By SHABBIR H. KAZMI
Updated Apr 21, 2001

As the budget preparation is going on in Islamabad under the broad policy guidelines of lenders, the fear of imposition of new taxes is being apprehended. Since corporate sector is the major contributor of taxes, the axe of new taxes is expected to slash its earnings.

While PTCL shares are being traded around Rs 18.00 the GoP has called for express of interest for its sales. According to information from Islamabad some investors from Saudi Arabia have expressed interest in acquiring the management control of PTCL at around Rs 30.00 per share. This price looks substantially low when one looks at previous sale of PTCL shares. However, the euphoria of investing in telephone companies of nineties is over and the GoP should not expect that price despite premium for transfer of management.

Investors have been ignoring textile sector despite very high dividend payout by the companies for the year ending September 30, 2000. The general impression is that it was a one time jackpot and most of the companies will not be able to pay good dividend for the year ending September 2001. However, this perception is not correct. There are more than two dozen companies which will be able to improve their payout and such companies should not be ignored.

MILLAT TRACTORS

Half yearly results of the Company indicates 37 per cent decline in sales and nearly 26 per cent reduction in profit after tax as compared to results for the corresponding period of previous year. During the first half of 2001 the Company sold 5,253 tractors as against a sale of 8,725 units for the first half of 2000. Sales of local tractor manufacturers are expected to go down drastically if the GoP decides to allow duty free import of tractors from China. However, the option has repercussions for the GoP — subsidy on imported tractors, local manufacturers and above all farmers. Most of the farmers who got Chinese tractors were not satisfied with the performance and quality of these tractors. On top of this non-availability of spare parts added to the miseries of farmers.

HINOPAK MOTORS

The full year results for the period ending December 31, 2000 indicates that profit after tax earned for the full year was even lower than the profit earned during July-December (six months) period of the year 2000. The Company has posted Rs. 4.8 million profit after tax for the year 2000 and it is difficult to understand how it is going to recover accumulated losses touching Rs 498 million. One of the factors responsible for losses in the past was lower capacity utilization. Better capacity utilization of car assembly plants is due to leasing arrangements. Therefore, it will not be wrong to say that unless financial institutions also undertake leasing of buses, neither the capacity utilization of bus chassis assemblers nor the quality of vehicles running on the road can be improved. This issue must be addressed by the GoP immediately.

SARGODHA SPINNING MILLS

The Company has posted Rs 107 million profit before tax for the year ending September 30, 2000 as against a loss before tax of Rs 27 million for the previous year. This was mainly due to an increase in sales — from Rs 558.6 million for 1999 to Rs 885.4 million for the year under review. The better cashflow allowed the Company to curtail financial charges which were Rs 60.7 million for the previous year to Rs 15.3 million for the year 2000. However, the shareholders could not get a paisa dividend because a profit after tax of Rs 102.6 million could only help in reducing accumulated loss — still at Rs 641.7 million as at September 30, 2000.

INDUS DYEING & MANUFACTURING

The Company has posted Rs 302 million operating profit for the year ending September 30, 2000 as compared to a profit of Rs 158 million for the previous year. However, profit before tax for the year 2000 was reduced to Rs 179.5 million due to financial charges amounting to Rs 119 million. The Board of Directors proposed 55 per cent final dividend. A 12 per cent interim dividend has been paid earlier — total payout comes to 67 per cent. The Board has also approved issue of 18 per cent Right Shares at premium of Rs 3.00 per share. One fails to understand the logic behind distributing 67 per cent dividend and then recommending right issue at premium. The Company should have issued Bonus Shares rather than complicating the situation. It seems that while the Company paid 10 per cent dividend for the previous, distribution of 67 per cent dividend was aimed at attracting other investors to buy the right shares.

SUNRAYS TEXTILE MILLS

The Company has not only improved its dividend payout but also succeeded in wiping out accumulated losses at the end of accounting year on September 30, 2000. The Company has posted Rs 70.6 million profit after tax for the year under review as compared to a profit of Rs 16.7 million for the year 1999. The Board of Directors has proposed 20 per cent dividend for the year 2000 as compared to a 12.5 per cent payout for the previous year.

MOVEMENT AT A GLANCE
SCRIP	HIGH (Rs.)	LOW (Rs.)	CLOSING  PRICE	TURNOVER  (SHARE MN)
HUBCO	21.80	20.90	21.50	174,240,000
PTCL	18.90	18.25	164,485,500
ICI	10.35	9.70	10.10	100,447,500
PSO	146.00	140.05	141.00	60,994,800
Engro Chemical	63.70	59.20	62.25	50,551.600
Fauji Fertilizer	42.85	41.05	42.05	22,387,800
Nishat Mills	18.30	17.55	17.60	3,003,500
Millat Tractors	98.00	91.70	96.00	32,000