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NATIONAL REFINERY LIMITED |
|
|
A PERAC COMPANY |
|
|
33rd Annual Report and Accounts 1996 |
|
|
|
| CONTENTS |
|
| Board
of Directors .................. |
|
2 |
|
| Company
Information ................. |
|
3 |
|
| NRL
at a Glance ..................... |
|
4 |
|
| Summary
of Operating Results ........ |
|
5 |
|
| Notice
of Meeting ................... |
|
6 |
|
| Directors'
Report ................... |
|
7 |
|
| Chairman's
Review ................... |
|
9 |
|
| Graphic
Illustrations ............... |
|
12 |
|
| Pattern
of Shareholdings ............ |
|
14 |
|
| Auditors'
Report .................... |
|
15 |
|
| Balance
Sheet ....................... |
|
16 |
|
| Profit
and Loss Account ............. |
|
18 |
|
| Cash
Flow Statement ................. |
|
19 |
|
| Notes
to the Accounts ............... |
|
20 |
|
|
| BOARD
OF DIRECTORS |
|
|
| CHAIRMAN |
|
| Mahmood
Ahmed |
|
|
| DIRECTORS |
|
| Ahmed Dawood |
|
| Abdus Sattar |
|
| Dato
Ahmed Hassan Bin Osman |
|
| G.A. Sabri |
|
| Istaqbal
Mehdi |
|
| Javed
Ashraf Hussain |
|
| Jehangir
Ansari |
|
| Mahmood
Ahmed |
|
| Sultan
Ahmed Shamsi |
|
|
| MANAGING
DIRECTOR |
|
| Mahmood
Ahmed |
|
|
| SECRETARY |
|
| Qazi
Wajeehuddin |
|
|
| COMPANY
INFORMATION |
|
|
| AUDITORS |
|
| TASEER
HADI KHALID & CO. |
|
|
| SOLICITORS |
|
| QAMAR
ABBAS & CO. |
|
|
| BANKERS |
|
| ABN-AMRO
BANK |
|
| ALLIED
BANK OF PAKISTAN LIMITED |
|
| AMERICAN
EXPRESS BANK LIMITED |
|
| ANZ
GRINDLAYS BANK PLC |
|
| BANK
OF AMERICA NT & SA |
|
| CITIBANK
N.A. |
|
| DEUTSCHE
BANK AG. |
|
| MUSLIM
COMMERCIAL BANK LIMITED |
|
| NATIONAL
BANK OF PAKISTAN |
|
| STANDARD
CHARTERED BANK |
|
| UNITED
BANK LIMITED |
|
|
| REGISTERED
OFFICE |
|
| 7-B,
KORANGI INDUSTRIAL ZONE, KARACHI. |
|
|
| SHARES
DEPARTMENT |
|
| 3RD
FLOOR, CENTRAL HOTEL BUILDING, |
|
| MEREWEATHER
ROAD, KARACHI. |
|
|
| REFINERY |
|
| 7-B,
KORANGI INDUSTRIAL ZONE, KARACHI. |
|
|
| NRL
AT A GLANCE |
|
|
|
FIRST LUBE REFINERY |
|
|
| Design
Capacity |
- |
539,700 Tonnes per year
of Crude processing |
|
|
|
- |
76,200 Tonnes per year of
Lube Base Oils |
|
| Date
Commissioned |
|
June 1966 |
|
| Project Cost |
|
|
103.9 Million Rupees |
|
|
|
FUEL REFINERY |
|
|
| BEFORE
REVAMP |
|
| Design
Capacity |
|
1,500,800 Tonnes per year
of Crude processing |
|
| Date
Commissioned |
|
April 1977 |
|
| Project Cost |
|
|
607.5 Million Rupees |
|
|
|
|
| Design
Capacity |
|
2,170,800 Tomes per year
of Crude processing |
|
| Date
Commissioning of Revamp |
February 1990 |
|
| Project
Cost of Revamp |
|
125.0 Million Rupees |
|
|
|
B.T.X. UNIT |
|
|
| Design
Capacity |
|
25,000 Tonnes per year of
B.T.X. |
|
| Date
Commissioned |
|
April 1979 |
|
| Project Cost |
|
|
66.7 Million Rupees |
|
|
|
SECOND LUBE REFINERY |
|
|
| Design
Capacity |
|
100,000 Tonnes per year
of Lube Base Oils |
|
| Date
Commissioned |
|
January 1985 |
|
| Project Cost |
|
|
2,082.4 Million Rupees |
|
|
|
SHARE HOLDERS' EQUITY |
|
|
| June 1966 |
|
|
20.0 Million Rupees |
|
| June 1996 |
|
|
988.8 Million Rupees |
|
|
| SUMMARY
OF OPERATING RESULTS |
|
|
RUPEES IN MILLION |
|
|
| YEAR
ENDED 30TH JUNE |
1987 |
1988 |
1989 |
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
|
| Sales
including taxes |
6224 |
7410 |
7193 |
8617 |
14888 |
14386 |
15095 |
15159 |
16239 |
18188 |
|
|
|
|
|
| Less:
Duties, taxes and |
|
| development
surcharge |
54 |
90 |
239 |
195 |
766 |
794 |
940 |
1176 |
1018 |
1449 |
|
| ------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
| Sales
after duties, etc. |
6170 |
7320 |
6954 |
8422 |
14122 |
13592 |
14155 |
13983 |
15221 |
16739 |
|
|
|
|
| Other income |
|
6 |
6 |
30 |
20 |
14 |
12 |
9 |
18 |
15 |
10 |
|
| ------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
|
6176 |
7326 |
6984 |
8442 |
14136 |
13604 |
14164 |
14001 |
15236 |
16749 |
|
|
|
|
| Deduct:
Cost of sales and |
|
| other
expenses |
|
| excluding
depredation |
5849 |
6998 |
6269 |
7843 |
13354 |
12978 |
13357 |
13132 |
15082 |
15968 |
|
|
|
|
327 |
328 |
715 |
599 |
782 |
626 |
807 |
869 |
154 |
781 |
|
|
|
|
|
| Depreciation |
|
207 |
208 |
219 |
225 |
229 |
220 |
218 |
236 |
277 |
315 |
|
| ------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
|
|
|
|
| Net
Profit/(1oss) after |
|
| depreciation |
|
120 |
120 |
496 |
374 |
553 |
406 |
589 |
633 |
(123) |
466 |
|
|
| Extraordinary
items |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
|
| Unappropriated
profit/ |
|
| (accumulated
loss) |
|
| brought
forward |
1 |
1 |
1 |
|
- |
- |
- |
- |
- |
(254) |
|
| Provision
for current |
|
| taxation |
|
- |
- |
217 |
161 |
234 |
179 |
298 |
280 |
132 |
187 |
|
| Less.
Dividend and other |
|
|
appropriations |
120 |
120 |
200 |
186 |
250 |
220 |
267 |
300 |
- |
- |
|
| Revenue
Reserve - General |
|
80 |
26 |
69 |
7 |
24 |
53 |
- |
25 |
|
| Unappropriated
profit/(1oss) |
|
|
|
| carried
to next year |
1 |
1 |
- |
1 |
- |
- |
- |
- |
(255) |
- |
|
| ------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
------------ |
| Rate
of dividend in % |
18 |
18 |
30 |
28 |
37.50 |
33 |
40 |
45 |
|
|
|
| NOTICE
OF MEETING |
|
| Notice
is hereby given that the Thirty Third Annual General meeting of National
Refinery Limited will be held |
|
| on
Saturday 28th December, 1996 at 10:30 a.m. at Hotel Metropole, Karachi to
transact the following |
|
| business:- |
|
|
| ORDINARY
BUSINESS |
|
| 1.
To confirm the minutes of the Annual General Meeting held on March 30, 1996. |
|
|
| 2.
To receive and adopt the Audited Accounts of the Company for the year ended
June 30, 1996 together |
|
| with the Director's Report and the
Auditor's Report thereon. |
|
|
| 3.
To appoint Auditors for the year 1996-97 and to fix their remuneration. |
|
|
| By
Order of the Board |
|
|
| QAZI
WAJEEHUDDIN |
|
| Secretary |
|
|
|
|
|
| Karachi:
November 10, 1996 |
|
|
|
|
| NOTES: |
|
| 1.
Share Transfer Books of the Company will remain closed from 22-12-1996 to
31-12-1996 both days |
|
| inclusive. |
|
|
|
|
|
| 2.
A member entitled to attend and vote at the meeting is entitled to appoint
another member as proxy. |
|
|
|
|
| 3.
Proxies in order to be effective must be received at the Registered Office of
the Company not less than 48 |
|
| hours
before the meeting and must be duly stamped, signed and witnessed. |
|
|
|
|
| 4.
Shareholders are requested to promptly notify the Company of any change in
their address. |
|
|
|
| DIRECTORS'
REPORT |
|
| The
Directors of your Company are pleased in presenting the Annual Report
together with Accounts & |
|
| Auditors
Report thereon for the year ended June 30, 1996. |
|
|
| PROFIT
& LOSS ACCOUNT |
|
| The
Directors submit the results together with accumulated loss brought forward
from previous year as under:- |
|
|
|
|
|
(Rs. in million) |
|
|
|
| Net
profit after taxation for the year taking into account |
|
|
|
| the
amount of Rs. 880.390 million taken in income |
|
|
|
| currently
(Note 26) and amount of Rs. 2828.793 million |
|
|
|
| receivable
from the Government as at June 30, 1996 |
|
|
|
| shown
in (Note 24) amounts to |
|
279.05 |
|
|
|
| Accumulated
loss being brought forward |
|
254.14 |
|
|
|
|
|
|
------------ |
|
|
|
|
|
24.90 |
|
|
|
|
|
|
|
|
| Less
Transfer to Revenue Reserves - General |
|
24.771 |
|
|
|
|
|
|
|
|
| Unappropriated
profit carried forward |
|
|
0.133 |
|
|
|
|
|
------------ |
|
|
|
|
|
| The
amount taken to income currently and receivable/payable to the Government
under the formula is |
|
| determined
after the audited accounts are submitted to the Government and the approval
is received in due |
|
| course
of time. |
|
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Istaqbal Mehdi replaced Mr. Nisar Hussain Khan and Mr. Abdus Sattar replaced
Lt. Col. (Retd.) M. Ashraf. |
|
| Mr.
Mahmood Ahmed took over as Managing Director effective 1st November, 1996,
after the sad demise of |
|
| Mr.
Mahmood Ali Khan, who died of a heart attack. The Board wishes to place on
record appreciation of the |
|
| useful
services rendered by the outgoing directors of the Board and prays Almighty
Allah for the eternal peace |
|
| of
the departed soul. |
|
|
|
| On
10th November, 1996 at 1700 hours Mr. Ainuddin Siddiqi, relinquished charge
as Chairman under the |
|
| Federal
Government orders and Mr. Mahmood Ahmed, Managing Director, National Refinery
Limited, |
|
| assumed
the charge as Chairman. |
|
|
|
| PATTERN
OF SHAREHOLDINGS |
|
| Pattern
of shareholdings is shown on page 14. |
|
|
| AUDITORS |
|
| The
Auditors M/s. Taseer Hadi Khalid & Company, Chartered Accountants, retire
and being eligible offer |
|
| themselves
for reappointment. |
|
|
| MISCELLANEOUS |
|
| Chairman's
Review is endorsed by the Directors of the Company. |
|
|
|
| On
behalf of the Board |
|
|
|
|
MAHMOOD AHMED |
|
|
CHAIRMAN |
|
|
|
| CHAIRMAN'S
REVIEW
~ |
|
|
| I
welcome you to the 33rd Annual General Meeting |
|
| of
the company and present the Audited Accounts |
|
| and
the Audit Report of the company for the year |
|
| ended
30th June 1996. |
|
|
|
| You
are aware that the Fuel Refinery, a production |
|
| section
of the company, has been operating under |
|
| the
Import Parity Pricing Formula in which the after |
|
| tax
profits have been restricted between a minimum |
|
| of
10% and a maximum of 40% of the paid up |
|
| capital.
Fuel Refinery earned maximum of 40% for |
|
| the
year under report and surplus profits amounting |
|
| to
Rs. 38 million were refunded to the Government. |
|
|
|
|
|
|
| Lube
Base Oil Refinery which is another production |
|
|
|
| segment
has not been subjected to the profitability |
|
|
|
| capping
as is done in the Fuel Refinery. The |
|
|
|
| company
was free to fix the prices of base oil |
|
|
|
| products.
Asphalt which remained regulated during |
|
|
|
| the
year has also been deregulated effective mid |
|
|
|
| June
1996 and the company has started fixing its |
|
|
|
| price.
During the year finished lubricants and asphalt |
|
|
| were
freely imported as well as smuggled into the |
|
|
|
| Country,
therefore, the company faced difficulty in |
|
|
|
| the
local upliftment of Lube Base Oils and Asphalt. |
|
|
|
| Efforts
were increased to sell these products and are |
|
|
|
| reflected
in the increased sale of Lube Base Oil and |
|
|
|
| Asphalt. |
|
|
|
|
|
|
|
|
|
| The
company earned after tax profit of Rs. 279 |
|
|
|
| Million
for the year under report compared to the |
|
|
|
| loss
of Rs. 255 million of last year. The main |
|
|
|
| reasons
for the conversion of loss into profit are as |
|
|
|
| under:- |
|
|
|
|
|
|
|
|
|
|
|
| i.
Due to upward trend of CIF prices of products |
|
|
|
| in
the Fuel Refinery which more than off set |
|
|
|
| the
upward trend of crude oil price, the after |
|
|
|
| tax
profit of 40% or Rs. 92 million was earned |
|
|
|
| compared
to the 10% profit or Rs.23 million |
|
|
|
| earned
last year. |
|
|
|
|
|
|
|
|
|
|
|
|
| ii.
In the Lube Refinery after tax profit for the |
|
|
|
| year
amounted to Rs. 149 million compared |
|
|
|
|
| to
a loss of Rs. 278 million last year. The |
|
|
|
| major
reasons of profitability in the Lube |
|
| Refinery
may be attributed to the following:- |
|
|
|
|
|
|
| a.
Elimination of development surcharge |
|
|
| from
the feed stock cost consumed in the |
|
|
| Lube
Refinery. As you are aware your |
|
|
| management
was persistently repre- |
|
|
| senting
with the authorities against the |
|
|
| levy
of development surcharge on the |
|
|
| feedstock
consumed in the Lube Refin- |
|
|
| ery
which was unjustified but the deci- |
|
|
| sion
was delayed and company suffered |
|
|
| substantial
losses during the year. Minis- |
|
| try
of Petroleum has now to officially |
|
|
| confirm
that development surcharge is |
|
|
| not
levieable on Furnace Oil consumed |
|
|
| in
Lube Oil Refinery. Your management |
|
|
| decided
not to book the development |
|
|
| surcharge
on the feedstock consumed in |
|
|
| the
Lube Refinery and excluded it from |
|
|
| the
cost of production for the year un- |
|
|
| der report. |
|
|
|
|
|
|
|
|
|
| b.
Increase in local sales volume of Lube |
|
|
| Base
Oil as well as Asphalt by 10,492 |
|
|
| M.
tons and 31,029 M. tons respec- |
|
|
| tively. |
|
|
|
|
|
|
|
|
|
| c.
Revision in the Lube Base Oil prices |
|
|
| and
export price of Asphalt. |
|
|
|
|
|
|
|
| d.
Withdrawal of credit on sale of Lube |
|
|
| Base Oils. |
|
|
|
| CRUDE OIL |
|
| The supplies of
Arabian Light Crude are continued |
|
| from
ARAMCO Saudi Arabia under the annual |
|
| contract. The crude
oil was shared and exchanged |
|
| with
Pakistan Refinery Limited for Iranian Light and |
|
| Murban
Crudes to give a blend mutually' |
|
| advantageous
to both the Refineries and the |
|
| Country.
The refinery processed 3,058,025 M. Tons |
|
| of
crude which included indigenous crude oil at an |
|
| average
of 15,000 barrel per day. It will, however, |
|
| be
noted that despite 28 strike calls and as many as |
|
| 99
power failures (approx. 23 days production hurt) |
|
| and
acute shortage of water, the company achieved |
|
| record
production during the year. |
|
|
|
| PRODUCTION |
|
|
| Fuel
products mix was achieved in accordance with |
|
| the
market demand maximizing production of the |
|
| deficit
items as required by the Government. Lube |
|
| Base
Oils production was 189,042 M. Tons |
|
|
|
| compared
to 185,191 M. Tons of the previous year. |
|
|
|
| SALES |
|
|
|
|
| The
total sales during the year amounted to |
|
|
|
| Rs.
16,739 million compared to Rs. 15,221 million |
|
|
|
| of
the previous year. The increase in sales was due |
|
|
|
| to
higher production as well as CIF prices of |
|
|
|
| products.
Sales included export sales of Lube Base |
|
|
|
| Oil,
Naphtha and Asphalt amounting to Rs. 560 |
|
|
|
| million
compared to Rs. 978 million last year. |
|
|
|
|
|
|
|
| COST
OF GOODS SOLD, SELLING, ADMIN- |
|
|
|
| ISTRATION
AND FINANCIAL EXPENSES |
|
|
|
| The
company operated on a throughput of |
|
| 3,058,025
M. Tons of Crude Oil in the Fuel |
|
| Refinery;
and 696,765 M. Tons of Reduced Crude |
|
| Oil
in the Lube Refinery. The cost of goods sold was |
|
|
|
| higher
i.e. Rs. 15,768 million compared to Rs. 15,065 |
|
|
|
| million
in the previous year due to higher throughput |
|
| of
Crude oil & Reduced crude. |
|
|
|
|
| The
selling administration and general expenses |
|
| were
RS. 208 million compared to Rs. 149 million |
|
|
| last
year. The increase was due to increase of the gas |
|
| prices
by 21.5% and electricity rates by 24%, |
|
| revision
of the salaries as announced by the |
|
|
|
| Government
and general escalation for inflation and |
|
|
|
| Rupee/Dollar
parity. |
|
|
|
|
|
|
| Financial
expenses were Rs. 233 million compared |
|
|
|
| to
Rs. 144 million of last year. The increase was due |
|
| to
increased borrowng to meet liquidity shortfall for |
|
|
|
| delayed
clearance of bills by PSO who had their |
|
|
|
| dues
stuck up with WAPDA, and the increase in |
|
|
|
| mark-up
rates under State Bank of Pakistan |
|
|
|
| regulations, whereby the
minimum rate for |
|
|
|
| Commercial
bankers has been fixed @ 14%. |
|
|
|
|
|
|
|
| PROJECTS |
|
|
|
| - Self Generation of 7.5
MW electricity by |
|
|
|
| utilizing
high pressure steam internally |
|
|
|
| available,
was mechanically 90% completed by |
|
|
|
| end
of June 1996. It is expected to be |
|
|
|
| commissioned
by December 1996, after which |
|
|
|
| company
will be ensured stable power supply |
|
|
|
| for
one of its units. |
|
|
|
|
|
|
|
|
|
| - Company is also
installing additional tankage |
|
|
|
| of
45,000 tons Crude Oil capacity to achive |
|
|
|
| crude
oil inventory level upto 22 days. The |
|
|
|
| project
is expected to be completed by mid |
|
|
|
| 1998. |
|
|
|
|
|
|
|
|
|
|
| OUTLOCK |
|
|
|
|
|
| The
National Environmental Quality Standard of the |
|
|
|
| Government
of Pakistan now require that by the |
|
|
|
| year
2000 the lead contents in M.S should be |
|
|
|
| reduced
from the present 0.42 mg/liter to 0.15 mg. |
|
|
|
| and
the Sulpher contents in the HSD be reduced to |
|
|
|
| 0.05%
from 1% at present. The company is actively |
|
|
|
| engaged
in plans for putting up an Isomerization |
|
|
|
| Unit
for M.S. and a Desulphurization Plant for HSD |
|
|
|
| to
produce both the products environmental friendly. |
|
|
|
|
|
|
|
|
| The
projects feasibilities are being examined by the |
|
|
|
| authorities
to find ways to means as to their |
|
|
|
| economic
and financial viability due to extra cost of |
|
|
|
| processing. |
|
|
|
|
|
| The
Company has also chalked out plans as joint |
|
| venture
with private sector company to lay a new |
|
| JP-I
Pipeline to the Quaid-e-Azam International |
|
| Airport
Karachi, as the old pipeline of PRL used so |
|
| far
is too old and vulnerable to leakages. |
|
|
|
|
| The
company has also planned and entered into an |
|
| agreement
to install additional Power Plant of 22 |
|
| MW
at Refinery site in collaboration with private |
|
| sector
so as to be independent of the National Power |
|
| Grid
and to ensure uninterrupted power supply to all |
|
| its
operating uints. |
|
|
| STAFF |
|
| On
the job training to technicians and engineers to |
|
| meet
the shortage of trained personnel continued |
|
| during
the year. |
|
|
|
|
|
| I
would like to record my appreciation for the efforts |
|
| and
dedication of all the executives, staff and |
|
| workers
during the year in keeping the Refinery |
|
| operating
despite strikes and law & order situation |
|
| in Karachi. |
|
|
|
|
| PATTERN
OF SHAREHOLDINGS AS AT JUNE 30, 1996 |
|
|
| NO. OF |
|
SHAREHOLDINGS |
|
TOTAL |
|
| SHARE HOLDERS |
FROM |
|
TO |
|
SHARES HELD |
|
|
| 1343 |
1 |
|
100 |
|
63,887 |
|
| 1399 |
101 |
|
500 |
|
437,993 |
|
| 743 |
501 |
|
1000 |
|
611,429 |
|
| 983 |
1001 |
|
5000 |
|
2,231,582 |
|
| 96 |
5001 |
|
10000 |
|
672,376 |
|
| 19 |
10001 |
|
15000 |
|
233,230 |
|
| 13 |
15001 |
|
20000 |
|
223,015 |
|
| 3 |
20001 |
|
25000 |
|
64,176 |
|
| 2 |
25001 |
|
30000 |
|
57,800 |
|
| 4 |
30001 |
|
35000 |
|
134,097 |
|
| 1 |
35001 |
|
40000 |
|
35,050 |
|
| 2 |
40001 |
|
45000 |
|
85,885 |
|
| 2 |
45001 |
|
50000 |
|
95,965 |
|
| 3 |
50001 |
|
55000 |
|
154,332 |
|
| 1 |
55001 |
|
60000 |
|
60,000 |
|
| 2 |
60001 |
|
75000 |
|
141,304 |
|
| 4 |
75001 |
|
90000 |
|
330,000 |
|
| 3 |
90001 |
|
100000 |
|
295,700 |
