The Karachi Electric Supply Company (KESC) has projected that it will switch to a profit regime in the outgoing financial year after a gap of five years. Despite all problems surrounding the company, a profit of Rs2.15 billion is estimated for financial year 2011, more than the total amount the company made in the last ten financial years.
The power distributor witnessed a profit only twice in the last twelve years. Moreover, it took the controversial new management of Abraaj Capital less than three years to switch it into a profit making company. The financial statement for the outgoing year has still not been announced. The company sees its profits swelling seven folds to Rs14.1 billion in the current financial year 2012.
The Karachi Electric Supply Company has also decided to issue right shares to generate Rs5.4 billion fresh capital.
The fresh equity will support the capital expenditure and improve profitability of the company, according to a statement issued by the power distributor.
The board of directors in a meeting held on Friday decided to issue 7.25 per cent right shares, hence 29 new shares for every 400 ordinary shares held by stakeholders.
The company plans to boost its net equity by more than five times to Rs6.6 billion with the proposed right issue.
Dubai-based Abraaj Capital took over management controls of the city’s sole power distributor in October 2008 and the stock price since then has fallen 43.7 per cent to Rs2.14.
“Funds generated will be utilised to partly finance the equity component of new power generation projects and capital expenditure to augment and expand dilapidated transmission and distribution network,” adds the statement.
KESC’s stock price rose Rs0.02 to close at Rs2.16 during trade at the Karachi Stock Exchange on Friday.
Published in The Express Tribune, July 30th, 2011.
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Great news! To think that they achieved this despite being hampered by the mess made by the union, gas shortage and non-payment of bills by Government bodies is absolutely astounding. We should sell off PIA and Steel Mills to the highest bidders as well and stop whining about them being "strategic assets". There is nothing strategic about these inefficient companies which are filled to the brim with corruption. Besides, you don't see governments of developed countries owning airlines or steel mills do you?
Dont over look the Creative Accounting aspect..
Why must we only look at only the negative aspect? They probably made a profit this year because politicians did not receive their "share" since KESC is now private. The best news however, is that they are looking to use part of their profit to upgrade their infrastructure rather than upgrade bank balances.
Not a bad achievement considering what they inherited and the crises they have faced ever since they took over.
The secret behind this estimated profit is the privatization agreement made between the GoP and the purchaser. This document is still kept secret by the KESC and Government itself despite all electricity crisis we witnessed in the Karachi after privatization. The GoP should public the agreement and its annexed parts, every one will know why we are suffering electric shortfall and how KESC is going to able book profits. The truth lies in the transparency which inturn move to good governance.
ha ha profit of 2.1 billion at what cost ????
Karachi is generate about 55 to 60 % revenue Karachi part in GDP is about 50 % Karachi part in country export more 60 %
Karachi is not getting light around 12 hours Karachi is not getting light around 8 hours in working hours 9 a.m to 8 p.m.
And this load shedding put loss of around 200 billions
Now one can say it is not profit of 2 billion but loss of 198 billion .
They generated profit by charging HIGH bills for not providing electricity for 12-14 hours/day.
KESC is seeking bailouts from the government, financialyl, in terms of fuel and even electricity from WAPDA, and yet having this huge profit! Bizarre regime here!
Who's gonna take those right shares? Underwriters's nightmares.
Finally a good news even though there no electricity from KESC.