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By SHABBIR H. KAZMI
Updated May 26, 2001

The federal budget for the financial year 2001-2002 will be announced on June 16. The present economic managers have already announced the broad policy parameters. Therefore, the common belief that investors are sitting on the sidelines and waiting for the ritual is incorrect. There are other factors which have rendered equities market less attractive for the investors.

KSE-100 index, which has remained range-bound for many weeks, is expected to plunge below 1300 points. The market would have gone below had the KSE not resisted inclusion of some volume leaders in T+3 system. It is to be seen for how long KSE members are going to resist full implementation of T+3 system.

IBRAHIM FIBRES
Despite a sharp contraction in the primary margins of the PSF sector, the Company has been able to hold its fort much better than any other domestic player. At the end of June 2000, it had over a billion rupee in cash in view of impending payments related to its 200 per cent capacity expansion project, now fully underway. This has helped boost other income by over 300 per cent (YoY) to Rs 18 million. The management is expected to complete the project at lower cost. To access the future earnings investors should look at the key driving forces: PSF prices, raw material prices, market share and capacity utilization.

LEVER BROTHERS

For the year 2000 the Company has posted the best-ever net profit amounting to Rs 1.34 billion 75 per cent higher than profit for the previous year. While total sales increased by 6 per cent it is necessary to examine growth in three key areas, i.e. food, beverages and detergents and personal products. Food sales have registered a decline largely due to the low international price of cooking oil. Beverage sales have not only grown but profit margins were also maintained. There was 27 per cent increase in turnover of detergents and personal products.

GENERAL TYRE & RUBBER COMPANY

The Company has posted Rs 77 million profit after tax for the six-months period ending December 31, 2000 as against a profit of Rs 95.7 million for the corresponding period of previous year. The factors which can be attributed to this decline in profit are: decrease in sales and increase in administrative expenses. While the Company managed to bring down financial and other charges, other income also came down during the period under review. Sales of the Company are expected to remain under pressure due to lower sales of automobiles. In the replacement market the Company continue to face competition from other manufacturers and smuggled tyres.

SHADMAN COTTON MILLS

The Company has announced 35 per cent dividend for the year ending September 30, 2000, it had not paid any dividend for the previous year. Dividend of this magnitude was possible because the Company has posted Rs 110 million profit after tax for the year under review as against a profit of Rs 31.7 million for the year 1999. While there was increase in sales, operating, administrative and selling expenses and financial and other charges also went up during the year under review.

TAJ TEXTILE MILLS

The Company has posted Rs 17.6 million profit after tax for the year ending September 30, 2000 as compared to a profit of Rs 6 million for the previous year. Operating profit for the year 2000 came to Rs 182.6 million. However, bulk of this Rs 158.6 million was eaten up by financial charges. The Board of the Company has recommended 7.5 dividend amounting to Rs 12.5 million. The Company had not paid any dividend for the previous year.

BHANERO TEXTILE MILLS

The Board of Directors have recommended 250 per cent dividend for the year ending September 30, 2000. It had paid 80 per cent dividend for the year 1999. Such a high payout was possible due to more than three fold increase in profit after tax as compared to the previous year. The Company has posted Rs 165 million profit after tax for the year under review. An amount of Rs 90 million has been transferred to general reserve. There was also an increase in administrative, selling and distribution expenses.

GLAMOUR TEXTILE MILLS

It must be a point of concern for the shareholders as well as lenders of the Company that its accumulated losses touched nearly Rs 633 million as at September 30, 2000. However, the Company was able to reduce its loss after tax for the year 2000 to Rs 73 million. It had posted Rs 108 million loss for the previous year. It must also be a point of concern that the Company has posted losses for the years 1999 and 2000. One of the reasons for this loss is out of proportion financial charges. There is an urgent need to restructure its credit or injection of fresh equity by the sponsors. Unless these measures are not taken the Company cannot post any substantial profit. The other alternative is to liquidate the Company.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE MN)

Hubco

20.95

20.40

20.50

69,200,000

PTCL

18.35

17.65

17.85

68,645,500

Adamjee

57.00

54.35

56.40

12,036,500

Fauji Fertilizer

43.90

43.05

43.75

7,828,900

FFC Jordan

4.95

4.65

4.65

1,418,000

KESC

5.25

4.95

5.00

658,000

SSGC

9.90

9.80

9.90

501,500