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Date: 25/05/2018
Introduction:
Hascol Petroleum Limited is engaged in the purchase, storage and sale of petroleum
products such as Fuel Oil, High Speed Diesel, Gasoline, Jet A-1, LPG and Lubricants. The
company was incorporated in 2001 under the Companies Ordinance 1984, primarily to take
advantage of the petroleum sector deregulation and undertake a program for owning, leasing
and renting oil storage facilities as well as importing petroleum products for its own account.
In February 2005 Hascol was granted a full marketing license by the Government of
Pakistan and since then, Hascol has been engaged in developing a retail network under
HASCOL brand and by 31st December 2012 we have commissioned two hundred retail
outlets, in the three provinces of Pakistan. This number will rise to 250 by the end of 2013.
Hascol is also developing storage facilities at Machike and Shikarpur. Work is already
completed at Shikarpur, and land has been acquired at Machike and work is in progress. At
Hascol has in place Hospitality arrangements with Pakistan State Oil Company & Shell
Pakistan for storage and handling of products at Keamari, Shikarpur, Machike and Sahiwal.
Prior to the incorporation of the company, the main personnel have been involved in the
Pakistan oil industry for over thirty years, dealing with imports and marketing of refined
products such as Gasoil, Fuel Oil, Kerosene, Gasoline and Base Oil. Hascol Petroleum
Limited has, independently or through its associated company Hascombe Limited, extensive
and market full range of Automotive / Industrial Lubricants & Greases. In the initial stages,
Hascol is getting the lubricants blended under a Toll Blending Agreement and will
subsequently put up its own blending plant in Karachi. Hascol is a major supplier of
of High Sulphur Fuel Oil (HSFO) and Marine Gas Oil (MGO) at Karachi and Port Qasim.
Hascol has signed a Technical Services Agreement (TSA) with Emirates National Oil
Company Limited (E.N.O.C) UAE, to start aircraft refuelling services at Karachi and other
main airports in Pakistan. We have applied for land at Karachi Airport and as soon as Civil
Aviation Authority allocates the land we will start aircraft refuelling service.
Hascol has also started to market LPG as an automotive fuel through its retail
network, and for this necessary license has been obtained from OGRA and supply
arrangements have been made with well-known LPG marketing companies in Pakistan.
Analysis of Financial Statement (2011, 2012, 2013)
Balance Sheet:
CURRENT ASSETS
CURRENT LIABILITIES
Sales
57,469,448 2,977,529 19,583,772
Sales tax
(7,649,848) (3,845,221) (2,513,430)
Net sale
49,819,601 2,593,075 17,070,342
Other revenue
46,988 62,269 23,361
Net revenue
49,866,589 25,992,344 17,093,703
Cost of sales
(48,506,431) (24,996,331) (1,639,426)
Gross profit
1,360,158 996,013 699,277
Distribution cost
(591,652) (4,488,777) (331,418)
Administrative expenses
(229,242) (141,863) (134,670)
LEVERAGE RATIOS
LIQUIDITY RATIOS
EFFICIENCY RATIOS
PROFITABILIT Y RATIOS
Leverage Ratios
LONG-TERM DEBT RATIO = TOTAL ASSETS - TOTAL EQUITY/ LONG-TERM DEBT + TOTAL EQUITY
Interpretation:
In 2011, Long Term Debt Ratio is low which means that company is not highly
leveraged because debt is 2.96 which shows that 2.96 of every rupee from capital is in
In 2012, Long Term Debt Ratio is the higher than the base year 2011, which shows
that the large amount of capital is in form of long term debt as compared to year 2011.
In 2013, Long Term Debt Ratio has increased and it is still higher than the base year
2011 which represents that the increase exists in amount of capital in the form of long
Conclusion:
The Long Term Debt Ratio has increased, when we compare it with the past 3 year’s
performance. Therefore, in order to decrease Long Term Debt Ratio, company should
decrease its debt from its equity. In this way company’s leverage can be in a better position.
Debt to Equity Ratio:
Interpretation:
In 2011, the Debt Equity Ratio is higher which represents that debt is 4.29 higher than
the equity which shows the higher risk for company in bad times.
In 2012, the Debt Equity Ratio for the company is higher as compared to the base
year 2011 which represents that the debt is much higher than the equity and therefore,
In 2013, the Debt equity Ratio for the company is higher as compared to the base year
2011 which represents the debt 7.29 times higher than its equity & has much
increased than the equity and the risk has also increased for the company.
Conclusion:
The Debt Equity Ratio is higher as compared to the three years’ analysis of the
company. Therefore, in order to decrease the Debt Equity Ratio, the company should
decrease its long term debt and increase its equity. As a matter of fact, equity can be
Interpretation:
In 2011, the Total Debt Ratio is 0.8044 which shows that 0.8044 cents of every rupee
from capital is in the form of total debt (short term debt and long term debt). This
represents that the company is highly leveraged and fluctuations in interest rate will
cause higher risk for the company as the equity is much lower than the total debt.
In 2012, the Total Debt Ratio had decreased a little as compared to the base year 2011
which shows that the debt and risk are decreased a little.
In 2013, the Total Debt Ratio for the company is increased as compared to the base
year 2011, which represents that in 2013 the debt, and risk were high and equity was
Conclusion:
The Total Debt Ratio is higher but fluctuations are seen in the three years’ analysis of
the company. Therefore, the company is considered to be as highly leveraged and in order to
increase the total debt ratio, company should decrease its debt and Increase its equity which
Interpretation:
In 2011, the Time Interest Earned also knows as Margin of Safety is 0.21 times which
shows that the earnings of the company are just 21% than its interest payable. This
In 2012, the Time Interest Earned has increase which shows that the earnings of the
company has increased as compared to the base year 2011 and the company is still
able to meet its interest payable with its earnings by 2.88 times.
In 2013, the Time Interest Earned has increased as compared to the base year 2011
which shows that the earnings of the company have also increased.
Conclusion:
The Time Interest Earned has fluctuation which shows that during the three years, the
company’s ability to pay interest with the passage of time, the company managed to increase
its Time Interest Earned and became able to pay its interest payable but the company still
needs to increase its interest payable which can be increased by increasing the earnings of the
company.
Cash Coverage Ratio:
Interpretation:
In 2011, the Cash Coverage Ratio shows that the company has the highest cash from
the operations to pay its interest payments with cash is just 49%. 49% is not sufficient
to pay because no amount will be left for other operations. Still company is not able to
In 2012, the Cash Coverage ratio is increased as compared to the base year 2011
which represents that the company’s ability to pay its interest payments with cash has
increased.
In 2013, the Cash Coverage Ratio has increased as compared to the base year 2011
which shows that the company’s ability to pay its interest payments with its cash has
also increased.
Conclusion:
The Cash Coverage Ratio of the company through the overall analysis of three years
shows the company’s ability to pay its interest was low in the beginning but with the passage
of time, it started increasing. Improvements are seen in the last two year. Therefore, in order
to increase the Cash Coverage Ratio, the company must increase its earnings and should
make depreciation conservative because depreciation is the amount which never goes out of
the company and its helps the company to decrease its payables.
Liquidity Ratio
Current Ratio:
Interpretation:
In 2011, the Current Ratio of the company is 0.6793 which shows the company’s
ability to meet its short term liabilities is 0.6793 times. This value is not so high to be
In 2012, the Current Ratio of the company has increased as compared to the base year
2011 due to which company’s ability to pay its current liabilities has increased to a
great extent.
In 2013, the Current Ratio of the company was high as compared to the base year
2011 which comprises of that the company’s ability to pay its current liabilities was
increased.
Conclusion:
The Current Ratio has minor fluctuations over the time of three years which
represents that the company is able to pay its current liabilities with the help of its current
assets but this extent is not considered as ideal because the company’s liquidity is too
minimal. Therefore, the company must increase its current assets by increasing its receivables
Interpretation:
In 2011, the Quick Ratio of the company shows the company’s ability to pay (current
assets apart from inventory) is 0.4892 times than its current liabilities. This value is
In 2012, the Quick Ratio of the company is increased to a small extent as compared to
the base year 2011 which shows that the company’s ability to pay its current liabilities
In 2013, the Quick Ratio of the company is decreased as compared to the base year
2011 which shows that the company’s ability to pay its current liabilities has
decreased.
Conclusion:
The Quick Ratio of the company has slight fluctuations which show that over the
period of three years’ the company’s ability to pay has not increased to a high extent apart
from its inventories. Therefore, the company possesses low liquidity. However, the company
can increase its liquidity by increasing sales to increase its accounts receivables and by
Interpretation:
In 2011, the Cash Ratio of the company is 6.94% which represent the company’s most
liquid assets to pay its current liabilities. The Cash Ratio of the company is not
In 2012, the Cash Ratio of the company has increased as compared to the base year
2011 which shows that the company’s ability to pay its current liabilities has also
increased.
In 2013, the Cash Ratio of the company has increased as compared to the base year
2011 which shows that the company’s ability to pay its current liabilities has also
increased.
Conclusion:
The Cash Ratio of the company has fluctuations which represents that during the three
years’ analysis the company’s ability to pay for its current liabilities from its most liquid
assets has increased and the company is not ideally liquid to pay for its current liabilities.
Therefore, company should increase its cash by increasing sales and by selling and increasing
Interpretation:
In 2011, the Net Working Capital of the company is negative which represents that
the company’s potential reservoir of cash is too low that the value has become
In 2012, the Net Working Capital of the company has decreased as compared to the
In 2013, the Net Working Capital of the company remains negative as compared to
the base year 2011 and the negativity has increased to a great extent.
Conclusion:
The Net Working Capital of the company has fluctuation over the period of three
years’ analysis but during this time the Net Working Capital of the company has remained
negative. Therefore, it is highly recommended that the company should increase its Net
Working Capital by increasing its current assets which can be increased by increase in sales,
Interpretation:
In 2011, the Net Working Capital to Assets is -31.05 which represents the company’s
un potential reservoir of cash with proportion to the asset. Therefore, company’s cash
In 2012, the Net Working Capital to Assets has decreased to a great extent as
compared to the base year 2011 and it has become negative which shows that the
company’s cash reservoir too negative that is not even backed by the company’s total
assets.
In 2013, the Net Working Capital to Assets has decreased to a great extent in
comparison with the base year 2011 and it remained negative. Therefore, company’s
Conclusion:
The Net Working Capital to Assets of the company has fluctuations during the three
years’ analysis which was negative at the start and then remained negative for the following
increasing its accounts receivables & selling and increasing outstanding number of shares to
make the company’s cash reservoir positive so that the Net Working Capital can also be
increased.
Efficiency Ratio
Interpretation:
In 2011, the Total Asset Turnover is 7.26 which represent that how hard the
company’s assets are being put to use. Therefore, it’s obvious that each rupee of asset
has produced 7.26 rupee of sale and the company is working close to its capacity.
In 2012, the Total Asset Turnover has decreased as compared to the base year 2011
which shows that the company has worked wider to its capacity.
In 2013, the Total Asset Turnover has decreased as compared to the base year 2011
which shows that the company has more decreased its assets for sales.
Conclusion:
The Total Asset Turnover of the company has been analysed for three years which
shows that the company’s Total Asset Turnover was high in the beginning but it decreased
during its following years. In order to further decrease of Total Asset Turnover, the company
Interpretation:
In 2011, the Fixed Asset Turnover is 16.13 which represent that how hard the
company’s fixed assets are being put to use. Therefore, it’s obvious that each rupee of
fixed asset has produced 16.13 rupee of sale and the company is working close to its
capacity.
In 2012, the Fixed Asset Turnover has decreased as compared to the base year 2011
which shows that the company has worked wider to its capacity.
In 2013, the Total Asset Turnover has increased as compared to the base year 2011
which shows that the company has utilized more efficiently its fixed assets for sales.
Conclusion:
The Fixed Asset Turnover of the company has been analysed for three years which
shows that the company’s Fixed Asset Turnover was high in the beginning but it fluctuated
during its following years. In order to further decrease of Fixed Asset Turnover, the company
Interpretation:
In 2011, the Inventory Turnover of the company is 52.67 which represent the rate at
In 2012, the Inventory Turnover of the company has decreased as compared to the
base year 2011 which shows they company’s ability for turning over its inventory has
decreased.
In 2013, the Inventory Turnover of the company has decreased to a large extent as
compared to the base year 2011 which shows that the company’s ability for turning
Conclusion:
The Inventory Turnover of the company has minor fluctuations during the analysis of
three years’ which shows that the inventory turnover has decreased which is not a good
remark. But to be a big player in the market, Hascol has increased its inventory to compete
maximum in the market. It is also recommended, company should increase its sales volume
which will increase its cost of goods sold which will lead to the increase in its Inventory
Turnover.
Day’s Sales Inventory:
Interpretation:
In 2011, the Days’ Sales in Inventories is 6.93 which represents that on average the
company has not sufficient inventory to maintain sales for 6.93 days.
In 2012, the Days’ Sales in Inventories was increased as compared to the base year
2011 which represents that the company had more inventories to maintain its sales.
In 2013, the Days’ Sales in Inventories has increased as compared to the base year
2011 which shows that the inventory has increased but still has sufficient to maintain
its sales.
Conclusion:
The Days Sales in Inventories has been analysed for three years’ which shows that
throughout the analysed period the company had sufficient inventories to meet its daily sales.
Hascol has increased its inventory due to frequent strikes of Petroleum Transport
Association. In Future if there is any further strikes, Hascol will be able to meet its current
Interpretation:
In 2011, the Receivable Turnover of the company is 36.74 which represent company
In 2012, the Receivable Turnover of the company has decreased as compared to the
base year 2011 which shows they company’s ability to collect its outstanding has
decreased.
In 2013, the Receivable Turnover of the company has decreased to a large extent as
compared to the base year 2011 which shows that the company’s ability to collect its
Conclusion:
The Receivable Turnover of the company has minor fluctuations during the analysis
of three years’ which shows that the receivable turnover has decreased which is not a good
remark. But to be a great competitor in the market, Hascol has changed its credit policy. It is
also recommended, company should increase its Cash sales which will decrease the risk of
Interpretation:
In 2011, the Days’ Sales in Receivables is 9.93 which represents that on average the
In 2012, the Days’ Sales in Receivables was increased as compared to the base year
2011 which represents that the company giving more leverage to its creditors.
In 2013, the Days’ Sales in Receivables has increased as compared to the base year
2011 which shows that the company has changed its credit policy & giving its
Conclusion:
The Days Sales in Receivables has been analysed for three years’ which shows that
throughout the analysed period the company had allowed its debtors to pay their debts more
easily. It will help him to create a better market, but it should collect its payment with a
Interpretation:
In 2011, the Net Profit Margin of the company is 0.47 % which represents that the
determines that the company earns revenue and the company incurred less profit
In 2012, the Net Profit Margin of the company increased as compared to the base year
2011 which shows that the company’s revenue (inclusive of debt) increased.
In 2013, the Net Profit Margin of the company has increased as compared to the base
year 2011 which shows that the company’s revenue (inclusive of debt) has also
increased.
Conclusion:
The Net Profit Margin of the Company has been analysed for three years’ which
shows fluctuations. Therefore, company should increase its Net Income by becoming more
Interpretation:
In 2011, the Return on Assets of the company is 3.47% which represents the return on
In 2012, the Return on Assets of the company has increased compared to the base
year 2011 which shows that the assets are more utilized in this year.
In 2013, the Return on Assets of the company has increased to be the positive as
compared to the base year 2011 which shows that the assets are better utilized in this
year.
Conclusion:
The Return on Assets of the company has been analysed for three years and it has
been found that the company earned return on its assets but the return was minimal to be
considered as ideal. However, the company’s assets are fully utilized. Therefore, company
should increase its Net Income by becoming more cost efficient & selling and increasing
Interpretation:
In 2011, the Return on Equity of the company is 0.18527 which represents that the
In 2012, the Return on Equity of the company has a slight increase which shows that
the return on shareholder’s equity has also slightly increased as compared to the base
year 2011.
In 2013, the Return on Equity of the company has a slight increase which shows that
the return on shareholder’s equity has also slightly increased as compared to the base
year 2011.
Conclusion:
The Return on Equity of the company has been analysed for three years and it has
been concluded that the company equity has increased during the period of time. Therefore it
is highly recommended that the company should increase its Return on Equity by increasing
its Net Income which can be increased by being more cost efficient & selling and increasing
Interpretation:
In 2011, the Assets of the company are higher than its equity 5.3364 times which
represents the company has tried to perform well as much it can do.
In 2012, the equity multiplier is in better position compared to base year 2011, this
In 2013, the Equity Multiplier has increased to almost 60% compared to its base year
2011.
Conclusion:
The Equity Multiplier is a very important ratio to analyse the companies financing
mix. Through analysis of HPL financials, we analysed that the company is much depending
on financing their assets through debt. It can also be concluded that The Hascol Petroleum
has become more leveraged company. Therefore it is highly recommended that the company
should get maximum amount of Cash by increasing its Net Income which can be increased by
being more cost efficient & selling and increasing outstanding number of shares.
Sources:
www.reuters.com
www.linkedin.com
www.slideshare.net
www.hascol.com