KARACHI, June 14: A total of 422 listed companies made profit during the year 2002, which was about the same number as in 2001. According to the Economic Survey 2002-03, number of dividend paying companies stood at 306 in 2002, compared with 314 the year ago.

The difference between companies that opted to pay or skip the dividends was not as wide as one might have expected, after the sword of compulsory payout had been lifted from their heads.

The budget 1999-2000 had decreed that companies making profits distribute 40 per cent of the taxed profit in dividends to the shareholders or face an additional tax penalty of 10 per cent on the sum of reserves that exceed 50 per cent of the company’s capital. The trick had worked. In most board rooms, heads had got put together and it was thought wiser to reward the shareholders (when majority stake was vested in directors themselves) than to let the taxman take away the bagful of money earned. Thus, during 2001, sizably larger number of companies had paid dividends than the year before. But many companies grudged the regulation of compulsory payout which they thought was an infringement on the right of the Board to decide on how the profit should be appropriated, based on the requirements of funds for expansions. When even some blue chip companies threatened to de-list from the stock exchanges, the regulators stepped back and quietly reversed the decision of compulsory payout of 40 per cent profit in dividends.

The decrease in the number of dividend paying companies was nearly the same in all other sectors except the cotton & textile, where 82 companies distributed dividends in 2002, compared with 97 companies that had made a payout in 2001. The reason appeared to be decline in number of profit making companies in the textile sector, to 126, against 142 companies that had posted profit the previous year.

The Economic Survey 2002-03 noted that in December 2002, total number of companies listed on the Karachi Stock Exchange stood at 711. These included 231 companies in cotton & other textile, 187 in banks & financial institutions, 98 in miscellaneous group, etc. The Survey pointed out that during 2002, only 187 companies had reported losses, which was considerably lower than 226 loss-making companies in 2001. Although loss making companies on the cotton & other textile sector was about even at 68 companies, the real difference was made by the banking sector, where 20 companies shifted from loss to profit, so that the loss making companies stood reduced to 34 in the year under review, from 54 companies in 2001.

In the year 2002, total before taxation profit of 12 trading groups listed with the KSE amounted to Rs90.9 billion, as compared to a total pre-taxation profit of Rs62.6 billion in 2001, thus showing a growth of 45 per cent. Transport & communication earned pre-taxation profit of Rs33.9 billion in 2002, compared to its pre-taxation profit of Rs27.1 billion in 2001.

Banking and other financial institutions recorded a pre-taxation profit of Rs20.1 billion in 2002 as compared to Rs7 billion in 2001, recording a jump of 187 per cent. Similarly, pre-taxation profit of chemicals & pharmaceuticals witnessed an unprecedented increase of 268 per cent to Rs9.2 billion, from Rs2.5 billion the year ago. Pretax profit of the cotton and other textiles stood reduced to Rs6.9 billion in the year under review, from Rs9.0 billion in 2001. Similarly, pretax profit of the fuel and energy sector also declined to Rs7.4 billion, from Rs9.7 billion.