HASHOO GROUP OF COMPANIES

Introduction To Hashoo Group

Hashoo Group of Companies was established under the
leadership of Mr. Sadruddin Hashwani, a dynamic businessman
with vision and values. In a period of three decades, he, through
his dedication and commitment to the profession, has
transformed the Group into a leading business power house of
Pakistan. The Group is well known for its forward-looking
approach and high standards of quality and integrity. Starting
with cotton trading, Hashoo Group of Companies today have in
their fold, as owners and operators of chain of Pearl Continental
Hotels with presence in all big cities of Pakistan and Marriott
Hotels at Karachi and Islamabad. Besides hospitality industry,
the Group is engaged in oil / gas exploration and production, information
technology, mining, ceramics, pharmaceuticals, tourism, travel and real estate.

The Group dominates in the hospitality industry of Pakistan through Pakistan

Services Limited or PSL which owns and manages Pearl Continental and Marriott
chain of hotels. In addition to existing hotels, Pearl Continental Hotel Peshawar is
being expanded and new hotels are being built in Muzaffarabad and Gwadar, the
futuristic port city of Pakistan. Plans are in offing for new deluxe hotel cum
convention centre tower in Lahore. Large-scale modernization of existing hotels is
also in progress as a part of the continuing efforts to remain at the cutting edge of
the hospitality business.

Corporate profile / Information

Pearl continental Hotels, a chain owned and operated by Pakistan Services Limited,
sets the international standards for quality hotel accommodation in South Asia. The
company manages 5 luxury hotels at Karachi, Lahore, Rawalpindi, Peshawar and
Bhurban; comprising 1301 rooms with registered office in Karachi, Pakistan.

Board of Directors Legal Advisor

Mr. Sadruddin Hashwani
Mr. Murtaza Hashwani M/s Liaquat Merchant & Associates
Ms. Sarah Hashwani
Mr. Vazir Ali F.Mohammad Credit Rating Agency
Mr. Syed Sajid Ali
Mr. Syed Aslam Ali JCR-VIS Credit Rating Company Limited
Mr. Shiraz Noordin

Audit Committee Instrument Rating (TFCs)

Mr. Sadruddin Hashwani
Ms. Sarah Hashwani
Mr. Vazir Ali F.Mohammad A-(A-Minus)
Mr. Syed Sajid Ali
 Compensation Committee Bankers

Mr. Sadruddin Hashwani Allied Bank Limited

Ms. Sarah Hashwani Faysal Bank Limited
Mr. Vazir Ali F.Mohammad Habib Bank Limited
KASB Bank Limited
Mybank Limited
National Bank of Pakistan
PICIC Commercial Bank Limited
Saudi Pak Commercial Bank Limited
Standard Chartered Bank
The Bank of Khyber
The Bank of Punjab
Union Bank Limited

Human Resource and Registered Office

Recruitment Committee
Mr. Sadruddin Hashwani
Mr. Murtaza Hashwani
Mr. Vazir Ali F.Mohammad
Mr. Shiraz Noordin
Chief Financial Officier
A-9,Mohammad Ali Bogra Road,
Bath Island ,Karachi, Pakistan.
Tel:0092-21-5872941-4
Fax:0092-21-5879872-4
www.pchotels.com
www.pchotels.biz
www.pchotels.com.pk
www.hashoogroup.com.pk
Auditors

Mr.Shiraz Noordin Mr.Anjum Asim Shahid Rahman

Chartered Accountant

Member of
Grant Thornton

Company Secretary

Mr. Syed Masud Arif

Strategic Objectives

• Sustain potential market share through managed Average Daily Rate

• Continue achieving sales growth to support long term plan.
• Ensure successful completion of all expansion projects.
• Reinforce all areas of security risks to company’s assets and guests
• Seek improvement in employee’s competence and enhancing performance
goals.
Hospitality

The gleam and sparkle of the Pearl welcomes you with open arms. The guiding
principle of the Pearl Continental chain of luxury hotels and their array of restaurants
in Karachi, Lahore, Rawalpindi, Bhurban and Peshawar is the same: guest is always
right.

PC hotels are owned and operated by Pakistan Services Limited which prizes
traditional warmth, hospitality and top-class service above everything else. Pakistanis
are traditionally very hospitable.

In PC one doesn’t believe in “It is better to try and fail than never to have tried at all”.
Whole drills have been developed to ensure that we don’t fall short of expectations.
For us the supreme consideration is client’s comforts. It is not just the magnitude of
hospitality that is outstanding; the quality is superb as well.

Economic environment

Pakistan’s economy showed steady growth during 2005-06 despites extraordinary

upward surge in the oil prices. The holding of economy on its own against this serious
handicap and the aftermath of developing earthquake of October 8th, 2005, which
demolished the entire infrastructure in the affected areas of Pakistan and Azad Jammu
& Kashmir, is very impressive. With a figure of 6.6% in 2005-06 Pakistan’s economy
has grown at an average of about 7% per annum during the last four years, thus
joining the ranks of fastest growing economies of the Asian, region the economic
growth momentum that Pakistan has sustained for the last four years underpinned by
dynamism in industry, agriculture & services sectors and the emergence of a new
investment cycle with investment rate reaching new height of 20% of GDP.

There were several remarkable achievements during the FY 2005-2006, which are
worth highlighting. The per capita income has increased from $742 (in 2004-2005) to
$ 847 showing a gain of 14 % and overall increased of 46% in the last three yrs. The
average rate of inflation during the FY06 was 7.9%, 1.4% lower than in FY05. The
public debt to GDP ratio, which was 85% in 1999-2000, has declined sharply to
54.7% in 2005-06 _ which amounts to reduction of almost 30% in debt burden in just
six years. This performance alone can be taken as a very significant and remarkable
achievement of the Government.

Business Review

The present favourable economic scenario has contributed towards the remarkable
health of PSL during the year. Taking into account the sustained national economic
growth and government policies that are fuelling the growth, the management
determined that it was the perfect time to poise the PSL for benefiting from better
environment .It has redoubled its efforts to consolidate and strengthen the existing
assets of PSL through modernization, expansion wherever possible and addition of
new machinery, equipment and systems. The IT infrastructure of the PSL properties
is constantly being upgraded. New information highways have been laid in the
properties and these combined with latest hardware and software facilitates rapid
exchange of data and information.

Financial Review

The year 2005-2006 has showed a sound and healthy financial picture of your
company. Complete focus and concentration have been given to every revenue
generating activity and considerable growth is reported in almost every notable
sector. Formulation of optimal business practices and their strict execution by the
company employees has resulted in:-

• 29% increase in total revenues.

• 39% higher gross profit as compared to the last year.
• Profit after tax goes up to Rs.753 million from Rs.257 million.
• Earning per share goes up to Rs.23.16 from Rs.7.91.

Room Revenue

Room revenue is the highest revenue generating unit and its contribution counts the
most. The hotels have achieved an average occupancy of 72% with average daily
room rate of Rs 6726 with increased revenue of Rs 693 million, resulting in 43%
increased in terms of percentage as compared to last year.

Food and Beverages Revenue

Another area in which our performance is heavily based is food and beverage revenue
and stepping upwards in this area reflects strong company portfolio. Our tradition of
not making compromise on quality is very dear to us and that has made us the
foremost choice of all quality conscious people. The company capitalizing on this
area has recorded a growth of 17% over corresponding period last year and the
revenue stays at Rs.1715 million.

Liquidity Position

The performance of your company on the ground of cash management has reflected
through the liquidity ratio. Current ratio at the year end works out 1.22:1 with net
current assets of Rs 325 million.

Future Prospects

During the last four years, Pakistan has excelled various fields. The enlighten
moderation approach of our country is being appreciated throughout the world and it
has started recognizing Pakistan as their worthy ally. The awareness has gained
ground with the world community that their prosperity is inextricably linked to the
growth and development of Pakistan. By considering these factors we foresee that
due to the increased business activities and consistent growth in the market size, the
hotels in Karachi and Lahore will be running out of occupancy, if no expansion is
made.

In this regard we are adding two floors in both the wings of our PC hotel Lahore
consisting of 80 and 50 rooms respectively. The construction of a separate wing is
also under advance level of consideration for about 500 rooms in each PC hotels
Lahore and Karachi.

In this present scenario , Pakistan and India are evenly poised to resolve their disputes
and being the capital of Azad Kashmir , Muzzaffarabad is expected to complete this
year will be a significant addition to the pearl family.

In the year 2004-2005 the company made an investment of US $4.9 million in M/s
Hashoo Group Limited , which is engaged to construct a 5 star hotel in Tripoli, Libya.
In our efforts to further globalize and gradually move towards our expansion path,
during the year a further investment of US $4.9 million has been made in the Hashoo
Group limited after generating the approval in annual general meeting. Our company
also made and equity investment of US $4.7 million in Pearl Continental hotels in
Dubai after getting the approval from SBP.

SWOT ANALYSIS
1. Strengths.
The major strengths of Hashoo Group are:-

a. Customer Loyalty. The hotels of the Hashoo Group are mostly relay on their
permanent customer who prefers quality of services then the economy. These
loyal customers prefer to stay at Marriott and Pearl continental hotels year
after year
b. Favourable competition
c. Ownership in one hand/Unity of Command
d. Foreign /diplomatic customers – Constant Customers
e. Located at business centres, i.e. Islamabad and Karachi
f. Strong financial stability.
g. Profitability
h. Strong corporate culture
i. Brand image
j. Social status of owners

2. Weaknesses

a. Niche market share

b. Stagnant organization due to lack of competitors
c. Autocratic system of leadership due to limited ownership.
d. Limited geographic disposition, i.e., restricted to Major cities

3. Opportunities
 a. Price maker
b. Market expansion
c. Earthquake 2005

4. Threat

a. Political ramification
b. Emerging competitors
c. Terrorism

FACTORS
1. Sales
2. Share price
3. Total assets
4. Hotels
5. Competitors
6. Government
7. Single ownership
8. Number of customers
9. Long term investments
10. Long term assets
11. Reserves
12. Share capital
13. Market value per share
14. Earning per share
15. Capital expenditure
16. Gross profit
17. Operational profit
 Overall Performance of Company
Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01
Sales and services
Net 4173 3225 2563 1932 1933 1885

5000
2005-06
Amount in millions

4000
2004-05
3000 2003-04
2000 2002-03
2001-02
1000
2000-01
0
Sales and services Net

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Gross Profit 1529 1102 851 580 616 622

2000
2005-06
Amount in millions

1500 2004-05
2003-04
1000
2002-03
500 2001-02
2000-01
0
Gross Profit

Factor 05 -06 04-05 03-04 02-03 01-02 00-01

Operating
Profit 836 533 370 190 256 296
 1000
2005-06

Amount in millions
800
2004-05
600 2003-04
400 2002-03
2001-02
200
2000-01
0
Operating Profit

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Profit after
Taxation 753 257 156 33 85 6

800
Amount in millions

700 2005-06
600 2004-05
500 2003-04
400
300 2002-03
200 2001-02
100 2000-01
0
Profit after Taxation

FINANCIAL POSITION

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Reserves 369 369 369 399 399 599

700
Amount in (millions)

600 2005-06
500 2004-05
400 2003-04
300 2002-03
200 2001-02
100 2000-01
0
Reserves

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Current Liabilities 1463 1239 725 832 1236 1433

1600

Amount in (millions)
1400 2005-06
1200 2004-05
1000 2003-04
800
600 2002-03
400 2001-02
200 2000-01
0
Current Liabilities

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Property,Plant and
Equipment 12201 12136 6531 6432 6350 6239

14000
Amount in (millions)

12000 2005-06
10000 2004-05
8000 2003-04
6000 2002-03
4000 2001-02
2000 2000-01
0
Property,Plant and Equipment

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Current Assets 1788 1776 1224 726 616 610

2000
Amount in (millions)

2005-06
1500 2004-05
2003-04
1000
2002-03
500 2001-02
2000-01
0
Current Assets
 Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01
Current Liabilities 1463 1239 725 832 1236 1433

1600
2005-06
Amount in millions
1400
1200 2004-05
1000 2003-04
800
600 2002-03
400 2001-02
200 2000-01
0
Current Liabilities

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Net Current
Assets/Liabilities 325 536 499 -106 -620 -823

1000
2005-06
Amount in millions

500 2004-05
2003-04
0
2002-03
Net Current Assets/Liabilities
-500 2001-02
2000-01
-1000
Net current assets/Liabilities

Investor Information
Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Fixed asset
turnover ratio 0.4 0.31 0.53 0.4 0.4 0.38
 0.6
2005-06
0.5
2004-05
0.4
2003-04
0.3
2002-03
0.2
2001-02
0.1
2000-01
0
Fixed asset turnover ratio

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Dividend per
share 2.5 2.5 0 0 0 0

3
2005-06
2.5
2004-05
2
2003-04
1.5
2002-03
1
2001-02
0.5
2000-01
0
Dividend per share

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Market value 393.55 299.98 123.68 130.78 129.67 126.85

500
2005-06
Amount in Rupees

400
2004-05
300 2003-04
200 2002-03
2001-02
100
2000-01
0
Market value per share

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Earning per
share 23.16 7.91 4.79 1.11 2.87 0.19
 25
2005-06

Amount in Rupees
20
2004-05
15 2003-04
10 2002-03
2001-02
5
2000-01
0
Earning per share

Factor 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01

Capital
expenditure 75 54 103 97 126 79

140
2005-06
Amount in millions

120
100 2004-05
80 2003-04
60 2002-03
40 2001-02
20 2000-01
0
Capital expenditure

CORRELATION
Sales and gross profit:

Sales and services

Net(X) Gross Profit(Y)
4173 1529
3225 1102
2563 851
1932 580
1933 616
1885 622
0.997778336

Sales and operating profit:

Sales and services Operating

 Net(X) Profit(Y)
4173 836
3225 533
2563 370
1932 190
1933 256
1885 296
0.981751879

Sales and market value:

Sales and services

Net(X) Market Value(Y)
4173 393.55
3225 299.98
2563 123.68
1932 130.78
1933 129.67
1885 126.85
0.953790935

Current assets and sales:

Sales and
Current assets(X) services Net(Y)
1788 4173
1776 3225
1224 2563
726 1932
616 1933
610 1885
0.939240302

Earning per share and dividend per share:

Dividend per
Earning per share(X) share(Y)
23.16 2.5
7.91 2.5
4.79 0
1.11 0
2.87 0
0.19 0
 0.804278793

Capital expenditure and sales:

Capital expenditure(X) Sales (Y)

75 4173
54 3225
103 2563
97 1932
126 1933
79 1885
-0.580418166
Capital expenditure and reserves:

Capital expenditure(X) Reserves(Y)

75 369
54 369
103 369
97 399
126 399
79 599
-0.083918954
 Regression Analysis
Sales and Gross profit:

Sales (X) Gross Profit(Y)

4173 1529
3225 1102
2563 851
1932 580
1933 616
1885 622

Linear equation:
y = a + bx

a = -62.391694859682

b = 0 . 365141779004607

Correlation coefficient=r = 0 . 994903365690678

 1592

Gross pro

0 4173
Sales

Sales and Operating Profit :

Sales and services Operating

Net(X) Profit(Y)
4173 836
3225 533
2563 370
1932 190
1933 256
1885 296

Linear equation:

y = a + bx

a = -248.859102607598

b = 0 .252953491683371

r = 0 .981752574301844
 836

O.P(Y)

0 4173
Sales(X)

Sales and market value:

Sales (X) Market Value(Y)

4173 393.55
3225 299.98
2563 123.68
1932 130.78
1933 129.67
1885 126.85

Linear equation:

y = a + bx

a = -115.395975447287

b = 0.120736190759119

r = 0.953791988823572
 394

M.V(Y)

0 4173
Sales(X)

Reserves and Capital expenditure:

Reserves(X) Capital expenditure(Y)

369 75
369 54
369 103
399 97
399 126
599 79

Linear equation :
y = a + bx

a = 98.0828185170012

b = -2.21630479311757E-02

r = 7.92873443276074E-02
 126

C.E(Y)

0 599
Rev (X)