Lahore, Pakistan-based oil supplier Hi-Tech Lubricants Limited in its bid to raise Rs1.25 billion by first-time offering one-fourth of the companys shares in the equity market, raised Rs2.84 billion (U.S. $27.1 million) in the first phase of its initial public stock offering on the Pakistan Stock Exchange. The company has scheduled a second phase later this month.
Chief Financial Officer Muhammad Imran at Hi-Tech Lubricants Limited said the raised fund through 25 percent share offers will be used to expand the companys production plant in Lahore and open retail outlets across the country.
The new plants will start operation within the next six months. We will inject Rs200 million into the expansion and another Rs770 million to open 37 retail outlets in 11 major cities of the country, said Imran. Presently, the company manufactures plastic bottles and blends lubricants, and is engaged in packaging of ZIC and SK brands for South Korean SK Lubricants.
At present, the company has a capacity to manufacture plastic bottles for 0.7 to 10 litre.
Imran said the production enhancement will help in increasing our gross profit margins by 15-20 percent. Cans and drums will allow the company to import lubricant products in bulk.
At present, it imports lubricants in iron drums from South Korea.
One container can carry maximum 22,000-litre in iron drums. The bulk import will increase this volume to 42,000-litre/container and cut the cost by half to $1,500/container, Imran said.
The company said it will also launch two new products: lubricant for diesel engine vehicles and for power transformers.
All the outlets would be ready to provide services within the next 15 months. Out of the total 37 outlets in the pipeline, eight would directly be owned and operated by the firm. Remaining outlets would be outsourced.
In addition to injecting the capital from local bourses, the firm said it will inject another Rs100 million from its own accounts.
Founded in 2005, Hi-Tech Lubricants reported a profit after tax at Rs338 million for the year ended June 30, 2015. It sold goods worth Rs5.46 billion during the year. The company said its compound annual growth rate (CAGR) stands at 21.1 percent at present and the company projects a conservative CAGR at 20 percent for the next five years.
