Presentation on Shell Pakistan

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SHELL PAKISTAN BME/726 Khalid Bashir BME/739 Ejaz Ahmed BME/719 Malik Muhammad Imran BEM/1050 Malik Qamar Hayat BEM/1043 Faiza Zahid Financial Management Mr. Adeel Durvesh Biztek

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SCHEME OF PRESENTATION Introduction Mission Statement Vision Statement Objectives Responsibilities of Shell Pakistan Principles of Shell Pakistan Financial health of Shell Pakistan Problems in Shell Pakistan Actions Executed by the Company to Overcome Problems Our Suggestions that the Company Should Initiate Upcoming Global Challenges that Company Has to Face Conclusion Recommendations

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Introduction The Shell brand name enjoys a 100-year history in this part of the world. The history of Royal Dutch Shell in Indo Pak subcontinent dates back to 1903. In 1928, Royal Dutch Shell and the Burmah Oil Company Limited in India were merged and Burmah Shell Oil Storage & Distribution Company of India was borne. After the independence of Pakistan in 1947, the name was changed to the Burmah Shell Oil Distribution Company of Pakistan. In 1970, when 51% of the shareholding was transferred to Pakistani investors, the name of changed to Pakistan Burmah Shell (PBS) Limited. The Shell and the Burmah Groups retained the remaining 49% in equal propositions. In February of 1993, as economic liberalization began to take root and the Burmah divested from PBS, Shell Petroleum stepped into raise its stake to 51%. The years 2001-2 have seen the Shell Petroleum Company successively increasing its share, with the Group now having a 76% stake in Shell Pakistan Ltd (SPL)- an expression of confidence.

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Mission Shell Pakistan Ltd. employees share a set of core values – honesty, integrity and respect for people. We also firmly believe in the fundamental importance of trust, openness, teamwork and professionalism, and pride in what we do.

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Vision As Shell Pakistan Limited, we strive to deliver results, perform to the highest standards, develop our people, provide quality customer service and actively pursue consistent safety improvements. A firm foundation based on performance enables us to deliver strong returns and values growth for our shareholders, greater and better choices for our customers and opportunities and improvements in the quality of life of our communities. In an unsettled world, our commitment to performance at every level continues to be both the challenges and the aspiration.

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Objectives The objectives of Shell Pakistan Ltd. are to engage efficiently, responsibly and profitably in oil, gas, chemicals and other selected businesses and to participate in the search for and development of other sources of energy to meet evolving customer needs and the world’s growing demand for energy. Their role is to ensure that they extract and deliver them profitably and in environmentally and socially responsible ways.

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Responsibilities of Shell Pakistan Shell Pakistan Ltd. recognizes five areas of responsibility. It is the duty of management continuously to assess the priorities and discharge these inseparable responsibilities on the basis of that assessment. Shareholders To protect shareholders’ investment, and provide a long-term return competitive with those of other leading companies in the industry. Customers To win and maintain customers by developing and providing products and services which offer value in terms of price, quality, safety and environmental impact, which are supported by the requisite technological, environmental and commercial expertise.

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Employees To respect the human rights of their employees and to provide them with good and safe working conditions and competitive terms and conditions of employment. They recognize that commercial success depends on the full commitment of all employees. Those With Whom They Do Business To seek mutually beneficial relationships with contractors, suppliers and in joint ventures and to promote the application of these Shell Pakistan Ltd. General Business Principles or equivalent principles in such relationships. Society To conduct business as responsible corporate members of society, to comply with applicable laws and regulations, to support fundamental human rights in line with the legitimate role of business, and to give proper regard to health, safety, security and the environment.

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Principles of Shell Pakistan Economic Long-term profitability is essential to achieving our business goals and to our continued growth. Without profits and a strong financial foundation, it would not be possible to fulfill responsibilities. Competition Shell Pakistan Ltd. supports free enterprise. They seek to compete fairly and ethically and within the framework of applicable competition laws; they will not prevent others from competing freely with them. Business Integrity Shell Pakistan Ltd. insists on honesty, integrity and fairness in all aspects of their business. The direct or indirect offer, payment, soliciting or acceptance of bribes in any form is unacceptable. All business transactions on behalf of Shell Pakistan Ltd. must be reflected accurately and fairly.

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Political Activities Shell Pakistan Ltd. does not make payments to political parties, organizations or their representatives. Shell Pakistan Ltd. does not take part in party politics and do their business according to countries legislations. Political activities of employees were individual’s wish to engage in activities in the community, including standing for election to public office, they will be given the opportunity to do so where this is appropriate in the light of local circumstances. Health, Safety, Security and the Environment Shell Pakistan Ltd. has a systematic approach to health, safety, security and environmental management in order to achieve continuous performance improvement. They continually look for ways to reduce the environmental impact of their operations, products and services. Local Communities They manage the social impacts of their business activities carefully and work with others to enhance the benefits to local communities, and to mitigate any negative impacts from their activities.

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Compliance They comply with all applicable laws and regulations of the countries in which they operate. Living by Their Principles Their shared core values of honesty, integrity and respect for people. The Business Principles apply to all transactions, large or small. Reputation will be upheld if they act according with the law and Principles. They encourage their employees to demonstrate leadership and teamwork Management to ensure all employees are aware of principles, behave with spirit. Management to provide employees safe confidential channels. Shell Pakistan Ltd. employees to report suspected breaches of the Principles.

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Financial Health of Shell Pakistan Current Ratios

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Acid Test Ratio

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Summary of Liquidity Ratios

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Financial Leverage Ratios Debt to Equity Ratio

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Debt to Total Assets Ratio

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Total Capitalization Ratio

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Summary of Financial Leverage Ratios

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Interest Coverage Ratio

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Summary of Interest Coverage Ratios Trend Analysis

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Activity Ratios Inventory Turnover Ratio

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Total Assets Turnover Ratio

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Summary of Activity Ratio

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Profitability Ratios Gross Profit Margin in %

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Net Profit Margin in %

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Return on Investment in %

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Return on Equity in %

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Summary of Activity Ratio in %

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Problems in Shell Pakistan 1. The Shell Pakistan has weaker the acid test ratios due to the following: There is inventory management problem with Shell Pakistan. May be the inventory of Shell Pakistan is too high as compared with the industry ratios. Shell Pakistan has less EBIT to cover interest charges that is why is using very minute long term debt as compared to industry ratios. 3. There are some other problems with the profitability ratios which are mentioned below: The cost of goods sold may be the too high of Shell Pakistan or they have huge investment in the assets. The concerned of Shell Pakistan is toward the equity financing as compared to the industry. So the gross profit margin is less. The cost of goods sold may be the too high of Shell Pakistan or they have huge operating cost ie taxes etc. as compared to the industry. So the net profit margin is less. The net profit of Shell Pakistan is not satisfactorily and they have huge investment in assets as compared to the industry. The net profit after taxes of Shell Pakistan are not satisfactorily and they have huge investment in equity financing as compared to the industry.

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Actions Executed by the Company so far to Overcome Problems 1. Shell Pakistan is improving the weaker acid test ratios as mentioned below: It is improving the inventory management problem with Shell Pakistan. It is improving the too high inventory of Shell Pakistan. Shell Pakistan is improving the EBIT to cover interest charges if any that is why Shell Pakistan is using very minute long term debt as compared to industry ratios. 3. There are some other problems with the profitability ratios of Shell Pakistan and is trying to improve: It is improving the cost of goods sold which is too high or they have huge investment in the assets. The concerned of Shell Pakistan is toward the equity financing as compared to the industry. So it is improving its gross profit margin. It is improving the too high cost of goods sold or they have huge operating cost ie taxes etc. as compared to the industry. So it is improving its net profit margin. The net profit of Shell Pakistan is improving with less risk factor and they have huge investment in assets as compared to the industry. The net profit after taxes of Shell Pakistan is going satisfactorily with less risk factor and they have huge investment in equity financing as compared to the industry.

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Our Suggestions that the Company Should Imitate 1. The Shell Pakistan should improve the weaker acid test ratios due to the following: Inventory management problem with Shell Pakistan. Too high inventory of Shell Pakistan as compared with the industry ratios. Shell Pakistan should improve EBIT to cover interest charges that is why Shell Pakistan is using very minute long term debt as compared to industry ratios. 3. There are some other mentioned below problems with the profitability ratios which Shell Pakistan should improve: The cost of goods sold may be too high or they have huge investment in the assets. The concerned of Shell Pakistan is toward the equity financing as compared to the industry. The cost of goods sold may be the too high or they have huge operating cost ie taxes etc. as compared to the industry. The net profit of Shell Pakistan is not satisfactorily and they have huge investment in assets as compared to the industry. The net profit after taxes of Shell Pakistan is not satisfactorily and they have huge investment in equity financing as compared to the industry.

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Upcoming Global Challenges that the Company Has to Face Balancing short and long term interests. Integrating economic, environmental and social considerations. Over staffing problem. Global financial crisis. Shortage of raw material. Globally growing fuel requirements. Shortage of sources. Energy crisis. Demand and supply issues. Environmental problems. Globally competition Freight and subsidies. Currency volatility. Taxes rate. ISO certification. Trade policies of different countries Unemployment issues. Foreign exchange isuues.

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Conclusion 1. The Shell Pakistan has weaker the acid test ratios due to the following: There is inventory management problem with Shell Pakistan. May be the inventory of Shell Pakistan is too high as compared with the industry ratios. Shell Pakistan has less EBIT to cover interest charges that is why is using very minute long term debt as compared to industry ratios. 3. There are some other problems with the profitability ratios which are mentioned below: The cost of goods sold may be the too high of Shell Pakistan or they have huge investment in the assets. The concerned of Shell Pakistan is toward the equity financing as compared to the industry. So the gross profit margin is less. The cost of goods sold may be the too high of Shell Pakistan or they have huge operating cost ie taxes etc. as compared to the industry. So the net profit margin is less. The net profit of Shell Pakistan is not satisfactorily and they have huge investment in assets as compared to the industry. The net profit after taxes of Shell Pakistan are not satisfactorily and they have huge investment in equity financing as compared to the industry.

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Recommendations 1. The Shell Pakistan should improve the weaker acid test ratios due to the following: Inventory management problem with Shell Pakistan. Too high inventory of Shell Pakistan as compared with the industry ratios. Shell Pakistan should improve EBIT to cover interest charges that is why is using very minute long term debt as compared to industry ratios. There are some other mentioned below problems with the profitability ratios which Shell Pakistan should improve: The cost of goods sold may be the too high or they have huge investment in the assets. The concerned of Shell Pakistan is toward the equity financing as compared to the industry. The cost of goods sold may be the too high or they have huge operating cost ie taxes etc. as compared to the industry. The net profit of Shell Pakistan is not satisfactorily and they have huge investment in assets as compared to the industry. The net profit after taxes of Shell Pakistan is not satisfactorily and they have huge investment in equity financing as compared to the industry.

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Q & A

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Thank You

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