KARACHI, Nov 8: A project, predominantly, of the expatriate Pakistani doctors, Shifa International Hospitals is not exactly a cash cow. Except possibly for the last three years, the hospital has been losing money for most of the years since stock market listing in 1995. But the hospital looks to be contributing to the alleviation of the sufferings of the sick. If that is not good enough for the money-minded investor in the hospital’s equity, he ought to be comforted by the knowledge that world-wide, healthcare is indeed a very profitable business. It has been seven years since the investors put money in the hospital stock and a bit of disenchantment with almost nil returns, might be natural. But the performance of the last three years, should be reasons to rekindle hope. There are signs that Shifa Hospital is recovering. Profits have been earned and the hospital even managed to pay a modest, but possibly the maiden cash dividend at 3 per cent or 30 paisa per share of Rs10 each for the year 2001. There is a huge debris of past deficit that needs to be cleared, but once that is done, the road to recovery, hopefully, should be smooth.

Shifa Hospital was incorporated in September 29, 1987 as a private limited company and converted into a public limited company on October 12, 1989. Its principal object is to establish medical centres in Pakistan and the first hospital was set up in Islamabad.

The hospital got to be listed at the KSE on February 27, 1995. It had offered shares of the value of Rs85.5 million to the general public, Rs12.0 million to NIT and Rs22.5 million to ‘others’. NIT did not take up the offer, general public placed Rs43.5 million and ‘others’ subscribed Rs13.1 million; the unsubscribed portion of Rs63.5 million had to be taken up by the underwriters. The 10-rupee share touched its highest at Rs15 in the year of the issue. The stock is now trading at Rs5.80.

At the last count on June 30, 2002, major part of the equity was vested in individuals, as 3,794 individuals had a combined holding of 57.78 per cent. Almost all of the remaining 33.7 per cent stake was vested in a foreign investor — M/s Muwaffaq Limited, that had three nominee directors on the board.

The hospital had made sizable net profit of Rs15.2 million in 2001. But the latest year to end-June 2002 began with a natural calamity. “Flash floods” on July 23, 2001, inundated the hospital located at sector H-8/4, Islamabad, resulting in complete closure of the hospital for several days. The hospital lost ‘patient revenue’ during the first six months and suffered loss of Rs14.4 million in the first half of the year.

A strong second half performance enabled the hospital to close the year with net profit of Rs2.7 million.

Aggregate revenue amounted to Rs339.1 million for the year ended June 30, 2002, which was about the same as the earlier year. Operating expenses, however, increased to Rs323.4 million, from Rs303.4 million, which reduced the operating profit to Rs15.7 million, from Rs36.2 million in 2001. Financial charges decreased to Rs19.8 million, from Rs25.6 million. “Other income” contribution for the year under review improved to Rs9.7 million, from Rs7.0 million.

Paid-up capital has remained unchanged since listing at Rs505.1 million. Capital reserves of Rs40.0 million representing share premium, were wiped out by the accumulated deficit that loomed large at Rs189.3 million. Break-up value of the share worked out at Rs7.05. Including the operating assets of Rs619 million and capital work in progress — at cost Rs67 million, total asset of the hospital at June 30, 2002 stood at the book value of Rs795 million.

The 16th annual general meeting (AGM) of the hospital was held at the registered office in Islamabad on October 31. No one is disputing the company’s right to hold AGMs at the site of hospital’s location and its registered office. But with most equity investors known to be based in Karachi, attendance must have been, all but thin.