Attock Refinery Limited

Balance Sheet
As at June 30, 2017
2017 2016
Note Rs ‘000 Rs ‘000

ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT
Operating assets 12 35,133,344 12,148,054
Capital work-in-progress 13 142,057 22,733,687
Major spares parts and stand-by equipment 81,396 83,293
35,356,797 34,965,034

LONG TERM INVESTMENTS 14 13,264,915 13,264,915

LONG TERM LOANS AND DEPOSITS 15 34,642 31,289
DEFERRED TAXATION 16 493,985 644,246

CURRENT ASSETS
Stores, spares and loose tools 17 2,193,275 1,815,409
Stock-in-trade 18 5,712,344 6,707,642
Trade debts 19 10,678,545 6,889,427
Loans, advances, deposits, prepayments
and other receivables 20 1,842,288 1,618,030
Cash and bank balances 21 21,630,109 9,683,198
42,056,561 26,713,706
TOTAL ASSETS 91,206,900 75,619,190

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Share capital
Authorized share capital 6 1,500,000 1,500,000
Issued, subscribed and paid-up capital 6 852,930 852,930
Reserves and surplus 7 26,475,311 21,524,684
27,328,241 22,377,614
SURPLUS ON REVALUATION OF FREEHOLD LAND 8 12,052,576 10,811,949
39,380,817 33,189,563
NON-CURRENT LIABILITIES
Long term financing 9 17,672,166 14,613,682

CURRENT LIABILITIES
Trade and other payables 10 28,175,711 23,043,629
Accrued mark-up on long term financing 9 338,226 266,556
Current portion of long-term financing 9 2,200,000 550,000
Provision for taxation 3,439,980 3,955,760
34,153,917 27,815,945
TOTAL EQUITY AND LIABILITIES 91,206,900 75,619,190
Profit and Loss Account
For the year ended June 30, 2017

2017 2016
Note Rs ‘000 Rs ‘000

Gross sales 22 139,515,951 95,960,398

Taxes, duties, levies and price differential 23 (38,104,159) (29,395,474)
Net sales 101,411,792 66,564,924
Cost of sales 24 (97,078,919) (67,466,755)
Gross profit/ (loss) 4,332,873 (901,831)

Administration expenses 25 595,023 520,546

Distribution cost 26 49,047 50,538
Other charges 27 202,660 5,800
(846,730) (576,884)
Other income 28 1,434,222 927,384
Operating profit/ (loss) 4,920,365 (551,331)
Finance cost 29 (1,263,141) (156,881)
Profit/ (loss) before taxation from refinery operations 3,657,224 (708,212)
Taxation 30 42,111 4,819
Profit/ (loss) after taxation from refinery operations 3,699,335 (703,393)
Income from non-refinery operations less
applicable charges and taxation 31 1,714,329 1,519,743
Profit for the year 5,413,664 816,350

Earnings/ (loss) per share - Basic and diluted (Rs)

Refinery operations 43.37 (8.25)
Non-refinery operations 20.10 17.82
32 63.47 9.57
Attock Refinery Limited
Ratio Analysis
For the Year 2016/2017
BALANCE SHEET RATIOS: Stability (Staying Power)
1 Current Ratio 2017 2016
Current Assets 42,056,561 26,713,706
1.23 0.96
Current Liabilities 34,153,917 27,815,945
2 Debt Ratio
Total Liabilities 51,826,083 42,429,627
0.57 0.56
Total Assets 91,206,900 75,619,190
3 Equity Ratio
Total Equity 39,380,817 27,815,945
0.43 0.37
Total Assets 91,206,900 75,619,190

INCOME STATEMENT RATIOS: Profitability (Earning Power)

4 Gross Margin
Gross Profit 4,332,873 901,831
0.043 (0.014)
Sales 101,411,792 66,564,924
5 Net Margin
Net Profit Before Tax 3,699,335 703,393
0.036 (0.011)
Sales 101,411,792 66,564,924

ASSET MANAGEMENT RATIOS: Overall Efficiency Ratios

6 Return on Capital Employeed
Operating Profit 4,920,365 (551,331)
0.086 (0.012)
Capital Employeed 57,052,983 47,803,245
7 Return on Assets
Operating Profit 4,920,365 (551,331)
0.054 -0.007
Total Assets 91,206,900 75,619,190
8 Return on Equity
Operating Profit 4,920,365 (551,331)
0.12 -0.02
Net Equity 39,380,817 33,189,563

ASSET MANAGEMENT RATIOS: Working Capital Cycle

9 Inventory Turnover
Cost of Goods Sold 97,078,919 67,466,755
17 10
Inventory 5,712,344 6,707,642
10 Inventory Turn-Days
360 360 360
21 36
Inventory Turnover 17 10
11 Accounts Receivable Turnover
Sales 101,411,792 66,564,924
9.5 9.7
Accounts Receivable 10,678,545 6,889,427
12 Accounts Receivable Turn-Days
360 360 360
38 37
Accts. Rec. Turnover 9.5 9.7
13 Accounts Payable Turnover
Cost of Goods Sold 97078919 67,466,755
3.4 2.9
Accounts Payable 28175711 23,043,629
14 Average Payment Period
360 360 360
104 123
Accts. Pay. Turnover 3.4 2.9
15 Net Operating Cycle in Days
Inventry Turnover in Day + Account Receivable
21+38-104 -45 36+37-123 -50
Turnover in days - Account payable Turnover in
Attock Refinery Analysis
Ratios Comparison of Year 2017 with Year 2016

If we compare ratio analysis of year 2016 to 2017, we can find following result.
Current ratio of Attock is increase in 2017 as it was 0.96 times in 2016 which become 1.23 times in
2017. Which shows that they manage to decrease their current liabilities as compare to current assets,
but if we talk about their capital structure it’s however remain same , Their capital structure is
constructed on 56% on debt and 44% on equity, which become 57% on debt and 43% equity on equity
which does not show any major changes in their capital structure, Which clearly show that their
management is financing their business using debt mostly.
However, company slightly recover their margins, company had a net loss of 0.9Billion in 2016 and in
2017 company managed to achieve profit of 4.3 Billion Rs, their gross loss margin was 1.4% which
become 4.3% as a gross profit margin in 2017. Companies net loss margin was 1.1% which become
net profit margin of 3.6% in year 2017.
Because of loss in 2016 their return on Capital employed, Return on Assets and Return on equity was
negative 1.2%, 0.7% and 2% respectively. Which after an operating profit of 4.9 billion become positive
8.6%, 5.4% and 12% respectively, which shows a positive achievement.
Company used to maintain 36days inventory in year 2016 which they reduce to 21days inventory only
in year 2017. Their recovery days does not show major changes in year 2016-2017.It was 37days in
2016 which become 38 days in year 2017. Company improve their payment policy in year 2017,
Companies average payment period was 123days in 2016 which company able to manage reduce to
104days in 2017. Their operating cycle was negative 50days in 2016 which become negative 45days
after they improve their payment policy.
National Refinery Limited
Balance Sheet
As on 30 July 2017
National Refinery Limited
Ratio Analysis
For the Year 2016/2017

BALANCE SHEET RATIOS: Stability (Staying Power)

1 Current Ratio 2017 2016
Current Assets 22,751,593 29,956,587
1.26 1.78
Current Liabilities 18,046,065 16,838,088
2 Debt Ratio
Total Liabilities 18,046,065 16,838,088
0.29 0.31
Total Assets 61,385,945 53,660,531
3 Equity Ratio
Total Equity 43,339,880 36,822,443
0.71 0.69
Total Assets 61,385,945 53,660,531

INCOME STATEMENT RATIOS: Profitability (Earning Power)

4 Gross Margin
Gross Profit 9,799,508 11,043,086
0.091 0.118
Sales 107,447,444 93,788,378
5 Net Margin
Net Profit Before Tax 8,045,781 7,688,076
0.075 0.696
Sales 107,447,444 11,043,086

ASSET MANAGEMENT RATIOS: Overall Efficiency Ratios

6 Return on Capital Employeed
Operating Profit 8,497,697 10,364,553
0.196 0.281
Capital Employeed 43,339,880 36,822,443
7 Return on Assets
Operating Profit 8,497,697 10,364,553
0.138 0.193
Total Assets 61,385,945 53,660,531
8 Return on Equity
Operating Profit 8,497,697 10,364,553
0.20 0.281
Net Equity 43,339,880 36,822,443

ASSET MANAGEMENT RATIOS: Working Capital Cycle

9 Inventory Turnover
Cost of Goods Sold 97,647,936 82,745,292
9 7
Inventory 10,931,017 11,252,503
10 Inventory Turn-Days
360 360 360
40 49
Inventory Turnover 9 7
11 Accounts Receivable Turnover
Sales 107,447,444 93,788,378
17.8 17.7
Accounts Receivable 6,032,874 5,297,198
12 Accounts Receivable Turn-Days
360 360 360
20 20
Accts. Rec. Turnover 17.8 17.7
13 Accounts Payable Turnover
Cost of Goods Sold 97,647,936 82,745,292
5.9 5.5
Accounts Payable 16,484,464 15,030,594
14 Average Payment Period
360 360 360
61 65
Accts. Pay. Turnover 5.9 5.5
15 Net Operating Cycle in Days
Inventry Turnover in Day + Account Receivable
40+20-61 0 49+20-65 4
Turnover in days - Account payable Turnover in
National Refinery Limited Analysis
Ratios Comparison of Year 2017 with Year 2016

If we compare ratio analysis of year 2016 to 2017, we can find following result.
Current ratio of NRL decrease in 2017 as it was 1.78 times in 2016 which become 1.26 times in 2017.
That is because they reduce their cash level by investing their cash into fixed assets in year 2017, but
if we talk about their capital structure it’s however remain same , Their capital structure is constructed
on 31% on debt and 69% on equity, which become 29% on debt and 71% equity on equity which does
not show any major changes in their capital structure, Which clearly show that their management is
financing their business by cash generated internally.
However, company margins slightly decline in 2017, Their gross profit margin was 11.8% which become
9.1% as a gross profit margin in 2017. Companies net profit margin was 8.2% which become 7.5% in
year 2017.
Because of better margins in 2017 their return on Capital employed, Return on Assets and Return on
equity was 28.1%, 19.3% and 27.7% respectively. Which become 19.6%, 13.8% and 20% respectively,
which shows a slightly negative impact.
Company used to maintain 49 days inventory in year 2016 which they reduce to 40 days inventory only
in year 2017. Their recovery days does not show any changes in year 2016-2017.It was 20days in 2016
which remains 20 days in year 2017. Company improve their payment policy in year 2017, Companies
average payment period was 65 days in 2016 which company able to manage reduce to 61 days in
2017. Their operating cycle was 4 days in 2016 which become zero days after they improve their
payment policy.
Pakistan Petroleum Limited
Balance Sheet
As on June 30 2017
Pakistan Petroleum Limited
Income Statement
For the Year ended June 30,2017
Pakistan Petroleum Limited
Ratio Analysis
For the Year 2016/2017

BALANCE SHEET RATIOS: Stability (Staying Power)

1 Current Ratio 2017 2016
Current Assets 155,450,715 91,604,072
2.89 2.88
Current Liabilities 53,781,787 31,795,252
2 Debt Ratio
Total Liabilities 108,214,699 79,813,384
0.33 0.29
Total Assets 324,283,576 272,462,321
3 Equity Ratio
Total Equity 216,068,877 192,648,937
0.67 0.71
Total Assets 324,283,576 272,462,321

INCOME STATEMENT RATIOS: Profitability (Earning Power)

4 Gross Margin
Gross Profit 64,481,918 44,946,508
0.551 0.561
Sales 116,986,307 80,151,211
5 Net Margin
Net Profit Before Tax 35,678,643 17,242,019
0.305 0.215
Sales 116,986,307 80,151,211

ASSET MANAGEMENT RATIOS: Overall Efficiency Ratios

6 Return on Capital Employeed
Operating Profit 48,128,675 26,706,716
0.178 0.111
Capital Employeed 270,501,789 240,667,069
7 Return on Assets
Operating Profit 48,128,675 26,706,716
0.148 0.098
Total Assets 324,283,576 272,462,321
8 Return on Equity
Operating Profit 48,128,675 26,706,716
0.22 0.139
Net Equity 216,068,877 192,648,937

ASSET MANAGEMENT RATIOS: Working Capital Cycle

9 Inventory Turnover
Cost of Goods Sold - -
0 0
Inventory - -
10 Inventory Turn-Days
360 - -
0 0
Inventory Turnover - -
11 Accounts Receivable Turnover
Sales 116,986,307 80,151,211
1.2 1.4
Accounts Receivable 99,283,854 57,835,214
12 Accounts Receivable Turn-Days
360 360 306 360 260
Accts. Rec. Turnover 1.2 1.4
13 Accounts Payable Turnover
Operating expenses, Royaliteis and other levies 52,504,389 35,204,703
1.1 1.1
Trade payable 48,602,277 31,669,572
14 Average Payment Period
360 360 360
333 324
Accts. Pay. Turnover 1.1 1.1
15 Net Operating Cycle in Days
Inventry Turnover in Day + Account Receivable
306-333 -28 260-324 -64
Turnover in days - Account payable Turnover in
Pakistan Petroleum Limited Analysis
Ratios Comparison of Year 2017 with Year 2016

By comparing ratio of year 2016 & 2017, we conclude on following results

Current ratio of Pakistan Petroleum Limited remain same in 2017 as it was 2.88 times in 2016 which
become 2.89 times in 2017. but if we talk about their capital structure it’s however remain same, Their
capital structure is constructed on 29% on debt and 71% on equity, which become 33% on debt and
67% equity on equity which shows a minor changes in their capital structure but still they finance their
business by internally generated cash flows.
PPL gross profit margin does not make any major change during year 2016 to 2017 it was 56.1% which
become 55.1% as a gross profit margin in 2017. However, company improve their net profit margin
which was 21.5% in year 2016 and after phenomenal increase it become 30.5% in year 2017. Major
reason of this change is company strategy to decline their exploration cost, which increase net profit
margin in 2017.
Pakistan Petroleum Limited margin improved in year 2017.Their Return on Capital employed, Return
on Assets and Return on equity was 11.1%, 9.8% and 13.9% respectively in 2016. Which become
17.8%, 14.8% and 22% respectively in year 2017, which shows a major improvement in asset
management ratios.
Company does not maintain any inventory, so we cannot calculate their inventory turnover but
analyzing their Account receivable in day we conclude that their recovery in days does get worst in year
2016-2017.It was 260 days in 2016 which increases to 306 days in year 2017.Their is no major change
in company’s payment policy in year 2017, Companies average payment period was 324 days in 2016
which company able to increase to 333 days in 2017. Their operating cycle was -64 days in 2016 which
become -28 days.
Ratio Analysis of Peer group
This peer group is consisting of three large scale refinery companies. Our main purpose is to
understand financial performance of Attock refinery as compare to other peer companies which are
National Refinery limited and Pakistan petroleum limited, however Attock and National refinery has
main focus on refinery and their principle line of business is

Ratio Comparison of Attock refinery with Peer group

If we analyses comparison of Attock with national refinery with its peer group i.e. National refinery
limited & Pakistan petroleum limited we can conclude following result
Attock refinery current ratio is 1.23 in year 2017 as compare to National refinery limited current ratio is
1.26 and Pakistan petroleum limited current ratio is 2.89 as there is no major difference between Attock
refinery and National refinery ratio but Pakistan petroleum ratio is in better position. It shows that Attock
refinery relays more on current liabilities as compare to National refinery and Pakistan petroleum.
By analyzing debt ratio and equity ratio we analyses that Attock refinery relays more on debt as
compare to their peer group, Attock refinery capital consist of 57% on debt and 43% on equity while
National refinery and Pakistan petroleum debt ratio is 29% and 33% respectively and accordingly their
equity is 71% and 67% of their business.
Attock refinery has low margins as compare to National Refinery Limited and Pakistan Petroleum
Limited, Attock refinery has gross profit margin of 4.3% and their net profit margin is 3.6% and National
refinery has margin of 9.1% gross and 7.5% net profit of their sales while Pakistan petroleum limited
has best margin in this peer group, Pakistan petroleum has gross margin of 55.1% and their net profit
is 30.5% of their sales.
Attock has poor efficiency in this peer group, Attock’s Return on Capital employed is only 8.6% while
their peer group has even more then 2 times of their ROCE, National refinery has ROCE of 19.6% with
respect Pakistan petroleum has achieved ROCE 17.8% in year 2017. Attock’s ROA is 5.4% which
shows their poor utilization of their assets, but their peer manages to get return on their assets 13.8%
and 14.8% respectively. Because of Attock’s poor utilization they manage to get return on their equity
is only 12% however National refinery has ROE of 20% and Pakistan petroleum achieved return of
22% on their equity.
Attock refinery turnover their inventory more then National refinery which means they have more
ordering cost then National refinery however National refinery maintain buffer stock more then Attock
refinery. However, Pakistan petroleum does not hold any inventory. Attock inventory turnover is 17
times in a year while National refinery has only 9 times. But They manage inventory for 40 days, on
other side Attock manage inventory for 21 days only.
National refinery has best recovery team in this peer group, their receivable period is only 20 days while
Attock recovery period is 38 days however Pakistan petroleum has longest average receivable in days
which is 306 in year 2017.
Pakistan petroleum utilize their debtor financing most, they take average time of 333 days to pay their
vendors while Attock petroleum take 104 days but least days are taken by National refinery who has
average payment period of 61 days only.
Attock refinery has net operating cycle of negative 45 days, which means they have been utilizing their
short-term debt not only in working capital but also for long term financing. Pakistan petroleum has net
operating cycle of negative 28 days which is because they have been utilizing most of their short-term
liabilities into short term investments. That’s also a reason that they have long duration for payment.

Conclusion
Attock debt capital structure and their poor efficiency seems the reason of their low margins and
Pakistan petroleum Limited’s equity capital structure, better efficiency and no inventory system make
their margins higher in this peer group. However National refinery maintain to achieve better margin
because of high level of inventory, because of increasing price trend of crude oil with high level of
inventory help them to achieve better margins.

Recommendation
Attock refinery should improve their efficiency and should improve their capital structure by paying off
some their debts, they should also improve their margins by maintaining high level of inventory in rising
price trend and low level of inventory in price falling trend.