Byco forked out into the petroleum marketing business in 2008, which has grown remarkably over the past six years. The firm enjoys presence in both mid-stream and downstream sector of the oil business now. In addition, a new company Byco Oil Pakistan Limited was set up in 2008 for setting up 120,000 barrels a day refinery. This new refinery was completed in December 2012 and is the largest refinery in the country. However, it has been shut for two years now due to a fire incident.
In 2012, Byco completed the single point mooring project. This floating port is the first of its kind in the country and has a capacity to handle very large petroleum cargo vessels.
Shareholding at Byco As the illustration shows, over 80 percent of Byco Petroleum Pakistan Limited is held by Byco Oil Pakistan Limited, whereas banks and financial institutions hold 0.37percent and the individuals hold18.79 percent of the shares.
Byco Oil Pakistan Limited's (BOPL) is owned by Byco Industries Incorporated (BII), Mauritius, which is the ultimate Parent company. BOPL owns a major shareholding in Byco Petroleum Pakistan Limited (BPPL).
All Byco companies have finally been merged into one entity with Byco Petroleum Pakistan Limited absorbing its holding and subsidiary companies. The High Court of Sindh in January, 2017 approved the merger of Byco Oil Pakistan Limited and Byco Terminals Pakistan Limited with and into Byco Petroleum Limited.
Past and recent annual financial performance Byco Petroleum's financial position is visible from six-year summary of the financial ratios. Gross margins have steadily increased, and net margins too have come into the green zone. The liquidity position for the form has not changed much in terms of current and quick ratios - both these ratios have remained somewhat constant over the six-year period.
FY15 was extremely challenging for the oil sector and especially for the refineries that witnessed sharp decline in crude and product prices, which continued throughout the first half of the year. During the initial six months of year, prices dropped by approximately 55 percent amidst the global supply glut in the oil markets.
Despite strong increase in sales volume, Byco Petroleum Pakistan Limited suffered at the expense of low oil prices. The company enhanced its oil marketing business by establishing 11 new retail outlets at strategic locations during the year and now has 261 retail sales outlets in Pakistan. The government also revised margins for Oil Marketing Companies (OMCs), which improved the profitability of this segment of BYCO.
Net sales for FY15 amounted to Rs 94.8 billion, 2 percent higher year-on-year despite the fall in prices as the company continued its focus on high margin products. Byco earned a gross profit of Rs 4.9 billion in FY15 as compared to a gross profit of Rs 409 million in FY14. This substantial increase in gross profit can be attributed to impressive increase in sales volume coupled with increased level of production that resulted in high absorption rate of manufacturing overheads and improved marketing margins.
Moreover, an effective supply chain management policy coupled with a lower inventory holding period allowed the company to curtail its inventory losses. Overall it was a good year for the firm amidst a tumultuous times and a past record of lacklustre performance.
FY16 on the other hand, saw a fall in revenues by 16 percent year-on-year. FY16 was another challenging year for the oil sector as declining price trend continued to persist in most part of the year where the prices further declined by about 23 percent.
Byco's volumes continued to stride forward, rising by 27 percent year-on-year, offset by lower oil prices. The Company earned gross profit of Rs 6 billion in FY16 versus RS4.90 billion in FY15 primarily due to significantly high sales volume, import of products at competitive pricing and improved marketing margins. Expenses remained within the budget, and hence the earnings for the year picked up staggeringly from Rs 72 million to Rs 1.37 billion.
9MFY17 snapshot BPPL's profits were up in 9MFY17 as well, which reflects the company's strength of having forward and backward integration in the form of petroleum marketing and dedicated oil port facility. It continued to focus on importing and selling higher margin products and was able to increase volume by 17 percent in 9MFY17 on a year-on-year basis. The revenues were also up by around 18 percent year-on-year in 9MFY17 as oil prices depicted an upward trend during the nine-month period.
It was during this time that the Sindh High Court sanctioned the merger of Byco Oil Pakistan Limited (BOPL) and Byco Terminals Pakistan Limited (BTPL) with and into BPPL.
Outlook The merger is expected to bring some positive synergies which include a larger asset base, economies of scale and increase in risk absorption capacity. The larger asset bases will allow the company to undertake larger investments and expand growth prospects with a potentially lower cost of fund raising. Also, the amalgamations will make single corporate and tax reporting possible for the merged entity and avoid duplication of work and higher costs. Last year, in order to improve the capital structure of the company, the company had approved the proposal to sell Isomerisation unit to a wholly owned subsidiary company namely Byco Isomerisation Pakistan (Private) Limited (BIPL).
Byco is also restarting its largest oil refinery next month that closed down almost two years ago after a fire damaged its oil heater back in 2015. This is a 120K barrel-per-day refinery that has been shut since October 2015. But now it seems that the restoration of the 120K refinery will bring synergetic benefits to the group if form of economies of scale and value chain integration.
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Byco -Financial Ratios - Six Year Summary
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2010 2011 2012 2013 2014 2015 2016
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Profitability Ratios
Gross Profit % 1.62 1.99 -8.82 0.12 0.45 5.13 7.57
Net Profit % -3.93 -5.10 -15.82 -3.41 -6.42 0.08 1.72
EBITDA Margin to sales % 5.29 2.41 4.76 2.67 -1.83 4.44 5.60
Return on equity % 38.40 -79.30 -270.0 66.23 -117.52 1.39 20.86
Liquidity Ratios
Current Ratio Times 0.52 0.43 0.39 0.70 1.02 0.52 0.53
Quick / Acid Test Ratio Times 0.32 0.28 0.31 0.50 0.78 0.39 0.34
Activity Ratios
Inventory turnover Times 8.34 9.47 6.58 11.60 12.72 13.19 12.04
Debtors turnover Times 5.99 5.85 2.00 5.46 8.27 9.68 9.01
Creditors turnover Times 1.82 1.41 0.82 3.29 3.83 3.05 2.55
Total assets turnover ratio Times 1.28 1.09 0.50 1.51 1.56 1.71 1.42
Fixed assets turnover ratio Times 2.93 2.09 1.06 3.76 6.20 6.91 6.31
Capital Ratios
Interest coverage ratio Times 0.51 0.12 (0.08) 0.28 (0.96) 1.06 1.41
Debt to equity ratio Times (1.30) 1.42 (2.21) (3.03) (1.77) (615.14) 12.1
Earnings per share Rs (4.12) (4.91) (3.15) (2.31) (6.07) 0.07 1.4
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Source: Company Accounts
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BYCO - Pattern of Shareholding (as of 30th June, 2016)
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Shareholders Category No. of No. of %
shareholder shares
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Associated Companies, Undertakings 1 790,510,099 80.84
and Related Parties - BOPL
Executives 3 51,000 0.01
NIT and ICP - - -
Directors, CEO and their spouse and minor children 8 19,800 0
Banks, Development Financial Institutions, 7 2,437,567 0.25
Non-Banking Finance Institutions
Modarabas and Mutual Funds 12 1,142,500 0.12
Insurance Companies 1 200 0
Others 107 14,942,014 1.53
General Public 15,798 168,755,557 17.25
Total Outstanding Shares 15,937 977,858,737 100
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Copyright Business Recorder, 2017