MAHEEN FATIMA

ERP: 08479
ATTOCK PETROLUEM LIMITED
INTRODUCTION:
Attock Petroleum Limited (APL) is the fourth Oil Marketing Company in Pakistan to be
allowed a marketing license and started operations in February 1998.
Together supported by the Pharaon Investment Group Limited Holding s.a.l. (PIGL) and
Attock Oil Group of Companies (AOC); PIGL has differentiated worldwide interests in
upstream and downstream petroleum segment, chemicals, property and cement sectors.
APL is one of the major oil marketing corporation in Pakistan having a place with a
completely vertically incorporated gathering covering all parts of the Oil and Gas division of
Pakistan; from investigation, generation and refining to showcasing of an extensive variety
of petroleum items.
In spite of the fact that a generally new contestant in the field of oil marketing, APL has
figured out how to build up its reputation as a dynamic and element association,
concentrated on giving quality petroleum items and administrations in Pakistan and abroad.
The relentless and significant effort of APL's effective approaches, proactive attempts and
visionary outlook has taken it to new heights.
A goal-oriented key corporate arrangement, actualized by a devoted group of experts has
empowered them to maintain an admirable level of development. APL is constantly
extending and its piece of the overall industry and client certainty is becoming efficient.
Managing a two-fold part in the oil market by taking care of one of a kind request of the
locale and in the meantime serving adequately to the necessities of a worldwide customer
base, they have viably entered the business sector and are effectively contending with
settled oil marketing organizations.
Today, with a broad stockpiling, transportation and retail outlet system, APL is resolved to
add to the country's advancement by supplying quality items and provide services which are
past the desires of their clients and different partners.
The Company is adding to a system of advanced petrol pumps, particularly taking into
account far-flung zones of Pakistan, and are essentially adding to the improvement and
extension of the petroleum segment in Pakistan by creating best in class framework for
capacity, taking care of and conveyance of petroleum items to neighbourhood and remote
markets. The Company has likewise infiltrated in the oil send out business and, regardless of
extreme rivalry from other territorial and worldwide players, is in accordance with the
administration's arrangement to exploit Pakistan's remote trade and HR and its vital land
area.
Developing their items and administrations in light of the needs of our esteemed clients,
they approach the test of focusing so as to secure their fulfilment and dedication on two-way
correspondence, unparalleled execution, and encouraging a ceaseless change society in
every aspect of their operations. Entirely sticking to most elevated moral principles, they put

stock in group and natural prosperity and endeavour to keep up quality at all levels, as
exhibited by their Quality Policy Statement and the stringent quality targets we have set for
themselves.
With solid backing and direction from their sponsors, and the constant and devoted
endeavours of their group of experts and professionals, and most importantly, the certainty
and fulfilment of their clients, they are unhesitatingly advancing together making progress
towards greater achievement.

ANALYSIS OF FINANCIAL STATEMENTS:

If we observe the current assets section of the balance sheet of all the years from 2010 to 2015, we
would see that there has been a sharp growth in 2012 from 2011. From then, there is moderate growth
along with fluctuations.
From 2010-2011, there was 14.5% increase which seems pretty moderate. The most significant
variable contributing to such a rise in current asset is stocks in trade. One reason is because in 2010,
oil prices were pretty slacked, at $70 per barrel in May 2010. However, in just one year, it soared up to
$114 per barrel in June 2011. Since, oil is a commodity which has relatively in-elastic demand, APL
needed to buy crude oil in order to ensure smooth supply to all its customers including Government
organizations, power companies, firms and households. This explains why the value of the inventory
was so high in 2011 than in 2010. Moving forward another year, we can observe that there has been a
sharp increase of almost 43% in current assets. The most significant factor contributing is now trade
debtors. Upon inspection of notes to accounts, it can be concluded that APL sold quite a major sum to
(power companies) who are their debtors. The next three years then arent quite significant as
magnitude of change is steady.
It is pleasing to see non-current assets of APL over the period of 6 years. They have grown steadily. If
these assets were held constant, depreciation expense would have eroded their value. However, it is
not the case. The steep rises in fixed assets show that their oil products are in increasing demand and
that they are continuously improving in order to cater to the market.
It is also interesting to see that such steepness in fixed asset purchasing did not seem to have
significant effect on gearing of APL. The trend of long term liability is rising over the years continuously
just like that of fixed assets. Although the percent change is quite significant, however, when in
comparison with the dollar amounts, the change is not much, keeping in view of companys rising fixed
assets.
Next comes the current liabilities which rose gradually from 2010-2011 and then sharply from 2011 to
2012. Then it remained at this level for years onwards. Perhaps the major interpretation that caused it
to rise sharply in 2012 is because the company had trade receivables which were rising as well. This
meant that cash was stuck with them. Paying majority of trade payables at this time where your
receivables arent paying would have had negative impact on its net cash flow. This would have
hindered day to day running of the business as they would have been facing liquidity crisis. Therefore
we believe that it was a key decision in holding of payables.

RATIO ANALYSIS:
LIQUIDITY RATIOS:

Ratio
Current
Ratio
Quick
Ratio

2010
1.63

2011
1.76

2012
1.58

2013
1.75

2014
1.59

1.55

1.35

1.35

1.42

1.24

The Current Ratio in fiscal year 2010 for Attock Petroleum was 1.63x this means that the company can
pay off its current liabilities 1.63 times. The current ratio in fiscal year 2011 rose to 1.76x because the
current asset of Attock rose by Rs 2.8(000) m while the current liabilities only rose by Rs 0.6(000) m.
The current asset rose by a higher rate than the rise in the current liabilities. In the fiscal year 2012 the
current ratio fell to 1.58x which was because the current liabilities rose fromRs12, 613,827 to
17,735,089 which is an increase of 40.6%. However the rise in current assets was only 26.14% i.e.
from Rs22, 247,396 to 28,062,795. This significant increase in current liabilities was caused by the
growing problem of circular debt in Pakistan at that time. Between the fiscal years of 2012 and 2013
the current ratio rose from 1.58x to 1.75x. This increase was caused by a 12% decline in current
liabilities as compared to a relatively smaller decrease in current asset of 2.5%. The decrease in
current liabilities was caused by the payment of circular debt by the government. From fiscal year
2013 to 2014 the current ratio again fell from 1.75x to 1.59x. This was caused by a 26.3% increase in
current liabilities while the current assets only rose by 14.23%. This low increase in current assets was
caused due the use of cash in operations. Trade debts increased by Rs 4,938,185 representing an
increase in receivable balance from power producers and others and also contributed corresponding
increase in trade payables primarily due to increase in customer base.
Now coming on to the quick ratio the change in which occurs due to the changes in inventory.
Inventory is the least liquid asset and the quick ratio shows the liquidity position of the company after
it is subtracted. Although there was an increase in current ratio from fiscal year 2010 to 2011 the quick
ratio decreased from fiscal year 2010 to 2011 due to a 428% increase in stock in trade. The quick ratio
remained constant between fiscal year 2011 and 2012. Although there was a 20.5% fall in stock in
trade, this change was set off from the significant rise in current liabilities. From fiscal year 2012 to
2013 the quick ratio increased to 1.42x because of a 23.7% increase in inventory. In the fiscal year
2014 the quick ratio again fell to 1.24x because stock in trade rose by 31.6%.

PROFITABILITY RATIOS:
Ratio
Gross Profit Margin
Net Profit Margin

2010
4.54%
4.34%

2011
4.19%
3.89%

2012
3.08%
2.70%

2013
3.14%
2.37%

2014
2.90%
2.11%

Gross profit margin is a profitability ratio that measures how much of every dollar of revenues is left
over after paying cost of goods sold. The chart above clearly shows that the gross profit margin for
Attock is continuously decreasing with every passing year. Between fiscal years 2010 to 2011 the gross
profit margin fell by 0.35%. Although the increase in net sales was 32% the subsequent increase in
cost of products by 32.45% brought about this change. The large increase in cost of goods sold was
because the company in order meets the increasing demands purchased large amounts of raw
material. From fiscal year 2011 to 2012 the fall in the gross profit margin was of 1.11%. Although, the
higher oil prices in the international markets along with an increase in volume sold, increased net sales
by 40% the large increase of 41.6% in cost of goods sold caused this decrease in gross profit margin.
This is due to fact that Attock is getting its product from its supplier at higher prices which is causing
the cost of goods sold to increase at a higher rate than the sales revenue. Also price decrease in last
quarter of the year, stiff competition and ban on export of

Petroleum products to Afghanistan during the year led to this decrease in gross profit margin. In fiscal
year 2013 the gross profit margin increased by 0.06%. The increase in sales revenue for fiscal year
2013 was only 8% but a lower increase of 7.6% in cost of goods sold led to this increase. Again
between fiscal year 2013 and 2014 the gross profit margin fell by 0.24%. The net sales figures
increased by 24.55% however a rise of 24.8% in cost of goods sold led to this change. The main reason
for this was stiff completion which led to a higher cost of goods sold.
Net profit margin is the percentage of revenue left after all expenses have been deducted from sales.
The measurement reveals the amount of profit that a business can extract from its total sales. It can
be seen from the graph above the overall profitability of Attock petroleum was in constant decline
between FY 2010 to 2014. From FY 2010 to 2011 the net profit margin of Attock decreased by 0.45%,
now although net sales increased by 32.12% the increase of only 18.42% in net profit brought about
this decline. This low increase in net profit was due to a 113.4% increase in finance cost and a 27.12%
increase in operating expense. Due to stiff competition in the petroleum industry the company had to
increase its expenditure on marketing and advertising, also an increase of 12.9% in property, plant and
equipment caused depreciation to rise. Between the fiscal year 2011 to 2012 the net profit margin fell
by 1.19%. The rise in net sales during the year was 39.7%, but this change was offset due to a 77.4%
rise in finance cost and a 45.5% in operating expense. Now the most part of the 77.4% increase in
finance cost was due to late payments made by the company. Between the fiscal years 2012 to 2014
the net profit margin fell by 0.59%. This was because net profit in this period only rose by 5.01%
whereas the increase in sales was 36.05%. This low increase in net profit was caused by a significant
increase of 117.6% in operating cost, this was because in order to increase its market share the
company had to substantially increase its expenditure on marketing and establishing new outlets.

MARKET VALUE RATIOS

EARNINGS PER SHARE:
EPS is the earning per share, which is the portion of the company's profit allocated to common stock
divided by the number of shares. The ratio cannot judge the future of the company because some
companies might not assign much amount as dividends payable and instead invest the amount on the
company again. This approach is long term both for the company and the shareholders and is more
widely used. The EPS of APL being very high compared with other companies and the price of share
increasing every year makes the APL share a very good one to invest in. The high dividends pay out by
APL can also be to lure the investors' interest.
There is a constant decrease in the EPS of Attock Petroleum Limited which means that the company
started giving lesser amount for the dividends even though the price of share was increasing. They
started thinking long term and this also was the cause of the share price to increase.
In 2012 the industry average's earning per share fell down because of the loss of the companies such
as Byco. This was caused by the low rate of oil in 2012. The EPS of APL is more than double of other
companies which does not show how big the company is and is not a very verifiable source. But the
reason for EPS of APL being high is cause of its huge share price compared to the share price of Byco
and Burshane LPG which is much less.

PRICE EARNINGS RATIO:

The Price to Earnings ratio is a ratio to value a company's current price relative to the earning per
share. Every industry has a different PE ratio, according to our average the oil industry ratio is 5.12. A
lower Price Earnings ratio means that an investor would earn by investing less. APL does not have the
best PE compared to other companies, it is very high. The industry average PE is very low and
investors are always willing to invest in these kinds of shares.

The graph shows that there is more earning in a share with the less price of the share of the industry
averages than that of the APL. The PE Ratio of APL is increasing and every year it gets less suitable for
an investor to invest in it. While the industry average PE ratio is very varied, it goes up and down as
seen in graph. The PE of APL is increasing not because of change in income but it is due to the fact
that the price of share is increasing, in five years the price of share has nearly doubled from 289 to 580
which is healthy for the company.

CONCLUSION:
Listed on the Karachi Stock Exchange (KSE) on March 07 2005, Attock Petroleum Limited is one of the
four oil marketing companies which have been approved a marketing license. Although in the recent
years due to the stiff competition and falling oil prices in the international arena Attock had to go
through turbulent times but through the constant efforts of the management, Attock still managed to
keep a constant rise on their turnover increasing the volume by 8% in FY2014During FY2014 the
international oil prices took a bad tumble falling from USD 108 a barrel to USD 60 a barrel, but Attock
pulled through with their excellent inventory management and handled the shortage crisis ensuring
continuous fuel supplies. One of the major features about Attock Petroleum is that amongst the listed
OMCs in Pakistan, it has one of the highest dividend yield plus it also seems to be immune to the
circular debt issue which has been going on, thus in a period of low interest the stock of Attock
Petroleum is certainly to be of value.

* Charts and Graphs are provided in the excel sheet. Please find the attachment