Profit E-paper 14 March, 2013

01

business

BThursday, 14 March, 2013

Govt committed to

completing gas pipeline

project. — Dr Asim Hussain

Pacra upgradesMCB’s long termcredit ratingKARACHI: The Pakistan Credit Rating

Agency (PACRA) has upgraded the MCB

Bank’s long term credit rating from AA+ to

AAA, said a statement issued Wednesday.

The up-gradation, it said, defined the

highest credit quality with lowest

expectation of credit risk. Such rating is

assigned only in case of exceptionally

strong capacity for timely repayment of

financial commitments and which is highly

unlikely to be negatively affected by

foreseeable events and reflects the top

status on the PACRA rating mechanism.

The short term rating of the Bank is

maintained at A1+ which is already the

highest allocated rating in the grid. A1+

denotes the ability of the Bank to meet its

obligation supported by the highest

capacity for timely repayment. This

elevation is coherent with the well-defined

organizational structure of the Bank,

experienced Management, high standards

of corporate governance, prudent risk

management framework, improving asset

quality, continuous investment in

information technology, well established

and well diversified branch network and

strong absorption capacity. MCB Bank is

one of the leading financial institutions of

Pakistan with history of robust profitability

ratios, highest capital adequacy, lowest

cost of deposits and lowest infection ratios.

A comprehensive insight into our various

groups setup and detailed assessment of

relevant leadership in each area has been

central to this upgrade. Given the current

country rating, economic position and the

weak monetary and fiscal governance,

such an acknowledgement of performance

of MCB Bank Limited is indeed a

milestone. STAFF REPORT

Growing exports toarrest trade deficitat $15bn during FY13KARACHI: As the next budget is just a

quarter away, April-June, the economic

observers are expecting the monthly

trade deficit to further turndown in the

remaining months of current fiscal year

(FY13). They foresee the trade deficit to

stand at around $ 15 billion during

FY13. “The declining deficit is expected

on account of better performance by

exports as PKR depreciation against

dollar is anticipated to reach 9% YoY by

year-end thus making our local exports

cheaper,” viewed Muniba Saeed of

InvestCap Research. This, the analyst

said, along with beginning of textile

exports to EU on concessionary tariff

from Pakistan as well as continuing

exports of yarn and grey cloth to China

was expected to fare well for exports.

“On the imports side, we see decline in

fertilizer, palm oil and oil exports to

weigh down the import bill thus

relieving pressure on the deficit,” she

said. Giving a monthly account of the

balance of trade, the analyst said as per

data of the Pakistan Bureau of Statistics

(PBS) the trade deficit in Feb-13

declined by a handsome 11% MoM to a

level of $1.548 billion. Such positivity

can be attributed to a 10% MoM step

down in imports of Feb-13 to a level of

$3.383 billion (down by $380 million)

whereas the dip in exports of 9.29%

MoM ($188mn lower) to $1.835 billion

made such positivity less pronounced.

Compared to Feb-2012, trade deficit

showed a decline of 6.6% YoY in Feb-

13, where imports fell by 2.3% YoY and

exports lowered by 8.7% YoY. In

8MFY13, the analyst said, the balance

of trade (commodities) stood at a deficit

of $13.185 billion, a level 10% YoY

lower compared to $ 14.660 billion in

8MFY12. STAFF REPORT

KARACHI

STAFF REPORT

THE Federal Board of Revenue(FBR) is cognizant of all issuesemanating out of SRO 98(I)/2013issued on February 14 and steps

are being taken to address all problematicissues in consultation with the Institute ofChartered Accountants of Pakistan(ICAP) so businesses may not be ad-versely affected due to new set of sales taxwithholding rules.

This was stated by Khawaja TanveerAhmad, Chief Commissioner RegionalTax Office, Karachi, while addressing awell-attended seminar organized byICAP Southern Region Committee(SRC) here Wednesday.

The top sales tax FBR official dilatedupon reasons why government failed tointroduce a broad based Value Added Tax(VAT) in 2009. He explained that in thepast FBR’s enforcement arm was frozenfor sometime resulting in suspension oftax audits; as a result most of the field of-ficers forgot techniques for conductingmeaningful tax audits.

However, he agreed that collection ofsales tax through withholding schemeswas negation of self assessment, whichshould be discouraged. Tanveer categori-cally declared that SRO 98 would beamended to cater and suit business opera-tions and no business needs to modify itsoperations due to the new withholding taxscheme. Upon a question, the Chief Com-

missioner also clarified that FBR has noobjection to allow input tax credits to itstaxpayers whose corresponding output taxwas being paid in SRB or PRA kitty.

Earlier, while making a comprehen-sive and elaborative presentation on SRO09, M. Adnan Mufti FCA, CPD ConvenerSRC dilated at length about legislativehistory of Sales Tax WithholdingTax Rules 2007. He high-lighted that due to re-scinding of SRO 603,the requirement oftax deduction onpurchase from un-registered sectorshas been doneaway with. Healso explained thebackground of Sec-tions 2(21a) and 7 ofFederal Excise Act2005 read with RSO543(I)/2008 dated 11 June2008 and contended that excus-able goods and services are outside thepurview of Sales Tax Withholding Rules2007. He apprehended that as a result ofnew measures, corporate withholdingagents might start / shift business in thename of AOP / Individuals; thus, corpora-tization would be hampered and adverselyaffected. Alternatively, mmanufacturers /importers might prefer sales to unregis-tered sectors or to AOPs / Individuals notliable to withhold tax. On the issue of in-come tax / excise duty assesses being clas-

sified as sales tax withholding agents,Mufti emphasized that the provisions ofIncome Tax Ordinance 2001 and FederalExcise Act 2005 do not provide any ref-erence, authority or reliance upon SalesTax Act 1990 and rules made thereunderfor collection of sales tax for a company,not otherwise in sales tax fold, which may

be made liable to withhold salestax. On the contrary, such

reciprocity or counterreference only finds

place in Sections2(21a) & 7 of Fed-eral Excise Act2005 and Section2(14)(c) of SalesTax Act 1990whereby excise

duty is made ad-justable as sales tax

and vice versa.Taking up a key

issue regarding applicabil-ity of SRO 98 on invoices is-

sued prior to 14 February 2013, AdnanMufti referred to FBR’s clarificationdated 17 August 2009 whereby it wasclarified that old invoices will not attractwithholding tax. He elaborated that underSRO 98, 1/5th of the amount of sales tax,shown on the face of tax invoice, needsto be deducted. For instance, extra tax @0.75% would also undergo tax withhold-ing over and above 16%.

In his presentation, Adnan Mufti ex-plained with practical examples that un-

less a business earns 25% profit on cost,it will be exposed to liquidity pressuresunder SRO 98. In particular, he referredto Rule 58C of Sales Tax Special Proce-dure Rules 2007 whereby commercial im-porters are not entitled to claim refund inany circumstances. In this way, SRO 98directly hits cash flows of commercial im-porters, he claimed.

On the legal touch tone, Mufti ex-plained that no specific provision exists inthe statute to claim refund of withheld tax.In particular, law is silent where tax waswithheld at the time of making paymentsand subsequently the goods were returnedback to the supplier. How supplier mayclaim adjustment / refund of such with-held tax; he questioned.

In the end, Mufti addressed the penalprovisions of the sales tax law and ex-plained SRO 660 does not prescribe anyspecific penalty for non deduction ofwithholding tax. However, such an actmay attract misc. penal provisions envis-aged under Section 33 of the Act. He wenton to say that in numerous cases, assess-ment orders have been issued whereby tax@ 1% not withheld by the taxpayersunder SRO 660/97 was added back totheir own liability. If the correspondingsupplier had discharged his entire liability@ 16%, this addition would mean 17%tax to the exchequer. Penalty should notbe levied till it is proved that the supplierhas also defaulted in his liability to thestate and a revenue dent was caused to theexchequer, he maintained.

KARACHI

STAFF REPORT

Engro Corporation was recognizedamong the top and most preferred em-ployers in the country.

Engro Corporation is the only Pak-istani private company that has made itto top five. According to a survey con-ducted by Rozee.pk, in collaborationwith a UK based Research CompanyYouGov, the Corporation was voted asa preferred employer bringing the com-pany to the 4th place in the league oftop five employers.

To ensure that Engro remains themost sought after employer among col-lege graduates and experienced profes-sionals, the company continues toimplement its holistic strategy for em-ployee and organizational development.As part of the survey, the respondentswere asked to cast their votes based on or-ganization’s brand image, potential for ca-reer growth, work environment,compensation & benefits and social re-

sponsibility. Engro Corporation receiveda weighted share of 77 percent in Agricul-ture/Fertilizer & Pesticide sector for itsfertilizers business – Engro Fertilizers andwas, thus, the most preferred em-ployer in the category, secur-ing the first position.Similarly, the foodsbusiness of the Com-pany – Engro Foods– received 34 per-cent weightedvotes and securedthe second posi-tion in the cate-gory of the mostpreferred employerin the FMCG sector.

Speaking of therecognition – Tahir Jawaid– Senior Vice President ofHuman Resources & Public Affairsat Engro Corporation said: “Engro’s suc-cess can be credited to one reason aboveall others: we have consistently attracted,hired and retained some of the most tal-

ented people in Pakistan. Our ability tocreate high performance teams in a cultureof inclusiveness, professionalism and ex-cellence is what drives our success. We are

pleased to be part of the list andgoing forward we will con-

tinue to ensure that Engroremains the most

sought after em-ployer among col-lege graduates andexperienced pro-fessionals alike.”Engro is a dy-namic companyand has a strong

history of nurturingtalent and creating

opportunities forgrowth. With existing

employee strength of over3,700 individuals, Engro regularly

recruits graduates through career fairs andgraduate recruitment programs and pro-vides unmatched career guidance andmentoring to its employees.

SECP amends firstschedule to CompaniesOrdinance 1984

KARACHI

STAFF REPORT

The Securities and Exchange Commission ofPakistan (SECP), aiming to facilitatecorporate sector, has amended the FirstSchedule to the 1984 Companies Ordinance,containing articles of association ofcompanies vide its SRO 194(I)/2013. Theamendments broadly relate to the areas ofalternative dispute resolution (ADR)mechanism, dividend payments mode,holding of the meetings of the Board ofDirectors through tele/video conferencing,sending of notices through email, andprocedure for election of directors forcompanies limited by guarantee and nothaving a share capital. In order to provide atool for dispute resolution between thecompany or its shareholders or between thedirectors or the shareholders, new provisionshave been added to Tables A and C. The saidprovisions seek to encourage directors,shareholders and other stakeholders to solvetheir disputes without recourse to courts oflaw. Amendments have also been made toTable A of the First Schedule, enabling thecompanies to make payment of dividend incash and/or in specie. Earlier, such facilitywas not clarified in the relevant provisions. Asper previous provisions, it was not necessaryto give notice of directors’ meeting to anydirector who was out of country for the timebeing. Now, owing to the amendment toTables A and C of the First Schedule, it hasbeen made easier to send notice to directors,whether in the country or out of country, viaemail, which will be considered a validnotice. Keeping in view the technologicaladvances, new provisions in Tables A and Chave been added to facilitate directors to holdmeetings through tele/video conferencing inemergency situations, where it is not possiblefor them to be physically present at thevenue of the meeting. This provision shallincrease directors’ participation inmeetings. Lastly, to make provisions forholding of election in companies limitedby guarantee and not having share capital,a new provision has been added to TableC, which mandates that the directors of thecompany shall be elected in accordancewith the provisions of the ordinance.

FBR vows changes in SRO 98to suit business operations

SRO 98 WOULD BE AMENDED TO CATER AND SUITBUSINESS OPERATIONS ANDNO BUSINESS NEEDS TO

MODIFY ITS OPERATIONS DUETO THE NEW

WITHHOLDING TAX SCHEME

ENGRO’S SUCCESS CAN BE CREDITED TO ONEREASON ABOVE ALLOTHERS: WE HAVECONSISTENTLY

ATTRACTED, HIRED ANDRETAINED SOME OF THEMOST TALENTED PEOPLE

IN PAKISTAN

Engro recognised among Pakistan’s top 5 employers

FAISALABAD: A factory is seen

closed due to gas and electricity

load shedding in Faisalabad. online

CMYK

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businessThursday, 14 March, 2013

Major Gainers

COMPANY OPEN HIGH LOW CLOSE CHANGE TURNOVERNestle Pakistan Ltd. 5000.00 5250.00 5000.00 5250.00 250.00 600Philip Morris Pak. 204.85 215.09 195.01 214.82 9.97 18,200Millat Tractors XDXB 504.13 512.69 505.51 510.21 6.08 6,000Sunrays Textile 254.00 260.00 245.00 260.00 6.00 6,000Siemens Pakistan 600.00 605.00 600.00 605.00 5.00 900

Major LosersIndus Motor CoSPOT 325.00 325.00 310.99 312.11 -12.89 1,100Exide (PAK) 341.40 342.00 330.00 330.00 -11.40 2,100Indus Dyeing SD 487.67 485.00 463.30 477.66 -10.01 1,200Tri-Pack Films 192.07 193.80 182.47 182.77 -9.30 52,300Pak Oilfields XD 462.18 466.05 456.50 458.02 -4.16 366,800

Volume Leaders

Engro Corporation 128.65 128.50 122.25 124.75 -3.90 25,127,700P.T.C.L.A 21.08 21.30 20.25 20.45 -0.63 24,266,500Lafarge Pakistan 6.14 6.37 6.08 6.20 0.06 12,119,000Telecard Limited 6.16 6.25 5.80 5.96 -0.20 9,399,500Lotte PakPTA 7.42 7.73 7.41 7.49 0.07 8,431,500

interbank RatesUSD PKR 97.8890GBP PKR 146.5105JPY PKR 1.0221EURO PKR 127.4417

ForexBUY SELL

US Dollar 99.2 99.45Australian Dollar 102.8 104.5Canadian Dollar 98.5 99UK Pound Sterling 152 153Euro 133.5 134.2China Yuan 13.5 14Japanese Yen 1.055 1.11Saudi Riyal 26.6 26.8U.A.E Dirham 26.85 27.05

Across the aisle – first coremeeting on population anddevelopment

LAHORE: Under the ambit of APNA Pakistan

(Advocacy for Population and National

Advancement) campaign, the first meeting of the

Core Working Group on Health, Population and

Development was held in Lahore on 26th February,

2013. The meeting was organized as a follow up to

the non-partisan forum titled “Across the Aisle”

held during December, 2012 to bring together

political leaders, health and population experts and

religious scholars on one platform to build

consensus on the need for promoting

comprehensive reproductive health on the national

agenda regardless of political and ideological

affiliations. This non-partisan forum was concluded

with the pledge to create a core working group

from amongst the participants tasked with

formulating a policy framework at the national

level to address these challenges. The first meeting

of the Core Working Group was attended by a

selected group of representatives of eight major

political parties (PML-N, PML-Q, JUI, JI, PPP, ANP,

PTI & MQM) as well as renowned health experts,

religious leaders and representatives from minority

groups. Keeping in view the advocacy approach of

APNA Pakistan, a framework was proposed based

on best international practices adapted to local

context to ensure universal access to reproductive

health services. The framework proposed by team

leader Dr. Naeem uddin Mian met with support and

the usefulness of such an approach was

appreciated by the participants. In light of the

proposed framework, the participants discussed

ways to improve maternal and child health and

birth spacing services through focusing on four

main tiers including political leadership, planning

and management, service delivery and community.

Participants gave their valuable suggestions and

the need for sustained political commitment to

solve these issues was especially highlighted.

Other salient recommendations included better

coordination between Health and Population

Welfare Departments to ensure effective service

delivery and efficient use of available resources,

and to create effective monitoring and

accountability mechanisms at provincial, district

and local levels to ensure delivery of quality

services. PRESS RELEASE

Dr Asim, Agex inaugurate

OGDCL Institute of

Science and Technology

ISLAMABAD: Dr. Asim Hussain Advisor to the Prime

Minister on Petroleum & Natural Resources and Mr.

Awad Ahmed Algez Minister of Petroleum

Government of Sudan inaugurated OGDCL Institute

of Science & Technology (OIST). The ceremony was

graced by H.E Alshafie Ahmed Ambassador of Sudan

in Pakistan, Vice Chancellor of Quaid-e-Azam

University Dr. Masoom Yasinzai, and Mr. Masood

Siddiqui MD/CEO OGDCL and Chief Executives of

other E&P Companies were present on the occasion

here today. The Institute is starting an MS Petroleum

Engineering Programme and Geosciences soon. Oil &

Gas Training Institute of OGDCL, is a premier

institute of petroleum industry in the country which

was established in 1979 with technical assistance

from Canadian International Development Agency

and has now been upgraded to higher education and

training institute. This institute has been elevated to

a degree awarding institute through affiliation with

Quaid-i-Azam University Islamabad and renamed as

OGDCL Institute of Science & Technology (OIST). A

high level Sudanese delegation visited OGDCL Head

office on March 12, 2013. The Advisor for Petroleum

and Natural Resources welcomed the delegation to

Pakistan and highlighted that Sudan is one of the

promising upcoming highly prospective country

which has a lot of potential to monetize oil and gas

resources. Further there exists a number of joint

venture opportunities which can both be materialized

by OGDCL and PPL jointly. Likewise, Sudan can also

explore possibilities of farm-in in blocks owned and

operated by OGDCL and PPL. PRESS RELEASE

Cathay Pacificannounces 2012 resultsKARACHI: The Cathay Pacific Group reported an

attributable profit of HK$916 million for 2012 – an

83.3% fall compared to the profit of HK$5,501

million reported for 2011. Earnings per share fell by

83.3% to HK23.3 cents. Turnover for the year

increased by 1.0% to HK$99,376 million. In 2012

the Group’s core business was adversely affected

by the high price of jet fuel, pressure on passenger

yields and weak air cargo demand. Economic

uncertainty, particularly in the Eurozone countries,

and an increasingly competitive environment added

to the difficulties. It was a challenging year for the

aviation industry generally. The Group’s share of

profits from associated companies, including Air

China, showed a marked decline. PRESS RELEASE

Wateen delivers fibreoptic network LAHORE: Wateen Telecom, Pakistan’s leading

converged communications company has been

awarded a PKR 449 million project to develop an

extensive optical fibre network in Sindh. The USF

Sindh project entails the laying of over (1,037) km

of an optical fibre network in Southern Telecom

Region. An amount of PKR 449 Million will be

provided by USF in the form of a subsidy; the rest

of the cost will be borne by Wateen. The new optical

fibre network will connect 17 unserved cities and

towns.. Wateen has joined hands with the Universal

Service Fund Company (USF Co.) to undertake this

project of national importance, which will go a long

way in bridging the digital divide in the country. The

project, funded through a USF subsidy, will provide

state of the art digital infrastructure in remote areas

of Sindh, and could be further exploited to build IT,

telecom, education, health and business services in

these areas. This protect has been inaugurated by

Prime Minister Raja Pervaiz Ashraf on 23 February

2013, in Sanghar – Chak # 11 along with a number

of telecommunications and health and education

projects. PRESS RELEASE

CORPORATE CORNER

ISLAMABAD: The 13th Al Baraka Bank Board of Directors meeting was held recently. PR

LAHORE: Chaudhry Shahbaz MPA PP 143, Ch Asghar

and Hameed give a solar energy lamp to student

Maaz Butt. PR

02

B

Japan special economic zone will be a landmark

achievement. —KCCI President Haroon Agar

Pakistan paying heavyprice for runningpower plants onfurnace oil, gas: IWCCI

ISLAMABAD

NNI

The Islamabad Women’s Chamber ofCommerce and Industry (IWCCI) said onWednesday converting furnace oil basedpower plants to Thar coal can help save fivebillion dollars per annum being spent onimport of furnace oil which is around 40 percent of the energy mix. Coal is the cheapestfuel for producing electricity with 41 per centshare in global power generation, its share inworld’s energy mix has recorded increase of5.4 per cent but it is yet to get properattention in Pakistan, it said. Pakistan importoil bill has been estimated to touch mark of $50 billion by 2025 which necessitates usageof Thar coal for power generation, saidFarida Rashid, President IWCCI. With 1004billion tonnes of coal reserves left and globalconsumption estimated at 9.98 billion tonnesby 2030, Pakistan can become a major playerwith 175 billion tonnes of coal, she saidwhile talking to business community. Shesaid that we are paying heavy price forrunning power plants on furnace oil andnatural gas while the slow pace of thegovernment’s decision to convert somepower plants on coal is unsatisfying. FaridaRashid said that switching on coal should bemade easier for the private power producersseeking permission since long. She said thatsome two billion dollars could also be savedby ensuring merit in provision of gas to thepower plants.

ISLAMABAD

NNI

PAKISTAN and Sudan, being brotherlycountries are enjoying close andcordial relations and facingalmost similar chal-lenges which could

be resolved in a better way bypromoting bilateral cooper-ation in multiple fields.

Zafar Bakhtawari,President IslamabadChamber of commerceand Industry (ICCI) madethese remarks during ameeting with AlshafieAhmad Mohamed, Ambas-sador of Sudan in Pakistan andDr. Awad Ahmed Algaaz, Minis-ter for Petroleum, Sudan was alsopresent on the occasion, who is on an of-ficial visit to Pakistan.

Speaking on the occasion, Dr. Awad AhmedAlgaaz, Sudanese Minister for Petroleum con-veyed the greetings of Sudanese leadership for thepeople of Pakistan and said that his visit is aimedto find ways and means to strengthen the bilateralrelations. He said that Sudan has very high qualityoil with infrastructure of refineries and pipelinesas well as oil exploration is vast sector which

could be exploited by Pakistan investors. TheMinister further said that Sudan also wants to ben-efit from Pakistan’s knowledge in agriculture sothat it can utilize its vast agricultural land.

Alshafie Ahmad Mohamed, Ambassa-dor of Sudan in Pakistan said that

Pakistan is a brotherly Islamiccountry who always support-

edSudan on all issues. Hesaid both countries havemany similarities whichshould be exploited tocreate bilateral businessand investment opportu-nities. The Ambassadoralso assured that Su-

danese Embassy would al-ways extend cooperation to

Pakistani businessmen forimproving trade and exports

between the two countries.Zafar Bakhtawari, President ICCI

said that economy is the key for stability of acountry and a strong force to keep a countryunited. Therefore, Pakistan and Sudan must focuson strengthening their economies, he added.

Bakhtawari expressed confidence that thevisit of the Sudanese Minister for Petroleum andmeetings with his Pakistani counterparts is pro-ductive and would pave the way for further ex-panding the relations.

Sudanese ministerinvites entrepreneurs toinvest in oil, gas sector

sudan wants to benefit from

Pakistan’sknowledge inagriculture so

that it can utilizeits vast

agricultural land

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