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By SHABBIR H. KAZMI
Updated Feb 05, 2001

The market is still moving side ways and players never miss an opportunity of profit taking as and when available. The negotiations between the SECP and the KSE seems to have boiled down to an urgent appointment of Managing Director for KSE. The situation looks a little funny as the two sides could not agree on certain names, for the best reasons only known to them.

It is often observed that many listed companies deviate from their core business and are involved so grossly in other activities that earnings in the core business are adversely affected. This seems to be true in case of two companies, atleast. These are Diamond Industries and Shaffi Chemical Industries. Funds from these companies were diverted to capital market activities. However, when they felt the pinch, the intensity of resentment, originating from May crisis, is evident from Directors' Report of both the companies. The Report says, "The profit in this head would have been much higher had it not been for acts of CHEATING, FRAUD, MANIPULATION and UNFAIR PLAY by the Chairman, Vice Chairman, office bearers, directors, management and certain members of the Karachi Stock Exchange during the period of July 1999 to June 2000."

DIAMOND INDUSTRIES

The Company has posted Rs 26.398 million profit before tax for the year ending June 30, 2000 as against a loss of Rs 5.111 million for the previous year. This profit was mainly due to other income amounting to Rs 58.228 million, otherwise the Company had posted operating loss of Rs 31.829 million. The remarkable feature of operations was sales of Rs 146.722 million for the year 2000 as compared to that of Rs 2.492 million for the previous year. There was no production at foam unit having an installed capacity of 12,000 tonnes. However, at PVA units actual production was 1,357 tonnes against installed capacity of 1,560 tonnes. The company declared 30 per cent dividend for the year 2000 but directors/sponsors of the Company surrendered their right of dividend. The Company has invested Rs 31.772 million in two associate companies, Diamond Polymer and Shaffi Chemicals. As at June 30, 2000 the short-term investment amounted Rs 100.883 million in shares of various listed companies (5,245,150 shares of The Bank of Punjab, 871,000 of D. G. Khan Cement and 165,000 shares of Adamjee Insurance Company).

SHAFFI CHEMICAL INDUSTRIES

The Company posted Rs 12.763 million gross loss for the year ending June 30, 2000. It has also posted a loss amounting to Rs 14.265 million for the previous year. Operating expenses for the year 2000 amounted Rs 18.364 million resulting in an operating loss of Rs 31.128 million. Other income amounting to Rs 101.605 million enabled the Company to post Rs 70.476 million profit before tax. Other income was realized from capital gains amounting to Rs 93.396 million. Sales of the Company came down from Rs 121.063 million for the year 1999 to Rs 82.096 million for the year under review. The Company has an installed capacity of 17,500 tonnes per annum but actual production was 3,285 tonnes during the year 2000 even lower than that of 4,391 tonnes for the previous year. The company declared 30 per cent dividend for the year 2000 but directors/sponsors of the Company surrendered their right of dividend.

ENGRO CHEMICAL PAKISTAN

Profit after tax announced by the Company, amounting to Rs 1,126.3 million was above the expectation of the market. The announcement created buying euphoria and price of the scrip went up. The scrip has attracted attention mainly due to its earnings potential which is expected to further improve after the GoP announces Fertilizer Policy and capacity utilization improves. One of the joint venture has already started yielding profit, despite problems faced in LPG imports. Earnings are also expected to realize from PVC joint venture after its capacity utilization improves further.

AL-ABBAS SUGAR MILLS

Despite a reduction in sales, the Company was able to maintain payment of 15 per cent dividend for the year ending September 30, 2000. The reason attributable for that was other income of Rs 36.8 million. At the same time efforts to curtail selling and distribution expenses proved fruitful and the amount reduced from Rs 15 million for the year 1999 to one million rupee for the year 2000. However, administrative expenses (Rs 23 million) and financial charges (Rs 48.7 million) were much higher than those of previous year.

ORIX INVESTMENT BANK

A profit before tax at Rs 23 million, for July-December 2000 period, was more or less was at the level of corresponding period of the previous year. While there was an increase in income expenditures also went up. However, higher provision for potential losses on term finance/credit facility, at Rs 2.7 million further eroded profit before tax and the Company preferred to skip payment of any interim dividend. This is a common policy followed by the listed companies and also seems prudent in the light of recent announcement regarding increase in paid-up capital of NBFIs.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE MN)

PTCL

20.75

19.75

20.55

185,125,500

HUBCO

19.85

18.80

19.50

156,866,500

Engro

83.00

68.10

82.50

90,086,800

ICI

9.85

8.90

9.65

54,575,000

Adamjee

74.90

68.70

73.50

19,929,500

Fauji Fertilizer

50.25

45.85

50.00

3,540,400

Bank of Punjab

11.15

10.10

11.10

2,603,500

Source: Invest Capital & Securities