CONTENTS 18
10
10 Barbers, the KIA Sportage, and mango murder - this week in Pakistan’s business and economics twitterverse 12 The great Pakistani real estate racket
18 18 The rise of Inam Akbar 24 Will auto-disabled syringes save Pakistan from a health crisis?
27
27 Ismail Industries to invest in packaging 28 Debunking the income tax amendment bill
30 30 ucky Cement finds some luck in...Iraq
Profit
33 Why is GroupM launching INCA in Pakistan?
Executive Editor: Babar Nizami l Managing Editor: Farooq Tirmizi l Joint Editor: Yousaf Nizami Reporters: Ariba Shahid l Babar Khan Javed l Taimoor Hassan Abdullah Niazi l Meiryum Ali l Shahab Omer Director Marketing: Zahid Ali l Regional Heads of Marketing: Muddasir Alam (Khi) Zulfiqar Butt (Lhr) l Mudassir Iqbal (Isl) l Layout: Rizwan Ahmad l Photographers: Zubair Mehfooz & Imran Gillani l Business, Economic & Financial news by 'Pakistan Today' Contact: profit@pakistantoday.com.pk
Readers Say Shan is a very good brand and is known around the world, particularly in diaspora South Asian communities, for its superior quality. Here in the UAE, masala by Shan is also being used very widely. However, I personally think they need to focus more on the market and expand their business even further in foreign countries. The thing is, they are currently doing well in countries outside of Pakistan, but the size of the opportunity they have in front of them is massive. There is so much potential for their products outside of Pakistan, and they should treat this as the opportunity that it is for them. Especially because their masalas are not just popular among the Pakistani diaspora market, but are also very popular among the Indian diaspora market, which is even larger than the Pakistani market and can make them some serious profits. Apropos: Why Shan Foods should actively consider an IPO Lawangen Khan, Facebook They are quite well known in Europe as well. Definitely a good idea to fuel expansion! Apropos: Why Shan Foods should actively consider an IPO Ahmed Manzoor, Facebook Shan Masalas are one of the best exports that Pakistan has, and we must recognize the potential for them. This product has gone beyond just being worth exporting or having demand in certain sectors. Since the South Asian diaspora is quite large, Shan’s products have become an essential presence in all major superstores such as ASD, or Tesco that they have to have on their shelves. In addition to this, I do not think there is an equivalent from India to compete with Shan Masala. They have companies like MDH which are famous in India and trying to make their mark abroad as well, but I have personally seen a lot of Indians preferring Shan’s mixes to the ones by MDH and other Indian companies. Apropos: Why Shan Foods should actively consider an IPO @talhamalikgma1, Twitter
facebook.com/Profitpk twitter.com/Profitpk linkedin.com/showcase/13251020 profit.com.pk profit@pakistantoday.com
HOW TO CONTACT
7
Correct me if I’m wrong but I guess none of the ETFs in Pakistan is tracking any index like KSE-100 or KMI-30 and are mostly composed of only around a dozen stocks so are they really well diversified and passively managed? I hope you’ll discuss index funds and ETFs in any of your future substack. Apropos: Exchange Traded Funds: An Opportunity Lost? @MZainSiddiqui1, Twitter I planned to buy an ETF many times but there are simply no volumes. All PSX ETFs are illiquid. I don’t think it works only one way. If I have to sell the ETF, then there is no one to buy
it. Hardly a few thousand shares are traded each day in ETFs on PSX. Check the volumes. On many days there are zero trades in ETFs. I always find it difficult to sell, even below NAV. Apropos: Exchange Traded Funds: An Opportunity Lost? @aliimtiaz38, Twitter This is to clarify that Pakistan Telecommunication Company Limited (PTCL), being a national carrier, had moved its Voice Network from Analogue to Digital way back in 1990s. In 2003, PTCL further upgraded its service and began the Optical Fiber Access Network (OFAN) project to provide high speed and quality telephone, internet & Smart TV services (Triple Play). PTCL expanded its footprint in all major metropolitan cities of Pakistan and is providing state-of-the-art services over Optical Fiber Access Network using FTTC (Fiber to the Curb) & FTTB (Fiber to the Building) for a while now. With the global technological advancement and evolution, the company moved a notch up as well with its Fiber-ToThe-Home (FTTH) service in all the major cities nationwide and maintains its high standard and quality of services within the competitive telecom industry.With the largest fixed line network of the country, PTCL offers numerous products for the customers including high speed Broadband internet, CharJi wireless internet, Smart TV (IPTV) service, over-the-top (OTT) applications like Smart Link App, Smart TV App and PTCL Touch App, and world class digital content like Netflix etc. Moreover, PTCL’s enterprise portfolio includes Smart Cloud, Tier-3 Certified Data Centers, Managed Services and Satellite Services. These provide robust, scalable and secure architecture that help enterprise customers to build more agile and reliable networks. Furthermore, enhanced performance is delivered with higher capacity bandwidth, network visibility, and a seamless on-ramp to the Cloud with significant application performance.PTCL provides the connectivity backbone for the country with largest fiber cable network that spans from Khyber to Karachi. PTCL is part of consortium of 4 major submarine cables (SEAMEWE-3, SEAMEWE4, IMEWE & AAE-1) connecting Pakistan to the world. According to the Best Buy Award research survey conducted by the Swiss organization ICERTIAS, PTCL has also been ranked as the number one broadband and fixed line telephony service provider in Pakistan. Fariha Tahir Shah, GM Corporate CommunicationPTCL, appropos LTE published February 22nd, by Mr. Haroon Rashid.
COMMENTS
IN BRIEF The government’s aggressive pro-export policies took another hit as the import bill of edible items widened 50.3pc to $5.34 billion year-on-year in the first eight months (July-Feb) of FY21, triggering higher-than-expected trade deficit.
$7 billion:
Foreign lenders disbursed over $7 billion in loans during the first eight months of the current fiscal year (8MFY21), higher by 12 per cent. According to local media reports, China remained the largest creditor that gave $2.4 bn or over one-third of the total new loans.
Rs1.76 billion:
Philip Morris (Pakistan) Limited has announced a profit after tax of Rs1,765 million for the year ended 31st December 2020 as compared to a loss after tax of Rs1,980 million in the corresponding period last year. The government has reversed its decision to allow uncapped prices for Covid-19 vaccines imported by private firms, the health minister said on the same day that the first shipment of privately imported Russian Sputnik V shots arrived.
Pakistan’s largest shoe exporter, Service Global Footwear Ltd., is planning an initial public offering (IPO) in the domestic market to raise funds to invest in its parent’s tire joint venture. The company plans to raise at least 1.6 billion rupees ($10 million) by offering 41 million shares at a floor price of Rs38 per share. The dream for a digital Pakistan continued to slip after the Peshawar High Court (PHC) ruled that TikTok will remain blocked until a mechanism is devised to remove ‘immoral and indecent’ content from the app.
Rs12.3 billion:
The French government has agreed to provide a soft loan of Rs12.3 billion (65 million euros) for the Bus Rapid Transit (BRT) Red Line Project in Karachi. In order to facilitate the credit, Ambassador of France in Pakistan Marc Barety and the French Agency for Development (AFD) country director signed a credit financing agreement.
8
Barbers, the KIA Sportage, and mango murder this week in Pakistan’s business and economics twitterverse
Questions of financial inclusion, missing cars, and GDP projections dominate this week’s social media roundup
W
Profit’s reporter Ariba Shahid analyses the business and economic highlights from Pakistani Twitter this week.
Numbers game
hile social media abuzz with wishes for the Prime Minister’s quick recovery from the coronavirus and concerns about how this will affect vaccine perception in Pakistan, a lot has quickly traveled to the background in terms of the happenings of social media. However, there were still more than a few interesting and amusing moments throughout the week. This week, we look at the potential of barbers as mobile money agents, APTMA’s latest activities that are raising eyebrows, the auto industry in Pakistan trying to break free from the shackles of the Big Three, how Pakistan is squandering its mango export potential, and much more. Profit’s Ariba Shahid presents this week’s social media roundup
IPOs are cool
Brokerage firms often overlook the tech sector. This is to the extent that most do not have a dedicated analyst for the sector nor do they provide coverage. That, however, has to change considering the fact that the brokerage sector needs to play its part in readying tech companies for IPOs instead of merely relying on foreign buyouts.
10
A mathematician, a statistician and an accountant apply for the same job. The interviewer calls in the mathematician and asks, “What does two plus two equal?” The mathematician replies, “Four.” Then the interviewer calls in the statistician and asks the same question, “What does two plus two equal?” The statistician says, “On average, four - give or take ten percent, but on average four.” Then the interviewer calls in the accountant and poses the same question, “What does two plus two equal? “The accountant gets up, locks the door, closes the shades, sits down next to the interviewer and says, “What do you want it to equal?” Here, Bilal Lakhani, reminds us of the account. While a 2% GDP forecast jumping to 3% is merely a 1% or 100bps change, if you calculate the change in percentage terms it comes down to 50%. While Bilal is talking about this 1% change, he is also teaching us a valuable lesson on representation of numbers and how sometimes even an absolute change of 1% can seem 50% given the low base case.
APTMA spinning a tale
Digital mapping Annabel Gerry, the development director in @UKinPakistan applauds the efforts of SNG Pakistan and the Government of Punjab for their efforts in digital mapping in order to increase property tax revenue. This is an important step considering the fact that there are approximately 15,000 properties to 1 field surveyor.
Mango murder Zuhair Abbasi, Senior Analyst at BR Research, makes his skepticism known about the fact that industrialists have already invested $3 billion into expanding capacity, and also points out the incorrect calculation done by APTMA. Moreover, Abbasi points out the confusing nature of the term “output gap” whilst also claiming the industry is at full capacity
No love for the Big Three
In the past, roads in Pakistan were filled with favorites such as Mehran, Alto, Corolla, City, or Civic. These cars were favourites less because they were such cool cars, and more because there were no other options. The power of the infamous ‘big three’ seems to be on the wane, however, considering the increasing number of cars by other brands, in particular the KIA Sportage. Adeel Azhar, a local radio show host, however questions about where the Tuscons, Proton X70s, and MG cars are that claim to have been sold out.
Who doesn’t love Mangos? Well it looks like some Pakistanis do not, and are merrily out and about chopping down mango trees. While that may just be a whatsapp forward, Uzair Younus is right about the fact that Pakistan just isn’t living up to it’s true mango potential considering the fact that not much has been done to tap into the global mango supply chain to make mangoes the next avocado.
Barber potential We’re always going on about financial inclusion, mostly because it is very important. But recently, the founder of Gallup Pakistan, Bilal Gilani, made an interesting suggestion about an industry that could act as mobile agents: barbers. There are currently at least 150,000 barbers in Pakistan, the vast majority of them local corner shop setups. The overall estimated turnover of the industry is $750 million, all things that make them a viable option to be mobile money agents. However, this would require documentation. That acts as a hindrance towards recording transactions because of tax aversion. However, Raheel Kuraishy, an Innovative Scientist as per his LinkedIn, comments that post offices, logistic companies, barber shops, dairy shops, restaurants, fruits and vegetable shops can’t help without a digital roadmap and guiding hand
SOCIAL MEDIA ROUNDUP
The great
Pakistani real estate racket By Shahab Omer and Abdullah Niazi
W
e begin this story with two requests of our readers - the first is that they remember, as they read through this description of dicey events and questionable business practices, all of the relatives and friends they undoubtedly have that have been scammed by property dealers, housing projects, and real estate developers. Because this much we can safely assume: that the average reader of Profit at the very least knows someone that has their money stuck in some unsellable plot, or has bought a ‘file’ or a registration certificate for a plot in some shiny new housing scheme that they have yet to receive and are likely not to. Our second request is to applaud and marvel at the twin genius of the internet and citizen journalism. Because the idea for this story comes from a tweet, or more precisely, one twitter handle @2paisay, that has been relentlessly waging a battle against the Master
12
Master Tile’s La Ville De Paris scheme is just one example of everything that is wrong with how real estate in Pakistan works
Tiles Group and their latest project, La Ville De Paris, and has written a brilliant blog compiling all of the red flags from the project through meticulous research and analysis of the project’s marketing campaign. Yes, this is the same Master Tiles that recently hosted the much talked about wedding in which their daughter married the scion of the family that owns Jalal Sons. The project is nearly as gaudy as the wedding, and plans to build a replica of Paris over 4800 acres full with a 200 meter tall Eiffel Tower, a replica of the Arc de Triomphe, and a ChampsElysees-style road. It is also the same Master group, that only a few years ago in 2015, was involved in Master City, in which the buying and selling of plots was halted after the courts got involved, and when the housing scheme did not comply, contempt notices were issued against its owners. Since the publishing of the blog by twitter user @2paisay, Profit has been digging into the regulatory and legal realities of Le Ville De Paris. On Friday, the Securities and Exchange Commission of Pakistan (SECP) warned the general public about the La Ville De Paris scheme, declaring it unlawful for investment.
Before this, the Chairman of the Gujranwala Development Authority (GDA) confirmed to Profit that not only had the Le Ville De Paris not gotten the necessary approval from the GDA, but that the GDA had not even received a request from them, yet they have been collecting money from people in lieu of ‘certificates.’ All of this is illegal. All of this is a scam. Hook, line, and sinker. All of this is infuriatingly typical of what goes on in the murky world of Pakistani real estate. The story of what led to the SECP recognising and declaring what seemed to be a massive undertaking a scam tells the larger story of the real estate scam in Pakistan that so many regularly fall prey to. Profit investigates.
The bait - Paris
T
here is one and only one real cultural estimation of whether you have ‘made it’ in Pakistan - and that measure is whether veteran journalist Sohail Warraich has ever called you up and asked to film an ‘Aik Din Geo Kai Saath’ episode with you. A seemingly unassuming, gentlemanly, even oafish presence, Warraich
is beneath the surface a master interviewer that can shrewdly get powerful men and women to spill their secrets, and bring out the private personalities of those that otherwise maintain very stoic media profiles out of necessity. In an episode of the show that he filmed with Malik Riaz, the founder of the Bahria Town group, one moment of Warraich’s journalistic mastery was on display when he asked Malik Riaz a number of lighthearted questions to soften him up, before throwing a pointed question about the European inspiration behind his housing projects. “We go to foreign countries, we see what they have done, we steal the idea and we bring it here,” Riaz responds with shocking candor. “That is all there is. Like I just saw the Eiffel Tower recently, so we imported a replica from China and everyone loves it and comes to Bahria Town from far away to see it.” This little tidbit reveals a much darker side of how real estate developers hook in people for their housing schemes. A ‘plot’ (pee-lat) in Pakistan is sacred. The desire to live in a clean, gated, ‘posh’ area is the upper-middle class dream for most Pakistanis, one that they spend their entire lives at times, trying to achieve. Every year, the urban housing demand in Pakistan is 350,000 homes. Of this, 62 per cent is for lower-income groups, 25 per cent for lower middle- income groups, and 10 per cent for higher and upper middle-income
“There was a definite problem of over-selling in Master City. But that project was completely under Sheikh Maqsood Iqbal, La Ville De Paris is the vision of Sheikh Mehmood Iqbal. Our project is very transparent and we want to keep it neat and clean” Bilal Sandhu, marketing manager of La Ville De Paris groups. The formal supply per year is 150,000 units, a vast majority of which caters to the higher and middle-income groups. So when a swanky businessman like Malik Riaz or Sheikh Mehmood Iqbal of the Master Group says they are going to build a European city in Pakistan, and you can buy a file or a certificate to be a part of it when it is fully developed in a very short amount of time, you don’t think, you run and find the nearest property dealer. That is exactly how La Ville De Paris began as well. With huge billboards, full page newspaper advertisements, and property dealers on commission. The marketing campaign for this project was massive, and along with a promise to build Paris in Gujranwala, there was the added bonus of a French team working on the project, led by Chairman, Jean Louis Raja Martinez, a supposedly famous French management guru that was to have
Explainer
The file system
W
hat happens is that whenever a developer launches a housing scheme, they never have enough investment to buy a large enough tract of land to impress possible buyers. What they do then is go on a marketing campaign in which they announce a new housing scheme, often getting celebrity endorsements and pasting huge advertisements all over the cityscape. They then offer what they call ‘advance booking’ and present it as a chance to be some of the first people to buy plots for cheap in the new society. What they are doing instead is getting together enough capital from these ‘advance bookings’ to actually be able to buy the land required for the project. The people investing are told their plots are still in the development stage and they will only be told where their plot is once the technical aspects of mapping and zoning are figured out. The truth is that the land has not yet been purchased by the real estate developer. So how do they get people to buy these prospective plots that they cannot see or visit? Every savvy developer hires an army of local property dealers on commission to sell files for their scheme. Now, you might think that this is simply an issue of semantics of what customers are promised and shady selling techniques, except the
control of everything from investors to the technical aspects of the project. While Martinez was unavailable for comment, the project's marketing manager, Bilal Sandhu said that Martinez had come to Pakistan only out of love for the project and that now Pakistanis “will have a place like Paris where houses will be offered for sale at a reasonable price, with the kind of facilities that they would expect to find in Paris.” That is a pretty little mission statement. The problem is, for all their pomp and show, La Villa De Paris is operating the same way you would expect any housing society in Pakistan to operate. The general perception is that since there is a large group like Master Tiles behind the project, it will be legitimate and free from fraud. The truth is a little different. You see, buying a residential plot in a new society is like building a house on sand.
problem goes deeper than this. For example, if enough investments are not collected and the project is halted, the people that bought the files could have tied up their money for decades to come. Then there are other common scams. Say, for example, that a housing scheme covers an area of 1000 acres, and has a capacity of 1500 residential plots. The property dealers that the developers have on commission will go ahead and sell around 3000 people, sweet talking buyers into believing they will soon become owners of these plots. What we have now is 3000 files on the market for 1500 plots, many of them with the same plot numbers on the files. So if a file was sold for Rs 100,000, then by selling 3000 files, Rs 300 million comes straight into the pocket of the developer. One or two percent of these Rs 300 million is distributed to property dealers. It is with this money that the developer starts buying the land. However, by the time this happens, people start demanding their plots are allotted already. At this point, rumours begin to spread that the developers have shortchanged the buyers, and people start selling their files in a frenzy. This is good for the developers because they then buy back many of these files through property dealers at a much lower price, still managing to make a significant profit for very little work. With the major chunk of the profit already made, motivation to work on the development of the housing scheme is also low and work can go very slowly. For the extra files that remain, either the project is expanded and the plots are ‘re-priced,’ or the buyers are completely hoodwinked out of their investment.
REAL ESTATE
People protesting outside the master city The real estate developer, even before acquiring any land or deciding where the project will exactly be located, begins a marketing campaign with big promises of a Paris-esque housing society. It is usually named something like ‘Dream Gardens,’ ‘Paradise Villas,’ or some other Utopian sounding name. Along with the marketing campaign is an offer to buy ‘files’ or ‘certificates’ to pre-register for the opportunity to buy plots in these societies. All of this is done without any approval from district administration, housing authorities, and any sorts of checks from regulatory agencies like the SECP. Then, once they have collected enough capital from selling these certificates, they then buy the
14
land and begin development. If this does not work out, the money often sinks and people are left stranded. These tactics are common, however. They are the same ones that Bahria Town uses, and which are being used in ARY Lagoona. Even in societies like DHA, the infamous ‘file system’ is operational which has been explained in more detail in the in-set that accompanies this story. But what got the SECP to notice the La Ville De Paris project and advise the general public “to refrain from investing their hard-earned money in any unauthorized scheme,” was the lottery that they recently tried to hold.
The hook - Le Paris’ method
L
a Ville De Paris is offering certificates. Essentially, you buy a certificate for Rs 115,000 and then you have the right to conduct business and buy and purchase plots in the housing scheme. Without a certificate, you cannot do any of this. The problem is how mysterious everything surrounding these certificates has been. For starters, by their own admission, as revealed to Profit, Le Ville De Paris has only purchased 3000 acres out of the 4800 acres the society is to be built on. This means that while the company may claim this is just a business tactic, the money from the certificates will be used to purchase the rest of the land. More importantly than this, they have gotten no approval from any government agency or the Gujranwala Development AUthority (GDA), before launching this project since they will not get it before purchasing all of the land. And if any issue crops up or the project cannot go ahead or fail, the certificates become useless and the money people have put into them is lost. The problem is made worse considering that the details surrounding the certificates are few and inconsistent. Speaking to Profit, the project’s marketing manager initially said that anyone can buy more than 100 certificates if they want. According to Sandhu, the project's
marketing manager, these certificates are required for investing in La Ville De Paris or for any type of plot, whether commercial or residential. “These certificates must be in the possession of the customer making any purchase in the La Ville De Paris project. A customer who does not have a company certificate will not be able to make any purchases in this project in the future. Our main purpose in announcing the value of the certificate was to reach the original buyer. If we gave these certificates for free, we would probably be able to reach only ten or twenty percent of the original buyers and the rest would get our free certificates without having to make any investment later,” he claims. But the SECP, in its warning to the general public, said that “any investment opportunity, whereby any future return/ benefit, determined by chance or lottery or like manner, is assured or promised in return
“We have not received any documents from La Ville De Paris and we have removed all their advertisements from Gujranwala city. We have also written letters to the concerned authorities to remove their advertisements from Lahore as well” Ashraf Mughal, chairman of the GDA for a deposit or contribution is an unlawful activity and is a ground for winding up of such a company in terms of section 301 of the Companies Act, 2017.” In addition to this, while the Master group promises that the project will be completed in 12 to 18 months and guarantees money back if it is not done in that time, the encouragement to sell the certificates ahead
and the guarantee of profit make it questionable. With Pakistan’s land registry the way that it is, and the certificates in no way being a promise of land, it is entirely possible that the money is not returned. The problem with this is that La Ville De Paris claims that they are not selling the certificates to gather capital to buy land and begin the project’s development. They say the only purpose the certificates serve is to attract serious customers that will buy the plots in the project. However, only one certificate is required to make purchases, so why would anyone want to buy hundreds unless they plan on selling them ahead. And why would La Ville De Paris agree to doing this unless they were trying to gather capital quickly so they could acquire the land. By their own admission, they have not bought all of the projected land yet. Of the 4800 acres, only 3000 acres have been purchased and of these 800 acres have been earmarked for the Prime Minister’s Naya Pakistan Housing Scheme. With thousands of certificates being sold, it seems that this is a drive to raise investment. When confronted with this, Sandhu changed his tone later on and said that only limited certificates are being sold, which can be up to 2 percent of the quantum of the whole project. Despite being asked a number of times, Sandhu and officials of the project refused to reveal how many certificates have been sold so far, how many the company aims to sell, and how many of the certificates have been sold to the same person.
The lottery
T
his goes pretty much how you would expect it. If you have been driving around Lahore or Gujranwala in recent days, you might even have noticed huge billboards announcing a lottery on the 31st of March this year for people that are in possession of certificates for the La Ville De Paris Project. The lottery has some big prizes, with the total lot of 105 prizes amounting to Rs 143.5 million, and the prizes are all cash. The first prize will be Rs 50 million, which will go to one lucky winner, while the second prize of Rs 10 million
REAL ESTATE
will be won by two lucky winners. Similarly, the third prize will be RS 5 million which will be given to five lucky winners, and the fourth prize will be RS 0.5 million will be won by 97 people. Now, keep in mind that this Rs 143.5 million is of course only a fraction of the money that the developers have gathered. They have sourced this amount by selling certificates. Essentially, what La Ville De Paris did is offer certificates for sale to people that you need to acquire if you want to buy any commercial or residential plot in Le Paris.The confusion is that the certificate that is being sold and it is guaranteeing a profit. The lottery just makes the deal more attractive. Why not put in Rs 115,000 for the chance to walk away with Rs 50 million? And if you don’t end up winning anything
“Any investment opportunity, whereby any future return/benefit, determined by chance or lottery or like manner, is assured or promised in return for a deposit or contribution is an unlawful activity and is a ground for winding up of such a company in terms of section 301 of the Companies Act, 2017” SECP notification at all, you can then always either use the certificate to buy a plot in the project or sell the certificate to someone that does want to do this.
An image of the full page advertisements published in January 2021 in leading Pakistani newspapers
16
A history of deceit
T
his is perhaps the biggest red flag of them all, both about the La Ville De Paris Project and about real estate developers in Pakistan in general. This is not the first time that the Master Group has ventured into this business, and when that happened, it did not go very well. Despite the proven fraud of that episode, the group has very easily been able to come back into the industry, with the past having been forgotten, and with their promises and armies of property dealers been able to wrangle significant investment from people unaware of what exactly they are signing up for. Back in 2015, the group had developed a housing scheme called Master City. According to one official of the Board of Revenue, the management of Master City had tried to commit fraud with overseas Pakistanis through the same old technique of selling files and then not handing over any plots to the buyers despite the time in which development was to have finished ending. The episode was quite the spectacle, with the victims of Master City protesting for several days. “The victims claimed that billions of rupees have been defrauded from the people by the owners of Master City. Meanwhile, a person named Javed had also obtained a stay order from the court on the sale and purchase of plots in Master City,” revealed the official on condition of anonymity. “The court ordered the owners not to buy or sell until further court orders, and at that time, the managing director of Master City, Sheikh Ahmed bin Maqsood, had also admitted that buying and selling was not being done in compliance with the court orders. Despite this, Master City continued both the buying and selling of plots after which the court took notice again and this time not only issued a notice against them, but also charged them with contempt of court.” Despite all of this, the Master Group were able to continue the buying and selling of plots in Master City with impunity, and have now been able to launch a new project while many unsuspecting investors in the Mater
TEXTILES
City project, who were also made the same promise of quick returns and development in 12 to 18 months, continue to not receive any dividend or any plot allotment from the project. You see, when the court issued the stay order, Master City could no longer accept money in lieu of files, and since they had not actually acquired all the land for the project beforehand but had sold more files than were plots, they cannot assign plots to people that bought those files under the promise of getting a plot within a couple of years. Now, as long as the project remains tied up in court (which could be decades), these investors cannot touch their money. The association with Master City is something that the group has actively tried to avoid, of course, something that is evident in the project not containing the word ‘Master’ when even the wedding of the group’s owner’s son had ‘Master’ plastered everywhere. One official of the Gujranwala Development Authority (GDA) also confirmed to Profit that La Ville De Paris was being run under a different entity, and an advertisement was also issued recently in which the project denied any connection with Master City. However, despite the entity being different, the owners of the project remain the same people behind the Master Group and Master City. “This is a technical difference only. Back in 2015, Sheikh Mahmood Iqbal had taken a lot of pride in it and had presented it as a result of the group’s hard work over years.Now that people have been defrauded in Master City, they do not want the baggage from that to affect their new scheme,” says the GDA official on condition of anonymity. “The only difference is that Sheikh Mahmood Iqbal is
Registration form for lottery on official website leparis.pk
looking after the affairs of Le Paris, while his brother Sheikh Maqsood Iqbal was looking after the affairs of Master City.” “The GDA has already started preparing for legal action, and we would encourage people to be wary of such fraudulent schemes. The government needs to take action to make sure that unless a scheme completes its area, its design and its infrastructure, it will not be approved - otherwise innocents will continue to be fooled into investing with these crooks.” This seems to be a solid idea, particularly because if a group can actually produce the amount of money that is needed to procure and begin development on 4800 acres of residential, urban land, then it can be expected that they are not in it to make a quick buck but are invested in making sure that the housing scheme is up to the mark and that genuine investors and buyers come to them, and get what they came there for instead of being enticed in with the offer for cheap plots only to lose all of their money. The GDA's Town Planning Director has also issued a public notice stating that the owners of Master Tiles had advertised the plots and files of La Ville De Paris City, which was totally illegal. The notice also states that La Ville De Paris is a completely fake and illegal housing scheme, which the GDA has no record of yet. In addition, the distribution of certificates and lucky draws by the scheme owners is completely illegal. The notice also warned investors not to invest in any illegal scheme and seek GDA details about its legal status before investing in any scheme,” he said. “There was a definite problem of over-selling in Master City,” admits Sandhu. “But that project was completely under Sheikh Mahmood Iqbal, La Ville De Paris is the vision of Sheikh Maqbool Iqbal. People are just getting worried because of similar names. “Our project is Le Paris certificates with very transparent and we want to keep it Rs 125,000 face value neat and clean.” “Some people in the ceramics
industry that are our rivals have also tried to say that we have a cash flow problem and are not to be trusted. However, we are only selling a few thousand certificates. Master Tiles has a net worth of $4 billion. Do you really think the group would want to risk its business and its reputation for a single project? Senior property dealers are overseeing this project even the president of Property Dealers Association DHA Lahore, Abubakar Bhatti is personally overseeing this project in Lahore. After all, this is the credibility of the project, that's when so many senior dealers are marketing it.” Despite these clarifications, officials of both the Board of Revenue and the GDA continue to slam the La Ville De Paris project, saying another fraud was going to happen, and that the clock was ticking to possibly contain some of the damage. “The biggest red flag is that the purchase of land for this project has not been completed yet and the project has been announced. Secondly, the purchase of land and its transfer is not an easy task, and there is not a single 4,800 acre area in Gujranwala where there are no court cases. When a housing society is announced, it must first be approved. For example, any Housing Society in Gujranwala has to get approval from the Gujranwala Development Authority (GDA) and La Ville De Paris does not have any approval,” says a revenue board official. To these accusations, La Ville De Paris have claimed that they are in the process of approval, and are waiting to acquire all the land before applying for final approval. This still does not explain how they have launched without the approval, or are accepting money for the certificates. The chairman of the GDA, Ali Ashraf Mughal, responded to these claims by vehemently denying any approval being “in the process” and said that they had not even been approached by La Ville De Paris yet. “We have not received any documents from La Ville De Paris and we have removed all their advertisements from Gujranwala city. We have also written letters to the concerned authorities to remove their advertisements from Lahore as well.” n
REAL ESTATE
18
NEWS MEDIA
I
By Babar Khan Javed & Abdullah Niazi
f we were to claim that there was one single man whose presence could jolt Pakistan’s news media industry out of its slump and get it back up on its feet, you might laugh. But this is exactly the kind of reverence that some sections of the industry hold for Inam Akbar. “If he were to be released, he has so many strategies, and so many ways to fix problems that his mere presence will calm the unrest in the media industry,” says twice former federal information minister Firdous Ashiq Awan in a 2019 interview. Mubasher Luqman, a senior television anchor, has similar views. And they are not the only ones calling for charges against Inam Akbar to be dropped.
But who is Inam Akbar?
F
or years, there has existed a great, intricate, web of connections between news media organizations, political parties, government institutions, bureaucrats, and advertising agencies that has been ruling the entire media industry in Pakistan. At the center of it all has been one man, Inam Akbar, who has been exerting a great gravitational pull that has kept the entire media industry up and running. The perception is that anything he touches turns into gold, and one of the reasons for the news media industry being in crisis is the absence of him and his appropriately named advertising agency, Midas. The story of Inam Akbar has seen dizzying highs and now abysmal lows.Outside of those involved in the business of the media, particularly the news media, he has kept a relatively low profile. Most people will have heard of Mir Shakil ur Rehman, Salman Iqbal, or even Mian Amir Mehmood as the big players in Pakistan’s media industry, but for anyone that has been involved in the business end of journalism or media, Inam Akbar has time and again overshadowed them all. As owner of few of the country’s largest advertising agencies, with most of the government and real estate accounts on his client list, he was really the one that held the purse strings. Today, he is nowhere to be seen. The once mighty figure that made the owners of large media houses and politicians dance to his tune is currently out on bail in a number of corruption references filed by the National Accountability Bureau. His main advertising agency, Midas, has gone from the largest advertiser in Pakistan to being suspended and blacklisted by the All Pakistan Newspapers Society (APNS) and Pakistan Broadcasters Association (PBA). And Inam Akbar has gone
20
from the puppetmaster practically bankrolling the country’s entire media industry to being the biggest defaulter in the industry’s history. As the media industry grapples with the largest bad debt it is likely to book in its entire history, they will have to reflect on a man that started off by astounding them with his brilliance, lured them in with his connections, and then, before they even knew it, had them stuck in a loop of defaulting payments, strongarming them into ‘discounts,’ and convincing everyone that Midas (and more importantly Inam Akbar himself) was too big to fail. One thing is for sure, it did all start out with brilliance. Over the years, Inam Akbar would apparently perfect the art of bribery, and leverage personal relationships to make himself and his advertising agency larger than life. But as a number of media personalities point out, the news media industry owes a great debt to Inam Akbar because of the special talent he had for convincing the government and real estate moguls to spend money on news media advertising, an ability he used to its maximum potential and then some. Where did Inam Akbar come from? How did he become the biggest advertiser in Pakistan? And more importantly, what made him go from mythical proportions to notoriety in the industry that was for years codependent with him? The story starts a generation before Inam Akbar, and it starts in a newspaper office.
Shaky foundations
T
he lifeblood of journalism and advertising has long been tied together. Ideally, newspapers and television channels should not be dependent on revenue from advertisers considering it might taint their reporting of events that involve their advertisers. In Pakistan, this is much worse, because the largest advertiser is the government itself. But because of this unfortunate alliance that does exist, when most journalists get tired of the low-pays (or the no-pays) and are disillusioned by how disempowered they are, advertising is one of the professions they can very easily transition into from journalism. That is exactly what happened to Ghulam Akbar (born July 1939), who was the father of Inam Akbar. At the age of 22, he joined the Daily Kohistan as the magazine editor and was promoted to the Karachi bureau chief within a year. He quickly rose in the ranks, being promoted to the dual role of general manager and executive editor. This is where he first started to meet, interact with, and befriend the founder of Orient Advertising, S.H. Hashmi. It was also soon after this that his first son, Inam Akbar, was born in June 1963. For a while, things were good. Ghulam Akbar was at the top of his game after more
than a decade in journalism, but the arrival of the Bhutto administration in 1971 meant everything was changing. Akbar felt the squeeze of what can politely be described as Bhutto’s not-so-friendly press policies, and at the peak of his career, bid farewell to journalism. But work he still had to, and right in front of him was his lifelong friend S. H. Hashmi. So in 1974, Ghulam Akbar joined Orient Advertising as the head of Northern operations. It was also here that the career and life trajectory of Inam Akbar would be sealed. “In Aug 1974 Secretary Information Punjab Sheikh Hafeez called me to his office [to rhetorically say] ‘is it so important that a bag of heroin is found by police in your home and you rot for years in Bhutto’s jails? Sign this form’,” said Ghulam Akbar. “It was [a declaration ceasing the publishing] of Ishtraak. A week later I was in advertising.” After seven years with the advertising agency, Ghulam founded Midas Pvt Ltd on the 21st of April 1981. The business was inaugurated formally by Nawaz Sharif and Raja Zafarul Haque on the 4th of June 1981. By 1985, after completing a bachelor’s in engineering from the University of Engineering and Technology in the mid-80s, Inam Akbar joined Midas Pvt Ltd at the age of 22, the same age at which his father joined the Daily Kohistan as the magazine editor. By 1986 and 1988, his brothers Aftab Akbar and Nadeem Akbar also joined the family business. The brothers took to the business like fish to water, and satisfied that he would be leaving Midas in good hands, Ghulam Akbar handed over the reins to Inam in 1991, after exactly a decade at the helm. Ghulam Akbar went on to Midas Media Services in 1991 while his wife Shameem Akhtar founded Midas International that same year. Within a decade, brothers Nadeem Akbar and Aftab Akbar ventured off on their own, forming Midas Communications and Midas Entertainment in 2000. But it was clear, Inam was now in charge, and his skill was outweighed only by his ambition. It was also around this time that the agency took over political advertising for the Pakistan People’s Party, the very party whose government had forced Akbar out of journalism. However, Inam was a different man, and Benazir was a different kind of leader, so the arrangement worked. Over the years, Inam would go on to cultivate relationships with nearly every single political party in Pakistan, and Midas would get their business with the exception of the Pakistan Muslim LeagueNawaz (PML-N), despite Mian Nawaz Sharif innaugurating Midas. During the Musharraf era, Inam Akbar woul grow close to and conduct business for the Pakistan Muslim League-Quaid (PML-Q), while at the same time maintaining his relationship with Benazir
They all may be doing it but the publishers of newspapers who voice these charges and also call me corrupt are the same ones that print advertisements in a couple of hundred copies and charge as if they have printed in many many a thousands of copies Inam Akbar, CEO of Midas
Bhutto and Asif Ali Zardari. Eventually, when Musharraf was finally pressured into leaving office and holding elections, it would be Midas that handled the PPP’s election marketing campaign. So when the PPP came to power again in 2008 after more than a decade-long wait, lucrative government contracts awaited Midas. What also awaited them was a PML-N government in Punjab that was seething at Inam Akbar. The result was chaos, and Inam thrived in the midst of the madness.
Political connections aren’t enough
H
ere is how it all works. The government wants to advertise so that its perception among the public improves. It wants attention paid to its schemes and projects, and because of this it needs someone that can curate ad campaigns and then spread them through newspapers and television channels for them. They hire an advertising agency to do this, which does all the work in making the campaigns and ads, and acts as the go between for the government and media organizations. It then takes a cut from the deal. This was the first thing that Inam Akbar was incredibly good at: convincing politicians that they needed to advertise and getting them to spend cleverly on the news media. “Inam has this natural gift that his clients would heed his advice. This and Inam’s ability to see beyond the present were the secrets to his success. He
used to talk about digital media when the rest of the industry was still not convinced on cable television,” explains Rizwan Ashraf, a senior media sales professional. “And then he would back his ideas with investment and sometimes he would incur loss as well, but that did not deter him from taking risks.” But things are not as clear-cut and simple as they appear. As was discussed recently in an earlier Profit feature, corporations in Pakistan treat media as a commodity and try to get it as cheap as possible. Media agencies that want to pay employee salaries on time and generate a profit secure backdoor deals with media owners, restructuring deals on the front end and back end to accommodate all of these realities. Essentially, what this means is that they fudge receipts and try to get as much out of it as possible. In a way, this has become necessary for advertising agencies to survive, And when the government advertises, things are a little bit different. You see unlike the significantly smaller cuts that corporations give to the agencies, the government gives a set 15%. The problem is that while the government is giving this much commision to the agency, to actually get contracts, agencies have to grease the wheels a little and pay off the necessary bureaucrats and politicians that need to sign off on such things. This is the second thing Inam Akbar had become a master of over the years. According to a source who wished not to be named, Inam took this game to a new level “ He would not just take good care of some of the senior people in the government depart-
“In Aug 1974 Secretary Information Punjab Sheikh Hafeez called me to his office [to rhetorically say] ‘is it so important that a bag of heroin is found by police in your home and you rot for years in Bhutto’s jails? Sign this form’. It was a declaration ceasing the publishing of Ishtraak. A week later I was in advertising” Ghulam Akbar, founder of Midas
ments but also junior officers who might (or might not) reach a position of authority one day,” the source claimed. During an audit of the accounts of Abdul Majeed Shahid, Punjab’s former director-general public relations in the tenure of the Pakistan Muslim League-Quaid (PML-Q) regime, Rs 632.59 million in fake invoices were unearthed, all of which were connected to Midas Pvt Ltd, the full-service advertising agency owned by Inam Akbar. While Inam may have had the political connections that got him advertising business, offices like that of the DGPR can still make your life a living nightmare, and it is easier to simply bribe them off as well. But then the problem arises that if you are bribing everyone from the DGPR to the smallest cog of the information ministry, then you are bleeding a lot of cash. Especially since these officials often demand to be paid off in advance instead of after the advertising agency receives its payments from the government. Getting these payments, by the way, is no easy task. The reality of the market is that the government sometimes delays dues by one to two years, and every media agency needs to hedge its investments and bets against these delays which impact the time value of money. Assuming the allegations of bribery are correct, so how did Inam Akbar off-set the costs of having to bribe everyone and their grandmother in addition to the government delaying payments by years at times? Easy, he started strongarming the media organizations by pressuring them into giving him ‘discounts’ with veiled threats about no longer giving them business, and then not passing on the information about the discounted prices to the government, and pocketing the extra amount the government was paying.
Codependence conundrum
I
magine this for a scenario. It is 2008, you own a small newspaper, and you have been doing business with Inam Akbar for years. The PPP is in power and you know that
NEWS MEDIA
Inam has risen to where he is due to three factors: the first is his knack for doing political advertising for various political parties and figures, the second is his knowledge of how governments work and how to create and develop advertising for government departments, and the last one is his skill in real estate advertising Sarmad Ali, managing director at Jang Media Group
he is close to President Zardari. Midas sends you an advertisement that was to go on page three in black and white and says please adjust this in colour on page 1 but for the same price. You know what is happening. The government is paying Midas, lets say, Rs 200,000, as per rates approved by the government for your newspaper. For this ad you are supposed to get Rs 170,000 and Midas is supposed to keep Rs 30,000 as commission. Instead, Midas is paying you Rs 57,000 (the rate for a page three black and white ad let us assume), and pocketing the rest of the Rs 143,000, depriving you of Rs 113,000 that should in principle be yours. Why would you ever agree to this? Well, for starters, Midas holds the strings to the government’s advertising budget. Then there is the fact that Midas owes you money for previous ad campaigns. And if you make Inam Akbar and Midas unhappy, you may never see that money again. You need Midas. You need Inam Akbar. You know this. He knows this. Your marketing manager haggles on the phone for a bit and Inam’s media manager benevolently lets you keep Rs 100,000. You think that might pay a few salaries and accept it quietly. The government never finds out. This is what it comes down to. Inam Akbar’s business was dependent on him giving bribes and keeping lots of people happy - an expensive endeavour. So he decided he would make his profits at the expense of the media organizations that had no other option but to cozy up to him. Except as time passed, things kept getting worse. The cuts that Inam was taking and the ‘discounts’ he was demanding from media organizations kept growing larger. At the same time, his power, influence, and the amount of money he owed to media organizations kept growing, which meant suspending his business was out of the question. Inam Akbar and Midas had officially reached the ‘too big to fail’ category, and he knew this was the case and took full advantage of it. (As per APNS records, his advertising agencies owe more than a billion rupees to the newspapers
22
and the figure is expected to be much larger for the television industry.) And at this point, it was not just government ads that he was bringing. Few of the largest real estate advertisers in Pakistan including Bahria Town were his main non-government clients. “Inam has risen to where he is due to three factors: the first is his knack for doing political advertising for various political parties and figures, the second is his knowledge of how governments work and how to create and develop advertising for government departments, and the last one is his skill in real estate advertising,” said Sarmad Ali, the managing director at the Jang Media Group and the person in charge at APNS. With all of these connections, Inam Akbar had made himself indispensable to the news media industry. “Over the years he has acquired and established a group of advertising agencies [such as] Evernew Concepts, X20, Creative Consultants, and so on. I think there are eight agencies under the group,” Sarmad adds. Wherever you looked, it was the hand of Midas and Inam Akbar. In the absence of business partners and stakeholders that would question and second guess every decision, Inam Akbar set out with an ambitious expansion plan, one which would hedge itself against the very nature of the media and advertising industry.
The crash
T
o recap, Inam Akbar was a shrewd advertiser that figured out very quickly that even if he had connections in the government (which he had plenty of), there was no way he could grow his business without paying people off. And the only way to manage that expense was to technically shortchange the government by manipulating media organizations to take less money than they were supposed to be getting from the government, and pocketing the change. The only problem was that while this system worked and made him arguably the largest advertiser in Pakistan, it also made him enemies. In 2008, when he managed the
election campaign of the PPP, he ran a number of ads that were considered by the cadre of the PML-N to be crass and below the belt. So while the PPP coming to power paid off big time for Midas with their continued patronage and both federal and Sindh government ads in their pocket, they had a staunch opponent in Punjab, where Shehbaz Sharif would rule with an iron fist for the next ten years. And because Inam Akbar had been close to the PML-Q government that had preceded the Sharifs, he had done a lot of work for them. At this point we must say again that the structure of the government is fundamentally flawed and bribery is built into the system. Many of the media agencies other than Midas that were hired by the successive administrations were not much better, but according to some the trend setter for this racket of bribery and shortchanging was Inam Akbar. Because of the many projects he had done for the PML-Q, Shehbaz Sharif ordered inquiries and started digging into the activities of Midas. Was this motivated in some part by revenge? Absolutely. For all his ‘good administration rhetoric and performance, Shehbaz Sharif is notoriously petty. Sources told Profit that when Shahbaz Sharif became chief minister of Punjab in mid-2008, he halted payments owed to Midas Pvt Ltd due for projects done for the PMLN-Q such as the Punjab Crorepati Scheme and work for Bank of Punjab. But were the allegations based on reality? Most likely, yes. In fact, despite this vendetta, the PML-N actually wanted to work with Inam Akbar for the 2013 election. However, his loyalty to the incumbent government remained, and according to another source, charges were accelerated against Akbar because of his refusal and a new wave of NAB cases hounded him. In 2012, the government of Punjab reportedly approached the Supreme Court, federal, and the three other provincial governments for the recovery of millions of rupees allegedly embezzled by Midas Pvt Ltd, which worked for the provincial information department from 1996 to 2007-08. It is alleged that Midas Pvt Ltd managed to
TEXTILES
One of the reasons for Inam’s rise is his ability to see beyond the present. He used to talk about digital media when the rest of the industry was still not convinced on cable television. And then he would back his ideas with investment and sometimes he would incur loss as well, but that did not deter him from taking risks Rizwan Ashraf, senior media sales professional
get fraudulent and bogus payments worth hundreds of millions of rupees from the Punjab government on the basis of fake invoices and in collusion with some public functionaries. Among the fake invoices unearthed worth Rs632.59 million, was an amount of Rs208.657 million pertaining to the Punjab development funds’ advertisements, which represents a total of Rs94.386 million and Rs114.271 million in print and electronic media campaigns respectively, pertaining to the Punjab Development Fund (PDF) Crorepati Scheme in 2004. On the charges of embezzlement, Punjab’s Anti-Corruption Establishment (ACE) registered a case against eight accused, including Inam Akbar and Abdul Majeed Shahid, the latter of which evaded ACE and fled to Canada. Despite these proceedings, Midas and its sister agencies continued to do business with the government, as evidenced by various testimony, and the agency is listed as one of the beneficiaries of the Rs300 million secret fund, earning Rs.37 million for a media campaign titled “Benazir Bhutto Song”.
The legal complexities manifest
F
rom here on out it was a case of falling dominoes. Inam Akbar had been the man in the media industry for decades, and suddenly there was an avalanche of court cases he was getting buried under. And while he has turned into the focal point for criticism, he represents the larger issues with advertising in Pakistan. Because other media agencies continue to use the same tricks of the trade that were perfected by Midas. If it had not been Inam Akbar, sooner or later, it would have been someone else. In November 2015, the first real sign of Inam Akbar being in serious trouble cropped up when he was removed from a flight and told he had been placed on the Exit Control List (ECL). On the 6th of September 2018, NAB
filed a corruption reference against former Prime Minister Syed Yousaf Raza Gillani and others for allegedly misusing their authority in an illegal publicity campaign which caused millions of rupees loss to the national exchequer. According to NAB, Midas Pvt Ltd violated Press Information Department instructions regarding media campaigns and undertook an entire electronic media campaign without getting any written release orders from the Ministry of IT nor from Universal Services Fund, serving an Rs 128 million bill for payment. Violating the Public Procurement Regulatory Authority (PPRA) rules and policy guidelines by the Ministry of Information and Broadcasting and PID, there was no competition held for formally awarding the media campaign, NAB claimed. “NAB does not understand how the advertising industry works,” said a source. “They expect you to manage the 15% you have a right to and deal with it. They don’t know or choose to ignore that a government-side or advertiser client-side decision-maker is taking an upfront cut of the deal so she can be worthy of a Canadian immigration scheme. NAB chooses to ignore the reality of the business and should be holding those accountable who accept the bribe rather than those that have to pay the bribes, who are the real victims in any scenario.”
Aftermath
I
n the face of all of this, Inam Akbar has remained stoic, and is trying to keep up appearances. Once thought impossible, his agency Midas has been suspended, and during a Sindh Committee meeting held in January 2018 by the Council of Pakistan Newspaper Editors, the efforts of the courts and NAB which led to the arrest of Inam Akbar was lauded. Speaking with Profit, Inam Akbar said that all the allegations against him may have been the result of various stakeholders being
upset over not finding the gains they expected from his business dealings. Next year he plans to be back in full bloom again and hopes that his relationships with the industry should have new parameters. “The general perception is that there is no agency in Pakistan that doesn’t use women, alcohol, money, or influence in order to sway the outcomes of their business dealings,” said Inam Akbar in an interview with Profit. “They all may be doing it but the publishers of newspapers who voice these charges and also call me corrupt are the same ones that print advertisements in a couple of hundred copies and charge as if they have printed in many many a thousands of copies.” Inam Akbar has a point. The racket of dummy newspapers and magazines which publish only a few hundred copies, and some television channels with little to no viewership, mostly being run by influential journalists and anchors, blackmail the governments into advertising with them at exorbitant prices. So what is wrong if an ad agency is able to blackmail these blackmailers? Inam Akbar told Profit that he in his individual capacity has served a large number of clients in practically all the sectors. That being said, due to international network affiliations taking the business of multinationals, he chose to focus his efforts where big money is, acknowledging that dabbling in campaigns for politicians, government and social sector, real estate developers, agriculture and education sector grew his business. “Media has largely been concentrated in Karachi, so the idea that a Lahore-based agency becomes this big doesn’t go well with some people,” he said. “The media agency owners in Karachi never had taken Lahorite very seriously or may even have been disturbed due to my rise. I may have failed to fulfill the expectations of media owners in Pakistan but still claim that the media has always needed a catalyst to generate its business and I was that catalyst. Taking me out hurt them and now they know it.” n
NEWS MEDIA
By Shaha Omer
W
hen there was an alarming spread of HIV in Pakistan back in 2019, one of the major factors that came to light was the prevalence of quack doctors. According to the Pakistan Medical Association (PMA), there are more than 600,000 quacks currently practicing in the country with more than 80,000 based in Punjab province alone. Another reason that came under scrutiny was the usage of sub-standard syringes. Combined, these two factors make a deadly combination. You don’t have to look far to find either quackery or bad medical practice in Pakistan. Government hospitals are in shambles, and in urban centers, you will find a plethora of private clinics. There are two or three small clinics open on every street corner, and those are the ones that have qualified doctors that have at least completed their MBBS. Since there is no govern-
24
ment agency that effectively monitors private clinics, anyone can start one up and claim to be a doctor. When contacted for this story, some Lahore district administration officials have even admitted that most of their field staff are in alliance with the quacks and take bribes for them, and that the administration is powerless to stop them. On average, the district administration seals more than 400 such fake clinics on a monthly basis, but they either pop up somewhere else or reopen in that same spot and continue on with impunity for many months. A health department official told Profit that a common practice in Pakistan is that after completing an MBBS and a two-year RMO course, most doctors open private clinics to increase their income. “These clinics, opened in one or two rooms or in a small shop, are actually factories that spread diseases. There is a shortage of space in these clinics and their condition is such that health and hygiene are not far away. Then there are the clinical medicines used in it, the quality of which, apart from international standards, can be said to be the worst at the local level as well and most of all, there
is a tendency not to sterilize the glass syringes used in these clinics or to order highly substandard disposable syringes from the market and implant them in patients.” Essentially, what we have going on here is that there are countless quacks pretending to be doctors treating patients in small, dingy clinics. The clinics that are actually operated by qualified doctors are in putrid conditions and end up causing more damage than good. However, people tend to go to these because the doctors there charge less both for their services and the syringes. The medicines they use are also questionable, but for the purposes of this report, we are sticking to the substandard syringes and needles that are used.
Where the syringes come from
I
n the mid 200s, there was a serious move to stop sterilizing syringes and instead use single use syringes and break their needles after they have been used once to halt the spread of viruses like HIV. Another reason for
“As far as the price is concerned it will be a little higher than the regular one but this invention will be helpful only if the government makes some policy and promotes it” Osman Khalid Waheed, CEO of Ferozsons this was that when hospitals would eventually dispose of the syringes, people would buy these from them, recycle them, repackage them and sell them to these shanty clinics. The scary thing is that this practice still continues to this day, because single use syringes are still not widespread, especially in Punjab. “This mafia buys these used syringes which are washed or melted down and then re-syringed and then the same syringes are delivered to hospitals and clinics. There is a profit of billions of rupees in this nefarious business but the germs of dangerous diseases are also in the number of billions but it does not mean anything to anyone,” said the source in the district administration. The official revealed that the World Health Organization (WHO) conducted a study in 2004 on complaints of substandard syringe sales in Pakistan and found 34 per cent of companies to be substandard. For this study, WHO purchased syringes from 30 companies across Pakistan which identified substandard companies. To address all these issues, the government of Pakistan had decided to introduce auto-disabled syringes in the country a year and a half ago. Dr. Zafar Mirza, the then Special Assistant to the Prime Minister for Health, claimed that the government will buy 50 percent auto-disabled syringes during the fiscal year 2020-21 at the government level. However, the decision to introduce these modern syringes was taken by the government due to the Larkana AIDS (Acquired immunodeficiency syndrome) cases. An auto-disable syringe is an automatic syringe that, when injected, clicks the lock at the end, after which the syringe becomes unusable. The syringe was developed in 1986 under the special guidance of the WHO and in accordance with the WHO’s 2015 guidelines, all member states were advised to use safe syringes. According to official figures, the highest number of injections in the world is given to patients in Pakistan, and 8 to 10 injections are given to each person in Pakistan annually while 95 per cent of the injections given to Pakistani patients are unnecessary.
Stab happy country
A
ccording to the General of Pakistan Medical Association, Pakistan is one of the countries where injections are used the most. The association in its
report claimed that about 450 million syringes are imported annually, of which 30 million are used annually for vaccines and 10 million for insulin, while the domestic production of syringes is 744 to 804 million annually. Now, if we look at the government and association statistics, we will see that this is a huge business at the level of medical devices. Profit has conducted a survey on the current trend of old technology syringes market and the trend of prices and supply and demand with the advent of modern technology syringes market according to which, experts are happy with this technology, but in spite of high-sounding claims, it has not yet come to Pakistan in practice. However, an official of the Federal Health Department informed Profit that importers have been given some time to switch from traditional syringes to modern syringes as the Ministry of Health has banned the import of old technology syringes as well as their manufacturing from April 1, 2021. One wholesale dealer of medical devices, Muhammad Faizan, who operates in the old Lohari market (which is one of the wholesale market of medical devices and medicines in Lahore) informed Profit that the business of syringes is undoubtedly a big business, and that auto-disabled syringes have been rumoured to hit the market for a while now, but are yet to arrive. “These syringes have not yet hit the market, but given their demand, it can be said that the price of syringes is likely to go up if they are not supplied properly in the market. This is because investors already dealing with this business in the market have accumulated a large stock of syringes. Because it is a best-selling item, customer demand cannot be met unless it has a large stock,” Faizan explains. Syringes are supplied from these wholesale markets to almost all public and private hospitals, medical stores, and clinics in Punjab. Now, if new technology syringes come on the market all of a sudden, the old stock is in danger of being lost and the investors do not want to let this loss happen. “This is why these mafias will do the opposite of what is right. They will artificially shorten supply for the new technology syringe by not selling them until the old stock is sold. While they sell their old stock, the demand for auto-syringes will continue to increase and the price will increase. Then, when their old stock is finished, that is when they will pull out
the new tech syringes they had been hoarding and start selling them.”
The anatomy of a syringe
T
he syringe may seem like a very simple contraption, but it has behind it any complications and kinds. As Faizan explains, there are different types of syringes for sale in the market. These syringes are sold according to their containers starting from 1cc up to 60cc. “There are regular in-demand syringes in the market. A syringe consists of three parts. First and foremost, and the most important, is the needle which makes contact with the surface. Then there is a hollow container which is used to identify the size of the syringe and in the last comes the plunger which pushes or sucks the fluid in the container via needle. An important fact is that cc in a syringe is equivalent to ml (milliliter). There is a huge conflict in the market between the local manufacturing companies,” he explains. The quality of locally manufactured syringes is low, which is why they are not exported either. Some good quality and well-known local syringes include Zindagi, Trust, and Shifa. In imported syringe brands include BD, A froze and Sultan son but the real competition is between rate and quality,” he said. Similarly, Muhammad Farhan, who is a pharmacy manager at Mayo Hospital (which is the largest hospital in Pakistan) it was hearteing that Pakistan was somewhat independent in manufacturing syringes. However, the situation of medical supplies has been drastic ever since the initial months of the Covid-19 pandemic. “Many people in Pakistan are investing and focusing on syringe manufacturing, as there is always rising demand in the market. Inject, Shifa and Master are among the well-known local syringe manufacturers. Rate and Quality are two main things in this product. As far as
HEALTHCARE
it looks, there is a certain difference in quality. BD, Sultan son and Afroze are being imported in bulk in Pakistan whereas one syringe of BD in wholesale is being sold at 25 rupees and in retail at 30 rupees.” Compared to these prices, locally manufactured syringes are being sold in the market starting from 3 rupees up to 7 rupees. Locally, this medical device is manufactured somewhere on the outskirts of Faisalabad and in Karachi. These syringes cannot be exported anywhere out of Pakistan as local manufacturers would not be able to compete at the rate price of China in the international market. Now if we look at the difference between the price of local and imported syringes, then the price of imported syringes is much higher. One of the main reasons for this is the quality of the syringes manufactured here. However, when asked about the used syringe, Farhan expressed grief over the situation and said that regulatory authorities are responsible to control and make some strategy for used syringes. I’ll tell you something, we even get customers who think they can get used syringes from the wholesale market. Almost three years back a question erupted about the scandal of selling used syringes after repacking them. No doubt, the department is making policies and enforcing them. But in big cities like Lahore, Islamabad and Karachi doctors are vigilant in this matter. Doctors even open the syringe out from packing in front patients to ensure all types of safety. However, these are doctors in posh urban centers, things in rural areas get quite nasty and unhygienic.” This makes some sense. For people that are barely making ends meet, when a man says he is a doctor and offers to treat them with a Rs 2 syringe, they will run towards him instead of going to the office of the doctor that treats them with a Rs 30 syringe in some private hospital that has all kinds of other costs associated with it as well. Generally, doctors in Pakistan strongly recommend the syringe of BD to the patients of diabetes. As the sterilizing syringe of BD is completely reliable. The government purchases at a lower rate in tender, for instance, one million syringes at Rs 2 each. In this condition the quality of the syringe will be understandable. There is a rumor of one time usable syringe in the market and it can prove to be helpful especially in the areas where transmitted diseases are found,” he concluded. An importer of disposable syringes informed Profit that the situation of the Pakistan economy is already in critical condition as the inflation rate in Pakistan increased rapidly. “The inflation is disturbing not only our market, but the entire economy. In recent months, Pakistani currency rupee has lost huge worth. It is directly or indirectly affecting the common man of Pakistan. As the prices of all things are getting higher day after day likewise
26
“Some companies are already making disposable syringes. They just have to make some changes in their machines and this new technology syringe will be ready” Dr Ghazzanfar, senior official DRAP the syringes currently available in the market have become a little costly because of inflation and vendors and pharmacies are already unpleasant at this. In this scenario if any new technology is introduced things will become uglier as that technology will not launch at the same rate in the market, which will become a burden for patients.”
What will happen if the syringes come out tomorrow?
T
he importers will simply dump all of the old stock of syringes and the new ones being imported into the market. Currently, the average price of the conventional disposable syringe of 5 ml is Rs4.72 (inclusive of all taxes) and 3ml is Rs4.59 (inclusive of all taxes), whereas the average price of 5ml auto-disable syringe is Rs7.35 (inclusive all taxes) and 3ml is Rs7.09 (inclusive of all taxes). This means that an auto-disable syringe of 5ml is 55pc costlier than the conventional disposable syringe, whereas a 3ml syringe is 54pc costlier than the conventional syringe. The government should exempt importers and manufacturers from taxes on the manufacture and import of auto-disabled syringes as the waiver of taxes would not only improve manufacturing technology (shift from conventional to auto-disable syringes) in the country but would also ensure availability of auto-disable syringes at affordable prices to the end-user. Osman Khalid Waheed, CEO of Ferozsons Laboratories Limited speaking to Profit said, that the new tech being introduced in Pakistan named Auto-Disable syringe could be a turning point in Pakistan medical device industry. “As per various surveys, the major cause of widespread disease in certain areas is syringes. Currently in use syringes are refillable and reusable which a negative point of this classical device is. But with the advancement in every field, one time usable syringe has been developed in Pakistan. Now it is in its manufacturing process and soon will be available in markets. The sole purpose of this device is to stop certain widespread transmitted diseases but it can only be possible with the backing of the Government and certain relevant departments,” he said. “As far as the price is concerned it will be a little higher than the regular one but this invention
will be helpful only if the government makes some policy and promotes it.” “The newly invented syringe is here for the betterment of people. It is easy to say that syringes are little medical devices of rupees 5 or 7 rupees, but they have massive implications for public health. There are certain people who collect the used devices, repack them and then sell them for a little margin of profit. These goons play with the lives of others. To avoid this very trouble, one time syringes are being introduced to avoid HIV, Hepatitis and other transmittable diseases. In order to control the situation departments have to intervene enforcing strict policies and regulations. All the used medical stuff must be collected and disposed off with strict care including special collecting cars.” Dr. Ghazanfar, a senior official of the Drug Regulatory Authority of Pakistan (DRAP), believed that the companies that were already making traditional syringes in Pakistan would be the ones to change their technology.“Some companies are already making disposable syringes. They just have to make some changes in their machines and this new technology syringe will be ready,” he said. “These companies already have contacts in the open market, so if it is said that the advent of new technology will make a difference to their business, it will not happen at all. This business requires a huge investment and some new players are also looking to set up manufacturing plants for these syringes and their work is in the final stages. Since the motives behind bringing this technology are very good and Pakistan will be the first country where this technology will be used, we need to consider the positive aspects of it,” he said. When asked about the risk of loss of old stock and shortage of syringes due to the arrival of new syringes in the market, Ghazanfar said that this was absolutely possible, because when new syringes come on the market their demand will be high, which means that their price may go up or there may be a shortage in the market, but this situation will not last long and it will be overcome in a few months. DRAP’s field staff are working diligently in the market and obviously when these syringes are brought to market, DRAP will also enforce their use. Our teams will also keep an eye on the supply and demand of these syringes in the market and there will be a complete check on its price control,” he claimed. n
HEALTHCARE
Ismail Industries to invest in packaging
The successful conglomerate is creating a Rs1.5 billion PVC plant
A
t the risk of starting with a personal anecdote, this reporter would like to point out that they are old enough (or young enough, depending on how you look at it), to remember their very first school trip to the Candyland factory. The nice employees at the factory had given the children as much free candy as they wanted, which as you can imagine, meant an extremely over excited bus of school children. But believe it or not, tactics like that worked and Candlyland, which had only started in 1988, very quickly became and still is a mainstay in school tuck shops and canteens
PLASTICS
across Pakistan. Its jingles have been seen by adoring children on channels like Cartoon Network, and the parent company, Ismail Industries, has done well off the back of that brand. To add to all of these positives, it seems that demand is set to only grow further. On March 15, 2021, Ismail Industries announced that it was to set up a new polyester resin (PET resin) manufacturing plant, with an annual capacity of 108,000 tons. To do this, the parent company is going to invest Rs1.5 billion through equity in the subsidiary company Ismail Resin, through which the plant will be made. “This new manufacturing company ill
not only meet the local demand of PET Resin in Pakistan, but would capture the global market as well,” the company said in its notice. So, who are Ismail Industries? Technically, the origins of this family affair begin much earlier, around the time of independence, when one Haji Ahmed Chandia set up a factory in Sukkur. This did quite poorly, so in 1964, that factory was scrapped, and along with his four sons Chandia founded Union Biscuit Private (Ltd) in Karachi. This did quite well - up until a point that is. Chandia’s son and heir to his business, Mohammad Ismail, had an early death that shook the company which found itself floundering for a few years before com-
27
pletely falling apart by the 1980s. However, the family’s business spirit had not died yet, and two of Ismail’s sons, Mohammad Ismail and Maqsood Ismail, decided to set up a brand new business called Ismail Industries in 1988. The third son joined the company in 1994 after finishing his PhD at Wharton and a short stint in the IMF, and the reader might recognise him as die-hard PML-N supporter and briefly the country’s finance minister in 2018, Miftah Ismail. Today, Mohammad Ismail is the chairman of the group, Maqsood Ismail is the CEO, and Miftah Ismail is an executive director. The parent corporation has four major companies. The first is Candyland which was launched in 1990. It introduced soft jellies in Pakistan (think the classic Chilli Milli), along with other iconic brands like Fanty, Super Twister, and Paradise. The second is Bisconni, launched in 2002. This company offered perhaps the greatest addition to Pakistani cuisine: Cocomo ( with the popular tagline ‘Cocomo, mujhe bhi do’). It also introduced Rite, a knockoff of Oreo biscuits (before Oreo became more widely accessible in the country). The third company, SnackCity, was set up in 2006, and mostly manufacturer Kurleez (crisp packets). Ismail Industries exports its products to over 40 countries in Africa, Europe, and the Middle East. Finally, the fourth company has nothing to do with food: Astro Films makes cast polypropylene (CPP) and bi-axially oriented polypropylene (BOPP). The Astro Films family comprises three brands: Astro Pack, Plastiflex Films Pvt. Limited, and Astro Plastics Pvt. Limited. Both CPP and BOPP used in food and beverage applications like snack and confectionery are also used for lamination and bag making. BOPP is derived from polypropylene, which is the world’s second most used commodity plastic. The ‘biaxially-oriented’ part comes from the fact that the polypropylene is stretched flat in two directions. BOPP films can be white, metal-colored, or clear. That is why it is often used to make transparent labels for clear containers. The material is also waterproof, and non-toxic, which makes it very useful as bottle labels, jar labels, and canning labels. CPP film is also derived from polypropylene, but has gained some popularity over the more widely used BOPP because it has a soft film, and some small barrier property differences. But now, Ismail Industries is focused on PET, also known as Polyethylene Terephthalate. It is a clear, strong and lightweight plastic which belongs to the polyester family. It is typically called "polyester" when used for fibers or fabrics, and "PET Resin" when used for bottles, jars, containers and packaging
28
The family’s business spirit had not died yet, and two of Ismail’s sons, Mohammad Ismail and Maqsood Ismail, decided to set up Ismail Industries in 1988. The third son joined the company in 1994 after finishing his PhD at Wharton, and the reader might recognise him as die-hard PML-N supporter and briefly the country’s finance minister in 2018, Miftah Ismail applications. Because it is shatterproof, and retains freshness, and is inert (ie.does not react with food products), it is very popular, and is most commonly used to package carbonated soft drinks and water. So, is Ismail Industries considering branching into the drinks segment? It is not entirely far off: after all, its financials show that its sales have increased year-on-year, and it has not made a single loss after tax since 2004 (the last publically available figures). On the other hand, the company did have a rough 2020,:
as it pointed out in its annual report: “The cost pressure on net profit is mainly sourced through overall high inflation, high energy cost & worsening rupee-dollar parity. Rise in prices of basic inputs due to sky-scraping food inflation, stiff competition, causing sizeable increase in marketing spent and other related factors has exorbitantly raised cost of doing business.” That may be true, but children (and plenty of adults) across the country are not going to stop buying candy and Cocomo. Perhaps a new business segment is due.
Debunking the income tax amendment bill
Widening the tax net is not going to be as easy a fix as passing this amendment
I
n what is undoubtedly a depressing statistic, only 1.46 million people in Pakistan paid income tax in 2018, which is the last year for which reliable data is available. Sure, the tax net has grown much wider from the 980,000 people who were paying income tax in 2014, but not by much. This is especially true when compared to the 57.4 million employed labour force that the country boasts. The percentage could be a lot higher, but 42% of that labour force are employed in the agriculture sector, which is usually exempt from income tax or pays very little. In the fiscal year 2019-2020, the Federal Board of Revenue (FBR) collected Rs.3,996.7 billion, reflecting 4.4% growth over the collection of Rs3,828.5 billion collected in fiscal year 2018-19. Still it is much lower than the original target for the
year, set for Rs5,503.0 billion. And our taxto-GDP ratio has fallen from 12.6 in 2015, to 11.4 in 2019. So some things had to change, and now, it looks like those changes are at hand. In a note sent to clients on March 15, an AKD research analysis team pointed out that the federal government is likely to push forward the second Income Tax Amendment bill in the coming days. This will purportedly save around Rs140 billion, or around 0.3% of GDP in income tax exemptions or reductions, which would be effective from Jul 1, 2021. According to AKD Research, the bill is part of a Rs600 billion revenue generation targeted in fiscal year 2022 through FBR’s current base in order to meet an aggressive target of Rs6 trillion, an increase of 27.6% year-on-year on revised fiscal year 2021’s FBR target. “However, our initial assess-
ment suggests authorities would be able to generate around Rs44 billion, or 0.1% of GD additional revenue from said amendments,” the report said. So, what are these amendments? According to AKD, there are ten different amendments, including: 1. Removal of first year allowance: Plant, machinery and equipment installed by any industrial undertaking set up in specified rural and under developed areas are allowed a 90% tax allowance for the first year of operation. The allowance is expected to be removed. 2. Tax credit on enlistment to be removed: a 20% tax credit of the tax payable was allowed in the first year of enlistment on stock exchange, which may be omitted. 3. Conditions defined for IT companies to avail tax credit: Exports of computer software, IT Services or IT enabled services are exempt from tax, given 80% of the proceeds are remitted back through formal banking channels. However they are subject to minimum tax on their turnover. The proposed amendment means a 100% tax credit will be available, even against minimum tax liability on turnover. 4. Tax credit on greenfield investments: Greenfield investments in the country will be liable for 25% tax credit on new investment.
5. Removal of tax exemption on intercorporate dividend: Companies having more than 56% stake in a company were allowed a tax exemption on dividend from its subsidiaries, which will be removed. 6. Tax exemption for establishment or up-gradation of refinery: New deep conversion refineries of at least 100,000 barrels per day will be liable for tax exemption for a period of 10 years. 7. Removal of tax exemption of new electric power projects: Tax exemptions extended to electric power generation projects in Pakistan will not be available to projects issued Letter of Intent after June 30, 2021. 8. Removal of reduced tax rate for listed companies: Listed companies who a) are shariah compliant, ii) derive income from manufacturing activities only, iii) have declared taxable income for last three years, and iv) have issued dividend for last five consecutive tax years were liable for a 2% reduction in tax rate. These exceptions are to be removed. 9. Removal of tax exemption on profit derived by HUBC on its bank deposit or account. 10. Removal on tax exemption on distribution by REIT, Venture Capital, Private Equity Fund or a Money Market Mutual Fund.
What are the ramifications of these? As per AKD Research, ignoring the fact that certain measures such as limiting the scope of exemption to refineries, or replacement of tax exemption on IT Sector with 100% tax credit, will translate to lower revenue potential. So essentially, even though the government may pull off this year’s target of Rs4.7 trillion, revised from Rs4.96 trillion, it will still be a ‘daunting challenge’ in fiscal year 2022, where the government is likely to undertake tough measures in the upcoming budget. “From market’s vantage, abolishment of intercorporate dividends for conglomerates such as Engro which have stake in subsidiaries between 55-100% (7% earnings impact) would be negative while introduction of 25% tax credit for greenfield expansion would be positive for players such as Kohat Cement, and Fauji Cement. We believe amendments would be neutral for the IT Sector,” said AKD. By the way, the market still has other concerns, not just related to the tax bill. According to AKD, the near term outlook is dependent on developments surrounding the IMF program particularly those relating to budgetary measures, and intensifying inflationary pressures that are likely to pull inflation in the coming months into double digits.
TAXATION
Lucky Cement finds some luck in...Iraq
The cement company’s Iraqi operations have finally commenced
T
he average Pakistani will somewhat raise their eyebrows if you mention Iraq (blame the world news), but at the very least, they will know that it is a country with a Muslim-Arab majority, that it was invaded by the United States and that it is somewhere in the Middle East. But we can bet the average Pakistani cannot find the Demcratic Republic of Congo on the map, or know, for instance, that it is a
30
francophone country, or even have heard of it in the past. Both of these countries are important, however, and it might be worth brushing up on some basic geography because Lucky Cement has its eyes set on global expansion, and it is starting with these two countries. In a notice sent to the Pakistan Stock Exchange on March 11, the company said that its Greenfield Cement Production facility in Samawah, Iraq, with a capacity of 1.2 million tons per annum
has successfully commenced its operations with effect from March 10, 2021. The said cement production facility is a joint venture with Al-Shamookh Group of Iraq. This now means that Lucky Cement;s overseas cement capacity now stands at 4.12 million tons per annum, which includes a cement grinding plant in Basra, Iraq at 1.74 million tons per annum; a fully integrated cement plant in Democratic Republic of Congo, at 1.18 million tons per annum.
This now means that Lucky Cement;s overseas cement capacity now stands at 4.12 million tons per annum, which includes a cement grinding plant in Basra, Iraq at 1.74 million tons per annum; a fully integrated cement plant in Democratic Republic of Congo, at 1.18 million tons per annum
Both of these projects have been a decade in the making. In 2011, Lucky Cement entered into a joint venture agreement Rawsons Investments Limited (registered in Cayman Islands) for establishing Lucky Rawji Holdings Limited (LRHL), incorporated with limited liability under laws of British Virgin Islands, for constructing a fully integrated cement manufacturing unit in the Democratic Republic of
Congo. This finally commenced operations in 2016. Similarly, in 2012, the company entered into joint venture agreements with Al Shamookh group to form Lucky Al Shamookh Holdings Limited (LASHL), for operating a cement grinding unit in Basra, Iraq, and Al Shamookh Lucky Investment Limited (ASLIL) for constructing a fully integrated cement manufacturing unit in Samawah, Iraq. LASHL and ASLIL are companies with limited liability registered in Jebel Ali Free Zone, United Arab Emirates. The plant in Basra began operations in 2014. “The existing cement plants based in Iraq and DRC have shown robust results and will continue to operate at better efficiencies with increase in the capacity utilization,” the company said in its annual report. So, what is the history behind Lucky Cement, and who are the people running it? The company is part of the Yunus Brothers Group, which is behind such companies as Gadoon Textile Mills, Yunus Textiles, Tabba Heart Institute, Tabba Kidney Institute, and perhaps most famously, the LuckyOne Mall in Karachi, which is the largest mall in Pakistan. Lucky Cement in turn owns 55% of ICI Pakistan, and 71.55% of Kia Lucky Motors, among others. Members of the Tabba family sit on the board of directors, while Muhammad Ali Tabba is the CEO. The company was incorporated in 1993, and listed on the then Karachi Stock Exchange in 1994. It commenced commercial operations in 1996, and by 2005, had become Pakistan’s largest cement producer, and by 2006, had become Pakistan largest cement exporter.The registered office of the Company is located at Pezu, District Lakki Marwat in Khyber Pakhtunkhwa, and the head office is situated at Muhammad Ali Housing Society, in Karachi.
The company was incorporated in 1993, and listed on the then Karachi Stock Exchange in 1994. It commenced commercial operations in 1996, and by 2005, had become Pakistan’s largest cement producer, and by 2006, had become Pakistan largest cement exporter
The company has two production facilities: at Pezu, District Lakki Marwat, and at Main Super Highway in Karachi. The Pezu plant is very clearly, however, the star of the company. Its total capacity is 12.15 MPTA, making Lucky cement the largest cement producer in Pakistan. In the last six years, the company net turnover has stayed above the Rs41 billion mark. In 2014, the company’s net turnover stood at Rs 44.8 billion, climbing to its peak of Rs 48 billion in 2019, before falling to Rs41.8 billion in 2020. The company’s profit after taxation has fallen from a peak of Rs13.7 billion in 2016 to Rs10.49 billion in 2019, and then just Rs3.34 billion in 2020. What happened that year? According to the company’s latest annual report ending June 2020, “As a result of Covid-19 lockdowns locally and internationally during fourth quarter 2020, both local and export sales were adversely affected.” But that was then. In the latter half of 2020, the cement sector saw a boom. For one, the government recently announced a slew of policies meant to spur growth in the housing and construction sector, which appear at last to be bearing fruit. One of those policies was the mandate by the State Bank of Pakistan for the banking sector to increase lending towards construction and real estate to equal 5% of their total private sector lending. Then in July, the Prime Minister announced major construction projects and provided a subsidy of Rs30 billion for the Naya Pakistan Housing Project so that people could build their dream house at an affordable cost. The many projects of the China-Pakistan Economic Corridor (CPEC) are also still ongoing, pandemic or no pandemic. Analysts have also noted that recovery has been driven in large part by actual demand for construction materials as the country’s real estate sector gears up to offer affordable housing to a rising middle class that increasingly has the ability to buy their own homes. It is the combination of these factors that have led Lucky Cement to decide to enhance its cement production capacity at its Pezu plant by 3.15 million tons annually. And with the new plant in Iraq, it seems like production capacity is only set to increase in the future. n
CEMENT
Why is
GroupM launching INCA
in Pakistan?
The largest media investment company is coming for everyone
By Babar Khan Javed
T
he heat is on. In light of a 2021 forecast that valued the influencer marketing market in Pakistan between $15 million to $25 million, coupled with the aggressive market entry of the AnyMind Group, and the rapid adoption of Pakistan-based Amplifyd, Bradri, DEN, and Walee, the largest media investment company
ADVERTISING
is coming for 50% market share with its own artificial intelligence (AI) based data mining technology. “Marketers, reeling from dual shocks of challenged ad visibility and challenged organic reach, have latched onto influencers the way a drowning man grabs at a buoy,” said Stephanie Liu, an analyst at Forrester. “But as this is essentially just a new kind of native advertising, it’ll have the same fate as its predecessors: breakout success in contexts where it works (like Google’s paid search ads and Facebook’s
suggested posts) and invisibility or loathing where it doesn’t. These technologies will accelerate influencer marketing’s success or failure.” In 2017, GroupM introduced an influencer marketing campaign management tool called MFluence which allowed advertisers to view a database of social media content creators (SMCC), including their self-reported audience insights, and pricing. While MFluence ended up representing nearly a quarter of the business generated by the entertainment, sports & partnerships (ESP) team, it faced
33
Marketers, reeling from dual shocks of challenged ad visibility and challenged organic reach, have latched onto influencers the way a drowning man grabs at a buoy. But as this is essentially just a new kind of native advertising, it’ll have the same fate as its predecessors Stephanie Liu, an analyst at Forrester
multiple challenges. In the absence of a proprietary application programming interface (API), MFluence could not bridge itself between SMCCs in order to view audience analytics in the same way that DEN reportedly can do today. In addition, the absence of a pricing benchmark meant that rates changed at whim, which does not bode well for media planners that require some leeway between research, recommendations, and client approvals. Sources also shared that a cartel formed among large and small SMCCs that attempted to fix minimum pricing regardless of reach, engagement, and audience size. In some cases, these cartels were represented by multichannel networks or by talent agencies. Finally, many of the SMCCs had chosen against being tax registered, setting off the task of insisting that they do so in order to be listed on the platform. This is visible in the 2017 advertising agency ranking based on taxes paid to the FBR, with digital-first PR agencies being at the bottom of the list, with advertising pundits postulating that the extent of cash-based payments and tax evasion may have much to do with it. As the SMCC landscape continues to grow and more platforms invest in SMCC acquisition campaigns & award schemes, the playing field finally places the ball back in GroupM’s court. “Influencer marketing solutions are still an emerging category that overlaps with social listening platforms in identifying influencers and with content marketing platforms in managing and producing content with these creators,” said Liu. “As many as 100 vendors exist, and about a dozen have already folded or pivoted.”
Lessons have entered the chat
L 34
aunched in 2019 initially for Singapore, the Philippines, Thailand, and Indonesia, INCA by GroupM scours data across accounts, content,
audience, and profiles to generate the right macro, micro, and nano influencers. By mid2020, INCA was rolled out in India as well. With sources telling Profit that the INCA team in Pakistan will be led by GroupM chief investment officer (CIO) Ateeq Ur Rehman, this has multiple implications. The first of which is that performance-related incentives will be created for SMCCs to comply with pricing benchmarks as part of a new trading model. It also means that amid SOX compliance that GroupM and all its media agencies in Pakistan need to adhere to, cash-based payments will not be tolerated nor allowed. Finally, it means that the artificial intelligence proprietary API that bridges an SMCC and INCA during account sign up gives the media investment agency access to real-time audience insights including an understanding of true engagement rates, audience demographics, types of posts that followers organically engage on, and the extent to which fake followers or bots have been used. Pakistan-based Amplifyd, Bradri, DEN, and Walee already have these capabilities. INCA intends to connect advertisers to trusted SMCCs and publishers such as Paperazzi Magazine in order to drive brand engagement across digital platforms. Much like Amplifyd, Bradri, DEN, and Walee, INCA promises to help marketers verify influencers and access a campaign management process that will help improve content quality and brand safety. “Most vendors count engagements and extrapolate from there rather than track success against real business metrics,” said Liu. “Vendors provide stories of transformative sales and business impact, but the value is not always tied inextricably to vendors’ contribution.” According to an internal pitch deck seen by Profit, the proprietary technology platform provides unique creator and audi-
ence insights, fraud detection, workflow tools, content amplification, and detailed campaign reporting dashboards. Leveraging a proprietary algorithm, INCA claims to use real-time data to source, curate, and match SMCCs to the campaign objectives and target audience profiles of an advertiser. In a bid to appease the risk mitigation requirement of every advertiser in the country, GroupM plans to guarantee outcomes against every client campaign using historical benchmarking, predictive performance technology, and unmatched negotiation power. With MFluence primarily focused on platforms such as YouTube, Instagram, and Twitter, sources told Profit that INCA would not likely deviate from these three too much, perhaps opting for Snapchat but not for TikTok, which is banned repeatedly for failing to mitigate unsafe content. This suggests that GroupM will enforce its brand safety policy for INCA as well, allowing advertisers to create inclusion and exclusion lists pertaining to platforms and SMCCs as well. Of course, a win-lose meeting between TikTok reseller Jack of Digital and the CIO of GroupM could very well shift platform preferences for the long run. Sources at Joyy Inc and Kuaishou shared that they had already begun the process of structuring master services agreements (MSAs) to make SMCCs on LIKEE and SnackVideo, respectively, preferred avenues of campaign coordination, with the MSAs too guaranteeing outcomes based on reach, impressions, and volumes. With internal meetings viewing tools such as INCA, Amplifyd, Bradri, DEN, and Walee as channel partners, the language in the MSAs intends to reward directing client campaigns towards SMCCs on LIKEE and SnackVideo, which are currently favored by the masses according to data from Sensor Tower placing the apps on 8th place and 5th place respectively on the Google Play Store. n
ADVERTISING