After resuming its core activity of long-term
financing, the corporation has started leasing and acquired controlling
share of a commercial bank
By SHABBIR H. KAZMI
Feb-04 - Feb-10, 2002
The strategic plan, initiated in 1996, has enabled
Pakistan Industrial Credit and Investment Corporation (PICIC) helped the
Corporation to move ahead with remarkable success. Under the able
guidance of Muhammad Ali Khoja, PICIC has been able to consolidate its
financial position and improve its ability to offer a diversified range
of services. The Corporation continues to draw inspiration from its
vision of being the premier financial institution of the country and
withstand the commitment to industrial growth of Pakistan.
The performance of economy was characterized by the
government effort to improve macroeconomic fundamentals. The year
2000-2001 was an year of mixed fortunes. During the year PICIC's
operating profit attained impressive level. The driving force behind
improvement of profitability was containment of expenses, sustained
recovery drive and enhanced exploitation of resources. PICIC earned
operating profit of Rs 529 million which was 70 per cent higher than the
profit for the previous year. This enabled the Corporation to pay 12 per
cent dividend and issue 15 per cent Bonus Shares.
Improving the asset quality remained one of the most
significant attributes of PICIC's recovery campaign. In the cases where
recovery of loan was in doubtful, legal actions were initiated for the
enforcement of security. Recovery from delinquent accounts was pursued
for striking settlement through or out of court. The efforts resulted in
recovery of Rs 3.3 billion during the year 2000-2001. The biggest
confidence is that PICIC's non-performing advances are fully guarded
through provisions and fair realizable value of securities.
The recovery drive initiated in 1996-97 is still on
and has enabled PICIC to recover Rs 15.2 billion in cash during the past
five years. With the improved liquidity position, PICIC started looking
for new avenues where funds could be invested to earn better profit
margin. As a first step, PICIC resumed its core business of long-term
financing and also started lease financing. As per diversification plan,
as envisaged in 'PICIC Vision 2005, controlling shares of Gulf
Commercial Bank were acquired. This bank is now operating under a new
name, PICIC Commercial Bank.
During the year under review PICIC approved Rs 2,057
for 14 industrial projects as compared to Rs 928 million for 5 projects
last year. The implementation of these projects would contribute Rs
1,420 million annually to the national economy, generate employment
opportunities for 812 persons and earn Rs 4,648 million foreign exchange
for the country every year.
During 1998-99, the Securities and Exchange
Commission of Pakistan (SECP) allowed PICIC to undertake business up to
20 per cent of its paid-up capital. Lease proposals up to the admissible
limit were approved and disbursed during 1999-2000. In order to expand
lease operations, SECP was again approached and was given permission to
allocate Rs 200 million for the specific purpose of leasing business by
creating a separate department and appointing a Chief Operating Officer.
During the year 2000-2001 lease contracts of Rs 212 million were
approved out of which contracts amounting to Rs 178 million were
executed upto June 30, 2001.
PICIC plans to further diversify its activities. It
is studying the possibility either to acquire an existing modaraba or
float its own. To supplement its capital market operations, the
Corporation plans to acquire or establish an Asset Management Company.
It is also actively involved in due diligence for the privatization of
National Investment Trust (NIT).
PICIC has been an institution that unlike others, has
seen various stages of Pakistan's economy, its successes and upheavals.
It has withstood its commitment to contribute significantly towards
national cause of industrial development. PICIC has initiated
implementing a diversification plan aiming to transform it into a
financial super market.
Operating Profit
(Before diminution, provision and tax)
Rs in million
1997 151
1998 443
1999 1176
2000 311
2001 529
Income
(Rs in million)
Year Amount
1997 1945
1998 2078
1999 2525
2000 1482
2001 1685
Expenditure
(Rs in million)
Year Amount
1997 1794
1998 1635
1999 1349
2000 1171
2001 1156
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