PSO

Overview:

Pakistan State Oil is the nation's largest oil marketing company, providing its customers with fuel for
transportation, energy for heat and light, retail services and petrochemicals products for industrial and
individual needs.

Company Profile

Pakistan State Oil Company Limited ( the Company ) is a public company

incorporated in Pakistan in 1976 and is listed on the Pakistan Stock Exchange
Limited. The registered office of the Company is located at PSO House,
Khayaban-e-Iqbal, Clifton, Karachi. The principal activities of the Company
are procurement, storage and marketing of petroleum and related products. It
also blends and markets various kinds of lubricating oils.

The business units of the Company include the following:

 Head Office PSO House, Khayaban-e-Iqbal, Clifton, Karachi.

 Lubes Manufacturing Plant National Refinery Limited, Korangi,
Karachi. Kemari Oil Terminal, Kemari, Karachi.

Regional marketing, sales offices and invoicing points are located across the
country. The Company owns retail operation sites and sites operated through
dealers across Pakistan and Northern areas, the details of which is
impracticable to disclose in these financial statements as required under
Paragraph 1 (i) of Part I of the 4th Schedule to the Companies Act, 2017.

The Board of Management - Oil (BoM) nominated by the Federal Government

under section 7 of the Marketing of Petroleum Products (Federal Control) Act,
1974 ( the Act ) manages the affairs of the Company. The provisions of the
Act shall have effect notwithstanding anything contained in the Companies
Act, 2017 (previously Companies Ordinance, 1984) or any other law for the
time being in force or any agreement, contract, Memorandum or Articles of
Association of the Company.

The Pakistani government's move toward a nationalized oil sector began in 1974, with
the passage of Petroleum Products (Federal Control) Act. Under the new legislation, the
government took control of the two Pakistani oil companies, Pakistan National and
Dawood Petroleum. Following the takeover, Dawood was renamed Premier Oil
Company. Also in 1974, the government founded a new agency, the Petroleum Storage
Development Corporation (PSDC). That entity was subsequently renamed Pakistan
State Oil (PSO) in 1976.
Following the adoption of the new name, PSO then took over both Pakistan National
and Premier, in what was then the largest ever merger to take place in Pakistan. One
month later, the government also took over the operations of Esso in Pakistan, which
were placed under PSO. As such, PSO became the undisputed leader in the Pakistani
market.
Geographical Presentations
Pakistan State Oil reporting name: PSO) is a Karachi-based Pakistani state-owned petroleum
corporation involved in marketing and distribution of petroleum products. It has a network of 3,689
petroleum filling stations, out of which 3500 outlets serve the public retail sector and 189 outlets
serve wholesale bulk customers. Pakistan State Oil is Pakistan's largest fuel marketing company.

Pakistan State Oil Company Limited is a public company incorporated in Pakistan in 1976 under the repealed
Companies Act, 1913 (now Companies Act, 2017) and is listed on the Pakistan Stock Exchange Limited.

Performa Statement

Corporate Valuation:

Free cash flow (FCF) represents the cash a company generates after accounting
for cash outflows to support operations and maintain its capital assets.
Unlike earnings or net income, free cash flow is a measure of profitability that
excludes the non-cash expenses of the income statement and includes spending
on equipment and assets as well as changes in working capital from the balance
sheet.

Interest payments are excluded from the generally accepted definition of free
cash flow. Investment bankers and analysts who need to evaluate a company’s
expected performance with different capital structures will use variations of free
cash flow like free cash flow for the firm and free cash flow to equity, which are
adjusted for interest payments and borrowings.

For PSO, free cash flow for next five projected years is negative because Net Operating
Working Capital of the company is mostly in negatives. Also, large cash outflows describes the
negativity of net operating working capital being negative.

Negative cash flow occurs when a company's cash outflow over a certain period of time is higher
than its cash inflow. Cash outflow is a fancy way to say "expenditures;" it can apply to any operating
costs, expansion expenses, investments and other costs to the company. Cash inflow is a fancy was to
say "profits;" cash inflow is gross, meaning no expense has been subtracted from the profits. Negative
cash flow at the end of a month or quarter can be a bad sign, but it is not necessarily a sign of
financial weakness. In case of PSO, The cash flow is negative primarily due to loans repaid during the year
on account of recoveries from power sector, recoveries of exchange loss on FE borrowings from Government
and decline in stock in trade.

Value of NOPAT is -6,392,565 in 2025 which is extremely low with respect to EBIT which also low.

Some other analysis regarding this includes:

  Gross profit ratio has declined primarily due to significant inventory losses during the year on account
of decline in international oil prices.
 Net loss ratio vs. net profit ratio in FY2022 due to significant inventory losses during the year on
account of decline in international oil prices and increase in finance cost on account of higher average
policy rate of SBP in FY20.
 EBITDA margins has decreased primarily due to net loss in FY21 on account of reasons mentioned
above vs profit in FY2020.
 Negative return on shareholders' equity and capital employed is mainly due to net loss during the year
on account of reasons mentioned above.
 Increase in operating leverage is due to decline of 68.7% in EBIT against a decrease of 4.0% in net
sales.

Assuptions:

Dividentds
Looking into the past 5 years company is paying regularly dividends to its shareholders unless it’s net
income in year 2020 is negative which means company is in loss so, in that particular year due to which
it doesn’t pay dividend in that year.