Karachi June 21 2021: Hascol Petroleum has approved the resignation of its external auditors, M/s Grant Thornton Anjum Rahman, Chartered Accountants, for the year 2020, as per the notification issued at PSX.
Under Company’s Whistleblower Policy, the Company’s internal Auditor received a Whistleblower statement and evidence from within the company that in 2019 a series of false purchase orders were created and entered into the company’s Accounts
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The Internal Auditor has referred the matter to the Board Audit Committee which concluded that there is sufficient evidence in support of the accusation to justify referring the matter to the full Board of Directors (BOD). The BOD has yet to receive the detail report on this matter.
Whistleblower information, if proven correct, may require the company to restate its past Income Statements and past Current and current Balance sheets.
Earlier, in March quarter 2020, the shareholders injected PKR8 Billion as additional capital, to bolster the operations and address the liquidity position of the Company, both of which had been adversely affected in 2019. But due to the lockdowns imposed by the government to tackle the COVID 19 situation; not only the sales volumes decreased due to a drop in consumption of oil products, the unprecedented fall in oil prices and devaluation of currency also had a severe dampening effect on the Company’s financial performance.
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In addition to the above, cost of servicing an over-sized debt, high capacity charges on storage arrangement, provisioning against some doubtful assets and restatement of some liabilities contributed to a net loss of PKR3 Billion for the three months ended September 30, 2020; and PKR20.9 Billion for nine months ended September 30, 2020. As a result, the shareholder’s deficit as of September 30, 2020 rose to PKR 29.5 Billion, and the current ratio fell to 0.30 due to high short term debt burden.
Company’s equity is at negative PKR29.5 billion as of September 2020 accounts
The Company’s lenders agreed to partially convert short-term debt to long-term, which was completed in September, 2020 to improve the Company’s debt maturity profile. However, due to the subdued economic conditions and volatility of the oil markets, the expected results of above mentioned additional equity injection and conversion of short term debt to long term debt could not be positively materialized.
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