KARACHI – An unnecessary delay on the part of the government in revising the petroleum pricing mechanism has added to the financial woes of the public sector refiners like Pakistan Refinery Limited (PRL).
According to the auditor’s report, the current liabilities of the state-owned refiners have exceeded the company’s current assets by Rs 2.46 billion. PRL, a hydro skimming refinery, has told its shareholders at Karachi Stock Exchange that it was facing an accumulative loss of Rs 259.98 million.
Furthermore, the company’s Board of Directors in Monday’s meeting have recommended ‘nil’ dividends for the first half of the current fiscal year. “As at December 3l, 2010 the company has accumulated losses of Rs 259.98 million and its current liabilities exceed its current assets by Rs 2,46 billion,” reads Note 1.4 of the extracts released by the company with its shareholders at KSE.
PRL, however, has expressed the hope that its ongoing negotiations with the government would yield positive results with regards to profitability. It said during July-December 2010, the company’s had earned a profit after taxation of Rs 881.12 million. “Based on estimated future cash flows, the management believes that the current situation would further improve, resulting in a positive impact on the profitability and liquidity of the company,” it hoped.
The company has declared Profit After Taxation (PAT) of Rs 881.121 million during the first six months of FY11 against a loss of Rs 1.69 billion during the previous corresponding period. The earning per share has been recorded at Rs 25.17 against a loss of Rs 48.57 last year. The PRL management said that a favoring outcome of its ongoing discussions with the government for the revision of the petroleum pricing mechanism would further add to the company’s profitability.
“Therefore, the company expects to be able to realise its assets and discharge its liabilities in the normal course of business, accordingly this condensed interim financial information is prepared on a going concern basis,” it added. The losses hit company is also seeking state financing to complete the Rs 1.39 billion upgradation project which would be also bolstered by a favorable outcome of the petroleum pricing mechanism presently under consideration.
Auditors have warned that the prevailing conditions were detrimental to the company’s financial health. “These conditions… indicate the existence of material uncertainty which may affect the company’s ability to continue as a functioning concern,” they warned.
