KARACHI, Not 20: The financial figures for the first-quarter ended September 30, 2002, released earlier this month showed the gas utility posting pretax profit at Rs471 million, representing 5.6 per cent increase over profit before tax of Rs446 million in the corresponding period of the previous year. For all of last year to end-June 2002, the company had logged in all-time high pretax profit figure of Rs2.154 billion and contributed to the exchequer Rs6 billion in sales tax, corporate tax and gas development surcharge.

SSGC operates on a fixed return formula enabling it to earn operating profit at 17 per cent of average operating assets. Thus, any increment in operating assets directly affects the utility’s profitability. The company has earmarked Rs1.55 billion for its ongoing Gas Infrastructure Rehabilitation & Expansion Project (GIREP) for financial year 2003.

During the quarter under review, volume of gas sold stood at 61,197 mmcf and value of sales was Rs8.677 billion, both representing improvement from sale of 57,959 mmcf and sales valued at Rs7.888 billion in the comparable period of 2001.

The company has the agreeable habit of listing the past 10-year performance with each annual report, which makes it easy for analysts to compare performances. Total assets of SSGC, which were valued at Rs8 billion in 1993, had shot up to Rs22 billion at the end of financial year 2002. Over the 10-year period, the number of consumers almost doubled from 883,254 to 1.612 million with sales to these consumers reaching the mark of 234,553 million cubic feet (mmcf) in the latest financial year. In terms of gas sales pattern, 82.6 per cent went to industrial consumers; followed by 13.52 per cent to domestic users and 3.87 per cent to commercial users.

Last year, the company had cut down the transmission and distribution losses to 7.60 per cent, from 8.36 per cent and plans were afoot to curtail them further to 6 per cent over the next three years. In the last annual chairman’s report, it had been observed that KESC and Wapda were the company’s major customers accounting for 22 and 14 per cent, of the entire sales, respectively. Their payment performance, was stated to be cause for concern, as at June 30, 2002, sum of Rs1.375 billion stood due from KESC and Rs2.581 billion from Wapda.

Paid-up capital of SSGC at end-September 2002 stood at Rs6,711 million. The company maintained an unbroken chain of bonus issues from 1993, up until financial year 2000, when the last bonus at 15 per cent was disbursed to the shareholders.

At the last count on June 30, 2002, a little over 70 per cent shares in SSGC were vested in the Government and another 12 per cent were held by banks and DFIs. NIT and ICP together controlled 11 per cent equity, while the aggregate stake of 11,029 individuals was 4.51 per cent.

For so many small shareholders in SSGC, investing money in the company stock must make good investment sense over the long haul.

Cash dividend at 15 per cent was resumed in 2001, after the last cash payout at 20 per cent disbursed in 1991-92. The cash dividend was raised to 17.5 per cent for the previous year. The ruling market price of the share is Rs14.60. At Sept 30 debt/equity ratio worked out at 44:56. The company is expected to benefit from SBP’s discount rate cuts by 1.50 per cent announced earlier this week, as it would be able to trim down the financial charges through renegotiations on existing as well as future loans.

The company is in the process of separating non-core business arms. Last year, the company entered into an agreement with Pakistan Petroleum Limited for sale of its purification plant at Sui and the transaction was completed during the quarter under review. Next on the auction block is the sale of meter manufacturing plant. Another major event during the quarter under review was the commissioning of the project for supply of gas to Nooriabad Industrial Estate.

Just at the close of the quarter — on October 9, the company got its new Managing director/CEO: Munawar B.Ahmad, who is said to bring along a combined local and overseas experience of 28 years in the fields of engineering and management.