Hascol Petroleum Ltd. has finally announced its financial results for the first quarter that ended on 31 March 2021. It has reported a net consolidated loss of Rs. 936 million for the quarter that ended, as compared to a net loss of Rs. 9.47 billion in 2020 which cut its losses by 90 percent.
However, its sales were down by 45.5 percent to Rs. 19.09 billion as compared to Rs. 35.03 billion in the same period of 2020. Its cost of sales was also down by 50 percent to Rs. 18 billion from Rs. 36.35 billion.
According to the financial statement issued after a year, the company reported a gross profit of Rs. 1.02 billion during the period of January to March 2020 as compared to a loss of Rs. 1.32 billion that was reported in the same period of 2020.
The improvement in Hascol Petroleum’s income is attributed to the reopening of the businesses countrywide which boosted its sales with stable margins. Also, the transition of its leadership in 2020 promoted encouraging trends of performance within the company’s operations and its earnings.
The overall dynamics of the company in terms of operations and financial flows have improved significantly, which indicates the recovery of the losses and the regaining of the profitability in the business. Its financial mismanagement issues are being tackled internally, which promises to bode well for the company.
Hascol Petroleum had discovered inaccurate entries in its 2019 accounts and had immediately reported them to its national regulators. Simultaneously restating its financial statements for 2019 and 2018, it had posted a loss of Rs. 25 billion for 2020, a loss of Rs. 35.20 billion in 2019 and a loss of Rs. 3.4 billion in 2018.
The company had posted a loss after tax of Rs. 25.0 billion during 2020 after its losses had stood at Rs. 35 billion in 2019. It came to a sustainable footing in 2020, and the reconstituted board and new management had formulated a business revival and financial restructuring plan. Consequently, it reported a loss per share of Rs. 0.94 as compared to Rs. 9.68.
According to its annual report for 2020, a number of short to medium-term measures are being taken, or are in process as part of the plan, which include but are not limited to a significant reduction in operating costs, recapturing and growing sales volumes and market shares, the disposal of non-core assets, shoring up working capital, and raising additional equity to reduce leverage and address negative book equity.
Additionally, and most importantly, Hascol Petroleum has commenced and is making due progress in discussions with banks to partially convert its outstanding debt into equity and restructure all of its remaining debt into long-term facilities to reduce its onerous debt service obligations, as per the report.