The KSE-100 index seems to be moving fast to breach 2000 psychological barrier. Buying has been extended to second tire scrips due to improved investors' confidence. This is attributed to easy financing facility by other than Badla providers. However, some analyst still apprehend profit taking in next couple of weeks which may lead to slight erosion in value. Their concern are based on the active involvement of some Lahore-based players. To substantiate their point of view they refer to recent bullish trend in National Bank of Pakistan. While the price has moved up significantly, profit for the year 2001 is expected to be less than Rs 500 million, which does not offer attractive dividend yield.

Many equities analysts and shareholders were surprised by a 40 per cent interim dividend announcement by the company. It is heartening to note that after the settlement of tariff dispute with WAPDA, working relationship with its sole buyer has improved considerably. WAPDA paid all the billed invoices and also paid the first installment of previously unpaid CPP as agreed in Settlement Agreement. This improved cashflow position and consequently dividend distribution. However, it is necessary to find out the forecast for the whole year. According to a report by KASB the projected cashflow available to shareholders for dividend payment indicates an IRR of about 12 per cent in real terms as compared to 17 per cent originally. The interim dividend provided fuel to demand for the share but also pushed the price up.

MARI GAS

In Board of Directors' meeting, to approve annual accounts, a special resolution was passed to increase the authorized capital of the company from Rs 500 million to Rs 2,500 million. The reason behind this move is to facilitate the issue of further equity to meet expansion plan, development of gas field. Provided the company goes ahead with a right issue, nearly 80 per cent of the new equity should be readily subscribed by the three major shareholders: Fauji Foundation, GoP and OGDCL. The company has also announced half yearly results, posting Rs 580.6 million profit after tax, a sales of Rs 5.8 billion. An interim dividend of 20 per cent was also announced. There was an improvement in quoted price.

As a result of loss after tax of Rs 65.74 million for the year ending June 30, 2001, accumulated loss of the bank exceeded Rs 243 million. For the year 2000, the bank had posted Rs 27 million profit after tax. The bank managed to curtail expenditure from Rs 190.4 million to Rs 147.7 million but the fall in income was too large — from Rs 219.8 million to Rs 85.4 million. There was an overall decrease in income but decline in profit on morabaha finance was colossal, a fall from Rs 173.6 million to Rs 66.7 million. While dividend income reduced to half, the bank also posted Rs 4 million loss on investment as against a profit of Rs 15 million under this head.

Despite an increase in sales profit after tax for the year ending September 30, 2001 was lower than the profit for the previous year. Sales went up from Rs 2,367 million to Rs 3,067 million. Cost of goods sold hiked from Rs 1,739 million to Rs 2,383 million. Two factors, increase in selling and distribution expenses and financial cost, seems to be responsible for this decline. Selling and distribution expenses grew from Rs 69 million to Rs 124 million and financial cost hiked from Rs 135.9 million to Rs 215.9 million. Administrative expenses also increased from Rs 29 million to Rs 41 million. However, the company managed to maintain its dividend payout at 25 per cent and transfer Rs 148 million to general reserve. The company has also issued shares worth Rs 201.6 million during year 2000.

Earning per share for the year ending September 30, 2001 works out to Rs 3.46 as against Rs 9.95 for the previous year. Despite an increase in sales there was a decline in gross profit, a fall from Rs 421 million to Rs 312 million. There was also increase in administrative, selling and general expenses which was compensated by increase in other income. However, the hike in financial and other charges, an increase from Rs 118 million to Rs 167 million further eroded profit. Profit before tax came down from Rs 264 million to Rs 108 million. This also reduced dividend payout from 40 per cent for the year 2000 to 15 per cent for the year 2001.

For the year ending September 30, 2001 the company has posted Rs 2.7 million loss after tax as opposed to a profit of Rs 51.4 million profit for the previous year. The main reason for this seems to be a fall in gross profit, from Rs 133.5 million to Rs 67.9 million. Sales increased from Rs 807.6 million to Rs 911.5 million. However, cost of goods sold went up from Rs 674 million to Rs 843.6 million. This proved too fatal and earning per share became negative Rs 0.12 as compared to a positive Rs 2.79 for the previous year.