Pakistan Industrial Credit and Investment
Corporation (PICIC) has embarked upon a business diversification plan
aimed at providing the various financial services under one banner.
The plan aims at achieving diversification of business and extending
periphery of its activities. It has already achieved three objectives
by acquiring a commercial bank and management rights of some of mutual
funds managed by Investment Corporation (ICP) and commencement of
leasing business. It has also been pre-qualified to participate in the
bidding process for acquisition of management rights of National
Investment Trust (NIT).
It will not be wrong to say that PICIC is an
organization that has very closely identified itself with the national
causes and exudes in its all endeavors. Its vision is, "To be a
premier financial institution of international standard and repute,
offering innovative value-added products and services, tailored
receptively to the customers needs and satisfaction, while optimizing
the shareholders' value through meeting their expectations, making
PICIC an investor preferred institution."
Playing a pivotal role in industrialization of
Pakistan, till June 30, 2002, it had financed 1,253 industrial
projects throughout Pakistan with gross financial assistance of Rs 33
billion. PICIC is an institution that has seen various stages of
Pakistan's economy, its rise and falls. Since its inception in 1957
till 90s PICIC's financial position was very sound. However, in 1990s
its financial stability was eroded resulting in operating losses and
large quantum of infected portfolio. PICIC after turning around in
financial year 1997, has been consolidating its position. It has once
again resumed its core business of long-term financing. Now it offers
complete range of financial services from commercial and merchant
banking to auto and medical equipment leasing.
In merchant banking area, the major initiative was
acquiring controlling share of Gulf Commercial Bank. After the
takeover, the name was changed to PICIC Commercial Bank. The new
management envisaged ambitious targets of deposits as well profit. The
targets were formidable but not beyond achievement albeit fierce
competition in the market. The main thrust of the policy was to
curtail expenditure without compromising efficiency, cutting further
the average cost of funds in conformity with the official policy to
facilitate lending at competitive rates and enhance profitability of
banking operations. Within a short span of time, PICIC Commercial Bank
has become one of the major players. It is also following an ambitious
branch expansion and upgradation programme to further improve the
quality of services.
PICIC established a leasing division and within a
short span of time, it has become one of the prominent members of the
leasing industry offering a multiple range of leasing products.
Special lease products have been developed for industrial customers,
small and medium enterprises (SMEs) and individual professionals to
help improve their quality of services. PICIC has also launched its
'Medical Equipment Leasing' programme. This is aimed at upgrading the
existing facilities in the country and making the services affordable.
PICIC has acquired management rights of 13 mutual
funds, commonly known as Lot-B and State Enterprise Mutual Fund (SEMF)
floated by the ICP. Net asset value of Lot-B when acquired was Rs
1,550 million had gone up to Rs 3,128 million on August 28, 2003 —
an increase of 102%. Net asset value of SEMF when acquired was Rs
3,725 million touched Rs 5,789 million on August 30, 2003.
Taking advantage of the bullish conditions of
equities market, PICIC has also restructured its widely held
portfolio. Efforts are being made to make it more liquid and
efficient. PICIC's strategy has been to realize capital gains and
liquidation of non-performing portfolio. The effective pruning of the
portfolio and accumulation of blue chip shares as improved dividend
income and resulted in substantial capital gains.
However, none of the above mentioned achievement
would have been impossible, had the management not followed a very
rigorous recovery policy to improve its financial health. PICIC also
made relentless efforts to the restructuring and rehabilitation of
sick units and the orderly transfer of assets of sick projects to new
investors. These measures have yielded positive results.
The efforts of management have not only yielded
positive results but also led to upgradation of its credit rating.
This is recognition of the enhanced risk absorption capacity of PICIC
emanating from a stronger financial structure. At the same time
PICIC's strong liquidity position provides adequate comfort for
meeting short-term obligations.