Profit E-Magazine Issue 376 by Pakistan Today

Millions on the line: inside

MedIQ’s largest private AI investment in Pakistan’s health sector

Macter gaining market share, and diversifying into cosmetics

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The formalized leverage market protecting from a contagion

The lessons from past crisis are providing the guard rails against future instability

By Zain Naeem

The recent stock market rally is eerily echoing the performances of the past. The fact that the market has increased more than three folds in less than 3 years is something to be marvelled at. The reasons behind the increase can long be debated and talked about. Whether it was the falling interest rates, the stable currency or the fact that the market had stayed undervalued for so long. The final conclusion could be that it was a mix of all these factors coming together.

The catch is that this is not the first time such a rally has been seen.

While the market reaches new highs, there is a sense of certainty and security that is seen in the market. The older players of the market feel that the crisis and market crashes of yesteryear have helped the system build guard rails for itself. With the help of National Clearing Company of Pakistan and Securities and Exchange Commission of Pakistan, there were many steps taken to protect from future catastrophes. One such measure was the establishment of the Margin Trading System (MTS).

In the wake of the 2005 stock market crisis, in house badla was seen as the major culprit for the crash taking place. So what exactly was in house badla and how did it wreak havoc? And more importantly, what was done to protect the market?

What happened in 2005?

To get a sense of what was going on in the market in 2005, we have to take a long walk down memory lane. After the US initiated its war on terror in 2001, there were many positive developments in Pakistan’s stock market. Economic indicators were on the up and up and the results were being seen on the Karachi stock exchange which was the primary stock market in the country. Foreign exchange reserves were increasing, interest rates were low, the banking sector was expanding rapidly, remittances were on the rise and the government was looking to privatize many of its state owned enterprises. Based on these developments, the investor sentiment was strong and optimistic and the stock market was the most attractive avenue for investment.

The bull run started in 2002 when the market rose from 1,500 points in 2002 to 10,300 points by March of 2005. This was an increase of almost seven folds. Comparing the market rise of today seems miniscule in comparison. In addition to the index increasing, the daily volumes were also touching all time highs. With the prices and volumes increasing, the market capitalization of many of the companies increased manifolds. The media was touting the market as the best performing stock exchange in Asia based on the increase.

As the index was increasing and returns were multiplying, the market was ripe for speculators to enter. With no end in sight of the bull run, there was an expectation that the music would never stop and the party could go on forever. This feedback loop was further reinforced by the fact that there was easy credit available for the speculators. This proved to be an upward spiral as speculation would fuel the market run which would further increase the speculation in the market as well.

The source of this easy credit was called in-house badla. This allowed investors to buy large amounts of shares based on borrowing at cheap rates from lenders. In-house badla was a market in which lenders were willing to lend funds to borrowers who could leverage their position by buying a large quantity of shares while investing a portion of this investment. The wisdom behind this buying was that, as the market would keep increasing, any profit earned by the trade would be more than enough to cover the cost of borrowing.

Another aspect which was fueled by this kind of borrowing was that lenders could move funds towards shares that they wanted to manipulate. For example, a lender would allow a borrower to borrow at a lower rate if the buying was going to be carried out in a stock of their interest. This allowed them to influence the price in their favour.

The biggest problem of this lending system was that it was informal and was maintained off the books. In many cases, the regulators and even the market participants had little to no knowledge in regards to the size of the leverage market. What this meant was that people would see the performance of the stock exchange and marvel at the increase rather than knowing that the exchange was becoming more and more fragile by the day.

With the system being supercharged by speculators and higher market prices, the fundamentals of the market started to lag

behind the valuations and a bubble was being created. With little in the way of oversight and regulation, the badla market kept growing in size with the influence of the market being monopolized by a chosen few. The reality was going to hit the market and hit it hard.

With market prices and badla volumes becoming unsustainable, the share prices started to fall and led to a cascading effect. The thing with leverage is that it works very well when the asset prices are increasing. The profits are being earned and they are more than enough to cover the costs. Even the collateral being used to take on a bigger position is also increasing in value in conjunction with the share price. The downside of leverage hits when the share prices start to fall.

And that is what happened in March of 2005 when the KSE-100 index crashed from 10,300 to below 7,700 points. When share prices start to fall in a leveraged market, the issues start to grow exponentially. The fall in price has to be covered by the investor while they still have to pay the cost of borrowing. As the collateral losses value, they have to put up more assets to cover their borrowing. As the losses start to accumulate, liquidation of the position has to be carried out at discounted rates which further depletes the value of the share and its collateral.

The upward spiral is followed by a more vicious and dangerous downward cycle as shares keep plummeting and there is no stop to where they will go. Soon the contagion starts to hit the lenders who had lent the funds in the first place as the lack of liquidity threatens their survival. With the lenders failing to make their payments, the domino effect takes the whole system down with itself as the default bleeds from one lender to the next.

Enter the devil

So how did in-house badla make things worse? As already stated, the fall in the market would be problematic in any situation. The problem that was posed by the badla market was that it was unofficial and off the books so there was no record as to how large the market had become. As there was no official way of documenting these transactions, the lenders could set the terms and change the terms as they wished.

As the market started to fall, the lenders started to fear for the money they had lent and started to call these loans back. This created

a panic in the market as borrowers could do little. They could not sell their holdings to free up the funds as the market was falling. This led to the market free falling. As lenders had kept some security and collateral against the borrowings, they started to sell these pledged shares as well in order to recover any value they could. All these factors combined to accelerate the crash further and further.

In the aftermath of the crisis, it was seen that many of the lenders or brokers ended up defaulting on their commitments. Others were able to use the rally to make large gains driving up prices and then exiting the market leaving the smaller investors to suffer huge losses.

SECP set up an inquiry commission under Justice Saleem Akhtar who submitted a report on the causes of the crisis. The commission stated that the in-house badla was the main reason as it turned the exchange into a casino which was run by the powerful brokers. And just like a casino, the brokerage houses always won. It also alleged that there was a conflict of interest between the brokers and the board of directors of the Karachi Stock Exchange as they controlled many of the seats of the directors as well.

Establishment of MTS

One of the solutions that was put forward by the commission was to establish a Margin Trading System (MTS) in place of the in-house badla. It is impossible for the stock market to function without leverage. In certain products like future markets, leverage is actually baked into the product. In face of this, it was felt that rather than having an informal system off the books, there was a need to have a more formalized manner to allow for leverage based trading to be carried out.

Leverage is helpful as it enhances market depth, liquidity and allows for greater investor participation to be carried out. Margin Trading allows an investor to buy securities by paying for a portion of his total investment and borrowing the rest from a financier. This financier can be a bank, a brokerage house or even a mutual fund which is allowed to lend to investors. The investor is able to enjoy a greater purchasing power leading to an increase in the activity in the market. The downside, however, is that there is added risk as the exposure of the investor is greater to any fall in the price.

The mechanics of the system are quite simple. An investor buys a security that is declared eligible by the NCCPL under the eligibility criteria that is set by them. This makes sure that investment is not being carried out in a stock which has weak fundamentals. The investor only has to put up the funds for 15% of the value of his purchase which means that they can multiply their holding by almost

6 times their investment. The remainder is provided by the financier or the lender in this case. The upside for the lender is that they get to earn a mark up for the lending carried out.

In order to make sure that proper accounting of all the transactions is maintained, the NCCPL has developed a system through which the transactions are executed on a daily basis. Just like regular trading terminals, a terminal can be accessed by borrowers and lenders who are willing to borrow or lend respectively.

In order to make this system secure, only certain eligible securities are allowed to be traded on the system to make sure that the securities are of the highest quality and have a strong track record behind them. To control the size of the market, a cap of 20% of free float is kept which means that no more than 20% of the free float of a share can be traded cumulatively.

In order to protect the lenders and borrowers from any credit risk, cash margin requirements are maintained and adhered to by NCCPL which makes sure that any sudden rise or fall in the market price of the share is protected and these margins are adjusted accordingly to make sure there is ample collateral against the borrowing carried out. In case a share price falls, the borrower has to bring back the margins back to the required levels on a daily basis.

To not let the funding dry up, the lenders are mandated to provide the funds for a period of 60 days or two months. At an interval of every 15 days, 25% of his lending is released which means they can get back their lent funds in a timely manner. They can choose to lend these funds again if they choose so. The borrower is also protected as they have a period of 60 days before all of their funds are taken away from one lender. This allows them the flexibility and ability to use the funds for at least 15 days and then choose to borrow from a new lender if they are being given better terms.

In terms of regulations, the SECP has

also enacted rules such as the Securities (Leveraged Markets and Pledging) Rules, 2011 which cover margin trading systems and other aspects of securities lending and borrowing.

Same same but different

The fruits of the new measures can already be seen now. Just like in 2001, interest rates are declining, foreign reserves are stable, remittances are on the rise and there is another privatization drive being carried out. Just like the run up to 2005 crisis, the index has been increasing steadily on a monthly basis with no end in sight. However, the biggest difference is that there is no chance of a shock that can be carried out ala 2005.

The MTS system has been deployed in order to make sure the withdrawal of funds by one financier cannot jeopardize the whole leverage market system. The mechanisms that have been built make sure that there is ample liquidity in the system which cannot dry up in a matter of days. This sense of security makes sure that all market participants are sure that they will have easy access to funds on a consistent basis and there is trust that has been integrated.

The recent market rally seems to be going past new historical thresholds on a daily basis and there are expectations that the index could reach 200,000 points in the next few months. The stock market crashes of 2000, 2005 and 2008 have scared older investors who are skeptical of the way the index is increasing on a daily basis. Their skepticism is justified to the extent that the carnage they saw with their own eyes is difficult to forget. For them to fathom such an increase on the back of little change in the fundamentals of the economy can be rationalized to some extent. What they fail to realize, however, is that the guard rails that have been placed are designed to withstand the rigours of the new normal. n

Post-mortem report: ChemicalImperial Industries

Who is buying Lotte Chemicals?

The sale of Lotte marks the last vestiges of the Imperial Chemical Industries (ICI), and another multinational exit from Pakistan. But this one is a little different

By Abdullah Niazi

Among the many legacies left by the British in India was a vast tapestry of corporations that had set up shop in the subcontinent. In Pakistan, no single company represented the heights of colonial corporate ambitions more than Imperial Chemicals Industries (ICI).

For more than half a century after the partition of 1947, the ICI name dominated corporate circles in Pakistan. ICI attracted the best talent, set standards across industries, and their products from paints to plastics were highly sought after. But the past 20 years have seen the company go from one of the largest multinational conglomerates in the country to a bevy of smaller companies that have been bought and sold twice over. The brand name ICI has also all but finished, existing only as a small watermark on Dulux paint boxes.

Lotte Chemicals was once a small part of the Gargantua that was ICI. It was such a small part that it was only one division of ICI’s presence in Pakistan, which in itself was a small slice of the company’s global business empire. Over the past week, official confirmation came through that Lotte’s South Korean sponsors had sold a 75% stake in the company to a Dubai based joint venture between Montage Oil and AsiaPak Investments. Montage is a longtime oil broker in the UAE of Pakistani origin with liquid storage facilities in Sharjah, Karachi, Lahore, Ho Chi Minh City, and Qingdao. They also have dry storages in Vietnam and the UAE. While Montage has generally kept a low profile, AsiaPak is headed by Shaheryar Chishty, a former banker who has made a habit of pursuing orphan investments and has turned AsiPak into an investment vehicle with stakes in Thar Coal and the majority shares in K-Electric. He is also the owner of Daewoo Bus Service in Pakistan.

The deal went through for $69 million, or around Rs 17 per share of the publicly listed company. Lotte’s share price the day the deal was announced was Rs 27.75, which would indicate that the South Koreans are selling it at a discount. The negotiations for the deal have been going on since February, and the lowest share price for Lotte in the past year has been Rs 16.71 in May 2025. This is starkly different from the sale of

a different limb of ICI in 2012, when the Lucky Group bought a 75% stake in ICI Pakistan’s chemical business for $152 million at a premium of 29.7%. What makes this deal even more interesting is the fact that the Lucky Group had actually signed a share purchase agreement with Lotte back in 2023 to buy this same 75% stake in the plastics company for a significantly higher Rs 31.29 per share.

This indicates that Lotte South Korea wanted a quick exit from their plastics business in Pakistan. Given how the company had to shut its plant down twice in 2023 and the continuing difficulty of doing business in Pakistan for global players, the rush makes sense. What makes this ‘exit’ a little different, however, is that it is not a complete divestment. Lotte has dropped out of their main business but have kept some of the other businesses they had acquired in Pakistan in the past decade including a bottling company and Kolson Foods.

The only question that remains is what is left of ICI, and how do these separate entities plan on doing business in a country where it is becoming increasingly difficult for both domestic and international players.

The ICI story

The story of ICI is one of grand ambitions. Formed in 1926 as a result of the merger of four of Britain’s leading chemical companies, ICI launched in what is now Pakistan in 1944. It began by the name of the Khewra Soda Ash Company, which was a subsidiary of ICI in England.

Soda Ash was the precursor to several industrial chemicals. After 1947, ICI incorporated its Pakistan assets under Khewra Soda Ash Company Ltd, which was set up in 1952, and in 1966 the company was renamed ICI Pakistan. At least one ICI subsidiary has been listed on the Karachi Stock Exchange since July 1957.

The post-Nationalisation era under Bhutto was fraught with fears. Many Pakistani businesses shifted focus to trading as investors lost confidence to set up manufacturing facilities in the country. However, ICI continued to thrive with the backing of its international parent. Also, for those who grew up in the 80 and 90s especially, it will be remembered that ICI was the main source of human capital development. Alongside CitiBank, ICI was the em-

ployer of choice for educated Pakistanis. Asif Jooma, CEO of ICI, while addressing the Leaders at LUMS conference in 2018 stated, “ICI was a significant leader feeder for the economy and it continues to be. If you do a quick scan of the corporate landscape of Pakistan, you would invariably find people that have in some shape or form been associated with ICI during their careers.”

The company did so well during those years that back in 1995, its international parent, ICI PLC, made its largest ever overseas investment in Pakistan, to set up a manufacturing facility of Pure Terephthalic Acid (PTA) at Port Qasim.

This PTA plant at Port Qasim is where our story begins. By setting it up, ICI had entered three distinct but related segments in Pakistan. There was the original business of soda ash and chemicals, there was their paints business with ICI paints being the go to brand for Pakistanis, and finally there was now the PTA business at Port Qasim. PTA is one of the primary raw materials used in the production of polyethylene terephthalate, or PET resin. This resin is used in two ways: first, to make PET bottles, which are plastic bottles used for packaging various liquids such as water, carbonated drinks, juices, sauces and oils. Second, it is used to manufacture polyester fibres, which can be further processed to create polyester staple fibre, or PSF. PSF is used in

textiles, cushioning material, carpets, and non-woven fabrics.

With these three verticals aligned, ICI continued to dominate Pakistan’s corporate sector.

Then international winds of change turned the entire company around in Pakistan. In 2008, Dutch paints and chemicals giant AkzoNobel bought out the global parent company of ICI, and ICI Pakistan became part of the global AkzoNobel umbrella. When AkzoNobel came to Pakistan, they decided as part of a broader global strategy to focus on paints more than on the chemicals business. Akzo decided to split up the business.

In 2009, they sold the PTA business to Lotte Chemicals of South Korea. Lotte was a major player in plastic resin in South Korea and had made a name for itself in the industry after originally starting as a confectionary company in 1967. Over the next two years, Lotte invested $800 million into Pakistan as Foreign Direct Investment (FDI) and also installed a 40MW captive power plant for their facility.

In 2010, Akzo pursued a demerger, splitting ICI into two new companies. The paints division became AkzoNobel Pakistan and the remaining chemicals business became ICI Pakistan.

This new entity by the name of ICI Pakistan immediately went on the market for sale and was bought by the Yunus Brother Groups,

the group run by the Tabba family that owns Lucky Cement. The Lucky Group bought a 75% share in ICI Pakistan for $152 million at a premium of nearly 30%, showing how coveted the business was.

In this way, by 2012, ICI’s holdings in Pakistan had been split between three players. AkzoNobel retained the paint business. Lotte Chemicals was running the PTA business out of Port Qasim. The Tabbas were running ICI Pakistan’s chemicals business. The British conglomerate was now owned by a Dutch entity, a South Korean entity, and a domestic player.

In the past month, however, both the Dutch and the South Korean shareholders of what was once ICI have left and are being replaced by large, seasoned, domestic buyers. But that is exactly what they are — domestic players.

What happened to Lotte chemicals?

Afew weeks ago, Profit covered the rise and fall of AkzoNobel in Pakistan, and gave some piece of advice to Syed Babar Ali: do not buy AkzoNovel paints. The company did not fare well in Pakistan, and over time a darker side of the paints business emerged that a multinational company found it difficult to operate in.

For Lotte Chemicals, the story is a little

different. Unlike AkzoNobel, which was operating in a field of many local competitors, Lotte was the sole domestic producer of PTA in Pakistan. The plant at Port Qasim has the capacity to produce 520,000 tonnes of PTA annually. Which is just as well, as Pakistan’s total demand for PTA stands at roughly 700,000 tons annually. The remaining 200,000 tons of PTA is imported. That means Lotte Chemical’s market share domestically is 100%, while its overall market share stands at around 70%.

As expected of a sole producer, Lotte Chemicals’s revenues have generally increased. The only times revenue declined were during the period 2014-2015 and in 2020, due to Covid-19.

In 2014, a 16% drop in revenues occurred, mainly due to lower PTA prices. The reduced PTA margin against PX, higher energy costs, coupled with inventory losses due a drop in price of PTA at year-end, led to a decreased overall profit margin. Moreover, the company had to bore outward freight charges as export sales increased, resulting in increased distribution and selling expenses. Consequently, the company’s net loss doubled to Rs 1,100 million as compared to Rs 498 million in the previous year.

The year 2015 again brought challenging conditions for the local polyester industry due to increased taxation, higher energy costs, and reduced textile exports. This strained PSF producers who were facing tough price competition from inexpensive imports, particularly from China. Moreover, the PET industry saw reduced demand due to bottle industries adopting cost-cutting measures with lighter bottles. All of this culminated into a 3% decrease in sales volume for Lotte Chemicals, as compared to 2014.

However, at the end of 2015, the domestic PSF industry successfully levied duties on Chinese PSF producers, which contributed to Lotte Chemicals’ turnaround in 2016. That year, the anti-dumping duties and better boosted Pakistan’s domestic polyester industry. Consequently, there was a notable 15% surge in PTA demand, leading Lotte Chemicals to attain an unprecedented domestic sales

record of 492,192 tonnes.

Over the next few years, Lotte Chemicals witnessed a steady rise in revenue, barring a substantial 36% decline in 2020 attributed to global lockdowns that affected PTA demand. Consequently, the company underwent a 54day plant shutdown, causing a 14% reduction in production and a 12% decrease in sales volumes. The gross profit margin tumbled to 6.8%, while the net profit margin plummeted to around 5% in 2020.

However, the gloom was fleeting as 2021 heralded resurgence for Lotte Chemicals, fueled by heightened demand and improved prices. That resulted in a remarkable 72% surge in revenue, and an impressive 11% gross profit margin in 2021.

Despite the improvement in revenues and margins noted in the 2022 annual report for Lotte Chemicals, heightened inflation significantly impacted consumer behavior. This resulted in a decrease in consumer spending, with individuals prioritizing essential goods over luxury items such as textiles. Consequently, domestic demand for PTA in 2022 declined by 6% compared to the previous year.

And then 2023 happened. The textile industry was hit by the double setbacks of dwindling exports and operational setbacks. The initial nine months of the year witnessed a stark decline in textile exports compared to the previous year. This downturn forced several companies to either temporarily shut down or scale back their operations. Notably, textile industry entities like Shahzad Textile Mills Limited and Elahi Cotton Mills Limited announced temporary closures in October alone, mirroring the industry’s distress.

Lotte Chemicals had to suspend plant operations for the second time in nearly seven months, due to declining demand in the downstream industry.

Just like the textile industry, demand within the PET industry has also declined. According to a PACRA rating report of Pakistan Synthetics Limited (a player in the PET industry), the tough economic environment has reduced the purchasing power of the con-

sumer and had a negative impact on the food and beverage segment.

This was not a Lotte specific problem. The economic conditions of the time meant the chemicals industry as a whole was struggling. Other chemical companies were also grappling with plant shutdowns in 2023. Take for example Sitara Peroxide Limited (Sitara Peroxide), which also suspended plant operations twice in 2023. Lotte was sitting in the same boat as all these other companies, the economic storm was threatening to envelop all of them.

The dream of ICI as it once was?

Lotte wanted out. There was a lot going on at the time for the company globally as well. According to one industry insider at Lotte, the South Korean company was facing a massive challenge from China, which had invested heavily in the PTA industry and was crushing the South Koreans by cutting costs.

At the time, Lotte decided it was going to divest from its PTA business in Pakistan. This was not to be a complete exit. According to one industry source, Lotte only wanted to get out of the plastics business and retain its bottling business which they bought around 2017 called Riaz Bottlers. They were also not going to sell Kollson Foods which they had purchased around the same time.

Almost immediately, interest was shown by three different players to buy Lotte Chemicals. The first company was Gatson Novatex. It made sense for Gatson to buy it because they have been Lotte’s biggest customers. Novtex buys nearly a third of Lotte’s resin and turns it into plastic products. On top of this, Lotte already had a 9% stake in Novatex. The second contender was a joint venture between Montage Commodities and AsiaPak. This JV has now struck a deal with them, but there was another contender: the Tabba Group.

“There was a sense of nostalgia around this sale,” says one person close to the original deal. “The Lucky Group had bought ICI Pakistan, the chemicals business, from AkzoNobel in 2012 at a premium. Back then as well the Tabba family had this feeling that owning the

ICI was a big achievement and that is why they paid so much for it. Now, if they were able to acquire the PTA business as well, they would be consolidating and rejoining two broken parts of what was once the mighty ICI” they explain.

The Lucky Group made an offer at an estimated price of Rs31.29 per share, translating into a total transaction volume of Rs35.5 billion. This was going to be a very good deal and once again Lucky would be paying a premium. The deal was approved happily by the South Koreans and work began on finalising the agreement between the two entities.

But then came a snag. This agreement was made in January 2022. At the time, Lotte Chemicals had not been struggling particularly, but because of international pressures from China they were looking to divest from Pakistan and shore up their cash reserves as well as avoid any liabilities in a market that isn’t always stable. But during 2023 came both plant shut downs and the downturn that we mentioned earlier. Not only this, but costs were rising as well. An increase of gas prices by Sui Southern further hurt the abilities of Lotte to be profitable. Lucky wanted to negotiate the price down. At the time, according to sources, Lotte was willing to play ball but it seemed the price being quoted was too low. Lotte also backed down and the deal fell through.

Enter the JV

One can only imagine what would have happened if the sale had gone through and Lucky had bought Lotte by the start of 2024. The deal, as Profit has been told, finally fell through in January 2024 a year after it had been made. Earlier this year, AkzoNobel announced it was selling and the Packages Group had expressed interest in acquiring it. Had the Lucky Group managed to buy Lotte, one imagines they would have been top bidders for AkzoNobel paints as well, an acquisition that would have reunified the old ICI.

But it did not take long for the deal to

fall through before the joint venture between Montage and AsiaPak stepped up to the plate. In November 2024, they began negotiations to acquire Lotte Chemicals. In the past couple of years, Lotte Chemicals has seen a bit of a reversal in their financial fortunes. The company has remained financially profitable, and the difficult period of 2022-23 also saw a small revival in 2024, as indicated in the graphs that are in this story.

By February 2025, the negotiations were almost finalised. By July 2025, Montage and AsiaPak joined hands to create PTA Global Holdings Limited — a Dubai based company that would buy Lotte Chemical’s stake. The price quoted for the 75% acquisition was $69 million, which equates to a share price of around Rs 17. The deal is a steal for PTA Global which now owns what is the only PTA manufacturer in Pakistan. But what do they plan on doing with this company?

In conversation with Profit, Shaheryar Chishty said the sale came because of typical Pakistani problems. “In the 2022-23 economic crisis, everyone was having problems with working capital and with LCs. This put a dent in cash flows and the international situation was such that the opportunity presented itself to us.”

“Lotte Chemicals actually used to be a client of mine when I was a banker. I approached them again and we began negotiations,” he explains. Chishty has experience working in South Korea in the past as well, and also bought Daewoo Bus Service from South Koreans who used to be his clients. Over the years, he has made a habit of acquiring what he calls orphans assets and turning them around. “What we need to keep in mind is that this is not an ‘exit’ from Pakistan like we’ve seen with other multinationals. Lotte had other business interests in Pakistan including bottling and foods which they have not sold.”

Chishty, of course, would know a thing or two about how difficult it is to do business in Pakistan. Back in 2022, he used AsiaPak Investments to buy a majority share in K-Electric. Despite what is a clear majority, resistance

from different quarters and languishing legal battles have meant his company has not been given control of KE, a frustrating situation for all involved, including the people of Karachi who continue to suffer the from the board room battles because of the lack of direction and initiative in the company’s existing management.

In Lotte Chemicals they have found a company that is publicly owned, has a massive market advantage in that they are the only player, and there are avenues for profitability. For Chishty, the goal is once again the synergies he can find with his other investments. When he bought KE the idea was to synergise it with Thar Coal, where he has investments. With Lotte as well, he wants to eventually go in a direction that brings Thar Coal into the picture. “I do believe Thar Coal has the answers for so many of Pakistan’s problems, and I want to explore the potential of coal to chemicals now that we are involved in this business as well.”

The sale of Lotte Chemicals marks a bittersweet moment for Pakistan. On the one hand, it means that what was once ICI, a grand old imperial company, is now entirely in the hands of Pakistanis. But not only has it taken time to get here, it has involved exits and divisions.

There are two words in Urdu that can be used to describe the act of division. The first is taqseem. Of Arabic origin, it is a politer word that indicates a fair distribution of some sort. The other word is of Hindi origin: Batwara. It denotes something far more visceral. It is a violent sundering of something whole, a selfish decimation.

It is perhaps why Pakistani histories of the partition refer to the events as Taqseeme-Hind, and the language used by the Indian National Congress at the time of partition referred to Jinnah’s plan as Hindustan ka Batwara. It is also why the word batwara continues to be used in a negative connotation in discussions of inheritance.

The sale of Lotte Chemicals raises a similar question: was this taqseem or the dreaded batwara? n

Millions on the line: inside startup MedIQ’s largest private AI investment in Pakistan’s health sector

By Taimoor Hassan

MedIQ, one of Pakistan’s recognized digital health platforms, has now positioned itself at the forefront of the country’s artificial intelligence revolution. With a multi-million-dollar investment into in-house AI development, the company is transforming its operations from traditional telemedicine into a data-driven healthcare system provider.

This move doesn’t just represents technological advancement, it marks a strategic shift toward building one of Pakistan’s first large-scale, healthcare-specific AI infrastructure, trained on local medical realities.

The company’s new AI engine automates the entire clinical workflow. From multilingual pre-consultation triage to real-time medical note taking during appointments and even post-consultation patient management, MedIQ’s system guides patients as well as practitioners through every step of their healthcare journey.

For hospitals, the impact is immediate: time spent on documentation drops and patient throughput increases. For Pakistan’s overburdened healthcare system where clinicians often see dozens of patients per shift, AI-driven efficiency is not just convenient, it’s essential to ease that burden.

What sets MedIQ apart is its commitment to building its AI locally rather than

relying on foreign models, which is trained on millions of Pakistani patient records and tested widely before full scale deployment. Backed by strong investor confidence and fresh profitability in the Saudi market, MedIQ’s strategic bet on AI positions it as one of the most ambitious players in Pakistan’s digital health ecosystem. Its investment in AI also puts MedIQ ahead of the competition: where others like OlaDoc and Sehat Kahani are taking it slow and sticking to teleconsultations and appointment bookings, MedIQ is moving fast, expanding in other markets, achieving profitability, testing new bets and driving innovation. In short, MedIQ is behaving like an innovative tech-first startup.

AI in Pakistan’s healthcare

Artificial intelligence is moving beyond the stage of hype and beginning to establish itself as a practical force in Pakistan’s healthcare system. Hospitals are gradually adopting AI driven technologies while telehealth services continue to expand their reach. Patients are already noticing tangible improvements in areas such as faster diagnostics, smoother procedures and more responsive care. Still, the technology is not a cure all. The human connection, empathy and clinical judgment that define medical practice remain irreplaceable. Recent collaborations between private innovators and government health programmes highlight both

the opportunities this shift can unlock and the caution that must guide its adoption.

In Pakistan’s urban hospitals and research centers, artificial intelligence has already begun to reshape the way diagnoses are made. Radiology departments that employ algorithms to scan X rays, CT images and MRIs are able to identify potential illnesses earlier than traditional methods allowed. This not only accelerates the diagnostic process but also eases the anxiety patients often feel while waiting for results.

The reach of AI expanded further during the COVID-19 pandemic, when telemedicine became a lifeline for many. Digital platforms equipped with AI powered chatbots and virtual triage systems provided guidance for patients who could not easily travel to major cities. These tools helped reduce delays, clarified referrals, and ensured more consistent follow up. Patients who used such services frequently reported greater satisfaction with their care, citing smoother access and clearer communication.

Evidence of this improvement has also been documented. A study published in the Journal of the Pakistan Medical Association concluded that AI and machine learning systems significantly reduced waiting times in large hospitals, which in turn strengthened patient trust. According to the findings, the simple act of shortening delays improved perceptions of quality and confidence in healthcare providers.

Professor Dr Asghar Naqi, principal

of Allama Iqbal Medical College and Jinnah Hospital in Lahore has expressed cautious optimism about the role of artificial intelligence in healthcare. He notes that medical imaging supported by AI algorithms can analyze X rays, MRIs and CT scans to detect abnormalities such as tumors, fractures or cardiovascular problems with greater accuracy and efficiency than traditional methods. According to him, this ability allows for earlier diagnosis and treatment, potentially saving lives. At the same time, he warns that these systems cannot replace human judgement, since every algorithm is ultimately built on human experience and clinical insight.

In Karachi, Dr Saleem Sayani, Director of the Technology Innovation Support Centre at Aga Khan University, has described AI as a transformative force for healthcare delivery. He highlights that these tools do more than assist in diagnostics as they also help process large volumes of medical data, strengthen predictive analytics and make treatment plans more personalized. Yet Dr Sayani emphasizes that ethical, legal and social considerations are critical. Without strong regulations and oversight, he cautions the speed of adoption could outpace the safeguards needed to protect patients.

Dr Imtiaz Ahmed, a specialist in microbiology and genetics has also spoken about the promise of AI in areas where medical staff are scarce. He argues that AI enabled diagnostic centers could play an important role in meeting growing healthcare demands in underserved regions. However, he acknowledges that technology alone is not enough. Persistent gaps in infrastructure, weak regulation and patient concerns about data privacy remain serious challenges that must be addressed if AI is to deliver its full benefits.

MedIQ sees the opportunity here: AI is essential and inevitable. It has taken the first leap into this, making a significant investment into creating and deploying AI solutions for Pakistan’s healthcare. Though MedIQ is not the only one eyeing AI in healthcare. Pakistan’s healthcare sector has foreign interest from California-based MindHYVE.ai which has committed to invest $22.5 million in Pakistan. MedIQ is ahead of the curve though, having made the investment already, testing and learning ahead of others.

MedIQ’s multi million dollar investment in AI

In most clinics and hospitals, the workflows are broken. Physicians spend a large portion of their time writing notes, updating electronic medical records and rewriting queries for insurers. Hospitals lose productivity. Patients lose quality time. Everyone pays more.

MedIQ’s AI platform addresses this with

a simple mechanism: the moment a consultation starts, the system captures the entire conversation, converts it into a structured SOAP (Subjective, Objective, Assessment and Plan) note [SOAP is the standardized method of documenting patient care], generates the prescription, and files it into the medical record all before the doctor even stands up. No backlogs created and no putting in after-hours to complete documentation.

Over the last two years, MedIQ has spent millions of dollars developing and deploying this AI system. Dr Saira gave us a range of between $3-5 million spent on developing this system. The company had raised $6 million earlier in May this year.

The results according to MedIQ are striking: up to 60% reduction in consultation time, up to 60% increase in daily patient throughput, near-elimination of manual data-entry, all resulting in higher revenue per doctor.

Solving for hospitals and patients

For hospitals operating on thin margins, MedIQ’s AI model can transform their financial performance. Publicly available financials of Shifa International Hospitals show that the renowned healthcare facility ended the year 2025 at Rs27.9 billion revenue and Rs2.3 billion in net profit, translating into a net profit margin of 8%. 2024 was even lower than that with revenue at Rs23.5 billion and net profit at Rs1.36 billion, translating into a net profit margin of 5.7%. MedIQ’s pitch is that its AI model will have a financial impact, pushing the net margins up significantly.

To understand MedIQ’s pitch, say if Shifa healthcare had incorporated MedIQ’s AI into their operations in 2025, its doctors would have completed consultations in shorter durations resulting in a higher patient throughput in a day. How? Before consultation starts, doctors would have access to basic diagnosis already during preconsultation through AI. When the consultation starts, AI literally records the conversation, transcribing it in real time, creating notes for the doctor which he would otherwise have to write and type and even create a prescription. The doctor would only have to review for accuracy. By reducing or eliminating the time spent on partly clerical tasks, doctors can move on to the next patient quickly.

Theoretically, Shifa doctors could have given consultation to more than double the number of patients in a day. This would translate into more than double revenue for the hospital per year and about double or more net profit after subtracting the cost of MedIQ’s AI service.

The potential here is massive: there were over 1,700 public hospitals in Pakistan in 2022 according to Public Health Financing report published by the Government of Pakistan. There are anywhere between 500 to 724 private hospitals in the country. Collectively, these hospitals possibly treat millions of people each year for various diseases. For its AI business, MedIQ has a big addressable market, not penetrated by a significant AI player. Because it affects a critical sector and Pakistan has a huge healthcare problem, at scale, MedIQ’s AI would have a massive impact in terms of decreasing the burden on the healthcare system while maintaining quality healthcare.

On the patient side, the product claims to address two chronic inefficiencies: misreferrals and wasted consultations. A multilingual AI assistant available in Urdu, Punjabi, Pashto, and Arabic conducts a complete pre-consultation history even before the patient arrives. Symptoms such as chest pain are analyzed and triaged correctly. Does the patient need a cardiologist, a gastroenterologist or a general practitioner, the AI decides that after collecting the symptoms of the patient. It then makes a referral for the nearest and best doctor available for in person check up or suggests on the app for a teleconsultation.

By routing patients correctly, the system claims to eliminate unnecessary specialist visits and cuts down diagnostic delays saving patients money and reducing hospital congestion. For providers, it means patients arrive pre-documented, allowing doctors to move directly into clinical decision-making, even having the prescriptions written and ready.

Traditionally, once the patient leaves the room, the hospital’s engagement ends. MedIQ says it reversed that. A virtual assistant takes over post-consultation, clarifying the complex medical terminologies on the prescriptions. The increase in retention as a consequence improves a hospital’s or a clinic’s bottom line and gives better healthcare for patients. Hospitals and clinics focusing more on value-based care models especially benefit here.

This all works only if AI is highly reliable. How well trained is the AI and how good and reliable the data is. Dr Saira says that she has done her work thoroughly on this end, having trained the model in-house using their own repository of data of 4 million medical records for two years.

“The model was tested on 1 million patients before commercial launch. Once the accuracy was about 97%, then we launched it commercially,” Dr Saira says.

While Dr Saira didn’t disclose how unit economics exactly worked for her AI model, she said that the revenue potential was significantly higher than the cost associated with providing it. n

Macter gaining market share, and diversifying into cosmetics

The biopharmaceutical manufacturer saw revenue growth faster than industry average, and also plans to launch a GLP 1 product

Macter International Ltd has emerged from the latest results season with a clear message for investors: momentum is back in branded generics, new biologics are scaling, and a bet on consumer beauty is moving from trial to traction. Management says the company is growing faster than the market, based on data from the healthcare data company IQVIA, aided by policy tailwinds from the deregulation of non essential drug prices and supported by a pipeline that now includes semaglutide in multiple delivery formats and a pending application for tirzepatide.

Macter closed FY25 with net sales of Rs9.9 billion, up 32% year on year from Rs7.5 billion in FY24, as mix shifted towards higher margin prescription brands and recently launched products. Gross margin widened from 42% to 45%, lifting gross profit 40% to Rs4.5 billion. Operating profit increased 76% to Rs1.2 billion, reflecting both the gross margin recovery and operating leverage, while profit after tax rose 73% to Rs738 million.

The first quarter of FY26 extended the trend. 1QFY26 net sales reached Rs2.8 billion, up 28% year on year; profit after tax rose 68%

to Rs156 million, indicating pricing and product mix remained supportive even as selling and distribution costs rose with brand investment.

Management attributes the outperformance partly to share gains evident in IQVIA data, noting that Macter has been growing revenue at roughly 1.5–1.7x the industry’s pace.

Biologics contributed meaningfully to that acceleration. The company highlighted that it is one of two domestic players offering semaglutide in both pre filled syringe and pre filled multi dose pen formats; overall, only four companies have semaglutide in injectable form in Pakistan. The current leaders in the GLP 1 segment are Novo Nordisk and Ferozsons, with Macter and Getz holding the second largest shares – an early sign that local manufacturing capability can translate into commercial relevance as prescriptions ramp. The briefing also notes an application filed with the Drug Regulatory Authority of Pakistan (DRAP) to launch tirzepatide, a next generation GLP 1/GIP.

A separate disclosure to the Pakistan Stock Exchange this month confirmed that Macter is now the only company in the country offering semaglutide in all three biotechnology dosage formats: vials, pre filled syringes and pre filled pens – an expansion of presentations that

should support both physician preference and patient adherence.

From a balance of effort standpoint, the FY25 P&L shows higher brand investment – selling and distribution costs rose 30% to Rs2.6 billion, and administrative expenses increased 28% to Rs646 million – but the gross margin gain more than offset this.

Macter’s numbers are unfolding against a changed domestic policy backdrop. In February 2024, the federal cabinet approved proposals to deregulate prices of medicines outside the National List of Essential Medicines, with amendments to the Drug Pricing Policy 2018. The change, announced by the caretaker government, effectively moved non essential medicines to a more market based regime while leaving essential drugs under oversight – an adjustment designed to address shortages and align incentives for local manufacturing and imports.

Subsequently, policymakers signalled further reforms to shift price setting for essential medicines away from DRAP to a new federal body, while DRAP would continue its broader regulatory mandate. Reporting at the time underscored that DRAP currently regulates prices for around 500 essential medicines, and that deregulating non essentials had already improved

availability by encouraging manufacturers to reintroduce previously uneconomic products. The net effect has been to reduce bottlenecks and revive competition, a dynamic visible in company level results across listed pharma.

Against this policy backdrop, companies capable of rapid formulation work, compliant scale up and multi format delivery – particularly in complex categories such as biologics – have been quickest to translate policy space into market share. Macter’s multi form semaglutide roll out is emblematic of that advantage.

Founded in 1992, Macter today operates as a branded generics manufacturer with a large contract manufacturing business. It operates across two main segments – branded generics and contract manufacturing – and as one of the larger contract manufacturers in Pakistan, particularly for multinationals.

Operationally, Macter is already selling into around 15 countries and is targeting an expansion to 30 by the end of FY27 – an export ambition that sits comfortably with the firm’s biologics push, especially if intellectual property windows for flagship GLP 1s open in select markets.

Capacity for physical expansion is also in place: management told investors it owns 16 acres in Gadap, a land bank intended to support the next five year growth phase without the friction of site acquisition.

Macter’s product architecture spans oral solids and liquids, parenterals (injectables), topicals, metered dose inhalers, and ear and eye drops – with dedicated facilities for cephalosporins, penicillins and biologics to ensure segregation and compliance. The company says it adheres to international cGMP standards and maintains ISO certified quality systems, while serving “blue chip” multinational clients on the contract manufacturing side. This breadth – in dosage forms and regulatory compliance – has historically been one of Macter’s competitive moats.

The most visible recent addition is GLP 1 therapy. In early November, Macter disclosed to PSX that it has launched semaglutide in pre filled syringe and pre filled multi dose pen presentations, adding to existing vial supply and making it the only firm nationally with all three biotechnology formats on offer. This matters clinically and commercially: physicians often tailor GLP 1 delivery to the patient, and wider presentation choice can support adherence, reduce switching, and deepen brand penetration across diabetology and metabolic indications. In company commentary, management also set out the local competitive map: in injectable semaglutide, Novo Nordisk and Ferozsons currently lead, while Macter and Getz comprise the second tier by share. The group expects substantial revenue growth from semaglutide as prescribing widens – mirroring global uptake

trends – and indicated that once global patents expire, exports could follow. In parallel, Macter has applied to DRAP to launch tirzepatide, pointing to a pipeline approach rather than a single asset bet in GLP 1s.

Outside biologics, Macter remains active in its traditional strongholds – anti infectives (with segregated beta lactam capacity), cardiovascular, and gastroenterology – while using its manufacturing infrastructure to serve multinational clients under tolling and contract arrangements. That dual engine – brands plus contracts – provides a measure of resilience as cycles shift between public tenders, private prescription demand and export windows.

The policy reset described earlier is relevant here. With non essential drugs deregulated, branded generics can better recover input cost shocks (APIs, packaging, energy), allowing firms with compliant capacity and strong field forces to lean into launches rather than ration supply. Macter’s 45% gross margin in FY25, up three points year on year, suggests the company has benefited from that alignment.

While the earnings story is still anchored in pharmaceuticals, Macter is diversifying into cosmetics via its subsidiary Misbah Cosmetics (Pvt) Ltd (MCPL) – a consumer facing arm that initially relied on imports but is now switching to local manufacturing. The company says it has leveraged its pharma experience – notably in chemical handling, quality systems and regulated production workflows – to raise standards in the cosmetics line up. As a result, MCPL’s gross margins are improving, and management expects the segment to contribute to the bottom line in the current year.

The subsidiary was formed in 2017 and is focused on halal certified cosmetics – consistent with how the brand positions itself in the market. The report also frames the move as a deliberate push into higher margin consumer products, complementary to the company’s pharmaceutical base.

Crucially, Macter can tap real world customer insight through the Depilex ecosystem founded by Masarrat Misbah, whose beauty brands are associated with MCPL. The Depilex network of over 80 salons nationwide is being used to test products, develop new SKUs and gather consumer feedback – a field laboratory of sorts that is rare in Pakistan’s still nascent beauty manufacturing landscape. This linkage shortens iteration cycles and reduces misfires in shade, texture and packaging decisions that often confound local cosmetics launches.

Market facing brand properties under the Misbah umbrella include Masarrat Misbah Makeup, a halal certified cosmetics line that has built distribution both online and offline. Public facing company and brand pages emphasise a focus on ingredient stewardship and accessibility – positioning that sits naturally with a parent

steeped in cGMP process discipline. At a strategic level, cosmetics offers a currency light growth vector relative to biologics. Where APIs and cold chain add volatility for therapeutics, localised sourcing and fill finish for colour and skincare can be managed with shorter lead times, in country packaging and domestic brand building. For Macter, co locating quality control, regulatory know how and pilot scale production under one corporate roof can reduce execution risk. The company’s disclosure that MCPL began as import based but is now moving into local manufacture suggests that learning curve is already being climbed.

Three threads define Macter’s next act. First, the core pharma engine is running hotter than the industry, by management’s own IQVIA benchmarked reckoning. That advantage is visible in the FY25 and 1QFY26 prints, where the combination of price normalisation, mix and new launches pushed both top line and margins higher. The company also says it is already present in around 15 export markets, with a plan to extend to 30 by FY27 – a goal that, if achieved, would diversify currency exposure and product risk.

Second, biologics – specifically GLP 1s – offer an avenue for step change growth. Being the only domestic manufacturer with vial, pre filled syringe and pre filled pen formats in semaglutide allows Macter to compete across prescriber preferences and patient segments. A tirzepatide launch, if cleared by DRAP, would enlarge that beachhead. Over a multi year horizon, management believes patent expiries could also open export optionality for these molecules.

Third, the consumer pivot via Misbah Cosmetics could smooth earnings by adding a portfolio with different cycles and cash conversion dynamics. The company is explicit that MCPL’s margins are improving as local manufacturing replaces imports, and that access to the Depilex salon network provides a ready test and learn platform – advantages that many new to manufacturing beauty entrants lack.

If there is a caution, it is the same one facing the broader sector: the policy transition must continue to balance affordability with the economics necessary to sustain local production, especially as energy prices and imported input costs fluctuate. Government reporting to date indicates that availability of non essential medicines has improved since deregulation, and that reforms around essential drug pricing are being considered to streamline governance; stable, predictable implementation will be the key variable for capital allocation decisions across the industry.

For now, the numbers – and the pipeline – tilt in Macter’s favour. Faster than market growth, a full suite of semaglutide presentations, and a cosmetics arm edging into profitability give the company a set of diversified growth

RETAIL SLOWDOWN STILL A DRAG ON IMAGE’S GROWTH PROSPECTS

The Pakistani consumer continues to struggle in the aftermath of the bout of high inflation from 2022 through 2025

Image Pakistan Ltd (PSX: IMAGE) is selling more clothes, but not fast enough to outrun the scars of Pakistan’s inflation shock.

The listed clothing and fabric manufacturer reported another year of double-digit revenue growth in FY25. Yet in an economy where consumer prices surged at rates north of 20% in 2022 and 2023 and remained elevated in 2024, its top line is rising more slowly than the general price level, suggesting that real volumes and basket sizes are still under pressure.

Management is responding with a familiar retail playbook: opening more stores, leaning on e-commerce and pushing into lifestyle and perfumes. Whether that will be enough to offset a cautious middle-class shopper base remains the key question for investors.

For the year ended June 2025, Image’s consolidated net sales rose 16% to Rs4.6 billion from Rs4.0 billion a year earlier. At first glance that looks healthy, but set against the inflationary backdrop it is more modest. The company’s nominal revenue growth lagged

nationwide price increases.

The story further into the income statement is more upbeat. Cost of sales grew just 2%, lifting gross profit by 37% to Rs2.1 billion and pushing the gross margin up from 39% to 46%. Operating profit almost doubled, climbing 93% to Rs1.2 billion, helped by relatively flat selling and distribution expenses and only a modest rise in administrative costs. Profit after tax surged 90% to Rs759 million, and basic earnings per share rose to Rs3.3 from Rs2.5.

Net margin expanded from 10% to 17%, a sizeable jump for a mid-tier fashion retailer. The board declared a cash dividend of Rs2.0 per share, having paid nothing in the previous year. As of this past Friday, the stock was trading around Rs23.9, implying a market capitalisation of roughly Rs5.5 billion, with a 52-week range between Rs14.9 and Rs36.8.

The most recent quarter paints a more nuanced picture. In 1QFY26, net sales grew a mere 7% year-on-year to Rs1.0 billion, while cost of sales jumped 17%. That shaved the gross margin down from an unusually high 54% in the same period last year to 50%, and gross

profit dipped 3% to Rs505 million. Operating profit was flat at Rs302 million, and higher finance costs – almost triple from Rs18 million to Rs50 million – pushed profit after tax down 12% to Rs242 million. Quarterly EPS slipped from Rs1.2 to Rs1.1.

The spike in finance charges is unsurprising. Businesses are still digesting the lagged effect of the State Bank’s policy rate, which was held at a record 22% for much of 2023 and only gradually cut to 12% by early 2025. Retailers like Image, which have invested in store networks and machinery, are carrying that interest burden into their P&Ls even as inflation cools.

Despite these headwinds, management has set an ambitious revenue target of Rs5.0–5.5 billion for FY26, implying top-line growth of about 20%. They expect gross margins to stay broadly in line with FY25, signalling confidence that the product mix – tilted towards higher-margin embroidered fabrics and readyto-wear – can absorb cost pressures.

Image Pakistan’s corporate and brand histories are intertwined but distinct.

The listed entity began life as Tri-Star Polyester Ltd, incorporated as a public company in 1990 and focused on manufacturing polyester filament yarn and fabric out of Karachi’s industrial estates. In 2021, as its fabric business increasingly revolved around the “Image” label, the company formally rebranded to Image Pakistan Ltd, aligning the corporate identity with the consumer-facing brand.

The brand itself predates that name change. Asad Ahmed and Farnaz Ahmed launched Image in 1993 as an embroidered-fabric specialist, selling premium Schiffli work wholesale to well-known fabric retailers in Lahore and Karachi. The first flagship store opened on Karachi’s Zamzama strip in 1998, marking the brand’s move into direct retail.

Initially, the market was dominated by unstitched cloth; as one director recalled, stitched ready-to-wear made up perhaps 5% of demand in the 1990s. But as malls proliferated and urban consumers warmed to off-the-rack kurtas in the 2010s, Image followed the trend, adding pret lines and gradually building a chain-store footprint.

Today the company describes itself as a fashion and retail house with a presence across five major cities – Karachi, Lahore, Islamabad, Rawalpindi and Peshawar – supported by a strong e-commerce platform. In 2021 it became one of the first Pakistani clothing brands to be officially listed as a seller on Amazon, and in 2022 it received a Prime Minister’s award recognising its e-commerce performance.

At the helm of the listed business is CEO Asad Ahmad, with headquarters located on Karachi’s Shahrah-e-Faisal and manufacturing facilities in SITE.

Image operates in two related domains: value-added textiles and branded fashion retail.

On the manufacturing side, the company produces embroidered fabrics – notably Schiffli embroidery – as well as ready-to-wear and unstitched suits aimed primarily at women. Its product range spans

• Embroidered and printed fabrics, often sold as three-piece or two-piece suits.

• Ready-to-wear kurtas and co-ords, many featuring heavy embroidery, appliqué and chikankari work.

• Seasonal collections – lawn and light cottons for summer, heavier fabrics and jacquards for winter – marketed both through physical stores and the online shop.

The company says it currently runs 72 multi-head embroidery machines and plans to add three more, taking the total to 75. Bank financing is already lined up for additional imports should demand justify further capacity expansion.

On the retail side, the brand operates a growing network of boutiques and mall outlets. Management told investors they

aim to reach 18 outlets by the first quarter of calendar 2026, with locations across major cities including Karachi, Lahore, Islamabad, Rawalpindi, Multan, Gujrat, Faisalabad and Peshawar. They highlighted that rent at their high-profile store in Karachi’s Dolmen Mall averages around 10% of sales – a healthy ratio by regional mall standards.

Internationally, Image is building a footprint in markets with sizeable South Asian diasporas – notably the UK, USA, UAE and European Union – primarily through online channels but increasingly via partnerships and pop-up formats.

Management is keen to diversify beyond fabrics and apparel into perfumes and lifestyle products, an increasingly crowded but higher-margin corner of the fashion market. They told analysts that Image is in the product-development phase and plans to launch three to four new perfumes each quarter once the line is established, potentially within FY26.

If executed well, this move could help smooth seasonality and deepen the brand’s relationship with its core female customer, but it also pits Image against specialised fragrance and cosmetics players at a time when discretionary spending is under strain.

Image’s trajectory cannot be understood in isolation from the broader formalisation of Pakistani retail.

A generation ago, apparel shopping largely meant buying fabric by the yard from neighbourhood stores and having it stitched by a family tailor. That paradigm began to shift in the late 2000s and early 2010s, as mall culture spread and branded lawn and pret labels such as Khaadi, Gul Ahmed, Nishat Linen, Sapphire and Sana Safinaz normalised the idea of chainstore fashion.

The growth has been rapid but remains shallow relative to the size of the population. A study by the Pakistan Institute of Development Economics estimates there are about 134 domestic chain-store brands in the country, with 73 of them in clothing and apparel, making it the largest formal segment. In total, these brands operate roughly 3,900 stores nationwide, with half of them concentrated in Karachi, Lahore and the Islamabad–Rawalpindi belt. The median chain has just 15 outlets.

The same paper describes Pakistan’s chain-store sector as still in its early stages of development, noting that even the biggest supermarket and fashion chains have far fewer outlets than comparable peers in India, and that only a handful of Pakistani clothing brands have a meaningful international presence.

In other words, the likes of Khaadi, Nishat Linen and Ideas by Gul Ahmed have built national awareness and dozens of stores, but the overall penetration of organised apparel retail remains low. These brands are now

experimenting with large-format “experience stores” – such as Ideas’ massive new outlet at Dolmen Mall Clifton – as well as online-to-offline integration and tech-driven personalisation.

Image sits in the middle of this evolution: smaller than the leading textile-backed giants, but with a more substantial footprint and brand equity than the niche labels that still rely on multi-brand retailers and seasonal exhibitions.

The retail opportunity is significant. One research house projects that Pakistan’s overall retail market could grow at a compound rate of about 6.5% from 2025 to 2031, driven by urbanisation, rising internet penetration and a slowly expanding middle class.

Yet the last three years have been brutal for household budgets. Pakistan’s inflation rate hit multi-decade highs in 2023, with some months recording year-on-year price increases of around 30% or more. While inflation has dropped sharply in 2025 – even touching low single digits early in the year – this reflects a statistical base effect more than a return to pre-crisis affordability.

For apparel chains, that translates into three challenges. Customers trade down from premium lines to basic suits or skip seasonal refreshes altogether. Mall visits spike around Eid and wedding seasons but remain muted otherwise. Fashion cycles do not slow down just because wallets are squeezed; the wrong bet on colour, cut or price point can be costly.

Image’s financials reflect these dynamics. Revenue growth in the mid-teens and single digits, as seen in FY25 and 1QFY26, is respectable but underwhelming once high past inflation is considered. The strong improvement in gross and net margins last year owes much to tight cost control and a favourable product mix, but the margin slippage in the latest quarter shows how quickly that cushion can erode when costs spike or discounting is required to clear stock.

Despite a challenging macro backdrop, Image’s management is clearly positioning the company for a more formal and brand-centric retail future.

The planned expansion to 18 domestic outlets within months, a continued push into the UK, US and Gulf markets, and the upcoming foray into perfumes all point to a growth-minded strategy rather than pure consolidation. The addition of more embroidery machines and the option to finance further capacity suggest confidence that demand for its core value-added textiles will eventually catch up.

For now, Image is doing enough to keep profitability moving in the right direction but not yet enough to break decisively away from the gravity of Pakistan’s bruised consumer. The inflation storm may have passed, but the dampness it left in shoppers’ wallets is still weighing on the company’s growth prospects. n

Revenue growth continues apace at Bank of Punjab in Q3

Aside from the structural boost to profitability from the interest rate environment for all banks, BOP’s branch expansion is beginning to yield results

The Bank of Punjab turned in another strong quarter, extending a two year run of outsized earnings as the provincial lender’s long push into low cost deposits, rural markets and digital origination starts to compound. Third quarter results show income advancing sharply and profits rising on the back of wider spreads and a better priced deposit base. Management says the repricing of legacy time deposits and a deliberate tilt towards current accounts should carry further gains into the year end.

The bank’s quarterly and nine month scorecards were the centrepiece of two post results briefings with analysts in November, which also laid out milestones in branch expansion, agricultural lending and an historic turn to dividends.

For 3QCY25, BOP posted profit after tax of about Rs5.1 billion, up 42% year on year. Earnings per share for the quarter printed around Rs1.6, up from Rs1.1 a year earlier, while 9MCY25 EPS rose to roughly Rs3.7 versus Rs2.6 last year, reflecting sustained operating leverage. Net interest income was up 61% year on year in the quarter, with total income up

42%; operating expenses rose 19%, far slower than income, helping lift profit before tax by 58% in Q3 and 81% for the nine months.

Arif Habib Ltd’s takeaways from the analyst call add more colour on deposits and funding costs. Deposits stood at about Rs1.8 trillion in September, with a seasonal quarter on quarter dip offset by healthier averages: current account balances increased 13.3% over six months and non MDR balances rose 10.5%, together adding an estimated Rs7.7 billion to revenue. Crucially, about 85% of high cost term deposits, roughly Rs427 billion of an estimated Rs500 billion, matured by late Q3. As these repriced, the weighted average cost of term deposits fell from 16.4% to 9.7%, with the full earnings effect expected to flow through Q4. Management’s current account share target for next year is 27% – another lever to sustain net interest margins even as the rate cycle stabilises.

Credit costs remained contained. Management highlighted that non performing loans total about Rs51 billion, of which Rs40 billion relate to legacy assets, with the NPL to book ratio at 6.5% – near the market average – and net NPLs at just 0.2% of book for the nine

months. The cost to income ratio has improved to around 60%, with a stated aim to bring it lower next year as returns from earlier technology and process investments materialise.

Beyond spreads and funding, non interest income held steady year to date, with fee income up 31% and foreign exchange gains higher, partly offset by lower securities gains. Put together, the 9 month total income rose 58%, against a 27% rise in operating expenses, lifting profit before tax by 81% year on year.

The sector backdrop has further helped. Since mid 2024, the State Bank has lowered the policy rate from 22% to 12% by late January 2025, improving the asset/liability repricing outlook for banks; the Monetary Policy Committee later paused the easing cycle at 12% in March to watch inflation dynamics. With high yielding assets rolling in and expensive funding rolling off, BOP appears well placed to clip the spread in the near term.

Constituted through the Bank of Punjab Act 1989 and accorded scheduled bank status in 1994, BOP is headquartered in Lahore and remains majority owned by the Government of Punjab, which holds just over 57%, according to public filings and company materials.

Its mandate has long straddled commercial banking and policy linked initiatives in the province, but the franchise today is national in reach.

A significant inflection came with the appointment of Zafar Masud as President and CEO in April 2020. The bank’s press release at the time underscored his remit to drive a modernisation and growth agenda, drawing on decades of international and domestic banking experience. Under his stewardship, BOP has pivoted hard into deposit mobilisation, digital origination, and inclusion linked lending –areas the bank now routinely highlights as engines of growth.

The branch network is the backbone of that push. The bank currently operates close to 900 branches across the country, and it houses a sprawling list of locations on its official site that stretches from large urban centres to smaller market towns – evidence of a strategy designed to skim deposits in deeper rural catchments as well as service mid market SMEs across the trading belt of Punjab and beyond.

BOP’s management told analysts the network will expand from about 900 to around 1,000 branches by 2027, with 50 openings planned in 2026 and 50 in 2027. Rural markets are a particular focus for low cost deposit acquisition, where competition is thinner and relationship banking still matters. The same briefings noted that private sector deposits have risen sharply since 2021, reducing historic reliance on public funds.

The funding transformation also has an operational spine: a multiyear investment in technology and process automation. Management says the returns are now visible in a better cost to income trend and in digital origination at scale. The briefings emphasised BOP’s status as Pakistan’s largest digital lender by cumulative disbursements – around Rs1,370 billion to nearly 1 million borrowers – and its position as the top credit card issuer, with more than 0.9 million cards in force. While these claims are couched in management’s own disclosures, they help explain the velocity in fee generating products and the bank’s confidence in cross selling as it adds branches.

Perhaps the most visible signal of balance sheet strength is dividends. In late summer 2025, BOP announced the first ever interim cash dividend in its history – Rs1.0 per share or 10% – a watershed moment for a bank that had previously prioritised capital build up over payouts. Multiple news outlets reported the milestone alongside record interim profits. Management has since indicated that, while it does not commit to quarterly payouts, a “historic” full year dividend is likely given earnings momentum and the stronger capital position.

Underpinning the strategy is funding discipline. As noted earlier, 85% of high cost

term deposits matured between Q2 and Q3, bringing their cost down from 16.4% to 9.7%; with policy rates steady at 12%, that repricing should support margins in Q4 and into 2026. Meanwhile, management is targeting a 27% current account share over the next year, a level that would reduce the average cost of funds further and insulate earnings should asset yields drift lower. These assumptions sit explicitly in the AHL takeaways.

Finally, asset quality and governance remain on the scorecard. The bank’s NPL stock is still weighted to legacy positions, with much lower net NPLs on the current period book – a sign, management argues, that underwriting standards and collections are holding up even as lending scales. The briefings describe the pillars of “sustainable profitability” as asset quality, operational efficiency, governance and compliance, deposit growth and digital transformation – a checklist that aligns with the post 2020 rebuild.

BOP’s agricultural franchise has become one of the bank’s signature differentiators. Management says the bank serves 18% of Pakistan’s agricultural borrowers, and has extended the Kissan Card programme rapidly in recent cycles. The portfolio stood near Rs60 billion in mid October and, by 13 November, about 85% had been recovered against maturity, with expectations of 98–99% recovery shortly thereafter – metrics that speak to both borrower selection and the mechanics of seasonal cash flow lending.

The bank also points to risk mitigants embedded in these books. Roughly 70% of the agriculture portfolio is secured by first loss guarantees from government programmes, in the 20–30% range; the remaining 30% is 95% collateralised. Management reports that only about 2% of agricultural borrowers were identified as flood affected – an exposure of around Rs650 million – and that this is fully collateralised. These specifics help contextualise both the provision line and the bank’s confidence in scaling agriculture without sacrificing asset quality.

Beyond agriculture, BOP has built share in SME lending, where it serves 44% of all SME borrowers since 2020, and in housing finance, where its share reportedly increased from 1.3% to 33% in recent years, with about Rs120 billion disbursed across more than 100,000 loans. The bank also claims leadership in logistics lending – from commercial vehicles and prime movers to tractors and farm to market transport. These business lines illustrate a mid market, cash flow centric lending strategy that fits neatly with the branch footprint’s tilt to trading and agro commercial districts.

The investment portfolio complements that posture. According to the AHL briefing, around 60–65% of investments are in floating

rate PIBs, with the remaining 20–22% split between fixed rate bonds and T bills. Floating rate paper reportedly pays 75–80 basis points over the benchmark; T bills and fixed rate bonds yield around 11.2–12.0%, with duration kept near 2.0–2.3 years – parameters that align with a balance sheet strategy seeking yield while keeping interest rate risk in check.

On the deposit side, the mix is improving. Management told analysts that public sector deposits now account for roughly 50% of the book, down from 70%, while private deposits have grown strongly since 2021 and are projected to close the year near Rs1 trillion – a healthier balance that should make funding more resilient through cycles.

Banking profits across Pakistan have benefited from the rate cycle – higher yields on assets repricing faster than deposits – but BOP’s operational decisions are amplifying those tailwinds. The deposit mix is sliding towards cheaper current accounts; the cost of term deposits is resetting meaningfully lower as old tranches mature; and the bank is opening branches where deposit competition is thinner. Together, those choices are widening spreads even as policy rates level off.

At the same time, digital scale is starting to show up in the P&L: more cards in force, more customers sourced at lower marginal cost, and a pipeline of fee earning propositions around payments and cash management, especially as the government’s cashless initiatives gain traction. The bank’s own disclosures position it as the largest digital lender and a leading card issuer – claims that align with reported fee growth in the 9 month figures and with the operating expense line that is rising slower than income.

The agriculture book merits close watch – not because the metrics are weak, but because the scale is material and seasonal. Here, BOP’s insistence on guaranteed or collateralised exposures, plus rapid recoveries on the Kissan cycle, reduces earnings volatility and frees up capital for growth in SME, housing and logistics lending. The briefings also stress that legacy NPLs dominate the problem asset pool, with net new slippages manageable – an important signpost for investors tracking whether growth is coming at the expense of underwriting.

Finally, the dividend. After years of balance sheet repair and scale up, the first ever interim cash dividend in 2025 signals both stronger capital and management’s confidence in the earnings runway. With term deposit costs falling and the branch roll out on schedule, BOP is preparing to move from a story of rebuild and catch up to one of repeatable profitability and shareholder returns – a transition the bank’s leadership has telegraphed since 2020. n

Nimir

to

bid on the

remainder of P&G’s manufacturing assets in Pakistan

While no deal is currently on the table, management announced their intention to seek a favourable deal from the multinational consumer goods giant

Nimir Industrial Chemicals Ltd has signalled its ambition to press harder into fast moving consumer goods manufacturing, telling analysts it intends to bid for the remainder of Procter & Gamble’s (P&G) manufacturing assets in Pakistan once the multinational completes its exit from direct operations in the country. The declaration – delivered almost in passing during a post results call – adds a new twist to Nimir’s already active expansion agenda and follows last year’s acquisition of P&G’s Hub, Balochistan, soap facility and a simultaneous toll manufacturing arrangement.

The comment came during an analyst briefing on Nimir’s first quarter FY26 results. Management, reviewing quarterly margins and the product pipeline, noted that the company would “potentially acquire” P&G’s Bin Qasim assets in Karachi – home to hair care and other consumer lines – if a transaction could be struck on attractive terms. The remark was made matter of factly, but its significance for both the country’s consumer goods supply chain and

Nimir’s strategy was hard to miss. The company has already integrated P&G’s Hub soap plant and is contemplating the next step as it assesses the financial case to add more FMCG manufacturing capacity.

Executives were careful to stress that there is no live deal on the table. Still, the intent is clear: with P&G retreating from direct manufacturing and commercial operations in Pakistan, Nimir sees room to build a larger contract and own brand production platform, adding scale close to ports and population centres. The same briefing underscores complementary moves, including relocating one oleochemicals plant from Sheikhupura to Hub to serve the southern market and to leverage proximity to seaborne export routes – another nudge that the company is configuring its footprint to support bigger consumer volumes.

P&G’s retreat from Pakistan has unfolded in stages over the past year. In early October, the company confirmed it would wind down all manufacturing and commercial activity in the country and rely on third party distributors to serve the market; at the same time, Gillette Pa-

kistan – the shaving products subsidiary – said it would consider delisting from the PSX as part of the restructuring. Pakistan, P&G said, would henceforth be served through distribution and contract partnerships.

That decision followed a long investment run in local capacity: as recently as 2019, P&G inaugurated a Port Qasim hair care plant producing Pantene and Head & Shoulders, part of a footprint that, at its zenith, spanned soap, hair care and other personal care categories. The group’s Hub facility manufactured Safeguard bar soap, while the Bin Qasim site hosted hair care and broader home and personal care operations. P&G’s own release confirms the commissioning of the Port Qasim hair care plant; Nimir’s analyst materials refer to Bin Qasim as a site for shampoo, detergents and Pampers, aligning with the brand’s historical portfolio in Pakistan.

As P&G pivots out, Nimir has already stepped into one gap. In July 2024, Nimir announced definitive agreements to acquire P&G’s Hub soap assets and to continue producing Safeguard on a toll manufacturing basis for the US multinational. The Competition Commission

of Pakistan cleared the transaction shortly thereafter, and operational control passed to Nimir on 1 September 2024, according to the company’s PSX notices. The company framed the deal as a way to shore up southern region capacity, boost exports via nearby ports and strengthen its position in hard soap manufacturing.

With P&G now definitively exiting direct operations in Pakistan, attention has turned to the fate of its Bin Qasim assets. There is a broad divestment plan covering remaining manufacturing lines, while P&G emphasises that consumer access to brands will be maintained through local partnerships. For would be acquirers like Nimir, the attraction is straightforward: brownfield capacity in categories that sit close to Nimir’s existing raw material and toll manufacturing strengths.

Nimir is not a newcomer to consumer adjacent chemistry. Incorporated in the mid 1990s, the company manufactures and sells a broad slate of oleochemicals and chlor alkali products – distilled fatty acids, soap noodles, stearic acid, glycerine, and caustic soda among them – supplying both domestic industrial users and multinationals. It has an installed capacities of roughly 140,000 tonnes in oleochemicals and 158,000 tonnes in chlor alkali products, signalling a scale base uncommon in Pakistan’s specialty chemicals space. Those inputs feed directly into soap, detergent, personal care and home care value chains – the very categories P&G historically manufactured locally.

The group’s public materials also point to a wider portfolio that includes aerosols, application services and other downstream chemistries – an operational scope that eases the path from bulk chemical to finished goods tolling and private label contracts. The company has repeatedly positioned itself as a partner to FMCG players seeking dependable third party manufacturing capacity, with an emphasis on quality systems and scale.

The analyst briefing from which the prospective P&G bid emerged shows why the fit could work. Nimir’s management says the company holds over 75% market share in oleochemicals, anchoring a contract manufacturing business that already spans toilet soap, aerosols, personal care liquids and home care products. It has also launched chlorinated paraffin wax (CPW) – a specialty used, among other things, in cable coatings – and reports encouraging market uptake. The plant network includes a captive 20 MW power plant fuelled by biomass and coal, insulating operations from grid volatility.

The company’s supply chain geography is another advantage. By moving one oleochemicals plant from Sheikhupura to Hub, Nimir aims to cut logistics to southern markets and unlock export optionality via Karachi’s seaports. If the Bin Qasim assets were to enter its orbit,

the combined Hub–Bin Qasim–Sheikhupura triangle would give Nimir a multi node footprint straddling raw materials production and FMCG finishing – exactly the integration a toll manufacturer seeks to compress cycle times and working capital. That plan, too, is set out in the briefing note.

Crucially, Nimir has already proven it can transact on complex deals in this segment. The CCP’s Phase I clearance for the Safeguard soap acquisition, and Nimir’s subsequent assumption of operational control on 1 September 2024, show the regulatory and operational plumbing can be executed within expected timelines – a non trivial de risking if further P&G assets are offered. The approvals and completion were documented by the regulator.

Where would the P&G assets fit? On the surface, hair care lines sit slightly outside Nimir’s legacy core of soap noodles, fatty acids and chlor alkali. Yet the company’s existing personal care liquids tolling, aerosol capabilities and home care manufacturing provide a technical bridge. P&G’s Port Qasim hair care facility, commissioned in 2019, is demonstrably modern and modular, factors that tend to ease technology transfer under toll manufacturing contracts or post acquisition integration. The opening press release for that plant described a “state of the art” site producing Pantene and Head & Shoulders, indicating a platform designed for high throughput and consistent quality – attributes valued by any acquirer.

Against this strategic backdrop, Nimir’s FY25 and 1QFY26 scorecards offer a steady, if unspectacular, picture that reflects both the industry’s input cost cycles and management’s cost control.

For the year ended June 2025, net sales rose 8% to Rs45.3 billion from Rs41.9 billion, with the gross margin flat at 15%. Gross profit therefore increased 8% to Rs6.7 billion, and profit after tax doubled to Rs2.0 billion, lifting EPS to Rs18.3 from Rs9.1.

The first quarter of FY26 showed the cost side becoming trickier. While net sales increased 12% year on year to Rs12.5 billion, the gross margin slipped to 13%, and gross profit edged down 2%. Even so, operating profit was broadly flat, and profit after tax climbed 67% to Rs504 m as financial charges dropped 34%, thanks to the easing interest rate cycle and a better funding mix. EPS printed at Rs4.6 for the quarter. Management expects that margins will recover as an unusual low margin order rolls off and product mix improves.

Most revenue still comes from corporate clients; CPW has launched to a good market reception; and the company is pursuing new chlor alkali products alongside expanded export partnerships. All of that should help Nimir hold margins even as it absorbs integration costs from the Hub plant and evaluates future brown-

field additions.

If Nimir follows through with a bid for P&G’s remaining manufacturing assets, it would mark one of the more consequential handovers in Pakistan’s consumer goods industrial base in recent years: a transition from a multinational owned network to a local operator with established ties to the very brands it might continue to produce under contract.

Three considerations frame the opportunity:

First, the industrial logic looks sound. Nimir’s oleochemical and chlor alkali backbone supplies the feedstocks for soaps and detergents; its growing personal care liquids and aerosols businesses already work to FMCG standards; and its Hub footprint, plus access to Karachi ports, makes it well placed to serve both domestic and export demand. That base gives it a credible route to scale and synergy if the Bin Qasim assets are offered under terms that reward re investment.

Second, execution risk is manageable but real. Integrating hair care and potentially diaper or detergent lines would increase Nimir’s exposure to categories with different formulation, packaging and quality assurance regimes than hard soap or bulk oleochemicals. That said, the company’s track record – completing a CCP cleared acquisition and assuming operational control on schedule – speaks to growing integration muscle.

Third, the macro policy wind is more benign than a year ago. As interest rates fell from last year’s peaks and began to stabilise, manufacturers with debt on the balance sheet captured meaningful savings below the operating line. Nimir’s own quarterly results quantify that effect via sharply lower finance costs, a tailwind that helps fund capex and working capital when opportunities arise.

For now, no formal sale process has been disclosed for P&G’s Bin Qasim factory or any residual Pakistan assets beyond those already transferred. P&G’s statement, as reported by Reuters, focused on the strategic decision to cease direct operations and to serve Pakistan through third party partners rather than the mechanics or timing of individual asset divestments. Whether disposal proceeds line by line, or as a package, remains to be seen.

For Nimir, the calculus is straightforward: any bid must preserve returns and expand scale without stretching the balance sheet. The FY25 numbers show a company capable of funding growth through cash flows and measured borrowing; the 1QFY26 update adds that margin headwinds can be absorbed when finance costs are falling and product mix is refreshed. If the Bin Qasim assets come to market, Nimir’s management has made it clear they will at least seek a favourable deal – and that they will not chase one if the economics do not stack up. n

As utilities and the government resume capex, Fast Cables rebounds

The company expects an uptick in economic activity and investment from both the government and private sector to boost sales

After a bruising fiscal year in which revenues and earnings slid, Fast Cables Ltd has opened FY26 on a firmer footing. The Lahore based wire, cable and conductors manufacturer reported a strong first quarter bounce in sales and profits, a print management links to early signs of revived procurement by utilities and the government, and to a pipeline of private sector projects long delayed by high inflation and tight budgets.

The company’s analyst briefing in early November offered a striking contrast: a difficult FY25 now in the rear view mirror and a first quarter that suggests demand is finally moving again. The tone was cautiously optimistic – emphasis on “cautiously” – but with a clear message that capital expenditure across the public and private sectors is the key variable for the rest of the year.

Fast Cables’ 1QFY26 numbers point to a turn in operating momentum. Net sales rose to Rs8.6 billion, up 20% year on year from Rs7.2 billion in 1QFY25. Gross margin improved to 17% from 15%, lifting gross profit by 39% to Rs1.5 billion. Operating profit surged 70% to Rs1.0 billion, and profit after tax climbed 87% to Rs388 m. Quarterly earnings per share were Rs0.6, versus Rs0.3 a year earlier. Finance costs eased 26%, helping the bottom line even as the company stepped up activity.

Set against those quarterly gains is a subdued FY25 base. For the year ended June 2025, net sales fell 12% to Rs31.9 billion from Rs36.0 billion, as inflation squeezed procurement and delayed projects bit into volumes. Gross margin slipped to 17% from 19%, with profit after tax down 33% to Rs1.3 billion and full year EPS at Rs2.0 from Rs2.9. The company cited a sharp contraction in orders from utilities and other state linked entities –down 36% year on year – as budget allocations for distribution company modernisation and related infrastructure were trimmed.

Management’s Q1 commentary stopped short of calling an all clear. But the combination of higher volumes, better mix, and a modest reduction in finance charges as the interest rate cycle eased gave the quarter a healthier shape than any period in the prior year. The

team guided that 2026 should see “meaningful” operating improvement as stalled public sector projects move forward and as export channels and private sector work pick up.

Critically for a firm that sells into long cycle infrastructure and utility networks, the pace of public sector capital expenditure has begun to normalise. The federal budget for FY26 allocates Rs1.0 trillion to the Public Sector Development Programme (PSDP), with infrastructure – including energy and transport – again prominent in the “Budget at a Glance” table. That headline envelope matters for upstream suppliers like cable manufacturers because it underpins awards for grid upgrades, grid station extensions, and urban services work that had been repeatedly deferred.

Fast Cables’ roots stretch back nearly four decades, with the company formally founded in 1985 and building its reputation as a premium domestic supplier of cables and conductors. Based in Lahore, it has grown from a single focus cable maker into a broader industrial group with verticals in Cables, Lights, Metals and PVC, while keeping the Fast Cables brand at its core. The company maintains that the brand’s “real quality” positioning – reinforced by third party certifications and an in house testing regime – has been central to its growth.

The group entered the public markets last year. The Pakistan Stock Exchange formally listed Fast Cables on 10 June 2024, marking one of the larger industrial IPOs of the fiscal year. The exchange’s gong ceremony two days later underlined the market’s appetite for industrial names with credible domestic demand exposure and the promise of export growth.

Alongside factory expansion, the company has invested in customer facing technology. Its Fast Tasdeeq and Fast Tasdeeq Plus services allow installers, dealers and end users to verify the authenticity of products by SMS or QR code – part of an effort to counter counterfeits and ensure compliance on critical installations. Those tools live inside the firm’s mobile Fast App and have been widely trailed in trade media and on the company’s site.

Fast Cables also emphasises certification and compliance. Management told analysts the company achieved KEMA Gold certifi-

cation at the Dutch high voltage laboratory and secured third party British standards accreditation (a path that, in the industry, typically runs through BASEC or related bodies). Beyond cables, the company says it operates the first ISO 17025 certified laboratory in Pakistan’s cable and wire industry and has achieved multiple international standards across its product families. These credentials, coupled with testing capability, have been key to approvals for regional projects, including qualification to supply to the UAE transmission network. The corporate notes and investor materials place this testing and certification posture at the centre of export strategy.

If there is a single reason Fast Cables is positioned to benefit from a capex restart, it is the breadth of its catalogue. The company describes a 10 plus category line up and roughly 6,000 SKUs spanning transmission line cables and conductors, control and instrumentation wires, underground power cables, and overhead conductors. That reach allows the sales team to follow the customer – from national grid extensions to city level distribution, and from industrial estates to commercial buildings – without ceding share at the project boundary. The network is backed by a nationwide branch and distribution footprint and, increasingly, a commercial presence in Saudi Arabia, the UAE and the United States through staff and partners.

The company is also pushing into lighting. Management told analysts that home, commercial and infrastructure grade street lighting solutions are now a strategic focus, with a target for the lighting division to contribute 10–15% of overall revenues in the five year plan. On the ground, that push is visible through the Fast Lights range – from road luminaires engineered for dusty, humid environments to indoor and professional products – supported by a dedicated website and catalogues that mirror international competitors. The strategic hook is straightforward: lighting projects often bundle with cable procurement, giving Fast Cables a second product family to sell into the same capex cycles.

Under the hood, the company casts itself as a process driven manufacturer that “designs to code” and “tests to failure” – language more

commonly heard from European incumbents than from emerging market rivals. That quality stance, the company argues, has been validated by recognitions such as KEMA type tests and British standards accreditation, and by project approvals on foreign grids. In a market where compliance is increasingly a pre qualification gate, certifications can be a moat as well as a passport.

Capacity is expanding, too. Pre IPO materials referenced growth in copper and aluminium rod capacities to feed downstream cable output – an internal hedge against import bottlenecks and a way to control input quality. Post listing, the company has signalled that the mix will continue to tilt to higher value cables and engineered lighting rather than commodity wires.

For a supplier whose products run through every energy and infrastructure node, the quantity and quality of capex is destiny. After two years of belt tightening, there are signs of normalisation.

First, the federal development budget is back at scale. The Budget in Brief for FY26 sets the Federal PSDP at Rs1.0 trn. In plain terms: funds for transmission lines, grid stations, road corridors and urban services that require kilometres of cable and conductor. The milestone appears in Table 1: Budget 2025 26 at a Glance, which lists the PSDP line item under “Development & Net Lending”.

Second, utility investment plans are moving. In the transmission segment, last autumn the government announced a Rs352 billion plan to strengthen NTDC’s network – projects ranging from a new 220 kV grid station at Dhabeji to looping works on the Jhimpir line. These are exactly the sorts of jobs that consume high performance conductors and specialised cable. In the distribution segment, NEPRA has been processing review and investment plan determinations for Discos, laying the regulatory groundwork for capex on loss reduction, system reinforcement and service quality. Each approval may look technical, but together they create the demand that fills cable factories.

Third, concessional financing is supportive. The Asian Development Bank’s ongoing Second Power Transmission Enhancement programme continues to disburse for asset upgrades, with fresh monitoring reports posted through mid 2025. Multilateral programmes do not swing quarterly numbers, but they anchor a multi year pipeline for transmission equipment and materials – again, a favourable backdrop for suppliers with the testing and quality credentials multilateral borrowers demand.

On the tariff side, NEPRA’s adjustments for Discos in FY26, and the broader evolution of multi year tariff frameworks, point to a modestly more predictable operating environ-

ment for utilities. Combined with a nascent recovery in electricity demand, that predictability can unlock delayed maintenance and network modernisation – both cable intensive.

The macro linkages matter. Electrical infrastructure spends seed activity across construction, housing and industry. Each time a grid station is extended, a feeder upgraded or a municipal lighting project is rolled out, there is a chain of upstream and downstream orders: from copper and aluminium rod, to polymer insulation, to testing services and civil works. For Fast Cables, that chain is the business model: convert more of those programmes into orders, bundle cables with lighting where relevant, and use certifications and delivery performance to defend pricing.

Management’s commentary in the briefing underscored three levers to turn a macro tailwind into company level growth.

Compliance and certification. In a market where state linked buyers are increasingly risk averse and multilateral lenders require rigorous documentation, third party certifications are no longer window dressing. Fast Cables’ ISO 17025 lab and the KEMA Gold credential, alongside British standards certification, are positioned as door openers for both domestic tenders and export orders. The company says these credentials have already expanded eligibility to regional and global projects, including the UAE government’s transmission network.

Channel reach and digital verification. The nationwide branch network and the company’s presence in Saudi Arabia, the UAE and the United States provide access to customers across markets. At home, Fast Tasdeeq and Tasdeeq Plus help installers and buyers verify authenticity – reducing counterfeit risk and building brand trust, especially on mission critical jobs.

Portfolio adjacency – lighting. By developing a parallel lighting business – from street lights to professional and consumer luminaires – the company aims to ride the same procurement cycles with a second ticket. The target to lift lighting to 10–15% of revenue over five years is deliberately incremental: bolt on, not bet the company.

The immediate question for investors is whether 1QFY26 is the start of a trend or a blip. Two elements argue for the former.

Order book and mix. The swing in gross margin to 17% in Q1 suggests volumes are returning in higher value lines. Management’s narrative – resumption in government and utility orders, and strengthening private sector demand as rates ease – aligns with the year’s budgetary and regulatory set up. While FY25’s slump in utility procurement (–36%) is a reminder that policy can turn quickly, the PSDP allocation and utility investment approvals

point to a better funded pipeline in FY26.

Cost of money. Finance charges fell 26% in Q1, and, while not a profit driver on their own, lower borrowing costs help a working capital intensive manufacturer buffer price competition and scale production as orders arrive. Should the interest rate environment remain broadly supportive, the improvement below the operating line will continue to complement operating gains.

Risks remain. Competition is “intensifying across major segments,” management acknowledges, and energy tariff volatility can compress margins if price pass through lags. But the company appears to be using the tools at its disposal – testing credentials, export approvals, product breadth and digital verification – to keep price realisations and volumes on track.

The proof of a capex rebound will be in tender calendars and award notices from NTDC and the Discos. Grid station extensions, conductor upgrades, and feeder reinforcement all translate into immediate cable demand.

Municipal street lighting programmes and industrial campus upgrades are natural homes for Fast Lights. A rising contribution from lighting – towards the 10–15% five year target – would be evidence that cross selling is working.

Approvals in the Gulf and North America are promising, but conversion to repeat orders is the hard part. The company’s standards portfolio suggests it can compete on compliance; the task now is to prove that service levels and pricing can win share.

The PSDP envelope is the tide that lifts or drops many industrial boats. The Rs1.0 trillion allocation for FY26 is supportive; mid year revisions, if any, will be important. Continued multilateral financing for transmission upgrades, as documented by the ADB, adds a measure of insulation to the project pipeline.

Fast Cables’ Q1 shows what a normalising capex environment can do for a well positioned industrial: volumes return, mix improves, and margins expand. The company spent FY25 contending with squeezed budgets, high energy costs and fierce competition, and the numbers showed it. This year has started differently. With a Rs1.0 trillion federal development programme, advancing investment plans in transmission and distribution, and a backlog of private projects to wire and light, the demand picture looks less anaemic.

To capture that demand, Fast Cables will lean on a familiar formula: compliance as a moat, channel reach at home and abroad, and a widening portfolio that travels with the same customer through the project cycle. It is too early to call a full blown upturn, but after a long pause, the cables are humming again. n

How Did Meezan Become So Big?

The story of Meezan Bank’s dizzying rise to become one of Pakistan’s top five banks deserved to be told. Sibtain Naqvi does a decent job of telling an incredible story

By Usama Liaqat

Unless you’ve been living under a rock, you most probably have heard of Meezan Bank. Posturing as “the Premier Islamic Bank,” its rise has been nothing short of meteoric. Conceptualised in the mid-1990s by its Founding CEO, Irfan Siddiqui, it has fought an uphill battle in introducing and developing the field of Islamic banking in Pakistan. However, it grew so much and built such a strong reputation that it now ranks among the top five banks in Pakistan. Period. And a story like

that certainly deserves to be chronicled.

Sibtain Naqvi has taken this task on. In Unconventional: The Bank No One Saw Coming, he has written a story of Meezan Bank, from the seeds of its inception coming up to the present day. As Naqvi points out in his Author’s Note, “Irfan Siddiqui’s personal journey is so intertwined with Meezan’s history that it’s hard to separate the two”. Unconventional is a portrait of both the man and the bank.

Irfan had trained as an accountant in the UK, and after working in the Middle East with Kuwait Investment Authority (KIA) in the 1980s, shifted back to Pakistan to be with his parents. He had given up a glittering career to

move to a smaller and weaker market. Deciding to settle permanently in Pakistan, he soon became the General Manager of Pakistan Kuwait Investment Company (PKIC). PKIC was a dead horse – almost. However, Irfan was able to make a profitable turnaround in three years. Success shone upon his shoulders. Things were going well.

Yet once again, Irfan found himself at a crossroads. His wife, Dr. Ghazala, had started taking Quran classes and had learned that riba, or interest charged on loans, was forbidden in Islam. Irfan initially dismissed this by saying that the type of interest he dealt with was not prohibited. Yet, the domestic discussion

The decision was to quit conventional banking and then see what to do. I told my wife that we aren’t short on money as we have our savings and I have a simple lifestyle, so we can easily live on less if we have to

Irfan Siddiqui, CEO of Meezan Bank

persisted, and the couple eventually consulted Mufti Taqi Usmani, a renowned religious authority on the matter. His pronouncement was clear: it was indeed prohibited. Irfan was convinced, and was even willing to give conventional banking up altogether in order to not breach the religious injunction.

It is in these moments, where Naqvi shows what was happening behind the scenes at the personal level, that his narrative is moving. His reliance on interviews with key players contextualises key decisions in Meezan’s

Given its scale, experience and market standing. Meezan Bank is wellpositioned to lead the next phase of the industry’s development and set new benchmarks of high performance

Jameel Ahmad - Governor, State Bank of Pakistan

history by linking them to the motivations of the individuals making these decisions. For example, there is a palpable sense of Irfan’s willingness to take risks after his discussion with Mufti Taqi Usmani. Naqvi quotes Irfan: “The decision was to quit conventional banking and then see what to do. I told my wife that we aren’t short on money as we have our savings and I have a simple lifestyle, so we can easily live on less if we have to.”

So, once Irfan decided that he needed to give up conventional banking, he started to think about ways to bring what he does in line with his beliefs. And he hit upon the idea of opening an Islamic bank in Pakistan. There were successful precedents in the Middle East, but the idea still came with a significant risk, especially since a failed attempt had already been made in Pakistan in the 1980s. Irfan, however, through a mixture of persuasiveness, connections, and sheer luck was able to raise PKR 1 billion in order to start Al Meezan Investment Management in 1994.

The license to become a scheduled bank, however, was tough to obtain. Regulatory approvals were slow as the doomsday in coming. Eventually, Irfan found himself in a lucky position. The Pakistan government was looking to meet important people in the Middle East to attract foreign direct investment, and Irfan’s contact book was needed. One of those contacts in his meetings was able to convince a government official to expedite the license. Al Meezan Investment Bank (AMIB) was finally formed in 1997.

The business was slow, initially. Yet, with their emphasis on frugality and cutting costs, they were able to stay afloat. Since AMIB was the first Islamic bank in Pakistan, they not only had to educate their clients on Shariah-compliant banking, but also had to compete against banks that could offer better rates on liabilities and deposits. Meezan, therefore, had to both create conditions where it could thrive, and improve its service in order to stay competitive. At the same time, since they were serving almost exclusively corporate clients, Irfan’s ambition of spreading Islamic banking through Pakistan was still beyond grasp.

The opportunity for expansion came in

2002, when AMIB was able to acquire the Pakistan operations of Société Générale (SocGen), which was exiting the country. Naqvi provides some interesting details about the story of this acquisition, the hesitation on part of AMIB management, the different strategies they explored, and the advice of Dr. Ishrat Hussain in helping the process. In acquiring SocGen’s portfolio, AMIB was able to integrate their commercial banking operations, and consequently was able to expand its offerings to the general population. AMIB now became the recognizable Meezan Bank Limited.

Once they had completed the acquisition, there were a total of five branches – four came from SocGen, and the remaining one was AMIB’s headquarters in Karachi. Total assets post-acquisition were PKR 4 billion. After the complex process of converting SocGen’s assets into a Shariah-compliant form, Meezan set on its path. The growth was steady, but nothing remarkable. Meezan had to overcome scepticism around Islamic banking, while at the same time inculcating a belief in its need among its employees. In fact, enthusiasm for Islamic banking was as important a factor as technical competencies in being hired at Meezan. The bank’s operations were also overseen by a Shariah board to ensure whatever it did strayed not from its vision.

It is adherence to this vision – that of establishing “Islamic banking as the banking of first choice” in order to lead to public good – that Meezan’s commitment shines through the book. The book could, however, have benefitted from a short primer on what exactly Islamic banking was, considering it’s the heart of the matter. It would have provided some much-needed context for the lay reader.

In any case, the story of growth continued, with Meezan launching new Islamic banking products and branches. At the same time, it started investing in various local corporations and MNCs, such as General Tyre, Rafhan Maize, Gul Ahmed, Engro, Nishat etc. Starting initially with a goal of opening 20 branches, the post was shifted in 2005 to the target of 100 branches. Concurrently, the bank was investing heavily in technology, people,

and educating both prospective clients and the general population. It also focused heavily on making processes easier and efficient for its clients in order to improve its service. For instance, it once approved a PKR 2 billion credit for Tetra Pak Pakistan in one day. Its reputation was strengthened by the fact that it aimed to be the best in service across all sorts of banking. The ‘Islamic’ factor, although important, took a backseat to excellent service through which Meezan was able to build trust in its brand.

By 2012, Meezan had become the 8th largest bank in Pakistan by branch network, now totalling over 350 from the initial five. Profits after tax had risen to over PKR 1 billion from PKR 223 million in 2002.

Another opportunity for expansion came with the acquisition of HSBC’s Pakistan operations. The merger was finalised in 2014, and although HSBC’s operations were not too large, they provided a valuable reputational boost, provided “international banking practices and operational efficiencies,” and brought in newer clients.

In the decade since, Meezan has grown

Meezan Bank has transformed the banking landscape of an entire country. Its rise and influence have no real parallel, making it one of the most significant financial success stories of our time

Zafar Masud Chairman, Pakistan Banks’ Association

at an astonishing speed. By 2024, the number of branches had grown from 428 to 1051. After tax profits during the same period rose from PKR 4.6 billion to PKR 84 billion. Total deposits grew from PKR 380 billion to 2585 billion in the decade. It has become the most profitable bank in Pakistan, and the second largest by market cap.

In telling the story of this rise, in the chapter “The Dominant Decade: 2014 to 2024”, the book becomes a little flat. Instead of the narrative that had sustained interest in leading up to Meezan’s founding and its initial decade, there are few substantial hooks to gather the reader’s attention here. Granted not every part of the book could be similar, or as dramatic as the two fires in Meezan’s previous office at the PNSC building in Karachi, the narrative thrust is what keeps the reader’s interest intact. Here, instead, Naqvi prioritizes listing out in detail the possible causes of Meezan’s rise, and the effect is somewhat dry. For example, talking at length about technology, while going into detail about the software, where they were bought from and so on, comes across as mere record-keeping, which is important to be sure, but not very interesting.

Critical distance is not a strength of this book. Unabashedly partisan, the author tells the story of how Meezan Bank sees itself, not a fault in itself – it is Meezan’s own story, after all. There is, however, little critical input Naqvi provides other than relating platitudes about success to what was happening in the bank’s journey. He often interjects with commonplaces such as “if one dreams, then one should dream big” and “the journey of a thousand miles begins with a single step”. In a narrative driven by the interviews of the key players in Meezan’s success, where everything is neatly resolved into a story of success, the author could have punctuated with some surprising wisdom of his own. Instead, for an ‘unconventional’ book, the advice is surprisingly conventional.

In fact, the book also purports to be sort of a self-help manual, branded by Naqvi as an invitation to a journey. Each chapter starts with a “Finding True North” section which is a rumination on aligning beliefs and action. Each chapter ends with a “Living the Meezan” section which explores what the events in the previous chapter mean in life terms. Faux-inspirational, these offer inflated riffings on the themes of believing in yourself, sometimes things work out in different ways that you had imagined, being true to what you believe in, a leap of faith sometimes works out, the importance of humility, and so on. This roster of wisdom might certainly be effective advice in some cases, but here it is too repetitive and on the nose to be pleasing. The story of Meezan Bank is sufficiently interesting and speaks enough on its own without these nuggets thrown in.

Meezan Bank is not just an Islamic Banking success story. It’s the success story of Pakistan’s banking history

Mian Muhammad ManshaChairman, MCB Bank Limited

The book could also have benefitted from more tables or graphs charting in numerical terms the growth of Meezan Bank on a yearly basis. As it stands, there is only one small table, which compares growth across 2014 and 2024. Growth figures otherwise are thrown into the sea of prose, and it’s hard to compare them unless you are making a table of your own on the side. Similarly, perhaps, a timeline of Meezan’s progress could also have been included. It would have helped the reader keep their bearings as the narrative meandered through various quotes, figures, personages, technical terms, and so on.

Overall, this paean to Meezan Bank is readable and generally holds interest. One factor in this is the topic, of course. You couldn’t go wrong with it. But Naqvi has done his research, and the extensive list of interviews he has done (an interviewee list is appended at the end of the book), adds colour and verve to his book. Some interesting reproductions in the book, such as Irfan’s handwritten note on a notepad listing the potential investors for AMIB and how much he could potentially get them to invest, are also a great peek into what was happening behind the scenes. It is a welcome contribution to a literature that should certainly see more people chipping in. Many stories such as Meezan’s are waiting to be told. n

The art of thriving in a survival economy

How a Pakistani co-working startup survived a funding winter, and found gold in the desert

By Ahtasam Ahmad and Taimoor Hassan

In a nondescript building in Lahore, Omar Shah pulls up a spreadsheet that tells two stories. The first column shows Pakistan’s co-working revenue per seat: Rs.30,00040,000, largely unchanged for three years. The second shows Saudi Arabia: $1,500 per seat. “Cost is 5x but revenue is 10x,” he says, with great confidence and pride in his eyes, during a conversation with Profit.

They are not expanding to Saudi Arabia. They are graduating.

If you go back to January 2025, the situation looked extremely bleak. Pakistani startups raised $42.5 million all year, less than what some companies raised in a single round three years ago. Co-working spaces were bleeding customers. The average lifespan of a co-working space in Pakistan has been around two years. Contrary to that, COLABS claims it has been profitable for more than three. Now, in Q1 2026, COLABS will open its flagship Riyadh location with Shorooq Partners and Waseel Investment backing. The same week, another Pakistani co-working space will likely shut down.

The graveyard shift

Pakistan has 449 co-working spaces. Most are ghosts. When 3G and 4G launched in 2014-2015, Pakistan was supposed to be the next frontier. The narrative was intoxicating: 220 million people, a median age of 22, thousands of freelancers joining global platforms, and a nascent startup ecosystem ready to explode. By 2016, the pioneers moved in. Kickstart, founded by LUMS alumni. Daftarkhwan, backed by entrepreneurs wanting to bring Silicon Valley culture to South Asia. The Hive, bootstrapped from a single Islamabad location.

They all thought they’d be the WeWork

of Pakistan. They were copying the wrong playbook.

While Pakistani operators were raising their first rounds, Adam Neumann was burning through $47 billion in valuation. WeWork had become Silicon Valley’s darling, promising to “elevate the world’s consciousness” one desk at a time. The company expanded to 600 locations worldwide, hosting 600,000 members. But beneath the kombucha taps lay a fundamental problem: co-working’s real issue isn’t just burning money, it’s depending on a customer base that could disappear overnight. WeWork’s 2019 implosion should have been a warning. The IPO prospectus revealed staggering losses, questionable governance with Neumann’s supervoting shares, and bizarre self-dealing including Neumann selling the “We” trademark to his own company for $5.9 million. The valuation crashed from $47 billion to under $10 billion. Neumann was ousted.

Pakistani operators dismissed it as American excess. By 2021, it seemed they were right. Pakistan’s startup ecosystem was flying high with $352 million in funding. International VCs were circling. Co-working spaces expanded aggressively. Daftarkhwan grew from 5 to 9 locations. Kickstart reached 10. Everyone was betting on startups.

Then came the winter.

When the music stopped

The unraveling began in Q4 2022. Global interest rates were rising. The free money era was ending. But in Pakistan, the pain would be particularly acute. Q4 2022 saw funding drop 78% year-over-year. The numbers tell a brutal story: 2022 brought $355 million but declining quarterly, 2023 saw only $74 million raised, a 79% collapse, and 2024 managed just $42.5 million. Pakistan’s 79% funding decline far exceeded the global venture capital decrease of 38%. The casualties mounted like a startup

massacre. Airlift, which had raised $85 million at a $275 million valuation, shut down abruptly. TAG, a fintech that raised $17.5 million, became embroiled in controversy. Jugnu collapsed. Medznmore gone. These weren’t just statistics, they were co-working spaces’ biggest potential customers.

The domino effect was swift. Pakistan’s political turmoil intensified with routine internet shutdowns during protests. Inflation hit 38% in May 2023. Interest rates soared to 22%. Co-working spaces faced a triple crisis: customer exodus as startups died or downsized, cost explosion with electricity bills doubling, and payment delays from even surviving startups.

Spaces that were 90% occupied in January could be 40% occupied by March. Operators were losing 60% of their business but still had to pay full rent to landlords. The math stopped working.

The pivot

“In 2022, we had a choice,” Omar Shah recalls. “Chase dying startups for Rs.30,000 per seat, or pivot completely.”

While competitors doubled down on distressed startups with ever-deeper discounts, COLABS made a counterintuitive move: they went upmarket. The transformation required fundamentally rethinking what a co-working space could be in a country where startups were dying but enterprises were still operating.

In 2021, COLABS’s client base had a high number of startups. By 2024, enterprises led with 30-40%. “A startup might die tomorrow,” Shah explains. “Coca-Cola won’t. Ernst & Young won’t. These companies need space and flexibility.”

The real innovation was the business model. The old model was straightforward: lease space, fit it out, sublease to members, pray occupancy stayed high. It was the WeWork model, and it was broken. COLABS

went to landlords with a different proposition, partnership, not tenancy. The landlord provides space and capital for fit-outs. COLABS provides operations, brand, technology, and members. Revenues and profits are shared.

For landlords, the math was compelling. Traditional lease yields in Pakistan commercial real estate run 7-8%. With the JV model, yields jump to 14-16%, effectively doubling returns. When markets are tough, both parties share the pain. While competitors bled cash regardless of occupancy, COLABS’s costs flexed with revenue.

COLABS stopped thinking of itself as a real estate company and became a business services platform. Payroll processing for companies navigating Pakistan’s complex reporting system. Investor introductions for scaling SMEs and startups. Legal services partnerships. “During COVID, we gave some clients 50% discounts,” Shah reveals. “Those companies are still with us, now paying full price and referring others.”

The network effect became COLABS’s real moat: 5,000 members across 300 companies, each one a potential customer, partner, or referral source. The proof of concept came from an unexpected source, the Pakistan Air Force. The NASTAP Lahore partnership brought military discipline to startup culture. “If we could make the Air Force a co-working partner, we could partner with anyone,” Shah says.

The 10X arbitrage

The math on Shah’s laptop seems almost too good to be true. Pakistan reality shows revenue per seat at $100-150 monthly, requiring a high occupancy for breakeven, with growth flat for three years. The Saudi opportunity presents revenue per seat at $1,000-1,500 monthly, needing only 35-40% occupancy for breakeven, with demand “through the roof” in a current market of 500 seats with potential for more than 10x.

“It’s not just price arbitrage,” Shah explains. “In Saudi, physical offices are mandatory for business licenses. Every new company needs an address. The demand isn’t speculative, it’s structural, built into the regulatory framework.”

International operators in the Saudi market charge $2,000+ per month for office space, targeting multinationals. Local players lack ecosystem experience. COLABS at $1,0001,500 hits the sweet spot, affordable for SMEs, premium enough for quality. Add to it the subsidy structure. “Our Pakistan operations, profitable for many years, will subsidize Saudi overhead,” Shah reveals. “We already have the backend team, the platform, the playbooks. Saudi is pure margin expansion.”

While Pakistani operators fight over shrinking Rs.30,000 seats, COLABS moves to

a market where the same product generates 10 times the revenue. Saudi’s Vision 2030 has created unprecedented demand. New business formation is at record highs. Women entering the workforce need professional spaces. International companies require flexible solutions.

The desert landing

Adam Neumann built WeWork into a $47 billion fantasy with supervoting shares, self-dealing property leases, and a $5.9 million payment to himself for the “We” trademark. What WeWork has taught many operators like shah is what not to do. No messianic founder worship. No growth at all costs. No 20-year leases for 2-year customers.

The lessons, as per shah, are embedded in COLABS’s DNA. Free cash flow has been their anchor. Ninety percent of COLABS’s revenue comes from 12-month contracts with 2-month deposits upfront. “We don’t sell vision. We sell desks with predictable payment terms.” They claim to have chosen profit over growth, which is why they survived Pakistan’s worst economic crisis.

Now, Q1 2026 approaches with ambitious but achievable targets: 30-40% occupancy from day one. In Pakistan, they’d need higher occupancy rates to survive. In Saudi, 40% means profit. The pipeline is already being built. Pakistani companies expanding to Saudi need familiar spaces. Saudi SMEs want COLABS’s price point. International firms seek alternatives to overpriced competitors.

The Vision 2030 tailwind is powerful. Saudi Arabia isn’t just diversifying its economy, it’s reimagining its business culture. COLABS isn’t just bringing desks; they’re bringing ecosystem expertise from a country that, despite challenges, built a vibrant startup culture from nothing. The risks are real, cultural navigation, competition from deep-pocketed locals, managing operations across 3,000 kilometers. Can Pakistani innovation translate to Saudi execution?

The last stand

COLABS’s Saudi expansion is more than a business story, it’s a template for how Pakistani companies can thrive despite their home market’s challenges. While Pakistan’s startup ecosystem craters with $42.5 million raised in 2024, a profitable company expands regionally, proving success is possible with the right model.

The template is clear: companies that survive Pakistan’s chaos can thrive anywhere. Venture capital is a luxury, not a necessity, COLABS raised just $5 million total. The same product generating $150 in Karachi generates $1,500 in Riyadh. COLABS’s 5,000 members across Pakistan will soon connect with Saudi

We didn’t survive Pakistan’s startup winter to die in Saudi’s desert,” Shah says. “We survived it to bloom there

Omar Shah, Founder Colabs

members, creating a bridge for cross-border business beyond co-working.

In 2021, when Pakistani startups raised $352 million, everyone wanted to build co-working spaces. In 2024, COLABS is perhaps the only operator still building, just not in Pakistan. “Maybe that’s the lesson,” Shah reflects. “Sometimes the best way to serve your home market is to prove you can succeed beyond it.”

The last man standing in Pakistan’s co-working wars isn’t trying to win the war anymore. He’s moved to a different battlefield where the economics actually work.

“We didn’t survive Pakistan’s startup winter to die in Saudi’s desert,” Shah says. “We survived it to bloom there.”

The average Pakistani co-working space survives two years. COLABS is approaching six. The difference isn’t luck or timing or capital. The difference is recognizing when to stop fighting yesterday’s war and start winning tomorrow’s peace, even if that peace is 3,000 kilometers away, in a desert kingdom where Pakistani efficiency might just be the competitive advantage nobody saw coming.

And in a world where unicorns regularly turn into donkeys, being a profitable camel crossing from one desert to another might be a great success story. n

Authorities continue to block Pak-Afghan trade to send tough message to Pakistani economy

By Profit

In the latest episode in the ongoing tensions between Pakistan and its economy, Pakistani Customs have prevented an attempt to import Afghan-origin fresh fruits through Iran, a move authorities say was aimed at bypassing the suspension of bilateral trade with Afghanistan, even as more than 5,500 Afghan transit containers remain stranded due to ongoing border closures.

The importer submitted Afghan-origin documents including invoices, bills

of lading, export declarations and phytosanitary certificates but it was of no use, as the Customs officials said no bilateral trade can take place as the government had announced strict actions against both Pakistani exporters and importers.

“We have to ensure our targets are met,” said an official over at the Economic Affairs Division at the Civil Secretariat, Islamabad. “and we are already seeing results. Just the other day a delegation from the Sarhad Chamber of Commerce and Industry assured us that the closure of trade between Pakistan and Afghanistan

will hurt Pakistan more.”

“We also have reports that both Uzbekistan and Russia have offered to sell them sugar, and that the Iranians and Indians are competing to sell medicine,” said the official. “Soon, we will stop blocking the trade as there won’t be any. Soon, our exports to Afghanistan, which were $2.6 billion in 2011, will shrivel to next to nothing.”

“In the meanwhile, we just want the public to be understanding and patient. The bad times will end soon, and the worse times will start.”