Is HASCOL’s loss of Rs25 billion in 2019 engineered?
Aftab Ahmed
Islamabad: Hascol Petroleum Limited (HASCOL) has reported loss due to a massive decline of volumes as a result of regulatory tightening by PSO. HASCOL has also suffered inventory loss in its last quarter which resulted in negative gross margins.
It is worth mentioning to note that by reviewing company accounts it looks that company has engineered some key heads of income statement heads in the fourth quarter of 2019, as done by the company in the second quarter of 2019 in which the company changed its first-quarter published profit of Rs674 million into Rs6.19 billion loss. For the full year of 2019 year, the company has reported a Distribution and Admin expense of Rs4.89 billion, which is lower than Rs5.05 billion reported by the company for nine months of 2019.
How can distribution & admin expenses decline in the last three months of 2019 as the company recorded the highest quarterly sale of ever quarterly sales of Rs48.9 billion in the last quarter of 2019 that creates serious concerns about the credibility of accounts?
Due to the volatile economic environment in 2019 company has also suffered significant exchange loss and reported other expenses of Rs8.79 billion as compared to Rs1.09 billion in 2018. HASCOL has also reversed tax credit of Rs4.55 billion booked in the first nine months of 2019 and in the last quarter has recognized a net tax charge of Rs865 million.
The Company informed stakeholders that due to uncertain/uncontrollable circumstances as a result of COVID-19, our working environment of the business was badly affected due to which the annual results for the year ended 31″ December 2019 are being announced late.
This was mainly because of the hindrance being caused by lockdowns and due to health situation faced by our core staff who were tested positive during the annual audit procedure and resultantly the head office of the Company was closed for quite some time.
The year 2019 had been a tough year for the Company due to significant volatility in the international oil market, and serious currency devaluation in the local economy. The nature of the market itself has changed, particularly as the power sector has steadily reduced its use of fuel oil for electricity generation.
This has combined with punitively high interest rates, which has placed a severe burden on the company’s cost of financing. These circumstances have presented the company with a difficult business climate for its activities.
The effect of all these factors has rendered the company unprofitable in 2019, but it has throughout received valuable support from its sponsors, shareholders, suppliers, and bankers. The successful closure of equity of Rs.8 billion in January 2020, inking of agreement of seven (07) year long term debt of Rs 13.4 billion from various banks, and continued support of the Company’s principal supplier for its working capital are some major events that helped us in generating liquidity and financial discipline. Moreover, the stability of international and resulting local market pricing and recovery of forex losses through GoP approved pricing formula lately has been very positive for Company and has helped in stabilizing the operations and sales of the Company.
The company has begun to reposition itself through organizational restructuring and wholesale cost optimization. These efforts will be continued in the year 2020 as we continue to stabilize the operations of the company and hence the profit and loss of the Company.
With new management and a revised Board, every effort will now be made to turn the corner and restore the company to growth and profitability. Those efforts will be accompanied by keen attention to high standards of governance and ethics in order to ensure that an efficient and respectable company stands behind the Hascol brand.
