Billion dollars Pakistani companies

[Toramana]

http://tribune.com.pk/story/483287/corporate-revenues-the-growth-of-the-billion-dollar-club-in-pakistan/

KARACHI: Corporate Pakistan seems on the verge of hitting some sort of tipping point: the number of companies reporting revenues of higher than $1 billion over the past two years has grown dramatically.
While there is currently no Pakistani corporate colossus that spans the globe, and certainly no Pakistani equivalent of Tata Sons, many Pakistani companies appear to be growing in size and are reaching the stage where they may begin to consider global expansion. The growth in size of some of these companies is also likely to have a significant impact on the economy as a whole.
In this special report, The Express Tribune takes a look at the 19 companies that are part of the “billion dollar club”, companies that have reported more than US$1 billion over a financial year. We have taken revenues net of any sales taxes or federal excise duty, unless such a number was not available, in which case we have simply taken the number reported by the company on its financial statements.
We recognise that revenues are by no means a perfect measure of looking at how big companies are. But given the relatively small size of Pakistan’s public equity markets, we felt that many other measures – such as profits or market capitalisation – would provide too narrow a picture of the economy since such information would not be available for a large number of companies.
For the exchange rate, we have used the average interbank exchange rate during the financial year ending June 30, 2012. We recognise that the dollar is currently trading significantly higher now than it did last year, but we decided to use the exchange rate that corresponds with the period under consideration.
For banks, we have used their net interest income – before taking into account any impact of loan write-offs and provisioning for bad debts – and added their non-interest-based income.
We have also not included any conglomerates that do not have a unified holding company that releases public data. So, for instance, the Nishat Group does not make the list because there is no single holding entity, but instead a series of interlocking ownership between the companies, owned ultimately by Mian Muhammad Masha and his family. Were it a single company, the Nishat Group would most certainly be part of the billion dollar club.
We have also excluded such conglomerates as the Atlas Group, which does have a unified holding company – Shirazi Investments – but does not report its consolidated financial information publically. Were that data available publicly, we estimate that it would easily qualify to be part of the list.
Nonetheless, the list we have compiled is a remarkable one and tells the tale of what has been going on in the Pakistani economy. The most noticeable element of the billion dollar club is just how many of them are state-owned, and how a disproportionately large number of them are in the energy sector. Indeed, all but three of them are energy companies and eleven of them (more than half of the list) have substantial shareholding – in most cases the majority – by the government of Pakistan.
And this list does not even take into account the many government entities that are part of the energy chain, but for which no reliable data is available. The best estimate we have been able to get is for the National Transmission and Dispatch Company, which reportedly had revenues of nearly $5.5 billion.
The picture painted by the billion dollar club is a decidedly unhappy one: where the largest companies in the country are mostly state-owned, and operating highly inefficiently, compared to their private sector counterparts. Many of these companies are, at least in theory, up for sale, though the current administration, led by the left-leaning Pakistan Peoples Party does not appear to be in the mood to revitalise the privatisation process.
The energy sector typically does have higher revenues than most other sectors, and similar lists compiled for developed economies also yield lopsided results favouring energy, particularly the oil and gas sector.
Yet the dominance of state-owned companies on this list represents the outsized role played by the state in creating large-scale industries in Pakistan. This is a pattern of development that has historically been adopted by other countries too. Some of the largest companies in Brazil and Mexico, for instance, are still state-owned.
But in most cases, governments have unlocked the massive untapped economic potential of these slumbering state-owned giants by eventually privatising them. Pakistan has certainly experimented with that technique, to a considerable degree of success. The banking sector went from being overwhelmingly state-owned to overwhelmingly private-owned and has gone from needing bailouts every year to being one of the biggest taxpayers in the entire economy.
The energy sector, however, appears to be one area where the government refuses to let go, retaining control over nearly all of the electricity supply and most of the oil and gas exploration and distribution systems in the country.
This is not to suggest that there is no private-sector presence in the energy sector. Three of the 19 “billion dollar” companies are part of the Attock Group, a private sector energy conglomerate owned by Saudi billionaire Ghaith Pharaon. The largest electricity companies – the Karachi Electric Supply Company and the Hub Power Company – are both mostly owned by private investors.
The only two private sector non-energy companies on the list are the Engro Corporation and Pakistan Mobile Communications. Engro is a large industrial conglomerate with interests in fertilisers, food, petrochemicals, energy, chemical storage, and commodity trading. PMCL operates under the brand name Mobilink, the largest mobile services provider in Pakistan.
Nonetheless, while the billion dollar club illustrates where this economy has been – a large dominance of the state in capital-intensive industries – our “near billion dollar club” list shows where this economy is going: a place where global and local companies compete for an every greater share of the rising middle class consumers’ pockets.

The Billion Dollar Club
1. Pakistan State Oil Company
Revenues: $11.57 billion
Joined club: Before 1986
Pakistan State Oil is the largest oil marketing company in the country, with a 67% share in the retail fuel market. It is owned by the government of Pakistan and was established in 1976.
2. Pak-Arab Refinery
Revenues: $3.00 billion
Joined club: 2000
Pak-Arab Refinery (PARCO) is the largest oil refining company in the country. It was set up in 1974 as a joint venture between the governments of Pakistan and Abu Dhabi.
3. Sui Northern Gas Pipelines
Revenues: $2.52 billion
Joined club: 2004
Sui Northern Gas Pipelines is one of three gas distribution companies in Pakistan, with mandate to supply gas to Punjab and Khyber-Pakhtunkhwa. It is owned by the government of Pakistan.
4. Shell Pakistan
Revenues: $2.38 billion
Joined club: 2000
Established in 1928 as Burmah Shell, this company is the oldest oil marketing company in Pakistan and the second largest. It is the Pakistani subsidiary of global oil giant Royal Dutch Shell.
5. Oil & Gas Development Company
Revenues: $2.23 billion
Joined club: 2005
OGDC is the largest company in the country by market capitalisation as well as being the largest domestic oil producer. It is owned by the government of Pakistan.
6. National Refinery
Revenues: $1.97 billion
Joined club: 2005
The second largest oil refinery in the country by revenues, National Refinery is one of two refineries owned by the Attock Group, the largest private sector oil conglomerate in Pakistan.
7. Hub Power Company
Revenues: $1.97 billion
Joined club: 2009
Hubco is the largest private sector power generation company in Pakistan and originally established by French power companies. It is now owned in part by the Dawood Hercules Corporation.
8. Karachi Electric Supply Company
Revenues: $1.84 billion
Joined club: 2008
Established in 1912, the Karachi Electric Supply Company is the oldest utility company in Pakistan and the oldest company still listed on the Karachi Stock Exchange. It is owned in part by Abraaj Capital.
9. Attock Refinery
Revenues: $1.74 billion
Joined club: 2008
The third largest oil refinery in the country by revenues, Attock Refinery is one of two refineries owned by the Attock Group, the largest private sector oil conglomerate in Pakistan.
10. Attock Petroleum
Revenues: $1.72 billion
Joined club: 2010
APL is the second-largest private sector oil marketing company, with more than 350 retail outlets across the country. It is owned by the Attock Group, the largest private oil conglomerate in Pakistan.
11. Lahore Electric Supply Company
Revenues: $1.49 billion
Joined club: 2006
Lesco came into existence in its current form in 1994, when the government of Pakistan split up the state-owned power distribution company into regional groups. Lesco remains state-owned.
12. Pakistan Refinery
Revenues: $1.44 billion
Joined club: 2011
The oldest oil refining company in Pakistan, PRL is one of only two refineries that is still at least partially state-owned. It is set to become the smallest after Byco’s new refinery comes online in 2013.
13. Sui Southern Gas Company
Revenues: $1.38 billion
Joined club: 2005
SSGC is the second largest gas distribution company in the country, serving the populations of Sindh and Balochistan. It has remained state-owned since it was created in its current form in 1989.
14. Pakistan International Airlines
Revenues: $1.36 billion
Joined club: 2005
Founded in 1956, Pakistan International Airlines is Pakistan’s national flag carrier. This company is begrudgingly included in the billion dollar list, since its expenses vastly exceed its revenues.
15. Engro Corporation
Revenues: $1.29 billion
Joined club: 2011
It is one of the largest private sector industrial conglomerates in the country with interests in fertiliser manufacturing, food, energy and others. Its largest shareholder is the Dawood Hercules Corporation.
16. Pakistan Telecommunications Company
Revenues: $1.25 billion
Joined club: 2000
PTCL was once a monopoly provider of telecommunications services in Pakistan and is still the largest player by revenues. It is jointly owned by the government of Pakistan and Etisalat of the UAE.
17. Kot Addu Power Company
Revenues: $1.14 billion
Joined club: 2012
Kapco is the second largest power generation company in the country. It is partially owned by the government of Pakistan and supplies power to southern Punjab.
18. Mobilink
Revenues: $1.11 billion
Joined club: 2006
Formally known as Pakistan Mobile Communications Ltd, Mobilink is the largest telecommunication provider in Pakistan and is owned by Egypt-based Orascom Telecom.
19. Pakistan Petroleum
Revenues: $1.09 billion
Joined club: 2012
PPL is the second largest oil exploration and development company in the country and is majority-owned by the government of Pakistan. It was founded in 1950 as the subsidiary of a British oil firm.

[Toramana]

Rising tide: Consumer-centric companies dominate the “near billion dollar club”

KARACHI: Call it the democratisation of the economy: while the list of Pakistani companies with more than $1 billion in revenues is dominated by state-owned energy companies, the list of companies closest to achieving that milestone is dominated by companies that rely on the increasing spending power of the middle class Pakistani consumer.
The Express Tribune’s “near billion dollar club” includes companies with over $500 million in revenues for the financial year ending June 30, 2012, unless the company uses a different financial year, in which case we use its most recently completed year. There is some room for uncertainty about this list for us since many of these companies are not publicly listed or otherwise make their financial statements available.
This “near billion dollar club” is more exciting from the perspective of both the private sector within the country as well as foreign investors looking to enter the market. It is dominated by companies in the food, beverages, automobiles and telecommunication services sectors.
The financial services sector also makes its debut here. For banks, we have used their net interest income – before taking into account any impact of loan write-offs and provisioning for bad debts – and added their non-interest-based income, to arrive at total revenues. For insurance companies, we take added their gross premiums and investment income.
The largest company in the near-billion dollar club is Telenor Pakistan, with $951 million in revenues. It is our most likely candidate for entering the billion dollar club next year. Our estimates for Pepsico’s revenues are based on their market share and our estimates of the total size of the Pakistani market for soft drinks and snack foods.
What is interesting about the food and consumer goods companies on the list in the near-billion dollar club is that they are all local subsidiaries of foreign food giants: Pepsi, Nestle, Unilever and Coca Cola. Yet investors estimate that this pattern will soon change.
“In 20 years time, Pakistan will have quite a few $1 billion consumer products companies outside Nestle and Unilever, just like any other emerging market,” said Mattias Martinsson, CEO of Tundra Fonder, a Stockholm-based asset management company that runs a Pakistan-focused mutual fund with over $40 million in assets under management.
Yet regardless of their ownership, the fact that companies in consumer-facing sectors are the most likely to cross the $1 billion threshold in terms of revenues represents a tectonic shift for the economy. Gone are the days when the largest icons of Corporate Pakistan were dominated by the state-owned, capital-intensive companies. Instead, the rise of this new breed of company shows that the Pakistani consumer is about to make his or her presence felt on the economy in a big way.
The rising purchasing power of the Pakistani middle class – covered in previous special reports at The Express Tribune – is beginning to translate into the shift in structure of the economy. And this shift is beginning to attract investor attention. Unilever, for instance, decided to buy out its local shareholders and convert Unilever Pakistan into a wholly-owned subsidiary of the global parent before it pumps in more investment to expand its presence in Pakistan.
And while the energy sector makes its entrance into the near-billion dollar club as well, it is mostly through companies that are most consumer-facing, such as the electricity distribution companies in Faisalabad, Multan, and Islamabad.
Among commercial banks, it is somewhat encouraging to see that the largest by revenues is no longer the state-owned National Bank, but instead the privatised, revitalised Habib Bank, which now leads the bank contingent.
The Near-Billion Dollar club
1. Telenor Pakistan
Revenues: $951 million
The Pakistani subsidiary of the Norwegian telecommunications giant, Telenor Pakistan is the second largest mobile service provider in the country. Telenor came to Pakistan in 2004.
2. Pepsico Pakistan
Revenues: $922 million
Established in 1960, Totoya Indus is a joint-venture between the Japanese auto giant Toyota and the one branch of the House of Habib branch of the Habib family.
3. State Life Insurance Corporation
Revenues: $885 million
Founded in 1972 after the nationalisation and consolidation of the entire life insurance industry in Pakistan, State Life is still the dominant player in the market, capturing 67% of all premiums.
4. Toyota Indus
Revenues: $869 million
Established in 1960, Totoya Indus is a joint-venture between the Japanese auto giant Toyota and the one branch of the House of Habib branch of the Habib family.
5. Habib Bank
Revenues: $831 million
Founded in 1941 by the Habib family, the bank has now grown to become the largest in Pakistan, overtaking National Bank in terms of both branch network size and asset base.
6. Nestle Pakistan
Revenues: $804 million
The local subsidiary of Swiss food giant Nestle is one of the largest food companies in the country. The company first entered Pakistan through a joint venture with Milkpak Ltd in 1988.
7. National Bank of Pakistan
Revenues: $781 million
NBP is the government’s own treasury bank and for much of Pakistan’s history was the largest financial institution in the country before being overtaken in 2011 by Habib Bank.
8. Faisalabad Electric Supply Company
Revenues: $775 million
Fesco came into existence in its current form in 1994, when the government of Pakistan split up the state-owned power distribution company into regional groups. It remains state-owned.
9. Multan Electric Power Company
Revenues: $761 million
Split off in 1994 from the Water and Power Development Authority, Mepco is the monopoly electricity distribution company for most of southern Punjab. It is state-owned.
10. Unilever Pakistan
Revenues: $746 million
Founded in 1948 in Rahimyar Khan, Unilever Pakistan is one of the oldest multinational food companies in the country. It is owned by Anglo-Dutch food and consumer goods giant Unilever.
11. Pakistan Tobacco Company
Revenues: $728 million
PTC is the local subsidiary of British American Tobacco and has been operating in Pakistan since 1947. It sells such well-known brands as Dunhill, Benson & Hedges, Gold Leaf, Capstan, and Gold Flake.
12. Pak Suzuki
Revenues: $713 million
PSMC is the local subsidiary of Japanese automobile manufacturer Suzuki and has been operating in Pakistan since 1984. It is largest selling brand amongst smaller cars in the country.
13. Islamabad Electric Supply Company
Revenues: $681 million
Iesco was split off from Wapda in 1994 and supplies electricity to the federal capital and surrounding districts in Punjab as well as Azad Jammu & Kashmir. It is state-owned.
14. Fauji Fertilizer Company
Revenues: $634 million
Owned by the Army-owned Fauji Foundation, Fauji Fertilizer is the largest manufacturer of urea in the country. It was established in 1978 and manufactures the Sona brand of urea.
15. Lotte Pakistan
Revenues: $624 million
Lotte is a manufacturer of purified terephthalic acid, an essential raw material used in the polyester industry. It is owned by a South Korean Industrial conglomerate Lotte.
16. United Bank
Revenues: $622 million
UBL was founded in 1959 by legendary banker Agha Hasan Abedi. It was owned by investors based in the United Arab Emirates before being nationalised in 1971. It is now owned mostly by the Abu Dhabi Group.
17. MCB Bank
Revenues: $617 million
MCB Bank was originally founded by the Adamjee family in 1947 before being nationalised in 1971. It then privatised in 1991 and sold to the Nishat Group, owned by Mian Muhammad Mansha.

http://tribune.com.pk/story/483448/rising-tide-consumer-centric-companies-dominate-the-near-billion-dollar-club/

[Toramana]

Strong Earnings Propel Pak Shares Index to 4 Years High

A string of strong earnings announcements by Karachi Stock Exchange listed companies and the Central Bank's 1.5% rate cut have helped the KSE-100 index gain 32% year to date. In the week ended on August 16, the benchmark index surged by 238.59 points, or 1.61 percent, to 51-month high of 15,000.08 points. This was the highest close since April 30, 2008.

Strong Earnings:

Last week, KSE-listed Indus Motors announced 57% jump in profits on record sales of Toyota Corolla cars. It was followed by Lucky Cement Ltd. (LUCK), Pakistan’s largest producer of the building material, announcing 71 percent surge in profits to a record as an increase in domestic sales offset a decline in exports. Pakistan Petroleum Limited (PPL), the country’s second largest oil and gas explorer, said its profits soared 30% to Rs40.9 billion in fiscal 2012. Strong earnings have also been reported by Unilever Foods and Bata shoes in the last few days.

Best Performing Market:

So far in 2012 Pakistan is the best performing market in Asia surpassing the Philippines which was the top performer until June of this year. Karachi stocks have also significantly outperformed all emerging stock smarket indexes, including Mumbai and Shanghai, in 2012.


Rising Consumer Demand:

Meteoric rise of Engro Foods symbolizes strong consumer demand in growing package food sector. Its CEO Muhammad Afnan Ahsan has forecast 81% increase in net income in the current year ending December 31, 2012. With a compound annual growth rate (CAGR) of 65 percent and a planned infrastructure investment in 2012 of eight billion rupees, Engro Foods has become the country's fastest growing local company catering to a wide range of consumers in Pakistan and overseas.


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.

http://www.riazhaq.com/2012/08/strong-earnings-propel-pak-shares-index.html

[Toramana]

The unparalleled growth of the services sector

KARACHI: The title of this report is ‘The Billion-dollar Club. It could just as easily have been ‘The Pakistani services sector’ and still been a fairly adequate moniker. The most unique factor about the billion-dollar club is that the bulk of the companies are not from the agri sector. But they are from the services sector. This includes telecom, power companies, utilities, retail giants and food companies. Manufacturing giants and agriculture are largely missing from the list.
This is not to say that agriculture or industry have no role or future in Pakistan, far from it, but it does show how the services industry has latched on to the spending boom and catapulted itself to the top of the food-chain, literally. The bulk of the companies on the list are oil marketing companies. I am not sure what to infer from this. The oil marketing companies here are big because we have a power demand or they are so big and still we have a power shortfall?
This should really come as no surprise considering the fact that the services sector is the largest and fastest growing sector in the world economy, accounting for the largest share in total output and employment in most developed countries. The average share of the services sector in total GDP is 47% in low income countries, 53% in middle income countries and 73% in high income countries.
The sector now accounts for 69% of global output, 35% of global employment and nearly 20% of global trade. The value of services in world exports has increased 41.7% whereas the value of goods has increased just 35.5% from 1975 to 2005. Since then the trend has been even more acute.
Over the last few decades, the structure of the Pakistan economy has experienced significant changes. An analysis shows that the share of agriculture has been declining gradually over time from 43.6% in 1960-61 to 21.5% of GDP in 2009-10, and share of industry has increased from 15.6% in 1960-61 to 25.2% of GDP in 2009-10. The share of service sector has increased from 39% of GDP in 1960-61 to 53.3% of GDP in 2009-10, therefore the service sector is the largest contributor to the GDP of Pakistan.
Cross country data reveals that structural transformation of most countries has been multi-stage. In the first stage of transformation, the decline in the share of the agriculture sector has been seen to be compensated by an almost equal increase in industry, whereas share of services sector has remained stagnant. In the second stage of economic growth, substitution has mostly taken place between industry and services while agriculture has remained constant. This implies that the services sector has in most cases gained momentum at the expense of agriculture.
In case of Pakistan, the share of services is increasing in all sectors of the economy. In fact, the growth rate of services sector is higher than the growth rate of agriculture and the industrial sector and it now accounts for one third of total employment. It also provides essential inputs to the agriculture sector and the manufacturing sector.
It is because of its strong linkages with other sectors of the economy that the growth of the services sector can be taken as an indicator of the strong potential for overall economic growth.

http://tribune.com.pk/story/483436/the-unparalleled-growth-of-the-services-sector/

[Toramana]

ISLAMABAD: Driving from Karachi to Nooriabad, it is hard not to notice a constant feature. To the left of the Super Highway, power transmission lines sag between evenly spaced towers along the road for several kilometres before curving away toward the distant northern skyline.
This is Pakistan’s national power grid. And soon it may carry a significant load from an alternative, clean, ‘green’ and a free source: Wind.
By February 2013, two wind power projects in Jhimpir – a town in Sindh’s Thatta district – are expected to inject around 106 megawatts (MW) into the country’s electricity transmission system.
Jhimpir falls in the Gharo-Keti Bandar Wind Corridor, which has a potential to generate up to 50,000MW of electricity, according to the Alternative Energy Development Board (AEDB). The organisation has already racked up 12 wind power projects there.
Land of wind turbines
From the Nooriabad Industrial Area, a 25-kilometre dirt track leads southeast to the Zorlu Energy Pakistan’s wind turbine farm in Jhimpir. The sun hangs low over the monotonous landscape: A vast stretch of uncultivated land dotted with bushes and trees. Then, the wind turbines pop up: Huge three-blade structures mounted at the top of towers going up 85 metres into the sky.

The 1,148-acre wind turbine farm by Zorlu, a subsidiary of the Turkish firm Zorlu Enerji, started off with five turbines in 2009. A $36.8-million loan from Asian Development Bank (ADB) and credit from other banks helped it expand to 33 turbines.
Once it gets the remaining formal approvals from the National Transmission and Despatch Company (NTDC), the $143-million project will be set to add 56.4MW to the system, says Mumtaz Hassan, the country manager of Zorlu Energy Pakistan. “We are ready and are targeting the end of January [2013] to start electricity supply,” he said.
Wind power projects are pricey. A 50MW farm costs around $135 million. The land sublease rates have gone up since the Sindh government took over land allocation from the AEDB in April.
That’s not all
In Jhimpir, another wind energy project, by the Fauji Fertiliser Company Energy Limited (FFCEL), will start contributing 49.5MW to the national grid from December 24.
Twelve independent power producers have also been given lands and another 12 are being considered, says Naeem Memon, the AEDB deputy director. Letters of interest have been issued to 47 companies to set up wind power projects between 5MW and 350MW capacity.
Wind is good
The Gharo-Keti Bandar Wind Corridor stretches around 70 kilometres along the coast and 110 kilometres inland. Identified by the AEDB and Pakistan Meteorological Department in 2005, it holds promise with average wind speeds of around 7.3 metres per second (m/s).
Only the first 12 projects will get a “wind-risk” guarantee. If the wind speed is lower than 7.3 m/s, the Pakistani government will pay the difference of energy not produced, Memon said. “The guarantee will not be offered to the future projects because AEDB has sufficient wind forecast data now,” he said.
‘Not a substitute’
Though it all sounds great, there are some caveats. “Wind power is not a substitute, it is a secondary source,” Zorlu’s site manager Murat Aziz puts it frankly. “If you invest without increasing capacity of other sources of electricity, the system will collapse when the wind stops.”
Experts suggest wind power should not comprise more than 10 per cent of the total power capacity installed. The 1,000MW expected from Jhimpir would only be around 3 per cent of Pakistan’s total power capacity of 21,000MW.
Also, linking two dozen power plants from the same place may result in power transmission issues. A more-supply-than-demand situation may trip the grid. But for now, Hassan and Memon are confident that maximum wind power generation can be achieved in Jhimpir during summers when the power demands are at the peak.

http://tribune.com.pk/story/483543/alternative-energy-in-jhimpir-lies-the-future-of-wind-farming/

[Friend]

In the number 18, the revenue it has given is totally biased$1.2 ... mobilink one day revenue must be obe $1billion. they have a huge number of customers, a wide spread network and a huge daily sales revenue lool.