Pampers and Always,” he explained.
It may be added here that consumer spending in Pakistan has increased by an average of 26% in three years, according to a Bloomberg report published on November 21, 2012 – a strong sign that people are consuming more goods than ever before.
This rise in consumer demand has spurred the growth of supermarkets across major urban centres, which include, but are no longer limited to Karachi, Hyderabad, Multan, Lahore, Faisalabad and Islamabad.
Such superstores are getting larger and asking manufacturers for broader brand portfolios in order to serve their customers better. They have larger shelves, enabling them to have more sophisticated and developed categories in which they can stock more products than ever before....


http://tribune.com.pk/story/567315/in-resilient-pakistan-emerging-middle-class-powers-fmcg-sector/

Riaz Haq said...

#Pakistan's monthly auto sales up 129pc to 15,909 in units in July 2015 https://shar.es/1tTkru via @sharethis

Pakistan local car assemblers have started the new fiscal year with a positive growth of around 129 percent year on year (YoY), according to the data released by Pakistan Automotive Manufacturers Association (PAMA).

During July 2015, the local vehicle sales including LCVs, Vans and Jeeps stood at 15,909 units. It is important to note that in July 2014, sales dropped abnormally due to increase in advance motor vehicle tax and imposition of advance income tax on transfer of motor vehicles in Federal Budget FY15, said Muhammad Tahir Saeed, an analyst at Topline Research.

“Furthermore, anticipated new ‘Corolla’ model and less working hours due to Ramadan were other factors contributing to the historical low sales in last July,” he added.

Overall healthy growth in auto sector is indicative of increase in per capita income, improved farmer economics and overall recovery of the economy. Car financing is also picking up gradually, currently estimated at 30 percent versus 5.0 percent few years ago. To recall, car sales in Pakistan grew at a 5-year (FY11-15) CAGR of 5.3 percent to 179,953 units while volumes surged by 31 percent in FY15 on the back of a new model of Toyota Corolla, Taxi Scheme of Punjab government and an increase in car financing due to 42-year low interest rates in the country.

“We forecast car sales to grow at 13 percent in FY16 to reach at 203,653 units,” the analyst added.

Among individual companies, Pak Suzuki Motors (PSMC) sales increased by 119 percent YoY to 9,464 units in Jul 2015 primarily due to Punjab government’s Taxi Scheme. Volumes declined by three percent on Month-on-Month (MoM) basis due to extended Eid holidays.

Indus Motors Company (IMC) sold around 4,259 units in Jul 2015 compared to 1,106 units in the same month last year. It is pertinent to note that customers were waiting for the new model of Toyota Corolla in the same month last year which was the main reason for such an abnormally low base. On MoM basis, INDU sales decreased by 22 percent from 5,458 units it sold in Jun 2015.

Saeed attributed this decline to less working hours during Ramadan and extended Eid holidays. Just to highlight, Toyota’s new Corolla model is sold out for next 3-4 months, according to the sources in the industry.

HCAR sold 2,181 units in Jul 2015 compared to 1,505 units in the same month last year. On MoM basis, HCAR sales decreased by 12 percent in Jul 2015 from 2,488 units in Jun 2015.

It is important to note that HCAR is consistently posting sales growth despite the new model of Toyota Corolla launched by its competitor Indus Motors. This indicates that overall market size of Pakistan automobile sector is growing.

Millat Tractors (MTL) and Al Ghazi (AGTL) sales have been affected due to the floods.

MTL sold 743 units in July 2015 compared to 1,703 units in the same month last year. On Month-on-Month basis, MTL sales decreased by 71 percent in July 2015 from 2,556 units in June 2015.

AGTL sold 820 units in Jul 2015 compared to 1,056 units in the same month last year. On Month-on-Month basis, AGTL sales decreased by 40 percent in Jul 2015 from 1,375 units in Jun 2015.