ISLAMABAD, Feb 10: Saudi-Pak Industrial and Agricultural Investment Company (SPIAC) has decided to set up an insurance company and a securities organization to expand its investment in Pakistan.

"Both the companies are likely to be launched by April this year with an initial paid-up capital of Rs300 million," said Chief Executive of Saudi-Pak company, Rashid Zahir.

Saudi-Pak is a joint venture of Saudi Arabia and Pakistan with a 50:50 investment and their joint equity today stood at Rs5.2 billion after having paid Rs2 billion dividend to its shareholders, he said.

Giving details, Mr Zahir told Dawn here on Tuesday that the paid-up capital of the proposed Saudi-Pak General Insurance Company would be Rs200 million, while Rs100 million has been allocated for Saudi-Pak Securities Company as part of its paid-up capital.

"We expect to have strong partnership with institutional investors in the insurance and securities business," Mr Zahir said, adding the Board of Directors of Saudi-Pak Investment Company has given formal approval for the setting up of these two new companies. SPIAC, he pointed out, had posted a record growth in its operations in the year 2003.

In a challenging environment epitomized by tough competition in the financial sector, Saudi-Pak received 29 per cent more financing proposals in 2003 as compared to 2002. The number of financing proposals approved have increased by 75 per cent over the previous year.

Mr Zahir said Saudi-Pak was offering loans to help set up new textile, sugar and cement plants, beside extending lending to Balancing, Modernization and Replacement (BMR) and value addition. "But we are also giving loans for new sectors like housing, construction, information technology, telecommunication, entertainment, tourism and infrastructure," he added.

The amount of financing approved by the company surged to Rs6.5 billion, up 196 per cent over Rs2.2 billion in 2002. The financing was extended to both traditional and non-traditional sectors and was balanced both in terms of industrial sectors and regions. The approvals of financing since the inception of Saudi-Pak Investment Company in 1982 rose to Rs21.8 billion as on December 31, 2003.

The disbursement of funds against approved financing amounted to Rs4.2 billion in 2003, which is 96 per cent higher than Rs2.2 billion in 2002. The cumulative disbursements of the funded financing since the inception soared to Rs16.9 billion as on December 31, 2003.

On the loan recovery side, Saudi-Pak Investment Company recovered an aggregate amount of Rs2.4 billion from its borrowers and lessees as against Rs1.5 billion in the previous year, showing an increase of 55 per cent.

The ratio of loan recoveries to current receivables - a touch stone of performing portfolio - improved to 95 per cent from 94 per cent in the previous year.

The loan recovery ratio of the company has remained above 93 per cent in the last seven years. "Non- performing loans of the company are about 15 per cent," he admitted.

Saudi-Pak offers financial services to medium and large scale industrial projects in private and public sectors. Over the years, the company has diversified its product line to meet the growing needs of its customers.

The existing product mix includes project financing, short-term working capital loans, equity financing, term finance certificates (TFCs), lease financing, underwriting and guarantees. The company has since acquired major interests in a commercial bank and a leasing company.