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SHELL PAKISTAN LIMITED-Year Ended 30-06-2006

06 October, 2006

OVERVIEW : During the year under review, there has been changes in the company's Board of Directors. The year also witnessed enlargement in the retail outlets network including CNG sites.

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It recorded very high growth in sales while net profit was highest. It has excellent profit distribution record. For the financial year 2005-06, the company declared cash dividend at 30% and bonus issue in the proportion of 1:4.

The closing market price of the Shell Pakistan share on September 26, 2006, was recorded at Rs 466 per share which is close to 47 times of the par value. During the last one year market value of the share remained very high between Rs 453 and Rs 855 per share.

The year 2005 was marked by a tragic national calamity - the devastating earthquake that shook Pakistan in October. In the immediate aftermath of the earthquake, Shell Pakistan mobilised emergency response and medical teams for the affected areas and provided cash donations to the President's Relief Fund and various NGOs working in the earthquake area.

In total the company collected a total of US $1 million through Shell Pakistan Earthquake Relief Fund. This amount included donations from Shell staff across globe, Shell companies in Pakistan and the Shell group. Shell Pakistan local business partners and dealers also contributed generously to this worthy cause.

Shell Pakistan Limited (SPL) is a limited liability company incorporated in Pakistan and is listed on the Karachi and Lahore Stock Exchanges. On June 30, 2006, The Shell Petroleum Company Limited, United Kingdom, a subsidiary of Royal Dutch Shell Plc held 76.11% of SPL's total 43.832 million shares of Rs 10 each.

The company markets petroleum products and compressed natural gas (CNG). It also blends and markets various kinds of lubricant oils. During the financial year ended June 30 2006, the year under review, the network growth of its retail business reached 839 RVI sites 120 CNG sites in the preferred market areas. It has been reported that the company registered robust sales of lubricants in existing channels and activated new channels by leveraging Shell's global partnership with large Original Equipment Manufacturers (OEMs) such as Suzuki and Hyundai. By clearly monitoring shift in the consumer needs towards CNG, it has been the first company to introduce Helix CNG in the market.

The company's aviation business continues to show good results through operational excellence and growing the customer portfolio. It has also continued to meet growing export demand through improved supply arrangements with its partners. The Annual Report 2006 of the company noted that in 2005, SPL's aviation operations were recognised as the "best" within the Shell Africa, Middle East, and South and Central Asia (MESAF) region.

The year under review also witnessed changes in SPL's personnel at the highest strategic level. Quentin D' Silva succeeded Farooq Rahmatullah as Chief Executive and Chairman of the Board of Directors.

Farooq Rahmatullah had served the company for 38 years. The vacancy on the Board caused by his resignation was filled in by the appointment of Leon Menezes. Two more board members, Ms Fawzia Kazmi and Hasnain Moochhala also resigned and in their places Quentin D' Silva and Asif Sindhu were appointed as directors.

During FY 2005-06 the company posted net revenue at Rs 117.262 billion as against Rs 98.423 billion recorded in the previous year registering 19.12% growth which is impressive performance.

Net profit after taxation recorded even higher growth as it increased to Rs 3.108 billion from Rs 2.451 billion the previous year and in this case growth rate was at 26.82%.

The Annual Report attributes this commendable performance to a number of factors, ie shift of strategy towards higher margin products, effective management of supply and operations and increased focus on forecourt sales of high margin lubricants. In addition, the management reported sustained effort to control operating costs in all areas of operations.

The Annual Report highlights a number of milestones achieved some of which are mentioned here such as, significant IT initiative, Shell's Dealers Royal Club programme, mystery motorist 80% score, revealing remarkable enhancement in the company's service delivery across its core network.

SPL's approach toward safety and care is simply phenomenal which has been emphasized through HSSE management CNG safety remained top priority for Shell Pakistan to make aware that greatest danger comes from CNG conversion centres with unskilled staff and the use of substandard illegal manufactured parts.

COMPANY INFORMATION: Chairman & Chief Executive: Quentin D' Silva; Director: Akber Aziz; Company Secretary: M.G. Dossa; Registered Office: Shell House, 6 Chaudhry Khaliquzzaman Road Karachi-75530; Website: Registrar & Share Registration Office: Ferguson Associates (Pvt) Ltd State Life Building 1-A, I.I. Chundrigar Road Karachi-74000.

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