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Oct 23 - 29, 2000

SBP detects 'shady' deal between ABL and Fateh Group

The State Bank has unearthed an underhand deal between the management of the Allied Bank (ABL) and a private concern for the transfer of the bank's majority shares to the party but avoided to take action against those involved in the "shady" business.

Reliable sources in the SBP told that an effort had been made to use the bank's funds for purchase of its majority shares by Fateh Textile Mills, Hyderabad, (also known as Fateh Group) so as to deprive the officials and employees of the bank from their management rights.

The ABL president, Rashid M. Chaudhry, who has lately sought premature retirement and two senior directors of the bank, S. Jauhar Hussain and I.A. Usmani, who have also retired recently, have been suspected for favouring the group for their personal gains.

The stage was all set for the transfer of the management to the group but the State Bank's timely intervention halted the process. However, instead of proceeding against the bank's senior management the SBP allowed them to retire with full benefits, including millions of rupees in cash.

The government has appointed Khalid Sherwani, the managing director, House Building Finance Corporation (HBFC), as the new president of the bank. The SBP sources indicated that an inquiry on the issue was likely to be ordered now to fix the responsibility.

In 1991 under the privatization scheme the then government sold its 51 per cent shares to the officials-employees of the bank together with transfer of the bank's management.

This transfer of management deal carried a condition that the same cannot be sold to outsiders before retention thereof for five years from the date of transfer.

Last year the SBP had learnt that one of the ABL's old client, Fateh Group, had taken control of the majority shares of the bank's employees and also manoeuvring to take over the balance of 49 per cent shares presently held by the SBP/government through underwriting.

Furnace oil

Pakistan State Oil (PSO) has raised the furnace oil prices by 3.34 per cent to Rs12,882 per metric tons from Rs12,465 per metric tons (inclusive of sales tax).

Pakistan Refinery Limited (PRL) and National Refinery Limited (NRL) had also increased the prices of fuel oil to Rs11,085pmt from Rs10,750pmt as a result of rising spurt in international oil prices. Refineries main buyers of fuel oil are Shell Pakistan and Caltex Pakistan.

An official in a refinery said that the global price of fuel oil has gone up to $175pmt as compared to $160-163pmt two weeks back and the situation is further compounded by the downward journey of rupee since July 20.

On Monday, Shell Pakistan Limited (SPL) had also hiked the furnace oil price by Rs287.50 per metric tons to Rs12,822.50 per metric tons from Rs12,535 per metric tons due to price hike made by local refineries.

Loans on floating rates costlier

Mark-up on most of working capital loans and even long term loans that are priced at some floating rates has gone up, inquiries reveal.

The rate of increase vary from bank to bank and from case to case but in most cases it is in the band of 2.00-3.75 per cent depending upon the reference rates used in the pricing of loans.

Basically banks use the State Bank repo rate or treasury bills rate as base rates. Whereas repo rate has risen by two per cent in the past three weeks the yield on T-bills of different tenures has moved up by 3.17-3.75 per cent.

State-run and partly privatized banks say they would wait for some time before making an across-the-board increase in lending rates. But they admit that they are currently revising lending rates upwards on a selective basis.

$ below Rs57

The rupee on Thursday rose to 56.85/56.95 to a US dollar in the inter-bank market showing a 90 paisa recovery in a single session. This brings the total gain the rupee had made against the dollar in the inter-bank market to 175 paisa or three per cent in the past three days.

Sugar prices shoot up

Sugar prices have once again come under pressure and consumers have started paying higher prices to buy sugar at Rs29-30 per kg in various parts of the city as compared to Rs27-28 per kg.

Besides, the price of gram pulse (from Australia), has also shot up to Rs30-32 per kg depending on the areas as compared to Rs27-28 per kg.

Sherwani to head ABL

The board of directors of Allied Bank Ltd. has appointed Khalid A. Sherwani as the president of the bank.

The decision was taken at an emergent meeting of the board held on Monday with Rashid M. Chaudhry in the chair.

Javed Omer Vohra & Company

Cash dividend recommended by the board of JOV & Co on October 9 at Rs10.50 per share of Rs10, is twice the payout of Rs5.25 made by the company last year and has been made on the back of nearly four time jump in after tax profit.

Pretax profit for the year ended June 30, 2000 amounted to Rs108.1 million, up 291 per cent from a year ago pretax profit at Rs27.6 million. After tax profit also quadrupled to Rs101.8 million, from Rs26.4 million.

Lawrencepur Mills

Lawrencepur Woollen & Textile Mills Limited announced financial results for the year ended June 30 on Monday, posting 10 per cent improvement in pretax profit to Rs29.5 million, from a year ago profit amounting to Rs26.9 million. The board has proposed cash dividend at 30 per cent, stepped up from 22.5 per cent declared the earlier year.

PTC to invest another $40m

Pakistan Tobacco Company (PTC) will further make an invest of $40 million in Pakistan despite facing losses during the last few years.

"We have decided to invest $40 million despite experiencing losses and denial of a level-playing field compared to many other cigarette companies who are evading duties and taxes", said Stephen W. Daintith, Finance Director of the Pakistan Tobacco Company Limited (PTC).

$5bn fresh investment needed

Pakistan needs fresh investments of $5 billion over a period of next two years to jumpstart its economy.

This was stated by Pakistani-American investor Mian Iftikhar Siddique while speaking to businessmen at the Lahore Chamber of Commerce & Industry (LCCI) on Saturday.