|Company ProfileHaroon Oils
Mar 26 - Apr 01, 2001
Brief History of the Company: Haroon Oils Limited is
one of the leading companies in Pakistan, engaged in the business of blending and sales of
lubricating oils and greases. It was incorporated as a public limited company on 30th May
1964 and commenced business on 19th June 1964. The objectives were to establish,
construct, own and operate a lubricating Oil Blending Plant in Pakistan. Haroon Oils
Limited is currently listed on the Karachi and Lahore Stock Exchanges.
Premises and Plant: The Blending Plant was constructed
in the industrial Area of West Wharf, Karachi, in a plot comprising on area of
approximately 14,295 square meters, including the land utilized for oil pipelines from the
Plant to the quayside at West Wharf. It comprises storage tanks, automatic blending and
filling machines, gas-fired steam generator and other miscellaneous implements.
A well-equipped Laboratory was also established in the premises of the
Plant. This provides quality control throughout the blending operations of The Company.
Extract from the 36th Annual Report of the Company
Sales Volume: The Sale Volumes for the year under
review were 6,362 MT as compared to 4,794 MT during last year, showing a growth of 33%.
The main contributing factors in the growth were the Railways' volumes of 2,605 MT and
trade through small packs of 4 & 10 liters introduced in October 1999.
Financial Results: The loss before taxation for the
year is Rs. 10,023,500 as compared to a profit before taxation of Rs. 827,584 during the
previous year. The loss is mainly due to a sharp increase in cost of sales by 12% of
turnover, resulting in a decrease of gross profit by Rs. 18.9 million. The increase in
cost of sales is because of the following items:
1. Low margin-Railways business
2. Cost of lube base oils increased by Rs. 4.10 per litre.
3. Cost of additives increased by Rs. 2.12 per litre.
4. Central Excise Duty increased by Rs. 2.20 per litre.
5. However, overall cost of transportation has slightly reduced by Rs.
Factors influencing Growth:
1. Stagnation in industrial activity and overall economic
recession in the country.
2. No restrictions on imports of finished lubricants due to the policy of
deregulation and liberalization.
3. Free imports of lube base oils by commercial importers.
4. Stiff competition by small blenders and major oil companies by
price-cutting, discounts and unlimited credit.
5. Furnace oil is a value-added product - PSO and Shell are using furnace
oil as a lever to promote sales of lubricants by allocating the product to distributors.
In addition to above, the overall economic conditions in the country
were not satisfactory for business due to the stringent steps initiated by the government
towards documentation of the economy.
During the year under review, company's contribution to the national
exchequer amounted to Rs. 105.111 million, (1998-1999: Rs. 71.778 million) in respect of
payments towards central excise duty, sales tax and corporate income tax against the
turn-over of Rs. 410,886 million i.e. 25.58%.
Future Prospects: Besides our normal business
the company has also been awarded large contracts for supply of lubricants to Defence and
Major trading of the company is sales through the 205 litres drums.
However, extensive sales plans have been developed to stabilize/grow in our trading
through 4-litres, 10-litres and 20-litres containers of Automotive Grades, which were
introduced late last year and have been well received in the market place. We expect
positive growth in our sales in these packings. Based on the encouraging response from the
customers we are confident that in the coming year we will be able to increase our market
share of the small containers.
Employee Relations: Three major developments, mutually
beneficial to the Company and the Employees have materialized in the last six months.
Firstly, a new Union Agreement has been contracted for the period 1st
July 2000 - 30th June 2002. This has been well received by all the workers. It is a major
step forward in promoting industrial harmony and motivation, insofar as this provides for
a better working environment and an improved quality of life.
Secondly, the Management has also formulated and issued comprehensive
Rules in the form of a manual, 'Human Resources - Policies and Procedures'. These are
applicable with effect from 1st January 2001. The Company's long-term interests have been
fully secured by a transparent enunciation of Employees' work responsibilities and
obligation. At the same time, the Employees have been made aware of their
performance-oriented benefits and accountabilities in their functioning.
Thirdly, a systematic restructuring of the Organization Matrix has been
carried out, along with introduction of cadres and grades for all personnel. 20 Unionized
employees were upgraded to the Management Cadre.
General: Being a commercial enterprise Haroon Oils
Limited constantly endeavours to improve its standing in the market place. All-out efforts
have been made to enhance its corporate image through various measures that directly
effect its reputation. The Company realizes that the key to success is in improving and
subsequently maintaining the quality of its products. In this regard, special attention is
being paid to bring product quality upto internationally-approved standards.
The Company places great emphasis on providing excellent service to its
customers. In addition, the best possible strategies are being developed so that a niche
for can be created in the market.
On aspects of Safety, Health & Environment (SHE), Haroon Oils
Limited is aware of its share of responsibility. Awareness for SHE is being nurtured in
the minds of staff members, workers and the customers. Safety notices and instructions
have been placed at appropriate places to keep the staff informed. Adequate safety and
fire-fighting instruments are in place. Lectures on these are arranged regularly. Action
is in hand to develop, sustain and enhance a practicable and effective Safety, Health and
Environment Management System (SHEMS).