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INTRODUCTION
PSO is the market leader in Pakistan¶s energy sector. The company has the largest network of retail outlets to serve the automotive sector and is the major fuel supplier to aviation, railways, power projects, armed forces and agriculture sector. PSO also provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 ports. The company takes pride in continuing the tradition of excellence and is fully committed to meet the energy needs of today and rising challenges of tomorrow. Pakistan State Oil, the largest oil marketing company in the country, is currently engaged in storage, distribution and marketing of various POL products. The company¶s current market share of 82.3% in the black oil market and 59.4% share in the white oil market, alone speak volumes about its success.

PSO Major Highlights - FY 2009

Sold 7 million tons of furnace oil ± the highest in the last 8 years Efficiently managed supply to the power sector despite the liquidity crisis Imported approximately 90% of the country¶s POL imports - 3.4 million tons of HSD and 5 million tons of FO Helped in the revenue collection of more than Rs. 161 billion to the GOP (Sales Tax: 97 billion, taxes: 1.4 billion,PDL: 61 billion) Extended support to various charitable organizations in the health & education sector including contribution for the rehabilitation of IDPs due to the Swat operation

HISTORY
The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January 1st; the government took over and merged Pakistan National Oil (PNO) and Dawood Petroleum Limited (DPL) as Premiere Oil Company Limited (POCL). Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC) came into existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23rd 1976. Following that, the ESSO undertakings were purchased on 15th September 1976 and control was vested in SOCL. The end of that year (30th December 1976) saw the merger of the Premier Oil Company Limited and State Oil Company Limited, giving way to Pakistan state Oil (PSO). After PSO¶s inception, the corporate culture underwent a comprehensive renewal program which was fully implemented in 2004. This program over the years included the revamping of the organizational architecture, rationalization of staff, employee empowerment and transparency in decision making through cross functional teams. This new corporate renewal program has divided the company¶s major operations into independent activities supported by legal, financial, informative and other services. Inorder to reinforce and monitor this structural change, related check and balances have been established by incorporating monitoring and control systems. Human Resource Development became one of the main priorities on the company¶s agenda under this

corporate reform. It is due to this effective implementation of corporate reform and consistent application of the best industrial practices and business development strategies, that PSO has been able to maintain its market leadership in a highly competitive business environment.

January 1, 1974

The federal government took over the management of PNO (Pakistan National Oil) and DPL (Dawood Petroleum Limited), renamed into POCL (Premier Oil Company Limited) under marketing of Petroleum Products (Federal Control Act, 1974)
June 6, 1974

The government incorporates ³Petroleum Storage Development Corporation¶ PSDC

August 23, 1976

PSCDC renamed to State Oil Company Limited (SOCL)

September 15, 1976

The Governement purchases ESSO undertakings, vests their control in SOCL
December 30, 1976

The Government merges PNO and POCL into SOCL (State Oil Company Limited) and renames it Pakistan State Oil Company Limited (PSO)

1999

The new vision program is launched with the new logo of PSO.

VISION, MISSION AND VALUES

To excel in delivering value to customers as an innovative and dynamic energy company that gets to the future first.

We are committed to leadership in energy market through competitive advantage in providing the highest quality petroleum products and services to our customers, based on: Professionally trained, high quality, motivated workforce, working as a team in an environment, which recognizes and rewards performance, innovation and creativity, and provides for personal growth and development Lowest cost operations and assured access to long-term and cost effective supply sources Sustained growth in earnings in real terms Highly ethical, safe environment friendly and socially responsible business practices

Excellence

We believe that excellence in our core activities emerges from a passion for satisfying our customers' needs in terms of total quality management. Our foremost goal is to retain our corporate leadership.
Cohesiveness

We endeavor to achieve higher collective and individual goals through team. This is inculcated in the organization through effective communication.

Respect

We are an Equal Opportunity Employer attracting and recruiting the finest people from around the country. We value contribution of individuals and teams. Individual contributions are recognized through our reward and recognition program.
Integrity

We uphold our values and Business Ethics principles in every action and decision. Professional and personal honesty, dedication and commitment are the landmarks of our success. Open and transparent business practices are based on ethical values and respect for employees, communities and the environment.
Innovation

We are committed to continuous improvement, both in New Product and Processes as well as those existing already. We encourage Creative Ideas from all stakeholders.

PRODUCTS AND SERVICES
PSO caters to POL requirements of a wide spectrum of customers comprising the retail consumer, various industrial units, government, power projects, aviation and marine sectors of Pakistan. We are truly the drivers of economy of this country. A network of 3612 retail outlets enables us to reach Pakistanis from Nagarparkar to Sost. We are proud to cater to the fuel and non fuel needs of approximately 2.8 million customers per day. PSO industrial consumer dominance in the government sector can be judged by the fact that all the major government entities like OGDC, Pakistan Army, Pakistan railways, Navy, NLC, PAF Wah and HIT have entrusted PSO to meet their POL needs. Besides supplying fuel to national power utilities like WAPDA and KESC, PSO is the sole furnace oil supplier to all Independent Power Projects (IPPs) in Pakistan with a share of over 80% in furnace oil market. Moreover, PSO is also playing its due role in meeting the growing energy demand of the country. PSO also supplies fuel to industrial units like textile, cement, agriculture, transport etc. Our industrial consumer base includes prestigious entities like the Presidency and the Prime Minister Secretariat, where PSO has developed consumer outlets for timely refueling of their fleets. Furthermore, PSO also serves the fuel needs of both national & international air carriers. We also provide jet fuel into-plane refueling facilities at 9 airports of Pakistan i.e. Karachi, Lahore, Islamabad, Peshawar, Multan, Faisalabad, Turbat, Pasni and Sialkot. We also supply fuel to ships at Karachi Port, Korangi Fish Harbour & Port Qasim. Moreover, we cater to the fuel requirements of Pakistan Navy, Maritime Security Agency, Karachi Port Trust, PNSC, Faisal Marine Oil Services (Pvt) Ltd.

Besides supplying fuel to national power utilities like WAPDA and KESC, PSO is the sole furnace oil supplier to all Independent Power Projects (IPPs) in Pakistan with a share of over 80% in furnace oil market. Moreover, PSO is also playing its due role in meeting the growing energy demand of the country. Major products and services of the company include: RETAIL FUELS: ‡Premier XL ‡Green XL GASEOUS FUELS: ‡CNG ‡LPG CARDS: ‡Fuel Based Cards ‡Reward Based Cards ‡Fleet Management System ‡Vehicle Identification System(VIS) LUBRICANTS: ‡PSO Automotive Oils ‡PSO Industrial Oils ‡PSO Fuel Oils AVIATION & MARINE: ‡Into-Plane Re-Fueling Facility ‡Aviation Customers ‡Marine Products ‡Marine Customers NON FUEL RETAILS: ‡ATMs ‡Auto Car Wash ‡Shop Stop ‡Courier Service Centers ‡Quick Service Restaurant Distribution Channels: With a network of 3612 retail outlets, PSO cater to the fuel and non fuel needs of approximately 2.8 million customers per day. PSO in involved in the distribution of its products and services through its various outlets spread throughout the country, and also at their sites, and through their transport facilities (PSO railway wagons and lorries)

FUNCTIONS OF MANAGEMENT

Setting perfomance objectives and deciding how to achieve them.

Inspiring people to work hard to achieve high performance.

PLANNING

LEADING

CONTROLLING

ORGANIZING
Arranging tasks, people and other resources to accomplish the work.

Mearusing performance and taking action to ensure desired results.

PLANNING AT PSO
Planning: a process that involves defining the organization objectives or goals and developing an overall strategy for achieving those goals and developing a complete hierarchy of plans to integrate and coordinate activities. SHORT TERM PLANS y Short- term Investments: investments in unquoted shares all stated at the lower of cost or break up value. y Short-term Loans and Finances: the company has short-term liabilities of Rs.5525 million from various bands at mark-up rates from 33-38 paisas toRs. 1000/day net of prompt payment rebates. These arrangements are general for a period of 12 months and are receivable subject to payment of repurchase price by specified dates. These facilities are secured by way ofcharge against hypothecation of company s stock of petroleum products and trade debts. LONG TERM PLAN Investments: the company follows the cost methods of accounting for long term investments. The carrying amount is reduced to recognize a decline other than temporary in the value of investments. LONG TERM DEPOSITS Include Rs.15 million which are interest based against dealership for an initial period of10 years. The rate of interest ranges from 7-13% per annum and are expected to be renewed on maturity. Represent interest free deposits from contractors against the transportation of petroleum products and are refundable on the cancellation of contract. CORPORATE PLANNING PSO is striving to add value to its business by introducing modern efficient and innovative business practices to boost corporate performance. Benefits of this value will be given to shareholders and the employees of the company. Corporate planning is about competitive advantage; at this most challenging juncture in PSO s history the focus is on forward thinking of on cutting edge issues. Staffed with professionals having a diverse background in business engineering and computer technology and international experience CP is endeavoring to prepare PSO for the challenges ahead to ensure its sustainable corporate leadership in future based on the best industrial practices. The development of a financial model that resulted in the company s first in depth study on product wise and business wise profitability as well as the establishment of an effective procedural framework for capital budgeting mark the first year of the corporate planning activity in PSO. This has led to classification of authority and criterion for investment decisions efficient project appraisal based on computer modeling and effective monitoring of the status results of investments undertaken. These systems have been adopted by the company for periodic review of corporate performance through management committee meetings. CONTINGENCY FACTORS IN PLANNING LEVEL ON ORGANIZATION Outstanding performance of company was recorded by the board of management and noted by the secretary petroleum during his recent visit. It was because employees worked hard delivered efforts and produced results. During the last six months unnecessary expenses had been curtailed to a great extent; operations improved depot losses cut down and cartage fleet upgraded.

CONTROLLING AT PSO
The process of monitoring activities that are being accomplished as planned and correcting any significant deviations. In the controlling process actual performance is compared with the standard performance. At PSO the standard performance is compared with the performance of Shell. And the total revenues, market share, sales and profits are measured. This is done to have a total outlook of both the companies and helps in deciding who is leading and which of the two organizations is in profit, so that incase of any deviations, it can be corrected to improve the profit, sales, revenues and market share. TYPES OF CONTROL Market Control uses external market mechanisms such as price, competition and related market share to establish standards used in system. Typically used by organizations where products or services are clearly specified and distinct and who face considerable market place competition. PSO is in direct, cut threat competition with shell. PSO surveys the external; market taking into consideration the progress of Shell, because it is its major competitor. It uses Shell s progress to compare for markets control.

LEADING AT PSO
Leadership in PSO has specific focus on managerial leadership. Muhammad Abdul Aleem serves as a Managing Director and Member of Management Board of Pakistan State OilCompany Ltd. Previously, Mr. Aleem served as a SeniorExecutive Vice President of Finance at PakistanTelecommunication Co. Ltd. He served as the ChiefFinancial Officer of Pakistan International AirlinesCorporation. He served as a Director of Pakistan Refinery Ltd. The company revamped its retail operations, upgrading its facilities and further expanding its network. A growing number of the group's retail shops also featured modern convenience stores.PSO also launched a system of pre-paid fuel cards, a public service in a country where cash was often in short supply.

ORGANIZING

B

BUSINESS STRUCTURE OF ORGANIZATION

SWOT ANALYSIS OF PSO

STRENGTHS
Number of outlets Storage facility Logistics Employment power Depos Relations with Govt.

WEAKNESSES
Beauracratic Red Tapism Govt. Policies Lubricant Market

OPPORTUNITIES
Engro Power Plant Collabration Afghanistan's Market Industrial & Trade growth in Pakistan

THREATS
New entrants Eg: Byco Govt. Policies Substitutes in Black Oil Products PARCO

BCG MATRIX APPROACH FOR PSO

HIGH HIGH

LOW

STAR
FURNACE OIL

QUESTION MARK
LUBRIC ANT

BCG
PETROL AND DIESEL LIGHT DIESEL OIL

CASH COW
LOW

DOG

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