Islamabad August 9 2021: Oil and Gas Regulatory Authority (OGRA) has acknowledged the satisfactory completion of HTL's second Oil Storage Facility situated at Nowshera, KPK to be in compliance with the applicable standards, as per company notice published at Pakistan Stock Exchange (PSX).
OGRA has based its acknowledgment on its Third Party Inspection Report which concluded that HTL's Oil Storage Facility at Nowshera-KPK meets the mandatory requirements of "Regulations/ Technical Standards for the Petroleum Industry (Depots for the Storage of Petroleum Products) S.R.O. 624(1)2009 as well as license by Department of Explosives.
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FINANCIAL PERFORMANCE – CONSOLIDATED
During the period under review, your Company earned profit after tax of Rs508 million, compared to a loss after tax of Rs92 million during the corresponding period of last year. The consolidated earnings per share increased to Rs4.35 as compared to loss per share of Rs0.80 during the corresponding period. The quarter's net income of PKR 203 million was the highest ever recorded by the Company in the third quarter of any fiscal year (a seasonally slower quarter for us generally). The Group's statement of financial position shows an impressive improvement with our short term borrowings levels reduced to Rs 580 million compared to Rs1 billion on June 2020 while our carrying stocks reached Rs 1.53 billion. The current ratio has also improved to stand at 1.46 against 1.33 on June 2020. This continued improvement in working capital position reiterates our ongoing commitment to financial strength and efficiency while creating shareholders' value.
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OPERATIONAL PERFORMANCE LUBRICANTS SEGMENT
During the nine months' period ended, the lubricants segment net revenue has reached PKR5,788 million, up by 61.5 percent compared to PKR 3,585 million during the corresponding period. Gross profit and profit from operations has been increased by PKR 973.85million and PKR 423.26millionrespectively in comparison to the corresponding period. Hi-Tech Blending (Private) Limited played an important role in the growth of lubricant segment of the Group for the period. The plant started local blending of Fighter Brands (in-house produced ZIC Lubricants) in November 2018 and during the period under review saw a 92 perent volumetric growth in this product line over the same period last year. We expect the blending plant to continue its strong volumetric and profitability growth in the future. Therefore, the Group is expanding its blending facilities with the establishment of new LCs for additional blow molding machines, storage tanks and filling lines. Pakistan's automobile industry witnessed a significant growth due to new entrants' in the market and a rebound in economic activity. Pakistan Automotive Manufacturers Association (PAMA) released latest auto sales data for nine months ended March 21, portraying an increase of 36% year on year basis to 134,718 units which is a healthy sign for lubricants segment of the Company. To reap benefits of the growth in automobile sector, the Company has signed contracts with Hyundai Nishat Motors (Private) Limited and M/S Regal Automobile Industries Limited (DSFK) for use of ZIC lubricants in their after sales services in all variants of cars sold by them. Company is also in negotiation with other vehicle manufacturers and is expecting a favorable outcome.
The Company has also widened the scope of its Distribution Network beyond the geographical borders of Pakistan and have entered into a Non-Exclusive Distribution Agreement with M/S Osman Ghani Limited (an Afghanistan based company) for export of locally blended ZIC Brand products. It is expected that this will offer significant increase in our turnover in the near future.
During the period under review, the marketing and sale of petroleum products through HTL Fuel stations reached PKR 1,465 million translating into the gross profit of PKR 66.4million and loss from operations of Rs36.1 million. The loss is mainly on account of fixed costs, including depreciation, which will be better absorbed with the expansion of this segment's operations through increase in number of fuel stations. The petroleum segment achieved accounting breakeven for the quarter. Currently, the Company has twenty three fuel stations operational in Punjab with 3 under construction/ under approval process with OGRA. Expansion of our Sahiwal Oil storage depot is in final stages; which will allow us to substantially increase the number of our HTL Fuel Stations in Punjab Province, in addition to the twenty-six we are already permitted. In order to safeguard continuous uninterrupted supply of petroleum products. The Company also plans to build its own storage near the oil pipeline terminal for which agreements are under process. The Nowshera Oil storage depot is complete in all respects and third party inspection has already been carried out. The Company expects to start marketing and sale of petroleum products in Khyber Pakhtunkhwa Province soon after receiving formal approvals from Oil and Gas Regulatory Authority (OGRA) in near future. It will enable the Company to operate thirty-five HTL Fuel Stations in Khyber Pakhtunkhwa Province. INDUSTRY'S OVERALL PERFORMANCE Petroleum and lubricant sales in the country clocked in at 1.49 million tons in March 2021, depicting a gigantic growth of 44 percent on year-on-year basis. The growth in sales volumes is primarily attributable to economic growth driving retail fuel sales, surge in trade activity (exports and imports) and better agricultural yields resulting in higher sales of HSD, double digit growth in automobile off take and preference to private transport over public transport to reduce chances of contracting Covid-19, and strict surveillance on borders and various parts of country in order to control supply of illegal or dumped fuel from neighbouring countries.
ENTRANCE INTO NEW BUSINESS VENTURE THROUGH HI-TECH BLENDING (PRIVATE) LIMITED
WHOLLY OWNED SUBSIDIARY The Group has decided to avail new business opportunities in the plastic packaging industry by venturing into the production of plastic products for external customers and third parties. This business will be pursued through our wholly-owned subsidiary, Hi-Tech Blending (Private) Limited (HTBL). HTBL has produced bottles for its own needs since 2016 for both its locally blended and locally filled products. It has attained substantial experience in extrusion blow molding and injection molding. The Company has been exploring the provision of similar plastic packaging to outside customers for some time. In addition, the Company has been approached by potential large scale users of plastic bottles for supply of specially designed plastic bottles to meet their varied specific needs. For this purpose, the process for import and installation of requisite machinery in the Extrusion Blow Molding and Feeding Recycling System section of the Plant Site of HTBL has been initiated for the production of various quality products for external customers/local third parties.
POSITION OF IPO FUNDS
At 31 March 2021, the un-utilized proceeds of Rs516.49 million of the initial public offer have been kept by the Company in the shape of bank balances, term deposit receipts and mutual funds. These can only be utilized for the purposes of expansions related to OMC project (petroleum segment) of the Company