Jan-07- 13, 2002
Petroleum products' marketing is a challenging
business that, like other professions, requires foresight, acumen,
quick judgment and hard work. At PSO, we have been breaking new
grounds since our inception. By introducing an exciting product
portfolio, meeting our corporate social responsibility, setting up
storage depots at far-flung areas, presenting innovative marketing
techniques, energizing industrial institutions, supporting the
country's armed forces, ensuring customer satisfaction and meeting new
business challenges, PSO has been setting the benchmark for other oil
marketing companies during the 25 years of its existence.
In its present form, Pakistan State Oil (PSO) was
formed on December 30th, 1976 through a reorganization plan
implemented by the Government of Pakistan in pursuance of Section 15
of Marketing of Petroleum Products (Federal Control) Act 1974 and
Section 8 of the Esso Undertakings (Vesting) Act 1976.
Under the plan, State Oil Company Limited — a
private company wholly owned by the federal government in which ESSO
undertakings were vested on 15th September 1976 — took over the
entire undertakings of Pakistan National Oils Limited and Premier Oil
Company Limited as disclosed in their respective balance sheets as at
30th June with all assets, liabilities etc, at the date of transfer.
The company was later converted into a public
company and its name changed to Pakistan State Oil Company Limited.
The amalgamation scheme did not involve any
acquisition of shares from private shareholders of Pakistan National
Oils Limited and former Premier Oil Company Limited. PSO, with annual
turnover of Rs 270 crores, thus, became the largest oil marketing
company of Pakistan.
In consideration for the said transfer, the
reorganization plan provided that all shareholders of the two former
companies, PNOL and POCL, be issued fully paid-up ordinary shares of
PSO against their holdings in PNOL and POCL along with fully paid-up
premium shares. This was done at the rate of 1,185 PSO shares for
every 1,000 shares of PNOL and 1,136 PSO shares for every 1,000 shares
of POCL.
The formative period of any company is always
comparatively difficult but for an organization emerging out of the
merger of three separate units, the problems can be more complex. PSO,
during its first year of operation, was no exception. However, most of
the problems were satisfactorily resolved and the company emerged as a
homogenous commercial organization.
PSO sold a total of 2,514,000 tons of petroleum
products during the year ending June 30th 1977. This accounted for a
turnover of Rs 404.53 crores, showing tax before profit of Rs 2.68
crores. Such meager return was partially due to the unrealistic gross
margins, which were available to the oil marketing companies in all
main products and were fixed by the government as far back as 1963.
At the end of the first year, the extent of the PSO
operations was that it had four ocean terminals, 34 inland depots,
four blending plants and 950 retail outlets. Of the retail outlets,
715 were gasoline and HSD stations, 126 service stations, 44 LDO farm
stations and 65 kerosene stations.
In its first year of operations, the upcountry
storage capacity of the company was augmented by 33,000 tons. The
storage capacity was established at Gilgit, Chitral and Skardu,
enabling the residents of the Northern Areas to obtain their
requirements of petroleum products throughout the year and at
reasonable prices.
By the second year of operations i.e. 1977, the
company had successfully overcome the initial problems of the merger,
establishing itself as a homogeneous commercial force capable of
playing its rightful role in the economic progress of the country. It
sold 1,826,000 metric tons of petroleum products during the year as
against 1,746,000 tons in the first year. This indicated an increase
of 4.56 per cent.
Since then, PSO's success story has continued with
the company making a strong impact on the country's overall
development over the years with excellent prospects for further
growth.
A cursory look at "PSO at a Glance" in
the annual report reveals remarkable financial strength accumulated
since inception. Statistics, though somewhat restricted, nevertheless,
give a picture of all-round improvement despite temporary setbacks.
The company's shareholders have reposed unwavering
confidence in the astute financial policies followed by the company
that have not only given extremely attractive cash dividends
year-after-year but also a consistent increase in the shareholders'
equity from Rs 116.2 million in 1977 to Rs 9,808 million in 2001.
And where do we stand today?
PSO's sales revenue during FY-2001 rose to Rs. 170
billion, showing a growth of 25.7% over the previous year. The company
earned an all-time record gross profit of Rs. 6.4 billion, which was
up by 12.4% over the preceding year. The profit after tax was Rs. 2.25
billion. This was marginally higher than the previous year's profit of
Rs. 2.23 billion. This after-tax profit was achieved despite the
financial impact of Rs. 408 million due to the Voluntary Separation
Scheme (VSS) that the company offered in April 2001 as part of the
restructuring plan. In addition, provisioning for medical retirement
and other adjustments amounting to Rs 138 million had been made.
If PSO had not made these provisions, the company
would have reflected an additional profit of the same amount, which
would have resulted in significantly higher profit than the preceding
year.
In every respect, the profit increase is primarily
due to improved margins combined with the results derived from the New
Vision Development program and other marketing initiatives.
Not only that, the company has emerged as one of
the country's few largest taxpayers in the corporate sector. PSO's
business operations have helped collect over the years Rs 338 billion
in duties and taxes on behalf of the government.
Integral to our success are our efforts to provide
our customers an unmatched service based on innovation, deep care and
our vision for the future. Accordingly, we have launched an aggressive
plan to build New Vision outlets in order to provide better quality
service to its customers. Some 330 New Vision retail outlets have been
established all over the country in a short period of two and a half
years, which is a record.
At the same time, to set high standards of customer
service, the number of Company-owned and Company-operated (CoCo) sites
has increased to 20.
Yet another ambitious program that PSO has launched
will see the promotion of Internet, especially in inaccessible areas
of Pakistan. A total of 500 retail outlets are to be provided with
Internet facility, which is now available at 150 outlets.
|
