Profit E-Magazine Issue 375

Air Link’s bid to assemble Acer laptops hits bureaucratic snag

10 Boycotts and border closures: How a stock market star lost its mojo

16 Two steps backwards, no steps forward

20 Bank Alfalah just pledged Rs 1.4 billion for flood damages. How far can the efforts of top-tier banks go?

22 Engro Polymer, perennial problem child, swings to losses again

24 First National Equities to acquire a pharmaceutical company

26 As home appliances market recovers, Waves will return to the AC market

28 Two major Hubco-backed Thar coal power projects now online

30 Shabbir Tiles swings to a loss amidst continued construction slowdown

Publishing Editor: Babar Nizami - Editor Multimedia: Umar Aziz Khan - Senior Editor: Abdullah Niazi

Editorial Consultant: Ahtasam Ahmad - Business Reporters: Taimoor Hassan | Shahab Omer

Zain Naeem | Saneela Jawad | Nisma Riaz | Mariam Umar | Shahnawaz Ali | Ghulam Abbass

Ahmad Ahmadani | Aziz Buneri - Sub-Editor: Saddam Hussain - Video Producer: Talha Farooqi Director Marketing : Muddasir Alam - Regional Heads of Marketing: Agha Anwer (Khi) Kamal Rizvi (Lhe) | Malik Israr (Isb) GM Special Projects Zulfiqar Butt - Manager Subscriptions: Irfan Farooq

Pakistan’s #1 business magazine - your go-to source for business, economic and financial news. Contact us: profit@pakistantoday.com.pk

Boycotts and border closures: How a stock market star lost its mojo

IPakistan Aluminium Beverage Cans has no competitors, but BDS boycotts and closures on the Afghanistan border have left the company adrift

By Zain Naeem

n 2021, Pakistan Aluminium Beverage Cans (PABC) was the hottest new company on the stock market. Their Initial Public Offering (IPO) was oversubscribed by 2.5 times, with bids made for 233 million shares against their offer to sell 93.8 million shares. Stock-hungry investors swooped in to send the price of PABC stock crashing into its ceiling of Rs 49 by the end of the book-building stage.

The company raised Rs 4.6 billion, making it the second largest IPO in the history of Pakistan. They were second only to Interloop, the hosiery company based in Faisalabad which had raised over Rs 5 billion back in 2019.

But PABC’s rise was different. Interloop was a solid family company founded in 2019 with decades of proven success. It was also one of many Pakistani companies in the textile industry. PABC was a new company founded in 2015 introducing a new product in Pakistan: aluminum beverage cans.

Their first year of production was 2017 when they immediately made a splash. With big multinational clients on board, their production that year was 700 million cans. After their IPO in 2021, they increased this capacity to 900 million cans a year, and in August 2023 they raised this capacity to 1.2 billion cans a year.

The company was flying high. With no competitor in sight and demand for carbonated drinks increasing every single year, sales and profit were up. But then came a jolt. Less than two months after their capacity expansion, war broke out between Hamas and Israel. In the ensuing months Israel launched an offensive that has since been declared genocide against the Gazan population by every international forum that deliberates on such matters. As global outrage against the atrocities increased, there was a revival of the international Boycott Divest and Sanction (BDS) movement, which calls for people to boycott companies complicit in supporting Israeli economic interests. While companies like Caterpillar and HP are on the top of these lists, in Pakistan the anger turned towards multinational companies like Coca Cola, Pepsico, and McDonalds.

The demand for carbonated beverages fell dramatically in Pakistan, and PABC was suddenly the unwitting victim in a much larger global boycott. Initially they found a way to fight back. The company turned its attention towards exports. Even before October 2023

they had been exporting to Afghanistan as well as Uzbekistan and Tajikistan through Afghan trade routes. The decreased demand simply led them to focus on selling outside Pakistan.

But then came the border closures. Recent fighting between Pakistan and the Afghan Taliban following a spate of terror attacks have seen the Torkham border shut down and trade between the two countries come to a grinding halt.

The official closure of the border took place on 12th October 2025. The most recent quarterly accounts are up to September 30th of 2025 which fail to take the closure into account. But based on how the stock market has responded, there is an expectation that the revenues will be impacted. Will the company be able to survive another shock? Profit takes a deeper dive.

The origin story

The history of cans in Pakistan is a fraught one. At the time of partition, the main material used in the packaging industry was tin. Plastics had still not seen the boom of the 1970s and 1980s.

Before partition, there were only two tin container manufacturing units in the subcontinent owned by a giant company, Metal Box of the United Kingdom. These factories were located in Bombay and Calcutta, which catered to the demand of undivided India. While they were important for commercial products as well by the turn of the 20th century, their main role was providing packaging for food used in the

colonial army.

After partition in 1947, however, the Pakistan army did not have a facility making tin packaging for their food. For the first few years, Metal Box exported these items to Pakistan and the army used a few skeleton facilities which flattened and repurposed old cans. Given the severity of the situation, Metal Box decided to set up a facility in Pakistan as well. In 1953, with the collaboration of local sponsors, a production facility was established in Karachi for tin containers and cans under the name Hashimi Can Company. From its very inception, Hashimi was the largest tin manufacturer in Pakistan and had the business of the Pakistan Army, which meant it grew very quickly.

The story of the Hashmi Can Company is fascinating. For decades it was run by Gohar Ayub, the son of Field Marshal Ayub Khan, and the company eventually went down in literal flames. What is important to note is that Hashmi Cans mostly made tin packaging for army supply boxes and canned and packaged foods. Which is why when Coca Cola arrived in Pakistan in 1953, they sold their iconic beverage in glass bottles rather than in tin cans. Glass was the main material Coke used all over the world, but they had introduced tin cans as early as 1955. However, Hashmi Cans was so plagued with labour problems and constant fighting that the idea never came to the fore.

Glass remained the medium for both Coca Cola and Pepsico in Pakistan. While those glass bottles led to some iconic marketing campaigns, particularly related to cricket, cans remained elusive. Coca Cola moved away from tin cans

in 1967 and began selling their product in aluminum cans. Pakistan had no aluminum can manufacturer, and the medium remained glass. When the plastics boom came to Pakistan in the 2000s and the MNCs decided they would make plastic bottles as well, that material joined the mix too. Certain retailers stocked imported cans but they were too expensive and were out of the reach of most of the market.

All of that changed around 2017. Just think back a decade and you might remember round cans of imported coke and pepsi were sold at stores like Alfatah and Esajees in Lahore above the regular plastic or glass versions. But then longer and thinner aluminum cans at local prices began showing up. These were the result of the birth of PABC.

Incorporated in 2015 and initiating manufacturing in 2017, the company saw growing demand and revenues year on year. The success was so meteoric that it got listed on the stock exchange in 2019 and saw its book building process generate Rs 4 billion. The company was set up after collaboration between Ashmore Investment Management, Liberty Group and Soorty Enterprises which still hold around 74% shares of the company.

The advantage of first mover helped the company as it was able to rope in Pepsi and Coca Cola as their initial customers. After establishing themselves locally, the exports have also started to increase as Afghanistan, Tajikistan and Iraq have become the next big markets. Currently, Nestle, Muree Brewery and Mehran Brothers also count themselves as the clients who have been secured with long term contracts which are able to provide sustainable revenues into the future.

While being a monopoly in the field, the management at the company always tries to take the next big step in order to stay dynamic and flexible in the face of an issue. First making Coke and Pepsi their clients, then establishing

This was the first project of its kind in Pakistan. Before this it was entirely imported cans. What this facility has done is to ensure that not only are there not any imports, but there will also be exports which will help Pakistan. With the employment benefits from this project, it is in the national interest”

international markets and now selling cans to companies like Nestle and Murree Brewery shows that they are diversifying themselves from any substantial risk or loss. The local bottlers had been using other packaging solutions as they were cheaper alternatives for themselves. By using cans, these bottlers are now extending the shelf life of their products while controlling the costs associated with them.

Pak Aluminum was also able to take advantage of a tax holiday that was granted to it for a period of 10 years as they were located in the Special Economic Zone in Faisalabad which expired in September of 2027. In addition to that, the management has complete control over the pricing power and control as they follow a cost plus pricing model. Any increase in the cost is passed on to the customer which guarantees that they end up making a profit.

The early years

Since the company started its manufacturing process in 2017, the revenues of the company kept growing from one year to the next. At the end of 2018, the company registered revenues of Rs 2 billion. By the end of 2023, these revenues had grown almost 10 fold

Abdullah Yousaf, Co-chairman of PABC

to 19.7 billion. The effect of this could be seen in terms of the losses of Rs 80 crores seen in 2018 turning to profits of Rs 5.3 billion by 2023.

To understand the secret to the company’s success, the best measure of performance is the gross profit margin that was earned. In 2018, due to the higher cost of production, the company actually made a gross margin of -10.7% and net margin of -38.8%. By 2019, the company had reversed this trend making a gross margin of 22.3% in 2019 and 3% in terms of its net margin. The key raw material used by Pak Aluminum is quite simple aluminum. Specifically, it is aluminum coil which is then used to be turned into cans.

During 2018, the price of aluminum fluctuated between $2,200 per metric tonne and $1,800 per metric tonne. These prices kept decreasing throughout 2019 and 2020 hitting a low of $1,400 per metric tonne in mid 2020. Due to this decrease, the gross margin increased to 22.3% in 2019 and 30.3% in 2020. The next time the threshold of $2,200 per metric tonne was crossed was in March of 2021. The company was able to maintain its gross profit margin to some extent in 2021 as well as its recorded margin of 35.5%.

One of the biggest advantages of Pak Aluminum was the fact that it was practicing cost plus margin pricing which allowed it to pass on any increase in the cost to its customers. This was the disclosed policy as the company was the only game in town and bottlers had no other option but to absorb the increase in the price. As there were no substitutes in the market, Pak Aluminum was able to take advantage of this situation.

The year 2022 saw gross margins decrease from 35.5% to 33.4%. This was due to the fact that aluminum prices escalated from $2,200 per metric tonne to $3,500 per metric tonne in a space of one year. Due to the lag between ordering, producing and then selling the cans, the cost increase could not be passed on leading to a decrease in the margins. Prices started to ease once again through most of 2023 which allowed the company to once again see its gross margin increase back to 38.7% in 2023.

The Gaza genocide impact

Considering that the year end of Pak Aluminum falls in December, the impact of the Gaza war can be seen throughout most of the year of 2024. As Israel started to bomb the Gaza strip, there was an active movement in Pakistan which called for the boycott of Pepsi and Coca Cola. The movement went a step further in terms of outreach as there was a call to boycott all foreign products. As these were two of the biggest clients, it was inevitable that Pak Aluminum was going to face some of the brunt of these actions.

The decline in sales was drastic and obvious. It is worth looking at the sales numbers of these companies over the past few years. Last year, Profit reported that in 2023, 1.33 billion litres of carbonated drinks sold in Pakistan last year. This included all drinks produced by Coca Cola Pakistan and Pepsico, as well as carbonated drinks produced by local manufacturers such as Gourmet Cola and Cola Next. The leading company in this entire mix was Coke Pakistan, which sold nearly 567.5 million litres of carbonated drinks. Pepsico sold just over 528 million litres of carbonated drink, giving them a total market share of 39.2% compared to Coke’s 42.7%.

The total sales of carbonated drinks in Pakistan for 2023 stood at an even Rs 303 billion. In terms of revenue, Coca Cola had sales worth nearly Rs 129 billion. In comparison, Pepsi had sales worth just over Rs 120 billion. Local competitors were small participants in this pie. Gourmet Cola sold some 23 million litres of carbonated drinks, Mehran Bottlers, which makes Pakola, sold around 18 million litres of carbonated drinks, and Meezan, which makes Cola Next, sold only around 6.5 million litres of carbonated drinks. Other even smaller local manufacturers made up the remaining amount. Overall, all local manufacturers accounted for just around 17% of all carbonated drinks sold.

Now compare these numbers to the year before. In 2022, the sales revenue was significantly less for everyone involved. The total earnings for the entire industry from that year were Rs 221 billion compared to Rs 303 billion in 2023. However, the actual volume of sales fell in 2023 compared to 2022. In fact, it fell by a significant margin. In 2022 the total volume of sales for carbonated drinks was 1.64 billion litres. This fell by over 300 million litres to 1.33 billion litres in 2023. The discrepancy is for obvious reasons. Inflation increased in Pakistan, which is why companies made more revenue despite posting fewer sales. But there might be more to this data. Inflationary pressure has been ongoing in Pakistan since at least 2019, and also spiked during Covid-19 and also in 2021. Despite this, the total volume of sales never fell. In fact, sales have been steadily increasing in

On the BDS Movement in Pakistan

This publication believes in the non-violent global Palestinian Boycott Sanction and Divest (BDS) movement. As a matter of editorial policy, we hold that efforts to boycott certain companies in a targeted attempt to exert economic pressure on them for supporting Israel at a time when it is embarking on a relentless genocide in Gaza and The West Bank is an effective mode of resistance. More importantly than the effectiveness of such methods, we believe in the moral merit of boycotts simply because it is one of the foremost popular demands made by the Palestinian people.

We also believe in understanding what this movement means, and what it asks of global civil society. Founded in 2005, BDS is a successor movement. It is modelled on a method of targeted boycotts inspired by the South African anti-apartheid movement, the US Civil Rights movement, the Indian and the Irish anti-colonial struggles, among others worldwide. It is non-violent, and believes that when it comes to corporations, consumer choice is a weapon that can be wielded to great effect.

The concept is simple: there are corporations all over the world that do business with Israel. Some of these companies are harmless while others provide key technology and equipment that is directly used for the subjugation of the Palestinian people. The idea is for individuals all over the world that support the end of Apartheid in Palestine to boycott these companies, and hopefully hurt the businesses of these corporations enough for them to notice and change their policies.

The question is, does it work? There are examples of boycott movements exerting significant pressure on corporations in countries like South Africa and Ireland. BDS itself has had its own victories, both big and small, over the past two decades. Since October 2023, when the brutal invasion and subsequent bombing of Gaza began, there has been increased interest in the BDS movement which has picked up steam in different parts of the world.

It has also done so in Pakistan. But Pakistan holds a strange position when it comes to the BDS movement. On the one hand, it is the second-largest Muslim population in the world and has historically been a staunch ally of the Palestinians. But the actual global impact Pakistan can contribute to the BDS movement is minimal simply because it is not a large enough market.

There has been a loose, disconnected effort to boycott companies perceived as foreign and as such complicit with Israel. This has resulted in unfortunate incidents that go against the spirit of the movement such as the burning of a KFC (which is not even on the movement’s list) in Mirpur. Largely, the boycott sentiment in Pakistan remains disconnected from the global BDS movement, particularly since most of the major tech and engineering corporations that are the primary focus of the BDS movement either do not have a presence in Pakistan, or are not household names. This means that boycotts in Pakistan have largely targeted foreign fast food franchises such as McDonalds, and brands such as Coca Cola and Pepsi.

While the numbers for all sectors are not available, a recent report by Euromonitor on Pakistan’s carbonated drinks segment shows a significant dip in sales for both Pepsico and Coca Cola. In fact, the total volume of sales of these brands has shrunk in 2023 and 2024, falling by nearly 20%. However, local brands have failed to capitalise on this the way they could have. Caught unprepared, even though the total volume of sales for carbonates has fallen, the market share of Coca Cola and Pepsi has only fallen by about 2%. People are simply drinking less soda in Pakistan since the local alternatives have not managed to bridge the gap.

Conversations with industry insiders further reveal the extent of pressure these companies faced in the early days following October 2023. Distributors and executives claim they had a much larger chunk of their market share taken away in the initial few months. Another industry insider tells us that international franchise restaurants like McDonald’s and KFC saw dips of more than 40% in their sales almost overnight. Conversely, as all of these different sources also concur, these losses have been recovered for the large part. Most of the lingering effects can be found in Karachi and KP, with the market in Punjab recovering well.

What does any of this mean for Pakistan and for the global boycott movement? Pakistan is, to put it frankly, what we would call small fry. Within carbonated drinks, Pakistan is not a particularly large or profitable market. The same is true for franchise restaurants. The question of whether to boycott or not in Pakistan is largely a moral and personal one rather than a practical one.

this segment for years. Data from Euromonitor shows increasing sales volumes for carbonated drinks since at least 2009, when total volume was just over 500 million litres.

Now fast forward to 2024, and what is the picture that we have? Well, for starters, both revenue and volume of sales have increased compared to 2023. The total revenue from sales increased to Rs 381.7 billion, but most of this can be accounted for by inflation, since carbonated beverages all say a hike in price. The volume of sales has also increased from 2023 and has gone from 1.33 billion to 1.35 billion. This is a very moderate increase, and does not come close to the growth rate pre-2023. What is even more telling is that the sales volume has not gone back up to the 1.6 billion litre mark that they had hit back in 2022. For all intents and purposes, the carbonated drinks market has lost close to 20% of its entire market.

PABC’s fortunes turn

The impact on PABC has also been clear. From 2020 onwards, the company’s growth in sales had been 42%, 96% and 39% respectively. The growth in sales in 2024 plummeted down to only 17% which does show that the boycott was having an impact. Another negative factor was that aluminum started to increase in price yet again as it went from $2,200 in January 2024 to $2,500 in December of 2024. The gross margin yet again took a hit to some extent as it fell from 38.7% to 36.5% in 2024.

With the economy seeing historically high interest rates and the company carrying out expansive selling and distribution expenses, it could be expected that its net margin would take a serious hit during 2024. Fortunately, the company had the farsightedness to invest its cash resources into profit bearing investments. Between 2023 and 2024, the short term investments of the company jumped from Rs 4.5 billion to Rs 15 billion. The effect of this invest-

ment was that even when gross profit margin decreased, other income increased from Rs 46 crores to Rs 2.2 billion in a span of a year.

This was a way for Pak Aluminum to be able to boost its profits in the face of declining margins. The earnings per share in 2023 were Rs 13.9 per share which increased to Rs 16.9 in 2024. Another shift that was seen at the company was that local sales had already started to plateau for the company. In 2022, local sales were Rs 9.5 billion making up 61.5% of its total sales. Exports only made up the remaining 38.5%. From 2022 to 2023, local sales remained more or less the same while exports surpassed local sales clocking in at Rs 11.7 billion.

By 2024, this gulf had widened further with exports valuing Rs 14.5 billion and local sales falling behind at Rs 10.2 billion. In just two years, exports had gone from 38% to 59% of sales. This was one way Pak Aluminum was able to compensate for the fall in local sales. By looking to exploit its export markets, any decrease in local sales was countered and revenues ended up actually increasing.

The current year has not closed for the

company yet, however, certain conclusions can be made from its nine month ended results. The most recent figures for revenues show that sales were higher in the current period, totalling at Rs 21 billion which had been Rs 17.5 billion for the same period last year. This is a good sign which shows that there is still potential for sales to increase going forward. This was helped by a 16.7% increase in local sales and 22% increase in exports.

The bad sign was the fact that gross margin actually decreased again during this period. This was due to two facts. First of all, aluminum prices actually crossed the $2,700 per metric tonne mark after a long time which showed that the price of raw materials kept increasing. In addition to that, China had announced a new export rebate regime back in November of 2024. According to the new policy, aluminum was given an export tax rebate which made aluminum cheaper to any country importing it. After the rebate was removed, the cost of aluminum imports increased leading to higher cost.

Up until now, the company has not been able to transfer any of this increase on to their customers. The best course of action that was seen in the face of falling profits was for the company to rely on other income to boost some of its profits. Other incomes had been Rs 1.3 billion in the 9 month period of 2024 which actually increased to Rs 1.5 for the latest year. This was on the back of short term investments increasing further to Rs 18.3 billion from Rs 15 billion in 2024.

The latest crisis looms

It was seen in the past that the management was able to weather many of the issues it faced by looking towards new opportunities that were available to it. As local sales started to lag behind, exports were able to fill some of the decrease in demand. In the face of rising costs, the next course of action was to

invest additional cash resources into short term investments which would complement the profits of the company. Now it seems like a new crisis is going to impact the company.

On 9th of October 2025, Pakistan carried out airstrikes in Kabul, Khost, Jalalabad and Patika. The purpose of the strikes was to target Pakistani Taliban. Pakistan alleged that Afghanistan was giving a safe haven to the terrorists including Noor Wali Mehsud who were targeted. In response, the Afghan Taliban carried out attacks on multiple Pakistani military posts along the border. After this, the ruling Taliban announced the conclusion of their side of the operation.

The cessation of hostilities was rejected by Pakistan which then launched another attack on the 12th of October with drone strikes carried out in Kandahar and Helmand provinces. This was followed by intense fighting between the two sides from 15th of October. On 19th of October, Qatar announced that a ceasefire had been reached between the two parties and extensive talks would be carried out in Qatar and Turkey.

Until 29th of October, there was a feeling that the peace talks had failed and there would be no resolution. By the next day, a new round of talks was announced as the cease fire was extended for another week. The damage that was caused due to these clashes on Pak Aluminum was that on the 12th of October, the border between the two countries was closed down. This has not been opened as of yet. The company itself threw some light on this issue with a notification sent to the exchange on 15th of October. The company stated that “We would like to apprise….out esteemed stakeholders of certain recent developments in the regional landscape affecting Pak-Afghan trade routes. In view of the current tensions and hostilities along the border, all border crossings have been closed for commercial activities.”

The statement went on to say that “Our

company values its established trade connections with partners in Afghanistan and Central Asia, which form an integral part of our diverse sales activities. In the event that this closure persists, it may present some considerations for our sales performance in these areas. We are attentively following the situation, always with a focus on upholding the trust and expectations of our shareholders and clients.”

In order to quantify the damage that can be caused, the exports made till 2024 can be used as a proxy. In 2024, local sales were worth Rs 10 billion while exports came in at Rs 14.5 billion.

Breaking down exports to regions, out of the total exports, Rs 12 billion were made in Afghanistan alone. This makes up around 83% of total exports. Rs 12 billion of export means that every month the company is selling Rs 1 billion worth to Afghanistan alone. Everyday the border is closed, the company is losing Rs 3.3 crores in daily sales. The border has officially been closed for 25 days now and there is no prospect on the horizon of the border being opened anytime soon. Back of the envelope

calculations mean that the company has already lost out on Rs 75 crores in revenues alone.

Add to this the fact that exports are also being sent to Uzbekistan, Tajikistan and Iraq which are being facilitated by the route that goes through Afghanistan. By a conservative estimate, these exports are worth another Rs 1.8 billion which is not being carried out. The remaining exports are being sent to Bangladesh and other regions which only constitute 4% of the company’s exports.

Not only have the sales been impacted by the recent border tensions, aluminum prices are also persistently increasing as they are trading at around $2,850 per metric tonne currently. It seems like the situation has turned into the perfect storm for the company and it has to take on all these challenges at the same time. The increase in the cost of aluminum, the rebate being removed by China and now the border closure seems to have all hit at the same time.

The company itself is recognising that it has little it can do even when it holds such a dominant position in the canning industry. Having a large client base extended over different countries and being the only supplier in the industry would be a dream for any producer or manufacturer. The analysis that has been carried out shows that it is all but a mirage. Once the situation is looked into, the reality is far more nuanced to be painted in white and black.

Pak Aluminum started off with a bang and was having some of its best performance in its initial years. Being the dominant company in the canning industry, it had the enviable position of limitless growth in its future. Sadly, once things turned for the worse, it ended up facing falling demand and increasing costs. Being able to expand into new markets, it was able to weather some of its troubles. Only to be hit with new challenges coming altogether at once. The future of the company lies in how well it is able to handle these lean times and able to come out through to the other side. n

Two steps backwards, no steps forward

At a time when the government should focus on empowering and strengthening local governments with revenue, it is instead trying to take back money and power from the provinces guaranteed by the 18th amendment

By Usama Liaqat

There seems to be a serious generational gap within the ranks of both the Pakistan Muslim League Nawaz (PML-N) and the Pakistan People’s Party (PPP). Perhaps nothing indicates this more than two recent proposals to amend the constitution.

The first, of course, is the proposed 27th Amendment which has taken over the news cycle. Forged in secret and discussed in clandestine meetings, there was no indication that such an amendment was even on the cards until PPP Chairperson Bilawal Bhutto Zardari announced on the 3rd of November. The amendment proposes to fundamentally change the balance of power in Pakistan. If it passes and is signed into law, an already weak judiciary will become completely beholden to political power, the military chain of command will shift, and the country’s economic governance shall return to the days of centralised power.

For all intents and purposes it would be a serious rollback of the hard-won 18th amendment, and it is being championed and discussed by the old guards of the PPP and the PML-N.

The second proposal to amend the constitution came only a few days before Mr Bhutto-Zardari announced his party had been approached for support on the 27th amendment. This proposal came from the Punjab Assembly, which sent a resolution to the federal government, seeking constitutional protection for local governments via an amendment to Article 140-A of the Constitution of Pakistan. The proposal points out that under the 18th Amendment, local governments are constitutionally mandated — a requirement the provinces have failed to take reasonable steps towards.

If passed, the resolution would strengthen democracy, governance, and the 18th Amendment. It was co-sponsored by members Ahmad Iqbal of the PML-N and Ali Haider Gilani of the PPP. Mr Iqbal is the son of planning minister Ahsan Iqbal and Mr Gilani is the son of former prime minister and current Senate Chairman Yousaf Raza Gilani. It is a strange twist of fate. Yousaf Raza Gilani was the Prime Minister of Pakistan when the 18th Amendment was

passed. After the 2008 election, Ahsan Iqbal had been part of Gilani’s cabinet in the short-lived PML-N-PPP coalition government. They were the generation of political leaders that paved the way to the 18th amendment, devolution of powers to the provinces, and the strengthening of democracy. The one element of that amendment that remained unimplemented was the establishment of local governments. It makes sense that the next generation is trying to fulfill that goal. Except it is now the very architects of the 18th amendment that are debating the merits of the 27th amendment. Perhaps one of the most contentious measures in the proposed amendment is the removal of the protection placed by the 18th Amendment on the provinces’ share from the federal tax revenues. The federal government, you see, has a bit of a revenue problem. The ever increasing demands that the defence budget dictates and the yearly rise in loan repayments always leave Islamabad with a shortfall which the government then has to bridge with more loans. One of the answers to this has been to take some of the share that is constitutionally owed to the provincial governments.

This will cripple the ability of provincial governments to deliver essential services to their populations, and it will still not be enough to meet the expenditures of the federal government. Instead of trying to widen the tax net, restructure the FBR, crack down on cash-based businesses, or finally begin taxing agriculture, the government seems to be more interested in simply taking money from the provinces by going through the complicated steps of a constitutional amendment that will also restructure military and judicial administration.

All of this is happening without a Leader of the Opposition in either houses of parliament and with no real public debate. Profit looks at how both proposed amendments would change Pakistan’s economic governance.

What the 18th amendment changed

The 18th amendment serves two functions. The first is the very practical matter of how it dictates the country will be run as a federation.

The second is its symbolic significance. It has become a golden example of how people could come together and take charge of deciding how they want to govern and be governed in a democratic system. For Pakistan’s political elite, it has also been a rallying cry.

After the comical-if-it-weren’t-so-tragic series of events over the past few decades where the President arrogated to himself the power to unilaterally dissolve the Parliament and did not shy away from doing exactly that, in 2010, the political parties of Pakistan by a consensus voted to pass the 18th Amendment.

The 18th Amendment was supposed to be a guarantee of democracy. The president’s powers were curtailed, and power was given back to the elected representatives in the Parliament. At the same time, the strong centre that military dictators had favoured was abandoned in favour of a more decentralized system. The provinces were given more responsibilities, and they now had an active voice in handling key issues. Some of the ministries devolved to the provinces included significant subjects like Education, Health, and Food and Agriculture.

At the same time, it provided a framework for financial relations between the centre and the provinces. The provinces were supposed to receive a certain percentage from the total divisible pool (the total amount of tax collected by the federal government). The percentage varied from province to province, but an overall protection was placed that this award could not be less than the previous award. The current share stands at 57.5%.

Provincial governments felt – and still feel –that it is an important protection not only of their constitutionally mandated fiscal rights, but also of their right to govern and function as part of a federation.

Woes and the Federal Government

There have always been opponents to the 18th amendment. Perhaps none had more issues with it in the beginning than the country’s roster of bureaucrats that think they can solve national problems

The proposed 27th Constitutional Amendment includes the establishment of a constitutional court, restoration of executive magistrates, and authority for the transfer of judges. It also includes points on abolishing the protection of provincial shares in the NFC and amendments to Article 243”

without any political will or mandate. This can be seen nowhere more than in the workings of Pakistan’s finances.

It is not an uncommonly known fact that the federal government has its own priorities. It deals with matters that are different from what the provinces normally deal with. Therefore, it has its own expenditures. But, and herein lies the rub, the pool both the provinces and the centre draw money from is more-or-less the same. And it becomes a zero-sum-game: the centre cannot increase its share from the total divisible pool without reducing the provinces’ share, and vice versa.

For instance, the national budget is the centre’s problem. While the major source of income is taxation, the expenditures far exceed whatever amount the government is able to generate as income. The bulk of these expenses are consumed by international loan payments and military expenditures. The expenses do not give any signs of reducing, nor does the income give any signs of significant increase.

How does the government then finance this shortfall? It taxes even harder the people it knows well enough to tax. And that is the salaried class. In Fiscal Year 2025, the salaried class paid a total of around Rs 606 billion in income tax at source, which is roughly equal to what was received combined from exporters, electricity bills, income from property, purchase and sale of immovable properties, and sales from distributors, retailers, and wholesalers. On a year-by-year basis, the tax collected from the salaried class increased by 54.7%, a horrifying jump.

The issue, despite this poorly-received and ineffective turn of policy, stayed. This increased revenue was not enough. And now, the federal government eyes the provinces’ share from the total divisible pool. In a tweet on X, the Chairman of Pakistan People’s Party (PPP), Bilawal Bhutto Zardari mentioned that his party had been approached by a Pakistan Muslim League - N (PML-N) delegation to request PPP’s support in getting the 27th Amendment passed. One of the features he mentioned as salient to this amendment is the “removal of protection of provincial share in NFC”.

According to reports, the amount that is being asked of the provinces totals to around

Bilawal Bhutto Zardari, chairman PPP

PKR 500 billion a year. A readily foreseeable consequence of this measure is that the reduction of the provinces’ share would directly impact their ability to provide and improve public services. And, even in this quartet of woe, KP and Balochistan are likely to suffer more because they don’t have as many sources of revenue as do the other two more populous and prosperous provinces. There is also a counter-argument which goes something like this: since the provinces are sure that they will receive a certain sizable amount, they grow complacent and therefore do not have enough incentive to develop and expand their own revenue streams. At the same time, there is a credible point to be made that the provincial governments often spend what they get from the federal tax revenues not in the social sector, but, cynically, on efforts to bolster their own popularity – on appearances more than the real thing.

Taxes, taxes, taxes

In any case, there is certainly a huge problem of raising enough taxation revenues, and financing the budget deficit. The deficit remains a permanent problem. No one could deny that. Despite the tax-to-GDP ratio in FY2025 reaching the highest level in two decades (15.7%), the Federal Board of Revenue missed its revenue collection target by a staggering PKR 1.23 trillion.

Beside the obvious consequences of alienating the provinces and rolling back on the federalism championed by the 18th Amendment, the proposed measures of removing the protection on the provinces’ share would simply be an unsustainable practice. It would be a temporary fix. No new measure will have been taken to meaningfully increase tax revenue streams. This way, the total left for everyone would not increase in any significant way, and of this amount left, the centre will be free to impinge on the provinces’ share once the protection is removed. And once the precedent is set, rolling back this invasion of the provinces’ rights would be tough. The situation could well become way worse, as the provinces fear.

However, instead of strongarming the provinces into giving up more of their share, there is a more sustainable way of addressing the problem. It would require substantial re-

forms, but without it, no meaningful long-term progress could be made.

The federal government needs to shift its focus from heavily taxing the salaried class to shift to other sectors which have historically paid lower than they should have. In other words, instead of taxing one sector deeply, reforms should be introduced that would widen the serviceable tax net by sharing the burden with other sectors. These would include the agriculture sector, corporations and industries.

The easy fix of simply overburdening salaried individuals with taxes needs to be abandoned. It would allay part of their dissatisfaction of the majority of the country’s population, and raise public morale, eventually encouraging participation in the political process and development of the country. It would also give young people a hope: staying in Pakistan and serving their country wouldn’t necessarily have to mean giving up a big chunk of your salary with little substantial to show in return. At the same, it would mobilise other sectors which, as part of the social and economic fabric of the country, should also be a part of the democratic effort to help finance national expenditures.

Local Governments

The issue of taxation and revenues is also deeply intertwined with how people govern themselves at the grassroots level. The 18th Amendment beside strengthening the provinces’ role, also gave a framework to ensure every part of the society played a part in it. The keystone of this project were local governments. This third tier would comprise of the locally elected city, district, and tehsil representatives serving in municipal committees and municipal councils.

The system was stipulated to be a tiered one. On the federal level, as the FBR collected taxes, it gave a percentage of the total tax revenues to the provinces through the NFC award. The provincial governments were, in turn, supposed to collect both the sum from the NFC award and the provincial revenues, and allot a certain percentage of this total amount to local governments. The devolution of powers envisioned in the 18th amendment would have led

issues such as health and education to eventually come under the purview of the local governments. The funds received from the provincial government would go, therefore, primarily to finance education and health authorities at the district level.

This arrangement made sense, since it would - at least in theory - lead to a genuine trickle down from the top to the bottom. It would empower and enable people to make decisions about matters which most directly affected their lives. It would help ensure that issues that were the day-to-day concerns would be addressed efficiently, without going through the complex and bureaucratic process of involving the provincial or federal government. At the same time, it would leave lawmakers in the assemblies to focus on bigger strategic issues, instead of being caught up in quotidian operational affairs at the lowest level.

The Current State

However, as might be evident to anyone living locally, this system hasn’t really borne out the promise. It is not for some inherent problem with the idea. In fact, the cause is easily identifiable: provincial governments have taken little genuine interest in developing these local administrations.

As mentioned by a recent Punjab Assembly resolution (no. 91), since the passage of the 18th Amendment in 2010, local governments remained in power for only around two years in Punjab, and neither a continuous nor an independent system of local governments could be meaningfully established.

After one initial attempt during the Musharraf era, the first major step to institute and develop local governments was taken in 2013, when the newly-elected PML-N and Pakistan Tehreek-e-Insaf (PTI) governments sought to develop this tier in their respective provinces. The attempt by PML-N in Punjab was elementary: there was no guaranteed funding for the local governments and they only had limited powers to contribute to the important issues such as healthcare and education.

The Punjab Local Government Act 2019 passed by the PTI government was a massive improvement on the 2013 Act. It stipulated guaranteed funding as well as increased the powers of the local governments. However, this was never applied. The PTI government walked back on it, and the officials supposed to serve in these new local governments were never elected.

Yet another valiant attempt was made by the short-lived Hamza Shehbaz government in Punjab in 2022, which provided more clarity on how much these local governments would receive from the provincial government, totalling around PKR 550 billion.

However, a scandal reported earlier this

year revealed that at least PKR 828 billion which were supposed to be owed to the local governments over a period of eight years had never been processed. The interim Provincial Financial Commission (PFC) was supposed to oversee the transfer of these funds from the provinces to the local governments, just like the way the NFC transfers federal tax funds to provinces. But, either due to negligence or incompetence, it never happened.

Consequently, these local governments find themselves in a dilapidated state. With no regular elections and their inability to finance their expenditures, they find themselves robbed of what the Constitution had empowered them to do. And people, in general, are the worst for it.

The current state of local governments is a matter of concern not merely because it is not fulfilling what the Constitution says, though of course that is a significant issue. The more important thing is that without these local governments participatory democracy cannot really function. In theory at least, they are supposed to be an efficient system, allowing people to address the problems they face and which they know the best about. Unlike the current cumbersome and heavy-handed system where the government-appointed District Commissioner is essentially king, local governments are directly accountable to the people at the organic level. They can move swiftly and are a direct line to the people.

What is to be done?

As the former Finance Minister, Miftah Ismail, said in a recent post on X, “independent and effective local governments across Pakistan are the most significant and needed reform in the governance structure of Pakistan”. A recent resolution passed by the Punjab Assembly, which Miftah welcomed, also urged the federal government to amend the constitution and make a provision to empower local governments.

Local governments must be empowered both structurally, with real mechanisms set in place to ensure that they function and flourish. And this would not be possible without these administrations receiving their due share from the NFC. One obvious way would be that the provincial government through improved PFCs could create a steady and reliable stream of money, which will be transferred to the local governments. This is their constitutional right.

An alternative would be, as Miftah suggests, that, since the provinces had failed to “meaningfully and equitably transfer funds to localities,” the federal government could step in and, based on the formula used by NFC, directly transfer funds to these local governments.

The advantages – beside the deepening of democracy – would also be financial. These empowered local governments were also sup-

Independent and effective local governments across Pakistan are the most significant and needed reform in the governance structure of Pakistan

Miftah Ismail, former finance minister

posed to help with generating revenue. Some of the most potentially rich sources of income such as agriculture and property would be significant streams of taxation revenue for these local governments. Small retailers, which also form a big potential source of revenue, often fall through the tax net because there are no refined mechanisms to collect taxes from them.

Consequently, they do not pay as much tax as they should. Local governments, which work on the ground and have a reach that the provincial government lacks, could also be great avenues to collect money from this sector.

Empowering local governments would therefore give a financial cushion to the provincial government. At the same time, these localities would have enough funds to work on their own independently, and not rely each second on the capricious moods of the provincial government for their lifeblood.

The provincial governments in turn would also be able to provide some to the central government in revenues. Since the provinces are also protected by the armed forces, there is a case to be made that the provinces could contribute to the national defence expenditures, and help ease some of the financial pressures the centre has to bear. Instead of cutting through the provinces’ share in the total divisible pool, as the 27th Amendment might purport to do, strengthening local governments would provide the provinces a better and more sustainable way to help ameliorate the centre’s woes. n

Bank Alfalah just pledged Rs 1.4 billion for flood damages.

How far can the efforts of

top-tier banks go?

Alfalah is not the only bank to ramp up CSR commitments in the face of the floods.

But beyond the CSR, it makes sense for banks to help the agri sector back to its feet

Bank Alfalah has pledged Rs 1.4 billion ($5 million) to support communities devastated by this year’s monsoon floods. On the surface, this may seem like basic CSR spending. The floods, after all, were the biggest feature in the news cycle this year and it makes sense for an organisation to spend CSR money on rehabilitating communities that suffered losses during the unprecedented rains.

But scratch beneath the surface and there is more than meets the eye. The recent contribution of Rs 1.4 billion has now taken Bank Alfalah’s cumulative contributions for flood-related relief to a total of $15 million since 2022 when the last mega floods hit Pakistan. The amount of money announced in social welfare by Alfalah is unprecedented, not just in absolute terms but also as a percentage of its profit.

So why invest so heavily in this one area? Behind the decision are a number of factors. There is, of course, the desire to help a sector that has traditionally been unattended by banks and financial institutions during a time when it is struggling from natural calamities. Agriculture has traditionally been underserved by Pakistan’s banks and at a time when banks are taking more of an interest in it, the sector faces

its greatest threat: climate change.

In a press briefing in Lahore, Bank Alfalah’s President & CEO Atif Bajwa described the pledge as “a commitment to rebuilding lives and strengthening climate resilience”. He said the funds will be deployed across housing reconstruction, education, health services and climate-smart agriculture through partnerships with over 25 organisations including the Aga Khan Development Network, the Citizens Foundation and the Karachi Relief Trust.

But one question remains: how is the banking industry responding to the floods, and how much of a difference will their CSR approach make?

CSR and Pakistani Banks

The notion that good intentions can be organized, institutionalized, and scaled through corporate systems is not new.

Over the years, this idea has found its corporate manifestation in what the business world calls Corporate Social Responsibility (CSR); a company’s voluntary commitment to improving society beyond its bottom line.

In boardrooms and annual reports, CSR sits comfortably beside profitability metrics and

mission statements. It promises that capitalism, if done thoughtfully, can serve not only shareholders but society at large. Yet, for all its appeal, CSR remains a contested idea. Is it genuine compassion or just a new language of self-promotion?

These questions take on new meaning in Pakistan, a country frequently tested by climate catastrophes, fragile governance, and widespread poverty. Here, CSR is not just a branding exercise; it’s a lifeline for communities the state often fails to reach. And increasingly, it is Pakistan’s banks that are leading this charge.

Perhaps the only sector that has not tasted the woes of financial strain in the last six years in Pakistan is our banking sector. An understandable position as their biggest borrower remains the Pakistani government.

One can hence argue that an industry making a lot of money during destitute times, probably owes some to the less fortunate parts of the society. And in a country increasingly battered by climate-fueled disasters and economic instability, donating opportunities are far from scarce.

And as monetary relaxation would have it, Pakistan’s largest banks are embracing corporate social responsibility (CSR) not as a sideline activity, but as a strategic investment. Both in their nation’s resilience and their brand’s goodwill.

Bank Alfalah has had a leading role in this shift. Their approach is particularly notable for its internal solidarity: the bank has also set aside Rs 500 million to support nearly 480 employees whose homes or assets were damaged by the floods. But the shifting trend has been seen in the larger industry as well.

It is important to note that the following is a comparison of “declared” financial amounts spent and accounted for specifically on social causes, which includes institutional donation. It is very likely that a bank is indirectly adhering to sustainable goals but could not describe the financial impact of it in tangible terms. In fact most of the CSR reports claim much larger contributions than can be found on the respective bank’s books. And it is absolutely plausible that some organisations intangibly contribute much

better than others.

The following comparison, however, is purely a comparison of corporate social contribution significant and tangible enough to be on the books of the organisation between the ten biggest banks in Pakistan.

Habib Bank Limited (HBL) spent Rs 861 million on CSR activities in 2024, around 1.49% of its Rs 57.8 billion profit after tax, making it one of the more active contributors among its peers. Bank AL Habib (BAHL), despite earning a lower profit of Rs 39.9 billion, devoted Rs 626.95 million to CSR roughly 1.57%, the highest proportional share across the top ten banks. Bank Alfalah followed closely, with Rs 550.8 million in spending against a Rs38.3 billion profit, equivalent to 1.44%.

Habib Metropolitan Bank (HMB), however, outperformed all in relative terms: it channelled Rs519.95 million 2.02% of its Rsv25.8 billion profit toward social causes, a figure that stands out in an industry where most banks barely cross the 1% threshold. Meezan Bank (MEBL), Pakistan’s largest Islamic bank, allocated Rs 513.76 million, but due to its massive Rs 101.5 billion profit, this amounted to only 0.51%.

United Bank Limited (UBL) and Allied Bank Limited (ABL) both large and well-capitalised, spent Rs205 million and Rs186 million, or 0.25% and 0.43% of their profits, respectively. The National Bank of Pakistan (NBP) committed Rs155.76 million (0.58%) while MCB Bank, despite earning Rs57.6 billion, spent Rs31.6 million (.05%).

Taken together, the numbers suggest that CSR spending in Pakistan’s banking sector remains limited and inconsistent. A few banks notably HMB and BAHL appear to treat it as a defined share of profits, while others approach it as a discretionary afterthought. Compared with Indian banks, which are required to contribute 2% of profits toward CSR under corporate law, Pakistani institutions’ voluntary commitments seem cautious and largely self-regulated.

The debate over whether CSR should be institutionalised or perhaps even mandated continues. Proponents argue that banks, given their role in economic intermediation, have a duty to reinvest in communities they profit from. Critics counter that token donations or photo-op campaigns rarely address systemic issues such as financial exclusion, environmental sustainability, or equitable access to credit.

The moral calculus of giving

The debate over CSR is not just about how much is spent, but also why.

Critics argue that CSR can function as a public relations shield, a way to offset reputational risks, distract from exploitative labor practices, or “greenwash” an unsustainable business model. Others see it as a form of soft power, allowing corporations to extend their influence in areas traditionally reserved for the state.

But the defenders of CSR argue that in a country where the state cannot shoulder the entire social burden, private institutions have both the means and the moral obligation to help. For banks, which sit at the intersection of financial stability and social equity, community investment is not just philanthropy, it’s risk management. A more resilient society is, by extension, a more resilient market. And for banks like Alfalah, it’s also about narrative positioning themselves not merely as custodians of capital, but as agents of change in an era where capital and conscience must coexist.

CSR in Pakistan is still far from systemic. While banks like Alfalah are often cited as benchmarks spending nearly 1.5% of their net profits. Most corporations spend a fraction of that. The banks lower on the list, for instance, allocated much less to CSR in comparison.

If the threshold seems arbitrary, it’s worth noting that China, Indonesia, the UK, and India

The pledge is a commitment to rebuilding lives and strengthening climate resilience

Atif Bajwa, President and CEO of Bank Alfalah

have all institutionalized CSR through legal frameworks. By mandating minimum thresholds, they have turned voluntary altruism into predictable, transparent policy. Pakistan, however, still depends on voluntary pledges generous at times, but unpredictable and uneven.

From conscience to structure

Pakistan is a country of charitable people. Giving, in spirit and law, runs deep in its culture. Yet when it comes to institutional charity, CSR; the structure remains fragile.

There is a strong case for making CSR contributions mandatory, provided the state ensures basic business security and reduces regulatory uncertainty. Without that, firms will hesitate to formalize commitments that might later threaten their profitability.

Still, CSR has evolved. For the banks that shape Pakistan’s economy, social responsibility has become a form of identity, a marker of modernity and moral legitimacy. What began as a checkbox in annual reports is now an ongoing negotiation between profit and purpose.

The idea of CSR may still divide economists, but one truth remains: in a country like Pakistan, where the lines between private interest and public good are blurred by necessity, corporate responsibility may well be the only consistent social policy we have left. n

Engro Polymer, perennial problem child, swings to losses again

The petrochemical manufacturer saw a decline in revenue amidst stiffer competition even as it was unable to secure lower prices for its inputs

Engro Polymer & Chemicals Ltd (EPCL) has slipped back into the red, capping an unforgiving year for Pakistan’s only fully-integrated PVC player. Weak pricing in its end-market, elevated energy and financing costs, and a slow-moving relief on feedstock economics combined to crush margins. Management says the “core delta” (the spread between PVC prices and ethylene-based inputs) has begun to improve late in the year, but it is also re-architecting power procurement for the next decade to stabilise production costs.

Net sales fell 7% to Rs75.7 billion (from Rs81.3 billion), while gross margin collapsed to 9% from 25% a year earlier. That swing dragged gross profit down 68% to Rs6.6 billion

(from Rs20.6 billion) and turned a profit after tax of Rs8.9 billion in CY23 into a loss after tax of Rs0.2 billion in CY24. The dividend was skipped. The company’s own summary table attributes much of the pain to a 14% rise in cost of sales even as revenue fell, and to financial charges jumping 79% year-on-year.

There were glimmers of stabilisation by 3QCY25. Quarterly sales were broadly flat year-on-year, but gross margin improved to 11% from 5% in the same quarter last year, pushing operating profit sharply higher on a low base. Management credits cost efficiencies and an improvement in core delta for the sequential lift, even though PVC selling prices did not rise.

Power economics remained a thorn. The government’s off-grid captive levy – notified

at Rs791 per MMBtu – arrived with a lag and only reached the full rate by 3QCY25, blunting any early-year benefit from lower fuel inputs and keeping unit costs elevated through most of CY24. Finance costs also stayed heavy given high interest rates, compounding pressure at the bottom line.

Looking ahead, management guided that core delta stood near USD 334 per tonne in September and has “seen more relief” in recent weeks, with the prospect of further improvement next year as more ethylene supply comes on line globally. Even so, it cautions that new PVC capacities elsewhere could briefly weigh on margins – a reminder that the supply cycle is still unsettled.

PVC economics live and die by spreads. In EPCL’s case, the sell-side price of PVC

meets a cost base built around ethylene-derived precursors (EDC/VCM) plus chlor-alkali inputs and energy. Through CY24, PVC prices failed to lift, but the world was awash with ethylene, nudging the core delta in EPCL’s favour late in the year. Unfortunately, the relief arrived after the damage was done: the company spent most of CY24 selling into a soft market while swallowing higher costs for energy and debt service.

Two variables did most of the harm. Firstly, there was energy and reliability. The captive-power levy raised gas costs for off-grid users. EPCL says the levy’s full impact hit by 3QCY25, and it is now rethinking its power stack to secure >94% reliability for a 55MW base-load requirement. Options on the table include third-party gas, grid, coal, and solar, with a 10–15-year plan promised around the turn of CY25/26. In heavy-process chemistry, even small stutters in steam or power ripple through yield and maintenance costs; hence the emphasis on reliability alongside price.

Secondly, with policy rates elevated, financial charges rose 79% in CY24. While interest costs should ease as the cycle turns, they converted what might have been a breakeven year into a reported loss.

Competition, meanwhile, has been stiffer. Regional producers – especially in Asia –have been pushing tonnes into export markets as domestic construction wobbled, pressuring PVC realisations across import-parity economies. That dynamic shows up in EPCL’s 7% revenue decline despite a domestic footprint that typically gives it an edge in logistics and lead times.

End-markets are slowly normalising, but the mix is not yet ideal. Construction and infrastructure (pipes, profiles, cables and flooring) dominate Pakistan’s PVC consumption, and remodelling/new-build activity has been tepid amid high borrowing costs. Agricultural demand for irrigation and tube-well piping has helped, but not enough to offset urban construction softness. EPCL’s own commentary hints that the volume-price balance has yet to turn decisively in its favour; the core-delta tailwind must persist for several quarters for that to show through in earnings.

EPCL sits within the Engro ecosystem and operates Pakistan’s only integrated vinyls chain, making PVC resin and chlor-alkali products and converting imported feedstock into downstream precursors (EDC/VCM) before polymerisation. The company has expanded in phases over the past decade to lift local PVC sufficiency, paired with investments in utilities and reliability at its Port Qasim complex. In common with Engro’s other industrial arms, EPCL is run with an eye on long-cycle capital outlays and cash generation, which is why the power-cost reset now in evaluation is framed

as a 10–15-year fix rather than a short patch. For investors and customers alike, that integration matters. In a country without a domestic naphtha cracker, EPCL’s ability to convert imported ethylene into VCM and then PVC is the only near-term route to import substitution in vinyls. It also leaves the business exposed to global feedstock cycles and exchange-rate swings, which is precisely what CY24 laid bare.

EPCL’s flagship is suspension-grade PVC resin, sold into pipes & fittings, profiles, cable insulation, films and sheets. Alongside sit chlor-alkali outputs such as caustic soda and chlorine, with downstream derivatives (e.g., HCl, sodium hypochlorite) that monetise the chlorine stream. The vinyl chloride monomer (VCM) unit bridges ethylene to PVC, while the EDC step provides feedstock flexibility. The product slate and process choices are typical of a chlor-vinyls complex tuned for Pakistan’s demand mix.

The plant’s 55MW energy need and >94% reliability threshold drive a multi-source strategy. Management told investors it is evaluating a portfolio of power sources – grid, third-party gas, coal and solar – and expects to table a formal plan by end-CY25 or early-CY26. The explicit goal is to lock in cost certainty and flexibility to toggle between sources as tariffs and fuel availability change.

The CY24 P&L shows how sensitive the operation is to energy and feedstocks: cost of sales rose 14% even as sales slipped, crushing gross margin to 9%. The same table shows other income halving and financial charges ballooning, explaining the slide from Rs8.9 billion after-tax profit to a Rs0.2 billion loss. In 3QCY25, however, a core-delta uplift and process efficiencies lifted the gross margin to 11% – not yet healthy, but moving the right way.

Management pegs September’s core delta around USD 334 per tonne and sees “more relief” as global ethylene supply rises in 2026, while cautioning that fresh PVC capacities could temporarily soften realisations. In other words, the spread may improve on the cost side even if resin prices grind rather than leap – an outlook that argues for relentless cost control and power-procurement agility.

Pakistan’s petrochemicals system is import-dependent across most major polymers because the country lacks a naphtha cracker and associated C2/C3 value chains. Polyethylene and polypropylene are largely imported; PVC is the exception, where EPCL anchors domestic supply and trims the trade bill. That position, however, also concentrates sector risk: when global cycles turn against PVC or when local energy policy adds cost, there are few offsets elsewhere in the chain.

Three structural features frame the outlook. First, there is the feedstock expo-

sure. With ethylene imported (directly or via EDC/VCM intermediates), the landed cost is sensitive to global balances and the rupee. The recent oversupply of ethylene has started to improve EPCL’s core delta, but the company is right to flag that new PVC capacity in Asia can pressure resin prices at the same time, tempering the benefit unless end-market demand also firms.

Second, there is energy policy and levies. The off-grid captive levy is a textbook example of how policy changes can swing industrial economics. Because the levy’s full effect only hit by 3QCY25, most of CY24 saw higher energy costs relative to the revenue environment. EPCL’s planned multi-source power approach is thus as much about policy hedging as it is about price.

Finally, there is end-market normalisation. PVC tracks construction and infrastructure. As financing eases and public-works budgets stabilise, the pipes-and-profiles demand engine should gradually re-engage. For now, EPCL’s 7% revenue decline and margin compression say recovery has yet to spill decisively into earnings, even if 3QCY25 hints at a trough.

EPCL’s label as Engro’s “problem child” has always been about volatility, not viability. The CY24 numbers were bruising: sales down 7%, gross margin sliced to 9%, finance costs up 79%, and a swing to a small loss after a bumper Rs8.9 billion profit the prior year. But the mechanics of improvement are already visible: a core-delta uplift from abundant ethylene, process efficiencies that showed up in 3QCY25, and a board-level push to re-engineer power for 10–15 years of cost and reliability certainty.

What must go right from here? Three things. First, the core delta needs to hold or widen as new ethylene supply lands, without a matching dump of new PVC depressing resin prices. Second, power costs must be bent lower via the multi-source plan – grid where it is cheapest and reliable, third-party gas when spreads favour it, solar to shave daytime load, and coal only if the economics withstand environmental scrutiny. Third, the domestic demand base – construction, utilities and agriculture – has to re-accelerate as rates ease, so that volume growth amplifies any margin repair.

Investors will also watch cash discipline. The no-dividend stance in CY24 was prudent; a return to payouts will depend on sustained margin repair, lower finance charges, and tangible progress on power procurement. If EPCL can stitch those threads together, the perennial problem child could yet grow into a steadier contributor to Engro’s portfolio – less hostage to fuel levies and global whipsaws, and more anchored by domestic import substitution in a market that needs it.

First National Equities to acquire a pharmaceutical company

The brokerage firm appears to be diversifying away from the securities business and instead wading into what might be described as private equity

First National Equities Ltd (FNEL) has signalled a strategic turn that could reshape its earnings profile and risk mix. In a notice to the Pakistan Stock Exchange on 6 November, the brokerage said its board had granted in principle approval to acquire 100% of Albert Pharma (Pvt) Ltd, subject to customary conditions including due diligence, execution of definitive agreements, and regulatory clearances. The same disclosure directed management to prepare a Sharia compliant business and financial plan in line with PSX and SECP rules, reflecting a wider intent to broaden beyond stockbroking into pharmaceuticals, healthcare and allied sectors.

FNEL framed the decision as “material information” emerging from an emer¬gent board meeting, and placed it squarely within a multi year plan to diversify revenue sources. The company emphasised that the deal remains contingent on standard approvals – and on the board’s satisfaction with the resulting business plan – yet the notice carried an unusual level of specificity for an early stage move: a full takeover of Albert Pharma and an explicit mandate to prepare for regulatory transition. The letter also underscored compliance with Section 96 of the Securities Act, 2015 and Clause 5.6.1(a) of the PSX Rule Book, a familiar legal scaffolding for transactions of this type. In short, FNEL is not merely testing the waters of pharma distribution; it is preparing to own and operate a manufacturer.

There is recent precedent for the strategic pivot. In early October, FNEL notified the exchange of a portfolio reshuffle that included (i) divesting 20% of Kingbhai Digisol (Pvt) Ltd for Rs280 million, (ii) expanding committed investment in its real estate arm FNE Developments (Pvt) Ltd up to Rs400 million, and (iii) seeking authority to invest up to Rs500 million for entry into pharmaceutical manufacturing – either by setting up a facility or acquiring an existing company. The new move to buy Albert Pharma is a tangible follow through on that October mandate.

FNEL is a public listed company incorporated in Pakistan and a TREC holder of the Pakistan Stock Exchange. Its principal activities remain shares brokerage, consultan-

cy services and portfolio investment.

The past year was one of operational reset. The company transitioned its licence from Self Clearing to Trading Only Broker – a move approved by the SECP in April – and resumed operations in June under the new framework, with EClear Services Ltd responsible for settlements and custody. The change temporarily interrupted revenue in FY25; the directors’ report records operating revenue of Rs8.6 million and a loss after tax of Rs78.7 million, or Rs0.3 per share, as the firm recalibrated its model. The obvious message from management is that the medium term plan rests on a more diversified earnings base rather than a return to the old brokerage playbook.

Strategically, the October board decisions amounted to a blueprint. First, FNEL chose to reallocate capital into real estate, seeking recurring income through FNE Developments. Second, it sought shareholder approval to invest up to Rs500 million in pharmaceutical manufacturing, explicitly contemplating either a greenfield plant or an acquisition. Third, it moved to divest part of its technology venture – Kingbhai Digisol –freeing up cash and management bandwidth. Read together, these steps foreshadowed a broader principal investment posture, closer to private equity than traditional sell side brokerage.

Publicly available information paints Albert Pharma as a Lahore based pharmaceutical maker with a portfolio spanning gastrointestinal, anti infective, analgesic, neuropsychiatric, and nutraceutical categories. Retail listings on major e pharmacies show a broad stable of brands – for instance Esobert (acid suppression), Linezert (antibiotic), Etogesic (pain relief), A Calm (anxiety and related disorders), and supplements such as Mega Z, Mysitol and Mpause – supported by the usual mix of capsules, tablets, suspensions and sachets. These are the bread and butter lines of Pakistan’s branded generics market, which depend less on patent exclusivity and more on distribution, prescriber relationships and affordability.

Business directories and trade data hubs list Albert Pharma’s presence in Lahore, with indications of operations in or near Sundar Industrial Estate – a location that anchors

hundreds of small and mid sized industrial units and offers straightforward access to the city’s road network. While official corporate filings for the private company are not public, product listings across multiple retail platforms corroborate that the company is an active supplier into Pakistan’s pharmacy channel, with price points geared to the mid market.

For FNEL, the proposed deal offers a ready made platform: a functioning branded generics portfolio, a local footprint, and consumer facing SKUs that can be scaled with working capital and field force support. The fact that Albert Pharma is already shipping finished product simplifies the integration challenge, compared to building a plant and line up from scratch.

The timing is not accidental. Pakistan spent the better part of the past decade wrestling with drug pricing formulas that linked annual increases to CPI and subject by subject approvals by the Drug Regulatory Authority of Pakistan (DRAP). That regime produced recurrent shortages when spiralling input costs – raw materials, packaging, energy – made the controlled prices uneconomic. In 2024–25, however, Islamabad deregulated prices for non essential medicines – those outside the National Essential Medicines List – allowing manufacturers to set prices and adjust more quickly to costs. Research from local brokerages described the shift as a boon to the sector, restoring viability to broad swathes of product portfolios.

Mainstream reporting since then has captured the push and pull of deregulation. On the positive side, supply improved and new products returned to shelves, with industry bodies crediting the policy for ending months of stock outs. On the other, prices rose – a predictable outcome when price caps lift –triggering calls for tighter oversight on alleged excesses. For investors, the key point is that deregulation has reduced policy risk and clarified margins in non essential categories, which dominate most local firms’ catalogues. That clarity typically raises asset values, loosens bank credit, and invites M&A as sponsors seek platforms that can be scaled. FNEL’s move sits squarely in that lane.

A further, under appreciated angle is the export option. Once domestic price economics stabilise, firms can rationalise plants and certifications for selected exports, particularly in OTC, nutraceuticals and older molecules, where regulatory pathways and buyer diligence are more tractable. Trade press has highlighted a rebound in pharma exports in FY25, with bullish talk of medium term growth if standards and logistics improve. If FNEL can professionalise manufacturing and quality systems at Albert Pharma, that export upside becomes at least conceivable.

FNEL is no stranger to reinvention. The company’s annual report reads as a case study in course correction: a shift to Trading Only Broker status under SECP oversight; a temporary suspension of trading during the licence transition; and a resumption of operations under a new settlement architecture via EClear Services. Those steps depressed revenue and earnings in FY25 – a year closed with a Rs78.7 million loss – but also reset cost structures and compliance obligations for the core brokerage.

At the same time, the board has grown more activist with the balance sheet. The October PSX filing itemised not just the pharma foray but a stepped up commitment to real estate via FNE Developments and the divestment of part of its technology venture, Kingbhai Digisol. The company emphasised that the Kingbhai transaction reflected an independently assessed enterprise value of around Rs1.5 billion, but it also confirmed a strategic reallocation of capital to businesses with recurring cashflow potential. In short: the firm is morphing from a pure broker into a small cap holding company with financial services heritage.

A look through retail shelves and digital pharmacies suggests Albert’s catalogue is solidly mid tier, with brands that ride physician prescriptions and chemist recommendations rather than mass advertising. Esobert sits in the acid suppression family; Linezert is an anti infective; Etogesic plays in pain management; A Calm is targeted at anxiety linked indications; and Mega Z, Mysitol and Mpause are nutraceutical or women’s health products. Collectively, they offer a recurring demand base, albeit with limited pricing power per SKU even in a deregulated environment. For an acquirer, the immediate levers are working capital, field force discipline, quality and compliance upgrades, and SKU rationalisation to push volume into higher margin lines.

The geography helps. Being Lahore based, Albert Pharma can recruit and deploy a field force across the populous central region with relative ease, while accessing raw material import routes and packaging supplies quickly. Business listings also place the firm

in or near Sundar Industrial Estate, which eases plant logistics and offers utilities that are more reliable than in inner city sites. All of this lowers the execution risk for a non pharma sponsor like FNEL.

Though FNEL remains a securities broker by licence, its behaviour is increasingly that of a financial sponsor, taking stakes in private companies, reshaping portfolios, and aiming for cash yields and asset appreciation rather than brokerage commissions alone. The October PSX notice expressly sought shareholder authority to invest up to Rs500 million to establish or acquire a pharma plant, in parallel with a Rs400 million expansion at its real estate subsidiary. Together with the Kingbhai Digisol partial exit, those moves are straight out of the private equity playbook: focus on sectors with improving economics, recycle capital from lower yielding ventures, and control rather than minority positions.

Albert Pharma fits this pattern. It is an operating business with products, customers and cashflows. It can, with investment and managerial attention, be made more efficient. And if deregulation persists, it can arguably generate steady free cash, attractive for dividends or debt service – an appealing complement to FNEL’s market sensitive brokerage income.

FNEL’s last high profile foray outside brokerage was its investment in Kingbhai Digisol (Private) Limited, a Lahore based software house offering web, mobile and design services. The company’s own auditor flagged the valuation of the unquoted investment in Kingbhai as a Key Audit Matter, noting that FNEL first invested in 2019 and relied on an independent valuer for fair value estimates. That is the polite language of audit for “this holding requires extra scrutiny,” and it underscores how illiquid tech stakes can complicate a broker’s balance sheet.

By October this year, FNEL moved to divest 20% of Kingbhai – 10,000 Class B non voting shares – for Rs280 million, citing an enterprise value assessment of roughly Rs1.5 billion. While that valuation headline is robust, the earnings impact of the technology venture on FNEL’s consolidated results had been muted, and the line item “share of profit from associates” remained small and occasionally negative. In practical terms, the software house bet did not materially move the needle, prompting the board to recycle capital toward real estate and now, pharmaceuticals.

Kingbhai’s own public footprint confirms its software services orientation and Lahore base, with company pages and directories listing development services and local contact coordinates. As a strategic learning, the venture reminded FNEL that minority, non controlling tech stakes can entail valuation

uncertainty and delayed cash returns – factors that the Albert Pharma deal, with its proposed 100% control, is designed to mitigate.

For all the logic of the move, three execution items will dominate the next quarters.

The PSX notice emphasised that the Albert Pharma acquisition is subject to due diligence and regulatory approvals. In manufacturing, that includes licensing and compliance checks beyond standard corporate approvals. A clean diligence and smooth handover will be step one.

The investor case for Pakistan’s pharma sector rests on the durability of deregulation for non essential drugs. Press coverage has oscillated between praising improved availability and criticising price increases; policymakers have considered changing DRAP’s remit and revisiting the boundaries of deregulation. For a sponsor like FNEL, policy whiplash is the key risk to valuations and cash forecasts.

Assuming the deal closes, FNEL will need to professionalise quality assurance, supply chain, working capital discipline, and field force management – the unglamorous levers that make branded generics work. The upside is tangible: steadier cashflows, a platform for selective new launches, and the option to build export ready lines. The downside is equally clear: a mis timed SKU mix or a policy reversal could crimp margins.

FNEL is not the first brokerage to diversify into operating assets, but it is among the more explicit about doing so. The October board decisions laid out the capital allocation map; the November PSX notice names the first pharma target. In between, the company has retooled its brokerage licence, accepted a lean year on the P&L, and staked out a role as a sponsor of businesses with hard assets and cashflows. For shareholders, the appeal is a less cyclical earnings mix. For the market, it is a small but telling vote of confidence in Pakistani pharma post deregulation.

If the deal proceeds to signing and closing, FNEL will own a mid market pharmaceutical platform with room to grow. It will also carry the responsibility that comes with control – from quality standards to price ethics – at a time when public scrutiny of medicine costs is intense. That combination of opportunity and accountability is what makes this pivot more than a financial footnote. It is a test of whether private capital in Pakistan can scale essential industries while still delivering returns.

For now, the market will mark the file: broker turns sponsor; tech stake trimmed; real estate and pharma in focus. The next set of disclosures – on due diligence findings, definitive agreements, and regulatory clearances – will determine whether this story becomes a template for other financial firms or a one off. n

As home appliances market recovers,

Waves will return to the AC market

The white goods manufacturer holds a commanding position in deep freezers but lags in the faster growing parts of the appliance markets

Waves Corporation and its key subsidiary Waves Home Appliances say the worst of the down-cycle is behind the sector and are preparing a full re-entry into air conditioners (ACs) – a category they exited during the currency crisis over the past three years – betting that a recovering consumer and a cleaner balance-sheet can restore growth in the core white-goods franchise.

On a consolidated basis, Waves Corporation reported a robust rebound for the first nine months of calendar year 2025, with net sales up by the mid-teens and profits roughly doubling from the prior year. Specifically, 9MCY25 consolidated revenue rose about 15% year-on-year to Rs3.54 billion, while profit after tax increased about 130% to Rs648 million. Gross margin was near 30% for 9MCY25, EBITDA up about 12%, and profit before tax up about 91% year-on-year, reflecting both operating improvement and a large contribution from “other income.”

At the subsidiary level, Waves Home Appliances’ full-year CY24 was still a rebuilding year – sales fell about 24%. But the turning point is visible in CY25’s run-rate: in 3QCY25 alone, revenue rose about 21% year-on-year and profit after tax swung to Rs106 million, lifting the quarterly net margin to 13%. The operating line improved as well, with operating profit

up about 17% year-on-year in the quarter. Margin expansion alongside a rising top line signals that pricing, mix and cost discipline are beginning to offset the drag from elevated borrowing costs.

Two non-operational levers aided reported earnings across the group in the period: gradual recognition of unrealised gains on real-estate assets (the holding company’s Lahore land and the subsidiary’s Kasur land), and gains recognised from approved bank loan restructurings that deferred accumulated and recurring financial charges. Management emphasises that these revaluation-driven items are being booked conservatively and phased to avoid a single “one-off” spike.

Today’s Waves Corporation is a holding company with three main businesses:

Waves Home Appliances Ltd – the manufacturing arm for refrigerators, deep freezers and planned CKD-based categories such as ACs, washing machines and microwaves. Waves Corporation now owns 50% of WAVESAPP, reflecting a partial divestiture of the manufacturing business in recent years.

Waves Market Place – the group’s retail and instalment-sales platform. It operates about 100 branded shops and sells both WAVES and other leading consumer-appliance brands, with a recovery ratio above 95% even through the tight credit conditions of the past few years – an outcome management attributes to a committed customer base and

disciplined credit control.

Waves Builders & Developers – the real-estate arm that sits on the legacy factory land in Lahore near Thokar Niaz Baig on Multan Road – an entry point for traffic and wholesale flows across Punjab. The land remains on the holding company’s balance-sheet and is the foundation for a mixed-use plan whose options range from a wholesale market to education and healthcare uses, small-plot commercial development and, critically, affordable housing within the urban core.

The corporate realignment – especially the sale of a stake in the appliances manufacturing arm – has left Waves Corporation more like a portfolio parent: half-owner of the industrial engine, full owner of a retail/consumer-finance channel that can pull through factory volume, and steward of a large urban land tract. That land has assumed greater importance not only as collateral and source of latent value for the balance-sheet, but also as a strategic hedge against the cyclicality of durables demand. As of the latest briefing, the Lahore property’s book value is about Rs3.8 billion, which management calls conservative relative to DC rates – let alone market prices – given that the book value was recorded at 25–30% below DC rates.

(Context: tax collection on land is done at the district level, and based on the declared value of the land. Most people severely under declare to the government. The office in charge

of collecting such taxes is the Deputy Commissioner (DC) of a district and hence the lower “official” values of land are called DC rates.)

Management says there has been real third-party interest in an outright purchase, though final offers have paused as housing demand cooled nationwide. Internally, while Waves has a plan to develop the site, the current macro backdrop has nudged the company to be more inclined toward a simple sale if that route maximises near-term value. Either way, management expects to continue booking unrealised gains gradually in “other income.”

Deep freezers remain the franchise cornerstone. Over the past five years, Waves’ overall market share in deep freezers has averaged around 40%, and at one point the company captured 70–80% of the corporate (institutional) segment – selling to beverage and food players that need robust cold-chain assets. The corporate-client list includes household names such as Coca-Cola and poultry-to-processed foods giant K&N’s. The institutional franchise provides not only volume stability but also a platform for specification-led upgrades as energy-efficiency standards rise.

Refrigerators are the main battleground. Management acknowledges the brand’s single-digit share in refrigerators today, despite offering a full-width range across five sizes that “covers most market needs.” The intention is to grow share through a combination of improved aesthetics, higher-capacity models, and tighter integration with the retail instalment channel so that buyers can trade up without a large cash outlay.

During the monetary squeeze and import compression of the last two years, Waves discontinued several categories that rely on imported components and Completely Knocked Down (CKD) assembly – including ACs. With conditions easing, ACs are slated to restart under a CKD model, with supply expected “in the next couple of months,” positioning the brand to participate in what remains one of the largest, fastest-growing pockets in Pakistan’s appliance market. Management frames ACs as a key growth lever for CY26-onward: even a 5% share of an AC market sized at 1.2–1.5 million units could materially lift group sales.

Other lines include washing machines, microwaves and geysers, with plans to revive water dispensers as supply chains normalise. The company also exports refrigerators and freezers to Afghanistan, though shipments have been temporarily paused due to the “warlike” situation in that market – an external headwind the company expects to reassess periodically.

The Pakistan appliances market is sizeable – about Rs750 billion – and structurally tilted toward refrigeration and cooling. Refrigerators account for roughly Rs230 billion,

and ACs near Rs190 billion by value. In other words, nearly three fifths of the market’s value sits in categories where Waves either has its strongest legacy (deep freezers/refrigeration) or is restoring presence (ACs). That creates a clear strategic imperative: defend and grow the refrigeration franchise while rapidly rebuilding credibility in ACs.

As incomes recover from the past tightening cycle and banks re-open to consumer credit partnerships, instalment plans – whether via retailers like Waves Market Place or through bank tie-ups – can expand penetration beyond cash buyers. Waves’ retail arm already serves about 400,000 customers and is exploring a consumer-financing partnership, which could be a meaningful in-house demand engine for higher-priced lines.

Even with flattish volumes, average selling prices rise as households leapfrog to bigger refrigerators and higher-efficiency ACs. The group’s notes explicitly highlight that top-line value is growing faster than units, a dynamic that rewards brands with credible after-sales networks and financing hooks.

Against that backdrop, the company’s earlier exit from ACs – forced by import compression and high rates – carried an obvious growth cost. Re-entry matters because ACs are where brand discovery, seasonal promotions and consumer-finance economics often interlock most strongly. With CKD-based relaunch plans advancing and supply expected to resume imminently, Waves is positioning itself to compete in that profit pool again.

Waves Market Place is not merely a distribution channel; it is a credit engine. Operating roughly 100 shops nationwide and selling both the group’s and third-party brands on instalments, the arm maintained greater than 95% recovery through the downturn – an outcome that speaks to underwriting discipline and useful first-party data. As the AC relaunch proceeds, that same platform can target pre-qualified customers for upgrades, smoothing demand through monsoon-to-summer seasonality.

Real estate as a value unlock – and a transit story. The holding company’s Lahore factory land – near Thokar Niaz Baig on Multan Road – has morphed from an industrial footprint into a high-optionality urban asset as the city expanded outward. Crucially, the site’s proximity to the Orange Line of the Lahore Metro underpins much of its latent value. Management’s concept plan envisions a mixeduse scheme: wholesale-market space to serve Punjab’s distribution trade, community-scale education and healthcare, small-plot commercial opportunities, and affordable multi-storey housing – something the company argues is scarce within the city core. If executed, the project would be a textbook case of transit-led

development, with mass-transit adjacency converting former factory land into residential and community value.

From a capital-allocation standpoint, Waves stresses prudence. The book value of the Lahore property (about Rs3.8 billion) is, by management’s estimate, marked below even DC rates, and well below what market participants would ascribe in a liquid environment. That conservative accounting gives the group room to recognise revaluation gains gradually in other income, smoothing earnings while it weighs an outright sale versus phased development. Interest from large developers has been real, management says, but final bids are on ice until housing absorption improves.

A similar approach is visible at the subsidiary level, where WAVESAPP has partially booked the unrealised gain on Kasur land –estimated by management at nearly four times its book value – again doing so gradually rather than in a single lump-sum to avoid distorting comparability.

Risks remain. A sustained spike in interest rates or renewed import compression could again squeeze CKD supply chains and instalment affordability. Competitive intensity in ACs and refrigerators is high, with global and local players fighting on price, features and after-sales reach. And while “other income” has been a legitimate, disclosed earnings bridge – stemming from conservative revaluation and restructuring accounting – it is not a substitute for cash profits from operations. Still, the 3QCY25 subsidiary turnaround and the 9MCY25 consolidated step-up suggest that operational recovery is taking the wheel as the re-entry into ACs approaches.

Waves’ story in 2025 is not a simple cost-cutting rebound. It is a portfolio reset: a cleaner, more transparent corporate structure; a manufacturing arm gearing up for a return to high-growth categories; a retail-credit network that can manufacture demand; and a transit-adjacent urban asset whose patient monetisation can underwrite growth. The headline act is the AC relaunch – a necessary move if Waves is to participate in the biggest profit pool in Pakistani white goods. But the supporting cast matters: deep-freezer leadership gives credibility; refrigerators define everyday relevance; retail instalments widen access; and the Lahore land bank offers a capital cushion in a cyclical business.

If management can deliver even a modest AC share and a few points of refrigerator share gain – while keeping recoveries high and debt controlled – the financial arc already visible in 3QCY25 could extend. The result would be a group better aligned to where the consumer is actually spending and to where the city is actually growing – on showroom floors and along the Orange Line.

Two major Hubco-backed Thar coal power projects now online

The power plants will likely yield significant cash flows for the company, but may put additional pressure on the already oversupplied electricity grid

Hub Power Company (Hubco) has cleared a pivotal milestone in its long-running Thar strategy, with two mine-mouth coal plants –Thar Energy Limited (TEL) and ThalNova Power Thar (TNPTL) – reaching their Project Completion Date (PCD). The step, achieved on 31 October 2025, unlocks the ability for both projects to start distributing accumulated cash to shareholders and marks the latest wave of China–Pakistan Economic Corridor (CPEC) capacity additions feeding the national grid.

Hubco disclosed in a material notice that both TEL and TNPTL hit PCD “in accordance with the terms of their project financing documents,” a change in status that formally transitions the projects from construction risk into operations with distributable reserves. The two Thar Block-II units together contribute 660MW (two plants of 330MW each) to Pakistan’s installed base, reinforcing the coalfrom-Thar pillar of the country’s energy mix.

Ownership is tightly held by familiar domestic sponsors. Hubco directly owns 60% of TEL, while Fauji Fertilizer Company (FFC) holds 30%. In TNPTL, Hubco has an indirect 38.3% stake via its wholly owned subsidiary HPHL, while the Habib family-controlled Thal Ltd owns 26%. Both plants are designated CPEC priority projects, reflecting their strategic role in displacing imported fuels with indigenous Thar coal. The PCD declaration also confirms that no “true-up” is required before PCD, removing an administrative uncertainty that could have delayed distributions.

With PCD achieved, management and lenders move to a different rulebook: dividends can now be declared when excess cash is available, and the initial pattern is expected to be semi-annual – with payments clustered around December and May as reserves build and debt-service cycles settle. Earlier guidance from management also discussed a twice-yearly cadence for TEL (around May and November), highlighting that exact months can vary by project documentation and cash-flow timing.

One lingering condition relates to the extension of Standby Letters of Credit (SBLCs) that Hubco had issued for cost-overrun protec-

tion during construction. Shareholders have already approved an extension of the SBLC tenor to as late as 2034, without a material cash outflow to Hubco, to satisfy lenders’ requirements while certain conditions are waived. The extended tenor is designed to cover potential disputed HVDC-related liquidated damages under the amended PPAs and any temporary debt-servicing shortfalls – insurance of a sort that keeps the projects bankable without hitting Hubco’s cash today.

For Hubco shareholders, the Thar PCDs are less about nameplate megawatts and more about cash yield. The company’s research guidance suggests TEL could remit around Rs8.0 billion to Hubco in FY26, normalising to Rs8.5 billion in FY27 as operating rhythms settle. TNPTL’s contribution is projected near Rs4.9 billion in FY26, normalising to Rs5.6 billion in FY27. Taken together, those inflows underpin an estimate that Hubco’s total dividend per share (DPS) could be around Rs15.0 in FY26, rising to Rs17.0 in FY27 – a step-up supported not just by current-year returns on equity, but also by accumulated cash reserves that the projects built during testing and ramp-up.

Two process notes matter for dividend visibility. First, management expects no tariff true-ups prior to PCD at TEL/TNPTL, which removes a common bottleneck for new IPPs trying to clear payables/recoveries before opening the dividend spigot. Second, management reiterated that TEL can distribute twice a year, while other assets in the Hubco portfolio have their own rhythms; for example, CPHGC historically pays once a year around May. These nuances affect quarterly cash

planning and how swiftly parent-level DPS can be transmitted.

There is, however, a parallel thread of caution running through management’s expectations. At CPHGC (China Power Hub Generation Company), management is already recognising a contract liability based on its assumed tariff while NEPRA’s approved tariff differs. In the event of an adverse true-up, Hubco plans to seek a stay from the NEPRA tribunal; if that fails, the accounting adjustment would flow as a credit note against trade debts. This highlights the regulatory friction that can intrude on cash timetables even for operating plants, and it will be watched closely as Thar dividends begin.

In market terms, the Thar cash unlock dovetails with a valuation still tied to yields. As of this past week, Hubco was trading on a forward FY26 P/E of about 6.2x and P/B of about 1.2x, with an implied dividend yield near 6.9% – metrics that investors benchmark against both the sovereign yield curve and peer IPPs. The Thar distributions have the potential to lift the DPS and support that yield case even as other portfolio items cycle through tariff and receivables adjustments.

The arrival of another 660MW of baseload coal at a time of rapid solar adoption will add to a policy debate already simmering in Islamabad. On the one hand, mine-mouth Thar coal helps reduce imported-fuel exposure, stabilising generation costs and foreign-exchange outflows. On the other, Pakistan’s grid is contending with rising daytime solar output – from both utility-scale plants and rooftop/ net-metered systems – which depresses mid-

day demand for thermal units and pushes higher capacity payments onto consumers when base-load plants are dispatched below take-or-pay levels.

The arithmetic is simple, even if the solutions are not. Fixed capacity charges are meant to remunerate IPPs for availability, not just energy sold. As unutilised capacity rises – because load growth is soft, losses remain elevated, or net-metering shifts demand curves –unit tariffs can climb even when fuel costs fall. The two Thar units are mine-mouth base-load assets; they do not flex as easily as peakers and are designed to run steadily. In a system with oversupply in off-peak hours, this can intensify the pressure to either (i) curtail solar at times, (ii) improve grid flexibility and storage, or (iii) accelerate industrial demand-side reforms to soak up generation. Policymakers have already floated combinations of these, but implementation lags mean near-term pain tends to land as higher consumer bills and circular-debt stress.

Hubco’s own management recognises this evolving landscape, which is why the company has been building an adjacent EVcharging and mobility strategy (more below) and evaluating grid-supportive investments through its holding platforms. Still, for FY26–27, the near-term financial impulse from Thar will be positive for Hubco’s cash flows even as the grid-level optimisation challenge becomes more complex.

No discussion of Hubco is complete without its contractual dance with the state. Pakistan’s power market remains effectively a single-buyer system, with CPPA-G purchasing from IPPs and selling onward to DISCOs. This structure has long produced payment delays, late payment surcharge (LPS) accruals, and periodic renegotiations of tariff structures and term sheets.

Recent management commentary underscores that LPS waivers for CPEC IPPs remain an unresolved, government-to-government issue, with no concrete progress reported from the latest bilateral meetings. The uncertainty matters for cash and accounting, because waiving LPS accruals would alter receivables valuations and could ripple through dividend decisions. At the same time, the CPHGC tariff true-up saga illustrates the regulatory exposure even for mature projects: the company is booking a contract liability based on its own view of the tariff, prepared to seek tribunal relief if NEPRA’s determination goes against it, and, failing that, to net the impact against trade debts. These items, while technical, feed directly into working-capital draw and payout capacity at the parent.

There are also asset-specific pivots underway at the Hub base plant. Management had floated an RFP to dispose two units, but that plan has been shelved due to increased

competition from other GENCOs driving lower scrap prices. The remaining two units have been earmarked for coal conversion to supply K-Electric, though management cautions the conversion will take time. Meanwhile, the land tied to the project is restricted to industrial uses, limiting near-term monetisation through real-estate repurposing. In parallel, HPHL (a Hubco subsidiary) is evaluating greenfield new-energy investments and has signed an MoU with Pakistan State Oil (PSO) to explore a Single Point Mooring (SPM) and oil terminal at Hub for white-oil supplies into the northern load centres – an infrastructure bet that could complement the company’s generation footprint.

Another thread is coal supply risk and option value at the mine. Hubco disclosed that it invested Rs5.4 billion to acquire an additional 9.5% stake in Sindh Engro Coal Mining Company (SECMC), taking its holding to 17.5%, although completion has stalled pending the non-completion of a related Engro transaction. SECMC’s Phase 3 financial close is targeted by end-CY25, with COD the following year – timelines that, if held, would deepen the mine’s economies of scale and potentially lower all-in delivered coal costs for Thar plants over time.

All of the above puts Hubco at the centre of Pakistan’s contract and policy transition: accruing new base-load cash flows from Thar, while navigating legacy base-plant decisions, regulatory true-ups, and a shifting fuel and demand mix.

Amid the coal build-out, Hubco is simultaneously making a mobility and electrification bet with BYD of China, aiming to localise assembly and help seed the charging backbone that could, in time, lift off-peak electricity demand. Management says the CKD plant is expected to be operational by 4QFY26. To date, the company has incurred roughly USD 10mn in capex on the programme, with the bulk of spending to occur over the next four to five months once LCs open for the EPC contract. Funding lines are largely in place: $90 million of debt has been drawn, and the $30 million equity requirement is to be funded internally. Early market interest in BYD’s Shark model has been described as “very encouraging,” a positive, if still anecdotal, read-through for initial volumes.

The tax environment is a modest tailwind: sales tax on EV CKD/CBU units is 1%, an incentive structure that supports early adoption while local content and scale build. On the charging side, Hubco (through HUBC Green) plans to co-own and co-operate EV charging stations (EVCS) with oil marketing companies, splitting profits 50:50. The initial EVCS capex is around Rs400 million, with a long-distance network design: chargers spaced

roughly every 100 kilometres on motorways and highways. Management is realistic about the ramp, projecting low utilisation initially that improves as the fleet base grows. The focus on inter-city corridors rather than urban kerbside fits the current bottleneck – range anxiety on long trips – and taps into sites where OMCs already hold real estate and traffic.

Strategically, the BYD/EVCS push is more than a diversification headline. If Pakistan’s daytime solar continues to expand, EV charging – especially off-peak or managed charging – could absorb surplus electrons, flatten demand curves, and soften capacity-payment pressure. Hubco, as both a generator and a charging-network investor, would then be positioned on both sides of the meter, participating in value created by a more flexible, electrified transport system.

The immediate story for Hubco is cash. With TEL and TNPTL now through PCD and semi-annual dividends expected from their accumulated reserves and ongoing operations, the FY26–27 DPS outlook strengthens materially, subject to routine constraints around receivables and regulatory synchronisation. No pre-PCD true-up and a SBLC extension that does not require cash out today provide the procedural clarity lenders and sponsors need to move into a steady state.

The second-order story is systemic. Pakistan’s grid must integrate new base-load while accommodating rapidly growing solar. That means dispatch rules, storage pilots, demand-side incentives and distribution-loss fixes will matter as much as fuel choices in determining the consumer tariff path and the circular-debt trajectory. In this setting, investors will pay attention to how quickly Thar plants reach cash-distribution cadence, the evolution of CPHGC’s tariff true-up, the pace of SECMC Phase 3, and early signals from BYD CKD/EVCS capex and partnerships.

Hubco has rarely been a simple utility story; it has been a proxy for Pakistan’s broader energy-sector bargain: sovereign-anchored cash flows meeting regulatory and demand-mix volatility. With two more Thar anchors now online – and a transport-electrification venture set to come onstream in due course – the company’s next chapter will hinge on how deftly it converts megawatts into sustainable dividends while helping the grid turn oversupply into opportunity.

If the cash arrives on the timetable management has sketched, Hubco’s Thar bet will start paying out just as the company leans into a mobility strategy designed to grow the grid’s demand side. That combination – new baseload cash, contract discipline, and EV-enabled offtake – could define Hubco’s investment case over the next two financial years. n

swings to a loss amidst continued construction slowdown Shabbir Tiles

High interest rates have meant that new home construction and remodelling of existing homes has been slow

Shabbir Tiles & Ceramics Ltd, the maker of Stile-branded tiles, sinks and sanitary ware, has slipped into the red as Pakistan’s construction malaise stretches into a second year. Management points to weak homebuilding and deferred renovation demand, expensive energy and logistics, and a structural cost handicap versus Punjab-based rivals. The company says it is leaning into niches –especially porcelain – while cutting its energy bill with solar, but stresses that a demand recovery hinges on easier monetary conditions and improved gas availability over the coming quarters.

STCL reported a loss per share of Rs0.80 for FY25, a sharp reversal from earnings per share of Rs1.34 in FY24. The weak run-rate

persisted into the new financial year: 1QFY26 loss per share was Rs0.80, versus Rs0.36 in the same quarter last year. Net sales fell 11% yearon-year to Rs13,846 million in FY25 as volumes and pricing buckled under sector-wide pressure; gross profit slid 24%, driving the gross margin down to 20% from 23% a year earlier. The company swung from operating profit of Rs733 milion in FY24 to an operating loss of Rs141 million in FY25, while EBITDA more than halved to Rs618 million. The deterioration accelerated on a quarterly basis in 1QFY26, when net sales fell 11% and the gross margin eased to 16%, locking in a quarterly net loss that matched the full-year FY25 per-share loss.

The top-line decline is rooted in demand and mix. Sales volume dropped to 8.33 million square metres in FY25, from 10.39 million

in FY24, reflecting fewer housing starts and households postponing discretionary remodelling amid high borrowing costs. Lower plant loading meant poorer fixed-cost absorption, amplifying the hit to margins despite management’s efforts to control overheads.

Costs were sticky. The company cites persistent gas supply issues – both availability and low pressure in winter – plus a sharp rise in freight costs over the past 18 months due to elevated diesel prices. These factors pinched gross margins even as the firm pursued efficiencies and price discipline. The briefing also notes that primary raw material is sourced in the North while operations are in the South, saddling STCL with longer hauls than Punjab-based competitors. Meanwhile, ceramic inks, frits and glazes remain imported inputs,

exposing cost of goods sold to exchange-rate and import-volatility risk.

The P&L details underscore how quickly operating pressure cascaded. Selling and distribution expenses fell 5% and financial charges fell 10% in FY25, but these savings were outweighed by the drop in gross profit.

Management’s near-term tone is cautious but not bleak. The note flags expectations for a gradual demand recovery over the next eight to nine months, and says operations have been “adjusted accordingly,” a signal that the company is aligning production with a slow thaw rather than a snap-back.

Founded more than four decades ago, Shabbir Tiles & Ceramics is one of Pakistan’s longest-standing branded tile manufacturers and a mainstay of the Stile marque in floor and wall tiles. Over time the group has broadened its product scope to include bathroom fixtures – basins, commodes and accessories – to complement the core surface portfolio, a strategy designed to keep the brand present across the value chain from rough-in to finishing. The company’s market approach has long married a quality/brand-led pitch with selective category focus. Today, management underscores that STCL is the only porcelain tile manufacturer in Pakistan, a differentiator it hopes will support pricing power even as mass-market ceramics are buffeted by aggressive competition.

On market footprint, the briefing places STCL’s market share around 10%, with management expecting it to be stable in volumes and to improve in value terms given a premium-pricing strategy. That balance – holding share while pushing mix and realisations – is central to the brand’s positioning until macro conditions allow for broader category expansion.

From an operating-structure standpoint, the company remains Southern-based, which historically allowed it to serve Sindh and Balochistan efficiently and export via ports when regional markets were receptive. That geography has become a double-edged sword in a high-diesel, high-freight environment because Northern raw materials must be hauled South. As a result, Punjab-based rivals who can source closer to plant enjoy a structural freight advantage, one that has widened over the past year and a half.

STCL’s portfolio spans ceramic and porcelain floor and wall tiles under the Stile brand, supplemented by sanitary ware – bathroom sinks, toilets and related fittings. The porcelain capability is its calling card: management highlights that no other local producer currently makes porcelain tiles, a segment prized for durability and finish that commands a premium. In commoditised segments, the firm’s stance is to compete selectively, resisting a race to the bottom on price.

The industry’s pain is evident in utilisa-

tion rates. The broader tile industry is operating at roughly one third of installed capacity, yet STCL has sustained a higher utilisation of around 50%, reflecting both its brand pull and tighter alignment of production to orders. That said, half-loaded kilns still dilute economies of scale, so sustained gains in demand are necessary to restore normal margins.

Tiles are energy-intensive. The firm reports ongoing gas availability and pressure issues in winter – a recurring operational headache in Pakistan’s energy mix. To mitigate rising energy costs, STCL has expanded its solar capacity, aiming to reduce reliance on coal and LPG. Solar yields are naturally diurnal and weather-dependent, but over a year they can shave a meaningful share off electricity costs, especially during the sun-rich summer months when kilns and spray dryers draw heavily.

On raw materials, clays and other primary inputs are trucked from the northern region; ceramic inks, frits and glazes are still imported. The import content complicates cost control when the rupee is weak or when import curbs delay consignments, forcing higher buffer stocks or opportunistic purchases at unfavourable rates.

The note points to a sharp increase in freight costs over the past 18 months on the back of elevated diesel prices. For a product that is heavy, fragile and low in value per kilogram, line-haul and last-mile expenses can decide whether a sale is profitable. The spread between ex-factory prices and retail tags for tiles often has as much to do with diesel and handling as with manufacturing, so this headwind matters.

Encouragingly for formal players, the briefing says smuggling from neighbouring countries has declined significantly, easing a longstanding distortion that undercut compliant manufacturers on price. While smuggled stock never fully disappears, a lower tide can lift formal margins, improve dealer confidence in branded lines, and stabilise realisations.

The past two years have been rough for construction materials across Pakistan. High interest rates have cooled mortgage activity and pushed many homebuilders and small developers to the sidelines; households have deferred discretionary remodelling, and commercial projects have slowed. For producers of cement, steel, glass and ceramics, this has meant a battle to keep kilns and grinders running efficiently. STCL’s 11% fall in revenue and 24% drop in gross profit in FY25 capture that pressure in microcosm.

Within ceramics specifically, the competitive map has shifted. The company notes that four large Chinese players are operating locally with state-of-the-art machinery. Chinese entrants tend to bring newer kilns, precise digital printing lines, and integrated glaze and body preparation – allowing faster

changeovers, higher first-pass yield and, crucially, lower unit energy per square metre. In a normal economy, fresh capacity can spur innovation and promote exports. In a demand-constrained domestic market, it intensifies price competition, particularly in standard sizes and looks where brand and technical advantages are less visible. For a legacy brand like Stile, the strategic answer is to defend value-added niches (e.g., porcelain, premium finishes) and use the brand to maintain dealer shelf space even when volumes are sluggish.

Energy remains the other systemic variable. Gas supply intermittency and winter pressure drops add hidden costs – idle time, re-firings, and scrap – on top of outright price inflation. Firms with captive solar and more flexible kiln schedules can manage these shocks better, but the industry still depends on stable gas and grid supply for peak efficiency. STCL’s solar expansion is therefore a defensive investment as much as a sustainability story.

There are, however, a few green shoots. Management expects a gradual demand recovery within eight to nine months, a timeline that loosely aligns with market hopes for monetary easing and a reacceleration in private construction if inflation moderates. Also positive is the decline in smuggling, which narrows the price undercut from grey channels and could help formal makers like STCL win back contractors who value warranty, after-sales assurances and consistent shade batches for large jobs.

The next leg for STCL likely looks like this: six to nine months of careful volume management while waiting for mortgage rates and project financing to ease; a gradual rebuild of utilisation toward and beyond 50%; and a margin lift from mix, energy self-generation, and better fixed-cost absorption. Risks are obvious: a slower-than-expected rate-cut path, renewed gas curtailments in winter, or a fresh wave of price-led competition by local Chinese-operated plants could delay the turn.

Yet the company’s brand equity, porcelain uniqueness, and installed distribution give it tools many smaller rivals lack. Add in the reduced drag from smuggled imports and the potential for remodelling to revive first –even before new-home construction – once household confidence steadies, and the case for a measured recovery in the Stile franchise becomes plausible.

Shabbir Tiles’ latest numbers reflect the sector’s harsh macro – thin demand, high energy and logistics, and price-aggressive competition. The company’s path back runs through a careful defence of premium niches, incremental cost relief from solar, and a macro tailwind from easier rates. If those elements align, the Stile brand should be well-placed to benefit when Pakistani households and builders return to the showroom. n

Air Link’s bid to assemble Acer laptops hits bureaucratic snag

The

company is ready to launch a major product line, but the government has yet to issue it the correct code needed to record the import of components, delaying launch by a year

Air Link Communication Limited’s long-trailed move into laptops – fronted by Acer’s E-series – has run into an unusually prosaic roadblock: a missing HS code. Without a customs classification for semi-knocked-down (SKD) kits, the electronics assembler cannot bring in the parts it needs to build machines locally. Management has therefore pivoted to importing completely built-up (CBU) units first, while it waits for Islamabad to assign the SKD code that unlocks full localisation economics. The company has already opened its first letter of credit and expects an initial 10,000-unit CBU shipment to land imminently, but margins and volumes will be lower than the original “assemble-in-Pakistan” plan implied.

In trade logistics, the dullest acronyms often carry the sharpest commercial edge. HS codes – short for “Harmonised System” codes – are the multi-digit identifiers that customs authorities use worldwide to classify goods, apply tariffs, track trade statistics and implement policy exemptions. For firms that localise manufacturing through SKD/CKD routes, the specific HS codes covering parts and sub-assemblies are the difference between a viable margin and a non-starter. In Air Link’s case, the government has not yet assigned an HS code for Acer laptops in SKD form. That gap forces the company to start with CBU imports (taxed and treated differently) and postpone local assembly until the SKD classification exists. As the company tells investors, local assembly can commence “once these codes are assigned by the government”;

under the interim CBU model, gross margins are estimated around 16–18%.

The operational knock-on is straightforward. SKD allows some labour and overhead to be captured domestically, often alongside incentives designed to encourage value addition. CBU, by contrast, carries a heavier duty load, leaves less value in-country and compresses profitability. The firm is pressing ahead with a beachhead shipment to establish market presence, but the economics will only look like the original business case when the SKD pathway is cleared and local assembly gets the green light.

Air Link had aimed to bring the first Acer units to shelves in the first half of calendar 2025; the combination of missing HS codes and a slower-than-hoped approvals process has effectively pushed a local-assembly start into

2026. The revised plan now begins with CBU shipments, with local assembly to follow once codes are granted. Research coverage assumes ~45,000 laptops sold in FY26 under this altered mix, a figure below the kind of numbers a fullfledged SKD ramp might have supported. The company’s initial LC and the first 10,000 units are already paced for arrival, but the team is explicit that assembly will start only after HS code issuance.

This “CBU-first” detour matters for cash flows and positioning. At 16–18% gross margins, CBU laptops contribute, but they do not deliver the same operating leverage as SKD, especially once marketing and channel costs are layered in. The upside is that an early retail presence should seed brand familiarity and allow Air Link to learn the laptop category’s quirks (after-sales, service parts, seasonal demand) before turning on the bigger SKD machine.

While laptops stall at the border, televisions are chugging ahead. Air Link launched Xiaomi Smart TVs in 3QFY25, deliberately positioning below the incumbent giants – Samsung and TCL – on price, while matching their headline features (bezel-less designs, Google Assistant integration and the rest). The company and its covering analysts expect the TV line to contribute about Rs5.4 billion of revenue in FY26, on ~40,000 units – well below management’s stretch target of 100,000 but a credible first full-year footprint for a brand-new category. The report’s Industry Local and Import Sales chart also shows how formal local production has been steadily gaining share in adjacent electronics, a tailwind for any assembler that can balance price, quality and after-sales reach.

The strategy with TVs echoes Air Link’s smartphone playbook: compete on value and availability, not just sticker price. Xiaomi’s global software ecosystem – especially a familiar Android TV experience – helps lower switching costs for consumers. If the company can lock in stable panel supplies and keep duty/tax arbitrage in its favour, TVs could become the steady second engine that smooths the lumpier laptop ramp.

Air Link’s corporate narrative still begins at the storefront. The company built its name as a handset distributor and retailer before climbing the value chain into local assembly as Pakistan’s policy environment turned more welcoming. Today, smartphones remain the core: Air Link is a major local assembler for Xiaomi, Tecno and Itel, and is expanding production at a new facility in the Sundar Green Special Economic Zone (SG-SEZ) in Lahore. The site – spanning eight acres across the parent and its wholly owned subsidiary, Select Technologies – qualifies the business for a 10-year tax holiday and a one-time GST exemption on machinery, incentives that improve after-tax returns as volumes scale. The company plans to shift about

half of smartphone output to the new plant initially, then migrate the remainder during FY26.

The SG-SEZ campus is also where non-phone lines (laptops, TVs and a to-be-announced home-appliances suite) will be housed, reinforcing the group’s broader push “beyond smartphones.” Management’s channel checks point to an operational shift by December 2025, which underpins an earnings step-up as the tax holiday kicks in.

Air Link’s ascent owes a lot to Pakistan’s policy turn toward local assembly. Two levers mattered most. First, DIRBS – the Device Identification, Registration and Blocking System – curbed handset smuggling, forcing grey-market imports into the formal net. Second, duty structures increasingly favoured locally assembled units over fully built imports. The result, according to research coverage, is that up to 95% of domestic demand was expected to be met by local production by 2025 – a whiplash change that benefited domestic assemblers with scale and brand relationships.

For Air Link, those mechanics translate into dependable volumes across value-priced brands and a platform to add categories. The SGSEZ tax holiday and GST break on machinery further strengthen economics on every incremental device that rolls off the line. Put simply: if the company can keep components flowing and maintain brand partnerships, the local assembly “flywheel” does a lot of the heavy lifting.

In a bolder move into the premium tier, Air Link has announced plans to open Pakistan’s first official Apple “mono-store” – a single-brand retail concept that would offer a tighter Apple-like experience. The outlet is targeted by December 2025 in Lahore’s Dolmen Mall, and the distributor points to a Rs280m single-day sales record during the iPhone 17 launch as evidence of the latent demand it can channel. Gross margins on iPhone resale currently run in the 8–14% range; a flagship mono-store adds brand theatre, service integration and direct retail control – useful differentiators when grey-channel imports blur pricing signals.

The Apple bet also invites contrast. Regionally, Apple has shifted an increasing share of iPhone assembly into India over recent years, deepening its supplier ecosystem there. Pakistan won’t replicate that anytime soon, but an official retail presence – if executed to Cupertino’s standards – could formalise part of the premium demand that now leaks to parallel imports. For Air Link, the significance is twofold: a richer product mix to offset thinner CBU laptop margins in FY26, and a visible brand asset that signals retail sophistication to other potential OEM partners.

At one level, the Acer delay is simply a clerical miss – no HS code, no SKD imports. But scratch a little deeper and it becomes a stress test of Pakistan’s localisation regime. The state

wants domestic value addition, and has rightly used tools such as DIRBS and tariff differentials to grow local assembly in smartphones. Now the same logic must be extended, cleanly and predictably, to adjacent categories like laptops. When codes and approvals lag, firms are forced into CBU stopgaps that blunt the very benefits –jobs, taxes, supplier ecosystems – that policymakers seek.

Air Link’s case is instructive precisely because the commercial pieces are already in place: a brand partner (Acer), a new SEZ facility with a 10-year tax holiday, a trained workforce accustomed to electronics assembly, and a distribution/routing muscle built over a decade in phones. What is missing is alignment between policy intent and execution detail. Fixing that is low-hanging fruit, and would send a useful signal to other OEMs scanning Pakistan for localisation partners.

CBU exposure magnifies FX and tariff risk in FY26. A weaker rupee or a duty tweak can dent already-modest CBU laptop margins. SKD rollout mitigates this, but remains contingent on the HS code and related notifications.

Laptops are more consolidated than smartphones in Pakistan, with entrenched importer-retailers. A price-led counter-move from rivals could pinch early CBU sell-through. Air Link’s offset is breadth: smartphones (Xiaomi/ Tecno/Itel) remain the cash engine, while Xiaomi TV traction and a differentiated Apple retail experience add ballast.

Shifting half the phone line to the new site as the laptop line readies will test planning. The upside is the one-time GST exemption on machinery and the tax holiday – powerful cushions during a period of category expansion.

Air Link is hitting the right strategic notes: use a decade of smartphone-assembly know-how and a new SEZ platform to diversify into TVs and laptops; exploit policy incentives to improve returns; and upgrade retail credentials with an Apple-branded flagship. The snag is a surprisingly ordinary one: an SKD HS code that has yet to be assigned. Until it is, Acer will arrive as CBU, margins will be thinner, and FY26 laptop volumes will underwhelm the original plan. The good news is that the TV line is already contributing, smartphone assembly remains robust under Pakistan’s localisation regime, and the Apple mono-store – if opened on schedule – can become a premium showcase that strengthens Air Link’s hand with global brands.

The fix is administrative, not industrial. If Islamabad wants Pakistan’s electronics playbook to evolve beyond phones, it must sweat the small stuff: codes, notifications, and predictable timelines. Do that, and Air Link can move swiftly from “CBU stopgap” to full local assembly – and turn a delayed launch into a durable new profit pool. n

Can Pakistan use palm oil for more than cooking?

Indonesian palm sellers are making a surprising pitch to global buyers: palm oil as biofuel

By Taimoor Hassan

In the bustling kitchens of Pakistani homes, from the hum of deep fryers to the sizzling sound of pakoras and samosas, a surprising foreign ingredient plays a starring role: Indonesian palm oil. But behind its ubiquity in daily life, there’s a much larger economic story unfolding. It stretches far beyond the cooking pot and into the heart of Pakistan’s consumer goods sector.

In fiscal year 2025, Pakistan imported a staggering 3.2 million tonnes of palm oil, worth a total of $3.4 billion, with Indonesia supplying the lion’s share. This makes palm oil one of the country’s most critical imports, integral not just to food production, but to the broader economy. Indonesia, the world’s largest producer, has become Pakistan’s primary partner in a trade that’s so essential that its disruption could leave Pakistan’s bustling food markets— and the manufacturing sector—reeling. While it might seem like just another commodity, palm oil’s importance runs deeper than its role in frying up crispy snacks. It touches nearly every part of Pakistan’s consumer landscape. From the vanaspati ghee that graces every kitchen to the packaged

snacks lining grocery store aisles, palm oil has woven itself into the very fabric of daily life. For a country that imports over 80% of its edible oils, the stability of the palm oil supply is crucial, especially in a region where food prices are volatile and household budgets are stretched thin.

But as with most global commodities, palm oil has its detractors. Its health effects, environmental impact, and the ethics of its production have become contentious issues, fueling debates that extend far beyond the frying pan. Still, it remains a fixture of Pakistan’s food industry, with no clear alternative in sight. But in recent times Indonesian palm sellers have been making a new pitch: using palm oil as biofuel.

A commodity, not just an ingredient

To understand why palm oil is so essential to Pakistan, it’s important to first grasp its place in the global food system. Palm oil accounts for about 40% of the world’s vegetable oil production, making it a dominant force in the edible oils market. In 2023, imports of both refined and crude palm oil to Pakistan were valued at nearly $2.86 billion, reinforcing the magnitude of its role.

But why is this palm oil so critical to Pakistan? For one, it’s affordable. The price stability of palm oil helps keep the cost of everyday essentials in check, whether it’s ghee, cooking oil, or packaged foods. While Pakistan does grow some oil palm domestically, yields are relatively low, making local production unprofitable. This leaves the country reliant on imports to fill the gap—a vulnerability that could have far-reaching consequences if global supply chains were disrupted.

Despite its widespread use, palm oil remains one of the most controversial ingredients in the world. Critics have long linked it to health issues, particularly its high levels of saturated fat. The Indonesian Palm Oil Association (IPOA), however, has repeatedly pushed back against these claims, emphasizing that palm oil contains no trans fats, which are considered far more harmful. The association points to research, including findings from the World Health Organization (WHO) in 2023, which suggests that moderate consumption of palm oil does not raise LDL cholesterol—often cited as a major contributor to heart disease.

“People misunderstand palm oil,” says Eddy Martono, chairman of IPOA. “A common misconception is that palm oil is unhealthy because it contains saturated fat.”

“In fact, its fatty acid profile is balanced -

roughly 50% saturated, 40% monounsaturated, and 10% polyunsaturated - and it contains no trans fats, which are far more harmful. Scientific studies, including 2023 World Health Organization (WHO) findings, show that moderate consumption of palm oil does not raise LDL cholesterol and may actually help maintain a healthier balance between good and bad cholesterol.

According to him, it is not the oil that’s the problem—it’s how it’s used. Overheating oil, reusing it repeatedly, that’s where the health risks lie. But the conversation doesn’t stop at health. Palm oil’s environmental footprint—specifically its link to deforestation— has prompted global criticism. Oil palm plantations have been blamed for destroying forests in Southeast Asia, contributing to biodiversity loss and climate change. Indonesia, however, has been taking steps to address these concerns. The country’s ISPO certification system ensures that palm oil is produced sustainably, without harming forests or communities.

The Sustainability Question

As Pakistan continues to rely on imported palm oil, the question of sustainability will inevitably shape future policy decisions. With Indonesia’s palm oil industry aiming to meet rising global demand while adhering to stricter environmental and labor standards, the path forward is clear: ensuring that palm oil imports are not just affordable but responsibly sourced. The challenge for Pakistan will be to balance the economic benefits of palm oil imports with the growing demand for sustainability.

As Indonesia continues to implement its sustainability initiatives and Pakistan grapples with the broader economic implications of its reliance on palm oil, one thing is certain: the conversation surrounding palm oil is far from over. The balance between economic benefit, health, and environmental stewardship will shape the future of this commodity, both in Pakistan and around the world.

At the Pakistan Edible Oil Conference (PEOC) 2024, government and industry leaders reaffirmed this strategic partnership. In the face of global volatility, Indonesia’s reliable supply chain provides long-term resilience - feeding families, fuelling industries, and securing Pakistan’s FMCG growth. Indonesia’s representatives were also present to make a case for their product.

According to Eddy Martono, the chairman of Indonesian Palm Oil Association (IPOA), Palm oil is often misunderstood, with health myths clouding the real evidence. “A common misconception is that palm oil is unhealthy because it contains saturated fat.”

According to him, nutritionally, palm

oil is rich in antioxidants such as vitamin E tocotrienols and beta-carotene, which support heart, brain, and eye health. Its high smoke point makes it a stable and safe choice for cooking in hot climates like Pakistan.

Negative perceptions are often shaped by labelling and simplified messages that overlook the facts: the real health risk comes from repeatedly reusing oil at very high temperatures, which reduces quality and forms harmful compounds. “When used properly, palm oil is a safe, nutritious, and versatile part of everyday diets. On the environmental front, another myth is that palm oil is the biggest driver of deforestation. In reality, oil palm is the world’s most land-efficient crop, producing more oil on less land than soybean, sunflower, or rapeseed. The real challenge is ensuring sustainable production - something Indonesian producers are addressing through mandatory certification, stricter regulations, and advanced traceability systems,” says Eddy.

Indonesian Palm Oil and the Future of Biofuels

While palm oil’s presence in Pakistani kitchens is widely recognized, its growing role in the energy sector is less well known.

Here’s where things get interesting. In the archipelago of Indonesia, a quiet revolution is underway in the fuel tanks. The government has rolled out its mandatory biodiesel programme known as B40 which requires diesel fuel to contain 40 % palm-oil-based content marking a significant leap from the previous B35 level.

By doing this, Indonesia is essentially signalling that it is not just an agricultural player, but a key energy transition actor. And it’s using its strength in palm oil to power this transition. The thinking is multifaceted.

Firstly, Indonesia is one of the world’s largest producers of palm oil. By leveraging domestic output instead of relying solely on imported fossil diesel, the country seeks to slash its fuel-import bill. The Indonesian Ministry of Energy estimates that B40 could save up to $9 billion of diesel imports in 2025 through this approach.

Secondly, the policy is an important demand pull for the palm-oil sector: higher domestic absorption of crude palm oil (CPO) helps stabilize prices, supports rural jobs, and strengthens downstream value chains. As one analysis points out, the requirement for 2025 is set at about 15.6 million kilolitres of biodiesel, requiring roughly 14.9 million tonnes of crude palm oil.

IPOA believes that For Pakistan, which faces rising oil import bills, adopting a similar

People misunderstand palm oil. A common misconception is that palm oil is unhealthy because it contains saturated fat

Eddy Martono, chairman of IPOA

program could reduce exposure to global fuel price volatility and support energy diversification. Beyond economics, palm oil biofuel also offers environmental benefits, lowering emissions while building new agricultural and industrial value chains. Indonesia’s experience highlights the importance of policy support, investment in biodiesel plants, and public-private collaboration. With knowledge-sharing and technology transfer, Pakistan could adapt the B40 model to its own needs, using palm oil as both a renewable energy source and a stabilizer of the national economy.

Indonesia has introduced the B40 program, which mandates that 40% of diesel fuel come from palm oil-based biodiesel. The move is part of a broader strategy to reduce the country’s reliance on imported fossil fuels and lower its diesel import bill. In fact, the Indonesian government estimates that by 2025, the B40 program will save up to $9 billion in diesel imports.

For Pakistan, which faces its own energy challenges, Indonesia’s biodiesel initiative offers a potential roadmap. By incorporating palm oil into biofuels, Pakistan could diversify its energy sources and reduce its vulnerability to fluctuating global oil prices. This model could also help stabilize the domestic palm oil market by increasing demand for the commodity. n

$4 million funding, NBFC license and fintech acquisition: SLGTrax set to dominate logistics industry?

With the introduction of 4PL model, an NBFC license under their sleeve, and strong finances, SLGTrax now positions as a strong challenger in logistics industry

By Taimoor Hassan

SLGTrax, the new entity formed by the merger of Secure Logistics Group Limited (SLGL) and last mile delivery startup Trax Online last month, has successfully completed and deployed $4 million in a post merger funding round as it scales its fourth-party platform.

Last month, SLGTrax secured an NBFC license to introduce fintech offerings and establish itself as a strong challenger in the logistics industry. The company is further in the process of acquisition of Singapore-based fintech company Finova, currently experimenting with their lending and payments solution in Pakistan.

The merger is another major consolidation in the logistics industry which has seen

one startup – Swyft Logistics – rooted out and the acquisition of CallCourier by PostEx.

Founded in 2017, Trax Online quickly made a name for itself as an agile, tech-enabled last-mile delivery service catering primarily to Pakistan’s growing eCommerce sector. Over the last several years, it expanded operations to include international shipping, warehousing, and retail networks to serve walk-in customers. In 2023, the company attracted $3.2 million in seed funding from TriCap Investments and Amaana Capital. Its clients include J., AlKaram, Baby Planet, Bagallery, Bank Alfalah, Generation and JS Bank among prominent ones.

Secure Logistics Group (SLG) Limited, on the other hand, emerged from a legacy of logistics and security operations in Pakistan. Recently restructured and listed on the PSX in 2024, SLGL has developed a network that

spans over 1,600 cities and includes more than 300 commercial vehicles. Through its Securlog brand the company caters to the mid and long haul brands while also offering static and mobile security services via FIST Security and Sky Guards.

It further distinguishes itself through its LogiServe platform, which provides asset tracking and fleet management solutions. SLGL’s credentials are underscored by its A+ credit rating from PACRA and partnerships with global players like Maersk.

This newly formed logistics company now combines extensive national infrastructure with cutting-edge technology, offering services that span long-haul freight, lastmile delivery, warehousing, security, and real-time asset tracking, completing the 4PL loop, giving complete over supply chain to SLGTrax.

What led to the merger?

Over the last 11 years, Trax Online became one of the most visible names in Pakistan’s eCommerce delivery boom, synonymous with service quality and a very good corporate culture. Starting as a small startup, it grew into a company touching Rs10 billion in annual revenue at its peak, Hassan Khan, the co-founder of Trax said.

By 2024, Trax came under pressure due to the overall economic downturn and the funding drydown and looked for opportunities to consolidate. It completed the merger with Secure Logistics Group which saw strong synergies with Trax Online especially on the technology side of Trax’s business.

Group CEO Gulraiz Khan believes that the future of logistics is technology-based and Trax had strong technology. “What we were doing was static legacy industrial logistics. When you merge Trax, we are going into technology based logistics. One of the segments that we want to increase is warehousing and last mile logistics that Trax used to do.”

The legal process was by a Scheme of Amalgamation following completion of which Trax Online became a 100% subsidiary of SLG. As part of the merger structure, Trax Global holds roughly 28% of SLGTrax.

The total shares of the publicly listed SLGTrax are 417 million. Assuming 28% shareholding of Trax in SLG, around 116.7 million shares form Trax’s shareholding. At the recent share price of Rs22, Trax’s implied valuation comes to Rs2.5 billion rupees or almost $9 million.

As part of the merger strategy, SLGTrax also secured a separate round of funding, raising and deploying $4 million to drive technology growth, regional expansion and enhancing service offerings. This capital raise stands apart from the previous funding obtained by Trax in 2023 and is specifically tied to scaling the newly combined business.

The shareholder base reflects the global aspirations of the company, featuring prominent international institutional investors such as the Saudi Bugshan Group, Karandaaz Pakistan (a development finance initiative supported by the UK’s DFID and the Bill & Melinda Gates Foundation), and Tricap Investments, a Dubai-based firm backed by Middle Eastern investors. The governance and compliance structure of the new entity is significantly bolstered by these shareholders, alongside its publicly listed status.

The merger is projected to result in annual savings of approximately Rs600 million for the combined entity.

The big sponsors on its roster including

the Saudi Arabia-based Bugshan family give it an edge over others. The Bugshan family has a vast business empire encompassing manufacturing, logistics, distribution and power. If SLG and by extension Trax plan to enter the Middle East market, they will be able to establish themselves with ease because of the backing of such a big group, unlike a solo Pakistani logistics startup whose Middle Eastern could prove to be a shot in the dark.

What is 4PL about?

Trax is now legally integrated into Secure Logistics Group that has been piecing together a multi-vertical logistics platform. A multi-vertical platform has distinct businesses catering to different industries all combined into a single platform.

The strategy is clear. SLG has been building across verticals: long-haul trucking, fleet management, courier, warehousing, IT solutions, and even embedded security services. By bringing Trax into the fold, the group adds a strong eCommerce courier capability to that stack.

This integration is not cosmetic of course. SLG wanted more integration, dedicated vendors, owned fleet, in-house operations, and embedded security. In Pakistan’s fragmented logistics landscape, each handoff between trucking, warehousing, last-mile, and cash reconciliation is a potential failure point. SLG’s bet is that by owning the entire stack, it can reduce leaks, delays, and fraud, while offering merchants tighter control of their supply chains.

The stakes are enormous. Pakistan’s eCommerce economy is valued between $5-8 billion in 2025, with growth projected at a double-digit CAGR through 2027. But cash on delivery (COD) still dominates, with roughly 90% of online purchases paid at the doorstep. That means couriers are not just delivery companies, they are payments companies on wheels. Every failed delivery, delayed settlement, or incident of rider misconduct directly hits merchants’ cash flow and consumer trust.

SLGTrax now comes with a pitch of operational reliability because of their 4PL model and abundant cash. This will result in fewer failed deliveries, tighter cash cycles, and a better doorstep experience.

How exactly? The concept of fourth-party Logistics, or 4PL, goes beyond traditional third-party logistics (3PL). Under the 4PL model, a company provides complete supply chain management. Under this model, Secure Logistics doesn’t merely handle warehousing and transportation, it integrates strategy, planning, technology, and vendor management across the entire supply chain because it controls almost every part of the supply chain,

all in-house.

This level of integration enables complete real-time visibility, operational efficiency, and scalability that are difficult to achieve with fragmented service providers. This includes long-and medium-haul delivery, last-mile eCommerce fulfillment, warehouse management, and IoT-powered tracking. Unlike other market players, SLGTrax is not reliant on external vendors for core services, making it a self-sufficient logistics operator in the country and controller of all the experience and service in the supply chain. This control over the supply chain allows them to convert customers that are not satisfied with other logistics service providers such as PostEx.

Moreover, the company is in the process of launching LogiServe as a Non-Banking Finance Company (NBFC). This move is particularly relevant in Pakistan’s eCommerce landscape, where over 90 per cent of transactions rely on cash-on-delivery, leading to liquidity bottlenecks for merchants. The NBFC will offer financial services such as invoice financing, working capital loans, and digital payment solutions integrated directly with logistics operations to unlock growth for small and medium-sized merchants.

Through the NBFC, SLGTrax will provide short-term credit, invoice discounting, and digital payment solutions by leveraging COD flows and merchant data to help SMEs, freelancers, and resellers overcome cash flow delays of 15–25 days caused by Pakistan’s cash-heavy eCommerce model. By integrating lending with SLG-Trax’s logistics network, LogiServe bridges the financing gap left by traditional banks and drives growth in the e-commerce ecosystem.

The license puts SLGTrax to efficiently compete with PostEx’s invoice factoring offering. PostEx’s invoice factoring offering has been a major driver of its growth since the company’s inception.

Globally, companies like DHL and UPS have developed similar 4PL capabilities, offering end-to-end logistics management given better ability of strategic management and enhanced use of technology. SLGTrax aims to extend its offering across the region as well.

SLGTrax has undergone a significant organizational transformation to prepare for its next phase of growth. A new leadership structure has been put in place to ensure strategic alignment and operational efficiency. Gulraiz Khan, the CEO of SLG now serves as the Group CEO.

Trax co-founder Hassan Khan has been appointed Group Deputy CEO, managing eCommerce, logistics, and warehousing. Additionally, Trax board members Asad Abdullah and Ayaz Abdullah are responsible for financial governance and investor relations. n

New digital news platform lays off 37 new employees before lunch break on first day

By Profit

Merely hours into the first day of the new digital media startup Haashia were 37 employees laid off in an attempt to cut costs.

“We were looking at the books and nothing seemed to add up in this environment of media economics,” said Sahoor Zaidi, Chief Financial Officer at Haashia, speaking to reporters, two of whom were amongst the fired 37.

“Why didn’t we do this calculation from earlier on, before hiring, and even poaching people from other media organisations, you ask? Well, I did. And I also clearly said as much to the management

at just about every opportunity I got,” he said, responding to a question. “But they just kept saying I didn’t have any ‘vision’, whatever that meant.”

News publications the world over have faced a crisis as print advertising has shifted online, where it can find much cheaper, and more effective options.

“Other than niche, specialised outlets, there really isn’t much space for online ads in the general news segment,” said Haider Khan, over at the Centre for Excellence in Journalism at Quaid-e-Azam University. “I mean yes, there might be legacy brands in the general news section that could carry on, but not new setups.”

The government has responded to the news with empathy and information minister Attaullah Tarar has said that though the Ministry of Information and Broadcasting would not be able to get the fired journalists jobs, they would nevertheless buy them the lunch that they will have when they have been fired.

When contacted, the CEO and Chief Editor of the publication, Ismail Bhatti said that this was only a minor hiccup in the trajectory of what is a solid company.

“I assure you things are well settled, and our books are balanced and all our employees are in the clear for at least a couple of more days,” he said.