PICIC EMERGING AS A FINANCIAL SUPER MARKET
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.
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