The story
Dr Arshad is a self-made man who started Hi-Tech Feeds with the financial support of his three academics about 35 years ago with seed money of Rs1 million.
Today, Hi-Tech Feeds is part of the Hi-Tech Group of Companies, a multibillion rupee company engaged in various activities. It has a reasonable local market share, in addition to exporting a product (quality rice) to Saudi Arabia, the United Arab Emirates and European countries.
The depreciation of the rupee has raised inflation and put the local industry under great pressure, as the cost of imported raw materials has increased dramatically, said Dr Muhammad Arshad, managing director of Hi-Tech Feeds.
“In the past six months, there has been an induction of $ 7 billion to $ 8 billion into the treasury via loans and grants, but the continued depreciation of the rupee, despite stable foreign exchange reserves, is alarming. Our products in the international market have become uncompetitive due to an increase in the cost of inputs, ”he said, speaking exclusively to BOL News.
Dr Arshad said the State Bank of Pakistan (SBP) should step in and stabilize the exchange rate, as current conditions are severely damaging the industry.
The indifferent attitude of the regulator could prove to be disastrous for the country, he added.
“Autonomy has strengthened the responsibilities of the central bank. The State Bank is not so helpless. There is a difference between independence and an unbridled situation. Local currency cannot be left at the mercy of speculators. The SBP should intervene to keep the exchange rate at the real level, ”he added.
Dr Arshad is a self-made man who started Hi-Tech Feeds with the financial support of his three academics about 35 years ago with seed money of Rs1 million.
Today, Hi-Tech Feeds is part of the Hi-Tech Group of Companies, a multibillion rupee company engaged in various activities. It has a reasonable local market share, in addition to exporting a product (quality rice) to Saudi Arabia, the United Arab Emirates and European countries.
Dr Arshad is not only the Managing Director of Hi-Tech Feeds, Hi-Tech Edible Oils and Hi-Tech Grain Mills, but he is also the Managing Director of Hi-Tech Poultry Breeders, Hi-Tech Pharmaceuticals, Hi-Tech Poultries and Hi -Tech -Technological farms.
This down-to-earth and humble man who believes in strict adherence to business ethics and proper attention to the well-being of all employees has expressed concern over the alarming increase in the bill. imports and the resulting widening trade deficit.
Steps need to be taken to reduce the cost of inputs to export-oriented industries, diversify products, add value and explore new export destinations.
With an interest in trade policy, Dr Arshad was a member of the executive committee of the Lahore Chamber of Commerce and Industry, president of the All Pakistan Solvent Extractors Association and vice-president of the Federation of Chambers of Commerce and from Pakistan and regional chairman of his Punjab branch.
He is a member of the Punjab Procurement and Regulatory Authority (PPRA). He is also a member of the union of the University of Veterinary and Animal Sciences of Cholistan, Bahawalpur.
Here are excerpts from a meeting with him.
What was your first business? Where are you now ?
After obtaining the DVM (Doctor of Veterinary Medicine) from Faisalabad University of Agriculture in 1976, I joined Abror Acres as deputy sales manager. A two year affiliation with the world renowned company specializing in poultry products was a wonderful learning experience which has helped shape my career a lot. My father did not like work because of his frequent trips. At his insistence (my father), I left the company to be part of the faculty of Faisalabad University of Agriculture. I continued to teach histology for 10 years and later started my own business.
I am self-taught. We (me and my three friends) created Hi-Tech Feeds and Poultry with seed capital of Rs1 million in 1986. Today, Hi-Tech Group of Companies is a large empire with an annual turnover of more than Rs30 billion.
The company is engaged in various businesses, including poultry feed and medicine, commercial broiler farming, rice mills, and edible oil extraction. Hi-Tech has provided employment for over 3,000 people.
What do you think about the depreciation of the rupee and the possible increase in exports?
It is bad for businesses and the economy. The depreciation of the rupee has raised inflation and raised the cost of inputs. High energy prices have already increased the cost of doing business. Industries that depend on imported raw materials must now bear additional expenses, while our products are not competitive in the international market due to the increase in the cost of inputs.
The appreciation of the dollar has increased the landed cost of raw materials and industrial machinery, which constitute 70 to 80 percent of imports.
The State Bank of Pakistan is expected to intervene to stabilize the volatile exchange rate, as any further delay could prove disastrous for the country.
It is a misconception that the depreciation of the rupee played a role in increasing exports. Local production of raw materials has largely contributed to the increase in exports. For example, cotton production increased by 81 percent, which helped boost textile exports.
It is the same for the cultivation of rice. We have 11.5 million tonnes of rice stocks. An increase in rice exports will be due to an increase in production and not to the depreciation of the rupee.
How do you see the rise in interest rates?
An increase in the mark-up has increased the cost of borrowing for businesses. Now it is more difficult for Small and Medium Enterprises and the cottage industry to run their businesses.
There are reports of a further increase in mark-up rates in the coming months. In this case, the ratio of bank defaults will increase dramatically, which is not in the interest of the government and entrepreneurs. Instead of increasing the margin rate, the central bank should do the opposite to give cash-strapped companies some breathing space.
Your take on the use of technology in agriculture?
I have been dealing with poultry related products for many years. As a stakeholder with relevant training, I support the use of technology to improve the yield and quality of agricultural products.
For example, about 70 to 80 percent of the maize produced in the country is used in poultry feed. Any genetic modification that can provide quality disease-free corn would be beneficial for poultry feed production. There is a need to initiate a debate among scientists, regulators and stakeholders to eliminate misconceptions about genetically modified seeds, if any.
Many developed countries have accepted this technology due to a number of advantages and so should we.
What do you propose to improve the business environment in the country?
The environment is not good for new entrants as well as for existing players. Uncertainty, bureaucratic hurdles, multiple taxes and high input costs have affected businesses. At present, the government’s priority is large-scale manufacturing and that too only the textile sector.
There is a need to provide a one-stop-shop and tax exemptions for new entrants. Controlling inflation, reducing the cost of inputs, including lowering energy prices, harmonizing the tax system and reducing the depreciation of the rupee are necessary for a favorable business climate.
What is the future outlook for the overall business environment in Pakistan?
I am not optimistic unless the government takes concrete steps to create a favorable business climate. The cost of production has increased significantly due to high prices of imported raw materials and rising energy tariffs. Unstable exchange rates and inflation are big challenges. The government should take action to address these issues. In addition, the government should also pay special attention to the agriculture, engineering, service and information technology sectors. There is a need to stimulate Small and Medium Enterprises (SMEs) and the cottage industry, which are the backbone of any economy.
Your personal achievements?
I have done my best to give the best education and the greatest exposure to my children. My oldest son Javaid Arshad graduated from McGill University in Montreal, Canada. Junaid Arshad graduated with an MA in Marketing from Imperial College London, UK. I tried to allow my children, who support me in my business, to become self-made men like me.
Why did you join the trade policy?
I entered trade policy on the advice of my friends. Politics is a good source of frequent meetings with other businessmen and regular interactions with decision-makers and executors. Now my policy is aimed at playing the role of a bridge between the business world and the decision makers and the executors.
