Pakistan Industries Updates

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Pakistan Industries updates​

National Foods Ltd is setting up its fifth plant in the M4 Industrial City of Faisalabad, said a company official on Tuesday.

Briefing a group of journalists at the Port Qasim factory of the manufacturer of convenience-based food products, the official said the 30-acre Faisalabad plant will be the company’s biggest production facility upon its completion by the end of 2022.

Currently, the company operates three plants in Karachi’s Port Qasim, SITE and Nooriabad industrial estates and one plant in Gujranwala. He didn’t share the size of the investment.

The company posted an unconsolidated profit of Rs725 million for January-March, up 39.3 per cent from a year ago. Its quarterly sales grew 23.4pc to Rs8.4 billion.

Even though the company is one of the major Pakistani exporters of recipe mixes, a sharp devaluation of the local currency against the dollar in recent quarters has left a negative impact on the earnings growth, the official said

 

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The government on Friday decided to sell state-owned enterprises to foreign countries through negotiated deals instead of conducting transparent bidding and also ruled out the possibility of handing over management control of power distribution companies to the private sector.

The decisions taken by the Cabinet Committee on Privatisation (CCOP) mark a departure from the privatisation path laid in an Act of parliament, which was aimed at ensuring maximum gains for the state and avoiding discretion in such sensitive matters.

Finance Minister Miftah Ismail chaired the first meeting of the CCOP that was attended by the key cabinet ministers.

An official statement issued by the finance ministry stated that the CCOP deliberated the modalities for the negotiated government-to-government (G2G) commercial transactions and decided that it was not the domain of the Privatisation Commission.

The CCOP directed the Ministry of Finance to formulate the proposal for structured transactions in coordination with the relevant ministries for the consideration of the cabinet, according to the finance ministry.

Miftah Ismail had directed the Privatisation Commission to initiate the process for a new legal framework for the negotiated government-to-government transactions.

It was decided that the finance ministry would prepare a new legal framework for the approval of the federal cabinet that would then decide and allow for either the strategic sale or giving the stake of government companies listed at the stock market to the foreign government under a negotiated deal.
The route has been adopted for fast-track sale of the government entities. But during the PTI regime, Saudi Arabia had offered to buy two multibillion-dollar LNG power plants under a government-to-government deal. The previous government turned down the offer, terming it against the Privatisation Ordinance of 2000.

Similarly, the PTI government had also refused to sell the Pakistan Steel Mills to China under the China-Pakistan Economic Corridor Framework agreement because of the same reason.

The CCOP meeting was informed that the government of the United Arab Emirates has showed interest in acquiring stakes in the state-owned enterprises under a negotiated deal.

The Privatisation Commission had proposed the CCOP that a competitive route should be adopted for the sale of the listed government entities to the institutional investors and the foreign governments as per the prevailing laws and regulations.

The CCOP also blocked an ongoing process to handover the management control of the power distribution companies to the private sector to bring efficiency.

“The CCoP agreed that this is a critical area of focus and directed Privatisation Commission to take one DISCO at a time to pursue a concessional arrangement focused on enhancing their financial viability and service quality. Additionally, transfer of DISCOs to provinces was also deliberated, it added.

The decision to offer the distribution companies to the provinces lay bare the government’s intention to keep these entities in the public sector. The provinces in past have already refused to take over the distribution companies.

The sources said that the CCOP wanted to handover the Faisalabad Electric Supply Company (FESCO) to the private sector but then dropped the idea due to opposition by some CCOP members.

 

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SLM Tyres reaching first-phase production​

ISLAMABAD, Jul. 27 (Gwadar Pro)-Servis Long March (SLM) Tyres has reached a milestone of manufacturing more than 2,000 tyres per day at its Nooriabad plant in Sindh Industrial and Trade Estate (SITE), Karachi.

It marks the completion of the first-phase production capacity of 740,000 tyres per annum, Gwadar Pro learned recently.

SLM Tyres is a $300 million joint venture between Pakistan’s Servis Group and China’s Chaoyang Long March Co. Ltd. It’s the first All-Steel Radial Truck and Bus Tyres manufacturing facility in Pakistan with complete transfer of technology right from the commencement of commercial production, according to the Servis Group. The JV started commercial production in March 2022.

Servis Group owns 51% shares in the JV while Chaoyang Long March Co. Ltd. owns a 44% stake.

The targeted production capacity of SLM Tyres is 2.4 million tyres per annum in three phases. Annual tyre production is expected to rise from 0.74 million in the first phase to 1.2 million in the second phase and 2.4 million in the third phase.

According to the Servis Group, the project will contribute Rs. 23 billion to the national exchequer by way of customs duty, sales tax and income tax during its initial 10 years of commercial operations.

SLM tyres are being exported to the US, with the next areas of focus being the European Union and Brazil. Yearly exports are expected around $70 million in the first year of commercial operations, which will gradually increase to $300 million, Servis said.

 

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Fauji Fertilizer Company Limited (FFC) has announced its half-yearly financial results for the period ended June 30, 2022, in its Board of Directors’ meeting held on July 28, 2022.

FFC attained Urea production of 1,276 thousand tones, 4% higher than last year mainly because of the deferment of plant turnaround to H2. The company also achieved a benchmark sona urea offtake of 1,275 thousand tones for the period. Increased urea sales combined with higher prices of imported fertilizers also led to the highest ever all-product revenue of Rs54.71 billion during the period.

 

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According to the PBS data, the annual production of big industries witnessed a spike of 11.7 % in the fiscal year 2021-22. An increase of 11.5 % was noticed in June 2022, it added. The production increased by 0.2 % in comparison to May 2022.

Food producing and processing industries witnessed a growth of 8.4 %, while the tobacco sector gained by 15.9% in 2021-22. The PBS data said that Textile grew by 3.5 %, while the automobile sector saw a significant growth of 49.4 %.

The highest growth in production was witnessed in the timber and furniture sector. The Furniture sector grew by a staggering 180%, while the Timber by 115.7%.

 

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On cigarettes output​

BR Research

The country’s cigarette output has been gradually picking up this year, but it may not be enough to offset the impact from the challenging operating environment and higher taxes and duties. Based on latest data from Pakistan Bureau of Statistics (PBS), the cigarette production (in the formal industry) stood at 29.15 billion sticks in the Jan-Jun period of 2022, showing growth of 10 percent year-on-year. The growth trend has continued since CY21, when annual output had hit 57 billion sticks, rising by 16 percent year-on-year.

Based on the PBS data, the average cigarette production in the latest half-yearly period stood at 4.86 billion sticks per month, which is higher than 4.4 billion sticks per month seen in 1HCY21. Output is slowly reaching closer to the previous peak of 5.1 billion sticks per month produced on average during CY18. On a monthly basis, the highest monthly production was recorded at 6.27 billion sticks back in April 2018.

The 10 percent output growth in the cigarette manufacturing industry during 1HCY22 is reflected in the financials of the top two tobacco companies, where volumetric growth has been visible. For instance, at Philip Morris (Pakistan) Limited (PSX: PMPK), the net turnover grew by 10 percent year-on-year to reach Rs10.16 billion. And at Pakistan Tobacco Company Limited (PSX: PAKT), the net turnover grew by a bigger 21 percent year-on-year.

While the topline growth helped propel the operating profitability of both firms by double-digits in the analysis period, the duo’s bottomline /net profits still underwent double-digit contraction. For PAKT, net profits reduced by 10 percent year-on-year to Rs8.51 billion, and at PMPK, the net profits went down by 11 percent year-on-year to Rs1.53 billion. This decline could be attributed to proportionally much higher booking of income-tax expense during 1HCY22.Recall the federal government had levied a 10 percent ‘super tax’ on a number of industries, including tobaccos, in June 2022.

Going forward, the cigarette output may come under pressure. Recall that the latest federal budget had also raised the FED on cigarettes. This may render cigarette output in the formal industry more expensive than the informal sector alternatives that are cheaper due to evading taxes and duties.

The cheaper, non-duty-paid cigarettes are cited by PAKT and PMPK as a major challenge to the viability of the formal sector as well as government’s tax revenues. Let’s see how things unfold in the second half of the year.

 

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These huge machines are equipped with most advanced technology incorporated in any such equipment in Pakistan for the first time.

The state of the art Rescue Aerial Platform shall be used to encounter incidents like Hafeez center and related. The 3 in 1 machine. Manufactured in Pakistan by Javaid industrial company, which is a leading manufacturers of Aerial Platforms in Pakistan.

 

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Pakistan’s only can-maker to enhance production capacity by 26%​

• Earlier this year, company increased production capacity from 700mn cans to 950mn cans per annum

BR
October 28, 2022

Pakistan Aluminium Beverage Cans Limited (PABC), the only aluminium can-maker in the country, aims to enhance its production capacity by over 26%, the company said in a notice sent to the Pakistan Stock Exchange (PSX) on Friday.

The company said its Board of Directors, during a meeting held on October 26, "approved capital project with the objective to enhance rated production capacity to 1,200 million cans per annum (p.a.) (currently 950 million cans) and also to eliminate bottlenecks in existing capacities and equalize capacities of all processes.”

PABC said that the project is expected to commence commercial operations by July 2023.

Back in August, the can-maker successfully commenced the project for the enhancement of production capacity, under which the rated production capacity was increased from 700 million cans p.a. to 950 million cans p.a.

As per the company’s latest financials, PABC’s net sales increased by Rs5.10 billion to reach Rs10.85 billion, during the nine months ended September 30, 2022, recording a growth of 88.79% in comparison with the corresponding period last year.

The sales growth was driven by currency devaluation and metal price increases, as well as volumetric sales growth.

This performance has translated into Earnings per Share of Rs6.83 for nine months ended September 30, 2022. The gross profit during the period under review stood at 34.11%, compared to 34.92% during the corresponding period last year. The profit after tax has increased by Rs1,274 million to reach Rs2,468 million, an increase of 106.66%, compared to corresponding period last year.

Last year in June, PABC raised Rs4.6 billion against an offering of 94 million shares at a strike price of Rs 49 per share, 40% above the floor price of Rs35 per share. The plan was to raise Rs3.3 billion.

At the time of filing this report, the share of PABC was being traded at Rs45.51, up by Re0.21 or 0.46%.

 

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Two sets of production lines of Pakistan Qiangsheng Ceramics Enterprise

On June 29th, 2020, Liu Dan, Chairman of Zhongyao Co., Ltd., and You Zuojian, general manager of Pakistan Qiangsheng Ceramics Enterprise, signed a strategic cooperation agreement in Henan Qiangsheng Ceramics Co., Ltd. Pakistan Qiangsheng Ceramics Enterprise has introduced Zhongyao Shenzhou ZY788 Group II energy-saving and environmental protection production lines, which are 55,000 square meters of internal wall tile production lines and 45,000 square meters of fully polished glaze production lines.

https://www.facebook.com/video.php?v=539635470996132

 

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Large Scale Manufacturing (LSM) posted a negative growth for the 5th consecutive month (= industry closing or reducing operations).
LSM negative growth is concerning as many small scale industries are linked to it, chain effect.

Machinery & Equipment,,, -56.13%
Textile,,,,, -22.04%

 

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Bestway Cement expands production capacity with completion of Hattar Plant Line​

BR
February 17, 2023

Bestway Cement Limited (BWCL), one of Pakistan’s leading cement manufacturers, said the construction and installation of a brownfield line at its Hattar Plant is now complete..

The company shared the development in a notification to Pakistan Stock Exchange (PSX) on Friday.

“We are pleased to inform you that Bestway Cement Limited has completed the construction and installation of a brownfield line at its Hattar Plant.

“Hattar Line-Il has a clinker capacity of 7,200 tonnes per day. The new production line has commenced cement production on 17th February 2023,” read the notice.

BWCL is a subsidiary of Bestway International Holdings Limited (BIHL), which holds 56.43% shares in the Company. BIHL is a wholly owned subsidiary of Bestway Group Limited (BGL), a British multinational conglomerate company.

Last year in October, BWCL commissioned a fifth plant site in Mianwali in Khyber Pakhtunkhwa, which increase its annual production capacity to 12.9 million tonnes.

The company was the first cement operator to install Waste Heat Recovery Power Plants at all of its sites. It has also recently commissioned the installation of Solar Power Plants at all of its operation sites. The implementation of these solutions has enabled it to generate its own energy and as a result reduce its carbon footprint.

 

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Big industries contract by 12% in February​

Reeling from supply-chain disruptions, high costs, economic slowdown

Shahbaz Rana
April 18, 2023

The pace of contraction in Pakistan’s major industries sharpened to nearly 12% in February over a year ago, as the industries reel under pressure from supply-chain disruptions, high fuel costs, policy uncertainty and an economic slowdown.

Large-Scale Manufacturing (LSM) industries recorded an 11.6% lower production rate in February over a year ago, the Pakistan Bureau of Statistics (PBS) said on Monday. The contraction was steeper than the market expectations but is in line with the expectation of overall negative growth in the industrial sector during the current fiscal year.

Pakistan’s factories are shutting down one after another because of restrictions imposed on imports that have caused a shortage of imported raw material. The steep currency devaluation has also made raw material expensive and business models unviable.

Dwindling foreign exchange reserves, standing at only $4 billion, administrative import controls, flood-related supply-chain disruptions, high fuel costs, policy uncertainty, and the slowdown in domestic and global demand have affected the industry and service sector activity, according to a recent report by the World Bank.

The World Bank has projected negative growth in both industrial and agriculture sectors during the current fiscal year with overall Gross Domestic Product (GDP) growth rate at only 0.4%. Business and consumer confidence have continued to plummet, suggesting continued suppressed activity over the coming months.

The government is allowing imports equal to monthly inflows on account of exports and remittances – a strategy that has proven too costly for industries. The government has compressed imports to a range between $2 billion and $2.5 billion per month, causing supply shortages.

“Our foreign exchange position is very tight and we are giving preference to the import of food and medicines,” said Prime Minister Shehbaz Sharif while speaking on the floor of the National Assembly on Monday.

The government has been waiting for the International Monetary Fund (IMF) deal to materialise before it starts normalising imports.

Earlier this month, the central bank also increased its interest rates to 21% – the highest in Pakistan’s history – in hopes of cinching a staff level agreement with the IMF. Still, there is uncertainty, as the lender had initially demanded around 7% increase in the interest rates.

The LSM trend indicates that this year the overall GDP growth rate may remain below 1% due to the shutdown of industries and adverse impact of the devastating floods on the agriculture sector, according to estimates from the finance ministry, IMF, World Bank and Asian Development Bank. The government had targeted economic growth of 5.1% in the current fiscal year.

Overall, LSM output shrank 5.6% in the July-February period of fiscal year 2022-23, the PBS reported.

The big industries faced broad-based contraction, with 18 of the 22 sectors witnessing lower production during the first eight months (July-February) compared to a year ago. Only clothing, leather products, furniture, and other manufacturing sectors saw an increase in production during the first eight months.

Since large industries contribute heavily to revenue collection and job creation, any change in their growth impacts the government and business sentiment across the board. The LSM sector contributes nearly one-tenth to total national output, however, a constant decline in the share and growth of LSM may cause a lot of problems for the government already struggling to create new jobs.

The main contributors towards overall the negative growth of 5.6% include the food sector that shrank by 2% and the tobacco industry which contracted by one-fifth. Similarly, the textile sector’s output also dropped by over 14%. Petroleum products and cement production also dipped significantly during the first eight months of the fiscal year.

The two sectors hit hardest by the ban on imports were pharmaceuticals and automobiles, both of which witnessed significant contraction during the first eight months of the current fiscal year.

Production was also lower in the chemicals sector, non-metallic mineral products, machinery and equipment and transport equipment.

 

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MoU signed to promote Pak-China furniture collaboration​

By Mariam Raheem
Jul 7, 2023

DONGGUAN- On July 7th, an Memorandum of Understanding (MoU) was signed between the International Famous Furniture Fair (Dongguan) and the All Pakistan Furniture Makers Association (APFMA) to promote communication and cooperation between Chinese and Pakistani furniture enterprises.

MOU signed between APFMA & Dongguan Famous Furniture Association in presence of Acting Consul General of Pakistan in Guangzhou, Sardar Muhammad

In the presence of the signing ceremony, Mr. Sardar Muhammad, the Acting Consul General of Pakistan in Guangzhou, expressed his appreciation for this move, recognizing the potential benefits for both countries in collaborating within the furniture sector.

According to the MoU, cooperation will be fostered through business negotiations, technology exchange, market promotion, and other projects. This agreement aims to provide a platform and opportunities for collaboration between Chinese and Pakistani furniture enterprises, promoting mutual benefits and achieving win-win situations.

The MoU seeks to leverage the advantageous resources of the furniture industries in both countries to enhance overall competitiveness and international influence. Additionally, it aims to provide comprehensive support for joint exhibition events, ensuring they become more influential and inclusive by offering richer, more professional, and authoritative assistance.

The two parties will also assist Pakistani furniture enterprises in expanding into the Chinese market, promoting Pakistani furniture brands and products through participation in renowned international furniture exhibitions, business exchanges, and other activities.

Furthermore, they will work together to promote sustainable development in the global furniture industry through mutual learning, collaborative innovation, and addressing environmental protection and resource utilization.

The MoU was signed by Lin Binghui, Chairman of Dongguan Famous Furniture Association, and Hamad Aslam, Chairman of APFMA, on behalf of their respective organizations.

 

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Tyres industry in Pakistan.

ISLAMABAD: Prime Minister Shehbaz Sharif has assured to extend every possible facilitation to the Chinese investors for investment in Pakistan.

He made the remarks while talking to a delegation of Service Long March Tyres and Chaoyang Long March Tyres led by Chairman Li Qingwen in Islamabad.

Shehbaz Sharif said China has also supported Pakistan in difficult times. He said China is a lonstanding friend of Pakistan.

The Prime Minister directed the relevant quarters to extend maximum facilitation to the Chinese investors for improvement of Tyres industry in Pakistan.

Shehbaz Sharif welcomed the Chinese investment through a joint venture with a prominent Pakistani Tyres company.

The Prime Minister was informed that the Tyres being manufactured in Pakistan at a plant established through the Chinese investment are being sold in international markets. It was informed that the production of tyres would be increased to take annual exports to two hundred million dollars.

 

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Big industry output shrinks 14pc in May​

Mubarak Zeb Khan
July 14, 2023

ISLAMABAD: Large-Scale Manufacturing (LSM) experienced a significant year-on-year contraction of 14.37 per cent in May, showed data released by the Pakistan Bureau of Statistics on Thursday.

This marks the ninth consecutive month of decline for the country’s major industries during the outgoing FY23. The primary reason behind this decline can be attributed to a slowdown in the production of export-oriented textile and clothing sectors.

The consequences of this downturn in large industries are evident in the form of a significant number of job losses. The reduction in production capacity has led to an unfortunate situation where many individuals were rendered jobless.

These statistics highlight the challenges faced by Pakistan’s manufacturing sector and raise concerns about the overall economic performance of the country in the coming months.

The growth of LSM experienced a decline in May compared to the same month last year. The decline was 21pc in April, which is lower than the decline of 25pc in March, 11.6pc in February, and 7.9pc in January. In December 2022, there was a small decrease of 3.51pc.

In November 2022, there was a negative growth of 5.49pc, while in October 2022, it declined by 7.7pc. In September 2022, there was a decrease of 2.27pc compared to the same month last year. In August, there was a slight increase of 0.30pc after a decline of 1.67pc in July, which was the first month of the current fiscal year.

Between July and May, LSM also posted a negative growth of 9.87pc on a year-on-year basis.

In FY22, the LSM expanded by 11.7pc year-on-year. The production estimate for LSM industries was made using the new base year of 2015-16.

In May, the production of 16 sectors shrank and only four posted a marginal rise.

The textile sector’s production shrank 25.97pc over a year ago. Major negative growth originated from yarn (29.89pc), and cloth (17.49pc). Nominal growth was reported in the production of other products.

The production of garments posted a growth of 12.86pc during May. Its performance remained positive in the first 10 months except for February when it witnessed a negative growth.

In the food group, wheat and rice production dipped by 0.36pc and starch and its products by 2.15pc. However, the production of blended tea was up by 39.99pc, cooking oil by 24.45pc and vegetable ghee by 23.80pc, respectively.

Petroleum products posted a negative growth of 21.85pc in May, mainly because of a decline in the production of petrol and high-speed diesel while almost all other petroleum products recorded a slowdown except jet fuel, kerosene, jute and batching oil. The auto sector also saw a 68.60pc slump in May as the production of almost all kinds of vehicles went down.

The production of iron and steel dipped 5.83pc in May mainly because of a decline of 15.09pc in billets/ingots, whereas that of non-metallic mineral products saw a paltry growth of 0.53pc. However, chemical products posted a negative growth of 15.44pc in May from a year ago.

The production of pharmaceutical products dipped 38.61pc, rubber products 5.81pc and fertilisers 13.31pc in May from a year ago.