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TABLE OF CONTENTS
SR no
Description
Page no
Environmental analysis
Industry analysis
Financial analysis
1.
2.
3.
4.
5.
3. Environment analysis
Power generation is provided by three sources; thermal, hydel and nuclear. There
are 13hydroelectric facilities with installed capacity of 6,481 MW are owned and
operated by the WAPDA while thermal power plants are owned by both public and
private sector companies. The public sector operates 13 thermal power plants with
installed capacity of 4,900 MW. One third of power generation is provided by
Independent Power Producers-IPPs. KESC operates plants with total capacity of
1,955 MW.
Out of total 19,252 MW of the National installed generation capacity, dependable
generation is about 17,523 MW in the summer and 14,640 MW in winter.
Independent power producer companies contribute approximately 25% of total
power generation
4. INDUSTRY ANALYSIS
We have applied the porters five competitive forces model to analyze the Electricity
industry and its details are stated as under
4.1 Industry competitors
1
2
3
4
5
6
7
8
9
10
11
12
13
Categories
Individuals
Joint stock companies
Financial institutions
Investment companies
Insurance companies
Modaraba / Mutual Funds / Leasing
Companies
Government of Balochistan
GDR Depository
Charitable Trusts
Cooperative societies
Provident/ Pension / Gratuity fund
EOBI
Total
Number of
shareholders
12,444
174
72
23
17
66
1
1
36
11
134
1
12,980
Number of
% age
shares
194,926,797
16.84
359,361,594
31.06
336,977,142
29.12
40,012,594
3.46
55,002,081
4.75
58,227,324
5.03
358,607
13,724,741
10,991,852
4,590,500
63,331,155
19,650,000
1,157,154,387
0.03
1.19
0.95
0.40
5.47
1.70
100.00
2012
10,541GWh
7,770 GWh
74%
2011
10,512 GWh
8,115 GWh
77%
2012
1,878 GWh
2011
359 GWh
Total output
Load factor
1,321 GWh
70%
237 GWh
66%
2011
2010
2009
2008
46.6 billion
24.8 billion
2007
Rupees
Trade
debts
151.1 billion
85.8 billion
66.7 billion
7.9 billion
Sales
Finance
cost
174.7 billion
123.3 billion
99.6 billion
82.7 billion
62.4 billion
44.1 billion
7 billion
3.3 billion
1.7 billion
2 billion
1.9 billion
1.4 billion
The above mentioned facts highlight the non-correlation among profitability, liquidity and
solvency position of Hub Power Company Limited.
(74) Any profit on debt derived by Hub Power Company Limited on or after the first day of July,
1991, on its bank deposits or accounts with4[financial institutions] institutions] directly
connected with financial transactions relating to the project operations.
Conclusion: In the light of above mentioned legal requirements the provision for tax demand of 143
million should be recognized in the audited financial statements The impact of non-recording of
provision
1. Overstatement of profits
2. Understatement of expenses
3. Understatement of liabilities
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Trade and
other payables
Interest / mark
up accrued
25,834,390,000
127,711,782,000
1,638,555,000
Short term
borrowings
Current
maturity of
long term
loans
Total
19,688,469,000
2,165,723,000
177,038,919,000
Between 6 to Between 1 to 5
12 months
years
Rupees
Between 5 to
10 years
Total
16,264,330,000
48,203,934,000
126,301,387,000
Rupees
Contractual maturities schedule of financial liabilities
Less than 6
months
2011-12
Long term loans
Trade and other
payables
Short term
borrowings
Total
3,178,732,000
126,301,387,000
3,149,689,000
25,611,183,000
20,141,883,000
146,622,002,000
20,141,883,000
3,149,689,000
25,611,183,000
16,264,330,000
194,647,204,000
I would like to make request to clarify the difference between PKR 194,647,204,000 and PKR
177,038,919,000.
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I would like to make request to Company management to share the financial strategy to deal
the payment issue of financial obligations which will be paid within next 6 month and as per
contractual maturity schedule, its amount is 149.6 billion rupees.
SUMMARY:
In the AGM of HUBCO held today 27th September 2012 at 1100 hours at Marriot Hotel
Islamabad.
The above points were deliberated by me in detail however answers to some of my questions
were ambiguous and non explanatory.
I light of the above I have come to the following conclusions:
a. The Company is faced with extreme liquidity and solvency crisis and if the forth coming
events do not become favorable as regards circular debt and allied problems then there
will be a big question mark on the companys ability to move forward as a going
concern for which the provision of ISA-570 should have been pointed out by the
auditors.
b. Poor Financial stewardship of the companys resources as there is non co-relationship
among profitability liquidity and solvency position of HUBCO.
c. The closing paragraphs of statutory report of directors under section 236 of Companies
ordinance 1984 disclose the critical financial situation as given on page 63 of the annual
report.
d. Contingency of 143 Million Rupees on account of term deposits but HIBCO
management has refused to pay the said tax demand and also has not been recognized
as provision in the audited financial statements.
e. The Company is paying 7 billion as financial cost and the gearing ratio 48:52 is very high
and may stick out like a sour thumb in the future.
Recommendations
Shareholders of HUBCO are advised in their own interest to make a critical review and analysis
of my report and decide their future mode of action as past performance is no guarantee for
future performance.
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