Early next month Prime Minister Nawaz Sharif will present awards to the chairman/CEOs of 25 companies judged as the ‘Top companies for the year 2013’ by the Karachi Stock Exchange among 569 companies listed at the bourse.

It is almost 36 years since the KSE board of directors started to sift the best from the rest. But over time — since 1978 when the first awards to the top companies were presented — the KSE has continued to revise and re-adjust the criteria for selection.

Yet, certain requirements to make to the top remain little changed. For the selection of 25 best for 2013, it was mandatory for companies to meet three ‘prerequisites’. First, a minimum dividend distribution of 30pc (including at least 15pc cash dividend) for the year; second, the shares of the company had to be traded 50pc of the total trading days during the year, and third, that the company should not be in the ‘Defaulters Segment of the Exchange’ or trading of its shares were not suspended on account of violation of laws and regulations.

A KSE official explained that the companies that fulfill the above prerequisites were then selected on the basis of highest marks obtained as per following criteria: Capital efficiency (27.5pc marks); profitability (37.5pc marks); free-float of shares (7.5pc); turnover of shares (2.5pc); corporate social responsibilities (2.5pc) and transparency and investors relation (22.5pc). All of that makes a tally of 100pc.

A quick look at the selected Top 25 for the year 2013 should be relevant. In order of their standing, the companies include: Fauji Fertiliser, Millat Tractors, Pakistan Oilfields, Archroma Pakistan, Fauji Fertiliser Bin Qasim, Pakistan International Container Terminal, Bata Pakistan, Crescent Steel, Colgate-Palmolive, Security Papers, Hub Power Co, Golden Arrow Fund, Attock Petroleum, Services Industries, Atlas Honda, Premium Textile, Atlas Battery, IGI Insurance, Biafo, EFU Life, Kohat Cement, Pakistan Cables, Din Textile, Pakistan Petroleum and Attock Refinery.

“The awards were a good attempt by the KSE to encourage shareholders’ confidence and develop a competitive spirit among companies,” says Jalees Ahmed Siddiqi

The interesting point to note is that among the 32 sectors on the KSE, there are no representations from at least 10 segments such as the pharmaceutical, food, household goods, chemicals, paper and board and even banks. Some of the blue chip companies are also conspicuous by their absence, such as OGDC, ICI, Engro, Lucky Cement, Abbott, HBL.

Yet, there are surprising new entrants on the 2013 list such as Kohat Cement Company Limited. Aizaz Mansoor Sheikh, CEO of Kohat Cement (KOHC) told Dawn that his company had made to the Top 25 for the first time. He affirmed that the distribution of awards encouraged entrepreneurs to improve their ‘systems and method of doing business’. A glance at the KOHC balance sheet shows that the company paid cash dividend at 30pc for 2012 after several blank years; for 2013 cash dividend was raised to 50pc along with bonus at 20pc and for 2014, the board declared cash dividend at 20pc. Total assets of KOHC stood at Rs14.15bn. Paid-up capital of KOHC stands at Rs1.55bn with 15.96pc shares held by the general public.

Another company that shoved some of its bigger peers in the insurance sector behind and climbed to take a place among the Top 25 is IGI Insurance.

Jalees Ahmed Siddiqi, who held the reins as CEO of IGI Insurance in 2013, told Dawn that he thought the awards were a good attempt by the KSE to encourage shareholders’ confidence and develop a competitive spirit among companies. The IGI Insurance Annual Accounts for 2013 shows that nearly 59pc of the paid-up shares were held by the directors and associated companies with relatively a good part of the equity at 18.04pc with the general public. IGI distributed Rs278m in cash dividend at Rs2.50 per share to the stock holders, tied to a bonus issue at 10pc, which absorbed Rs112m.

The company’s profit after tax for 2013 amounted to Rs812m, translating into earning per share at Rs7.29. It represented a turnaround from the loss of Rs354m sustained the earlier year.

Now a little about the one sitting on top of all others: Fauji Fertiliser Company FFC. It has an enviable record of seizing a position among the top 25 companies, consecutively for 20 years since 1994. For four years (2010 to 2013), The FFC) has stood first among the top 25. For many years, Unilever Pakistan offered tough competition to FFC. But with the buy-back of shares and de-listing of Unilever, FFC now stands unchallenged.

The pattern of shareholding of FFC shows that 564m of the total 1,272m shares of the company, which formed 44pc of the total, vests with Fauji Foundation, while ‘individuals’ also own comparatively a higher number of 263m shares or 21pc of the equity. FFC paid cash dividend at 94.53pc in 2012 and raised it to 96.99pc for 2013. Including reserves, shareholders’ equity of the company amounted to Rs25.2bn and the total assets of FFC at the close of financial year 2013 stood at Rs70bn.

Published in Dawn, Economic & Business, February 23rd , 2015

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