Hascol may redo balance sheets after ‘false purchase orders’ surface

KARACHI: Hascol Petro­leum Ltd said on Monday it could restate its financial statements in view of fresh evidence received from a whistleblower about “a series of false purchase orders” recorded in the company’s 2019 books.

In a note released through the Pakistan Stock Exchange website, the oil marketing company said its board audit committee concluded last week there was “sufficient evidence in support of the accusation to justify referring the matter to the full board of directors”.

The statement, attributed to company chairman Sir Alan Duncan, said the entity would revise its past income statement in addition to the past and present balance sheets if the accusation turned out to be correct.

Hascol has been in financial trouble since 2018. Its revenues have dropped, losses mounted and loans risen, sending its share price down from over Rs300 three years ago to just Rs11.23 on Monday. Regulatory actions against the company in Khyber Pakhtunkhwa for unauthorised storage and selling of petroleum products also marred its reputation last year. The company has lately been in news for abrupt resignations by auditors as well as members of its board and senior management.

Revisions in financial accounts are not expected to make any material difference to the company’s recent and future operations, the statement added.

Speaking to Dawn, Arif Habib Ltd Research Analyst Arsalan Hanif said the restatement exercise could cause a material impact on the share price of Hascol, which held a seven per cent share in the oil marketing segment for the first 11 months of 2020-21.

“I think any restatement will make the numbers more favourable,” he said, noting that the allegedly false purchase orders must have been recorded at higher-than-actual rates.

“The share price can possibly go up from where it currently is. If someone still owns the stock, I’d advise them to hold on to it for now,” he said.

Hascol’s retail fuel volumes witnessed a decline of 48pc year-on-year in May.

Hascol hasn’t announced its financial results since Sept 30, 2020. Its quarterly loss stood at over Rs3 billion, with long-term liabilities amounting to Rs14.5bn. The company said at the time that one of the reasons for the delay in the July-September quarterly results was the resignation of EY Ford Rhodes as co-auditors and the appointment of Grant Thornton as auditors.

However, the latest statement from the company chairman informed shareholders that even Grant Thornton had resigned as its auditor for 2020 with immediate effect.