ICI Pakistan Limited: Strong Volume Growth by Restructuring

Article excerpt

ICI Pakistan Limited is incorporated in Pakistan and is listed on Karachi and Lahore Stock Exchanges. It produces Polyester, Soda Ash, Paints, Agrochemicals and seeds, Pharmaceuticals, Chemicals, with another launching programme of Pure Terephthalic Acid (PTA).

Changes in the Board of Directors

Mr. Naseem S. Mirza has relinquished the office of the Chairman/Director at the conclusion of the 45th Annual General Meeting which was held on April 17, 1997. Another gentleman who bade farewell to ICI, is Iain M. Macfarlane, Group Manager, Regional Business, Imperial Chemical Industries PLC who was on the Board of Directors of ICI Pakistan since September 1993. They have been given a hearty farewell by the Board. The Board also welcomed Mr. Desmond O'Shea who replaces Mr. Nasim S. Mirza as Chairman/Director of the organisation. Mr. Desmond O'Shea has hitherto been Regional Executive Asia, ICI PLC based in London.

The economic and political turmoils on the Governmental level placed this company also to a very unfavourable position. The rising of taxes and the falling of tariffs on the finished products and their imports restricted selling prices and thereby the margins for domestic goods, checking monetary expansion and lowering the fiscal deficit in order to meet the targets given by the IMF. Moreover, the rates of interest was increased exorbitantly. All these factors combined together created unmanageable turmoils generally for all businesses and industries.

Yet the company fought out the unhappy situation and was able to show strong volumetric growth by restructuring all through resulting into the controlling of costs and improving of productivity, which resulted into record profit in all fields except polyester fibre and pharmaceuticals, which owing to external pressure caused adverse swing of Rs.476 million in operating profit as compared to 1995. It was, however, made up by the profits earned in other sectors and the overall operating profit of 1996 was Rs.975.5 million which is very near to the last year's profit. Total turn-over exceeded Rs.8 billion or a 16 per cent improvement over last year. These results are undoubtedly very satisfactory.

Polyester

The plant worked in full bloom, but the production remained at last year's level except that the domestic demand was 18 per cent higher. The selling prices remained under pressure from the low prices quoted by foreign exporters whereas the low prices quoted by the exporters from Far East and Saudi Arabia.

The issue of dumping continue to threaten the local polyester staple fibre industry and has now assumed greater significance as import duties fall in line with IMF conditionalities. ICI has, therefore, objected strongly to the government against dumping, and advocated for effective anti-dumping legislation, Work on expansion project was completed in December 1996 and was commissioned early this year and it is now in operation giving Sheikhupura plant of ICI an expanded capacity of over 91,000 tonnes/annum.

Soda Ash

The industrial dispute at Khewra was settled in February 1996 after signing a two year wage agreement with the Union. After this settlement the production substantially increased. Business position in the glass sector, however, remained sluggish owing to the depleted demand, but overall demand of the product remained strong. Yet the low production in the previous year owing to strike was made up by import of 3000 tonnes in the first quarter of 1996 to maintain the demand level, and a 10 per cent increase in the price in December 1996 helped in recovering the input cost significantly per annum and enabled the company to increase the profit by 86 per cent over the last year. The growth of sales of Sodium Bicarbonate was also very significant in comparison with that in 1995. Calcium carbonate also made a good increase in production in line with the demand.

Paints

Political and economic uncertainty prevailing in the country throughout the year cast a very bad impact on this sector. …