May 24, 2003	Saturday	Rabi-ul-Awwal 21,1424

KARACHI, May 23: Mr M. Salman Burney, chairman/chief executive of GlaxoSmithKline could be an envy of many corporate bosses in the country. Last year he received what might possibly be one of the biggest pay packages for any corporate executive in the country — Rs16 million, including Rs2 million in retirement benefits.

Interestingly, at the recently held shareholders meeting of National Bank of Pakistan,

the President, who is running the country’s largest bank, was put on the mat by a shareholder who objected that he was allowing himself too high a remunerations — Rs8 million; half of what the GlaxoSmithKline’s boss was drawing. It is not to criticize the fat pay package of the man heading the largest pharmaceutical firm in Pakistan, for he possibly receives his due.

Salman Burney pieced together the biggest ever merger of GlaxoWellcome with SmithKline Beecham in Pakistan. On May 30, 2002, the Sindh High Court approved amalgamation between Smith Kline & French of Pakistan Limited and Beecham Pakistan (Private) Limited with the company, which took effect from January 1, 2002. “This merger will provide an opportunity to the shareholders of all three companies to benefit from operational synergies, and from business stability, as the leading pharmaceutical company in the country”, the chairman had declared in his annual report 2002.

Jobs must have been axed as a natural consequence of the merger and the company paid Rs91 million in severance costs to executives; payment on that account in 2001 stood at Rs54 million.

The accounts for the quarter ended March 31, 2003, released last month, shows that the company holds Rs5.2 billion in total assets — about twice the Rs2.6 billion at the same time last year.

The company is valued at over Rs7.5 billion at the market, calculated on the market price per share of Rs124.10 (ex-dividend, ex-bonus) on 61 million outstanding shares.

It is due to illiquidity that stock analysts at brokerage houses do not follow the foreign pharmaceutical firms. That does not prevent volatility in the share prices, all the same; the GlaxoSmithKline stock traded widely between the low and high of Rs77 and Rs136 during the first four months of the current year (Jan-April).

For the quarter under review, company earned an after tax profit of Rs275 million, which represented 47 per cent growth over taxed profit of Rs187 million earned in the corresponding period of 2002.

The report of the directors for the quarter observed that during the quarter net sales amounted to Rs1,965 million, which were Rs263 million higher than the corresponding period last year. Local sales increased by 15.2 per cent. The company claimed that many key products including Augmentin, Amoxil, Engerix-B, Zinacef, Seroxat and Ventolin recorded double digit growth. Export and Animal Health sales also rose strongly. The consumer business also showed good growth over the same period last year with the re-introduction of Horlicks.

The company declared that higher sales in the quarter, combined with efficiency improvement and control on expenses helped generate a (pretax) profit of Rs424 million, which was 39 per cent more than the pretax profit of Rs305 million made in the corresponding period last year.

“Other income” was reported to have decreased by Rs21.5 million mainly due to lower interest rates on short-term deposits with bank. Capital expenditure for the year-to-date was Rs27.8 million.

With reserves at Rs2.9 billion and unappropriated profit of Rs472 million, the shareholders’ equity stood at Rs3.8 billion, which produced break-up value of Rs75 per share. Current ratio worked out at 3.01:1. Cash and bank balances were in the huge sum of Rs2.3 billion at end-March 2003.

As the company was sitting atop cash mountain, it managed to do without outside borrowings. The company was keeping a big pile of ready cash, which could be to finance some kind of immediate expansion plans or just as contingency to perhaps build up raw material stocks?