Zulqarnain Ali Khan

Chairman, Utility Stores Corporation

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Zulqarnain Ali Khan Chairman Utility Stores Corporation

Q) Sir, Initially when you got this idea of taking over as Chairman, Utility Stores Corporation, what were the challenges faced?

A) Actually before I became Chairman I had some idea about the Utility Stores because I have my own business in Pakistan whose biggest clients are Retailers, such as Imtiaz, etc as such we also have considerable experience. We are in this business since last 38 years so it was a bit easy because knowing the business I decided to take up the challenge. When Imran Khan became PM he asked me to contribute towards Pakistan, I requested him to give me the Utility Stores, Razzaq Dawood who later became Minister for Commerce also has good relations with me and also good knowledge about my business out of Pakistan particularly in Saudi Arabia. He gave me brotherly advice saying ‘why are you leaving such a ‘sukoon ki zindagi’ and taking up such a challenge?’ Anyway later when I was leaving for Lahore with my daughter I received a phone call from Naeem ul Haq saying that the PM has indicated that I take over as Chairman USC. I came back in Nov 2018 and took over as Chairman of the Board.

When I became Chairman I was under the impression that it would be an advisory role, attend board meetings, give businessmen, give them guidelines on how to run the business on a new mode, however I realized that it is nothing like what I thought. I analyzed the entire situation and after a month went to the PM and told him in view of the issues her the Chairman has no authority to anything or take any decisions. He told me to take over as MD upon which I told him that MDs are working under my employ, how can I come down to this level. He told me to do whatever I like to do, he called the secretary and the minister and instructed them to arrange everything and me to come to Islamabad. I told the PM that I will accept on one condition i.e. I will work for the govt but will not take any salary or benefits. I now want to do something for the country having achieved much for my own.

Going forward I started realizing that there were many problems, an organisation of about 16000 people, over 4000 stores, monthly sales 23 crore/ month, operating cost 55 crore/month, they had no money and were eating away their own inventory. I again went to the PM and brought everything to his knowledge, he told me to talk to Asad Umar. I knew Asad but he said that there was no money to spare. Then I met all the big vendors in Karachi and Lahore, since I sit on both sides of the table I know their difficulties. I told them that we could provide loans for them to help them out. I was facing multiple challenges without any support.

Then I had my own private team which I involved to help them out. I once again approached the PM and apprised him of the situation. I cannot repeat what he told me but in short, he gave me a message asking me to do whatever I could for the sake of the country as ‘we are under emergency’. To me this indicated just how concerned the PM was about the problems facing the countryand also how much he is trusting me – so I had to deliver – this was another challenge for me. Many of my friends advised me to leave these problems and just leave, but I could not do this telling them that a Pathan either dies or he delivers, I do not believe in the middle road. They asked what benefit would I get from this to which I said that everything is not done for gain or profit, sometimes one does things to please Allah.

I started work on putting together a professional team bringing inMDs, Directors, etc. It took me six months after I gave a presentation to Asad Umar who was quite impressed saying that ‘You are pinpointing problems as well as providing their solutions”. Asad said that since I had no money, he could help out by introducing me to President of National Bank and asked me to meet him. I went to Karachi and met Arif Usmani, President NBP who I also knew previously when he was with SAMBA in Saudi Arabia and then in Mashriq Bank. After sharing my business plan and other details he asked why should his bank give money to a bankrupt company? I told him that I did not want any money, only a credit line of Rs. 5 billion. He was kind enough to put my entire plan before the bank’s Board and after much discussions he agreed to provide me Rs. 5 billion provided I handed over to NBP my passport because as president of the bank he had to ensure the money given will not be wasted. I gave him my Business Plan as to how we were going to utilize the money, he said the bank had not worked in this way before.

I began with the 5 billion, basically I had two targets i.e. serving the people of Pakistan and second, bring the organisation to a self sustaining mode. When we started in November the USC went on a hartal with several demands. I alongwith Naeem bhai (Allah rest his soul in peace) went and had discussions with them we are ready to give them whatever they want provided the organisation became self-sustaining. I told them frankly that their demands could not be met at this point because the government had no money but I promised that not a single employee would be fired. I asked them to give their support to me, which they did. We started giving their salaries and gradually managed to the point our sales went up to Rs. 1 billion and slowly kept rising. After one year, the organisation was still losing money but its position had become much better.

The PM was very concerned about proving relief to the poor and asked me to work on this one point agenda. By now I had a good idea of how the govt depts and civil services worked and had a good idea of how to proceed. In Dec last year I informed the PM there are some basic food, such as atta, rice, sugar, pulses, etc which we should give to people on subsidized rates. The PM agreed and said he would give us Rs 7 billion per month as a relief to pass on to the people by selling these at competitive price, preferably lower than market price. Challenges here were to start buying goods and provide at cheaper rates. Since USC was not computerized at that time, there was fear that it could be misused so we used different methods to control the same at which we were quite successful. One of our problems is that people are very quick to criticise for the sake of criticism only, there is no criticism for improvement – this is unfortunately our national nature, we do not realize the negative impact this could have. Anyway I requested PM to give me Rs. 6.5 bn upfront, in six months I will pass it on but I will also use it as working capital so that our inventory level goes up and sales become better. I was able to increase sales upto Rs. 6 billion per month. On 8 Jan the PM officially launched the package meant to provide relief to the poor through the Utility Stores Corporation (USC) providing atta, sugar, pulses, etc, after which our sales went up to Rs. 12 bn per month. Gradually, as at end year ending June we are on almost break even, in Ramzan our sales were Rs. 22 billion, this is an achievement as never before in the history of USC since 1971 has Rs. 22 billion sales per month been recorded. We were able to balance this on a good margin so as to cover our cost also because I do not like to ask for money from the government to pay our employees like the Pakistan Steel Mills, etc. The govt has 134 organisations whose task is to earn money and also serve the people but this is not happening. There is a way to do which is happening the world over and is not something new. I am in the international market, doing business in many countries and therefore have a good idea of how thingswork and in retail there is vast future if your manage your funds properly you can do a lot.

I also met Shabbar Zaidi, Chairman FBR, also a friend. I told him USC is one of the highest tax paying organisation. In a cabinet meeting with the PM I gave a presentation, told him that you give us subside of Rs. 1 bn and we return back an amount in tax so what is the use. Mr. Razzaq had asked me not to discuss this subject but I pointed out that if we do not discuss how will we resolve the problem. In short, Hafeez Shaikh had to agree, as the PM was also supporting my viewpoint. I told Hafeez that I am not here to argue, I have a very logical point, you please answer me. As a protocol I am the Chairman, he is the Finance Minister i.e. the second most important position. I know Hafeez from Saudi Arabia so there is some frankness between us. But I must appreciate Hafeez is a very smart person. Hafeez said that the government has some regulations regarding tax breaks which we have to follow but nevertheless I will look into the matter and devise a system to give tax break.

Slowly, Alhamdolillah, we proceeded towards betterment, the organisation is going towards automation, giving a new shape to the organisation to change the perception of people that the Utility Stores are only for the poor people whereas this is for everyone. We are now promoting products of our local industries – you produce the product we will sell it for you. We are going towards the ‘Franchise’ model in the Naya Pakistan programme, it is expected employment for almost 25000 people will be generated. In Ramadan we created employment for2600 people, unfortunately this was not publicized by the media, good things seldom are!The present situation in utility stores is that is the only government organisation to be on break even, it has covered its losses, it is going towards growth. I feel that Pakistan Steel Mills can also be turned around. A few weeks ago a package of Rs.18 billion was approved for PSM to pay salaries for employees who were being paid since last five years with the PSM shut down. The decision of former Chief Justice Iftikhar Chaudhry to strike down the privatisation process of PSM cost the nation dearly, more than Rs. 80 bn but no one talks about this very wrong decision.

I would like to give a message to people through this interview that whatever work you do, do it will good intentions, never think about your personal benefit. Allah has given you two choices, it is totally up to you to go for Halaal or Haraam earning. This is my experience which I have shared with you.

Whenever you try to do good work, first you have to have credibility. Take for instance the Edhi Foundation of Shaukat Khanum Hospital, they have excellent credibility. Problem with USC is that it does not have that kind of credibility so first we had to create its credibility. This Ramadan I tried to do it, my Zulqarnain Foundation is also involved in charitable work. USC distributed free rations to 100000 people, financer of which was not the govt but the private sector helped along by many business friends who want to remain anonymous.

Q) Sir, Utility stores is a big success in Pakistan. Rather than getting subsidy from the government, do you think private donors can help in making utility stores self-reliant?

A) Whenever you try to do good work, first you have to have credibility. Take for instance the Edhi Foundation of Shaukat Khanum Hospital, they have excellent credibility. Problem with USC is that it does not have that kind of credibility so first we had to create its credibility. This Ramadan I tried to do it, my Zulqarnain Foundation is also involved in charitable work. USC distributed free rations to 100000 people, financer of which was not the govt but the private sector helped along by many business friends who want to remain anonymous. The situation of the Line of Control in Kashmir was not so good and I wanted to distribute rations to them at the rates of USC so we were able to distribute 5000 ration bags there with the help of the Pakistan Army and the civil services that cost us about 60 to 70 lakhs. You might have seen below how we are still providing ration packages worth Rs. 5000 to people after entering details of the NICs into our system. This has continued after Ramadan. Aftab Siddiqui MNA helped us out and introduced this in Karachi. For the first time people have become involved in any USC venture. I received a call from a gentleman in Saudi Arabia who wanted to distribute 500 bags of sugar and 500 bags of Atta in Siaklot in his locality. I said this was no problem, he only had to authorize a person to pick up the ration packages from the utility store in his locality upon provision of his NIC. It is a good start and it is only a matter of time that the entire process is systemized to bring better results when people will start trusting USC that USC is also catering to this element.

Q) You mentioned going towards transformation of your system from manual to IT so that it will be easier to manage on macro and micro level. Many systems are available in the market today which you can use, there is one scheme of our own company and only scheme authorized by the State Bank and government of Pakistan. This can be of great help in your endeavour for USC

A) I have already discussed with your Mr. Tariq on this matter. I had asked him to give me a proposal, perhaps we can integrate your app with our own app, etc. As for live demo, I shall be going to Karachi where your company has a good setup and I can see the demo live there and think about integrating your app with ours. We are just on the edge of deployment of this system, anyone deserving can call us on 5556 and register, we then issue him a ration card, called Sahulat Card. We then check his entitlement and then issue him ration. We have also started e-commerce where we deliver ration, etc directly to the person’s house.

Q) We are all part of this society. You cause is extremely noble but unfortunately we have largely overlooked the middle class and lower middle class about whom our political leaders/system have not succeeded to deliver on ground. Our Group with the blessing of our Chairman would also like to contribute to you cause, there are many areas where our seven companies in the Group can be of assistance. For example a huge amount of cash will be moved from your USC to outlets, we can help here.

A) As far as moving cash is concerned, National Bank and Muslim Commercial Bank are doing it as we have 5000 locations countrywide. Here we have also asked for a proposal from your Group and we will look into it. We have also asked a proposal from your group regarding Assan Mobile Account which will help us in paying vendors etc.

Thank you very much Sir for your valuable time and sharing your thoughts and views. We look forward to your visit to Karachi where we can give you a detailed presentation of our Group’s activities and look for areas where we can be of assistance to USC.

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