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Struggling Fauji Meals given lifeline by SECP 



The Securities and Change Commision of Pakistan (SECP), which is the premier regulatory physique for publicly listed firms on the Pakistan Inventory Change (PSX), has lastly allowed Fauji Meals Restricted (FFL) to lift Rs 11.7 billion by way of issuing 1,170,874,980 extraordinary shares. FFL made the announcement to the PSX on Tuesday.

Again in August of final 12 months, the Quick-moving client items (FMCG) firm held an Extraordinary Common Assembly (EGM) the place it determined to extend its whole authorised share capital from Rs 18 billion to twenty-eight billion. A ten billion enhance in authorised shares on the time instructed that the corporate was going to difficulty one other huge spherical of shares quickly. Naturally, on September twentieth, 2022, FFL held a Board of Administrators (BoD) assembly the place the board advisable to difficulty new shares, aside from proper shares, pending approval till one other EGM on October 18th. The next shares have been to be issued:

  1. 400,000,000 shares to be issued at Rs 10 per share amounting to Rs 4 billion to FFBL Energy Firm Restricted (FPCL) in opposition to money.
  2. 465,000,000 shares to be issued at Rs 10 per share amounting to Rs 4.65 billion to FFC power restricted (FFCEL) in opposition to money.
  3. 235,000,000 shares to be issued at Rs 10 per share amounting to Rs 2.35 billion to Fauji Basis (FF), out of which Rs 350 million is contemporary money injection whereas Rs 2 billion is in opposition to conversion of subordinated mortgage to fairness
  4. 70,874,980 to be issued at Rs 10 per share to Fauji Fertilizer Bin Qasim Restricted (FFBL) in opposition to conversion of accrued markup on subordinated mortgage amounting to Rs 708 Million to fairness.

Company historical past – Fauji basis and Fauji meals 

The issues at FFL have been nicely documented through the years. The corporate is a subsidiary of the Fauji Basis, which is the conglomerate owned by the Pakistan Military concerned in cement, fertiliser, and meals amongst different issues. 

The Fauji Basis itself has an extended and wealthy historical past. It was initially based in 1945 on the finish of the second world struggle as a Put up Battle Providers Reconstruction Fund (PWSRF) for Indian Battle Veterans who served the crown in opposition to the axis powers. In 1947, the fund’s stability was divided between India and Pakistan and the civilian authorities continued to function it till 1953. 

In 1954, nevertheless, the civilian authorities ceded management of the fund to the military which is the place the Fauji Basis took root. As a substitute of disbursing the stability of the fund value round Rs 18.2 hundreds of thousands among the many beneficiaries, the military invested it in establishing a textile mill. Later, from the revenue of the textile mill, it established the primary 50 bedded TB hospital at Rawalpindi.

And that additionally grew to become the aim of the Fauji Basis. It could go into enterprise and develop that enterprise in order that the revenue might be spent in the direction of taking care of veterans of the Pakistan military and different charitable causes. For many years, the conglomerate grew and ran profitable ventures together with within the fields of fertiliser and cement. 

Nevertheless, FFL has been a completely completely different story all collectively. The Fauji Basis is meant to be a conglomerate that makes cash and spends that cash on the welfare of veterans and serving women and men. FFL has lengthy confirmed to be a drain on the assets of this organisation.

On Aug 25, FFL launched its half-yearly monetary statements for the primary half of 2022, ending June 30, which highlighted its continued struggles, regardless of a “wholesome progress” of seven% in internet gross sales. The assertion confirmed that the corporate’s loss, after tax, stood at a whopping Rs1,253 million in comparison with Rs758 million in the identical interval final 12 months. Gross revenue was all the way down to Rs178 million from Rs545 million. 

The accounts confirmed a large uptick in income prices, advertising and marketing and distribution bills, leaving the loss from operations at Rs708 million, skyrocketing from Rs 117 million within the first half of 2021.  “The corporate has began a number of price effectivity and margin enchancment initiatives which ought to begin kicking in from H2 of 2022,” learn the report. 

A behavior of needing assist 

The financials which have come out from FFL are terrifying to place it mildly. The answer that’s being provided is that the military makes use of a few of its extra profitable enterprises to basically subsidise FFL. In one of many inventory market notifications talked about earlier, it was introduced that the Fauji Basis shareholders will likely be offering a mortgage to FFL value Rs2,350,000,000. 

The Fauji Basis shareholder mortgage to FFL is supposed to allow it to fulfill its working capital necessities. The mortgage is curiosity free for a interval of two years after which it can carry mark-up on the charge of 6 Month Kibor +2%, based on the announcement to the PSX. Fauji Basis additionally has the choice to transform this mortgage into fairness capital at any time. 

Along with this, one other notification introduced that help was additionally coming within the type of an settlement with Remount Veterinary Farms Corps (RVFC), to offer 1,250 tonnes of skimmed milk powder for the 12 months 2022-23, based on an announcement on the PSX web site posted final week. 

This, in fact, will not be the primary time one thing like this has occurred. The FFL has made a behavior of needing the military to bail it out. The help from the RVFC isn’t any completely different, since RVFC in Pakistan was established by the military school of veterinary sciences some 30 years in the past. This contract, based on the announcement, is meant to assist develop each revenues and revenue. 

EGM choices

The EGM on October 18th, 2022, gave its approval for the brand new share difficulty pending approval from the SECP. Now the SECP has lastly given the inexperienced mild to FFL to lift extra fairness so as to save its bleeding enterprise.

It’s attention-grabbing to notice right here that two new subsidiaries of the Fauji Group, particularly FPCL and FFCEL, are investing 8.65 billion PKR into FFL. This means that the Fauji group’s downside youngster has grow to be so huge of a burden that it now wants the help of the remaining members of the enterprise conglomerate as nicely.

Though the corporate has not disclosed its monetary outcomes for the 12 months ended December 2022, the corporate is once more anticipated to put up a destructive internet revenue of at the least Rs 2 billion, judging by the losses incurred within the first three quarters of the earlier 12 months. 

The share value of FFL elevated by 4.09% throughout the Tuesday buying and selling session to shut Rs 4.58. 


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Pak-IMF talks finish with out consensus on energy sector subsidies, major deficit



ISLAMABAD: A Week lengthy technical talks between Pakistan and the Worldwide Financial Fund (IMF) ended on Monday with out constructing consensus on energy sector subsidies and first deficit.  

Sources mentioned that either side will begin dialogue on coverage degree talks from Tomorrow (Tuesday) to finalize the Memorandum of Financial Insurance policies Framework (MEFP) and they’re going to attempt to kind out the pending points.

Sources mentioned that the Pakistani facet couldn’t persuade the IMF crew about curbing the vitality sector round debt. 

The Fund needed the federal government to extend electrical energy tariff to beat losses of DISCOs in addition to withdrawing Rs100 billion vitality associated subsidies to the export sector.

Sources mentioned that the federal government has given assurance that it’s going to withdraw Rs100 billion subsidies to the export sector, nevertheless provinces might be free to subsidize the export sector on their very own.

In the meantime, the federal government crew has additionally assured the IMF that they shall make cuts in PSDP in addition to growing the electrical energy tariff to beat vitality sector round debt.

Alternatively, the federal government crew has additionally shared a plan with regard to decreasing the round debt of the oil and fuel sector.

As per the plan, the federal government will make a money injection in a single day price Rs 543 billion to SSGC and SNGPL.

The federal government pays Rs 241 billion to SSGC and Rs 302 billion to SNGPL.

The quantity obtained by SSGC will additional clear the round of OGDCL. The SSGC will have the ability to repay Rs 154 billion mortgage to OGDCL and Rs87 billion to Govt Holdings pvt ltd, sources added.

As well as, SNGPL pays Rs 172 billion to OGDCL, Rs 90 billion to PPL and Rs 40 billion to GHPL, sources added.

Sources mentioned that IMF has additionally forecasted 0.9% major deficit towards the budgeted estimation of 0.5 p.c throughout this yr.

Sources added that the IMF crew has additionally proven issues over non implementation of Single Treasury Accounts as plenty of departments nonetheless are working accounts in personal banks.

Sources additionally added that the IMF crew remained dedicated to its calls for with regard to growing of GST from 17 to 18 p.c GST on all items with a viewpoint that one p.c GST hike will assist in gathering one other Rs 39 billion, sources added.

The fund has additionally emphasised the Pakistani crew not just for abolishment of revenue tax exemption however to impose Rs180 billion Flood levy to fulfill FBR’ income goal.

Sources mentioned that Finance Minister Ishaq Dar nonetheless sticks to not imposing gross sales tax on petroleum merchandise as he thinks {that a} new wave of inflation will comply with.

Sources mentioned that the IMF agrees to subsidize vitality associated tariffs within the Kisan package deal in addition to the Balochistan tube effectively scheme.

The federal government crew can even give a roadmap for the privatization program through the coverage talks, sources added.



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CDWP clears 10 growth tasks price Rs87.17bn



ISLAMABAD: The Central Growth Working Social gathering (CDWP) has cleared ten growth tasks price Rs 87.17 billion throughout its assembly on Monday.

The assembly, which was chaired by Federal Minister for Planning Growth & Particular Initiatives Professor Ahsan Iqbal, was additionally attended by the Planning Ministry secretary, the Chief Economist, members of the Planning Fee and representatives from numerous different ministries and divisions.

In accordance with particulars, the discussion board thought-about ten tasks associated to the Ministry of Housing and Works, Ministry of Nationwide Well being Companies Rules and Coordination, Ministry of Communication, Ministry of Science & Expertise and Greater Schooling Fee HEC. These tasks embrace: reconstruction of Turbat-Mand Street, building of Pun Panjgur-Gichak-Awaran Street, reconstruction of Manghopir, completion of Niheng Bridge, the Shagharthang Hydropower Mission, the Strengthening Establishment for Refugee’s Administration (SIRA), institution of Most cancers Hospital in ICT, Gwadar Protected Metropolis Mission (Section-1), growth of Ziarat City and the Nationwide Forensic Science Laboratory.

The discussion board cleared the Reconstruction of Turbat- Mand Street from M-8 until Iranian Border-Radeeq at the price of Rs 20,992.875m to the Government Committee of the Nationwide Financial Council (ECNE). 

The revised mission moreover envisaged the completion of 410-meter lengthy and eight.2-meter large two lane Niheng Bridge at Rodbun, District Kech, Baluchistan Province at the price of Rs 673.688m. The place to begin of the mission extends from the present Nehang Bridge, the South aspect embankment of which has been washed away on account of floods.

The discussion board additionally really useful the Building of Pun Panjgur-Gichak-Awaran Street, District Awaran at the price of Rs 29,638.353m to the ECNE. This entails the development of 228-kilometer lengthy and seven.3-meter large (3.65-meter large every) asphaltic carriageway, ranging from Panjgur – Gichak -Awaran, District Panjgur & Awaran, within the Southern Baluchistan Area. The highway will join Gichak with Panjgur, in addition to with Karachi by way of Bela-Hoshab Street. 

Equally, the reconstruction of Manghopir at the price of Rs 3190.432m was additionally cleared by the discussion board.

The CDWP moreover authorised the mission, Strengthening Establishments for Refugee’s Administration SIRA at the price of Rs 2.043.000m. The Ministry of States and Frontier Areas is remitted to take care of the problems associated to Afghan refugees. The Chief Commissionerate for Afghan Refugees (CCAR) being an connected division of the Ministry of SAFRON is the operational arm to handle Afghan Refugees. CCAR and its Provincial Afghan Commissionerate’s places of work are liable for advising/ offering inputs on coverage issues and implementing the insurance policies of the Ministry of SAFRON on Afghan Refugees’ points. It’s estimated that almost three million Afghan Refugees live in Pakistan i.e. 1.436 million Afghans with Proof of Registration Playing cards (POR) for his or her identification; along with roughly 840,000 Afghan Citizen Card holders and an estimated 700,000 undocumented Afghan dwelling in Pakistan. The Ministry of SAFRON with the technical help of the Nationwide Database & Registration Authority (NADRA) has registered these Afghan refugees. The Authorities of Pakistan has allowed UNHCR to conduct refugee standing dedication (RSD). People acknowledged as refugees on the end result of the UNHCR’s RSD course of and members of their household are issued with UNHCR Refugee Identification playing cards, referred to as Proof of Registration (PoR) playing cards.

Furthermore, the 26 MW Shagharthang Hydropower Mission in Skardu was really useful at the price of 17,972.902m to the ECNE. The Ministry of Kashmir Affairs and Gilgit-Baltistan is the sponsoring company of the mission. The principle goal of the mission is to take advantage of the potential of hydropower out there within the center stretch of Kachura Lungma to generate 26 MW output, which can increase energy to the present electrical energy community of the realm to resolve energy scarcity to the shoppers of load facilities in Skardu valley.

The CDWP additionally authorised the institution of a Most cancers Hospital in ICT (Revised) at the price of Rs3,406.169m. The Ministry of Nationwide Well being Companies, Rules and Coordination is the sponsoring company of the mission. This mission envisages the institution of a 200 bedded cutting-edge hospital for indoor admission of assorted sorts of most cancers sufferers. The division of the beds embrace 75 beds for grownup oncology, 25 beds for girls oncology, 25 beds for ICU, 30 beds for personal and 20 beds for emergencies.

Moreover, the discussion board authorised of the Gwadar Protected Metropolis Mission (Section-1) at the price of Rs 4,966.905m. Authorities of Balochistan is the sponsoring Company. This mission seeks to supply a safer metropolis for the residents of Gwadar significantly on the recognized strategic areas and likewise helps the legislation enforcement businesses in detecting and investigating crime by gathering proof. Gwadar is comparatively an unsafe metropolis, with many international governments advising their residents in opposition to touring there. The present infrastructure is inadequate to cater to the safety wants of Gwadar metropolis. Gwadar secure metropolis has been developed exactly to assist all authorities stakeholders together with town administration, Gwadar police and different Legislation Enforcement Businesses (LEAs) to mitigate the safety and communication challenges. 

Lastly, institution of the Nationwide Forensic Science Laboratory at the price of Rs 1978.422m was additionally authorised by the discussion board. The Ministry of Inside is the sponsoring company of the mission. The laboratory will probably be established in ICT.







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Second buy-back of 2023: Kohinoor Textile Mills declares 30m share buy-back



ISLAMABAD: Kohinoor Textile Mills Restricted (KTML) has determined to purchase again 30 million of its atypical shares, the corporate introduced to the Pakistan Inventory Alternate (PSX) on Monday. That is the second such buy-back announcement in 2023 after Kohat Cement Firm Restricted (KOHC) introduced the identical final month.

The KTML’s notification to the PSX learn: “The Board of Administrators of Kohinoor Textile Mills Restricted in its assembly held on February 06, 2023, has accorded approval to the corporate, topic to approval of shareholders by the use of particular decision, with a view to buy/buy-back of its personal shares by way of Pakistan Inventory Alternate Restricted upto a most of 30,000 000 constituting 10.023% of the issued atypical shares of the face worth of Rs 10 every on the spot / present share worth prevailing throughout the buy interval in money and out of distributable income of the corporate.”

The principal enterprise of KTML is the manufacturing of yarn and material, processing and stitching the fabric and commerce of textile merchandise. The choice of the board of KTML to buy-back shares will have to be authorized by way of a particular decision handed by the shareholders within the subsequent Extraordinary Normal Assembly (EGM) of the corporate. The EGM can be held on March 3. The proposed buy-back interval will begin from March 13 to August 29. 

The aim of the buy-back is the cancellation of shares and can be made out of the distributable income of the corporate. In line with the corporate, the decreased share capital after the buy-back will enhance the earnings per share, future dividends, and break-up worth of the corporate’s shares. As well as, it’ll additionally enable a possibility of exit to these buyers who want to liquidate their investments within the firm’s inventory.

In 2022, six main firms on the PSX introduced share buybacks. The unsure financial state of affairs in Pakistan decreased the share costs of many beneficial and established firms which made their valuations enticing. Attributable to a scarcity of institutional and overseas buyers available in the market, these firms determined to reap the benefits of the decline of their share costs to purchase again their very own shares. 

It began with NETSOL in Could (two million shares), adopted by Maple Leaf Cement (25 million shares), then Fortunate Cement (10 million shares), JDW Sugar Mills (two million shares), then BAFL (200 million shares), and at last ENGRO (70 million shares). Aside from the ENGRO buy-back, which is but to start out, all earlier buy-backs have been accomplished.

We wrote a featured piece for Revenue journal on the finish of final 12 months titled ‘2022: the 12 months of share buybacks’. The article predicted that “it would even be the case that the buybacks have solely simply began, and subsequent 12 months in 2023 we might even see much more buybacks than those we noticed in 2022. Time will inform.” After KOHC, the KTML announcement is the continuation of the buy-backs we noticed final 12 months.

On Monday, the share worth of KTML opened at Rs 46.5, reached a excessive of Rs 49.45 and at last closed at Rs 48.77, a day by day enhance of 6.02%. The amount traded was additionally a large 1,909,500 shares. 

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