Major portion of investment made in government securities, blue chips: PRCL informs National Assembly panel

The Pakistan Re-Insurance Corporation Limited (PRCL) has informed the National Assembly Standing Committee on Commerce that the long-term investment has been made in the government securities including blue chips traded on the stock exchanges.
Pakistan Re-Insurance Corporation Limited (PRCL) Chairperson Rukhsana Saleem on Thursday informed the committee headed by Engineer Khurram Dastgir Khan that a major portion of the investment of the PRCL has been made in the government securities.
She said PRCL has also made investment in stock exchange. The companies in which investment had been made included JS Value Fund, Picic Growth Fund, Pakistan Premium Fund, Picic Investment Fund, JS Growth Fund and others. About the profits made by the PRCL, she stated the PRCL has made record profit of Rs 1.7 billion as compared to Rs 782 million in 2005.
The corporation's total assets have shown remarkable increase from Rs 6 billion to Rs 12.5 billion as per latest data. The committee highly appreciated the performance of the PRCL in a situation where most of the public sector entities such as Pakistan Railways, PIA, Steel Mills and others were running in loss.
Responding to a query, the PRCL chairperson stated that we have nine directors on the board of the corporation including chairperson. The transparency in the affairs of the PRCL is evident from the fact that the corporation has appointed chief internal auditor and external auditors have regularly been engaged for conducting commercial audit of the corporation.
On a proposal of MNA Kashmala Tariq, the committee agreed to direct the Ministry of Commerce for conducting meeting of all stakeholders on the new SECP Act by the Securities and Exchange Commission of Pakistan (SECP). Kashmala Tariq pointed out that the powers of the SECP would be considerably enhanced under the new SECP Act for which viewpoint of all stakeholders needs to be taken. The officials of the ministry of commerce decided to direct the SECP for convening an early meeting on the new SECP Act.
On the issue of audit paras pertaining to 2010-11 and its outcome, Rukhsana Saleem informed the committee that out of nine audit paras, seven have been settled at the level of the Public Accounts Committee (PAC). One of the audit paras was that the medical expenses amounting to Rs 9.879 million incurred during the year under review showed an upward trend, which was 36 percent higher than the expenditure incurred under the same head during the preceding year 2008. The PRCL responded that the medical expenses amounted to Rs 9.879 million during the year 2009 whereas the same was 7.310 million in the year 2008, which shows an increase of Rs 2.569 million. The medical expenses are within the budgetary provision for the said year. The reasons for increase in medical expenses were mainly due to revision in rates (Medicines, Hospitalisation and Labs).
Another audit objection was that during the year under review, absolute cash ratio of the company deteriorated from 1.87 in 2008 to 1.24 in 2009. It shows that cash reserves available to meet current liability (including dividend and surplus profit payable) have been reduced considerably as compared to previous year. Such reduction in absolute cash ratio needs justification.
The PRCL responded that the cash ratio is arrived at by comparing cash and bank deposits with the prior year. The cash and bank deposit head has three sub-head of accounts namely (i) Cash and other equivalent (ii) current and other accounts and (iii) deposits maturing within 12 months.
The total cash and bank deposits in the year 2009 was Rs 1,834 million, whereas the same was Rs 2,837 million in the year 2008. In the year 2008 a sum of Rs 2 billion was kept in deposits maturing within 12 months whereas the same was Rs 602 million in the year 2009. Such deposits change the ratio but in actual in PRCL current bank and other accounts the position of 2009 is far better than 2008 as the same was Rs 790 million in the year 2008 whereas the same was Rs 1,232 million in the year 2009.
The PRCL has not facing cash liquidity problem as per example in the year 2009 and 2010 PRCL paid cash dividend of Rs 900 million each year to its shareholders, PRCL response added. The committee also expressed displeasure over continues absence of Federal Minister for Commerce and suggested that it should be brought in the notice of prime minister.