KARACHI
Comprehensive earning in the Karachi Stock Exchange (KSE) for financial year of 2010 is down by Rs 239.451 million and has declined by a surprising 78 percent. As indicated in KSE’s Annual Report 2010, total comprehensive income of the KSE for the year under review decreased to Rs 67.329 million compared to Rs 306.78 million earned the year before.
“Besides the unpopular Capital Gains Tax (CGT), the heavy remunerations, especially, that of management are key factors behind the massive decline in earnings,” market analysts informed Pakistan Today.
Furthermore, the report indicates that managerial remuneration account of the KSE amounted to Rs 19.724 million with an increase of 12.57 percent or Rs 2.204 million.
Analysis of the data clearly shows that the chief executive and the board of directors have, respectively, drawn Rs 30.769 million and Rs 1.763 million during this period under various heads such as managerial remuneration, annual performance payout, reimbursement of expenses and fees.
According to the analysts, the ill conceived government measures like the unilateral imposition of the CGT had a devastating impact on consumer confidence and restricting the traded volumes on the local bourse. “The government had collected some Rs seven billion under the head of Capital Value Tax, but its CGT collections would not exceed Rs 500 million,” the analysts opined.
They said the new levy was discouraging investors from the bourse, a development that would ultimately lead to stagnation on the stock market. Elaborating on the ineptitude of the KSE management, the analysts said during 2009 at least nine members of the Karachi stocks had faced insolvency.
“It’s unprecedented in the history of KSE, that the cards of nine members are auctioned simultaneously,” they said. The analysts said those affected included Shabbir Ismail Shakoor Securities, Capital One, Mass Securities, Click Securities, Eastern Capital, Sikandar Bakasra Securities and Double AA Ghani Securities.
The value of the company’s financial assets witnessed a surge of 20.9 percent or Rs 474.23 million to stand at Rs 2.74 billion during the said period, its liabilities also rose to Rs 6.641 million against the previous Rs 26,000, the annual report showed.
