Karachi November 15, 2021 : Hascol reported gross profit of PKR 1.2 billion during the last quarter of 2020 and ending the year 2020 with gross loss of PKR 1.4 billion against gross loss of PKR 12.5 billion in CY 2019.
For the year company reported net sales of PKR 113 billion and gross loss of PKR 1.4 billion. Company booked impairment losses of PKR 7.3 billion on financial assets during the year.
Finance cost decreased to PKR 8.6 billion from PKR 9.6 billion a year earlier while exchange losses were decreased substantially to PKR 1.1 billion from PKR 2.7 billion in 2019.
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The company discovered inaccurate entries in its 2019 accounts and immediately reported these to its national regulators. It is substantially restating its results from 2018 to 2020. The restated accounts shows that Hascol posted loss of PKR 25 billion for CY 2020, a loss of PKR 35.2 billion for 2019 and a loss of PKR 3.4 billion for CY 2018.
Earlier, in Q1 2020, the shareholders injected PKR 8 Billion as additional capital, to bolster the operations and address the liquidity position of the Company, both of which had been adversely affected in FY 2019. But due to the lockdowns imposed by the government to tackle the C-19 situation; not only the sales volumes decreased due to a drop in consumption of oil products, the unprecedented fall in oil prices and devaluation of currency also had a severe dampening effect on the Company’s financial performance. In addition to the above, cost of servicing an over-sized debt, high capacity charges on storage arrangement, provisioning against some doubtful assets and restatement of some liabilities contributed to a net loss of PKR 4 Billion for the three months ended December 31, 2020; and PKR 25.0 Billion for year ended December 30, 2020.
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The Company’s lenders agreed to partially convert short-term debt to long-term, which was completed in September, 2020 to improve the Company’s debt maturity profile. However, due to the subdued economic conditions and volatility of the oil markets, the expected results of above mentioned additional equity injection and conversion of short term debt to long term debt could not be positively materialized.
There were some changes in the Board of Directors during the period under review. Sir Alan Duncan replaced Mr. Mumtaz Hasan Khan as the new Chairman of the Board, Mr. Nauman Dar replaced Mr. Atif Aslam Bajwa as Independent Director and Mr. Aqeel Ahmed Khan was appointed as the CEO and an Executive Director in the month of April 2020. In early September 2020, the Board of Directors was reconstituted with Mr. Najmus Saquib Hameed and Mr. Farooq Rahmatullah Khan retiring and replaced by Mr. Farrukh Saeed and Mr. Hasan Reza ur Rahim as Independent Directors. Soon thereafter, in late September 2020, Mr. Adeeb Ahmad was appointed as the CEO (replacing Mr. Aqeel Ahmed Khan) and an Executive Director of the Company.
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Criminal or Civil Proceedings Against Hascol Will Be Done: SECP
Subsequent to the period under review, to return the Company to a sustainable footing, the reconstituted board and the new management formulated a business revival and financial restructuring plan (“Plan”). A number of short to medium term measures are being taken, or are in process, as part of the Plan including, but not limited to, significant reduction in operating costs, recapturing and growing sales volumes and market share, disposal of non-core assets, shoring up working capital and raising of additional equity to reduce leverage and address negative book equity. Additionally, and most importantly, the Company commenced, and making due progress on, discussions with the banks to partially convert their outstanding debt into equity and restructure all of the Company’s remaining debt into long term facilities in order to reduce its onerous debt service obligations.
The Board and management of the Company are committed to, and are confident of, improving the Company’s financial position and its operating and financial performance and are working with major shareholders, various lender and potential strategic partners towards an early and successful execution of the Plan.
