When it comes to oil marketing downstream sector, Hascol Petroleum Limited (PSX: HASCOL) has built quite a presence in just a decade. Via its strong linkages, it is the second largest OMC today after PSO. Hascol Petroleum Limited was incorporated in Pakistan as a private limited company on March 28, 2001. In 2007 the company was converted into a public unlisted company, while in 2014 Hascol was listed on the Pakistan Stock Exchange Limited. The firm was granted an Oil Marketing License by the Government of Pakistan in 2005 for the purchase, storage and sale of petroleum products like High Speed Diesel, Gasoline, Fuel Oil and FUCHS lubricants.
Shareholding and operations
In November 2015, the global oil trader, Vitol acquired 15 percent of HASCOL along with an option to buy another 10 percent in one year. It exercised this option in 2016, which made Vitol Dubai Limited the largest shareholder in the company. The other prominent shareholders in the company include local firms like Fossil Energy (Pvt.) Limited and Marshal Gas (Pvt.) Limited; and Mumtaz Hasan Khan who is the Chairman and the Director of the company.
HASCOL and Vitol have also entered into a joint venture company for marketing of LNG in the country with 30/70 percent share, respectively. HASCOL has also signed a Technical Services Agreement with Vitol Aviation to enable the firm to start fuelling aircrafts at Karachi, Lahore and Islamabad airports in the country.
HASCOL has a strategic license agreement with FUCHS Middle East (FOMEL), an associate of FUCHS Petrolub based in Germany, to represent the brand in Pakistan. It is also the first OMC to market LPG through its retail network for the automotive sector, and currently there are 15 AutoMax LPG stations across Pakistan in various stages of approval with the Government of Pakistan. The company plans to market LPG for domestic consumers and to develop several auto gas LPG stations across the country in the coming years.
Past performance
Hascol Petroleum has gained prominence in the downstream sector in no time. The firm has capitalised on the growth in POL demand in recent years with a focus on retail side. The company has opened 541 retail outlets in Pakistan till September 2018, as per the information available on the website, which is an increase of over 9 percent over the total retail outlets commissioned up until Dec 2017. The table shows the province-wise breakup where their concentration continues to be in Punjab and Sindh.
Hence, Hascol Petroleum has witnessed aggressive expansion in the storage facilities and volumetric sales. It has overtaken its competitors to become the second largest OMC in Pakistan in terms of volumes with a CAGR of 54 percent over 2011-16.
A look at the company's performance in the last couple of years show that it has been sanguine where its volumes increased by almost 46 percent with improved net margins in FY16. Key highlights for 2016 included the commissioning of ZY terminal at Keamari, which has enabled the company to import larger volumes of motor gasoline; and the completion of a storage facility at Mehmood Kot, which will enable the firm to receive diesel directly via pipeline from Karachi. The company also set up Hascol Terminals Limited with Vitol for 200,000 metric tons of storage at Port Qasim.
In 2017, HASCOL continued to expand its supply chain network. Increased volumetric sales of retail fuels continued where the company's share in white oil reached 12 percent in 2017 versus 2 percent four years ago. During the year 2017, HASCOL also started a chemical business for importing bulk chemicals and supplying to end users.
HASCOL's overall sales volumes increased by 39 percent year-on-year in CY17, translating into revenue growth of 75 percent, and gross profit growth of 44 percent, year-on-year. Earnings for the year increased by over 15 percent, year-on-year.
In 2017, HASCOL also announced right issue of 20 percent to fund upcoming projects like development of storage facilities, retail outlets and lube oil and grease blending plant.
2018 and beyond
Hascol Petroleum Limited's net sales for the first half of 2018 (1HCY18) stood 57 percent higher as compared to 1HCY17 on account of improving volumes as well as higher prices. Earning for the six-month period improved by 30 percent, year-on-year. The company's quarterly accounts however, highlight that the growth in the firm's earnings do not reflect the increase in revenues and the growth trajectory that Hascol Petroleum Limited has been on.
This was due to significant exchange losses incurred in 1HCY18 from the depreciation of the domestic currency in the ongoing year.
Going forward, the company has come close to the final stages of its storage infrastructure development. It has two depots at Thalian (near Islamabad) and Kotlajam that are complete and ready to start functioning. Similarly, the first phase of the Hascol Terminals project at Port Qasim is also almost done, as per the company's quarterly accounts.
In the chemical business, the company has been profitably marketing imported chemicals, while it has also acquired the LPG assets of Marshal Gas (Private) Limited, which will enable HASCOL to start marketing of LPG cylinders under the Hascol brand very soon. Its Lube Oil Blending Plant is also in expected to come online as soon as Nov 2018.
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Pattern of Shareholding (as on Dec 31, 2017)
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Categories of Shareholders Percentage
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Directors and their spouse(s) and minor children
MUMTAZ HASAN KHAN 18.77
NAZIA MALIK 0.93
FAROOQ RAHMATULLAH KHAN 0.23
SALEEM BUTT 0.22
LIAQUAT ALI 2.2
NAJMUS SAQIB HAMEED 0.04
Associated Companies, undertakings and related parties
FOSSIL ENERGY (PRIVATE) LIMITED 10.45
MARSHAL GAS (PVT) LIMITED 6.44
Executives 0.78
Public Sector Companies and Corporations 0
Banks, development finance institutions, 6.33
non-banking finance companies,
insurance companies, takaful, modarabas
and pension funds
Mutual Funds 2.36
General Public
Local 12.13
Foreign 0.32
Foreign Companies 37.38
OTHERS 1.42
Total 100
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Source: Company accounts
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Hascol Retail Network
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Province Commissioned Sites
As of Sept 30, 2018 As of Dec 31, 2017
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Sindh 180 160
Balouchistan 17 17
Punjab 288 264
Khyber Pakhtunkhwa 43 42
AZK, FATA and Gilgit 13 12
Total 541 495
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