Government and SBP studying proposal to merge, sell ICP's shares

KARACHI (May 14 2003) : The government and the State Bank of Pakistan (SBP) are studying a proposal to either merge or sell Investment Corporation of Pakistan (ICP) shares after its present management is near to clean its balance sheet from huge liabilities.

“Its a discretion of the government, the Privatisation Commission and the State Bank of Pakistan to sell or merge the ICP, our duty was to remove the hurdles and clean the balance sheet of the corporation,” ICP Chairman Tariq Iqbal Khan said at a news briefing.

He said that the main task was to make the corporation a debt-free entity and hoped that by the end of this fiscal year ICP would clear all its debt owed to the State Bank of Pakistan.

“We have sold the managing rights in the lot 'A', 'B' and 'C' and have received about Rs 1.264 billion through this sale,” Tariq said. Another Rs 786.786 million was expected from the government through the sale of SEMF Mutual Fund which would help in paying out outstanding to the SBP.

To a question, he said that the profit in the year ended March 31, 2003 would be less as compared to the same period of the corresponding year if the ICP would not have received the amount fetched after selling shares in three lots of the mutual funds.

He explained that the ICP as of March 31, 2003 cleared all the outstanding amount under the head of employees scheme. “We have relieved around 200 employees and paid all the benefits due to them,” he said.

Moreover, the ICP took a bold decision and sold ill-liquid stocks which have no major movement in the market.

The selling of these shares resulted into a loss of Rs 81 million as the market value of these stocks were below the purchasing price.

However, with strenuous efforts and restructuring plan as per book value the net worth Rs 1.4 billion.

But we haven't revalue our assets (including some of the lands owned by the ICP in different cities of the country).

He said that profit was lower because the ICP made hefty payment of Rs 648 million in the nine months ended March 31, 2003 and aimed to pay another Rs 500 million by June 2003.

The release of the ICP said the income surged to Rs l,415 million in the third quarter. Referring to the third quarter report the ICP managing director said that the total income recorded as of March 31, 2003 stood at Rs 1,415 million as against Rs 373 million during the corresponding period of the last year.

Phenomenal increase of Rs 1,264 million was recorded on account of sale of management rights of the ICP Mutual Funds Lot “A”, “B” and “C”, he added.

Tariq said, “The management took a policy decision to get rid of the ill-liquid shares in a systematic manner to clean its investment portfolio which resulted in loss of Rs 77.5 million.

Moreover, in pursuance with the decision of the Federal Cabinet to wind up the operations, branches were geared up towards closure of investment accounts.

As a consequence of sale of shares, the corporation registered a loss of Rs 29.6 million on its investment held under PLS investors' sharing scheme.”

He said that the expenditure was kept under control, which declined from Rs 243 million during the nine months ended March 31, 2002 to Rs 177 million during the same period in 2003.

Substantial decrease of Rs 74 million was registered on account of reduction in financial charges from Rs 161 million to Rs 87 million during the period under review.

The ICP MD said that reduction in the financial expenses became possible because of prudent repayment of entire short-term financing and term deposits respectively from internal resources.

As such the corporation has cleared entire liabilities except GoP/SBP loans.

A proposal has been sent to the GoP/SBP for repayments of their entire principal amount.

A sum of Rs 648 million has been paid to the SBP out of the total liability (principal of Rs 1,342 million).

The remaining amount will be paid soon.

Tariq also said that the corporation thus ended with a net profit before provision at Rs 1,238 million, after taking into account provisions/reversals mainly consisting of Rs 600 million on account of Severance Scheme, and future liabilities of all the pensioners and widows.

Further, the ICP relieved around 200 employees under Severance Scheme and retained skeleton staff to carry out its operations smoothly.

The net profit stood at Rs 653 million.

The improved performance contributed to marked impact on equity, which stood at Rs 1,243 million (including Rs 724.8 million on account of surplus on revaluation of securities) as of March 31, 2003 as compared to the adverse equity of Rs 156.1 million as of June 30, 2002.

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