Promote investment in industrial and agro-based projects with high value addition, export potential, and maximum utilization of indigenous resources. Build and manage a diversified equity portfolio promising optimum return. Mobilize funds in a cost effective manner to meet our financing needs Achieve sustainable growth and be competitive in our commercial operations. Undertake investment advisory services and formation / participation in financing syndicates.
To excel in performance and play a leading role in the financial sector in Pakistan.
Saudi Pak aims at strengthening economic cooperation between the brotherly people of Saudi Arabia and Pakistan. To achieve this objective, we are committed to add value for our stakeholders through capital formation and investment related activities in Pakistan and abroad.
On behalf of the Board of Directors, I would like to present the 40th audited financial statements of Saudi Pak Industrial and Agricultural Investment Company Limited as well as consolidated accounts together with Auditors’ Report to Members and the Directors’ Report for the year ended December 31, 2021.
During the period, Pakistan’s economy saw recovery after contraction of 1% in FY20. With the impetus provided by government and central bank’s fiscal and monetary stimulus packages to combat the effects of the COVID-19 pandemic, the GDP growth rate for FY21 clocked in at a robust 5.6%.
However, the second half of the calendar year saw the ongoing economic recovery encounter headwinds in the form of an escalation in external deficits in the backdrop of higher domestic demand and increased international oil and other commodity prices. Despite a 25% increase in exports and
sustained momentum in remittances, the currency depreciated by 12% over the second-half of the year and annual CPI inflation closed at 12.3%. The State Bank of Pakistan responded through increasing the policy rate by cumulative 2.75% from September 2021 onwards, to close the year at 9.75%. Other measures taken by the State Bank of Pakistan to lower inflation and keep the economic recovery sustainable included higher cash reserve requirements, tightening of consumer finance and restriction of non-essential imports.
During this period, Large Scale Manufacturing, which exhibited a sizable 14.9% growth rate in FY21 (Jul-Jun), slowed to 3.3% in FY22 (Jul-Nov). Private sector credit grew by 13% in FY22 (Jul-Dec) after growing 11% in FY21 (Jul-Jun), mainly driven by increase in working capital financing requirements.
On the fiscal side, FBR tax collections grew significantly by 33% during the second half of the year. The budget deficit was contained to 2.1% of GDP during 1HFY22 from 2.5% in 1HFY21, with further fiscal consolidation likely following the enactment of the Finance (Supplementary) Act 2022 in January 2022.
The economic headwinds were compounded by multiple waves of the COVID-19 pandemic, the evolving geopolitical situation, and delayed finalization of the IMF program which had a negative effect on the capital markets during the year, as KSE-100 index remained volatile and closed flat.
Going forward, the pace of Pakistan’s economic growth trajectory may moderate in the wake of coordinated fiscal and monetary stabilization measures. Key risks include any faster than anticipated increase in global interest rates and rising international oil and commodity prices under a fast evolving global economic and geopolitical scenario.
During the period, Company closely monitored the COVID-19 situation and invoked required actions to ensure the safety of its staff while providing uninterrupted operations. Company maintained a cautious stance with focus on reducing risk, recoveries, and booking profit opportunistically. As a result, NPLs were reduced by 39% and provisioning coverage was increased from 65% to 94%. Given the high inflationary reading, to safeguard against future interest rate shock, Company prudently took a strategic decision to reduce fixed-rate PIB book.
Overall, as a result of the above Company achieved an excellent result. Profit before Tax increased by 66% to Rs. 1,341 Million while Profit after Tax increased by 50% to Rs. 922 Million. Total comprehensive income was Rs. 1,547 Million. Net interest margin increased by 44% to Rs. 1,431 Million. Dividend income increased by 99% to Rs. 319 Million as a result of portfolio allocation in high dividend yielding stocks. Shareholder’s equity increased by 12.0%. This is an excellent result achieved during a very difficult operating environment.
The Company’s overall risk profile including operating results and financial flexibility was reconfirmed by external Credit Rating Agency VIS who maintained Company’s long term entity rating at AA+ and short term rating at A-1+ with stable outlook.
Moving forward, Company remains well-positioned to capitalize on available opportunities as and when they present themselves. Focus will remain on the core business of project finance. The Board firmly supports management to pursue its plans.
In the end, I would like to express on my behalf and on behalf of the Board our sincere gratitude to the joint venture partners, the Kingdom of Saudi Arabia and the Islamic Republic of Pakistan for their unwavering support and State Bank of Pakistan as well as Securities Exchange Commission of Pakistan for their professional guidance. I am also thankful to the Board Members for their valuable contributions. Further, I thank and congratulate the Saudi Pak staff and management for this excellent performance amid extremely challenging conditions.
Sultan Mohammed Hasan Abdulrauf
View our yearly milestones below
Completion of Saudi Pak Tower
Acquisition of Standard Chartered Mercantile Leasing Company Limited
(Later Renamed Saudi Pak Leasing Company Limited)
Established Regional office at Karachi
Acquisition of Prudential Commercial Bank Limited
(Later Renamed Saudi Pak Commercial Bank Limited)
Established Regional office at Lahore
View our Distinguished Affiliates below
Saudi Pak Real Estate Limited, a wholly owned subsidiary of Saudi Pak Industrial and Agricultural Investment Company Limited was established with prime objective of real estate development. Its activities include investment in properties both for investment and development purposes, property management services, investment in joint ventures and other related services.
Saudi Pak Real Estate Limited since its inception utilized its resources towards investment as well as development of properties. In addition to the strategy of earning capital gains the Company also made investments for regular rental income. Saudi Pak Real Estate Limited successfully completed its development project of “Saudi Pak Homes” at Lahore City earning good return on investment. Presently, the Company has investment in prime locations of Lahore and Islamabad. Future projects may also include joint venture with reputed firms.
In FY2019, the Company posted revenue of Rs. 35.34 million and net profit of Rs. 14.73 million. The net equity stood at Rs. 695.30 million with breakup value of Rs. 13.91 per share. The current portfolio and prudent utilization of available cash resources is expected to improve revenues and profitability of the Company in coming years.