KARACHI, Nov 7: Shareholders at the company’s annual general meeting (AGM) on October 24 may have been disappointed that for yet another year, Pakistan National Shipping Corporation (PNSC) skipped a dividend. They may have been comforted, nonetheless, by the Corporation’s return to profitability. For the latest year ended June 30, 2002, PNSC posted after tax profit of Rs457 million. The earnings replace the loss of Rs299 million of the previous year; the bottomline having emerged in the black after several years. But has the shipping company really managed to sail out of troubled waters?

Chairman PNSC, in his report said that an important development during the year under review was that, in pursuance of the scheme of corporate restructuring approved at the extra-ordinary general meeting held on August 16, 2001, 14 wholly-owned subsidiary companies were incorporated in the last quarter of 2001. That was followed by the transfer of 11 vessels to the subsidiary companies in April 2002. The chairman stated that the remaining three vessels were also to be transferred as soon as they were released from mortgage by HBL. Under the terms of the agreement, concluded with each of the subsidiary companies, the vessels were under operational management of PNSC in consideration of a mutually agreed fee. The financial statements for the year 2002 reflected financial implications resulting from the transfer of vessels.

In view of corporate restructuring, PNSC’s own turnover for the year under review (excluding service fees received from subsidiary companies) amounted to Rs4,544 million. The turnover achieved by the 11 subsidiary companies after transfer of vessels in April 2002 was Rs285 million. Thus, the Group turnover for the year stood at Rs4,829 million. This reflected overall decline from last year’s turnover of Rs5,459 million and was attributed by the directors to post-September 11, 2001 economic downturn resulting in significantly lower availability of cargo and appreciation of Pak currency against the dollar which caused lower rupee numbers.

During the year, PNSC and its 11 operating subsidiary companies together performed a total of 628 voyages (including foreign chartered vessel) and lifted 6.557 million freight tons of cargo as compared to lifting of 7.417 million freight tons in 537 voyages last year. In addition, the Corporation lifted 5.407 million freight tons of dry/liquid bulk cargo as compared to 6.066 million freight tons in the preceding year.

The profit for the year under review went to reduce PNSC’s accumulated losses from Rs1,326 million to Rs850 million and propelled the shareholders’ equity in the positive in the sum of Rs420 million, against negative of Rs56 million at the end of last year.

The 10-rupee share in PNSC is currently trading at Rs9.10, which albeit at discount to the face value, reflects a huge rise from high and low quotes of Rs5.85 and Rs1.55 in the period Jan-Sept 2002.

Directors stated that the future growth of the Corporation depended to a large extent on the conclusion of a long-term contract with the Refineries for transportation of crude oil. They stated that after prolonged negotiations, agreement had been reached on most clauses, but the crucial issue of fixation of freight rate still remained unresolved. “Efforts are being made to find a mutually acceptable solution to the outstanding issues”, directors said. They stated that subject to conclusion of a long-term contract with the Refineries, the Corporation intended to acquire at least two tankers for the transportation of crude oil. Total assets of PNSC at book value stood at Rs3.6 billion at end-June 2002.

There was noted to have been reduction in administration and general expenses to Rs196 million, from Rs254 million the previous year. The schedule of remuneration of directors and executives shows that the chairman PNSC received measly Rs0.194 million in ‘managerial remuneration’ for all of the year 2002. Drawing a salary, which works out to no more than Rs16,000 a month, the PNSC chairman ought to be one of the lowest paid chief of a company on the country’s corporate sector.