Sani e Mehmood Khan
Economic Coordination Committee (ECC) view to compensate OMCs against foreign exchange loss in oil prices would bring hundred of billions of rupees on the table that would be a certain plus for companies like SHELL
The Lube segment of SHELL contributes ~67% in gross profit which has been the main reason for losses in the past few years. the analogy can be drawn with line losses of electricity where other good pay masters pay on behalf of consumers who steel or where electric supply companies provide KUNDA (illegal) connections.
After ECC decision that allows PSO to pass on exchange loss impact in pricing formula will be highly beneficial for SHEL.
SHELL had booked exchange loss in the following manner:
SHELL lube volumes nosedived CY19 due to lockdown which is likely increase CY20. Moreover, company has benefit at the time of lower oil prices due to decline in prices of its raw material which is lube base oil.
Some of the Market Analysts expecting incremental Rs1bn (9.3/sh) in context Exchange Rate Policy Implementation
SHELL has booked finance cost of Rs 1.5bn ( Rs14/sh) in CY19 which could reduced the cost by nearly 50% or RS 7/- per share.