Pakistan Auto Industry Posts Huge Sales Gains

Auto sales in Pakistan jumped 61% in July, 2011 to 17,563 units from 10,942 units in the same month of last year. Pak Suzuki Motor Company led the auto sales up with 116 percent rise to 11,997 units from 4,503 seen in the same period last year. This is in sharp contrast to a Reuters report of 16% decline in auto sales in July across the border in India.



Earlier, Economic Survey of Pakistan 2010-2011 reported that the first 9 months of fiscal 2010-2011 saw production of television sets jump 28.6% and automobile production increase by 14.6%. From July 2010 to March 2011, production of cars, light commercial vehicles and two and three wheelers grew by 16.4%, 20.5% and 12.6% respectively. These figures confirm the return of Pakistanis' appetite for consumer durables after a significant drop from 2007-2008 to 2008-2009.

In a separate news story carried by Bloomberg, Swiss food giant Nestle's Pakistan subsidiary said its sales of consumer packaged goods rose 25% year-over-year. Engro Foods, a local Pakistani competitor of Nestle, reported its sales climbed 46 percent to 7 billion rupees in the last quarter.

Rising sales of consumer durables like cars and fast moving consumer goods (FMCG) represent a clear sign of the return of the middle class consumers who had pulled back since 2008. This improvement has been been aided by rising incomes in the rural areas stimulated by higher food and commodity prices. Fast moving consumer goods (FMCG) – or Consumer Packaged Goods (CPG) – are products that are sold quickly and at relatively low cost. Examples include non-durable goods such as milk, juices, sodas, toiletries, and packaged grocery items.

Nestle Pakistan's chief Ian Donald summed up the rising demand for his company's products as follows: “It’s a common perception that China and India are much bigger in terms of growth than Pakistan. But for Nestle, the per capita consumption of our products in Pakistan is twice as much as we have in China and India.” It should be noted that Nestle is the world's largest packaged food company.

Over the last two decades, Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report on Asia's rising middle class released in 2010.

The ADB report on Asia's rising middle class confirms that Pakistan's middle class has grown to 40% of the population, significantly larger than the Indian middle class of about 25% of its population, and it has been growing faster than India's middle class.

Coming on the eve of Pakistan's Independence Day this Aug 14, the news of rising sales of cars and other consumer products could lead to more hiring and help revive Pakistan's economy which has been stagnant since 2008.

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Comments

Riaz Haq said…
Reduction in taxes announced by the government helped car sales sprint 35% in the first two months of financial year 2011-12, according to a report in The Express Tribune:

Sales stood at 29,537 units from July to August 2011 against 21,833 units sold in the preceding year, according to data released by Pakistan Automotive Manufacturers Association on Monday.

The incentive given by the government in terms of removal of 2.5% special excise duty on imported and locally manufactured vehicles coupled with reduction in general sales tax to 16% from 17% were the core reasons for the growth, said Summit Capital analyst Sarfraz Abbasi.

Growth was primarily led by Pak Suzuki Motor Company as its sales rose by 67% to 18,301 units followed by Indus Motor by 6% to 8,829 units.

The biggest leap forward was seen in Suzuki Swift sales that tripled to 1,274 units against 421 units in the same period last year. Liana, under the domain of 1,300cc engine capacity and above, recorded 149% jump in its sales to 127 units in comparison with just 51 units sold in the same period last year.

Meanwhile, tractor sales dropped by a hefty 78% to 1,993 units on the back of higher input taxes and plant shutdowns during the period. Al-Ghazi Tractors’ production operation remained completely shut during August.

Moreover, car sales declined by 31% in August alone amid less working days due to Eid holidays and lower production on account of Ramazan.

Company-wise breakup shows that this time Indus Motor took the front seat to lead sales with an increase of 27% to 4,728 units compared with 3,360 units sold in the same period last year.

New variants launched by the company in 1,600cc segment and CNG vehicles introduced in the already established market acted as a catalyst in this growth.


http://tribune.com.pk/story/250984/car-sales-rise-35-per-cent/
Riaz Haq said…
Here's a news report on India's slowing car sales:

Passenger car sales in India grew at a scorching 30% in 2010-11 (April-March). But with rising interest rates on auto loans and a sharp rise in petrol prices, car sales this year have slowed down to a crawl.

In fact passenger car sales crashed 16% in July and 10% in August, according to data by Society of Indian Auto Manufacturers (SIAM). Strike at Maruti Suzuki’s plant in Manesar, which had hit output of one of its most selling cars, the Swift hatchback, has only added to the pressure on overall industry sales.

SIAM has already cut its growth forecast for car sales to 10-12% from earlier 16-18%. Last month it said it would further downgrade growth forecast for the full year.

Research firm Crisil painted a bleak picture earlier in the week, saying it expects "growth in passenger vehicles to decelerate sharply to 2-4% with domestic cars growing at a mere 0-3% as against earlier forecast of a growth of 8-10%."

Crisil said its latest downgrade was prompted by Rs 3 rise in petrol price and 25 basis points hike in interest rates by Reserve Bank of India in September.

Other analysts, like Nikhil Deshpande of Pinc Research and Sejal Jhunjhunwala of Way2Wealth Securities too agree that sentiments are not looking good this year, despite the ongoing festive season.

"Automakers had expected car sales to pickup in the festive season. But there were two conditions -- interest rate hike cycle would peak out and fuel prices wouldn’t rise. But there has been no respite on either front," Deshpande told moneycontrol.com

No wonder then the automakers are going all out to tempt customers now, with more offers this year than last year, in the hope that people will spend impulsively during Dassera-Diwali. Fiat India, for instance, is offering benefits up to Rs 1.30 lakh on its Linea sedan, and Rs 75,000 on the Punto hatchback. Fiat’s offer includes insurance at Rs 1, exchange benefits, gift cheque and free road side assistance for 50 months.


http://www.moneycontrol.com/news/business/discounts-galore-as-passenger-car-sales-hit-speed-bumps_592863.html
Riaz Haq said…
Here's a Bloomberg report on rising consumer spending and growing FMCG sector in Pakistan:

...“The rural push is aimed at the boisterous youth in these areas, who have bountiful cash and resources to increase purchases,” Shazia Syed, vice president for customer development at Unilever Pakistan Ltd., said in an interview. “Rural growth is more than double that of national sales.”
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Nestle Pakistan Ltd., which is spending 300 million Swiss francs ($330 million) to double dairy output in four years, boosted sales 29 percent to 33 billion rupees ($377 million) in the six months through June.

“We have been focusing on rural areas very strongly,” Ian Donald, managing director of Nestle’s Pakistan unit, said in an interview in Lahore. “Our observation is that Pakistan’s rural economy is doing better than urban areas.”

The parent, based in Vevey, Switzerland, aims to get 45 percent of revenue from emerging markets by 2020.
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Haji Mirbar, who grows cotton on a 5-acre farm with his four brothers, said his family’s income grew fivefold in the year through June, allowing him to buy branded products. He uses Unilever’s Lifebuoy for his open-air baths under a hand pump, instead of the handmade soap he used before.
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Sales for the Pakistan unit of Unilever rose 15 percent to 24.8 billion rupees in the first half. Colgate-Palmolive Pakistan Ltd.’s sales increased 29 percent in the six months through June to 7.6 billion rupees, according to data compiled by Bloomberg.
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Unilever is pushing beauty products in the countryside through a program called “Guddi Baji,” an Urdu phrase that literally means “doll sister.” It employs “beauty specialists who understand rural women,” providing them with vans filled with samples and equipment, Syed said. Women in villages are also employed as sales representatives, because “rural is the growth engine” for Unilever in Pakistan, she said.

While the bulk of spending for rural families goes to food, about 20 percent “is spent on looking beautiful and buying expensive clothes,” Syed said.

Colgate-Palmolive, the world’s largest toothpaste maker, aims to address a “huge gap” in sales outside Pakistan’s cities by more than tripling the number of villages where its products, such as Palmolive soap, are sold, from the current 5,000, said Syed Wasif Ali, rural operations manager at the local unit.
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Unilever plans to increase the number of villages where its products are sold to almost half of the total 34,000 within three years. Its merchandise, including Dove shampoo, Surf detergent and Brooke Bond Supreme tea, is available in about 11,000 villages now.
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Pakistan, Asia’s third-largest wheat grower, in 2008 increased wheat prices by more than 50 percent as Prime Minister Yousuf Raza Gilani sought to boost production of the staple.

“The injection of purchasing power in the rural sector has been unprecedented,” said Sherani, who added that local prices for rice and sugarcane have also risen.
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Increasing consumption in rural areas is forecast to drive economic growth in the South Asian country of 177 million people, according to government estimates.

Higher crop prices boosted farmers’ incomes in Pakistan by 342 billion rupees in the 12 months through June, according to a government economic survey. That was higher than the gain of 329 billion rupees in the preceding eight years.
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Telenor Pakistan (Pvt) Ltd. is also expanding in Pakistan’s rural areas, which already contribute 60 percent of sales, said Anjum Nida Rahman, corporate communications director for the local unit of the Nordic region’s largest phone company.
Riaz Haq said…
Here's a Dawn report on Pakistan auto sales July-Sept 2011:

KARACHI: While sale of cars, two and three wheelers and light commercial vehicles remained brisk from July-September 2011, production by a leading tractor assembler remained suspended between second week of July 2011 and September 2011.
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Buying spree was witnessed for locally assembled cars thanks to huge arrival of home remittances, surging farm income, slight increase in car sales through bank financing, etc.

Even rising prices of locally produced cars and high cost of fuel (petroleum products and CNG) did not make any adverse impact on vehicle sales.

Pak-Suzuki Motor Company Limited (PSMCL) raised the prices by Rs14,000-30,000 followed by two to four per cent by Indus Motor Company (IMC).

Honda City also became costlier by Rs25,000 while Civic price was raised by Rs38,000.

Pakistan Automotive Manufacturers Association (PAMA) claimed rise in overall car sales to 38,065 units in July-September 2011 as compared to 30,030 units in the same month of last year.

Overall sale of costly cars (1,300cc and above) rose to 16,936 units as compared to 14,949 units.

Sale of Honda Civic, Honda City and Toyota Corolla stood higher at 1,710, 2,562 and 10,682 units as compared to 1,558, 2,274 and 10,371 units respectively. Suzuki Swift sales also surged to 1,826 units from 673 units.

In 1,000cc segment, overall car sales jumped to 7,343 in July-September 2011 from 5,679 units in the same period of last year in which sales of Suzuki Cultus and Suzuki Alto swelled to 3,710 and 3,633 units from 2,860 and 2,819 units respectively.

Increase in Suzuki Mehran sales to 8,415 units from 5,356 units made a positive impact on overall sales of 800cc and below 1,000cc cars which rose to 13,786 units from 9,402 units.

Sale of Daihatsu Cuore and Suzuki Mehran went up to 1,282 and 4,089 units as compared to 1,136 and 2,910 units.

A leading car assembler said he checked with many banks who intend to cut interest rates from Nov 1 after Central Bank`s decision to lower interest rates.

He said car financing by banks now enjoys 20 per cent share in overall car sales and this share may go up slightly after cut in interest rates.

From July onwards, the buyers especially on cash basis had resumed purchases and it was evident from sales trend in the first quarter of the current fiscal year.

Rising farm income also encouraged farmers and growers to purchase more new bikes, thus pushing up Honda bikes sales to 152,605 units in July-September 2011 from 126,701 units in the corresponding period of 2010.

Sale of Suzuki bikes also increased to 5,506 from 4,588 units while sale of Ravi and Habib bikes (Chinese two-wheelers) improved to 6,680 and 7,707 units from 5,971 and 4,053 units.

Qingqi and Sazgar three-wheeler sales reached 5,193 and 3,901 units from 2,787 and 2,976 units.

In pick-ups, a total of 4,586 units of Suzuki Ravi and 856 units of Toyota Hilux were sold in July-September 2011 as compared to 3,129 of Ravi and 285 units of Hilux in the same months during 2010.

In heavy vehicles, sales of only Master trucks rose to 110 units from 82 units while sales of Hino, Nissan and Isuzu trucks plunged to 231, 33 and 36 units from 422, 102 and 119 units.

In buses, Hino bus sales dropped to 56 units from 110 units and Isuzu bus sales also came down to 12 units from 23 units........


http://www.dawn.com/2011/10/11/tractor-heavy-vehicles-sale-dip.html
Riaz Haq said…
SIAM, India's auto-industry lobby, forecasts sales growth will slow to 2% to 4% for the year ending April, about one-tenth of what it was last year, according a report in the Wall Street Journal.

Rising prices are usually something auto makers welcome. Not in India.

As recently as April, some Indian auto makers were struggling to produce enough cars to meet demand as sales hit successive monthly highs.

But thanks to rising interest rates, buyers are hitting the brakes.

Across the industry, sales fell 16% in July compared with last year and 10% in August. September's decline was a relatively mild 1.4%, the Society of Indian Automobile Manufacturers reported Monday, though sales figures in the three ...

http://online.wsj.com/article/SB10001424052970203499704576624454021313240.html

Here's more from Reuters:

NEW DELHI, Oct 10 (Reuters) - Car sales in India are expected to rise just 2 to 4 percent this fiscal year, an industry body said, cutting its forecast for the second time this year, as high interest rates and rising costs continue to hit demand in Asia's third-largest economy.

The growth forecast is down from the earlier estimate of 10 to 12 percent by the Society of Indian Automobile Manufacturers (SIAM), and 16 to 18 percent before that. Car sales had jumped 30 percent in the fiscal year 2010/11 that ended March.

"If the government continues to raise fuel prices and interest rates continue to go up the demand for cars will remain subdued," S Sandilya, President, SIAM and Chairman, Eicher Motors , told reporters.

Indian car sales last grew in single digits in 2008/09, at 1.39 percent.

Demand for cars in the world's second-fastest growing auto market after China has also been dented in recent months by rising vehicle costs, with many first-time buyers plumbing for motorcycles or scooters.

Car sales fell 1.8 percent in September to 165,925 cars, data released by SIAM showed on Monday. Demand for cars shrunk in July for the first time in nearly three years.

However, sales of commercial vehicles, a key pointer to the country's economic activity, rose 18.05 percent to 70,634, while motorcycle sales rose 19.93 percent to 933,465 vehicles.

India's central bank has raised interest rates 12 times since March last year in an effort to battle stubbornly high inflation, a move that has hurt credit-based purchases and slowed economic growth.

The Indian car market, which saw a 10 percent decline in August, is driven by a burgeoning and aspirational middle class that mostly relies on bank loans for purchases.

Maruti Suzuki , India's largest car maker, and 54.2 percent owned by Japan's Suzuki Motor Corp , posted a 21 percent drop in September sales, but rival Tata Motors , which makes both commercial vehicles and cars, reported a 22 percent increase for the month.

"The way things have been going in the last few months, this is a realistic number. While there is some uptick in festive demand, it's nowhere close to what it was in the last two years," said Vineet Hetamasaria, auto analyst at Mumbai's PINC Research.

SIAM raised its growth forecast for commercial vehicles to 13 to 15 percent, from the earlier forecast of 12 to 14 percent.

"Demand for movement of goods still remains, because the economy is still growing at 7 to 8 percent," SIAM's Sandilya said.

http://www.reuters.com/article/2011/10/10/india-autos-forecast-idUSL3E7LA1J320111010
Riaz Haq said…
Here's a report in The Nation newspaper on Pakistan's auto parts industry:

The auto sector has taken initiative to organize the show for local auto part vendors to look for more export opportunities. Praising the efforts of local vendors in developing the engineering base and enhancing the skill sets of local engineers, they said that it is for the efforts of OEMs that local auto manufacturers have achieved 60 percent localization.
The auto sector is fully committed to localization process and has already developed 60 vendors and has arranged 34 technical assistance agreements for transfer of technology. In this regard, the IMC has invested Rs13 billion in development of internal infrastructure which includes Press Shop, Engine Shop and Paint Shop.
The OEMs have invested over Rs75 billion in local auto industry and it contributes more than 5 percent annually towards the national exchequer. Moreover OEMs and auto parts manufacturers employ around 200,000 people and supports employment of over 1,392,000 persons throughout its supply chain of vendors, suppliers and dealers.
The auto industry experts expressed confidence that the show will attract local and foreign investors and that the local auto industry will get support from government and policy makers which will help open doors for exploring foreign markets.
The local car manufacturers including the Indus Motors Company are the platinum sponsor for Pakistan Auto Parts Show (PAPS 2011) aimed to provide a platform for local engineering firms to introduce their products.
The auto sector in Pakistan is committed to play its role in the development of engineering base of the country. So, sponsoring ‘PAPS 2011’ is a step in this direction, which will showcase the achievements of Pakistan auto industry.


http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/24-Oct-2011/Pakistan-Auto-Parts-Show-opens-today
Riaz Haq said…
Here's an excerpt from a Unilever report on ice cream consumption in Pakistan:

0.5 kg consumption per capita but growing at double digit rate

http://www.igisecurities.com.pk/pdf/Unilever_Pakistan_Limited_Initiating_Coverage.pdf
Riaz Haq said…
Pakistan auto sales up 24% in October, reports Daily Times:

KARACHI: Pakistan Automotive Manufacturers Association (PAMA) has released local automobile industry’s sales and production numbers for the month of October 2011. As per data, auto sales of the industry witnessed a substantial growth of 24 percent year to year (YoY) to 58,576 units in four months of fiscal year 2012 (FY12) as against the sales of 47,143 units in the corresponding period last year.

The main reason behind this substantial volumetric growth seems to be incentive given by the government to local auto manufacturers in terms of removal of Special Excise Duty (SED) of 2.5 percent on imported and manufactured vehicles coupled with reduction in General Sales Tax (GST) from 17 percent to 16 percent in addition to the low base effect. Pak Suzuki Motor Company Limited (PSMC) witnessed a 38 percent YoY growth to 34,877 units in 4M FY12 as against the sales of 25,279 units in same period last year.

Highest growth was observed in the sales of Suzuki Swift of 140 percent YoY to 2,328 units as against 969 units in the same period last year.

Liana under the domain of 1300cc and above segment also witnessed a handsome 37 percent YoY jump in its sales to 168 units in comparison of 123 units in the same period last year.

Ravi, the pickup, experienced a massive 23 percent growth to 5,722 units versus 4,665 units same period last year. Indus Motor Company Limited (INDU) witnessed a 7 percent YoY growth in sales to 17,806 units in 4M FY12 as against 16,622 units in same period last year. Hilux, under pickup segment led the growth in sales of the company with a gigantic 135 percent YoY to 1,099 units as against 647 units in the same period last year.

Toyota Corolla posted upsurge in sales by 6 percent YoY to 15,175 units as against 14,622 units in the same period last year. Cuore remained as the only segment of the company, whose sales experienced a decline of 19 percent YoY to 1,532 as against sales of 1,893 units in the same period last year. Honda Atlas Cars Pakistan Limited (HCAR) also showed a handsome growth in its sales of 14 percent YoY to 5,893 units in 4M FY12 as against the sales of 5,172 units in 4M FY11.

The main reason behind growth was low base effect. The City, the most liked segment of consumers post 20 percent YoY growth to 3,647 units as against sales 3,041 units in same period last year.

Civic another product of the company in 1300CC and above segment posted a modest rise of 5 percent YoY to 2,246 units in comparison of 2,131 in corresponding period of last year.

As far as the market share is concerned, PSMC leads the market with 60 percent market share followed by IMC and HCAR with 30 percent and 10 percent market share in 4M FY12.


http://www.dailytimes.com.pk/default.asp?page=2011\11\15\story_15-11-2011_pg5_2
Riaz Haq said…
India car prices rising as Indian rupee hits record lows, reports Wall Street Journal:

NEW DELHI – Several auto makers in India have decided to increase their vehicle prices in January due to rising raw material costs and a fall in the local currency’s value, which has made imports of parts more expensive.

The local units of Hyundai Motor Co., General Motors Co., Ford Motor Co. and Toyota Motor Corp. will increase vehicle prices on Jan. 1. Suzuki Motor Corp’s unit already increased prices of its diesel models last month.

The Indian rupee is the worst-performing Asian currency this year, with the U.S. dollar rising nearly 16% against the local unit. Auto makers, especially the local units of foreign companies, import large amounts of parts and the rupee’s weakness has driven up their costs.

They have also been hit by higher prices of key raw materials such as steel and aluminum.

Raising vehicle prices could further damp demand for vehicles, which has remained weak since June due to rising fuel costs and higher interest rates on loans.

Hyundai Motor India Ltd.’s director of sales and marketing, Arvind Saxena, said factors such as inflation and the rupee’s depreciation have “compelled us to look at a price increase.”

The company will increase the prices of all its vehicles by 1.5%-2.0%.

Maruti Suzuki India Ltd. raised prices of the diesel variants of four models by up to 10,000 rupees ($195), and it will consider a similar increase for gasoline-powered vehicles after December as an appreciation in the Japanese yen has made parts imports expensive, India’s largest car maker said on Dec. 1.

The company expects its operating profit margin to shrink 1.0 percentage point during October-March due to the currency effect.

Ford India will raise prices of all vehicles by up to 3%, while General Motors India will increase prices of most models by 1%-2%.

P. Balendran, vice president for corporate affairs at GM India, said it will increase the price of the diesel variant of its Beat small car by 15,000 rupees as it is currently being sold at introductory rates.

Toyota Kirloskar Motor Pvt. Ltd. also said it will lift prices by up to 3%.

Honda Siel Cars India Ltd., however, said it isn’t considering raising prices right now. “Our immediate priority is to make sufficient cars to meet demand,” said Jnaneswar Sen, senior vice president of marketing and sales.

The company has been forced to cut production due to a shortage of parts from Thailand following heavy floods there.

A Tata Motors Ltd. spokesman refused to comment, while executives at Mahindra & Mahindra Ltd. couldn’t be contacted.


http://blogs.wsj.com/drivers-seat/2011/12/07/car-prices-to-rise-in-india/
Riaz Haq said…
Proctor & Gamble Pakistan wins award for corp social responsibility, reports The News:

The US Secretary of State Hilary Clinton presented Proctor & Gamble (P&G) with the thirteenth annual Secretary of State’s Award for Corporate Excellence (ACE) for the company’s exceptional corporate social responsibility (CSR) efforts in Pakistan.

Bob McDonald, Chairman of the Board, President and Chief Executive Officer of The Proctor & Gamble Company accepted the award in a ceremony held at the State Department in Washington, DC on Wednesday.

US Consul General in Karachi William Martin and P&G Pakistan Country Manager Faisal Sabzwari joined the ceremony in Washington via digital video conferencing.

Addressing a news conference at the Karachi Consulate, Martin said that this was the first time that a firm based in Pakistan had received this prestigious award.

He said this recognition is likely to help boost foreign investments in Pakistan as international organisations are bound to take notice of the quality work being conducted in the country. He stated that this award signified the interest American investors have in Pakistan.

He further said that this award had been presented to a firm run and managed by Pakistanis which highlights the progressive social attitude of the people here. Sabzwari said that P&G Pakistan had made massive investments in the country, the last one being a $40 million investment into a laundry manufacturing facility.

He also mentioned the new plant established by the organisation in Port Qasim. Speaking about the award, he said that this year, 62 nominations were received for American companies operating in 38 different countries. Of these, some 13 companies were selected as award finalists. P&G Pakistan and Nigeria were selected as the winners among this group.

P&G Pakistan was awarded the ACE for the company’s efforts under its ‘Live, Learn, and Thrive’ CSR programme, including humanitarian assistance efforts to provide clean drinking water, food, hygiene products. It also made medical care available to over 1.9 million affected residents after the devastating 2010 floods. It also established a network of schools and supported orphanages. “A total contribution of over $2 million was made in flood aid,” he said.


http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=88426&Cat=3
Riaz Haq said…
Excerpts from The News on Pakistan auto makers' contribution to economy:

The local auto industry manufacturers and vendors had paid total revenue of Rs64 billion last year while the industry saved foreign exchange of $500 million during the same period, said a presentation of the Indus Motor Company (IMC) to visiting journalists on Saturday.

With total investments of Rs92 billion and 0.4 million job opportunities, the local auto manufacturing industry has contributed substantially in the growth of national economy.

Despite some challenges and regulatory issues, the local auto industry has been flourishing and it is one of the important contributors in the country’s gross domestic product (GDP) growth, it added.

However, the local auto industry is a victim of government’s anti-industry policies like the import of used cars which are not only hurting the industry but also depriving the government of huge revenues in terms of duties.

Besides, the local auto manufacturers are fighting with the misperception that they charge exorbitant prices for vehicles while the quality is also not good. Yet, most of the facts once known would easily make the public to change perception about the industry.

The prices of cars have been increased by only 14 percent in last 2 years whereas the price of steel has increased by 16.5 percent, aluminum by 50.5 percent and polypropylene by 127 percent, minimum wage has increased by 75 percent, electricity and gas increased by 51 percent and 43.6 percent respectively during the same period.

Besides this, the depreciation of Pakistani rupee also played its role in increasing pressure on the industry, like the US dollar increased by 20 percent, Japanese Yen by 66 percent and Thai Bhatt by 22 percent.

Moreover, the duties on completely knocked down units (CKD) in Pakistan are much higher than other regional countries which contribute to high car prices. CKD duty in the country ranges between 32 to 50 percent, while in Thailand it is 30 percent and in India it ranges between 10 to 30 percent.

One of the major players of local auto manufacturing industry, IMC, while nullifying the stereotype image of the industry, has contribution of 1.5 percent/year to the national economy growth and maintained its image of quality production with plausible prices.

In addition, it has increased its production capacity from 20 units per day in 1993 to 210 units per day in 2011.

The company also created huge job opportunities as its number of direct employees increased from 496 in 1993 to 2,180 in 2011.

While commenting on IMC’s performance, CEO IMC, Parvez Ghias said that the buyer’s trust on the quality of the company’s products can be gauged by the fact that the company’s unit sales increased from 11,000 in 1993 to 51,000 in 2011.

Similarly, its units’ production increased from 2,930 in 1993 to 50,759 in 2011.

He said that IMC has been contributing heavily to the localization.

It is pertinent to note here that a total of 582 Corolla parts and assemblies are produced locally, while the company’s vendor-base has increased from 21 in 1993 to 60 in 2011 and these vendors are employing over 0.2 million people.

He said that on the part of dealership, the company’s 3S dealership increased from 21 in 1993 to 24 in 2002 and 34 in 2011 and of the total 34 3S dealership, 8 are in north region, 16 in central region and 10 in south region.

The company’s 3S dealership will increase to 66 till 2016.


http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=88793&Cat=3
Riaz Haq said…
Here's Express Tribune on rising sales of international global brands in Pakistan:

Faisalabad has historically been a city that conducted the manufacturing for global brands. Yet as the middle class in Pakistan expands, it appears that many of the city’s residents are affluent enough – or aspirational enough – to become consumers of those brands, resulting in booming sales for retailers and local franchisees of international brands.

Most of the sales of branded clothing and jewellery is taking place through franchises that have bought the right to sell these products to consumers in Faisalabad. The demand for these products is fuelled by the vast segment of the middle class that can afford to buy global brands but not necessarily to fly out to Dubai – or even to Karachi and Lahore – to buy them.

A series of interviews conducted by The Express Tribune, both amongst consumers and retail managers, suggests a voracious and growing appetite for branded clothing lines. And it seems that the economic slowdown has done nothing to decrease sales in this segment of the market.

“The higher income buyers of international brands never seem to get affected by economic disorder in the country,” said Sohail Safdar, a franchise manager for Charles & Keith, the Singapore-based company that sells its own brand of women’s shoes and bags. “Many of our buyers do not want to have to travel abroad to buy these products. That has created a boom in retail sales and led many retail franchise owners to think hard about expansion.”

“Sales of international brands keeps getting better and better and has begun to lure in even more brands,” said Syed Suleman Raza, a manager at one of the Nike franchises in Faisalabad.

The underlying cause of the trend seems to be a willingness by a large part of the Pakistani middle class to be willing to pay significantly higher prices for what they perceive to be higher quality. And given their longer durability, many branded products are seen as good value for money.

“Branded tend to be more and last two to three seasons,” said Sonia Razzaq, a shopper at one of the upscale malls in Faisalabad.

Nonetheless, prices are steep for many products, with shoes frequently costing Rs5,000 per pair or more. Jackets, shirts and women’s dresses go for even higher, commanding prices in the range of Rs10,000 or higher. These prices are well beyond the reach of most ordinary Pakistanis and yet a sizeable proportion of the population can easily afford them.

“Our customers are very brand-conscious and buy these products without any hesitation at the price tag or any attempt at bargaining,” said Sheikh Sultan, a manager at a franchise of The Body Shop, a UK-based cosmetics brand.


http://tribune.com.pk/story/354707/the-rise-of-the-pakistani-middle-class-international-brands-compete-for-faisalabads-attention/
Riaz Haq said…
Here's a Business Recorder summary of packaged food giant Nestle Pakistan:

Nestlé Pakistan seems to be doing well in 2012.

The Companys financials for the first quarter ended March 31, 2012 show that the foods giant posted a profit after tax of Rs1.664 billion.

Nestlés product portfolio in Pakistan is truly diverse, which includes dairy products such as Milk Pak, Nido, Everyday and yogurts; beverages like Fruita Vitals, Milo and Nescafe; and food products like Maggi noodles, Cerelac, breakfast cereals, and confectionaries.

The Companys net sales crossed the milestone of Rs20 billion in 1QCY12, as the milk and nutrient businesses seem to be growing.

The competitive landscape has drastically changed for Nestlé Pakistan in recent years following the arrival of Engro Foods and strong performance of Unilever Foods.

Nestlé has had to deal with multiple competitors across various product lines; however, its consistent revenue growth shows that the size of the pie is expanding as the competition is penetrating deeply into the addressable markets.

Nestlés topline grew by a strong 24 percent during 1QCY12, but somewhat diluted by a larger, 25.4 percent increase in cost of goods sold.

Resultantly, these costs consumed 72.7 percent of net sales, and brought down the gross margin by 78bps compared to same period last year.

The spiraling prices of key commodity inputs (wheat and milk) along with the energy crisis continue to weigh heavy on the margins.

Nearly 15 percent increase is seen in the distribution & selling expenses, whereas the administrative expenses rose by a whopping 31 percent.

Nestle spent Rs12.53 on these two expense heads for every 100 bucks it earned in the quarter under review.

However, compared to the competition, Nestlés distribution & administrative expenses are controlled due to its vast network and economies of scale.

Nestlés non-operating performance is clearly an area that needs to complement the decent operating performance.

For instance, the finance cost jumped by a whopping 125.7 percent; the other operating expenses increased by 52.2 percent; and the other operating income decreased by 52.17 percent.

Healthy topline growth, coupled with somewhat controlled operating expenditures, ensured that Nestlé posted a double-digit profitability growth during 1QCY12.

Yet the net margin dropped by 93bps to come down to 8.24 percent, owing to the slippages mentioned earlier.

However, the profit of over 1,600 million rupees is sweeter still, especially for shareholders who earned Rs36.71 on each share during the period.

Despite the rising input costs and energy issues, Nestlé is well-placed to capture a bigger slice of Pakistans food market which is forecasted by various estimates to grow in double-digit in the coming years.

Services like Nestlé Professional - which markets food and beverage solutions for out-of-home establishments like restaurants, offices, airports, universities and hospitals - can also boost revenues.

Nestlé may be leading in many of the product lines it operates in.

However, the packaged goods share is still a fraction of the total market, and that is where the promise for sustained future growth lays.


http://www.brecorder.com/br-research/42:foods/2438:nestle-pakistan-limited/?date=2012-04-18
Riaz Haq said…
Here's a <a href="http://www.thenewstribe.com/2012/04/23/ian-james-donald-md-nestle-leaving-pakistan/>news story</a> on progress made by outgoing MD of Nestle Pakistan:

<i>Karachi: Ian James Donald Managing Director Nestle Pakistan is likely to be deputed from Pakistan to other country after one year and eight months of his successful service in the leading nutrition country.

Ian J Donald has been Managing Director at Nestle Pakistan Limited since September 1, 2009. He was deputed from Nestle Malaysia Bhd where he served as a Director of Ice Cream, Chilled Products & Associated Businesses.

Under his leadership, Nestle Pakistan succeeded in delivering robust financial results despite the economic slow down and flood crises in the country, which hit livestock sector and affected productions channels of the company.

The leading FMCG company announced good results heralding a prosperous year and sound financials backing its many initiatives.

The profit and revenues witnessed handsome growth from 2010 to 2011 under his tenure as the profit of the company up by 56.6 percent and revenues increased by 58 percent.

Nestle Pakistan profits and revenues stood at Rs 4.7 billion and Rs 64.8 billion by 2011 as compared with profits and revenues recorded in 2010 at Rs 3 billion and Rs 41 billion.

The business profitability and strategy had been successful in the past two years as the company was witnessed as one of most preferred one in equity market. It share value was stood at Rs 66.27 in 2010, which went to Rs 102.94, showing 55 percent growth.

Managing Director Ian Donald – a South African national who has been with the global parent company for 40 years – has focused on expansion of Nestle business primarily by growing the packaged foods market.

Nestle already has a gigantic infrastructure in Pakistan. The company collects milk from over 190,000 farmers spread out over an area of about 145,000 square kilometers.

Donald believes that the strategy of value addition in existing brands rather than adding newer brands in the market. Besides, his contribution was immense in sales expansion in the rural market, which he believes a driving factor for promoting business and standards of masses’ lives.

The outing MD of Nestle, a Swiss company, has made a three years business expansion plan of Rs 320 million Swiss Francs in its presence in Pakistan’ rural and urban markets.</i>

http://www.thenewstribe.com/2012/04/23/ian-james-donald-md-nestle-leaving-pakistan/
Riaz Haq said…
PSMC to post PAT of Rs413mn (EPS 5.02), up 351% YoY, 237% QoQ, reports Investorguide360.com

The company is expected to announce PAT of Rs413mn (EPS Rs5.02) in 1QCY12, up by a massive 351% YoY. The gigantic rise in the profitability is mainly due to 31%YoY increase in unit sales coupled with 9%YoY increase product prices. Moreover, the other income of the company is also estimated to have helped in boosting up the bottomline of the company as it registers a healthy growth of 49%YoY to Rs196mn in 1QCY12. In the light of historical payout trend, we do not expect any cash dividend from the company with the results.

Company’s bottomline is also expected to jump 237% on QoQ basis due to 23%QoQ primarily due to increase in company’s sales volumes. As the customers prefer to book vehicles with the new year registration, therefore, during the last quarter company’s unit sales remained dull. As such, the other income of the company is also expected to decline (income comes from the customers’ advances).

At current levels, the company scrip is trading at a PE of 5.5x and 6.1x based on CY12 and CY13 earnings estimates, respectively. We recommend ‘Buy’ on the scrip with our revised Jun-12 target price of Rs92/share.


http://investorguide360.com/lucky-cement-3qe-gm-at-3-yr-high-pak-suzuki-motors-pat-up-237-qoq-investcap/
Riaz Haq said…
Here are excerpts of PakistanToday's interview with Pepsico Asia chief Qasim Khan:

.. In a recently-conducted detailed interview with Pakistan Today (PT), Qasim Khan, a US-educated Pakistani who is PepsiCo’sgeneral manager and president for the North and South Asia Business Unit that, in its scope, ranges from Japan to Mongolia, talked at length about the immense potential as well as challenges the MNCs like his own are presently facing in Pakistan.
-----------
What is the current size
and scope of your business in Pakistan?

Qasim Khan: PepsiCo International is intricately linked towards the development of the corporate sector in Pakistan as we were one of the first multinationals to start operations in Pakistan in 1967. Now we are the biggest Food and Beverage Company in terms of the retail turnover in Pakistan having seven beverages franchises across the country. We also brought in Foreign Direct Investment in the shape of a concentrate plant set up in Hattar. Today, Pakistan is the 6th largest market for PI worldwide and we have three brands; Pepsi, Dew and 7-UP which are bigger than our rivals in terms of volume contribution. Pepsi is ingrained as a household brand while our contributions towards the development of sport, specifically cricket and music industry is unparalleled. We have been the pioneers of developing both these industries while strengthening our beverages brands over the past many decades. Since 2006 we also introduced the famous Lay’s potato chips brand in Pakistan by investing in a state-of-the-art plant which employs over a 1000 people. We have made strong investments in the agricultural sector of Punjab by introducing latest technologies for potato growers and are looking to expand potato growing into the country’s northern areas. We also plan to export potatoes to other countries around the world. Our snacks portfolio consists of leading global brands like Lays, Cheetos, Kurkure and Wavy.
--------------
PT: OK, now tell us what made PepsiCo invest in Pakistan?
Qasim Khan: Pakistan’s opportunity is driven from the following facts:
Large Market: It’s the 6th most populace country in the world with approximately 70 percent population under the age of 30.
Trained Workforce: A large trained and productive population represents a big opportunity to Pakistan to benefit from its demographic dividends.
Investment Policies: Pakistan’s policy trends have been consistent with liberalization, de-regulation, privatization and facilitation being the cornerstones of its policy.
Large Agro Base: The strong agriculture base presents a great opportunity for our food business to expand in the future. We realize that Pakistan is the 11th largest wheat producer, 12th largest rice producer and the 5th largest milk producer in the world.
Geo-Strategic Location: It can be a gateway between the energy rich Central Asian states, the financially-liquid Gulf states and technologically-advanced Far Eastern countries. This alone makes Pakistan a market teeming with possibilities.
Incomes on F&B: A significant amount of individual incomes (as high as 40 percent) are spent on food and beverage representing a huge opportunity for the industry.
Financial Markets: The capital markets are being modernized, and reforms have resulted in development of improved infrastructure in the stock exchanges of the country. The Securities and Exchange Commission of Pakistan has improved the regulatory environment of the stock exchanges, corporate bond market and the leasing sector....


http://www.pakistantoday.com.pk/2012/07/16/news/profit/grappling-with-the-challenging-pakistani-economy/
Riaz Haq said…
Here's a Bloomberg story on Pakistan seeking US investments:

The American Business Council, that includes the Pakistan units of Coca-Cola Co. and Cisco Systems Inc., plans to invite 10 U.S. companies a year to invest in the South Asian nation and take advantage of rising consumer demand.

“Branded product penetration in Pakistan is so low that the potential for growth is immense,” Saad Amanullah Khan, president of the council, said in an interview in Karachi today. Up to 80 percent of American companies operating in Pakistan, especially technology and consumer goods companies, had a “good year” in 2011.

Pakistan needs to increase overseas investment to help meet an economic growth target of 4.3 percent in the year that began July 1. Foreign direct investment declined 50 percent to $813 million in the year ended June 30, according to the central bank.

The council plans to double its membership of U.S. companies from 63 in the next five years and increase the total investment to $1 billion from $663 million, said Khan, 51, who is also chief executive officer of Gillette Pakistan Ltd.

Pakistan agreed this month to end a seven-month ban on North Atlantic Treaty Organization trucks crossing its territory on the way to Afghanistan, easing tensions with the U.S., its biggest trading partner. The routes were reopened after U.S. Secretary of State Hillary Clinton apologized for the killing of 24 Pakistani soldiers in a November border strike by American helicopters.

Pakistan’s credit rating was lowered deeper into junk status by Moody’s Investors Service on July 13, which cited dwindling currency reserves and political instability. The $200 billion economy faces the fastest inflation in Asia, lingering power blackouts, an insurgency on the Afghan border and reduced aid flows.


http://www.businessweek.com/news/2012-07-16/american-business-council-of-pakistan-to-target-fresh-investment
Riaz Haq said…
Here's a Daily Times report on motorcycle industry in Pakistan:

Pakistan motorcycle industry sector is vibrant, flourishing and exemplary, as it achieved 95 percent localisation through latest technology transfer, billions of rupees investment and hundreds of thousands of skilled workers.

The sector progressed tremendously so far due to consistent policy of the government, while it gave protection to local investors to expand its businesses locally as well as globally.

The sector is apparently standing on its feet as it is not only able to meet the local demand but also capable of exporting various models to various countries, resulting in becoming a strong foreign exchange earning arm of the country.

Motorcycle production in Pakistan has increased in past 12 years. It has increased from a mere 100,000 units at the start of the century to around 2.0 million this fiscal. No other industrial sector has shown high and sustained growth during the past one decade. In fact Pakistan has emerged as global leader in production of 70cc motorcycles. He said that now even new 125cc bikes are also being exported.

However the proposed abrupt change in policy has badly shaken the confidence of investors and local manufacturers, following Board of Investment (BoI) ill-conceived initiatives to incentivise a Japanese bike maker to re-enter the Pakistani market at zero rate.

The plan to allow a new investor to import all motorcycle parts at zero duty will be negation of the previous policies and will encourage all original equipment manufacturers (OEMs) to bypass vendors and parts made locally, a representative of OEM said. The U-turn of policies will be worrisome and against the interest of the country and future industrialisation, he added.

Pakistan needs foreign investment! However, the country should not be so desperate in attracting investment by catering to unit specific investment proposals so as to destroy its most vibrant sectors where existing domestic and foreign are already investing. Such a case is that of the motorcycle industry.

The projection of this bike maker as a new investor conveniently ignores the fact that the same brand was being produced and marketed for decades in Pakistan and was forced to wind up on failure to compete with either other brands especially the Chinese bikes. Industry experts are dismayed at the constant pursuance to grant special status to this OEM on its re-launch and even more so by insisting that a supposed, and highly misleading, $150 million investment figure will be made.

The local industry, based on the projection of increase in demand, has already embarked on capacity enhancement plans and by the end of current fiscal year will have invested around $100 million out of which a size able amount is already invested while plans for rest are already submitted.

The proposal given to the government reflects that the OEM’s investment is hardly a couple of million dollars in the initial years. The remainder is merely a commitment to reinvest the tax so saved in the form of exemptions granted, when all other motorcycle manufacturers have readily agreed to pay high duty on the import of parts that are not being produced in Pakistan.

Another surprising aspect in this regard is the government wants to allow the Japanese manufacturer to import parts from anywhere but most probably from China. The claim that the new investment would bring new technology is an eyewash as the existing players have all introduced latest Euro 2 engines into the market without any special incentive.

Current players are even willing to import hybrid and EFI based engine without special incentives.


http://www.dailytimes.com.pk/default.asp?page=2012\07\17\story_17-7-2012_pg5_12
Riaz Haq said…
Here's a PakTribune report on new plant for producing BOPET for packaging of FMCG products in Pakistan:

Novatex Limited has successfully commissioned a project to produce Biaxially Oriented Poly Ethylene Terephthalate (BOPET) film.

This is a pioneer industry for Pakistan, bringing in technology and machinery, which is so far non-existent in the country.

Habib Bank Ltd, United Bank, Faysal Bank and Standard Chartered financed this project and the plant commenced operations in June 2012.

BOPET Polyester film, which will be produced by Novatex, has due to its superior attributes become a necessary packaging material for food, etc allowing the introduction of strong aroma retention and beautiful printed small as well as bulk pouches for tea, ketchup, mayonnaise, salad dressings, spices, fruit and vegetables packaging, food pastes as well as milk powder, good quality biscuits/snacks washing powder and shampoos, etc.

The current consumption of BOPET in Pakistan is over 16,000 tonnes and it will cross 20,000 tonnes following its availability locally.

Pakistan will become self sufficient in BOPET polyester film and save import of $40 million besides will generate export in excess of $30 million.

BOPET polyester film is also used for LCD/LED TV panels, solar panels, cable interior, salma sitara type decorations and x-ray film.

The project of Novatex has been set up with the latest German technology supplied by Lindauer Dornier of Germany.

It has a capacity to produce 31,000 tonnes BOPET per annum with 8.7 metre width and is the largest capacity and width currently available in the world for BOPET film lines.


http://paktribune.com/business/news/Pakistans-first-BOPET-polyester-film-plant-starts-production-10091.html
Riaz Haq said…
Pakistan auto sales rose 23% in FY 2011-12, reports The Nation:

The Pakistan car industry grew by 23% to 178,753 units YoY in FY12 where PSMC contributed 60% followed by INDUS contributing 29% to the total industry sales. The increase can be attributed primarily to 1) good agricultural income 2) deferred sales due to reduction in Sales Tax and 3) Yellow cab scheme.
In Jun12,car sales stood at 19,140 units, depicting an exceptional increase of 158% from 7,419 units sold in Jun11 mainly because of the low base effect as the government was expected to reduce Sales Tax by 1% in Jun11.
PSMC had a phenomenal FY12 as it witnessed a 40% YoY jump in its sales figures contributing more than 50% to the industry’s total sales pie. This growth in units from 79943k to 112157k units was mainly triggered by Punjab Government Yellow cab scheme where PSMC was the prime beneficiary.
INDU also saw its sales units go up to 54477 units from 50015k (9% up in FY12) on the back of good agricultural growth and subsequently good rural income.
Segment wise YoY analysis makes Corolla(+58%), Cultus(+ 20%) and Mehran(+ 46%) the star performers in 1300cc, 1000cc and 800cc respectively. We believe Corolla on the back of agricultural income and Cultus and Mehran as substitutes to Alto and Cuore will continue to capture the customer interest.
Auto sales in June-2012 clocked in at 19.2k units, which is an increase of 15%MoM. This improvement in sales is most likely due to anticipated price hikes by the manufacturers owing to conversion to Euro II compliance and steep depreciation of Rupee. On a YoY watch, auto sales soared by 155%.
However, this growth is misleading as sales last year in June abnormally declined owing to expectation of price cuts. As a result, auto sales reached 179k units (up 22%YoY) in FY12 vs. our expectation of 175k units. In expectation of stiff competition from imports, we expect growth to slowdown to 6% in FY13. We presently have a ‘Market-Weight’ stance on the sector, with Indus Motor (INDU) as our preferred play.
FY12 culminated with a growth of 22%YoY, with sales touching 179k units. The improvement in demand was largely led by the subsidized Yellow Cab scheme offered by the Punjab government. We expect the growth to slow down to 6% in FY13 (sales likely to reach 190k units) owing to a lower amount allocated to the cab scheme this year and stiff competition from imports.
The announcement of a new long term auto policy (termed as AIDP-2) will be pivotal for the sector going forward.
Significantly lower duties on CBU imports in the policy can substantially hurt the local manufacturers. We retain our outlook on the sector at ‘Market-Weight’, with INDU as our preferred play. The stock trades at an FY13 PE of 5.8x, and offers a dividend yield of 7.4%


http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/13-Jul-2012/car-sales-speed-up-23pc-in-fy12
Riaz Haq said…
Here's an ET report n Toyota's rising sales and profits in Pakistan:

Global automobile giant Toyota’s affiliate in Pakistan announced that the 2012 financial year was its most profitable ever in the country, earning Rs4.3 billion in net income, a 57% increase over the previous year.

Indus Motor Company – a company that is 37.5% owned by Japan’s Toyota – announced its annual results on Thursday. The company’s revenues rose by nearly 25% to reach Rs75 billion, largely on the back of increased car sales, though higher prices were also a factor. The company sold over 55,000 cars during the financial year that ended on June 30, 2012, its highest ever for a single year. Both revenues and profits were the highest in the company’s history in Pakistan.

Investors in Indus Motors are likely to be pleased by the management’s decision to announce a Rs24 per share dividend, bringing the total annual payout to Rs32 per share. Given the company’s earnings per share of Rs54.74, that comes to a payout ratio of 58.5%.

Indus Motors assembles the Toyota Corolla, easily the most popular sedan in the Pakistani market, made even more attractive by the company’s wide network of dealerships and after-sales service points, which help the car retain a high resale value. As incomes in Pakistan’s urban middle class have recovered after the 2008 financial crisis, sales of the sedan have bounced back to pre-crisis levels.

Nonetheless, analysts point to several dangers to the company’s business. “Demand for new cars in Pakistan will decline, going forward,” said Atif Zafar, a research analyst at JS Global Capital, an investment bank. “Local car manufacturers are expected to remain under pressure from competition with imported used cars.”

Nonetheless, sales figures for new cars have been improving, reaching a four-year high of over 157,000 units in 2012, an almost 23% increase over the previous year. Indus Motors share of that is almost 35%.

Officials at Indus Motors concurred with JS Global’s assessment that new car demand had slowed in recent weeks, largely due to an expectation among car buyers that the government will relax rules on the import of used cars. Low demand is forcing local manufacturers to cut back on production, they said. Indus suspended its production for four days in July and plans six off-days in August to offset the problem of slow demand.

The largest carmaker of country, Pak Suzuki Motors, is also expected to see a hit in its sales this year. This year, the Punjab government has allocated fewer funds for the Punjab taxi scheme so one can expect that Pak Suzuki may get less orders compared to last year’s order of 20,000 units, Zafar said.

While car importers vow to double car imports this year, local carmakers are continuously pressuring the government to reduce the age-limit of used car imports from the current five years to three years. Pakistan imported 55,000 cars in fiscal year 2012, a massive increase over the 18,000 cars in previous fiscal year.


http://tribune.com.pk/story/419836/profits-at-toyotas-pakistan-affiliate-hit-all-time-high-in-2012/
Riaz Haq said…
Here's BR report on Engro Foods:

Engro with its rich history of over four decades of developing the agricultural sector of Pakistan used dairy as a stepping stone to enter the foods business in 2005 to give further impetus to its already diversified business portfolio including fertilisers, petrochemicals, energy, trading and chemicals storage and handling.

In a span of just seven years, with a compound annual growth rate (CAGR) of 65 percent and a planned infrastructure investment in 2012 to the tune of eight billion rupees, Engro Foods has become the country's fastest growing local company catering to a wide demographic consumer base from high income groups to the more economically conscious segment of the market both in Pakistan and abroad.

Serving over five million consumers nation-wide every day, Engro Foods had revenues of about Rs 19.76 billion during 1H-2012 with profitability registering an increase of over 450 percent to close at Rs 1.02 billion. Since its inception Engro Foods has invested heavily in dairy development initiatives, cold chain infrastructure, enhancing capabilities of dairy farmers across Pakistan through innovative breakthroughs that have redefined the milk collection standards and benchmarks in the dairy industry. Employing over 12,000 individuals both directly and indirectly, Engro Foods' continues to touch and improve life for over 160,000 dairy farmers through improved payment cycles, guaranteed collection, improved margins and up to a 15 percent increase in milk yields. Through its wide network of over 900 milk collection centres, Engro Foods focuses its impact at the most economically challenged communities in Pakistan - an effort that has also been recognised at local and international fronts including the IFC managed G20 Challenge on Business Innovation where Engro Foods was declared the winner from over 300 global contracts.

The Company also had the unique opportunity to become the first company in Pakistan to produce one billion packs within a year in 2010 alone; a distinction that has been achieved by only 18 companies out of 3,000 Tetra Pak customers world-wide. Living its vision of 'elevating consumer delight world-wide' the business established its Global Business Unit (GBU) and acquired Al-Safa Halal - the oldest Halal meat brand in North America in 2010. With presence in key retail stores including Loblaws, Wal-Mart, Sobeys, Metro, Kroger etc, Engro Foods GBU has obtained a market share of 15 percent in Canada and three percent in USA in the branded foods category.

Speaking at the occasion, Afnan Ahsan - CEO Engro Foods said: "The story of Engro and that of Engro Foods is a source of national pride. The fact that in a short span of seven years a home-grown multinational company has been created - with a geographic footprint spanning across Pakistan, Afghanistan, US and Canada - is testament to the vision and business acumen of the Company. Engro Foods is an example that through focused approach companies can create real business value - not just in the Pakistani market but also globally." Building on plans for the future of the Company Afnan said: "We are in the early stages of our growth trajectory and looking ahead we will continue to further explore diversification with focused growth in our dairy and beverage business - both locally and on the international front. We are also confident that we will continue to create real value for all our stakeholders by pursuing an inclusive growth strategy that positively impacts each individual through the value chain process."


http://www.brecorder.com/business-a-economy/189/1226476/
Riaz Haq said…
Here's BMI report on vehicle sales in Pakistan:

Pakistan’s auto industry suffered mixed fortunes over FY12, which ended in June 2012. Passenger carsales and production were both up strongly, while the commercial vehicles sector continued to lag. EndFY12 sales figures released by the Pakistan Automotive Manufacturers Association (PAMA) showed thatpassenger car sales were up by 23% y-o-y, to reach 157,325 CBUs. Jeep and pick-up sales were up by17.6%, at 21,472 CBUs. This was slightly ahead of BMI’s forecasts and reflected the robust nature ofdemand in the new car market. The past year also saw a one-off boost to sales from the Punjab Province’s‘Yellow Cab’ taxi purchasing scheme, which saw Pak Suzuki deliver some 20,000 Bolan and Mehranmodels. Total vehicle sales for FY12 stood at 231,545 units, an increase of 6% year-on-year (y-o-y).

Breaking down the headline figure, sales of passenger cars with engine size less than 1000cc increased by41.6% y-o-y, to 61,528 CBUs. Mid-size engine cars (1,000-1,300cc) saw sales growth of 28.3% overFY12, to reach 29,981 CBUs, with larger engine cars (1,300cc+) showing the smallest growth, up just7.6%, at 65,816 CBUs.

Over FY12, long-time market leader Pak Suzuki retained its dominance of the Pakistani new passengercar and pick-up sales market, selling 112,166 units for a market share of 62.7%. Indus Motor retained itsposition as the second most-important player in the local market, with sales of 54,477 CBUs over FY12,up by 9.9%, for a market share of 30.5%, with Honda Atlas suffering a 22.2% annual decline in sales,down to just 12,119 CBUs, for a market share of 6.8%.

Turning to commercial vehicles sales, sales of trucks were down by 18.6%, at 2,394 units, while bus saleswere up by 13.1%, at 609 units. The worst performing sub-segment of the industry over FY12 was farmtractors, whose sales fell by 28.1% y-o-y, to just 49,745 units. This reflected the collapse in demandduring H1FY12, following the government’s decision to implement a 16% general sales tax on tractorpurchases, which was later reduced to 5% as of January 2012. Since this time, tractor sales haverebounded strongly, from a year-low of just 369 tractors sold in January 2012, back up to 8,368 tractorssold in June 2012. However, with the government still planning to increase GST on tractors to 10% in2013 and then to 16% in 2014, it remains to be seen what effect these staggered tax hikes will have ontractor sales over the medium term.

Turning to production, passenger car production stood at 154,255 CBUs for FY12, an increase of 15.1%y-o-y. This was a strong performance, given the disruption to supplies suffered by Honda Atlas over theend of 2011 and the start of 2012. Indeed, Honda did not produce any cars in Pakistan between December2011 and February 2012. Pak Suzuki remained the dominant producer, producing 107,736 passenger carsand pick-ups. In second place was Indus Motor, on 54,917 passenger cars and pick-ups, with Honda Atlasin third place, on 12,484 passenger cars (Civic and City models).

Looking forward, BMI is targeting new vehicle sales growth of 3% for FY13, to reach 238,491 units,with production set to increase by 5%, to reach 235,689 units.


http://www.marketresearch.com/Business-Monitor-International-v304/Pakistan-Autos-Q4-7131013/
Riaz Haq said…
Here's a BR report on subsidized tractors in Punjab:

Tractor manufacturers have more than 10,000 tractors of various makes in their stocks for immediate delivery under the Punjab government's Green Tractor Scheme 2012-13 to the farmers before sowing of Rabi crops, a senior tractor industry executive told Business Recorder, here on Friday.

The Punjab government has completed the process of providing 10,000 tractors to farmers through transparent computerised balloting of 0.275 million applicants of 18 to 35 years age having land holding of 2 and a half acres to 25 acres irrigable and 50 acres arid land across the province. The Punjab government is providing subsidy of Rs 200,000 on each tractor. The provincial government has so far provided 30,000 tractors during the past four years under the Green Tractor scheme to the small farmers with a subsidy of Rs 6 billion to boost agriculture production in the province.

The executives said though the auto manufactures have increased prices of cars t recently yet the tractor industry is not only maintaining June 2012 prices but also giving one percent discount on the sale of tractors under the Green Tractors Scheme. They however suggested that the government should not delay payment of Rs 200,000 to the tractor manufacturers given as subsidy on the Green tractors. The prices of tractors manufactured in Pakistan are still the most competitive in the region despite severe electricity load-shedding and increased cost of production, they emphasised.

They said that small farmers suffered huge financial losses due to rain floods in Sindh and Balochistan in the out-going monsoon season this year, therefore the government should not increase the proposed rate of General Sales Tax from 5 percent to 10 percent in January next year as it would put an additional burden on the agriculture sector.

They said that the tractor industry sold 5,675 tractors in the first two months of the current financial year as against 2,000 of the previous year. President Farmers Associates of Pakistan (FAP) Dr Tariq Bucha has appreciated the Punjab government's Green Tractors Scheme and said the government should make immediate arrangements for delivery of the tractors to the lucky farmers so that they could be used them for preparing the fields before sowing of the Rabi crops seeds in time. Bucha demanded of the government to also provide subsidy and reduce the rate of GST on accessories such as trolleys, ploughs, etc.


http://www.brecorder.com/agriculture-a-allied/183/1245125/
Riaz Haq said…
Here's Pakistan Times on Benazir Tractor Scheme:

ISLAMABAD: All arrangements have been finalized to hold balloting of Benazir Tractors Scheme to provide subsidized tractors for growers.

The balloting for the scheme is expected to be held on September 6.This was stated by the Federal Minister for Food and Agriculture (MinFA), Nazar Muhammad Gondal responding to the live calls of the people after inaugurating the radio programme “Aaj Mandi key Bhao”, here on Monday.

The minister said that preparations had been finalized to provide 10,000 tractors to farmers under Benazir Tractor Scheme.

It may be recalled that about 355,000 printed application forms had been provided to farmers through the ZTBL branches in addition to those who applied on-line.

About 340,000 application were received, of which 277,106 were finalized for balloting of the scheme.

For Punjab province 5000 tractors, Sindh 2000, NWFP 1200 and for Balochistan 850 tractors would be allocated.

In AJK, FATA 350 tractors each while FANA 200 tractors and Federal Capital 50 tractors quota is fixed.


http://www.pakistantimes.net/pt/detail.php?newsId=3863
Riaz Haq said…
Here's Nigerian Observer on tractor imports from Pakistan:

MAIDUGURI -The Borno State Government has planed to import 1,000 heavy duty tractors from Pakistan to harness the agricultural potential of the state.


Gov. Kashim Shettima who made this known while speaking with newsmen in Maiduguri.


Shettima explained that an agreement had already been signed by the Pakistani government and the Borno state government for the supply of the tractors.


“We are just coming back from a working visit to three countries - Pakistan, Turkey and India.


“The visit was aimed at exploring avenues for partnership with these countries on agricultural development.”


Shettima said the manufacturers of the tractors had agreed to supply them in a few months time.


“We are trying to see how we can tap from the experience of these countries to empower our people.


“Our farmers are still using hoes and cutlasses when other countries are busy using advanced technology in farming.”


Shettima said the tractors would be distributed to farmers across the state to boost agricultural production.
He said the objective was to enhance food production and fight poverty among the people.


“We have realised that the best way to tackle the current insurgency in the state is to develop agriculture and provide jobs for our employed youths.


“We believe that once we empower the youths the problem of the insurgency will be tackled.”


Shettima said the government would also collaborate with the Chad Basin Development Authority (CBDA)
toward cultivating the 70,000 hectare South Chad Irrigation Scheme (SCIS) in the state.


“We are going to partner with the CBDA toward cultivating the 70,000 hectares of land at the SCIS.


“We are going to supply fertiliser, and other implements to farmers to encourage them.”


http://nigerianobservernews.com/16102012/news/Other%20News/othernews14.html
Riaz Haq said…
Here's a description of JS Business & Global Venture, a tractor exporter from Pakistan:

JS Business & Global Venture was established in 1999. The company is one of the pioneers in Pakistan for exporting the Tractors, Agricultural Machinery and a range of Implements.

Agriculture sector being the dominant sector of Pakistan’s economy, as a market of material products contribute substantially in and outside the country. The JS Businesses & Global Venture has the endowment to fulfill the multidimensional needs of National and Multinational customers.

The company is exporting the agricultural products almost to the whole world, especially to Holland, England, Kenya, South Africa, Nigeria, Dubai, Jordan, Sri Lanka and Bangladesh etc. etc.

With the support of it’s highly qualified and Professional team developed and maintain highest service standards in the company, and of course with an ever increasing customer support JS Businesses & Global Venture showed an unprecedented growth within very short period of time.

We believe that each customer is a long term business partner and strive to meet their requirements swiftly and professionally.

We are main dealer for Millat, Massey Ferguson Tractors in Lahore, Pakistan. We also have a long range of Agricultural Implements, Millat Electricity Generators, Millat Prime Movers and Fork Lift Truck (Fork Lifter).

Following Tractor’s models are available MF 240, MF 260, MF 375, MF 385, and MF 385 4WD.


http://www.jsglobalbusiness.com/
Riaz Haq said…
Here's an Automotive World story on Pakistan restricting used car imports:

With local policy aimed at making Pakistan a favourable trading country, rather than a manufacturing one, the significant inflow of used cars into Pakistan has, in the past, constricted the local automotive industry. This may be about to change, however, following a decision by the country’s Economic Coordination Committee (ECC).

The ECC has decided to reduce the age limit of used car imports into Pakistan to three years, from the previous limit of five years, according to The News International. This directive will come into effect on 15 December 2012.

The Economic Coordination Committee is a cabinet-level body responsible for final decisions pertaining to Pakistan’s economy. Set up under the Chairmanship of the country’s Central Finance Minister, the committee comprises ministers in charge of the country’s economic ministries.

This decision has drawn mixed reactions from the various automotive industry bodies in Pakistan. The Pakistan Automotive Manufacturers Association (PAMA) has welcomed this decision, as it favours local vehicle manufacturers. The association’s Chairman, Parvez Ghias, feels that this move is in the greater national interest.

The All Pakistan Motor Dealers Association (APMDA), on the other hand, has called this move unfair and unjust, as it is a setback to the import of used cars. Chairman HM Shahzad says this cut in age limit, along with the depreciation policy in force at present, will push the prices of cars significantly.

Earlier, Daily Times, citing industry experts, said the government lost nearly Pakistani Rs16.5bn (US$171.79m) due to the import of 55,000 vehicles. Around US$371m were reportedly spent on the import of used cars last year. According to Shahzad, though, this move to restrict import of used cars into Pakistan will result in a Pakistani Rs32bn loss to national exchequers
---------
The report stated that there were more than 100 vehicle assemblers in the country. These companies assemble cars, buses, trucks, two- and three-wheelers and tractors. The number of automotive parts manufacturers, however, totals approximately 1,700.

Japanese companies lead the list of vehicle assemblers in Pakistan, while local companies form the bulk of the country’s parts manufacturers. This is compounded by a weakness in terms of manufacturing systems and technology in the supply industry, which the report attributes to a lack of competition brought on by localisation requirements.
....



http://www.automotiveworld.com/articles/manufacturing-logistics/ecc-move-to-restrict-import-of-used-cars-brings-cheer-to-assemblers-in-pakistan/


Riaz Haq said…
Here's a News story on rising obesity in Pakistan:

KARACHI: The obesity is an emerging challenge to human well-being like other parts of the world, it was also on the increase in Pakistan.



The overweight and obesity are the fifth leading risk for global deaths.



The World Health Organization (WHO) estimates suggest that 26 percent of women and 19 percent of men in Pakistan are obese. Women are 2-3 times more likely to be obese.Childhood obesity is increasing with an estimated value of 10 percent.



This was stated by Prof Dr Muhammad Iqbal Choudhary, Director International Center for Chemical and Biological Sciences (ICCBS), Karachi University.



He was delivering a lecture on Wednesday at the 4th International Symposium-Cum-Training Course on Molecular Medicine and Drug Research being held at the International Center for Chemical and Biological Sciences (ICCBS).



Over 350 scientists, including 35 scientists from 24 countries, are attending the international event, organised by Dr Panjwani Center for Molecular Medicine and Drug Research (PCMD), University of Karachi.



Dr. Iqbal said that obesity had become a serious health problem worldwide, which is a result of an imbalance between energy intake and expenditure; the molecular cascade involves in obesity and associated disorders are not fully understood.



Proliferation of adipocytes plays an important role in the onset and progression of obesity, he added.



`Obesity has been linked to several serious health ailments like heart disease and stroke, high blood pressure, diabetes, cancer.



Overweight and obesity are major risk factors for a number of chronic diseases, including diabetes, cardiovascular diseases and cancer; once considered a problem only in high income countries, overweight and obesity are now on the rise in low and middle-income countries.



Overweight and obesity are largely preventable; the intake of healthier foods, and regular physical activity are easiest ways to prevent obesity, he said.



There is an urgent need to have R&D programme in the field of anti-obesity drug discovery and development, he urged, saying that the fundamental causes of obesity are an increased intake of energy-dense foods that are high in fat, salt and sugars but low in vitamins, minerals and other micronutrients; and a decrease in physical activity due to the increasingly sedentary nature of many forms of work, changing modes of transportation and increasing urbanization.



Talking about the multi-drug-resistant pathogens, he said that a rapid decline in research and development on new antibiotics coincides with increasing frequency of infections caused by multi-drug-resistant pathogens.



The key reason of bacterial resistance is the indiscriminate of suboptimal use of antibiotics. During the last three days of the symposium, various lectures of the national and international scientists were held on different scientific issues.


http://www.thenews.com.pk/article-83095-Obesity-on-the-increase-in-Pakistan
Riaz Haq said…
Here's Shan COO's interview with PakistanToday:

Tell our readers about Shan Foods (Pvt.) Ltd. that you joined in July, 2007.
FAISAL MUBIN GANATRA: The journey of Shan’s remarkable success starts from 1981, when the dream of one man became a reality. A visionary entrepreneur, an avowed humanist and a committed philanthropist, Shan Foods (Pvt.) Limited CEO Muhammad Sikander Sultan, helped pave the way to success by pioneering in the spice business. “We are one of the most reputed food company and a powerful global brand with presence in more than 63 countries across 5 continents.”
Shan Foods has been governed by its core values. They shape the culture and define the character of Shan, forming the foundation on which its employees perform and make decisions. Long term thinking, integrity, mutual respect, pragmatism, openness to diversity, passion for quality and delighting consumers in accordance to the Islamic laws remain at the core of our company culture.”
“By the grace of Almighty Allah, our Islamic culture and value remain our single most important competitive advantage”.
Company’s vision is to become a global food company offering premium quality innovative products which delight our consumers. “We are determined to reach every kitchen by diversifying into growing food categories through innovative, healthy and safe products for the ultimate delight of our consumers”,
Shan Foods is committed to producing top quality products. To do so, we pay a higher price compared with our competitors for premium raw materials. We are also the only second company in the Asia Pacific region that uses Cryogenic Technology to preserve the taste, texture and aroma in order to ensure our spices & foods are bacteria-free. Finally, we use food-grade nitrogen & aluminum foil packaging to preserve freshness and quality (V Lock Freshness). Our dedication to producing the highest standard products and our belief in long-term mutually beneficial relationships means we are happy making nominal profits: that is a key reason for our survival and prosperity.
In 2006, our CEO Mr. Sikandar Sultan and BOD’s decided to induct a professional team for the survival of brand, sustainable growth and transformation into a corporate company. When I joined Shan Foods, it was being run as a sole proprietorship, but we had a plan that by January 2008 we would start business as a Private Limited concern which I have been responsible for. I started as Chief Financial Officer and have been heading business operations for the last 1.5 years.
Today, Shan is Pakistan leading Food Company with its products being appreciated globally and continues to introduce new products that better cater to the changing needs of the consumers. In order to take advantage of growth opportunities, Shan has now enhanced its production capacity even further with the manufacturing units installed in United Arab Emirates (UAE) and Saudi Arabia and United Kingdom.

PAKISTAN TODAY: What difference did the induction of professionals make? What is the secret of Shan Foods success?
FAISAL MUBIN GANATRA: Shan has been growing since it was founded but the professional team that was added to the company in 2006 has had a huge impact on the company practices. By implementing a new set of procedures and cultivating a new corporate environment, Shan has become an increasingly transparent company with proper systems in place and a culture respect, trust, transparency and sharing information at all levels of management. This change has reaped benefits in 2011-12, our turnover was double what we made in 2009-10. The secret of our success lies in the upholding of our values & the belief that change comes from the top....


http://www.pakistantoday.com.pk/2013/01/21/news/profit/shan-foods-coo-says-big-ideas-not-money-make-big-brands/
Riaz Haq said…
Here's ET on cost difference in Indian and Pakistani cars:

In support of his claim, he said average cost of a Pakistani car (excluding taxes) is Rs750,000. An average Pakistani car uses 60% of local components and the value of such components is around Rs450,000. This is the amount that the parts makers lost on each imported car, he said.

Most people believe that locally assembled cars are much more expensive than vehicles manufactured in other countries, but this is a wrong perception, the industry representatives said while giving a comparison between prices of Pakistani cars and those manufactured in regional countries.

Pakistani cars are cheaper than most cars manufactured in India, Allawala claimed, adding 1,800cc Toyota Corolla is being sold in India for $16,334 (retail price excluding taxes) while the price of the same car in Pakistan is $13,253, lower by $3,081.

Including taxes, the retail price of Toyota Corolla in India is $26,744 while in Pakistan it is $19,781, a difference of $6,963.

Similarly, the retail price of 1,800cc Honda Civic in India he said was $19,216 (excluding all taxes) while the same car is being sold for $15,214 in Pakistan, a difference of $4,002, he said.

After including all taxes, the difference in prices of Honda Civic in Pakistan and India is $7,403. In India, Civic is being sold for $30,455 while it is available at $23,052 in Pakistan.

The automakers and vendors have underlined the need for revision in the import duty slabs, saying the old duty structures are favouring car importers.

In response to a question, PAMA Director General Abdul Waheed cautioned the consumers, who are opting for imported used cars, saying they were making a wrong decision.

“The buyers of used cars may spend less initially, but eventually they pay much more in terms of expensive maintenance and low resale value compared to a new car,” he said.


http://tribune.com.pk/story/478485/auto-assemblers-say-cannot-sustain-liberal-import-policy/
Riaz Haq said…
Here's a report of Japanese investment in Pakistan:



TOKYO (Kyodo) -- Yamaha Motor Co. will build a motorcycle plant in Pakistan with the aim of starting production in 2015, in an attempt to expand its business in an untapped emerging market, company President Hiroyuki Yanagi said Friday in an interview with Kyodo News.

Yamaha will first invest 1.3 billion yen in the Pakistani plant before increasing the amount to a total of 10 billion yen by 2020 to raise its production capacity to 400,000 units a year.

"Motorcycles sold now in Pakistan are mainly Chinese-made, but they are very old," Yanagi said. "We'd like to stimulate the market by introducing new models."

Yamaha has set its initial production target at 40,000 units per year.

The motorcycle market in Pakistan is expected to double to 3 million units in 2020 from the 2013 level of 1.5 million, according to the Japanese manufacturer.


http://www.manufacturing.net/news/2013/02/yamaha-building-motorcycle-plant-in-pakistan

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