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Industry bullish

March 24, 2014

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NABEEL Hashmi has an unflinching faith in Pakistan, its people and its economic potential. He is an optimist who believes in looking for an opportunity hiding behind every problem, and not in lamenting over bad business conditions because “there is nothing that crying will do for you”.

“This country has given us so much. It is frustrating to see many who are making money and still criticising this country,” says the chairman of the SNH Group of Companies.

His three companies produce engineering plastic blow and injection molding components for domestic and European car, bus and tractor makers, and import, store and market liquefied petroleum gas (LPG), and also trade in general merchandise.

Born and educated in Bahrain, where his family has lived and has been running a steel fabrication business since 1928, Hashmi returned to Pakistan as a 23-year-old to set up a small plastic packaging business in Lahore in 1987.

“Pakistan was a virgin territory for me. I had zero experience of the business landscape here; knew no one and had no friends,” he recalls in an interview with Dawn.

Nevertheless, he believed there was “no risk in investing in your own country at any time”.

“I was totally unaware of local business laws and regulations. What I had was faith in this country, in myself and some experience in steel engineering by virtue of my being from a family involved in steel fabrication.”

The first break for Hashmi came soon, when Suzuki approached him in 1989 for the development of a plastic component for its 800cc car. The former Paapam chairman accepted the offer because Suzuki was willing to give him ‘fabulous’ returns, although the quantities were very small.

That was when he started making plastic automotive components — first for Suzuki, and later for Honda, Toyota and Millat Tractors.

Ten years later, he managed to get his first export order. Today, he produces plastic engine components for European car and bus makers like Mercedes and Volkswagen, with his exports having risen to Rs85-90m last year.

For many years, he was content with a modest annual turnover of Rs2.5-3m from his first company. And he continued diversifying into areas like high quality plastic packaging products, where competition was almost non-existent and returns were good.

“The automotive business was not giving me enough milk to sustain my company. I needed to grow my sales to stay in business. By the end of the 1990s, my turnover rose to Rs30m a year,” says Hashmi, who has served on the boards of several government, semi-government and private institutions and helped developed the state-of-the-art Sundar industrial estate in Lahore.

He got his big break in the early 2000s, when domestic car sales peaked, creating room for vendors like him to invest in capacity enhancements, increase sales and earn handsome profits.

This was also the time for him to diversify into the energy sector — importing, storing and marketing LPG. The rising possibility of opening up of trade with India encouraged him to set up a trading company as well.

“The growing automotive business had put surplus cash in my pocket, and I decided to diversify into other businesses.” He says it is always better to diversify one’s business when times are good. “In Pakistan, people try to diversify into other areas in bad times, when they are short of cash and ideas.”

Today, Hashmi’s companies turn over Rs1.4bn a year in sales, and he has 450 people working for him. He has also acquired land to set up an automotive parts plant in Karachi, but is waiting for the security conditions in the city to improve.

His energy and trading companies have strategically placed him in a position where he is ready to grab emerging opportunities in the LPG business and improvement in bilateral trade with India.

Hashmi doesn’t believe in letting any obstacle impede his way. “There are opportunities everywhere, whether times are good or bad. You just have to be ready to grab them. We began selling our products to top car and bus brands in Europe when car sales volumes here were low. In spite of all this mumbo jumbo of terrorism, we have retained our customers who are happy to do business with us.”

He contends that the “industry is feeling bullish” right now because of the business-friendly government, headed by a prime minister who wastes no time in taking decisions to resolve issues facing businesspeople.

Besides, energy supplies to the industry have improved at this time of the year compared with last year; appreciation of the currency has reduced raw material costs; and production is increasing.

But he admits that the country’s image remains a major obstacle in its economic recovery and expansion of its exports, and needs to be corrected.

“At present, we have to pay a price for entering into foreign markets and give a ‘terrorism discount’ to attract buyers. As a company, we have never asked for rebates or concessions to enter export markets. Still, I want the government to take actions that are crucial to correcting our perception in the world.”