KARACHI, Dec 1: The Fauji Foundation, the Army Welfare Trust, the Bahria and Shaheen foundations, together, constitute the country’s largest industrial and trading complex. No private sector group can match their assets or the range of their diversified business activity.

The Fauji Foundation is the biggest and oldest of the four organizations. To quote BusinessWeek, with an annual turnover estimated at $500 million and profits of $41 million, the Fauji Foundation “is at the heart of the military’s economic machine.”

“Just how big a slice of economic pie the military controls remains a well guarded secret, but it is safe to say that it is the single biggest player,” reveals an article by journalist Frederick Balfour of the business weekly.

Fauji Foundation runs fertilizer plants, sugar mills, produces popular branded cereal products and gas bottled in cylinders for household use, owns gas field and runs a power plant.

Fauji Fertilizer is one of the most profitable company which earned profit before tax of Rs4.2 billion on net sales of Rs10.2 billion in calender year 2000. The company is also reviewing feasibility study for revamping Ammonia and Urea plants. It is also a prospective buyer of Pak-Saudi Fertilizer Plant.

With a 40 per cent stake, Fauji Foundation is the largest shareholder in Mari Gas Company with paid-up capital of Rs367.5 million. It also manages the company. It’s profits have been adversely affected in the past because of an annual subsidy of Rs7 billion to fertilizer plants in the form of discriminating pricing policies. For the year ending June 2000, its profits amounted to nearly Rs200 million.

Fauji Foundation, which manages about 20 companies and some of the best hospitals and schools, is also alert to the changing business environment and the opportunities it offers. But for the loss of interest of its European joint venture partner after September 11, Fauji was a keen buyer of the United Bank.

Askari Commercial Bank, managed by Army Welfare Trust,is the largest private bank with total assets of Rs37.3 billion and profits of Rs316 million recorded in its balance sheet for year 2000. The AWT also runs an insurance company. Though both of them are outward looking, they have plenty of inhouse business within the family empire.

Business rivals, however, often complain what has beenreported in the BusinessWeek that “Military companies enjoy access to prime real estate, easy bank credit and tax breaks and routinely beat out civilian companies in bidding for contracts.” This is, however, denied Foundation officials. No doubt, they have lost some of the previous patronage as the emerging market is gaining grounds.

It is often also alleged that Frontier Works Organization is preferred in contracts awarded for road building, trucking and property development, though its expertise in the construction business cannot be denied.

However, some of the Fauji companies and AWT are in financial trouble. Fauji Jordan Fertilizer is suffering losses, because of what is stated to be lower than the level of subsidy anticipated by the company. Fauji Foundation has injected cash to keep the company afloat.

Similarly, Army Welfare Trust (AWT) Nizampur Cement plant is making losses since it was set up in 1997 due to over capacity in cement industry and slack countrywide demand and to some market reports, due over-capitalization. It owes Britain’s Commonwealth Development Corporation and International Finance Corporation nearly $60 million in debt. Business companies managed by AWT include pharmaceuticals and shoe-making.

All the military foundations have prime estate in the premier commercial and financial centre and port city of Karachi. Recently, the AWT purchased the now defunct Press Trust building on I.I. Chundrigar road. Shaheen Foundation building is located on the crossing of Ziauddin Road and Chundrigar. Located on Queens Road are two prestigious buildings of Bahria Foundation.

Shaheen Foundation runs an air cargo, TV station, real estate and knitwear. Earlier, it’s joint venture airlines catering to passenger service failed to take off.

The companies run by the military foundations are not listed for privatization as these are stated to be meant for looking after the retired servicemen and families. And to quote BusinessWeek “Fauji provides womb-to-tomb benefits for more than $8.5 million ex-military men and their dependents.”