Refinery: NATIONAL REFINERY LIMITED - Year Ended 30-06-2005

After the under review balance sheet date of the company, this public sector refinery has been privatised and Attock Oil Group has taken over 51% stake in its euqity alongwith the management of the company.
The takeover of the company was at the most opportune period as the all time highest prices of crude oil have increased the company's sales and margins. At the same the continued reform of the present government has accelerated the industrial activity in the country.
This has enhanced sales of cars and motor bikes fuelling the demand for motor gasoline. Hence increased sales of commercial vehicles, trucks and buses have increased sales of HSD. Hence the company posted all time high net sales and profit after taxation. Resultantly, the reserves and break-up value of the share were also all time high reflecting robust financial backbone of the company.
The strong financial position has been also reflected in Pacra (Pakistan Credit Rating Agency) assigning 'Triple A' rating for long term and short term A one plus rating. The company has successfully completed the implementation of SAP modules in finance, materials management, plant maintenance and payroll. The ERP is scheduled to also cover SILO managed and production.
National Refinery Limited (NRL) was incorporated in Pakistan on August 19, 1963 as a public limited company. It is emphasised in the report under review that the company enjoys seasoned and proficient technical management aided by an equally experienced workforce.
NRL is a petroleum refining and petro chemical complex engaged in manufacturing and supplying a wide range of fuel products, lubes, BTX asphalt and speciality products for domestic consumption and export.
NRL was privatised and management handed over to the new owner (Attock Oil Group) on July 7, 2005. The Group is being represented through shareholding acquired by Pakistan Oilfields Ltd, (POL) Attock Refinery Limited and Attock Petroleum Limited.
The company's plants have refining capacity of 2.710 million tones per annum (tpa) of crude oil, two lube refineries with designed capacity of 176.2 thousand tpa of lube base oils and a BTX unit with designed capacity of 25 thousand tpa. It is the only refinery producing LBO in Pakistan.
NRL's gross storage capacity both at the refinery site in Korangi (Karachi) and Keamari Harbour, comprises about 163 thousand tones (20 days) for crude and 90 thousand tones for petroleum products. The petroleum products are pumped from NRL storage tanks to oil marketing company (OMC) terminals or to Karachi airport by pipelines. Other products such as LBO (Lube Base Oils), asphalt, chemicals, BTX are transported through truck lorries.
The significant and inherent advantage enjoyed by NRL is due to its ability to change its product mix (both fuel and lube), due to relatively higher operational flexibility. This enables the company to capitalise upon some demand-supply imbalance with primary focus on value added products. The directors emphasised in the report that product mix was constantly monitored for optimisation of yields, matching of market demand, maximising value addition and enhancing profitability.
During FY 2004-05, the year under review the unprecedented increase in prices of crude oil and refined products, resulted in higher net sales and gross margins. Net sales amounted to Rs 60.741 billion (FY 2003-04: Rs 40.4 billion) registered impressive growth of 50.35%.
The country witnessed unprecedented rise in demand for motor gasoline and HSD (High Speed Diesel) due growth in car and motorcycle sales. With the acceleration in the industrial activity alongwith growth in commercial vehicle sales and truck sales induced higher consumption of HSD.
Fuel refining profitability grew by 30.8% mainly on account of strong margins and increase in local consumption.
During the year, NRL exported naphtha and LBO and fetched all time high value of Rs 9.14 billion compared to Rs 4.75 billion last year. Lube refinery has been reported to perform well as it contributed Rs 1.274 billion towards the profits of the company.
During the year the company earned an after tax profit of Rs 2.121 billion which is higher than the previous year's and the highest ever profit in the history of the company. The reserves have risen to all time high at amount of Rs 6.034 billion. Definetely the performance is evidence of the competitive edge which NRL enjoys in the oil refining sector.
The company has excellent track record of regular profit distribution at high pay out rates. For the year the company announced dividend in cash @125% similar to the preceding year.
The company's share is highly priced at stock market and present market price is Rs 413.30 a share.

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Performance Statistics                (Million Rupees)

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30th June                            2005         2004

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Share Capital-paid-up:             666.39       666.39

Reserves:                        6,033.54     4,912.61

Shareholders Equity:             6,699.93     5,579.00

Deferred Liabilities:                   -       182.89

Current Liabilities:            11,732.49    11,121.62

Fixed Assets:                    2,121.58     1,583.03

Intangible Assets:                  21.26            -

Deferred Taxation:                 375.68       321.68

L.T. Investment:                        -            -

L.T. Loans & Deposits:              64.41        64.39

Current Assets:                 15,849.49    14,914.41

Total Assets:                   18,432.42    16,883.51

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Sales, Profit & Pay Out

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Net Sales:                      60,740.85    40,399.86

Gross Profit:                    3,835.96     2,956.54

Operating Profit:                3,174.07     2,589.69

Other Income:                      420.86       629.08

Finance (Costs):                   (13.20)     (18.58)

Depreciation & Amortization:      (168.22)    (148.21)

Profit Before Taxation:          3,294.66     2,764.52

Profit After Taxation:           2,120.51     1,849.51

Dividend Cash Rs Per Share:         12.50        12.50

Earnings Per Share (Rs):            31.82        27.75

Share Price (Rs) on 10/11/05:      413.30            -

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Financial Ratios

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Price/Earning Ratio:                13.00            -

Book Value Per Share:              100.54        83.72

Price/Book Value Ratio:              4.11            -

Debt/Equity Ratio:                  0:100        0:100

Current Ratio:                       1.35         1.34

Asset Turn Over Ratio:               3.30         2.39

Days Receivable:                       10           22

Days Inventory:                        21           26

Gross Profit Margin (%):             6.32         7.32

Net Profit Margin (%):               3.49         4.58

R.O.A (%):                          11.50            -

R.O.C.E (%):                        31.65        32.10

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Capacity & Actual Performance (Million Metric Tons)

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(A) Fuel Section Throughput of Crude Oil

Annual Designed Throughput

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Capacity:                           2.711        2.711

Actual Throughput:                  2.742        2.609

Capacity Utilization (%):          101.14        96.24

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(B) Lube Section Throughput of reduced Crude Oil

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Annual Designed Throughput Capacity:0.620        0.620

Actual Throughput:                  0.698        0.707

Capacity Utilization (%):          112.58       114.03

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