Clover Pakistan Limited

Clover Pakistan Limited, established in 1986 as a public limited company, is listed on the Pakistan Stock Exchange. It has under its belt several businesses, in both categories of goods and services; these include auto care, business solutions such as provision of office equipment, document management among others, and lastly food and beverages.

Its food and beverages product portfolio comprises of spices, jams, pickles, ketchup and sauces, ready-made pastes, grains and lentils.

Shareholding pattern

Fossil Energy Private Limited is the largest shareholder of Clover Pakistan Limited, holding a significant 82.96 percent of the total shares, making it the holding company. Fossil Energy (Private) Limited is the holding company of other companies also such as Hascombe Business Solutions (which has now merged with Clover Pakistan), VOS Petroleum and Petrotech. Another considerable shareholder of the company is the local general public which holds 13.92 percent of the shares while the 'others' hold the remainder of the shares. Directors, CEO, their spouses and minor children hold a mere 0.01 percent

Historical performance Clover Pakistan Limited accounts show a fluctuating historical performance, with the years 2016 till 2018 showing significant reduction in the overall business with a major dip in FY17, whereas some revival is seen in FY19. The top-line has experienced a positive trend since FY17. Similarly, gross and net profit margins have also shown more or less the same trend since FY18; gross profit margins have increased from 20 percent in 2018 to 36 percent in 2019. This is mostly due to a remarkable jump in sales which exceeds the increase in cost of sales. Despite the plunge in sales of FY17, standing at a mere Rs600,000, the net profit margin recorded is highest in this year because of a decrease in taxation. As compared to the years before and after FY17, the taxation for FY17 was quite low allowing for net profit margin to soar. However, despite the increase in sales, the net profit margin in FY18 reduced to 15 percent owing to an increase in taxation.

In FY19, sales increased tremendously which was also accompanied by an increase in cost of sales. However, it still allowed for a positive gross profit margin. On the expense side, a major increase was also seen in administrative expenses as well as taxation; the latter has seen an increase throughout the sector while the former was due to the company expanding its businesses and therefore, workforce. Due to the current business conditions, almost all the companies have been affected by the increased taxation, however the company still managed to command a net profit margin of 20 percent year-on-year. The company's highest earnings per share of Rs10.31 are seen in FY19.

The firm's inflated current ratio shows that its current assets are covering current liabilities more than is necessary. However, the business has seen some restructuring since the mergers and acquisitions post FY17.

General business insights/changes In 2016, the company did not find an adequate return on investment in money market funds and government securities; therefore, it decided to pay out dividends of a little over Rs562 million. In 2017, Fossil Energy Private Limited acquired 17.68 percent of the issued share capital of Clover Pakistan Limited. In addition, in FY19 the board of directors approved the merger resolution between Hascombe Business Solutions (Private) Limited and Clover Pakistan. Today both the companies are under the control of Fossil Energy (Private) Limited.

Stock performance: Clover Pakistan Limited stock performance has steadily declined from May 2019; it remained volatile in the beginning of the year performing above the market between February 2019 and March 2019. However, as aforementioned, from May 2019 it reduced significantly, thereafter remaining stable to date, seeing an upward trend only until November 2019.

Future outlook The economic slowdown in the economy has affected the business environment across all sectors; the rise in interest rates, the rise in taxation in addition to the currency devaluation has spared no one. Clover Pakistan Limited is no exception. The company recently saw a change in its CEO, with Mr. Abu Talib Haideri being recently appointed whose expertise is depended on to drive the company forward profitably. In addition, the company aims to focus on expanding and diversifying its product portfolio and customer reach along with sustaining running businesses.