Lahore January 16 2022: OGRA, through its letter dated January 11, 2022 as received by Hi Tech Lubricant on January 13, 2022, has further extended/renewed the Provisional License for setting up of an Oil Marketing Company by Hi-Tech Lubricants Limited upto December 31, 2023.
Company had filled application dated November 16, 2020 to the Oil and Gas Regulatory Authority (OGRA) for further extension/renewal of Hi-Tech Lubricant Limited (HTL) Provisional License for setting up of an Oil Marketing Company (OMC) under HTL’s OMC Project, which was initially granted by OGRA to HTL on October 21, 2016 and extended/renewed periodically.
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The principal activity of the Company is to procure and distribute lubricants and petroleum products. During the year ended 30 June 2017, Oil and Gas Regulatory Authority (OGRA) granted license to the Company to establish an Oil Marketing Company (OMC), subject to some conditions. On 31 May 2019, Oil and Gas Regulatory Authority (OGRA) has granted permission to the Company to operate new storage facility at Sahiwal and marketing of petroleum products in province of Punjab. On 20 January 2020, the Company has started marketing and sale of petroleum products. On 21 February 2020, OGRA has granted permission to the Company to apply for No Objection Certificates (NOCs) from concerned departments to setup petrol pumps in Khyber Pakhtunkhwa Province.
During the first quarter ended September 30, 2021, the Company generated PKR 3.8 billion of Gross Revenue with gross margins of 22%.
The lubricants segment generated very healthy gross margins of 34% and the fuel segment 4% gross margins. Total net income generated was PKR 104 million compared to 89 million of last year. The operating profit for the period was PKR 152 million, an increase of 42% compared to same period last year driven by volume growth, cost controls and value chain cost optimization initiatives. This includes almost 10% depreciation of rupee versus dollar in the quarter which hit badly and contributed a foreign exchange loss of approximately PKR 74 million.
Included in the numbers is a loss associated with our OMC segment of PKR 5 million which includes depreciation expense of 18 Million. The Company’s goal is to bring the OMC Segment to breakeven as soon as possible and is building out its pump network and increasing volumes to generate sufficient income to offset the depreciation charges associated with our storage infrastructure. The delay in regulatory approvals associated with our KPK business has delayed this endeavor, though we are hopeful that this approval will be received in the near future. Increasing lubricant sales at all OMC locations remains a key focus for your Company.
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Despite all the challenges posed by the pandemic and rising input costs emanating from surge in the commodity prices, the Company remains cautiously optimistic about the performance in the 2nd half of the year on the back of strong brand equity, continuous initiatives for operational excellence supported by highly committed workforce. We remain committed to deliver value through engine
safety, fuel savings and longer drain periods. We also employ processes and technologies to ensure health and wellness of our employees and business partners.
To support value chain cost optimization initiatives along with the current supply chain constraints, the Company is carrying stocks of approximately PKR 2.8 billion. This not only gives us greater flexibility to serve our customers, but combined with lower interest rates has led to a significant reduction in our operational costs.
Position of IPO Funds
Bank balances of PKR 40.341 million and short term investments of PKR 441.529 million at 30 September 2021 represent un-utilized proceeds of the initial public offer and can only be utilized for the purposes of expansions through OMC Project of the Company.