Established in 1860, Murree Brewery is one of the oldest public companies of the subcontinent. The company’s shares were traded on the Calcutta Stock Exchange as early as 1902.

Last year, it completed 155 years of continuous operations and stood out as the oldest company quoted on the Pakistan Stock Exchange.

Murree Brewery’s (MB) two manufacturing units are located in Rawalpindi and Hattar, Khyber Pakhtunkhwa.

The company brews alcoholic beer, non-alcoholic beer and Pakistan Made Foreign Liquor (PMFL). It also produces fruity malts, soft drinks, Tops extra packs, squashes, sauces, Murree Sparkletts water and vinegar.

The company operates three divisions — the Liquor Division, Tops Division and the Glass Division. The Tops Food and Beverages division was established in 1969, while the Tetra-Pak packaging facility was added in 2001.

MB earned the highest ever after tax profit in the year ended June 30, 2016 amounting to Rs1.151 billion.

The latest annual report and accounts for the year ended June 30, 2017 are yet to be released; but the nine-months (July-Mar 2016-17) showed a sharp fall in profit by 22pc to Rs662 million, despite increase in turnover at Rs4.837bn, compared to the corresponding period of the earlier year.

‘All I ask is that the numerous government departments, bureaucrats and politicians keep away from meddling in a company’s affairs,’ says Bhandara

Directors said that the decline in the company’s earnings was due to a bonus paid to employees in settlement of the Charter of Demands served by the Collective Bargaining Agent (CBA) for two years from July 1, 2015 to June 30.

Also on March 3, all wine shops across Sindh were sealed and stock taken into custody. Supplies to Sindh were restored but the issue of liquor sales to the province remains to be decided.

The second suspension of liquor sales not only resulted in adversely affecting the company’s profitability but also put a dent in government levies collected by both the Punjab and Sindh provinces, directors said in their report.

They affirmed: “The two suspensions in the past six months greatly reduced the profitability of the company as Sindh is the company’s major market for liquor sales”.

The Punjab Government, through a notification, has levied ‘Still Head Duty’ from July 1, 2015 on all Pakistan made foreign liquor and beer meant for consumption outside the Province of Punjab.

This placed MB at a disadvantage against other distilleries in Sindh and Balochistan which are not charged any duty on export of alcoholic products to other provinces. “Due to this disadvantage sales of beer showed a small decrease in the year while liquor products decreased by 11pc”, directors said in their 2016 annual report.

Talking to this writer last Tuesday, Murree Brewery CEO Isphanyar M. Bhandara complained of unfair competition with the two breweries (believed to be owned by powerful political personalities of the provinces) —Mehran Brewery in Landhi, Karachi and Quetta Brewery located in the industrial area of Hub in Balochistan.

“All I ask is that the numerous government departments, bureaucrats and politicians keep away from meddling in a company’s affairs as they do not understand the dynamics of the business”. He asked for a level playing field for all.

The company has undertaken expansion projects in all areas of operation and is looking forward to completing them entirely through internal financing

Public interest soared a couple of years ago when MB was believed to have entered into an agreement to operate in India via a franchise. Mr Bhandara said that the deal had fallen apart as the other side showed scant interest.

In FY 2015-16, the company earned PAT at Rs115m on sales revenue of Rs10.2bn. The liquor division provided operating profit of Rs969m, down from Rs1.09bn the earlier year due to unhealthy competition with other distillers. The glass division added an operating profit of Rs403m to the bottom-line while the Tops division contributed Rs81m to net earnings.

Although alcoholic sales contribute major portion to the firm’s turnover, Mr Bhandara says he wants to turn that around and derive 60pc revenue from sales of non-alcoholic beverages. “The reason being that the demand for non-alcoholic beverages is limitless”, he said.

Under the present prohibition law, only non-Muslims and foreigners are permitted to consume alcohol in Pakistan.

The CEO affirmed that the company had undertaken expansion projects in all areas of operation. “We intend to double the production capacity in all divisions which would require capital outlay of Rs150-Rs200m”, he said and informed that the expansion at the glass division in Hattar had raised the plant’s capacity by 40pc.

Due to a strong balance sheet the company looked forward to completing the entire expansion through internal financing. At June 30, last, the company held Rs9.491bn in total assets.

MB has been following the policy of balancing, modernisation and expansion since the 1990s.

New beer-canning and modern bottle-filling facilities were acquired from Germany and installed. Two units of alcohol-rectification columns for producing extra neutral grade of potable alcohol from molasses were procured from France and Italy. Beer-fermentation capacities were renewed during the period as well.

Paid-up capital of Murree Brewery stands at Rs230m. The number of shareholders at June 30, last year was 865. Around 10 foreign companies also held 30.78pc of the company stock.

Kingsway Fund-Frontier Consumer — a Luxembourg-based specialised investment fund — is the largest stakeholder of 5.32m shares or 23.07pc of the foreigners’ holdings in the company’s paid-up capital.

Published in Dawn, The Business and Finance Weekly, September 5th, 2017