FINANCIAL MANAGEMENT

FINAL PROJECT

Hascol is a Pakistani petroleum and oil marketing company which is active in

downstream sector.The company has distribution rights of German lubricating oil
Fuches in Pakistan. Its petrol and service stations are rapidly increasing in Pakistan all
around.
On May 12, 2014 the Company was listed on the Karachi, Lahore and Islamabad
Stock Exchanges of Pakistan (due to demutualization, all stock exchanges are now
integrated into Pakistan Stock Exchange).

Vision statement:
To become the leading energy marketing company in Pakistan through operational
excellence, talent management, business diversification and sustainable expansion.

In December 2016, The sales revenue of company was 997 Billion rupees which
increased 74% to 174 Billion in 2017. Then there was 34.5% increase in 2018 and the
sales revenue was all time high in its record, But in 2019 it fell to a 66% Decrease.
Due to the industry-wide contraction in volumes due to slower economic activity
in 2019, drastic decline in volumes for HASCOLs has been due to shortage of
working capital to procure the product, and thus lower sales revenue. This was
because of market distress.
Sale Forecast:
While it is usually unwise to decipher the direction the company’s financials would
take with only 1Q performance at hand, it is quite obvious that HASCOL is in trouble.
Firstly, the first three months of 2020 will follow more than a quarter of much weaker
macro-economic conditions when the lockdown was imposed, and demand restricted
further as the country went through its peak of Covid-19 cases. So there was a chance
of more 30-40% decrease.

HASC Income statement

Period Ending: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Total Revenue 156334.59 234444.13 174239.63 99715.78
Gross Profit -1621.77 10964.67 7388.98 5130.11
Operating -15199.48 5586.91 4456.45 3065.73
Income
Net Income -25876.76 -218.24 1399.83 1207.85
All values in Million Pkr*

HASC Balance sheet

Period Ending: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Total Assets 87563.56 73927.35 58094.41 45120.03
Total 98214.68 62598.77 47830.85 39023.69
Liabilities
Total Equity -10651.12 11328.58 10263.56 6096.34
All values in Million Pkr*

Sustainable and Internal Growth rate:

The sustainable growth rate (SGR) is the maximum rate of growth that a company or
social enterprise can sustain without having to finance growth with additional equity
or debt. The SGR involves maximizing sales and revenue growth without increasing
financial leverage.

SGR= ratio of equity x retention ratio

IGR= ratio of asset x retention ratio

year 2019 2018 2017 2016

EPS Growth (11,931.48) (112.62) (9.03) (0.21)
(%)

Capital Structure:

The capital structure is the particular combination of debt and equity used by a

company to finance its overall operations and growth. Debt comes in the form of bond
issues or loans, while equity may come in the form of common stock, preferred stock,
or retained earnings.

Hascol capital structure

2016
Asset Liability and Equity
45120 38553
6566
2017
Asset Liability and Equity
58094 47830
10263
2018
Asset Liability and Equity
73930 61449
12481
2019
Asset Liability and Equity
87554 96475
-8922

The core problem for the company, of course, has been the fact that the government
regulates prices of oil products sold in the country and does not adjust prices fast
enough to keep pace with the extent to which prices change in international markets.
As a result, companies are often stuck with inventory that they bought at much higher
prices and are forced by the government to sell at much lower prices. This is
especially a problem for Hascol, which has bigger inventories than any other oil
marketing company.

WACC:
The weighted average cost of capital (WACC) is a calculation of a firm's cost of
capital in which each category of capital is proportionately weighted. All sources of
capital, including common stock, preferred stock, bonds, and any other long-term
debt, are included in a WACC calculation.

WACC = [(weight of equity x cost of equity) + (weight of debt x cost of debt)] X

(1-tax rate)

HASC Cash Flow Statement

Period Ending: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Period Length: 12 Months 0 Months 0 Months 12 Months
Cash From -4325.52 -7819.88 1276.06 2599.76
Operating
Activities
Cash From -14618.26 -5516.65 -5829.35 -3581.8
Investing
Activities
Cash From 3413.29 1518.04 4747.67 2259.61
 Financing
Activities
Net Change in -15530.49 -11818.49 194.39 1277.57
Cash
All values in Million Pkr*