INVESTMENT COMPANIES IN PAKISTAN

 1.      National Investment Trust Limited:

The National Investment Trust Limited (NITL) is the first Asset Management Company of Pakistan, formed in 1962, had Funds under management of Rs. 86 billion, with approximately 53,323 unit holders as on June 30, 2014. NIT's distribution network comprises of 23 branches, various Authorized bank branches all over Pakistan.

2.      Pak China Investment Company Limited:

Pak China Investment Company Limited (PCICL) is a Development Financial Institution (DFI) formed under the initiatives taken by Government of Pakistan and Peoples Republic of China for promotion of Trade, Investment and Economic Growth of Pakistan. The company was incorporated in July 2007 with an Authorized Capital of USD 200 Million and was formally launched in December 2007. The company is a joint venture in which equity is equally contributed by Government of Pakistan and China Development Bank. Pak China Investment Company Limited in view of its inherent strengths and mandate aims to become a hub for investment activity and add value to sectors like Industry, Agriculture, Services, Information & Technology, Manufacturing, Real Estate and Infrastructure etc., for which we offer conventional and innovative solutions to Investors and Projects through a full range of Investment Banking services.

3.      Al Meezan Investment Management Limited:

Incorporated on February 27, 1995, Al Meezan Investment Management Limited is one of the pioneers in private sector mutual funds in Pakistan with a solid track spanning over 19 years. We are the largest asset management company in private sector in Pakistan currently managing assets of Rs.57 Billion. We are a group company of Meezan Bank Limited and Pakistan Kuwait Investment Company Private Limited.

4.      Pakistan Industrial Credit and Investment Corporation:

Pakistan Industrial Credit and Investment Corporation (PICIC) is a financial institution in Pakistan, one of the first Development finance institutions established with the World Bank Group assistance in 1957. In 2007, PICIC Commercial Bank was bought by Singapore owned NIB Bank. Recently, NIB Bank has sold its thirty percent stake to Sakib Berjees & Consortium Private Limited. Recently, Picic Insurance Ltd announced that Sakib Berjees along with a consortium of investors is in the process of establishing a special purpose vehicle (SPV) to be named Sakib Berjees & Consortium (Private) Limited for the acquisition of 30% stake in the Company from NIB Bank Ltd which currently holds 30% stake only in the Company. The Sakib Berjees and Consortium already owns Car4u Private Limited

5.      ORIX Leasing Pakistan limited:

ORIX Leasing Pakistan Limited – OLP is Pakistan’s leading leasing company. ORIX Leasing Pakistan Limited was established in 1986 as Orient Leasing (Pvt) Limited, a subsidiary of Orient Leasing Company Limited, Japan’s largest leasing conglomerate. It was converted into a public limited company in December 1987. In December 1989, the Company’s name was changed to ORIX Leasing Pakistan Limited in line with the change in name of its Parent company to ORIX Corporation. The Company is listed on all three stock exchanges in Pakistan. OLP completed its 25 years in Pakistan in the year 2011.

6.      Lakson Investment Company:

The management team has a combined experience of 50 years in both domestic and international markets.  On average, our team members have worked together for about 5 years in different capacities in the asset management industry of Pakistan and all of our department heads have a proven track record of delivering results and working together as a team in an exemplary fashion. Mr. Lakhani   (CEO) has over 13 years of investment and portfolio management experience in domestic and international equity and fixed income markets.

7.      BMA Asset Management Company:

BMA is amongst the leading financial groups in Pakistan. BMA Capital’s core areas of business include Equity Markets, Treasury Markets, Corporate Finance & Advisory, Research, and Retail Brokerage. BMA Capital is the leader in privatisation advisory in Pakistan, having successfully advised on over 50% of all privatizations in Pakistan, by value, in transactions valued in excess of US$4 billion. Recent transactions include joint lead managing the $813 million GDR Offering of 10% of OGDCL on the London Stock Exchange in 2006-07, and advising Escalate on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. The firm is among the top brokers in the Pakistan equity and treasury markets, and is among a handful of firms that comprehensively cover all segments of the capital markets. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media. BMA Capital’s retail brokerage brand, BMA Trade, has launched a nationwide network of branches as well as a comprehensive online trading platform, enabling investors across Pakistan to take part in the capital markets. 

8.      KASB Investment Banking:

The Investment Banking Group at KASB serves as a trusted advisor to premier clients, helping them develop and achieve their strategic objectives and meet their financial needs. As the leading investment banking group in Pakistan, KASB has extensive knowledge of domestic markets and industries and well-established relationships with local and international investors. KASB is the only local investment bank to be affiliated with a global bulge-bracket bank, i.e. Bank of America - Merrill Lynch (BofA Merrill Lynch). Access to BofA Merrill Lynch’s investment banking professionals and distribution capabilities around the world gives KASB a global understanding and reach coupled with strong local knowledge.

9.      PRIMUS Investment Management Limited:

Primus Investment management limited is a nonbanking finance company, licensed by the securities and exchange commission of Pakistan to manage open and closed end funds with the paid up capital of PKR 250 million.

10.  OIL & GAS Investment Limited:

Oil & Gas Investment Limited (OGIL) is a 100 % Pakistani Company established in year 2004, with the objective of playing a significant role in oil & gas exploration and production sector. OGIL has hydrocarbon producing assets as well as exploration acreage. OGIL is committed to explore new hydrocarbon reserves through its highly experienced Oil & Gas professionals.

11.  Escort Investment Bank Limited:

This company was established 1995 and the main headquarter is in Lahore. It is registered in Karachi and Lahore stock exchange. After the full SOWT analysis the company was launched in 2002 January. It is an investment company within NBFC which is designed and regulated by SECP .The main purpose of this company is to achieve profitability and sustainability in growth of infrastructure, HR, risk management policies by providing a high range of products in the market. The main objective of Escort Company is to provide shareholder satisfaction for which Escort bank offers different kinds of financial services in Pakistan. It gives following types of schemes for example

High income saving certificate

Income growth certificate

Money multiplier certificate

12.  First Credit And Investment Bank Limited

FCIBL was established on 31 august 1989 as a credit and discount private company, according to the Company Ordinance 1984. It is a joint venture of WAPDA (water and power development authority) and NBP (national bank of Pakistan).  In 2003 FCIBL  was converted into a public company after the success in the bonds issues by the WAPDA and aviation authority. Firstly 50% ownership was with NCB and WAPDA each but after distribution of new shares worth 250millian rupees .their ownership has been reduced to 30%each and 38%is given to shareholders .  The main objective of this company is to benefit the capital market of Pakistan by providing capital debt instruments. It also offers funding and non funding facilities to entities so that development is achieved by business entities

13.  First Dawood Investment Bank Limited

First Dawood investment bank was established in 22 June 1994. This company started working with a paid up capital of 250 million as a leasing company named Dawood leasing company. It is also registered in the Karachi stock exchange. Some of the features of First Dawood Bank are given below:
Subscription of 140 million
Public offering of 95 million
Achievement of 12.22 billion in balance sheet over thirteen years
Good returns to investors

14.  IGI Investment Bank Limited

IGI investment bank limited is a joint venture America express bank, international finance corporation and packages group. IGI was established and incorporated in 1990. Currently IGI is listed in all three exchanges of Pakistan that are Lahore, Karachi and Islamabad. It is also licensed by SECP (security and exchange commission of Pakistan). In short term credit rating for IGI is A2 and for long term credit rating is A-.

IGI is working for more than 20 years and has provided reliability in its services to individuals and corporations.IGI is striving to be more efficient in its investment services on the same time is working to expand in its growth and size.IGI is working hard so that the customers can get access to expertise and resources of investment banking, mutual funds, security brokerage, insurance etc.

15.  Innovative Investment Bank Limited

Innovative investment bank limited was incorporated in 2007 in Lahore Pakistan and is licensed by SECP to provide leasing, investment services to the local and foreign clients. It is a subsidiary of Innovative global business group limited. It was first named Innovating house financing limited but in 2008 it was changed to Innovative investment bank limited.

It issues finance leasing, cash deposit and housing finance services.

IIBL direct the needs of its clients through wealth management

IIBL offers a wide range of products and services.

IIBL provide such services that create trustworthy relationship with the customers

16.  Security Investment Bank Limited

Security Investment Bank limited was established in 23 MAY 1991 after getting permission from the federal government to work as an investment finance company. It was listed in stock exchange of Pakistan on 6 January 1992 and it is a public limited company. The symbol SIBL is used in stock exchange for the security investment bank limited shares. For short term credit rating of SIBL is A2 and for long term it is A.

SIBL aims to give its utmost services to its clients that work efficiently and effectively manage and produce client relationship

• To  promote industrial development by providing financial services
• To nourish return on shareholders’ investment and long term earnings

17.  Trust Investment Bank Limited

Trust investment is the largest investment bank which holds largest leasing portfolios in the country and its branches in Punjab, Sindh and NWFP. It was incorporated in 1992. Its credit rating is BBB in short term and A3 in long term according to PACRA. There are 5 branches of Trust investment bank limited employing 43 employees. It is the only bank that provides investment facility to urban centers in Karachi, Lahore, Islamabad and Faisalabad and also small towns like Multan.

18.  Trust investment bank limited wants to achieve a better place in market by creating good relation with its shareholders and stakeholders by competing the challenges of financial market place. This company wants to earn customer satisfaction and value to shareholders.

BUDGETING AND BUDGETARY CONTROL

An important Project Management Tool

What is a budget?

·         A Plan

·         A Limit

·         A Schedule

·         A Reality Check

·         An Allocation

Budget – a definition

“A planned expression of money”

   Wright.D 1994 “A practical foundation in costing” Routledge

For a defined activity shows;

·         Income & Expenditure

·         Total estimated costs

·         Defined period of time

Another definition

   A budget process is a system of rules governing the decision-making that leads to a budget, from its formulation, through its legislative approval, to its execution.

   

More definitions

BBudget = Quantitative expression of a plan

A plan expressed in monetary terms, prepared and approved prior to the budget period and which shows income expenditure and the  capital employed. It may be drawn showing incremental effects on former budgeted figures or complied by zero budgeting.

Budgets are therefore not prepared in isolation and then filed away but are concrete components of what is known as a budgetary control system. Such a system essentially ensures communication, coordination and control within an organization. The basic functions of management are allocation of resources, planning and control.BBudgets involve – Planning & Control

·         Budgeting in Context

·         A budget helps

·         Why use a budget?

·         Stay within a limit

·         Control

·         Forecasting

·         Delegate

·         Prioritise Wants, Organise Needs,

·         Within the realm of what we Can

PURPOSE OF A BUDGET

·         Co-ordination- Important for the achievement of organization goals e.g.

·         Coordinate inputs and outputs in order to ensure balance of efforts and effects.

·         Coordinate budget lines within the organization to ensure effective implementation of  plans and monitoring of results.

·         Coordinate responses to economic trends and challenges posed by the environment within which programmes and activities are undertaken

PREPARATION OF THE BUDGET

1. Identify objectives

2. Gather data about alternatives

3. Select alternative courses of action

4. Discuss the plans/activities and allocate the budget.

5. Establish monitoring mechanisms.

6. Respond to problems encountered in the previous budget.

• Communication: The budget is used to communicate plans and to control information. Once formulated the aspects of the plan having a bearing on a particular division of the organization are communicated to that division.
• Motivation: The budget seeks to motivate managers to achieve objectives and thereby establish control within the organization
• Performance Evaluation: a budget is used to evaluate the capability of managers to achieve targets.Good performance is associated with achieving better performance targets set on costs of operations and benefits to the organisation.
• Authorization: The budget is used to authorize  expenditure or to pursue certain initiatives once a budget is approved:

a.       it becomes a permission to spend.

b.      acceptance that either a project or activities should commence.

DATA FOR BUDGET PROCESS

INTERNAL INFORMATION

1. Production and operational information
2. Financial information
3. Research and development information
4. Personnel information
5. Sources of internal information-expected outputs  - performance targets, control and monitoring and evaluation mechanisms.

EXTERNAL INFORMATION

1.      Market and competitors

2.      Economic conditions

3.      Industrial structure

4.      Political factors

5.      Technological change

6.      Demographic trends and social factors

7.      Government statistics, commercial data, banks.

8.      Media coverage, business trips, conferences.

Types of budgeting

There are three common budgeting methods:

1.      Top-down Budgeting

2.      Bottom-up Budgeting

3.      Iterative Budgeting

Top Down Budgeting

         Top-Down Budgeting is the term given to a budgeting process based on estimating the cost of higher level tasks first and using these estimates to constrain the estimates for lower level tasks

         A crucial factor for successfully implementing this method for estimating budgets is the experience and judgement of those involved in producing the overall budget estimate.

Organisations need the ability to allow:

Financial Managers to establish centralised budgets to control organisation spending.

Project Managers to establish projects budgets that consume the centralised organisation budget and control project spending.

Advantages

1.      Takes less time

2.      Promotes upper-level commitment

3.      Involves no multilevel participation Aggregate budget is quite accurate, even though some individual activities subject to large error

4.      Budgets are stable as a percent of total allocation and the statistical distribution of the budget is also stable leading to high predictability

5.      Small costly tasks don’t need to be identified early in this process - factored into overall estimate

6.      Lower management better understands what upper management expects

7.      Presented down the ladder

Disadvantage
1.      Translating long-range budgets into short-range budgets.
2.      Problems scheduling projects in a "sub-optimal way" to meet the strategic goals
3.      Result of top management's limited knowledge of specifics of project tasks and activities
4.      Competition for funds among lower-level managers, try to secure adequate funding for their operations.
5.      May cause unhealthy competition.
6.      This process is a zero sum game--one person's or area's gain is another's loss.
7.      Subordinate managers often feel that they have insufficient budget allocations to achieve the objective

Bottom Up Budgeting

         Sometimes called Zero Based Budgeting

Bottom-up budgeting begins with identifying all the constituent tasks that are involved in implementing a project and working out the resources and funding required by each

Provides the opportunity to create organisation level    budgets by rolling up project budgets

Create centralised project level budgets from their sub-project budgets (WBS)

         Advantages

• Project Managers have the flexibility to define their project budgets independently
• Financial Managers have the ability to centrally review the total project budget/s
• Is in the accuracy of the budgets for individual tasks
• Clear flow of information
• Use of detailed data available at project management level as basic source of cost, schedule, and resource requirement information.
• Participation in the process leads to ownership and acceptance

Disadvantage

•  Takes more time
•  Involves cross-section of the organisation
• Presented up the ladder
•  Seeks participation at all levels
•   Encourages commitment to the plan
• Top management has limited influence over the budgeting process,
• Individual tend to overstate their resource needs because they suspect that higher management will probably cut all budgets by the same percentage
• More persuasive managers sometimes get a disproportionate share of resources
• A significant portion of budget building is in the hands of the junior personnel in the organisation
• Sometimes critical activities are missed and left unbudgeted

Iterative Budgeting                           Iterative – to repeat or do again

A combination of top-down and bottom-up budget building

·         Higher project level estimated (top down)

·         Lower level costed (bottom up)

·         The two costs negotiated and reconciled

Disadvantage

1.      Is in the relative inefficiency and time consuming nature of the negotiations over the budgets.

2.      Process may not work well when communication channels are either informal or blocked between lower-level managers and senior management

Advantage

1.      It promotes employee involvement and stimulates a high degree of information flow between those involved in the project at different levels

2.      Both senior management and lower level managers closer to the actual process participate in the budgeting process

Top Down vs. Bottom Up

•       Top-down           Bottom-up

Problems of Bottom-up Budgeting

1.      Difficult to control aggregate spending

2.      Allocations may not be optimal

3.      Hard to keep multi-year perspective

Top Down & Bottom Up Compared

• Bottom-up                                • Top-down      

      

  - Annual                                             - Multi-year     

  - Time consuming                              - Delegated authority

  - Ownership of proposals is               - Creates joint ownership of

     specific                                              proposals

  - Reactive                                           - Proactive

Activity Orientated Budget

1.      The traditional budget is activity based

2.      Individual expenses classified and assigned to basic budget lines e.g. phone, materials, personnel, clerical, utilities, direct labour, etc

3.      Diffused control so widely that it was frequently non-existent

Task Orientated Budget

Also known as Program Budgeting

Aggregates income and expenditures across programs (projects)

The project has its own budget

Pure project organisation, the budgets of all projects are aggregated to the highest organisational level

Functional organisation income/expense for each project are shown

Planning Programming Budgeting System (PPBS)

1. The system focuses on funding those projects that will bring the greatest progress toward organisational goals for the least cost
2. Basically a Program and Planning Budgeting System
3. Planning Programming Budgeting System (PPBS)
4. Identification of goals and objectives for each major area of activity - planning
5. Analysis of the programs proposed to obtain organizational objectives - programming
6. Estimation of the total costs for each project, including indirect costs. Time phasing of costs is detailed.
7. Final analysis of alternative projects in terms of costs, expected costs, expected benefits, and expected project lives.
8. Cost/benefit analyses are performed for each program so programs can be compared with each other and a portfolio of projects can be selected for funding
9. Budget Planning linked to Project Activity
10. Only way a detailed budget can be produced
11. Can monitor budget usage against project activity
12. Can be done when the project schedule has been determined
13. Completion Times, Project Activities, Costs
14. Direct relationship of these items
15. Will affect the final budgeted figure
16. Is a “trade off”

Budgetary Control

This is the establishment of a budget relating the responsibilities of executive management to the requirement of a policy and continuos comparison of actual and budgeted results.

Control should ensure that actions are accordance with the objective of the policy in question

Also provides a basis for its revision.

ELEMENTS OF BUDGETARY CONTROL

Setting up budgets i.e. planned targets on revenue, expenses, assets and liabilities relating to the activities concerned.

Measuring actual results against the budgets on a continuous basis

Identifying and analyzing deviations from budgets and modifying both actual operations and subsequent budgets.

MAIN AIMS OF BUDGETARY CONTROL

·         To establish the degree of progress to the achievement of short term plans

·         To allow delegation to occur without losing overall control

·         To provide a measure for allowing flexibility in operations

·         To establish short term plans and aid the organization’s planning process

The ability to control anticipated expenditures for your project using a project cost budget.

   The Projects Budgetary Controls feature includes the following:

1. Flexible Setup of Controls
2. Defines Control Amounts
3. Defines Control Levels
4. Funds Check - Performs the available funds verifications.
5. Maintenance of Available Balances - Maintains the available balance for each project budget line.

Actual Transactions;are recorded project costs. 

         Examples include labour, expense report, usage and miscellaneous costs.

Commitment Transactions;

         are anticipated project costs. 

         Examples include purchase requisitions and purchase orders or contract commitments.

Features of an effective budget

1.      Accurate forecasting

2.      Based on organisational goals

3.      Information is timely and accurate

4.      Formed with multilevel input

5.      Regular reviews are built-in

Problems with budgeting

The process is too long

There is a lot of game playing

Business decisions change but the budget does not

People in charge of budget are held accountable in areas where they have no responsibility

Applying an arbitrary percentage to prior period actual

Analysing Variance

·         Budget deviation analysis (variance analysis) regularly compares what you expected or planned to earn and spend with what you actually spent and earned. 

·         Variation analysis can help greatly when detecting how well you’re tracking your plans, how much to accurately budget in the future, where there might be upcoming problems in spending.

Example of a variance report

Date:                      June 30, 2006

                                                        

Account:  Product Development                 MONTH TO DATE

                                

ACCOUNT   REF.   ACTUAL       BUDGET       VARIANCE              %

SALARIES    5025    £48,000           £43,750          - £4,375                      - 10

TRAVEL       6442      £1,500           £1,200                - £300                       - 25

SUPPLIES     5320         £500           £700                    £200                         28.5

Benefits to checking variance

1. Understand the reason for the differences
2. Prepare a more accurate budget in the future
3. Evaluate budget goals
4. Isolate problems
5. Identify weak areas
6. Motivate managers
7. Communicate with all levels
8. Forecast
9. Response to budget warnings
10. Freeze spending
11. Freeze activity
12. Put off “unnecessary” projects activity
13. Re-schedule/cost your project
14. Downsize your project