46520579 Shell Pakistan Limited
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Transcript of 46520579 Shell Pakistan Limited
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Shell Pakistan Limited (by Nouman Sabir)
University of Sargodha
Department of Commerce
A Final Project of Financial Management by:
Muhammad Nouman Sabir
(Roll No: 28 R / 08)
Submitted to:
Prof. Zahid Ali Akbar
Topic:
SHELL PAKISTAN LIMITED
B.Com (HONS)
Vth Semester / Regular
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Shell Limited Pakistan Shell Pakistan Limited (Shell Pakistan) is engaged in marketing of compressed natural gas
and petroleum. The company provides different types of lubricating oil and caters to
businesses and motorists. The company for businesses provides Shell cards, aviation
customer service, exploration and production, transport, liquefied petroleum gas and
industrial operations for power, automotive and sugar. Shell Pakistan for motorists
provides customer service, car care tips, shell Helix motor oil and Shell advance
motorcycle oil. The company also participates in motor sports like formula one and Moto
GP by tying up with Audi, Ferrari and Ducati. Shell Pakistan is headquartered in Karachi,
Pakistan.
Shell @ Glance
The second largest oil company in the country, Shell Pakistan has successfully positioned
itself as the preferred oil and Gas Company in Pakistan, leading the field in its
commitment to customer service, quality of products, safety and environmental
protection. Shell is a global group of energy and petrochemical companies. Our aim is to
meet the energy needs of society, in ways that are economically, socially and
environmentally viable, now and in the future.
Corporate History
Marcus Samuel, founder of the Shell Transport and Trading
Company. Almost 200 years ago, a London antique dealer
began importing sea shells from the Far East to supply a fashion
for exotic dcor.
Marcus Samuels enterprise laid the foundations for a thriving
import-export business later run by his sons, Marcus Junior and
Sam. At this time oil was largely used in lighting and lubricants
and the industry was based in Baku, Russia, with its large reserves of high quality oil and
strategic natural harbor.
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Revolutionizing Oil Transport
The arrival of the internal combustion engine in 1886 led to a surge in demand for
transport fuel. Building on their shipping expertise, the Samuel brothers commissioned a
fleet of steamers to carry oil in bulk. They revolutionized oil transport with the maiden
voyage of their first tanker, Murex. In 1892, Murex was the first ever tanker to transit the
Suez Canal. The brothers company was named the Shell Transport and Trading Company
in 1897. It used a mussel shell as its logo.
Becoming Royal Dutch Shell
Shell Transports activities in the East, combined with a search for new sources of oil to
reduce dependence on Russia, brought it into contact with Royal Dutch Petroleum. The
two companies joined forces in 1903 to protect themselves against the dominance of
Standard Oil. They fully merged into the Royal Dutch Shell Group in 1907.
Shell changed its logo to the scallop shell, or pecten, which is used today. By the end of
the 1920s Shell was the worlds leading oil company, producing 11% of the worlds crude
and owning 10% of its tanker tonnage. The 1930s were difficult: the groups assets in
Mexico were seized and it was forced to concede generous terms to the Venezuelan
government when it nationalized its oil fields.
Post War Expansion
After the Second World War, as peace brought a boom in car use, Shell expanded into
Africa and South America. Shipping became larger and better powered. In 1947 Shell
drilled the first commercially viable offshore oil well in the Gulf of Mexico. By 1955 Shell
had 300 wells. In 1958 Shell began production in Nigeria.
The Oil Crisis
In 1969, Ghaddafi took power in Libya, cutting oil production and raising prices. Other
producers threatened to do the same and the Yom Kippur war of 1973 brought the crisis
to a head. Within weeks OPEC countries quadrupled the oil price and imposed a boycott
for two months. The effect on the West was economically catastrophic.
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Tapping New Resources
The 1970s were notable for Shells development of the oil fields in the North Sea and
South America - difficult and expensive to do, but crucial given the reduced supplies from
the Middle East. In 1978 Shell completed the Cognac drilling and production platform in
the Gulf of Mexico, the worlds tallest platform at 1,100 feet.
Worldwide Expansion
From the mid-1990s public scrutiny of the oil industry intensified as environmental issues
gained prominence. Shell was criticized over plans to dispose
of the Brent Spar platform and also ran into difficulties in
Nigeria. As the new millennium got under way, Shell
expanded in China and Russia. In 2005 Shell dissolved its old
corporate structure to create a single new company. Shell
remains one of the worlds major oil and gas companies. We
have interests in liquefied natural gas and gas to liquids
products; we help develop sustainable biofuels; and we are involved in wind projects.
History of Shell in Sub Continent
The Shell brand name enjoys a 100-year history in this part of the world, dating back to
1899 when Asiatic Petroleum, the far eastern marketing arm of two companies: Shell
Transport Company and Royal Dutch Petroleum Company, began importing kerosene oil
from Azerbaijan into the subcontinent. Even today, the legacy of the past is visible in a
storage tank carrying the date - 1898.
The documented history of Royal Dutch Shell plc in Indo_Pakistan subcontinent dates
back to 1903 when partnership was struck between The Shell Transport & Trading
Company and the Royal Dutch Petroleum Company to supply petroleum to Asia.
In 1928, to enhance their distribution capabilities, the marketing interest of Royal Dutch
Shell plc and the Burmah Oil Company Limited in India were merged and Burmah Shell Oil
Storage & Distribution company of India was born. After the independence of Pakistan in
1947, the name was changed to the Burmah Shell Oil Distribution Company of Pakistan. In
1970, when 51% of the shareholding was transferred to Pakistani investors, the name of
changed to Pakistan Burmah Shell (PBS) Limited.
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The Shell and the Burmah Groups, retained the remaining 49% in equal proportions. In
February of 1993, as economic liberalisation began to take root and the Burmah divested
from PBS, Shell Petroleum stepped into raise its stake to 51%. The years 2001 -2 have seen
the Shell Petroleum Company successively increasing its share, with the Group now
having a 76% stake in Shell Pakistan Ltd (SPL)- an expression of confidence.
History of Shell Logo Patent
For more than 100 years the word Shell, our Pecten emblem, and the distinctive red
and yellow colours have identified the Shell brand and promoted our corporate
reputation. These symbols have stood for the quality of our products and services, and
represented our professionalism and values around the world.
The word Shell first appeared in 1891 as the trademark for the kerosene that Marcus
Samuel and Company shipped to the Far East. The small London business dealt originally
in antiques and oriental seashells.
In 1897 Samuel formed The Shell Transport and Trading Company. The first logo in 1901
was a mussel shell. In 1904 a scallop shell, or Pecten, gave a visual element to the
corporate and brand name.
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Why the Pecten?
The company name was Shell and each of Samuels tankers carrying kerosene to the
Far East was named after a different seashell.
The Pecten may have been taken from the family coat of arms of a business associate, Mr
Graham, who imported Samuels kerosene into India and became a director of The Shell
Transport and Trading Company. Following a pilgrimage to Santiago de Compostela in
Spain the Graham family had adopted the St Jamess Shell.
Over the years the form of the Shell emblem has changed gradually in line with trends in
graphic design. Designer Raymond Loewy created and introduced the current emblem in
1971.
Why Red and Yellow?
In 1915 the Shell Company of California first built service stations and had to make these
stand out from the competition. They used bright colours that would not offend the
Californians: because of the states strong Spanish connections they chose red and
yellow.
The actual colours have developed over the years, most notably in 1995 when a bright,
consumer-friendly Shell Red and Shell Yellow were introduced to launch our new retail
visual identity. The Pecten remains one of the greatest brand symbols in the 21st century.
Our Values & Customs
Our eight Business Principles are based on our core values and promote trust, openness,
teamwork, professionalism, and pride in what we do. We were one of the first global
companies to state and share our beliefs when we published our General Business
Principles in 1976.
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The Shell Code of Conduct
How should I react if a business partner offers me a gift? What is insider information
and how must I deal with it? Our Code of Conduct provides practical advice to our staff on
how to comply with laws and regulations, how to work with others and how to resolve
questions on business conduct.
Shells Slogan / Mission
You can be sure of Shell
Shells Objectivity for Customers
Shell is focusing on retailing, providing better facilities to customers, clean petrol pumps
constructing international standard petrol filling stations, good advertising campaigns
and mini markets.
Shells Vision
To Be the Top Performer of First Choice
Shells Aim
Creating a secure business environment, minimizing economic losses, and business
disruptions safeguarding the groups integrity and reputations
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Shells Goal
The goal of the company is to position itself as the preferred oil company in Pakistan,
leading the field in its commitment to safety, customer service, quality and environmental
protection.
Shells Strategy
A strategy of corporation forms a comprehensive master plan stating how the
corporation will achieve its mission and objectives. It maximizes competitive advantage
and minimizes competitive disadvantage. The strategy of Shell is to grow internally by
expanding its operations through acquisition and strategic alliances.
Shell focuses to differentiate its products from competitors in the area of quality and
services.
Shells Policy
A policy is a broad guideline for decision-making that links the formulation of strategy
with its implementation. The policy of Shell is to make sure that the employees
throughout the firm make decisions and take actions that support the corporations
mission, objectives, and strategies.
People Diversity in Shell Organization
We employ around 101,000 people in more than 90 countries and territories. Our people
are central to the delivery of our strategy and we involve them in the planning and
direction of their own work. We create a work environment that values differences and
provides channels to report concerns.
We value communication and consultation with our employees, directly or via staff
councils or recognised trade unions. We encourage our staff to report their views about
our processes and practices safely and confidentially to managers or Human Resources
staff. Our global telephone helpline and website enable employees to report breaches of
our Code of Conduct and the Shell General Business Principles, confidentially and
anonymously.
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A diverse workforce and an inclusive work environment are vital to our
success and are aligned with our core values of honesty, integrity and respect for people.
The varied skills and experience of people from different cultures, gender and ages
benefits our business, helping us to better understand our customers across the world
and to build stronger relationships at a local level. Our focus on diversity and inclusion
also means customers, employees and partners choose us more often.
New Energy Future by Shell
Everyone has a part to play in securing a new low-carbon energy future. At Shell we are
working to deliver cleaner energy and helping our customers to use less energy.
The world is shifting towards a new low-carbon energy future. It will be powered by a
range of sources, from cleaner fossil fuels to renewables. But to reach it, governments,
industry and customers must work together. Shell is already taking the first steps with
partners to tackle the challenges that lie ahead.
The energy transition will take time and fossil fuels will continue to provide the bulk of
energy for many years to come. We use advanced technology to open up new sources of
oil and natural gas and to squeeze more from existing resources.
Managing CO2 We use a range of approaches to tap into the energy of natural gas,
the cleanest-burning fossil fuel. It emits 50-70% less carbon dioxide (CO2) than coal when
burnt to generate electricity.
We liquefy natural gas for shipping to markets from remote fields, and we turn natural
gas into cleaner-burning liquid transport fuels and other products. From 2012, we will
produce more natural gas than oil.
Low-carbon biofuels offer the most commercially realistic way to reduce CO2 emissions
from transport in the coming years. We are working to increase the sustainability of
todays biofuels, and investing in the development of advanced biofuels.
Smarter Mobility In a new, low-carbon energy future cars will be powered by a wide
range of fuels and energy sources, from advanced petrol and diesel to biofuels,
electricity, and even hydrogen.
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We are helping our customers use less energy. We are developing more
advanced fuels and lubricants to help drivers go further on less fuel, and we offer driving
tips to further improve economy. We also help build roads using less energy and with
fewer CO2 emissions because our technology allows asphalt to be mixed at lower
temperatures. With our customers and partners, Shell is helping to secure the new
energy future.
Shell Pakistan General Business Principles
Shell Pakistan Limited General Business Principles govern how Shell Pakistan Ltd.
conducts its affairs. The objectives of Shell Pakistan Ltd. are to engage efficiently,
responsibly and profitably in oil, gas, chemicals and other selected businesses and to
participate in the search for and development of other sources of energy to meet
evolving customer needs and the worlds growing demand for energy.
We believe that oil and gas will be integral to the global energy needs for economic
development for many decades to come. Our role is to ensure that we extract and
deliver them profitably and in environmentally and socially responsible ways. We seek a
high standard of performance, maintaining a strong long-term and growing position in
the competitive environments in which we choose to operate.
We aim to work closely with our customers, partners and policy-makers to advance more
efficient and sustainable use of energy and natural resources.
Shell Worldwide Managerial Strategies
Shell is a global group of energy and petrochemical companies. Our headquarters are in
The Hague, the Netherlands, and our Chief Executive Officer is Peter Voser. The parent
company of the Shell group is Royal Dutch Shell plc, which is incorporated in England and
Wales.
Our strategy seeks to reinforce our position as a leader in the oil and gas industry in order
to provide a competitive shareholder return while helping to meet global energy demand
in a responsible way. In Upstream we focus on exploring for new oil and gas reserves
and developing major projects where our technology and know-how adds value to the
resource holders.
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In Downstream our emphasis remains on sustained cash generation from our
existing assets and selective investments in growth markets. Our core values of honesty,
integrity and respect for people form the basis of the Shell General Business Principles.
Shell by Numbers
+ 90 countries where we operate
~ 101,000 number of employees
2% amount of worlds oil we produce
3% amount of worlds gas we produce
3.1 million barrels of gas and oil we produce every day
44,000 Shell service stations worldwide
145 billion liters of fuel sold
>35 refineries and chemical plants we run
1 ranking by Fortune 500 in 2009
Our Businesses
Upstream searches for and recovers crude oil and natural gas. Downstream refines,
supplies, trades and ships crude worldwide, manufactures and markets a range of
products, and produces petrochemicals for industrial customers.
Projects & Technology manages delivery of Shells major projects and drives the research
and innovation to create technology solutions.
Financial Performance
Revenue $278.2 billion
Income $12.7 billion
Capital Investment $31.7 billion
Investment in R & D $1.2 billion
Fast facts for Sustainable Developments
$2 billion spent on CO2 and renewable energy technologies over the last 5 years.
In 2009 greenhouse gas emissions from facilities where we operate were
approximately 35% below 1990 levels.
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$13 billion spent in 2009 with locally owned companies in low and
middle income countries.
$132 million on social investment programmes in 2009.
Shell Pakistan Managerial Strategies
Shell Pakistan is divided into 8 functional areas i .e. Retail, Lubricants, Aviation,
Operations, Finance, Corporate, Human Resource and Commercial Fuels. It has played a
leading role in abridging the growing energy demand gap in Pakistan. We are
represented in all aspects of the upstream and downstream oil business in Pakistan - in
exploration both onshore and offshore, in refining, as well as a 26% share holding in the
white oil pipeline. Currently Shell in Pakistan is headed by Mr. Zaiviji Ismail bin Abdullah,
Chairman and Managing Director of Shell Pakistan Limited (SPL) and Chairman of Shell
Companies in Pakistan.
Shell has over 100 years of experience in developing the technology and services that
make us a leading provider of innovative and new fuels today. We were the first to
introduce retail visual identity on its forecourts. We strive to meet and exceed customer
expectations by delivering the best fuels and service to our customers at every site, every
visit, everyday. With a dynamic portfolio and a fast-growing retail network, the Shell
Brand is the most preferred brand amongst motorists across Pakistan.
Shell has always placed great importance on the health, safety and environment aspect
of the society it does business in. Safety is one of our top priorities, and we base our
policies on the belief that all accidents are preventable.
Market Share
PSO Shell APL Others
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Over the last decade, SPL has developed a robust programme of social
investment, which supports organizations and initiatives in the areas of health,
education, welfare, community development, heritage and environment.
In an increasingly competitive business environment, we at Shell Pakistan strive ever
harder to maintain operational excellence. We strengthen standardized and simplified
business processes and systems, and ensure top quality, right quantity and su perior
service to all customers across the country.
Shells Task Environment in Pakistan
Customer
Supplier
Labor component
Competitors
Government
CUSTOMER - Our customers are high class, low class and also middle class, because every
class is used petrol for consumption.
SUPPLIER - Our suppliers are Pakistan refinery, National refinery and Attock refinery and
Dhodak refinery.
LABOUR COMPONENT - Labour is frequently available in Pakistan because of high
unemployment rate. So skilled and unskilled persons are available at lower wages rate.
COMPETITORS - Major competitors of Shell are PSO with petrol pumps and Caltex with
petrol pumps. But Shell Pakistan Limited operates in the Petroleum refining sector. Shell
Pakistan Limited also compete with three other petroleum refiners in Asia
Chennai Petroleum Corporation Limited
National Refinery Limited
Mangalore Ref & Petrochemicals Limited
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Stock Exchange Corporate Profiles (in Pakistan)
Shell Pakistan Limited (SPL) is a Pakistan-based company engaged in the marketing of
petroleum and compressed natural gas. It also blends and markets various kinds of
lubricating oils. The Company has investments in two non-trading subsidiaries, namely
Shell Pakistan Provident Trust (Private) Limited and Shell Pakistan Pensions Trust
(Private) Limited. The Company introduced Shell Helix Ultra, Shell Helix CNG Super, and
restored its Quick Oil Change service as Shell Helix Oil Change Plus.
Ticker: SHEL Country: PAKISTAN
Exchanges: KAR Major Industry: Oil, Gas, Coal & Related
Services
Sub Industry: Oil Refiners & Distributors
2009 Sales
100,407,007,366
(Year Ending Jan
2010).
Employees: 534
Currency: Pakistan Rupees Market Cap: 14,215,351,015
Fiscal Yr
Ends: December
Shares
Outstanding: 68,487,912
Share Type: Ordinary Closely Held
Shares: 52,666,047
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Board of Directors
Indicators 2009 2008
Profit/ (Loss) before taxation(mn) 3910 (3049) Profit/ (Loss) after taxation(mn) 2563 (1726) New Capital Expenditure(mn) 1325 1024
Shareholder,s Equity(mn) 8271 6256
Earning/ (Loss) per Share 37.42 25.20
No Name of Member
1 Mr. Zaiviji Ismail
2 M/s. Shahnaz Wazir Ali
3 Mr. Rafi H. Basheer
4 Mr. Farrokh K. Captain 5 Mr. Imran R. Ibrahim
6 Mr. Nick Chong
7 Mr. Zaffar A. Khan
8 Mr. Michael
9 Mr. Badruddin F. Vellani 10 Mr. Omar Sheikh
11 Mr. Gary Fisher
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Products & Services
Following are the major products of the Shell Pakistan!
- On the Road Fuel
- Oils & Lubricants
- Shell Motorsports
- Businesses Lubricants
- Commercial Fuels
On the Road Fuel
- Unleaded = Shell Unleaded has been designed to help keep your engine clean and
helps protect against corrosion. Designed
to help keep your engine clean. To
operate at their best, engines require the
precise amount of air and fuel to enter
the engine and be mixed together at the
right time. With some fuels, deposits may
form over time on the back of the inlet valves. This can lead to delays in the
required fuel charge entering the engine and a poor mix of fuel and air, reducing
the engines performance. Shell Unleaded has been formulated to help prevent
the build-up of these deposits, and to help maintain your engines performance.
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- Shell Diesel = New improved Shell
Diesel with fuel economy formula
contains ingredients that are designed
to speed-up ignition; keep the engine
clean; reduce foaming; and protect
against corrosion. It is formulated to
help the fuel ignite earlier, in order to help convert chemical energy more
effectively into energy that drives your wheels. It is developed to help protect
against deposit formation, and so help your engine achieve, and maintain, better
fuel mixing, further contributing to overall combustion efficiency.
Oils & Lubricants
Shell lubricants provide increased protection against engine wear and corrosion in your
car, pickup, or motorbike.
- Shell Advance
- Shell Helix
- Shell Lube Match
- Shell Rimula
Shell Motorsports
Through technical partnerships with Ferrari, Ducati
and the Shell-Pennzoil team in NASCAR, Shell has the
most extreme test bed to develop the best premium
products for every Shell customer. In this section you
have the chance to get behind the scenes and find out
all you need to know about Shells involvement .
Businesses Lubricants
At Shell Lubricants, we use our leading technology to bring you innovative oils and
greases designed to meet your challenges. Our extensive range includes our ultimate -
performance synthetic lubricants, which offer outstanding protection, long lubricant life
and system efficiency.
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Our international team of on-the-ground lubricant experts has experience in
your industry. These people can help you to reduce your total cost of equipment
ownership by maximising the value of using Shell lubricants. The benefits are proven in
real-life applications. Ask us how our technology-leading products can enhance your
operations.
Commercial Fuels
Supplying transport, heating and industrial fuels to corporate and distributing companies
in many industries, including road transport, mining, construction, power and agriculture.
Our product portfolio ranges from standard main grades to premium fuels with advanced
Shell formulation. Whatever your needs, you can rely on our fuels to help you get the
most out of your vehicle or machinery.
Environmental & Social Behavior by Shell
Contributing to sustainable development is integral
to the way we do business. As we work to help meet
the worlds growing energy needs we aim to bring
benefits to local communities and reduce impacts of
our operations, including tackling greenhouse gas
emissions. We look after our people and our core values of honesty, integrity and respect
for people have been laid out in the Shell General Business Principles for over 30 years.
Innovation Concept by Shell
Innovative technology is helping to shape the energy
future. Shell is opening up new energy resources and
squeezing more from existing resources to help
power the world's economies.
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Financial Analysis of Shell Pakistan Limited
The profit before taxation of Shell Pakistan Limited has increased to Rs 1,762.434 million
in the half year period ended June 30, 2010 as compared to Rs 962.213 million earned in
the corresponding period in 2009. However, the company s profit after tax declined to Rs
720.210 million in the period under review against Rs 1,013.962 million in the same period
a year back.
The company s earning per share stood at
Rs 10.52 in the half-year period this year
against Rs 14.80 in the same period last
year. The board of directors of the
company in its meeting held on Tuesday
approved the payment of an interim
dividend for the year ending December 31,
2010 at the rate of Rs 4.00 per ordinary
share of Rs 10 each i.e. 40%.
Zaiviji Ismail bin Abdullah, the Chairman
and Chief Executive of Shell Pakistan paid
that during the first half of the current
year the company has achieved significant
growth in its pre-tax earning, achieving Rs
1.762 billion in comparison to Rs 962
million earned in the same period last
year. He said this improvement in
profitability is mainly on the back of
continued volume growth in key business segment, better product mix towards higher
margin products and favourable movements in the international price of oil during the
period.
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However, he said, the after tax earnings declined to Rs 720 million as against Rs 1.014
billion in the same period last year due to an exceptional increase in Income Tax following
the re-introduction of turnover tax in the previous year s budget and the subsequent
increase in the rate of tax from 0.5 percent to 1.0 percent in this year s budget.
It is pertinent to note that the company is now being taxed at an extraordinary high
effective tax rate of 70 percent due to the recent increase in turnover tax rates. This has
significantly increased the cost of doing business for the company and added further
pressure on its bottom line The
management of the company is
pursuing this matter with relevant
fiscal authorities with a view to
rationalise the applicable income tax
rates.
He said that the 50 percent reduction
in shareholder returns is primarily due
to the imposition of the increase in
turnover tax and the long
outstanding government receivables,
a situation that is causing serious
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June'03 June'04 June'05 June'06 June'07 June'08 Dec'08 Dec'09
Gross Sales
Gross Sales
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concerns amongst shareholders. We still have approximately Rs 5 billion
outstanding government receivables, comprising of price differential claims and sales
tax/petroleum development levy (PDL) refunds , he said and added the sooner these
outstandings are settled, the better it would be for all key stakeholders. The
management team is vigorously following up the matter with the concerned government
authorities.
Looking forward to the rest of the year, we see some new challenges on the business
front in the aftermath of the crises from the flood damages faced the most parts of the
country , he said adding Nonetheless, we are confident that the company will overcome
these challenges and create a more friendly environment for businesses to prosper and in
this spirit, we continue to look beyond 2010 positively.
He said the country is currently going through a very challenging period and our thoughts
are with people who have impacted from the ongoing flood crises. More than 200 sites of
the company have also been effected. We are doing our utmost to ensure continued and
adequate supply of all products across the country. In addition, a number of our staff are
already involved in supporting relief efforts on a voluntary basis in various parts of the
country.
He said that the events of the last few weeks are indeed very unfortunate. To he lp with
the relief and rehabilitation efforts, the company and its employees are jointly making a
total contribution of Rs 5 million. In addition to this, the parent company, Royal Dutch
Shell, has also committed a further Rs 10 million bringing total initial contribution of Rs 15
million. We are confident that the country will get through this difficult situation very
soon , he added.
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According to the financial results sent to Karachi Stock Exchange (KSE), the
company s sales increased to Rs 102.015 billion in the half year period this year against Rs
82.002 billion in the same period last year. The cost of product sold increased to Rs
84.422 billion against Rs 66.750 billion.
Financial Highlights
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Profitability Analysis
-100.00
-80.00
-60.00
-40.00
-20.00
0.00
20.00
40.00
60.00
June'03 June'04 June'05 June'06 June'07 June'08 Dec'08 Dec'09Net Profit Margin on Sales
Gross Profit Margin
Return on Assets
Retutn onEquity
Comparison of key Figures with the Industry
Shell PSO APL
Increase in Sales (%) 84.28 23.33 12.86
Increase in Gross
Profit (%) 5.38 -89.97 -3.52
Increase in Profit
before tax (%) 134.56 -153.13 -2.87
Increase in Profit after
tax (%) 149.63 -147.67 1.43
Increase in EPS (%) 149.62 -147.66 1.80
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Liquidity Analysis
Previous Years Analysis Approaches
In recent years, this stock has performed terribly. In fiscal year 2000, the stock traded as
high as 367.50 Pakistan Rupees, versus 165.15 Pakistan Rupees on 1/18/02. For the 52
weeks ending 1/18/02, the stock of this company was down 42.5% to 165.15 Pakistan
Rupees. During the past 13 weeks, the stock has fallen 8.3%.
During the 12 months ending 6/30/01, earnings per share totaled 30.12 Pakistan Rupees
per share. Thus, the Price / Earnings ratio is 5.48. Earnings per share fell 18.7% in 2001 from
2000. This company is currently trading at 0.09 times sales. Shell Pakistan Limited is
trading at 1.07 times book value. The company's price to book ratio is higher than that of
all three comparable companies, which are trading between 0.25 and 0.97 times book
value.
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
June'03 June'04 June'05 June'06 June'07 June'08 Dec'08 Dec'09
Current Ratio
Current Ratio
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The market capitalization of this company is 5.79 billion Pakistan Rupees (US$96.42
million). Closely held shares (i.e., those held by officers, directors, pension and benefit
plans and those shareholders who own more than 5% of the stock) amount to over 50% of
the total shares outstanding: thus, it is impossible for an outsider to acquire a majority of
the shares without the consent of management and other insiders. The capitalization of
the floating stock (i.e., that which is not closely held) is 2.33 billion Pakistan Rupees
(US$38.83 million).
During the 12 months ending 6/30/01, Shell Pakistan Limited paid dividends totaling 12.50
Pakistan Rupees per share. Since the stock is currently trading at 165.15 Pakistan Rupees,
this implies a dividend yield of 7.6%. The company has paid a dividend for 4 straight years.
During the same 12 month period ended 6/30/01, the Company reported earnings of 30.12
Pakistan Rupees per share. Thus, the company paid 41.5% of its profits as dividends.
On the 63.63 billion Pakistan Rupees in sales reported by the company in 2001, the cost of
goods sold totaled 44.75 billion Pakistan Rupees, or 70.3% of sales (i.e., the gross profit
was 29.7% of sales). This gross profit margin is significantly better than the company
achieved in 2000, when cost of goods sold totaled 91.1% of sales.
Shell Pakistan Limited's 2001 gross profit margin of 29.7% was better than all three
comparable companies (which had gross profits in 2001 between 3.9% and 5.1% of sales).
The company's earnings before interest, taxes, depreciation and amorization (EBITDA)
were 1.96 billion Pakistan Rupees, or 3.1% of sales. This EBITDA margin is worse than the
company achieved in 2000, when the EBITDA margin was equal to 5.6% of sales. The three
comparable companies had EBITDA margins that were all higher (between 3.2% and 4.8%)
than that achieved by Shell Pakistan Limited.
In 2001, earnings before extraordinary items at Shell Pakistan Limited were 1.06 billion
Pakistan Rupees, or 1.7% of sales. This profit margin is lower than the level the company
achieved in 2000, when the profit margin was 3.6% of sales.
The company's return on equity in 2001 was 22.1%. This was significantly worse than the
already high 32.0% return the company achieved in 2000. (Extraordinary items have been
excluded).
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Shell Pakistan Limited (by Nouman Sabir)
Page - 25
Current Analysis Approach
The current quarter saw some
stabilisation in oil prices to around
$55 a barrel. However, the company
continued to make inventory losses
on account of unfavourable
movements in the international
prices of oil in the previous quarters.
The company's performance in the
quarter remained very similar to the
industry with a 3.6% decline in the
company's sales in the quarter
ending March 2009 as compared to
the same period last year (SPLY).
Attock Petroleum, which is the third largest company in the OMC sector after PSO and
Shell, also had a decline in its sales by 8% in 3Q09 as compared to 3Q08. Only PSO which is
the market leader in the oil marketing sector with a 72% market share managed a minor
1.8% growth in its sales in 3Q09 as compared to 3Q08.
The company's decline in its fuel sales combined with a 79% decline in its non-fuel retail
sales resulted in a 25.6% decline in the company's gross profit. However, the company's
decline in the gross profits was lower than its competitors PSO who had a 37.5% decline in
their gross profits.
The company also had a 101% increase
in its administrative and marketing
expense which contributed to a 65%
decline in its operating profits as
compared to the SPLY. The energy
sector also faces the problem of
circular debt which is estimated to be
around Rs 200 billion in the energy
sector.
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Shell Pakistan Limited (by Nouman Sabir)
Page - 26
Shell still continues to finance sizeable receivables of over 5 billion rupees from
government and other public sector entities which has resulted in a financing cost of
around 185 million rupees and has resulted in an increase in the company's financing cost
by 131.8% in 3Q09 as compared to 3Q08. The circular debt position is even worse in the
other two major oil marketing companies with PSO having dues of over Rs 50 billion and
Attock Petroleum having dues of Rs 6 billion that have not been cleared yet by the
government.
Top Company Award 2009
Shell Pakistan Limited, a company of the Royal Dutch Shell plc group, was recently
awarded the prestigious Top Companies Award for 2009 by the Karachi Stock Exchange.
The awards were conferred after a lapse of 2 years and are KSE's means of recognising
the excellent performance of the top 25 companies on the basis of comprehensive
criteria.
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Shell Pakistan Limited (by Nouman Sabir)
Page - 27
SWOT Analysis Shell has the quality control and quantity control team visit and inspect the quality and
quantity of motor gasoline of their petrol pump regularly.
STRENGTHS
Shell confirms its position as a leader in the gas and power business with a deal to
design the world's first large scale Gas to Liquids plant
Shell is using effective means for the promotion of its products. It is heavily
emphasizing on advertisement and other promotional tactics
Shell provides in time deliver to their petrol pumps
The HRM policies of Shell are its strengths; its incentive based policies are
motivating for employees
The shell gives the proper attention to their customers
Shell has international standard petrol pump
Mobile training units side keeping staff up to date on a whole range of topic
including most important issues of health safety and environment
Shell has the heavy budget for the promotion activities
All tanker is fitted with special tamper-profit seals to ensure that only the highest
quality fuel is delivered to all company operation sites
WEAKNESS
They have no proper shades and sitting arrangements at the filling stations
because people who came for oil changing and car washing face difficulties in this
regard
There is no proper drainage system at filling station
There is very little empowerment of employees
Shell has eight regional retail managers who are watching the activities of petrol
pumps in all over the Pakistan that is insufficient to handle the problems
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Shell Pakistan Limited (by Nouman Sabir)
Page - 28
OPPORTUNITIES
Shell has maintained a tradition of introducing new innovation as compare to its
competitors. The example being the mobile, training unit, quality and quantity unit,
Mini-market (select, Jet was (Rianbow), oil change. Lubricants (Rumila C.D.X,)
Helix that is opportunity for Shell to maintain these facilities
People perceptions are changing and they prefer digital pumps. So they should
renovate their petrol pumps. Shell also has an opportunity to enter in the nice
market
Shell has strong financial position so it has opportunity to avail a new market share
in CNG business
Shell is the market leader due to innovation so it can easily win the customer
confidence
THREATS
The smuggling of petrol in Baluchistan form Iran is one of the greats threats to the
company
The fake oil makes up a large share in the market, if such practices are not
prohibited it will create a disastrous effects on sale
PSO is also servicing in profitable areas
Shell is charging few paisas more than their competitor. Shell is facing very stiff
competition to PSO and Caltex
Entrant of new companies in the refinery sector
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Shell Pakistan Limited (by Nouman Sabir)
Page - 29
CURRENT MARKETING STRATEGY OF
SHELL PAKISTAN LTD The current strategy of shell is concentrate on its business and selected market areas. By
using this strategy company expands its business by upgrading petrol pumps in the
country.
Especially they are concentrating in the following three areas:
Customer service
Brand image
Quality & Quantity
Customer Services - Shell Pakistan ltd. is working for customer satisfaction because customers play a very vital role in the prosperity ort failure of a particular company. That
is the reason that shell is operating with the basic aim to satisfy its customers and provide
better and better service to its customers. In brief it can be said that shell gives a strong
emphasis on customer services.
Brand Image - The second strategy of Shell is creating a strong Brand Image of the company in the customers mind. In visual terms, the installation of Shells Retail Visual
Identity (RVI) makes a striking and immediate difference between shells gasoline
stations and those of its competitors, Pakistan State Oil (PSO) and Caltex. The RVI
programme is massive, for the 1200 or so sites which shell inherited through the take
over, around two thirds are scheduled to be developed as RVI sites, many of them being
completely redesigned from the underground storage tanks up. In addition, new sites are
being acquired in strategic locations.
The new sites are being designed according to the international standards keeping in
view the cleanliness in all respects and an Excellent/Terrific out look. The purpose of this
is to attract the customer and develop a strong brand image in his mind.
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Shell Pakistan Limited (by Nouman Sabir)
Page - 30
Quality & Quantity - The third strategy of the company is to set standards for reliability and honest dealing because it is fundamental to the companys reputation. For the
improvement of quality and quantity following points are important:
Mobile Training Units
Quality & Quantity Control System
References:
- www.shell.com
- www.shell.com.pk
- Business Recorder
- www.invest.com.pk
- Google
- Wikipedia
- KSE Index Analysis WEB
THE END