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ATTOCK REFINERY LIMITED

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Highlights - Corporate News

Attock Refinery Limited was incorporated as a private limited company in 1978, taking over the refinery operations of Attock Oil Company (AOC).

It was later converted into a public limited company in 1979 and is listed on all the three stock exchanges of the country.

The company is a member of Attock Group of Companies, a fully integrated group that covers all segments of oil and gas from exploration, production and refining to marketing of a wide range of petroleum products.

The group is also engaged in manufacturing and trading of cement, information technology, etcThe company pioneered the crude oil refining starting as early as 1922.

At present Attock Refinery Limited has a total capacity of 42,000 bpd, possessing the capability to process the lightest to the heaviest crude.

Refinery products Attock Refinery Limited produces a wide range of petroleum products including both energy and non-energy products.

Its key products include motor gasoline.

Kerosene oil, high speed diesel, high and low sulphur furnace oil, aviation fuels (JP-1, JP-8), Naphtha, Light diesel oil, LPG, solvent oils, etcIt is also engaged in the export of various high grade and high specification products including naphtha, kerosene oil, HSD and JP-8.

Operational activates During the fragile year, the company operated under a challenging financial environment due to the rising debt payables by OMCs especially PSO.

These amounted to around to Rs 41 billion during the year.

However, after efforts to resolve circular debt payments to and from Attock refinery Limited, the figure hovered around Rs 17 billion on June 30, FY11.The operational efficiency of the refinery stood at 97 percent.

The refinery throughput for FY11 was 14.289 million barrels versus 13.493 million barrels in FY10.

During FY11, Attock Refinery received a total 14.296 million barrels of crude oil versus 13.704 million barrels in FY10 from 70 southern and northern oil fields.

As a result the company was able to supply 1.755 million tons of petroleum products during the year,

Positive sales growth The refinery is involved in the selling and distribution of various refinery products.

The growth in sales revenue was almost 32 percent during FY11 versus 14 percent in FY10.

High speed diesel and motor gasoline account for about 65 percent of the company's revenue.

Naphha and aviation fuels lie next in terms of share in the total revenue.

Profitability bouncing back During FY11, the prices of crude oil were highly skewed towards higher side and petroleum products fetched better prices.

However, the gross refinery margins remained favourable..After a weak FY10, FY11 witnessed a surge in the profits and thus the profit margins.

The gross margins have historically been very low as cost of sales has chopped of majority of the revenue.

The company experiences a very high cost of sales.

This has been primarily due to the crude purchases to meet the existing demand.

The refinery segment posted a healthy profit of over 1 billion versus a net loss of almost half a million rupees in FY10.

This was primarily due to the better sales revenue and falling finance cost amid high cost of crude oil purchases.

Income from non refinery segment provides a buffer to the profits, helping the company to inch up its profitability, extremely visible in FY10.

Liquidity and Operations The company does not have any long term financing.

The short-term liquidity position of the company is satisfactory as the current ratio moved around 1 for 1FY11.

Total asset turnover for the Attock Refinery Limited rose to 1.83 in FY11 after falling significantly in FY10 depicting a low profit margin on its products.

Outlook The future of Attock Refinery should allow it to strengthen the gains made in FY11.

The management of the company envisions a positive impact of deregulation of petroleum product prices on gross refinery margins.Moreover, the company has taken up the installation of isomerization plant that will allow the company to convert its naphtha into premier motor gasoline, a value added product.

To address the refining needs in the country, the company plans to take steps to increase the refining capacity.

Despite satisfactory growth in FY11, the payout expectations from the company remain dull.

This is primarily due to various expansion projects taken up by the company.

Also, an important factor to look at for FY12 profitability is the course deemed duty takes.

A reduction in deemed duty on high speed diesel as it could seriously impact the refinery's profitability amid rising crude oil prices.

Source: Company accounts

COURTESY: Economics and Finance Department, Institute of Business Administration, Karachi, prepared this analytical report for Business Recorder.

DISCLAIMER: No reliance should be placed on the [above information] by any one for making any financial, investment and business decision.

The [above information] is general in nature and has not been prepared for any specific decision making process.

[The newspaper] has not independently verified all of the [above information] and has relied on sources that have been deemed reliable in the past.

Courtesy: Business Recorder

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