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

27 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 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 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...

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/

Hopewins 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 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 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 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.

Hopewins 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 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 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 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 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...

Chief Engineer Yoshiki Konishi: #Pakistan is top market for #Toyota #Corolla cars in #Asia and 4th in the world.

http://nation.com.pk/business/08-Aug-2017/pakistan-has-4th-highest-corolla-sales-globally

Remarkable success of Corolla in Pakistan has made Pakistan number 1 in Corolla sales in Asia Pacific and number 4 in the world,” said Yoshiki Konishi, Chief Engineer for Corolla, Toyota Motor Corporation at the 26th IMC Dealers Conference held at a local hotel here recently.

The theme of the conference was “Race to Ace”. Dealership CEOs, executives from Toyota Motor Corporation, Toyota Tsusho Corporation, senior management from the House of Habib, dealer management and teams and the IMC management attended the conference.

In his video message, Yoshiki Konishi appreciated IMC’s efforts in successfully promoting Toyota in Pakistan for the last 26 years. He added that since its inception 44.1 million Corolla cars have been sold globally.

“Technology is changing the entire landscape of business. Big names which fail to change according to the environment soon become part of history and we have to acknowledge the technological change happening in our country,” said Chairman Indus Motor Company (IMC), Ali Habib. “We have gone back to the basics, that is, Toyota Way,” he added.

The new facelift model of 11th generation of Corolla was unveiled in the event, which will be available in Pakistan from August. “The most beautiful Corolla is here to excite Pakistani market with new features like Push Start, Smart entry, 16 inch Alloys, 9 inch infotainment, new interior, Vehicle Stability Control etc.” said the Chief Executive Officer, IMC, Ali Asghar Jamali.

He said their special emphasis is on ‘best in class’ safety features to standardize Dual SRS Air Bag across all the variants of Toyota Corolla, ISO Fix Seat Anchors, Front seats 3point ELR with Pre-Tensioner and Force Limiter seatbelts in all variants.