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Byco Petroleum Limited Pakistan

A player in the downstream sector of oil and gas, Byco Petroleum Pakistan Limited, is involved in a diverse set of operations including petroleum refining, petroleum marketing and chemicals manufacturing to petroleum logistics. The ownership structure is such that from June 30, 2011, Byco Oil Pakistan Limited, a wholly owned subsidiary of an international joint venture, became the ultimate parent company for Byco Petroleum Pakistan Limited with 86.98 percent ownership in the company.

Byco Petroleum has one wholly owned subsidiary, Byco Terminals Pakistan Limited.

Byco Petroleum Pakistan Limited (BYCO) operates in two business segments: oil refinery business and petroleum marketing business. Its oil refining plant has a capacity of 35,000 barrels per day and the petroleum marketing business was launched in 2007 as a step of forward integration. It refines various petroleum products such as LPG, naphtha, motor gasoline, kerosene, jet fuel, HSD, furnace oil, HOBC. The refined products are then marketed by its marketing wing; the firm has around 219 retail outlets for marketing of POL products.

FY13 HIGHLIGHTS Where FY12 was a destructive and a notorious year for Byco Petroleum Pakistan Limited, FY13 was tremendous as far as revenues are concerned. However, earnings remained in the red zone for the company. Amid liquidity concerns, depreciating local currency versus dollar, the turnover tax regime, the refinery and the oil marketing firm saw a 3.4 times increase in its revenues in FY13. This was verily due to increase in refinery throughput.

Besides better top line, better working capital and stringent inventory management supported the gross profit of the company; gross margins turned positive in FY13 from negative margins in FY12. However, higher costs like transportation, power and fuel pulled down the earnings in the loss area, eating away all the gains that came from the top. Profit after tax plunged from a loss of about Rs 3 billion in FY12 to a loss of about Rs 5 billion in FY13.

FINANCIAL PERFORMANCE 9M FY14 Byco Petroleum finally saw a turnaround in FY13, and in 9M FY14 its growth trend in revenues continued even though FY14 has remained turbulent. After witnessing significant deterioration against the greenback, the rupee went up the recovery path in the third quarter of FY14, appreciating by around seven percent while it lost value by six percent in the first half of FY14. However, this volatility in exchange rate gave rise to exchange losses for the firm which hampered the refinery business of the firm.

In 9M FY14, the firm witnessed a growth of 42 percent year on year in its revenues due to improved marketing and sales and logistics management. Increase in refinery throughput and better sales to third parties by the OMC segment also supported the top line. Growth in petroleum marketing business is evident from a further increase in the number of retail outlets by 15, bringing the total number of retail outlets to 246.

Because of this, the firm's gross profit doubled in 9M FY14 versus similar period of FY13. Gross margins improved from 0.78 percent in 9M FY13 to 1.12 percent in 9M FY14. But, with increased activity comes increased expenses. The benefits of increase in revenues and improvement in gross margins were eroded by increase in selling and distribution and administrative expenses characterised by transportation, product handling charges and other costs. The reclining other income and stubborn financial charges further ate away the bottom line. Byco registered a net loss after tax of Rs 2.75 billion in 9M FY14 compared to net profit of Rs 555 million in 9M FY13

Liquidity The company has continued to wrestle with working capital constraints for some time now, especially after the 2008 crisis. However, better gross profit helped the firm meet the condition laid out in its debt restructuring agreement and as a result, principal repayment of Rs 800 million was made during the period.

OUTLOOK Improved prospects in shape of synergies from the new refinery lie ahead for the company. The company's holding company, Byco Oil Pakistan Limited (BOPL) has put up the largest oil refinery of Pakistan with a capacity of 120,000 barrels of oil per day. This refinery would help Byco deal with working capital issues.

The board of Byco Petroleum Pakistan Limited has proposed to sell the isomerisation plant to Byco Isomerization Pakistan (Private) Limited-a wholly-owned subsidiary of Byco Petroleum Pakistan Limited. Furthermore, the refining business is also likely to benefit from Byco Terminal which will provide terminal services to both group refineries. And the company has also embarked upon a plan to invest in a petrochemical complex.

Source: Company accounts

Copyright Business Recorder, 2014


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Banking Review 2014

Foreign Debt $62.649bn
Per Cap Income $1,512
GDP Growth 4.24%
Average CPI 8.6%
Trade Balance $-2.378 bln
Exports $2.016 bln
Imports $4.394 bln
WeeklyAugust 24, 2015
Reserves $18.678 bln